Company Quick10K Filing
Quick10K
Selective Insurance Group
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$70.76 59 $4,190
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-05-01 Earnings, Regulation FD, Exhibits
8-K 2019-02-13 Regulation FD, Exhibits
8-K 2019-02-06 Regulation FD, Exhibits
8-K 2019-02-04 Regulation FD
8-K 2019-01-31 Earnings, Regulation FD, Exhibits
8-K 2018-10-25 Earnings, Regulation FD, Exhibits
8-K 2018-08-01 Earnings, Regulation FD, Exhibits
8-K 2018-07-17 Officers, Exhibits
8-K 2018-05-02 Earnings, Regulation FD, Exhibits
8-K 2018-04-09 Earnings, Exhibits
8-K 2018-03-12 Officers, Exhibits
8-K 2018-02-13 Regulation FD, Exhibits
8-K 2018-02-01 Earnings, Regulation FD, Exhibits
CAT Caterpillar 75,030
SIX Six Flags Entertainment 4,650
CNS Cohen & Steers 2,390
FTSV Forty Seven 585
DSKE Daseke 353
DFRG Del Frisco's 200
AQB Aquabounty Technologies 49
LLIT Lianluo Smart 26
PTIX Protagenic 0
IMN Glassbridge Enterprises 0
SIGI 2019-03-31
Part I. Financial Information
Item 1. Financial Statements.
Note 1. Basis of Presentation
Note 2. Adoption of Accounting Pronouncements
Note 3. Statements of Cash Flows
Note 4. Investments
Note 5. Indebtedness
Note 6. Fair Value Measurements
Note 7. Reinsurance
Note 8. "Reinsurance" in Item 8. "Financial Statements and Supplementary Data." of Our 2018 Annual Report.
Note 8. Reserve for Loss and Loss Expense
Note 9. Segment Information
Note 10. Retirement Plans
Note 11. Comprehensive Income
Note 12. Leases
Note 13. Litigation
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Part II. Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 5. Other Information.
Item 6. Exhibits.
EX-11 sigi-ex11_3312019xq1.htm
EX-31.1 sigi-ex311_3312019xq1.htm
EX-31.2 sigi-ex312_3312019xq1.htm
EX-32.1 sigi-ex321_3312019xq1.htm
EX-32.2 sigi-ex322_3312019xq1.htm

Selective Insurance Group Earnings 2019-03-31

SIGI 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 sigi-3312019x10q.htm 10-Q Document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended: March 31, 2019
or
 
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from_____________________________to_____________________________
 
Commission File Number: 001-33067
SELECTIVE INSURANCE GROUP, INC.
(Exact Name of Registrant as Specified in Its Charter)
 
New Jersey
 
22-2168890
(State or Other Jurisdiction of Incorporation or Organization)
 
(I.R.S. Employer Identification No.)
 
 
 
40 Wantage Avenue
 
 
Branchville, New Jersey
 
07890
(Address of Principal Executive Offices)
 
(Zip Code)
(973) 948-3000
(Registrant’s Telephone Number, Including Area Code)
 
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Common Stock, par value $2 per share
SIGI
NASDAQ Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x           No o

 Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x           No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x
 
Accelerated filer o
Non-accelerated filer o 
Smaller reporting company o
 
 
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).                                                              Yes o          No x
As of April 19, 2019, there were 59,231,319 shares of common stock, par value $2.00 per share, outstanding. 



 
SELECTIVE INSURANCE GROUP, INC.
 
 
Table of Contents
 
 
 
Page No.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 5.
 
 
 
 
 
 
 
 
 



PART I. FINANCIAL INFORMATION
 
ITEM 1. FINANCIAL STATEMENTS.
 
SELECTIVE INSURANCE GROUP, INC.
CONSOLIDATED BALANCE SHEETS
 
Unaudited
 
 
($ in thousands, except share amounts)
 
March 31,
2019
 
December 31,
2018
ASSETS
 
 

 
 

Investments:
 
 

 
 

Fixed income securities, held-to-maturity – at carrying value (fair value:  $37,942 – 2019; $38,317 – 2018)
 
$
36,493

 
37,110

Fixed income securities, available-for-sale – at fair value (amortized cost: $5,463,273 – 2019; $5,270,798 – 2018)
 
5,567,358

 
5,273,100

Equity securities – at fair value (cost:  $143,376 – 2019; $138,144 – 2018)
 
163,016

 
147,639

Short-term investments (at cost which approximates fair value)
 
290,653

 
323,864

Other investments
 
176,225

 
178,938

Total investments (Note 4 and 6)
 
6,233,745


5,960,651

Cash
 
516

 
505

Restricted cash
 
9,998

 
16,414

Interest and dividends due or accrued
 
42,147

 
41,620

Premiums receivable, net of allowance for uncollectible accounts of:  $9,600 – 2019; $9,400 – 2018
 
814,914

 
770,518

Reinsurance recoverable, net of allowance for uncollectible accounts of: $4,100 – 2019; $4,500 – 2018
 
553,206

 
549,172

Prepaid reinsurance premiums
 
155,700

 
157,723

Deferred federal income tax
 
32,130

 
53,540

Property and equipment – at cost, net of accumulated depreciation and amortization of:
$216,071 – 2019; $211,657 – 2018
 
68,660

 
65,248

Deferred policy acquisition costs
 
260,754

 
252,612

Goodwill
 
7,849

 
7,849

Other assets
 
103,142

 
76,877

Total assets
 
$
8,282,761

 
7,952,729

 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 

 
 

Liabilities:
 
 

 
 

Reserve for loss and loss expense (Note 8)
 
$
3,966,509

 
3,893,868

Unearned premiums
 
1,470,283

 
1,431,932

Long-term debt
 
550,104

 
439,540

Current federal income tax
 
13,551

 
1,302

Accrued salaries and benefits
 
78,177

 
116,706

Other liabilities
 
278,915

 
277,579

Total liabilities
 
$
6,357,539

 
6,160,927

 
 
 
 
 
Stockholders’ Equity:
 
 

 
 

Preferred stock of $0 par value per share:
 
$

 

Authorized shares 5,000,000; no shares issued or outstanding
 
 
 
 
Common stock of $2 par value per share:
 
 
 
 
Authorized shares 360,000,000
 
 
 
 
Issued: 103,225,716 – 2019; 102,848,394 – 2018
 
206,451

 
205,697

Additional paid-in capital
 
398,881

 
390,315

Retained earnings
 
1,908,119

 
1,858,414

Accumulated other comprehensive income (loss) (Note 11)
 
3,024

 
(77,956
)
Treasury stock – at cost
(shares:  44,002,811 – 2019; 43,899,840 – 2018)
 
(591,253
)
 
(584,668
)
Total stockholders’ equity
 
$
1,925,222

 
1,791,802

Commitments and contingencies
 


 


Total liabilities and stockholders’ equity
 
$
8,282,761

 
7,952,729


The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

1


SELECTIVE INSURANCE GROUP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
 
Quarter ended March 31,
($ in thousands, except per share amounts)
 
2019
 
2018
Revenues:
 
 

 
 

Net premiums earned
 
$
632,573

 
591,828

Net investment income earned
 
50,618

 
43,231

Net realized and unrealized gains (losses):
 
 

 
 

Net realized investment gains on disposals
 
3,444

 
4,731

Other-than-temporary impairments
 
(104
)
 
(1,212
)
Unrealized gains (losses) on equity securities
 
10,111

 
(14,068
)
Total net realized and unrealized gains (losses)
 
13,451

 
(10,549
)
Other income
 
2,320

 
2,179

Total revenues
 
698,962

 
626,689

 
 
 
 
 
Expenses:
 
 

 
 

Loss and loss expense incurred
 
386,579

 
384,941

Amortization of deferred policy acquisition costs
 
129,674

 
121,093

Other insurance expenses
 
85,079

 
83,240

Interest expense
 
11,526

 
6,152

Corporate expenses
 
12,410

 
11,332

Total expenses
 
625,268

 
606,758

 
 
 
 
 
Income before federal income tax
 
73,694

 
19,931

 
 
 
 
 
Federal income tax expense:
 
 

 
 

Current
 
12,581

 
433

Deferred
 
(235
)
 
573

Total federal income tax expense
 
12,346

 
1,006

 
 
 
 
 
Net income
 
$
61,348

 
18,925

 
 
 
 
 
Earnings per share:
 
 

 
 

Basic net income
 
$
1.04

 
0.32

 
 
 
 
 
Diluted net income
 
$
1.02

 
0.32

 
The accompanying notes are an integral part of these unaudited interim consolidated financial statements. 
 


2


SELECTIVE INSURANCE GROUP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 
Quarter ended March 31,
($ in thousands)
 
2019
 
2018
Net income
 
$
61,348

 
18,925

 
 
 
 
 
Other comprehensive income (loss), net of tax:
 
 

 
 

Unrealized gains (losses) on investment securities:
 
 

 
 

Unrealized holding gains (losses) arising during period
 
81,313

 
(67,398
)
  Amounts reclassified into net income:
 
 
 
 
Held-to-maturity securities
 
(7
)
 
(10
)
Realized (gains) losses on disposals and other-than-temporary impairments of available-for-sale securities
 
(851
)
 
3,594

Total unrealized gains (losses) on investment securities
 
80,455

 
(63,814
)
 
 
 
 
 
Defined benefit pension and post-retirement plans:
 
 

 
 

Amounts reclassified into net income:
 
 
 
 
Net actuarial loss
 
525

 
420

  Total defined benefit pension and post-retirement plans
 
525

 
420

Other comprehensive income (loss)
 
80,980

 
(63,394
)
Comprehensive income (loss)
 
$
142,328

 
(44,469
)
 
The accompanying notes are an integral part of these unaudited interim consolidated financial statements.
 


3


SELECTIVE INSURANCE GROUP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
 
Quarter ended March 31,
($ in thousands, except per share amounts)
 
2019
 
2018
Common stock:
 
 

 
 

Beginning of year
 
$
205,697

 
204,569

Dividend reinvestment plan (shares:  5,694 – 2019; 6,298 – 2018)
 
11

 
13

Stock purchase and compensation plans (shares:  371,628 – 2019; 349,255 – 2018)
 
743

 
698

End of period
 
206,451

 
205,280

 
 
 
 
 
Additional paid-in capital:
 
 

 
 

Beginning of year
 
390,315

 
367,717

Dividend reinvestment plan
 
365

 
353

Stock purchase and compensation plans
 
8,201

 
7,085

End of period
 
398,881

 
375,155

 
 
 
 
 
Retained earnings:
 
 

 
 

Beginning of year, as previously reported
 
1,858,414

 
1,698,613

Cumulative effect adjustment due to adoption of equity security guidance, net of tax
 

 
30,726

Cumulative effect adjustment due to adoption of stranded deferred tax guidance
 

 
(5,707
)
Cumulative effect adjustment due to adoption of lease guidance, net of tax (Note 2)
 
342

 

Balance at beginning of year, as adjusted
 
1,858,756

 
1,723,632

Net income
 
61,348

 
18,925

Dividends to stockholders ($0.20 per share – 2019; $0.18 per share – 2018)
 
(11,985
)
 
(10,725
)
End of period
 
1,908,119

 
1,731,832

 
 
 
 
 
Accumulated other comprehensive income (loss):
 
 

 
 

Beginning of year, as previously reported
 
(77,956
)
 
20,170

Cumulative effect adjustment due to adoption of equity security guidance, net of tax
 

 
(30,726
)
Cumulative effect adjustment due to adoption of stranded deferred tax guidance
 

 
5,707

Balance at beginning of year, as adjusted
 
(77,956
)
 
(4,849
)
Other comprehensive income (loss)
 
80,980

 
(63,394
)
End of period
 
3,024

 
(68,243
)
 
 
 
 
 
Treasury stock:
 
 

 
 

Beginning of year
 
(584,668
)
 
(578,112
)
Acquisition of treasury stock (shares: 102,971 – 2019; 103,170 – 2018)
 
(6,585
)
 
(6,116
)
End of period
 
(591,253
)
 
(584,228
)
Total stockholders’ equity
 
$
1,925,222

 
1,659,796

 
Selective Insurance Group, Inc. also has authorized, but not issued, 5,000,000 shares of preferred stock, without par value, of which 300,000 shares have been
designated Series A junior preferred stock, without par value.
  
The accompanying notes are an integral part of these unaudited interim consolidated financial statements.
 


4


SELECTIVE INSURANCE GROUP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Quarter ended March 31,
($ in thousands)
 
2019
 
2018
Operating Activities
 
 

 
 

Net income
 
$
61,348

 
18,925

 
 
 
 
 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 

 
 

Depreciation and amortization
 
16,278

 
11,200

Stock-based compensation expense
 
6,677

 
5,820

Undistributed gains of equity method investments
 
(971
)
 
(881
)
Distributions in excess of current year income of equity method investments
 
1,771

 
1,346

Loss on disposal of fixed assets
 

 
29

Net realized and unrealized (gains) losses
 
(13,451
)
 
10,549

 
 
 
 
 
Changes in assets and liabilities:
 
 

 
 

Increase in reserve for loss and loss expense, net of reinsurance recoverable
 
68,607

 
54,766

Increase in unearned premiums, net of prepaid reinsurance
 
40,374

 
32,732

Decrease in net federal income taxes
 
12,044

 
3,616

Increase in premiums receivable
 
(44,396
)
 
(19,284
)
Increase in deferred policy acquisition costs
 
(8,142
)
 
(4,237
)
Increase in interest and dividends due or accrued
 
(491
)
 
(864
)
Decrease in accrued salaries and benefits
 
(38,529
)
 
(41,363
)
Increase in other assets
 
(8,711
)
 
(9,672
)
Decrease in other liabilities
 
(45,769
)
 
(70,387
)
Net cash provided by (used in) operating activities
 
46,639

 
(7,705
)
 
 
 
 
 
Investing Activities
 
 

 
 

Purchase of fixed income securities, available-for-sale
 
(474,962
)
 
(875,016
)
Purchase of equity securities
 
(6,702
)
 
(38,273
)
Purchase of other investments
 
(12,178
)
 
(13,471
)
Purchase of short-term investments
 
(2,416,285
)
 
(754,524
)
Sale of fixed income securities, available-for-sale
 
218,411

 
675,396

Sale of short-term investments
 
2,449,725

 
737,097

Redemption and maturities of fixed income securities, held-to-maturity
 
579

 
484

Redemption and maturities of fixed income securities, available-for-sale
 
86,572

 
160,514

Sale of equity securities
 
3,721

 
40,740

Sale of other investments
 
4,995

 
3,497

Distributions from other investments
 
11,350

 
6,221

Purchase of property and equipment
 
(7,955
)
 
(2,120
)
Net cash used in investing activities
 
(142,729
)
 
(59,455
)
 
 
 
 
 
Financing Activities
 
 

 
 

Dividends to stockholders
 
(11,462
)
 
(10,203
)
Acquisition of treasury stock
 
(6,585
)
 
(6,116
)
Net proceeds from stock purchase and compensation plans
 
1,760

 
1,435

Proceeds from borrowings
 
341,256

 
130,000

Repayments of borrowings
 
(235,000
)
 
(75,000
)
Repayments of finance lease obligations
 
(284
)
 
(734
)
Net cash provided by financing activities
 
89,685

 
39,382

Net decrease in cash and restricted cash
 
(6,405
)
 
(27,778
)
Cash and restricted cash, beginning of year
 
16,919

 
44,710

Cash and restricted cash, end of period
 
$
10,514

 
16,932

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

5


NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. Basis of Presentation
As used herein, the "Company,” “we,” “us,” or “our” refers to Selective Insurance Group, Inc. (the "Parent"), and its subsidiaries, except as expressly indicated or unless the context otherwise requires. Our interim unaudited consolidated financial statements (“Financial Statements”) have been prepared by us in conformity with U.S. generally accepted accounting principles (“GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The preparation of the Financial Statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported financial statement balances, as well as the disclosure of contingent assets and liabilities. Actual results could differ from those estimates. All significant intercompany accounts and transactions between the Parent and its subsidiaries are eliminated in consolidation.

Our Financial Statements reflect all adjustments that, in our opinion, are normal, recurring, and necessary for a fair presentation of our results of operations and financial condition. Our Financial Statements cover the first quarters ended March 31, 2019 (“First Quarter 2019”) and March 31, 2018 (“First Quarter 2018”). These Financial Statements do not include all of the information and disclosures required by GAAP and the SEC for audited annual financial statements. Additionally, results of operations for any interim period are not necessarily indicative of results for a full year. Consequently, our Financial Statements should be read in conjunction with the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2018 (“2018 Annual Report”) filed with the SEC.

NOTE 2. Adoption of Accounting Pronouncements 
The Financial Accounting Standards Board ("FASB") issued new leasing guidance through ASU 2016-02, Leases, which was issued in February 2016, as well as additional implementation guidance that was issued in 2018 and 2019 (collectively referred to as "ASU 2016-02"). ASU 2016-02 requires all lessees to recognize assets and liabilities on their balance sheets for the rights and obligations created by leases with terms longer than 12 months. For leases with a term of 12 months or less, an accounting policy election is allowed to recognize lease expense on a straight-line basis over the lease term.

ASU 2016-02 allows for certain practical expedients, accounting policy elections, and a transition method election. We adopted practical expedients related to reassessing: (i) whether our existing contracts are, or contain, leases; (ii) lease classification for existing leases; and (iii) initial direct costs for existing leases. Additionally, we adopted accounting policy elections to: (i) aggregate lease and non-lease components of a contract into a single lease component; and (ii) expense short-term leases on a straight-line basis over the lease term. We adopted ASU 2016-02 effective January 1, 2019. See Note 12. "Leases" in this Form 10-Q for additional information regarding our leases and the impact of this guidance on our financial condition and results of operations.

In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting ("ASU 2018-07"). The amendments in ASU 2018-07 expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. We adopted ASU 2018-07 in First Quarter 2019 and it did not have a material impact on our financial condition or results of operations.

Pronouncements to be effective in the future
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (“ASU 2016-13”). ASU 2016-13 will change the way entities recognize impairment of financial assets by requiring immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, including, among others, held-to-maturity ("HTM") debt securities, trade receivables, and reinsurance recoverables. This ASU will not impact the impairment accounting model for available-for-sale ("AFS") debt securities. ASU 2016-13 requires a valuation allowance to be calculated on these financial assets, and that they be presented on the financial statements net of the valuation allowance. The valuation allowance is a measurement of expected losses that is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. This methodology is referred to as the current expected credit loss model. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those annual periods. We are currently evaluating the impact of this guidance on our financial condition and results of operations.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement: Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). ASU 2018-13 modifies the disclosure requirements for fair value measurements. The modifications removed the following disclosure requirements: (i) the amount of, and reasons for, transfers between Level 1 and Level 2 of the fair value hierarchy; (ii) the policy for timing of transfers between levels; and (iii) the valuation processes for Level 3 fair value measurements. This ASU added the following disclosure requirements: (i) the changes in unrealized gains and losses for the period included in other comprehensive income ("OCI") for recurring Level 3

6


fair value measurements held at the end of the reporting period; and (ii) the range and weighted average of significant observable inputs used to develop Level 3 fair value measurements. This update is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted. As the requirements of this literature are disclosure only, ASU 2018-13 will not impact our financial condition or results of operations.

In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General: Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans (“ASU 2018-14”). ASU 2018-14 modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. These modifications include: (i) removing the requirement to disclose the amount in accumulated other comprehensive income ("AOCI") expected to be recognized as components of net periodic benefit cost over the next fiscal year; and (ii) adding the requirement to disclose an explanation of the reasons for significant gains or losses related to changes in the benefit obligation for the period. This update is effective for fiscal years ending after December 15, 2020, with early adoption permitted. As the requirements of this literature are disclosure only, ASU 2018-14 will not impact our financial condition or results of operations.

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”). ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This update is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the impact of this guidance on our financial condition or results of operations.

NOTE 3. Statements of Cash Flows
Supplemental cash flow information was as follows:
 
 
Quarter ended March 31,
($ in thousands)
 
2019
 
2018
Cash paid during the period for:
 
 

 
 

Interest
 
$
4,477

 
3,455

Federal income tax
 

 
(2,807
)
 
 
 
 
 
Cash paid for amounts included in the measurement of lease liabilities:

 
 
 
 
Operating cash flows from operating leases1
 
1,983

 

Financing cash flows from finance leases

 
284

 
734

 
 
 
 
 
Non-cash items:
 
 
 
 
Corporate actions related to fixed income securities, AFS2
 
18,447

 
11,347

Assets acquired under operating lease arrangements1

 
6,136

 

Non-cash purchase of property and equipment
 
162

 

1Upon adoption of ASU 2016-02, effective January 1, 2019, we are required to disclose cash paid for amounts included in the measurement of operating lease liabilities, as well as supplemental non-cash information on operating lease liabilities arising from obtaining operating lease assets.
2Examples of such corporate actions include exchanges, non-cash acquisitions, and stock splits.

The following table provides a reconciliation of cash and restricted cash reported within the Consolidated Balance Sheets that equate to the amount reported in the Consolidated Statements of Cash Flows:
($ in thousands)
 
March 31, 2019
 
December 31, 2018
Cash
 
$
516

 
505

Restricted cash
 
9,998

 
16,414

Total cash and restricted cash shown in the Statements of Cash Flows
 
$
10,514

 
16,919


Amounts included in restricted cash represent cash received from the NFIP, which is restricted to pay flood claims under the Write Your Own program.


7


NOTE 4. Investments
(a) Our HTM fixed income securities as of March 31, 2019 represented less than 1% of our total invested assets, largely unchanged compared to December 31, 2018. The carry value and net unrealized/unrecognized gains were $36.5 million and $1.5 million, respectively, at March 31, 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 $0.1 million at March 31, 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 March 31, 2019 and December 31, 2018 was as follows:
March 31, 2019
 
 
 
 
 
 
 
 
($ in thousands)
 
Cost/
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
AFS fixed income securities:
 
 
 
 
 
 
 
 
U.S. government and government agencies
 
$
125,664

 
1,766

 
(341
)
 
127,089

Foreign government
 
20,238

 
299

 
(11
)
 
20,526

Obligations of states and political subdivisions
 
1,110,504

 
39,936

 
(197
)
 
1,150,243

Corporate securities
 
1,651,773

 
32,355

 
(6,113
)
 
1,678,015

Collateralized loan obligations and other asset-backed securities ("CLO and other ABS")
 
722,573

 
5,050

 
(5,383
)
 
722,240

Commercial mortgage-backed securities ("CMBS")
 
557,148

 
11,867

 
(815
)
 
568,200

Residential mortgage-backed securities (“RMBS”)
 
1,275,373

 
27,100

 
(1,428
)
 
1,301,045

Total AFS securities
 
$
5,463,273

 
118,373

 
(14,288
)
 
5,567,358

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 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.
  

8


(c) The severity of impairment on AFS securities in an unrealized/unrecognized loss position averaged approximately 1% of amortized cost at March 31, 2019 and approximately 2% at December 31, 2018. Quantitative information regarding these losses is provided below.
March 31, 2019
 
Less than 12 months
 
12 months or longer
 
Total
($ in thousands)
 
Fair Value
 
Unrealized
Losses1
 
Fair Value
 
Unrealized
Losses1
 
Fair Value
 
Unrealized
Losses
1
AFS fixed income securities:
 
 

 
 

 
 

 
 

 
 
 
 
U.S. government and government agencies
 
$
13,443

 
(41
)
 
25,774

 
(300
)
 
39,217

 
(341
)
Foreign government
 

 

 
3,509

 
(11
)
 
3,509

 
(11
)
Obligations of states and political subdivisions
 
15,257

 
(71
)
 
21,676

 
(126
)
 
36,933

 
(197
)
Corporate securities
 
158,607

 
(2,783
)
 
160,121

 
(3,330
)
 
318,728

 
(6,113
)
CLO and other ABS
 
366,775

 
(4,231
)
 
79,489

 
(1,152
)
 
446,264

 
(5,383
)
CMBS
 
112,025

 
(505
)
 
63,774

 
(310
)
 
175,799

 
(815
)
RMBS
 
22,881

 
(258
)
 
83,792

 
(1,170
)
 
106,673

 
(1,428
)
Total AFS securities
 
$
688,988

 
(7,889
)
 
438,135

 
(6,399
)
 
1,127,123

 
(14,288
)

December 31, 2018
 
Less than 12 months
 
12 months or longer
 
Total
($ in thousands)
 
Fair
Value
 
Unrealized
Losses1
 
Fair Value
 
Unrealized
Losses1
 
Fair Value
 
Unrealized
Losses
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 decrease in the less than 12 months unrealized loss position was due to: (i) lower interest rates, with a 21-basis point decrease in 2-year U.S. Treasury Note yields and a 28-basis point decrease in 10-year U.S. Treasury Note yields during First Quarter 2019; and (ii) tightening option adjusted corporate credit spreads, with a 34-basis point decrease in the Bloomberg Barclays U.S. Aggregate Corporate Bond Index during First Quarter 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 March 31, 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.
 

9


Listed below are the contractual maturities of fixed income securities at March 31, 2019:
 
 
AFS
 
HTM
($ in thousands)
 
Fair Value
 
Carrying Value
 
Fair Value
Due in one year or less
 
$
238,650

 
12,795

 
12,927

Due after one year through five years
 
2,126,600

 
17,574

 
18,728

Due after five years through 10 years
 
3,060,270

 
6,124

 
6,287

Due after 10 years
 
141,838

 

 

Total fixed income securities
 
$
5,567,358

 
36,493

 
37,942

  
(e) The following table summarizes our other investment portfolio by strategy:
Other Investments
 
March 31, 2019
 
December 31, 2018
($ in thousands)
 
Carrying Value
 
Remaining Commitment
 
Maximum Exposure to Loss1
 
Carrying Value
 
Remaining Commitment
 
Maximum Exposure to Loss1
Alternative Investments
 
 

 
 

 
 
 
 
 
 
 
 
   Private equity
 
$
92,371

 
101,297

 
193,668

 
84,352

 
93,688

 
178,040

   Private credit
 
30,518

 
90,812

 
121,330

 
41,682

 
81,453

 
123,135

   Real assets
 
28,844

 
25,152

 
53,996

 
27,862

 
27,129

 
54,991

Total alternative investments
 
151,733

 
217,261

 
368,994

 
153,896

 
202,270

 
356,166

Other securities
 
24,492

 

 
24,492

 
25,042

 

 
25,042

Total other investments
 
$
176,225

 
217,261

 
393,486

 
178,938

 
202,270

 
381,208

1The maximum exposure to loss includes both the carry value of these investments and the related unfunded 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 do not have a future obligation to fund losses or debts on behalf of the investments above; however, we are contractually committed to make additional investments up to the remaining commitment outlined above. 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 December 31 is included in our First Quarter results. This information is as follows:
Income Statement Information
 
Quarter ended March 31,
($ in millions)
 
2019
 
2018
Net investment income (loss)
 
$
(150.1
)

(56.2
)
Realized gains (losses)
 
143.3


1,003.0

Net change in unrealized appreciation
 
554.3


96.2

Net gain
 
$
547.5


1,043.0

Selective’s insurance subsidiaries’ alternative investments gain
 
$
0.6

 
1.6

 
(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 March 31, 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 March 31, 2019:
($ in millions)
 
FHLBI Collateral
 
FHLBNY Collateral
 
State and Regulatory Deposits
 
Total
U.S. government and government agencies
 
$

 

 
22.5

 
22.5

Obligations of states and political subdivisions
 

 

 
3.9

 
3.9

Corporate securities
 

 

 
0.3

 
0.3

CMBS
 
7.2

 
20.8

 

 
28.0

RMBS
 
57.3

 
96.6

 

 
153.9

Total pledged as collateral
 
$
64.5

 
117.4

 
26.7


208.6

 

10


(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 March 31, 2019 or December 31, 2018.

(h) The components of pre-tax net investment income earned were as follows:
 
 
Quarter ended March 31,
($ in thousands)
 
2019
 
2018
Fixed income securities
 
$
49,033


42,041

Equity securities
 
1,640


1,977

Short-term investments
 
2,044


523

Other investments
 
660


1,563

Investment expenses
 
(2,759
)

(2,873
)
Net investment income earned
 
$
50,618

 
43,231


(i) OTTI charges were $0.1 million and $1.2 million in First Quarter 2019 and First Quarter 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 First Quarter 2019 and 2018 included the following:
 
 
Quarter ended March 31,
($ in thousands)
 
2019
 
2018
Net realized gains (losses) on the disposals of securities:
 
 
 
 
Fixed income securities
 
$
1,143

 
(3,335
)
Equity securities
 
2,280

 
8,069

Short-term investments
 
14

 
(3
)
Other investments
 
7

 

Net realized gains on the disposal of securities
 
3,444

 
4,731

OTTI charges
 
(104
)
 
(1,212
)
Net realized gains
 
3,340

 
3,519

Unrealized gains (losses) recognized in income on equity securities1
 
10,111

 
(14,068
)
Total net realized and unrealized investment gains (losses)
 
$
13,451

 
(10,549
)
1Includes unrealized holding gains (losses) of: (i) $12.0 million in First Quarter 2019 and $(5.1) million in First Quarter 2018 on equity securities remaining in our portfolio as of March 31, 2019 and 2018, respectively; and (ii) $(1.9) million in First Quarter 2019 and $(9.0) million in First Quarter 2018 on equity securities sold in each respective period.

The components of net realized gains on disposals of securities for the periods indicated were as follows:
 
 
Quarter ended March 31,
($ in thousands)
 
2019
 
2018
HTM fixed income securities
 
 
 
 
Gains
 
$

 
2

Losses
 

 

AFS fixed income securities
 
 

 
 

Gains
 
1,844

 
2,623

Losses
 
(701
)
 
(5,960
)
Equity securities
 
 

 
 

Gains
 
2,280

 
8,399

Losses
 

 
(330
)
Short-term investments
 
 
 
 
Gains
 
14

 
1

Losses
 

 
(4
)
Other investments
 
 
 
 
Gains
 
7

 

      Losses
 



Total net realized gains on disposals of securities
 
$
3,444


4,731


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 $218.4 million and $675.4 million in First Quarter 2019 and First Quarter 2018, respectively. Proceeds from the sales of equity securities were $3.7 million and $40.7 million in First Quarter 2019 and First Quarter 2018, respectively.

11



NOTE 5. Indebtedness
The table below provides a summary of our outstanding debt at March 31, 2019 and December 31, 2018:
Outstanding Debt
 
Issuance Date
 
Maturity Date
 
Interest Rate
 
Original Amount
 
2019
 
Carry Value
($ in thousands)
 
 
 
 
 
Debt Discount and Unamortized Issuance Cost
 
March 31, 2019
 
December 31, 2018
Description
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long term
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Issuance:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Senior Notes
 
3/1/2019
 
3/1/2049
 
5.375
%
 
$
300,000

 
9,293

 
290,707

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Redemption:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Senior Notes
 
2/8/2013
 
2/9/2043
 
5.875
%
 
185,000

 

 

 
180,771

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Other Outstanding:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      FHLBI
 
12/16/2016
 
12/16/2026
 
3.03
%
 
60,000

 

 
60,000

 
60,000

      FHLBNY
 
8/15/2016
 
8/16/2021
 
1.56
%
 
25,000

 

 
25,000

 
25,000

      FHLBNY
 
7/21/2016
 
7/21/2021
 
1.61
%
 
25,000

 

 
25,000

 
25,000

      Senior Notes
 
11/3/2005
 
11/1/2035
 
6.70
%
 
100,000

 
917

 
99,083

 
99,069

      Senior Notes
 
11/16/2004
 
11/15/2034
 
7.25
%
 
50,000

 
293

 
49,707

 
49,700

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Finance Lease Obligations1
 
 
 
 
 
 
 
 
 
 
 
607

 

Total long-term debt
 
 
 
 
 
 
 
$
745,000

 
10,503

 
550,104

 
439,540

1 Concurrent with the adoption of ASU 2016-02 discussed in Note 2. "Adoption of Accounting Pronouncements," finance lease obligations are now captured in Long-term debt on our Consolidated Balance Sheets.

Short Term Debt Activity
On March 7, 2019, Selective Insurance Company of America (“SICA”) borrowed short-term funds of $50 million from the FHLBNY at an interest rate of 2.64%. This borrowing was repaid on March 28, 2019.

Long Term Debt Activity
In First Quarter 2019, we issued $300 million of 5.375% Senior Notes due 2049 at a discount of $5.9 million which, when coupled with debt issuance costs of approximately $3.4 million, resulted in net proceeds from the offering of $290.7 million. The Senior Notes will pay interest on March 1 and September 1 of each year, beginning on September 1, 2019. A portion of the proceeds from this debt issuance was used to fully redeem the $185 million aggregate principal amount of our 5.875% Senior Notes due 2043, with the remaining $106 million being used for general corporate purposes. The 5.875% Senior Notes had pre-tax debt retirement costs of $4.2 million, or $3.3 million after tax, which was recorded in Interest expense on the Consolidated Statements of Income in First Quarter 2019.

For detailed information on our indebtedness, see Note 10. "Indebtedness" in Item 8. "Financial Statements and Supplementary Data." of our 2018 Annual Report.


12


NOTE 6. Fair Value Measurements
The financial assets in our investment portfolio are primarily measured at fair value as disclosed on the Consolidated Balance Sheets. The following table presents the carrying amounts and estimated fair values of our financial liabilities as of March 31, 2019 and December 31, 2018:
 
 
March 31, 2019
 
December 31, 2018
($ in thousands)
 
Carrying Amount
 
Fair Value
 
Carrying Amount
 
Fair Value
Financial Liabilities
 
 
 
 
 
 
 
 
Long-term debt:
 
 
 
 
 
 
 
 
7.25% Senior Notes
 
49,907

 
61,391

 
49,907

 
57,032

6.70% Senior Notes
 
99,467

 
115,671

 
99,462

 
107,075

5.875% Senior Notes
 

 

 
185,000

 
177,230

5.375% Senior Notes
 
294,097

 
307,215

 

 

1.61% borrowings from FHLBNY
 
25,000

 
24,474

 
25,000

 
24,218

1.56% borrowings from FHLBNY
 
25,000

 
24,426

 
25,000

 
24,162

3.03% borrowings from FHLBI
 
60,000

 
61,814

 
60,000

 
58,905

Subtotal long-term debt
 
553,471

 
594,991

 
444,369

 
448,622

Unamortized debt issuance costs
 
(3,974
)
 
 
 
(4,829
)
 
 
Finance lease obligations
 
607

 
 
 

 
 
Total long-term debt
 
550,104

 
 
 
439,540

 
 

For a discussion of our long-term debt activity in First Quarter 2019, see Note 5. "Indebtedness" and for a discussion of the fair value hierarchy and techniques used to value our financial assets and liabilities, refer to Note 2. "Summary of Significant Accounting Policies" in Item 8. "Financial Statements and Supplementary Data." of our 2018 Annual Report.

The following tables provide quantitative disclosures of our financial assets that were measured and recorded at fair value at March 31, 2019 and December 31, 2018:
March 31, 2019
 
 
 
Fair Value Measurements Using
($ in thousands)
 
Assets
Measured at
Fair Value
 
Quoted Prices in
Active Markets for
Identical Assets/
Liabilities (Level 1)1
 
Significant Other
 Observable
Inputs
 (Level 2)1
 
Significant Unobservable
 Inputs
 (Level 3)
Description
 
 

 
 

 
 

 
 

Measured on a recurring basis:
 
 

 
 

 
 

 
 

AFS fixed income securities:
 
 
 
 
 
 
 
 
U.S. government and government agencies
 
$
127,089

 
68,645

 
58,444

 

Foreign government
 
20,526

 

 
20,526

 

Obligations of states and political subdivisions
 
1,150,243

 

 
1,150,243

 

Corporate securities
 
1,678,015

 

 
1,661,596

 
16,419

CLO and other ABS
 
722,240

 

 
690,948

 
31,292

CMBS
 
568,200

 

 
568,200

 

RMBS
 
1,301,045

 

 
1,301,045

 

Total AFS fixed income securities
 
5,567,358

 
68,645

 
5,451,002

 
47,711

Equity securities:
 
 
 
 
 
 
 
 
Common stock2
 
160,011

 
119,977

 

 

Preferred stock
 
3,005

 
3,005

 

 

Total equity securities
 
163,016

 
122,982

 

 

Short-term investments
 
290,653

 
289,232

 
1,421

 

Total assets measured at fair value
 
$
6,021,027

 
480,859

 
5,452,423


47,711


13


December 31, 2018
 
 
 
Fair Value Measurements Using
($ in thousands)
 
Assets
Measured at
Fair Value
 
Quoted Prices in
 Active Markets for
Identical Assets/Liabilities
(Level 1)1
 
Significant
Other Observable
Inputs
 (Level 2)1
 
Significant Unobservable
Inputs
 (Level 3)
Description
 
 

 
 

 
 

 
 

Measured on a recurring basis:
 
 

 
 

 
 

 
 

AFS fixed income securities:
 
 
 
 
 
 
 
 
U.S. government and government agencies
 
$
121,310

 
78,381

 
42,929

 

Foreign government
 
23,131

 

 
23,131

 

Obligations of states and political subdivisions
 
1,138,469

 

 
1,138,469

 

Corporate securities
 
1,617,408

 

 
1,617,408

 

CLO and other ABS
 
717,362

 

 
709,953

 
7,409

CMBS
 
527,078

 

 
527,078

 

RMBS
 
1,128,342

 

 
1,128,342

 

Total AFS fixed income securities
 
5,273,100

 
78,381

 
5,187,310

 
7,409

Equity securities:
 
 
 
 
 
 
 
 
Common stock2
 
144,727

 
107,397

 

 

Preferred stock
 
2,912

 
2,912

 

 

Total equity securities
 
147,639

 
110,309

 

 

Short-term investments
 
323,864

 
321,370

 
2,494

 

Total assets measured at fair value
 
$
5,744,603

 
510,060

 
5,189,804

 
7,409

1 
There were no transfers of securities between Level 1 and Level 2.
2 
Investments amounting to $40.0 million at March 31, 2019, and $23.7 million at December 31, 2018, were measured at fair value using net asset value per share (or its practical expedient) and have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to total assets measured at fair value.

The following table provides a summary of Level 3 changes in First Quarter 2019:
March 31, 2019
 
 
 
 
 
 
($ in thousands)
 
Corporate Securities
 
CLO and Other ABS
 
Total
Fair value, December 31, 2018
 

 
7,409

 
7,409

Total net (losses) gains for the period included in:
 
 
 
 
 
 
OCI
 

 
(225
)
 
(225
)
Net income
 

 

 

Purchases
 

 
12,434

 
12,434

Sales
 

 

 

Issuances
 

 

 

Settlements
 

 

 

Transfers into Level 3
 
16,419

 
11,674

 
28,093

Transfers out of Level 3
 

 

 

Fair value, March 31, 2019
 
16,419

 
31,292