Company Quick10K Filing
Quick10K
Berkley W R
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$60.64 183 $11,100
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 2019-06-06 Shareholder Vote
8-K 2019-04-23 Earnings, Exhibits
8-K 2019-02-21 Officers, Other Events, Exhibits
8-K 2019-01-29 Earnings, Exhibits
8-K 2018-10-23 Earnings, Exhibits
8-K 2018-07-24 Earnings, Exhibits
8-K 2018-05-31 Officers, Shareholder Vote
8-K 2018-04-24 Earnings, Exhibits
8-K 2018-04-03 Other Events, Exhibits
8-K 2018-03-26 Enter Agreement, Exhibits
8-K 2018-03-19 Enter Agreement, Exhibits
8-K 2018-01-30 Earnings, Exhibits
DVN Devon Energy 12,980
NVT Nvent Electric 4,590
R Ryder System 3,270
FCBC First Community Bancshares 542
TGEN Tecogen 88
BOTJ Bank of The James Financial Group 65
MYND Mynd Analytics 10
AASP All American Sportpark 0
TKLS Trutankless 0
WSCI WSI Industries 0
WRB 2019-03-31
Part I - Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosure 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 6. Exhibits
EX-31.1 wrb331201910qex311.htm
EX-31.2 wrb331201910qex312.htm
EX-32.1 wrb331201910qex321.htm

Berkley W R Earnings 2019-03-31

WRB 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Document
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q
(Mark one)
þ
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
o
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 1-15202

W. R. BERKLEY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
 
22-1867895
(State or other jurisdiction of
 
(I.R.S. Employer
incorporation or organization)
 
Identification No.)
 
 
 
475 Steamboat Road, Greenwich, Connecticut
 
06830
(Address of principal executive offices)
 
(Zip Code)
 
(203) 629-3000
 
 
(Registrant’s telephone number, including area code)
 
 
 
 
 
None
 
Former name, former address and former fiscal year, if changed since last report.
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 þ     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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ     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 þ
 
 
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 þ







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 $.20 per share
WRB
New York Stock Exchange
5.625% Subordinated Debentures due 2053
WRB B
New York Stock Exchange
5.9% Subordinated Debentures due 2056
WRB C
New York Stock Exchange
5.75% Subordinated Debentures due 2056
WRB D
New York Stock Exchange
5.70% Subordinated Debentures due 2058
WRB E
New York Stock Exchange
Number of shares of common stock, $.20 par value, outstanding as of May 6, 2019: 183,118,577
 




TABLE OF CONTENTS
 
 
 
 
 
 
 
 
EX-31.1
EX-31.2
EX-32.1
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT




Part I — FINANCIAL INFORMATION
Item 1.     Financial Statements

W. R. BERKLEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
 
March 31,
2019
 
December 31,
2018
 
(Unaudited)
 
(Audited)
Assets
 
 
 
Investments:
 
 
 
Fixed maturity securities
$
13,640,669

 
$
13,606,812

Real estate
2,019,123

 
1,957,092

Investment funds
1,359,908

 
1,332,818

Arbitrage trading account
504,633

 
452,548

Equity securities
341,981

 
279,006

Loans receivable
95,557

 
94,813

Total investments
17,961,871

 
17,723,089

Cash and cash equivalents
937,428

 
817,602

Premiums and fees receivable
1,964,244

 
1,807,762

Due from reinsurers
1,941,311

 
1,932,291

Deferred policy acquisition costs
515,595

 
497,629

Prepaid reinsurance premiums
516,691

 
498,880

Trading account receivables from brokers and clearing organizations
322,925

 
347,228

Property, furniture and equipment
406,841

 
416,372

Goodwill
173,037

 
173,037

Accrued investment income
150,294

 
144,481

Federal and foreign income taxes

 
36,193

Other assets
695,023

 
501,413

Total assets
$
25,585,260

 
$
24,895,977

 
 
 
 
Liabilities and Equity
 
 
 
Liabilities:
 
 
 
Reserves for losses and loss expenses
$
12,093,110

 
$
11,966,448

Unearned premiums
3,496,199

 
3,359,991

Due to reinsurers
262,781

 
256,917

Trading account securities sold but not yet purchased
58,148

 
38,120

Federal and foreign income taxes
43,243

 

Other liabilities
1,046,286

 
1,005,184

Senior notes and other debt
1,875,018

 
1,882,028

Subordinated debentures
907,679

 
907,491

Total liabilities
19,782,464

 
19,416,179

Equity:
 
 
 
Preferred stock, par value $.10 per share:
 
 
 
Authorized 5,000,000 shares; issued and outstanding - none

 

Common stock, par value $.20 per share:
 
 
 
Authorized 500,000,000 shares, issued and outstanding, net of treasury shares, 183,024,006 and 182,993,640 shares, respectively
70,535

 
70,535

Additional paid-in capital
1,053,372

 
1,039,633

Retained earnings
7,721,039

 
7,558,619

Accumulated other comprehensive loss
(364,983
)
 
(510,470
)
Treasury stock, at cost, 169,652,871 and 169,683,237 shares, respectively
(2,720,011
)
 
(2,720,466
)
Total stockholders’ equity
5,759,952

 
5,437,851

Noncontrolling interests
42,844

 
41,947

Total equity
5,802,796

 
5,479,798

Total liabilities and equity
$
25,585,260

 
$
24,895,977

See accompanying notes to interim consolidated financial statements.

1




W. R. BERKLEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share data)
 
For the Three Months
Ended March 31,
 
 
2019
 
2018
REVENUES:
 
 
 
Net premiums written
$
1,709,601

 
$
1,665,338

Change in net unearned premiums
(116,745
)
 
(97,930
)
Net premiums earned
1,592,856

 
1,567,408

Net investment income
158,254

 
174,518

Net realized and unrealized gains on investments
68,653

 
48,464

Revenues from non-insurance businesses
91,827

 
70,171

Insurance service fees
25,312

 
30,675

Other income
120

 
11

Total revenues
1,937,022

 
1,891,247

OPERATING COSTS AND EXPENSES:
 
 
 
Losses and loss expenses
988,650

 
963,219

Other operating costs and expenses
588,087

 
610,439

Expenses from non-insurance businesses
90,125

 
69,543

Interest expense
40,721

 
37,056

Total operating costs and expenses
1,707,583

 
1,680,257

Income before income taxes
229,439

 
210,990

Income tax expense
(47,825
)
 
(43,417
)
Net income before noncontrolling interests
181,614

 
167,573

Noncontrolling interests
(892
)
 
(1,177
)
Net income to common stockholders
$
180,722

 
$
166,396

 
 
 
 
NET INCOME PER SHARE:
 
 
 
Basic
$
0.95

 
$
0.88

Diluted
$
0.94

 
$
0.87


See accompanying notes to interim consolidated financial statements.






2



W. R. BERKLEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(In thousands)
 
For the Three Months
Ended March 31,
 
 
2019
 
2018
Net income before noncontrolling interests
$
181,614

 
$
167,573

Other comprehensive income (losses):
 
 
 
Change in unrealized currency translation adjustments
19,760

 
12,799

Change in unrealized investment gains (losses), net of taxes
125,774

 
(125,772
)
Other comprehensive income (losses)
145,534

 
(112,973
)
Comprehensive income
327,148

 
54,600

Noncontrolling interests
(845
)
 
(1,188
)
Comprehensive income to common stockholders
$
326,303

 
$
53,412


See accompanying notes to interim consolidated financial statements.

3



W. R. BERKLEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
(In thousands)
 
For the Three Months
Ended March 31,
 
 
2019

2018
COMMON STOCK:
 
 
 
Beginning and end of period
$
70,535

 
$
70,535

ADDITIONAL PAID-IN CAPITAL:
 
 
 
Beginning of period
$
1,039,633

 
$
1,024,771

Restricted stock units issued
(455
)
 
(487
)
Restricted stock units expensed
14,194

 
9,434

End of period
$
1,053,372

 
$
1,033,718

RETAINED EARNINGS:
 
 
 
Beginning of period
$
7,558,619

 
$
6,956,882

Cumulative effect adjustment resulting from changes in accounting principles

 
215,939

Net income to common stockholders
180,722

 
166,396

Dividends ($0.10 and $0.09 per share, respectively)
(18,302
)
 
(17,016
)
End of period
$
7,721,039

 
$
7,322,201

ACCUMULATED OTHER COMPREHENSIVE LOSS:
 
 
 
Unrealized investment gains:
 
 
 
Beginning of period
$
(91,491
)
 
$
375,421

Cumulative effect adjustment resulting from changes in accounting principles

 
(214,539
)
Change in unrealized gains (losses) on securities not other-than-temporarily impaired
125,796

 
(125,796
)
Change in unrealized (losses) gains on other-than-temporarily impaired securities
(69
)
 
13

End of period
34,236

 
35,099

Currency translation adjustments:
 
 
 
Beginning of period
(418,979
)
 
(306,880
)
Net change in period
19,760

 
12,799

End of period
(399,219
)
 
(294,081
)
Total accumulated other comprehensive loss
$
(364,983
)
 
$
(258,982
)
TREASURY STOCK:
 
 
 
Beginning of period
$
(2,720,466
)
 
$
(2,709,386
)
Stock exercised/vested
455

 
488

Stock repurchased

 
(6,799
)
End of period
$
(2,720,011
)
 
$
(2,715,697
)
NONCONTROLLING INTERESTS:
 
 
 
Beginning of period
$
41,947

 
$
39,819

Contributions (distributions)
52

 
(603
)
Net income
892

 
1,177

Other comprehensive (loss) income, net of tax
(47
)
 
11

End of period
$
42,844

 
$
40,404

See accompanying notes to interim consolidated financial statements.

4



W. R. BERKLEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
 
For the Three Months
Ended March 31,
 
 
2019
 
2018
CASH FROM (USED IN) OPERATING ACTIVITIES:
 
 
 
Net income to common stockholders
$
180,722

 
$
166,396

Adjustments to reconcile net income to net cash from (used in) operating activities:
 
 
 
Net realized and unrealized gains on investments
(68,653
)
 
(48,464
)
Depreciation and amortization
27,424

 
29,027

Noncontrolling interests
892

 
1,177

Investment funds
(11,411
)
 
(40,354
)
Stock incentive plans
14,828

 
9,434

Change in:
 
 
 
Arbitrage trading account
(7,753
)
 
497

Premiums and fees receivable
(156,450
)
 
(74,492
)
Reinsurance accounts
(20,272
)
 
(100,379
)
Deferred policy acquisition costs
(17,732
)
 
(6,851
)
Income taxes
36,180

 
50,505

Reserves for losses and loss expenses
119,780

 
120,063

Unearned premiums
135,184

 
116,627

Other
(154,409
)
 
(243,221
)
Net cash from (used in) operating activities
78,330

 
(20,035
)
CASH FROM (USED IN) INVESTING ACTIVITIES:
 
 
 
Proceeds from sale of fixed maturity securities
973,626

 
2,004,008

Proceeds from sale of equity securities
37,762

 
152,949

(Contributions to) distributions from investment funds
(13,874
)
 
33,695

Proceeds from maturities and prepayments of fixed maturity securities
686,795

 
97,911

Purchase of fixed maturity securities
(1,528,267
)
 
(2,085,683
)
Purchase of equity securities
(35,314
)
 
(44,219
)
Real estate purchased
(52,901
)
 
(336,601
)
Change in loans receivable
(726
)
 
2,058

Net additions to property, furniture and equipment
(3,299
)
 
(14,102
)
Change in balances due to security brokers
(22,011
)
 
58,500

Net cash from (used in) investing activities
41,791

 
(131,484
)
CASH (USED IN) FROM FINANCING ACTIVITIES:
 
 
 
Repayment of senior notes and other debt

 
(23
)
Net proceeds from issuance of debt

 
181,792

Cash dividends to common stockholders

 
(17,016
)
Purchase of common treasury shares

 
(6,799
)
Other, net
(976
)
 
(544
)
Net cash (used in) from financing activities
(976
)
 
157,410

Net impact on cash due to change in foreign exchange rates
681

 
241

Net change in cash and cash equivalents
119,826

 
6,132

Cash and cash equivalents at beginning of year
817,602

 
950,471

Cash and cash equivalents at end of period
$
937,428

 
$
956,603

See accompanying notes to interim consolidated financial statements.

5




W. R. Berkley Corporation and Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(1) General
The unaudited consolidated financial statements, which include the accounts of W. R. Berkley Corporation and its subsidiaries (the “Company”) have been prepared on the basis of U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all the information and notes required by GAAP for annual financial statements. The unaudited consolidated financial statements reflect all adjustments, consisting only of normal recurring items, which are necessary to present fairly the Company’s financial position and results of operations on a basis consistent with the prior audited consolidated financial statements. Operating results for interim periods are not necessarily indicative of the results that may be expected for the year. All significant intercompany accounts and transactions have been eliminated. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the revenues and expenses reflected during the reporting period. For further information related to a description of areas of judgment and estimates and other information necessary to understand the Company’s financial position and results of operations, refer to the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.
Reclassifications have been made in the 2018 financial statements as originally reported to conform to the presentation of the 2019 financial statements. Shares outstanding and per share amounts have been adjusted to reflect the 3-for-2 common stock split effected on April 2, 2019. Additionally, the Company renamed the Reinsurance segment to Reinsurance & Monoline Excess, and reclassified the monoline excess business from the Insurance segment. The reclassified business includes operations that solely retain risk on an excess basis.
The income tax provision has been computed based on the Company’s estimated annual effective tax rate. The effective tax rate for the quarter differs from the federal income tax rate of 21% principally because of tax-exempt investment income, as well as tax on income from foreign jurisdictions with different tax rates.

(2) Per Share Data
The Company presents both basic and diluted net income per share (“EPS”) amounts. Basic EPS is calculated by dividing net income by the weighted average number of common shares outstanding during the period (including 7,389,781 and 7,270,954 common shares held in a grantor trust as of March 31, 2019 and 2018, respectively). The common shares held in the grantor trust are for delivery upon settlement of vested but mandatorily deferred restricted stock units ("RSUs"). Shares held by the grantor trust do not affect diluted shares outstanding since the shares deliverable under vested RSUs were already included in diluted shares outstanding. Diluted EPS is based upon the weighted average number of basic and common equivalent shares outstanding during the period and is calculated using the treasury stock method for stock incentive plans. Common equivalent shares are excluded from the computation in periods in which they have an anti-dilutive effect.
The weighted average number of common shares used in the computation of basic and diluted earnings per share was as follows:
 
For the Three Months
Ended March 31,
 
(In thousands)
2019
 
2018
Basic
190,400

 
189,563

Diluted
192,669

 
192,188



(3) Recent Accounting Pronouncements
Recently adopted accounting pronouncements:
In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02, Leases, which amends the accounting and disclosure guidance for leases. This guidance retains the two classifications of a lease, as either an operating or finance lease, both of which require lessees to recognize a right-of-use asset and a lease liability for leases with terms of more than 12 months. The right-of-use asset and the lease liability are determined based upon the present value of cash flows. Finance leases reflect the financial arrangement by recognizing interest expense on the lease liability separately from the amortization expense of the right-of-use asset. Operating leases recognize lease expense (with no separate recognition of interest expense) on a straight-line basis over the term of the lease. The accounting

6



by lessors is not significantly changed by the updated guidance. The updated guidance is effective for reporting periods beginning after December 15, 2018. As permitted by the rules, the Company adopted the new guidance prospectively for the quarter ended March 31, 2019. The Company elected to use the practical expedient permitted by the transition guidance which allowed companies to not reassess existing lease classifications for already effective leases. The adoption of this guidance resulted in the recognition of a right-of-use asset of $185 million and a lease liability of $215 million (prior to adoption the Company had a $30 million deferred rent liability recognized) reported within other assets and other liabilities, respectively, in the consolidated balance sheet. The adoption of this guidance did not have an impact on the Company's results of operations or liquidity.

All other accounting and reporting standards that have become effective in 2019 were either not applicable to the Company or their adoption did not have a material impact on the Company. 
Accounting and reporting standards that are not yet effective:
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, which amends the accounting guidance for credit losses on financial instruments. The updated guidance amends the current other-than-temporary impairment model for available-for-sale debt securities by requiring the recognition of impairments relating to credit losses through an allowance account and limits the amount of credit loss to the difference between a security’s amortized cost basis and its fair value. This guidance also applies a new current expected credit loss model for determining credit-related impairments for financial instruments measured at amortized cost.  The updated guidance is effective for reporting periods beginning after December 15, 2019. The Company will not be able to determine the impact the adoption of this guidance will have on its results of operations, financial position or liquidity until the year the guidance becomes effective.

All other recently issued but not yet effective accounting and reporting standards are either not applicable to the Company or are not expected to have a material impact on the Company.



7



(4) Consolidated Statement of Comprehensive Income

The following table presents the components of the changes in accumulated other comprehensive (loss) income ("AOCI"):
(In thousands)
Unrealized Investment
Gains (Losses)
 
Currency Translation Adjustments
 
Accumulated Other Comprehensive
(Loss) Income
As of and for the three months ended March 31, 2019
 
 
 
 
Changes in AOCI
 
 
 
 
Beginning of period
$
(91,491
)
 
$
(418,979
)
 
$
(510,470
)
Other comprehensive income before reclassifications
127,139

 
19,760

 
146,899

Amounts reclassified from AOCI
(1,365
)
 

 
(1,365
)
Other comprehensive income
125,774

 
19,760

 
145,534

Unrealized investment gain related to noncontrolling interest
(47
)
 

 
(47
)
Ending balance
$
34,236

 
$
(399,219
)
 
$
(364,983
)
Amounts reclassified from AOCI
 
 
 
 
 
Pre-tax
$
(1,728
)
(1)
$

 
$
(1,728
)
Tax effect
363

(2)

 
363

After-tax amounts reclassified
$
(1,365
)
 
$

 
$
(1,365
)
Other comprehensive income
 
 
 
 
 
Pre-tax
$
169,260

 
$
19,760

 
$
189,020

Tax effect
(43,486
)
 

 
(43,486
)
Other comprehensive income
$
125,774

 
$
19,760

 
$
145,534

As of and for the three months ended March 31, 2018
 
 
 
 
 
Changes in AOCI
 
 
 


Beginning of period
$
375,421

 
$
(306,880
)
 
$
68,541

Cumulative effect adjustment resulting from changes in accounting principles
(214,539
)
 

 
(214,539
)
Restated beginning of period
160,882

 
(306,880
)
 
(145,998
)
Other comprehensive (loss) income before reclassifications
(118,189
)
 
12,799

 
(105,390
)
Amounts reclassified from AOCI
(7,583
)
 

 
(7,583
)
Other comprehensive (loss) income
(125,772
)
 
12,799

 
(112,973
)
Unrealized investment gain related to noncontrolling interest
(11
)
 

 
(11
)
End of period
$
35,099

 
$
(294,081
)
 
$
(258,982
)
Amounts reclassified from AOCI
 
 
 
 

Pre-tax
$
(9,599
)
(1)
$

 
$
(9,599
)
Tax effect
2,016

(2)

 
2,016

After-tax amounts reclassified
$
(7,583
)
 
$

 
$
(7,583
)
Other comprehensive (loss) income
 
 
 
 

Pre-tax
$
(160,848
)
 
$
12,799

 
$
(148,049
)
Tax effect
35,076

 

 
35,076

Other comprehensive (loss) income
$
(125,772
)
 
$
12,799

 
$
(112,973
)
_________________________
(1) Net realized and unrealized gains on investments in the consolidated statements of income.
(2) Income tax expense in the consolidated statements of income.



8



(5) Statements of Cash Flows
Interest payments were $62,981,000 and $61,890,000 for the three months ended March 31, 2019 and 2018, respectively. No income taxes were paid during such periods.

(6) Investments in Fixed Maturity Securities
At March 31, 2019 and December 31, 2018, investments in fixed maturity securities were as follows:
 
(In thousands)
Amortized
Cost
 
Gross Unrealized
 
Fair
Value
 
Carrying
Value
Gains
 
Losses
 
March 31, 2019
 
 
 
 
 
 
 
 
 
Held to maturity:
 
 
 
 
 
 
 
 
 
State and municipal
$
68,535

 
$
12,517

 
$

 
$
81,052

 
$
68,535

Residential mortgage-backed
10,093

 
1,151

 

 
11,244

 
10,093

Total held to maturity
78,628

 
13,668

 

 
92,296

 
78,628

Available for sale:
 
 
 
 
 
 
 
 
 
U.S. government and government agency
728,606

 
12,991

 
(2,934
)
 
738,663

 
738,663

State and municipal:
 
 
 
 
 
 
 
 
 
Special revenue
2,392,362

 
47,293

 
(6,052
)
 
2,433,603

 
2,433,603

State general obligation
334,406

 
16,158

 
(168
)
 
350,396

 
350,396

Pre-refunded
337,026

 
18,590

 
(153
)
 
355,463

 
355,463

Corporate backed
252,072

 
5,851

 
(1,233
)
 
256,690

 
256,690

Local general obligation
406,499

 
24,710

 
(498
)
 
430,711

 
430,711

Total state and municipal
3,722,365

 
112,602

 
(8,104
)
 
3,826,863

 
3,826,863

Mortgage-backed securities:
 
 
 
 
 
 
 
 
 
Residential (1)
1,226,647

 
14,595

 
(12,591
)
 
1,228,651

 
1,228,651

Commercial
351,485

 
2,514

 
(1,940
)
 
352,059

 
352,059

Total mortgage-backed securities
1,578,132

 
17,109

 
(14,531
)
 
1,580,710

 
1,580,710

Asset-backed
2,658,355

 
6,124

 
(33,680
)
 
2,630,799

 
2,630,799

Corporate:
 
 
 
 
 
 
 
 
 
Industrial
2,112,002

 
32,886

 
(14,637
)
 
2,130,251

 
2,130,251

Financial
1,475,201

 
15,054

 
(11,457
)
 
1,478,798

 
1,478,798

Utilities
317,341

 
5,801

 
(1,751
)
 
321,391

 
321,391

Other
42,952

 
669

 
(129
)
 
43,492

 
43,492

Total corporate
3,947,496

 
54,410

 
(27,974
)
 
3,973,932

 
3,973,932

Foreign government
820,541

 
14,465

 
(23,932
)
 
811,074

 
811,074

Total available for sale
13,455,495

 
217,701

 
(111,155
)
 
13,562,041

 
13,562,041

Total investments in fixed maturity securities
$
13,534,123

 
$
231,369

 
$
(111,155
)
 
$
13,654,337

 
$
13,640,669


9



(In thousands)
Amortized
Cost
 
Gross Unrealized
 
Fair
Value
 
Carrying
Value
Gains
 
Losses
December 31, 2018
 
 
 
 
 
 
 
 
 
Held to maturity:
 
 
 
 
 
 
 
 
 
State and municipal
$
67,891

 
$
11,549

 
$

 
$
79,440

 
$
67,891

Residential mortgage-backed
10,744

 
1,259

 

 
12,003

 
10,744

Total held to maturity
78,635

 
12,808

 

 
91,443

 
78,635

Available for sale:
 
 
 
 
 
 
 
 
 
U.S. government and government agency
697,931

 
9,219

 
(4,910
)
 
702,240

 
702,240

State and municipal:
 
 
 
 
 
 
 
 
 
Special revenue
2,396,089

 
30,507

 
(19,790
)
 
2,406,806

 
2,406,806

State general obligation
335,626

 
11,951

 
(1,103
)
 
346,474

 
346,474

Pre-refunded
408,141

 
16,568

 
(30
)
 
424,679

 
424,679

Corporate backed
272,440

 
4,319

 
(2,350
)
 
274,409

 
274,409

Local general obligation
403,219

 
18,350

 
(1,339
)
 
420,230

 
420,230

Total state and municipal
3,815,515

 
81,695

 
(24,612
)
 
3,872,598

 
3,872,598

Mortgage-backed securities:
 
 
 
 
 
 
 
 
 
Residential (1)
1,264,376

 
7,729

 
(20,225
)
 
1,251,880

 
1,251,880

Commercial
345,070

 
1,304

 
(3,708
)
 
342,666

 
342,666

Total mortgage-backed securities
1,609,446

 
9,033

 
(23,933
)
 
1,594,546

 
1,594,546

Asset-backed
2,462,303

 
10,131

 
(33,687
)
 
2,438,747

 
2,438,747

Corporate:
 
 
 
 
 
 
 
 
 
Industrial
2,295,778

 
15,355

 
(53,312
)
 
2,257,821

 
2,257,821

Financial
1,502,427

 
7,178

 
(45,683
)
 
1,463,922

 
1,463,922

Utilities
330,326

 
2,997

 
(4,148
)
 
329,175

 
329,175

Other
60,238

 
322

 
(167
)
 
60,393

 
60,393

Total corporate
4,188,769

 
25,852

 
(103,310
)
 
4,111,311

 
4,111,311

Foreign government
822,093

 
11,753

 
(25,111
)
 
808,735

 
808,735

Total available for sale
13,596,057

 
147,683

 
(215,563
)
 
13,528,177

 
13,528,177

Total investments in fixed maturity securities
$
13,674,692


$
160,491

 
$
(215,563
)
 
$
13,619,620

 
$
13,606,812

____________
(1) Gross unrealized losses for residential mortgage-backed securities include $(123,614) and $(55,090) as of March 31, 2019 and December 31, 2018, respectively, related to securities with the non-credit portion of other-than-temporary impairments (“OTTI”) recognized in accumulated other comprehensive income.

The amortized cost and fair value of fixed maturity securities at March 31, 2019, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because certain issuers may have the right to call or prepay obligations.
 
(In thousands)
Amortized
Cost
 
Fair
Value
Due in one year or less
$
1,035,545

 
$
1,037,210

Due after one year through five years
4,571,361

 
4,624,168

Due after five years through ten years
3,130,252

 
3,201,572

Due after ten years
3,208,740

 
3,199,433

Mortgage-backed securities
1,588,225

 
1,591,954

Total
$
13,534,123

 
$
13,654,337


At March 31, 2019 and December 31, 2018, there were no investments that exceeded 10% of common stockholders' equity, other than investments in United States government and government agency securities.



10



(7) Investments in Equity Securities
At March 31, 2019 and December 31, 2018, investments in equity securities were as follows:
 
(In thousands)
Cost
 
Gross Unrealized
 
Fair
Value
 
Carrying
Value
Gains
 
Losses
 
March 31, 2019
 
 
 
 
 
 
 
 
 
Common stocks
$
148,242

 
$
7,052

 
$
(19,195
)
 
$
136,099

 
$
136,099

Preferred stocks
101,432

 
110,879

 
(6,429
)
 
205,882

 
205,882

Total
$
249,674

 
$
117,931

 
$
(25,624
)