Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Jul. 24, 2019 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2019 | |
Document Transition Report | false | |
Entity File Number | 1-16725 | |
Entity Registrant Name | PRINCIPAL FINANCIAL GROUP, INC | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 42-1520346 | |
Entity Address, Address Line One | 711 High Street | |
Entity Address, City or Town | Des Moines | |
Entity Address, State or Province | IA | |
Entity Address, Postal Zip Code | 50392 | |
City Area Code | 515 | |
Local Phone Number | 247-5111 | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | PFG | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 278,796,363 | |
Entity Central Index Key | 0001126328 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
Consolidated Statements of Fina
Consolidated Statements of Financial Position - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Assets | ||
Fixed maturities, available-for-sale (2019 and 2018 include $97.9 million and $94.5 million related to consolidated variable interest entities) | $ 65,268.1 | $ 60,108.5 |
Fixed maturities, trading | 686.8 | 636.1 |
Equity securities (2019 and 2018 include $831.7 million and $774.8 million related to consolidated variable interest entities) | 1,895.2 | 1,843.7 |
Mortgage loans | 16,136.8 | 15,336.9 |
Real estate (2019 and 2018 include $384.8 million and $364.0 million related to consolidated variable interest entities) | 1,740.4 | 1,729.7 |
Policy loans | 800.9 | 801.4 |
Other investments (2019 and 2018 include $288.8 million and $457.9 million related to consolidated variable interest entities and $24.5 million and $23.6 million measured at fair value under the fair value option) | 4,667 | 4,310.3 |
Total investments | 91,195.2 | 84,766.6 |
Cash and cash equivalents | 3,315.9 | 2,977.5 |
Accrued investment income | 663.8 | 636.2 |
Premiums due and other receivables | 1,549.2 | 1,413.1 |
Deferred acquisition costs | 3,519.5 | 3,693.5 |
Property and equipment | 959.5 | 767.3 |
Goodwill | 1,111.5 | 1,100 |
Other intangibles | 1,300.7 | 1,315.1 |
Separate account assets (2019 and 2018 include $40,957.2 million and $37,183.3 million related to consolidated variable interest entities) | 162,848.6 | 144,987.9 |
Other assets | 1,454.1 | 1,378.9 |
Total assets | 267,918 | 243,036.1 |
Liabilities | ||
Contractholder funds (2019 and 2018 include $397.1 million and $396.0 million related to consolidated variable interest entities) | 39,658.8 | 39,699.7 |
Future policy benefits and claims | 38,479.5 | 35,664.8 |
Other policyholder funds | 996.2 | 888.4 |
Short-term debt | 76.8 | 42.9 |
Long-term debt (2019 and 2018 include $64.2 million and $58.4 million related to consolidated variable interest entities) | 3,762.4 | 3,259.6 |
Income taxes currently payable | 19.8 | 25.3 |
Deferred income taxes | 1,687.5 | 958.4 |
Separate account liabilities (2019 and 2018 include $40,957.2 million and $37,183.3 million related to consolidated variable interest entities) | 162,848.6 | 144,987.9 |
Other liabilities (2019 and 2018 include $113.1 million and $104.9 million related to consolidated variable interest entities) | 5,981.9 | 5,661.9 |
Total liabilities | 253,511.5 | 231,188.9 |
Redeemable noncontrolling interest (2019 and 2018 include $194.9 million and $325.7 million related to consolidated variable interest entities) | 304.5 | 391.2 |
Stockholders' equity | ||
Common stock, par value $0.01 per share - 2,500.0 million shares authorized, 478.9 million and 476.7 million shares issued, and 278.6 million and 279.5 million shares outstanding in 2019 and 2018 | 4.8 | 4.8 |
Additional paid-in capital | 10,130.7 | 10,060.7 |
Retained earnings (accumulated deficit) | 10,805.8 | 10,290.2 |
Accumulated other comprehensive income (loss) | 647.7 | (1,565.1) |
Treasury stock, at cost (200.3 million and 197.2 million shares in 2019 and 2018) | (7,554.3) | (7,400.6) |
Total stockholders' equity attributable to Principal Financial Group, Inc. | 14,034.7 | 11,390 |
Noncontrolling interest | 67.3 | 66 |
Total stockholders' equity | 14,102 | 11,456 |
Total liabilities and stockholders' equity | $ 267,918 | $ 243,036.1 |
Consolidated Statements of Fi_2
Consolidated Statements of Financial Position (Parenthetical) - USD ($) shares in Millions, $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Fixed maturities, available-for-sale | $ 65,268.1 | $ 60,108.5 |
Equity securities | 1,895.2 | 1,843.7 |
Real estate | 1,740.4 | 1,729.7 |
Other investments | 4,667 | 4,310.3 |
Other investments measured at fair value under fair value option | 24.5 | 23.6 |
Separate account assets | 162,848.6 | 144,987.9 |
Contractholder funds | 39,658.8 | 39,699.7 |
Long-term debt | 3,762.4 | 3,259.6 |
Separate account liabilities | 162,848.6 | 144,987.9 |
Other liabilities | 5,981.9 | 5,661.9 |
Redeemable noncontrolling interest | $ 304.5 | $ 391.2 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 2,500 | 2,500 |
Common stock, issued (in shares) | 478.9 | 476.7 |
Common stock, outstanding (in shares) | 278.6 | 279.5 |
Treasury stock (in shares) | 200.3 | 197.2 |
Aggregate consolidated variable interest entities | ||
Fixed maturities, available-for-sale | $ 97.9 | $ 94.5 |
Equity securities | 831.7 | 774.8 |
Real estate | 384.8 | 364 |
Other investments | 288.8 | 457.9 |
Separate account assets | 40,957.2 | 37,183.3 |
Contractholder funds | 397.1 | 396 |
Long-term debt | 64.2 | 58.4 |
Separate account liabilities | 40,957.2 | 37,183.3 |
Other liabilities | 113.1 | 104.9 |
Redeemable noncontrolling interest | $ 194.9 | $ 325.7 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Revenues | ||||
Premiums and other considerations | $ 1,932.9 | $ 1,265.8 | $ 3,657.8 | $ 2,261 |
Fees and other revenues | 1,006.6 | 1,012.6 | 1,980.1 | 2,023.9 |
Net investment income (loss) | 1,037.1 | 889.1 | 1,998.1 | 1,791.3 |
Net realized capital gains (losses), excluding impairment losses on available-for-sale securities | 13.3 | 76.4 | 104.6 | 61.2 |
Net other-than-temporary impairment (losses) recoveries on available-for-sale securities | (17) | (8.2) | (26.6) | (6.9) |
Other-than-temporary impairment losses on fixed maturities, available-for-sale reclassified to (from) other comprehensive income | (0.3) | (0.8) | 2.5 | (12) |
Net impairment (losses) recoveries on fixed maturities, available-for-sale | (17.3) | (9) | (24.1) | (18.9) |
Net realized capital gains (losses) | (4) | 67.4 | 80.5 | 42.3 |
Total revenues | 3,972.6 | 3,234.9 | 7,716.5 | 6,118.5 |
Expenses | ||||
Benefits, claims and settlement expenses | 2,446.1 | 1,699.2 | 4,641.2 | 3,110.3 |
Dividends to policyholders | 29.9 | 30.2 | 60 | 60.7 |
Operating expenses | 1,046.3 | 990.1 | 2,039 | 1,975.1 |
Total expenses | 3,522.3 | 2,719.5 | 6,740.2 | 5,146.1 |
Income (loss) before income taxes | 450.3 | 515.4 | 976.3 | 972.4 |
Income taxes (benefits) | 58.2 | 55.9 | 132.1 | 110.4 |
Net income (loss) | 392.1 | 459.5 | 844.2 | 862 |
Net income (loss) attributable to noncontrolling interest | 5.8 | 2.9 | 28 | 8.3 |
Net income (loss) attributable to Principal Financial Group, Inc. | $ 386.3 | $ 456.6 | $ 816.2 | $ 853.7 |
Earnings per common share | ||||
Basic earnings per common share (in dollars per share) | $ 1.38 | $ 1.59 | $ 2.93 | $ 2.97 |
Diluted earnings per common share (in dollars per share) | $ 1.37 | $ 1.58 | $ 2.90 | $ 2.93 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Consolidated Statements of Comprehensive Income | ||||
Net income (loss) | $ 392.1 | $ 459.5 | $ 844.2 | $ 862 |
Other comprehensive income (loss), net: | ||||
Net unrealized gains (losses) on available-for-sale securities | 984.9 | (466.1) | 2,089.2 | (1,271.6) |
Noncredit component of impairment losses on fixed maturities, available-for-sale | (0.3) | 0.8 | (2.8) | 10.1 |
Net unrealized gains (losses) on derivative instruments | 1.6 | 20.3 | (2.9) | 5.9 |
Foreign currency translation adjustment | 28.9 | (236.1) | 66.8 | (170.3) |
Net unrecognized postretirement benefit obligation | 57.2 | 8.8 | 68.7 | 17.5 |
Other comprehensive income (loss) | 1,072.3 | (672.3) | 2,219 | (1,408.4) |
Comprehensive income (loss) | 1,464.4 | (212.8) | 3,063.2 | (546.4) |
Comprehensive income (loss) attributable to noncontrolling interest | 11.5 | (0.8) | 34.2 | 5.5 |
Comprehensive income (loss) attributable to Principal Financial Group, Inc. | $ 1,452.9 | $ (212) | $ 3,029 | $ (551.9) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Millions | Common stock | Additional paid-in capital | Retained earnings (accumulated deficit) | Accumulated other comprehensive income (loss) | Treasury stock | Noncontrolling interest | Total | |
Balances at Dec. 31, 2017 | $ 4.7 | $ 9,925.2 | $ 9,482.9 | $ 165.5 | $ (6,729) | $ 72.6 | $ 12,921.9 | |
Increase (decrease) in stockholders' equity | ||||||||
Common stock issued | 0.1 | 44.5 | 44.6 | |||||
Stock-based compensation | 44.4 | (3.6) | (0.5) | 40.3 | ||||
Treasury stock acquired, common | (396.5) | (396.5) | ||||||
Dividends to common stockholders | (295.8) | (295.8) | ||||||
Distributions to noncontrolling interest | (9.5) | (9.5) | ||||||
Contributions from noncontrolling interest | 2 | 2 | ||||||
Purchase of subsidiary shares from noncontrolling interest | (21.4) | (1.6) | (23) | |||||
Adjustments to redemption amount of redeemable noncontrolling interest | 0.9 | (0.3) | 0.6 | |||||
Effects of implementation of accounting change | ASU 2016-01 - Equity investments | 1 | (1) | ||||||
Effects of implementation of accounting change | ASU 2014-09 - Revenue recognition | (65) | 25.6 | (0.3) | (39.7) | ||||
Effects of implementation of accounting change | ASU 2018-02 - Reclassification of certain tax effects | (77.6) | 77.6 | ||||||
Effects of implementation of accounting change | ASU 2016-16 - Intra-entity asset transfer taxes | 8.7 | 8.7 | ||||||
Net income (loss) | 853.7 | 6.2 | 859.9 | |||||
Other comprehensive income (loss) | (1,405.6) | (1.4) | (1,407) | |||||
Balances at Jun. 30, 2018 | 4.8 | 9,993.6 | 9,904.3 | (1,137.9) | (7,125.5) | 67.2 | 11,706.5 | |
Balances at Mar. 31, 2018 | 4.7 | 9,981.8 | 9,598.3 | (469.3) | (6,928.6) | 68.9 | 12,255.8 | |
Increase (decrease) in stockholders' equity | ||||||||
Common stock issued | 0.1 | 12 | 12.1 | |||||
Stock-based compensation | 21.2 | (2.1) | 0.1 | 19.2 | ||||
Treasury stock acquired, common | (196.9) | (196.9) | ||||||
Dividends to common stockholders | (148.5) | (148.5) | ||||||
Distributions to noncontrolling interest | (1.5) | (1.5) | ||||||
Contributions from noncontrolling interest | 1.9 | 1.9 | ||||||
Purchase of subsidiary shares from noncontrolling interest | (21.4) | (1.6) | (23) | |||||
Adjustments to redemption amount of redeemable noncontrolling interest | (0.3) | (0.3) | ||||||
Net income (loss) | [1] | 456.6 | 1.6 | 458.2 | ||||
Other comprehensive income (loss) | [1] | (668.6) | (1.9) | (670.5) | ||||
Balances at Jun. 30, 2018 | 4.8 | 9,993.6 | 9,904.3 | (1,137.9) | (7,125.5) | 67.2 | 11,706.5 | |
Balances at Dec. 31, 2018 | 4.8 | 10,060.7 | 10,290.2 | (1,565.1) | (7,400.6) | 66 | 11,456 | |
Increase (decrease) in stockholders' equity | ||||||||
Common stock issued | 22.1 | 22.1 | ||||||
Stock-based compensation | 49.4 | (4) | 0.1 | 45.5 | ||||
Treasury stock acquired, common | (153.7) | (153.7) | ||||||
Dividends to common stockholders | (300.6) | (300.6) | ||||||
Distributions to noncontrolling interest | (4.7) | (4.7) | ||||||
Contributions from noncontrolling interest | 1.8 | 1.8 | ||||||
Adjustments to redemption amount of redeemable noncontrolling interest | (1.5) | (0.2) | (1.7) | |||||
Effects of implementation of accounting change | ASU 2016-02 - Leases | 4 | 4 | ||||||
Net income (loss) | 816.2 | 3.7 | 819.9 | |||||
Other comprehensive income (loss) | 2,212.8 | 0.6 | 2,213.4 | |||||
Balances at Jun. 30, 2019 | 4.8 | 10,130.7 | 10,805.8 | 647.7 | (7,554.3) | 67.3 | 14,102 | |
Balances at Mar. 31, 2019 | 4.8 | 10,090.8 | 10,571.9 | (418.9) | (7,554.2) | 67.8 | 12,762.2 | |
Increase (decrease) in stockholders' equity | ||||||||
Common stock issued | 16.3 | 16.3 | ||||||
Stock-based compensation | 22.6 | (2) | 0.1 | 20.7 | ||||
Treasury stock acquired, common | (0.1) | (0.1) | ||||||
Dividends to common stockholders | (150.4) | (150.4) | ||||||
Distributions to noncontrolling interest | (3.4) | (3.4) | ||||||
Contributions from noncontrolling interest | 1 | 1 | ||||||
Adjustments to redemption amount of redeemable noncontrolling interest | 1 | (0.2) | 0.8 | |||||
Net income (loss) | 386.3 | 1.8 | 388.1 | |||||
Other comprehensive income (loss) | 1,066.6 | 0.2 | 1,066.8 | |||||
Balances at Jun. 30, 2019 | $ 4.8 | $ 10,130.7 | $ 10,805.8 | $ 647.7 | $ (7,554.3) | $ 67.3 | $ 14,102 | |
[1] | Excludes amounts attributable to redeemable noncontrolling interest. See Note 10, Stockholders’ Equity, for further details. |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Operating activities | ||
Net income (loss) | $ 844.2 | $ 862 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Net realized capital (gains) losses | (80.5) | (42.3) |
Depreciation and amortization expense | 104.2 | 101.2 |
Amortization of deferred acquisition costs and contract costs | 141.2 | 138 |
Additions to deferred acquisition costs and contract costs | (216.2) | (225.3) |
Stock-based compensation | 45.8 | 40.8 |
(Income) loss from equity method investments, net of dividends received | (42.5) | (66.8) |
Changes in: | ||
Accrued investment income | (27.6) | (17.2) |
Net cash flows for trading securities and equity securities with operating intent | (44.7) | (170.6) |
Premiums due and other receivables | (70.8) | 26.3 |
Contractholder and policyholder liabilities and dividends | 2,003 | 920.5 |
Current and deferred income taxes (benefits) | 110.6 | 131.3 |
Real estate acquired through operating activities | (12.8) | (57.6) |
Real estate sold through operating activities | 3.3 | 48.6 |
Other assets and liabilities | (67.7) | (26.8) |
Other | (11.1) | (23.9) |
Net adjustments | 1,834.2 | 776.2 |
Net cash provided by (used in) operating activities | 2,678.4 | 1,638.2 |
Investing activities | ||
Fixed maturities available-for-sale and equity securities with intent to hold: Purchases | (5,771.8) | (7,364.4) |
Fixed maturities available-for-sale and equity securities with intent to hold: Sales | 1,477.2 | 2,122 |
Fixed maturities available-for-sale and equity securities with intent to hold: Maturities | 3,025.9 | 3,292.1 |
Mortgage loans acquired or originated | (2,008.5) | (1,326.2) |
Mortgage loans sold or repaid | 1,243.9 | 1,094 |
Real estate acquired | (48.5) | (36.4) |
Real estate sold | 57 | 63.5 |
Net (purchases) sales of property and equipment | (65.4) | (43.6) |
Purchase of interests in subsidiaries, net of cash acquired | (141.5) | |
Net change in other investments | (253.8) | (1) |
Net cash provided by (used in) investing activities | (2,344) | (2,341.5) |
Financing activities | ||
Issuance of common stock | 22.1 | 44.6 |
Acquisition of treasury stock | (153.7) | (396.5) |
Payments for financing element derivatives | (13.1) | (37.9) |
Purchase of subsidiary shares from noncontrolling interest | (23) | |
Dividends to common stockholders | (300.6) | (295.8) |
Issuance of long-term debt | 502.7 | 41.3 |
Principal repayments of long-term debt | (0.7) | (0.7) |
Net proceeds from (repayments of) short-term borrowings | 33.1 | 27.6 |
Investment contract deposits | 3,627.4 | 4,196.9 |
Investment contract withdrawals | (3,800.8) | (3,110) |
Net increase (decrease) in banking operation deposits | 82 | 126 |
Other | 5.6 | 2 |
Net cash provided by (used in) financing activities | 4 | 574.5 |
Net increase (decrease) in cash and cash equivalents | 338.4 | (128.8) |
Cash and cash equivalents at beginning of period | 2,977.5 | 2,470.8 |
Cash and cash equivalents at end of period | 3,315.9 | $ 2,342 |
Supplemental disclosure of non-cash activities: | ||
Lease assets established upon adoption of accounting guidance | 168.8 | |
Lease liabilities established upon adoption of accounting guidance | 164 | |
Assets received in kind for pension risk transfer transactions | $ 139 |
Nature of Operations and Signif
Nature of Operations and Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2019 | |
Nature of Operations and Significant Accounting Policies | |
Nature of Operations and Significant Accounting Policies | 1. Nature of Operations and Significant Accounting Policies Basis of Presentation The accompanying unaudited consolidated financial statements of Principal Financial Group, Inc. (“PFG”) have been prepared in conformity with accounting principles generally accepted in the U.S. (“U.S. GAAP”) for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2019, are not necessarily indicative of the results that may be expected for the year ended December 31, 2019. These interim unaudited consolidated financial statements should be read in conjunction with our annual audited financial statements as of December 31, 2018, included in our Form 10-K for the year ended December 31, 2018, filed with the United States Securities and Exchange Commission (“SEC”). The accompanying consolidated statement of financial position as of December 31, 2018, has been derived from the audited consolidated statement of financial position but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Consolidation We have relationships with various special purpose entities and other legal entities that must be evaluated to determine if the entities meet the criteria of a variable interest entity (“VIE”) or a voting interest entity (“VOE”). This assessment is performed by reviewing contractual, ownership and other rights, including involvement of related parties, and requires use of judgment. First, we determine if we hold a variable interest in an entity by assessing if we have the right to receive expected losses and expected residual returns of the entity. If we hold a variable interest, then the entity is assessed to determine if it is a VIE. An entity is a VIE if the equity at risk is not sufficient to support its activities, if the equity holders lack a controlling financial interest or if the entity is structured with non-substantive voting rights. In addition to the previous criteria, if the entity is a limited partnership or similar entity, it is a VIE if the limited partners do not have the power to direct the entity’s most significant activities through substantive kick-out rights or participating rights. A VIE is evaluated to determine the primary beneficiary. The primary beneficiary of a VIE is the enterprise with (1) the power to direct the activities of a VIE that most significantly impact the entity's economic performance and (2) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. When we are the primary beneficiary, we are required to consolidate the entity in our financial statements. We reassess our involvement with VIEs on a quarterly basis. For further information about VIEs, refer to Note 2, Variable Interest Entities. If an entity is not a VIE, it is considered a VOE. VOEs are generally consolidated if we own a greater than 50% voting interest. If we determine our involvement in an entity no longer meets the requirements for consolidation under either the VIE or VOE models, the entity is deconsolidated. Entities in which we have management influence over the operating and financing decisions but are not required to consolidate, other than investments accounted for at fair value under the fair value option, are reported using the equity method. Recent Accounting Pronouncements Description Date of Effect on our consolidated Standards not yet adopted: Targeted improvements to the accounting for long-duration insurance contracts This authoritative guidance updates certain requirements in the accounting for long-duration insurance and annuity contracts. 1. The assumptions used to calculate the liability for future policy benefits on traditional and limited-payment contracts will be reviewed and updated periodically. Cash flow assumptions will be reviewed at least annually and updated when necessary with the impact recognized in net income. Discount rate assumptions are prescribed as the current upper-medium grade (low credit risk) fixed income instrument yield and will be updated quarterly with the impact recognized in other comprehensive income (“OCI”). 2. Market risk benefits, which are certain market-based options or guarantees associated with deposit or account balance contracts, will be measured at fair value. The periodic change in fair value related to instrument-specific credit risk will be recognized in OCI while the remaining change in fair value will be recognized in net income. 3. Deferred acquisition costs (“DAC”) for all insurance and annuity contracts will be amortized on a constant basis over the expected term of the related contracts. 4. Additional disclosures are required, including disaggregated rollforwards of significant insurance liabilities and other account balances and disclosures about significant inputs, judgments, assumptions and methods used in measurement. The guidance for the liability for future policy benefits for traditional and limited-payment contracts and DAC will be applied on a modified retrospective basis; that is, to contracts in force as of the beginning of the earliest period presented based on their existing carrying amounts. An entity may elect to apply the changes retrospectively. The guidance for market risk benefits will be applied retrospectively. Early adoption is permitted. January 1, Our implementation and evaluation process to date includes, but is not limited to, identifying and documenting contracts and contract features in scope of the guidance; identifying the actuarial models, systems and processes to be updated; evaluating and selecting our systems solutions for implementing the new guidance; beginning to build key models and evaluating our key accounting policies. As we progress through our implementation, we will be able to better assess the impact to our consolidated financial statements; however, we expect this guidance to significantly change how we account for many of our insurance and annuity products. Description Date of Effect on our consolidated Goodwill impairment testing This authoritative guidance simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 (which measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill to the carrying amount of that goodwill) from the goodwill impairment test. A goodwill impairment loss will be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. Early adoption is permitted. January 1, We are currently evaluating the impact this guidance will have on our consolidated financial statements, but do not expect it to have a material impact on our consolidated financial statements. We expect the guidance will reduce complexity and costs associated with performing a Step 2 test, should one be needed in the future. However, the impact on the outcome of any such future impairment assessment will be dependent on modeling factors that are not currently determinable. Credit losses This authoritative guidance requires entities to use a current expected credit loss (“CECL”) model to measure impairment for most financial assets that are not recorded at fair value through net income. Under the CECL model, an entity will estimate lifetime expected credit losses considering available relevant information about historical events, current conditions and reasonable and supportable forecasts. The CECL model does not apply to available-for-sale debt securities. This guidance also expands the required credit loss disclosures and will be applied using a modified retrospective approach by recording a cumulative effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. Early adoption is permitted. January 1, Our implementation and evaluation process to date includes, but is not limited to, identifying financial assets within scope of the guidance, developing and refining CECL models for the relevant assets, preparing quarterly estimates of the cumulative effect of adoption, and drafting the required financial statement disclosures. We believe estimated credit losses under the CECL model will generally result in earlier loss recognition for loans and other receivables. Standards adopted: Implementation costs in a cloud computing arrangement that is a service contract This authoritative guidance 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 guidance can be applied either retrospectively or prospectively and early adoption is permitted. January 1, The effective date of the guidance is January 1, 2020; however, we elected to early-adopt this guidance on a prospective basis, effective January 1, 2019. This guidance did not have a material impact on our consolidated financial statements. Nonemployee share-based payment accounting This authoritative guidance simplifies the accounting for share-based payments to nonemployees by generally aligning it with the accounting for share-based payments to employees. Under the guidance, the measurement of equity-classified nonemployee awards will be fixed at the grant date, where previously the measurement was fixed at performance completion date. The guidance will be applied to equity-classified nonemployee awards for which a measurement date has not been established as of the date of adoption. January 1, This guidance did not have a material impact on our consolidated financial statements. Description Date of Effect on our consolidated Leases This authoritative guidance requires lessee recognition of lease assets and lease liabilities on the balance sheet. The concept of an operating lease, where the lease assets and liabilities are off balance sheet, is eliminated under the new guidance. For lessors, the guidance modifies lease classification criteria and accounting for certain types of leases. Other key aspects of the guidance relate to the removal of the current real estate-specific guidance and new presentation and disclosure requirements. Lessees and lessors are required to recognize and measure leases using a modified retrospective approach, which includes certain optional practical expedients that may be elected. We elected the alternative transition method, which allows entities to initially apply the new standard at the adoption date and recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. January 1, We adopted the guidance using the modified retrospective approach and comparative periods were not restated. Further details are included under the caption “Adoption of Lease Guidance” and in Note 9, Contingencies, Guarantees, Indemnifications and Leases. Targeted improvements to accounting for hedging activities This authoritative guidance updated certain recognition and measurement requirements for hedge accounting. The objective of the guidance is to more closely align the economics of a company’s risk management activities in its financial results and reduce the complexity of applying hedge accounting. The updates included the expansion of hedging strategies that are eligible for hedge accounting, elimination of the separate measurement and reporting of hedge ineffectiveness, presentation of the changes in the fair value of the hedging instrument in the same consolidated statement of operations line as the earnings effect of the hedged item and simplification of hedge effectiveness assessments. This guidance also included new disclosures. January 1, This guidance did not have a material impact on our consolidated financial statements. See Note 4, Derivative Financial Instruments, for further details. Premium amortization on purchased callable debt securities This authoritative guidance applies to entities that hold certain non-contingently callable debt securities, where the amortized cost basis is at a premium to the price repayable by the issuer at the earliest call date. Under the guidance the premium will be amortized to the first call date. January 1, This guidance did not have a material impact on our consolidated financial statements. Description Date of Effect on our consolidated Reclassification of certain tax effects from accumulated other comprehensive income This authoritative guidance permits a reclassification from accumulated other comprehensive income (“AOCI”) to retained earnings for the stranded tax effects resulting from U.S. tax legislation enacted on December 22, 2017, which is referred to as the ‘‘Tax Cuts and Jobs Act’’ (‘‘U.S. tax reform’’). The amount of that reclassification includes the change in corporate income tax rate, as well as an election to include other income tax effects related to the application of U.S. tax reform. The guidance also requires disclosures about stranded tax effects. January 1, The effective date of the guidance was January 1, 2019; however, we elected to early adopt the guidance. The guidance was applied at the beginning of the period of adoption and comparative periods were not restated. We reclassified the stranded tax effects in AOCI resulting from U.S. tax reform, which includes the change in corporate income tax rate and an election to reclassify the tax effects of the one-time deemed repatriation tax. A reclassification of $77.6 million was recorded as an increase to AOCI and a decrease to retained earnings. Revenue recognition This authoritative guidance replaces all general and most industry specific revenue recognition guidance currently prescribed by U.S. GAAP. The core principle is that an entity recognizes revenue to reflect the transfer of a promised good or service to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for that good or service. This guidance also provides clarification on when an entity is a principal or an agent in a transaction. In addition, the guidance updates the accounting for certain costs associated with obtaining and fulfilling a customer contract. The guidance may be applied using one of the following two methods: (1) retrospectively to each prior reporting period presented, or (2) retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application. January 1, We adopted the guidance using the modified retrospective approach. The guidance did not have a material impact on our consolidated financial statements. A cumulative effect adjustment of $39.7 million was recorded as a decrease to total stockholders’ equity. See Note 13, Revenues from Contracts with Customers, for further details. Income tax - intra-entity transfers of assets This authoritative guidance requires entities to recognize current and deferred income tax resulting from an intra-entity asset transfer when the transfer occurs. Prior to issuance of this guidance, U.S. GAAP did not allow recognition of income tax consequences until the asset had been sold to a third party. This guidance requires adoption through a cumulative effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. January 1, We adopted the guidance using the modified retrospective approach. A cumulative effect adjustment of $8.7 million was recorded as an increase to retained earnings. In addition, other assets and deferred income taxes decreased $21.1 million and $29.8 million, respectively, due to the adoption of this guidance. Description Date of Effect on our consolidated Financial instruments - recognition and measurement This authoritative guidance addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The guidance eliminated the classification of equity securities into different categories (trading or available-for-sale) and requires equity investments to be measured at fair value with changes in the fair value recognized through net income. The guidance also updated certain financial instrument disclosures and eliminated the requirement to disclose the methods and significant assumptions used to estimate the fair value of financial instruments that are measured at amortized cost on the balance sheet. January 1, We adopted this guidance using the modified retrospective approach. A cumulative effect adjustment of $1.0 million was recorded as a decrease to AOCI and a corresponding increase to retained earnings. The guidance did not have a material impact on our consolidated financial statements. See Note 3, Investments, for further details. Nonfinancial asset derecognition and partial sales of nonfinancial assets This authoritative guidance clarifies the scope of the recently established guidance on nonfinancial asset derecognition and the accounting for partial sales of nonfinancial assets. The guidance conforms the derecognition guidance on nonfinancial assets with the model for transactions in the new revenue recognition standard. January 1, The guidance did not have a material impact on our consolidated financial statements. Presentation of net periodic pension cost and net periodic postretirement benefit cost This authoritative guidance requires that an employer disaggregate the service cost component from the other components of net benefit cost. The guidance also provides explicit guidance on the presentation of the service cost component and the other components of net benefit cost in the consolidated statement of operations and allows only the service cost component of net benefit cost to be eligible for capitalization. January 1, The guidance did not have a material impact on our consolidated financial statements. Definition of a business This authoritative guidance clarifies the definition of a business to assist with evaluating when transactions involving an integrated set of assets and activities (a “set”) should be accounted for as acquisitions or disposals of assets or businesses. The guidance requires that when substantially all of the fair value of the gross assets acquired or disposed of is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. The guidance also requires a set to include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output to be considered a business. Lastly, the guidance removes the evaluation of whether a market participant could replace missing elements and narrows the definition of outputs by more closely aligning it with how outputs are described in the revenue recognition guidance. The guidance will be applied prospectively. January 1, The guidance did not have a material impact on our consolidated financial statements. When we adopt new accounting standards, we have a process in place to perform a thorough review of the pronouncement, identify the financial statement and system impacts and create an implementation plan among our impacted business units to ensure we are compliant with the pronouncement on the date of adoption. This includes having effective processes and controls in place to support the reported amounts. Each of the standards listed above is in varying stages in our implementation process based on its issuance and adoption dates. We are on track to implement guidance by the respective effective dates. Adoption of Lease Guidance On January 1, 2019, we adopted the guidance using the modified retrospective approach with the cumulative effect of initially applying the standard recognized at the date of adoption. We elected the package of practical expedients permitted under the transition guidance. In addition, we elected the hindsight practical expedient to determine the lease term for existing leases. We have agreements with lease and non-lease components, which we account for as a combined unit of account for all classes. The impact of the guidance to our consolidated financial statements primarily related to the establishment of additional assets and liabilities of $168.8 million and $164.0 million, respectively. The difference between the additional assets and liabilities, net of deferred tax impacts, was recorded as a cumulative effect adjustment to retained earnings and increased total stockholders’ equity by $4.0 million. Results of reporting periods beginning January 1, 2019, are presented under the new guidance, while prior period amounts are not adjusted and continue to be reported in accordance with our prior accounting. The guidance did not have a material impact on our consolidated statements of operations and did not impact earnings per common share. Derivatives Overview Derivatives are financial instruments whose values are derived from interest rates, foreign exchange rates, financial indices or the values of securities. Derivatives generally used by us include swaps, options, futures and forwards. Derivative positions are either assets or liabilities in the consolidated statements of financial position and are measured at fair value, generally by obtaining quoted market prices or through the use of pricing models. See Note 11, Fair Value Measurements, for policies related to the determination of fair value. Fair values can be affected by changes in interest rates, foreign exchange rates, financial indices, values of securities, credit spreads, and market volatility and liquidity. Accounting and Financial Statement Presentation We designate derivatives as either: (a) a hedge of the exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm commitment, including those denominated in a foreign currency ("fair value hedge"); (b) a hedge of a forecasted transaction or the exposure to variability of cash flows to be received or paid related to a recognized asset or liability, including those denominated in a foreign currency ("cash flow hedge"); (c) a hedge of a net investment in a foreign operation or (d) a derivative not designated as a hedging instrument. Our accounting for the ongoing changes in fair value of a derivative depends on the intended use of the derivative and the designation, as described above, and is determined when the derivative contract is entered into or at the time of redesignation. Hedge accounting is used for derivatives that are specifically designated in advance as hedges and that reduce our exposure to an indicated risk by having a high correlation between changes in the value of the derivatives and the items being hedged at both the inception of the hedge and throughout the hedge period. Fair Value Hedges. Cash Flow Hedges. Net Investment in a Foreign Operation Hedge. Non-Hedge Derivatives. Hedge Documentation and Effectiveness Testing. We use qualitative and quantitative methods to assess hedge effectiveness. Qualitative methods may include monitoring changes to terms and conditions and counterparty credit ratings. Quantitative methods may include statistical tests including regression analysis and minimum variance and dollar offset techniques. Termination of Hedge Accounting. If it is determined that a derivative no longer qualifies as an effective hedge, the derivative will continue to be carried on the consolidated statements of financial position at its fair value, with changes in fair value recognized prospectively in net realized capital gains (losses). The asset or liability under a fair value hedge will no longer be adjusted for changes in fair value pursuant to hedging rules and the existing basis adjustment is amortized to the consolidated statements of operations line associated with the asset or liability. The component of AOCI related to discontinued cash flow hedges that are no longer highly effective is amortized to the consolidated statements of operations consistent with the net income impacts of the original hedged cash flows. If a cash flow hedge is discontinued because it is probable the hedged forecasted transaction will not occur, the deferred gain or loss is immediately reclassified from AOCI into net income. Embedded Derivatives. Separate Accounts The separate accounts are legally segregated and are not subject to the claims that arise out of any of our other business. The client, rather than us, directs the investments and bears the investment risk of these funds. The separate account assets represent the fair value of funds that are separately administered by us for contracts with equity, real estate and fixed income investments and are presented as a summary total within the consolidated statements of financial position. An equivalent amount is reported as separate account liabilities, which represent the obligation to return the monies to the client. We receive fees for mortality, withdrawal and expense risks, as well as administrative, maintenance and investment advisory services that are included in the consolidated statements of operations. Net deposits, net investment income and realized and unrealized capital gains and losses of the separate accounts are not reflected in the consolidated statements of operations. Separate account assets and separate account liabilities include certain international retirement accumulation products where the segregated funds and associated obligation to the client are consolidated within our financial statements. We have determined that summary totals are the most meaningful presentation for these funds. As of June 30, 2019 and December 31, 2018, the separate accounts included a separate account valued at $110.4 million and $94.9 million, respectively, which primarily included shares of our stock that were allocated and issued to eligible participants of qualified employee benefit plans administered by us as part of the policy credits issued under our 2001 demutualization. These shares are included in both basic and diluted earnings per share calculations. In the consolidated statements of financial position, the separate account shares are recorded at fair value and are reported as separate account assets with a corresponding separate account liability to eligible participants of the qualified plan. Changes in fair value of the separate account shares are reflected in both the separate account assets and separate account liabilities and do not impact our results of operations . |
Variable Interest Entities
Variable Interest Entities | 6 Months Ended |
Jun. 30, 2019 | |
Variable Interest Entities | |
Variable Interest Entities | 2. Variable Interest Entities We have relationships with various types of entities which may be VIEs. Certain VIEs are consolidated in our financial results. See Note 1, Nature of Operations and Significant Accounting Policies, under the caption “Consolidation” for further details of our consolidation accounting policies. We did not provide financial or other support to investees designated as VIEs for the periods ended June 30, 2019 and December 31, 2018. Consolidated Variable Interest Entities Grantor Trust We contributed undated subordinated floating rate notes to a grantor trust. The trust separated its cash flows by issuing an interest-only certificate and a residual certificate related to each note contributed. Each interest-only certificate entitles the holder to interest on the stated note for a specified term, while the residual certificate entitles the holder to interest payments subsequent to the term of the interest-only certificate and to all principal payments. We retained the interest-only certificates and the residual certificates were subsequently sold to third parties. We determined the grantor trust is a VIE due to insufficient equity to sustain it. We determined we are the primary beneficiary as a result of our contribution of securities into the trust and our significant continuing interest in the trust. Commercial Mortgage-Backed Securities We sold commercial mortgage loans to a real estate mortgage investment conduit trust. The trust issued various commercial mortgage-backed securities ("CMBS") certificates using the cash flows of the underlying commercial mortgage loans it purchased. This is considered a VIE due to insufficient equity to sustain itself. We determined we are the primary beneficiary as we retained the special servicing role for the assets within the trust as well as the ownership of the bond class that controls the unilateral kick-out rights of the special servicer. Mandatory Retirement Savings Funds We hold an equity interest in Chilean mandatory privatized social security funds in which we provide asset management services. We determined the mandatory privatized social security funds, which also include contributions for voluntary pension savings, voluntary non-pension savings and compensation savings accounts, are VIEs. This is because the equity holders as a group lack the power, due to voting rights or similar rights, to direct the activities of the entity that most significantly impact the entity's economic performance and also because equity investors are protected from below-average market investment returns relative to the industry's return, due to a regulatory guarantee that we provide. Further we concluded we are the primary beneficiary through our power to make decisions and our significant variable interest in the funds. The purpose of the funds, which reside in legally segregated entities, is to provide long-term retirement savings. The obligation to the customer is directly related to the assets held in the funds and, as such, we present the assets as separate account assets and the obligation as separate account liabilities within our consolidated statements of financial position. Principal International Hong Kong offers retirement pension schemes in which we provide trustee, administration and asset management services to employers and employees under the Hong Kong Mandatory Provident Fund and Occupational Retirement Schemes Ordinance pension schemes. Each pension scheme has various guaranteed and non- guaranteed constituent funds, or investment options, in which customers can invest their money. The guaranteed funds provide either a guaranteed rate of return to the customer or a minimum guarantee on withdrawals under certain qualifying events. We determined the guaranteed funds are VIEs due to the fact the equity holders, as a group, lack the obligation to absorb expected losses due to the guarantee we provide. We concluded we are the primary beneficiary because we have the power to make decisions and to receive benefits and the obligation to absorb losses that could be potentially significant to the VIE. Therefore, we consolidate the underlying assets and liabilities of the funds and present as separate accounts or within the general account, depending on the terms of the guarantee. Real Estate We invest in several real estate limited partnerships and limited liability companies. The entities invest in real estate properties. Certain of these entities are VIEs based on the combination of our significant economic interest and related voting rights. We determined we are the primary beneficiary as a result of our power to control the entities through our significant ownership. Due to the nature of these real estate investments, the investment balance will fluctuate as we purchase and sell interests in the entities and as capital expenditures are made to improve the underlying real estate. Sponsored Investment Funds We sponsor and invest in certain investment funds for which we provide asset management services. Although our asset management fee is commensurate with the services provided and consistent with fees for similar services negotiated at arms-length, we have a variable interest for funds where our other interests are more than insignificant. The funds are VIEs as the equity holders lack power through voting rights to direct the activities of the entity that most significantly impact its economic performance. We determined we are the primary beneficiary of the VIEs where our interest in the entity is more than insignificant and we are the asset manager. We also invest in certain series of another investment fund. These series are VIEs as the equity holders of each series lack the power to direct the most significant activities of the VIE. We determined we are the primary beneficiary of these series as our interest is more than insignificant and collectively we have the power to direct the most significant activities of the fund. Assets and Liabilities of Consolidated Variable Interest Entities The carrying amounts of our consolidated VIE assets, which can only be used to settle obligations of consolidated VIEs, and liabilities of consolidated VIEs for which creditors do not have recourse were as follows: June 30, 2019 December 31, 2018 Total Total Total Total assets liabilities assets liabilities (in millions) Grantor trust (1) $ 98.6 $ 95.3 $ 95.0 $ 89.4 CMBS 5.4 — 6.4 — Mandatory retirement savings funds (2) 41,743.8 41,354.2 37,915.7 37,579.3 Real estate (3) 397.0 78.3 379.2 70.6 Sponsored investment funds (4) 337.4 4.0 526.5 3.6 Total $ 42,582.2 $ 41,531.8 $ 38,922.8 $ 37,742.9 (1) The assets of the grantor trust are primarily fixed maturities, available-for-sale. The liabilities are primarily other liabilities that reflect an embedded derivative of the forecasted transaction to deliver the underlying securities. (2) The assets of the mandatory retirement savings funds include separate account assets and equity securities. The liabilities include separate account liabilities and contractholder funds. (3) The assets of the real estate VIEs primarily include real estate and cash. Liabilities primarily include long-term debt and other liabilities. (4) The assets of sponsored investment funds are primarily fixed maturities and equity securities, certain of which are reported with other investments, and cash. The consolidated statements of financial position included a $194.9 million and $325.7 million redeemable noncontrolling interest for sponsored investment funds as of June 30, 2019 and December 31, 2018, respectively. Unconsolidated Variable Interest Entities We hold a variable interest in a number of VIEs where we are not the primary beneficiary. Our investments in these VIEs are reported in fixed maturities, available-for-sale; fixed maturities, trading; equity securities and other investments in the consolidated statements of financial position and are described below. Unconsolidated VIEs include certain CMBS, residential mortgage-backed pass-through securities ("RMBS") and other asset-backed securities (“ABS”). All of these entities were deemed VIEs because the equity within these entities is insufficient to sustain them. We determined we are not the primary beneficiary in the entities within these categories of investments. This determination was based primarily on the fact we do not own the class of security that controls the unilateral right to replace the special servicer or equivalent function. We invest in cash collateralized debt obligations, collateralized bond obligations, collateralized loan obligations and other collateralized structures, which are VIEs due to insufficient equity to sustain the entities. We have determined we are not the primary beneficiary of these entities primarily because we do not control the economic performance of the entities and were not involved with the design of the entities or because we do not have a potentially significant variable interest in the entities for which we are the asset manager. We have invested in various VIE trusts and similar entities as a debt holder. Most of these entities are classified as VIEs due to insufficient equity to sustain them. In addition, we have an entity classified as a VIE based on the combination of our significant economic interest and lack of voting rights. We have determined we are not the primary beneficiary primarily because we do not control the economic performance of the entities and were not involved with the design of the entities. We have invested in partnerships and other funds, which are classified as VIEs. The entities are VIEs as equity holders lack the power to control the most significant activities of the entities because the equity holders do not have either the ability by a simple majority to exercise substantive kick-out rights or substantive participating rights. We have determined we are not the primary beneficiary because we do not have the power to direct the most significant activities of the entities. As previously discussed, we sponsor, invest in and have other interests in certain investment funds that are VIEs. We determined we are not the primary beneficiary of the VIEs for which we are the asset manager but do not have a potentially significant variable interest in the funds. We hold an equity interest in Mexican mandatory privatized social security funds in which we provide asset management services. Our equity interest in the funds is considered a variable interest. We concluded the funds are VIEs because the equity holders as a group lack decision-making ability through their voting rights. We are not the primary beneficiary of the VIEs because although we, as the asset manager, have the power to direct the activities of the VIEs, we do not have a potentially significant variable interest in the funds. The carrying value and maximum loss exposure for our unconsolidated VIEs were as follows: Maximum exposure to Asset carrying value loss (1) (in millions) June 30, 2019 Fixed maturities, available-for-sale: Corporate $ 235.7 $ 220.8 Residential mortgage-backed pass-through securities 2,437.0 2,389.1 Commercial mortgage-backed securities 4,569.9 4,460.3 Collateralized debt obligations (2) 2,759.4 2,771.9 Other debt obligations 7,801.9 7,675.1 Fixed maturities, trading: Residential mortgage-backed pass-through securities 310.3 310.3 Commercial mortgage-backed securities 29.0 29.0 Collateralized debt obligations (2) 20.4 20.4 Other debt obligations 13.8 13.8 Equity securities 114.4 114.4 Other investments: Other limited partnership and fund interests (3) 847.2 1,464.8 December 31, 2018 Fixed maturities, available-for-sale: Corporate $ 235.3 $ 222.6 Residential mortgage-backed pass-through securities 2,460.6 2,488.5 Commercial mortgage-backed securities 3,945.6 4,023.1 Collateralized debt obligations (2) 2,420.8 2,451.3 Other debt obligations 7,153.2 7,196.6 Fixed maturities, trading: Residential mortgage-backed pass-through securities 322.6 322.6 Commercial mortgage-backed securities 13.8 13.8 Collateralized debt obligations (2) 11.8 11.8 Other debt obligations 9.7 9.7 Equity securities 103.9 103.9 Other investments: Other limited partnership and fund interests (3) 737.5 1,432.2 (1) Our risk of loss is limited to our initial investment measured at amortized cost for fixed maturities, available-for-sale. Our risk of loss is limited to our investment measured at fair value for our fixed maturities, trading and equity securities. Our risk of loss is limited to our carrying value plus any unfunded commitments and/or guarantees and similar provisions for our other investments. Unfunded commitments are not liabilities on our consolidated statements of financial position because we are only required to fund additional equity when called upon to do so by the general partner or investment manager. (2) Primarily consists of collateralized loan obligations backed by secured corporate loans. (3) As of June 30, 2019 and December 31, 2018, the maximum exposure to loss for other limited partnership and fund interests includes $131.3 million and $132.2 million, respectively, of debt within certain of our managed international real estate funds that is fully secured by assets whose value exceeds the amount of the debt, but also includes recourse to the investment manager. Money Market Funds We are the investment manager for certain money market mutual funds. These types of funds are exempt from assessment under any consolidation model due to a scope exception for money market funds registered under Rule 2a-7 of the Investment Company Act of 1940 or similar funds. As of June 30, 2019 and December 31, 2018, money market mutual funds we manage held $4.0 billion and $3.0 billion in total assets, respectively. We have no contractual obligation to contribute to these funds; however, we provide support through the waiver of fees and through expense reimbursements. The amount of fees waived and expenses reimbursed was insignificant. |
Investments
Investments | 6 Months Ended |
Jun. 30, 2019 | |
Investments | |
Investments | 3. Investments Fixed Maturities and Equity Securities Fixed maturities include bonds, ABS, redeemable preferred stock and certain non-redeemable preferred securities. Equity securities include mutual funds, common stock, non-redeemable preferred stock and required regulatory investments. We classify fixed maturities as either available-for-sale or trading at the time of the purchase and, accordingly, carry them at fair value. Equity securities are also carried at fair value. See Note 11, Fair Value Measurements, for methodologies related to the determination of fair value. Unrealized gains and losses related to fixed maturities, available-for-sale, excluding those in fair value hedging relationships, are reflected in stockholders' equity, net of adjustments associated with DAC and related actuarial balances, derivatives in cash flow hedge relationships and applicable income taxes. Mark-to-market adjustments on equity securities, unrealized gains and losses related to hedged portions of fixed maturities, available-for-sale in fair value hedging relationships prior to 2019 and mark-to-market adjustments on certain fixed maturities, trading are reflected in net realized capital gains (losses). Beginning in 2019, unrealized gains and losses related to hedged portions of fixed maturities, available-for-sale in fair value hedging relationships are reflected in net investment income. Mark-to-market adjustments related to certain securities carried at fair value with an investment objective to realize economic value through mark-to-market changes are reflected in net investment income. The amortized cost of fixed maturities includes cost adjusted for amortization of premiums and discounts, computed using the interest method. The amortized cost of fixed maturities, available-for-sale is adjusted for changes in fair value of the hedged portions of securities in fair value hedging relationships and declines in value that are other than temporary. Impairments in value deemed to be other than temporary are primarily reported in net income as a component of net realized capital gains (losses), with noncredit impairment losses for certain fixed maturities, available-for-sale reported in other comprehensive income (“OCI”). For loan-backed and structured securities, we recognize income using a constant effective yield based on currently anticipated cash flows. The amortized cost, gross unrealized gains and losses, other-than-temporary impairments in AOCI and fair value of available-for-sale securities were as follows: Other-than- Gross Gross temporary Amortized unrealized unrealized impairments in cost gains losses Fair value AOCI (1) (in millions) June 30, 2019 Fixed maturities, available-for-sale: U.S. government and agencies $ 1,457.4 $ 82.9 $ 3.9 $ 1,536.4 $ — Non-U.S. governments 880.4 122.8 2.5 1,000.7 — States and political subdivisions 6,413.2 561.0 5.6 6,968.6 — Corporate 35,200.2 3,052.4 81.3 38,171.3 — Residential mortgage-backed pass-through securities 2,389.1 56.7 8.8 2,437.0 — Commercial mortgage-backed securities 4,460.3 130.7 21.1 4,569.9 20.5 Collateralized debt obligations (2) 2,771.9 1.1 13.6 2,759.4 1.4 Other debt obligations 7,697.9 141.3 14.4 7,824.8 34.2 Total fixed maturities, available-for-sale $ 61,270.4 $ 4,148.9 $ 151.2 $ 65,268.1 $ 56.1 December 31, 2018 Fixed maturities, available-for-sale: U.S. government and agencies $ 1,441.6 $ 16.4 $ 17.0 $ 1,441.0 $ — Non-U.S. governments 833.4 71.7 14.6 890.5 — States and political subdivisions 6,125.0 196.0 95.3 6,225.7 — Corporate 35,134.6 1,249.9 845.2 35,539.3 — Residential mortgage-backed pass-through securities 2,488.5 21.9 49.8 2,460.6 — Commercial mortgage-backed securities 4,023.1 17.1 94.6 3,945.6 16.3 Collateralized debt obligations (2) 2,451.3 — 30.5 2,420.8 1.2 Other debt obligations 7,228.3 39.4 82.7 7,185.0 36.1 Total fixed maturities, available-for-sale $ 59,725.8 $ 1,612.4 $ 1,229.7 $ 60,108.5 $ 53.6 (1) Excludes $70.0 million and $64.2 million as of June 30, 2019 and December 31, 2018, respectively, of net unrealized gains on impaired fixed maturities, available-for-sale related to changes in fair value subsequent to the impairment date, which are included in gross unrealized gains and gross unrealized losses. (2) Primarily consists of collateralized loan obligations backed by secured corporate loans. The amortized cost and fair value of fixed maturities, available-for-sale as of June 30, 2019, by expected maturity, were as follows: Amortized cost Fair value (in millions) Due in one year or less $ 2,729.6 $ 2,751.4 Due after one year through five years 10,019.9 10,333.8 Due after five years through ten years 10,564.6 11,185.6 Due after ten years 20,637.1 23,406.2 Subtotal 43,951.2 47,677.0 Mortgage-backed and other asset-backed securities 17,319.2 17,591.1 Total $ 61,270.4 $ 65,268.1 Actual maturities may differ because borrowers may have the right to call or prepay obligations. Our portfolio is diversified by industry, issuer and asset class. Credit concentrations are managed to established limits. Net Realized Capital Gains and Losses Net realized capital gains and losses on sales of investments are determined on the basis of specific identification. In general, in addition to realized capital gains and losses on investment sales and periodic settlements on derivatives not designated as hedges, we report gains and losses related to the following in net realized capital gains (losses): other-than- temporary impairments of securities and subsequent realized recoveries, mark-to-market adjustments on equity securities, mark-to-market adjustments on certain fixed maturities, trading, mark-to-market adjustments on sponsored investment funds, mark-to-market adjustments on derivatives not designated as hedges, changes in the mortgage loan valuation allowance provision, impairments of real estate held for investment and impairments on equity method investments. Investment gains and losses on sales of certain real estate held for sale due to investment strategy and mark-to-market adjustments on certain securities carried at fair value with an investment objective to realize economic value through mark-to-market changes are reported as net investment income and are excluded from net realized capital gains (losses). The major components of net realized capital gains (losses) on investments were as follows: For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Fixed maturities, available-for-sale: Gross gains $ 6.2 $ 0.7 $ 8.7 $ 5.0 Gross losses (7.9) (18.5) (9.4) (45.2) Net impairment losses (17.3) (9.0) (24.1) (18.9) Hedging, net (1) (9.3) (2.9) (9.3) (8.0) Fixed maturities, trading (2) 17.5 (2.7) 31.7 (13.4) Equity securities (3) 14.7 5.6 35.7 3.6 Mortgage loans 0.3 2.5 0.6 2.9 Derivatives (1) 4.6 (37.4) 9.6 (28.0) Other (12.8) 129.1 37.0 144.3 Net realized capital gains (losses) $ (4.0) $ 67.4 $ 80.5 $ 42.3 (1) Upon adoption of authoritative guidance effective January 1, 2019, the change in fair value of fixed maturities, available-for-sale and the change in fair value of derivative hedging instruments in fair value hedging relationships are reported in net investment income with the earnings effect of fixed maturities, available-for-sale. Prior to 2019, the change in fair value of fixed maturities, available-for-sale and the change in fair value of derivative hedging instruments in fair value hedging relationships were reported in net realized capital gains (losses). See Note 4, Derivative Financial Instruments, for further details. (2) Unrealized gains (losses) on fixed maturities, trading still held at the reporting date were $17.6 million and $(2.7) million for the three months ended June 30, 2019 and 2018, respectively, and $31.8 million and $(13.4) million for the six months ended June 30, 2019 and 2018, respectively. (3) Unrealized gains (losses) on equity securities still held at the reporting date were $9.7 million and $0.1 million for the three months ended June 30, 2019 and 2018, respectively, and $29.7 million and $(14.1) million for the six months ended June 30, 2019 and 2018, respectively. This excludes $18.7 million and $3.3 million for the three months ended June 30, 2019 and 2018, respectively, and $41.3 million and $3.2 million for the six months ended June 30, 2019 and 2018, respectively, of unrealized gains on equity securities still held at the reporting date that were reported in net investment income. Proceeds from sales of investments (excluding call and maturity proceeds) in fixed maturities, available-for-sale were $1,028.0 million and $525.9 million for the three months ended June 30, 2019 and 2018, and $1,191.0 million and $1,737.7 million for the six months ended June 30, 2019 and 2018, respectively. Other-Than-Temporary Impairments We have a process in place to identify fixed maturity securities that could potentially have an impairment that is other than temporary. This process involves monitoring market events that could impact issuers’ credit ratings, business climate, management changes, litigation and government actions and other similar factors. This process also involves monitoring late payments, pricing levels, downgrades by rating agencies, key financial ratios, financial statements, revenue forecasts and cash flow projections as indicators of credit issues. Each reporting period, all securities are reviewed to determine whether an other-than-temporary decline in value exists and whether losses should be recognized. We consider relevant facts and circumstances in evaluating whether a credit or interest rate related impairment of a security is other than temporary. Relevant facts and circumstances considered include: (1) the extent and length of time the fair value has been below cost; (2) the reasons for the decline in value; (3) the financial position and access to capital of the issuer, including the current and future impact of any specific events; (4) for structured securities, the adequacy of the expected cash flows and (5) our intent to sell a security or whether it is more likely than not we will be required to sell the security before the recovery of its amortized cost which, in some cases, may extend to maturity. To the extent we determine a security is deemed to be other than temporarily impaired, an impairment loss is recognized. The way in which impairment losses on fixed maturities are recognized in the financial statements is dependent on the facts and circumstances related to the specific security. If we intend to sell a security or it is more likely than not that we would be required to sell a security before the recovery of its amortized cost, we recognize an other-than-temporary impairment in net income for the difference between amortized cost and fair value. If we do not expect to recover the amortized cost basis, we do not plan to sell the security and if it is not more likely than not that we would be required to sell a security before the recovery of its amortized cost, the recognition of the other-than-temporary impairment is bifurcated. We recognize the credit loss portion in net income and the noncredit loss portion in OCI (“bifurcated OTTI”). Total other-than-temporary impairment losses, net of recoveries from the sale of previously impaired fixed maturities, available-for-sale, were as follows: For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Net other-than-temporary impairment recoveries $ (17.0) $ (8.2) $ (26.6) $ (6.9) Other-than-temporary impairment losses on fixed maturities, available-for-sale reclassified to (from) OCI (1) (0.3) (0.8) 2.5 (12.0) Net impairment losses on fixed maturities, available-for-sale $ (17.3) $ (9.0) $ (24.1) $ (18.9) (1) Represents the net impact of (a) gains resulting from reclassification of noncredit impairment losses for fixed maturities with bifurcated OTTI from net realized capital gains (losses) to OCI and (b) losses resulting from reclassification of previously recognized noncredit impairment losses from OCI to net realized capital gains (losses) for fixed maturities with bifurcated OTTI that had additional credit losses or fixed maturities that previously had bifurcated OTTI that have now been sold or are intended to be sold. We estimate the amount of the credit loss component of a fixed maturity security impairment as the difference between amortized cost and the present value of the expected cash flows of the security. The present value is determined using the best estimate cash flows discounted at the effective interest rate implicit to the security at the date of purchase or the current yield to accrete an asset-backed or floating rate security. The methodology and assumptions for establishing the best estimate cash flows vary depending on the type of security. The ABS cash flow estimates are based on security specific facts and circumstances that may include collateral characteristics, expectations of delinquency and default rates, loss severity and prepayment speeds and structural support, including subordination and guarantees. The corporate security cash flow estimates are derived from scenario-based outcomes of expected corporate restructurings or liquidations using bond specific facts and circumstances including timing, security interests and loss severity. The following table provides a rollforward of accumulated credit losses for fixed maturities with bifurcated credit losses. The purpose of the table is to provide detail of (1) additions to the bifurcated credit loss amounts recognized in net realized capital gains (losses) during the period and (2) decrements for previously recognized bifurcated credit losses where the loss is no longer bifurcated and/or there has been a positive change in expected cash flows or accretion of the bifurcated credit loss amount. For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Beginning balance $ (102.3) $ (129.2) $ (117.5) $ (124.3) Credit losses for which an other-than-temporary impairment was not previously recognized (0.8) (5.5) (2.8) (10.1) Credit losses for which an other-than-temporary impairment was previously recognized (4.6) (1.9) (8.9) (11.7) Reduction for credit losses previously recognized on fixed maturities now sold, paid down or intended to be sold 8.0 2.7 28.4 10.0 Net reduction (increase) for positive changes in cash flows expected to be collected and amortization (1) (0.6) 2.8 0.5 5.0 Ending balance $ (100.3) $ (131.1) $ (100.3) $ (131.1) (1) Amounts are recognized in net investment income. Gross Unrealized Losses for Available-for-Sale Securities For available-for-sale securities with unrealized losses, including other-than-temporary impairment losses reported in OCI, the gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position were as follows: June 30, 2019 Less than Greater than or twelve months equal to twelve months Total Gross Gross Gross Fair unrealized Fair unrealized Fair unrealized value losses value losses value losses (in millions) Fixed maturities, available-for-sale: U.S. government and agencies $ 5.7 $ — $ 160.8 $ 3.9 $ 166.5 $ 3.9 Non-U.S. governments 13.2 0.2 47.9 2.3 61.1 2.5 States and political subdivisions 2.3 — 509.8 5.6 512.1 5.6 Corporate 579.1 9.7 2,556.0 71.6 3,135.1 81.3 Residential mortgage-backed pass-through securities 1.0 — 747.4 8.8 748.4 8.8 Commercial mortgage-backed securities 127.3 2.1 625.6 19.0 752.9 21.1 Collateralized debt obligations (1) 975.5 2.7 1,063.9 10.9 2,039.4 13.6 Other debt obligations 110.9 0.5 1,677.0 13.9 1,787.9 14.4 Total fixed maturities, available-for-sale $ 1,815.0 $ 15.2 $ 7,388.4 $ 136.0 $ 9,203.4 $ 151.2 (1) Primarily consists of collateralized loan obligations backed by secured corporate loans. Of the total amounts, Principal Life’s consolidated portfolio represented were investment grade (rated AAA through BBB-) with an average price of For those securities that had been in a continuous unrealized loss position for less than twelve months, Principal Life's consolidated portfolio held securities with a carrying value of million reflecting an average price of 99 as of June 30, 2019. Of this portfolio, 84% was investment grade (rated AAA through BBB-) as of June 30, 2019, with associated unrealized losses of $8.8 million. The unrealized losses on these securities can primarily be attributed to changes in market interest rates and changes in credit spreads since the securities were acquired. For those securities that had been in a continuous unrealized loss position greater than or equal to twelve months, Principal Life’s consolidated portfolio held 1,081 securities with a carrying value of $7,304.3 million and unrealized losses of $133.8 million. The average credit rating of this portfolio was AA- with an average price of 98 as of June 30, 2019. Of the $133.8 million in unrealized losses, the corporate sector accounts for $69.7 million in unrealized losses with an average price of 97 and an average credit rating of BBB+. The remaining unrealized losses also include $18.8 million within the commercial mortgage-backed securities sector with an average price of 97 and an average credit rating of AA+. The unrealized losses on these securities can primarily be attributed to changes in market interest rates and changes in credit spreads since the securities were acquired. Because we expected to recover our amortized cost, it was not our intent to sell the fixed maturity available-for-sale securities with unrealized losses and it was not more likely than not that we would be required to sell these securities before recovery of the amortized cost, which may be at maturity, we did not consider these investments to be other-than-temporarily impaired as of June 30, 2019. December 31, 2018 Less than Greater than or twelve months equal to twelve months Total Gross Gross Gross Fair unrealized Fair unrealized Fair unrealized value losses value losses value losses (in millions) Fixed maturities, available-for-sale: U.S. government and agencies $ 101.8 $ 1.6 $ 500.3 $ 15.4 $ 602.1 $ 17.0 Non-U.S. governments 210.2 4.7 191.5 9.9 401.7 14.6 States and political subdivisions 1,359.9 33.9 1,590.3 61.4 2,950.2 95.3 Corporate 13,198.4 476.0 6,865.0 369.2 20,063.4 845.2 Residential mortgage-backed pass-through securities 236.7 1.0 1,410.2 48.8 1,646.9 49.8 Commercial mortgage-backed securities 790.3 11.6 2,223.2 83.0 3,013.5 94.6 Collateralized debt obligations (1) 2,233.3 24.0 162.6 6.5 2,395.9 30.5 Other debt obligations 985.5 4.9 3,665.1 77.8 4,650.6 82.7 Total fixed maturities, available-for-sale $ 19,116.1 $ 557.7 $ 16,608.2 $ 672.0 $ 35,724.3 $ 1,229.7 (1) Primarily consists of collateralized loan obligations backed by secured corporate loans. Of the total amounts, Principal Life’s consolidated portfolio represented $35,051.9 million in available-for-sale fixed maturities with gross unrealized losses of $1,202.9 million. Of the available-for-sale fixed maturities within Principal Life's consolidated portfolio in a gross unrealized loss position, 95% were investment grade (rated AAA through BBB-) with an average price of 97 (carrying value/amortized cost) as of December 31, 2018. Gross unrealized losses in our fixed maturities portfolio increased during the year ended December 31, 2018, primarily due to widening of credit spreads and an increase in interest rates. For those securities that had been in a continuous unrealized loss position for less than twelve months, Principal Life's consolidated portfolio held 2,076 securities with a carrying value of $18,764.0 million and unrealized losses of $541.3 million reflecting an average price of 97 as of December 31, 2018. Of this portfolio, 92% was investment grade (rated AAA through BBB-) as of December 31, 2018, with associated unrealized losses of $473.7 million. The unrealized losses on these securities can primarily be attributed to changes in market interest rates and changes in credit spreads since the securities were acquired. For those securities that had been in a continuous unrealized loss position greater than or equal to twelve months, Principal Life's consolidated portfolio held 2,335 securities with a carrying value of $16,287.9 million and unrealized losses of $661.6 million. The average credit rating of this portfolio was AA- with an average price of 96 as of December 31, 2018. Of the $661.6 million in unrealized losses, the corporate sector accounts for $360.4 million in unrealized losses with an average price of 95 and an average credit rating of A-. The remaining unrealized losses also include $82.2 million within the commercial mortgage-backed securities sector with an average price of 96 and an average credit rating of AA+. The unrealized losses on these securities can primarily be attributed to changes in market interest rates and changes in credit spreads since the securities were acquired. Because we expected to recover our amortized cost, it was not our intent to sell the fixed maturity available-for-sale securities with unrealized losses and it was not more likely than not that we would be required to sell these securities before recovery of the amortized cost, which may be at maturity, we did not consider these investments to be other-than-temporarily impaired as of December 31, 2018. Net Unrealized Gains and Losses on Available-for-Sale Securities and Derivative Instruments The net unrealized gains and losses on investments in available-for-sale securities, the noncredit component of impairment losses on fixed maturities available-for-sale and the net unrealized gains and losses on derivative instruments in cash flow hedge relationships are reported as separate components of stockholders' equity. The cumulative amount of net unrealized gains and losses on available-for-sale securities and derivative instruments in cash flow hedge relationships net of adjustments related to DAC and related actuarial balances, policyholder liabilities, noncontrolling interest and applicable income taxes was as follows: June 30, 2019 December 31, 2018 (in millions) Net unrealized gains on fixed maturities, available-for-sale (1) $ 4,029.5 $ 400.8 Noncredit component of impairment losses on fixed maturities, available-for-sale (56.1) (53.6) Net unrealized gains on derivative instruments 108.0 118.5 Adjustments for assumed changes in amortization patterns (208.1) 30.3 Adjustments for assumed changes in policyholder liabilities (1,051.4) (293.7) Net unrealized gains on other investments and noncontrolling interest adjustments 97.6 68.8 Provision for deferred income taxes (628.8) (63.8) Net unrealized gains on available-for-sale securities and derivative instruments $ 2,290.7 $ 207.3 (1) Excludes net unrealized gains (losses) on fixed maturities, available-for-sale included in fair value hedging relationships. Mortgage Loans Mortgage loans consist of commercial and residential mortgage loans. We evaluate risks inherent in our commercial mortgage loans in two classes: (1) brick and mortar property loans, including mezzanine loans, where we analyze the property's rent payments as support for the loan, and (2) credit tenant loans (“CTL”), where we rely on the credit analysis of the tenant for the repayment of the loan. We evaluate risks inherent in our residential mortgage loan portfolio in two classes: (1) first lien mortgages and (2) home equity mortgages. The carrying amount of our mortgage loan portfolio was as follows: June 30, 2019 December 31, 2018 (in millions) Commercial mortgage loans $ 14,830.6 $ 13,996.3 Residential mortgage loans 1,334.3 1,368.0 Total amortized cost 16,164.9 15,364.3 Valuation allowance (28.1) (27.4) Total carrying value $ 16,136.8 $ 15,336.9 We periodically purchase mortgage loans as well as sell mortgage loans we have originated. Mortgage loans purchased and sold were as follows: For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Commercial mortgage loans: Purchased $ 103.0 $ — $ 115.9 $ — Sold — 1.6 0.5 1.6 Residential mortgage loans: Purchased 66.2 92.6 99.4 204.8 Sold 21.2 27.7 32.1 51.3 Our commercial mortgage loan portfolio consists primarily of non-recourse, fixed rate mortgages on stabilized properties. Our commercial mortgage loan portfolio is diversified by geographic region and specific collateral property type as follows: June 30, 2019 December 31, 2018 Amortized Percent Amortized Percent cost of total cost of total ($ in millions) Geographic distribution New England $ 652.6 4.4 % $ 640.6 4.6 % Middle Atlantic 4,263.9 28.7 3,927.3 28.0 East North Central 604.9 4.1 592.8 4.2 West North Central 200.5 1.4 205.8 1.5 South Atlantic 2,338.0 15.8 2,206.5 15.8 East South Central 444.8 3.0 422.5 3.0 West South Central 1,463.1 9.9 1,213.8 8.7 Mountain 897.2 6.0 968.6 6.9 Pacific 3,686.2 24.9 3,567.6 25.5 International 279.4 1.8 250.8 1.8 Total $ 14,830.6 100.0 % $ 13,996.3 100.0 % Property type distribution Office $ 4,960.6 33.4 % $ 4,625.8 33.0 % Retail 2,118.9 14.3 2,305.6 16.5 Industrial 2,350.5 15.8 2,312.9 16.5 Apartments 4,850.1 32.7 4,250.5 30.4 Hotel 97.9 0.7 99.8 0.7 Mixed use/other 452.6 3.1 401.7 2.9 Total $ 14,830.6 100.0 % $ 13,996.3 100.0 % Our residential mortgage loan portfolio is composed of first lien mortgages with an amortized cost of million as of June 30, 2019 and December 31, 2018, respectively. Our first lien loans are concentrated in Chile and the United States. Our residential home equity mortgages are concentrated in the United States and are generally second lien mortgages comprised of closed-end loans and lines of credit. Mortgage Loan Credit Monitoring Commercial Credit Risk Profile Based on Internal Rating We actively monitor and manage our commercial mortgage loan portfolio. All commercial mortgage loans are analyzed regularly and substantially all are internally rated, based on a proprietary risk rating cash flow model, in order to monitor the financial quality of these assets. The model stresses expected cash flows at various levels and at different points in time depending on the durability of the income stream, which includes our assessment of factors such as location (macro and micro markets), tenant quality and lease expirations. Our internal rating analysis presents expected losses in terms of an S&P Global (“S&P”) bond equivalent rating. As the credit risk for commercial mortgage loans increases, we adjust our internal ratings downward with loans in the category “B+ and below” having the highest risk for credit loss. Internal ratings on commercial mortgage loans are updated at least annually and potentially more often for certain loans with material changes in collateral value or occupancy and for loans on an internal “watch list”. Commercial mortgage loans that require more frequent and detailed attention are identified and placed on an internal “watch list”. Among the criteria that would indicate a potential problem are significant negative changes in ratios of loan to value or contract rents to debt service, major tenant vacancies or bankruptcies, borrower sponsorship problems, late payments, delinquent taxes and loan relief/restructuring requests. The amortized cost of our commercial mortgage loan portfolio by credit risk, as determined by our internal rating system expressed in terms of an S&P bond equivalent rating, was as follows: June 30, 2019 Brick and mortar CTL Total (in millions) A- and above $ 13,714.8 $ 80.6 $ 13,795.4 BBB+ thru BBB- 855.0 89.9 944.9 BB+ thru BB- 84.7 — 84.7 B+ and below 5.6 — 5.6 Total $ 14,660.1 $ 170.5 $ 14,830.6 December 31, 2018 Brick and mortar CTL Total (in millions) A- and above $ 12,735.2 $ 84.3 $ 12,819.5 BBB+ thru BBB- 977.3 105.7 1,083.0 BB+ thru BB- 88.3 — 88.3 B+ and below 5.5 — 5.5 Total $ 13,806.3 $ 190.0 $ 13,996.3 Residential Credit Risk Profile Based on Performance Status Our residential mortgage loan portfolio is monitored based on performance of the loans. Monitoring on a residential mortgage loan increases when the loan is delinquent or earlier if there is an indication of potential impairment. We define non-performing residential mortgage loans as loans 90 days or greater delinquent or on non-accrual status. The amortized cost of our performing and non-performing residential mortgage loans was as follows: June 30, 2019 First liens Home equity Total (in millions) Performing $ 1,310.4 $ 9.3 $ 1,319.7 Non-performing 11.2 3.4 14.6 Total $ 1,321.6 $ 12.7 $ 1,334.3 December 31, 2018 First liens Home equity Total (in millions) Performing $ 1,340.3 $ 10.8 $ 1,351.1 Non-performing 12.6 4.3 16.9 Total $ 1,352.9 $ 15.1 $ 1,368.0 Non-Accrual Mortgage Loans Commercial and residential mortgage loans are placed on non-accrual status if we have concern regarding the collectability of future payments or if a loan has matured without being paid off or extended. Factors considered may include conversations with the borrower, loss of major tenant, bankruptcy of borrower or major tenant, decreased property cash flow for commercial mortgage loans or number of days past due and other circumstances for residential mortgage loans. Based on an assessment as to the collectability of the principal, a determination is made to apply any payments received either against the principal, against the valuation allowance or according to the contractual terms of the loan. When a loan is placed on non-accrual status, the accrued unpaid interest receivable is reversed against interest income. Accrual of interest resumes after factors resulting in doubts about collectability have improved. Residential first lien mortgages in the Chilean market are carried on accrual for a longer period of delinquency than domestic loans, as assessment of collectability is based on the nature of the loans and collection practices in that market. The amortized cost of mortgage loans on non-accrual status was as follows: June 30, 2019 December 31, 2018 (in millions) Residential: First liens $ 9.2 $ 10.1 Home equity 3.4 4.3 Total $ 12.6 $ 14.4 The aging of our mortgage loans, based on amortized cost, was as follows: June 30, 2019 Recorded |
Derivative Financial Instrument
Derivative Financial Instruments | 6 Months Ended |
Jun. 30, 2019 | |
Derivative Financial Instruments | |
Derivative Financial Instruments | 4. Derivative Financial Instruments Derivatives are generally used to hedge or reduce exposure to market risks associated with assets held or expected to be purchased or sold and liabilities incurred or expected to be incurred. Derivatives are used to change the characteristics of our asset/liability mix consistent with our risk management activities. Derivatives are also used in asset replication strategies. Types of Derivative Instruments Interest Rate Contracts Interest rate risk is the risk we will incur economic losses due to adverse changes in interest rates. Sources of interest rate risk include the difference between the maturity and interest rate changes of assets with the liabilities they support, timing differences between the pricing of liabilities and the purchase or procurement of assets and changing cash flow profiles from original projections due to prepayment options embedded within asset and liability contracts. We use various derivatives to manage our exposure to fluctuations in interest rates. Interest rate swaps are contracts in which we agree with other parties to exchange, at specified intervals, the difference between fixed rate and/or floating rate interest amounts based upon designated market rates or rate indices and an agreed upon notional principal amount. Generally, no cash is exchanged at the outset of the contract and no principal payments are made by any party. Cash is paid or received based on the terms of the swap. We use interest rate swaps primarily to more closely match the interest rate characteristics of assets and liabilities and to mitigate the risks arising from timing mismatches between assets and liabilities (including duration mismatches). We also use interest rate swaps to hedge against changes in the value of assets we anticipate acquiring and other anticipated transactions and commitments. Interest rate swaps are used to hedge against changes in the value of the guaranteed minimum withdrawal benefit (“GMWB”) liability. The GMWB rider on our variable annuity products provides for guaranteed minimum withdrawal benefits regardless of the actual performance of various equity and/or fixed income funds available with the product. Interest rate options, including interest rate caps and interest rate floors, which can be combined to form interest rate collars, are contracts that entitle the purchaser to pay or receive the amounts, if any, by which a specified market rate exceeds a cap strike interest rate, or falls below a floor strike interest rate, respectively, at specified dates. We use interest rate options to manage prepayment risks in our assets and minimum guaranteed interest rates and lapse risks in our liabilities. A swaption is an option to enter into an interest rate swap at a future date. We purchase swaptions to hedge interest rate exposure for certain assets and liabilities. Swaptions not only hedge against the downside risk, but also allow us to take advantage of any upside benefits. In exchange-traded futures transactions, we agree to purchase or sell a specified number of contracts, the values of which are determined by the values of designated classes of securities, and to post variation margin on a daily basis in an amount equal to the difference in the daily market values of those contracts. We enter into exchange-traded futures with regulated futures commissions merchants who are members of a trading exchange. We have used exchange-traded futures to reduce market risks from changes in interest rates and to alter mismatches between the assets in a portfolio and the liabilities supported by those assets. Foreign Exchange Contracts Foreign currency risk is the risk we will incur economic losses due to adverse fluctuations in foreign currency exchange rates. This risk arises from foreign currency -denominated funding agreements issued to nonqualified institutional investors in the international market, foreign currency-denominated fixed maturity and equity securities, and our international operations, including expected cash flows and potential acquisition and divestiture activity. We use various derivatives to manage our exposure to fluctuations in foreign currency exchange rates. Currency swaps are contracts in which we agree with other parties to exchange, at specified intervals, a series of principal and interest payments in one currency for that of another currency. Generally, the principal amount of each currency is exchanged at the beginning and termination of the currency swap by each party. The interest payments are primarily fixed-to-fixed rate; however, they may also be fixed-to-floating rate or floating-to-fixed rate. These transactions are entered into pursuant to master agreements that provide for a single net payment to be made by one counterparty for payments made in the same currency at each due date. We use currency swaps to reduce market risks from changes in currency exchange rates with respect to investments or liabilities denominated in foreign currencies that we either hold or intend to acquire or sell. Currency forwards are contracts in which we agree with other parties to deliver or receive a specified amount of an identified currency at a specified future date. Typically, the price is agreed upon at the time of the contract and payment for such a contract is made at the specified future date. We use currency forwards to reduce market risks from changes in currency exchange rates with respect to investments or liabilities denominated in foreign currencies that we either hold or intend to acquire or sell. We sometimes use currency forwards to hedge the currency risk associated with a business combination or to hedge certain net equity investments in or expected cash flows from our foreign operations. Currency options are contracts that give the holder the right, but not the obligation to buy or sell a specified amount of the identified currency within a limited period of time at a contracted price. The contracts are net settled in cash, based on the differential in the current foreign exchange rate and the strike price. Purchased and sold options can be combined to form a foreign currency collar where we receive a payment if the foreign exchange rate is below the purchased option strike price and make a payment if the foreign exchange rate is above the sold option strike price. We use currency options to hedge expected cash flows from our foreign operations. Equity Contracts Equity risk is the risk that we will incur economic losses due to adverse fluctuations in common stock prices. We use various derivatives to manage our exposure to equity risk, which arises from products in which the interest we credit is tied to an external equity index as well as products subject to minimum contractual guarantees. We purchase equity call spreads (“option collars”) to hedge the equity participation rates promised to contractholders in conjunction with our fixed deferred annuity and universal life products that credit interest based on changes in an external equity index. We use exchange-traded futures and equity put options to hedge against changes in the value of the GMWB liability related to the GMWB rider on our variable annuity product. The premium associated with certain options is paid quarterly over the life of the option contract. Credit Contracts Credit risk relates to the uncertainty associated with the continued ability of a given obligor to make timely payments of principal and interest. We use credit default swaps to enhance the return on our investment portfolio by providing comparable exposure to fixed income securities that might not be available in the primary market. They are also used to hedge credit exposures in our investment portfolio. Credit derivatives are used to sell or buy credit protection on an identified name or names on an unfunded or synthetic basis in return for receiving or paying a quarterly premium. The premium generally corresponds to a referenced name’s credit spread at the time the agreement is executed. In cases where we sell protection, we also buy a quality cash bond to match against the credit default swap, thereby entering into a synthetic transaction replicating a cash security. When selling protection, if there is an event of default by the referenced name, as defined by the agreement, we are obligated to pay the counterparty the referenced amount of the contract and receive in return the referenced security in a principal amount equal to the notional value of the credit default swap. Other Contracts Embedded Derivatives. We offer group annuity contracts that have guaranteed separate accounts as an investment option. We also offer funds with embedded fixed-rate guarantees as investment options in our defined contribution plans in Hong Kong. We have structured investment relationships with trusts we have determined to be VIEs, which are consolidated in our financial statements. The notes issued by these trusts include obligations to deliver an underlying security to residual interest holders and the obligations contain an embedded derivative of the forecasted transaction to deliver the underlying security. We have fixed deferred annuities and universal life products that credit interest based on changes in an external equity index. We also have certain variable annuity products with a GMWB rider, which allows the customer to make withdrawals of a specified annual amount, either for a fixed number of years or for the lifetime of the customer, even if the account value is fully exhausted. Declines in the equity markets may increase our exposure to benefits under contracts with the GMWB. We economically hedge the exposure in these contracts, as previously explained. Exposure Our risk of loss is typically limited to the fair value of our derivative instruments and not to the notional or contractual amounts of these derivatives. We are also exposed to credit losses in the event of nonperformance of the counterparties. Our current credit exposure is limited to the value of derivatives that have become favorable to us. This credit risk is minimized by purchasing such agreements from financial institutions with high credit ratings and by establishing and monitoring exposure limits. We also utilize various credit enhancements, including collateral and credit triggers to reduce the credit exposure to our derivative instruments. Derivatives may be exchange-traded or they may be privately negotiated contracts, which are usually referred to as over-the-counter (“OTC”) derivatives. Certain of our OTC derivatives are cleared and settled through central clearing counterparties (“OTC cleared”), while others are bilateral contracts between two counterparties (“bilateral OTC”). Our derivative transactions are generally documented under International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreements. Management believes that such agreements provide for legally enforceable set-off and close-out netting of exposures to specific counterparties. Under such agreements, in connection with an early termination of a transaction, we are permitted to set off our receivable from a counterparty against our payables to the same counterparty arising out of all included transactions. For reporting purposes, we do not offset fair value amounts of bilateral OTC derivatives for the right to reclaim cash collateral or the obligation to return cash collateral against fair value amounts recognized for derivative instruments executed with the same counterparties under master netting agreements. OTC cleared derivatives have variation margin that is legally characterized as settlement of the derivative exposure, which reduces their fair value in the consolidated statements of financial position. We posted $170.1 million and $106.6 million in cash and securities under collateral arrangements as of June 30, 2019 and December 31, 2018, respectively, to satisfy collateral and initial margin requirements associated with our derivative credit support agreements and FCM agreements. Certain of our derivative instruments contain provisions that require us to maintain an investment grade rating from each of the major credit rating agencies on our debt. If the ratings on our debt were to fall below investment grade, it would be in violation of these provisions and the counterparties to the derivative instruments could request immediate payment or demand immediate and ongoing full overnight collateralization on derivative instruments in net liability positions. The aggregate fair value, inclusive of accrued interest, of all derivative instruments with credit-risk-related contingent features that were in a liability position without regard to netting under derivative credit support annex agreements as of June 30, 2019 and December 31, 2018, was $143.9 million and $109.7 million, respectively. Cleared derivatives have contingent features that require us to post excess margin as required by the FCM. The terms surrounding excess margin vary by FCM agreement. With respect to derivatives containing collateral triggers, we posted collateral and initial margin of $170.1 million and $106.6 million as of June 30, 2019 and December 31, 2018, respectively, in the normal course of business, which reflects netting under derivative agreements. If the credit-risk-related contingent features underlying these agreements were triggered on June 30, 2019, we would be required to post an additional $32.4 million of collateral to our counterparties. As of June 30, 2019 and December 31, 2018, we had received $115.5 million and $79.5 million, respectively, of cash collateral associated with our derivative credit support annex agreements and FCM agreements, for which we recorded a corresponding liability reflecting our obligation to return the collateral. Notional amounts are used to express the extent of our involvement in derivative transactions and represent a standard measurement of the volume of our derivative activity. Notional amounts represent those amounts used to calculate contractual flows to be exchanged and are not paid or received, except for contracts such as currency swaps. Credit exposure represents the gross amount owed to us under derivative contracts as of the valuation date. The notional amounts and credit exposure of our derivative financial instruments by type were as follows: June 30, 2019 December 31, 2018 (in millions) Notional amounts of derivative instruments Interest rate contracts: Interest rate swaps $ 34,178.3 $ 34,393.7 Interest rate options 1,126.9 1,126.9 Interest rate futures 270.0 260.0 Swaptions 62.0 — Foreign exchange contracts: Currency forwards 915.1 863.6 Currency swaps 903.8 898.6 Currency options 469.2 525.2 Equity contracts: Equity options 1,581.5 1,522.5 Equity futures 316.1 491.7 Credit contracts: Credit default swaps 370.0 420.0 Other contracts: Embedded derivatives 9,476.5 9,452.3 Total notional amounts at end of period $ 49,669.4 $ 49,954.5 Credit exposure of derivative instruments Interest rate contracts: Interest rate swaps $ 174.3 $ 95.4 Interest rate options 29.5 16.3 Swaptions 0.1 — Foreign exchange contracts: Currency swaps 68.5 71.2 Currency forwards 1.3 2.8 Currency options 0.5 1.9 Equity contracts: Equity options 22.2 7.7 Credit contracts: Credit default swaps 1.0 2.4 Total gross credit exposure 297.4 197.7 Less: collateral received 200.0 122.9 Net credit exposure $ 97.4 $ 74.8 The fair value of our derivative instruments classified as assets and liabilities was as follows: Derivative assets (1) Derivative liabilities (2) June 30, 2019 December 31, 2018 June 30, 2019 December 31, 2018 (in millions) Derivatives designated as hedging instruments Interest rate contracts $ — $ — $ 22.0 $ 16.1 Foreign exchange contracts 29.2 37.6 10.2 13.5 Total derivatives designated as hedging instruments $ 29.2 $ 37.6 $ 32.2 $ 29.6 Derivatives not designated as hedging instruments Interest rate contracts $ 198.9 $ 108.0 $ 19.7 $ 22.6 Foreign exchange contracts 40.3 38.4 63.0 72.9 Equity contracts 22.2 7.7 51.9 27.6 Credit contracts 0.9 2.3 1.1 4.4 Other contracts — — 214.0 134.6 Total derivatives not designated as hedging instruments 262.3 156.4 349.7 262.1 Total derivative instruments $ 291.5 $ 194.0 $ 381.9 $ 291.7 (1) The fair value of derivative assets is reported with other investments on the consolidated statements of financial position. (2) The fair value of derivative liabilities is reported with other liabilities on the consolidated statements of financial position, with the exception of certain embedded derivative liabilities. Embedded derivatives with a net liability fair value of $118.7 million and $45.2 million as of June 30, 2019 and December 31, 2018, respectively, are reported with contractholder funds on the consolidated statements of financial position. Credit Derivatives Sold When we sell credit protection, we are exposed to the underlying credit risk similar to purchasing a fixed maturity security instrument. Our credit derivative contracts sold reference a single name or reference security (referred to as “single name credit default swaps”). These instruments are either referenced in an OTC credit derivative transaction or embedded within an investment structure that has been fully consolidated into our financial statements. These credit derivative transactions are subject to events of default defined within the terms of the contract, which normally consist of bankruptcy, failure to pay, or modified restructuring of the reference entity and/or issue. If a default event occurs for a reference name or security, we are obligated to pay the counterparty an amount equal to the notional amount of the credit derivative transaction. As a result, our maximum future payment is equal to the notional amount of the credit derivative. In certain cases, we also may have purchased credit protection with identical underlyings to certain of our sold protection transactions. As of June 30, 2019 and December 31, 2018, we did not purchase credit protection relating to our sold protection transactions. In certain circumstances, our potential loss could also be reduced by any amount recovered in the default proceedings of the underlying credit name. The following tables show our credit default swap protection sold by types of contract, types of referenced/underlying asset class and external agency rating for the underlying reference security. The maximum future payments are undiscounted and have not been reduced by the effect of any offsetting transactions, collateral or recourse features described above. June 30, 2019 Weighted Maximum average Notional Fair future expected life amount value payments (in years) (in millions) Single name credit default swaps Corporate debt AAA $ 10.0 $ — $ 10.0 0.2 A 15.0 0.1 15.0 0.5 BBB 165.0 0.2 165.0 1.5 Government/municipalities AA 20.0 0.1 20.0 0.5 Sovereign A 10.0 — 10.0 0.2 BBB 55.0 0.4 55.0 0.8 Total credit default swap protection sold $ 275.0 $ 0.8 $ 275.0 1.1 December 31, 2018 Weighted Maximum average Notional Fair future expected life amount value payments (in years) (in millions) Single name credit default swaps Corporate debt AAA $ 10.0 $ 0.1 $ 10.0 0.7 A 15.0 0.1 15.0 1.0 BBB 190.0 0.4 190.0 1.7 BB 10.0 — 10.0 0.5 CCC 15.0 (3.6) 15.0 0.9 Government/municipalities AA 20.0 0.2 20.0 1.0 Sovereign A 10.0 0.1 10.0 0.7 BBB 55.0 0.4 55.0 1.3 Total credit default swap protection sold $ 325.0 $ (2.3) $ 325.0 1.4 Fair Value and Cash Flow Hedges Fair Value Hedges We use fixed-to-floating rate interest rate swaps to more closely align the interest rate characteristics of certain assets and have used them to align the interest rate characteristics of certain liabilities. In general, these swaps are used in asset and liability management to modify duration, which is a measure of sensitivity to interest rate changes. The net interest effect of interest rate swap transactions for derivatives in fair value hedges is recorded as an adjustment to income or expense of the underlying hedged item in our consolidated statements of operations. The following amounts were recorded on the consolidated statements of financial position related to cumulative basis adjustments for fair value hedges. The amortized cost includes the amortized cost basis and the fair value hedging basis adjustment. Cumulative amount of fair value hedging basis adjustment Line item in the consolidated statements included in the amortized cost of financial position in which the Amortized cost of hedged item of the hedged item hedged item is included June 30, 2019 December 31, 2018 June 30, 2019 December 31, 2018 (in millions) Fixed maturities, available-for-sale: Active hedging relationships $ 143.3 $ 137.0 $ 19.0 $ 12.4 Discontinued hedging relationships 248.7 298.9 9.6 13.3 Total fixed maturities, available-for-sale in active or discontinued hedging relationships $ 392.0 $ 435.9 $ 28.6 $ 25.7 Cash Flow Hedges We utilized floating-to-fixed rate interest rate swaps to eliminate the variability in cash flows of recognized financial assets and liabilities and forecasted transactions. We enter into currency exchange swap agreements to convert both principal and interest payments of certain foreign denominated assets and liabilities into U.S. dollar denominated fixed-rate instruments to eliminate the exposure to future currency volatility on those items. The net interest effect of interest rate swap and currency swap transactions for derivatives in cash flow hedges is recorded as an adjustment to income or expense of the underlying hedged item in our consolidated statements of operations. The maximum length of time we are hedging our exposure to the variability in future cash flows for forecasted transactions, excluding those related to the payments of variable interest on existing financial assets and liabilities, is 1.0 years. As of June 30, 2019, we had $0.0 million of net gains reported in AOCI on the consolidated statements of financial position related to active hedges of forecasted transactions. If a hedged forecasted transaction is no longer probable of occurring, cash flow hedge accounting is discontinued. If it is probable that the hedged forecasted transaction will not occur, the deferred gain or loss is immediately reclassified from AOCI into net income. The following table shows the effect of derivatives in cash flow hedging relationships on the consolidated statements of financial position. Amount of gain (loss) recognized in AOCI on derivatives For the three months ended For the six months ended Derivatives in cash June 30, June 30, flow hedging relationships Related hedged item 2019 2018 2019 2018 (in millions) (in millions) Interest rate contracts Fixed maturities, available-for-sale $ 0.9 $ 34.8 $ (3.3) $ 30.2 Foreign exchange contracts Fixed maturities, available-for-sale 3.4 27.2 (5.2) 8.4 Foreign exchange contracts Investment contracts — — — (0.1) Total $ 4.3 $ 62.0 $ (8.5) $ 38.5 We expect to reclassify net gains of $23.5 million from AOCI into net income in the next 12 months, which includes both net deferred gains on discontinued hedges and net losses on periodic settlements of active hedges. Actual amounts may vary from this amount as a result of market conditions. Effect of Fair Value and Cash Flow Hedges on Consolidated Statements of Operations The following tables show the effect of derivatives in fair value and cash flow hedging relationships and the related hedged items on the consolidated statements of operations. For the three months ended June 30, 2019 Benefits, Net investment Net realized claims and income related capital gains settlement to hedges (losses) related to expenses of fixed hedges of fixed related to Operating maturities, maturities, hedges of expenses available- available- investment related to for-sale for-sale contracts hedges of debt (in millions) Total amounts of consolidated statement of operations line items in which the effects of fair value and cash flow hedges are reported $ 1,037.1 $ (4.0) $ 2,446.1 $ 1,046.3 Losses on fair value hedging relationships: Interest rate contracts: Gain recognized on hedged item $ 4.2 $ — $ — $ — Loss recognized on derivatives (4.3) — — — Amortization of hedged item basis adjustments (1.2) — — — Amounts related to periodic settlements on derivatives (0.7) — — — Total loss recognized for fair value hedging relationships $ (2.0) $ — $ — $ — Gains (losses) on cash flow hedging relationships: Interest rate contracts: Gain (loss) reclassified from AOCI on derivatives $ 4.9 $ — $ — $ (2.0) Gain reclassified from AOCI into net income as a result that a forecasted transaction is no longer probable of occurring — 0.1 — — Foreign exchange contracts: Gain reclassified from AOCI on derivatives — 9.5 — — Amounts related to periodic settlements on derivatives 1.7 — — — Total gain (loss) recognized for cash flow hedging relationships $ 6.6 $ 9.6 $ — $ (2.0) For the three months ended June 30, 2018 Benefits, Net investment Net realized claims and income related capital gains settlement to hedges related to expenses of fixed hedges of fixed related to Operating maturities, maturities, hedges of expenses available- available- investment related to for-sale for-sale contracts hedges of debt (in millions) Total amounts of consolidated statement of operations line items in which the effects of fair value and cash flow hedges are reported $ 889.1 $ 67.4 $ 1,699.2 $ 990.1 Losses on fair value hedging relationships: Interest rate contracts: Loss recognized on hedged item $ — $ (2.3) $ — $ — Gain recognized on derivatives — 2.2 — — Amortization of hedged item basis adjustments (1.7) — — — Amounts related to periodic settlements on derivatives (1.7) — — — Total loss recognized for fair value hedging relationships $ (3.4) $ (0.1) $ — $ — Gains (losses) on cash flow hedging relationships: Interest rate contracts: Gain (loss) reclassified from AOCI on derivatives $ 5.3 $ — $ — $ (2.6) Gain reclassified from AOCI as a result that a forecasted transaction is no longer probable of occurring — 0.1 — — Foreign exchange contracts: Gain reclassified from AOCI on derivatives — 0.6 — — Amounts related to periodic settlements on derivatives 1.5 — — — Total gain (loss) recognized for cash flow hedging relationships $ 6.8 $ 0.7 $ — $ (2.6) For the six months ended June 30, 2019 Benefits, Net investment Net realized claims and income related capital gains settlement to hedges related to expenses of fixed hedges of fixed related to Operating maturities, maturities, hedges of expenses available- available- investment related to for-sale for-sale contracts hedges of debt (in millions) Total amounts of consolidated statement of operations line items in which the effects of fair value and cash flow hedges are reported $ 1,998.1 $ 80.5 $ 4,641.2 $ 2,039.0 Losses on fair value hedging relationships: Interest rate contracts: Gain recognized on hedged item $ 6.6 $ — $ — $ — Loss recognized on derivatives (6.8) — — — Amortization of hedged item basis adjustments (2.5) — — — Amounts related to periodic settlements on derivatives (1.5) — — — Total loss recognized for fair value hedging relationships $ (4.2) $ — $ — $ — Gains (losses) on cash flow hedging relationships: Interest rate contracts: Gain (loss) reclassified from AOCI on derivatives $ 10.0 $ — $ — $ (4.8) Gain reclassified from AOCI into net income as a result that a forecasted transaction is no longer probable of occurring — 0.1 — — Foreign exchange contracts: Gain reclassified from AOCI on derivatives — 9.5 — — Amounts related to periodic settlements on derivatives 3.3 — — — Total gain (loss) recognized for cash flow hedging relationships $ 13.3 $ 9.6 $ — $ (4.8) For the six months ended June 30, 2018 Benefits, Net investment Net realized claims and income related capital gains settlement to hedges related to expenses of fixed hedges of fixed related to Operating maturities, maturities, hedges of expenses available- available- investment related to for-sale for-sale contracts hedges of debt (in millions) Total amounts of consolidated statement of operations line items in which the effects of fair value and cash flow hedges are reported $ 1,791.3 $ 42.3 $ 3,110.3 $ 1,975.1 Losses on fair value hedging relationships: Interest rate contracts: Loss recognized on hedged item $ — $ (7.8) $ — $ — Gain recognized on derivatives — 7.6 — — Amortization of hedged item basis adjustments (3.5) — — — Amounts related to periodic settlements on derivatives (3.7) — — — Total loss recognized for fair value hedging relationships $ (7.2) $ (0.2) $ — $ — Gains (losses) on cash flow hedging relationships: Interest rate contracts: Gain (loss) reclassified from AOCI on derivatives $ 10.7 $ — $ — $ (5.2) Gain reclassified from AOCI as a result that a forecasted transaction is no longer probable of occurring — 0.2 — — Foreign exchange contracts: Gain reclassified from AOCI on derivatives — 0.2 — — Amounts related to periodic settlements on derivatives 3.1 — (0.1) — Total gain (loss) recognized for cash flow hedging relationships $ 13.8 $ 0.4 $ (0.1) $ (5.2) Derivatives Not Designated as Hedging Instruments Our use of futures, certain swaptions and swaps, option collars, options and forwards are effective from an economic standpoint, but they have not been designated as hedges for financial reporting purposes. As such, periodic changes in the market value of these instruments, which includes mark-to-market gains and losses as well as periodic and final settlements, primarily flow directly into net realized capital gains (losses) on the consolidated statements of operations. The following table shows the effect of derivatives not designated as hedging instruments, including fair value changes of embedded derivatives that have been bifurcated from the host contract, on the consolidated statements of operations. Amount of gain (loss) recognized in Amount of gain (loss) recognized in net income on derivatives for the net income on derivatives for the t |
Insurance Liabilities
Insurance Liabilities | 6 Months Ended |
Jun. 30, 2019 | |
Insurance Liabilities | |
Insurance Liabilities | 5. Insurance Liabilities Liability for Unpaid Claims The liability for unpaid claims is reported in future policy benefits and claims within our consolidated statements of financial position. Activity associated with unpaid claims was as follows: For the six months ended June 30, 2019 2018 (in millions) Balance at beginning of period $ 2,252.7 $ 2,130.5 Less: reinsurance recoverable 404.3 375.8 Net balance at beginning of period 1,848.4 1,754.7 Incurred: Current year 653.6 617.3 Prior years 29.0 17.9 Total incurred 682.6 635.2 Payments: Current year 387.8 358.3 Prior years 238.1 231.8 Total payments 625.9 590.1 Net balance at end of period 1,905.1 1,799.8 Plus: reinsurance recoverable 403.7 388.2 Balance at end of period $ 2,308.8 $ 2,188.0 Amounts not included in the rollforward above: Claim adjustment expense liabilities $ 55.1 $ 51.9 Incurred liability adjustments relating to prior years, which affected current operations during 2019 and 2018, resulted in part from developed claims for prior years being different than were anticipated when the liabilities for unpaid claims were originally estimated. These trends have been considered in establishing the current year liability for unpaid claims. |
Long-Term Debt
Long-Term Debt | 6 Months Ended |
Jun. 30, 2019 | |
Long-Term Debt | |
Long-Term Debt | 6. Long-Term Debt June 30, 2019 Net unamortized discount, premium and debt issuance Carrying Principal costs amount (in millions) 3.3% notes payable, due 2022 $ 300.0 $ (1.3) $ 298.7 3.125% notes payable, due 2023 300.0 (1.1) 298.9 3.4% notes payable, due 2025 400.0 (2.8) 397.2 3.1% notes payable, due 2026 350.0 (2.6) 347.4 3.7% notes payable, due in 2029 500.0 (6.4) 493.6 6.05% notes payable, due 2036 505.6 (2.5) 503.1 4.625% notes payable, due 2042 300.0 (3.2) 296.8 4.35% notes payable, due 2043 300.0 (3.3) 296.7 4.3% notes payable, due 2046 300.0 (3.3) 296.7 4.7% notes payable, due 2055 400.0 (4.9) 395.1 Non-recourse mortgages and notes payable 137.0 1.2 138.2 Total long-term debt $ 3,792.6 $ (30.2) $ 3,762.4 December 31, 2018 Net unamortized discount, premium and debt issuance Carrying Principal costs amount (in millions) 3.3% notes payable, due 2022 $ 300.0 $ (1.5) $ 298.5 3.125% notes payable, due 2023 300.0 (1.2) 298.8 3.4% notes payable, due 2025 400.0 (3.0) 397.0 3.1% notes payable, due 2026 350.0 (2.7) 347.3 6.05% notes payable, due 2036 505.6 (2.6) 503.0 4.625% notes payable, due 2042 300.0 (3.3) 296.7 4.35% notes payable, due 2043 300.0 (3.3) 296.7 4.3% notes payable, due 2046 300.0 (3.3) 296.7 4.7% notes payable, due 2055 400.0 (4.9) 395.1 Non-recourse mortgages and notes payable 128.5 1.3 129.8 Total long-term debt $ 3,284.1 $ (24.5) $ 3,259.6 Net discount, premium and issuance costs associated with issuing these notes are amortized to expense over the respective terms using the interest method. On May 7, 2019, we issued $500.0 million of senior notes. The notes bear interest at 3.7% and will mature in 2029. Interest on the notes is payable semi-annually on May 15 and November 15 each year, beginning on November 15, 2019. The proceeds from these notes, along with available cash, will be used to fund the acquisition of the Institutional Retirement & Trust business of Wells Fargo Bank, N.A. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2019 | |
Income Taxes | |
Income Taxes | 7. Income Taxes Effective Income Tax Rate Our provision for income taxes may not have the customary relationship of taxes to income. A reconciliation between the U.S. corporate income tax rate and the effective income tax rate was as follows: For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 U.S. corporate income tax rate 21 % 21 % 21 % 21 % Dividends received deduction (4) (3) (5) (3) Tax credits (3) (3) (2) (3) Impact of equity method presentation (1) (1) (1) (1) Impact of the Tax Cuts and Jobs Act — (4) — (3) State income taxes — 1 1 1 Other — — — (1) Effective income tax rate 13 % 11 % 14 % 11 % Unrecognized Tax Benefits Our changes in unrecognized tax benefits were as follows: For the six months ended For the year ended June 30, 2019 December 31, 2018 (in millions) Balance at beginning of period $ 42.1 $ 194.1 Additions based on tax positions related to the current year 23.2 0.8 Additions for tax positions of prior years — 43.7 Reductions for tax positions related to the current year (2.2) (10.6) Reductions for tax positions of prior years (0.5) (23.2) Settlements — (162.7) Balance at end of period $ 62.6 $ 42.1 Deferred tax liabilities are recognized for taxes payable on the unremitted earnings from foreign operations of our subsidiaries, except where it is our intention to indefinitely reinvest a portion or all of these undistributed earnings. During the second quarter of 2019, foreign undistributed earnings of $250.0 million previously indefinitely reinvested were repatriated from the United Kingdom. No applicable taxes were recorded with the distribution nor any further changes to our repatriation and reinvestment plans. |
Employee and Agent Benefits
Employee and Agent Benefits | 6 Months Ended |
Jun. 30, 2019 | |
Employee and Agent Benefits | |
Employee and Agent Benefits | 8. Employee and Agent Benefits Components of Net Periodic Benefit Cost Other postretirement Pension benefits benefits For the three months ended For the three months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Service cost $ 16.7 $ 18.2 $ — $ — Interest cost 32.1 29.9 1.0 0.8 Expected return on plan assets (36.4) (39.3) (8.3) (8.4) Amortization (2.0) (0.8) (0.3) (3.4) Recognized net actuarial (gain) loss 17.2 16.9 — (0.4) Net periodic benefit cost (income) $ 27.6 $ 24.9 $ (7.6) $ (11.4) Other postretirement Pension benefits benefits For the six months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Service cost $ 33.5 $ 36.5 $ — $ — Interest cost 64.9 59.8 1.9 1.7 Expected return on plan assets (71.9) (78.5) (16.6) (16.8) Amortization (2.9) (1.7) (0.6) (6.9) Recognized net actuarial (gain) loss 34.1 33.8 — (0.7) Net periodic benefit cost (income) $ 57.7 $ 49.9 $ (15.3) $ (22.7) The components of net periodic benefit cost including the service cost component are included in operating expenses on the consolidated statements of operations. During the second quarter of 2019, we amended The Principal Pension Plan and The Principal Financial Group Nonqualified Defined Benefit Plan for Employees to end traditional benefit accruals as of December 31, 2022, and begin cash balance accruals January, 1, 2023. We remeasured the associated plan assets and pension benefit obligations as of May 31, 2019, resulting in a net actuarial loss of $59.0 million and a total plan amendment gain of $122.4 million. The net actuarial loss is composed of an increase in benefit obligation of $237.6 million resulting from the reduction in discount rate compared to December 31, 2018, partially offset by a $178.6 million asset gain. The net plan amendment gain was recorded in AOCI and will be amortized over the average future working lifetimes of the plans. Contributions Our funding policy for our qualified pension plan is to fund the plan annually in an amount at least equal to the minimum annual contribution required under the Employee Retirement Income Security Act (“ERISA”) and, generally, not greater than the maximum amount that can be deducted for federal income tax purposes. It is too early to determine, but we do not anticipate that we will be required to fund a minimum required contribution under ERISA. Regardless, it is possible that we may fund the qualified and nonqualified pension plans in 2019 for a combined total of up to $25.0 million. During the three and six months ended June 30, 2019, we contributed $5.7 million and $11.4 million to these plans, respectively. |
Contingencies, Guarantees, Inde
Contingencies, Guarantees, Indemnifications and Leases | 6 Months Ended |
Jun. 30, 2019 | |
Contingencies, Guarantees, Indemnifications and Leases | |
Contingencies, Guarantees, Indemnifications and Leases | 9. Contingencies, Guarantees, Indemnifications and Leases Litigation and Regulatory Contingencies We are regularly involved in litigation, both as a defendant and as a plaintiff, but primarily as a defendant. Litigation naming us as a defendant ordinarily arises out of our business operations as a provider of asset management and accumulation products and services, individual life insurance, specialty benefits insurance and our investment activities. Some of the lawsuits may be class actions, or purport to be, and some may include claims for unspecified or substantial punitive and treble damages. We may discuss such litigation in one of three ways. We accrue a charge to income and disclose legal matters for which the chance of loss is probable and for which the amount of loss can be reasonably estimated. We may disclose contingencies for which the chance of loss is reasonably possible and provide an estimate of the possible loss or range of loss or a statement that such an estimate cannot be made. Finally, we may voluntarily disclose loss contingencies for which the chance of loss is remote in order to provide information concerning matters that potentially expose us to possible losses. In addition, regulatory bodies such as state insurance departments, the SEC, the Financial Industry Regulatory Authority (“FINRA”), the Department of Labor (“DOL”) and other regulatory agencies in the U.S. and in international locations in which we do business, regularly make inquiries and conduct examinations or investigations concerning our compliance with, among other things, insurance laws, securities laws, ERISA and laws governing the activities of broker-dealers. We receive requests from regulators and other governmental authorities relating to industry issues and may receive additional requests, including subpoenas and interrogatories, in the future. As of June 30, 2019, we had no litigation or regulatory contingencies for which we believe disclosure is appropriate. Guarantees and Indemnifications In the normal course of business, we have provided guarantees to third parties primarily related to former subsidiaries and joint ventures. The terms of these agreements range in duration and often are not explicitly defined. The maximum exposure under these agreements as of June 30, 2019, was approximately $118.0 million. At inception, the fair value of such guarantees was insignificant. In addition, we believe the likelihood is remote that material payments will be required. Therefore, any liability accrued within our consolidated statements of financial position is insignificant. Should we be required to perform under these guarantees, we generally could recover a portion of the loss from third parties through recourse provisions included in agreements with such parties, the sale of assets held as collateral that can be liquidated in the event performance is required under the guarantees or other recourse generally available to us; therefore, such guarantees would not result in a material adverse effect on our business or financial position. While the likelihood is remote, such outcomes could materially affect net income in a particular quarter or annual period. Furthermore, in connection with contingent funding agreements, we are required to purchase any principal and interest strips of U.S. Treasury securities that are due and not paid from the associated unconsolidated trusts. The maximum exposure under these agreements as of June 30, 2019, was $750.0 million. We manage mandatory privatized social security funds in Chile. By regulation, we have a required minimum guarantee on the funds’ relative return. Because the guarantee has no limitation with respect to duration or amount, the maximum exposure of the guarantee in the future is indeterminable. We are also subject to various other indemnification obligations issued in conjunction with divestitures, acquisitions and financing transactions whose terms range in duration and often are not explicitly defined. Certain portions of these indemnifications may be capped, while other portions are not subject to such limitations; therefore, the overall maximum amount of the obligation under the indemnifications cannot be reasonably estimated. At inception, the fair value of such indemnifications was insignificant. In addition, we believe the likelihood is remote that material payments will be required. Therefore, any liability accrued within our consolidated statements of financial position is insignificant. While we are unable to estimate with certainty the ultimate legal and financial liability with respect to these indemnifications, we believe that performance under these indemnifications would not result in a material adverse effect on our business or financial position. While the likelihood is remote, performance under these indemnifications could materially affect net income in a particular quarter or annual period. Leases As a lessee, we lease office space, data processing equipment, office furniture and office equipment under various operating leases. We also lease buildings and hardware storage equipment under finance leases. Lease assets and liabilities are recognized at the commencement of a lease based on the present value of lease payments over the lease term. We generally use our incremental borrowing rate based on the information available at the lease commencement date to determine the present value of lease payments. Lease term may include options to extend or terminate the lease when it is reasonably certain we will exercise the option. Leases with an initial term of twelve months or less are not recorded on the consolidated statements of financial position. We recognize lease expense for leases on a straight-line basis over the lease term. Some of our lease agreements include payments for property taxes, insurance, utilities or common area maintenance, which are not based on an index or rate. These payments are recognized in net income in the period in which the obligation has occurred. We sublease certain office space to third parties, which are primarily operating leases. We record sublease income on a straight-line basis over the lease term. The lease assets and liabilities were as follows: June 30, 2019 (in millions) Assets Operating lease assets (1) $ 195.2 Finance lease assets (1) 32.8 Total lease assets $ 228.0 Liabilities Operating lease liabilities (2) $ 204.4 Finance lease liabilities (2) 33.0 Total lease liabilities $ 237.4 (1) Operating and finance lease assets are primarily reported within property and equipment on the consolidated statements of financial position. (2) Operating and finance lease liabilities are reported within other liabilities on the consolidated statements of financial position. The lease cost was as follows: For the three months ended For the six months ended June 30, 2019 June 30, 2019 (in millions) Finance lease cost (1): Amortization of right-of-use assets $ 3.5 $ 7.0 Interest on lease liabilities 0.2 0.5 Operating lease cost (1) 14.4 27.8 Other lease cost (1) (2) 1.8 4.6 Sublease income (3) (0.4) (0.8) Total lease cost $ 19.5 $ 39.1 (1) Finance, operating and other lease costs are primarily included in operating expenses on the consolidated statements of operations. (2) Other lease cost primarily reflects variable and short-term lease costs. (3) Sublease income is included in fees and other revenues on the consolidated statements of operations. The following represents payments due by period for lease obligations: Operating leases Finance leases Total (in millions) For the twelve months ending June 30: 2020 $ 52.5 $ 14.4 $ 66.9 2021 45.4 11.5 56.9 2022 35.3 6.7 42.0 2023 28.0 1.3 29.3 2024 17.7 0.2 17.9 2025 and thereafter 50.8 0.2 51.0 Total lease payments 229.7 34.3 264.0 Less: interest 25.3 1.3 26.6 Present value of lease liabilities $ 204.4 $ 33.0 $ 237.4 The weighted-average remaining lease term and weighted-average discount rates were as follows: For the six months ended June 30, 2019 Weighted-average remaining lease term (in years): Operating leases 6.9 Finance leases 2.7 Weighted-average discount rate: Operating leases 4.0 % Finance leases 2.9 % |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2019 | |
Stockholders' Equity | |
Stockholders' Equity | 10. Stockholders’ Equity Common Stock Dividends For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 Dividends declared per common share $ 0.54 $ 0.52 $ 1.08 $ 1.03 Reconciliation of Outstanding Common Shares For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Beginning balance 278.2 287.7 279.5 289.0 Shares issued 0.4 0.3 2.2 2.2 Treasury stock acquired — (3.4) (3.1) (6.6) Ending balance 278.6 284.6 278.6 284.6 In February 2016, our Board of Directors authorized a share repurchase program of up to $400.0 million of our outstanding common stock, which was completed in February 2018. In May 2017, our Board of Directors authorized a share repurchase program of up to $250.0 million of our outstanding common stock, which was completed in April 2018. In May 2018, our Board of Directors authorized a share repurchase program of up to $300.0 million of our outstanding common stock, which was completed in December 2018. In November 2018, our Board of Directors authorized a share repurchase program of up to $500.0 million of our outstanding common stock. In the first quarter of 2019, we suspended purchases of the remaining $295.3 million available under the November 2018 authorization. Shares repurchased under these programs are accounted for as treasury stock, carried at cost and reflected as a reduction to stockholders’ equity. Other Comprehensive Income (Loss) For the three months ended For the six months ended June 30, 2019 June 30, 2019 Pre-Tax Tax After-Tax Pre-Tax Tax After-Tax (in millions) Net unrealized gains on available-for-sale securities during the period $ 1,804.0 $ (394.9) $ 1,409.1 $ 3,621.0 $ (787.4) $ 2,833.6 Reclassification adjustment for losses included in net income (1) 27.9 (5.5) 22.4 36.6 (7.2) 29.4 Adjustments for assumed changes in amortization patterns (117.6) 24.7 (92.9) (239.7) 50.4 (189.3) Adjustments for assumed changes in policyholder liabilities (462.3) 108.6 (353.7) (762.6) 178.1 (584.5) Net unrealized gains on available-for-sale securities 1,252.0 (267.1) 984.9 2,655.3 (566.1) 2,089.2 Noncredit component of impairment losses on fixed maturities, available-for-sale during the period 0.3 — 0.3 (2.5) 0.6 (1.9) Adjustments for assumed changes in amortization patterns (0.8) 0.1 (0.7) (1.2) 0.2 (1.0) Adjustments for assumed changes in policyholder liabilities 0.1 — 0.1 0.1 — 0.1 Noncredit component of impairment losses on fixed maturities, available-for-sale (2) (0.4) 0.1 (0.3) (3.6) 0.8 (2.8) Net unrealized gains on derivative instruments during the period 12.8 (2.7) 10.1 4.3 (0.9) 3.4 Reclassification adjustment for gains included in net income (3) (12.5) 2.5 (10.0) (14.8) 2.8 (12.0) Adjustments for assumed changes in amortization patterns 0.6 (0.1) 0.5 2.5 (0.5) 2.0 Adjustments for assumed changes in policyholder liabilities 1.2 (0.2) 1.0 4.8 (1.1) 3.7 Net unrealized gains (losses) on derivative instruments 2.1 (0.5) 1.6 (3.2) 0.3 (2.9) Foreign currency translation adjustment during the period 4.6 (2.2) 2.4 45.5 (4.8) 40.7 Reclassification adjustment for losses included in net income (4) 26.5 — 26.5 26.1 — 26.1 Foreign currency translation adjustment 31.1 (2.2) 28.9 71.6 (4.8) 66.8 Unrecognized postretirement benefit obligation during the period 63.4 (17.1) 46.3 63.4 (17.1) 46.3 Amortization of amounts included in net periodic benefit cost (5) 14.9 (4.0) 10.9 30.6 (8.2) 22.4 Net unrecognized postretirement benefit obligation 78.3 (21.1) 57.2 94.0 (25.3) 68.7 Other comprehensive income $ 1,363.1 $ (290.8) $ 1,072.3 $ 2,814.1 $ (595.1) $ 2,219.0 For the three months ended For the six months ended June 30, 2018 June 30, 2018 Pre-Tax Tax After-Tax Pre-Tax Tax After-Tax (in millions) Net unrealized losses on available-for-sale securities during the period $ (777.8) $ 158.1 $ (619.7) $ (2,081.5) $ 438.5 $ (1,643.0) Reclassification adjustment for losses included in net income (1) 26.5 (5.6) 20.9 47.2 (10.0) 37.2 Adjustments for assumed changes in amortization patterns 54.2 (11.4) 42.8 140.4 (29.5) 110.9 Adjustments for assumed changes in policyholder liabilities 102.2 (12.3) 89.9 280.7 (57.4) 223.3 Net unrealized losses on available-for-sale securities (594.9) 128.8 (466.1) (1,613.2) 341.6 (1,271.6) Noncredit component of impairment losses on fixed maturities, available-for-sale during the period 0.8 (0.2) 0.6 12.0 (2.6) 9.4 Adjustments for assumed changes in amortization patterns — 0.1 0.1 1.3 (0.2) 1.1 Adjustments for assumed changes in policyholder liabilities 0.1 — 0.1 (0.5) 0.1 (0.4) Noncredit component of impairment losses on fixed maturities, available-for-sale (2) 0.9 (0.1) 0.8 12.8 (2.7) 10.1 Net unrealized gains on derivative instruments during the period 27.7 (5.8) 21.9 8.5 (1.8) 6.7 Reclassification adjustment for gains included in net income (3) (3.3) 0.5 (2.8) (5.7) 0.9 (4.8) Adjustments for assumed changes in amortization patterns — — — 0.9 (0.2) 0.7 Adjustments for assumed changes in policyholder liabilities 1.4 (0.2) 1.2 4.2 (0.9) 3.3 Net unrealized gains on derivative instruments 25.8 (5.5) 20.3 7.9 (2.0) 5.9 Foreign currency translation adjustment (247.0) 10.9 (236.1) (180.1) 9.8 (170.3) Amortization of amounts included in net periodic benefit cost (5) 12.3 (3.5) 8.8 24.5 (7.0) 17.5 Net unrecognized postretirement benefit obligation 12.3 (3.5) 8.8 24.5 (7.0) 17.5 Other comprehensive loss $ (802.9) $ 130.6 $ (672.3) $ (1,748.1) $ 339.7 $ (1,408.4) (1) Pre-tax reclassification adjustments relating to available-for-sale securities are reported in net realized capital gains (losses) on the consolidated statements of operations. (2) Represents the net impact of (1) unrealized gains resulting from reclassification of previously recognized noncredit impairment losses from OCI to net realized capital gains (losses) for fixed maturities with bifurcated OTTI that had additional credit losses or fixed maturities that previously had bifurcated OTTI that have now been sold or are intended to be sold and (2) unrealized losses resulting from reclassification of noncredit impairment losses for fixed maturities with bifurcated OTTI from net realized capital gains (losses) to OCI. (3) See Note 4, Derivative Financial Instruments – Effect of Fair Value and Cash Flow Hedges on Consolidated Statements of Operations, for further details. (4) Pre-tax reclassification adjustments primarily relate to deconsolidated sponsored investment funds and are reported in net realized capital gains (losses) on the consolidated statements of operations. For both the three and six months ended June 30, 2019, $5.7 million of this reclassification relates to noncontrolling interest and is reported in net income attributable to noncontrolling interest on the consolidated statements of operations. (5) Amount is comprised of amortization of prior service cost (benefit) and recognized net actuarial (gain) loss, which is reported in operating expenses on the consolidated statements of operations. See Note 8, Employee and Agent Benefits – Components of Net Periodic Benefit Cost, for further details. Accumulated Other Comprehensive Income (Loss) Noncredit Net unrealized component of Net unrealized Foreign Unrecognized Accumulated gains on impairment losses gains currency postretirement other available-for-sale on fixed maturities on derivative translation benefit comprehensive securities available-for-sale instruments adjustment obligation income (loss) (in millions) Balances as of April 1, 2018 $ 914.0 $ (64.2) $ 34.0 $ (909.8) $ (443.3) $ (469.3) Other comprehensive loss during the period, net of adjustments (487.0) — 23.1 (232.4) — (696.3) Amounts reclassified from AOCI 20.9 0.8 (2.8) — 8.8 27.7 Other comprehensive loss (466.1) 0.8 20.3 (232.4) 8.8 (668.6) Balances as of June 30, 2018 $ 447.9 $ (63.4) $ 54.3 $ (1,142.2) $ (434.5) $ (1,137.9) Balances as of April 1, 2019 $ 1,294.3 $ (49.6) $ 59.9 $ (1,222.1) $ (501.4) $ (418.9) Other comprehensive income during the period, net of adjustments 962.4 (0.3) 11.6 2.5 46.3 1,022.5 Amounts reclassified from AOCI 22.4 — (10.0) 20.8 10.9 44.1 Other comprehensive income 984.8 (0.3) 1.6 23.3 57.2 1,066.6 Balances as of June 30, 2019 $ 2,279.1 $ (49.9) $ 61.5 $ (1,198.8) $ (444.2) $ 647.7 Noncredit Net unrealized component of Net unrealized Foreign Unrecognized Accumulated gains on impairment losses gains currency postretirement other available-for-sale on fixed maturities on derivative translation benefit comprehensive securities available-for-sale instruments adjustment obligation income (loss) (in millions) Balances as of January 1, 2018 $ 1,470.7 $ (58.3) $ 42.7 $ (918.5) $ (371.1) $ 165.5 Other comprehensive loss during the period, net of adjustments (1,308.8) — 10.7 (167.5) — (1,465.6) Amounts reclassified from AOCI 37.2 10.1 (4.8) — 17.5 60.0 Other comprehensive loss (1,271.6) 10.1 5.9 (167.5) 17.5 (1,405.6) Effects of implementation of accounting change related to equity investments, net (1.0) — — — — (1.0) Effects of implementation of accounting change accounting change related to revenue recognition, net — — — 25.6 — 25.6 Effects of implementation of accounting change related to the reclassification of certain tax effects, net 249.8 (15.2) 5.7 (81.8) (80.9) 77.6 Balances as of June 30, 2018 $ 447.9 $ (63.4) $ 54.3 $ (1,142.2) $ (434.5) $ (1,137.9) Balances as of January 1, 2019 $ 190.0 $ (47.1) $ 64.4 $ (1,259.5) $ (512.9) $ (1,565.1) Other comprehensive income during the period, net of adjustments 2,059.7 (2.8) 9.1 40.3 46.3 2,152.6 Amounts reclassified from AOCI 29.4 — (12.0) 20.4 22.4 60.2 Other comprehensive income 2,089.1 (2.8) (2.9) 60.7 68.7 2,212.8 Balances as of June 30, 2019 $ 2,279.1 $ (49.9) $ 61.5 $ (1,198.8) $ (444.2) $ 647.7 Noncontrolling Interest Interests held by unaffiliated parties in consolidated entities are reflected in noncontrolling interest, which represents the noncontrolling partners’ share of the underlying net assets of our consolidated subsidiaries. Noncontrolling interest that is not redeemable is reported in the equity section of the consolidated statements of financial position. The noncontrolling interest holders in certain of our consolidated entities maintain an equity interest that is redeemable at the option of the holder, which may be exercised on varying dates. Since redemption of the noncontrolling interest is outside of our control, this interest is excluded from stockholders’ equity and reported separately as redeemable noncontrolling interest on the consolidated statements of financial position. Our redeemable noncontrolling interest primarily relates to consolidated sponsored investment funds for which interests are redeemed at fair value from the net assets of the funds. For our redeemable noncontrolling interest related to other consolidated subsidiaries, redemptions are required to be purchased at fair value or a value based on a formula that management intended to reasonably approximate fair value based on a fixed multiple of earnings over a measurement period. The carrying value of the redeemable noncontrolling interest is compared to the redemption value at each reporting period. Any adjustments to the carrying amount of the redeemable noncontrolling interest for changes in redemption value prior to exercise of the redemption option are determined after the attribution of net income or loss of the subsidiary and are recognized in the redemption value as they occur. Adjustments to the carrying value of redeemable noncontrolling interest result in adjustments to additional paid-in capital and/or retained earnings. Adjustments are recorded in retained earnings to the extent the redemption value of the redeemable noncontrolling interest exceeds its fair value and will impact the numerator in our earnings per share calculations. All other adjustments to the redeemable noncontrolling interest are recorded in additional paid-in capital. Following is a reconciliation of the changes in the redeemable noncontrolling interest (in millions): For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Balance at beginning of period $ 537.7 $ 127.8 $ 391.2 $ 101.3 Net income attributable to redeemable noncontrolling interest 4.0 1.3 24.3 2.1 Redeemable noncontrolling interest of deconsolidated entities (1) (370.0) — (370.0) (3.2) Contributions from redeemable noncontrolling interest 154.0 17.4 297.7 56.4 Distributions to redeemable noncontrolling interest (25.8) (5.8) (46.1) (15.7) Change in redemption value of redeemable noncontrolling interest (1.0) — 1.7 (0.6) Stock-based compensation attributable to redeemable noncontrolling interest 0.1 — 0.1 — Other comprehensive income (loss) attributable to redeemable noncontrolling interest 5.5 (1.8) 5.6 (1.4) Balance at end of period $ 304.5 $ 138.9 $ 304.5 $ 138.9 (1) We deconsolidated certain sponsored investment funds as they no longer met the requirements for consolidation. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Measurements | |
Fair Value Measurements | 11. Fair Value Measurements We use fair value measurements to record fair value of certain assets and liabilities and to estimate fair value of financial instruments not recorded at fair value but required to be disclosed at fair value. Certain financial instruments, particularly policyholder liabilities other than investment contracts, are excluded from these fair value disclosure requirements. Valuation Hierarchy Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels. The level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety considering factors specific to the asset or liability. ● Level 1 ● Level 2 ● Level 3 Determination of Fair Value The following discussion describes the valuation methodologies and inputs used for assets and liabilities measured at fair value on a recurring basis or disclosed at fair value. The techniques utilized in estimating the fair value of financial instruments are reliant on the assumptions used. Care should be exercised in deriving conclusions about our business, its value or financial position based on the fair value information of financial instruments presented below. Fair value estimates are made based on available market information and judgments about the financial instrument at a specific point in time. Such estimates do not consider the tax impact of the realization of unrealized gains or losses. In addition, the disclosed fair value may not be realized in the immediate settlement of the financial instrument. We validate prices through an investment analyst review process, which includes validation through direct interaction with external sources, review of recent trade activity or use of internal models. In circumstances where broker quotes are used to value an instrument, we generally receive one non-binding quote. Broker quotes are validated through an investment analyst review process, which includes validation through direct interaction with external sources and use of internal models or other relevant information. We did not make any significant changes to our valuation processes during 2019. Fixed Maturities Fixed maturities include bonds, ABS, redeemable preferred stock and certain non-redeemable preferred securities. When available, the fair value of fixed maturities is based on quoted prices of identical assets in active markets. These are reflected in Level 1 and primarily include U.S. Treasury bonds and actively traded redeemable corporate preferred securities. When quoted prices of identical assets in active markets are not available, our first priority is to obtain prices from third party pricing vendors. We have regular interaction with these vendors to ensure we understand their pricing methodologies and to confirm they are utilizing observable market information. Their methodologies vary by asset class and include inputs such as estimated cash flows, benchmark yields, reported trades, broker quotes, credit quality, industry events and economic events. Fixed maturities with validated prices from pricing services, which includes the majority of our public fixed maturities in all asset classes, are generally reflected in Level 2. Also included in Level 2 are corporate bonds when quoted market prices are not available, for which an internal model using substantially all observable inputs or a matrix pricing valuation approach is used. In the matrix approach, securities are grouped into pricing categories that vary by sector, rating and average life. Each pricing category is assigned a risk spread based on studies of observable public market data from the investment professionals assigned to specific security classes. The expected cash flows of the security are then discounted back at the current Treasury curve plus the appropriate risk spread. Although the matrix valuation approach provides a fair valuation of each pricing category, the valuation of an individual security within each pricing category may also be impacted by company specific factors. If we are unable to price a fixed maturity security using prices from third party pricing vendors or other sources specific to the asset class, we may obtain a broker quote or utilize an internal pricing model specific to the asset utilizing relevant market information, to the extent available and where at least one significant unobservable input is utilized. These are reflected in Level 3 in the fair value hierarchy and can include fixed maturities across all asset classes. As of June 30, 2019, less than 1% of our total fixed maturities were Level 3 securities valued using internal pricing models. The primary inputs, by asset class, for valuations of the majority of our Level 2 investments from third party pricing vendors or our internal pricing valuation approach are described below. U.S. Government and Agencies/Non-U.S. Governments States and Political Subdivisions Corporate RMBS, CMBS, Collateralized Debt Obligations and Other Debt Obligations Equity Securities Equity securities include mutual funds, common stock, non-redeemable preferred stock and required regulatory investments. Fair values of equity securities are determined using quoted prices in active markets for identical assets when available, which are reflected in Level 1. When quoted prices are not available, we may utilize internal valuation methodologies appropriate for the specific asset that use observable inputs such as underlying share prices or the net asset value (“NAV”), which are reflected in Level 2. Fair values might also be determined using broker quotes or through the use of internal models or analysis that incorporate significant assumptions deemed appropriate given the circumstances and consistent with what other market participants would use when pricing such securities, which are reflected in Level 3. Derivatives The fair values of exchange-traded derivatives are determined through quoted market prices, which are reflected in Level 1. Exchange-traded derivatives include futures that are settled daily, which reduces their fair value in the consolidated statements of financial position. The fair values of OTC cleared derivatives are determined through market prices published by the clearinghouses, which are reflected in Level 2. The clearinghouses may utilize the overnight indexed swap (“OIS”) curve in their valuation. Variation margin associated with OTC cleared derivatives is settled daily, which reduces their fair value in the consolidated statements of financial position. The fair values of bilateral OTC derivative instruments are determined using either pricing valuation models that utilize market observable inputs or broker quotes. The majority of our bilateral OTC derivatives are valued with models that use market observable inputs, which are reflected in Level 2. Significant inputs include contractual terms, interest rates, currency exchange rates, credit spread curves, equity prices and volatilities. These valuation models consider projected discounted cash flows, relevant swap curves and appropriate implied volatilities. Certain bilateral OTC derivatives utilize unobservable market data, primarily independent broker quotes that are nonbinding quotes based on models that do not reflect the result of market transactions, which are reflected in Level 3. Our non-cleared derivative contracts are generally documented under ISDA Master Agreements, which provide for legally enforceable set-off and close-out netting of exposures to specific counterparties. Collateral arrangements are bilateral and based on current ratings of each entity. We utilize the LIBOR interest rate curve to value our positions, which includes a credit spread. This credit spread incorporates an appropriate level of nonperformance risk into our valuations given the current ratings of our counterparties, as well as the collateral agreements in place. Counterparty credit risk is routinely monitored to ensure our adjustment for non-performance risk is appropriate. Our centrally cleared derivative contracts are conducted with regulated centralized clearinghouses, which provide for daily exchange of cash collateral or variation margin equal to the difference in the daily market values of those contracts that eliminates the non-performance risk on these trades. Interest Rate Contracts. Foreign Exchange Contracts. Equity Contracts. Credit Contracts. Other Investments Other investments reported at fair value include invested assets of consolidated sponsored investment funds, unconsolidated sponsored investment funds, other investment funds reported at fair value, commercial mortgage loans of consolidated VIEs for which the fair value option was elected, equity method real estate investments for which the fair value option was elected and certain redeemable preferred stock. Invested assets of consolidated sponsored investment funds include equity securities, fixed maturities and other investments, for which fair values are determined as previously described, and are reflected in Level 1 and Level 2. The fair value of unconsolidated sponsored investment funds and other investment funds is determined using the NAV of the fund. The NAV of the fund represents the price at which we would be able to initiate a transaction. Investments for which the NAV represents a quoted price in an active market for identical assets are reflected in Level 1. Investments that do not have a quoted price in an active market are reflected in Level 2. Commercial mortgage loans of consolidated VIEs are valued using the more observable fair value of the liabilities of the consolidated collateralized financing entities (“CCFEs”) under the measurement alternative guidance and are reflected in Level 2. The liabilities are affiliated so are not reflected in our consolidated results. Equity method real estate investments for which the fair value option was elected are reflected in Level 3. The equity method real estate investments consist of underlying real estate and debt. The real estate fair value is estimated using a discounted cash flow valuation model that utilizes public real estate market data inputs such as transaction prices, market rents, vacancy levels, leasing absorption, market cap rates and discount rates. The debt fair value is estimated using a discounted cash flow analysis based on our incremental borrowing rate for similar borrowing arrangements. The fair value of certain redeemable preferred stock is based on an internal model using unobservable inputs, which is reflected in Level 3. In 2018, the fair value was based on observable inputs and was reflected in Level 2. Cash Equivalents Certain cash equivalents are reported at fair value on a recurring basis and include money market instruments and other short-term investments with maturities of three months or less. Fair values of these cash equivalents may be determined using public quotations, when available, which are reflected in Level 1. When public quotations are not available, because of the highly liquid nature of these assets, carrying amounts may be used to approximate fair values, which are reflected in Level 2. Separate Account Assets Separate account assets include equity securities, debt securities, cash equivalents and derivative instruments, for which fair values are determined as previously described, and are reflected in Level 1, Level 2 and Level 3. Separate account assets also include commercial mortgage loans, for which the fair value is estimated by discounting the expected total cash flows using market rates that are applicable to the yield, credit quality and maturity of the loans. The market clearing spreads vary based on mortgage type, weighted average life, rating and liquidity. These are reflected in Level 3. Finally, separate account assets include real estate, for which the fair value is estimated using discounted cash flow valuation models that utilize various public real estate market data inputs. In addition, each property is appraised annually by an independent appraiser. The real estate included in separate account assets is recorded net of related mortgage encumbrances for which the fair value is estimated using discounted cash flow analysis based on our incremental borrowing rate for similar borrowing arrangements. The real estate within the separate accounts is reflected in Level 3. Investment Contracts Certain annuity contracts and other investment contracts include embedded derivatives that have been bifurcated from the host contract and are measured at fair value on a recurring basis, which are reflected in Level 3. The key assumptions for calculating the fair value of the embedded derivative liabilities are market assumptions (such as equity market returns, interest rate levels, market volatility and correlations) and policyholder behavior assumptions (such as lapse, mortality, utilization and withdrawal patterns). Risk margins are included in the policyholder behavior assumptions. The assumptions are based on a combination of historical data and actuarial judgment. The embedded derivative liabilities are valued using stochastic models that incorporate a spread reflecting our own creditworthiness. The assumption for our own non-performance risk for investment contracts and any embedded derivatives bifurcated from certain annuity and investment contracts is based on the current market credit spreads for debt-like instruments we have issued and are available in the market. Other Liabilities Certain obligations reported in other liabilities include embedded derivatives to deliver underlying securities of structured investments to third parties. The fair value of the embedded derivatives is calculated based on the value of the underlying securities that are valued based on prices obtained from third party pricing vendors as utilized and described in our discussion of how fair value is determined for fixed maturities, which are reflected in Level 2. Assets and Liabilities Measured at Fair Value on a Recurring Basis Assets and liabilities measured at fair value on a recurring basis were as follows: June 30, 2019 Assets/ Amount (liabilities) measured at measured at net asset Fair value hierarchy level fair value value (4) Level 1 Level 2 Level 3 (in millions) Assets Fixed maturities, available-for-sale: U.S. government and agencies $ 1,536.4 $ — $ 1,125.6 $ 410.8 $ — Non-U.S. governments 1,000.7 — 2.0 994.8 3.9 States and political subdivisions 6,968.6 — — 6,968.6 — Corporate 38,171.3 — 19.1 38,107.5 44.7 Residential mortgage-backed securities 2,437.0 — — 2,437.0 — Commercial mortgage-backed securities 4,569.9 — — 4,556.8 13.1 Collateralized debt obligations (1) 2,759.4 — — 2,724.6 34.8 Other debt obligations 7,824.8 — — 7,764.9 59.9 Total fixed maturities, available-for-sale 65,268.1 — 1,146.7 63,965.0 156.4 Fixed maturities, trading 686.8 — — 686.3 0.5 Equity securities 1,895.2 — 633.5 1,261.7 — Derivative assets (2) 291.5 — — 261.3 30.2 Other investments 812.5 84.2 201.7 497.5 29.1 Cash equivalents 2,123.6 — 36.6 2,087.0 — Sub-total excluding separate account assets 71,077.7 84.2 2,018.5 68,758.8 216.2 Separate account assets 162,848.6 129.7 91,789.6 62,239.5 8,689.8 Total assets $ 233,926.3 $ 213.9 $ 93,808.1 $ 130,998.3 $ 8,906.0 Liabilities Investment contracts (3) $ (118.7) $ — $ — $ — $ (118.7) Derivative liabilities (2) (168.0) — — (153.6) (14.4) Other liabilities (3) (96.0) — — (96.0) — Total liabilities $ (382.7) $ — $ — $ (249.6) $ (133.1) Net assets $ 233,543.6 $ 213.9 $ 93,808.1 $ 130,748.7 $ 8,772.9 December 31, 2018 Assets/ Amount (liabilities) measured at measured at net asset Fair value hierarchy level fair value value (4) Level 1 Level 2 Level 3 (in millions) Assets Fixed maturities, available-for-sale: U.S. government and agencies $ 1,441.0 $ — $ 1,027.8 $ 413.2 $ — Non-U.S. governments 890.5 — 2.7 883.2 4.6 States and political subdivisions 6,225.7 — — 6,225.7 — Corporate 35,539.3 — 19.2 35,462.2 57.9 Residential mortgage-backed securities 2,460.6 — — 2,460.6 — Commercial mortgage-backed securities 3,945.6 — — 3,936.1 9.5 Collateralized debt obligations (1) 2,420.8 — — 2,412.5 8.3 Other debt obligations 7,185.0 — — 7,126.5 58.5 Total fixed maturities, available-for-sale 60,108.5 — 1,049.7 58,920.0 138.8 Fixed maturities, trading 636.1 — — 636.1 — Equity securities 1,843.7 — 661.2 1,182.5 — Derivative assets (2) 194.0 — — 175.4 18.6 Other investments 828.6 75.4 125.9 610.1 17.2 Cash equivalents 1,775.9 — 46.3 1,729.6 — Sub-total excluding separate account assets 65,386.8 75.4 1,883.1 63,253.7 174.6 Separate account assets 144,987.9 124.6 79,572.0 56,675.8 8,615.5 Total assets $ 210,374.7 $ 200.0 $ 81,455.1 $ 119,929.5 $ 8,790.1 Liabilities Investment contracts (3) $ (45.2) $ — $ — $ — $ (45.2) Derivative liabilities (2) (157.1) — — (141.6) (15.5) Other liabilities (3) (91.5) — — (91.5) — Total liabilities $ (293.8) $ — $ — $ (233.1) $ (60.7) Net assets $ 210,080.9 $ 200.0 $ 81,455.1 $ 119,696.4 $ 8,729.4 (1) Primarily consists of collateralized loan obligations backed by secured corporate loans. (2) Within the consolidated statements of financial position, derivative assets are reported with other investments and derivative liabilities are reported with other liabilities. The amounts are presented gross in the tables above to reflect the presentation on the consolidated statements of financial position; however, are presented net for purposes of the rollforward in the Changes in Level 3 Fair Value Measurements tables. Refer to Note 4, Derivative Financial Instruments, for further information on fair value by class of derivative instruments. (3) Includes bifurcated embedded derivatives that are reported at net asset (liability) fair value within the same line item in the consolidated statements of financial position in which the host contract is reported. (4) Certain investments are measured at fair value using the NAV per share (or its equivalent) practical expedient and have not been classified in the fair value hierarchy. Other investments using the NAV practical expedient consist of certain fund interests that are restricted until maturity with unfunded commitments totaling $24.7 million and $32.0 million as of June 30, 2019 and December 31, 2018, respectively. Separate account assets using the NAV practical expedient consist of hedge funds with varying investment strategies that also have a variety of redemption terms and conditions. We do not have unfunded commitments associated with these hedge funds. Changes in Level 3 Fair Value Measurements The reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) was as follows: For the three months ended June 30, 2019 Changes in Beginning Net Ending unrealized asset/ Total realized/unrealized purchases, asset/ gains (losses) (liability) gains (losses) sales, (liability) included in balance Included in Included in issuances balance net income as of net other and Transfers Transfers as of relating to April 1, income comprehensive settlements into out of June 30, positions still 2019 (1) income (3) (4) Level 3 Level 3 2019 held (1) (in millions) Assets Fixed maturities, available-for-sale: Non-U.S. governments $ 4.2 $ — $ — $ (0.3) $ — $ — $ 3.9 $ — Corporate 58.5 — — (13.8) — — 44.7 — Commercial mortgage-backed securities 12.0 (3.2) 2.9 — 3.7 (2.3) 13.1 (2.1) Collateralized debt obligations 5.9 — 0.5 (1.6) 30.0 — 34.8 — Other debt obligations 43.4 — 0.5 16.0 — — 59.9 — Total fixed maturities, available-for-sale 124.0 (3.2) 3.9 0.3 33.7 (2.3) 156.4 (2.1) Fixed maturities,trading — — — 0.5 — — 0.5 — Equity securities 0.4 — (0.4) — — — — — Other investments 29.4 0.1 — (0.4) — — 29.1 0.1 Separate account assets (2) 8,718.7 138.9 0.5 4.2 — (172.5) 8,689.8 126.4 Liabilities Investment contracts (40.5) (76.2) (0.2) (1.8) — — (118.7) (75.5) Derivatives Net derivative assets (liabilities) 3.4 6.6 — 5.8 — — 15.8 11.2 For the three months ended June 30, 2018 Changes in Beginning Net Ending unrealized asset/ Total realized/unrealized purchases, asset/ gains (losses) (liability) gains (losses) sales, (liability) included in balance Included in Included in issuances balance net income as of net other and Transfers Transfers as of relating to April 1, income comprehensive settlements into out of June 30, positions still 2018 (1) income (3) (4) Level 3 Level 3 2018 held (1) (in millions) Assets Fixed maturities, available-for-sale: Non-U.S. governments $ 7.0 $ — $ — $ (0.4) $ — $ — $ 6.6 $ — Corporate 103.8 — (0.7) (6.0) 0.4 (11.5) 86.0 — Commercial mortgage-backed securities 11.1 — (0.1) — — (0.9) 10.1 — Collateralized debt obligations 80.7 — (0.4) 27.8 12.0 (39.9) 80.2 — Other debt obligations 2.1 (0.1) 0.3 92.5 — — 94.8 — Total fixed maturities, available-for-sale 204.7 (0.1) (0.9) 113.9 12.4 (52.3) 277.7 — Fixed maturities, trading — — — 3.7 — — 3.7 — Equity securities 14.9 0.7 — (15.6) — — — — Other investments 9.3 0.3 — 3.6 — — 13.2 0.3 Separate account assets (2) 7,991.9 245.4 0.1 54.5 — (0.4) 8,291.5 257.9 Liabilities Investment contracts (96.2) 52.0 (0.1) 1.5 — — (42.8) 51.6 Derivatives Net derivative assets (liabilities) 16.8 (11.1) — (0.3) — — 5.4 (12.4) For the six months ended June 30, 2019 Changes in Beginning Net Ending unrealized asset/ Total realized/unrealized purchases, asset/ gains (losses) (liability) gains (losses) sales, (liability) included in balance Included Included in issuances balance net income as of in net other and Transfers Transfers as of relating to January 1, income comprehensive settlements into out of June 30, positions still 2019 (1) income (3) (4) Level 3 Level 3 2019 held (1) (in millions) Assets Fixed maturities, available-for-sale: Non-U.S. governments $ 4.6 $ — $ — $ (0.7) $ — $ — $ 3.9 $ — Corporate 57.9 — 0.4 (13.6) — — 44.7 — Commercial mortgage-backed securities 9.5 (3.2) 3.2 2.2 3.7 (2.3) 13.1 (2.1) Collateralized debt obligations 8.3 (2.5) 0.3 (1.3) 30.0 — 34.8 (2.5) Other debt obligations 58.5 — 1.6 25.8 — (26.0) 59.9 — Total fixed maturities, available-for-sale 138.8 (5.7) 5.5 12.4 33.7 (28.3) 156.4 (4.6) Fixed maturities, trading — — — 0.5 — — 0.5 — Other investments 17.2 2.3 — (0.4) 10.0 — 29.1 2.3 Separate account assets (2) 8,615.5 313.5 0.1 (66.1) — (173.2) 8,689.8 327.2 Liabilities Investment contracts (45.2) (71.9) (0.1) (1.5) — — (118.7) (70.3) Derivatives Net derivative assets (liabilities) 3.1 5.0 — 7.7 — — 15.8 8.9 For the six months ended June 30, 2018 Changes in Beginning Net Ending unrealized asset/ Total realized/unrealized purchases, asset/ gains (losses) (liability) gains (losses) sales, (liability) included in balance Included Included in issuances balance net income as of in net other and Transfers Transfers as of relating to January 1, income comprehensive settlements into out of June 30, positions still 2018 (1) income (3) (4) Level 3 Level 3 2018 held (1) (in millions) Assets Fixed maturities, available-for-sale: Non-U.S. governments $ 7.4 $ — $ (0.1) $ (0.7) $ — $ — $ 6.6 $ — Corporate 128.0 1.1 (0.3) (3.6) 1.0 (40.2) 86.0 — Commercial mortgage-backed securities 10.6 (2.5) 0.5 (0.1) 2.5 (0.9) 10.1 — Collateralized debt obligations 125.0 (0.6) 0.6 2.3 12.1 (59.2) 80.2 (0.6) Other debt obligations 2.3 — 0.2 92.3 — — 94.8 — Total fixed maturities, available-for-sale 273.3 (2.0) 0.9 90.2 15.6 (100.3) 277.7 (0.6) Fixed maturities, trading — — — 3.7 — — 3.7 — Equity securities 2.7 12.9 — (15.6) — — — — Other investments 6.5 1.8 — 4.9 — — 13.2 1.8 Separate account assets (2) 7,651.4 409.8 (0.6) 231.3 — (0.4) 8,291.5 402.6 Liabilities Investment contracts (160.3) 115.7 0.1 1.7 — — (42.8) 115.3 Derivatives Net derivative assets (liabilities) 18.1 (16.1) — 3.4 — — 5.4 (16.0) (1) Both realized gains (losses) and mark-to-market unrealized gains (losses) are generally reported in net realized capital gains (losses) within the consolidated statements of operations. Realized and unrealized gains (losses) on certain securities with an investment objective to realize economic value through mark-to-market changes are reported in net investment income within the consolidated statements of operations. (2) Gains and losses for separate account assets do not impact net income as the change in value of separate account assets is offset by a change in value of separate account liabilities. Foreign currency translation adjustments related to the Principal International segment separate account assets are recorded in AOCI and are offset by foreign currency translation adjustments of the corresponding separate account liabilities. (3) Includes foreign currency translation adjustments related to our Principal International segment. (4) Gross purchases, sales, issuances and settlements were: For the three months ended June 30, 2019 Net purchases, sales, issuances Purchases Sales Issuances Settlements and settlements (in millions) Assets Fixed maturities, available-for-sale: Non-U.S. governments $ — $ — $ — $ (0.3) $ (0.3) Corporate 5.2 (0.2) — (18.8) (13.8) Collateralized debt obligations — — — (1.6) (1.6) Other debt obligations 16.8 — — (0.8) 16.0 Total fixed maturities, available-for-sale 22.0 (0.2) — (21.5) 0.3 Fixed maturities, trading 0.5 — — — 0.5 Other investments 4.5 (4.9) — — (0.4) Separate account assets (5) 41.0 (112.8) (156.5) 232.5 4.2 Liabilities Investment contracts — — (3.5) 1.7 (1.8) Derivatives Net derivative assets (liabilities) — 5.8 — — 5.8 For the three months ended June 30, 2018 Net purchases, sales, issuances Purchases Sales Issuances Settlements and settlements (in millions) Assets Fixed maturities, available-for-sale: Non-U.S. governments $ — $ — $ — $ (0.4) $ (0.4) Corporate 0.7 — — (6.7) (6.0) Collateralized debt obligations 28.1 — — (0.3) 27.8 Other debt obligations 94.4 — — (1.9) 92.5 Total fixed maturities, available-for-sale 123.2 — — (9.3) 113.9 Fixed maturities, trading 3.7 — — — 3.7 Equity securities — (15.6) — — (15.6) Other investments 3.6 — — — 3.6 Separate account assets (5) 231.4 (124.1) (60.0) 7.2 54.5 Liabilities Investment contracts — — 0.7 0.8 1.5 Derivatives Net derivative assets (liabilities) (1.2) 0.9 — — (0.3) For the six months ended June 30, 2019 Net purchases, sales, issuances Purchases Sales Issuances Settlements and settlements (in millions) Assets Fixed maturities, available-for-sale: Non-U.S. governments $ — $ — $ — $ (0.7) $ (0.7) Corporate 5.7 (0.4) — |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2019 | |
Segment Information | |
Segment Information | 12. Segment Information We provide financial products and services through the following segments: Retirement and Income Solutions, Principal Global Investors, Principal International and U.S. Insurance Solutions. In addition, we have a Corporate segment. The segments are managed and reported separately because they provide different products and services, have different strategies or have different markets and distribution channels. The Retirement and Income Solutions segment provides retirement and related financial products and services primarily to businesses, their employees and other individuals. The segment is organized into Retirement and Income Solutions – Fee, which includes full service accumulation, trust services and individual variable annuities; and Retirement and Income Solutions – Spread, which includes individual fixed annuities, investment only, pension risk transfer and banking services. The Principal Global Investors segment provides asset management services to our asset accumulation business, our insurance operations, the Corporate segment and third party clients. This segment also includes our mutual fund business. The Principal International segment has operations in Latin America (Brazil, Chile and Mexico) and Asia (China, Hong Kong Special Administrative Region, India and Southeast Asia). We focus on locations with large middle classes, favorable demographics and growing long-term savings, ideally with voluntary or mandatory pension markets. We entered these locations through acquisitions, start-up operations and joint ventures. The U.S. Insurance Solutions segment focuses on solutions for individuals and small-to-medium sized businesses and their employees. The segment is organized into Specialty Benefits insurance, which provides group dental and vision insurance, individual and group disability insurance, critical illness, accident, group life insurance and non-medical fee-for-service claims administration; and Individual Life insurance, which provides universal life, variable universal life, indexed universal life and traditional life insurance. Our Corporate segment manages the assets representing capital that has not been allocated to any other segment. Financial results of the Corporate segment primarily reflect our financing activities (including financing costs), income on capital not allocated to other segments, inter-segment eliminations, income tax risks and certain income, expenses and other adjustments not allocated to the segments based on the nature of such items. Results of Principal Securities, Inc. (“PSI”), our retail broker-dealer and registered investment advisor ("RIA”); RobustWealth, Inc. (“RobustWealth”), our financial technology company; and our exited group medical and long-term care insurance businesses are reported in this segment. Effective January 1, 2019, we made changes to the allocation of certain compensation and other expenses and net investment income among the reportable segments. These allocation changes were made as a result of a global financial process improvement project. The expense allocation changes simplify the allocation processes, increase transparency and allow for more effective expense management across the enterprise. The net investment income allocation changes better align our internal capital allocation with enterprise capital targets. Segment results for prior periods were recast so they are reported on a comparable basis, with no impact to total company financial results. Management uses segment pre-tax operating earnings in evaluating performance, which is consistent with the financial results provided to and discussed with securities analysts. We determine segment pre-tax operating earnings by adjusting U.S. GAAP income before income taxes for pre-tax net realized capital gains (losses), as adjusted, pre-tax other adjustments that management believes are not indicative of overall operating trends and certain adjustments related to equity method investments and noncontrolling interest. While these items may be significant components in understanding and assessing the consolidated financial performance, management believes the presentation of pre-tax operating earnings enhances the understanding of our results of operations by highlighting pre-tax earnings attributable to the normal, ongoing operations of the business. The pre-tax net realized capital gains (losses), as adjusted, excluded from pre-tax operating earnings reflects consolidated U.S. GAAP pre-tax net realized capital gains (losses) excluding the following items that are included in pre-tax operating earnings: ● Periodic settlements and accruals on derivative instruments not designated as hedging instruments and ● Certain market value adjustments of embedded derivatives. Pre-tax net realized capital gains (losses), as adjusted, are further adjusted for: ● Amortization of hedge accounting book value adjustments for certain discontinued hedges, ● Certain hedge accounting market value revenue adjustments, ● Certain market value adjustments to fee revenues, ● Pre-tax net realized capital gains (losses) adjustments related to equity method investments, ● Pre-tax net realized capital gains (losses) adjustments related to sponsored investment funds, ● Recognition of deferred front-end fee revenues for sales charges on retirement and life insurance products and services, ● Related changes in the amortization pattern of DAC and related actuarial balances, ● Certain hedge accounting market value expense adjustments and ● Net realized capital gains (losses) distributed. Segment operating revenues reflect consolidated U.S. GAAP total revenues excluding: ● Net realized capital gains (losses), except periodic settlements and accruals on derivatives not designated as hedging instruments, and their impact on: ● Amortization of hedge accounting book value adjustments for certain discontinued hedges, ● Certain hedge accounting market value revenue adjustments, ● Certain market value adjustments to fee revenues, ● Pre-tax net realized capital gains (losses) adjustments related to equity method investments, ● Pre-tax net realized capital gains (losses) adjustments related to sponsored investment funds and ● Recognition of deferred front-end fee revenues for sales charges on retirement and life insurance products and services. ● Pre-tax other adjustments and income taxes of equity method investments and ● Pre-tax other adjustments management believes are not indicative of overall operating trends. The accounting policies of the segments are consistent with the accounting policies for the consolidated financial statements, with the exception of: (1) pension and other postretirement employee benefits (“OPEB”) cost allocations, (2) certain expenses deemed to benefit the entire organization and (3) income tax allocations. For purposes of determining pre-tax operating earnings, the segments are allocated the service component of pension and other postretirement benefit costs. The Corporate segment reflects the non-service components of pension and other postretirement benefit costs as assumptions are established and funding decisions are managed from a company-wide perspective. Additionally, the Corporate segment reflects expenses that benefit the entire organization for which the segments are not able to influence the spend. This includes expenses such as public company costs, executive management costs, acquisition and disposition costs, among others. The Corporate segment functions to absorb the risk inherent in interpreting and applying tax law. For purposes of determining non-GAAP operating earnings, the segments are allocated tax adjustments consistent with the positions we took on tax returns. The Corporate segment results reflect any differences between the tax returns and the estimated resolution of any disputes. The following tables summarize select financial information by segment, including operating revenues for our products and services, and reconcile segment totals to those reported in the consolidated financial statements: June 30, 2019 December 31, 2018 (in millions) Assets: Retirement and Income Solutions $ 181,663.0 $ 163,833.6 Principal Global Investors 2,312.9 2,301.0 Principal International 51,285.8 46,701.2 U.S. Insurance Solutions 27,178.3 25,388.2 Corporate 5,478.0 4,812.1 Total consolidated assets $ 267,918.0 $ 243,036.1 For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Operating revenues by segment: Retirement and Income Solutions: Retirement and Income Solutions – Fee $ 450.5 $ 446.5 $ 881.3 $ 894.3 Retirement and Income Solutions – Spread 1,709.1 1,003.4 3,170.2 1,734.5 Total Retirement and Income Solutions (1) 2,159.6 1,449.9 4,051.5 2,628.8 Principal Global Investors (2) 359.5 379.6 698.5 748.1 Principal International 411.6 389.6 792.1 772.7 U.S. Insurance Solutions: Specialty Benefits insurance 625.8 572.2 1,227.6 1,137.6 Individual Life insurance 461.6 432.0 927.9 883.3 Eliminations (0.1) (0.1) (0.1) (0.1) Total U.S. Insurance Solutions 1,087.3 1,004.1 2,155.4 2,020.8 Corporate (15.8) (17.0) (14.6) (17.0) Total segment operating revenues 4,002.2 3,206.2 7,682.9 6,153.4 Net realized capital gains (losses), net of related revenue adjustments (13.2) 50.6 70.5 8.4 Adjustments related to equity method investments (16.4) (21.9) (36.9) (43.3) Total revenues per consolidated statements of operations $ 3,972.6 $ 3,234.9 $ 7,716.5 $ 6,118.5 Pre-tax operating earnings (losses) by segment: Retirement and Income Solutions $ 256.2 $ 227.6 $ 496.8 $ 471.5 Principal Global Investors 115.6 129.2 216.3 242.9 Principal International 93.2 86.3 204.3 177.8 U.S. Insurance Solutions 146.3 113.3 257.0 228.3 Corporate (98.1) (70.7) (182.5) (138.3) Total segment pre-tax operating earnings 513.2 485.7 991.9 982.2 Pre-tax net realized capital gains (losses), as adjusted (3) (48.6) 48.6 17.0 25.0 Adjustments related to equity method investments and noncontrolling interest (14.3) (18.9) (32.6) (34.8) Income before income taxes per consolidated statements of operations $ 450.3 $ 515.4 $ 976.3 $ 972.4 (1) Reflects inter-segment revenues of $88.5 million and $98.9 million for the three months ended June 30, 2019 and 2018, respectively, $174.2 million and $200.6 million for the six months ended June 30, 2019 and 2018, respectively. (2) Reflects inter-segment revenues of $66.2 million and $67.8 million for the three months ended June 30, 2019 and 2018, respectively, $127.7 million and $130.0 million for the six months ended June 30, 2019 and 2018, respectively. (3) Pre-tax net realized capital gains (losses), as adjusted, is derived as follows: For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Net realized capital gains (losses): Net realized capital gains (losses) $ (4.0) $ 67.4 $ 80.5 $ 42.3 Derivative and hedging-related revenue adjustments (21.4) (14.9) (32.9) (32.7) Market value adjustments to fee revenues — 0.1 — 0.1 Adjustments related to equity method investments 1.2 (4.2) 0.8 (4.0) Adjustments related to sponsored investment funds 6.8 3.0 14.8 5.1 Recognition of front-end fee revenue 4.2 (0.8) 7.3 (2.4) Net realized capital gains (losses), net of related revenue adjustments (13.2) 50.6 70.5 8.4 Amortization of deferred acquisition costs and other actuarial balances (29.1) 1.2 (45.5) 6.8 Capital (gains) losses distributed (15.2) (8.3) (23.9) 2.3 Market value adjustments of embedded derivatives 8.9 5.1 15.9 7.5 Pre-tax net realized capital gains (losses), as adjusted (a) $ (48.6) $ 48.6 $ 17.0 $ 25.0 (a) As adjusted before noncontrolling interest capital gains (losses). |
Revenues from Contracts with Cu
Revenues from Contracts with Customers | 6 Months Ended |
Jun. 30, 2019 | |
Revenues from Contracts with Customers | |
Revenues from Contracts with Customers | 13. Revenues from Contracts with Customers The following tables summarize disaggregation of revenues from contracts with customers, including select financial information by segment, and reconcile totals to those reported in the consolidated financial statements. Revenues from contracts with customers are included in fees and other revenues on the consolidated statements of operations. For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Revenue from contracts with customers by segment: Retirement and Income Solutions: Retirement and Income Solutions – Fee $ 63.9 $ 66.9 $ 122.3 $ 128.6 Retirement and Income Solutions – Spread 2.3 2.7 5.2 5.4 Total Retirement and Income Solutions 66.2 69.6 127.5 134.0 Principal Global Investors 346.2 371.1 678.5 731.4 Principal International 116.2 123.1 231.1 244.2 U.S. Insurance Solutions: Specialty Benefits insurance 3.6 3.8 7.3 7.5 Individual Life insurance 12.6 9.8 24.6 19.2 Eliminations (0.1) (0.1) (0.1) (0.1) Total U.S. Insurance Solutions 16.1 13.5 31.8 26.6 Corporate 42.5 37.0 79.5 80.9 Total segment revenue from contracts with customers 587.2 614.3 1,148.4 1,217.1 Adjustments for fees and other revenues not within the scope of revenue recognition guidance (1) 415.2 399.0 824.4 809.1 Pre-tax other adjustments (2) 4.2 (0.7) 7.3 (2.3) Total fees and other revenues per consolidated statements of operations $ 1,006.6 $ 1,012.6 $ 1,980.1 $ 2,023.9 (1) Fees and other revenues not within the scope of the revenue recognition guidance primarily represent revenue on contracts accounted for under the financial instruments or insurance contracts standards. (2) Pre-tax other adjustments relate to the recognition of deferred front-end fee revenues for sales charges on retirement and life insurance products and certain market value adjustments to fee revenues. Retirement and Income Solutions - Fee Retirement and Income Solutions - Fee offers service and trust agreements for defined contribution plans, including 401(k) plans, 403(b) plans, and employee stock ownership plans. The investment components of these service agreements are in the form of mutual fund offerings. In addition, plan sponsor trust services are also available through an affiliated trust company. Fees and other revenues are earned for administrative activities performed for the defined contribution plans including recordkeeping and reporting as well as trust, asset management and investment services. The majority of these activities are performed daily over time. Fee-for-service transactions are also provided upon client request. These services are considered distinct or grouped into a bundle until a distinct performance obligation is identified. Some performance obligations are considered a series of distinct services, which are substantially the same and have the same pattern of transfer to the customer. Fees and other revenues can be based on a fixed contractual rate for these services or can be variable based upon contractual rates applied to the market value of the client's investment portfolio each day. If the consideration for this series of performance obligations is based on daily market value, it is considered variable each day as the services are performed over time. The consideration becomes unconstrained and thus recognized as revenue for each day’s series of distinct services once the market value of the clients’ investment portfolios is determined at market close or carried over at the end of the day for days when the market is closed. Additionally, fixed fees and other revenues are recognized point-in-time as fee-for-service transactions upon completion. The types of revenues from contracts with customers were as follows: For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Administrative service fee revenue $ 63.3 $ 66.3 $ 121.5 $ 127.9 Other fee revenue 0.6 0.6 0.8 0.7 Total revenues from contracts with customers 63.9 66.9 122.3 128.6 Fees and other revenues not within the scope of revenue recognition guidance 281.6 282.8 553.4 569.2 Total fees and other revenues 345.5 349.7 675.7 697.8 Premiums and other considerations 0.6 0.9 1.7 2.4 Net investment income 104.4 95.9 203.9 194.1 Total operating revenues $ 450.5 $ 446.5 $ 881.3 $ 894.3 Retirement and Income Solutions - Spread Retirement and Income Solutions – Spread offers individual retirement accounts (“IRAs”) through Principal Bank, which are primarily funded by retirement savings rolled over from qualified retirement plans. The IRAs are held in savings accounts, money market accounts and certificates of deposit. Revenues are earned through fees as the performance of establishing and maintaining IRA accounts is completed. Fee-for-service transactions are also provided upon client request. The establishment fees and annual maintenance fees are accrued into earnings over a period of time using the average account life. Upfront and recurring bank fees are related to performance obligations that have the same pattern of transfer to the customer and are recognized in income over time with control transferred to the customers utilizing the output method. These fees are based on a fixed contractual rate. Fixed fees and other revenues are also recognized point-in-time as fee-for-service transactions upon completion. The types of revenues from contracts with customers were as follows: For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Deposit account fee revenue $ 2.3 $ 2.7 $ 5.2 $ 5.4 Total revenues from contracts with customers 2.3 2.7 5.2 5.4 Fees and other revenues not within the scope of revenue recognition guidance 4.2 2.9 9.1 5.6 Total fees and other revenues 6.5 5.6 14.3 11.0 Premiums and other considerations 1,171.5 555.1 2,129.0 843.4 Net investment income 531.1 442.7 1,026.9 880.1 Total operating revenues $ 1,709.1 $ 1,003.4 $ 3,170.2 $ 1,734.5 Principal Global Investors Fees and other revenues earned for asset management, investment advisory and distribution services provided to institutional and retail clients are based largely upon contractual rates applied to the specified amounts of the clients’ portfolios. Each service is a distinct performance obligation, or a series of distinct services that are a single performance obligation in that the services are substantially the same and have the same pattern of transfer to the customer. Fees and other revenues received for performance obligations such as asset management and other services are typically recognized over time utilizing the output method as the service is performed. Performance fees and transaction fees on certain accounts are recognized in income when the probability of significant reversal will not occur upon resolution of the uncertainty, which could be based on a variety of factors such as market performance or other internal metrics. Asset management fees are accrued each month based on the fee terms within the applicable agreement and are generally billed quarterly when values used for the calculation are available. Management fees and performance fees are variable consideration as they are subject to fluctuation based on assets under management (“AUM”) and other constraints. These fees are not recognized until unconstrained at the end of each reporting period. The types of revenues from contracts with customers were as follows: For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Management fee revenue $ 304.2 $ 312.2 $ 597.0 $ 628.5 Other fee revenue 42.0 58.9 81.5 102.9 Total revenues from contracts with customers 346.2 371.1 678.5 731.4 Fees and other revenues not within the scope of revenue recognition guidance 10.4 7.3 14.7 14.0 Total fees and other revenues 356.6 378.4 693.2 745.4 Net investment income 2.9 1.2 5.3 2.7 Total operating revenues $ 359.5 $ 379.6 $ 698.5 $ 748.1 Principal International Fees and other revenues are earned for asset management and distribution services provided to retail and institutional clients in addition to trustee and/or administrative services performed for retirement savings plans. Each service is considered a distinct performance obligation; however, if the services are not distinct on their own, we combine them into a distinct bundle or we have a series of distinct services that are substantially the same and have the same pattern of transfer to the customer. Fees and other revenues are typically based upon contractual rates applied to the market value of the clients’ investment portfolios and are considered variable consideration. The transaction price generally includes the amount determined at the end of the reporting period, whereby fees are deducted from the clients’ investment portfolios and are recognized as revenue when no longer constrained and satisfied as the services are performed over time utilizing the output method. In addition, payments to customers can take the form of an incentive given by us to entice the customer to purchase its goods or services. Incentives offered to customers are recognized as part of the transaction price as a reduction of revenue either over the period the customer remains in order to receive the incentive or monthly throughout the life of the contract. Incentive-based fees are recognized in income when the probability of significant reversal will not occur upon the resolution of the uncertainty, which is based on market performance. Fees for managing customers’ mandatory retirement savings accounts in Chile are collected with each monthly deposit made by our customers. If a customer stops contributing before retirement age, we collect no fees but services are still provided. We recognize revenue from these contracts as services are performed over the life of the contract and review annually. The types of revenues from contracts with customers were as follows: For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Management fee revenue $ 115.5 $ 121.8 $ 229.8 $ 241.9 Other fee revenue 0.7 1.3 1.3 2.3 Total revenues from contracts with customers 116.2 123.1 231.1 244.2 Fees and other revenues not within the scope of revenue recognition guidance 1.7 1.8 3.4 3.8 Total fees and other revenues 117.9 124.9 234.5 248.0 Premiums and other considerations 109.5 101.6 227.0 199.5 Net investment income 184.2 163.1 330.6 325.2 Total operating revenues $ 411.6 $ 389.6 $ 792.1 $ 772.7 Revenues from contracts with customers by region: Latin America $ 88.6 $ 96.5 $ 176.7 $ 189.0 Asia 27.6 26.7 54.6 55.4 Principal International corporate / regional offices 0.2 0.3 0.4 0.6 Eliminations (0.2) (0.4) (0.6) (0.8) Total revenues from contracts with customers $ 116.2 $ 123.1 $ 231.1 $ 244.2 U.S. Insurance Solutions Fees and other revenues are earned for administrative services performed including recordkeeping and reporting services for fee-for-service products, nonqualified benefit plans, separate accounts and dental networks. Services within contracts are not distinct on their own; however, we combine the services into a distinct bundle and account for the bundle as a single performance obligation, which is satisfied over time utilizing the output method as services are rendered. The transaction price corresponds with the performance completed to date, for which the value is recognized as revenue during the period. Variability of consideration is resolved at the end of each period and payments are due when billed. Commission income is earned through sponsored brokerage services. Performance obligations are satisfied at a point in time, upon delivery of a placed case, and the transaction price calculated per the compensation schedule is recognized as revenue. The types of revenues from contracts with customers were as follows: For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Specialty Benefits Insurance: Administrative service fees $ 3.6 $ 3.8 $ 7.3 $ 7.5 Total revenues from contracts with customers 3.6 3.8 7.3 7.5 Fees and other revenues not within the scope of revenue recognition guidance 4.9 5.2 9.8 10.4 Total fees and other revenues 8.5 9.0 17.1 17.9 Premiums and other considerations 571.6 527.7 1,127.5 1,044.7 Net investment income 45.7 35.5 83.0 75.0 Total operating revenues $ 625.8 $ 572.2 $ 1,227.6 $ 1,137.6 For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Individual Life Insurance: Administrative service fees $ 6.2 $ 5.8 $ 12.1 $ 11.6 Commission income 6.4 4.0 12.5 7.6 Total revenues from contracts with customers 12.6 9.8 24.6 19.2 Fees and other revenues not within the scope of revenue recognition guidance 190.3 177.7 382.5 363.4 Total fees and other revenues 202.9 187.5 407.1 382.6 Premiums and other considerations 79.7 80.5 172.6 171.0 Net investment income 179.0 164.0 348.2 329.7 Total operating revenues $ 461.6 $ 432.0 $ 927.9 $ 883.3 Corporate Fees and other revenues are earned on the performance of selling and servicing of securities and related products offered through PSI, an introducing broker-dealer registered with the FINRA. PSI enters into selling and distribution agreements with the obligation to sell or distribute the securities products, such as mutual funds, annuities and products sold through RIAs, to individual clients in return for a front-end sales charges, 12b-1 service fees, annuity fees and asset-based fees. Front-end sales charges, 12b-1 fees and annuity fees are related to a single sale and are earned at the time of sale. PSI also enters into agreements with individual customers to provide securities trade execution and custody through a brokerage services platform in return for ticket charge and other service fee revenue. These services are bundled as one single distinct service referred to as brokerage services. This revenue is related to distinct transactions and is earned at a point in time. PSI also enters into agreements with individual customers to provide trade execution, clearing services, custody services and investment research services through our proprietary offered fee-based products. These services are bundled as one single distinct service referred to as advisory services. In addition, for outside RIA business PSI performs sales and distribution services only. The revenues are earned over time as the service is performed utilizing the output method. A majority of our revenue is based upon contractual rates applied to the market value of the clients’ portfolios and considered variable consideration. The Corporate segment also includes inter-segment eliminations of fees and other revenues. The types of revenues from contracts with customers were as follows: For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Commission income $ 78.7 $ 78.5 $ 154.5 $ 157.5 Other fee revenue 11.2 9.2 20.0 17.2 Eliminations (47.4) (50.7) (95.0) (93.8) Total revenues from contracts with customers 42.5 37.0 79.5 80.9 Fees and other revenues not within the scope of revenue recognition guidance (77.9) (78.7) (148.5) (157.3) Total fees and other revenues (35.4) (41.7) (69.0) (76.4) Net investment income 19.6 24.7 54.4 59.4 Total operating revenues $ (15.8) $ (17.0) $ (14.6) $ (17.0) Contract Costs Sales compensation and other incremental costs of obtaining a contract are capitalized and amortized over the period of contract benefit if the costs are expected to be recovered. The contract cost asset, which is included in other assets on the consolidated statements of financial position, was $147.4 million and $137.6 million as of June 30, 2019 and December 31, 2018, respectively. We apply the practical expedient for certain costs where we recognize the incremental costs of obtaining these contracts as an expense when incurred if the amortization period of the assets is one year or less. These costs, along with costs that are not deferrable, are included in operating expenses on the consolidated statements of operations. Deferred contract costs consist primarily of commissions and variable compensation. We amortize capitalized contract costs on a straight-line basis over the expected contract life, reflecting lapses as they are incurred. Deferred contract costs are subject to impairment testing on an annual basis, or when a triggering event occurs that could warrant an impairment. To the extent future revenues less future maintenance expenses are not adequate to cover the asset balance, an impairment is recognized. Amortization expense of $6.2 million and $5.9 million for the three months ended June 30, 2019 and 2018 and $11.8 million and $11.6 million for the six months ended June 30, 2019 and 2018, respectively, was recorded in operating expenses on the consolidated statements of operations and no impairment loss was recognized in relation to the costs capitalized. |
Stock-Based Compensation Plans
Stock-Based Compensation Plans | 6 Months Ended |
Jun. 30, 2019 | |
Stock-Based Compensation Plans | |
Stock-Based Compensation Plans | 14. Stock-Based Compensation Plans As of June 30, 2019, we had the 2014 Stock Incentive Plan, the Employee Stock Purchase Plan, the 2014 Directors Stock Plan, the Amended and Restated 2010 Stock Incentive Plan, the 2005 Directors Stock Plan, the Stock Incentive Plan and the Directors Stock Plan ("Stock-Based Compensation Plans"). As of May 20, 2014, no new grants will be made under the Amended and Restated 2010 Stock Incentive Plan or the 2005 Directors Stock Plan. No grants have been made under the Stock Incentive Plan or the Directors Stock Plan since at least 2005. Under the terms of the 2014 Stock Incentive Plan, grants may be nonqualified stock options, incentive stock options qualifying under Section 422 of the Internal Revenue Code, restricted stock, restricted stock units, stock appreciation rights, performance shares, performance units or other stock-based awards. The 2014 Directors Stock Plan provides for the grant of nonqualified stock options, restricted stock, restricted stock units or other stock-based awards to our nonemployee directors. To date, we have not granted any incentive stock options, restricted stock or performance units under any plans. As of June 30, 2019, the maximum number of new shares of common stock available for grant under the 2014 Stock Incentive Plan and the 2014 Directors Stock Plan was 6.8 million. For awards with graded vesting, we use an accelerated expense attribution method. The compensation cost that was charged against net income for stock-based awards granted under the Stock-Based Compensation Plans was as follows: For the six months ended June 30, 2019 2018 (in millions) Compensation cost $ 44.4 $ 42.7 Related income tax benefit 9.3 9.3 Capitalized as part of an asset 1.0 1.1 Nonqualified Stock Options Nonqualified stock options were granted to certain employees under the 2014 Stock Incentive Plan. Total options granted were 1.2 million for the six months ended June 30, 2019. The fair value of stock options is estimated using the Black-Scholes option pricing model. The following is a summary of the assumptions used in this model for the stock options granted during the period: For the six months ended June 30, 2019 Expected volatility 23.3 % Expected term (in years) 7.0 Risk-free interest rate 2.6 % Expected dividend yield 4.07 % Weighted average estimated fair value per common share $ 10.00 As of June 30, 2019, we had $7.4 million of total unrecognized compensation cost related to nonvested stock options. The cost is expected to be recognized over a weighted-average service period of approximately 1.2 years. Performance Share Awards Performance share awards were granted to certain employees under the 2014 Stock Incentive Plan. Total performance share awards granted were 0.2 million for the six months ended June 30, 2019. The performance share awards granted represent initial target awards and do not reflect potential increases or decreases resulting from the final performance results to be determined at the end of the performance period. The actual number of common shares to be awarded at the end of each performance period will range between 0% and 150% of the initial target awards. The fair value of performance share awards is determined based on the closing stock price of our common shares on the grant date. The weighted-average grant date fair value of these performance share awards granted was $53.09 per common share. As of June 30, 2019, we had $8.0 million of total unrecognized compensation cost related to nonvested performance share awards granted. The cost is expected to be recognized over a weighted-average service period of approximately 1.2 years. Restricted Stock Units Restricted stock units were issued to certain employees pursuant to the 2014 Stock Incentive Plan and non-employee directors pursuant to the 2014 Directors Stock Plan. Total restricted stock units granted were 1.0 million for the six months ended June 30, 2019. The fair value of restricted stock units is determined based on the closing stock price of our common shares on the grant date. The weighted-average grant date fair value of these restricted stock units granted was $53.14 per common share. As of June 30, 2019, we had $68.8 million of total unrecognized compensation cost related to nonvested restricted stock unit awards granted. The cost is expected to be recognized over a weighted-average period of approximately 1.9 years. Employee Stock Purchase Plan Under the Employee Stock Purchase Plan, employees purchased 0.6 million shares for the six months ended June 30, 2019. The weighted average fair value of the discount on the stock purchased was $12.89 per share. As of June 30, 2019, a total of 1.7 million of new shares were available to be made issuable by us for this plan. |
Earnings Per Common Share
Earnings Per Common Share | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Common Share | |
Earnings Per Common Share | 15. Earnings Per Common Share The computations of the basic and diluted per share amounts were as follows: For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions, except per share data) Net income $ 392.1 $ 459.5 $ 844.2 $ 862.0 Subtract: Net income attributable to noncontrolling interest 5.8 2.9 28.0 8.3 Total $ 386.3 $ 456.6 $ 816.2 $ 853.7 Weighted-average shares outstanding: Basic 279.0 286.4 278.8 287.9 Dilutive effects: Stock options 0.9 1.0 0.9 1.2 Restricted stock units 1.2 1.6 1.3 1.8 Performance share awards 0.1 0.2 0.2 0.2 Diluted 281.2 289.2 281.2 291.1 Net income per common share: Basic $ 1.38 $ 1.59 $ 2.93 $ 2.97 Diluted $ 1.37 $ 1.58 $ 2.90 $ 2.93 The calculation of diluted earnings per share for the three and six months ended June 30, 2019 and 2018, excludes the incremental effect related to certain outstanding stock-based compensation grants due to their anti-dilutive effect. |
Condensed Consolidating Financi
Condensed Consolidating Financial Information | 6 Months Ended |
Jun. 30, 2019 | |
Condensed Consolidating Financial Information | |
Condensed Consolidating Financial Information | 16. Condensed Consolidating Financial Information Principal Life has established special purpose entities to issue secured medium-term notes. Under the program, the payment obligations of principal and interest on the notes are secured by funding agreements issued by Principal Life. Principal Life's payment obligations on the funding agreements are fully and unconditionally guaranteed by PFG. All of the outstanding stock of Principal Life is indirectly owned by PFG and PFG is the only guarantor of the payment obligations of the funding agreements. The following tables set forth condensed consolidating financial information of (i) PFG, (ii) Principal Life, (iii) Principal Financial Services, Inc. (“ PFS”) and all other direct and indirect subsidiaries of PFG on a combined basis and (iv) the eliminations necessary to arrive at the information for PFG on a consolidated basis as of June 30, 2019 and December 31, 2018, and for the six months ended June 30, 2019 and 2018. In presenting the condensed consolidating financial statements, the equity method of accounting has been applied to (i) PFG’s interest in all direct subsidiaries of PFG, (ii) Principal Life’s interest in all direct subsidiaries of Principal Life and (iii) PFS’s interest in Principal Life even though all such subsidiaries meet the requirements to be consolidated under U.S. GAAP. Earnings of subsidiaries are, therefore, reflected in the parent’s investment and earnings. All intercompany balances and transactions, including elimination of the parent’s investment in subsidiaries, between PFG, Principal Life and PFS and all other subsidiaries have been eliminated, as shown in the column “Eliminations.” These condensed consolidating financial statements should be read in conjunction with the consolidated financial statements. The financial information may not necessarily be indicative of results of operations, cash flows or financial position had the subsidiaries operated as independent entities. PFG sponsors nonqualified benefit plans for select employees and agents and is responsible for the obligations of these plans. Nonqualified plan assets are held in Rabbi trusts for the benefit of all nonqualified plan participants. The Rabbi trusts are separate legal entities and are not a part of PFG on a stand-alone basis. The plan assets are available to satisfy the claims of general creditors only in the event of bankruptcy and are, therefore, consolidated in our statements of financial position. Condensed Consolidating Statements of Financial Position June 30, 2019 Principal Principal Life Principal Financial Principal Financial Insurance Services, Inc. and Financial Group, Inc. Company Other Subsidiaries Group, Inc. Parent Only Only Combined (1) Eliminations Consolidated (in millions) Assets Fixed maturities, available-for-sale $ 206.4 $ 57,676.6 $ 7,749.6 $ (364.5) $ 65,268.1 Fixed maturities, trading 297.0 223.6 166.2 — 686.8 Equity securities — 82.8 1,812.4 — 1,895.2 Mortgage loans — 15,279.1 1,610.9 (753.2) 16,136.8 Real estate — 3.3 1,737.1 — 1,740.4 Policy loans — 748.8 52.1 — 800.9 Investment in unconsolidated entities 16,723.4 1,930.3 9,074.5 (26,796.8) 931.4 Other investments 10.5 6,669.6 2,518.8 (5,463.3) 3,735.6 Cash and cash equivalents 615.8 805.0 2,758.5 (863.4) 3,315.9 Accrued investment income 1.8 578.7 85.6 (2.3) 663.8 Premiums due and other receivables — 1,969.9 4,087.1 (4,507.8) 1,549.2 Deferred acquisition costs — 3,506.3 13.2 — 3,519.5 Property and equipment — 739.5 220.0 — 959.5 Goodwill — 54.3 1,057.2 — 1,111.5 Other intangibles — 18.7 1,282.0 — 1,300.7 Separate account assets — 121,368.4 41,480.2 — 162,848.6 Other assets 353.3 1,190.6 4,839.4 (4,929.2) 1,454.1 Total assets $ 18,208.2 $ 212,845.5 $ 80,544.8 $ (43,680.5) $ 267,918.0 Liabilities Contractholder funds $ — $ 36,703.3 $ 3,312.1 $ (356.6) $ 39,658.8 Future policy benefits and claims — 32,840.2 6,892.8 (1,253.5) 38,479.5 Other policyholder funds — 821.2 177.7 (2.7) 996.2 Short-term debt — — 76.8 — 76.8 Long-term debt 3,624.2 — 852.1 (713.9) 3,762.4 Income taxes currently payable 2.0 — 85.5 (67.7) 19.8 Deferred income taxes 7.1 1,065.4 1,111.6 (496.6) 1,687.5 Separate account liabilities — 121,368.4 41,480.2 — 162,848.6 Other liabilities 540.2 9,260.6 9,593.3 (13,412.2) 5,981.9 Total liabilities 4,173.5 202,059.1 63,582.1 (16,303.2) 253,511.5 Redeemable noncontrolling interest — — 304.5 — 304.5 Stockholders' equity Common stock 4.8 2.5 — (2.5) 4.8 Additional paid-in capital 10,130.7 6,321.0 9,500.0 (15,821.0) 10,130.7 Retained earnings 10,805.8 2,396.3 6,554.6 (8,950.9) 10,805.8 Accumulated other comprehensive income 647.7 2,066.6 536.3 (2,602.9) 647.7 Treasury stock, at cost (7,554.3) — — — (7,554.3) Total stockholders' equity attributable to PFG 14,034.7 10,786.4 16,590.9 (27,377.3) 14,034.7 Noncontrolling interest — — 67.3 — 67.3 Total stockholders’ equity 14,034.7 10,786.4 16,658.2 (27,377.3) 14,102.0 Total liabilities and stockholders' equity $ 18,208.2 $ 212,845.5 $ 80,544.8 $ (43,680.5) $ 267,918.0 (1) PFG sponsors nonqualified benefit plans. Nonqualified benefit plan assets and liabilities held in Rabbi trusts were $699.1 million and $566.7 million, respectively. Condensed Consolidating Statements of Financial Position December 31, 2018 Principal Principal Life Principal Financial Principal Financial Insurance Services, Inc. and Financial Group, Inc. Company Other Subsidiaries Group, Inc. Parent Only Only Combined (1) Eliminations Consolidated (in millions) Assets Fixed maturities, available-for-sale $ 211.5 $ 53,401.7 $ 6,857.9 $ (362.6) $ 60,108.5 Fixed maturities, trading 308.9 165.5 161.7 — 636.1 Equity securities — 84.8 1,758.9 — 1,843.7 Mortgage loans — 14,478.0 1,615.5 (756.6) 15,336.9 Real estate — 1.9 1,727.8 — 1,729.7 Policy loans — 755.9 45.5 — 801.4 Investment in unconsolidated entities 13,862.4 2,324.4 6,853.8 (22,171.8) 868.8 Other investments 10.7 5,549.1 2,517.6 (4,635.9) 3,441.5 Cash and cash equivalents 334.9 1,323.9 2,014.8 (696.1) 2,977.5 Accrued investment income 1.4 563.2 77.5 (5.9) 636.2 Premiums due and other receivables — 1,818.1 3,781.3 (4,186.3) 1,413.1 Deferred acquisition costs — 3,680.2 13.3 — 3,693.5 Property and equipment — 661.3 106.0 — 767.3 Goodwill — 54.3 1,045.7 — 1,100.0 Other intangibles — 19.7 1,295.4 — 1,315.1 Separate account assets — 107,343.0 37,644.9 — 144,987.9 Other assets 375.0 1,135.1 4,418.3 (4,549.5) 1,378.9 Total assets $ 15,104.8 $ 193,360.1 $ 71,935.9 $ (37,364.7) $ 243,036.1 Liabilities Contractholder funds $ — $ 36,861.7 $ 3,189.2 $ (351.2) $ 39,699.7 Future policy benefits and claims — 30,690.3 6,128.6 (1,154.1) 35,664.8 Other policyholder funds — 725.7 165.3 (2.6) 888.4 Short-term debt — — 42.9 — 42.9 Long-term debt 3,129.8 — 851.2 (721.4) 3,259.6 Income taxes currently payable — — 80.7 (55.4) 25.3 Deferred income taxes — 405.3 1,056.4 (503.3) 958.4 Separate account liabilities — 107,343.0 37,644.9 — 144,987.9 Other liabilities 585.0 8,503.2 8,586.5 (12,012.8) 5,661.9 Total liabilities 3,714.8 184,529.2 57,745.7 (14,800.8) 231,188.9 Redeemable noncontrolling interest — — 391.2 — 391.2 Stockholders' equity Common stock 4.8 2.5 — (2.5) 4.8 Additional paid-in capital 10,060.7 6,331.6 9,461.2 (15,792.8) 10,060.7 Retained earnings 10,290.2 2,441.2 5,855.0 (8,296.2) 10,290.2 Accumulated other comprehensive income (loss) (1,565.1) 55.6 (1,583.2) 1,527.6 (1,565.1) Treasury stock, at cost (7,400.6) — — — (7,400.6) Total stockholders' equity attributable to PFG 11,390.0 8,830.9 13,733.0 (22,563.9) 11,390.0 Noncontrolling interest — — 66.0 — 66.0 Total stockholders’ equity 11,390.0 8,830.9 13,799.0 (22,563.9) 11,456.0 Total liabilities and stockholders' equity $ 15,104.8 $ 193,360.1 $ 71,935.9 $ (37,364.7) $ 243,036.1 (1) PFG sponsors nonqualified benefit plans. Nonqualified benefit plan assets and liabilities held in Rabbi trusts were $671.7 million and $542.4 million, respectively. Condensed Consolidating Statements of Operations For the six months ended June 30, 2019 Principal Principal Life Principal Financial Principal Financial Insurance Services, Inc. and Financial Group, Inc. Company Other Subsidiaries Group, Inc. Parent Only Only Combined Eliminations Consolidated (in millions) Revenues Premiums and other considerations $ — $ 3,293.1 $ 364.7 $ — $ 3,657.8 Fees and other revenues — 1,102.5 1,067.7 (190.1) 1,980.1 Net investment income 10.9 1,419.2 1,151.0 (583.0) 1,998.1 Net realized capital gains (losses), excluding impairment losses on available-for-sale securities 9.2 411.8 (316.4) — 104.6 Net other-than-temporary impairment losses on available-for-sale securities — (24.1) (2.5) — (26.6) Other-than-temporary impairment losses on fixed maturities, available-for-sale reclassified to (from) other comprehensive income — 2.6 (0.1) — 2.5 Net impairment losses on available-for-sale securities — (21.5) (2.6) — (24.1) Net realized capital gains (losses) 9.2 390.3 (319.0) — 80.5 Total revenues 20.1 6,205.1 2,264.4 (773.1) 7,716.5 Expenses Benefits, claims and settlement expenses — 4,116.2 530.7 (5.7) 4,641.2 Dividends to policyholders — 60.0 — — 60.0 Operating expenses 110.1 1,189.3 917.0 (177.4) 2,039.0 Total expenses 110.1 5,365.5 1,447.7 (183.1) 6,740.2 Income (loss) before income taxes (90.0) 839.6 816.7 (590.0) 976.3 Income taxes (benefits) (22.3) 110.7 44.8 (1.1) 132.1 Equity in the net income (loss) of subsidiaries 883.9 (131.6) 134.5 (886.8) — Net income 816.2 597.3 906.4 (1,475.7) 844.2 Net income attributable to noncontrolling interest — — 25.6 2.4 28.0 Net income attributable to PFG $ 816.2 $ 597.3 $ 880.8 $ (1,478.1) $ 816.2 Net income $ 816.2 $ 597.3 $ 906.4 $ (1,475.7) $ 844.2 Other comprehensive income 2,201.1 2,011.1 2,227.8 (4,221.0) 2,219.0 Comprehensive income $ 3,017.3 $ 2,608.4 $ 3,134.2 $ (5,696.7) $ 3,063.2 Condensed Consolidating Statements of Operations For the six months ended June 30, 2018 Principal Principal Life Principal Financial Principal Financial Insurance Services, Inc. and Financial Group, Inc. Company Other Subsidiaries Group, Inc. Parent Only Only Combined Eliminations Consolidated (in millions) Revenues Premiums and other considerations $ — $ 1,941.7 $ 319.3 $ — $ 2,261.0 Fees and other revenues — 1,091.3 1,126.7 (194.1) 2,023.9 Net investment income 11.8 1,282.0 1,152.8 (655.3) 1,791.3 Net realized capital gains (losses), excluding impairment losses on available-for-sale securities (8.6) (98.6) 168.4 — 61.2 Net other-than-temporary impairment losses recoveries on available-for-sale securities — (4.6) (2.3) — (6.9) Other-than-temporary impairment losses on fixed maturities, available-for-sale reclassified from other comprehensive income — (11.4) (0.6) — (12.0) Net impairment losses on available-for-sale securities — (16.0) (2.9) — (18.9) Net realized capital gains (losses) (8.6) (114.6) 165.5 — 42.3 Total revenues 3.2 4,200.4 2,764.3 (849.4) 6,118.5 Expenses Benefits, claims and settlement expenses — 2,640.6 475.3 (5.6) 3,110.3 Dividends to policyholders — 60.7 — — 60.7 Operating expenses 95.2 1,144.3 916.7 (181.1) 1,975.1 Total expenses 95.2 3,845.6 1,392.0 (186.7) 5,146.1 Income (loss) before income taxes (92.0) 354.8 1,372.3 (662.7) 972.4 Income taxes (benefits) (41.0) 7.2 144.5 (0.3) 110.4 Equity in the net income (loss) of subsidiaries 904.7 313.2 (320.3) (897.6) — Net income 853.7 660.8 907.5 (1,560.0) 862.0 Net income attributable to noncontrolling interest — — 8.3 — 8.3 Net income attributable to PFG $ 853.7 $ 660.8 $ 899.2 $ (1,560.0) $ 853.7 Net income $ 853.7 $ 660.8 $ 907.5 $ (1,560.0) $ 862.0 Other comprehensive loss (1,398.2) (1,219.2) (1,500.5) 2,709.5 (1,408.4) Comprehensive loss $ (544.5) $ (558.4) $ (593.0) $ 1,149.5 $ (546.4) Condensed Consolidating Statements of Cash Flows For the six months ended June 30, 2019 Principal Principal Life Principal Financial Principal Financial Insurance Services, Inc. and Financial Group, Inc. Company Other Subsidiaries Group, Inc. Parent Only Only Combined Eliminations Consolidated (in millions) Operating activities Net cash provided by operating activities $ 16.3 $ 2,742.1 $ 803.9 $ (883.9) $ 2,678.4 Investing activities Fixed maturities available-for-sale and equity securities with intent to hold: Purchases (150.2) (4,703.3) (922.7) 4.4 (5,771.8) Sales — 1,065.7 411.5 — 1,477.2 Maturities 158.1 2,581.4 286.4 — 3,025.9 Mortgage loans acquired or originated — (1,894.5) (121.4) 7.4 (2,008.5) Mortgage loans sold or repaid — 1,088.5 162.9 (7.5) 1,243.9 Real estate acquired — (0.1) (48.4) — (48.5) Real estate sold — — 57.0 — 57.0 Net purchases of property and equipment — (25.1) (40.3) — (65.4) Dividends and returns of capital received from unconsolidated entities 208.9 1.2 668.9 (879.0) — Net change in other investments (13.6) (317.3) (627.7) 704.8 (253.8) Net cash provided by (used in) investing activities 203.2 (2,203.5) (173.8) (169.9) (2,344.0) Financing activities Issuance of common stock 22.1 — — — 22.1 Acquisition of treasury stock (153.7) — — — (153.7) Payments for financing element derivatives — (13.1) — — (13.1) Dividends to common stockholders (300.6) — — — (300.6) Issuance of long-term debt 493.6 — 9.1 — 502.7 Principal repayments of long-term debt — — (8.2) 7.5 (0.7) Net proceeds from short-term borrowings — — 33.1 — 33.1 Dividends and capital paid to parent — (668.9) (210.1) 879.0 — Investment contract deposits — 3,401.8 225.6 — 3,627.4 Investment contract withdrawals — (3,783.1) (17.7) — (3,800.8) Net increase in banking operation deposits — — 82.0 — 82.0 Other — 5.8 (0.2) — 5.6 Net cash provided by (used in) financing activities 61.4 (1,057.5) 113.6 886.5 4.0 Net increase (decrease) in cash and cash equivalents 280.9 (518.9) 743.7 (167.3) 338.4 Cash and cash equivalents at beginning of period 334.9 1,323.9 2,014.8 (696.1) 2,977.5 Cash and cash equivalents at end of period $ 615.8 $ 805.0 $ 2,758.5 $ (863.4) $ 3,315.9 Condensed Consolidating Statements of Cash Flows For the six months ended June 30, 2018 Principal Principal Life Principal Financial Principal Financial Insurance Services, Inc. and Financial Group, Inc. Company Other Subsidiaries Group, Inc. Parent Only Only Combined Eliminations Consolidated (in millions) Operating activities Net cash provided by (used in) operating activities $ (81.4) $ 1,891.4 $ 805.3 $ (977.1) $ 1,638.2 Investing activities Fixed maturities available-for-sale and equity securities with intent to hold: Purchases (200.8) (6,188.8) (980.3) 5.5 (7,364.4) Sales — 1,623.7 498.3 — 2,122.0 Maturities 0.8 3,005.7 285.6 — 3,292.1 Mortgage loans acquired or originated — (1,207.9) (204.8) 86.5 (1,326.2) Mortgage loans sold or repaid — 960.7 158.0 (24.7) 1,094.0 Real estate acquired — — (36.4) — (36.4) Real estate sold — — 63.5 — 63.5 Net purchases of property and equipment — (25.4) (18.2) — (43.6) Purchase of interests in subsidiaries, net of cash acquired — — (141.5) — (141.5) Dividends and returns of capital received from unconsolidated entities 336.5 42.6 371.5 (750.6) — Net change in other investments 0.5 (207.1) (786.7) 992.3 (1.0) Net cash provided by (used in) investing activities 137.0 (1,996.5) (791.0) 309.0 (2,341.5) Financing activities Issuance of common stock 44.6 — — — 44.6 Acquisition of treasury stock (396.5) — — — (396.5) Payments for financing element derivatives — (37.9) — — (37.9) Purchase of subsidiary shares from noncontrolling interest — — (23.0) — (23.0) Dividends to common stockholders (295.8) — — — (295.8) Issuance of long-term debt — — 123.9 (82.6) 41.3 Principal repayments of long-term debt — — (25.4) 24.7 (0.7) Net proceeds from short-term borrowings — — 27.6 — 27.6 Dividends and capital paid to parent — (371.5) (379.1) 750.6 — Investment contract deposits — 3,985.9 211.0 — 4,196.9 Investment contract withdrawals — (3,066.7) (43.3) — (3,110.0) Net increase in banking operation deposits — — 126.0 — 126.0 Other — 2.0 — — 2.0 Net cash provided by (used in) financing activities (647.7) 511.8 17.7 692.7 574.5 Net increase (decrease) in cash and cash equivalents (592.1) 406.7 32.0 24.6 (128.8) Cash and cash equivalents at beginning of period 842.8 426.7 1,526.4 (325.1) 2,470.8 Cash and cash equivalents at end of period $ 250.7 $ 833.4 $ 1,558.4 $ (300.5) $ 2,342.0 Under our current shelf registration that was filed with the SEC and became effective May 3, 2017, we have the ability to issue, in unlimited amounts, unsecured senior debt securities or subordinated debt securities, junior subordinated debt, preferred stock, common stock, warrants, depositary shares, purchase contracts and purchase units of PFG. Our wholly owned subsidiary, PFS, may guarantee, fully and unconditionally or otherwise, our obligations with respect to any non-convertible securities, other than common stock, described in the shelf registration. The following tables set forth condensed consolidating financial information of (i) PFG, (ii) PFS, (iii) Principal Life and all other direct and indirect subsidiaries of PFG on a combined basis and (iv) the eliminations necessary to arrive at the information for PFG on a consolidated basis as of June 30, 2019 and December 31, 2018, and for the six months ended June 30, 2019 and 2018. In presenting the condensed consolidating financial statements, the equity method of accounting has been applied to (i) PFG’s interest in all direct subsidiaries of PFG and (ii) PFS’s interest in Principal Life and all other subsidiaries, where applicable, even though all such subsidiaries meet the requirements to be consolidated under U.S. GAAP. Earnings of subsidiaries are, therefore, reflected in the parent’s investment and earnings. All intercompany balances and transactions, including elimination of the parent’s investment in subsidiaries, between PFG, PFS and Principal Life and all other subsidiaries have been eliminated, as shown in the column “Eliminations.” These condensed consolidating financial statements should be read in conjunction with the consolidated financial statements. The financial information may not necessarily be indicative of results of operations, cash flows or financial position had the subsidiaries operated as independent entities. PFG sponsors nonqualified benefit plans for select employees and agents and is responsible for the obligations of these plans. Nonqualified plan assets are held in Rabbi trusts for the benefit of all nonqualified plan participants. The Rabbi trusts are separate legal entities and are not a part of PFG on a stand-alone basis. The plan assets are available to satisfy the claims of general creditors only in the event of bankruptcy and are, therefore, consolidated in our statements of financial position. Condensed Consolidating Statements of Financial Position June 30, 2019 Principal Life Principal Principal Insurance Company Principal Financial Financial and Other Financial Group, Inc. Services, Inc. Subsidiaries Group, Inc. Parent Only Only Combined (1) Eliminations Consolidated (in millions) Assets Fixed maturities, available-for-sale $ 206.4 $ — $ 65,061.7 $ — $ 65,268.1 Fixed maturities, trading 297.0 — 389.8 — 686.8 Equity securities — 14.0 1,881.2 — 1,895.2 Mortgage loans — — 16,136.8 — 16,136.8 Real estate — — 1,740.4 — 1,740.4 Policy loans — — 800.9 — 800.9 Investment in unconsolidated entities 16,723.4 16,318.6 766.7 (32,877.3) 931.4 Other investments 10.5 161.2 3,563.9 — 3,735.6 Cash and cash equivalents 615.8 1,603.0 2,365.2 (1,268.1) 3,315.9 Accrued investment income 1.8 3.0 659.0 — 663.8 Premiums due and other receivables — 13.5 1,880.4 (344.7) 1,549.2 Deferred acquisition costs — — 3,519.5 — 3,519.5 Property and equipment — — 959.5 — 959.5 Goodwill — — 1,111.5 — 1,111.5 Other intangibles — — 1,300.7 — 1,300.7 Separate account assets — — 162,848.6 — 162,848.6 Other assets 353.3 61.0 1,600.3 (560.5) 1,454.1 Total assets $ 18,208.2 $ 18,174.3 $ 266,586.1 $ (35,050.6) $ 267,918.0 Liabilities Contractholder funds $ — $ — $ 39,658.8 $ — $ 39,658.8 Future policy benefits and claims — — 38,479.5 — 38,479.5 Other policyholder funds — — 996.2 — 996.2 Short-term debt — — 76.8 — 76.8 Long-term debt 3,624.2 343.8 138.1 (343.7) 3,762.4 Income taxes currently payable 2.0 — 65.0 (47.2) 19.8 Deferred income taxes 7.1 21.6 2,154.0 (495.2) 1,687.5 Separate account liabilities — — 162,848.6 — 162,848.6 Other liabilities 540.2 1,217.8 5,277.6 (1,053.7) 5,981.9 Total liabilities 4,173.5 1,583.2 249,694.6 (1,939.8) 253,511.5 Redeemable noncontrolling interest — — 304.5 — 304.5 Stockholders' equity Common stock 4.8 — 11.0 (11.0) 4.8 Additional paid-in capital 10,130.7 9,123.0 11,927.8 (21,050.8) 10,130.7 Retained earnings 10,805.8 6,412.8 3,343.3 (9,756.1) 10,805.8 Accumulated other comprehensive income 647.7 1,055.3 1,239.6 (2,294.9) 647.7 Treasury stock, at cost (7,554.3) — (2.0) 2.0 (7,554.3) Total stockholders' equity attributable to PFG 14,034.7 16,591.1 16,519.7 (33,110.8) 14,034.7 Noncontrolling interest — — 67.3 — 67.3 Total stockholders’ equity 14,034.7 16,591.1 16,587.0 (33,110.8) 14,102.0 Total liabilities and stockholders' equity $ 18,208.2 $ 18,174.3 $ 266,586.1 $ (35,050.6) $ 267,918.0 (1) PFG sponsors nonqualified benefit plans. Nonqualified benefit plan assets and liabilities held in Rabbi trusts were $699.1 million and $566.7 million, respectively. Condensed Consolidating Statements of Financial Position December 31, 2018 Principal Life Principal Principal Insurance Company Principal Financial Financial and Other Financial Group, Inc. Services, Inc. Subsidiaries Group, Inc. Parent Only Only Combined (1) Eliminations Consolidated (in millions) Assets Fixed maturities, available-for-sale $ 211.5 $ — $ 59,897.0 $ — $ 60,108.5 Fixed maturities, trading 308.9 — 327.2 — 636.1 Equity securities — 11.9 1,831.8 — 1,843.7 Mortgage loans — — 15,336.9 — 15,336.9 Real estate — — 1,729.7 — 1,729.7 Policy loans — — 801.4 — 801.4 Investment in unconsolidated entities 13,862.4 14,325.5 726.0 (28,045.1) 868.8 Other investments 10.7 100.9 3,329.9 — 3,441.5 Cash and cash equivalents 334.9 649.0 3,096.8 (1,103.2) 2,977.5 Accrued investment income 1.4 0.3 634.5 — 636.2 Premiums due and other receivables — 0.5 1,779.6 (367.0) 1,413.1 Deferred acquisition costs — — 3,693.5 — 3,693.5 Property and equipment — — 767.3 — 767.3 Goodwill — — 1,100.0 — 1,100.0 Other intangibles — — 1,315.1 — 1,315.1 Separate account assets — — 144,987.9 — 144,987.9 Other assets 375.0 38.7 1,521.9 (556.7) 1,378.9 Total assets $ 15,104.8 $ 15,126.8 $ 242,876.5 $ (30,072.0) $ 243,036.1 Liabilities Contractholder funds $ — $ — $ 39,699.7 $ — $ 39,699.7 Future policy benefits and claims — — 35,664.8 — 35,664.8 Other policyholder funds — — 888.4 — 888.4 Short-term debt — — 42.9 — 42.9 Long-term debt 3,129.8 366.7 129.9 (366.8) 3,259.6 Income taxes currently payable — 9.8 61.5 (46.0) 25.3 Deferred income taxes — 13.9 1,446.4 (501.9) 958.4 Separate account liabilities — — 144,987.9 — 144,987.9 Other liabilities 585.0 1,002.9 4,838.1 (764.1) 5,661.9 Total liabilities 3,714.8 1,393.3 227,759.6 (1,678.8) 231,188.9 Redeemable noncontrolling interest — — 391.2 — 391.2 Stockholders' equity Common stock 4.8 — 11.0 (11.0) 4.8 Additional paid-in capital 10,060.7 9,100.0 12,004.5 (21,104.5) 10,060.7 Retained earnings 10,290.2 5,716.8 3,549.8 (9,266.6) 10,290.2 Accumulated other comprehensive loss (1,565.1) (1,083.3) (903.6) 1,986.9 (1,565.1) Treasury stock, at cost (7,400.6) — (2.0) 2.0 (7,400.6) Total stockholders' equity attributable to PFG 11,390.0 13,733.5 14,659.7 (28,393.2) 11,390.0 Noncontrolling interest — — 66.0 — 66.0 Total stockholders’ equity 11,390.0 13,733.5 14,725.7 (28,393.2) 11,456.0 Total liabilities and stockholders' equity $ 15,104.8 $ 15,126.8 $ 242,876.5 $ (30,072.0) $ 243,036.1 (1) PFG sponsors nonqualified benefit plans. Nonqualified benefit plan assets and liabilities held in Rabbi trusts were $671.7 million and $542.4 million, respectively. Condensed Consolidating Statements of Operations For the six months ended June 30, 2019 Principal Life Principal Principal Insurance Principal Financial Financial Company and Financial Group, Inc. Services, Inc. Other Subsidiaries Group, Inc. Parent Only Only Combined Eliminations Consolidated (in millions) Revenues Premiums and other considerations $ — $ — $ 3,657.8 $ — $ 3,657.8 Fees and other revenues — 0.3 1,985.8 (6.0) 1,980.1 Net investment income (loss) 10.9 (4.1) 1,987.3 4.0 1,998.1 Net realized capital gains, excluding impairment losses on available-for-sale securities 9.2 5.9 89.5 — 104.6 Net other-than-temporary impairment losses on available-for-sale securities — — (26.6) — (26.6) Other-than-temporary impairment losses on fixed maturities, available-for-sale reclassified to other comprehensive income — — 2.5 — 2.5 Net impairment losses on available-for-sale securities — — (24.1) — (24.1) Net realized capital gains 9.2 5.9 65.4 — 80.5 Total revenues 20.1 2.1 7,696.3 (2.0) 7,716.5 Expenses Benefits, claims and settlement expenses — — 4,641.2 — 4,641.2 Dividends to policyholders — — 60.0 — 60.0 Operating expenses 110.1 60.1 1,873.9 (5.1) 2,039.0 Total expenses 110.1 60.1 6,575.1 (5.1) 6,740.2 Income (loss) before income taxes (90.0) (58.0) 1,121.2 3.1 976.3 Income taxes (benefits) (22.3) (11.8) 166.2 — 132.1 Equity in the net income of subsidiaries 883.9 927.0 — (1,810.9) — Net income 816.2 880.8 955.0 (1,807.8) 844.2 Net income attributable to noncontrolling interest — — 28.0 — 28.0 Net income attributable to PFG $ 816.2 $ 880.8 $ 927.0 $ (1,807.8) $ 816.2 Net income $ 816.2 $ 880.8 $ 955.0 $ (1,807.8) $ 844.2 Other comprehensive income 2,201.1 2,127.0 2,149.5 (4,258.6) 2,219.0 Comprehensive income $ 3,017.3 $ 3,007.8 $ 3,104.5 $ (6,066.4) $ 3,063.2 Condensed Consolidating Statements of Operations For the six months ended June 30, 2018 Principal Life Principal Principal Insurance Principal Financial Financial Company and Financial Group, Inc. Services, Inc. Other Subsidiaries Group, Inc. Parent Only Only Combined Eliminations Consolidated (in millions) Revenues Premiums and other considerations $ — $ — $ 2,261.0 $ — $ 2,261.0 Fees and other revenues — 0.3 2,030.5 (6.9) 2,023.9 Net investment income (loss) 11.8 (3.0) 1,776.1 6.4 1,791.3 Net realized capital gains (losses), excluding impairment losses on available-for-sale securities (8.6) (0.5) 70.2 0.1 61.2 Net other-than-temporary impairment losses on available-for-sale securities — — (6.9) — (6.9) Other-than-temporary impairment losses on fixed maturities, available-for-sale reclassified from other comprehensive income — — (12.0) — (12.0) Net impairment losses on available-for-sale securities — — (18.9) — (18.9) Net realized capital gains (losses) (8.6) (0.5) 51.3 0.1 42.3 Total revenues 3.2 |
Subsequent Event
Subsequent Event | 6 Months Ended |
Jun. 30, 2019 | |
Subsequent Event | |
Subsequent Event | 17. Subsequent Event On July 1, 2019, we closed on our agreement with Wells Fargo Bank, N.A. to acquire its Institutional Retirement & Trust business (the “Business”), which includes defined contribution, defined benefit, executive deferred compensation, employee stock ownership plans, institutional trust and custody, and institutional asset advisory businesses. The purchase price consisted of (i) $1.2 billion cash paid at closing and (ii) an additional earn-out payment of up to $150.0 million based upon the retention of fee revenue of the Business through December 31, 2020. The transaction was funded with available cash and debt financing. |
Nature of Operations and Sign_2
Nature of Operations and Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Nature of Operations and Significant Accounting Policies | |
Basis of Presentation - Policy | Basis of Presentation The accompanying unaudited consolidated financial statements of Principal Financial Group, Inc. (“PFG”) have been prepared in conformity with accounting principles generally accepted in the U.S. (“U.S. GAAP”) for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2019, are not necessarily indicative of the results that may be expected for the year ended December 31, 2019. These interim unaudited consolidated financial statements should be read in conjunction with our annual audited financial statements as of December 31, 2018, included in our Form 10-K for the year ended December 31, 2018, filed with the United States Securities and Exchange Commission (“SEC”). The accompanying consolidated statement of financial position as of December 31, 2018, has been derived from the audited consolidated statement of financial position but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. |
Consolidation - Policy | Consolidation We have relationships with various special purpose entities and other legal entities that must be evaluated to determine if the entities meet the criteria of a variable interest entity (“VIE”) or a voting interest entity (“VOE”). This assessment is performed by reviewing contractual, ownership and other rights, including involvement of related parties, and requires use of judgment. First, we determine if we hold a variable interest in an entity by assessing if we have the right to receive expected losses and expected residual returns of the entity. If we hold a variable interest, then the entity is assessed to determine if it is a VIE. An entity is a VIE if the equity at risk is not sufficient to support its activities, if the equity holders lack a controlling financial interest or if the entity is structured with non-substantive voting rights. In addition to the previous criteria, if the entity is a limited partnership or similar entity, it is a VIE if the limited partners do not have the power to direct the entity’s most significant activities through substantive kick-out rights or participating rights. A VIE is evaluated to determine the primary beneficiary. The primary beneficiary of a VIE is the enterprise with (1) the power to direct the activities of a VIE that most significantly impact the entity's economic performance and (2) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. When we are the primary beneficiary, we are required to consolidate the entity in our financial statements. We reassess our involvement with VIEs on a quarterly basis. For further information about VIEs, refer to Note 2, Variable Interest Entities. If an entity is not a VIE, it is considered a VOE. VOEs are generally consolidated if we own a greater than 50% voting interest. If we determine our involvement in an entity no longer meets the requirements for consolidation under either the VIE or VOE models, the entity is deconsolidated. Entities in which we have management influence over the operating and financing decisions but are not required to consolidate, other than investments accounted for at fair value under the fair value option, are reported using the equity method. |
Recent Accounting Pronouncements - Policy | Recent Accounting Pronouncements Description Date of Effect on our consolidated Standards not yet adopted: Targeted improvements to the accounting for long-duration insurance contracts This authoritative guidance updates certain requirements in the accounting for long-duration insurance and annuity contracts. 1. The assumptions used to calculate the liability for future policy benefits on traditional and limited-payment contracts will be reviewed and updated periodically. Cash flow assumptions will be reviewed at least annually and updated when necessary with the impact recognized in net income. Discount rate assumptions are prescribed as the current upper-medium grade (low credit risk) fixed income instrument yield and will be updated quarterly with the impact recognized in other comprehensive income (“OCI”). 2. Market risk benefits, which are certain market-based options or guarantees associated with deposit or account balance contracts, will be measured at fair value. The periodic change in fair value related to instrument-specific credit risk will be recognized in OCI while the remaining change in fair value will be recognized in net income. 3. Deferred acquisition costs (“DAC”) for all insurance and annuity contracts will be amortized on a constant basis over the expected term of the related contracts. 4. Additional disclosures are required, including disaggregated rollforwards of significant insurance liabilities and other account balances and disclosures about significant inputs, judgments, assumptions and methods used in measurement. The guidance for the liability for future policy benefits for traditional and limited-payment contracts and DAC will be applied on a modified retrospective basis; that is, to contracts in force as of the beginning of the earliest period presented based on their existing carrying amounts. An entity may elect to apply the changes retrospectively. The guidance for market risk benefits will be applied retrospectively. Early adoption is permitted. January 1, Our implementation and evaluation process to date includes, but is not limited to, identifying and documenting contracts and contract features in scope of the guidance; identifying the actuarial models, systems and processes to be updated; evaluating and selecting our systems solutions for implementing the new guidance; beginning to build key models and evaluating our key accounting policies. As we progress through our implementation, we will be able to better assess the impact to our consolidated financial statements; however, we expect this guidance to significantly change how we account for many of our insurance and annuity products. Description Date of Effect on our consolidated Goodwill impairment testing This authoritative guidance simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 (which measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill to the carrying amount of that goodwill) from the goodwill impairment test. A goodwill impairment loss will be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. Early adoption is permitted. January 1, We are currently evaluating the impact this guidance will have on our consolidated financial statements, but do not expect it to have a material impact on our consolidated financial statements. We expect the guidance will reduce complexity and costs associated with performing a Step 2 test, should one be needed in the future. However, the impact on the outcome of any such future impairment assessment will be dependent on modeling factors that are not currently determinable. Credit losses This authoritative guidance requires entities to use a current expected credit loss (“CECL”) model to measure impairment for most financial assets that are not recorded at fair value through net income. Under the CECL model, an entity will estimate lifetime expected credit losses considering available relevant information about historical events, current conditions and reasonable and supportable forecasts. The CECL model does not apply to available-for-sale debt securities. This guidance also expands the required credit loss disclosures and will be applied using a modified retrospective approach by recording a cumulative effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. Early adoption is permitted. January 1, Our implementation and evaluation process to date includes, but is not limited to, identifying financial assets within scope of the guidance, developing and refining CECL models for the relevant assets, preparing quarterly estimates of the cumulative effect of adoption, and drafting the required financial statement disclosures. We believe estimated credit losses under the CECL model will generally result in earlier loss recognition for loans and other receivables. Standards adopted: Implementation costs in a cloud computing arrangement that is a service contract This authoritative guidance 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 guidance can be applied either retrospectively or prospectively and early adoption is permitted. January 1, The effective date of the guidance is January 1, 2020; however, we elected to early-adopt this guidance on a prospective basis, effective January 1, 2019. This guidance did not have a material impact on our consolidated financial statements. Nonemployee share-based payment accounting This authoritative guidance simplifies the accounting for share-based payments to nonemployees by generally aligning it with the accounting for share-based payments to employees. Under the guidance, the measurement of equity-classified nonemployee awards will be fixed at the grant date, where previously the measurement was fixed at performance completion date. The guidance will be applied to equity-classified nonemployee awards for which a measurement date has not been established as of the date of adoption. January 1, This guidance did not have a material impact on our consolidated financial statements. Description Date of Effect on our consolidated Leases This authoritative guidance requires lessee recognition of lease assets and lease liabilities on the balance sheet. The concept of an operating lease, where the lease assets and liabilities are off balance sheet, is eliminated under the new guidance. For lessors, the guidance modifies lease classification criteria and accounting for certain types of leases. Other key aspects of the guidance relate to the removal of the current real estate-specific guidance and new presentation and disclosure requirements. Lessees and lessors are required to recognize and measure leases using a modified retrospective approach, which includes certain optional practical expedients that may be elected. We elected the alternative transition method, which allows entities to initially apply the new standard at the adoption date and recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. January 1, We adopted the guidance using the modified retrospective approach and comparative periods were not restated. Further details are included under the caption “Adoption of Lease Guidance” and in Note 9, Contingencies, Guarantees, Indemnifications and Leases. Targeted improvements to accounting for hedging activities This authoritative guidance updated certain recognition and measurement requirements for hedge accounting. The objective of the guidance is to more closely align the economics of a company’s risk management activities in its financial results and reduce the complexity of applying hedge accounting. The updates included the expansion of hedging strategies that are eligible for hedge accounting, elimination of the separate measurement and reporting of hedge ineffectiveness, presentation of the changes in the fair value of the hedging instrument in the same consolidated statement of operations line as the earnings effect of the hedged item and simplification of hedge effectiveness assessments. This guidance also included new disclosures. January 1, This guidance did not have a material impact on our consolidated financial statements. See Note 4, Derivative Financial Instruments, for further details. Premium amortization on purchased callable debt securities This authoritative guidance applies to entities that hold certain non-contingently callable debt securities, where the amortized cost basis is at a premium to the price repayable by the issuer at the earliest call date. Under the guidance the premium will be amortized to the first call date. January 1, This guidance did not have a material impact on our consolidated financial statements. Description Date of Effect on our consolidated Reclassification of certain tax effects from accumulated other comprehensive income This authoritative guidance permits a reclassification from accumulated other comprehensive income (“AOCI”) to retained earnings for the stranded tax effects resulting from U.S. tax legislation enacted on December 22, 2017, which is referred to as the ‘‘Tax Cuts and Jobs Act’’ (‘‘U.S. tax reform’’). The amount of that reclassification includes the change in corporate income tax rate, as well as an election to include other income tax effects related to the application of U.S. tax reform. The guidance also requires disclosures about stranded tax effects. January 1, The effective date of the guidance was January 1, 2019; however, we elected to early adopt the guidance. The guidance was applied at the beginning of the period of adoption and comparative periods were not restated. We reclassified the stranded tax effects in AOCI resulting from U.S. tax reform, which includes the change in corporate income tax rate and an election to reclassify the tax effects of the one-time deemed repatriation tax. A reclassification of $77.6 million was recorded as an increase to AOCI and a decrease to retained earnings. Revenue recognition This authoritative guidance replaces all general and most industry specific revenue recognition guidance currently prescribed by U.S. GAAP. The core principle is that an entity recognizes revenue to reflect the transfer of a promised good or service to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for that good or service. This guidance also provides clarification on when an entity is a principal or an agent in a transaction. In addition, the guidance updates the accounting for certain costs associated with obtaining and fulfilling a customer contract. The guidance may be applied using one of the following two methods: (1) retrospectively to each prior reporting period presented, or (2) retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application. January 1, We adopted the guidance using the modified retrospective approach. The guidance did not have a material impact on our consolidated financial statements. A cumulative effect adjustment of $39.7 million was recorded as a decrease to total stockholders’ equity. See Note 13, Revenues from Contracts with Customers, for further details. Income tax - intra-entity transfers of assets This authoritative guidance requires entities to recognize current and deferred income tax resulting from an intra-entity asset transfer when the transfer occurs. Prior to issuance of this guidance, U.S. GAAP did not allow recognition of income tax consequences until the asset had been sold to a third party. This guidance requires adoption through a cumulative effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. January 1, We adopted the guidance using the modified retrospective approach. A cumulative effect adjustment of $8.7 million was recorded as an increase to retained earnings. In addition, other assets and deferred income taxes decreased $21.1 million and $29.8 million, respectively, due to the adoption of this guidance. Description Date of Effect on our consolidated Financial instruments - recognition and measurement This authoritative guidance addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The guidance eliminated the classification of equity securities into different categories (trading or available-for-sale) and requires equity investments to be measured at fair value with changes in the fair value recognized through net income. The guidance also updated certain financial instrument disclosures and eliminated the requirement to disclose the methods and significant assumptions used to estimate the fair value of financial instruments that are measured at amortized cost on the balance sheet. January 1, We adopted this guidance using the modified retrospective approach. A cumulative effect adjustment of $1.0 million was recorded as a decrease to AOCI and a corresponding increase to retained earnings. The guidance did not have a material impact on our consolidated financial statements. See Note 3, Investments, for further details. Nonfinancial asset derecognition and partial sales of nonfinancial assets This authoritative guidance clarifies the scope of the recently established guidance on nonfinancial asset derecognition and the accounting for partial sales of nonfinancial assets. The guidance conforms the derecognition guidance on nonfinancial assets with the model for transactions in the new revenue recognition standard. January 1, The guidance did not have a material impact on our consolidated financial statements. Presentation of net periodic pension cost and net periodic postretirement benefit cost This authoritative guidance requires that an employer disaggregate the service cost component from the other components of net benefit cost. The guidance also provides explicit guidance on the presentation of the service cost component and the other components of net benefit cost in the consolidated statement of operations and allows only the service cost component of net benefit cost to be eligible for capitalization. January 1, The guidance did not have a material impact on our consolidated financial statements. Definition of a business This authoritative guidance clarifies the definition of a business to assist with evaluating when transactions involving an integrated set of assets and activities (a “set”) should be accounted for as acquisitions or disposals of assets or businesses. The guidance requires that when substantially all of the fair value of the gross assets acquired or disposed of is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. The guidance also requires a set to include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output to be considered a business. Lastly, the guidance removes the evaluation of whether a market participant could replace missing elements and narrows the definition of outputs by more closely aligning it with how outputs are described in the revenue recognition guidance. The guidance will be applied prospectively. January 1, The guidance did not have a material impact on our consolidated financial statements. When we adopt new accounting standards, we have a process in place to perform a thorough review of the pronouncement, identify the financial statement and system impacts and create an implementation plan among our impacted business units to ensure we are compliant with the pronouncement on the date of adoption. This includes having effective processes and controls in place to support the reported amounts. Each of the standards listed above is in varying stages in our implementation process based on its issuance and adoption dates. We are on track to implement guidance by the respective effective dates. Adoption of Lease Guidance On January 1, 2019, we adopted the guidance using the modified retrospective approach with the cumulative effect of initially applying the standard recognized at the date of adoption. We elected the package of practical expedients permitted under the transition guidance. In addition, we elected the hindsight practical expedient to determine the lease term for existing leases. We have agreements with lease and non-lease components, which we account for as a combined unit of account for all classes. The impact of the guidance to our consolidated financial statements primarily related to the establishment of additional assets and liabilities of $168.8 million and $164.0 million, respectively. The difference between the additional assets and liabilities, net of deferred tax impacts, was recorded as a cumulative effect adjustment to retained earnings and increased total stockholders’ equity by $4.0 million. Results of reporting periods beginning January 1, 2019, are presented under the new guidance, while prior period amounts are not adjusted and continue to be reported in accordance with our prior accounting. The guidance did not have a material impact on our consolidated statements of operations and did not impact earnings per common share. |
Derivatives - Policy | Derivatives Overview Derivatives are financial instruments whose values are derived from interest rates, foreign exchange rates, financial indices or the values of securities. Derivatives generally used by us include swaps, options, futures and forwards. Derivative positions are either assets or liabilities in the consolidated statements of financial position and are measured at fair value, generally by obtaining quoted market prices or through the use of pricing models. See Note 11, Fair Value Measurements, for policies related to the determination of fair value. Fair values can be affected by changes in interest rates, foreign exchange rates, financial indices, values of securities, credit spreads, and market volatility and liquidity. Accounting and Financial Statement Presentation We designate derivatives as either: (a) a hedge of the exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm commitment, including those denominated in a foreign currency ("fair value hedge"); (b) a hedge of a forecasted transaction or the exposure to variability of cash flows to be received or paid related to a recognized asset or liability, including those denominated in a foreign currency ("cash flow hedge"); (c) a hedge of a net investment in a foreign operation or (d) a derivative not designated as a hedging instrument. Our accounting for the ongoing changes in fair value of a derivative depends on the intended use of the derivative and the designation, as described above, and is determined when the derivative contract is entered into or at the time of redesignation. Hedge accounting is used for derivatives that are specifically designated in advance as hedges and that reduce our exposure to an indicated risk by having a high correlation between changes in the value of the derivatives and the items being hedged at both the inception of the hedge and throughout the hedge period. Fair Value Hedges. Cash Flow Hedges. Net Investment in a Foreign Operation Hedge. Non-Hedge Derivatives. Hedge Documentation and Effectiveness Testing. We use qualitative and quantitative methods to assess hedge effectiveness. Qualitative methods may include monitoring changes to terms and conditions and counterparty credit ratings. Quantitative methods may include statistical tests including regression analysis and minimum variance and dollar offset techniques. Termination of Hedge Accounting. If it is determined that a derivative no longer qualifies as an effective hedge, the derivative will continue to be carried on the consolidated statements of financial position at its fair value, with changes in fair value recognized prospectively in net realized capital gains (losses). The asset or liability under a fair value hedge will no longer be adjusted for changes in fair value pursuant to hedging rules and the existing basis adjustment is amortized to the consolidated statements of operations line associated with the asset or liability. The component of AOCI related to discontinued cash flow hedges that are no longer highly effective is amortized to the consolidated statements of operations consistent with the net income impacts of the original hedged cash flows. If a cash flow hedge is discontinued because it is probable the hedged forecasted transaction will not occur, the deferred gain or loss is immediately reclassified from AOCI into net income. Embedded Derivatives. |
Separate Accounts - Policy | Separate Accounts The separate accounts are legally segregated and are not subject to the claims that arise out of any of our other business. The client, rather than us, directs the investments and bears the investment risk of these funds. The separate account assets represent the fair value of funds that are separately administered by us for contracts with equity, real estate and fixed income investments and are presented as a summary total within the consolidated statements of financial position. An equivalent amount is reported as separate account liabilities, which represent the obligation to return the monies to the client. We receive fees for mortality, withdrawal and expense risks, as well as administrative, maintenance and investment advisory services that are included in the consolidated statements of operations. Net deposits, net investment income and realized and unrealized capital gains and losses of the separate accounts are not reflected in the consolidated statements of operations. Separate account assets and separate account liabilities include certain international retirement accumulation products where the segregated funds and associated obligation to the client are consolidated within our financial statements. We have determined that summary totals are the most meaningful presentation for these funds. As of June 30, 2019 and December 31, 2018, the separate accounts included a separate account valued at $110.4 million and $94.9 million, respectively, which primarily included shares of our stock that were allocated and issued to eligible participants of qualified employee benefit plans administered by us as part of the policy credits issued under our 2001 demutualization. These shares are included in both basic and diluted earnings per share calculations. In the consolidated statements of financial position, the separate account shares are recorded at fair value and are reported as separate account assets with a corresponding separate account liability to eligible participants of the qualified plan. Changes in fair value of the separate account shares are reflected in both the separate account assets and separate account liabilities and do not impact our results of operations . |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Variable Interest Entities | |
Carrying Amounts of Assets and Liabilities of Consolidated Variable Interest Entities (Table) | June 30, 2019 December 31, 2018 Total Total Total Total assets liabilities assets liabilities (in millions) Grantor trust (1) $ 98.6 $ 95.3 $ 95.0 $ 89.4 CMBS 5.4 — 6.4 — Mandatory retirement savings funds (2) 41,743.8 41,354.2 37,915.7 37,579.3 Real estate (3) 397.0 78.3 379.2 70.6 Sponsored investment funds (4) 337.4 4.0 526.5 3.6 Total $ 42,582.2 $ 41,531.8 $ 38,922.8 $ 37,742.9 (1) The assets of the grantor trust are primarily fixed maturities, available-for-sale. The liabilities are primarily other liabilities that reflect an embedded derivative of the forecasted transaction to deliver the underlying securities. (2) The assets of the mandatory retirement savings funds include separate account assets and equity securities. The liabilities include separate account liabilities and contractholder funds. (3) The assets of the real estate VIEs primarily include real estate and cash. Liabilities primarily include long-term debt and other liabilities. (4) The assets of sponsored investment funds are primarily fixed maturities and equity securities, certain of which are reported with other investments, and cash. The consolidated statements of financial position included a $194.9 million and $325.7 million redeemable noncontrolling interest for sponsored investment funds as of June 30, 2019 and December 31, 2018, respectively. |
Asset Carrying Value and Maximum Loss Exposure of Unconsolidated Variable Interest Entities (Table) | Maximum exposure to Asset carrying value loss (1) (in millions) June 30, 2019 Fixed maturities, available-for-sale: Corporate $ 235.7 $ 220.8 Residential mortgage-backed pass-through securities 2,437.0 2,389.1 Commercial mortgage-backed securities 4,569.9 4,460.3 Collateralized debt obligations (2) 2,759.4 2,771.9 Other debt obligations 7,801.9 7,675.1 Fixed maturities, trading: Residential mortgage-backed pass-through securities 310.3 310.3 Commercial mortgage-backed securities 29.0 29.0 Collateralized debt obligations (2) 20.4 20.4 Other debt obligations 13.8 13.8 Equity securities 114.4 114.4 Other investments: Other limited partnership and fund interests (3) 847.2 1,464.8 December 31, 2018 Fixed maturities, available-for-sale: Corporate $ 235.3 $ 222.6 Residential mortgage-backed pass-through securities 2,460.6 2,488.5 Commercial mortgage-backed securities 3,945.6 4,023.1 Collateralized debt obligations (2) 2,420.8 2,451.3 Other debt obligations 7,153.2 7,196.6 Fixed maturities, trading: Residential mortgage-backed pass-through securities 322.6 322.6 Commercial mortgage-backed securities 13.8 13.8 Collateralized debt obligations (2) 11.8 11.8 Other debt obligations 9.7 9.7 Equity securities 103.9 103.9 Other investments: Other limited partnership and fund interests (3) 737.5 1,432.2 (1) Our risk of loss is limited to our initial investment measured at amortized cost for fixed maturities, available-for-sale. Our risk of loss is limited to our investment measured at fair value for our fixed maturities, trading and equity securities. Our risk of loss is limited to our carrying value plus any unfunded commitments and/or guarantees and similar provisions for our other investments. Unfunded commitments are not liabilities on our consolidated statements of financial position because we are only required to fund additional equity when called upon to do so by the general partner or investment manager. (2) Primarily consists of collateralized loan obligations backed by secured corporate loans. (3) As of June 30, 2019 and December 31, 2018, the maximum exposure to loss for other limited partnership and fund interests includes $131.3 million and $132.2 million, respectively, of debt within certain of our managed international real estate funds that is fully secured by assets whose value exceeds the amount of the debt, but also includes recourse to the investment manager. |
Investments (Tables)
Investments (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Investments | |
Fixed Maturities and Equity Securities Available-for-Sale (Table) | Other-than- Gross Gross temporary Amortized unrealized unrealized impairments in cost gains losses Fair value AOCI (1) (in millions) June 30, 2019 Fixed maturities, available-for-sale: U.S. government and agencies $ 1,457.4 $ 82.9 $ 3.9 $ 1,536.4 $ — Non-U.S. governments 880.4 122.8 2.5 1,000.7 — States and political subdivisions 6,413.2 561.0 5.6 6,968.6 — Corporate 35,200.2 3,052.4 81.3 38,171.3 — Residential mortgage-backed pass-through securities 2,389.1 56.7 8.8 2,437.0 — Commercial mortgage-backed securities 4,460.3 130.7 21.1 4,569.9 20.5 Collateralized debt obligations (2) 2,771.9 1.1 13.6 2,759.4 1.4 Other debt obligations 7,697.9 141.3 14.4 7,824.8 34.2 Total fixed maturities, available-for-sale $ 61,270.4 $ 4,148.9 $ 151.2 $ 65,268.1 $ 56.1 December 31, 2018 Fixed maturities, available-for-sale: U.S. government and agencies $ 1,441.6 $ 16.4 $ 17.0 $ 1,441.0 $ — Non-U.S. governments 833.4 71.7 14.6 890.5 — States and political subdivisions 6,125.0 196.0 95.3 6,225.7 — Corporate 35,134.6 1,249.9 845.2 35,539.3 — Residential mortgage-backed pass-through securities 2,488.5 21.9 49.8 2,460.6 — Commercial mortgage-backed securities 4,023.1 17.1 94.6 3,945.6 16.3 Collateralized debt obligations (2) 2,451.3 — 30.5 2,420.8 1.2 Other debt obligations 7,228.3 39.4 82.7 7,185.0 36.1 Total fixed maturities, available-for-sale $ 59,725.8 $ 1,612.4 $ 1,229.7 $ 60,108.5 $ 53.6 (1) Excludes $70.0 million and $64.2 million as of June 30, 2019 and December 31, 2018, respectively, of net unrealized gains on impaired fixed maturities, available-for-sale related to changes in fair value subsequent to the impairment date, which are included in gross unrealized gains and gross unrealized losses. (2) Primarily consists of collateralized loan obligations backed by secured corporate loans. |
Fixed Maturities Available-for-Sale by Contractual Maturity (Table) | Amortized cost Fair value (in millions) Due in one year or less $ 2,729.6 $ 2,751.4 Due after one year through five years 10,019.9 10,333.8 Due after five years through ten years 10,564.6 11,185.6 Due after ten years 20,637.1 23,406.2 Subtotal 43,951.2 47,677.0 Mortgage-backed and other asset-backed securities 17,319.2 17,591.1 Total $ 61,270.4 $ 65,268.1 |
Net Realized Capital Gains and Losses (Table) | For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Fixed maturities, available-for-sale: Gross gains $ 6.2 $ 0.7 $ 8.7 $ 5.0 Gross losses (7.9) (18.5) (9.4) (45.2) Net impairment losses (17.3) (9.0) (24.1) (18.9) Hedging, net (1) (9.3) (2.9) (9.3) (8.0) Fixed maturities, trading (2) 17.5 (2.7) 31.7 (13.4) Equity securities (3) 14.7 5.6 35.7 3.6 Mortgage loans 0.3 2.5 0.6 2.9 Derivatives (1) 4.6 (37.4) 9.6 (28.0) Other (12.8) 129.1 37.0 144.3 Net realized capital gains (losses) $ (4.0) $ 67.4 $ 80.5 $ 42.3 (1) Upon adoption of authoritative guidance effective January 1, 2019, the change in fair value of fixed maturities, available-for-sale and the change in fair value of derivative hedging instruments in fair value hedging relationships are reported in net investment income with the earnings effect of fixed maturities, available-for-sale. Prior to 2019, the change in fair value of fixed maturities, available-for-sale and the change in fair value of derivative hedging instruments in fair value hedging relationships were reported in net realized capital gains (losses). See Note 4, Derivative Financial Instruments, for further details. (2) Unrealized gains (losses) on fixed maturities, trading still held at the reporting date were $17.6 million and $(2.7) million for the three months ended June 30, 2019 and 2018, respectively, and $31.8 million and $(13.4) million for the six months ended June 30, 2019 and 2018, respectively. (3) Unrealized gains (losses) on equity securities still held at the reporting date were $9.7 million and $0.1 million for the three months ended June 30, 2019 and 2018, respectively, and $29.7 million and $(14.1) million for the six months ended June 30, 2019 and 2018, respectively. This excludes $18.7 million and $3.3 million for the three months ended June 30, 2019 and 2018, respectively, and $41.3 million and $3.2 million for the six months ended June 30, 2019 and 2018, respectively, of unrealized gains on equity securities still held at the reporting date that were reported in net investment income. |
Other-Than-Temporary Impairment Losses, Net of Recoveries (Table) | For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Net other-than-temporary impairment recoveries $ (17.0) $ (8.2) $ (26.6) $ (6.9) Other-than-temporary impairment losses on fixed maturities, available-for-sale reclassified to (from) OCI (1) (0.3) (0.8) 2.5 (12.0) Net impairment losses on fixed maturities, available-for-sale $ (17.3) $ (9.0) $ (24.1) $ (18.9) (1) Represents the net impact of (a) gains resulting from reclassification of noncredit impairment losses for fixed maturities with bifurcated OTTI from net realized capital gains (losses) to OCI and (b) losses resulting from reclassification of previously recognized noncredit impairment losses from OCI to net realized capital gains (losses) for fixed maturities with bifurcated OTTI that had additional credit losses or fixed maturities that previously had bifurcated OTTI that have now been sold or are intended to be sold. |
Other-Than-Temporary Impairment, Credit Losses Recognized in Earnings (Table) | For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Beginning balance $ (102.3) $ (129.2) $ (117.5) $ (124.3) Credit losses for which an other-than-temporary impairment was not previously recognized (0.8) (5.5) (2.8) (10.1) Credit losses for which an other-than-temporary impairment was previously recognized (4.6) (1.9) (8.9) (11.7) Reduction for credit losses previously recognized on fixed maturities now sold, paid down or intended to be sold 8.0 2.7 28.4 10.0 Net reduction (increase) for positive changes in cash flows expected to be collected and amortization (1) (0.6) 2.8 0.5 5.0 Ending balance $ (100.3) $ (131.1) $ (100.3) $ (131.1) (1) Amounts are recognized in net investment income. |
Gross Unrealized Losses for Fixed Maturities and Equity Securities (Table) | June 30, 2019 Less than Greater than or twelve months equal to twelve months Total Gross Gross Gross Fair unrealized Fair unrealized Fair unrealized value losses value losses value losses (in millions) Fixed maturities, available-for-sale: U.S. government and agencies $ 5.7 $ — $ 160.8 $ 3.9 $ 166.5 $ 3.9 Non-U.S. governments 13.2 0.2 47.9 2.3 61.1 2.5 States and political subdivisions 2.3 — 509.8 5.6 512.1 5.6 Corporate 579.1 9.7 2,556.0 71.6 3,135.1 81.3 Residential mortgage-backed pass-through securities 1.0 — 747.4 8.8 748.4 8.8 Commercial mortgage-backed securities 127.3 2.1 625.6 19.0 752.9 21.1 Collateralized debt obligations (1) 975.5 2.7 1,063.9 10.9 2,039.4 13.6 Other debt obligations 110.9 0.5 1,677.0 13.9 1,787.9 14.4 Total fixed maturities, available-for-sale $ 1,815.0 $ 15.2 $ 7,388.4 $ 136.0 $ 9,203.4 $ 151.2 (1) Primarily consists of collateralized loan obligations backed by secured corporate loans. December 31, 2018 Less than Greater than or twelve months equal to twelve months Total Gross Gross Gross Fair unrealized Fair unrealized Fair unrealized value losses value losses value losses (in millions) Fixed maturities, available-for-sale: U.S. government and agencies $ 101.8 $ 1.6 $ 500.3 $ 15.4 $ 602.1 $ 17.0 Non-U.S. governments 210.2 4.7 191.5 9.9 401.7 14.6 States and political subdivisions 1,359.9 33.9 1,590.3 61.4 2,950.2 95.3 Corporate 13,198.4 476.0 6,865.0 369.2 20,063.4 845.2 Residential mortgage-backed pass-through securities 236.7 1.0 1,410.2 48.8 1,646.9 49.8 Commercial mortgage-backed securities 790.3 11.6 2,223.2 83.0 3,013.5 94.6 Collateralized debt obligations (1) 2,233.3 24.0 162.6 6.5 2,395.9 30.5 Other debt obligations 985.5 4.9 3,665.1 77.8 4,650.6 82.7 Total fixed maturities, available-for-sale $ 19,116.1 $ 557.7 $ 16,608.2 $ 672.0 $ 35,724.3 $ 1,229.7 (1) Primarily consists of collateralized loan obligations backed by secured corporate loans. |
Net Unrealized Gains and Losses on Available-for-Sale Securities and Derivative Instruments (Table) | June 30, 2019 December 31, 2018 (in millions) Net unrealized gains on fixed maturities, available-for-sale (1) $ 4,029.5 $ 400.8 Noncredit component of impairment losses on fixed maturities, available-for-sale (56.1) (53.6) Net unrealized gains on derivative instruments 108.0 118.5 Adjustments for assumed changes in amortization patterns (208.1) 30.3 Adjustments for assumed changes in policyholder liabilities (1,051.4) (293.7) Net unrealized gains on other investments and noncontrolling interest adjustments 97.6 68.8 Provision for deferred income taxes (628.8) (63.8) Net unrealized gains on available-for-sale securities and derivative instruments $ 2,290.7 $ 207.3 (1) Excludes net unrealized gains (losses) on fixed maturities, available-for-sale included in fair value hedging relationships. |
Mortgage Loans (Table) | June 30, 2019 December 31, 2018 (in millions) Commercial mortgage loans $ 14,830.6 $ 13,996.3 Residential mortgage loans 1,334.3 1,368.0 Total amortized cost 16,164.9 15,364.3 Valuation allowance (28.1) (27.4) Total carrying value $ 16,136.8 $ 15,336.9 |
Mortgage Loans Purchased and Sold (Table) | For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Commercial mortgage loans: Purchased $ 103.0 $ — $ 115.9 $ — Sold — 1.6 0.5 1.6 Residential mortgage loans: Purchased 66.2 92.6 99.4 204.8 Sold 21.2 27.7 32.1 51.3 |
Commercial Mortgage Loans by Geographic Distribution and Property Type Distribution (Table) | June 30, 2019 December 31, 2018 Amortized Percent Amortized Percent cost of total cost of total ($ in millions) Geographic distribution New England $ 652.6 4.4 % $ 640.6 4.6 % Middle Atlantic 4,263.9 28.7 3,927.3 28.0 East North Central 604.9 4.1 592.8 4.2 West North Central 200.5 1.4 205.8 1.5 South Atlantic 2,338.0 15.8 2,206.5 15.8 East South Central 444.8 3.0 422.5 3.0 West South Central 1,463.1 9.9 1,213.8 8.7 Mountain 897.2 6.0 968.6 6.9 Pacific 3,686.2 24.9 3,567.6 25.5 International 279.4 1.8 250.8 1.8 Total $ 14,830.6 100.0 % $ 13,996.3 100.0 % Property type distribution Office $ 4,960.6 33.4 % $ 4,625.8 33.0 % Retail 2,118.9 14.3 2,305.6 16.5 Industrial 2,350.5 15.8 2,312.9 16.5 Apartments 4,850.1 32.7 4,250.5 30.4 Hotel 97.9 0.7 99.8 0.7 Mixed use/other 452.6 3.1 401.7 2.9 Total $ 14,830.6 100.0 % $ 13,996.3 100.0 % |
Commercial Mortgage Loan Portfolio by Credit Risk (Table) | June 30, 2019 Brick and mortar CTL Total (in millions) A- and above $ 13,714.8 $ 80.6 $ 13,795.4 BBB+ thru BBB- 855.0 89.9 944.9 BB+ thru BB- 84.7 — 84.7 B+ and below 5.6 — 5.6 Total $ 14,660.1 $ 170.5 $ 14,830.6 December 31, 2018 Brick and mortar CTL Total (in millions) A- and above $ 12,735.2 $ 84.3 $ 12,819.5 BBB+ thru BBB- 977.3 105.7 1,083.0 BB+ thru BB- 88.3 — 88.3 B+ and below 5.5 — 5.5 Total $ 13,806.3 $ 190.0 $ 13,996.3 |
Performing and Non-Performing Residential Mortgage Loans (Table) | June 30, 2019 First liens Home equity Total (in millions) Performing $ 1,310.4 $ 9.3 $ 1,319.7 Non-performing 11.2 3.4 14.6 Total $ 1,321.6 $ 12.7 $ 1,334.3 December 31, 2018 First liens Home equity Total (in millions) Performing $ 1,340.3 $ 10.8 $ 1,351.1 Non-performing 12.6 4.3 16.9 Total $ 1,352.9 $ 15.1 $ 1,368.0 |
Non-Accrual Mortgage Loans (Table) | June 30, 2019 December 31, 2018 (in millions) Residential: First liens $ 9.2 $ 10.1 Home equity 3.4 4.3 Total $ 12.6 $ 14.4 |
Mortgage Loans Aging (Table) | June 30, 2019 Recorded investment 90 days or 90 days or 30-59 days 60-89 days more past Total past more and past due past due due due Current Total loans accruing (in millions) Commercial-brick and mortar $ — $ — $ — $ — $ 14,660.1 $ 14,660.1 $ — Commercial-CTL — — — — 170.5 170.5 — Residential-first liens 42.2 7.3 10.0 59.5 1,262.1 1,321.6 2.0 Residential-home equity 0.7 — — 0.7 12.0 12.7 — Total $ 42.9 $ 7.3 $ 10.0 $ 60.2 $ 16,104.7 $ 16,164.9 $ 2.0 December 31, 2018 Recorded investment 90 days or 90 days or 30-59 days 60-89 days more past Total past more and past due past due due due Current Total loans accruing (in millions) Commercial-brick and mortar $ — $ — $ — $ — $ 13,806.3 $ 13,806.3 $ — Commercial-CTL — — — — 190.0 190.0 — Residential-first liens 44.3 8.4 12.1 64.8 1,288.1 1,352.9 2.5 Residential-home equity 0.8 0.6 0.4 1.8 13.3 15.1 — Total $ 45.1 $ 9.0 $ 12.5 $ 66.6 $ 15,297.7 $ 15,364.3 $ 2.5 |
Mortgage Loan Valuation Allowance (Table) | For the three months ended June 30, 2019 Commercial Residential Total (in millions) Beginning balance $ 24.7 $ 2.9 $ 27.6 Provision 0.7 (0.8) (0.1) Charge-offs — (0.3) (0.3) Recoveries — 0.9 0.9 Ending balance $ 25.4 $ 2.7 $ 28.1 For the six months ended June 30, 2019 Commercial Residential Total (in millions) Beginning balance $ 24.3 $ 3.1 $ 27.4 Provision 1.1 (1.6) (0.5) Charge-offs — (0.4) (0.4) Recoveries — 1.6 1.6 Ending balance $ 25.4 $ 2.7 $ 28.1 Allowance ending balance by basis of impairment method: Individually evaluated for impairment $ — $ 1.5 $ 1.5 Collectively evaluated for impairment 25.4 1.2 26.6 Allowance ending balance $ 25.4 $ 2.7 $ 28.1 Loan balance by basis of impairment method: Individually evaluated for impairment $ — $ 13.3 $ 13.3 Collectively evaluated for impairment 14,830.6 1,321.0 16,151.6 Loan ending balance $ 14,830.6 $ 1,334.3 $ 16,164.9 For the three months ended June 30, 2018 Commercial Residential Total (in millions) Beginning balance $ 26.6 $ 6.4 $ 33.0 Provision (0.8) (1.8) (2.6) Charge-offs — (1.1) (1.1) Recoveries — 0.8 0.8 Ending balance $ 25.8 $ 4.3 $ 30.1 For the six months ended June 30, 2018 Commercial Residential Total (in millions) Beginning balance $ 25.8 $ 6.9 $ 32.7 Provision — (2.8) (2.8) Charge-offs — (1.6) (1.6) Recoveries — 1.8 1.8 Ending balance $ 25.8 $ 4.3 $ 30.1 Allowance ending balance by basis of impairment method: Individually evaluated for impairment $ — $ 2.0 $ 2.0 Collectively evaluated for impairment 25.8 2.3 28.1 Allowance ending balance $ 25.8 $ 4.3 $ 30.1 Loan balance by basis of impairment method: Individually evaluated for impairment $ — $ 11.0 $ 11.0 Collectively evaluated for impairment 13,071.9 1,315.1 14,387.0 Loan ending balance $ 13,071.9 $ 1,326.1 $ 14,398.0 |
Impaired Mortgage Loans (Table) | June 30, 2019 Unpaid Recorded principal Related investment balance allowance (in millions) With no related allowance recorded: Residential-first liens $ 0.9 $ 0.9 $ — With an allowance recorded: Residential-first liens 7.7 7.7 0.2 Residential-home equity 4.7 5.7 1.3 Total: Residential $ 13.3 $ 14.3 $ 1.5 December 31, 2018 Unpaid Recorded principal Related investment balance allowance (in millions) With no related allowance recorded: Residential-first liens $ 1.6 $ 1.6 $ — With an allowance recorded: Residential-first liens 2.2 2.2 — Residential-home equity 5.4 6.5 1.4 Total: Residential $ 9.2 $ 10.3 $ 1.4 For the three months ended For the six months ended June 30, 2019 June 30, 2019 Average Average recorded Interest income recorded Interest income investment recognized investment recognized (in millions) With no related allowance recorded: Residential-first liens $ 0.9 $ — $ 1.3 $ — With an allowance recorded: Residential-first liens 4.9 — 5.0 — Residential-home equity 4.9 0.1 5.1 0.1 Total: Residential $ 10.7 $ 0.1 $ 11.4 $ 0.1 For the three months ended For the six months ended June 30, 2018 June 30, 2018 Average Average recorded Interest income recorded Interest income investment recognized investment recognized (in millions) With no related allowance recorded: Residential-first liens $ 0.8 $ — $ 0.8 $ — With an allowance recorded: Residential-first liens 3.9 0.1 3.9 0.1 Residential-home equity 6.9 — 7.1 0.1 Total: Residential $ 11.6 $ 0.1 $ 11.8 $ 0.2 |
Financial Assets Subject to Netting Agreements (Table) | Gross amounts not offset in the consolidated statements of financial position Gross amount of recognized Financial Collateral assets (1) instruments (2) received Net amount (in millions) June 30, 2019 Derivative assets $ 280.4 $ (80.9) $ (188.3) $ 11.2 Reverse repurchase agreements 74.6 — (74.6) — Total $ 355.0 $ (80.9) $ (262.9) $ 11.2 December 31, 2018 Derivative assets $ 186.3 $ (70.5) $ (108.1) $ 7.7 Reverse repurchase agreements 53.0 — (53.0) — Total $ 239.3 $ (70.5) $ (161.1) $ 7.7 (1) The gross amount of recognized derivative and reverse repurchase agreement assets are reported with other investments and cash and cash equivalents, respectively, on the consolidated statements of financial position. The above excludes $11.1 million and $7.7 million of derivative assets as of June 30, 2019 and December 31, 2018, respectively, that are not subject to master netting agreements or similar agreements. The gross amounts of derivative and reverse repurchase agreement assets are not netted against offsetting liabilities for presentation on the consolidated statements of financial position. (2) Represents amount of offsetting derivative liabilities that are subject to an enforceable master netting agreement or similar agreement that are not netted against the gross derivative assets for presentation on the consolidated statements of financial position. |
Financial Liabilities Subject to Netting Agreements (Table) | Gross amounts not offset in the consolidated statements of financial position Gross amount of recognized Financial Collateral liabilities (1) instruments (2) pledged Net amount (in millions) June 30, 2019 Derivative liabilities $ 166.4 $ (80.9) $ (76.4) $ 9.1 December 31, 2018 Derivative liabilities $ 153.4 $ (70.5) $ (52.3) $ 30.6 (1) The gross amount of recognized derivative liabilities is reported with other liabilities on the consolidated statements of financial position. The above excludes $215.5 million and $138.3 million of derivative liabilities as of June 30, 2019 and December 31, 2018, respectively, which are primarily embedded derivatives that are not subject to master netting agreements or similar agreements. The gross amounts of derivative liabilities are not netted against offsetting assets for presentation on the consolidated statements of financial position. (2) Represents amount of offsetting derivative assets that are subject to an enforceable master netting agreement or similar agreement that are not netted against the gross derivative liabilities for presentation on the consolidated statements of financial position. |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Derivative Financial Instruments | |
Derivative Financial Instruments, Exposure (Table) | June 30, 2019 December 31, 2018 (in millions) Notional amounts of derivative instruments Interest rate contracts: Interest rate swaps $ 34,178.3 $ 34,393.7 Interest rate options 1,126.9 1,126.9 Interest rate futures 270.0 260.0 Swaptions 62.0 — Foreign exchange contracts: Currency forwards 915.1 863.6 Currency swaps 903.8 898.6 Currency options 469.2 525.2 Equity contracts: Equity options 1,581.5 1,522.5 Equity futures 316.1 491.7 Credit contracts: Credit default swaps 370.0 420.0 Other contracts: Embedded derivatives 9,476.5 9,452.3 Total notional amounts at end of period $ 49,669.4 $ 49,954.5 Credit exposure of derivative instruments Interest rate contracts: Interest rate swaps $ 174.3 $ 95.4 Interest rate options 29.5 16.3 Swaptions 0.1 — Foreign exchange contracts: Currency swaps 68.5 71.2 Currency forwards 1.3 2.8 Currency options 0.5 1.9 Equity contracts: Equity options 22.2 7.7 Credit contracts: Credit default swaps 1.0 2.4 Total gross credit exposure 297.4 197.7 Less: collateral received 200.0 122.9 Net credit exposure $ 97.4 $ 74.8 |
Derivative Financial Instruments, Fair Value Disclosures (Table) | Derivative assets (1) Derivative liabilities (2) June 30, 2019 December 31, 2018 June 30, 2019 December 31, 2018 (in millions) Derivatives designated as hedging instruments Interest rate contracts $ — $ — $ 22.0 $ 16.1 Foreign exchange contracts 29.2 37.6 10.2 13.5 Total derivatives designated as hedging instruments $ 29.2 $ 37.6 $ 32.2 $ 29.6 Derivatives not designated as hedging instruments Interest rate contracts $ 198.9 $ 108.0 $ 19.7 $ 22.6 Foreign exchange contracts 40.3 38.4 63.0 72.9 Equity contracts 22.2 7.7 51.9 27.6 Credit contracts 0.9 2.3 1.1 4.4 Other contracts — — 214.0 134.6 Total derivatives not designated as hedging instruments 262.3 156.4 349.7 262.1 Total derivative instruments $ 291.5 $ 194.0 $ 381.9 $ 291.7 (1) The fair value of derivative assets is reported with other investments on the consolidated statements of financial position. (2) The fair value of derivative liabilities is reported with other liabilities on the consolidated statements of financial position, with the exception of certain embedded derivative liabilities. Embedded derivatives with a net liability fair value of $118.7 million and $45.2 million as of June 30, 2019 and December 31, 2018, respectively, are reported with contractholder funds on the consolidated statements of financial position. |
Credit Derivatives Sold (Table) | June 30, 2019 Weighted Maximum average Notional Fair future expected life amount value payments (in years) (in millions) Single name credit default swaps Corporate debt AAA $ 10.0 $ — $ 10.0 0.2 A 15.0 0.1 15.0 0.5 BBB 165.0 0.2 165.0 1.5 Government/municipalities AA 20.0 0.1 20.0 0.5 Sovereign A 10.0 — 10.0 0.2 BBB 55.0 0.4 55.0 0.8 Total credit default swap protection sold $ 275.0 $ 0.8 $ 275.0 1.1 December 31, 2018 Weighted Maximum average Notional Fair future expected life amount value payments (in years) (in millions) Single name credit default swaps Corporate debt AAA $ 10.0 $ 0.1 $ 10.0 0.7 A 15.0 0.1 15.0 1.0 BBB 190.0 0.4 190.0 1.7 BB 10.0 — 10.0 0.5 CCC 15.0 (3.6) 15.0 0.9 Government/municipalities AA 20.0 0.2 20.0 1.0 Sovereign A 10.0 0.1 10.0 0.7 BBB 55.0 0.4 55.0 1.3 Total credit default swap protection sold $ 325.0 $ (2.3) $ 325.0 1.4 |
Fair Value Hedges (Table) | Cumulative amount of fair value hedging basis adjustment Line item in the consolidated statements included in the amortized cost of financial position in which the Amortized cost of hedged item of the hedged item hedged item is included June 30, 2019 December 31, 2018 June 30, 2019 December 31, 2018 (in millions) Fixed maturities, available-for-sale: Active hedging relationships $ 143.3 $ 137.0 $ 19.0 $ 12.4 Discontinued hedging relationships 248.7 298.9 9.6 13.3 Total fixed maturities, available-for-sale in active or discontinued hedging relationships $ 392.0 $ 435.9 $ 28.6 $ 25.7 |
Cash Flow Hedges (Table) | Amount of gain (loss) recognized in AOCI on derivatives For the three months ended For the six months ended Derivatives in cash June 30, June 30, flow hedging relationships Related hedged item 2019 2018 2019 2018 (in millions) (in millions) Interest rate contracts Fixed maturities, available-for-sale $ 0.9 $ 34.8 $ (3.3) $ 30.2 Foreign exchange contracts Fixed maturities, available-for-sale 3.4 27.2 (5.2) 8.4 Foreign exchange contracts Investment contracts — — — (0.1) Total $ 4.3 $ 62.0 $ (8.5) $ 38.5 |
Effect of Fair Value and Cash Flow Hedges on Consolidated Statements of Operations (Table) | For the three months ended June 30, 2019 Benefits, Net investment Net realized claims and income related capital gains settlement to hedges (losses) related to expenses of fixed hedges of fixed related to Operating maturities, maturities, hedges of expenses available- available- investment related to for-sale for-sale contracts hedges of debt (in millions) Total amounts of consolidated statement of operations line items in which the effects of fair value and cash flow hedges are reported $ 1,037.1 $ (4.0) $ 2,446.1 $ 1,046.3 Losses on fair value hedging relationships: Interest rate contracts: Gain recognized on hedged item $ 4.2 $ — $ — $ — Loss recognized on derivatives (4.3) — — — Amortization of hedged item basis adjustments (1.2) — — — Amounts related to periodic settlements on derivatives (0.7) — — — Total loss recognized for fair value hedging relationships $ (2.0) $ — $ — $ — Gains (losses) on cash flow hedging relationships: Interest rate contracts: Gain (loss) reclassified from AOCI on derivatives $ 4.9 $ — $ — $ (2.0) Gain reclassified from AOCI into net income as a result that a forecasted transaction is no longer probable of occurring — 0.1 — — Foreign exchange contracts: Gain reclassified from AOCI on derivatives — 9.5 — — Amounts related to periodic settlements on derivatives 1.7 — — — Total gain (loss) recognized for cash flow hedging relationships $ 6.6 $ 9.6 $ — $ (2.0) For the three months ended June 30, 2018 Benefits, Net investment Net realized claims and income related capital gains settlement to hedges related to expenses of fixed hedges of fixed related to Operating maturities, maturities, hedges of expenses available- available- investment related to for-sale for-sale contracts hedges of debt (in millions) Total amounts of consolidated statement of operations line items in which the effects of fair value and cash flow hedges are reported $ 889.1 $ 67.4 $ 1,699.2 $ 990.1 Losses on fair value hedging relationships: Interest rate contracts: Loss recognized on hedged item $ — $ (2.3) $ — $ — Gain recognized on derivatives — 2.2 — — Amortization of hedged item basis adjustments (1.7) — — — Amounts related to periodic settlements on derivatives (1.7) — — — Total loss recognized for fair value hedging relationships $ (3.4) $ (0.1) $ — $ — Gains (losses) on cash flow hedging relationships: Interest rate contracts: Gain (loss) reclassified from AOCI on derivatives $ 5.3 $ — $ — $ (2.6) Gain reclassified from AOCI as a result that a forecasted transaction is no longer probable of occurring — 0.1 — — Foreign exchange contracts: Gain reclassified from AOCI on derivatives — 0.6 — — Amounts related to periodic settlements on derivatives 1.5 — — — Total gain (loss) recognized for cash flow hedging relationships $ 6.8 $ 0.7 $ — $ (2.6) For the six months ended June 30, 2019 Benefits, Net investment Net realized claims and income related capital gains settlement to hedges related to expenses of fixed hedges of fixed related to Operating maturities, maturities, hedges of expenses available- available- investment related to for-sale for-sale contracts hedges of debt (in millions) Total amounts of consolidated statement of operations line items in which the effects of fair value and cash flow hedges are reported $ 1,998.1 $ 80.5 $ 4,641.2 $ 2,039.0 Losses on fair value hedging relationships: Interest rate contracts: Gain recognized on hedged item $ 6.6 $ — $ — $ — Loss recognized on derivatives (6.8) — — — Amortization of hedged item basis adjustments (2.5) — — — Amounts related to periodic settlements on derivatives (1.5) — — — Total loss recognized for fair value hedging relationships $ (4.2) $ — $ — $ — Gains (losses) on cash flow hedging relationships: Interest rate contracts: Gain (loss) reclassified from AOCI on derivatives $ 10.0 $ — $ — $ (4.8) Gain reclassified from AOCI into net income as a result that a forecasted transaction is no longer probable of occurring — 0.1 — — Foreign exchange contracts: Gain reclassified from AOCI on derivatives — 9.5 — — Amounts related to periodic settlements on derivatives 3.3 — — — Total gain (loss) recognized for cash flow hedging relationships $ 13.3 $ 9.6 $ — $ (4.8) For the six months ended June 30, 2018 Benefits, Net investment Net realized claims and income related capital gains settlement to hedges related to expenses of fixed hedges of fixed related to Operating maturities, maturities, hedges of expenses available- available- investment related to for-sale for-sale contracts hedges of debt (in millions) Total amounts of consolidated statement of operations line items in which the effects of fair value and cash flow hedges are reported $ 1,791.3 $ 42.3 $ 3,110.3 $ 1,975.1 Losses on fair value hedging relationships: Interest rate contracts: Loss recognized on hedged item $ — $ (7.8) $ — $ — Gain recognized on derivatives — 7.6 — — Amortization of hedged item basis adjustments (3.5) — — — Amounts related to periodic settlements on derivatives (3.7) — — — Total loss recognized for fair value hedging relationships $ (7.2) $ (0.2) $ — $ — Gains (losses) on cash flow hedging relationships: Interest rate contracts: Gain (loss) reclassified from AOCI on derivatives $ 10.7 $ — $ — $ (5.2) Gain reclassified from AOCI as a result that a forecasted transaction is no longer probable of occurring — 0.2 — — Foreign exchange contracts: Gain reclassified from AOCI on derivatives — 0.2 — — Amounts related to periodic settlements on derivatives 3.1 — (0.1) — Total gain (loss) recognized for cash flow hedging relationships $ 13.8 $ 0.4 $ (0.1) $ (5.2) |
Derivatives Not Designated as Hedging Instruments (Table) | Amount of gain (loss) recognized in Amount of gain (loss) recognized in net income on derivatives for the net income on derivatives for the three months ended June 30, six months ended June 30, Derivatives not designated as hedging instruments 2019 2018 2019 2018 (in millions) Interest rate contracts $ 94.1 $ (19.8) $ 161.4 $ (67.8) Foreign exchange contracts 5.4 (24.2) 10.0 (15.4) Equity contracts (15.8) (43.0) (90.8) (58.2) Credit contracts (4.8) 1.2 (3.5) 1.3 Other contracts (76.1) 52.1 (71.4) 115.8 Total $ 2.8 $ (33.7) $ 5.7 $ (24.3) |
Insurance Liabilities (Tables)
Insurance Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Insurance Liabilities | |
Liability for Unpaid Claims (Table) | For the six months ended June 30, 2019 2018 (in millions) Balance at beginning of period $ 2,252.7 $ 2,130.5 Less: reinsurance recoverable 404.3 375.8 Net balance at beginning of period 1,848.4 1,754.7 Incurred: Current year 653.6 617.3 Prior years 29.0 17.9 Total incurred 682.6 635.2 Payments: Current year 387.8 358.3 Prior years 238.1 231.8 Total payments 625.9 590.1 Net balance at end of period 1,905.1 1,799.8 Plus: reinsurance recoverable 403.7 388.2 Balance at end of period $ 2,308.8 $ 2,188.0 Amounts not included in the rollforward above: Claim adjustment expense liabilities $ 55.1 $ 51.9 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Long-Term Debt | |
Long-Term Debt (Table) | June 30, 2019 Net unamortized discount, premium and debt issuance Carrying Principal costs amount (in millions) 3.3% notes payable, due 2022 $ 300.0 $ (1.3) $ 298.7 3.125% notes payable, due 2023 300.0 (1.1) 298.9 3.4% notes payable, due 2025 400.0 (2.8) 397.2 3.1% notes payable, due 2026 350.0 (2.6) 347.4 3.7% notes payable, due in 2029 500.0 (6.4) 493.6 6.05% notes payable, due 2036 505.6 (2.5) 503.1 4.625% notes payable, due 2042 300.0 (3.2) 296.8 4.35% notes payable, due 2043 300.0 (3.3) 296.7 4.3% notes payable, due 2046 300.0 (3.3) 296.7 4.7% notes payable, due 2055 400.0 (4.9) 395.1 Non-recourse mortgages and notes payable 137.0 1.2 138.2 Total long-term debt $ 3,792.6 $ (30.2) $ 3,762.4 December 31, 2018 Net unamortized discount, premium and debt issuance Carrying Principal costs amount (in millions) 3.3% notes payable, due 2022 $ 300.0 $ (1.5) $ 298.5 3.125% notes payable, due 2023 300.0 (1.2) 298.8 3.4% notes payable, due 2025 400.0 (3.0) 397.0 3.1% notes payable, due 2026 350.0 (2.7) 347.3 6.05% notes payable, due 2036 505.6 (2.6) 503.0 4.625% notes payable, due 2042 300.0 (3.3) 296.7 4.35% notes payable, due 2043 300.0 (3.3) 296.7 4.3% notes payable, due 2046 300.0 (3.3) 296.7 4.7% notes payable, due 2055 400.0 (4.9) 395.1 Non-recourse mortgages and notes payable 128.5 1.3 129.8 Total long-term debt $ 3,284.1 $ (24.5) $ 3,259.6 |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Income Taxes | |
Reconciliation Between U.S. Corporate Income Tax Rate and Effective Income Tax Rate from Continuing Operations (Table) | For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 U.S. corporate income tax rate 21 % 21 % 21 % 21 % Dividends received deduction (4) (3) (5) (3) Tax credits (3) (3) (2) (3) Impact of equity method presentation (1) (1) (1) (1) Impact of the Tax Cuts and Jobs Act — (4) — (3) State income taxes — 1 1 1 Other — — — (1) Effective income tax rate 13 % 11 % 14 % 11 % |
Changes in Unrecognized Tax Benefits (Table) | For the six months ended For the year ended June 30, 2019 December 31, 2018 (in millions) Balance at beginning of period $ 42.1 $ 194.1 Additions based on tax positions related to the current year 23.2 0.8 Additions for tax positions of prior years — 43.7 Reductions for tax positions related to the current year (2.2) (10.6) Reductions for tax positions of prior years (0.5) (23.2) Settlements — (162.7) Balance at end of period $ 62.6 $ 42.1 |
Employee and Agent Benefits (Ta
Employee and Agent Benefits (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Employee and Agent Benefits | |
Components of Net Periodic Benefit Cost (Income) (Table) | Other postretirement Pension benefits benefits For the three months ended For the three months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Service cost $ 16.7 $ 18.2 $ — $ — Interest cost 32.1 29.9 1.0 0.8 Expected return on plan assets (36.4) (39.3) (8.3) (8.4) Amortization (2.0) (0.8) (0.3) (3.4) Recognized net actuarial (gain) loss 17.2 16.9 — (0.4) Net periodic benefit cost (income) $ 27.6 $ 24.9 $ (7.6) $ (11.4) Other postretirement Pension benefits benefits For the six months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Service cost $ 33.5 $ 36.5 $ — $ — Interest cost 64.9 59.8 1.9 1.7 Expected return on plan assets (71.9) (78.5) (16.6) (16.8) Amortization (2.9) (1.7) (0.6) (6.9) Recognized net actuarial (gain) loss 34.1 33.8 — (0.7) Net periodic benefit cost (income) $ 57.7 $ 49.9 $ (15.3) $ (22.7) |
Contingencies, Guarantees, In_2
Contingencies, Guarantees, Indemnifications and Leases (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Contingencies, Guarantees, Indemnifications and Leases | |
Lease Assets and Liabilities (Table) | June 30, 2019 (in millions) Assets Operating lease assets (1) $ 195.2 Finance lease assets (1) 32.8 Total lease assets $ 228.0 Liabilities Operating lease liabilities (2) $ 204.4 Finance lease liabilities (2) 33.0 Total lease liabilities $ 237.4 (1) Operating and finance lease assets are primarily reported within property and equipment on the consolidated statements of financial position. (2) Operating and finance lease liabilities are reported within other liabilities on the consolidated statements of financial position. |
Lease Cost (Table) | For the three months ended For the six months ended June 30, 2019 June 30, 2019 (in millions) Finance lease cost (1): Amortization of right-of-use assets $ 3.5 $ 7.0 Interest on lease liabilities 0.2 0.5 Operating lease cost (1) 14.4 27.8 Other lease cost (1) (2) 1.8 4.6 Sublease income (3) (0.4) (0.8) Total lease cost $ 19.5 $ 39.1 (1) Finance, operating and other lease costs are primarily included in operating expenses on the consolidated statements of operations. (2) Other lease cost primarily reflects variable and short-term lease costs. (3) Sublease income is included in fees and other revenues on the consolidated statements of operations. |
Payments Due by Period for Lease Obligations (Table) | Operating leases Finance leases Total (in millions) For the twelve months ending June 30: 2020 $ 52.5 $ 14.4 $ 66.9 2021 45.4 11.5 56.9 2022 35.3 6.7 42.0 2023 28.0 1.3 29.3 2024 17.7 0.2 17.9 2025 and thereafter 50.8 0.2 51.0 Total lease payments 229.7 34.3 264.0 Less: interest 25.3 1.3 26.6 Present value of lease liabilities $ 204.4 $ 33.0 $ 237.4 |
Weighted-Average Remaining Lease Term and Weighted-Average Discount Rates (Table) | For the six months ended June 30, 2019 Weighted-average remaining lease term (in years): Operating leases 6.9 Finance leases 2.7 Weighted-average discount rate: Operating leases 4.0 % Finance leases 2.9 % |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Stockholders' Equity | |
Common Stock Dividends (Table) | For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 Dividends declared per common share $ 0.54 $ 0.52 $ 1.08 $ 1.03 |
Reconciliation of Outstanding Common Shares (Table) | For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Beginning balance 278.2 287.7 279.5 289.0 Shares issued 0.4 0.3 2.2 2.2 Treasury stock acquired — (3.4) (3.1) (6.6) Ending balance 278.6 284.6 278.6 284.6 |
Other Comprehensive Income (Loss) (Table) | For the three months ended For the six months ended June 30, 2019 June 30, 2019 Pre-Tax Tax After-Tax Pre-Tax Tax After-Tax (in millions) Net unrealized gains on available-for-sale securities during the period $ 1,804.0 $ (394.9) $ 1,409.1 $ 3,621.0 $ (787.4) $ 2,833.6 Reclassification adjustment for losses included in net income (1) 27.9 (5.5) 22.4 36.6 (7.2) 29.4 Adjustments for assumed changes in amortization patterns (117.6) 24.7 (92.9) (239.7) 50.4 (189.3) Adjustments for assumed changes in policyholder liabilities (462.3) 108.6 (353.7) (762.6) 178.1 (584.5) Net unrealized gains on available-for-sale securities 1,252.0 (267.1) 984.9 2,655.3 (566.1) 2,089.2 Noncredit component of impairment losses on fixed maturities, available-for-sale during the period 0.3 — 0.3 (2.5) 0.6 (1.9) Adjustments for assumed changes in amortization patterns (0.8) 0.1 (0.7) (1.2) 0.2 (1.0) Adjustments for assumed changes in policyholder liabilities 0.1 — 0.1 0.1 — 0.1 Noncredit component of impairment losses on fixed maturities, available-for-sale (2) (0.4) 0.1 (0.3) (3.6) 0.8 (2.8) Net unrealized gains on derivative instruments during the period 12.8 (2.7) 10.1 4.3 (0.9) 3.4 Reclassification adjustment for gains included in net income (3) (12.5) 2.5 (10.0) (14.8) 2.8 (12.0) Adjustments for assumed changes in amortization patterns 0.6 (0.1) 0.5 2.5 (0.5) 2.0 Adjustments for assumed changes in policyholder liabilities 1.2 (0.2) 1.0 4.8 (1.1) 3.7 Net unrealized gains (losses) on derivative instruments 2.1 (0.5) 1.6 (3.2) 0.3 (2.9) Foreign currency translation adjustment during the period 4.6 (2.2) 2.4 45.5 (4.8) 40.7 Reclassification adjustment for losses included in net income (4) 26.5 — 26.5 26.1 — 26.1 Foreign currency translation adjustment 31.1 (2.2) 28.9 71.6 (4.8) 66.8 Unrecognized postretirement benefit obligation during the period 63.4 (17.1) 46.3 63.4 (17.1) 46.3 Amortization of amounts included in net periodic benefit cost (5) 14.9 (4.0) 10.9 30.6 (8.2) 22.4 Net unrecognized postretirement benefit obligation 78.3 (21.1) 57.2 94.0 (25.3) 68.7 Other comprehensive income $ 1,363.1 $ (290.8) $ 1,072.3 $ 2,814.1 $ (595.1) $ 2,219.0 For the three months ended For the six months ended June 30, 2018 June 30, 2018 Pre-Tax Tax After-Tax Pre-Tax Tax After-Tax (in millions) Net unrealized losses on available-for-sale securities during the period $ (777.8) $ 158.1 $ (619.7) $ (2,081.5) $ 438.5 $ (1,643.0) Reclassification adjustment for losses included in net income (1) 26.5 (5.6) 20.9 47.2 (10.0) 37.2 Adjustments for assumed changes in amortization patterns 54.2 (11.4) 42.8 140.4 (29.5) 110.9 Adjustments for assumed changes in policyholder liabilities 102.2 (12.3) 89.9 280.7 (57.4) 223.3 Net unrealized losses on available-for-sale securities (594.9) 128.8 (466.1) (1,613.2) 341.6 (1,271.6) Noncredit component of impairment losses on fixed maturities, available-for-sale during the period 0.8 (0.2) 0.6 12.0 (2.6) 9.4 Adjustments for assumed changes in amortization patterns — 0.1 0.1 1.3 (0.2) 1.1 Adjustments for assumed changes in policyholder liabilities 0.1 — 0.1 (0.5) 0.1 (0.4) Noncredit component of impairment losses on fixed maturities, available-for-sale (2) 0.9 (0.1) 0.8 12.8 (2.7) 10.1 Net unrealized gains on derivative instruments during the period 27.7 (5.8) 21.9 8.5 (1.8) 6.7 Reclassification adjustment for gains included in net income (3) (3.3) 0.5 (2.8) (5.7) 0.9 (4.8) Adjustments for assumed changes in amortization patterns — — — 0.9 (0.2) 0.7 Adjustments for assumed changes in policyholder liabilities 1.4 (0.2) 1.2 4.2 (0.9) 3.3 Net unrealized gains on derivative instruments 25.8 (5.5) 20.3 7.9 (2.0) 5.9 Foreign currency translation adjustment (247.0) 10.9 (236.1) (180.1) 9.8 (170.3) Amortization of amounts included in net periodic benefit cost (5) 12.3 (3.5) 8.8 24.5 (7.0) 17.5 Net unrecognized postretirement benefit obligation 12.3 (3.5) 8.8 24.5 (7.0) 17.5 Other comprehensive loss $ (802.9) $ 130.6 $ (672.3) $ (1,748.1) $ 339.7 $ (1,408.4) (1) Pre-tax reclassification adjustments relating to available-for-sale securities are reported in net realized capital gains (losses) on the consolidated statements of operations. (2) Represents the net impact of (1) unrealized gains resulting from reclassification of previously recognized noncredit impairment losses from OCI to net realized capital gains (losses) for fixed maturities with bifurcated OTTI that had additional credit losses or fixed maturities that previously had bifurcated OTTI that have now been sold or are intended to be sold and (2) unrealized losses resulting from reclassification of noncredit impairment losses for fixed maturities with bifurcated OTTI from net realized capital gains (losses) to OCI. (3) See Note 4, Derivative Financial Instruments – Effect of Fair Value and Cash Flow Hedges on Consolidated Statements of Operations, for further details. (4) Pre-tax reclassification adjustments primarily relate to deconsolidated sponsored investment funds and are reported in net realized capital gains (losses) on the consolidated statements of operations. For both the three and six months ended June 30, 2019, $5.7 million of this reclassification relates to noncontrolling interest and is reported in net income attributable to noncontrolling interest on the consolidated statements of operations. (5) Amount is comprised of amortization of prior service cost (benefit) and recognized net actuarial (gain) loss, which is reported in operating expenses on the consolidated statements of operations. See Note 8, Employee and Agent Benefits – Components of Net Periodic Benefit Cost, for further details. |
Accumulated Other Comprehensive Income (Loss) (Table) | Noncredit Net unrealized component of Net unrealized Foreign Unrecognized Accumulated gains on impairment losses gains currency postretirement other available-for-sale on fixed maturities on derivative translation benefit comprehensive securities available-for-sale instruments adjustment obligation income (loss) (in millions) Balances as of April 1, 2018 $ 914.0 $ (64.2) $ 34.0 $ (909.8) $ (443.3) $ (469.3) Other comprehensive loss during the period, net of adjustments (487.0) — 23.1 (232.4) — (696.3) Amounts reclassified from AOCI 20.9 0.8 (2.8) — 8.8 27.7 Other comprehensive loss (466.1) 0.8 20.3 (232.4) 8.8 (668.6) Balances as of June 30, 2018 $ 447.9 $ (63.4) $ 54.3 $ (1,142.2) $ (434.5) $ (1,137.9) Balances as of April 1, 2019 $ 1,294.3 $ (49.6) $ 59.9 $ (1,222.1) $ (501.4) $ (418.9) Other comprehensive income during the period, net of adjustments 962.4 (0.3) 11.6 2.5 46.3 1,022.5 Amounts reclassified from AOCI 22.4 — (10.0) 20.8 10.9 44.1 Other comprehensive income 984.8 (0.3) 1.6 23.3 57.2 1,066.6 Balances as of June 30, 2019 $ 2,279.1 $ (49.9) $ 61.5 $ (1,198.8) $ (444.2) $ 647.7 Noncredit Net unrealized component of Net unrealized Foreign Unrecognized Accumulated gains on impairment losses gains currency postretirement other available-for-sale on fixed maturities on derivative translation benefit comprehensive securities available-for-sale instruments adjustment obligation income (loss) (in millions) Balances as of January 1, 2018 $ 1,470.7 $ (58.3) $ 42.7 $ (918.5) $ (371.1) $ 165.5 Other comprehensive loss during the period, net of adjustments (1,308.8) — 10.7 (167.5) — (1,465.6) Amounts reclassified from AOCI 37.2 10.1 (4.8) — 17.5 60.0 Other comprehensive loss (1,271.6) 10.1 5.9 (167.5) 17.5 (1,405.6) Effects of implementation of accounting change related to equity investments, net (1.0) — — — — (1.0) Effects of implementation of accounting change accounting change related to revenue recognition, net — — — 25.6 — 25.6 Effects of implementation of accounting change related to the reclassification of certain tax effects, net 249.8 (15.2) 5.7 (81.8) (80.9) 77.6 Balances as of June 30, 2018 $ 447.9 $ (63.4) $ 54.3 $ (1,142.2) $ (434.5) $ (1,137.9) Balances as of January 1, 2019 $ 190.0 $ (47.1) $ 64.4 $ (1,259.5) $ (512.9) $ (1,565.1) Other comprehensive income during the period, net of adjustments 2,059.7 (2.8) 9.1 40.3 46.3 2,152.6 Amounts reclassified from AOCI 29.4 — (12.0) 20.4 22.4 60.2 Other comprehensive income 2,089.1 (2.8) (2.9) 60.7 68.7 2,212.8 Balances as of June 30, 2019 $ 2,279.1 $ (49.9) $ 61.5 $ (1,198.8) $ (444.2) $ 647.7 |
Redeemable Noncontrolling Interest (Table) | Following is a reconciliation of the changes in the redeemable noncontrolling interest (in millions): For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Balance at beginning of period $ 537.7 $ 127.8 $ 391.2 $ 101.3 Net income attributable to redeemable noncontrolling interest 4.0 1.3 24.3 2.1 Redeemable noncontrolling interest of deconsolidated entities (1) (370.0) — (370.0) (3.2) Contributions from redeemable noncontrolling interest 154.0 17.4 297.7 56.4 Distributions to redeemable noncontrolling interest (25.8) (5.8) (46.1) (15.7) Change in redemption value of redeemable noncontrolling interest (1.0) — 1.7 (0.6) Stock-based compensation attributable to redeemable noncontrolling interest 0.1 — 0.1 — Other comprehensive income (loss) attributable to redeemable noncontrolling interest 5.5 (1.8) 5.6 (1.4) Balance at end of period $ 304.5 $ 138.9 $ 304.5 $ 138.9 (1) We deconsolidated certain sponsored investment funds as they no longer met the requirements for consolidation. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Measurements | |
Fair Value (Table) | June 30, 2019 Assets/ Amount (liabilities) measured at measured at net asset Fair value hierarchy level fair value value (4) Level 1 Level 2 Level 3 (in millions) Assets Fixed maturities, available-for-sale: U.S. government and agencies $ 1,536.4 $ — $ 1,125.6 $ 410.8 $ — Non-U.S. governments 1,000.7 — 2.0 994.8 3.9 States and political subdivisions 6,968.6 — — 6,968.6 — Corporate 38,171.3 — 19.1 38,107.5 44.7 Residential mortgage-backed securities 2,437.0 — — 2,437.0 — Commercial mortgage-backed securities 4,569.9 — — 4,556.8 13.1 Collateralized debt obligations (1) 2,759.4 — — 2,724.6 34.8 Other debt obligations 7,824.8 — — 7,764.9 59.9 Total fixed maturities, available-for-sale 65,268.1 — 1,146.7 63,965.0 156.4 Fixed maturities, trading 686.8 — — 686.3 0.5 Equity securities 1,895.2 — 633.5 1,261.7 — Derivative assets (2) 291.5 — — 261.3 30.2 Other investments 812.5 84.2 201.7 497.5 29.1 Cash equivalents 2,123.6 — 36.6 2,087.0 — Sub-total excluding separate account assets 71,077.7 84.2 2,018.5 68,758.8 216.2 Separate account assets 162,848.6 129.7 91,789.6 62,239.5 8,689.8 Total assets $ 233,926.3 $ 213.9 $ 93,808.1 $ 130,998.3 $ 8,906.0 Liabilities Investment contracts (3) $ (118.7) $ — $ — $ — $ (118.7) Derivative liabilities (2) (168.0) — — (153.6) (14.4) Other liabilities (3) (96.0) — — (96.0) — Total liabilities $ (382.7) $ — $ — $ (249.6) $ (133.1) Net assets $ 233,543.6 $ 213.9 $ 93,808.1 $ 130,748.7 $ 8,772.9 December 31, 2018 Assets/ Amount (liabilities) measured at measured at net asset Fair value hierarchy level fair value value (4) Level 1 Level 2 Level 3 (in millions) Assets Fixed maturities, available-for-sale: U.S. government and agencies $ 1,441.0 $ — $ 1,027.8 $ 413.2 $ — Non-U.S. governments 890.5 — 2.7 883.2 4.6 States and political subdivisions 6,225.7 — — 6,225.7 — Corporate 35,539.3 — 19.2 35,462.2 57.9 Residential mortgage-backed securities 2,460.6 — — 2,460.6 — Commercial mortgage-backed securities 3,945.6 — — 3,936.1 9.5 Collateralized debt obligations (1) 2,420.8 — — 2,412.5 8.3 Other debt obligations 7,185.0 — — 7,126.5 58.5 Total fixed maturities, available-for-sale 60,108.5 — 1,049.7 58,920.0 138.8 Fixed maturities, trading 636.1 — — 636.1 — Equity securities 1,843.7 — 661.2 1,182.5 — Derivative assets (2) 194.0 — — 175.4 18.6 Other investments 828.6 75.4 125.9 610.1 17.2 Cash equivalents 1,775.9 — 46.3 1,729.6 — Sub-total excluding separate account assets 65,386.8 75.4 1,883.1 63,253.7 174.6 Separate account assets 144,987.9 124.6 79,572.0 56,675.8 8,615.5 Total assets $ 210,374.7 $ 200.0 $ 81,455.1 $ 119,929.5 $ 8,790.1 Liabilities Investment contracts (3) $ (45.2) $ — $ — $ — $ (45.2) Derivative liabilities (2) (157.1) — — (141.6) (15.5) Other liabilities (3) (91.5) — — (91.5) — Total liabilities $ (293.8) $ — $ — $ (233.1) $ (60.7) Net assets $ 210,080.9 $ 200.0 $ 81,455.1 $ 119,696.4 $ 8,729.4 (1) Primarily consists of collateralized loan obligations backed by secured corporate loans. (2) Within the consolidated statements of financial position, derivative assets are reported with other investments and derivative liabilities are reported with other liabilities. The amounts are presented gross in the tables above to reflect the presentation on the consolidated statements of financial position; however, are presented net for purposes of the rollforward in the Changes in Level 3 Fair Value Measurements tables. Refer to Note 4, Derivative Financial Instruments, for further information on fair value by class of derivative instruments. (3) Includes bifurcated embedded derivatives that are reported at net asset (liability) fair value within the same line item in the consolidated statements of financial position in which the host contract is reported. (4) Certain investments are measured at fair value using the NAV per share (or its equivalent) practical expedient and have not been classified in the fair value hierarchy. Other investments using the NAV practical expedient consist of certain fund interests that are restricted until maturity with unfunded commitments totaling $24.7 million and $32.0 million as of June 30, 2019 and December 31, 2018, respectively. Separate account assets using the NAV practical expedient consist of hedge funds with varying investment strategies that also have a variety of redemption terms and conditions. We do not have unfunded commitments associated with these hedge funds. |
Reconciliation for All Assets and Liabilities Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Table) | For the three months ended June 30, 2019 Changes in Beginning Net Ending unrealized asset/ Total realized/unrealized purchases, asset/ gains (losses) (liability) gains (losses) sales, (liability) included in balance Included in Included in issuances balance net income as of net other and Transfers Transfers as of relating to April 1, income comprehensive settlements into out of June 30, positions still 2019 (1) income (3) (4) Level 3 Level 3 2019 held (1) (in millions) Assets Fixed maturities, available-for-sale: Non-U.S. governments $ 4.2 $ — $ — $ (0.3) $ — $ — $ 3.9 $ — Corporate 58.5 — — (13.8) — — 44.7 — Commercial mortgage-backed securities 12.0 (3.2) 2.9 — 3.7 (2.3) 13.1 (2.1) Collateralized debt obligations 5.9 — 0.5 (1.6) 30.0 — 34.8 — Other debt obligations 43.4 — 0.5 16.0 — — 59.9 — Total fixed maturities, available-for-sale 124.0 (3.2) 3.9 0.3 33.7 (2.3) 156.4 (2.1) Fixed maturities,trading — — — 0.5 — — 0.5 — Equity securities 0.4 — (0.4) — — — — — Other investments 29.4 0.1 — (0.4) — — 29.1 0.1 Separate account assets (2) 8,718.7 138.9 0.5 4.2 — (172.5) 8,689.8 126.4 Liabilities Investment contracts (40.5) (76.2) (0.2) (1.8) — — (118.7) (75.5) Derivatives Net derivative assets (liabilities) 3.4 6.6 — 5.8 — — 15.8 11.2 For the three months ended June 30, 2018 Changes in Beginning Net Ending unrealized asset/ Total realized/unrealized purchases, asset/ gains (losses) (liability) gains (losses) sales, (liability) included in balance Included in Included in issuances balance net income as of net other and Transfers Transfers as of relating to April 1, income comprehensive settlements into out of June 30, positions still 2018 (1) income (3) (4) Level 3 Level 3 2018 held (1) (in millions) Assets Fixed maturities, available-for-sale: Non-U.S. governments $ 7.0 $ — $ — $ (0.4) $ — $ — $ 6.6 $ — Corporate 103.8 — (0.7) (6.0) 0.4 (11.5) 86.0 — Commercial mortgage-backed securities 11.1 — (0.1) — — (0.9) 10.1 — Collateralized debt obligations 80.7 — (0.4) 27.8 12.0 (39.9) 80.2 — Other debt obligations 2.1 (0.1) 0.3 92.5 — — 94.8 — Total fixed maturities, available-for-sale 204.7 (0.1) (0.9) 113.9 12.4 (52.3) 277.7 — Fixed maturities, trading — — — 3.7 — — 3.7 — Equity securities 14.9 0.7 — (15.6) — — — — Other investments 9.3 0.3 — 3.6 — — 13.2 0.3 Separate account assets (2) 7,991.9 245.4 0.1 54.5 — (0.4) 8,291.5 257.9 Liabilities Investment contracts (96.2) 52.0 (0.1) 1.5 — — (42.8) 51.6 Derivatives Net derivative assets (liabilities) 16.8 (11.1) — (0.3) — — 5.4 (12.4) For the six months ended June 30, 2019 Changes in Beginning Net Ending unrealized asset/ Total realized/unrealized purchases, asset/ gains (losses) (liability) gains (losses) sales, (liability) included in balance Included Included in issuances balance net income as of in net other and Transfers Transfers as of relating to January 1, income comprehensive settlements into out of June 30, positions still 2019 (1) income (3) (4) Level 3 Level 3 2019 held (1) (in millions) Assets Fixed maturities, available-for-sale: Non-U.S. governments $ 4.6 $ — $ — $ (0.7) $ — $ — $ 3.9 $ — Corporate 57.9 — 0.4 (13.6) — — 44.7 — Commercial mortgage-backed securities 9.5 (3.2) 3.2 2.2 3.7 (2.3) 13.1 (2.1) Collateralized debt obligations 8.3 (2.5) 0.3 (1.3) 30.0 — 34.8 (2.5) Other debt obligations 58.5 — 1.6 25.8 — (26.0) 59.9 — Total fixed maturities, available-for-sale 138.8 (5.7) 5.5 12.4 33.7 (28.3) 156.4 (4.6) Fixed maturities, trading — — — 0.5 — — 0.5 — Other investments 17.2 2.3 — (0.4) 10.0 — 29.1 2.3 Separate account assets (2) 8,615.5 313.5 0.1 (66.1) — (173.2) 8,689.8 327.2 Liabilities Investment contracts (45.2) (71.9) (0.1) (1.5) — — (118.7) (70.3) Derivatives Net derivative assets (liabilities) 3.1 5.0 — 7.7 — — 15.8 8.9 For the six months ended June 30, 2018 Changes in Beginning Net Ending unrealized asset/ Total realized/unrealized purchases, asset/ gains (losses) (liability) gains (losses) sales, (liability) included in balance Included Included in issuances balance net income as of in net other and Transfers Transfers as of relating to January 1, income comprehensive settlements into out of June 30, positions still 2018 (1) income (3) (4) Level 3 Level 3 2018 held (1) (in millions) Assets Fixed maturities, available-for-sale: Non-U.S. governments $ 7.4 $ — $ (0.1) $ (0.7) $ — $ — $ 6.6 $ — Corporate 128.0 1.1 (0.3) (3.6) 1.0 (40.2) 86.0 — Commercial mortgage-backed securities 10.6 (2.5) 0.5 (0.1) 2.5 (0.9) 10.1 — Collateralized debt obligations 125.0 (0.6) 0.6 2.3 12.1 (59.2) 80.2 (0.6) Other debt obligations 2.3 — 0.2 92.3 — — 94.8 — Total fixed maturities, available-for-sale 273.3 (2.0) 0.9 90.2 15.6 (100.3) 277.7 (0.6) Fixed maturities, trading — — — 3.7 — — 3.7 — Equity securities 2.7 12.9 — (15.6) — — — — Other investments 6.5 1.8 — 4.9 — — 13.2 1.8 Separate account assets (2) 7,651.4 409.8 (0.6) 231.3 — (0.4) 8,291.5 402.6 Liabilities Investment contracts (160.3) 115.7 0.1 1.7 — — (42.8) 115.3 Derivatives Net derivative assets (liabilities) 18.1 (16.1) — 3.4 — — 5.4 (16.0) (1) Both realized gains (losses) and mark-to-market unrealized gains (losses) are generally reported in net realized capital gains (losses) within the consolidated statements of operations. Realized and unrealized gains (losses) on certain securities with an investment objective to realize economic value through mark-to-market changes are reported in net investment income within the consolidated statements of operations. (2) Gains and losses for separate account assets do not impact net income as the change in value of separate account assets is offset by a change in value of separate account liabilities. Foreign currency translation adjustments related to the Principal International segment separate account assets are recorded in AOCI and are offset by foreign currency translation adjustments of the corresponding separate account liabilities. (3) Includes foreign currency translation adjustments related to our Principal International segment. (4) Gross purchases, sales, issuances and settlements were: For the three months ended June 30, 2019 Net purchases, sales, issuances Purchases Sales Issuances Settlements and settlements (in millions) Assets Fixed maturities, available-for-sale: Non-U.S. governments $ — $ — $ — $ (0.3) $ (0.3) Corporate 5.2 (0.2) — (18.8) (13.8) Collateralized debt obligations — — — (1.6) (1.6) Other debt obligations 16.8 — — (0.8) 16.0 Total fixed maturities, available-for-sale 22.0 (0.2) — (21.5) 0.3 Fixed maturities, trading 0.5 — — — 0.5 Other investments 4.5 (4.9) — — (0.4) Separate account assets (5) 41.0 (112.8) (156.5) 232.5 4.2 Liabilities Investment contracts — — (3.5) 1.7 (1.8) Derivatives Net derivative assets (liabilities) — 5.8 — — 5.8 For the three months ended June 30, 2018 Net purchases, sales, issuances Purchases Sales Issuances Settlements and settlements (in millions) Assets Fixed maturities, available-for-sale: Non-U.S. governments $ — $ — $ — $ (0.4) $ (0.4) Corporate 0.7 — — (6.7) (6.0) Collateralized debt obligations 28.1 — — (0.3) 27.8 Other debt obligations 94.4 — — (1.9) 92.5 Total fixed maturities, available-for-sale 123.2 — — (9.3) 113.9 Fixed maturities, trading 3.7 — — — 3.7 Equity securities — (15.6) — — (15.6) Other investments 3.6 — — — 3.6 Separate account assets (5) 231.4 (124.1) (60.0) 7.2 54.5 Liabilities Investment contracts — — 0.7 0.8 1.5 Derivatives Net derivative assets (liabilities) (1.2) 0.9 — — (0.3) For the six months ended June 30, 2019 Net purchases, sales, issuances Purchases Sales Issuances Settlements and settlements (in millions) Assets Fixed maturities, available-for-sale: Non-U.S. governments $ — $ — $ — $ (0.7) $ (0.7) Corporate 5.7 (0.4) — (18.9) (13.6) Commercial mortgage-backed securities 2.4 — — (0.2) 2.2 Collateralized debt obligations — — — (1.3) (1.3) Other debt obligations 26.8 — — (1.0) 25.8 Total fixed maturities, available-for-sale 34.9 (0.4) — (22.1) 12.4 Fixed maturities, trading 0.5 — — — 0.5 Other investments 4.5 (4.9) — — (0.4) Separate account assets (5) 120.0 (214.5) (203.8) 232.2 (66.1) Liabilities Investment contracts — — (4.8) 3.3 (1.5) Derivatives Net derivative assets (liabilities) — 7.7 — — 7.7 For the six months ended June 30, 2018 Net purchases, sales, issuances Purchases Sales Issuances Settlements and settlements (in millions) Assets Fixed maturities, available-for-sale: Non-U.S. governments $ — $ — $ — $ (0.7) $ (0.7) Corporate 12.0 (4.2) — (11.4) (3.6) Commercial mortgage-backed securities — — — (0.1) (0.1) Collateralized debt obligations 28.1 — — (25.8) 2.3 Other debt obligations 94.4 — — (2.1) 92.3 Total fixed maturities, available-for-sale 134.5 (4.2) — (40.1) 90.2 Fixed maturities, trading 3.7 — — — 3.7 Equity securities — (15.6) — — (15.6) Other investments 4.9 — — — 4.9 Separate account assets (5) 571.8 (228.5) (105.5) (6.5) 231.3 Liabilities Investment contracts — — 0.2 1.5 1.7 Derivatives Net derivative assets (liabilities) 1.9 1.5 — — 3.4 (5) Issuances and settlements include amounts related to mortgage encumbrances associated with real estate in our separate accounts. |
Transfers (Table) | For the three months ended June 30, 2019 Transfers out Transfers out Transfers out Transfers out Transfers out Transfers out of Level 1 into of Level 1 into of Level 2 into of Level 2 into of Level 3 into of Level 3 into Level 2 Level 3 Level 1 Level 3 Level 1 Level 2 (in millions) Assets Fixed maturities, available-for-sale: Commercial mortgage-backed securities $ — $ — $ — $ 3.7 $ — $ 2.3 Collateralized debt obligations — — — 30.0 — — Total fixed maturities, available-for-sale — — — 33.7 — 2.3 Separate account assets 102.7 — — — — 172.5 For the three months ended June 30, 2018 Transfers out Transfers out Transfers out Transfers out Transfers out Transfers out of Level 1 into of Level 1 into of Level 2 into of Level 2 into of Level 3 into of Level 3 into Level 2 Level 3 Level 1 Level 3 Level 1 Level 2 (in millions) Assets Fixed maturities, available-for-sale: Corporate $ — $ — $ — $ 0.4 $ — $ 11.5 Commercial mortgage-backed securities — — — — — 0.9 Collateralized debt obligations — — — 12.0 — 39.9 Total fixed maturities, available-for-sale — — — 12.4 — 52.3 Separate account assets 0.1 — 0.1 — 0.2 0.2 For the six months ended June 30, 2019 Transfers out Transfers out Transfers out Transfers out Transfers out Transfers out of Level 1 into of Level 1 into of Level 2 into of Level 2 into of Level 3 into of Level 3 into Level 2 Level 3 Level 1 Level 3 Level 1 Level 2 (in millions) Assets Fixed maturities, available-for-sale: U.S. government and agencies $ — $ — $ 1.1 $ — $ — $ — Commercial mortgage-backed securities — — — 3.7 — 2.3 Collateralized debt obligations — — — 30.0 — — Other debt obligations — — 1.1 — — 26.0 Total fixed maturities, available-for-sale — — 2.2 33.7 — 28.3 Other investments — — — 10.0 — — Separate account assets 102.7 — — — — 173.2 For the six months ended June 30, 2018 Transfers out Transfers out Transfers out Transfers out Transfers out Transfers out of Level 1 into of Level 1 into of Level 2 into of Level 2 into of Level 3 into of Level 3 into Level 2 Level 3 Level 1 Level 3 Level 1 Level 2 (in millions) Assets Fixed maturities, available-for-sale: Corporate $ — $ — $ — $ 1.0 $ — $ 40.2 Commercial mortgage-backed securities — — — 2.5 — 0.9 Collateralized debt obligations — — — 12.1 — 59.2 Total fixed maturities, available-for-sale — — — 15.6 — 100.3 Separate account assets 292.5 — 0.8 — 0.2 0.2 |
Quantitative Information about Level 3 Fair Value Measurements (Table) | June 30, 2019 Assets / (liabilities) measured at Valuation Unobservable Input/range of Weighted fair value technique(s) input description inputs average (in millions) Assets Fixed maturities, available-for-sale: Non-U.S. governments $ 3.9 Discounted cash flow Discount rate (1) 2.6% 2.6% Illiquidity premium 50 basis points ("bps") 50bps Comparability adjustment (25)bps (25)bps Corporate 30.9 Discounted cash flow Discount rate (1) 2.3% - 6.0% 3.1% Illiquidity premium 0bps - 60bps 31bps Comparability adjustment 0bps - 130bps 21bps Commercial mortgage-backed securities 2.8 Discounted cash flow Discount rate (1) 35.0% 35.0% Probability of default 100.0% 100.0% Potential loss severity 44.8% 44.8% Other debt obligations 1.9 Discounted cash flow Discount rate (1) 5.0% 5.0% Illiquidity premium 500bps 500bps Separate account assets 8,689.0 Discounted cash flow - Discount rate (1) 3.2% 3.2% Illiquidity premium 60bps 60bps Credit spread rate 138bps 138bps Discounted cash flow - Discount rate (1) 5.6% - 14.0% 6.7% Terminal capitalization rate 4.3% - 9.3% 5.7% Average market rent growth rate 1.8% - 4.6% 2.9% Discounted cash flow - Loan to value 11.0% - 68.6% 46.2% Market interest rate 3.2% - 6.0% 3.7% Liabilities Investment contracts (5) (118.7) Discounted cash flow Long duration interest rate 2.2% - 2.3% (2) Long-term equity market volatility 15.0% - 26.6% Non-performance risk 0.4% - 1.4% Utilization rate See note (3) Lapse rate 1.3% - 16.0% Mortality rate See note (4) December 31, 2018 Assets / (liabilities) measured at Valuation Unobservable Input/range of Weighted fair value technique(s) input description inputs average (in millions) Assets Fixed maturities, available-for-sale: Non-U.S. governments $ 4.6 Discounted cash flow Discount rate (1) 3.2% 3.2% Illiquidity premium 50bps 50bps Comparability adjustment (25)bps (25)bps Corporate 25.4 Discounted cash flow Discount rate (1) 3.3% - 4.5% 3.9% Illiquidity premium 0bps - 60bps 36bps Other debt obligations 1.7 Discounted cash flow Discount rate (1) 5.0% 5.0% Illiquidity premium 500bps 500bps Separate account assets 8,440.8 Discounted cash flow - Discount rate (1) 3.3% - 4.7% 4.2% Illiquidity premium 0bps - 60bps 56bps Credit spread rate 85bps - 172bps 168bps Discounted cash flow - Discount rate (1) 5.6% - 11.5% 6.7% Terminal capitalization rate 4.3% - 9.3% 5.8% Average market rent growth rate 2.0% - 4.7% 2.9% Discounted cash flow - Loan to value 11.0% - 69.3% 45.9% Market interest rate 3.9% - 6.0% 4.3% Liabilities Investment contracts (5) (45.2) Discounted cash flow Long duration interest rate 2.8% - 2.9% (2) Long-term equity market volatility 16.7% - 27.8% Non-performance risk 0.6% - 1.6% Utilization rate See note (3) Lapse rate 1.3% - 16.0% Mortality rate See note (4) (1) Represents market comparable interest rate or an index adjusted rate used as the base rate in the discounted cash flow analysis prior to any illiquidity or other adjustments, where applicable. (2) Represents the range of rate curves used in the valuation analysis that we have determined market participants would use when pricing the instrument. Derived from interpolation between various observable swap rates. (3) This input factor is the number of contractholders taking withdrawals as well as the amount and timing of the withdrawals and a range does not provide a meaningful presentation. (4) This input is based on an appropriate industry mortality table and a range does not provide a meaningful presentation. (5) Includes bifurcated embedded derivatives that are reported at net asset (liability) fair value within the same line item in the consolidated statements of financial position in which the host contract is reported. |
Fair Value Option (Table) | June 30, 2019 December 31, 2018 (in millions) Commercial mortgage loans of consolidated VIEs (1) (2) Fair value $ 5.4 $ 6.4 Aggregate contractual principal 5.4 6.5 Real estate ventures (1) Fair value 19.1 17.2 (1) Reported with other investments in the consolidated statements of financial position. (2) None of the loans were more than 90 days past due or in non-accrual status. For the three months ended June 30, For the six months ended June 30, 2019 2018 2019 2018 (in millions) Commercial mortgage loans of consolidated VIEs Change in fair value pre-tax loss (1) (2) $ — $ — $ — $ (0.1) Interest income (3) 0.1 0.2 0.2 0.4 Real estate ventures Change in fair value pre-tax gain (4) 0.1 0.3 2.3 1.8 (1) None of the change in fair value related to instrument-specific credit risk. (2) Reported in net realized capital gains (losses) on the consolidated statements of operations. (3) Reported in net investment income on the consolidated statements of operations and recorded based on the effective interest rates as determined at the closing of the loan. (4) Reported in net investment income on the consolidated statements of operations. |
Financial Instruments Not Reported at Fair Value (Table) | June 30, 2019 Fair value hierarchy level Carrying amount Fair value Level 1 Level 2 Level 3 (in millions) Assets (liabilities) Mortgage loans $ 16,136.8 $ 16,805.7 $ — $ — $ 16,805.7 Policy loans 800.9 1,038.1 — — 1,038.1 Other investments 261.8 266.1 — 175.0 91.1 Cash and cash equivalents 1,192.3 1,192.3 1,117.7 74.6 — Investment contracts (32,386.1) (32,182.8) — (3,880.9) (28,301.9) Short-term debt (76.8) (76.8) — (76.8) — Long-term debt (3,762.4) (4,023.6) — (3,887.4) (136.2) Separate account liabilities (149,038.5) (147,848.3) — — (147,848.3) Bank deposits (1) (485.1) (481.3) — (481.3) — Cash collateral payable (116.1) (116.1) (116.1) — — December 31, 2018 Fair value hierarchy level Carrying amount Fair value Level 1 Level 2 Level 3 (in millions) Assets (liabilities) Mortgage loans $ 15,336.9 $ 15,383.6 $ — $ — $ 15,383.6 Policy loans 801.4 965.5 — — 965.5 Other investments 247.4 239.8 — 157.5 82.3 Cash and cash equivalents 1,201.6 1,201.6 1,148.6 53.0 — Investment contracts (32,572.1) (31,428.2) — (4,085.7) (27,342.5) Short-term debt (42.9) (42.9) — (42.9) — Long-term debt (3,259.6) (3,257.1) — (3,129.3) (127.8) Separate account liabilities (132,562.9) (131,491.4) — — (131,491.4) Bank deposits (1) (500.0) (489.1) — (489.1) — Cash collateral payable (79.5) (79.5) (79.5) — — (1) Excludes deposit liabilities without defined or contractual maturities. |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Segment Information | |
Reconciliation of Assets from Segment to Consolidated (Table) | June 30, 2019 December 31, 2018 (in millions) Assets: Retirement and Income Solutions $ 181,663.0 $ 163,833.6 Principal Global Investors 2,312.9 2,301.0 Principal International 51,285.8 46,701.2 U.S. Insurance Solutions 27,178.3 25,388.2 Corporate 5,478.0 4,812.1 Total consolidated assets $ 267,918.0 $ 243,036.1 |
Reconciliation of Operating Revenues and Pre-tax Operating Earnings (Losses) by Segment (Table) | For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Operating revenues by segment: Retirement and Income Solutions: Retirement and Income Solutions – Fee $ 450.5 $ 446.5 $ 881.3 $ 894.3 Retirement and Income Solutions – Spread 1,709.1 1,003.4 3,170.2 1,734.5 Total Retirement and Income Solutions (1) 2,159.6 1,449.9 4,051.5 2,628.8 Principal Global Investors (2) 359.5 379.6 698.5 748.1 Principal International 411.6 389.6 792.1 772.7 U.S. Insurance Solutions: Specialty Benefits insurance 625.8 572.2 1,227.6 1,137.6 Individual Life insurance 461.6 432.0 927.9 883.3 Eliminations (0.1) (0.1) (0.1) (0.1) Total U.S. Insurance Solutions 1,087.3 1,004.1 2,155.4 2,020.8 Corporate (15.8) (17.0) (14.6) (17.0) Total segment operating revenues 4,002.2 3,206.2 7,682.9 6,153.4 Net realized capital gains (losses), net of related revenue adjustments (13.2) 50.6 70.5 8.4 Adjustments related to equity method investments (16.4) (21.9) (36.9) (43.3) Total revenues per consolidated statements of operations $ 3,972.6 $ 3,234.9 $ 7,716.5 $ 6,118.5 Pre-tax operating earnings (losses) by segment: Retirement and Income Solutions $ 256.2 $ 227.6 $ 496.8 $ 471.5 Principal Global Investors 115.6 129.2 216.3 242.9 Principal International 93.2 86.3 204.3 177.8 U.S. Insurance Solutions 146.3 113.3 257.0 228.3 Corporate (98.1) (70.7) (182.5) (138.3) Total segment pre-tax operating earnings 513.2 485.7 991.9 982.2 Pre-tax net realized capital gains (losses), as adjusted (3) (48.6) 48.6 17.0 25.0 Adjustments related to equity method investments and noncontrolling interest (14.3) (18.9) (32.6) (34.8) Income before income taxes per consolidated statements of operations $ 450.3 $ 515.4 $ 976.3 $ 972.4 (1) Reflects inter-segment revenues of $88.5 million and $98.9 million for the three months ended June 30, 2019 and 2018, respectively, $174.2 million and $200.6 million for the six months ended June 30, 2019 and 2018, respectively. (2) Reflects inter-segment revenues of $66.2 million and $67.8 million for the three months ended June 30, 2019 and 2018, respectively, $127.7 million and $130.0 million for the six months ended June 30, 2019 and 2018, respectively. (3) Pre-tax net realized capital gains (losses), as adjusted, is derived as follows: For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Net realized capital gains (losses): Net realized capital gains (losses) $ (4.0) $ 67.4 $ 80.5 $ 42.3 Derivative and hedging-related revenue adjustments (21.4) (14.9) (32.9) (32.7) Market value adjustments to fee revenues — 0.1 — 0.1 Adjustments related to equity method investments 1.2 (4.2) 0.8 (4.0) Adjustments related to sponsored investment funds 6.8 3.0 14.8 5.1 Recognition of front-end fee revenue 4.2 (0.8) 7.3 (2.4) Net realized capital gains (losses), net of related revenue adjustments (13.2) 50.6 70.5 8.4 Amortization of deferred acquisition costs and other actuarial balances (29.1) 1.2 (45.5) 6.8 Capital (gains) losses distributed (15.2) (8.3) (23.9) 2.3 Market value adjustments of embedded derivatives 8.9 5.1 15.9 7.5 Pre-tax net realized capital gains (losses), as adjusted (a) $ (48.6) $ 48.6 $ 17.0 $ 25.0 (a) As adjusted before noncontrolling interest capital gains (losses). |
Revenues from Contracts with _2
Revenues from Contracts with Customers (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Revenues from Contracts with Customers | |
Disaggregation of Revenues from Contracts with Customers (Table) | For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Revenue from contracts with customers by segment: Retirement and Income Solutions: Retirement and Income Solutions – Fee $ 63.9 $ 66.9 $ 122.3 $ 128.6 Retirement and Income Solutions – Spread 2.3 2.7 5.2 5.4 Total Retirement and Income Solutions 66.2 69.6 127.5 134.0 Principal Global Investors 346.2 371.1 678.5 731.4 Principal International 116.2 123.1 231.1 244.2 U.S. Insurance Solutions: Specialty Benefits insurance 3.6 3.8 7.3 7.5 Individual Life insurance 12.6 9.8 24.6 19.2 Eliminations (0.1) (0.1) (0.1) (0.1) Total U.S. Insurance Solutions 16.1 13.5 31.8 26.6 Corporate 42.5 37.0 79.5 80.9 Total segment revenue from contracts with customers 587.2 614.3 1,148.4 1,217.1 Adjustments for fees and other revenues not within the scope of revenue recognition guidance (1) 415.2 399.0 824.4 809.1 Pre-tax other adjustments (2) 4.2 (0.7) 7.3 (2.3) Total fees and other revenues per consolidated statements of operations $ 1,006.6 $ 1,012.6 $ 1,980.1 $ 2,023.9 (1) Fees and other revenues not within the scope of the revenue recognition guidance primarily represent revenue on contracts accounted for under the financial instruments or insurance contracts standards. (2) Pre-tax other adjustments relate to the recognition of deferred front-end fee revenues for sales charges on retirement and life insurance products and certain market value adjustments to fee revenues. |
Retirement and Income Solutions | Retirement and Income Solutions - Fee | |
Revenues from Contracts with Customers | |
Disaggregation of Revenues from Contracts with Customers (Table) | For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Administrative service fee revenue $ 63.3 $ 66.3 $ 121.5 $ 127.9 Other fee revenue 0.6 0.6 0.8 0.7 Total revenues from contracts with customers 63.9 66.9 122.3 128.6 Fees and other revenues not within the scope of revenue recognition guidance 281.6 282.8 553.4 569.2 Total fees and other revenues 345.5 349.7 675.7 697.8 Premiums and other considerations 0.6 0.9 1.7 2.4 Net investment income 104.4 95.9 203.9 194.1 Total operating revenues $ 450.5 $ 446.5 $ 881.3 $ 894.3 |
Retirement and Income Solutions | Retirement and Income Solutions - Spread | |
Revenues from Contracts with Customers | |
Disaggregation of Revenues from Contracts with Customers (Table) | For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Deposit account fee revenue $ 2.3 $ 2.7 $ 5.2 $ 5.4 Total revenues from contracts with customers 2.3 2.7 5.2 5.4 Fees and other revenues not within the scope of revenue recognition guidance 4.2 2.9 9.1 5.6 Total fees and other revenues 6.5 5.6 14.3 11.0 Premiums and other considerations 1,171.5 555.1 2,129.0 843.4 Net investment income 531.1 442.7 1,026.9 880.1 Total operating revenues $ 1,709.1 $ 1,003.4 $ 3,170.2 $ 1,734.5 |
Principal Global Investors | |
Revenues from Contracts with Customers | |
Disaggregation of Revenues from Contracts with Customers (Table) | For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Management fee revenue $ 304.2 $ 312.2 $ 597.0 $ 628.5 Other fee revenue 42.0 58.9 81.5 102.9 Total revenues from contracts with customers 346.2 371.1 678.5 731.4 Fees and other revenues not within the scope of revenue recognition guidance 10.4 7.3 14.7 14.0 Total fees and other revenues 356.6 378.4 693.2 745.4 Net investment income 2.9 1.2 5.3 2.7 Total operating revenues $ 359.5 $ 379.6 $ 698.5 $ 748.1 |
Principal International | |
Revenues from Contracts with Customers | |
Disaggregation of Revenues from Contracts with Customers (Table) | For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Management fee revenue $ 115.5 $ 121.8 $ 229.8 $ 241.9 Other fee revenue 0.7 1.3 1.3 2.3 Total revenues from contracts with customers 116.2 123.1 231.1 244.2 Fees and other revenues not within the scope of revenue recognition guidance 1.7 1.8 3.4 3.8 Total fees and other revenues 117.9 124.9 234.5 248.0 Premiums and other considerations 109.5 101.6 227.0 199.5 Net investment income 184.2 163.1 330.6 325.2 Total operating revenues $ 411.6 $ 389.6 $ 792.1 $ 772.7 Revenues from contracts with customers by region: Latin America $ 88.6 $ 96.5 $ 176.7 $ 189.0 Asia 27.6 26.7 54.6 55.4 Principal International corporate / regional offices 0.2 0.3 0.4 0.6 Eliminations (0.2) (0.4) (0.6) (0.8) Total revenues from contracts with customers $ 116.2 $ 123.1 $ 231.1 $ 244.2 |
U.S. Insurance Solutions | |
Revenues from Contracts with Customers | |
Disaggregation of Revenues from Contracts with Customers (Table) | For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Specialty Benefits Insurance: Administrative service fees $ 3.6 $ 3.8 $ 7.3 $ 7.5 Total revenues from contracts with customers 3.6 3.8 7.3 7.5 Fees and other revenues not within the scope of revenue recognition guidance 4.9 5.2 9.8 10.4 Total fees and other revenues 8.5 9.0 17.1 17.9 Premiums and other considerations 571.6 527.7 1,127.5 1,044.7 Net investment income 45.7 35.5 83.0 75.0 Total operating revenues $ 625.8 $ 572.2 $ 1,227.6 $ 1,137.6 For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Individual Life Insurance: Administrative service fees $ 6.2 $ 5.8 $ 12.1 $ 11.6 Commission income 6.4 4.0 12.5 7.6 Total revenues from contracts with customers 12.6 9.8 24.6 19.2 Fees and other revenues not within the scope of revenue recognition guidance 190.3 177.7 382.5 363.4 Total fees and other revenues 202.9 187.5 407.1 382.6 Premiums and other considerations 79.7 80.5 172.6 171.0 Net investment income 179.0 164.0 348.2 329.7 Total operating revenues $ 461.6 $ 432.0 $ 927.9 $ 883.3 |
Corporate | |
Revenues from Contracts with Customers | |
Disaggregation of Revenues from Contracts with Customers (Table) | For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions) Commission income $ 78.7 $ 78.5 $ 154.5 $ 157.5 Other fee revenue 11.2 9.2 20.0 17.2 Eliminations (47.4) (50.7) (95.0) (93.8) Total revenues from contracts with customers 42.5 37.0 79.5 80.9 Fees and other revenues not within the scope of revenue recognition guidance (77.9) (78.7) (148.5) (157.3) Total fees and other revenues (35.4) (41.7) (69.0) (76.4) Net investment income 19.6 24.7 54.4 59.4 Total operating revenues $ (15.8) $ (17.0) $ (14.6) $ (17.0) |
Stock-Based Compensation Plans
Stock-Based Compensation Plans (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Stock-Based Compensation Plans | |
Stock-Based Compensation Disclosures (Table) | For the six months ended June 30, 2019 2018 (in millions) Compensation cost $ 44.4 $ 42.7 Related income tax benefit 9.3 9.3 Capitalized as part of an asset 1.0 1.1 |
Nonqualified Stock Options Fair Value (Table) | For the six months ended June 30, 2019 Expected volatility 23.3 % Expected term (in years) 7.0 Risk-free interest rate 2.6 % Expected dividend yield 4.07 % Weighted average estimated fair value per common share $ 10.00 |
Earnings Per Common Share (Tabl
Earnings Per Common Share (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Common Share | |
Earnings Per Common Share (Table) | For the three months ended For the six months ended June 30, June 30, 2019 2018 2019 2018 (in millions, except per share data) Net income $ 392.1 $ 459.5 $ 844.2 $ 862.0 Subtract: Net income attributable to noncontrolling interest 5.8 2.9 28.0 8.3 Total $ 386.3 $ 456.6 $ 816.2 $ 853.7 Weighted-average shares outstanding: Basic 279.0 286.4 278.8 287.9 Dilutive effects: Stock options 0.9 1.0 0.9 1.2 Restricted stock units 1.2 1.6 1.3 1.8 Performance share awards 0.1 0.2 0.2 0.2 Diluted 281.2 289.2 281.2 291.1 Net income per common share: Basic $ 1.38 $ 1.59 $ 2.93 $ 2.97 Diluted $ 1.37 $ 1.58 $ 2.90 $ 2.93 |
Condensed Consolidating Finan_2
Condensed Consolidating Financial Information (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Condensed Consolidating Financial Information | |
Condensed Consolidating Financial Information, Notes Guarantor (Table) | Condensed Consolidating Statements of Financial Position June 30, 2019 Principal Principal Life Principal Financial Principal Financial Insurance Services, Inc. and Financial Group, Inc. Company Other Subsidiaries Group, Inc. Parent Only Only Combined (1) Eliminations Consolidated (in millions) Assets Fixed maturities, available-for-sale $ 206.4 $ 57,676.6 $ 7,749.6 $ (364.5) $ 65,268.1 Fixed maturities, trading 297.0 223.6 166.2 — 686.8 Equity securities — 82.8 1,812.4 — 1,895.2 Mortgage loans — 15,279.1 1,610.9 (753.2) 16,136.8 Real estate — 3.3 1,737.1 — 1,740.4 Policy loans — 748.8 52.1 — 800.9 Investment in unconsolidated entities 16,723.4 1,930.3 9,074.5 (26,796.8) 931.4 Other investments 10.5 6,669.6 2,518.8 (5,463.3) 3,735.6 Cash and cash equivalents 615.8 805.0 2,758.5 (863.4) 3,315.9 Accrued investment income 1.8 578.7 85.6 (2.3) 663.8 Premiums due and other receivables — 1,969.9 4,087.1 (4,507.8) 1,549.2 Deferred acquisition costs — 3,506.3 13.2 — 3,519.5 Property and equipment — 739.5 220.0 — 959.5 Goodwill — 54.3 1,057.2 — 1,111.5 Other intangibles — 18.7 1,282.0 — 1,300.7 Separate account assets — 121,368.4 41,480.2 — 162,848.6 Other assets 353.3 1,190.6 4,839.4 (4,929.2) 1,454.1 Total assets $ 18,208.2 $ 212,845.5 $ 80,544.8 $ (43,680.5) $ 267,918.0 Liabilities Contractholder funds $ — $ 36,703.3 $ 3,312.1 $ (356.6) $ 39,658.8 Future policy benefits and claims — 32,840.2 6,892.8 (1,253.5) 38,479.5 Other policyholder funds — 821.2 177.7 (2.7) 996.2 Short-term debt — — 76.8 — 76.8 Long-term debt 3,624.2 — 852.1 (713.9) 3,762.4 Income taxes currently payable 2.0 — 85.5 (67.7) 19.8 Deferred income taxes 7.1 1,065.4 1,111.6 (496.6) 1,687.5 Separate account liabilities — 121,368.4 41,480.2 — 162,848.6 Other liabilities 540.2 9,260.6 9,593.3 (13,412.2) 5,981.9 Total liabilities 4,173.5 202,059.1 63,582.1 (16,303.2) 253,511.5 Redeemable noncontrolling interest — — 304.5 — 304.5 Stockholders' equity Common stock 4.8 2.5 — (2.5) 4.8 Additional paid-in capital 10,130.7 6,321.0 9,500.0 (15,821.0) 10,130.7 Retained earnings 10,805.8 2,396.3 6,554.6 (8,950.9) 10,805.8 Accumulated other comprehensive income 647.7 2,066.6 536.3 (2,602.9) 647.7 Treasury stock, at cost (7,554.3) — — — (7,554.3) Total stockholders' equity attributable to PFG 14,034.7 10,786.4 16,590.9 (27,377.3) 14,034.7 Noncontrolling interest — — 67.3 — 67.3 Total stockholders’ equity 14,034.7 10,786.4 16,658.2 (27,377.3) 14,102.0 Total liabilities and stockholders' equity $ 18,208.2 $ 212,845.5 $ 80,544.8 $ (43,680.5) $ 267,918.0 (1) PFG sponsors nonqualified benefit plans. Nonqualified benefit plan assets and liabilities held in Rabbi trusts were $699.1 million and $566.7 million, respectively. Condensed Consolidating Statements of Financial Position December 31, 2018 Principal Principal Life Principal Financial Principal Financial Insurance Services, Inc. and Financial Group, Inc. Company Other Subsidiaries Group, Inc. Parent Only Only Combined (1) Eliminations Consolidated (in millions) Assets Fixed maturities, available-for-sale $ 211.5 $ 53,401.7 $ 6,857.9 $ (362.6) $ 60,108.5 Fixed maturities, trading 308.9 165.5 161.7 — 636.1 Equity securities — 84.8 1,758.9 — 1,843.7 Mortgage loans — 14,478.0 1,615.5 (756.6) 15,336.9 Real estate — 1.9 1,727.8 — 1,729.7 Policy loans — 755.9 45.5 — 801.4 Investment in unconsolidated entities 13,862.4 2,324.4 6,853.8 (22,171.8) 868.8 Other investments 10.7 5,549.1 2,517.6 (4,635.9) 3,441.5 Cash and cash equivalents 334.9 1,323.9 2,014.8 (696.1) 2,977.5 Accrued investment income 1.4 563.2 77.5 (5.9) 636.2 Premiums due and other receivables — 1,818.1 3,781.3 (4,186.3) 1,413.1 Deferred acquisition costs — 3,680.2 13.3 — 3,693.5 Property and equipment — 661.3 106.0 — 767.3 Goodwill — 54.3 1,045.7 — 1,100.0 Other intangibles — 19.7 1,295.4 — 1,315.1 Separate account assets — 107,343.0 37,644.9 — 144,987.9 Other assets 375.0 1,135.1 4,418.3 (4,549.5) 1,378.9 Total assets $ 15,104.8 $ 193,360.1 $ 71,935.9 $ (37,364.7) $ 243,036.1 Liabilities Contractholder funds $ — $ 36,861.7 $ 3,189.2 $ (351.2) $ 39,699.7 Future policy benefits and claims — 30,690.3 6,128.6 (1,154.1) 35,664.8 Other policyholder funds — 725.7 165.3 (2.6) 888.4 Short-term debt — — 42.9 — 42.9 Long-term debt 3,129.8 — 851.2 (721.4) 3,259.6 Income taxes currently payable — — 80.7 (55.4) 25.3 Deferred income taxes — 405.3 1,056.4 (503.3) 958.4 Separate account liabilities — 107,343.0 37,644.9 — 144,987.9 Other liabilities 585.0 8,503.2 8,586.5 (12,012.8) 5,661.9 Total liabilities 3,714.8 184,529.2 57,745.7 (14,800.8) 231,188.9 Redeemable noncontrolling interest — — 391.2 — 391.2 Stockholders' equity Common stock 4.8 2.5 — (2.5) 4.8 Additional paid-in capital 10,060.7 6,331.6 9,461.2 (15,792.8) 10,060.7 Retained earnings 10,290.2 2,441.2 5,855.0 (8,296.2) 10,290.2 Accumulated other comprehensive income (loss) (1,565.1) 55.6 (1,583.2) 1,527.6 (1,565.1) Treasury stock, at cost (7,400.6) — — — (7,400.6) Total stockholders' equity attributable to PFG 11,390.0 8,830.9 13,733.0 (22,563.9) 11,390.0 Noncontrolling interest — — 66.0 — 66.0 Total stockholders’ equity 11,390.0 8,830.9 13,799.0 (22,563.9) 11,456.0 Total liabilities and stockholders' equity $ 15,104.8 $ 193,360.1 $ 71,935.9 $ (37,364.7) $ 243,036.1 (1) PFG sponsors nonqualified benefit plans. Nonqualified benefit plan assets and liabilities held in Rabbi trusts were $671.7 million and $542.4 million, respectively. Condensed Consolidating Statements of Operations For the six months ended June 30, 2019 Principal Principal Life Principal Financial Principal Financial Insurance Services, Inc. and Financial Group, Inc. Company Other Subsidiaries Group, Inc. Parent Only Only Combined Eliminations Consolidated (in millions) Revenues Premiums and other considerations $ — $ 3,293.1 $ 364.7 $ — $ 3,657.8 Fees and other revenues — 1,102.5 1,067.7 (190.1) 1,980.1 Net investment income 10.9 1,419.2 1,151.0 (583.0) 1,998.1 Net realized capital gains (losses), excluding impairment losses on available-for-sale securities 9.2 411.8 (316.4) — 104.6 Net other-than-temporary impairment losses on available-for-sale securities — (24.1) (2.5) — (26.6) Other-than-temporary impairment losses on fixed maturities, available-for-sale reclassified to (from) other comprehensive income — 2.6 (0.1) — 2.5 Net impairment losses on available-for-sale securities — (21.5) (2.6) — (24.1) Net realized capital gains (losses) 9.2 390.3 (319.0) — 80.5 Total revenues 20.1 6,205.1 2,264.4 (773.1) 7,716.5 Expenses Benefits, claims and settlement expenses — 4,116.2 530.7 (5.7) 4,641.2 Dividends to policyholders — 60.0 — — 60.0 Operating expenses 110.1 1,189.3 917.0 (177.4) 2,039.0 Total expenses 110.1 5,365.5 1,447.7 (183.1) 6,740.2 Income (loss) before income taxes (90.0) 839.6 816.7 (590.0) 976.3 Income taxes (benefits) (22.3) 110.7 44.8 (1.1) 132.1 Equity in the net income (loss) of subsidiaries 883.9 (131.6) 134.5 (886.8) — Net income 816.2 597.3 906.4 (1,475.7) 844.2 Net income attributable to noncontrolling interest — — 25.6 2.4 28.0 Net income attributable to PFG $ 816.2 $ 597.3 $ 880.8 $ (1,478.1) $ 816.2 Net income $ 816.2 $ 597.3 $ 906.4 $ (1,475.7) $ 844.2 Other comprehensive income 2,201.1 2,011.1 2,227.8 (4,221.0) 2,219.0 Comprehensive income $ 3,017.3 $ 2,608.4 $ 3,134.2 $ (5,696.7) $ 3,063.2 Condensed Consolidating Statements of Operations For the six months ended June 30, 2018 Principal Principal Life Principal Financial Principal Financial Insurance Services, Inc. and Financial Group, Inc. Company Other Subsidiaries Group, Inc. Parent Only Only Combined Eliminations Consolidated (in millions) Revenues Premiums and other considerations $ — $ 1,941.7 $ 319.3 $ — $ 2,261.0 Fees and other revenues — 1,091.3 1,126.7 (194.1) 2,023.9 Net investment income 11.8 1,282.0 1,152.8 (655.3) 1,791.3 Net realized capital gains (losses), excluding impairment losses on available-for-sale securities (8.6) (98.6) 168.4 — 61.2 Net other-than-temporary impairment losses recoveries on available-for-sale securities — (4.6) (2.3) — (6.9) Other-than-temporary impairment losses on fixed maturities, available-for-sale reclassified from other comprehensive income — (11.4) (0.6) — (12.0) Net impairment losses on available-for-sale securities — (16.0) (2.9) — (18.9) Net realized capital gains (losses) (8.6) (114.6) 165.5 — 42.3 Total revenues 3.2 4,200.4 2,764.3 (849.4) 6,118.5 Expenses Benefits, claims and settlement expenses — 2,640.6 475.3 (5.6) 3,110.3 Dividends to policyholders — 60.7 — — 60.7 Operating expenses 95.2 1,144.3 916.7 (181.1) 1,975.1 Total expenses 95.2 3,845.6 1,392.0 (186.7) 5,146.1 Income (loss) before income taxes (92.0) 354.8 1,372.3 (662.7) 972.4 Income taxes (benefits) (41.0) 7.2 144.5 (0.3) 110.4 Equity in the net income (loss) of subsidiaries 904.7 313.2 (320.3) (897.6) — Net income 853.7 660.8 907.5 (1,560.0) 862.0 Net income attributable to noncontrolling interest — — 8.3 — 8.3 Net income attributable to PFG $ 853.7 $ 660.8 $ 899.2 $ (1,560.0) $ 853.7 Net income $ 853.7 $ 660.8 $ 907.5 $ (1,560.0) $ 862.0 Other comprehensive loss (1,398.2) (1,219.2) (1,500.5) 2,709.5 (1,408.4) Comprehensive loss $ (544.5) $ (558.4) $ (593.0) $ 1,149.5 $ (546.4) Condensed Consolidating Statements of Cash Flows For the six months ended June 30, 2019 Principal Principal Life Principal Financial Principal Financial Insurance Services, Inc. and Financial Group, Inc. Company Other Subsidiaries Group, Inc. Parent Only Only Combined Eliminations Consolidated (in millions) Operating activities Net cash provided by operating activities $ 16.3 $ 2,742.1 $ 803.9 $ (883.9) $ 2,678.4 Investing activities Fixed maturities available-for-sale and equity securities with intent to hold: Purchases (150.2) (4,703.3) (922.7) 4.4 (5,771.8) Sales — 1,065.7 411.5 — 1,477.2 Maturities 158.1 2,581.4 286.4 — 3,025.9 Mortgage loans acquired or originated — (1,894.5) (121.4) 7.4 (2,008.5) Mortgage loans sold or repaid — 1,088.5 162.9 (7.5) 1,243.9 Real estate acquired — (0.1) (48.4) — (48.5) Real estate sold — — 57.0 — 57.0 Net purchases of property and equipment — (25.1) (40.3) — (65.4) Dividends and returns of capital received from unconsolidated entities 208.9 1.2 668.9 (879.0) — Net change in other investments (13.6) (317.3) (627.7) 704.8 (253.8) Net cash provided by (used in) investing activities 203.2 (2,203.5) (173.8) (169.9) (2,344.0) Financing activities Issuance of common stock 22.1 — — — 22.1 Acquisition of treasury stock (153.7) — — — (153.7) Payments for financing element derivatives — (13.1) — — (13.1) Dividends to common stockholders (300.6) — — — (300.6) Issuance of long-term debt 493.6 — 9.1 — 502.7 Principal repayments of long-term debt — — (8.2) 7.5 (0.7) Net proceeds from short-term borrowings — — 33.1 — 33.1 Dividends and capital paid to parent — (668.9) (210.1) 879.0 — Investment contract deposits — 3,401.8 225.6 — 3,627.4 Investment contract withdrawals — (3,783.1) (17.7) — (3,800.8) Net increase in banking operation deposits — — 82.0 — 82.0 Other — 5.8 (0.2) — 5.6 Net cash provided by (used in) financing activities 61.4 (1,057.5) 113.6 886.5 4.0 Net increase (decrease) in cash and cash equivalents 280.9 (518.9) 743.7 (167.3) 338.4 Cash and cash equivalents at beginning of period 334.9 1,323.9 2,014.8 (696.1) 2,977.5 Cash and cash equivalents at end of period $ 615.8 $ 805.0 $ 2,758.5 $ (863.4) $ 3,315.9 Condensed Consolidating Statements of Cash Flows For the six months ended June 30, 2018 Principal Principal Life Principal Financial Principal Financial Insurance Services, Inc. and Financial Group, Inc. Company Other Subsidiaries Group, Inc. Parent Only Only Combined Eliminations Consolidated (in millions) Operating activities Net cash provided by (used in) operating activities $ (81.4) $ 1,891.4 $ 805.3 $ (977.1) $ 1,638.2 Investing activities Fixed maturities available-for-sale and equity securities with intent to hold: Purchases (200.8) (6,188.8) (980.3) 5.5 (7,364.4) Sales — 1,623.7 498.3 — 2,122.0 Maturities 0.8 3,005.7 285.6 — 3,292.1 Mortgage loans acquired or originated — (1,207.9) (204.8) 86.5 (1,326.2) Mortgage loans sold or repaid — 960.7 158.0 (24.7) 1,094.0 Real estate acquired — — (36.4) — (36.4) Real estate sold — — 63.5 — 63.5 Net purchases of property and equipment — (25.4) (18.2) — (43.6) Purchase of interests in subsidiaries, net of cash acquired — — (141.5) — (141.5) Dividends and returns of capital received from unconsolidated entities 336.5 42.6 371.5 (750.6) — Net change in other investments 0.5 (207.1) (786.7) 992.3 (1.0) Net cash provided by (used in) investing activities 137.0 (1,996.5) (791.0) 309.0 (2,341.5) Financing activities Issuance of common stock 44.6 — — — 44.6 Acquisition of treasury stock (396.5) — — — (396.5) Payments for financing element derivatives — (37.9) — — (37.9) Purchase of subsidiary shares from noncontrolling interest — — (23.0) — (23.0) Dividends to common stockholders (295.8) — — — (295.8) Issuance of long-term debt — — 123.9 (82.6) 41.3 Principal repayments of long-term debt — — (25.4) 24.7 (0.7) Net proceeds from short-term borrowings — — 27.6 — 27.6 Dividends and capital paid to parent — (371.5) (379.1) 750.6 — Investment contract deposits — 3,985.9 211.0 — 4,196.9 Investment contract withdrawals — (3,066.7) (43.3) — (3,110.0) Net increase in banking operation deposits — — 126.0 — 126.0 Other — 2.0 — — 2.0 Net cash provided by (used in) financing activities (647.7) 511.8 17.7 692.7 574.5 Net increase (decrease) in cash and cash equivalents (592.1) 406.7 32.0 24.6 (128.8) Cash and cash equivalents at beginning of period 842.8 426.7 1,526.4 (325.1) 2,470.8 Cash and cash equivalents at end of period $ 250.7 $ 833.4 $ 1,558.4 $ (300.5) $ 2,342.0 |
Condensed Consolidating Financial Information, Shelf Registration Guarantor (Table) | Condensed Consolidating Statements of Financial Position June 30, 2019 Principal Life Principal Principal Insurance Company Principal Financial Financial and Other Financial Group, Inc. Services, Inc. Subsidiaries Group, Inc. Parent Only Only Combined (1) Eliminations Consolidated (in millions) Assets Fixed maturities, available-for-sale $ 206.4 $ — $ 65,061.7 $ — $ 65,268.1 Fixed maturities, trading 297.0 — 389.8 — 686.8 Equity securities — 14.0 1,881.2 — 1,895.2 Mortgage loans — — 16,136.8 — 16,136.8 Real estate — — 1,740.4 — 1,740.4 Policy loans — — 800.9 — 800.9 Investment in unconsolidated entities 16,723.4 16,318.6 766.7 (32,877.3) 931.4 Other investments 10.5 161.2 3,563.9 — 3,735.6 Cash and cash equivalents 615.8 1,603.0 2,365.2 (1,268.1) 3,315.9 Accrued investment income 1.8 3.0 659.0 — 663.8 Premiums due and other receivables — 13.5 1,880.4 (344.7) 1,549.2 Deferred acquisition costs — — 3,519.5 — 3,519.5 Property and equipment — — 959.5 — 959.5 Goodwill — — 1,111.5 — 1,111.5 Other intangibles — — 1,300.7 — 1,300.7 Separate account assets — — 162,848.6 — 162,848.6 Other assets 353.3 61.0 1,600.3 (560.5) 1,454.1 Total assets $ 18,208.2 $ 18,174.3 $ 266,586.1 $ (35,050.6) $ 267,918.0 Liabilities Contractholder funds $ — $ — $ 39,658.8 $ — $ 39,658.8 Future policy benefits and claims — — 38,479.5 — 38,479.5 Other policyholder funds — — 996.2 — 996.2 Short-term debt — — 76.8 — 76.8 Long-term debt 3,624.2 343.8 138.1 (343.7) 3,762.4 Income taxes currently payable 2.0 — 65.0 (47.2) 19.8 Deferred income taxes 7.1 21.6 2,154.0 (495.2) 1,687.5 Separate account liabilities — — 162,848.6 — 162,848.6 Other liabilities 540.2 1,217.8 5,277.6 (1,053.7) 5,981.9 Total liabilities 4,173.5 1,583.2 249,694.6 (1,939.8) 253,511.5 Redeemable noncontrolling interest — — 304.5 — 304.5 Stockholders' equity Common stock 4.8 — 11.0 (11.0) 4.8 Additional paid-in capital 10,130.7 9,123.0 11,927.8 (21,050.8) 10,130.7 Retained earnings 10,805.8 6,412.8 3,343.3 (9,756.1) 10,805.8 Accumulated other comprehensive income 647.7 1,055.3 1,239.6 (2,294.9) 647.7 Treasury stock, at cost (7,554.3) — (2.0) 2.0 (7,554.3) Total stockholders' equity attributable to PFG 14,034.7 16,591.1 16,519.7 (33,110.8) 14,034.7 Noncontrolling interest — — 67.3 — 67.3 Total stockholders’ equity 14,034.7 16,591.1 16,587.0 (33,110.8) 14,102.0 Total liabilities and stockholders' equity $ 18,208.2 $ 18,174.3 $ 266,586.1 $ (35,050.6) $ 267,918.0 (1) PFG sponsors nonqualified benefit plans. Nonqualified benefit plan assets and liabilities held in Rabbi trusts were $699.1 million and $566.7 million, respectively. Condensed Consolidating Statements of Financial Position December 31, 2018 Principal Life Principal Principal Insurance Company Principal Financial Financial and Other Financial Group, Inc. Services, Inc. Subsidiaries Group, Inc. Parent Only Only Combined (1) Eliminations Consolidated (in millions) Assets Fixed maturities, available-for-sale $ 211.5 $ — $ 59,897.0 $ — $ 60,108.5 Fixed maturities, trading 308.9 — 327.2 — 636.1 Equity securities — 11.9 1,831.8 — 1,843.7 Mortgage loans — — 15,336.9 — 15,336.9 Real estate — — 1,729.7 — 1,729.7 Policy loans — — 801.4 — 801.4 Investment in unconsolidated entities 13,862.4 14,325.5 726.0 (28,045.1) 868.8 Other investments 10.7 100.9 3,329.9 — 3,441.5 Cash and cash equivalents 334.9 649.0 3,096.8 (1,103.2) 2,977.5 Accrued investment income 1.4 0.3 634.5 — 636.2 Premiums due and other receivables — 0.5 1,779.6 (367.0) 1,413.1 Deferred acquisition costs — — 3,693.5 — 3,693.5 Property and equipment — — 767.3 — 767.3 Goodwill — — 1,100.0 — 1,100.0 Other intangibles — — 1,315.1 — 1,315.1 Separate account assets — — 144,987.9 — 144,987.9 Other assets 375.0 38.7 1,521.9 (556.7) 1,378.9 Total assets $ 15,104.8 $ 15,126.8 $ 242,876.5 $ (30,072.0) $ 243,036.1 Liabilities Contractholder funds $ — $ — $ 39,699.7 $ — $ 39,699.7 Future policy benefits and claims — — 35,664.8 — 35,664.8 Other policyholder funds — — 888.4 — 888.4 Short-term debt — — 42.9 — 42.9 Long-term debt 3,129.8 366.7 129.9 (366.8) 3,259.6 Income taxes currently payable — 9.8 61.5 (46.0) 25.3 Deferred income taxes — 13.9 1,446.4 (501.9) 958.4 Separate account liabilities — — 144,987.9 — 144,987.9 Other liabilities 585.0 1,002.9 4,838.1 (764.1) 5,661.9 Total liabilities 3,714.8 1,393.3 227,759.6 (1,678.8) 231,188.9 Redeemable noncontrolling interest — — 391.2 — 391.2 Stockholders' equity Common stock 4.8 — 11.0 (11.0) 4.8 Additional paid-in capital 10,060.7 9,100.0 12,004.5 (21,104.5) 10,060.7 Retained earnings 10,290.2 5,716.8 3,549.8 (9,266.6) 10,290.2 Accumulated other comprehensive loss (1,565.1) (1,083.3) (903.6) 1,986.9 (1,565.1) Treasury stock, at cost (7,400.6) — (2.0) 2.0 (7,400.6) Total stockholders' equity attributable to PFG 11,390.0 13,733.5 14,659.7 (28,393.2) 11,390.0 Noncontrolling interest — — 66.0 — 66.0 Total stockholders’ equity 11,390.0 13,733.5 14,725.7 (28,393.2) 11,456.0 Total liabilities and stockholders' equity $ 15,104.8 $ 15,126.8 $ 242,876.5 $ (30,072.0) $ 243,036.1 (1) PFG sponsors nonqualified benefit plans. Nonqualified benefit plan assets and liabilities held in Rabbi trusts were $671.7 million and $542.4 million, respectively. Condensed Consolidating Statements of Operations For the six months ended June 30, 2019 Principal Life Principal Principal Insurance Principal Financial Financial Company and Financial Group, Inc. Services, Inc. Other Subsidiaries Group, Inc. Parent Only Only Combined Eliminations Consolidated (in millions) Revenues Premiums and other considerations $ — $ — $ 3,657.8 $ — $ 3,657.8 Fees and other revenues — 0.3 1,985.8 (6.0) 1,980.1 Net investment income (loss) 10.9 (4.1) 1,987.3 4.0 1,998.1 Net realized capital gains, excluding impairment losses on available-for-sale securities 9.2 5.9 89.5 — 104.6 Net other-than-temporary impairment losses on available-for-sale securities — — (26.6) — (26.6) Other-than-temporary impairment losses on fixed maturities, available-for-sale reclassified to other comprehensive income — — 2.5 — 2.5 Net impairment losses on available-for-sale securities — — (24.1) — (24.1) Net realized capital gains 9.2 5.9 65.4 — 80.5 Total revenues 20.1 2.1 7,696.3 (2.0) 7,716.5 Expenses Benefits, claims and settlement expenses — — 4,641.2 — 4,641.2 Dividends to policyholders — — 60.0 — 60.0 Operating expenses 110.1 60.1 1,873.9 (5.1) 2,039.0 Total expenses 110.1 60.1 6,575.1 (5.1) 6,740.2 Income (loss) before income taxes (90.0) (58.0) 1,121.2 3.1 976.3 Income taxes (benefits) (22.3) (11.8) 166.2 — 132.1 Equity in the net income of subsidiaries 883.9 927.0 — (1,810.9) — Net income 816.2 880.8 955.0 (1,807.8) 844.2 Net income attributable to noncontrolling interest — — 28.0 — 28.0 Net income attributable to PFG $ 816.2 $ 880.8 $ 927.0 $ (1,807.8) $ 816.2 Net income $ 816.2 $ 880.8 $ 955.0 $ (1,807.8) $ 844.2 Other comprehensive income 2,201.1 2,127.0 2,149.5 (4,258.6) 2,219.0 Comprehensive income $ 3,017.3 $ 3,007.8 $ 3,104.5 $ (6,066.4) $ 3,063.2 Condensed Consolidating Statements of Operations For the six months ended June 30, 2018 Principal Life Principal Principal Insurance Principal Financial Financial Company and Financial Group, Inc. Services, Inc. Other Subsidiaries Group, Inc. Parent Only Only Combined Eliminations Consolidated (in millions) Revenues Premiums and other considerations $ — $ — $ 2,261.0 $ — $ 2,261.0 Fees and other revenues — 0.3 2,030.5 (6.9) 2,023.9 Net investment income (loss) 11.8 (3.0) 1,776.1 6.4 1,791.3 Net realized capital gains (losses), excluding impairment losses on available-for-sale securities (8.6) (0.5) 70.2 0.1 61.2 Net other-than-temporary impairment losses on available-for-sale securities — — (6.9) — (6.9) Other-than-temporary impairment losses on fixed maturities, available-for-sale reclassified from other comprehensive income — — (12.0) — (12.0) Net impairment losses on available-for-sale securities — — (18.9) — (18.9) Net realized capital gains (losses) (8.6) (0.5) 51.3 0.1 42.3 Total revenues 3.2 (3.2) 6,118.9 (0.4) 6,118.5 Expenses Benefits, claims and settlement expenses — — 3,110.3 — 3,110.3 Dividends to policyholders — — 60.7 — 60.7 Operating expenses 95.2 16.7 1,869.1 (5.9) 1,975.1 Total expenses 95.2 16.7 5,040.1 (5.9) 5,146.1 Income (loss) before income taxes (92.0) (19.9) 1,078.8 5.5 972.4 Income taxes (benefits) (41.0) (2.9) 154.3 — 110.4 Equity in the net income of subsidiaries 904.7 916.2 — (1,820.9) — Net income 853.7 899.2 924.5 (1,815.4) 862.0 Net income attributable to noncontrolling interest — — 8.3 — 8.3 Net income attributable to PFG $ 853.7 $ 899.2 $ 916.2 $ (1,815.4) $ 853.7 Net income $ 853.7 $ 899.2 $ 924.5 $ (1,815.4) $ 862.0 Other comprehensive loss (1,398.2) (1,424.8) (1,447.6) 2,862.2 (1,408.4) Comprehensive loss $ (544.5) $ (525.6) $ (523.1) $ 1,046.8 $ (546.4) Condensed Consolidating Statements of Cash Flows For the six months ended June 30, 2019 Principal Life Principal Principal Insurance Principal Financial Financial Company and Financial Group, Inc. Services, Inc. Other Subsidiaries Group, Inc. Parent Only Only Combined Eliminations Consolidated (in millions) Operating activities Net cash provided by (used in) operating activities $ 16.3 $ (8.0) $ 2,800.6 $ (130.5) $ 2,678.4 Investing activities Fixed maturities available-for-sale and equity securities with intent to hold: Purchases (150.2) (0.2) (5,621.4) — (5,771.8) Sales — 0.2 1,477.0 — 1,477.2 Maturities 158.1 — 2,867.8 — 3,025.9 Mortgage loans acquired or originated — — (2,008.5) — (2,008.5) Mortgage loans sold or repaid — — 1,243.9 — 1,243.9 Real estate acquired — — (48.5) — (48.5) Real estate sold — — 57.0 — 57.0 Net purchases of property and equipment — (1.0) (64.4) — (65.4) Dividends and returns of capital received from unconsolidated entities 208.9 1,246.3 — (1,455.2) — Net change in other investments (13.6) (51.5) (131.4) (57.3) (253.8) Net cash provided by (used in) investing activities 203.2 1,193.8 (2,228.5) (1,512.5) (2,344.0) Financing activities Issuance of common stock 22.1 — — — 22.1 Acquisition of treasury stock (153.7) — — — (153.7) Payments for financing element derivatives — — (13.1) — (13.1) Dividends to common stockholders (300.6) — — — (300.6) Issuance of long-term debt 493.6 5.1 9.1 (5.1) 502.7 Principal repayments of long-term debt — (28.0) (0.7) 28.0 (0.7) Net proceeds from short-term borrowings — — 33.1 — 33.1 Dividends and capital paid to parent — (208.9) (1,246.3) 1,455.2 — Investment contract deposits — — 3,627.4 — 3,627.4 Investment contract withdrawals — — (3,800.8) — (3,800.8) Net increase in banking operation deposits — — 82.0 — 82.0 Other — — 5.6 — 5.6 Net cash provided by (used in) financing activities 61.4 (231.8) (1,303.7) 1,478.1 4.0 Net increase (decrease) in cash and cash equivalents 280.9 954.0 (731.6) (164.9) 338.4 Cash and cash equivalents at beginning of period 334.9 649.0 3,096.8 (1,103.2) 2,977.5 Cash and cash equivalents at end of period $ 615.8 $ 1,603.0 $ 2,365.2 $ (1,268.1) $ 3,315.9 Condensed Consolidating Statements of Cash Flows For the six months ended June 30, 2018 Principal Life Principal Principal Insurance Principal Financial Financial Company and Financial Group, Inc. Services, Inc. Other Subsidiaries Group, Inc. Parent Only Only Combined Eliminations Consolidated (in millions) Operating activities Net cash provided by (used in) operating activities $ (81.4) $ 87.1 $ 1,675.4 $ (42.9) $ 1,638.2 Investing activities Fixed maturities available-for-sale and equity securities with intent to hold: Purchases (200.8) — (7,163.6) — (7,364.4) Sales — — 2,122.0 — 2,122.0 Maturities 0.8 — 3,291.3 — 3,292.1 Mortgage loans acquired or originated — — (1,326.2) — (1,326.2) Mortgage loans sold or repaid — — 1,094.0 — 1,094.0 Real estate acquired — — (36.4) — (36.4) Real estate sold — — 63.5 — 63.5 Net purchases of property and equipment — — (43.6) — (43.6) Purchase of interests in subsidiaries, net of cash acquired — — (141.5) — (141.5) Dividends and returns of capital received from unconsolidated entities 336.5 259.8 — (596.3) — Net change in other investments 0.5 (74.4) (49.7) 122.6 (1.0) Net cash provided by (used in) investing activities 137.0 185.4 (2,190.2) (473.7) (2,341.5) Financing activities Issuance of common stock 44.6 — — — 44.6 Acquisition of treasury stock (396.5) — — — (396.5) Payments for financing element derivatives — — (37.9) — (37.9) Purchase of subsidiary shares from noncontrolling interest — — (23.0) — (23.0) Dividends to common stockholders (295.8) — — — (295.8) Issuance of long-term debt — 5.7 41.3 (5.7) 41.3 Principal repayments of long-term debt — (28.7) (0.7) 28.7 (0.7) Net proceeds from short-term borrowings — — 27.6 — 27.6 Dividends and capital paid to parent — (336.5) (259.8) 596.3 — Investment contract deposits — — 4,196.9 — 4,196.9 Investment contract withdrawals — — (3,110.0) — (3,110.0) Net increase in banking operation deposits — — 126.0 — 126.0 Other — — 2.0 — 2.0 Net cash provided by (used in) financing activities (647.7) (359.5) 962.4 619.3 574.5 Net increase (decrease) in cash and cash equivalents (592.1) (87.0) 447.6 102.7 (128.8) Cash and cash equivalents at beginning of period 842.8 617.4 2,001.1 (990.5) 2,470.8 Cash and cash equivalents at end of period $ 250.7 $ 530.4 $ 2,448.7 $ (887.8) $ 2,342.0 |
Nature of Operations and Sign_3
Nature of Operations and Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) $ in Millions | Jan. 01, 2019 | Jan. 01, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 |
Recent Accounting Pronouncements | |||||
Assets | $ 267,918 | $ 243,036.1 | |||
Liabilities | 253,511.5 | $ 231,188.9 | |||
Package of practical expedients permitted under transition guidance | true | ||||
Hindsight practical expedient to determine the lease term for existing leases | true | ||||
ASU 2018-02 - Reclassification of certain tax effects | Accumulated other comprehensive income (loss) | |||||
Recent Accounting Pronouncements | |||||
Cumulative effect adjustment from adopting guidance | $ 77.6 | $ 77.6 | |||
ASU 2018-02 - Reclassification of certain tax effects | Retained earnings (accumulated deficit) | |||||
Recent Accounting Pronouncements | |||||
Cumulative effect adjustment from adopting guidance | (77.6) | (77.6) | |||
ASU 2014-09 - Revenue recognition | |||||
Recent Accounting Pronouncements | |||||
Cumulative effect adjustment from adopting guidance | (39.7) | (39.7) | |||
ASU 2014-09 - Revenue recognition | Accumulated other comprehensive income (loss) | |||||
Recent Accounting Pronouncements | |||||
Cumulative effect adjustment from adopting guidance | 25.6 | ||||
ASU 2014-09 - Revenue recognition | Retained earnings (accumulated deficit) | |||||
Recent Accounting Pronouncements | |||||
Cumulative effect adjustment from adopting guidance | (65) | ||||
ASU 2016-16 - Intra-entity asset transfer taxes | |||||
Recent Accounting Pronouncements | |||||
Cumulative effect adjustment, increase to retained earnings | 8.7 | 8.7 | |||
Cumulative effect adjustment, decrease to other assets | 21.1 | ||||
Cumulative effect adjustment, decrease to deferred income taxes | 29.8 | ||||
ASU 2016-16 - Intra-entity asset transfer taxes | Retained earnings (accumulated deficit) | |||||
Recent Accounting Pronouncements | |||||
Cumulative effect adjustment, increase to retained earnings | 8.7 | ||||
ASU 2016-01 - Equity investments | Accumulated other comprehensive income (loss) | |||||
Recent Accounting Pronouncements | |||||
Cumulative effect adjustment from adopting guidance | (1) | (1) | |||
ASU 2016-01 - Equity investments | Retained earnings (accumulated deficit) | |||||
Recent Accounting Pronouncements | |||||
Cumulative effect adjustment from adopting guidance | $ 1 | $ 1 | |||
ASU 2016-02 - Leases | |||||
Recent Accounting Pronouncements | |||||
Cumulative effect adjustment, increase to retained earnings | $ 4 | 4 | |||
ASU 2016-02 - Leases | Adjustment for adoption of guidance | |||||
Recent Accounting Pronouncements | |||||
Assets | 168.8 | ||||
Liabilities | $ 164 | ||||
ASU 2016-02 - Leases | Retained earnings (accumulated deficit) | |||||
Recent Accounting Pronouncements | |||||
Cumulative effect adjustment, increase to retained earnings | $ 4 |
Nature of Operations and Sign_4
Nature of Operations and Significant Accounting Policies - Separate Accounts (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Separate Accounts | ||
Separate account that primarily includes shares of Principal Financial Group, Inc. stock that were allocated and issued to eligible participants of qualified employee benefit plans as part of the 2001 demutualization | $ 110.4 | $ 94.9 |
Variable Interest Entities - Co
Variable Interest Entities - Consolidated VIEs (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Carrying amounts of consolidated VIE assets and liabilities | ||
Total assets | $ 42,582.2 | $ 38,922.8 |
Total liabilities | 41,531.8 | 37,742.9 |
Grantor trust | ||
Carrying amounts of consolidated VIE assets and liabilities | ||
Total assets | 98.6 | 95 |
Total liabilities | 95.3 | 89.4 |
Commercial mortgage-backed securities VIE | ||
Carrying amounts of consolidated VIE assets and liabilities | ||
Total assets | 5.4 | 6.4 |
Mandatory retirement savings funds | ||
Carrying amounts of consolidated VIE assets and liabilities | ||
Total assets | 41,743.8 | 37,915.7 |
Total liabilities | 41,354.2 | 37,579.3 |
Real estate VIE | ||
Carrying amounts of consolidated VIE assets and liabilities | ||
Total assets | 397 | 379.2 |
Total liabilities | 78.3 | 70.6 |
Sponsored investment funds | ||
Carrying amounts of consolidated VIE assets and liabilities | ||
Total assets | 337.4 | 526.5 |
Total liabilities | 4 | 3.6 |
Redeemable noncontrolling interest | $ 194.9 | $ 325.7 |
Variable Interest Entities - Un
Variable Interest Entities - Unconsolidated VIEs (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Money Market Funds | ||
Total assets of unconsolidated money market mutual funds | $ 4,000 | $ 3,000 |
Corporate debt securities | Available-for-sale | ||
Unconsolidated Variable Interest Entity disclosures | ||
Asset carrying value | 235.7 | 235.3 |
Maximum exposure to loss | 220.8 | 222.6 |
Residential mortgage-backed pass-through securities | Available-for-sale | ||
Unconsolidated Variable Interest Entity disclosures | ||
Asset carrying value | 2,437 | 2,460.6 |
Maximum exposure to loss | 2,389.1 | 2,488.5 |
Residential mortgage-backed pass-through securities | Trading | ||
Unconsolidated Variable Interest Entity disclosures | ||
Asset carrying value | 310.3 | 322.6 |
Maximum exposure to loss | 310.3 | 322.6 |
Commercial mortgage-backed securities | Available-for-sale | ||
Unconsolidated Variable Interest Entity disclosures | ||
Asset carrying value | 4,569.9 | 3,945.6 |
Maximum exposure to loss | 4,460.3 | 4,023.1 |
Commercial mortgage-backed securities | Trading | ||
Unconsolidated Variable Interest Entity disclosures | ||
Asset carrying value | 29 | 13.8 |
Maximum exposure to loss | 29 | 13.8 |
Collateralized debt obligations | Available-for-sale | ||
Unconsolidated Variable Interest Entity disclosures | ||
Asset carrying value | 2,759.4 | 2,420.8 |
Maximum exposure to loss | 2,771.9 | 2,451.3 |
Collateralized debt obligations | Trading | ||
Unconsolidated Variable Interest Entity disclosures | ||
Asset carrying value | 20.4 | 11.8 |
Maximum exposure to loss | 20.4 | 11.8 |
Other debt obligations | Available-for-sale | ||
Unconsolidated Variable Interest Entity disclosures | ||
Asset carrying value | 7,801.9 | 7,153.2 |
Maximum exposure to loss | 7,675.1 | 7,196.6 |
Other debt obligations | Trading | ||
Unconsolidated Variable Interest Entity disclosures | ||
Asset carrying value | 13.8 | 9.7 |
Maximum exposure to loss | 13.8 | 9.7 |
Equity securities | ||
Unconsolidated Variable Interest Entity disclosures | ||
Asset carrying value | 114.4 | 103.9 |
Maximum exposure to loss | 114.4 | 103.9 |
Other investments: Other limited partnership and fund interests | ||
Unconsolidated Variable Interest Entity disclosures | ||
Asset carrying value | 847.2 | 737.5 |
Maximum exposure to loss | 1,464.8 | 1,432.2 |
Fully secured debt of international real estate funds with recourse to the investment manager, included in maximum loss exposure | $ 131.3 | $ 132.2 |
Investments - Fixed Maturities
Investments - Fixed Maturities and Equity Securities (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Available-for-sale securities | ||
Amortized cost, fixed maturities | $ 61,270.4 | $ 59,725.8 |
Gross unrealized gains, fixed maturities | 4,148.9 | 1,612.4 |
Gross unrealized losses, fixed maturities | 151.2 | 1,229.7 |
Fair value, fixed maturities | 65,268.1 | 60,108.5 |
Other-than-temporary impairments in AOCI | 56.1 | 53.6 |
Net unrealized gains (losses) on impaired fixed maturities, available-for-sale related to changes in fair value subsequent to the impairment date | 70 | 64.2 |
U.S. government and agencies | ||
Available-for-sale securities | ||
Amortized cost, fixed maturities | 1,457.4 | 1,441.6 |
Gross unrealized gains, fixed maturities | 82.9 | 16.4 |
Gross unrealized losses, fixed maturities | 3.9 | 17 |
Fair value, fixed maturities | 1,536.4 | 1,441 |
Non-U.S. governments | ||
Available-for-sale securities | ||
Amortized cost, fixed maturities | 880.4 | 833.4 |
Gross unrealized gains, fixed maturities | 122.8 | 71.7 |
Gross unrealized losses, fixed maturities | 2.5 | 14.6 |
Fair value, fixed maturities | 1,000.7 | 890.5 |
States and political subdivisions | ||
Available-for-sale securities | ||
Amortized cost, fixed maturities | 6,413.2 | 6,125 |
Gross unrealized gains, fixed maturities | 561 | 196 |
Gross unrealized losses, fixed maturities | 5.6 | 95.3 |
Fair value, fixed maturities | 6,968.6 | 6,225.7 |
Corporate debt securities | ||
Available-for-sale securities | ||
Amortized cost, fixed maturities | 35,200.2 | 35,134.6 |
Gross unrealized gains, fixed maturities | 3,052.4 | 1,249.9 |
Gross unrealized losses, fixed maturities | 81.3 | 845.2 |
Fair value, fixed maturities | 38,171.3 | 35,539.3 |
Residential mortgage-backed pass-through securities | ||
Available-for-sale securities | ||
Amortized cost, fixed maturities | 2,389.1 | 2,488.5 |
Gross unrealized gains, fixed maturities | 56.7 | 21.9 |
Gross unrealized losses, fixed maturities | 8.8 | 49.8 |
Fair value, fixed maturities | 2,437 | 2,460.6 |
Commercial mortgage-backed securities | ||
Available-for-sale securities | ||
Amortized cost, fixed maturities | 4,460.3 | 4,023.1 |
Gross unrealized gains, fixed maturities | 130.7 | 17.1 |
Gross unrealized losses, fixed maturities | 21.1 | 94.6 |
Fair value, fixed maturities | 4,569.9 | 3,945.6 |
Other-than-temporary impairments in AOCI | 20.5 | 16.3 |
Collateralized debt obligations | ||
Available-for-sale securities | ||
Amortized cost, fixed maturities | 2,771.9 | 2,451.3 |
Gross unrealized gains, fixed maturities | 1.1 | |
Gross unrealized losses, fixed maturities | 13.6 | 30.5 |
Fair value, fixed maturities | 2,759.4 | 2,420.8 |
Other-than-temporary impairments in AOCI | 1.4 | 1.2 |
Other debt obligations | ||
Available-for-sale securities | ||
Amortized cost, fixed maturities | 7,697.9 | 7,228.3 |
Gross unrealized gains, fixed maturities | 141.3 | 39.4 |
Gross unrealized losses, fixed maturities | 14.4 | 82.7 |
Fair value, fixed maturities | 7,824.8 | 7,185 |
Other-than-temporary impairments in AOCI | $ 34.2 | $ 36.1 |
Investments - Amortization by E
Investments - Amortization by Expected Maturity (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Amortized cost of fixed maturities available-for-sale | ||
Due in one year or less | $ 2,729.6 | |
Due after one year through five years | 10,019.9 | |
Due after five years through ten years | 10,564.6 | |
Due after ten years | 20,637.1 | |
Subtotal | 43,951.2 | |
Mortgage-backed and other asset-backed securities | 17,319.2 | |
Amortized cost, fixed maturities | 61,270.4 | $ 59,725.8 |
Fair value of fixed maturities available-for-sale | ||
Due in one year or less | 2,751.4 | |
Due after one year through five years | 10,333.8 | |
Due after five years through ten years | 11,185.6 | |
Due after ten years | 23,406.2 | |
Subtotal | 47,677 | |
Mortgage-backed and other asset-backed securities | 17,591.1 | |
Fair value, fixed maturities | $ 65,268.1 | $ 60,108.5 |
Investments - Net Realized Capi
Investments - Net Realized Capital Gains and Losses (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Major components of net realized capital gains (losses) on investments | ||||
Fixed maturities, available-for-sale: Gross gains | $ 6.2 | $ 0.7 | $ 8.7 | $ 5 |
Fixed maturities, available-for-sale: Gross losses | (7.9) | (18.5) | (9.4) | (45.2) |
Fixed maturities, available-for-sale: Net impairment recoveries (losses) | (17.3) | (9) | (24.1) | (18.9) |
Fixed maturities, available-for-sale: Hedging, net | (9.3) | (2.9) | (9.3) | (8) |
Fixed maturities, trading | 17.5 | (2.7) | 31.7 | (13.4) |
Equity securities | 14.7 | 5.6 | 35.7 | 3.6 |
Net realized capital gains (losses) | (4) | 67.4 | 80.5 | 42.3 |
Unrealized gains (losses) on fixed maturities, trading | 17.6 | (2.7) | 31.8 | (13.4) |
Unrealized gains (losses) on equity securities | 9.7 | 0.1 | 29.7 | (14.1) |
Unrealized gains (losses) on equity securities reported in net investment income | 18.7 | 3.3 | 41.3 | 3.2 |
Proceeds from sales of investments | ||||
Proceeds from sales of investments in fixed maturities, available-for-sale | 1,028 | 525.9 | 1,191 | 1,737.7 |
Mortgage loans | ||||
Major components of net realized capital gains (losses) on investments | ||||
Realized capital gains (losses) | 0.3 | 2.5 | 0.6 | 2.9 |
Derivatives | ||||
Major components of net realized capital gains (losses) on investments | ||||
Realized capital gains (losses) | 4.6 | (37.4) | 9.6 | (28) |
Other investment types | ||||
Major components of net realized capital gains (losses) on investments | ||||
Realized capital gains (losses) | $ (12.8) | $ 129.1 | $ 37 | $ 144.3 |
Investments - Other-Than-Tempor
Investments - Other-Than-Temporary Impairments (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Other-than-temporary impairment losses, net of recoveries | ||||
Net other-than-temporary impairment (losses) recoveries on fixed maturities, available-for-sale | $ (17) | $ (8.2) | $ (26.6) | $ (6.9) |
Other-than-temporary impairment losses on fixed maturities, available-for-sale reclassified to (from) other comprehensive income | (0.3) | (0.8) | 2.5 | (12) |
Net impairment (losses) recoveries on fixed maturities, available-for-sale | $ (17.3) | $ (9) | $ (24.1) | $ (18.9) |
Investments - Accumulated Credi
Investments - Accumulated Credit Losses for Fixed Maturities with Bifurcated Credit Losses (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Other-Than-Temporary Impairment Credit Losses Recognized in Net Income - Rollforward | ||||
Beginning balance | $ (102.3) | $ (129.2) | $ (117.5) | $ (124.3) |
Credit losses for which an other-than-temporary impairment was not previously recognized | (0.8) | (5.5) | (2.8) | (10.1) |
Credit losses for which an other-than-temporary impairment was previously recognized | (4.6) | (1.9) | (8.9) | (11.7) |
Reduction for credit losses previously recognized on fixed maturities now sold, paid down or intended to be sold | 8 | 2.7 | 28.4 | 10 |
Net reduction (increase) for positive changes in cash flows expected to be collected and amortization | (0.6) | 2.8 | 0.5 | 5 |
Ending balance | $ (100.3) | $ (131.1) | $ (100.3) | $ (131.1) |
Investments - Gross Unrealized
Investments - Gross Unrealized Losses for Fixed Maturities (Details) $ in Millions | Jun. 30, 2019USD ($)item | Dec. 31, 2018USD ($)item |
Gross Unrealized Losses for Fixed Maturities | ||
Fixed maturities, Less than twelve months, Fair value | $ 1,815 | $ 19,116.1 |
Fixed maturities, Less than twelve months, Gross unrealized losses | 15.2 | 557.7 |
Fixed maturities, Greater than or equal to twelve months, Fair value | 7,388.4 | 16,608.2 |
Fixed maturities, Greater than or equal to twelve months, Gross unrealized losses | 136 | 672 |
Fixed maturities, Total, Fair value | 9,203.4 | 35,724.3 |
Fixed maturities, Total, Gross unrealized losses | 151.2 | 1,229.7 |
U.S. government and agencies | ||
Gross Unrealized Losses for Fixed Maturities | ||
Fixed maturities, Less than twelve months, Fair value | 5.7 | 101.8 |
Fixed maturities, Less than twelve months, Gross unrealized losses | 1.6 | |
Fixed maturities, Greater than or equal to twelve months, Fair value | 160.8 | 500.3 |
Fixed maturities, Greater than or equal to twelve months, Gross unrealized losses | 3.9 | 15.4 |
Fixed maturities, Total, Fair value | 166.5 | 602.1 |
Fixed maturities, Total, Gross unrealized losses | 3.9 | 17 |
Non-U.S. governments | ||
Gross Unrealized Losses for Fixed Maturities | ||
Fixed maturities, Less than twelve months, Fair value | 13.2 | 210.2 |
Fixed maturities, Less than twelve months, Gross unrealized losses | 0.2 | 4.7 |
Fixed maturities, Greater than or equal to twelve months, Fair value | 47.9 | 191.5 |
Fixed maturities, Greater than or equal to twelve months, Gross unrealized losses | 2.3 | 9.9 |
Fixed maturities, Total, Fair value | 61.1 | 401.7 |
Fixed maturities, Total, Gross unrealized losses | 2.5 | 14.6 |
States and political subdivisions | ||
Gross Unrealized Losses for Fixed Maturities | ||
Fixed maturities, Less than twelve months, Fair value | 2.3 | 1,359.9 |
Fixed maturities, Less than twelve months, Gross unrealized losses | 33.9 | |
Fixed maturities, Greater than or equal to twelve months, Fair value | 509.8 | 1,590.3 |
Fixed maturities, Greater than or equal to twelve months, Gross unrealized losses | 5.6 | 61.4 |
Fixed maturities, Total, Fair value | 512.1 | 2,950.2 |
Fixed maturities, Total, Gross unrealized losses | 5.6 | 95.3 |
Corporate debt securities | ||
Gross Unrealized Losses for Fixed Maturities | ||
Fixed maturities, Less than twelve months, Fair value | 579.1 | 13,198.4 |
Fixed maturities, Less than twelve months, Gross unrealized losses | 9.7 | 476 |
Fixed maturities, Greater than or equal to twelve months, Fair value | 2,556 | 6,865 |
Fixed maturities, Greater than or equal to twelve months, Gross unrealized losses | 71.6 | 369.2 |
Fixed maturities, Total, Fair value | 3,135.1 | 20,063.4 |
Fixed maturities, Total, Gross unrealized losses | 81.3 | 845.2 |
Residential mortgage-backed pass-through securities | ||
Gross Unrealized Losses for Fixed Maturities | ||
Fixed maturities, Less than twelve months, Fair value | 1 | 236.7 |
Fixed maturities, Less than twelve months, Gross unrealized losses | 1 | |
Fixed maturities, Greater than or equal to twelve months, Fair value | 747.4 | 1,410.2 |
Fixed maturities, Greater than or equal to twelve months, Gross unrealized losses | 8.8 | 48.8 |
Fixed maturities, Total, Fair value | 748.4 | 1,646.9 |
Fixed maturities, Total, Gross unrealized losses | 8.8 | 49.8 |
Commercial mortgage-backed securities | ||
Gross Unrealized Losses for Fixed Maturities | ||
Fixed maturities, Less than twelve months, Fair value | 127.3 | 790.3 |
Fixed maturities, Less than twelve months, Gross unrealized losses | 2.1 | 11.6 |
Fixed maturities, Greater than or equal to twelve months, Fair value | 625.6 | 2,223.2 |
Fixed maturities, Greater than or equal to twelve months, Gross unrealized losses | 19 | 83 |
Fixed maturities, Total, Fair value | 752.9 | 3,013.5 |
Fixed maturities, Total, Gross unrealized losses | 21.1 | 94.6 |
Collateralized debt obligations | ||
Gross Unrealized Losses for Fixed Maturities | ||
Fixed maturities, Less than twelve months, Fair value | 975.5 | 2,233.3 |
Fixed maturities, Less than twelve months, Gross unrealized losses | 2.7 | 24 |
Fixed maturities, Greater than or equal to twelve months, Fair value | 1,063.9 | 162.6 |
Fixed maturities, Greater than or equal to twelve months, Gross unrealized losses | 10.9 | 6.5 |
Fixed maturities, Total, Fair value | 2,039.4 | 2,395.9 |
Fixed maturities, Total, Gross unrealized losses | 13.6 | 30.5 |
Other debt obligations | ||
Gross Unrealized Losses for Fixed Maturities | ||
Fixed maturities, Less than twelve months, Fair value | 110.9 | 985.5 |
Fixed maturities, Less than twelve months, Gross unrealized losses | 0.5 | 4.9 |
Fixed maturities, Greater than or equal to twelve months, Fair value | 1,677 | 3,665.1 |
Fixed maturities, Greater than or equal to twelve months, Gross unrealized losses | 13.9 | 77.8 |
Fixed maturities, Total, Fair value | 1,787.9 | 4,650.6 |
Fixed maturities, Total, Gross unrealized losses | 14.4 | 82.7 |
Principal Life Insurance Company | ||
Gross Unrealized Losses for Fixed Maturities | ||
Fixed maturities, Less than twelve months, Fair value | 1,768.2 | 18,764 |
Fixed maturities, Less than twelve months, Gross unrealized losses | 14.3 | 541.3 |
Fixed maturities, Greater than or equal to twelve months, Fair value | 7,304.3 | 16,287.9 |
Fixed maturities, Greater than or equal to twelve months, Gross unrealized losses | 133.8 | 661.6 |
Fixed maturities, Total, Fair value | 9,072.5 | 35,051.9 |
Fixed maturities, Total, Gross unrealized losses | $ 148.1 | $ 1,202.9 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Qualitative Disclosure | ||
Available-for-sale Securities in Unrealized Loss Positions, Qualitative Disclosure, Percent Investment Grade (as a percent) | 94.00% | 95.00% |
Available-for-sale Securities in Unrealized Loss Positions, Qualitative Disclosure, Average Price (percent of carrying value to amortized cost) | item | 98 | 97 |
Available-for-sale Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Less Than Twelve Months | item | 177 | 2,076 |
Available-for-sale Securities in Unrealized Loss Positions, Average Price, Less Than Twelve Months (percent of carrying value to amortized cost) | item | 99 | 97 |
Available-for-sale Securities in Unrealized Loss Positions, Percent Investment Grade, Less Than Twelve Months (as a percent) | 84.00% | 92.00% |
Available-for-sale Securities in Unrealized Loss Position, Aggregate Losses On Investment Grade Investments, Less Than Twelve Months | $ 8.8 | $ 473.7 |
Available-for-sale Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Twelve Months or Longer | item | 1,081 | 2,335 |
Available-for-sale Securities in Unrealized Loss Positions, Average Price, Twelve Months or Longer (percent of carrying value to amortized cost) | item | 98 | 96 |
Principal Life Insurance Company | Corporate debt securities | ||
Gross Unrealized Losses for Fixed Maturities | ||
Fixed maturities, Greater than or equal to twelve months, Gross unrealized losses | $ 69.7 | $ 360.4 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Qualitative Disclosure | ||
Available-for-sale Securities in Unrealized Loss Positions, Average Price, Twelve Months or Longer (percent of carrying value to amortized cost) | item | 97 | 95 |
Principal Life Insurance Company | Commercial mortgage-backed securities | ||
Gross Unrealized Losses for Fixed Maturities | ||
Fixed maturities, Greater than or equal to twelve months, Gross unrealized losses | $ 18.8 | $ 82.2 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Qualitative Disclosure | ||
Available-for-sale Securities in Unrealized Loss Positions, Average Price, Twelve Months or Longer (percent of carrying value to amortized cost) | item | 97 | 96 |
Investments - Net Unrealized Ga
Investments - Net Unrealized Gains and Losses on Available-for-Sale Securities and Derivative Instruments (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Net Unrealized Gains and Losses on Available-for-Sale Securities and Derivative Instruments | ||
Net unrealized gains (losses) on fixed maturities, available-for-sale | $ 4,029.5 | $ 400.8 |
Noncredit component of impairment losses on fixed maturities, available-for-sale | (56.1) | (53.6) |
Net unrealized gains (losses) on derivative instruments | 108 | 118.5 |
Adjustments for assumed changes in amortization patterns | (208.1) | 30.3 |
Adjustments for assumed changes in policyholder liabilities | (1,051.4) | (293.7) |
Net unrealized gains (losses) on other investments and noncontrolling interest adjustments | 97.6 | 68.8 |
Provision for deferred income tax benefits (taxes) | (628.8) | (63.8) |
Net unrealized gains (losses) on available-for-sale securities and derivative instruments | $ 2,290.7 | $ 207.3 |
Investments - Mortgage Loans (D
Investments - Mortgage Loans (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | |
Mortgage loan disclosures | ||||||||
Mortgage loans, Total amortized cost | $ 16,164.9 | $ 14,398 | $ 16,164.9 | $ 14,398 | $ 15,364.3 | |||
Mortgage loan valuation allowance | (28.1) | (30.1) | (28.1) | (30.1) | $ (27.6) | (27.4) | $ (33) | $ (32.7) |
Mortgage loans, Total carrying value | 16,136.8 | 16,136.8 | 15,336.9 | |||||
Commercial mortgage loans | ||||||||
Mortgage loan disclosures | ||||||||
Mortgage loans, Total amortized cost | 14,830.6 | 13,071.9 | 14,830.6 | 13,071.9 | 13,996.3 | |||
Mortgage loan valuation allowance | (25.4) | (25.8) | (25.4) | (25.8) | (24.7) | $ (24.3) | (26.6) | (25.8) |
Mortgage loans, purchased | $ 103 | 115.9 | ||||||
Mortgage loans, sold | 1.6 | $ 0.5 | 1.6 | |||||
Percent of mortgage loans (as a percent) | 100.00% | 100.00% | 100.00% | |||||
Commercial mortgage loans | Office | ||||||||
Mortgage loan disclosures | ||||||||
Mortgage loans, Total amortized cost | $ 4,960.6 | $ 4,960.6 | $ 4,625.8 | |||||
Percent of mortgage loans (as a percent) | 33.40% | 33.40% | 33.00% | |||||
Commercial mortgage loans | Retail | ||||||||
Mortgage loan disclosures | ||||||||
Mortgage loans, Total amortized cost | $ 2,118.9 | $ 2,118.9 | $ 2,305.6 | |||||
Percent of mortgage loans (as a percent) | 14.30% | 14.30% | 16.50% | |||||
Commercial mortgage loans | Industrial | ||||||||
Mortgage loan disclosures | ||||||||
Mortgage loans, Total amortized cost | $ 2,350.5 | $ 2,350.5 | $ 2,312.9 | |||||
Percent of mortgage loans (as a percent) | 15.80% | 15.80% | 16.50% | |||||
Commercial mortgage loans | Apartments | ||||||||
Mortgage loan disclosures | ||||||||
Mortgage loans, Total amortized cost | $ 4,850.1 | $ 4,850.1 | $ 4,250.5 | |||||
Percent of mortgage loans (as a percent) | 32.70% | 32.70% | 30.40% | |||||
Commercial mortgage loans | Hotel | ||||||||
Mortgage loan disclosures | ||||||||
Mortgage loans, Total amortized cost | $ 97.9 | $ 97.9 | $ 99.8 | |||||
Percent of mortgage loans (as a percent) | 0.70% | 0.70% | 0.70% | |||||
Commercial mortgage loans | Mixed use/other | ||||||||
Mortgage loan disclosures | ||||||||
Mortgage loans, Total amortized cost | $ 452.6 | $ 452.6 | $ 401.7 | |||||
Percent of mortgage loans (as a percent) | 3.10% | 3.10% | 2.90% | |||||
Commercial mortgage loans | New England | ||||||||
Mortgage loan disclosures | ||||||||
Mortgage loans, Total amortized cost | $ 652.6 | $ 652.6 | $ 640.6 | |||||
Percent of mortgage loans (as a percent) | 4.40% | 4.40% | 4.60% | |||||
Commercial mortgage loans | Middle Atlantic | ||||||||
Mortgage loan disclosures | ||||||||
Mortgage loans, Total amortized cost | $ 4,263.9 | $ 4,263.9 | $ 3,927.3 | |||||
Percent of mortgage loans (as a percent) | 28.70% | 28.70% | 28.00% | |||||
Commercial mortgage loans | East North Central | ||||||||
Mortgage loan disclosures | ||||||||
Mortgage loans, Total amortized cost | $ 604.9 | $ 604.9 | $ 592.8 | |||||
Percent of mortgage loans (as a percent) | 4.10% | 4.10% | 4.20% | |||||
Commercial mortgage loans | West North Central | ||||||||
Mortgage loan disclosures | ||||||||
Mortgage loans, Total amortized cost | $ 200.5 | $ 200.5 | $ 205.8 | |||||
Percent of mortgage loans (as a percent) | 1.40% | 1.40% | 1.50% | |||||
Commercial mortgage loans | South Atlantic | ||||||||
Mortgage loan disclosures | ||||||||
Mortgage loans, Total amortized cost | $ 2,338 | $ 2,338 | $ 2,206.5 | |||||
Percent of mortgage loans (as a percent) | 15.80% | 15.80% | 15.80% | |||||
Commercial mortgage loans | East South Central | ||||||||
Mortgage loan disclosures | ||||||||
Mortgage loans, Total amortized cost | $ 444.8 | $ 444.8 | $ 422.5 | |||||
Percent of mortgage loans (as a percent) | 3.00% | 3.00% | 3.00% | |||||
Commercial mortgage loans | West South Central | ||||||||
Mortgage loan disclosures | ||||||||
Mortgage loans, Total amortized cost | $ 1,463.1 | $ 1,463.1 | $ 1,213.8 | |||||
Percent of mortgage loans (as a percent) | 9.90% | 9.90% | 8.70% | |||||
Commercial mortgage loans | Mountain | ||||||||
Mortgage loan disclosures | ||||||||
Mortgage loans, Total amortized cost | $ 897.2 | $ 897.2 | $ 968.6 | |||||
Percent of mortgage loans (as a percent) | 6.00% | 6.00% | 6.90% | |||||
Commercial mortgage loans | Pacific | ||||||||
Mortgage loan disclosures | ||||||||
Mortgage loans, Total amortized cost | $ 3,686.2 | $ 3,686.2 | $ 3,567.6 | |||||
Percent of mortgage loans (as a percent) | 24.90% | 24.90% | 25.50% | |||||
Commercial mortgage loans | International | ||||||||
Mortgage loan disclosures | ||||||||
Mortgage loans, Total amortized cost | $ 279.4 | $ 279.4 | $ 250.8 | |||||
Percent of mortgage loans (as a percent) | 1.80% | 1.80% | 1.80% | |||||
Residential mortgage loans | ||||||||
Mortgage loan disclosures | ||||||||
Mortgage loans, Total amortized cost | $ 1,334.3 | 1,326.1 | $ 1,334.3 | 1,326.1 | $ 1,368 | |||
Mortgage loan valuation allowance | (2.7) | (4.3) | (2.7) | (4.3) | $ (2.9) | (3.1) | $ (6.4) | $ (6.9) |
Mortgage loans, purchased | 66.2 | 92.6 | 99.4 | 204.8 | ||||
Mortgage loans, sold | 21.2 | $ 27.7 | 32.1 | $ 51.3 | ||||
First liens | ||||||||
Mortgage loan disclosures | ||||||||
Mortgage loans, Total amortized cost | 1,321.6 | 1,321.6 | 1,352.9 | |||||
Home equity | ||||||||
Mortgage loan disclosures | ||||||||
Mortgage loans, Total amortized cost | $ 12.7 | $ 12.7 | $ 15.1 |
Investments - Mortgage Loan Cre
Investments - Mortgage Loan Credit Monitoring (Details) - USD ($) $ in Millions | 6 Months Ended | ||
Jun. 30, 2019 | Dec. 31, 2018 | Jun. 30, 2018 | |
Mortgage loan credit quality disclosures | |||
Mortgage loans, Total amortized cost | $ 16,164.9 | $ 15,364.3 | $ 14,398 |
Commercial mortgage loans | |||
Mortgage loan credit quality disclosures | |||
Mortgage loans, Total amortized cost | 14,830.6 | 13,996.3 | 13,071.9 |
Commercial mortgage loans | A- and above | |||
Mortgage loan credit quality disclosures | |||
Mortgage loans, Total amortized cost | 13,795.4 | 12,819.5 | |
Commercial mortgage loans | BBB+ thru BBB- | |||
Mortgage loan credit quality disclosures | |||
Mortgage loans, Total amortized cost | 944.9 | 1,083 | |
Commercial mortgage loans | BB+ thru BB- | |||
Mortgage loan credit quality disclosures | |||
Mortgage loans, Total amortized cost | 84.7 | 88.3 | |
Commercial mortgage loans | B+ and below | |||
Mortgage loan credit quality disclosures | |||
Mortgage loans, Total amortized cost | 5.6 | 5.5 | |
Brick and mortar | |||
Mortgage loan credit quality disclosures | |||
Mortgage loans, Total amortized cost | 14,660.1 | 13,806.3 | |
Brick and mortar | A- and above | |||
Mortgage loan credit quality disclosures | |||
Mortgage loans, Total amortized cost | 13,714.8 | 12,735.2 | |
Brick and mortar | BBB+ thru BBB- | |||
Mortgage loan credit quality disclosures | |||
Mortgage loans, Total amortized cost | 855 | 977.3 | |
Brick and mortar | BB+ thru BB- | |||
Mortgage loan credit quality disclosures | |||
Mortgage loans, Total amortized cost | 84.7 | 88.3 | |
Brick and mortar | B+ and below | |||
Mortgage loan credit quality disclosures | |||
Mortgage loans, Total amortized cost | 5.6 | 5.5 | |
Credit tenant loans | |||
Mortgage loan credit quality disclosures | |||
Mortgage loans, Total amortized cost | 170.5 | 190 | |
Credit tenant loans | A- and above | |||
Mortgage loan credit quality disclosures | |||
Mortgage loans, Total amortized cost | 80.6 | 84.3 | |
Credit tenant loans | BBB+ thru BBB- | |||
Mortgage loan credit quality disclosures | |||
Mortgage loans, Total amortized cost | 89.9 | 105.7 | |
Residential mortgage loans | |||
Mortgage loan credit quality disclosures | |||
Mortgage loans, Total amortized cost | 1,334.3 | 1,368 | $ 1,326.1 |
Residential mortgage loans | Performing | |||
Mortgage loan credit quality disclosures | |||
Mortgage loans, Total amortized cost | 1,319.7 | 1,351.1 | |
Residential mortgage loans | Non-performing | |||
Mortgage loan credit quality disclosures | |||
Mortgage loans, Total amortized cost | $ 14.6 | 16.9 | |
Mortgage loans, Days delinquent to be considered non-performing | 90 days | ||
First liens | |||
Mortgage loan credit quality disclosures | |||
Mortgage loans, Total amortized cost | $ 1,321.6 | 1,352.9 | |
First liens | Performing | |||
Mortgage loan credit quality disclosures | |||
Mortgage loans, Total amortized cost | 1,310.4 | 1,340.3 | |
First liens | Non-performing | |||
Mortgage loan credit quality disclosures | |||
Mortgage loans, Total amortized cost | 11.2 | 12.6 | |
Home equity | |||
Mortgage loan credit quality disclosures | |||
Mortgage loans, Total amortized cost | 12.7 | 15.1 | |
Home equity | Performing | |||
Mortgage loan credit quality disclosures | |||
Mortgage loans, Total amortized cost | 9.3 | 10.8 | |
Home equity | Non-performing | |||
Mortgage loan credit quality disclosures | |||
Mortgage loans, Total amortized cost | $ 3.4 | $ 4.3 |
Investments - Mortgage Loans, N
Investments - Mortgage Loans, Non-Accrual and Aging (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 | Jun. 30, 2018 |
Mortgage loan non-accrual and aging disclosures | |||
Mortgage loans, Non-accrual status | $ 12.6 | $ 14.4 | |
Past due | 60.2 | 66.6 | |
Current | 16,104.7 | 15,297.7 | |
Mortgage loans, Total amortized cost | 16,164.9 | 15,364.3 | $ 14,398 |
Recorded investment 90 days or more past due and accruing | 2 | 2.5 | |
30 to 59 Days Past Due | |||
Mortgage loan non-accrual and aging disclosures | |||
Past due | 42.9 | 45.1 | |
60 to 89 Days Past Due | |||
Mortgage loan non-accrual and aging disclosures | |||
Past due | 7.3 | 9 | |
90 Days Past Due | |||
Mortgage loan non-accrual and aging disclosures | |||
Past due | 10 | 12.5 | |
Commercial mortgage loans | |||
Mortgage loan non-accrual and aging disclosures | |||
Mortgage loans, Total amortized cost | 14,830.6 | 13,996.3 | 13,071.9 |
Brick and mortar | |||
Mortgage loan non-accrual and aging disclosures | |||
Current | 14,660.1 | 13,806.3 | |
Mortgage loans, Total amortized cost | 14,660.1 | 13,806.3 | |
Credit tenant loans | |||
Mortgage loan non-accrual and aging disclosures | |||
Current | 170.5 | 190 | |
Mortgage loans, Total amortized cost | 170.5 | 190 | |
Residential mortgage loans | |||
Mortgage loan non-accrual and aging disclosures | |||
Mortgage loans, Total amortized cost | 1,334.3 | 1,368 | $ 1,326.1 |
First liens | |||
Mortgage loan non-accrual and aging disclosures | |||
Mortgage loans, Non-accrual status | 9.2 | 10.1 | |
Past due | 59.5 | 64.8 | |
Current | 1,262.1 | 1,288.1 | |
Mortgage loans, Total amortized cost | 1,321.6 | 1,352.9 | |
Recorded investment 90 days or more past due and accruing | 2 | 2.5 | |
First liens | 30 to 59 Days Past Due | |||
Mortgage loan non-accrual and aging disclosures | |||
Past due | 42.2 | 44.3 | |
First liens | 60 to 89 Days Past Due | |||
Mortgage loan non-accrual and aging disclosures | |||
Past due | 7.3 | 8.4 | |
First liens | 90 Days Past Due | |||
Mortgage loan non-accrual and aging disclosures | |||
Past due | 10 | 12.1 | |
Home equity | |||
Mortgage loan non-accrual and aging disclosures | |||
Mortgage loans, Non-accrual status | 3.4 | 4.3 | |
Past due | 0.7 | 1.8 | |
Current | 12 | 13.3 | |
Mortgage loans, Total amortized cost | 12.7 | 15.1 | |
Home equity | 30 to 59 Days Past Due | |||
Mortgage loan non-accrual and aging disclosures | |||
Past due | $ 0.7 | 0.8 | |
Home equity | 60 to 89 Days Past Due | |||
Mortgage loan non-accrual and aging disclosures | |||
Past due | 0.6 | ||
Home equity | 90 Days Past Due | |||
Mortgage loan non-accrual and aging disclosures | |||
Past due | $ 0.4 |
Investments - Mortgage Loan Val
Investments - Mortgage Loan Valuation Allowance (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Changes in mortgage loan valuation allowance | |||||
Beginning balance, Mortgage loan valuation allowance | $ 27.6 | $ 33 | $ 27.4 | $ 32.7 | |
Provision: Mortgage loan valuation allowance | (0.1) | (2.6) | (0.5) | (2.8) | |
Charge-offs: Mortgage loan valuation allowance | (0.3) | (1.1) | (0.4) | (1.6) | |
Recoveries: Mortgage loan valuation allowance | 0.9 | 0.8 | 1.6 | 1.8 | |
Ending balance, Mortgage loan valuation allowance | 28.1 | 30.1 | 28.1 | 30.1 | |
Individually evaluated for impairment, Mortgage loan valuation allowance | 1.5 | 2 | 1.5 | 2 | |
Collectively evaluated for impairment, Mortgage loan valuation allowance | 26.6 | 28.1 | 26.6 | 28.1 | |
Individually evaluated for impairment, Mortgage loans | 13.3 | 11 | 13.3 | 11 | |
Collectively evaluated for impairment, Mortgage loans | 16,151.6 | 14,387 | 16,151.6 | 14,387 | |
Mortgage loans, Total amortized cost | 16,164.9 | 14,398 | $ 16,164.9 | 14,398 | $ 15,364.3 |
Commercial mortgage loans | |||||
Mortgage loan valuation allowance disclosures | |||||
Mortgage loans, Days delinquent to be analyzed for valuation allowance | 60 days | ||||
Changes in mortgage loan valuation allowance | |||||
Beginning balance, Mortgage loan valuation allowance | 24.7 | 26.6 | $ 24.3 | 25.8 | |
Provision: Mortgage loan valuation allowance | 0.7 | (0.8) | 1.1 | ||
Ending balance, Mortgage loan valuation allowance | 25.4 | 25.8 | 25.4 | 25.8 | |
Collectively evaluated for impairment, Mortgage loan valuation allowance | 25.4 | 25.8 | 25.4 | 25.8 | |
Collectively evaluated for impairment, Mortgage loans | 14,830.6 | 13,071.9 | 14,830.6 | 13,071.9 | |
Mortgage loans, Total amortized cost | 14,830.6 | 13,071.9 | 14,830.6 | 13,071.9 | 13,996.3 |
Residential mortgage loans | |||||
Changes in mortgage loan valuation allowance | |||||
Beginning balance, Mortgage loan valuation allowance | 2.9 | 6.4 | 3.1 | 6.9 | |
Provision: Mortgage loan valuation allowance | (0.8) | (1.8) | (1.6) | (2.8) | |
Charge-offs: Mortgage loan valuation allowance | (0.3) | (1.1) | (0.4) | (1.6) | |
Recoveries: Mortgage loan valuation allowance | 0.9 | 0.8 | 1.6 | 1.8 | |
Ending balance, Mortgage loan valuation allowance | 2.7 | 4.3 | 2.7 | 4.3 | |
Individually evaluated for impairment, Mortgage loan valuation allowance | 1.5 | 2 | 1.5 | 2 | |
Collectively evaluated for impairment, Mortgage loan valuation allowance | 1.2 | 2.3 | 1.2 | 2.3 | |
Individually evaluated for impairment, Mortgage loans | 13.3 | 11 | 13.3 | 11 | |
Collectively evaluated for impairment, Mortgage loans | 1,321 | 1,315.1 | 1,321 | 1,315.1 | |
Mortgage loans, Total amortized cost | $ 1,334.3 | $ 1,326.1 | $ 1,334.3 | $ 1,326.1 | $ 1,368 |
Investments - Impaired Mortgage
Investments - Impaired Mortgage Loans (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Residential mortgage loans | |||||
Impaired mortgage loans | |||||
Recorded investment in impaired mortgage loans | $ 13.3 | $ 13.3 | $ 9.2 | ||
Unpaid principal balance of impaired mortgage loans | 14.3 | 14.3 | 10.3 | ||
Related allowance for impaired mortgage loans | 1.5 | 1.5 | 1.4 | ||
Average investment in impaired mortgage loans | 10.7 | $ 11.6 | 11.4 | $ 11.8 | |
Interest income recognized on impaired mortgage loans | 0.1 | 0.1 | 0.1 | 0.2 | |
First liens | |||||
Impaired mortgage loans | |||||
Recorded investment in impaired mortgage loans with no related allowance | 0.9 | 0.9 | 1.6 | ||
Recorded investment in impaired mortgage loans with related allowance | 7.7 | 7.7 | 2.2 | ||
Unpaid principal balance of impaired mortgage loans with no related allowance | 0.9 | 0.9 | 1.6 | ||
Unpaid principal balance of impaired mortgage loans with related allowance | 7.7 | 7.7 | 2.2 | ||
Related allowance for impaired mortgage loans | 0.2 | 0.2 | |||
Average investment in impaired mortgage loans with no related allowance | 0.9 | 0.8 | 1.3 | 0.8 | |
Average investment in impaired mortgage loans with related allowance | 4.9 | 3.9 | 5 | 3.9 | |
Interest income recognized on impaired mortgage loans with related allowance | 0.1 | 0.1 | |||
Home equity | |||||
Impaired mortgage loans | |||||
Recorded investment in impaired mortgage loans with related allowance | 4.7 | 4.7 | 5.4 | ||
Unpaid principal balance of impaired mortgage loans with related allowance | 5.7 | 5.7 | 6.5 | ||
Related allowance for impaired mortgage loans | 1.3 | 1.3 | $ 1.4 | ||
Average investment in impaired mortgage loans with related allowance | 4.9 | $ 6.9 | 5.1 | 7.1 | |
Interest income recognized on impaired mortgage loans with related allowance | $ 0.1 | $ 0.1 | $ 0.1 |
Investments - Securities Posted
Investments - Securities Posted as Collateral (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Securities Posted as Collateral | ||
Commercial mortgage loans and residential first lien mortgages posted as collateral associated with obligation under funding agreements with the Federal Home Loan Bank of Des Moines | $ 3,681.9 | $ 3,761.3 |
Fixed maturities available-for-sale and trading securities posted as collateral for a reinsurance arrangement, derivative credit support annex (collateral) agreements, Futures Commission Merchant agreements, a lending arrangement and an obligation under funding agreements with Federal Home Loan Bank of Des Moines | 2,911.3 | 2,402.5 |
Securities posted as collateral eligible to be sold or repledged | $ 149.1 | $ 124.2 |
Investments - Balance Sheet Off
Investments - Balance Sheet Offsetting, Assets (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Financial Asset Offsetting | ||
Gross amount of recognized assets subject to netting agreements | $ 355 | $ 239.3 |
Amount of liabilities that offset the gross amount of assets subject to netting agreements not offset in statement of financial position | (80.9) | (70.5) |
Collateral received, financial assets | (262.9) | (161.1) |
Net amount of assets subject to netting agreements | 11.2 | 7.7 |
Derivative assets | ||
Financial Asset Offsetting | ||
Gross amount of recognized assets subject to netting agreements | 280.4 | 186.3 |
Amount of liabilities that offset the gross amount of assets subject to netting agreements not offset in statement of financial position | (80.9) | (70.5) |
Collateral received, financial assets | (188.3) | (108.1) |
Net amount of assets subject to netting agreements | 11.2 | 7.7 |
Gross amount of assets not subject to netting agreements | 11.1 | 7.7 |
Reverse repurchase agreements | ||
Financial Asset Offsetting | ||
Gross amount of recognized assets subject to netting agreements | 74.6 | 53 |
Collateral received, financial assets | $ (74.6) | $ (53) |
Investments - Balance Sheet O_2
Investments - Balance Sheet Offsetting, Liabilities (Details) - Derivative liabilities - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Financial Liability Offsetting | ||
Gross amount of recognized liabilities subject to netting agreements | $ 166.4 | $ 153.4 |
Amount of assets that offset the gross amount of liabilities subject to netting agreements not offset in statement of financial position | (80.9) | (70.5) |
Collateral pledged, financial liabilities | (76.4) | (52.3) |
Net amount of liabilities subject to netting agreements | 9.1 | 30.6 |
Gross amount of liabilities not subject to netting agreements | $ 215.5 | $ 138.3 |
Derivative Financial Instrume_3
Derivative Financial Instruments - Notional Amounts and Credit Exposure (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Dec. 31, 2018 | |
Derivative Financial Instruments, exposure | ||
Cash and securities posted under collateral arrangements associated with derivative credit support agreements and Futures Commission Merchant agreements | $ 170.1 | $ 106.6 |
Aggregate fair value of all derivative instruments with credit-risk-related contingent features that were in a liability position | 143.9 | 109.7 |
Collateral and initial margin posted supporting derivatives with credit-risk-related contingent features that were in a liability position | 170.1 | 106.6 |
Additional collateral required to be posted if derivative credit-risk-related contingent features were triggered | 32.4 | |
Cash collateral received associated with derivative credit support annex agreements and Futures Commission Merchant agreements | 115.5 | 79.5 |
Notional amount | 49,669.4 | 49,954.5 |
Gross credit exposure | 297.4 | 197.7 |
Less: collateral received | 200 | 122.9 |
Net credit exposure | 97.4 | 74.8 |
Interest rate swaps | ||
Derivative Financial Instruments, exposure | ||
Cash exchanged under contract | 0 | |
Principal payments made under contract | 0 | |
Notional amount | 34,178.3 | 34,393.7 |
Gross credit exposure | 174.3 | 95.4 |
Interest rate options | ||
Derivative Financial Instruments, exposure | ||
Notional amount | 1,126.9 | 1,126.9 |
Gross credit exposure | 29.5 | 16.3 |
Interest rate futures | ||
Derivative Financial Instruments, exposure | ||
Notional amount | 270 | 260 |
Swaptions | ||
Derivative Financial Instruments, exposure | ||
Notional amount | 62 | |
Gross credit exposure | 0.1 | |
Currency forwards | ||
Derivative Financial Instruments, exposure | ||
Notional amount | 915.1 | 863.6 |
Gross credit exposure | 1.3 | 2.8 |
Currency swaps | ||
Derivative Financial Instruments, exposure | ||
Notional amount | 903.8 | 898.6 |
Gross credit exposure | 68.5 | 71.2 |
Currency options | ||
Derivative Financial Instruments, exposure | ||
Notional amount | 469.2 | 525.2 |
Gross credit exposure | 0.5 | 1.9 |
Equity options | ||
Derivative Financial Instruments, exposure | ||
Notional amount | 1,581.5 | 1,522.5 |
Gross credit exposure | 22.2 | 7.7 |
Equity futures | ||
Derivative Financial Instruments, exposure | ||
Notional amount | 316.1 | 491.7 |
Credit default swaps | ||
Derivative Financial Instruments, exposure | ||
Notional amount | 370 | 420 |
Gross credit exposure | 1 | 2.4 |
Embedded derivative financial instruments | ||
Derivative Financial Instruments, exposure | ||
Notional amount | $ 9,476.5 | $ 9,452.3 |
Derivative Financial Instrume_4
Derivative Financial Instruments - Fair Value of Derivatives (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Derivatives, fair value disclosures | ||
Derivative instruments, assets | $ 291.5 | $ 194 |
Derivative instruments, liabilities | 381.9 | 291.7 |
Fair value of embedded derivative liabilities reported with contractholder funds | 118.7 | 45.2 |
Derivatives designated as hedging instruments | ||
Derivatives, fair value disclosures | ||
Derivative instruments, assets | 29.2 | 37.6 |
Derivative instruments, liabilities | 32.2 | 29.6 |
Derivatives not designated as hedging instruments | ||
Derivatives, fair value disclosures | ||
Derivative instruments, assets | 262.3 | 156.4 |
Derivative instruments, liabilities | 349.7 | 262.1 |
Interest rate contracts | Derivatives designated as hedging instruments | ||
Derivatives, fair value disclosures | ||
Derivative instruments, liabilities | 22 | 16.1 |
Interest rate contracts | Derivatives not designated as hedging instruments | ||
Derivatives, fair value disclosures | ||
Derivative instruments, assets | 198.9 | 108 |
Derivative instruments, liabilities | 19.7 | 22.6 |
Foreign exchange contracts | Derivatives designated as hedging instruments | ||
Derivatives, fair value disclosures | ||
Derivative instruments, assets | 29.2 | 37.6 |
Derivative instruments, liabilities | 10.2 | 13.5 |
Foreign exchange contracts | Derivatives not designated as hedging instruments | ||
Derivatives, fair value disclosures | ||
Derivative instruments, assets | 40.3 | 38.4 |
Derivative instruments, liabilities | 63 | 72.9 |
Equity contracts | Derivatives not designated as hedging instruments | ||
Derivatives, fair value disclosures | ||
Derivative instruments, assets | 22.2 | 7.7 |
Derivative instruments, liabilities | 51.9 | 27.6 |
Credit contracts | Derivatives not designated as hedging instruments | ||
Derivatives, fair value disclosures | ||
Derivative instruments, assets | 0.9 | 2.3 |
Derivative instruments, liabilities | 1.1 | 4.4 |
Other contracts | Derivatives not designated as hedging instruments | ||
Derivatives, fair value disclosures | ||
Derivative instruments, liabilities | $ 214 | $ 134.6 |
Derivative Financial Instrume_5
Derivative Financial Instruments - Credit Derivatives Sold (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Dec. 31, 2018 | |
Credit default swaps | ||
Credit derivatives sold disclosures | ||
Notional amount | $ 275 | $ 325 |
Fair value | 0.8 | (2.3) |
Maximum future payments | $ 275 | $ 325 |
Weighted average expected life | 1 year 1 month 6 days | 1 year 4 months 24 days |
Single name credit default swaps | Corporate debt securities | AAA | ||
Credit derivatives sold disclosures | ||
Notional amount | $ 10 | $ 10 |
Fair value | 0.1 | |
Maximum future payments | $ 10 | $ 10 |
Weighted average expected life | 2 months 12 days | 8 months 12 days |
Single name credit default swaps | Corporate debt securities | A | ||
Credit derivatives sold disclosures | ||
Notional amount | $ 15 | $ 15 |
Fair value | 0.1 | 0.1 |
Maximum future payments | $ 15 | $ 15 |
Weighted average expected life | 6 months | 1 year |
Single name credit default swaps | Corporate debt securities | BBB | ||
Credit derivatives sold disclosures | ||
Notional amount | $ 165 | $ 190 |
Fair value | 0.2 | 0.4 |
Maximum future payments | $ 165 | $ 190 |
Weighted average expected life | 1 year 6 months | 1 year 8 months 12 days |
Single name credit default swaps | Corporate debt securities | BB | ||
Credit derivatives sold disclosures | ||
Notional amount | $ 10 | |
Maximum future payments | $ 10 | |
Weighted average expected life | 6 months | |
Single name credit default swaps | Corporate debt securities | CCC | ||
Credit derivatives sold disclosures | ||
Notional amount | $ 15 | |
Fair value | (3.6) | |
Maximum future payments | $ 15 | |
Weighted average expected life | 10 months 24 days | |
Single name credit default swaps | Government/municipalities | AA | ||
Credit derivatives sold disclosures | ||
Notional amount | $ 20 | $ 20 |
Fair value | 0.1 | 0.2 |
Maximum future payments | $ 20 | $ 20 |
Weighted average expected life | 6 months | 1 year |
Single name credit default swaps | Sovereign | A | ||
Credit derivatives sold disclosures | ||
Notional amount | $ 10 | $ 10 |
Fair value | 0.1 | |
Maximum future payments | $ 10 | $ 10 |
Weighted average expected life | 2 months 12 days | 8 months 12 days |
Single name credit default swaps | Sovereign | BBB | ||
Credit derivatives sold disclosures | ||
Notional amount | $ 55 | $ 55 |
Fair value | 0.4 | 0.4 |
Maximum future payments | $ 55 | $ 55 |
Weighted average expected life | 9 months 18 days | 1 year 3 months 18 days |
Derivative Financial Instrume_6
Derivative Financial Instruments - Fair Value Hedges (Details) - Fixed maturities, available-for-sale - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Fair Value Hedges | ||
Amortized cost of hedged item - Active hedging relationships | $ 143.3 | $ 137 |
Amortized cost of hedged item - Discontinued hedging relationships | 248.7 | 298.9 |
Amortized cost of hedged item - Active or discontinued hedging relationships | 392 | 435.9 |
Cumulative amount of fair value hedging basis adjustment - Active hedging relationships | 19 | 12.4 |
Cumulative amount of fair value hedging basis adjustment - Discontinued hedging relationships | 9.6 | 13.3 |
Cumulative amount of fair value hedging basis adjustment - Active or discontinued hedging relationships | $ 28.6 | $ 25.7 |
Derivative Financial Instrume_7
Derivative Financial Instruments - Cash Flow Hedges (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Cash Flow Hedges | ||||
Maximum length of time hedging exposure to variability in future cash flows for forecasted transactions | 1 year | |||
Net gains (losses) reported in AOCI related to active cash flow hedges of forecasted transactions | $ 0 | $ 0 | ||
Amount of gain (loss) recognized in AOCI on derivatives in cash flow hedging relationships | 4.3 | (8.5) | ||
Amount of gain (loss) recognized in AOCI on derivatives in cash flow hedging relationships | $ 62 | $ 38.5 | ||
Net gains (losses) expected to be reclassified from accumulated OCI into net income in the next 12 months | 23.5 | |||
Interest rate contracts | Fixed maturities, available-for-sale | ||||
Cash Flow Hedges | ||||
Amount of gain (loss) recognized in AOCI on derivatives in cash flow hedging relationships | 0.9 | (3.3) | ||
Amount of gain (loss) recognized in AOCI on derivatives in cash flow hedging relationships | 34.8 | 30.2 | ||
Foreign exchange contracts | Fixed maturities, available-for-sale | ||||
Cash Flow Hedges | ||||
Amount of gain (loss) recognized in AOCI on derivatives in cash flow hedging relationships | $ 3.4 | $ (5.2) | ||
Amount of gain (loss) recognized in AOCI on derivatives in cash flow hedging relationships | $ 27.2 | 8.4 | ||
Foreign exchange contracts | Investment contracts | ||||
Cash Flow Hedges | ||||
Amount of gain (loss) recognized in AOCI on derivatives in cash flow hedging relationships | $ (0.1) |
Derivative Financial Instrume_8
Derivative Financial Instruments - Effect of Hedges on Consolidated Statements of Operations (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Gains (losses) recognized for hedging relationships | ||||
Net investment income (loss) | $ 1,037.1 | $ 889.1 | $ 1,998.1 | $ 1,791.3 |
Net realized capital gains (losses) | (4) | 67.4 | 80.5 | 42.3 |
Benefits, claims and settlement expenses | (2,446.1) | (1,699.2) | (4,641.2) | (3,110.3) |
Operating expenses | (1,046.3) | (990.1) | (2,039) | (1,975.1) |
Fair Value Hedges | Interest rate contracts | Net investment income | ||||
Gains (losses) recognized for hedging relationships | ||||
Gain (loss) recognized on hedged item | 4.2 | 6.6 | ||
Gain (loss) recognized on derivatives | (4.3) | (6.8) | ||
Amortization of hedged item basis adjustments | (1.2) | (1.7) | (2.5) | (3.5) |
Amounts related to periodic settlements on derivatives | (0.7) | (1.7) | (1.5) | (3.7) |
Total gain (loss) recognized for hedging relationships | (2) | (3.4) | (4.2) | (7.2) |
Fair Value Hedges | Interest rate contracts | Net realized capital gains (losses) | ||||
Gains (losses) recognized for hedging relationships | ||||
Gain (loss) recognized on hedged item | (2.3) | (7.8) | ||
Gain (loss) recognized on derivatives | 2.2 | 7.6 | ||
Total gain (loss) recognized for hedging relationships | (0.1) | (0.2) | ||
Cash Flow Hedges | Net investment income | ||||
Gains (losses) recognized for hedging relationships | ||||
Total gain (loss) recognized for hedging relationships | 6.6 | 6.8 | 13.3 | 13.8 |
Cash Flow Hedges | Net realized capital gains (losses) | ||||
Gains (losses) recognized for hedging relationships | ||||
Total gain (loss) recognized for hedging relationships | 9.6 | 0.7 | 9.6 | 0.4 |
Cash Flow Hedges | Benefits, claims and settlement expenses | ||||
Gains (losses) recognized for hedging relationships | ||||
Total gain (loss) recognized for hedging relationships | (0.1) | |||
Cash Flow Hedges | Operating expense | ||||
Gains (losses) recognized for hedging relationships | ||||
Total gain (loss) recognized for hedging relationships | (2) | (2.6) | (4.8) | (5.2) |
Cash Flow Hedges | Interest rate contracts | Gain (loss) reclassified from AOCI on derivatives | ||||
Gains (losses) recognized for hedging relationships | ||||
Net investment income (loss) | 4.9 | 5.3 | 10 | 10.7 |
Operating expenses | (2) | (2.6) | (4.8) | (5.2) |
Cash Flow Hedges | Interest rate contracts | Net realized capital gains (losses) | ||||
Gains (losses) recognized for hedging relationships | ||||
Gain (loss) reclassified from AOCI into net income as a result that a forecasted transaction is no longer probable of occurring | 0.1 | 0.1 | 0.1 | 0.2 |
Cash Flow Hedges | Foreign exchange contracts | Gain (loss) reclassified from AOCI on derivatives | ||||
Gains (losses) recognized for hedging relationships | ||||
Net realized capital gains (losses) | 9.5 | 0.6 | 9.5 | 0.2 |
Cash Flow Hedges | Foreign exchange contracts | Net investment income | ||||
Gains (losses) recognized for hedging relationships | ||||
Amounts related to periodic settlements on derivatives | $ 1.7 | $ 1.5 | $ 3.3 | 3.1 |
Cash Flow Hedges | Foreign exchange contracts | Benefits, claims and settlement expenses | ||||
Gains (losses) recognized for hedging relationships | ||||
Amounts related to periodic settlements on derivatives | $ (0.1) |
Derivative Financial Instrume_9
Derivative Financial Instruments - Derivatives Not Designated as Hedging Instruments (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Effect of derivatives not designated as hedging instruments on the consolidated statements of operations | ||||
Amount of gain (loss) recognized in net income on derivatives | $ 2.8 | $ (33.7) | $ 5.7 | $ (24.3) |
Interest rate contracts | ||||
Effect of derivatives not designated as hedging instruments on the consolidated statements of operations | ||||
Amount of gain (loss) recognized in net income on derivatives | 94.1 | (19.8) | 161.4 | (67.8) |
Foreign exchange contracts | ||||
Effect of derivatives not designated as hedging instruments on the consolidated statements of operations | ||||
Amount of gain (loss) recognized in net income on derivatives | 5.4 | (24.2) | 10 | (15.4) |
Equity contracts | ||||
Effect of derivatives not designated as hedging instruments on the consolidated statements of operations | ||||
Amount of gain (loss) recognized in net income on derivatives | (15.8) | (43) | (90.8) | (58.2) |
Credit contracts | ||||
Effect of derivatives not designated as hedging instruments on the consolidated statements of operations | ||||
Amount of gain (loss) recognized in net income on derivatives | (4.8) | 1.2 | (3.5) | 1.3 |
Other contracts | ||||
Effect of derivatives not designated as hedging instruments on the consolidated statements of operations | ||||
Amount of gain (loss) recognized in net income on derivatives | $ (76.1) | $ 52.1 | $ (71.4) | $ 115.8 |
Insurance Liabilities (Details)
Insurance Liabilities (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Change in unpaid claims | ||
Balance at beginning of period, unpaid claims | $ 2,252.7 | $ 2,130.5 |
Balance at beginning of period, reinsurance recoverables for unpaid claims | 404.3 | 375.8 |
Net balance at beginning of period, unpaid claims | 1,848.4 | 1,754.7 |
Incurred: | ||
Incurred: Current year | 653.6 | 617.3 |
Incurred: Prior years | 29 | 17.9 |
Total incurred | 682.6 | 635.2 |
Payments: | ||
Payments: Current year | 387.8 | 358.3 |
Payments: Prior years | 238.1 | 231.8 |
Total payments | 625.9 | 590.1 |
Net balance at end of period, unpaid claims | 1,905.1 | 1,799.8 |
Balance at end of period, reinsurance recoverables for unpaid claims | 403.7 | 388.2 |
Balance at end of period, unpaid claims | 2,308.8 | 2,188 |
Amount not included in the rollforward above: | ||
Claim adjustment expense liabilities | $ 55.1 | $ 51.9 |
Long-Term Debt - Components of
Long-Term Debt - Components of Long-Term Debt (Details) - USD ($) $ in Millions | Jun. 30, 2019 | May 07, 2019 | Dec. 31, 2018 |
Long-Term Debt | |||
Long-term debt principal | $ 3,792.6 | $ 3,284.1 | |
Net unamortized discount, premium and debt issuance costs | (30.2) | (24.5) | |
Long-term debt carrying amount | $ 3,762.4 | $ 3,259.6 | |
3.3% notes payable, due 2022 | |||
Long-Term Debt | |||
Interest rate (as a percent) | 3.30% | 3.30% | |
Long-term debt principal | $ 300 | $ 300 | |
Net unamortized discount, premium and debt issuance costs | (1.3) | (1.5) | |
Long-term debt carrying amount | $ 298.7 | $ 298.5 | |
3.125% notes payable, due 2023 | |||
Long-Term Debt | |||
Interest rate (as a percent) | 3.125% | 3.125% | |
Long-term debt principal | $ 300 | $ 300 | |
Net unamortized discount, premium and debt issuance costs | (1.1) | (1.2) | |
Long-term debt carrying amount | $ 298.9 | $ 298.8 | |
3.4% notes payable, due 2025 | |||
Long-Term Debt | |||
Interest rate (as a percent) | 3.40% | 3.40% | |
Long-term debt principal | $ 400 | $ 400 | |
Net unamortized discount, premium and debt issuance costs | (2.8) | (3) | |
Long-term debt carrying amount | $ 397.2 | $ 397 | |
3.1% notes payable, due 2026 | |||
Long-Term Debt | |||
Interest rate (as a percent) | 3.10% | 3.10% | |
Long-term debt principal | $ 350 | $ 350 | |
Net unamortized discount, premium and debt issuance costs | (2.6) | (2.7) | |
Long-term debt carrying amount | $ 347.4 | $ 347.3 | |
3.7% notes payable, due 2029 | |||
Long-Term Debt | |||
Interest rate (as a percent) | 3.70% | ||
Long-term debt principal | $ 500 | ||
Net unamortized discount, premium and debt issuance costs | (6.4) | ||
Long-term debt carrying amount | $ 493.6 | ||
3.7% notes payable, due 2029 | Senior notes | |||
Long-Term Debt | |||
Interest rate (as a percent) | 3.70% | ||
Long-term debt issued | $ 500 | ||
6.05% notes payable, due 2036 | |||
Long-Term Debt | |||
Interest rate (as a percent) | 6.05% | 6.05% | |
Long-term debt principal | $ 505.6 | $ 505.6 | |
Net unamortized discount, premium and debt issuance costs | (2.5) | (2.6) | |
Long-term debt carrying amount | $ 503.1 | $ 503 | |
4.625% notes payable, due 2042 | |||
Long-Term Debt | |||
Interest rate (as a percent) | 4.625% | 4.625% | |
Long-term debt principal | $ 300 | $ 300 | |
Net unamortized discount, premium and debt issuance costs | (3.2) | (3.3) | |
Long-term debt carrying amount | $ 296.8 | $ 296.7 | |
4.35% notes payable, due 2043 | |||
Long-Term Debt | |||
Interest rate (as a percent) | 4.35% | 4.35% | |
Long-term debt principal | $ 300 | $ 300 | |
Net unamortized discount, premium and debt issuance costs | (3.3) | (3.3) | |
Long-term debt carrying amount | $ 296.7 | $ 296.7 | |
4.3% notes payable, due 2046 | |||
Long-Term Debt | |||
Interest rate (as a percent) | 4.30% | 4.30% | |
Long-term debt principal | $ 300 | $ 300 | |
Net unamortized discount, premium and debt issuance costs | (3.3) | (3.3) | |
Long-term debt carrying amount | $ 296.7 | $ 296.7 | |
4.7% notes payable, due 2055 | |||
Long-Term Debt | |||
Interest rate (as a percent) | 4.70% | 4.70% | |
Long-term debt principal | $ 400 | $ 400 | |
Net unamortized discount, premium and debt issuance costs | (4.9) | (4.9) | |
Long-term debt carrying amount | 395.1 | 395.1 | |
Non-recourse mortgages and notes payable | |||
Long-Term Debt | |||
Long-term debt principal | 137 | 128.5 | |
Net unamortized discount, premium and debt issuance costs | 1.2 | 1.3 | |
Long-term debt carrying amount | $ 138.2 | $ 129.8 |
Income Taxes - Effective Income
Income Taxes - Effective Income Tax Rate (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Reconciliation between the U.S. corporate income tax rate and the effective income tax rate from continuing operations | ||||
U.S. corporate income tax rate (as a percent) | 21.00% | 21.00% | 21.00% | 21.00% |
Dividends received deduction (as a percent) | (4.00%) | (3.00%) | (5.00%) | (3.00%) |
Tax credits (as a percent) | (3.00%) | (3.00%) | (2.00%) | (3.00%) |
Impact of equity method presentation (as a percent) | (1.00%) | (1.00%) | (1.00%) | (1.00%) |
Impact of the Tax Cuts and Jobs Act (as a percent) | (4.00%) | (3.00%) | ||
State income taxes (as a percent) | 1.00% | 1.00% | 1.00% | |
Other income tax rate impacts (as a percent) | (1.00%) | |||
Effective income tax rate (as a percent) | 13.00% | 11.00% | 14.00% | 11.00% |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | |
Changes in Unrecognized Tax Benefits | |||
Beginning balance, Unrecognized tax benefits | $ 42.1 | $ 194.1 | |
Additions based on tax positions related to the current year | 23.2 | 0.8 | |
Additions for tax positions of prior years | 43.7 | ||
Reductions for tax positions related to the current year | (2.2) | (10.6) | |
Reductions for tax positions of prior years | (0.5) | (23.2) | |
Settlements | (162.7) | ||
Ending balance, Unrecognized tax benefits | $ 62.6 | $ 62.6 | $ 42.1 |
Foreign undistributed earnings previously indefinitely reinvested that were repatriated | $ 250 |
Employee and Agent Benefits (De
Employee and Agent Benefits (Details) - USD ($) $ in Millions | May 31, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 |
Pension benefits | |||||
Components of Net Periodic Benefit Cost (Income) | |||||
Service cost | $ 16.7 | $ 18.2 | $ 33.5 | $ 36.5 | |
Interest cost | 32.1 | 29.9 | 64.9 | 59.8 | |
Expected return on plan assets | (36.4) | (39.3) | (71.9) | (78.5) | |
Amortization of prior service (benefit) cost | (2) | (0.8) | (2.9) | (1.7) | |
Recognized net actuarial (gain) loss | 17.2 | 16.9 | 34.1 | 33.8 | |
Net periodic benefit cost (income) | 27.6 | 24.9 | 57.7 | 49.9 | |
Actuarial gain (loss) | $ (59) | ||||
Total plan amendment gain | 122.4 | ||||
Increase in benefit obligation | 237.6 | ||||
Asset gain on plan assets | $ 178.6 | ||||
Contributions | |||||
Contributions made by employer to fund qualified and nonqualified pension plans | 5.7 | 11.4 | |||
Pension benefits | Maximum | |||||
Contributions | |||||
Amount of possible contributions to be made during the current fiscal year to the qualified and nonqualified pension plans combined | 25 | 25 | |||
Other postretirement benefits | |||||
Components of Net Periodic Benefit Cost (Income) | |||||
Interest cost | 1 | 0.8 | 1.9 | 1.7 | |
Expected return on plan assets | (8.3) | (8.4) | (16.6) | (16.8) | |
Amortization of prior service (benefit) cost | (0.3) | (3.4) | (0.6) | (6.9) | |
Recognized net actuarial (gain) loss | (0.4) | (0.7) | |||
Net periodic benefit cost (income) | $ (7.6) | $ (11.4) | $ (15.3) | $ (22.7) |
Contingencies, Guarantees, In_3
Contingencies, Guarantees, Indemnifications and Leases - Guarantees and Indemnifications (Details) $ in Millions | Jun. 30, 2019USD ($) |
Guarantees to third parties primarily related to former subsidiaries and joint ventures | |
Guarantees and Indemnifications | |
Maximum exposure under guarantees | $ 118 |
Guarantees related to P-Caps contingent funding agreements | |
Guarantees and Indemnifications | |
Maximum exposure under guarantees | $ 750 |
Contingencies, Guarantees, In_4
Contingencies, Guarantees, Indemnifications and Leases - Leases (Details) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019USD ($) | Jun. 30, 2019USD ($) | |
Assets | ||
Operating lease assets | $ 195.2 | $ 195.2 |
Finance lease assets | 32.8 | 32.8 |
Total lease assets | 228 | 228 |
Liabilities | ||
Operating lease liabilities | 204.4 | 204.4 |
Finance lease liabilities | 33 | 33 |
Total lease liabilities | 237.4 | 237.4 |
Finance lease cost: | ||
Amortization of right-of-use assets | 3.5 | 7 |
Interest on lease liabilities | 0.2 | 0.5 |
Operating lease cost | 14.4 | 27.8 |
Other lease cost | 1.8 | 4.6 |
Sublease income | (0.4) | (0.8) |
Total lease cost | 19.5 | 39.1 |
Operating leases, payments due for the twelve months ending June 30: | ||
2020 | 52.5 | 52.5 |
2021 | 45.4 | 45.4 |
2022 | 35.3 | 35.3 |
2023 | 28 | 28 |
2024 | 17.7 | 17.7 |
2025 and thereafter | 50.8 | 50.8 |
Total lease payments | 229.7 | 229.7 |
Less: interest | 25.3 | 25.3 |
Present value of lease liabilities | 204.4 | 204.4 |
Finance leases, payments due for the twelve months ending June 30: | ||
2020 | 14.4 | 14.4 |
2021 | 11.5 | 11.5 |
2022 | 6.7 | 6.7 |
2023 | 1.3 | 1.3 |
2024 | 0.2 | 0.2 |
2025 and thereafter | 0.2 | 0.2 |
Total lease payments | 34.3 | 34.3 |
Less: interest | 1.3 | 1.3 |
Present value of lease liabilities | 33 | 33 |
Total leases, payments due for the twelve months ending June 30: | ||
2020 | 66.9 | 66.9 |
2021 | 56.9 | 56.9 |
2022 | 42 | 42 |
2023 | 29.3 | 29.3 |
2024 | 17.9 | 17.9 |
2025 and thereafter | 51 | 51 |
Total lease payments | 264 | 264 |
Less: interest | 26.6 | 26.6 |
Present value of lease liabilities | $ 237.4 | $ 237.4 |
Weighted-average remaining lease term and weighted-average discount rates | ||
Weighted average remaining lease term, Operating leases | 6 years 10 months 24 days | 6 years 10 months 24 days |
Weighted average remaining lease term, Finance leases | 2 years 8 months 12 days | 2 years 8 months 12 days |
Weighted-average discount rate, Operating leases | 4.00% | 4.00% |
Weighted-average discount rate, Finance leases | 2.90% | 2.90% |
Stockholders' Equity - Common S
Stockholders' Equity - Common Stock Dividends and Reconciliation of Outstanding Common Shares (Details) - Common stock - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||||
Nov. 30, 2018 | May 31, 2018 | May 31, 2017 | Feb. 29, 2016 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Common Stock Dividends | |||||||||
Dividends declared per common share (in dollars per share) | $ 0.54 | $ 0.52 | $ 1.08 | $ 1.03 | |||||
Reconciliation of Outstanding Common Shares | |||||||||
Outstanding shares at beginning of period | 278.2 | 279.5 | 287.7 | 279.5 | 289 | ||||
Shares issued | 0.4 | 0.3 | 2.2 | 2.2 | |||||
Treasury stock acquired | (3.4) | (3.1) | (6.6) | ||||||
Outstanding shares at end of period | 278.6 | 278.2 | 284.6 | 278.6 | 284.6 | ||||
Common stock share repurchase disclosures | |||||||||
Share repurchase program, maximum authorized amount (in dollars) | $ 500 | $ 300 | $ 250 | $ 400 | |||||
Remaining share repurchase authorization suspended | $ 295.3 |
Stockholders' Equity - Other Co
Stockholders' Equity - Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Other Comprehensive Income (Loss) | ||||
Other comprehensive income (loss), pre-tax | $ 1,363.1 | $ (802.9) | $ 2,814.1 | $ (1,748.1) |
Other comprehensive income (loss), tax | (290.8) | 130.6 | (595.1) | 339.7 |
Other comprehensive income (loss) | 1,072.3 | (672.3) | 2,219 | (1,408.4) |
Net unrealized gains (losses) on available-for-sale securities including NCI | ||||
Other Comprehensive Income (Loss) | ||||
Other comprehensive income (loss) before reclassifications, pre-tax | 1,804 | (777.8) | 3,621 | (2,081.5) |
Adjustments for assumed changes in amortization patterns, pre-tax | (117.6) | 54.2 | (239.7) | 140.4 |
Adjustments for assumed changes in policyholder liabilities, pre-tax | (462.3) | 102.2 | (762.6) | 280.7 |
Other comprehensive income (loss), pre-tax | 1,252 | (594.9) | 2,655.3 | (1,613.2) |
Other comprehensive income (loss) before reclassifications, tax | (394.9) | 158.1 | (787.4) | 438.5 |
Reclassification from accumulated other comprehensive income, tax | (5.5) | (5.6) | (7.2) | (10) |
Adjustments for assumed changes in amortization patterns, tax | 24.7 | (11.4) | 50.4 | (29.5) |
Adjustments for assumed changes in policyholder liabilities, tax | 108.6 | (12.3) | 178.1 | (57.4) |
Other comprehensive income (loss), tax | (267.1) | 128.8 | (566.1) | 341.6 |
Other comprehensive income (loss) before reclassifications, after-tax | 1,409.1 | (619.7) | 2,833.6 | (1,643) |
Reclassification from accumulated other comprehensive income, after-tax | 22.4 | 20.9 | 29.4 | 37.2 |
Adjustments for assumed changes in amortization patterns, after-tax | (92.9) | 42.8 | (189.3) | 110.9 |
Adjustments for assumed changes in policyholder liabilities, after-tax | (353.7) | 89.9 | (584.5) | 223.3 |
Other comprehensive income (loss) | 984.9 | (466.1) | 2,089.2 | (1,271.6) |
Net unrealized gains (losses) on available-for-sale securities including NCI | Net realized capital gains (losses) | ||||
Other Comprehensive Income (Loss) | ||||
Reclassification from accumulated other comprehensive income, pre-tax | 27.9 | 26.5 | 36.6 | 47.2 |
Noncredit component of impairment losses on fixed maturities available-for-sale including NCI | ||||
Other Comprehensive Income (Loss) | ||||
Other comprehensive income (loss) before reclassifications, pre-tax | 0.3 | 0.8 | (2.5) | 12 |
Adjustments for assumed changes in amortization patterns, pre-tax | (0.8) | (1.2) | 1.3 | |
Adjustments for assumed changes in policyholder liabilities, pre-tax | 0.1 | 0.1 | 0.1 | (0.5) |
Other comprehensive income (loss), pre-tax | (0.4) | 0.9 | (3.6) | 12.8 |
Other comprehensive income (loss) before reclassifications, tax | (0.2) | 0.6 | (2.6) | |
Adjustments for assumed changes in amortization patterns, tax | 0.1 | 0.1 | 0.2 | (0.2) |
Adjustments for assumed changes in policyholder liabilities, tax | 0.1 | |||
Other comprehensive income (loss), tax | 0.1 | (0.1) | 0.8 | (2.7) |
Other comprehensive income (loss) before reclassifications, after-tax | 0.3 | 0.6 | (1.9) | 9.4 |
Adjustments for assumed changes in amortization patterns, after-tax | (0.7) | 0.1 | (1) | 1.1 |
Adjustments for assumed changes in policyholder liabilities, after-tax | 0.1 | 0.1 | 0.1 | (0.4) |
Other comprehensive income (loss) | (0.3) | 0.8 | (2.8) | 10.1 |
Net unrealized gains(losses) on derivative instruments including NCI | ||||
Other Comprehensive Income (Loss) | ||||
Other comprehensive income (loss) before reclassifications, pre-tax | 12.8 | 4.3 | ||
Reclassification from accumulated other comprehensive income, pre-tax | (12.5) | (14.8) | ||
Adjustments for assumed changes in amortization patterns, pre-tax | 0.6 | 2.5 | ||
Adjustments for assumed changes in policyholder liabilities, pre-tax | 1.2 | 4.8 | ||
Other comprehensive income (loss), pre-tax | 2.1 | (3.2) | ||
Other comprehensive income (loss) before reclassifications, tax | (2.7) | (0.9) | ||
Reclassification from accumulated other comprehensive income, tax | 2.5 | 2.8 | ||
Adjustments for assumed changes in amortization patterns, tax | (0.1) | (0.5) | ||
Adjustments for assumed changes in policyholder liabilities, tax | (0.2) | (1.1) | ||
Other comprehensive income (loss), tax | (0.5) | 0.3 | ||
Other comprehensive income (loss) before reclassifications, after-tax | 10.1 | 3.4 | ||
Reclassification from accumulated other comprehensive income, after-tax | (10) | (12) | ||
Adjustments for assumed changes in amortization patterns, after-tax | 0.5 | 2 | ||
Adjustments for assumed changes in policyholder liabilities, after-tax | 1 | 3.7 | ||
Other comprehensive income (loss) | 1.6 | (2.9) | ||
Net unrealized gains (losses) on derivative instruments including NCI | ||||
Other Comprehensive Income (Loss) | ||||
Other comprehensive income (loss) before reclassifications, pre-tax | 27.7 | 8.5 | ||
Reclassification from accumulated other comprehensive income, pre-tax | (3.3) | (5.7) | ||
Adjustments for assumed changes in amortization patterns, pre-tax | 0.9 | |||
Adjustments for assumed changes in policyholder liabilities, pre-tax | 1.4 | 4.2 | ||
Other comprehensive income (loss), pre-tax | 25.8 | 7.9 | ||
Other comprehensive income (loss) before reclassifications, tax | (5.8) | (1.8) | ||
Reclassification from accumulated other comprehensive income, tax | 0.5 | 0.9 | ||
Adjustments for assumed changes in amortization patterns, tax | (0.2) | |||
Adjustments for assumed changes in policyholder liabilities, tax | (0.2) | (0.9) | ||
Other comprehensive income (loss), tax | (5.5) | (2) | ||
Other comprehensive income (loss) before reclassifications, after-tax | 21.9 | 6.7 | ||
Reclassification from accumulated other comprehensive income, after-tax | (2.8) | (4.8) | ||
Adjustments for assumed changes in amortization patterns, after-tax | 0.7 | |||
Adjustments for assumed changes in policyholder liabilities, after-tax | 1.2 | 3.3 | ||
Other comprehensive income (loss) | 20.3 | 5.9 | ||
Foreign currency translation adjustment including NCI | ||||
Other Comprehensive Income (Loss) | ||||
Other comprehensive income (loss) before reclassifications, pre-tax | 4.6 | 45.5 | ||
Other comprehensive income (loss), pre-tax | 31.1 | (247) | 71.6 | (180.1) |
Other comprehensive income (loss) before reclassifications, tax | (2.2) | (4.8) | ||
Other comprehensive income (loss), tax | (2.2) | 10.9 | (4.8) | 9.8 |
Other comprehensive income (loss) before reclassifications, after-tax | 2.4 | 40.7 | ||
Reclassification from accumulated other comprehensive income, after-tax | 26.5 | 26.1 | ||
Other comprehensive income (loss) | 28.9 | (236.1) | 66.8 | (170.3) |
Foreign currency translation adjustment including NCI | Net realized capital gains (losses) | ||||
Other Comprehensive Income (Loss) | ||||
Reclassification from accumulated other comprehensive income, pre-tax | 26.5 | 26.1 | ||
Foreign currency translation adjustment relating to noncontrolling interest | Net income attributable to noncontrolling interest | ||||
Other Comprehensive Income (Loss) | ||||
Reclassification from accumulated other comprehensive income, pre-tax | 5.7 | 5.7 | ||
Unrecognized postretirement benefit obligation including NCI | ||||
Other Comprehensive Income (Loss) | ||||
Other comprehensive income (loss) before reclassifications, pre-tax | 63.4 | 63.4 | ||
Other comprehensive income (loss), pre-tax | 78.3 | 12.3 | 94 | 24.5 |
Other comprehensive income (loss) before reclassifications, tax | (17.1) | (17.1) | ||
Reclassification from accumulated other comprehensive income, tax | (4) | (3.5) | (8.2) | (7) |
Other comprehensive income (loss), tax | (21.1) | (3.5) | (25.3) | (7) |
Other comprehensive income (loss) before reclassifications, after-tax | 46.3 | 46.3 | ||
Reclassification from accumulated other comprehensive income, after-tax | 10.9 | 8.8 | 22.4 | 17.5 |
Other comprehensive income (loss) | 57.2 | 8.8 | 68.7 | 17.5 |
Unrecognized postretirement benefit obligation including NCI | Operating expense | ||||
Other Comprehensive Income (Loss) | ||||
Reclassification from accumulated other comprehensive income, pre-tax | $ 14.9 | $ 12.3 | $ 30.6 | $ 24.5 |
Stockholders' Equity - AOCI and
Stockholders' Equity - AOCI and Noncontrolling Interest (Details) - USD ($) $ in Millions | Jan. 01, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 |
Change in accumulated other comprehensive income (loss) rollforward | |||||
Balances | $ 11,390 | ||||
Balances | $ 14,034.7 | 14,034.7 | |||
Change in redeemable noncontrolling interest rollforward | |||||
Redeemable noncontrolling interest, balance at beginning of period | $ 101.3 | 537.7 | $ 127.8 | 391.2 | $ 101.3 |
Net income (loss) attributable to redeemable noncontrolling interest | 4 | 1.3 | 24.3 | 2.1 | |
Redeemable noncontrolling interest of deconsolidated entities | (370) | (370) | (3.2) | ||
Contributions from redeemable noncontrolling interest | 154 | 17.4 | 297.7 | 56.4 | |
Distributions to redeemable noncontrolling interest | (25.8) | (5.8) | (46.1) | (15.7) | |
Change in redemption value of redeemable noncontrolling interest | (1) | 1.7 | (0.6) | ||
Stock-based compensation attributable to redeemable noncontrolling interest | 0.1 | 0.1 | |||
Other comprehensive income (loss) attributable to redeemable noncontrolling interest | 5.5 | (1.8) | 5.6 | (1.4) | |
Redeemable noncontrolling interest, balance at end of period | 304.5 | 138.9 | 304.5 | 138.9 | |
ASU 2014-09 - Revenue recognition | |||||
Change in accumulated other comprehensive income (loss) rollforward | |||||
Effects of implementation of accounting change | (39.7) | (39.7) | |||
Accumulated other comprehensive income (loss) | |||||
Change in accumulated other comprehensive income (loss) rollforward | |||||
Balances | 165.5 | (418.9) | (469.3) | (1,565.1) | 165.5 |
Other comprehensive income (loss) during the period, net of adjustments | 1,022.5 | (696.3) | 2,152.6 | (1,465.6) | |
Amounts reclassified from accumulated other comprehensive income (loss) | 44.1 | 27.7 | 60.2 | 60 | |
Other comprehensive income (loss) attributable to Principal Financial Group, Inc. | 1,066.6 | (668.6) | 2,212.8 | (1,405.6) | |
Balances | 647.7 | (1,137.9) | 647.7 | (1,137.9) | |
Accumulated other comprehensive income (loss) | ASU 2016-01 - Equity investments | |||||
Change in accumulated other comprehensive income (loss) rollforward | |||||
Effects of implementation of accounting change | (1) | (1) | |||
Accumulated other comprehensive income (loss) | ASU 2014-09 - Revenue recognition | |||||
Change in accumulated other comprehensive income (loss) rollforward | |||||
Effects of implementation of accounting change | 25.6 | ||||
Accumulated other comprehensive income (loss) | ASU 2018-02 - Reclassification of certain tax effects | |||||
Change in accumulated other comprehensive income (loss) rollforward | |||||
Effects of implementation of accounting change | 77.6 | 77.6 | |||
Net unrealized gains (losses) on available-for-sale securities | |||||
Change in accumulated other comprehensive income (loss) rollforward | |||||
Balances | 1,470.7 | 1,294.3 | 914 | 190 | 1,470.7 |
Other comprehensive income (loss) during the period, net of adjustments | 962.4 | (487) | 2,059.7 | (1,308.8) | |
Amounts reclassified from accumulated other comprehensive income (loss) | 22.4 | 20.9 | 29.4 | 37.2 | |
Other comprehensive income (loss) attributable to Principal Financial Group, Inc. | 984.8 | (466.1) | 2,089.1 | (1,271.6) | |
Balances | 2,279.1 | 447.9 | 2,279.1 | 447.9 | |
Net unrealized gains (losses) on available-for-sale securities | ASU 2016-01 - Equity investments | |||||
Change in accumulated other comprehensive income (loss) rollforward | |||||
Effects of implementation of accounting change | (1) | ||||
Net unrealized gains (losses) on available-for-sale securities | ASU 2018-02 - Reclassification of certain tax effects | |||||
Change in accumulated other comprehensive income (loss) rollforward | |||||
Effects of implementation of accounting change | 249.8 | ||||
Noncredit component of impairment losses on fixed maturities available-for-sale | |||||
Change in accumulated other comprehensive income (loss) rollforward | |||||
Balances | (58.3) | (49.6) | (64.2) | (47.1) | (58.3) |
Other comprehensive income (loss) during the period, net of adjustments | (0.3) | (2.8) | |||
Amounts reclassified from accumulated other comprehensive income (loss) | 0.8 | 10.1 | |||
Other comprehensive income (loss) attributable to Principal Financial Group, Inc. | (0.3) | 0.8 | (2.8) | 10.1 | |
Balances | (49.9) | (63.4) | (49.9) | (63.4) | |
Noncredit component of impairment losses on fixed maturities available-for-sale | ASU 2018-02 - Reclassification of certain tax effects | |||||
Change in accumulated other comprehensive income (loss) rollforward | |||||
Effects of implementation of accounting change | (15.2) | ||||
Net unrealized gains (losses) on derivative instruments | |||||
Change in accumulated other comprehensive income (loss) rollforward | |||||
Balances | 42.7 | 59.9 | 34 | 64.4 | 42.7 |
Other comprehensive income (loss) during the period, net of adjustments | 11.6 | 23.1 | 9.1 | 10.7 | |
Amounts reclassified from accumulated other comprehensive income (loss) | (10) | (2.8) | (12) | (4.8) | |
Other comprehensive income (loss) attributable to Principal Financial Group, Inc. | 1.6 | 20.3 | (2.9) | 5.9 | |
Balances | 61.5 | 54.3 | 61.5 | 54.3 | |
Net unrealized gains (losses) on derivative instruments | ASU 2018-02 - Reclassification of certain tax effects | |||||
Change in accumulated other comprehensive income (loss) rollforward | |||||
Effects of implementation of accounting change | 5.7 | ||||
Foreign currency translation adjustment | |||||
Change in accumulated other comprehensive income (loss) rollforward | |||||
Balances | (918.5) | (1,222.1) | (909.8) | (1,259.5) | (918.5) |
Other comprehensive income (loss) during the period, net of adjustments | 2.5 | (232.4) | 40.3 | (167.5) | |
Amounts reclassified from accumulated other comprehensive income (loss) | 20.8 | 20.4 | |||
Other comprehensive income (loss) attributable to Principal Financial Group, Inc. | 23.3 | (232.4) | 60.7 | (167.5) | |
Balances | (1,198.8) | (1,142.2) | (1,198.8) | (1,142.2) | |
Foreign currency translation adjustment | ASU 2014-09 - Revenue recognition | |||||
Change in accumulated other comprehensive income (loss) rollforward | |||||
Effects of implementation of accounting change | 25.6 | ||||
Foreign currency translation adjustment | ASU 2018-02 - Reclassification of certain tax effects | |||||
Change in accumulated other comprehensive income (loss) rollforward | |||||
Effects of implementation of accounting change | (81.8) | ||||
Unrecognized postretirement benefit obligation | |||||
Change in accumulated other comprehensive income (loss) rollforward | |||||
Balances | $ (371.1) | (501.4) | (443.3) | (512.9) | (371.1) |
Other comprehensive income (loss) during the period, net of adjustments | 46.3 | 46.3 | |||
Amounts reclassified from accumulated other comprehensive income (loss) | 10.9 | 8.8 | 22.4 | 17.5 | |
Other comprehensive income (loss) attributable to Principal Financial Group, Inc. | 57.2 | 8.8 | 68.7 | 17.5 | |
Balances | $ (444.2) | $ (434.5) | $ (444.2) | (434.5) | |
Unrecognized postretirement benefit obligation | ASU 2018-02 - Reclassification of certain tax effects | |||||
Change in accumulated other comprehensive income (loss) rollforward | |||||
Effects of implementation of accounting change | $ (80.9) |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | $ 65,268.1 | $ 60,108.5 |
Fixed maturities, trading | 686.8 | 636.1 |
Equity securities | 1,895.2 | 1,843.7 |
Derivative instruments, assets | 291.5 | 194 |
Separate account assets | 162,848.6 | 144,987.9 |
Investment contracts | $ (118.7) | (45.2) |
Fixed maturities valued using internal pricing models | ||
Fixed maturities classified as Level 3 assets, percent valued using internal pricing models (as a percent) | 1.00% | |
Amount measured at net asset value | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Unfunded commitments of investments measured using NAV | $ 24.7 | 32 |
U.S. government and agencies | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 1,536.4 | 1,441 |
Non-U.S. governments | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 1,000.7 | 890.5 |
States and political subdivisions | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 6,968.6 | 6,225.7 |
Corporate debt securities | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 38,171.3 | 35,539.3 |
Residential mortgage-backed pass-through securities | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 2,437 | 2,460.6 |
Commercial mortgage-backed securities | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 4,569.9 | 3,945.6 |
Collateralized debt obligations | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 2,759.4 | 2,420.8 |
Other debt obligations | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 7,824.8 | 7,185 |
Recurring Fair Value Measurements | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 65,268.1 | 60,108.5 |
Fixed maturities, trading | 686.8 | 636.1 |
Equity securities | 1,895.2 | 1,843.7 |
Derivative instruments, assets | 291.5 | 194 |
Other investments | 812.5 | 828.6 |
Cash equivalents | 2,123.6 | 1,775.9 |
Sub-total excluding separate account assets | 71,077.7 | 65,386.8 |
Separate account assets | 162,848.6 | 144,987.9 |
Total assets | 233,926.3 | 210,374.7 |
Investment contracts | (118.7) | (45.2) |
Derivative liabilities | (168) | (157.1) |
Other liabilities | (96) | (91.5) |
Total liabilities | (382.7) | (293.8) |
Net assets (liabilities) | 233,543.6 | 210,080.9 |
Recurring Fair Value Measurements | Amount measured at net asset value | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Other investments | 84.2 | 75.4 |
Sub-total excluding separate account assets | 84.2 | 75.4 |
Separate account assets | 129.7 | 124.6 |
Total assets | 213.9 | 200 |
Net assets (liabilities) | 213.9 | 200 |
Recurring Fair Value Measurements | Fair value hierarchy Level 1 | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 1,146.7 | 1,049.7 |
Equity securities | 633.5 | 661.2 |
Other investments | 201.7 | 125.9 |
Cash equivalents | 36.6 | 46.3 |
Sub-total excluding separate account assets | 2,018.5 | 1,883.1 |
Separate account assets | 91,789.6 | 79,572 |
Total assets | 93,808.1 | 81,455.1 |
Net assets (liabilities) | 93,808.1 | 81,455.1 |
Recurring Fair Value Measurements | Fair value hierarchy Level 2 | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 63,965 | 58,920 |
Fixed maturities, trading | 686.3 | 636.1 |
Equity securities | 1,261.7 | 1,182.5 |
Derivative instruments, assets | 261.3 | 175.4 |
Other investments | 497.5 | 610.1 |
Cash equivalents | 2,087 | 1,729.6 |
Sub-total excluding separate account assets | 68,758.8 | 63,253.7 |
Separate account assets | 62,239.5 | 56,675.8 |
Total assets | 130,998.3 | 119,929.5 |
Derivative liabilities | (153.6) | (141.6) |
Other liabilities | (96) | (91.5) |
Total liabilities | (249.6) | (233.1) |
Net assets (liabilities) | 130,748.7 | 119,696.4 |
Recurring Fair Value Measurements | Fair value hierarchy Level 3 | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 156.4 | 138.8 |
Fixed maturities, trading | 0.5 | |
Derivative instruments, assets | 30.2 | 18.6 |
Other investments | 29.1 | 17.2 |
Sub-total excluding separate account assets | 216.2 | 174.6 |
Separate account assets | 8,689.8 | 8,615.5 |
Total assets | 8,906 | 8,790.1 |
Investment contracts | (118.7) | (45.2) |
Derivative liabilities | (14.4) | (15.5) |
Total liabilities | (133.1) | (60.7) |
Net assets (liabilities) | 8,772.9 | 8,729.4 |
Recurring Fair Value Measurements | U.S. government and agencies | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 1,536.4 | 1,441 |
Recurring Fair Value Measurements | U.S. government and agencies | Fair value hierarchy Level 1 | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 1,125.6 | 1,027.8 |
Recurring Fair Value Measurements | U.S. government and agencies | Fair value hierarchy Level 2 | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 410.8 | 413.2 |
Recurring Fair Value Measurements | Non-U.S. governments | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 1,000.7 | 890.5 |
Recurring Fair Value Measurements | Non-U.S. governments | Fair value hierarchy Level 1 | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 2 | 2.7 |
Recurring Fair Value Measurements | Non-U.S. governments | Fair value hierarchy Level 2 | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 994.8 | 883.2 |
Recurring Fair Value Measurements | Non-U.S. governments | Fair value hierarchy Level 3 | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 3.9 | 4.6 |
Recurring Fair Value Measurements | States and political subdivisions | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 6,968.6 | 6,225.7 |
Recurring Fair Value Measurements | States and political subdivisions | Fair value hierarchy Level 2 | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 6,968.6 | 6,225.7 |
Recurring Fair Value Measurements | Corporate debt securities | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 38,171.3 | 35,539.3 |
Recurring Fair Value Measurements | Corporate debt securities | Fair value hierarchy Level 1 | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 19.1 | 19.2 |
Recurring Fair Value Measurements | Corporate debt securities | Fair value hierarchy Level 2 | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 38,107.5 | 35,462.2 |
Recurring Fair Value Measurements | Corporate debt securities | Fair value hierarchy Level 3 | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 44.7 | 57.9 |
Recurring Fair Value Measurements | Residential mortgage-backed pass-through securities | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 2,437 | 2,460.6 |
Recurring Fair Value Measurements | Residential mortgage-backed pass-through securities | Fair value hierarchy Level 2 | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 2,437 | 2,460.6 |
Recurring Fair Value Measurements | Commercial mortgage-backed securities | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 4,569.9 | 3,945.6 |
Recurring Fair Value Measurements | Commercial mortgage-backed securities | Fair value hierarchy Level 2 | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 4,556.8 | 3,936.1 |
Recurring Fair Value Measurements | Commercial mortgage-backed securities | Fair value hierarchy Level 3 | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 13.1 | 9.5 |
Recurring Fair Value Measurements | Collateralized debt obligations | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 2,759.4 | 2,420.8 |
Recurring Fair Value Measurements | Collateralized debt obligations | Fair value hierarchy Level 2 | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 2,724.6 | 2,412.5 |
Recurring Fair Value Measurements | Collateralized debt obligations | Fair value hierarchy Level 3 | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 34.8 | 8.3 |
Recurring Fair Value Measurements | Other debt obligations | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 7,824.8 | 7,185 |
Recurring Fair Value Measurements | Other debt obligations | Fair value hierarchy Level 2 | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | 7,764.9 | 7,126.5 |
Recurring Fair Value Measurements | Other debt obligations | Fair value hierarchy Level 3 | ||
Assets (liabilities) measured at fair value on a recurring basis | ||
Fixed maturities, available-for-sale | $ 59.9 | $ 58.5 |
Fair Value Measurements - Chang
Fair Value Measurements - Changes in Level 3 Fair Value Measurements (Details) - Recurring Fair Value Measurements - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Changes in Level 3 fair value measurements rollforward, assets and liabilities | ||||
Beginning balance, net derivative assets | $ 3.4 | $ 16.8 | $ 3.1 | $ 18.1 |
Total realized/unrealized gains (losses) included in net income, net derivative assets | 6.6 | (11.1) | 5 | (16.1) |
Net purchases, sales, issuances and settlements, net derivative assets | 5.8 | (0.3) | 7.7 | 3.4 |
Ending balance, net derivative assets | 15.8 | 5.4 | 15.8 | 5.4 |
Changes in unrealized gains (losses) included in net income relating to positions still held, net derivative assets | 11.2 | (12.4) | 8.9 | (16) |
Gross purchases, sales, issuances and settlements | ||||
Purchases, net derivative assets (liabilities) | (1.2) | 1.9 | ||
Sales, net derivative assets (liabilities) | 5.8 | 0.9 | 7.7 | 1.5 |
Net purchases, sales, issuances and settlements, net derivative assets (liabilities) | 5.8 | (0.3) | 7.7 | 3.4 |
Investment contracts | ||||
Changes in Level 3 fair value measurements rollforward, assets and liabilities | ||||
Beginning balance, liabilities | (40.5) | (96.2) | (45.2) | (160.3) |
Total realized/unrealized gains (losses) included in net income, liabilities | (76.2) | 52 | (71.9) | 115.7 |
Total realized/unrealized gains (losses) included in other comprehensive income, liabilities | (0.2) | (0.1) | (0.1) | 0.1 |
Net purchases, sales, issuances and settlements, liabilities | (1.8) | 1.5 | (1.5) | 1.7 |
Ending balance, liabilities | (118.7) | (42.8) | (118.7) | (42.8) |
Changes in unrealized gains (losses) included in net income relating to positions still held, liabilities | (75.5) | 51.6 | (70.3) | 115.3 |
Gross purchases, sales, issuances and settlements | ||||
Issuances, liabilities | (3.5) | 0.7 | (4.8) | 0.2 |
Settlements, liabilities | 1.7 | 0.8 | 3.3 | 1.5 |
Net purchases, sales, issuances and settlements, liabilities | (1.8) | 1.5 | (1.5) | 1.7 |
Fixed maturities | Available-for-sale | ||||
Changes in Level 3 fair value measurements rollforward, assets and liabilities | ||||
Beginning balance, assets | 124 | 204.7 | 138.8 | 273.3 |
Total realized/unrealized gains (losses) included in net income, assets | (3.2) | (0.1) | (5.7) | (2) |
Total realized/unrealized gains (losses) included in other comprehensive income, assets | 3.9 | (0.9) | 5.5 | 0.9 |
Net purchases, sales, issuances and settlements, assets | 0.3 | 113.9 | 12.4 | 90.2 |
Transfers into Level 3, assets | 33.7 | 12.4 | 33.7 | 15.6 |
Transfers out of Level 3, assets | (2.3) | (52.3) | (28.3) | (100.3) |
Ending balance, assets | 156.4 | 277.7 | 156.4 | 277.7 |
Changes in unrealized gains (losses) included in net income relating to positions still held, assets | (2.1) | (4.6) | (0.6) | |
Gross purchases, sales, issuances and settlements | ||||
Purchases, assets | 22 | 123.2 | 34.9 | 134.5 |
Sales, assets | (0.2) | (0.4) | (4.2) | |
Settlements, assets | (21.5) | (9.3) | (22.1) | (40.1) |
Net purchases, sales, issuances and settlements, assets | 0.3 | 113.9 | 12.4 | 90.2 |
Fixed maturities | Trading | ||||
Changes in Level 3 fair value measurements rollforward, assets and liabilities | ||||
Net purchases, sales, issuances and settlements, assets | 0.5 | 3.7 | 0.5 | 3.7 |
Ending balance, assets | 0.5 | 3.7 | 0.5 | 3.7 |
Gross purchases, sales, issuances and settlements | ||||
Purchases, assets | 0.5 | 3.7 | 0.5 | 3.7 |
Net purchases, sales, issuances and settlements, assets | 0.5 | 3.7 | 0.5 | 3.7 |
Non-U.S. governments | Available-for-sale | ||||
Changes in Level 3 fair value measurements rollforward, assets and liabilities | ||||
Beginning balance, assets | 4.2 | 7 | 4.6 | 7.4 |
Total realized/unrealized gains (losses) included in other comprehensive income, assets | (0.1) | |||
Net purchases, sales, issuances and settlements, assets | (0.3) | (0.4) | (0.7) | (0.7) |
Ending balance, assets | 3.9 | 6.6 | 3.9 | 6.6 |
Gross purchases, sales, issuances and settlements | ||||
Settlements, assets | (0.3) | (0.4) | (0.7) | (0.7) |
Net purchases, sales, issuances and settlements, assets | (0.3) | (0.4) | (0.7) | (0.7) |
Corporate debt securities | Available-for-sale | ||||
Changes in Level 3 fair value measurements rollforward, assets and liabilities | ||||
Beginning balance, assets | 58.5 | 103.8 | 57.9 | 128 |
Total realized/unrealized gains (losses) included in net income, assets | 1.1 | |||
Total realized/unrealized gains (losses) included in other comprehensive income, assets | (0.7) | 0.4 | (0.3) | |
Net purchases, sales, issuances and settlements, assets | (13.8) | (6) | (13.6) | (3.6) |
Transfers into Level 3, assets | 0.4 | 1 | ||
Transfers out of Level 3, assets | (11.5) | (40.2) | ||
Ending balance, assets | 44.7 | 86 | 44.7 | 86 |
Gross purchases, sales, issuances and settlements | ||||
Purchases, assets | 5.2 | 0.7 | 5.7 | 12 |
Sales, assets | (0.2) | (0.4) | (4.2) | |
Settlements, assets | (18.8) | (6.7) | (18.9) | (11.4) |
Net purchases, sales, issuances and settlements, assets | (13.8) | (6) | (13.6) | (3.6) |
Commercial mortgage-backed securities | Available-for-sale | ||||
Changes in Level 3 fair value measurements rollforward, assets and liabilities | ||||
Beginning balance, assets | 12 | 11.1 | 9.5 | 10.6 |
Total realized/unrealized gains (losses) included in net income, assets | (3.2) | (3.2) | (2.5) | |
Total realized/unrealized gains (losses) included in other comprehensive income, assets | 2.9 | (0.1) | 3.2 | 0.5 |
Net purchases, sales, issuances and settlements, assets | 2.2 | (0.1) | ||
Transfers into Level 3, assets | 3.7 | 3.7 | 2.5 | |
Transfers out of Level 3, assets | (2.3) | (0.9) | (2.3) | (0.9) |
Ending balance, assets | 13.1 | 10.1 | 13.1 | 10.1 |
Changes in unrealized gains (losses) included in net income relating to positions still held, assets | (2.1) | (2.1) | ||
Gross purchases, sales, issuances and settlements | ||||
Purchases, assets | 2.4 | |||
Settlements, assets | (0.2) | (0.1) | ||
Net purchases, sales, issuances and settlements, assets | 2.2 | (0.1) | ||
Collateralized debt obligations | Available-for-sale | ||||
Changes in Level 3 fair value measurements rollforward, assets and liabilities | ||||
Beginning balance, assets | 5.9 | 80.7 | 8.3 | 125 |
Total realized/unrealized gains (losses) included in net income, assets | (2.5) | (0.6) | ||
Total realized/unrealized gains (losses) included in other comprehensive income, assets | 0.5 | (0.4) | 0.3 | 0.6 |
Net purchases, sales, issuances and settlements, assets | (1.6) | 27.8 | (1.3) | 2.3 |
Transfers into Level 3, assets | 30 | 12 | 30 | 12.1 |
Transfers out of Level 3, assets | (39.9) | (59.2) | ||
Ending balance, assets | 34.8 | 80.2 | 34.8 | 80.2 |
Changes in unrealized gains (losses) included in net income relating to positions still held, assets | (2.5) | (0.6) | ||
Gross purchases, sales, issuances and settlements | ||||
Purchases, assets | 28.1 | 28.1 | ||
Settlements, assets | (1.6) | (0.3) | (1.3) | (25.8) |
Net purchases, sales, issuances and settlements, assets | (1.6) | 27.8 | (1.3) | 2.3 |
Other debt obligations | Available-for-sale | ||||
Changes in Level 3 fair value measurements rollforward, assets and liabilities | ||||
Beginning balance, assets | 43.4 | 2.1 | 58.5 | 2.3 |
Total realized/unrealized gains (losses) included in net income, assets | (0.1) | |||
Total realized/unrealized gains (losses) included in other comprehensive income, assets | 0.5 | 0.3 | 1.6 | 0.2 |
Net purchases, sales, issuances and settlements, assets | 16 | 92.5 | 25.8 | 92.3 |
Transfers out of Level 3, assets | (26) | |||
Ending balance, assets | 59.9 | 94.8 | 59.9 | 94.8 |
Gross purchases, sales, issuances and settlements | ||||
Purchases, assets | 16.8 | 94.4 | 26.8 | 94.4 |
Settlements, assets | (0.8) | (1.9) | (1) | (2.1) |
Net purchases, sales, issuances and settlements, assets | 16 | 92.5 | 25.8 | 92.3 |
Equity securities | ||||
Changes in Level 3 fair value measurements rollforward, assets and liabilities | ||||
Beginning balance, assets | 0.4 | 14.9 | 2.7 | |
Total realized/unrealized gains (losses) included in net income, assets | 0.7 | 12.9 | ||
Total realized/unrealized gains (losses) included in other comprehensive income, assets | (0.4) | |||
Net purchases, sales, issuances and settlements, assets | (15.6) | (15.6) | ||
Gross purchases, sales, issuances and settlements | ||||
Sales, assets | (15.6) | (15.6) | ||
Net purchases, sales, issuances and settlements, assets | (15.6) | (15.6) | ||
Other investments | ||||
Changes in Level 3 fair value measurements rollforward, assets and liabilities | ||||
Beginning balance, assets | 29.4 | 9.3 | 17.2 | 6.5 |
Total realized/unrealized gains (losses) included in net income, assets | 0.1 | 0.3 | 2.3 | 1.8 |
Net purchases, sales, issuances and settlements, assets | (0.4) | 3.6 | (0.4) | 4.9 |
Transfers into Level 3, assets | 10 | |||
Ending balance, assets | 29.1 | 13.2 | 29.1 | 13.2 |
Changes in unrealized gains (losses) included in net income relating to positions still held, assets | 0.1 | 0.3 | 2.3 | 1.8 |
Gross purchases, sales, issuances and settlements | ||||
Purchases, assets | 4.5 | 3.6 | 4.5 | 4.9 |
Sales, assets | (4.9) | (4.9) | ||
Net purchases, sales, issuances and settlements, assets | (0.4) | 3.6 | (0.4) | 4.9 |
Separate account assets | ||||
Changes in Level 3 fair value measurements rollforward, assets and liabilities | ||||
Beginning balance, assets | 8,718.7 | 7,991.9 | 8,615.5 | 7,651.4 |
Total realized/unrealized gains (losses) included in net income, assets | 138.9 | 245.4 | 313.5 | 409.8 |
Total realized/unrealized gains (losses) included in other comprehensive income, assets | 0.5 | 0.1 | 0.1 | (0.6) |
Net purchases, sales, issuances and settlements, assets | 4.2 | 54.5 | (66.1) | 231.3 |
Transfers out of Level 3, assets | (172.5) | (0.4) | (173.2) | (0.4) |
Ending balance, assets | 8,689.8 | 8,291.5 | 8,689.8 | 8,291.5 |
Changes in unrealized gains (losses) included in net income relating to positions still held, assets | 126.4 | 257.9 | 327.2 | 402.6 |
Gross purchases, sales, issuances and settlements | ||||
Purchases, assets | 41 | 231.4 | 120 | 571.8 |
Sales, assets | (112.8) | (124.1) | (214.5) | (228.5) |
Issuances, assets | (156.5) | (60) | (203.8) | (105.5) |
Settlements, assets | 232.5 | 7.2 | 232.2 | (6.5) |
Net purchases, sales, issuances and settlements, assets | $ 4.2 | $ 54.5 | $ (66.1) | $ 231.3 |
Fair Value Measurements - Trans
Fair Value Measurements - Transfers (Details) - Recurring Fair Value Measurements - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Fixed maturities | Available-for-sale | ||||
Fair Value Hierarchy Levels Transfers | ||||
Transfers out of Level 2 into Level 1 | $ 2.2 | |||
Transfers out of Level 2 into Level 3 | $ 33.7 | $ 12.4 | 33.7 | $ 15.6 |
Transfers out of Level 3 into Level 2 | 2.3 | 52.3 | 28.3 | 100.3 |
U.S. government and agencies | Available-for-sale | ||||
Fair Value Hierarchy Levels Transfers | ||||
Transfers out of Level 2 into Level 1 | 1.1 | |||
Corporate debt securities | Available-for-sale | ||||
Fair Value Hierarchy Levels Transfers | ||||
Transfers out of Level 2 into Level 3 | 0.4 | 1 | ||
Transfers out of Level 3 into Level 2 | 11.5 | 40.2 | ||
Commercial mortgage-backed securities | Available-for-sale | ||||
Fair Value Hierarchy Levels Transfers | ||||
Transfers out of Level 2 into Level 3 | 3.7 | 3.7 | 2.5 | |
Transfers out of Level 3 into Level 2 | 2.3 | 0.9 | 2.3 | 0.9 |
Collateralized debt obligations | Available-for-sale | ||||
Fair Value Hierarchy Levels Transfers | ||||
Transfers out of Level 2 into Level 3 | 30 | 12 | 30 | 12.1 |
Transfers out of Level 3 into Level 2 | 39.9 | 59.2 | ||
Other debt obligations | Available-for-sale | ||||
Fair Value Hierarchy Levels Transfers | ||||
Transfers out of Level 2 into Level 1 | 1.1 | |||
Transfers out of Level 3 into Level 2 | 26 | |||
Other investments | ||||
Fair Value Hierarchy Levels Transfers | ||||
Transfers out of Level 2 into Level 3 | 10 | |||
Separate account assets | ||||
Fair Value Hierarchy Levels Transfers | ||||
Transfers out of Level 1 into Level 2 | 102.7 | 0.1 | 102.7 | 292.5 |
Transfers out of Level 2 into Level 1 | 0.1 | 0.8 | ||
Transfers out of Level 3 into Level 1 | 0.2 | 0.2 | ||
Transfers out of Level 3 into Level 2 | $ 172.5 | $ 0.2 | $ 173.2 | $ 0.2 |
Fair Value Measurements - Quant
Fair Value Measurements - Quantitative Information for Level 3 Measurements (Details) - Recurring Fair Value Measurements $ in Millions | Jun. 30, 2019USD ($)item | Dec. 31, 2018USD ($)item |
Unobservable inputs | ||
Assets measured at fair value | $ | $ 233,926.3 | $ 210,374.7 |
Liabilities measured at fair value | $ | (382.7) | (293.8) |
Fair value hierarchy Level 3 | ||
Unobservable inputs | ||
Assets measured at fair value | $ | 8,906 | 8,790.1 |
Liabilities measured at fair value | $ | (133.1) | (60.7) |
Fair value hierarchy Level 3 | Investment contracts | ||
Unobservable inputs | ||
Liabilities measured at fair value | $ | $ (118.7) | $ (45.2) |
Embedded derivative, Valuation technique | us-gaap:ValuationTechniqueDiscountedCashFlowMember | us-gaap:ValuationTechniqueDiscountedCashFlowMember |
Fair value hierarchy Level 3 | Investment contracts | Discounted cash flow | Long duration interest rate | Minimum | ||
Unobservable inputs | ||
Embedded derivative, Input | 0.022 | 0.028 |
Fair value hierarchy Level 3 | Investment contracts | Discounted cash flow | Long duration interest rate | Maximum | ||
Unobservable inputs | ||
Embedded derivative, Input | 0.023 | 0.029 |
Fair value hierarchy Level 3 | Investment contracts | Discounted cash flow | Long-term equity market volatility | Minimum | ||
Unobservable inputs | ||
Embedded derivative, Input | 0.150 | 0.167 |
Fair value hierarchy Level 3 | Investment contracts | Discounted cash flow | Long-term equity market volatility | Maximum | ||
Unobservable inputs | ||
Embedded derivative, Input | 0.266 | 0.278 |
Fair value hierarchy Level 3 | Investment contracts | Discounted cash flow | Non-performance risk | Minimum | ||
Unobservable inputs | ||
Embedded derivative, Input | 0.004 | 0.006 |
Fair value hierarchy Level 3 | Investment contracts | Discounted cash flow | Non-performance risk | Maximum | ||
Unobservable inputs | ||
Embedded derivative, Input | 0.014 | 0.016 |
Fair value hierarchy Level 3 | Investment contracts | Discounted cash flow | Lapse rate | Minimum | ||
Unobservable inputs | ||
Embedded derivative, Input | 0.013 | 0.013 |
Fair value hierarchy Level 3 | Investment contracts | Discounted cash flow | Lapse rate | Maximum | ||
Unobservable inputs | ||
Embedded derivative, Input | 0.160 | 0.160 |
Fair value hierarchy Level 3 | Non-U.S. governments | Available-for-sale | ||
Unobservable inputs | ||
Assets measured at fair value | $ | $ 3.9 | $ 4.6 |
Fixed maturities, available-for-sale, Valuation technique | us-gaap:ValuationTechniqueDiscountedCashFlowMember | us-gaap:ValuationTechniqueDiscountedCashFlowMember |
Fair value hierarchy Level 3 | Non-U.S. governments | Available-for-sale | Discounted cash flow | Discount rate | ||
Unobservable inputs | ||
Fixed maturities, available-for-sale, Input | 0.026 | 0.032 |
Fair value hierarchy Level 3 | Non-U.S. governments | Available-for-sale | Discounted cash flow | Discount rate | Weighted average input | ||
Unobservable inputs | ||
Fixed maturities, available-for-sale, Input | 0.026 | 0.032 |
Fair value hierarchy Level 3 | Non-U.S. governments | Available-for-sale | Discounted cash flow | Illiquidity premium | ||
Unobservable inputs | ||
Fixed maturities, available-for-sale, Input | 0.0050 | 0.0050 |
Fair value hierarchy Level 3 | Non-U.S. governments | Available-for-sale | Discounted cash flow | Illiquidity premium | Weighted average input | ||
Unobservable inputs | ||
Fixed maturities, available-for-sale, Input | 0.0050 | 0.0050 |
Fair value hierarchy Level 3 | Non-U.S. governments | Available-for-sale | Discounted cash flow | Comparability adjustment | ||
Unobservable inputs | ||
Fixed maturities, available-for-sale, Input | (0.0025) | (0.0025) |
Fair value hierarchy Level 3 | Non-U.S. governments | Available-for-sale | Discounted cash flow | Comparability adjustment | Weighted average input | ||
Unobservable inputs | ||
Fixed maturities, available-for-sale, Input | (0.0025) | (0.0025) |
Fair value hierarchy Level 3 | Corporate debt securities | Available-for-sale | ||
Unobservable inputs | ||
Assets measured at fair value | $ | $ 30.9 | $ 25.4 |
Fixed maturities, available-for-sale, Valuation technique | us-gaap:ValuationTechniqueDiscountedCashFlowMember | us-gaap:ValuationTechniqueDiscountedCashFlowMember |
Fair value hierarchy Level 3 | Corporate debt securities | Available-for-sale | Discounted cash flow | Discount rate | Minimum | ||
Unobservable inputs | ||
Fixed maturities, available-for-sale, Input | 0.023 | 0.033 |
Fair value hierarchy Level 3 | Corporate debt securities | Available-for-sale | Discounted cash flow | Discount rate | Maximum | ||
Unobservable inputs | ||
Fixed maturities, available-for-sale, Input | 0.060 | 0.045 |
Fair value hierarchy Level 3 | Corporate debt securities | Available-for-sale | Discounted cash flow | Discount rate | Weighted average input | ||
Unobservable inputs | ||
Fixed maturities, available-for-sale, Input | 0.031 | 0.039 |
Fair value hierarchy Level 3 | Corporate debt securities | Available-for-sale | Discounted cash flow | Illiquidity premium | Minimum | ||
Unobservable inputs | ||
Fixed maturities, available-for-sale, Input | 0 | 0 |
Fair value hierarchy Level 3 | Corporate debt securities | Available-for-sale | Discounted cash flow | Illiquidity premium | Maximum | ||
Unobservable inputs | ||
Fixed maturities, available-for-sale, Input | 0.0060 | 0.0060 |
Fair value hierarchy Level 3 | Corporate debt securities | Available-for-sale | Discounted cash flow | Illiquidity premium | Weighted average input | ||
Unobservable inputs | ||
Fixed maturities, available-for-sale, Input | 0.0031 | 0.0036 |
Fair value hierarchy Level 3 | Corporate debt securities | Available-for-sale | Discounted cash flow | Comparability adjustment | Minimum | ||
Unobservable inputs | ||
Fixed maturities, available-for-sale, Input | 0 | |
Fair value hierarchy Level 3 | Corporate debt securities | Available-for-sale | Discounted cash flow | Comparability adjustment | Maximum | ||
Unobservable inputs | ||
Fixed maturities, available-for-sale, Input | 0.0130 | |
Fair value hierarchy Level 3 | Corporate debt securities | Available-for-sale | Discounted cash flow | Comparability adjustment | Weighted average input | ||
Unobservable inputs | ||
Fixed maturities, available-for-sale, Input | 0.0021 | |
Fair value hierarchy Level 3 | Commercial mortgage-backed securities | Available-for-sale | ||
Unobservable inputs | ||
Assets measured at fair value | $ | $ 2.8 | |
Fixed maturities, available-for-sale, Valuation technique | us-gaap:ValuationTechniqueDiscountedCashFlowMember | |
Fair value hierarchy Level 3 | Commercial mortgage-backed securities | Available-for-sale | Discounted cash flow | Discount rate | ||
Unobservable inputs | ||
Fixed maturities, available-for-sale, Input | 0.350 | |
Fair value hierarchy Level 3 | Commercial mortgage-backed securities | Available-for-sale | Discounted cash flow | Discount rate | Weighted average input | ||
Unobservable inputs | ||
Fixed maturities, available-for-sale, Input | 0.350 | |
Fair value hierarchy Level 3 | Commercial mortgage-backed securities | Available-for-sale | Discounted cash flow | Probability of default | ||
Unobservable inputs | ||
Fixed maturities, available-for-sale, Input | 1 | |
Fair value hierarchy Level 3 | Commercial mortgage-backed securities | Available-for-sale | Discounted cash flow | Probability of default | Weighted average input | ||
Unobservable inputs | ||
Fixed maturities, available-for-sale, Input | 1 | |
Fair value hierarchy Level 3 | Commercial mortgage-backed securities | Available-for-sale | Discounted cash flow | Potential loss severity | ||
Unobservable inputs | ||
Fixed maturities, available-for-sale, Input | 0.448 | |
Fair value hierarchy Level 3 | Commercial mortgage-backed securities | Available-for-sale | Discounted cash flow | Potential loss severity | Weighted average input | ||
Unobservable inputs | ||
Fixed maturities, available-for-sale, Input | 0.448 | |
Fair value hierarchy Level 3 | Other debt obligations | Available-for-sale | ||
Unobservable inputs | ||
Assets measured at fair value | $ | $ 1.9 | $ 1.7 |
Fixed maturities, available-for-sale, Valuation technique | us-gaap:ValuationTechniqueDiscountedCashFlowMember | us-gaap:ValuationTechniqueDiscountedCashFlowMember |
Fair value hierarchy Level 3 | Other debt obligations | Available-for-sale | Discounted cash flow | Discount rate | ||
Unobservable inputs | ||
Fixed maturities, available-for-sale, Input | 0.050 | 0.050 |
Fair value hierarchy Level 3 | Other debt obligations | Available-for-sale | Discounted cash flow | Discount rate | Weighted average input | ||
Unobservable inputs | ||
Fixed maturities, available-for-sale, Input | 0.050 | 0.050 |
Fair value hierarchy Level 3 | Other debt obligations | Available-for-sale | Discounted cash flow | Illiquidity premium | ||
Unobservable inputs | ||
Fixed maturities, available-for-sale, Input | 0.0500 | 0.0500 |
Fair value hierarchy Level 3 | Other debt obligations | Available-for-sale | Discounted cash flow | Illiquidity premium | Weighted average input | ||
Unobservable inputs | ||
Fixed maturities, available-for-sale, Input | 0.0500 | 0.0500 |
Fair value hierarchy Level 3 | Separate account assets | ||
Unobservable inputs | ||
Assets measured at fair value | $ | $ 8,689 | $ 8,440.8 |
Fair value hierarchy Level 3 | Separate account assets | Discounted cash flow, mortgage loans | Discount rate | ||
Unobservable inputs | ||
Separate account assets, Input | 0.032 | |
Fair value hierarchy Level 3 | Separate account assets | Discounted cash flow, mortgage loans | Discount rate | Minimum | ||
Unobservable inputs | ||
Separate account assets, Input | 0.033 | |
Fair value hierarchy Level 3 | Separate account assets | Discounted cash flow, mortgage loans | Discount rate | Maximum | ||
Unobservable inputs | ||
Separate account assets, Input | 0.047 | |
Fair value hierarchy Level 3 | Separate account assets | Discounted cash flow, mortgage loans | Discount rate | Weighted average input | ||
Unobservable inputs | ||
Separate account assets, Input | 0.032 | 0.042 |
Fair value hierarchy Level 3 | Separate account assets | Discounted cash flow, mortgage loans | Illiquidity premium | ||
Unobservable inputs | ||
Separate account assets, Input | 0.0060 | |
Fair value hierarchy Level 3 | Separate account assets | Discounted cash flow, mortgage loans | Illiquidity premium | Minimum | ||
Unobservable inputs | ||
Separate account assets, Input | 0 | |
Fair value hierarchy Level 3 | Separate account assets | Discounted cash flow, mortgage loans | Illiquidity premium | Maximum | ||
Unobservable inputs | ||
Separate account assets, Input | 0.0060 | |
Fair value hierarchy Level 3 | Separate account assets | Discounted cash flow, mortgage loans | Illiquidity premium | Weighted average input | ||
Unobservable inputs | ||
Separate account assets, Input | 0.0060 | 0.0056 |
Fair value hierarchy Level 3 | Separate account assets | Discounted cash flow, mortgage loans | Credit spread rate | ||
Unobservable inputs | ||
Separate account assets, Input | 0.0138 | |
Fair value hierarchy Level 3 | Separate account assets | Discounted cash flow, mortgage loans | Credit spread rate | Minimum | ||
Unobservable inputs | ||
Separate account assets, Input | 0.0085 | |
Fair value hierarchy Level 3 | Separate account assets | Discounted cash flow, mortgage loans | Credit spread rate | Maximum | ||
Unobservable inputs | ||
Separate account assets, Input | 0.0172 | |
Fair value hierarchy Level 3 | Separate account assets | Discounted cash flow, mortgage loans | Credit spread rate | Weighted average input | ||
Unobservable inputs | ||
Separate account assets, Input | 0.0138 | 0.0168 |
Fair value hierarchy Level 3 | Separate account assets | Discounted cash flow, real estate | Discount rate | Minimum | ||
Unobservable inputs | ||
Separate account assets, Input | 0.056 | 0.056 |
Fair value hierarchy Level 3 | Separate account assets | Discounted cash flow, real estate | Discount rate | Maximum | ||
Unobservable inputs | ||
Separate account assets, Input | 0.140 | 0.115 |
Fair value hierarchy Level 3 | Separate account assets | Discounted cash flow, real estate | Discount rate | Weighted average input | ||
Unobservable inputs | ||
Separate account assets, Input | 0.067 | 0.067 |
Fair value hierarchy Level 3 | Separate account assets | Discounted cash flow, real estate | Terminal capitalization rate | Minimum | ||
Unobservable inputs | ||
Separate account assets, Input | 0.043 | 0.043 |
Fair value hierarchy Level 3 | Separate account assets | Discounted cash flow, real estate | Terminal capitalization rate | Maximum | ||
Unobservable inputs | ||
Separate account assets, Input | 0.093 | 0.093 |
Fair value hierarchy Level 3 | Separate account assets | Discounted cash flow, real estate | Terminal capitalization rate | Weighted average input | ||
Unobservable inputs | ||
Separate account assets, Input | 0.057 | 0.058 |
Fair value hierarchy Level 3 | Separate account assets | Discounted cash flow, real estate | Average market rent growth rate | Minimum | ||
Unobservable inputs | ||
Separate account assets, Input | 0.018 | 0.020 |
Fair value hierarchy Level 3 | Separate account assets | Discounted cash flow, real estate | Average market rent growth rate | Maximum | ||
Unobservable inputs | ||
Separate account assets, Input | 0.046 | 0.047 |
Fair value hierarchy Level 3 | Separate account assets | Discounted cash flow, real estate | Average market rent growth rate | Weighted average input | ||
Unobservable inputs | ||
Separate account assets, Input | 0.029 | 0.029 |
Fair value hierarchy Level 3 | Separate account assets | Discounted cash flow, real estate debt | Loan to value | Minimum | ||
Unobservable inputs | ||
Separate account assets, Input | 0.110 | 0.110 |
Fair value hierarchy Level 3 | Separate account assets | Discounted cash flow, real estate debt | Loan to value | Maximum | ||
Unobservable inputs | ||
Separate account assets, Input | 0.686 | 0.693 |
Fair value hierarchy Level 3 | Separate account assets | Discounted cash flow, real estate debt | Loan to value | Weighted average input | ||
Unobservable inputs | ||
Separate account assets, Input | 0.462 | 0.459 |
Fair value hierarchy Level 3 | Separate account assets | Discounted cash flow, real estate debt | Market interest rate | Minimum | ||
Unobservable inputs | ||
Separate account assets, Input | 0.032 | 0.039 |
Fair value hierarchy Level 3 | Separate account assets | Discounted cash flow, real estate debt | Market interest rate | Maximum | ||
Unobservable inputs | ||
Separate account assets, Input | 0.060 | 0.060 |
Fair value hierarchy Level 3 | Separate account assets | Discounted cash flow, real estate debt | Market interest rate | Weighted average input | ||
Unobservable inputs | ||
Separate account assets, Input | 0.037 | 0.043 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value Option on Consolidated VIEs and Equity Method Investments (Details) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Dec. 31, 2018USD ($) | |
Commercial Mortgage Loans of Consolidated VIEs | |||||
Fair Value Option, Quantitative Disclosures | |||||
Fair value of assets for which fair value option was elected | $ 5.4 | $ 5.4 | $ 6.4 | ||
Contractual principal amounts of assets for which the fair value option was elected | $ 5.4 | $ 5.4 | $ 6.5 | ||
Number of loans which are more than 90 days past due or in nonaccrual status | 0 | 0 | 0 | ||
Pre-tax gain (loss) due to change in fair value of assets and liabilities for which the fair value option was elected | $ (0.1) | ||||
Interest income | $ 0.1 | $ 0.2 | $ 0.2 | 0.4 | |
Real Estate Ventures | |||||
Fair Value Option, Quantitative Disclosures | |||||
Fair value of assets for which fair value option was elected | 19.1 | 19.1 | $ 17.2 | ||
Pre-tax gain (loss) due to change in fair value of assets and liabilities for which the fair value option was elected | $ 0.1 | $ 0.3 | $ 2.3 | $ 1.8 |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Instruments Not Reported at Fair Value (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Assets (liabilities) | ||
Mortgage loans | $ 16,136.8 | $ 15,336.9 |
Policy loans | 800.9 | 801.4 |
Short-term debt | (76.8) | (42.9) |
Long-term debt | (3,762.4) | (3,259.6) |
Carrying amount | ||
Assets (liabilities) | ||
Mortgage loans | 16,136.8 | 15,336.9 |
Policy loans | 800.9 | 801.4 |
Other investments | 261.8 | 247.4 |
Cash and cash equivalents not required to be reported at fair value | 1,192.3 | 1,201.6 |
Investment contracts | (32,386.1) | (32,572.1) |
Short-term debt | (76.8) | (42.9) |
Long-term debt | (3,762.4) | (3,259.6) |
Separate account liabilities | (149,038.5) | (132,562.9) |
Bank deposits | (485.1) | (500) |
Cash collateral payable | (116.1) | (79.5) |
Assets (liabilities) measured at fair value | ||
Assets (liabilities) | ||
Mortgage loans | 16,805.7 | 15,383.6 |
Policy loans | 1,038.1 | 965.5 |
Other investments | 266.1 | 239.8 |
Cash and cash equivalents not required to be reported at fair value | 1,192.3 | 1,201.6 |
Investment contracts | (32,182.8) | (31,428.2) |
Short-term debt | (76.8) | (42.9) |
Long-term debt | (4,023.6) | (3,257.1) |
Separate account liabilities | (147,848.3) | (131,491.4) |
Bank deposits | (481.3) | (489.1) |
Cash collateral payable | (116.1) | (79.5) |
Assets (liabilities) measured at fair value | Fair value hierarchy Level 1 | ||
Assets (liabilities) | ||
Cash and cash equivalents not required to be reported at fair value | 1,117.7 | 1,148.6 |
Cash collateral payable | (116.1) | (79.5) |
Assets (liabilities) measured at fair value | Fair value hierarchy Level 2 | ||
Assets (liabilities) | ||
Other investments | 175 | 157.5 |
Cash and cash equivalents not required to be reported at fair value | 74.6 | 53 |
Investment contracts | (3,880.9) | (4,085.7) |
Short-term debt | (76.8) | (42.9) |
Long-term debt | (3,887.4) | (3,129.3) |
Bank deposits | (481.3) | (489.1) |
Assets (liabilities) measured at fair value | Fair value hierarchy Level 3 | ||
Assets (liabilities) | ||
Mortgage loans | 16,805.7 | 15,383.6 |
Policy loans | 1,038.1 | 965.5 |
Other investments | 91.1 | 82.3 |
Investment contracts | (28,301.9) | (27,342.5) |
Long-term debt | (136.2) | (127.8) |
Separate account liabilities | $ (147,848.3) | $ (131,491.4) |
Segment Information - Reconcili
Segment Information - Reconciliation of Segment Assets to Consolidated (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Segment Information: Assets | ||
Total assets | $ 267,918 | $ 243,036.1 |
Retirement and Income Solutions | ||
Segment Information: Assets | ||
Total assets | 181,663 | 163,833.6 |
Principal Global Investors | ||
Segment Information: Assets | ||
Total assets | 2,312.9 | 2,301 |
Principal International | ||
Segment Information: Assets | ||
Total assets | 51,285.8 | 46,701.2 |
U.S. Insurance Solutions | ||
Segment Information: Assets | ||
Total assets | 27,178.3 | 25,388.2 |
Corporate | ||
Segment Information: Assets | ||
Total assets | $ 5,478 | $ 4,812.1 |
Segment Information - Reconci_2
Segment Information - Reconciliation of Segment Operating Revenues and Earnings to Consolidated (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Operating Revenue And Profit (Loss) From Segments To Consolidated | ||||
Net realized capital gains (losses), net of related revenue adjustments | $ (13.2) | $ 50.6 | $ 70.5 | $ 8.4 |
Total revenues | 3,972.6 | 3,234.9 | 7,716.5 | 6,118.5 |
Pre-tax net realized capital gains (losses), as adjusted | (48.6) | 48.6 | 17 | 25 |
Income (loss) before income taxes | 450.3 | 515.4 | 976.3 | 972.4 |
Retirement and Income Solutions | ||||
Operating Revenue And Profit (Loss) From Segments To Consolidated | ||||
Inter-segment revenues | 88.5 | 98.9 | 174.2 | 200.6 |
Principal Global Investors | ||||
Operating Revenue And Profit (Loss) From Segments To Consolidated | ||||
Inter-segment revenues | 66.2 | 67.8 | 127.7 | 130 |
Operating Segments | ||||
Operating Revenue And Profit (Loss) From Segments To Consolidated | ||||
Operating revenues | 4,002.2 | 3,206.2 | 7,682.9 | 6,153.4 |
Pre-tax operating earnings (losses) | 513.2 | 485.7 | 991.9 | 982.2 |
Operating Segments | Retirement and Income Solutions | ||||
Operating Revenue And Profit (Loss) From Segments To Consolidated | ||||
Operating revenues | 2,159.6 | 1,449.9 | 4,051.5 | 2,628.8 |
Pre-tax operating earnings (losses) | 256.2 | 227.6 | 496.8 | 471.5 |
Operating Segments | Retirement and Income Solutions | Retirement and Income Solutions - Fee | ||||
Operating Revenue And Profit (Loss) From Segments To Consolidated | ||||
Operating revenues | 450.5 | 446.5 | 881.3 | 894.3 |
Operating Segments | Retirement and Income Solutions | Retirement and Income Solutions - Spread | ||||
Operating Revenue And Profit (Loss) From Segments To Consolidated | ||||
Operating revenues | 1,709.1 | 1,003.4 | 3,170.2 | 1,734.5 |
Operating Segments | Principal Global Investors | ||||
Operating Revenue And Profit (Loss) From Segments To Consolidated | ||||
Operating revenues | 359.5 | 379.6 | 698.5 | 748.1 |
Pre-tax operating earnings (losses) | 115.6 | 129.2 | 216.3 | 242.9 |
Operating Segments | Principal International | ||||
Operating Revenue And Profit (Loss) From Segments To Consolidated | ||||
Operating revenues | 411.6 | 389.6 | 792.1 | 772.7 |
Pre-tax operating earnings (losses) | 93.2 | 86.3 | 204.3 | 177.8 |
Operating Segments | U.S. Insurance Solutions | ||||
Operating Revenue And Profit (Loss) From Segments To Consolidated | ||||
Operating revenues | 1,087.3 | 1,004.1 | 2,155.4 | 2,020.8 |
Pre-tax operating earnings (losses) | 146.3 | 113.3 | 257 | 228.3 |
Operating Segments | U.S. Insurance Solutions | Specialty Benefits insurance | ||||
Operating Revenue And Profit (Loss) From Segments To Consolidated | ||||
Operating revenues | 625.8 | 572.2 | 1,227.6 | 1,137.6 |
Operating Segments | U.S. Insurance Solutions | Individual Life insurance | ||||
Operating Revenue And Profit (Loss) From Segments To Consolidated | ||||
Operating revenues | 461.6 | 432 | 927.9 | 883.3 |
Operating Segments | U.S. Insurance Solutions | U.S. Insurance Solutions Eliminations | ||||
Operating Revenue And Profit (Loss) From Segments To Consolidated | ||||
Operating revenues | (0.1) | (0.1) | (0.1) | (0.1) |
Operating Segments | Corporate | ||||
Operating Revenue And Profit (Loss) From Segments To Consolidated | ||||
Operating revenues | (15.8) | (17) | (14.6) | (17) |
Pre-tax operating earnings (losses) | (98.1) | (70.7) | (182.5) | (138.3) |
Reconciling Items | ||||
Operating Revenue And Profit (Loss) From Segments To Consolidated | ||||
Net realized capital gains (losses), net of related revenue adjustments | (13.2) | 50.6 | 70.5 | 8.4 |
Revenue adjustments related to equity method investments | (16.4) | (21.9) | (36.9) | (43.3) |
Pre-tax net realized capital gains (losses), as adjusted | (48.6) | 48.6 | 17 | 25 |
Earnings adjustments related to equity method investments and noncontrolling interest | $ (14.3) | $ (18.9) | $ (32.6) | $ (34.8) |
Segment Information - Net Reali
Segment Information - Net Realized Capital Gains (Losses) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Segment Information: Net realized capital gains (losses), as adjusted | ||||
Net realized capital gains (losses) | $ (4) | $ 67.4 | $ 80.5 | $ 42.3 |
Derivative and hedging-related revenue adjustments | (21.4) | (14.9) | (32.9) | (32.7) |
Market value adjustments to fee revenues | 0.1 | 0.1 | ||
Adjustments related to equity method investments | 1.2 | (4.2) | 0.8 | (4) |
Adjustments related to sponsored investment funds | 6.8 | 3 | 14.8 | 5.1 |
Recognition of front-end fee revenue | 4.2 | (0.8) | 7.3 | (2.4) |
Net realized capital gains (losses), net of related revenue adjustments | (13.2) | 50.6 | 70.5 | 8.4 |
Amortization of deferred acquisition costs and other actuarial balances | (29.1) | 1.2 | (45.5) | 6.8 |
Capital (gains) losses distributed | (15.2) | (8.3) | (23.9) | 2.3 |
Market value adjustments of embedded derivatives | 8.9 | 5.1 | 15.9 | 7.5 |
Pre-tax net realized capital gains (losses), as adjusted | $ (48.6) | $ 48.6 | $ 17 | $ 25 |
Revenues from Contracts with _3
Revenues from Contracts with Customers - Disaggregation by Segment (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total fees and other revenues per consolidated statements of operations | $ 1,006.6 | $ 1,012.6 | $ 1,980.1 | $ 2,023.9 |
Operating Segments | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total segment revenue from contracts with customers | 587.2 | 614.3 | 1,148.4 | 1,217.1 |
Operating Segments | Retirement and Income Solutions | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total segment revenue from contracts with customers | 66.2 | 69.6 | 127.5 | 134 |
Operating Segments | Principal Global Investors | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total segment revenue from contracts with customers | 346.2 | 371.1 | 678.5 | 731.4 |
Fees and other revenues not within the scope of revenue recognition guidance | 10.4 | 7.3 | 14.7 | 14 |
Total fees and other revenues per consolidated statements of operations | 356.6 | 378.4 | 693.2 | 745.4 |
Operating Segments | Principal International | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total segment revenue from contracts with customers | 116.2 | 123.1 | 231.1 | 244.2 |
Fees and other revenues not within the scope of revenue recognition guidance | 1.7 | 1.8 | 3.4 | 3.8 |
Total fees and other revenues per consolidated statements of operations | 117.9 | 124.9 | 234.5 | 248 |
Operating Segments | U.S. Insurance Solutions | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total segment revenue from contracts with customers | 16.1 | 13.5 | 31.8 | 26.6 |
Operating Segments | Corporate | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total segment revenue from contracts with customers | 42.5 | 37 | 79.5 | 80.9 |
Fees and other revenues not within the scope of revenue recognition guidance | (77.9) | (78.7) | (148.5) | (157.3) |
Total fees and other revenues per consolidated statements of operations | (35.4) | (41.7) | (69) | (76.4) |
Operating Segments | Retirement and Income Solutions - Fee | Retirement and Income Solutions | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total segment revenue from contracts with customers | 63.9 | 66.9 | 122.3 | 128.6 |
Fees and other revenues not within the scope of revenue recognition guidance | 281.6 | 282.8 | 553.4 | 569.2 |
Total fees and other revenues per consolidated statements of operations | 345.5 | 349.7 | 675.7 | 697.8 |
Operating Segments | Retirement and Income Solutions - Spread | Retirement and Income Solutions | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total segment revenue from contracts with customers | 2.3 | 2.7 | 5.2 | 5.4 |
Fees and other revenues not within the scope of revenue recognition guidance | 4.2 | 2.9 | 9.1 | 5.6 |
Total fees and other revenues per consolidated statements of operations | 6.5 | 5.6 | 14.3 | 11 |
Operating Segments | Specialty Benefits insurance | U.S. Insurance Solutions | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total segment revenue from contracts with customers | 3.6 | 3.8 | 7.3 | 7.5 |
Fees and other revenues not within the scope of revenue recognition guidance | 4.9 | 5.2 | 9.8 | 10.4 |
Total fees and other revenues per consolidated statements of operations | 8.5 | 9 | 17.1 | 17.9 |
Operating Segments | Individual Life insurance | U.S. Insurance Solutions | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total segment revenue from contracts with customers | 12.6 | 9.8 | 24.6 | 19.2 |
Fees and other revenues not within the scope of revenue recognition guidance | 190.3 | 177.7 | 382.5 | 363.4 |
Total fees and other revenues per consolidated statements of operations | 202.9 | 187.5 | 407.1 | 382.6 |
Operating Segments | U.S. Insurance Solutions Eliminations | U.S. Insurance Solutions | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total segment revenue from contracts with customers | (0.1) | (0.1) | (0.1) | (0.1) |
Reconciling Items | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Fees and other revenues not within the scope of revenue recognition guidance | 415.2 | 399 | 824.4 | 809.1 |
Pre-tax other adjustments | $ 4.2 | $ (0.7) | $ 7.3 | $ (2.3) |
Revenues from Contracts with _4
Revenues from Contracts with Customers - Disaggregation within Segments (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total fees and other revenues | $ 1,006.6 | $ 1,012.6 | $ 1,980.1 | $ 2,023.9 |
Premiums and other considerations | 1,932.9 | 1,265.8 | 3,657.8 | 2,261 |
Net investment income (loss) | 1,037.1 | 889.1 | 1,998.1 | 1,791.3 |
Operating Segments | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total revenues from contracts with customers | 587.2 | 614.3 | 1,148.4 | 1,217.1 |
Total operating revenues | 4,002.2 | 3,206.2 | 7,682.9 | 6,153.4 |
Operating Segments | Retirement and Income Solutions | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total revenues from contracts with customers | 66.2 | 69.6 | 127.5 | 134 |
Total operating revenues | 2,159.6 | 1,449.9 | 4,051.5 | 2,628.8 |
Operating Segments | Retirement and Income Solutions | Retirement and Income Solutions - Fee | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total revenues from contracts with customers | 63.9 | 66.9 | 122.3 | 128.6 |
Fees and other revenues not within the scope of revenue recognition guidance | 281.6 | 282.8 | 553.4 | 569.2 |
Total fees and other revenues | 345.5 | 349.7 | 675.7 | 697.8 |
Premiums and other considerations | 0.6 | 0.9 | 1.7 | 2.4 |
Net investment income (loss) | 104.4 | 95.9 | 203.9 | 194.1 |
Total operating revenues | 450.5 | 446.5 | 881.3 | 894.3 |
Operating Segments | Retirement and Income Solutions | Retirement and Income Solutions - Fee | Administrative service fee revenue | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total revenues from contracts with customers | 63.3 | 66.3 | 121.5 | 127.9 |
Operating Segments | Retirement and Income Solutions | Retirement and Income Solutions - Fee | Other fee revenue | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total revenues from contracts with customers | 0.6 | 0.6 | 0.8 | 0.7 |
Operating Segments | Retirement and Income Solutions | Retirement and Income Solutions - Spread | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total revenues from contracts with customers | 2.3 | 2.7 | 5.2 | 5.4 |
Fees and other revenues not within the scope of revenue recognition guidance | 4.2 | 2.9 | 9.1 | 5.6 |
Total fees and other revenues | 6.5 | 5.6 | 14.3 | 11 |
Premiums and other considerations | 1,171.5 | 555.1 | 2,129 | 843.4 |
Net investment income (loss) | 531.1 | 442.7 | 1,026.9 | 880.1 |
Total operating revenues | 1,709.1 | 1,003.4 | 3,170.2 | 1,734.5 |
Operating Segments | Retirement and Income Solutions | Retirement and Income Solutions - Spread | Deposit account fee revenue | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total revenues from contracts with customers | 2.3 | 2.7 | 5.2 | 5.4 |
Operating Segments | Principal Global Investors | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total revenues from contracts with customers | 346.2 | 371.1 | 678.5 | 731.4 |
Fees and other revenues not within the scope of revenue recognition guidance | 10.4 | 7.3 | 14.7 | 14 |
Total fees and other revenues | 356.6 | 378.4 | 693.2 | 745.4 |
Net investment income (loss) | 2.9 | 1.2 | 5.3 | 2.7 |
Total operating revenues | 359.5 | 379.6 | 698.5 | 748.1 |
Operating Segments | Principal Global Investors | Management fee revenue | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total revenues from contracts with customers | 304.2 | 312.2 | 597 | 628.5 |
Operating Segments | Principal Global Investors | Other fee revenue | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total revenues from contracts with customers | 42 | 58.9 | 81.5 | 102.9 |
Operating Segments | Principal International | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total revenues from contracts with customers | 116.2 | 123.1 | 231.1 | 244.2 |
Fees and other revenues not within the scope of revenue recognition guidance | 1.7 | 1.8 | 3.4 | 3.8 |
Total fees and other revenues | 117.9 | 124.9 | 234.5 | 248 |
Premiums and other considerations | 109.5 | 101.6 | 227 | 199.5 |
Net investment income (loss) | 184.2 | 163.1 | 330.6 | 325.2 |
Total operating revenues | 411.6 | 389.6 | 792.1 | 772.7 |
Operating Segments | Principal International | Latin America | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total revenues from contracts with customers | 88.6 | 96.5 | 176.7 | 189 |
Operating Segments | Principal International | Asia | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total revenues from contracts with customers | 27.6 | 26.7 | 54.6 | 55.4 |
Operating Segments | Principal International | Principal International Corporate / Regional Office | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total revenues from contracts with customers | 0.2 | 0.3 | 0.4 | 0.6 |
Operating Segments | Principal International | Geographical Eliminations | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total revenues from contracts with customers | (0.2) | (0.4) | (0.6) | (0.8) |
Operating Segments | Principal International | Management fee revenue | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total revenues from contracts with customers | 115.5 | 121.8 | 229.8 | 241.9 |
Operating Segments | Principal International | Other fee revenue | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total revenues from contracts with customers | 0.7 | 1.3 | 1.3 | 2.3 |
Operating Segments | U.S. Insurance Solutions | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total revenues from contracts with customers | 16.1 | 13.5 | 31.8 | 26.6 |
Total operating revenues | 1,087.3 | 1,004.1 | 2,155.4 | 2,020.8 |
Operating Segments | U.S. Insurance Solutions | Specialty Benefits insurance | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total revenues from contracts with customers | 3.6 | 3.8 | 7.3 | 7.5 |
Fees and other revenues not within the scope of revenue recognition guidance | 4.9 | 5.2 | 9.8 | 10.4 |
Total fees and other revenues | 8.5 | 9 | 17.1 | 17.9 |
Premiums and other considerations | 571.6 | 527.7 | 1,127.5 | 1,044.7 |
Net investment income (loss) | 45.7 | 35.5 | 83 | 75 |
Total operating revenues | 625.8 | 572.2 | 1,227.6 | 1,137.6 |
Operating Segments | U.S. Insurance Solutions | Specialty Benefits insurance | Administrative service fee revenue | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total revenues from contracts with customers | 3.6 | 3.8 | 7.3 | 7.5 |
Operating Segments | U.S. Insurance Solutions | Individual Life insurance | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total revenues from contracts with customers | 12.6 | 9.8 | 24.6 | 19.2 |
Fees and other revenues not within the scope of revenue recognition guidance | 190.3 | 177.7 | 382.5 | 363.4 |
Total fees and other revenues | 202.9 | 187.5 | 407.1 | 382.6 |
Premiums and other considerations | 79.7 | 80.5 | 172.6 | 171 |
Net investment income (loss) | 179 | 164 | 348.2 | 329.7 |
Total operating revenues | 461.6 | 432 | 927.9 | 883.3 |
Operating Segments | U.S. Insurance Solutions | Individual Life insurance | Administrative service fee revenue | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total revenues from contracts with customers | 6.2 | 5.8 | 12.1 | 11.6 |
Operating Segments | U.S. Insurance Solutions | Individual Life insurance | Commission income | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total revenues from contracts with customers | 6.4 | 4 | 12.5 | 7.6 |
Operating Segments | U.S. Insurance Solutions | U.S. Insurance Solutions Eliminations | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total revenues from contracts with customers | (0.1) | (0.1) | (0.1) | (0.1) |
Total operating revenues | (0.1) | (0.1) | (0.1) | (0.1) |
Operating Segments | Corporate | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total revenues from contracts with customers | 42.5 | 37 | 79.5 | 80.9 |
Fees and other revenues not within the scope of revenue recognition guidance | (77.9) | (78.7) | (148.5) | (157.3) |
Total fees and other revenues | (35.4) | (41.7) | (69) | (76.4) |
Net investment income (loss) | 19.6 | 24.7 | 54.4 | 59.4 |
Total operating revenues | (15.8) | (17) | (14.6) | (17) |
Operating Segments | Corporate | Other fee revenue | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total revenues from contracts with customers | 11.2 | 9.2 | 20 | 17.2 |
Operating Segments | Corporate | Commission income | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total revenues from contracts with customers | 78.7 | 78.5 | 154.5 | 157.5 |
Operating Segments | Corporate | Revenue by type - Eliminations | ||||
Revenues from Contracts with Customers - Disaggregation of Revenues | ||||
Total revenues from contracts with customers | $ (47.4) | $ (50.7) | $ (95) | $ (93.8) |
Revenues from Contracts with _5
Revenues from Contracts with Customers - Contract Costs (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Contract costs | |||||
Contract cost asset | $ 147.4 | $ 147.4 | $ 137.6 | ||
Practical expedient, incremental costs of obtaining a contract | true | ||||
Impairment loss for contract cost asset | $ 0 | ||||
Amortization expense of contract cost asset | $ 6.2 | $ 5.9 | $ 11.8 | $ 11.6 |
Stock-Based Compensation Plan_2
Stock-Based Compensation Plans - Stock-Based Awards (Details) - USD ($) shares in Millions, $ in Millions | 6 Months Ended | 162 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | May 20, 2014 | |
Stock-Based Compensation Plans | ||||
Stock-Based Compensation Plans - Disclosures | ||||
Compensation cost | $ 44.4 | $ 42.7 | ||
Related income tax benefit | 9.3 | 9.3 | ||
Capitalized as part of an asset | $ 1 | $ 1.1 | ||
Amended and Restated 2010 Stock Incentive Plan and 2005 Directors Stock Plan | ||||
Stock-Based Compensation Plans - Disclosures | ||||
Number of shares that will be granted | 0 | |||
Stock Incentive Plan and Directors Stock Plan | ||||
Stock-Based Compensation Plans - Disclosures | ||||
Options granted (in shares) | 0 | |||
Awards or units granted (in shares) | 0 | |||
2014 Stock Incentive Plan and 2014 Directors Stock Plan | ||||
Stock-Based Compensation Plans - Disclosures | ||||
Maximum number of new shares of common stock available for grant (in shares) | 6.8 | 6.8 |
Stock-Based Compensation Plan_3
Stock-Based Compensation Plans - Nonqualified Stock Options, Assumptions and Other Disclosures (Details) - Nonqualified Stock Options $ / shares in Units, shares in Millions, $ in Millions | 6 Months Ended |
Jun. 30, 2019USD ($)$ / sharesshares | |
Stock-Based Compensation Plans - Disclosures | |
Options granted (in shares) | shares | 1.2 |
Assumptions used to estimate fair value of stock options granted during period | |
Weighted-average expected volatility (as a percent) | 23.30% |
Weighted-average expected term | 7 years |
Weighted-average risk-free interest rate (as a percent) | 2.60% |
Weighted-average expected dividend yield (as a percent) | 4.07% |
Weighted-average estimated fair value of stock options granted (in dollars per share) | $ / shares | $ 10 |
Other nonqualified stock option disclosures | |
Unrecognized compensation costs | $ | $ 7.4 |
Weighted-average service period over which unrecognized compensation costs will be recognized | 1 year 2 months 12 days |
Stock-Based Compensation Plan_4
Stock-Based Compensation Plans - Performance Share Awards and Restricted Stock Units (Details) $ / shares in Units, shares in Millions, $ in Millions | 6 Months Ended |
Jun. 30, 2019USD ($)$ / sharesshares | |
Performance Share Awards | |
Change in nonvested units outstanding | |
Awards or units granted (in shares) | shares | 0.2 |
Awards or units granted, weighted-average grant-date fair value (in dollars per share) | $ / shares | $ 53.09 |
Other award and unit disclosures | |
Lower limit multiple of initial target awards (as a percent) | 0.00% |
Upper limit multiple of initial target awards (as a percent) | 150.00% |
Unrecognized compensation costs | $ | $ 8 |
Weighted-average service period over which unrecognized compensation costs will be recognized | 1 year 2 months 12 days |
Restricted Stock Units | |
Change in nonvested units outstanding | |
Awards or units granted (in shares) | shares | 1 |
Awards or units granted, weighted-average grant-date fair value (in dollars per share) | $ / shares | $ 53.14 |
Other award and unit disclosures | |
Unrecognized compensation costs | $ | $ 68.8 |
Weighted-average service period over which unrecognized compensation costs will be recognized | 1 year 10 months 24 days |
Stock-Based Compensation Plan_5
Stock-Based Compensation Plans - Employee Stock Purchase Plan (Details) - Employee Stock Purchase Plan shares in Millions | 6 Months Ended |
Jun. 30, 2019$ / sharesshares | |
Stock-Based Compensation Plans - Disclosures | |
Share purchases under employee stock purchase plan (in shares) | 0.6 |
Weighted-average fair value of discount on employee stock purchase plan (in dollars per share) | $ / shares | $ 12.89 |
Shares available to be issued under employee stock purchase plan (in shares) | 1.7 |
Earnings Per Common Share (Deta
Earnings Per Common Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Net income (loss) | $ 392.1 | $ 459.5 | $ 844.2 | $ 862 |
Subtract: | ||||
Net income (loss) attributable to noncontrolling interest | 5.8 | 2.9 | 28 | 8.3 |
Total | $ 386.3 | $ 456.6 | $ 816.2 | $ 853.7 |
Weighted-average shares outstanding: | ||||
Basic | 279 | 286.4 | 278.8 | 287.9 |
Dilutive effects: | ||||
Diluted | 281.2 | 289.2 | 281.2 | 291.1 |
Net income (loss) per common share: | ||||
Basic | $ 1.38 | $ 1.59 | $ 2.93 | $ 2.97 |
Diluted | $ 1.37 | $ 1.58 | $ 2.90 | $ 2.93 |
Nonqualified Stock Options | ||||
Dilutive effects: | ||||
Stock-based compensation awards | 0.9 | 1 | 0.9 | 1.2 |
Restricted Stock Units | ||||
Dilutive effects: | ||||
Stock-based compensation awards | 1.2 | 1.6 | 1.3 | 1.8 |
Performance Share Awards | ||||
Dilutive effects: | ||||
Stock-based compensation awards | 0.1 | 0.2 | 0.2 | 0.2 |
Condensed Consolidating Finan_3
Condensed Consolidating Financial Information - Guarantor, Statements of Financial Position (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Assets | ||||||
Fixed maturities, available-for-sale | $ 65,268.1 | $ 60,108.5 | ||||
Fixed maturities, trading | 686.8 | 636.1 | ||||
Equity securities | 1,895.2 | 1,843.7 | ||||
Mortgage loans | 16,136.8 | 15,336.9 | ||||
Real estate | 1,740.4 | 1,729.7 | ||||
Policy loans | 800.9 | 801.4 | ||||
Investment in unconsolidated entities | 931.4 | 868.8 | ||||
Other investments | 3,735.6 | 3,441.5 | ||||
Cash and cash equivalents | 3,315.9 | 2,977.5 | ||||
Accrued investment income | 663.8 | 636.2 | ||||
Premiums due and other receivables | 1,549.2 | 1,413.1 | ||||
Deferred acquisition costs | 3,519.5 | 3,693.5 | ||||
Property and equipment | 959.5 | 767.3 | ||||
Goodwill | 1,111.5 | 1,100 | ||||
Other intangibles | 1,300.7 | 1,315.1 | ||||
Separate account assets | 162,848.6 | 144,987.9 | ||||
Other assets | 1,454.1 | 1,378.9 | ||||
Total assets | 267,918 | 243,036.1 | ||||
Liabilities | ||||||
Contractholder funds | 39,658.8 | 39,699.7 | ||||
Future policy benefits and claims | 38,479.5 | 35,664.8 | ||||
Other policyholder funds | 996.2 | 888.4 | ||||
Short-term debt | 76.8 | 42.9 | ||||
Long-term debt | 3,762.4 | 3,259.6 | ||||
Income taxes currently payable | 19.8 | 25.3 | ||||
Deferred income taxes | 1,687.5 | 958.4 | ||||
Separate account liabilities | 162,848.6 | 144,987.9 | ||||
Other liabilities | 5,981.9 | 5,661.9 | ||||
Total liabilities | 253,511.5 | 231,188.9 | ||||
Redeemable noncontrolling interest | 304.5 | $ 537.7 | 391.2 | $ 138.9 | $ 127.8 | $ 101.3 |
Stockholders' equity | ||||||
Common stock | 4.8 | 4.8 | ||||
Additional paid-in capital | 10,130.7 | 10,060.7 | ||||
Retained earnings (accumulated deficit) | 10,805.8 | 10,290.2 | ||||
Accumulated other comprehensive income (loss) | 647.7 | (1,565.1) | ||||
Treasury stock, at cost | (7,554.3) | (7,400.6) | ||||
Total stockholders' equity attributable to Principal Financial Group, Inc. | 14,034.7 | 11,390 | ||||
Noncontrolling interest | 67.3 | 66 | ||||
Total stockholders' equity | 14,102 | $ 12,762.2 | 11,456 | $ 11,706.5 | $ 12,255.8 | $ 12,921.9 |
Total liabilities and stockholders' equity | 267,918 | 243,036.1 | ||||
Principal Financial Group, Inc. Parent Only | Legal Entities | ||||||
Assets | ||||||
Fixed maturities, available-for-sale | 206.4 | 211.5 | ||||
Fixed maturities, trading | 297 | 308.9 | ||||
Investment in unconsolidated entities | 16,723.4 | 13,862.4 | ||||
Other investments | 10.5 | 10.7 | ||||
Cash and cash equivalents | 615.8 | 334.9 | ||||
Accrued investment income | 1.8 | 1.4 | ||||
Other assets | 353.3 | 375 | ||||
Total assets | 18,208.2 | 15,104.8 | ||||
Liabilities | ||||||
Long-term debt | 3,624.2 | 3,129.8 | ||||
Income taxes currently payable | 2 | |||||
Deferred income taxes | 7.1 | |||||
Other liabilities | 540.2 | 585 | ||||
Total liabilities | 4,173.5 | 3,714.8 | ||||
Stockholders' equity | ||||||
Common stock | 4.8 | 4.8 | ||||
Additional paid-in capital | 10,130.7 | 10,060.7 | ||||
Retained earnings (accumulated deficit) | 10,805.8 | 10,290.2 | ||||
Accumulated other comprehensive income (loss) | 647.7 | (1,565.1) | ||||
Treasury stock, at cost | (7,554.3) | (7,400.6) | ||||
Total stockholders' equity attributable to Principal Financial Group, Inc. | 14,034.7 | 11,390 | ||||
Total stockholders' equity | 14,034.7 | 11,390 | ||||
Total liabilities and stockholders' equity | 18,208.2 | 15,104.8 | ||||
Principal Life Insurance Company Only | Legal Entities | ||||||
Assets | ||||||
Fixed maturities, available-for-sale | 57,676.6 | 53,401.7 | ||||
Fixed maturities, trading | 223.6 | 165.5 | ||||
Equity securities | 82.8 | 84.8 | ||||
Mortgage loans | 15,279.1 | 14,478 | ||||
Real estate | 3.3 | 1.9 | ||||
Policy loans | 748.8 | 755.9 | ||||
Investment in unconsolidated entities | 1,930.3 | 2,324.4 | ||||
Other investments | 6,669.6 | 5,549.1 | ||||
Cash and cash equivalents | 805 | 1,323.9 | ||||
Accrued investment income | 578.7 | 563.2 | ||||
Premiums due and other receivables | 1,969.9 | 1,818.1 | ||||
Deferred acquisition costs | 3,506.3 | 3,680.2 | ||||
Property and equipment | 739.5 | 661.3 | ||||
Goodwill | 54.3 | 54.3 | ||||
Other intangibles | 18.7 | 19.7 | ||||
Separate account assets | 121,368.4 | 107,343 | ||||
Other assets | 1,190.6 | 1,135.1 | ||||
Total assets | 212,845.5 | 193,360.1 | ||||
Liabilities | ||||||
Contractholder funds | 36,703.3 | 36,861.7 | ||||
Future policy benefits and claims | 32,840.2 | 30,690.3 | ||||
Other policyholder funds | 821.2 | 725.7 | ||||
Deferred income taxes | 1,065.4 | 405.3 | ||||
Separate account liabilities | 121,368.4 | 107,343 | ||||
Other liabilities | 9,260.6 | 8,503.2 | ||||
Total liabilities | 202,059.1 | 184,529.2 | ||||
Stockholders' equity | ||||||
Common stock | 2.5 | 2.5 | ||||
Additional paid-in capital | 6,321 | 6,331.6 | ||||
Retained earnings (accumulated deficit) | 2,396.3 | 2,441.2 | ||||
Accumulated other comprehensive income (loss) | 2,066.6 | 55.6 | ||||
Total stockholders' equity attributable to Principal Financial Group, Inc. | 10,786.4 | 8,830.9 | ||||
Total stockholders' equity | 10,786.4 | 8,830.9 | ||||
Total liabilities and stockholders' equity | 212,845.5 | 193,360.1 | ||||
Principal Financial Services, Inc. and Other Subsidiaries Combined | Legal Entities | ||||||
Assets | ||||||
Fixed maturities, available-for-sale | 7,749.6 | 6,857.9 | ||||
Fixed maturities, trading | 166.2 | 161.7 | ||||
Equity securities | 1,812.4 | 1,758.9 | ||||
Mortgage loans | 1,610.9 | 1,615.5 | ||||
Real estate | 1,737.1 | 1,727.8 | ||||
Policy loans | 52.1 | 45.5 | ||||
Investment in unconsolidated entities | 9,074.5 | 6,853.8 | ||||
Other investments | 2,518.8 | 2,517.6 | ||||
Cash and cash equivalents | 2,758.5 | 2,014.8 | ||||
Accrued investment income | 85.6 | 77.5 | ||||
Premiums due and other receivables | 4,087.1 | 3,781.3 | ||||
Deferred acquisition costs | 13.2 | 13.3 | ||||
Property and equipment | 220 | 106 | ||||
Goodwill | 1,057.2 | 1,045.7 | ||||
Other intangibles | 1,282 | 1,295.4 | ||||
Separate account assets | 41,480.2 | 37,644.9 | ||||
Other assets | 4,839.4 | 4,418.3 | ||||
Total assets | 80,544.8 | 71,935.9 | ||||
Liabilities | ||||||
Contractholder funds | 3,312.1 | 3,189.2 | ||||
Future policy benefits and claims | 6,892.8 | 6,128.6 | ||||
Other policyholder funds | 177.7 | 165.3 | ||||
Short-term debt | 76.8 | 42.9 | ||||
Long-term debt | 852.1 | 851.2 | ||||
Income taxes currently payable | 85.5 | 80.7 | ||||
Deferred income taxes | 1,111.6 | 1,056.4 | ||||
Separate account liabilities | 41,480.2 | 37,644.9 | ||||
Other liabilities | 9,593.3 | 8,586.5 | ||||
Total liabilities | 63,582.1 | 57,745.7 | ||||
Redeemable noncontrolling interest | 304.5 | 391.2 | ||||
Stockholders' equity | ||||||
Additional paid-in capital | 9,500 | 9,461.2 | ||||
Retained earnings (accumulated deficit) | 6,554.6 | 5,855 | ||||
Accumulated other comprehensive income (loss) | 536.3 | (1,583.2) | ||||
Total stockholders' equity attributable to Principal Financial Group, Inc. | 16,590.9 | 13,733 | ||||
Noncontrolling interest | 67.3 | 66 | ||||
Total stockholders' equity | 16,658.2 | 13,799 | ||||
Total liabilities and stockholders' equity | 80,544.8 | 71,935.9 | ||||
Principal Financial Services, Inc. and Other Subsidiaries Combined | Legal Entities | Nonqualified benefit plans | ||||||
Stockholders' equity | ||||||
Assets held in Rabbi trusts | 699.1 | 671.7 | ||||
Liabilities held in Rabbi trusts | 566.7 | 542.4 | ||||
Eliminations, Notes Guarantor | Eliminations | ||||||
Assets | ||||||
Fixed maturities, available-for-sale | (364.5) | (362.6) | ||||
Mortgage loans | (753.2) | (756.6) | ||||
Investment in unconsolidated entities | (26,796.8) | (22,171.8) | ||||
Other investments | (5,463.3) | (4,635.9) | ||||
Cash and cash equivalents | (863.4) | (696.1) | ||||
Accrued investment income | (2.3) | (5.9) | ||||
Premiums due and other receivables | (4,507.8) | (4,186.3) | ||||
Other assets | (4,929.2) | (4,549.5) | ||||
Total assets | (43,680.5) | (37,364.7) | ||||
Liabilities | ||||||
Contractholder funds | (356.6) | (351.2) | ||||
Future policy benefits and claims | (1,253.5) | (1,154.1) | ||||
Other policyholder funds | (2.7) | (2.6) | ||||
Long-term debt | (713.9) | (721.4) | ||||
Income taxes currently payable | (67.7) | (55.4) | ||||
Deferred income taxes | (496.6) | (503.3) | ||||
Other liabilities | (13,412.2) | (12,012.8) | ||||
Total liabilities | (16,303.2) | (14,800.8) | ||||
Stockholders' equity | ||||||
Common stock | (2.5) | (2.5) | ||||
Additional paid-in capital | (15,821) | (15,792.8) | ||||
Retained earnings (accumulated deficit) | (8,950.9) | (8,296.2) | ||||
Accumulated other comprehensive income (loss) | (2,602.9) | 1,527.6 | ||||
Total stockholders' equity attributable to Principal Financial Group, Inc. | (27,377.3) | (22,563.9) | ||||
Total stockholders' equity | (27,377.3) | (22,563.9) | ||||
Total liabilities and stockholders' equity | $ (43,680.5) | $ (37,364.7) |
Condensed Consolidating Finan_4
Condensed Consolidating Financial Information - Guarantor, Statements of Operations (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Revenues | ||||
Premiums and other considerations | $ 1,932.9 | $ 1,265.8 | $ 3,657.8 | $ 2,261 |
Fees and other revenues | 1,006.6 | 1,012.6 | 1,980.1 | 2,023.9 |
Net investment income (loss) | 1,037.1 | 889.1 | 1,998.1 | 1,791.3 |
Net realized capital gains (losses), excluding impairment losses on available-for-sale securities | 13.3 | 76.4 | 104.6 | 61.2 |
Net other-than-temporary impairment (losses) recoveries on fixed maturities, available-for-sale | (17) | (8.2) | (26.6) | (6.9) |
Other-than-temporary impairment losses on fixed maturities, available-for-sale reclassified to (from) other comprehensive income | (0.3) | (0.8) | 2.5 | (12) |
Net impairment (losses) recoveries on fixed maturities, available-for-sale | (17.3) | (9) | (24.1) | (18.9) |
Net realized capital gains (losses) | (4) | 67.4 | 80.5 | 42.3 |
Total revenues | 3,972.6 | 3,234.9 | 7,716.5 | 6,118.5 |
Expenses | ||||
Benefits, claims and settlement expenses | 2,446.1 | 1,699.2 | 4,641.2 | 3,110.3 |
Dividends to policyholders | 29.9 | 30.2 | 60 | 60.7 |
Operating expenses | 1,046.3 | 990.1 | 2,039 | 1,975.1 |
Total expenses | 3,522.3 | 2,719.5 | 6,740.2 | 5,146.1 |
Income (loss) before income taxes | 450.3 | 515.4 | 976.3 | 972.4 |
Income taxes (benefits) | 58.2 | 55.9 | 132.1 | 110.4 |
Net income (loss) | 392.1 | 459.5 | 844.2 | 862 |
Net income (loss) attributable to noncontrolling interest | 5.8 | 2.9 | 28 | 8.3 |
Net income (loss) attributable to Principal Financial Group, Inc. | 386.3 | 456.6 | 816.2 | 853.7 |
Net income (loss) | 392.1 | 459.5 | 844.2 | 862 |
Other comprehensive income (loss) | 1,072.3 | (672.3) | 2,219 | (1,408.4) |
Comprehensive income (loss) | $ 1,464.4 | $ (212.8) | 3,063.2 | (546.4) |
Principal Financial Group, Inc. Parent Only | Legal Entities | ||||
Revenues | ||||
Net investment income (loss) | 10.9 | 11.8 | ||
Net realized capital gains (losses), excluding impairment losses on available-for-sale securities | 9.2 | (8.6) | ||
Net realized capital gains (losses) | 9.2 | (8.6) | ||
Total revenues | 20.1 | 3.2 | ||
Expenses | ||||
Operating expenses | 110.1 | 95.2 | ||
Total expenses | 110.1 | 95.2 | ||
Income (loss) before income taxes | (90) | (92) | ||
Income taxes (benefits) | (22.3) | (41) | ||
Equity in the net income (loss) of subsidiaries | 883.9 | 904.7 | ||
Net income (loss) | 816.2 | 853.7 | ||
Net income (loss) attributable to Principal Financial Group, Inc. | 816.2 | 853.7 | ||
Net income (loss) | 816.2 | 853.7 | ||
Other comprehensive income (loss) | 2,201.1 | (1,398.2) | ||
Comprehensive income (loss) | 3,017.3 | (544.5) | ||
Principal Life Insurance Company Only | Legal Entities | ||||
Revenues | ||||
Premiums and other considerations | 3,293.1 | 1,941.7 | ||
Fees and other revenues | 1,102.5 | 1,091.3 | ||
Net investment income (loss) | 1,419.2 | 1,282 | ||
Net realized capital gains (losses), excluding impairment losses on available-for-sale securities | 411.8 | (98.6) | ||
Net other-than-temporary impairment (losses) recoveries on fixed maturities, available-for-sale | (24.1) | (4.6) | ||
Other-than-temporary impairment losses on fixed maturities, available-for-sale reclassified to (from) other comprehensive income | 2.6 | (11.4) | ||
Net impairment (losses) recoveries on fixed maturities, available-for-sale | (21.5) | (16) | ||
Net realized capital gains (losses) | 390.3 | (114.6) | ||
Total revenues | 6,205.1 | 4,200.4 | ||
Expenses | ||||
Benefits, claims and settlement expenses | 4,116.2 | 2,640.6 | ||
Dividends to policyholders | 60 | 60.7 | ||
Operating expenses | 1,189.3 | 1,144.3 | ||
Total expenses | 5,365.5 | 3,845.6 | ||
Income (loss) before income taxes | 839.6 | 354.8 | ||
Income taxes (benefits) | 110.7 | 7.2 | ||
Equity in the net income (loss) of subsidiaries | (131.6) | 313.2 | ||
Net income (loss) | 597.3 | 660.8 | ||
Net income (loss) attributable to Principal Financial Group, Inc. | 597.3 | 660.8 | ||
Net income (loss) | 597.3 | 660.8 | ||
Other comprehensive income (loss) | 2,011.1 | (1,219.2) | ||
Comprehensive income (loss) | 2,608.4 | (558.4) | ||
Principal Financial Services, Inc. and Other Subsidiaries Combined | Legal Entities | ||||
Revenues | ||||
Premiums and other considerations | 364.7 | 319.3 | ||
Fees and other revenues | 1,067.7 | 1,126.7 | ||
Net investment income (loss) | 1,151 | 1,152.8 | ||
Net realized capital gains (losses), excluding impairment losses on available-for-sale securities | (316.4) | 168.4 | ||
Net other-than-temporary impairment (losses) recoveries on fixed maturities, available-for-sale | (2.5) | (2.3) | ||
Other-than-temporary impairment losses on fixed maturities, available-for-sale reclassified to (from) other comprehensive income | (0.1) | (0.6) | ||
Net impairment (losses) recoveries on fixed maturities, available-for-sale | (2.6) | (2.9) | ||
Net realized capital gains (losses) | (319) | 165.5 | ||
Total revenues | 2,264.4 | 2,764.3 | ||
Expenses | ||||
Benefits, claims and settlement expenses | 530.7 | 475.3 | ||
Operating expenses | 917 | 916.7 | ||
Total expenses | 1,447.7 | 1,392 | ||
Income (loss) before income taxes | 816.7 | 1,372.3 | ||
Income taxes (benefits) | 44.8 | 144.5 | ||
Equity in the net income (loss) of subsidiaries | 134.5 | (320.3) | ||
Net income (loss) | 906.4 | 907.5 | ||
Net income (loss) attributable to noncontrolling interest | 25.6 | 8.3 | ||
Net income (loss) attributable to Principal Financial Group, Inc. | 880.8 | 899.2 | ||
Net income (loss) | 906.4 | 907.5 | ||
Other comprehensive income (loss) | 2,227.8 | (1,500.5) | ||
Comprehensive income (loss) | 3,134.2 | (593) | ||
Eliminations, Notes Guarantor | Eliminations | ||||
Revenues | ||||
Fees and other revenues | (190.1) | (194.1) | ||
Net investment income (loss) | (583) | (655.3) | ||
Total revenues | (773.1) | (849.4) | ||
Expenses | ||||
Benefits, claims and settlement expenses | (5.7) | (5.6) | ||
Operating expenses | (177.4) | (181.1) | ||
Total expenses | (183.1) | (186.7) | ||
Income (loss) before income taxes | (590) | (662.7) | ||
Income taxes (benefits) | (1.1) | (0.3) | ||
Equity in the net income (loss) of subsidiaries | (886.8) | (897.6) | ||
Net income (loss) | (1,475.7) | (1,560) | ||
Net income (loss) attributable to noncontrolling interest | 2.4 | |||
Net income (loss) attributable to Principal Financial Group, Inc. | (1,478.1) | (1,560) | ||
Net income (loss) | (1,475.7) | (1,560) | ||
Other comprehensive income (loss) | (4,221) | 2,709.5 | ||
Comprehensive income (loss) | $ (5,696.7) | $ 1,149.5 |
Condensed Consolidating Finan_5
Condensed Consolidating Financial Information - Guarantor, Statements of Cash Flows (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Operating activities | ||
Net cash provided by (used in) operating activities | $ 2,678.4 | $ 1,638.2 |
Investing activities | ||
Fixed maturities available-for-sale and equity securities with intent to hold: Purchases | (5,771.8) | (7,364.4) |
Fixed maturities available-for-sale and equity securities with intent to hold: Sales | 1,477.2 | 2,122 |
Fixed maturities available-for-sale and equity securities with intent to hold: Maturities | 3,025.9 | 3,292.1 |
Mortgage loans acquired or originated | (2,008.5) | (1,326.2) |
Mortgage loans sold or repaid | 1,243.9 | 1,094 |
Real estate acquired | (48.5) | (36.4) |
Real estate sold | 57 | 63.5 |
Net (purchases) sales of property and equipment | (65.4) | (43.6) |
Purchase of interests in subsidiaries, net of cash acquired | (141.5) | |
Net change in other investments | (253.8) | (1) |
Net cash provided by (used in) investing activities | (2,344) | (2,341.5) |
Financing activities | ||
Issuance of common stock | 22.1 | 44.6 |
Acquisition of treasury stock | (153.7) | (396.5) |
Payments for financing element derivatives | (13.1) | (37.9) |
Purchase of subsidiary shares from noncontrolling interest | (23) | |
Dividends to common stockholders | (300.6) | (295.8) |
Issuance of long-term debt | 502.7 | 41.3 |
Principal repayments of long-term debt | (0.7) | (0.7) |
Net proceeds from (repayments of) short-term borrowings | 33.1 | 27.6 |
Investment contract deposits | 3,627.4 | 4,196.9 |
Investment contract withdrawals | (3,800.8) | (3,110) |
Net increase (decrease) in banking operation deposits | 82 | 126 |
Other | 5.6 | 2 |
Net cash provided by (used in) financing activities | 4 | 574.5 |
Net increase (decrease) in cash and cash equivalents | 338.4 | (128.8) |
Cash and cash equivalents at beginning of period | 2,977.5 | 2,470.8 |
Cash and cash equivalents at end of period | 3,315.9 | 2,342 |
Principal Financial Group, Inc. Parent Only | Legal Entities | ||
Operating activities | ||
Net cash provided by (used in) operating activities | 16.3 | (81.4) |
Investing activities | ||
Fixed maturities available-for-sale and equity securities with intent to hold: Purchases | (150.2) | (200.8) |
Fixed maturities available-for-sale and equity securities with intent to hold: Maturities | 158.1 | 0.8 |
Dividends and returns of capital received from (contributed to) unconsolidated entities | 208.9 | 336.5 |
Net change in other investments | (13.6) | 0.5 |
Net cash provided by (used in) investing activities | 203.2 | 137 |
Financing activities | ||
Issuance of common stock | 22.1 | 44.6 |
Acquisition of treasury stock | (153.7) | (396.5) |
Dividends to common stockholders | (300.6) | (295.8) |
Issuance of long-term debt | 493.6 | |
Net cash provided by (used in) financing activities | 61.4 | (647.7) |
Net increase (decrease) in cash and cash equivalents | 280.9 | (592.1) |
Cash and cash equivalents at beginning of period | 334.9 | 842.8 |
Cash and cash equivalents at end of period | 615.8 | 250.7 |
Principal Life Insurance Company Only | Legal Entities | ||
Operating activities | ||
Net cash provided by (used in) operating activities | 2,742.1 | 1,891.4 |
Investing activities | ||
Fixed maturities available-for-sale and equity securities with intent to hold: Purchases | (4,703.3) | (6,188.8) |
Fixed maturities available-for-sale and equity securities with intent to hold: Sales | 1,065.7 | 1,623.7 |
Fixed maturities available-for-sale and equity securities with intent to hold: Maturities | 2,581.4 | 3,005.7 |
Mortgage loans acquired or originated | (1,894.5) | (1,207.9) |
Mortgage loans sold or repaid | 1,088.5 | 960.7 |
Real estate acquired | (0.1) | |
Net (purchases) sales of property and equipment | (25.1) | (25.4) |
Dividends and returns of capital received from (contributed to) unconsolidated entities | 1.2 | 42.6 |
Net change in other investments | (317.3) | (207.1) |
Net cash provided by (used in) investing activities | (2,203.5) | (1,996.5) |
Financing activities | ||
Payments for financing element derivatives | (13.1) | (37.9) |
Capital received from (dividends and capital paid to) parent | (668.9) | (371.5) |
Investment contract deposits | 3,401.8 | 3,985.9 |
Investment contract withdrawals | (3,783.1) | (3,066.7) |
Other | 5.8 | 2 |
Net cash provided by (used in) financing activities | (1,057.5) | 511.8 |
Net increase (decrease) in cash and cash equivalents | (518.9) | 406.7 |
Cash and cash equivalents at beginning of period | 1,323.9 | 426.7 |
Cash and cash equivalents at end of period | 805 | 833.4 |
Principal Financial Services, Inc. and Other Subsidiaries Combined | Legal Entities | ||
Operating activities | ||
Net cash provided by (used in) operating activities | 803.9 | 805.3 |
Investing activities | ||
Fixed maturities available-for-sale and equity securities with intent to hold: Purchases | (922.7) | (980.3) |
Fixed maturities available-for-sale and equity securities with intent to hold: Sales | 411.5 | 498.3 |
Fixed maturities available-for-sale and equity securities with intent to hold: Maturities | 286.4 | 285.6 |
Mortgage loans acquired or originated | (121.4) | (204.8) |
Mortgage loans sold or repaid | 162.9 | 158 |
Real estate acquired | (48.4) | (36.4) |
Real estate sold | 57 | 63.5 |
Net (purchases) sales of property and equipment | (40.3) | (18.2) |
Purchase of interests in subsidiaries, net of cash acquired | (141.5) | |
Dividends and returns of capital received from (contributed to) unconsolidated entities | 668.9 | 371.5 |
Net change in other investments | (627.7) | (786.7) |
Net cash provided by (used in) investing activities | (173.8) | (791) |
Financing activities | ||
Purchase of subsidiary shares from noncontrolling interest | (23) | |
Issuance of long-term debt | 9.1 | 123.9 |
Principal repayments of long-term debt | (8.2) | (25.4) |
Net proceeds from (repayments of) short-term borrowings | 33.1 | 27.6 |
Capital received from (dividends and capital paid to) parent | (210.1) | (379.1) |
Investment contract deposits | 225.6 | 211 |
Investment contract withdrawals | (17.7) | (43.3) |
Net increase (decrease) in banking operation deposits | 82 | 126 |
Other | (0.2) | |
Net cash provided by (used in) financing activities | 113.6 | 17.7 |
Net increase (decrease) in cash and cash equivalents | 743.7 | 32 |
Cash and cash equivalents at beginning of period | 2,014.8 | 1,526.4 |
Cash and cash equivalents at end of period | 2,758.5 | 1,558.4 |
Eliminations, Notes Guarantor | Eliminations | ||
Operating activities | ||
Net cash provided by (used in) operating activities | (883.9) | (977.1) |
Investing activities | ||
Fixed maturities available-for-sale and equity securities with intent to hold: Purchases | 4.4 | 5.5 |
Mortgage loans acquired or originated | 7.4 | 86.5 |
Mortgage loans sold or repaid | (7.5) | (24.7) |
Dividends and returns of capital received from (contributed to) unconsolidated entities | (879) | (750.6) |
Net change in other investments | 704.8 | 992.3 |
Net cash provided by (used in) investing activities | (169.9) | 309 |
Financing activities | ||
Issuance of long-term debt | (82.6) | |
Principal repayments of long-term debt | 7.5 | 24.7 |
Capital received from (dividends and capital paid to) parent | 879 | 750.6 |
Net cash provided by (used in) financing activities | 886.5 | 692.7 |
Net increase (decrease) in cash and cash equivalents | (167.3) | 24.6 |
Cash and cash equivalents at beginning of period | (696.1) | (325.1) |
Cash and cash equivalents at end of period | $ (863.4) | $ (300.5) |
Condensed Consolidating Finan_6
Condensed Consolidating Financial Information - Shelf Registration Guarantor, Statements of Financial Position (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Assets | ||||||
Fixed maturities, available-for-sale | $ 65,268.1 | $ 60,108.5 | ||||
Fixed maturities, trading | 686.8 | 636.1 | ||||
Equity securities | 1,895.2 | 1,843.7 | ||||
Mortgage loans | 16,136.8 | 15,336.9 | ||||
Real estate | 1,740.4 | 1,729.7 | ||||
Policy loans | 800.9 | 801.4 | ||||
Investment in unconsolidated entities | 931.4 | 868.8 | ||||
Other investments | 3,735.6 | 3,441.5 | ||||
Cash and cash equivalents | 3,315.9 | 2,977.5 | ||||
Accrued investment income | 663.8 | 636.2 | ||||
Premiums due and other receivables | 1,549.2 | 1,413.1 | ||||
Deferred acquisition costs | 3,519.5 | 3,693.5 | ||||
Property and equipment | 959.5 | 767.3 | ||||
Goodwill | 1,111.5 | 1,100 | ||||
Other intangibles | 1,300.7 | 1,315.1 | ||||
Separate account assets | 162,848.6 | 144,987.9 | ||||
Other assets | 1,454.1 | 1,378.9 | ||||
Total assets | 267,918 | 243,036.1 | ||||
Liabilities | ||||||
Contractholder funds | 39,658.8 | 39,699.7 | ||||
Future policy benefits and claims | 38,479.5 | 35,664.8 | ||||
Other policyholder funds | 996.2 | 888.4 | ||||
Short-term debt | 76.8 | 42.9 | ||||
Long-term debt | 3,762.4 | 3,259.6 | ||||
Income taxes currently payable | 19.8 | 25.3 | ||||
Deferred income taxes | 1,687.5 | 958.4 | ||||
Separate account liabilities | 162,848.6 | 144,987.9 | ||||
Other liabilities | 5,981.9 | 5,661.9 | ||||
Total liabilities | 253,511.5 | 231,188.9 | ||||
Redeemable noncontrolling interest | 304.5 | $ 537.7 | 391.2 | $ 138.9 | $ 127.8 | $ 101.3 |
Stockholders' equity | ||||||
Common stock | 4.8 | 4.8 | ||||
Additional paid-in capital | 10,130.7 | 10,060.7 | ||||
Retained earnings (accumulated deficit) | 10,805.8 | 10,290.2 | ||||
Accumulated other comprehensive income (loss) | 647.7 | (1,565.1) | ||||
Treasury stock, at cost | (7,554.3) | (7,400.6) | ||||
Total stockholders' equity attributable to Principal Financial Group, Inc. | 14,034.7 | 11,390 | ||||
Noncontrolling interest | 67.3 | 66 | ||||
Total stockholders' equity | 14,102 | $ 12,762.2 | 11,456 | $ 11,706.5 | $ 12,255.8 | $ 12,921.9 |
Total liabilities and stockholders' equity | 267,918 | 243,036.1 | ||||
Principal Financial Group, Inc. Parent Only | Legal Entities | ||||||
Assets | ||||||
Fixed maturities, available-for-sale | 206.4 | 211.5 | ||||
Fixed maturities, trading | 297 | 308.9 | ||||
Investment in unconsolidated entities | 16,723.4 | 13,862.4 | ||||
Other investments | 10.5 | 10.7 | ||||
Cash and cash equivalents | 615.8 | 334.9 | ||||
Accrued investment income | 1.8 | 1.4 | ||||
Other assets | 353.3 | 375 | ||||
Total assets | 18,208.2 | 15,104.8 | ||||
Liabilities | ||||||
Long-term debt | 3,624.2 | 3,129.8 | ||||
Income taxes currently payable | 2 | |||||
Deferred income taxes | 7.1 | |||||
Other liabilities | 540.2 | 585 | ||||
Total liabilities | 4,173.5 | 3,714.8 | ||||
Stockholders' equity | ||||||
Common stock | 4.8 | 4.8 | ||||
Additional paid-in capital | 10,130.7 | 10,060.7 | ||||
Retained earnings (accumulated deficit) | 10,805.8 | 10,290.2 | ||||
Accumulated other comprehensive income (loss) | 647.7 | (1,565.1) | ||||
Treasury stock, at cost | (7,554.3) | (7,400.6) | ||||
Total stockholders' equity attributable to Principal Financial Group, Inc. | 14,034.7 | 11,390 | ||||
Total stockholders' equity | 14,034.7 | 11,390 | ||||
Total liabilities and stockholders' equity | 18,208.2 | 15,104.8 | ||||
Principal Financial Services, Inc. Only | Legal Entities | ||||||
Assets | ||||||
Equity securities | 14 | 11.9 | ||||
Investment in unconsolidated entities | 16,318.6 | 14,325.5 | ||||
Other investments | 161.2 | 100.9 | ||||
Cash and cash equivalents | 1,603 | 649 | ||||
Accrued investment income | 3 | 0.3 | ||||
Premiums due and other receivables | 13.5 | 0.5 | ||||
Other assets | 61 | 38.7 | ||||
Total assets | 18,174.3 | 15,126.8 | ||||
Liabilities | ||||||
Long-term debt | 343.8 | 366.7 | ||||
Income taxes currently payable | 9.8 | |||||
Deferred income taxes | 21.6 | 13.9 | ||||
Other liabilities | 1,217.8 | 1,002.9 | ||||
Total liabilities | 1,583.2 | 1,393.3 | ||||
Stockholders' equity | ||||||
Additional paid-in capital | 9,123 | 9,100 | ||||
Retained earnings (accumulated deficit) | 6,412.8 | 5,716.8 | ||||
Accumulated other comprehensive income (loss) | 1,055.3 | (1,083.3) | ||||
Total stockholders' equity attributable to Principal Financial Group, Inc. | 16,591.1 | 13,733.5 | ||||
Total stockholders' equity | 16,591.1 | 13,733.5 | ||||
Total liabilities and stockholders' equity | 18,174.3 | 15,126.8 | ||||
Principal Life Insurance Company and Other Subsidiaries Combined | Legal Entities | ||||||
Assets | ||||||
Fixed maturities, available-for-sale | 65,061.7 | 59,897 | ||||
Fixed maturities, trading | 389.8 | 327.2 | ||||
Equity securities | 1,881.2 | 1,831.8 | ||||
Mortgage loans | 16,136.8 | 15,336.9 | ||||
Real estate | 1,740.4 | 1,729.7 | ||||
Policy loans | 800.9 | 801.4 | ||||
Investment in unconsolidated entities | 766.7 | 726 | ||||
Other investments | 3,563.9 | 3,329.9 | ||||
Cash and cash equivalents | 2,365.2 | 3,096.8 | ||||
Accrued investment income | 659 | 634.5 | ||||
Premiums due and other receivables | 1,880.4 | 1,779.6 | ||||
Deferred acquisition costs | 3,519.5 | 3,693.5 | ||||
Property and equipment | 959.5 | 767.3 | ||||
Goodwill | 1,111.5 | 1,100 | ||||
Other intangibles | 1,300.7 | 1,315.1 | ||||
Separate account assets | 162,848.6 | 144,987.9 | ||||
Other assets | 1,600.3 | 1,521.9 | ||||
Total assets | 266,586.1 | 242,876.5 | ||||
Liabilities | ||||||
Contractholder funds | 39,658.8 | 39,699.7 | ||||
Future policy benefits and claims | 38,479.5 | 35,664.8 | ||||
Other policyholder funds | 996.2 | 888.4 | ||||
Short-term debt | 76.8 | 42.9 | ||||
Long-term debt | 138.1 | 129.9 | ||||
Income taxes currently payable | 65 | 61.5 | ||||
Deferred income taxes | 2,154 | 1,446.4 | ||||
Separate account liabilities | 162,848.6 | 144,987.9 | ||||
Other liabilities | 5,277.6 | 4,838.1 | ||||
Total liabilities | 249,694.6 | 227,759.6 | ||||
Redeemable noncontrolling interest | 304.5 | 391.2 | ||||
Stockholders' equity | ||||||
Common stock | 11 | 11 | ||||
Additional paid-in capital | 11,927.8 | 12,004.5 | ||||
Retained earnings (accumulated deficit) | 3,343.3 | 3,549.8 | ||||
Accumulated other comprehensive income (loss) | 1,239.6 | (903.6) | ||||
Treasury stock, at cost | (2) | (2) | ||||
Total stockholders' equity attributable to Principal Financial Group, Inc. | 16,519.7 | 14,659.7 | ||||
Noncontrolling interest | 67.3 | 66 | ||||
Total stockholders' equity | 16,587 | 14,725.7 | ||||
Total liabilities and stockholders' equity | 266,586.1 | 242,876.5 | ||||
Principal Life Insurance Company and Other Subsidiaries Combined | Legal Entities | Nonqualified benefit plans | ||||||
Stockholders' equity | ||||||
Assets held in Rabbi trusts | 699.1 | 671.7 | ||||
Liabilities held in Rabbi trusts | 566.7 | 542.4 | ||||
Eliminations, Shelf Registration Debt Guarantor | Eliminations | ||||||
Assets | ||||||
Investment in unconsolidated entities | (32,877.3) | (28,045.1) | ||||
Cash and cash equivalents | (1,268.1) | (1,103.2) | ||||
Premiums due and other receivables | (344.7) | (367) | ||||
Other assets | (560.5) | (556.7) | ||||
Total assets | (35,050.6) | (30,072) | ||||
Liabilities | ||||||
Long-term debt | (343.7) | (366.8) | ||||
Income taxes currently payable | (47.2) | (46) | ||||
Deferred income taxes | (495.2) | (501.9) | ||||
Other liabilities | (1,053.7) | (764.1) | ||||
Total liabilities | (1,939.8) | (1,678.8) | ||||
Stockholders' equity | ||||||
Common stock | (11) | (11) | ||||
Additional paid-in capital | (21,050.8) | (21,104.5) | ||||
Retained earnings (accumulated deficit) | (9,756.1) | (9,266.6) | ||||
Accumulated other comprehensive income (loss) | (2,294.9) | 1,986.9 | ||||
Treasury stock, at cost | 2 | 2 | ||||
Total stockholders' equity attributable to Principal Financial Group, Inc. | (33,110.8) | (28,393.2) | ||||
Total stockholders' equity | (33,110.8) | (28,393.2) | ||||
Total liabilities and stockholders' equity | $ (35,050.6) | $ (30,072) |
Condensed Consolidating Finan_7
Condensed Consolidating Financial Information - Shelf Registration Guarantor, Statements of Operations (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Revenues | ||||
Premiums and other considerations | $ 1,932.9 | $ 1,265.8 | $ 3,657.8 | $ 2,261 |
Fees and other revenues | 1,006.6 | 1,012.6 | 1,980.1 | 2,023.9 |
Net investment income (loss) | 1,037.1 | 889.1 | 1,998.1 | 1,791.3 |
Net realized capital gains (losses), excluding impairment losses on available-for-sale securities | 13.3 | 76.4 | 104.6 | 61.2 |
Net other-than-temporary impairment (losses) recoveries on fixed maturities, available-for-sale | (17) | (8.2) | (26.6) | (6.9) |
Other-than-temporary impairment losses on fixed maturities, available-for-sale reclassified to (from) other comprehensive income | (0.3) | (0.8) | 2.5 | (12) |
Net impairment (losses) recoveries on fixed maturities, available-for-sale | (17.3) | (9) | (24.1) | (18.9) |
Net realized capital gains (losses) | (4) | 67.4 | 80.5 | 42.3 |
Total revenues | 3,972.6 | 3,234.9 | 7,716.5 | 6,118.5 |
Expenses | ||||
Benefits, claims and settlement expenses | 2,446.1 | 1,699.2 | 4,641.2 | 3,110.3 |
Dividends to policyholders | 29.9 | 30.2 | 60 | 60.7 |
Operating expenses | 1,046.3 | 990.1 | 2,039 | 1,975.1 |
Total expenses | 3,522.3 | 2,719.5 | 6,740.2 | 5,146.1 |
Income (loss) before income taxes | 450.3 | 515.4 | 976.3 | 972.4 |
Income taxes (benefits) | 58.2 | 55.9 | 132.1 | 110.4 |
Net income (loss) | 392.1 | 459.5 | 844.2 | 862 |
Net income (loss) attributable to noncontrolling interest | 5.8 | 2.9 | 28 | 8.3 |
Net income (loss) attributable to Principal Financial Group, Inc. | 386.3 | 456.6 | 816.2 | 853.7 |
Net income (loss) | 392.1 | 459.5 | 844.2 | 862 |
Other comprehensive income (loss) | 1,072.3 | (672.3) | 2,219 | (1,408.4) |
Comprehensive income (loss) | $ 1,464.4 | $ (212.8) | 3,063.2 | (546.4) |
Principal Financial Group, Inc. Parent Only | Legal Entities | ||||
Revenues | ||||
Net investment income (loss) | 10.9 | 11.8 | ||
Net realized capital gains (losses), excluding impairment losses on available-for-sale securities | 9.2 | (8.6) | ||
Net realized capital gains (losses) | 9.2 | (8.6) | ||
Total revenues | 20.1 | 3.2 | ||
Expenses | ||||
Operating expenses | 110.1 | 95.2 | ||
Total expenses | 110.1 | 95.2 | ||
Income (loss) before income taxes | (90) | (92) | ||
Income taxes (benefits) | (22.3) | (41) | ||
Equity in the net income (loss) of subsidiaries | 883.9 | 904.7 | ||
Net income (loss) | 816.2 | 853.7 | ||
Net income (loss) attributable to Principal Financial Group, Inc. | 816.2 | 853.7 | ||
Net income (loss) | 816.2 | 853.7 | ||
Other comprehensive income (loss) | 2,201.1 | (1,398.2) | ||
Comprehensive income (loss) | 3,017.3 | (544.5) | ||
Principal Financial Services, Inc. Only | Legal Entities | ||||
Revenues | ||||
Fees and other revenues | 0.3 | 0.3 | ||
Net investment income (loss) | (4.1) | (3) | ||
Net realized capital gains (losses), excluding impairment losses on available-for-sale securities | 5.9 | (0.5) | ||
Net realized capital gains (losses) | 5.9 | (0.5) | ||
Total revenues | 2.1 | (3.2) | ||
Expenses | ||||
Operating expenses | 60.1 | 16.7 | ||
Total expenses | 60.1 | 16.7 | ||
Income (loss) before income taxes | (58) | (19.9) | ||
Income taxes (benefits) | (11.8) | (2.9) | ||
Equity in the net income (loss) of subsidiaries | 927 | 916.2 | ||
Net income (loss) | 880.8 | 899.2 | ||
Net income (loss) attributable to Principal Financial Group, Inc. | 880.8 | 899.2 | ||
Net income (loss) | 880.8 | 899.2 | ||
Other comprehensive income (loss) | 2,127 | (1,424.8) | ||
Comprehensive income (loss) | 3,007.8 | (525.6) | ||
Principal Life Insurance Company and Other Subsidiaries Combined | Legal Entities | ||||
Revenues | ||||
Premiums and other considerations | 3,657.8 | 2,261 | ||
Fees and other revenues | 1,985.8 | 2,030.5 | ||
Net investment income (loss) | 1,987.3 | 1,776.1 | ||
Net realized capital gains (losses), excluding impairment losses on available-for-sale securities | 89.5 | 70.2 | ||
Net other-than-temporary impairment (losses) recoveries on fixed maturities, available-for-sale | (26.6) | (6.9) | ||
Other-than-temporary impairment losses on fixed maturities, available-for-sale reclassified to (from) other comprehensive income | 2.5 | (12) | ||
Net impairment (losses) recoveries on fixed maturities, available-for-sale | (24.1) | (18.9) | ||
Net realized capital gains (losses) | 65.4 | 51.3 | ||
Total revenues | 7,696.3 | 6,118.9 | ||
Expenses | ||||
Benefits, claims and settlement expenses | 4,641.2 | 3,110.3 | ||
Dividends to policyholders | 60 | 60.7 | ||
Operating expenses | 1,873.9 | 1,869.1 | ||
Total expenses | 6,575.1 | 5,040.1 | ||
Income (loss) before income taxes | 1,121.2 | 1,078.8 | ||
Income taxes (benefits) | 166.2 | 154.3 | ||
Net income (loss) | 955 | 924.5 | ||
Net income (loss) attributable to noncontrolling interest | 28 | 8.3 | ||
Net income (loss) attributable to Principal Financial Group, Inc. | 927 | 916.2 | ||
Net income (loss) | 955 | 924.5 | ||
Other comprehensive income (loss) | 2,149.5 | (1,447.6) | ||
Comprehensive income (loss) | 3,104.5 | (523.1) | ||
Eliminations, Shelf Registration Debt Guarantor | Eliminations | ||||
Revenues | ||||
Fees and other revenues | (6) | (6.9) | ||
Net investment income (loss) | 4 | 6.4 | ||
Net realized capital gains (losses), excluding impairment losses on available-for-sale securities | 0.1 | |||
Net realized capital gains (losses) | 0.1 | |||
Total revenues | (2) | (0.4) | ||
Expenses | ||||
Operating expenses | (5.1) | (5.9) | ||
Total expenses | (5.1) | (5.9) | ||
Income (loss) before income taxes | 3.1 | 5.5 | ||
Equity in the net income (loss) of subsidiaries | (1,810.9) | (1,820.9) | ||
Net income (loss) | (1,807.8) | (1,815.4) | ||
Net income (loss) attributable to Principal Financial Group, Inc. | (1,807.8) | (1,815.4) | ||
Net income (loss) | (1,807.8) | (1,815.4) | ||
Other comprehensive income (loss) | (4,258.6) | 2,862.2 | ||
Comprehensive income (loss) | $ (6,066.4) | $ 1,046.8 |
Condensed Consolidating Finan_8
Condensed Consolidating Financial Information - Shelf Registration Guarantor, Statements of Cash Flows (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Operating activities | ||
Net cash provided by (used in) operating activities | $ 2,678.4 | $ 1,638.2 |
Investing activities | ||
Fixed maturities available-for-sale and equity securities with intent to hold: Purchases | (5,771.8) | (7,364.4) |
Fixed maturities available-for-sale and equity securities with intent to hold: Sales | 1,477.2 | 2,122 |
Fixed maturities available-for-sale and equity securities with intent to hold: Maturities | 3,025.9 | 3,292.1 |
Mortgage loans acquired or originated | (2,008.5) | (1,326.2) |
Mortgage loans sold or repaid | 1,243.9 | 1,094 |
Real estate acquired | (48.5) | (36.4) |
Real estate sold | 57 | 63.5 |
Net (purchases) sales of property and equipment | (65.4) | (43.6) |
Purchase of interests in subsidiaries, net of cash acquired | (141.5) | |
Net change in other investments | (253.8) | (1) |
Net cash provided by (used in) investing activities | (2,344) | (2,341.5) |
Financing activities | ||
Issuance of common stock | 22.1 | 44.6 |
Acquisition of treasury stock | (153.7) | (396.5) |
Payments for financing element derivatives | (13.1) | (37.9) |
Dividends to common stockholders | (300.6) | (295.8) |
Purchase of subsidiary shares from noncontrolling interest | (23) | |
Issuance of long-term debt | 502.7 | 41.3 |
Principal repayments of long-term debt | (0.7) | (0.7) |
Net proceeds from (repayments of) short-term borrowings | 33.1 | 27.6 |
Investment contract deposits | 3,627.4 | 4,196.9 |
Investment contract withdrawals | (3,800.8) | (3,110) |
Net increase (decrease) in banking operation deposits | 82 | 126 |
Other | 5.6 | 2 |
Net cash provided by (used in) financing activities | 4 | 574.5 |
Net increase (decrease) in cash and cash equivalents | 338.4 | (128.8) |
Cash and cash equivalents at beginning of period | 2,977.5 | 2,470.8 |
Cash and cash equivalents at end of period | 3,315.9 | 2,342 |
Principal Financial Group, Inc. Parent Only | Legal Entities | ||
Operating activities | ||
Net cash provided by (used in) operating activities | 16.3 | (81.4) |
Investing activities | ||
Fixed maturities available-for-sale and equity securities with intent to hold: Purchases | (150.2) | (200.8) |
Fixed maturities available-for-sale and equity securities with intent to hold: Maturities | 158.1 | 0.8 |
Dividends and returns of capital received from (contributed to) unconsolidated entities | 208.9 | 336.5 |
Net change in other investments | (13.6) | 0.5 |
Net cash provided by (used in) investing activities | 203.2 | 137 |
Financing activities | ||
Issuance of common stock | 22.1 | 44.6 |
Acquisition of treasury stock | (153.7) | (396.5) |
Dividends to common stockholders | (300.6) | (295.8) |
Issuance of long-term debt | 493.6 | |
Net cash provided by (used in) financing activities | 61.4 | (647.7) |
Net increase (decrease) in cash and cash equivalents | 280.9 | (592.1) |
Cash and cash equivalents at beginning of period | 334.9 | 842.8 |
Cash and cash equivalents at end of period | 615.8 | 250.7 |
Principal Financial Services, Inc. Only | Legal Entities | ||
Operating activities | ||
Net cash provided by (used in) operating activities | (8) | 87.1 |
Investing activities | ||
Fixed maturities available-for-sale and equity securities with intent to hold: Purchases | (0.2) | |
Fixed maturities available-for-sale and equity securities with intent to hold: Sales | 0.2 | |
Net (purchases) sales of property and equipment | (1) | |
Dividends and returns of capital received from (contributed to) unconsolidated entities | 1,246.3 | 259.8 |
Net change in other investments | (51.5) | (74.4) |
Net cash provided by (used in) investing activities | 1,193.8 | 185.4 |
Financing activities | ||
Issuance of long-term debt | 5.1 | 5.7 |
Principal repayments of long-term debt | (28) | (28.7) |
Capital received from (dividends and capital paid to) parent | (208.9) | (336.5) |
Net cash provided by (used in) financing activities | (231.8) | (359.5) |
Net increase (decrease) in cash and cash equivalents | 954 | (87) |
Cash and cash equivalents at beginning of period | 649 | 617.4 |
Cash and cash equivalents at end of period | 1,603 | 530.4 |
Principal Life Insurance Company and Other Subsidiaries Combined | Legal Entities | ||
Operating activities | ||
Net cash provided by (used in) operating activities | 2,800.6 | 1,675.4 |
Investing activities | ||
Fixed maturities available-for-sale and equity securities with intent to hold: Purchases | (5,621.4) | (7,163.6) |
Fixed maturities available-for-sale and equity securities with intent to hold: Sales | 1,477 | 2,122 |
Fixed maturities available-for-sale and equity securities with intent to hold: Maturities | 2,867.8 | 3,291.3 |
Mortgage loans acquired or originated | (2,008.5) | (1,326.2) |
Mortgage loans sold or repaid | 1,243.9 | 1,094 |
Real estate acquired | (48.5) | (36.4) |
Real estate sold | 57 | 63.5 |
Net (purchases) sales of property and equipment | (64.4) | (43.6) |
Purchase of interests in subsidiaries, net of cash acquired | (141.5) | |
Net change in other investments | (131.4) | (49.7) |
Net cash provided by (used in) investing activities | (2,228.5) | (2,190.2) |
Financing activities | ||
Payments for financing element derivatives | (13.1) | (37.9) |
Purchase of subsidiary shares from noncontrolling interest | (23) | |
Issuance of long-term debt | 9.1 | 41.3 |
Principal repayments of long-term debt | (0.7) | (0.7) |
Net proceeds from (repayments of) short-term borrowings | 33.1 | 27.6 |
Capital received from (dividends and capital paid to) parent | (1,246.3) | (259.8) |
Investment contract deposits | 3,627.4 | 4,196.9 |
Investment contract withdrawals | (3,800.8) | (3,110) |
Net increase (decrease) in banking operation deposits | 82 | 126 |
Other | 5.6 | 2 |
Net cash provided by (used in) financing activities | (1,303.7) | 962.4 |
Net increase (decrease) in cash and cash equivalents | (731.6) | 447.6 |
Cash and cash equivalents at beginning of period | 3,096.8 | 2,001.1 |
Cash and cash equivalents at end of period | 2,365.2 | 2,448.7 |
Eliminations, Shelf Registration Debt Guarantor | Eliminations | ||
Operating activities | ||
Net cash provided by (used in) operating activities | (130.5) | (42.9) |
Investing activities | ||
Dividends and returns of capital received from (contributed to) unconsolidated entities | (1,455.2) | (596.3) |
Net change in other investments | (57.3) | 122.6 |
Net cash provided by (used in) investing activities | (1,512.5) | (473.7) |
Financing activities | ||
Issuance of long-term debt | (5.1) | (5.7) |
Principal repayments of long-term debt | 28 | 28.7 |
Capital received from (dividends and capital paid to) parent | 1,455.2 | 596.3 |
Net cash provided by (used in) financing activities | 1,478.1 | 619.3 |
Net increase (decrease) in cash and cash equivalents | (164.9) | 102.7 |
Cash and cash equivalents at beginning of period | (1,103.2) | (990.5) |
Cash and cash equivalents at end of period | $ (1,268.1) | $ (887.8) |
Subsequent Event (Details)
Subsequent Event (Details) - Subsequent Event - Institutional Retirement & Trust business $ in Millions | Jul. 01, 2019USD ($) |
Subsequent Event | |
Purchase price of acquired business in the form of cash to be paid at the closing | $ 1,200 |
Maximum additional earn-out payment based upon retention of fee revenue | $ 150 |