Document_and_Entity_Informatio
Document and Entity Information | 12 Months Ended |
Dec. 31, 2014 | |
Document and Entity Information | |
Entity Registrant Name | UNION SECURITY INSURANCE CO |
Entity Central Index Key | 823533 |
Document Type | S-1 |
Document Period End Date | 31-Dec-14 |
Amendment Flag | FALSE |
Current Fiscal Year End Date | -19 |
Entity Current Reporting Status | Yes |
Entity Filer Category | Non-accelerated Filer |
Document Fiscal Year Focus | 2014 |
Document Fiscal Period Focus | FY |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Investments: | ||
Fixed maturity securities available for sale, at fair value (amortized cost - $2,249,891 in 2014 and $2,315,654 in 2013) | $2,678,688 | $2,592,484 |
Equity securities available for sale, at fair value (cost - $122,347 in 2014 and $94,467 in 2013) | 135,746 | 100,266 |
Commercial mortgage loans on real estate, at amortized cost | 499,814 | 562,368 |
Policy loans | 11,663 | 12,461 |
Short-term investments | 64,104 | 64,457 |
Collateral held/pledged under securities agreements | 42,941 | 42,232 |
Other investments | 109,740 | 116,785 |
Total investments | 3,542,696 | 3,491,053 |
Cash and cash equivalents | 7,290 | 17,641 |
Premiums and accounts receivable, net | 77,467 | 71,304 |
Reinsurance recoverables | 2,154,208 | 1,837,380 |
Accrued investment income | 36,194 | 37,492 |
Deferred acquisition costs | 26,435 | 24,521 |
Tax receivable | 0 | 9,090 |
Goodwill | 17,285 | 17,285 |
Value of business acquired | 10,129 | 11,555 |
Other intangible assets, net | 14,760 | 16,548 |
Other assets | 3,965 | 6,323 |
Assets held in separate accounts | 1,685,061 | 1,715,625 |
Total assets | 7,575,490 | 7,255,817 |
Liabilities | ||
Future policy benefits and expenses | 2,906,706 | 2,743,876 |
Unearned premiums | 34,355 | 30,535 |
Claims and benefits payable | 1,717,938 | 1,679,730 |
Commissions payable | 17,599 | 16,330 |
Deferred gain on disposal of businesses | 67,460 | 62,313 |
Obligation under securities agreements | 42,941 | 42,229 |
Accounts payable and other liabilities | 222,501 | 161,217 |
Tax payable | 1,072 | 0 |
Liabilities related to separate accounts | 1,685,061 | 1,715,625 |
Total liabilities | 6,695,633 | 6,451,855 |
Commitments and contingencies (Note 16) | ||
Stockholder's equity | ||
Common stock, par value $5 per share, $1,000,000 shares authorized, issued and outstanding at December 31, 2014 and 2013 | 5,000 | 5,000 |
Additional paid-in capital | 515,630 | 515,630 |
Retained earnings | 75,409 | 103,231 |
Accumulated other comprehensive income | 283,818 | 180,101 |
Total stockholder's equity | 879,857 | 803,962 |
Total liabilities and stockholder's equity | $7,575,490 | $7,255,817 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
Consolidated Balance Sheets | ||
Fixed maturity securities available for sale, amortized cost (in dollars) | $2,249,891 | $2,315,654 |
Equity securities available for sale, cost (in dollars) | $122,347 | $94,467 |
Common stock, average par value (in dollars per share) | $5 | $5 |
Common stock, shares authorized | 1,000,000 | 1,000,000 |
Common stock, shares issued | 1,000,000 | 1,000,000 |
Common stock, shares outstanding | 1,000,000 | 1,000,000 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Revenues | |||
Net earned premiums | $1,035,467 | $1,001,631 | $1,007,986 |
Net investment income | 180,734 | 182,960 | 198,728 |
Net realized gains on investments, excluding other-than-temporary investment losses | 16,365 | 13,489 | 10,026 |
Total other-than-temporary investment losses | -55 | -1,969 | -53 |
Portion of net loss recognized in other comprehensive income, before taxes | 31 | 104 | 0 |
Net other-than-temporary investment losses recognized in earnings | -24 | -1,865 | -53 |
Amortization of deferred gains on disposal of businesses | -5,147 | 11,216 | 12,506 |
Fees and other income | 11,934 | 8,877 | 8,416 |
Total revenues | 1,239,329 | 1,216,308 | 1,237,609 |
Benefits, losses and expenses | |||
Policyholder benefits | 746,101 | 745,247 | 731,862 |
Amortization of deferred acquisition costs and value of business acquired | 32,638 | 29,988 | 28,758 |
Underwriting, general and administrative expenses | 356,413 | 348,232 | 346,292 |
Total benefits, losses and expenses | 1,135,152 | 1,123,467 | 1,106,912 |
Income before provision for income taxes | 104,177 | 92,841 | 130,697 |
Provision for income taxes | 34,999 | 30,077 | 41,292 |
Net income | $69,178 | $62,764 | $89,405 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Consolidated Statements of Comprehensive Income | |||
Net income | $69,178 | $62,764 | $89,405 |
Other comprehensive income (loss): | |||
Change in unrealized gains on securities, net of taxes of $(55,020) $75,389, and $(53,838), respectively | 102,176 | -140,008 | 99,986 |
Change in other-than-temporary impairment gains (losses) recognized in other comprehensive income, net of taxes of $(830), $259, and $(1,881), respectively | 1,541 | -481 | 3,493 |
Total other comprehensive income (loss) | 103,717 | -140,489 | 103,479 |
Total comprehensive income (loss) | $172,895 | ($77,725) | $192,884 |
Consolidated_Statements_of_Com1
Consolidated Statements of Comprehensive Income (Parenthetical) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Consolidated Statements of Comprehensive Income | |||
Net change in unrealized gains on securities, taxes | ($55,020) | $75,389 | ($53,838) |
Net change in other-than-temporary impairment gains (losses) recognized in other comprehensive income, taxes | ($830) | $259 | ($1,881) |
Consolidated_Statements_of_Cha
Consolidated Statements of Changes in Stockholder's Equity (USD $) | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income. | Total |
In Thousands, unless otherwise specified | |||||
Balance at Dec. 31, 2010 | |||||
Equity | |||||
Transfer of Dental Companies (Effect of Change) | ($230) | $230 | $0 | $0 | $0 |
Balance at Dec. 31, 2011 (As Previously Reported) | 5,230 | 515,400 | 167,862 | 217,111 | 905,603 |
Balance at Dec. 31, 2011 | 5,000 | 515,630 | 167,862 | 217,111 | 905,603 |
Equity | |||||
Dividends | 0 | 0 | -115,800 | 0 | -115,800 |
Net income | 0 | 0 | 89,405 | 0 | 89,405 |
Other comprehensive income | 0 | 0 | 0 | 103,479 | 103,479 |
Balance at Dec. 31, 2012 | 5,000 | 515,630 | 141,467 | 320,590 | 982,687 |
Equity | |||||
Dividends | 0 | 0 | -101,000 | 0 | -101,000 |
Net income | 0 | 0 | 62,764 | 0 | 62,764 |
Other comprehensive income | 0 | 0 | 0 | -140,489 | -140,489 |
Balance at Dec. 31, 2013 | 5,000 | 515,630 | 103,231 | 180,101 | 803,962 |
Equity | |||||
Dividends | 0 | 0 | -97,000 | 0 | -97,000 |
Net income | 0 | 0 | 69,178 | 0 | 69,178 |
Other comprehensive income | 0 | 0 | 0 | 103,717 | 103,717 |
Balance at Dec. 31, 2014 | $5,000 | $515,630 | $75,409 | $283,818 | $879,857 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Operating activities | |||
Net income | $69,178 | $62,764 | $89,405 |
Adjustments to reconcile net income to net cash used in operating activities: | |||
Change in reinsurance recoverable | -149 | 3,582 | 16,662 |
Change in premiums and accounts receivable | -6,153 | -2,857 | -2,128 |
Depreciation and amortization | 4,851 | 5,855 | 6,175 |
Change in deferred acquisition costs and value of business acquired | -488 | -2,371 | -235 |
Change in accrued investment income | 1,298 | 2,167 | 2,621 |
Change in insurance policy reserves and expenses | -111,616 | -114,145 | -161,767 |
Change in accounts payable and other liabilities | 2,865 | 1,178 | -10,496 |
Change in commissions payable | 1,269 | 360 | 1,557 |
Amortization of deferred gain on disposal of businesses | 5,147 | -11,216 | -12,506 |
Change in income taxes | 13,526 | 5,659 | 18,472 |
Net realized gains on investments | -16,341 | -11,624 | -9,973 |
Other | -6,090 | -89 | -2,976 |
Net cash used in operating activities | -42,703 | -60,737 | -65,189 |
Sales of: | |||
Fixed maturity securities available-for-sale | 267,664 | 383,298 | 292,422 |
Equity securities available for sale | 26,838 | 55,938 | 28,584 |
Other invested assets | 28,780 | 15,557 | 18,553 |
Maturities, calls, prepayments, and scheduled redemption of: | |||
Fixed maturity securities available for sale | 156,961 | 124,414 | 228,181 |
Commercial mortgage loans on real estate | 103,127 | 136,292 | 63,099 |
Purchase of: | |||
Fixed maturity securities available-for-sale | -347,194 | -363,489 | -445,751 |
Equity securities available for sale | -55,202 | -64,804 | -26,491 |
Commercial mortgage loans on real estate | -40,550 | -68,571 | -20,412 |
Other invested assets | -12,223 | -21,713 | -18,076 |
Change in short-term investments | 353 | -22,977 | 43,277 |
Change in collateral held under securities lending | -712 | 305 | 296 |
Change in policy loans | 798 | 341 | 20 |
Net cash provided by investing activities | 128,640 | 174,591 | 163,702 |
Financing activities | |||
Dividends paid | -97,000 | -101,000 | -115,800 |
Change in obligation under securities lending | 712 | -305 | -296 |
Net cash used in financing activities | -96,288 | -101,305 | -116,096 |
Change in cash and cash equivalents | -10,351 | 12,549 | -17,583 |
Cash and cash equivalents at beginning of period | 17,641 | 5,092 | 22,675 |
Cash and cash equivalents at end of period | 7,290 | 17,641 | 5,092 |
Supplemental information: | |||
Income taxes paid | $34,917 | $29,311 | $26,472 |
Nature_of_Operations
Nature of Operations | 12 Months Ended |
Dec. 31, 2014 | |
Nature of Operations | |
Nature of Operations | |
1.Nature of Operations | |
Union Security Insurance Company (the “Company”) is a provider of life and health insurance products, including group disability insurance, group dental insurance, group life insurance, group vision insurance, supplemental worksite insurance, small employer group health insurance and pre-funded funeral insurance (“preneed”). The Company is an indirect wholly-owned subsidiary of Assurant, Inc. (the “Parent”). The Parent’s common stock is traded on the New York Stock Exchange under the symbol AIZ. The Company distributes its products in the District of Columbia and in all states except New York. | |
Effective January 1, 2013, nine dental companies, indirectly wholly owned subsidiaries of the Parent (the “Dental Companies”), were consolidated into the operations of the Company. Accordingly, all prior period amounts have been restated to conform to the 2013 presentation. | |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2014 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | |
2.Summary of Significant Accounting Policies | |
Basis of Presentation | |
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Amounts are presented in United States of America (“U.S.”) dollars and all amounts are in thousands, except for number of shares, per share amounts and number of securities in an unrealized loss position. | |
Principles of Consolidation | |
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All inter-company transactions and balances are eliminated in consolidation. | |
Use of Estimates | |
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. The items on the Company’s balance sheets affected by the use of estimates include but are not limited to, investments, premiums and accounts receivable, reinsurance recoverables, deferred acquisition costs (“DAC”), deferred income taxes and associated valuation allowances, goodwill, valuation of business acquired (“VOBA”), future policy benefits and expenses, unearned premiums, claims and benefits payable, deferred gain on disposal of businesses, and commitments and contingencies. The estimates are sensitive to market conditions, investment yields, mortality, morbidity, commissions and other acquisition expenses, policyholder behavior and other factors. Actual results could differ from the estimates recorded. The Company believes all amounts reported are reasonable and adequate. | |
Comprehensive Income (Loss) | |
Comprehensive income (loss) is comprised of net income, net unrealized gains and losses on securities classified as available for sale and net unrealized gains and losses on other-than-temporarily impaired securities, less deferred income taxes. | |
Reclassifications | |
Certain prior period amounts have been reclassified to conform to the 2014 presentation. | |
Fair Value | |
The Company uses an exit price for its fair value measurements. An exit price is defined as the amount received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In measuring fair value, the Company gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. See Note 4 for further information. | |
Investments | |
Fixed maturity and equity securities are classified as available for sale, as defined in the investments guidance, and reported at fair value. If the fair value is higher than the amortized cost for fixed maturity securities or the purchase cost for equity securities, the excess is an unrealized gain; and, if lower than cost, the difference is an unrealized loss. Net unrealized gains and losses on securities classified as available for sale, less deferred income taxes, are included in accumulated other comprehensive income (“AOCI”). | |
Commercial mortgage loans on real estate are reported at unpaid balances, adjusted for amortization of premium or discount, less allowance for losses. The allowance is based on management’s analysis of factors including actual loan loss experience, specific events based on geographical, political or economic conditions, industry experience, loan groupings that have probable and estimable losses and individually impaired loan loss analysis. A loan is considered individually impaired when it becomes probable the Company will be unable to collect all amounts due, including principal and interest, according to the contractual terms of the loan agreement. Indicative factors of impairment include, but are not limited to, whether the loan is current, the value of the collateral and the financial position of the borrower. If a loan is individually impaired, the Company uses one of the following valuation methods based on the individual loan’s facts and circumstances to measure the impairment amount: (1) the present value of expected future cash flows, (2) the loan’s observable market price, or (3) the fair value of collateral. Changes in the allowance for loan losses are recorded in net realized losses on investments, excluding other-than-temporary impairment (“OTTI”) losses. | |
The Company places loans on non-accrual status after 90 days of delinquent payments (unless the loans are both well secured and in the process of collection). A loan may be placed on non-accrual status before this time if information is available that suggests its impairment is probable. | |
Policy loans are reported at unpaid principal balances, which do not exceed the cash surrender value of the underlying policies. | |
Short-term investments include money market funds and short maturity investments. These amounts are reported at cost, which approximates fair value. | |
The Company engages in collateralized transactions in which fixed maturity securities, especially bonds issued by the U.S. government, government agencies and authorities, and U.S. corporations, are loaned to selected broker/dealers. The collateral held under these securities lending transactions is reported at fair value and the obligation is reported at the amount of the collateral received. The difference between the collateral held and obligations under securities lending is recorded as an unrealized loss and is included as part of AOCI. | |
Other investments consist primarily of investments in joint ventures and partnerships. The joint ventures and partnerships are valued according to the equity method of accounting. In applying the equity method the Company uses financial information provided by the investee, generally on a three month lag. | |
The Company monitors its investment portfolio to identify investments that may be other-than-temporarily impaired. In addition, securities, aggregated by issuer, whose market price is equal to 80% or less of their original purchase price or which had a discrete credit event resulting in the debtor defaulting or seeking bankruptcy protection are added to a potential write-down list, which is discussed at quarterly meetings attended by members of the Company’s investment, accounting and finance departments. See Note 3 for further information. | |
Realized gains and losses on sales of investments are recognized on the specific identification basis. | |
Investment income is recorded as earned and reported net of investment expenses. The Company uses the interest method to recognize interest income on its commercial mortgage loans. | |
The Company anticipates prepayments of principal in the calculation of the effective yield for mortgage-backed securities and structured securities. The retrospective method is used to adjust the effective yield. | |
Cash and Cash Equivalents | |
The Company considers cash on hand, all operating cash and working capital cash to be cash equivalents. These amounts are carried at cost, which approximates fair value. Cash balances are reviewed at the end of each reporting period to determine if negative cash balances exist. If negative cash balances do exist, the cash accounts are netted with other positive cash accounts of the same bank provided the right of offset exists between the accounts. If the right of offset does not exist, the negative cash balances are reclassified to accounts payable. | |
Uncollectible Receivable Balance | |
The Company maintains allowances for doubtful accounts for probable losses resulting from the inability to collect payments. | |
Reinsurance | |
Reinsurance recoverables include amounts related to paid benefits and estimated amounts related to unpaid policy and contract claims, future policyholder benefits and policyholder contract deposits. The cost of reinsurance is recognized over the terms of the underlying reinsured policies using assumptions consistent with those used to account for the policies. Amounts recoverable from reinsurers are estimated in a manner consistent with claim and claim adjustment expense reserves or future policy benefits reserves and are reported in the consolidated balance sheets. The cost of reinsurance related to long-duration contracts is recognized over the life of the underlying reinsured policies. The ceding of insurance does not discharge the Company’s primary liability to insureds, thus a credit exposure exists to the extent that any reinsurer is unable to meet the obligation assumed in the reinsurance agreements. To mitigate this exposure to reinsurance insolvencies, the Company evaluates the financial condition of its reinsurers and holds collateral (in the form of funds withheld, trusts, and letters of credit) as security under the reinsurance agreements. An allowance for doubtful accounts is recorded on the basis of periodic evaluations of balances due from reinsurers (net of collateral), reinsurer solvency, management’s experience and current economic conditions. | |
Funds withheld under reinsurance represent amounts contractually held from assuming companies in accordance with reinsurance agreements. | |
Reinsurance premiums assumed are calculated based upon payments received from ceding companies together with accrual estimates, which are based on both payments received and in force policy information received from ceding companies. Any subsequent differences arising on such estimates are recorded in the period in which they are determined. | |
Income Taxes | |
The Company reports its taxable income in a consolidated federal income tax return along with other affiliated subsidiaries of the Parent. Income tax expense or benefit is allocated among the affiliated subsidiaries by applying corporate income tax rates to taxable income or loss determined on a separate return basis according to a tax allocation agreement. Entities with losses record current tax benefits to the extent such losses are recognized in the consolidated federal tax return. | |
Current federal income taxes are recognized based upon amounts estimated to be payable or recoverable as a result of taxable operations for the current year. Deferred income taxes are recorded for temporary differences between the financial reporting basis and income tax basis of assets and liabilities, based on enacted tax laws and statutory tax rates applicable to the periods in which the Company expects the temporary differences to reverse. A valuation allowance is established for deferred tax assets when it is more likely than not that an amount will not be realized. | |
The Company classifies net interest expense related to tax matters and any applicable penalties as a component of income tax expense. | |
Deferred Acquisition Costs | |
Only direct incremental costs associated with the successful acquisition of new or renewal insurance contracts are deferred to the extent that such costs are deemed recoverable from future premiums or gross profits. Acquisition costs primarily consist of commissions and compensation to sales representatives. Certain direct response advertising expenses are deferred when the primary purpose of the advertising is to elicit sales to customers who can be shown to have specifically responded to the advertising and the direct response advertising results in probable future benefits. | |
Premium deficiency testing is performed annually and generally reviewed quarterly. Such testing involves the use of best estimate assumptions including the anticipation of investment income to determine if anticipated future policy premiums are adequate to recover all DAC and related claims, benefits and expenses. To the extent a premium deficiency exists, it is recognized immediately by a charge to the consolidated statement of operations and a corresponding reduction in DAC. If the premium deficiency is greater than unamortized DAC, a liability will be accrued for the excess deficiency. | |
Long Duration Contracts | |
Acquisition costs for preneed life insurance policies and certain life insurance policies no longer offered are deferred and amortized in proportion to anticipated premiums over the premium-paying period. These acquisition costs consist primarily of first year commissions paid to agents. | |
Acquisition costs relating to group worksite insurance products consist primarily of first year commissions to brokers, costs of issuing new certificates, and compensation to sales representatives. These acquisition costs are front-end loaded, thus they are deferred and amortized over the estimated terms of the underlying contracts. | |
For preneed investment-type annuities, DAC is amortized in proportion to the present value of estimated gross profits from investment, mortality, expense margins and surrender charges over the estimated life of the policy or contract. The assumptions used for the estimates are consistent with those used in computing the policy or contract liabilities. | |
Acquisition costs on Fortis Financial Group (“FFG”) and Long-Term Care (“LTC”) disposed businesses were written off when the businesses were sold. | |
Short Duration Contracts | |
Acquisition costs relating to monthly pay credit insurance business consist mainly of direct response advertising costs and are deferred and amortized over the estimated average terms and balances of the underlying contracts. | |
Acquisition costs relating to group term life, group disability, group dental and group vision consist primarily of compensation to sales representatives. These acquisition costs are front-end loaded; thus, they are deferred and amortized over the estimated terms of the underlying contracts. | |
Property and Equipment | |
Property and equipment are included in other assets and reported at cost less accumulated depreciation. Depreciation is calculated on a straight-line basis over estimated useful lives with a maximum of 39.5 years for buildings, a maximum of 7 years for furniture and a maximum of 5 years for equipment. Expenditures for maintenance and repairs are charged to income as incurred. Expenditures for improvements are capitalized and depreciated over the remaining useful life of the asset. | |
Property and equipment also includes capitalized software costs, which represent costs directly related to obtaining, developing or upgrading internal use software. Such costs are capitalized and amortized using the straight-line method over their estimated useful lives, not to exceed 20 years. Property and equipment are assessed for impairment when impairment indicators exist. | |
Goodwill | |
Goodwill represents the excess of acquisition costs over the net fair value of identifiable assets acquired and liabilities assumed in a business combination. Goodwill is deemed to have an indefinite life and is not amortized, but rather is tested at least annually for impairment. The Company reviews goodwill annually in the fourth quarter for impairment, or more frequently if indicators of impairment exist. The Company regularly assesses whether any indicators of impairment exist. Such indicators include, but are not limited to: significant adverse change in legal factors, adverse action or assessment by a regulator, unanticipated competition, loss of key personnel, or a significant decline in expected future cash flows due to changes in company-specific factors or the broader business climate. The evaluation of such factors requires considerable management judgment. | |
At the time of the annual goodwill test, the Company has the option to first assess qualitative factors to determine whether it is necessary to perform the current two-step goodwill impairment test. The Company is required to perform step one if it determines qualitatively that it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value is less than its carrying amount, including goodwill. Otherwise, no further testing is required. | |
If the Company does not take the option to perform the qualitative assessment or the qualitative assessment performed indicates that it is more likely than not that the fair value is less than the carrying value, the Company will then compare its estimated fair value with its net book value (“Step 1”). If the estimated fair value exceeds its net book value, goodwill is deemed not to be impaired, and no further testing is necessary. If the net book value exceeds its estimated fair value, the Company would perform a second test to measure the amount of impairment, if any. To determine the amount of any impairment, the Company would determine the implied fair value of goodwill in the same manner as if the Company were being acquired in a business combination (“Step 2”). Specifically, the Company would determine the fair value of all of the assets and liabilities, including any unrecognized intangible assets, in a hypothetical calculation that would yield the implied fair value of goodwill. If the implied fair value of goodwill is less than the recorded goodwill, the Company would record an impairment charge for the difference. | |
In 2014 and 2013, the Company did not take the option to perform a qualitative assessment, thus Step 1 was performed and we concluded the estimated fair value exceeded its respective book value and therefore goodwill was not impaired. See Note 4 & 13 for further information. | |
Value of Businesses Acquired | |
VOBA is an identifiable intangible asset representing the value of the insurance businesses acquired. The amount is determined using best estimates for mortality, lapse, maintenance expenses and investment returns at date of purchase. The amount determined represents the purchase price paid to the seller for producing the business. Similar to the amortization of DAC, the amortization of VOBA is over the premium payment period for traditional life insurance policies. For all other products, the amortization of VOBA is over the expected lifetime of the policies. | |
VOBA is tested annually in the fourth quarter for recoverability. If it is determined that future policy premiums and investment income or gross profits are not adequate to cover related losses or loss expenses, then an expense is reported in current earnings. Based on 2014 and 2013 testing, future policy premiums and investment income or gross profits were deemed adequate to cover related losses or loss expenses. | |
Other Assets | |
Other assets primarily include prepaid items. | |
Other Intangible Assets | |
Other intangible assets that have finite lives, including but not limited to, customer contracts, are amortized over their estimated useful lives. Other intangible assets deemed to have indefinite useful lives, primarily certain state licenses, are not amortized and are subject to at least annual impairment tests. At the time of the annual impairment test, the Company has the option to first assess qualitative factors to determine whether it is necessary to perform a quantitative impairment test for indefinite-lived intangible assets. Impairment exists if the carrying amount of the indefinite-lived other intangible asset exceeds its fair value. For other intangible assets with finite lives, impairment is recognized if the carrying amount is not recoverable and exceeds the fair value of the other intangible asset. Generally other intangible assets with finite lives are only tested for impairment if there are indicators (“triggers”) of impairment identified. Triggers include, but are not limited to, a significant adverse change in the extent, manner or length of time in which the other intangible asset is being used or a significant adverse change in legal factors or in the business climate that could affect the value of the other intangible asset. In certain cases, the Company does perform an annual impairment test for other intangible assets with finite lives even if there are no triggers present. There were no impairments of finite-lived or indefinite-lived other intangible assets in either 2014 or 2013. | |
Amortization expense is included in underwriting, general and administrative expenses in the consolidated statements of operations. | |
Separate Accounts | |
Assets and liabilities associated with separate accounts relate to premium and annuity considerations for variable life and annuity products for which the contract-holder, rather than the Company, bears the investment risk. Separate account assets (with matching liabilities) are reported at fair value. Revenues and expenses related to the separate account assets and liabilities, to the extent of benefits paid or provided to the separate account policyholders, are excluded from the amounts reported in the accompanying consolidated statements of operations because the accounts are administered by reinsurers. | |
Reserves | |
Reserves are established in accordance with GAAP, using generally accepted actuarial methods. Factors used in their calculation include experience derived from historical claim payments and actuarial assumptions. Such assumptions and other factors include trends, the incidence of incurred claims, the extent to which all claims have been reported, and internal claims processing charges. The process used in computing reserves cannot be exact, particularly for liability coverages, since actual claim costs are dependent upon such complex factors as inflation, changes in doctrines of legal liabilities and damage awards. The methods of making such estimates and establishing the related liabilities are periodically reviewed and updated. | |
Reserves do not represent an exact calculation of exposure, but instead represent our best estimates of what we expect the ultimate settlement and administration of a claim or group of claims will cost based on facts and circumstances known at the time of calculation. The adequacy of reserves may be impacted by future trends in claims severity, frequency, judicial theories of liability and other factors. These variables are affected by both external and internal events, including but not limited to: changes in the economic cycle, changes in the social perception of the value of work, emerging medical perceptions regarding physiological or psychological causes of disability, emerging health issues and new methods of treatment or accommodation, inflation, judicial trends, legislative changes and claims handling procedures. | |
Many of these items are not directly quantifiable. Reserve estimates are refined as experience develops. Adjustments to reserves, both positive and negative, are reflected in the consolidated statement of operations in the period in which such estimates are updated. Because establishment of reserves is an inherently uncertain process involving estimates of future losses, there can be no certainty that ultimate losses will not exceed existing claims reserves. Future loss development could require reserves to be increased, which could have a material adverse effect on our earnings in the periods in which such increases are made. However, based on information currently available, we believe our reserve estimates are adequate. | |
Long Duration Contracts | |
The Company’s long duration contracts include preneed life insurance policies and annuity contracts, traditional life insurance policies no longer offered, policies disposed of via reinsurance (FFG and LTC contracts), group worksite policies, group life conversion policies and certain medical policies. | |
Future policy benefits and expense reserves for LTC, certain life and annuity insurance policies no longer offered, the traditional life insurance contracts within FFG, group worksite contracts and group life conversions are equal to the present value of future benefits to policyholders plus related expenses less the present value of the future net premiums. These amounts are estimated based on assumptions as to the expected investment yield, inflation, mortality, morbidity and withdrawal rates as well as other assumptions that are based on the Company’s experience. These assumptions reflect anticipated trends and include provisions for possible unfavorable deviations. | |
Future policy benefits and expense reserves for preneed investment-type annuities, and the variable life insurance and investment-type annuity contracts in FFG consist of policy account balances before applicable surrender charges and certain deferred policy initiation fees that are being recognized in income over the terms of the policies. Policy benefits charged to expense during the period include amounts paid in excess of policy account balances and interest credited to policy account balances. An unearned revenue reserve is also recorded for those preneed investment-type annuities which represent the balance of the excess of gross premiums over net premiums that is still recognized in future years’ income in a constant relationship to estimated gross profits. | |
Future policy benefits and expense reserves for preneed life insurance contracts are reported at the present value of future benefits to policyholders and related expenses less the present value of future net premiums. Reserve assumptions are selected using best estimates for expected investment yield, inflation, mortality and withdrawal rates. These assumptions reflect current trends, are based on Company experience and include provision for possible unfavorable deviation. An unearned revenue reserve is also recorded for these contracts which represents the balance of the excess of gross premiums over net premiums that is still to be recognized in future years’ income in a constant relationship to insurance in force. | |
Reserves for group worksite policies include case reserves and incurred but not reported (“IBNR”) reserves which equal the net present value of the expected future claims payments. Worksite group disability reserves are discounted to the valuation date at the valuation interest rate. The valuation interest rate is reviewed quarterly by taking into consideration actual and expected earned rates on our asset portfolio. | |
Risks related to the reserves recorded for policies under FFG and LTC have been 100% ceded via reinsurance. While the Company has not been released from the contractual obligation to the policyholders, changes in and deviations from economic mortality, morbidity, and expense assumptions used in the calculation of these reserves will not directly affect our results of operations unless there is a default by the assuming reinsurer. | |
Changes in the estimated liabilities are reported as a charge or credit to policyholder benefits as the estimates are revised. | |
Short Duration Contracts | |
The Company’s short duration contracts include group term life contracts, group disability contracts, medical contracts, dental contracts, vision contracts and credit disability contracts. For short duration contracts, claims and benefits payable reserves are recorded when insured events occur. The liability is based on the expected ultimate cost of settling the claims. The claims and benefits payable reserves include: (1) case reserves for known but unpaid claims as of the balance sheet date; (2) IBNR reserves for claims where the insured event has occurred but has not been reported to the Company as of the balance sheet date; and (3) loss adjustment expense reserves for the expected handling costs of settling the claims. | |
For group disability, the case reserves and the IBNR reserves are recorded at an amount equal to the net present value of the expected future claims payments. Group long-term disability and group term life waiver of premiums reserves are discounted to the valuation date at the valuation interest rate. The valuation interest rate is reviewed quarterly by taking into consideration actual and expected earned rates on our asset portfolio. Group long term disability and group term life reserve adequacy studies are performed annually, and morbidity and mortality assumptions are adjusted where appropriate. | |
Changes in the estimated liabilities are recorded as a charge or credit to policyholder benefits as estimates are revised. | |
Deferred Gain on Disposal of Businesses | |
The Company recorded a deferred gain on disposal of businesses utilizing reinsurance. On March 1, 2000, the Company sold its LTC business using a coinsurance contract. On April 2, 2001, the Company sold its FFG business using coinsurance and a modified coinsurance contract. Since the form of sale did not discharge the Company’s primary liability to the insureds, the gain on these disposals was deferred and reported as a liability. The liability is decreased and recognized as revenue over the estimated life of the contracts’ terms. The Company reviews and evaluates the estimates affecting the deferred gain on disposal of businesses annually or when significant information affecting the estimates becomes known to the Company, and adjusts the revenue recognized accordingly. Based on the Company’s 2014 annual review, the Company re-established $12,851 of the FFG deferred gain. There were no adjustments to the estimates affecting the deferred gain in 2013. | |
Premiums | |
Long Duration Contracts | |
Currently, the Company’s long duration contracts which are actively being sold are group worksite insurance policies. Revenues are recognized ratably as earned income over the premium-paying periods of the policies for the group worksite insurance products. | |
For life insurance policies previously sold by the preneed business (no longer offered), revenue is recognized when due from policyholders. | |
For investment-type annuity contracts previously sold by the preneed business (no longer offered), revenues consist of charges assessed against policy balances. | |
Premiums for LTC insurance and traditional life insurance contracts within FFG are recognized as revenue when due from the policyholder. For universal life insurance and investment-type annuity contracts within FFG, revenues consist of charges assessed against policy balances. For the FFG and LTC businesses previously sold, all revenue is ceded. | |
Short Duration Contracts | |
The Company’s short duration contracts are those on which the Company recognizes over the contract term in proportion to the amount of insurance protection provided. The Company’s short duration contracts primarily include group term life, group disability, medical, dental, vision and credit disability. | |
Total Other-Than-Temporary Impairment Losses | |
For debt securities with credit losses and non-credit losses or gains, total OTTI losses is the total of the decline in fair value from either the most recent OTTI determination or a prior period end in which the fair value declined until the current period end valuation date. This amount does not include any securities that had fair value increases. For equity securities and debt securities that the Company has the intent to sell or if it is more likely than not that it will be required to sell for equity securities that have an OTTI or for debt securities if there are only credit losses, total other-than-temporary impairment losses is the total amount by which the fair value of the security is less than its amortized cost basis at the period end valuation date and the decline in fair value is deemed to be other-than-temporary. | |
Fees and Other Income | |
Income earned on preneed life insurance policies with discretionary death benefit growth issued after 2008 is presented within fees and other income. | |
The Company also derives fees and other income from providing administrative services. These fees are recognized monthly when services are performed. | |
Underwriting, General and Administrative Expenses | |
Underwriting, general and administrative expenses consist primarily of commissions, premium taxes, licenses, fees, salaries and personnel benefits and other general operating expenses. | |
Leases | |
The Company records expenses for operating leases on a straight-line basis over the lease term. | |
Contingencies | |
The Company evaluates each contingent matter separately. A loss contingency is recorded if reasonably estimable and probable. The Company establishes reserves for these contingencies at the best estimate, or if no one estimated number within the range of possible losses is more probable than any other, the Company records an estimated reserve at the low end of the estimated range. Contingencies affecting the Company primarily relate to litigation matters which are inherently difficult to evaluate and are subject to significant changes. The Company believes the contingent amounts recorded are reasonable. | |
Recent Accounting Pronouncements—Adopted | |
On January 1, 2014, the Company adopted the new guidance on presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The amendments in this guidance state that an unrecognized tax benefit, or a portion thereof, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. An exception to this guidance would be where a net operating loss carryforward or similar tax loss or credit carryforward would not be available under the tax law to settle any additional income taxes that would result from the disallowance of a tax position, or the tax law does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose. In such a case, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The adoption of this new presentation guidance did not impact the Company’s financial position or results of operations. | |
On January 1, 2014, the Company adopted the other expenses guidance that addresses how health insurers should recognize and classify in their statements of operations fees mandated by the Affordable Care Act. The Affordable Care Act imposes an annual fee on health insurers for each calendar year beginning on or after January 1, 2014. The amendments specify that the liability for the fee should be estimated and recorded in full once the entity provides qualifying health insurance in the applicable calendar year in which the fee is payable with a corresponding deferred cost that is amortized to expense ratably over the calendar year during which it is payable. For the calendar year ended December 31, 2014, the Company ratably recorded $5,642 in underwriting, general and administrative expenses in the consolidated statements of operations, and paid, in full, the final assessment during the third quarter of 2014. | |
Recent Accounting Pronouncements — Not Yet Adopted | |
In May 2014, the Financial Accounting Standards Board (“FASB”) issued amended guidance on revenue recognition. The amended guidance affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. Insurance contracts are within the scope of other standards and therefore are specifically excluded from the scope of the amended revenue recognition guidance. The core principle of the amended guidance is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve the core principle, the entity applies a five step process outlined in the amended guidance. The amended guidance also includes a cohesive set of disclosure requirements. The amended guidance is effective for interim and annual periods beginning after December 15, 2016 and early adoption is not permitted. Therefore, the Company is required to adopt the guidance on January 1, 2017. An entity can choose to apply the amended guidance using either the full retrospective approach or a modified retrospective approach. The Company is currently evaluating the requirements of the revenue recognition guidance as it relates to its non-insurance contract revenue and the potential impact on the Company’s financial position and results of operations. | |
Investments
Investments | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Investments. | ||||||||||||||||||||
Investments | ||||||||||||||||||||
3.Investments | ||||||||||||||||||||
The following tables show the cost or amortized cost, gross unrealized gains and losses, fair value and other-than-temporary impairment (“OTTI”) of our fixed maturity and equity securities as of the dates indicated: | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Cost or | Gross | Gross | Fair Value | OTTI in | ||||||||||||||||
Amortized | Unrealized | Unrealized | AOCI (a) | |||||||||||||||||
Cost | Gains | Losses | ||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||
United States Government and government agencies and authorities | $ | 19,221 | $ | 255 | $ | (1 | ) | $ | 19,475 | $ | 0 | |||||||||
States, municipalities and political subdivisions | 42,745 | 3,043 | 0 | 45,788 | 0 | |||||||||||||||
Foreign governments | 19,061 | 2,763 | 0 | 21,824 | 0 | |||||||||||||||
Asset-backed | 684 | 50 | 0 | 734 | 0 | |||||||||||||||
Commercial mortgage-backed | 3,794 | 102 | 0 | 3,896 | 0 | |||||||||||||||
Residential mortgage-backed | 65,090 | 6,948 | (12 | ) | 72,026 | 2,386 | ||||||||||||||
Corporate | 2,099,296 | 418,393 | (2,744 | ) | 2,514,945 | 13,455 | ||||||||||||||
Total fixed maturity securities | $ | 2,249,891 | $ | 431,554 | $ | (2,757 | ) | $ | 2,678,688 | $ | 15,841 | |||||||||
Equity securities: | ||||||||||||||||||||
Common stocks | $ | 92 | $ | 322 | $ | 0 | $ | 414 | $ | 0 | ||||||||||
Non-redeemable preferred stocks | 122,255 | 13,350 | (273 | ) | 135,332 | 0 | ||||||||||||||
Total equity securities | $ | 122,347 | $ | 13,672 | $ | (273 | ) | $ | 135,746 | $ | 0 | |||||||||
December 31, 2013 | ||||||||||||||||||||
Cost or | Gross | Gross | Fair Value | OTTI in | ||||||||||||||||
Amortized | Unrealized | Unrealized | AOCI (a) | |||||||||||||||||
Cost | Gains | Losses | ||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||
United States Government and government agencies and authorities | $ | 22,562 | $ | 269 | $ | 0 | $ | 22,831 | $ | 0 | ||||||||||
States, municipalities and political subdivisions | 46,457 | 2,284 | (197 | ) | 48,544 | 0 | ||||||||||||||
Foreign governments | 22,381 | 2,072 | 0 | 24,453 | 0 | |||||||||||||||
Asset-backed | 789 | 62 | 0 | 851 | 0 | |||||||||||||||
Commercial mortgage-backed | 5,223 | 314 | 0 | 5,537 | 0 | |||||||||||||||
Residential mortgage-backed | 72,219 | 5,878 | (355 | ) | 77,742 | 2,482 | ||||||||||||||
Corporate | 2,146,023 | 269,657 | (3,154 | ) | 2,412,526 | 10,988 | ||||||||||||||
Total fixed maturity securities | $ | 2,315,654 | $ | 280,536 | $ | (3,706 | ) | $ | 2,592,484 | $ | 13,470 | |||||||||
Equity securities: | ||||||||||||||||||||
Common stocks | $ | 92 | $ | 326 | $ | 0 | $ | 418 | $ | 0 | ||||||||||
Non-redeemable preferred stocks | 94,375 | 7,559 | (2,086 | ) | 99,848 | 0 | ||||||||||||||
Total equity securities | $ | 94,467 | $ | 7,885 | $ | (2,086 | ) | $ | 100,266 | $ | 0 | |||||||||
(a) | Represents the amount of OTTI recognized in accumulated other comprehensive income (“AOCI”). Amount includes unrealized gains and losses on impaired securities relating to changes in the value of such securities subsequent to the impairment measurement date. | |||||||||||||||||||
Our states, municipalities and political subdivisions holdings are highly diversified across the United States, with no individual state’s exposure (including both general obligation and revenue securities) exceeding 0.5% of the overall investment portfolio as of December 31, 2014 and 2013. At December 31, 2014 and 2013, the securities include general obligation and revenue bonds issued by states, cities, counties, school districts and similar issuers, including $8,367 and $11,265, respectively, of advance refunded or escrowed-to-maturity bonds (collectively referred to as “pre-refunded bonds”), which are bonds for which an irrevocable trust has been established to fund the remaining payments of principal and interest. As of December 31, 2014 and 2013, revenue bonds account for 39% and 43% of the holdings, respectively. Excluding pre-refunded revenue bonds, the activities supporting the income streams of the Company’s revenue bonds are across a broad range of sectors, primarily water, airport and marina, specifically pledged tax revenues, and other miscellaneous sources such as bond banks, finance authorities and appropriations. | ||||||||||||||||||||
The Company’s largest European investment exposure in its corporate fixed maturity and equity securities is the country of the United Kingdom. The United Kingdom represents approximately 6% of our corporate securities as of December 31, 2014 and 2013. No other European country represented more than 2% of our corporate securities as of December 31, 2014 and 2013. All the European investments are denominated in U.S. dollars. Our international investments are managed as part of our overall portfolio with the same approach to risk management and focus on diversification. | ||||||||||||||||||||
The Company has exposure to the energy sector in its corporate fixed maturity securities of $314,978 with a net unrealized gain of $43,072 at December 31, 2014 and $316,582 with a net unrealized gain of $36,092 at December 31, 2013. Approximately 96% and 93% of the energy exposure is rated as investment grade as of December 31, 2014 and 2013, respectively. | ||||||||||||||||||||
The cost or amortized cost and fair value of fixed maturity securities at December 31, 2014 by contractual maturity are shown below. Expected maturities may differ from contractual maturities because issuers of the securities may have the right to call or prepay obligations with or without call or prepayment penalties. | ||||||||||||||||||||
Cost or | Fair Value | |||||||||||||||||||
Amortized | ||||||||||||||||||||
Cost | ||||||||||||||||||||
Due in one year or less | $ | 42,655 | $ | 43,046 | ||||||||||||||||
Due after one year through five years | 347,499 | 379,562 | ||||||||||||||||||
Due after five years through ten years | 382,654 | 412,697 | ||||||||||||||||||
Due after ten years | 1,407,515 | 1,766,727 | ||||||||||||||||||
Total | 2,180,323 | 2,602,032 | ||||||||||||||||||
Asset-backed | 684 | 734 | ||||||||||||||||||
Commercial mortgage-backed | 3,794 | 3,896 | ||||||||||||||||||
Residential mortgage-backed | 65,090 | 72,026 | ||||||||||||||||||
Total | $ | 2,249,891 | $ | 2,678,688 | ||||||||||||||||
Major categories of net investment income were as follows: | ||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||
Fixed maturity securities | $ | 136,005 | $ | 143,493 | $ | 152,637 | ||||||||||||||
Equity securities | 6,932 | 5,984 | 5,676 | |||||||||||||||||
Commercial mortgage loans on real estate | 33,403 | 36,336 | 39,767 | |||||||||||||||||
Policy loans | 778 | 802 | 789 | |||||||||||||||||
Short-term investments | 9 | 22 | 57 | |||||||||||||||||
Other investments | 10,617 | 3,580 | 6,314 | |||||||||||||||||
Cash and cash equivalents | 4 | 1 | 0 | |||||||||||||||||
Total investment income | 187,748 | 190,218 | 205,240 | |||||||||||||||||
Investment expenses | (7,014 | ) | (7,258 | ) | (6,512 | ) | ||||||||||||||
Net investment income | $ | 180,734 | $ | 182,960 | $ | 198,728 | ||||||||||||||
No material investments of the Company were non-income producing for the years ended December 31, 2014, 2013 and 2012. | ||||||||||||||||||||
The following table summarizes the proceeds from sales of available for sale securities and the gross realized gains and gross realized losses that have been included in earnings as a result of those sales. | ||||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||
Proceeds from sales | $ | 294,502 | $ | 438,984 | $ | 320,471 | ||||||||||||||
Gross realized gains | 16,833 | 23,898 | 11,995 | |||||||||||||||||
Gross realized losses | 1,083 | 11,173 | 4,046 | |||||||||||||||||
For securities sold at a loss during 2014, the average period of time these securities were trading continuously at a price below book value was approximately 11 months. | ||||||||||||||||||||
The following table sets forth the net realized gains (losses), including other-than-temporary impairments, recognized in the statement of operations as follows: | ||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||
Net realized gains (losses) related to sales and other: | ||||||||||||||||||||
Fixed maturity securities | $ | 16,820 | $ | 4,554 | $ | 10,496 | ||||||||||||||
Equity securities | (328 | ) | 8,793 | (2,203 | ) | |||||||||||||||
Commercial mortgage loans on real estate | 32 | 1,599 | 1,734 | |||||||||||||||||
Short-term investments | 0 | 0 | (1 | ) | ||||||||||||||||
Other investments | (159 | ) | (1,457 | ) | 0 | |||||||||||||||
Total net realized gains related to sales and other | 16,365 | 13,489 | 10,026 | |||||||||||||||||
Net realized losses related to other-than-temporary impairments: | ||||||||||||||||||||
Fixed maturity securities | (24 | ) | (1,865 | ) | (14 | ) | ||||||||||||||
Equity securities | 0 | 0 | (39 | ) | ||||||||||||||||
Total net realized losses related to other-than-temporary impairments | (24 | ) | (1,865 | ) | (53 | ) | ||||||||||||||
Total net realized gains | $ | 16,341 | $ | 11,624 | $ | 9,973 | ||||||||||||||
Other-Than-Temporary Impairments | ||||||||||||||||||||
The Company follows the OTTI guidance which requires entities to separate an OTTI of a debt security into two components when there are credit related losses associated with the impaired debt security for which the Company asserts that it does not have the intent to sell, and it is more likely than not that it will not be required to sell before recovery of its cost basis. Under the OTTI guidance, the amount of the OTTI related to a credit loss is recognized in earnings, and the amount of the OTTI related to other, non-credit factors (e.g., interest rates, market conditions, etc.) is recorded as a component of other comprehensive income. In instances where no credit loss exists but the Company intends to sell the security or it is more likely than not that the Company will have to sell the debt security prior to the anticipated recovery, the decline in market value below amortized cost is recognized as an OTTI in earnings. In periods after the recognition of an OTTI on debt securities, the Company accounts for such securities as if they had been purchased on the measurement date of the OTTI at an amortized cost basis equal to the previous amortized cost basis less the OTTI recognized in earnings. For debt securities for which OTTI was recognized in earnings, the difference between the new amortized cost basis and the cash flows expected to be collected will be accreted or amortized into net investment income. | ||||||||||||||||||||
For the twelve months ended December 31, 2014 and 2013, the Company recorded $55 and $1,969, respectively, of OTTI, of which $24 and $1,865 was related to credit losses and recorded as net OTTI losses recognized in earnings, with the remaining amounts of $31 and $104, respectively, related to all other factors and was recorded as an unrealized loss component of AOCI. | ||||||||||||||||||||
The following table sets forth the amount of credit loss impairments recognized within the results of operations on fixed maturity securities held by the Company as of the dates indicated, for which a portion of the OTTI loss was recognized in AOCI, and the corresponding changes in such amounts. | ||||||||||||||||||||
Years ended December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||
Balance, beginning of year | $ | 14,164 | $ | 26,970 | $ | 29,374 | ||||||||||||||
Additions for credit loss impairments recognized in the current period on securities previously impaired | 24 | 87 | 14 | |||||||||||||||||
Reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security | (461 | ) | (123 | ) | (403 | ) | ||||||||||||||
Reductions for credit loss impairments previously recognized on securities which matured, paid down, prepaid or were sold during the period | (260 | ) | (12,770 | ) | (2,015 | ) | ||||||||||||||
Balance, end of year | $ | 13,467 | $ | 14,164 | $ | 26,970 | ||||||||||||||
We regularly monitor our investment portfolio to ensure investments that may be other-than-temporarily impaired are identified in a timely fashion, properly valued, and charged against earnings in the proper period. The determination that a security has incurred an other-than-temporary decline in value requires the judgment of management. Assessment factors include, but are not limited to, the length of time and the extent to which the market value has been less than cost, the financial condition and rating of the issuer, whether any collateral is held, the intent and ability of the Company to retain the investment for a period of time sufficient to allow for recovery for equity securities and the intent to sell or whether it is more likely than not that the Company will be required to sell for fixed maturity securities. Inherently, there are risks and uncertainties involved in making these judgments. Changes in circumstances and critical assumptions such as a continued weak economy, a more pronounced economic downturn or unforeseen events which affect one or more companies, industry sectors, or countries could result in additional impairments in future periods for other-than-temporary declines in value. Any equity security whose price decline is deemed other-than-temporary is written down to its then current market value with the amount of the impairment reported as a realized loss in that period. The impairment of a fixed maturity security that the Company has the intent to sell or that it is more likely than not that the Company will be required to sell is deemed other-than-temporary and is written down to its market value at the balance sheet date with the amount of the impairment reported as a realized loss in that period. For all other-than-temporarily impaired fixed maturity securities that do not meet either of these two criteria, the Company is required to analyze its ability to recover the amortized cost of the security by calculating the net present value of projected future cash flows. For these other-than-temporarily impaired fixed maturity securities, the net amount recognized in earnings is equal to the difference between the amortized cost of the fixed maturity security and its net present value. | ||||||||||||||||||||
The Company considers different factors to determine the amount of projected future cash flows and discounting methods for corporate debt and residential and commercial mortgage-backed or asset-backed securities. For corporate debt securities, the split between the credit and non-credit losses is driven principally by assumptions regarding the amount and timing of projected future cash flows. The net present value is calculated by discounting the Company’s best estimate of projected future cash flows at the effective interest rate implicit in the security at the date of acquisition. For residential and commercial mortgage-backed and asset-backed securities, cash flow estimates, including prepayment assumptions, are based on data from widely accepted third-party data sources or internal estimates. In addition to prepayment assumptions, cash flow estimates vary based on assumptions regarding the underlying collateral including default rates, recoveries and changes in value. The net present value is calculated by discounting the Company’s best estimate of projected future cash flows at the effective interest rate implicit in the fixed maturity security prior to impairment at the balance sheet date. The discounted cash flows become the new amortized cost basis of the fixed maturity security. | ||||||||||||||||||||
In periods subsequent to the recognition of an OTTI, the Company generally accretes the discount (or amortizes the reduced premium) into net investment income, up to the non-discounted amount of projected future cash flows, resulting from the reduction in cost basis, based upon the amount and timing of the expected future cash flows over the estimated period of cash flows. | ||||||||||||||||||||
The investment category and duration of the Company’s gross unrealized losses on fixed maturity securities and equity securities at December 31, 2014 and 2013 were as follows: | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Less than 12 months | 12 Months or More | Total | ||||||||||||||||||
Fair Value | Unrealized | Fair Value | Unrealized | Fair Value | Unrealized | |||||||||||||||
Losses | Losses | Losses | ||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||
United States Government and government agencies and authorities | $ | 1,889 | $ | (1 | ) | $ | 0 | $ | 0 | $ | 1,889 | $ | (1 | ) | ||||||
Residential mortgage-backed | 0 | 0 | 526 | (12 | ) | 526 | (12 | ) | ||||||||||||
Corporate | 98,644 | (2,327 | ) | 5,295 | (417 | ) | 103,939 | (2,744 | ) | |||||||||||
Total fixed maturity securities | $ | 100,533 | $ | (2,328 | ) | $ | 5,821 | $ | (429 | ) | $ | 106,354 | $ | (2,757 | ) | |||||
Equity securities: | ||||||||||||||||||||
Non-redeemable preferred stocks | $ | 1,417 | $ | (14 | ) | $ | 4,454 | $ | (259 | ) | $ | 5,871 | $ | (273 | ) | |||||
December 31, 2013 | ||||||||||||||||||||
Less than 12 months | 12 Months or More | Total | ||||||||||||||||||
Fair Value | Unrealized | Fair Value | Unrealized | Fair Value | Unrealized | |||||||||||||||
Losses | Losses | Losses | ||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||
States, municipalities and political subdivisions | $ | 7,278 | $ | (197 | ) | $ | 0 | $ | 0 | $ | 7,278 | $ | (197 | ) | ||||||
Residential mortgage-backed | 25,457 | (331 | ) | 520 | (24 | ) | 25,977 | (355 | ) | |||||||||||
Corporate | 160,115 | (3,078 | ) | 4,343 | (76 | ) | 164,458 | (3,154 | ) | |||||||||||
Total fixed maturity securities | $ | 192,850 | $ | (3,606 | ) | $ | 4,863 | $ | (100 | ) | $ | 197,713 | $ | (3,706 | ) | |||||
Equity securities: | ||||||||||||||||||||
Non-redeemable preferred stocks | $ | 38,711 | $ | (1,970 | ) | $ | 3,524 | $ | (116 | ) | $ | 42,235 | $ | (2,086 | ) | |||||
Total gross unrealized losses represent approximately 3% and 2% of the aggregate fair value of the related securities at December 31, 2014 and 2013, respectively. Approximately 77% and 96% of these gross unrealized losses have been in a continuous loss position for less than twelve months at December 31, 2014 and 2013, respectively. The total gross unrealized losses are comprised of 96 and 151 individual securities at December 31, 2014 and 2013, respectively. In accordance with its policy described above, the Company concluded that for these securities an adjustment to its results of operations for other-than-temporary impairments of the gross unrealized losses was not warranted at December 31, 2014 and 2013. These conclusions were based on a detailed analysis of the underlying credit and expected cash flows of each security. As of December 31, 2014, the gross unrealized losses that have been in a continuous loss position for twelve months or more were concentrated in the Company’s residential mortgage-backed and corporate fixed maturity securities, and in non-redeemable preferred stocks. Within the Company’s corporate fixed maturity securities, the majority of the loss position relates to securities in the industrial sector. The industrial sector’s gross unrealized losses of twelve months or more were $387, or 93%, of the corporate fixed maturity total. The non-redeemable preferred stocks are perpetual preferred securities that have characteristics of both debt and equity securities. To evaluate these securities, we apply an impairment model similar to that used for our fixed maturity securities. As of December 31, 2014, the Company did not intend to sell these securities and it was not more likely than not that the Company would be required to sell them and no underlying cash flow issues were noted. Therefore, the Company did not recognize an OTTI on those perpetual preferred securities that had been in a continuous unrealized loss position for twelve months or more. As of December 31, 2014, the Company did not intend to sell the fixed maturity securities and it was not more likely than not that the Company would be required to sell the securities before the anticipated recovery of their amortized cost basis. The gross unrealized losses are primarily attributable to widening credit spreads associated with an underlying shift in overall credit risk premium. | ||||||||||||||||||||
The cost or amortized cost and fair value of available for sale fixed maturity securities in an unrealized loss position at December 31, 2014, by contractual maturity, is shown below: | ||||||||||||||||||||
Cost or | Fair Value | |||||||||||||||||||
Amortized Cost | ||||||||||||||||||||
Due after one year through five years | $ | 27,058 | $ | 26,666 | ||||||||||||||||
Due after five years through ten years | 40,342 | 39,773 | ||||||||||||||||||
Due after ten years | 41,173 | 39,389 | ||||||||||||||||||
Total | 108,573 | 105,828 | ||||||||||||||||||
Residential mortgage-backed | 538 | 526 | ||||||||||||||||||
Total | $ | 109,111 | $ | 106,354 | ||||||||||||||||
The Company has exposure to sub-prime and related mortgages within our fixed maturity security portfolio. At December 31, 2014, approximately 7.9% of our residential mortgage-backed holdings had exposure to sub-prime mortgage collateral. This represented approximately 0.2% of the total fixed income portfolio and 0.6% of the total unrealized gain position. Of the securities with sub-prime exposure, approximately 23.0% are rated as investment grade. All residential mortgage-backed securities, including those with sub-prime exposure, are reviewed as part of the ongoing other-than-temporary impairment monitoring process. | ||||||||||||||||||||
The Company has entered into commercial mortgage loans, collateralized by the underlying real estate, on properties located throughout the United States. At December 31, 2014, approximately 39% of the outstanding principal balance of commercial mortgage loans was concentrated in the states of California, New York and Utah. Although the Company has a diversified loan portfolio, an economic downturn could have an adverse impact on the ability of its debtors to repay their loans. The outstanding balance of commercial mortgage loans range in size from $77 to $12,251 at December 31, 2014 and from $22 to $12,500 at December 31, 2013. | ||||||||||||||||||||
Credit quality indicators for commercial mortgage loans are loan-to-value and debt-service coverage ratios. Loan-to-value and debt-service coverage ratios are measures commonly used to assess the credit quality of commercial mortgage loans. The loan-to-value ratio compares the principal amount of the loan to the fair value of the underlying property collateralizing the loan, and is commonly expressed as a percentage. The debt-service coverage ratio compares a property’s net operating income to its debt-service payments and is commonly expressed as a ratio. The loan-to-value and debt-service coverage ratios are generally updated annually in the third quarter. | ||||||||||||||||||||
The following summarizes our loan-to-value and average debt-service coverage ratios as of the dates indicated: | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Loan-to-Value | Carrying | % of Gross | Debt-Service | |||||||||||||||||
Value | Mortgage | Coverage ratio | ||||||||||||||||||
Loans | ||||||||||||||||||||
70% and less | $ | 447,941 | 89.4 | % | 1.99 | |||||||||||||||
71 – 80% | 40,651 | 8.1 | % | 1.28 | ||||||||||||||||
81 – 95% | 6,155 | 1.2 | % | 0.99 | ||||||||||||||||
Greater than 95% | 6,531 | 1.3 | % | 0.43 | ||||||||||||||||
Gross commercial mortgage loans | 501,278 | 100 | % | 1.9 | ||||||||||||||||
Less valuation allowance | (1,464 | ) | ||||||||||||||||||
Net commercial mortgage loans | $ | 499,814 | ||||||||||||||||||
December 31, 2013 | ||||||||||||||||||||
Loan-to-Value | Carrying | % of Gross | Debt-Service | |||||||||||||||||
Value | Mortgage | Coverage ratio | ||||||||||||||||||
Loans | ||||||||||||||||||||
70% and less | $ | 497,411 | 88.2 | % | 2.08 | |||||||||||||||
71 – 80% | 41,943 | 7.4 | % | 1.6 | ||||||||||||||||
81 – 95% | 18,687 | 3.3 | % | 1.35 | ||||||||||||||||
Greater than 95% | 6,374 | 1.1 | % | 0.85 | ||||||||||||||||
Gross commercial mortgage loans | 564,415 | 100 | % | 2.01 | ||||||||||||||||
Less valuation allowance | (2,047 | ) | ||||||||||||||||||
Net commercial mortgage loans | $ | 562,368 | ||||||||||||||||||
All commercial mortgage loans that are individually impaired have an established mortgage loan valuation allowance for losses. Changing economic conditions affect our valuation of commercial mortgage loans. Changing vacancies and rents are incorporated into the discounted cash flow analysis that we perform for monitored loans and may contribute to the establishment of (or an increase or decrease in) a commercial mortgage loan valuation allowance for losses. In addition, we continue to monitor the entire commercial mortgage loan portfolio to identify risk. Areas of emphasis are properties that have exposure to specific geographic events, have deteriorating credits or have experienced a reduction in debt-service coverage ratio. Where warranted, we have established or increased a valuation allowance based upon this analysis. | ||||||||||||||||||||
The commercial mortgage loan valuation allowance for losses was $1,464 and $2,047 at December 31, 2014 and 2013, respectively. In 2014 and 2013, the loan valuation allowance was decreased $583 and $1,599, respectively, due to changing economic conditions and geographic concentrations. | ||||||||||||||||||||
At December 31, 2014, the Company had mortgage loan commitments outstanding of approximately $13,650 and is committed to fund additional capital contributions of $50 to real estate joint ventures. | ||||||||||||||||||||
The Company has short term investments and fixed maturity securities of $11,592 and $11,792 at December 31, 2014 and 2013, respectively, on deposit with various governmental authorities as required by law. | ||||||||||||||||||||
The Company utilizes derivative instruments in managing the pre-arranged funeral business exposure to inflation risk. The derivative instruments, Consumer Price Index Caps (the “CPI CAPs”), limits the inflation risk on certain policies. The CPI CAPs do not qualify under GAAP as effective hedges; therefore, they are marked-to-market on a quarterly basis and the gain or loss is recognized in the statement of operations in fees and other income. As of December 31, 2014 and 2013, the CPI CAPs included in other assets on the consolidated balance sheet amounted to $692 and $2,016, respectively. The loss recorded in the results of operations totaled $1,324, $3,094, and $1,917 for the years ended December 31, 2014, 2013 and 2012, respectively. | ||||||||||||||||||||
Collateralized Transactions | ||||||||||||||||||||
The Company engages in transactions in which fixed maturity securities, primarily bonds issued by the U.S. government and government agencies and authorities, and U.S. corporations, are loaned to selected broker/dealers. Collateral, greater than or equal to 102% of the fair value of the securities lent, plus accrued interest, is received in the form of cash and cash equivalents held by a custodian bank for the benefit of the Company. The use of cash collateral received is unrestricted. The Company reinvests the cash collateral received, generally in investments of high credit quality that are designated as available for sale. The Company monitors the fair value of securities loaned and the collateral received, with additional collateral obtained, as necessary. The Company is subject to the risk of loss to the extent there is a loss on the re-investment of cash collateral. | ||||||||||||||||||||
As of December 31, 2014 and 2013, our collateral held under securities lending, of which its use is unrestricted, was $42,941 and $42,232, respectively, and is included in the consolidated balance sheets under the collateral held/pledged under securities agreements. Our liability to the borrower for collateral received was $42,941 and $42,229, respectively, and is included in the consolidated balance sheets under the obligation under securities agreements. The difference between the collateral held and obligations under securities lending is recorded as an unrealized gain (loss) and is included as part of AOCI. There were no securities in an unrealized loss position as of December 31, 2014 and 2013. The Company includes the available for sale investments purchased with the cash collateral in its evaluation of other-than-temporary impairments. | ||||||||||||||||||||
Cash proceeds that the Company receives as collateral for the securities it lends and subsequent repayment of the cash are regarded by the Company as cash flows from financing activities, since the cash received is considered a borrowing. Since the Company reinvests the cash collateral generally in investments that are designated as available for sale, the reinvestment is presented as cash flows from investing activities. | ||||||||||||||||||||
Fair_Value_Disclosures
Fair Value Disclosures | 12 Months Ended | |||||||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||||||
Fair Value Disclosures | ||||||||||||||||||||||||||
Fair Value Disclosures | ||||||||||||||||||||||||||
4.Fair Value Disclosures | ||||||||||||||||||||||||||
Fair Values, Inputs and Valuation Techniques for Financial Assets and Liabilities Disclosures | ||||||||||||||||||||||||||
The fair value measurements and disclosures guidance defines fair value and establishes a framework for measuring fair value. 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. In accordance with this guidance, the Company has categorized its recurring basis financial assets and liabilities into a three-level fair value hierarchy based on the priority of the inputs to the valuation technique. | ||||||||||||||||||||||||||
The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. | ||||||||||||||||||||||||||
The levels of the fair value hierarchy are described below: | ||||||||||||||||||||||||||
· | Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access. | |||||||||||||||||||||||||
· | Level 2 inputs utilize other than quoted prices included in Level 1 that are observable for the asset, either directly or indirectly, for substantially the full term of the asset. Level 2 inputs include quoted prices for similar assets in active markets, quoted prices for identical or similar assets in markets that are not active and inputs other than quoted prices that are observable in the marketplace for the asset. The observable inputs are used in valuation models to calculate the fair value for the asset. | |||||||||||||||||||||||||
· | Level 3 inputs are unobservable but are significant to the fair value measurement for the asset, and include situations where there is little, if any, market activity for the asset. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset. | |||||||||||||||||||||||||
A review of fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. | ||||||||||||||||||||||||||
The following tables present the Company’s fair value hierarchy for assets and liabilities measured at fair value on a recurring basis as of December 31, 2014 and 2013. The amounts presented below for Collateral held/pledged under securities agreements, Cash equivalents, Other assets and Assets and Liabilities held in separate accounts differ from the amounts presented in the consolidated balance sheets because only certain investments or certain assets and liabilities within these line items are measured at estimated fair value. The fair value amount and the majority of the associated levels presented for Assets and Liabilities held in separate accounts are received directly from third parties. | ||||||||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||
Financial Assets | ||||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||||
United States Government and government agencies and authorities | $ | 19,475 | $ | 0 | $ | 19,475 | $ | 0 | ||||||||||||||||||
State, municipalities and political subdivisions | 45,788 | 0 | 45,788 | 0 | ||||||||||||||||||||||
Foreign governments | 21,824 | 0 | 21,824 | 0 | ||||||||||||||||||||||
Asset-backed | 734 | 0 | 734 | 0 | ||||||||||||||||||||||
Commercial mortgage-backed | 3,896 | 0 | 3,694 | 202 | ||||||||||||||||||||||
Residential mortgage-backed | 72,026 | 0 | 72,026 | 0 | ||||||||||||||||||||||
Corporate | 2,514,945 | 0 | 2,492,920 | 22,025 | ||||||||||||||||||||||
Equity securities: | ||||||||||||||||||||||||||
Common stocks | 414 | 414 | 0 | 0 | ||||||||||||||||||||||
Non-redeemable preferred stocks | 135,332 | 0 | 134,332 | 1,000 | ||||||||||||||||||||||
Short-term investments | 64,104 | 61,150 | (b) | 2,954 | (c) | 0 | ||||||||||||||||||||
Collateral held/pledged under securities agreements | 33,541 | 30,315 | (b) | 3,226 | (c) | 0 | ||||||||||||||||||||
Cash equivalents | 1 | 1 | (b) | 0 | 0 | |||||||||||||||||||||
Other assets | 692 | 0 | 0 | 692 | (d) | |||||||||||||||||||||
Assets held in separate accounts | 1,683,739 | 1,645,964 | (a) | 37,775 | (c) | 0 | ||||||||||||||||||||
Total financial assets | $ | 4,596,511 | $ | 1,737,844 | $ | 2,834,748 | $ | 23,919 | ||||||||||||||||||
Financial Liabilities | ||||||||||||||||||||||||||
Liabilities related to separate accounts | $ | 1,683,739 | $ | 1,645,964 | (a) | $ | 37,775 | (c) | $ | 0 | ||||||||||||||||
December 31, 2013 | ||||||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||
Financial Assets | ||||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||||
United States Government and government agencies and authorities | $ | 22,831 | $ | 0 | $ | 22,831 | $ | 0 | ||||||||||||||||||
State, municipalities and political subdivisions | 48,544 | 0 | 48,544 | 0 | ||||||||||||||||||||||
Foreign governments | 24,453 | 0 | 24,453 | 0 | ||||||||||||||||||||||
Asset-backed | 851 | 0 | 851 | 0 | ||||||||||||||||||||||
Commercial mortgage-backed | 5,537 | 0 | 5,238 | 299 | ||||||||||||||||||||||
Residential mortgage-backed | 77,742 | 0 | 76,858 | 884 | ||||||||||||||||||||||
Corporate | 2,412,526 | 0 | 2,389,402 | 23,124 | ||||||||||||||||||||||
Equity securities: | ||||||||||||||||||||||||||
Common stocks | 418 | 418 | 0 | 0 | ||||||||||||||||||||||
Non-redeemable preferred stocks | 99,848 | 0 | 98,400 | 1,448 | ||||||||||||||||||||||
Short-term investments | 64,457 | 64,407 | (b) | 50 | 0 | |||||||||||||||||||||
Collateral held/pledged under securities agreements | 32,832 | 29,678 | (b) | 3,154 | (c) | 0 | ||||||||||||||||||||
Cash equivalents | 10,501 | 10,501 | (b) | 0 | 0 | |||||||||||||||||||||
Other assets | 2,016 | 0 | 0 | 2,016 | (d) | |||||||||||||||||||||
Assets held in separate accounts | 1,714,839 | 1,660,079 | (a) | 54,760 | (c) | 0 | ||||||||||||||||||||
Total financial assets | $ | 4,517,395 | $ | 1,765,083 | $ | 2,724,541 | $ | 27,771 | ||||||||||||||||||
Financial Liabilities | ||||||||||||||||||||||||||
Liabilities related to separate accounts | $ | 1,714,839 | $ | 1,660,079 | (a) | $ | 54,760 | (c) | $ | 0 | ||||||||||||||||
(a) | Mainly includes mutual funds. | |||||||||||||||||||||||||
(b) | Mainly includes money market funds. | |||||||||||||||||||||||||
(c) | Mainly includes fixed maturity securities. | |||||||||||||||||||||||||
(d) | Mainly includes the Consumer Price Index Cap Derivatives (“CPI Caps”). | |||||||||||||||||||||||||
There were no transfers between Level 1 and Level 2 financial assets during 2014 or 2013. However, there were transfers between Level 2 and Level 3 financial assets in 2014 and 2013, which are reflected in the “Transfers in” and “Transfers out” columns below. Transfers between Level 2 and Level 3 most commonly occur from changes in the availability of observable market information and re-evaluation of the observability of pricing inputs. Any remaining unpriced securities are submitted to independent brokers who provide non-binding broker quotes or are priced by other qualified sources. | ||||||||||||||||||||||||||
The following tables summarize the change in balance sheet carrying value associated with Level 3 financial assets carried at fair value during the years ended December 31, 2014 and 2013: | ||||||||||||||||||||||||||
Year Ended December 31, 2014 | ||||||||||||||||||||||||||
Balance, | Total | Net | Purchases | Sales | Transfers | Transfers | Balance, | |||||||||||||||||||
beginning | (losses) gains | unrealized | in (3) | out (3) | end of | |||||||||||||||||||||
of period | (realized/ | (losses) gains | period | |||||||||||||||||||||||
unrealized) | included in | |||||||||||||||||||||||||
included in | other | |||||||||||||||||||||||||
earnings (1) | comprehensive | |||||||||||||||||||||||||
income (2) | ||||||||||||||||||||||||||
Fixed Maturity Securities | ||||||||||||||||||||||||||
Commercial mortgage-backed | $ | 299 | $ | 0 | $ | (9 | ) | $ | 0 | $ | (88 | ) | $ | 0 | $ | 0 | $ | 202 | ||||||||
Residential mortgage-backed | 884 | 0 | 0 | 0 | 0 | 0 | (884 | ) | 0 | |||||||||||||||||
Corporate | 23,124 | (117 | ) | 471 | 4,733 | (1,653 | ) | 217 | (4,750 | ) | 22,025 | |||||||||||||||
Equity Securities | ||||||||||||||||||||||||||
Non-redeemable preferred stocks | 1,448 | 134 | (134 | ) | 0 | (448 | ) | 0 | 0 | 1,000 | ||||||||||||||||
Other assets | 2,016 | (1,324 | ) | 0 | 0 | 0 | 0 | 0 | 692 | |||||||||||||||||
Total level 3 assets | $ | 27,771 | $ | (1,307 | ) | $ | 328 | $ | 4,733 | $ | (2,189 | ) | $ | 217 | $ | (5,634 | ) | $ | 23,919 | |||||||
Year Ended December 31, 2013 | ||||||||||||||||||||||||||
Balance, | Total | Net | Purchases | Sales | Transfers | Transfers | Balance, | |||||||||||||||||||
beginning | (losses) gains | unrealized | in (3) | out (3) | end of | |||||||||||||||||||||
of period | (realized/ | losses | period | |||||||||||||||||||||||
unrealized) | included in | |||||||||||||||||||||||||
included in | other | |||||||||||||||||||||||||
earnings (1) | comprehensive | |||||||||||||||||||||||||
income (2) | ||||||||||||||||||||||||||
Fixed Maturity Securities | ||||||||||||||||||||||||||
Foreign governments | $ | 569 | $ | 0 | $ | (17 | ) | $ | 0 | $ | 0 | $ | 0 | $ | (552 | ) | $ | 0 | ||||||||
Commercial mortgage-backed | 638 | 5 | (11 | ) | 0 | (333 | ) | 0 | 0 | 299 | ||||||||||||||||
Residential mortgage-backed | 1,141 | (8 | ) | (26 | ) | 0 | (223 | ) | 0 | 0 | 884 | |||||||||||||||
Corporate | 32,376 | 1,462 | (1,803 | ) | 1,597 | (4,700 | ) | 2,085 | (7,893 | ) | 23,124 | |||||||||||||||
Equity Securities | ||||||||||||||||||||||||||
Non-redeemable preferred stocks | 10 | 7 | (81 | ) | 2,306 | (1,173 | ) | 389 | (10 | ) | 1,448 | |||||||||||||||
Other assets | 5,110 | (3,094 | ) | 0 | 0 | 0 | 0 | 0 | 2,016 | |||||||||||||||||
Total level 3 assets | $ | 39,844 | $ | (1,628 | ) | $ | (1,938 | ) | $ | 3,903 | $ | (6,429 | ) | $ | 2,474 | $ | (8,455 | ) | $ | 27,771 | ||||||
-1 | Included as part of net realized gains on investments in the consolidated statement of operations. | |||||||||||||||||||||||||
-2 | Included as part of change in unrealized gains on securities in the consolidated statement of comprehensive income. | |||||||||||||||||||||||||
-3 | Transfers are primarily attributable to changes in the availability of observable market information and re-evaluation of the observability of pricing inputs. | |||||||||||||||||||||||||
Three different valuation techniques can be used in determining fair value for financial assets and liabilities: the market, income or cost approaches. The three valuation techniques described in the fair value measurements and disclosures guidance are consistent with generally accepted valuation methodologies. The market approach valuation techniques use prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. When possible, quoted prices (unadjusted) in active markets are used as of the period-end date (such as for mutual funds and money market funds). Otherwise, valuation techniques consistent with the market approach including matrix pricing and comparables are used. Matrix pricing is a mathematical technique employed principally to value debt securities without relying exclusively on quoted prices for those securities but rather by relying on the securities’ relationship to other benchmark quoted securities. Market approach valuation techniques often use market multiples derived from a set of comparables. Multiples might lie in ranges with a different multiple for each comparable. The selection of where within the range the appropriate multiple falls requires judgment, considering both qualitative and quantitative factors specific to the measurement. | ||||||||||||||||||||||||||
Income approach valuation techniques convert future amounts, such as cash flows or earnings, to a single present amount, or a discounted amount. These techniques rely on current market expectations of future amounts as of the period-end date. Examples of income approach valuation techniques include present value techniques, option-pricing models, binomial or lattice models that incorporate present value techniques and the multi-period excess earnings method. | ||||||||||||||||||||||||||
Cost approach valuation techniques are based upon the amount that would be required to replace the service capacity of an asset at the period-end date, or the current replacement cost. That is, from the perspective of a market participant (seller), the price that would be received for the asset is determined based on the cost to a market participant (buyer) to acquire or construct a substitute asset of comparable utility, adjusted for obsolescence. | ||||||||||||||||||||||||||
While not all three approaches are applicable to all financial assets or liabilities, where appropriate, one or more valuation techniques may be used. For all the classes of financial assets and liabilities included in the above hierarchy, excluding the CPI Caps and certain privately placed corporate bonds, the market valuation technique is generally used. For certain privately placed corporate bonds and the CPI Caps, the income valuation technique is generally used. For the years ended December 31, 2014 and 2013, the application of the valuation technique applied to the Company’s classes of financial assets and liabilities has been consistent. | ||||||||||||||||||||||||||
Level 1 Securities | ||||||||||||||||||||||||||
The Company’s investments and liabilities classified as Level 1 as of December 31, 2014 and 2013, consisted of mutual funds, money market funds and common stocks that are publicly listed and/or actively traded in an established market. | ||||||||||||||||||||||||||
Level 2 Securities | ||||||||||||||||||||||||||
The Company’s Level 2 securities are valued using various observable market inputs obtained from a pricing service. The pricing service prepares estimates of fair value measurements for our Level 2 securities using proprietary valuation models based on techniques such as matrix pricing which include observable market inputs. The fair value measurements and disclosures guidance defines observable market inputs as the assumptions market participants would use in pricing the asset or liability developed on market data obtained from sources independent of the Company. The extent of the use of each observable market input for a security depends on the type of security and the market conditions at the balance sheet date. Depending on the security, the priority of the use of observable market inputs may change as some observable market inputs may not be relevant or additional inputs may be necessary. The following observable market inputs (“standard inputs”), listed in the approximate order of priority, are utilized in the pricing evaluation of Level 2 securities: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data including market research data. Further details for Level 2 investment types follow: | ||||||||||||||||||||||||||
United States Government and government agencies and authorities: U.S. government and government agencies and authorities securities are priced by our pricing service utilizing standard inputs. Included in this category are U.S. Treasury securities which are priced using vendor trading platform data in addition to the standard inputs. | ||||||||||||||||||||||||||
State, municipalities and political subdivisions: State, municipalities and political subdivisions securities are priced by our pricing service utilizing material event notices and new issue data inputs in addition to the standard inputs. | ||||||||||||||||||||||||||
Foreign governments: Foreign government securities are priced by our pricing service utilizing standard inputs. The pricing service also evaluates each security based on relevant market information including relevant credit information, perceived market movements and sector news. | ||||||||||||||||||||||||||
Commercial mortgage-backed, residential mortgage-backed and asset-backed: Commercial mortgage-backed, residential mortgage-backed and asset-backed securities are priced by our pricing service utilizing monthly payment information and collateral performance information in addition to the standard inputs. Additionally, commercial mortgage-backed securities and asset-backed securities utilize new issue data while residential mortgage-backed securities utilize vendor trading platform data. | ||||||||||||||||||||||||||
Corporate: Corporate securities are priced by our pricing service utilizing standard inputs. Non-investment grade securities within this category are priced by our pricing service utilizing observations of equity and credit default swap curves related to the issuer in addition to the standard inputs. Certain privately placed corporate bonds are priced by a non-pricing service source using a model with observable inputs including, but not limited to, the credit rating, credit spreads, sector add-ons, and issuer specific add-ons. | ||||||||||||||||||||||||||
Non-redeemable preferred stocks: Non-redeemable preferred stocks are priced by our pricing service utilizing observations of equity and credit default swap curves related to the issuer in addition to the standard inputs. | ||||||||||||||||||||||||||
Short-term investments, collateral held/pledged under securities agreements, and assets/liabilities held in separate accounts: To price the fixed maturity securities in these categories, the pricing service utilizes the standard inputs. | ||||||||||||||||||||||||||
Valuation models used by the pricing service can change period to period, depending on the appropriate observable inputs that are available at the balance sheet date to price a security. When market observable inputs are unavailable to the pricing service, the remaining unpriced securities are submitted to independent brokers who provide non-binding broker quotes or are priced by other qualified sources. If the Company cannot corroborate the non-binding broker quotes with Level 2 inputs, these securities are categorized as Level 3 securities. | ||||||||||||||||||||||||||
Level 3 Securities | ||||||||||||||||||||||||||
The Company’s investments classified as Level 3 as of December 31, 2014 and 2013, consisted of fixed maturity and equity securities and derivatives. All of the Level 3 fixed maturity and equity securities are priced using non-binding broker quotes which cannot be corroborated with Level 2 inputs. Of our total Level 3 fixed maturity and equity securities, $12,029 and $13,821 were priced by a pricing service using single broker quotes due to insufficient information to provide an evaluated price as of December 31, 2014 and 2013, respectively. The single broker quotes are provided by market makers or broker-dealers who are recognized as market participants in the markets in which they are providing the quotes. The remaining $11,198 and $11,934 were priced internally using independent and non-binding broker quotes as of December 31, 2014 and 2013, respectively. The inputs factoring into the broker quotes include trades in the actual bond being priced, trades of comparable bonds, quality of the issuer, optionality, structure and liquidity. Significant changes in interest rates, issuer credit, liquidity, and overall market conditions would result in a significantly lower or higher broker quote. The prices received from both the pricing service and internally are reviewed for reasonableness by management and if necessary, management works with the pricing service or broker to further understand how they developed their price. Further details on Level 3 derivative investment types follow: | ||||||||||||||||||||||||||
Other assets: A non-pricing service source prices the CPI Cap derivatives using a model with inputs including, but not limited to, the time to expiration, the notional amount, the strike price, the forward rate, implied volatility and the discount rate. | ||||||||||||||||||||||||||
Management evaluates the following factors in order to determine whether the market for a financial asset is inactive. The factors include, but are not limited to: | ||||||||||||||||||||||||||
· | There are few recent transactions, | |||||||||||||||||||||||||
· | Little information is released publicly, | |||||||||||||||||||||||||
· | The available prices vary significantly over time or among market participants, | |||||||||||||||||||||||||
· | The prices are stale (i.e., not current), and | |||||||||||||||||||||||||
· | The magnitude of the bid-ask spread. | |||||||||||||||||||||||||
Illiquidity did not have a material impact in the fair value determination of the Company’s financial assets. | ||||||||||||||||||||||||||
The Company generally obtains one price for each financial asset. The Company performs a monthly analysis to assess if the evaluated prices represent a reasonable estimate of their fair value. This process involves quantitative and qualitative analysis and is overseen by investment and accounting professionals. Examples of procedures performed include, but are not limited to, initial and on-going review of pricing service methodologies, review of the prices received from the pricing service, review of pricing statistics and trends, and comparison of prices for certain securities with two different appropriate price sources for reasonableness. Following this analysis, the Company generally uses the best estimate of fair value based upon all available inputs. On infrequent occasions, a non-pricing service source may be more familiar with the market activity for a particular security than the pricing service. In these cases the price used is taken from the non-pricing service source. The pricing service provides information to indicate which securities were priced using market observable inputs so that the Company can properly categorize our financial assets in the fair value hierarchy. | ||||||||||||||||||||||||||
Disclosures for Non-Financial Assets Measured at Fair Value on a Non-Recurring Basis | ||||||||||||||||||||||||||
The Company also measures the fair value of certain assets on a non-recurring basis, generally on an annual basis, or when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. These assets include commercial mortgage loans, goodwill and finite-lived intangible assets. | ||||||||||||||||||||||||||
For its 2014, 2013 and 2012 fourth quarter annual goodwill impairment tests, the Company performed a Step 1 analysis. Based on these analyses, it was determined that goodwill was not impaired. See Note 13 for further information. | ||||||||||||||||||||||||||
The Company utilizes both the income and market valuation approaches to measure its fair value when required. Under the income approach, the Company determined the fair value considering distributable earnings, which were estimated from operating plans. The resulting cash flows were then discounted using a market participant weighted average cost of capital. After discounting the future discrete earnings to their present value, the Company estimated the terminal value attributable to the years beyond the discrete operating plan period. The discounted terminal value was then added to the aggregate discounted distributable earnings from the discrete operating plan period to estimate the fair value. Under the market approach, the Company derived the fair value based on various financial multiples, including but not limited to: price to tangible book value of equity, price to estimated 2014 earnings and price to estimated 2015 earnings, which were estimated based on publicly available data related to comparable guideline companies. In addition, financial multiples were also estimated from publicly available purchase price data for acquisitions of companies operating in the insurance industry. The estimated fair value was more heavily weighted towards the income approach because in the current economic environment the earnings capacity of a business is generally considered the most important factor in the valuation of a business enterprise. This fair value determination was categorized as Level 3 (unobservable) in the fair value hierarchy. | ||||||||||||||||||||||||||
There was no remaining goodwill or other intangible assets measured at fair value on a non-recurring basis on which an impairment charge was recorded as of December 31, 2014, 2013 and 2012. | ||||||||||||||||||||||||||
Fair Value of Financial Instruments Disclosures | ||||||||||||||||||||||||||
The financial instruments guidance requires disclosure of fair value information about financial instruments, as defined therein, for which it is practicable to estimate such fair value. Therefore, it requires fair value disclosure for financial instruments that are not recognized or are not carried at fair value in the consolidated balance sheets. However, this guidance excludes certain financial instruments, including those related to insurance contracts and those accounted for under the equity method and joint ventures guidance (such as real estate joint ventures). | ||||||||||||||||||||||||||
For the financial instruments included within the following financial assets and financial liabilities, the carrying value in the consolidated balance sheets equals or approximates fair value. Please refer to the Fair Value Inputs and Valuation Techniques for Financial Assets and Liabilities Disclosures section above for more information on the financial instruments included within the following financial assets and financial liabilities and the methods and assumptions used to estimate fair value: | ||||||||||||||||||||||||||
· | Cash and cash equivalents | |||||||||||||||||||||||||
· | Fixed maturity securities | |||||||||||||||||||||||||
· | Equity securities | |||||||||||||||||||||||||
· | Short-term investments | |||||||||||||||||||||||||
· | Collateral held/pledged under securities agreements | |||||||||||||||||||||||||
· | Other assets | |||||||||||||||||||||||||
· | Assets held in separate accounts | |||||||||||||||||||||||||
· | Liabilities related to separate accounts | |||||||||||||||||||||||||
In estimating the fair value of the financial instruments that are not recognized or are not carried at fair value in the consolidated balance sheets, the Company used the following methods and assumptions: | ||||||||||||||||||||||||||
Commercial mortgage loans: the fair values of mortgage loans are estimated using discounted cash flow models. The model inputs include mortgage amortization schedules and loan provisions, an internally developed credit spread based on the credit risk associated with the borrower and the U.S. Treasury spot curve. Mortgage loans with similar characteristics are aggregated for purposes of the calculations. | ||||||||||||||||||||||||||
Policy loans: the carrying value of policy loans reported in the balance sheets approximates fair value. | ||||||||||||||||||||||||||
Other investments: Other investments include Certified Capital Company tax credits which are recorded at amortized cost. The carrying value reported for these investments approximates fair value. Due to the nature of these investments, there is a lack of liquidity in the primary market which results in the holdings being classified as Level 3. | ||||||||||||||||||||||||||
Policy reserves under investment products: the fair values for the Company’s policy reserves under investment products are determined using discounted cash flow analysis. Key inputs to the valuation include projections of policy cash flows, reserve run-off, market yields and risk margins. | ||||||||||||||||||||||||||
Obligations under securities agreements: obligation under securities agreements is reported at the amount of cash received from the selected broker/dealers. | ||||||||||||||||||||||||||
The following tables disclose the carrying value, fair value amount and hierarchy level of the financial instruments that are not recognized or are not carried at fair value in the consolidated balance sheets: | ||||||||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||||||||
Fair Value | ||||||||||||||||||||||||||
Carrying Value | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
Financial Assets | ||||||||||||||||||||||||||
Commercial mortgage loans on real estate | $ | 499,814 | $ | 569,754 | $ | 0 | $ | 0 | $ | 569,754 | ||||||||||||||||
Policy loans | 11,663 | 11,663 | 11,663 | 0 | 0 | |||||||||||||||||||||
Other investments | 944 | 944 | 0 | 0 | 944 | |||||||||||||||||||||
Total financial assets | $ | 512,421 | $ | 582,361 | $ | 11,663 | $ | 0 | $ | 570,698 | ||||||||||||||||
Financial Liabilities | ||||||||||||||||||||||||||
Policy reserves under investment products (Individual and group annuities, subject to discretionary withdrawal) (1) | $ | 227,240 | $ | 255,472 | $ | 0 | $ | 0 | $ | 255,472 | ||||||||||||||||
Obligation under securities agreements | 42,941 | 42,941 | 42,941 | 0 | 0 | |||||||||||||||||||||
Total financial liabilities | $ | 270,181 | $ | 298,413 | $ | 42,941 | $ | 0 | $ | 255,472 | ||||||||||||||||
December 31, 2013 | ||||||||||||||||||||||||||
Fair Value | ||||||||||||||||||||||||||
Carrying Value | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
Financial Assets | ||||||||||||||||||||||||||
Commercial mortgage loans on real estate | $ | 562,368 | $ | 632,820 | $ | 0 | $ | 0 | $ | 632,820 | ||||||||||||||||
Policy loans | 12,461 | 12,461 | 12,461 | 0 | 0 | |||||||||||||||||||||
Total financial assets | $ | 574,829 | $ | 645,281 | $ | 12,461 | $ | 0 | $ | 632,820 | ||||||||||||||||
Financial Liabilities | ||||||||||||||||||||||||||
Policy reserves under investment products (Individual and group annuities, subject to discretionary withdrawal) (1) | $ | 236,508 | $ | 250,660 | $ | 0 | $ | 0 | $ | 250,660 | ||||||||||||||||
Obligation under securities agreements | 42,229 | 42,229 | 42,229 | 0 | 0 | |||||||||||||||||||||
Total financial liabilities | $ | 278,737 | $ | 292,889 | $ | 42,229 | $ | 0 | $ | 250,660 | ||||||||||||||||
(1) Only the fair value of the Company’s policy reserves for investment-type contracts (those without significant mortality or morbidity risk) are reflected in the table above. | ||||||||||||||||||||||||||
Income_Taxes
Income Taxes | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Income Taxes | |||||||||||
Income Taxes | |||||||||||
5.Income Taxes | |||||||||||
The Company is subject to U.S. tax and files a U.S. consolidated federal income tax return with its Parent. All of the Company’s income comes from domestic sources. Information about the Company’s current and deferred tax expense follows: | |||||||||||
Year Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Current expense | $ | 31,688 | $ | 2,693 | $ | 23,415 | |||||
Deferred expense | 3,311 | 27,384 | 17,877 | ||||||||
Total income tax expense | $ | 34,999 | $ | 30,077 | $ | 41,292 | |||||
A reconciliation of the federal income tax rate to the Company’s effective income tax rate follows: | |||||||||||
December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Federal income tax rate: | 35 | % | 35 | % | 35 | % | |||||
Reconciling items: | |||||||||||
Dividends-received deduction | (2.6 | ) | (2.5 | ) | (1.7 | ) | |||||
Tax exempt interest | (0.4 | ) | (0.3 | ) | (0.2 | ) | |||||
Change in liability for prior years’ taxes | (0.3 | ) | 0.2 | (2.1 | ) | ||||||
Permanent nondeductible expenses | 0.3 | 0.3 | 0.3 | ||||||||
Nondeductible health insurer fee | 1.9 | 0 | 0 | ||||||||
Other | (0.3 | ) | (0.3 | ) | 0.3 | ||||||
Effective income tax rate | 33.6 | % | 32.4 | % | 31.6 | % | |||||
A reconciliation of the beginning and ending amounts of unrecognized tax benefits for the years ended December 31, 2014, 2013, and 2012, is as follows: | |||||||||||
Years Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Balance at beginning of year | $ | (382 | ) | $ | (776 | ) | $ | (2,187 | ) | ||
Additions based on tax positions related to the current year | 0 | (92 | ) | 0 | |||||||
Reductions based on tax positions related to the current year | 21 | 10 | 42 | ||||||||
Additions for tax positions of prior years | (703 | ) | (381 | ) | (1,585 | ) | |||||
Reductions for tax positions of prior years | 131 | 857 | 2,043 | ||||||||
Settlements | 858 | 0 | 911 | ||||||||
Balance at end of year | $ | (75 | ) | $ | (382 | ) | $ | (776 | ) | ||
The total unrecognized tax benefit of $108, $448 and $240, for 2014, 2013 and 2012, respectively, which includes interest, would impact the Company’s consolidated effective tax rate if recognized. The liability for unrecognized tax benefits is included in the Company’s tax payable on its consolidated balance sheets. | |||||||||||
The Company’s continuing practice is to recognize interest related to income tax matters in income tax expense. During the years ended December 31, 2014 and December 31, 2012, the Company recognized $127 and $564 of interest income, respectively, related to income tax matters. During the year ended December 31, 2013, the Company recognized $21 of interest expense related to income tax matters. The Company had $13 and $140 of interest accrued at December 31, 2014 and 2013, respectively. No penalties have been accrued. | |||||||||||
The Company files income tax returns in the U.S. and various state jurisdictions. The Company has substantially concluded all U.S. federal income tax matters for years through 2011. Substantially all state and local income tax matters have been concluded for the years through 2009. | |||||||||||
The tax effects of temporary differences that result in significant deferred tax assets and deferred tax liabilities are as follows: | |||||||||||
December 31, | |||||||||||
2014 | 2013 | ||||||||||
Deferred Tax Assets | |||||||||||
Deferred gain on disposal of businesses | $ | 23,672 | $ | 21,883 | |||||||
Investments, net | 45,270 | 48,551 | |||||||||
Deferred acquisition costs | 11,687 | 13,466 | |||||||||
Compensation related | 1,150 | 1,598 | |||||||||
Employee and post-retirement benefits | 3,553 | 1,642 | |||||||||
Total deferred tax asset | 85,332 | 87,140 | |||||||||
Deferred Tax Liabilities | |||||||||||
Net unrealized appreciation on securities | (154,852 | ) | (99,002 | ) | |||||||
Policyholder and separate account reserves | (4,848 | ) | (2,058 | ) | |||||||
Accrued liabilities | (1,938 | ) | (1,934 | ) | |||||||
Other | (5,147 | ) | (6,388 | ) | |||||||
Total deferred tax liability | (166,785 | ) | (109,382 | ) | |||||||
Net deferred income tax liability | $ | (81,453 | ) | $ | (22,242 | ) | |||||
The calculation of the valuation allowance is made at the consolidated return group level. A portion of the valuation allowance is assigned to the Company based on the provisions of the tax sharing agreement. No cumulative valuation allowance has been recorded because it is management’s assessment that it is more likely than not that deferred tax assets of $85,332 will be realized. | |||||||||||
The Company’s ability to realize deferred tax assets depends on its ability to generate sufficient taxable income of the same character within the carryback or carryforward periods. In assessing future taxable income, the Company has considered all sources of taxable income available to realize its deferred tax asset, including the future reversal of existing temporary differences, future taxable income exclusive of reversing temporary differences and carryforwards, taxable income in carryback years and tax-planning strategies. If changes occur in the assumptions underlying the Company’s tax planning strategies or in the scheduling of the reversal of the Company’s deferred tax liabilities, the valuation allowance may need to be adjusted in the future. | |||||||||||
At December 31, 2014, the Company had no net operating or capital loss carryforwards for U.S. federal income tax purposes. | |||||||||||
Premiums_and_Accounts_Receivab
Premiums and Accounts Receivable | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Premiums and Accounts Receivable | ||||||||
Premiums and Accounts Receivable | ||||||||
6.Premiums and Accounts Receivable | ||||||||
Receivables are reported net of an allowance for uncollectible items. A summary of such receivables is as follows: | ||||||||
As of December 31, | ||||||||
2014 | 2013 | |||||||
Insurance premiums receivable | $ | 64,352 | $ | 58,872 | ||||
Other receivables | 17,547 | 16,916 | ||||||
Allowance for uncollectible amounts | (4,432 | ) | (4,484 | ) | ||||
Total | $ | 77,467 | $ | 71,304 | ||||
Stockholders_Equity
Stockholder's Equity | 12 Months Ended |
Dec. 31, 2014 | |
Stockholder's Equity | |
Stockholder's Equity | |
7.Stockholder’s Equity | |
The Board of Directors of the Company has authorized 1,000,000 shares of common stock with an average par value of $5.00 per share. All shares are issued and outstanding as of December 31, 2014 and 2013. All the outstanding shares at December 31, 2014 are owned by the Parent (see Note 1). The Company paid dividends of $97,000, $101,000 and $115,800 during the year ended December 31, 2014, 2013 and 2012, respectively. | |
The maximum amount of dividends which can be paid by the Company to its shareholder without prior approval of the Insurance Commissioner is subject to restrictions relating to statutory surplus (see Note 8). | |
Statutory_Information
Statutory Information | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Statutory Information | |||||||||||
Statutory Information | |||||||||||
8.Statutory Information | |||||||||||
The Company prepares financial statements on the basis of statutory accounting principles (“SAP”) prescribed or permitted by the Kansas Insurance Department. Prescribed SAP includes the Accounting Practices and Procedures Manual of the National Association of Insurance Commissioners (“NAIC”) as well as state laws, regulations and administrative rules. | |||||||||||
The principal differences between SAP and GAAP are: 1) policy acquisition costs are expensed as incurred under SAP, but are deferred and amortized under GAAP; 2) the value of business acquired is not capitalized under SAP but is under GAAP; 3) amounts collected from holders of universal life-type and annuity products are recognized as premiums when collected under SAP, but are initially recorded as contract deposits under GAAP, with cost of insurance recognized as revenue when assessed and other contract charges recognized over the periods for which services are provided; 4) the classification and carrying amounts of investments in certain securities are different under SAP than under GAAP; 5) the criteria for providing asset valuation allowances, and the methodologies used to determine the amounts thereof, are different under SAP than under GAAP; 6) the timing of establishing certain reserves, and the methodologies used to determine the amounts thereof, are different under SAP than under GAAP; 7) certain assets are not admitted for purposes of determining surplus under SAP; 8) methodologies used to determine the amounts of deferred taxes and goodwill are different under SAP than under GAAP; and 9) the criteria for obtaining reinsurance accounting treatment is different under SAP than under GAAP. | |||||||||||
The Company’s statutory net income and capital and surplus are as follows: | |||||||||||
Years Ended and at | |||||||||||
December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Statutory net income | $ | 67,287 | $ | 85,356 | $ | 95,272 | |||||
Statutory capital and surplus | $ | 415,720 | $ | 436,457 | $ | 459,009 | |||||
Dividend distributions to the Parent are restricted as to the amount by state regulatory requirements. The Company declared and paid dividends of $97,000, of which all was extraordinary during the year ended December 31, 2014. The Company declared and paid dividends of $101,000, of which $29,860 was ordinary and $71,140 was extraordinary during the year ended December 31, 2013. A dividend is considered extraordinary when combined with all other dividends and distributions made within the preceding 12 months exceeds the greater of 10% of the insurer’s surplus as regards to policyholders on December 31 of the next preceding year, or the net gain from operations. Dividends may only be paid out of earned surplus. The Company has the ability, under state regulatory requirements, to dividend up to approximately $35,498 to the Parent in 2015 without permission from Kansas regulators. No assurance can be given that there will not be further regulatory actions restricting the ability of the Company to pay dividends. | |||||||||||
State regulators require insurance companies to meet minimum capitalization standards designed to ensure that they can fulfill obligations to policyholders. Minimum capital requirements are expressed as a ratio of a company’s total adjusted capital (“TAC”) to its risk-based capital (“RBC”) (the “RBC Ratio”). TAC is equal to statutory surplus adjusted to exclude certain statutory liabilities. RBC is calculated by applying specified factors to various asset, premium, expense, liability, and reserve items. | |||||||||||
Generally, if a company’s RBC Ratio is below 100% (the “Authorized Control Level”), the insurance commissioner of the company’s state of domicile is authorized to take control of the company, to protect the interests of policyholders. If the RBC Ratio is greater than 100% but less than 200% (the “Company Action Level”), the company must submit a RBC plan to the commissioner of the state of domicile. Corrective actions may also be required if the RBC Ratio is greater than the Company Action Level but the company fails certain trend tests. | |||||||||||
As of December 31, 2014, the TAC of the Company exceeded the Company Action Level and no trend tests that would require regulatory action were violated. As of December 31, 2014, the TAC of the Company subject to RBC requirements was $449,569 and the corresponding Authorized Control Level was $78,870. | |||||||||||
Reinsurance
Reinsurance | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||
Reinsurance | |||||||||||||||||||||||||||||
Reinsurance | |||||||||||||||||||||||||||||
9.Reinsurance | |||||||||||||||||||||||||||||
In the ordinary course of business, the Company is involved in both the assumption and cession of reinsurance with non-affiliated companies. The following table provides details of the reinsurance recoverables balance as of December 31: | |||||||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||||||
Ceded future policyholder benefits and expenses | $ | 1,797,057 | $ | 1,560,436 | |||||||||||||||||||||||||
Ceded unearned premium | 25,389 | 17,792 | |||||||||||||||||||||||||||
Ceded claims and benefits payable | 319,790 | 247,777 | |||||||||||||||||||||||||||
Ceded paid losses | 11,972 | 11,375 | |||||||||||||||||||||||||||
Total | $ | 2,154,208 | $ | 1,837,380 | |||||||||||||||||||||||||
A key credit quality indicator for reinsurance recoverables is the A.M. Best financial strength ratings of the reinsurer. The A.M. Best ratings are an independent opinion of a reinsurer’s ability to meet ongoing obligations to policyholders. The A.M. Best ratings for new reinsurance agreements where there is material credit exposure are reviewed at the time of execution. The A.M. Best ratings for existing reinsurance agreements are reviewed on a periodic basis, at least annually. The following table provides the reinsurance recoverable as of December 31, 2014 grouped by A.M. Best rating: | |||||||||||||||||||||||||||||
A. M. Best ratings | Ceded future | Ceded | Ceded claims | Ceded | Total | ||||||||||||||||||||||||
of reinsurer | policyholder | unearned | and benefits | paid | |||||||||||||||||||||||||
benefits and | premiums | payable | losses | ||||||||||||||||||||||||||
expense | |||||||||||||||||||||||||||||
A++ or A+ | $ | 1,158,636 | $ | 25,217 | $ | 295,587 | $ | 239 | $ | 1,479,679 | |||||||||||||||||||
A or A- | 601,782 | 37 | 16,696 | 26 | 618,541 | ||||||||||||||||||||||||
B++ or B+ | 36,315 | 135 | 244 | 0 | 36,694 | ||||||||||||||||||||||||
Not rated | 324 | 0 | 7,263 | 11,707 | 19,294 | ||||||||||||||||||||||||
Reinsurance recoverable | $ | 1,797,057 | $ | 25,389 | $ | 319,790 | $ | 11,972 | $ | 2,154,208 | |||||||||||||||||||
A.M. Best ratings for The Hartford and John Hancock Life Insurance Company (“John Hancock”), a subsidiary of Manulife Financial Corporation, the reinsurers with the largest reinsurance recoverable balances, are A- and A+, respectively. A.M. Best currently maintains a stable outlook on the financial strength ratings of John Hancock and The Hartford. The total amount of recoverable for these two reinsurers is $2,045,518 as of December 31, 2014. Most of the assets backing reserves relating to reinsurance recoverables from these two counterparties are held in trust. | |||||||||||||||||||||||||||||
The effect of reinsurance on premiums earned and benefits incurred was as follows: | |||||||||||||||||||||||||||||
Years Ended December 31, | |||||||||||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||||||||||
Long | Short | Total | Long | Short | Total | Long | Short | Total | |||||||||||||||||||||
Duration | Duration | Duration | Duration | Duration | Duration | ||||||||||||||||||||||||
Direct earned premiums | $ | 202,992 | $ | 839,786 | $ | 1,042,778 | $ | 207,159 | $ | 823,576 | $ | 1,030,735 | $ | 212,727 | $ | 827,048 | $ | 1,039,775 | |||||||||||
Premiums assumed | 8,400 | 149,549 | 157,949 | 9,709 | 140,971 | 150,680 | 11,983 | 146,130 | 158,113 | ||||||||||||||||||||
Premiums ceded | (151,491 | ) | (13,769 | ) | (165,260 | ) | (164,698 | ) | (15,086 | ) | (179,784 | ) | (175,042 | ) | (14,860 | ) | (189,902 | ) | |||||||||||
Net earned premiums | $ | 59,901 | $ | 975,566 | $ | 1,035,467 | $ | 52,170 | $ | 949,461 | $ | 1,001,631 | $ | 49,668 | $ | 958,318 | $ | 1,007,986 | |||||||||||
Direct policyholder benefits | $ | 661,461 | $ | 542,796 | $ | 1,204,257 | $ | 369,169 | $ | 548,631 | $ | 917,800 | $ | 344,022 | $ | 535,016 | $ | 879,038 | |||||||||||
Policyholder benefits assumed | 21,922 | 145,597 | 167,519 | 23,556 | 138,485 | 162,041 | 24,519 | 133,285 | 157,804 | ||||||||||||||||||||
Policyholder benefits ceded | (616,370 | ) | (9,305 | ) | (625,675 | ) | (325,982 | ) | (8,612 | ) | (334,594 | ) | (297,768 | ) | (7,212 | ) | (304,980 | ) | |||||||||||
Net policyholder benefits | $ | 67,013 | $ | 679,088 | $ | 746,101 | $ | 66,743 | $ | 678,504 | $ | 745,247 | $ | 70,773 | $ | 661,089 | $ | 731,862 | |||||||||||
The Company had $810,419 and $843,181, respectively, of invested assets held in trusts or by custodians as of December 31, 2014 and 2013, respectively, for the benefit of others related to certain reinsurance arrangements. | |||||||||||||||||||||||||||||
The Company utilizes ceded reinsurance primarily for loss protection and capital management and business dispositions. | |||||||||||||||||||||||||||||
Loss Protection and Capital Management | |||||||||||||||||||||||||||||
As part of the Company’s overall risk and capacity management strategy, the Company purchases reinsurance for certain risks underwritten by the Company, including significant individual risks. Under indemnity reinsurance transactions in which the Company is the ceding insurer, the Company remains liable for policy claims if the assuming company fails to meet its obligations. To mitigate this risk, the Company has control procedures to evaluate the financial condition of reinsurers and to monitor the concentration of credit risk. The selection of reinsurance companies is based on criteria related to solvency and reliability and, to a lesser degree, diversification. | |||||||||||||||||||||||||||||
Business Divestitures | |||||||||||||||||||||||||||||
The Company has used reinsurance to exit certain businesses. | |||||||||||||||||||||||||||||
In 2005, the Parent signed an agreement with Forethought Life Insurance Company whereby the Company agreed to discontinue writing new preneed insurance policies in the United States via independent funeral homes and funeral homes other than those owned and operated by Service Corporation International for a period of ten years. | |||||||||||||||||||||||||||||
In 2001, the Parent entered into a reinsurance agreement with The Hartford for the sale of the FFG division. In 2000, the Company divested its LTC operations to John Hancock. Assets supporting liabilities ceded relating to these businesses are mainly held in trusts and the separate accounts relating to FFG are still reflected in the Company’s balance sheet. If the reinsurers became insolvent, we would be exposed to the risk that the assets in the trusts and/or the separate accounts would be insufficient to support the liabilities that would revert back to us. The reinsurance recoverable from The Hartford was $575,625 and $585,108 as of December 31, 2014 and 2013, respectively. The reinsurance recoverable from John Hancock was $1,469,893 and $1,143,731 as of December 31, 2014 and 2013, respectively. | |||||||||||||||||||||||||||||
The reinsurance agreement associated with the FFG sale also stipulates that The Hartford contribute funds to increase the value of the separate account assets relating to Modified Guaranteed Annuity business sold if such value declines below the value of the associated liabilities. If The Hartford fails to fulfill these obligations, the Company will be obligated to make these payments. | |||||||||||||||||||||||||||||
In addition, the Company would be responsible for administering this business in the event of reinsurer insolvency. We do not currently have the administrative systems and capabilities to process this business. Accordingly, we would need to obtain those capabilities in the event of an insolvency of one or more of the reinsurers of these businesses. We might be forced to obtain such capabilities on unfavorable terms with a resulting material adverse effect on our results of operations and financial condition. | |||||||||||||||||||||||||||||
As of December 31, 2014, we were not aware of any regulatory actions taken with respect to the solvency of the insurance subsidiaries of The Hartford or John Hancock that reinsure the FFG and LTC businesses, and the Company has not been obligated to fulfill any of such reinsurers’ obligations. | |||||||||||||||||||||||||||||
John Hancock and The Hartford have paid their obligations when due and there have been no disputes. | |||||||||||||||||||||||||||||
Reserves
Reserves | 12 Months Ended | |||||||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||||||
Reserves | ||||||||||||||||||||||||||
Reserves | ||||||||||||||||||||||||||
10.Reserves | ||||||||||||||||||||||||||
The following table provides reserve information of the Company’s major product lines at the dates shown: | ||||||||||||||||||||||||||
December 31, 2014 | December 31, 2013 | |||||||||||||||||||||||||
Claims and Benefits | Claims and Benefits | |||||||||||||||||||||||||
Payable | Payable | |||||||||||||||||||||||||
Future | Unearned | Case | Incurred | Future | Unearned | Case | Incurred | |||||||||||||||||||
Policy | Premiums | Reserves | But Not | Policy | Premiums | Reserves | But Not | |||||||||||||||||||
Benefits and | Reported | Benefits and | Reported | |||||||||||||||||||||||
Expenses | Reserves | Expenses | Reserves | |||||||||||||||||||||||
Long Duration Contracts: | ||||||||||||||||||||||||||
Preneed funeral life insurance policies and investment-type annuity contracts | $ | 906,864 | $ | 42 | $ | 5,737 | $ | 3,021 | $ | 976,837 | $ | 101 | $ | 4,189 | $ | 3,003 | ||||||||||
Life insurance no longer offered | 251,495 | 525 | 1,485 | 1,163 | 258,513 | 528 | 1,140 | 2,521 | ||||||||||||||||||
FFG, LTC and other disposed businesses | 1,714,854 | 25,227 | 265,886 | 34,869 | 1,474,858 | 17,623 | 205,524 | 26,351 | ||||||||||||||||||
All other | 33,493 | 370 | 13,616 | 9,707 | 33,668 | 461 | 14,595 | 8,324 | ||||||||||||||||||
Short Duration Contracts: | ||||||||||||||||||||||||||
Group term life | 0 | 2,780 | 160,789 | 27,730 | 0 | 4,039 | 161,042 | 28,480 | ||||||||||||||||||
Group disability | 0 | 1,430 | 1,063,982 | 104,953 | 0 | 2,435 | 1,086,870 | 111,546 | ||||||||||||||||||
Medical | 0 | 22 | 1,412 | 726 | 0 | 244 | 1,895 | 1,205 | ||||||||||||||||||
Dental | 0 | 3,773 | 2,106 | 16,448 | 0 | 4,921 | 2,245 | 16,787 | ||||||||||||||||||
Credit disability | 0 | 14 | 0 | 1,962 | 0 | 2 | 0 | 2,203 | ||||||||||||||||||
All other | 0 | 172 | 360 | 1,986 | 0 | 181 | 245 | 1,565 | ||||||||||||||||||
Total | $ | 2,906,706 | $ | 34,355 | $ | 1,515,373 | $ | 202,565 | $ | 2,743,876 | $ | 30,535 | $ | 1,477,745 | $ | 201,985 | ||||||||||
The following table provides a roll forward of the Company’s product lines with the most significant claims and benefits payable balances: group term life and group disability lines of business. Claims and benefits payable is comprised of case and IBNR reserves. | ||||||||||||||||||||||||||
Group | Group | |||||||||||||||||||||||||
Term | Disability | |||||||||||||||||||||||||
Life | ||||||||||||||||||||||||||
Balance as of December 31, 2011, gross of reinsurance | 205,989 | 1,288,470 | ||||||||||||||||||||||||
Less: Reinsurance ceded and other (1) | (3,109 | ) | (32,709 | ) | ||||||||||||||||||||||
Balance as of January 1, 2012, net of reinsurance | 202,880 | 1,255,761 | ||||||||||||||||||||||||
Incurred losses related to: | ||||||||||||||||||||||||||
Current year | 121,051 | 280,183 | ||||||||||||||||||||||||
Prior year’s interest | 7,575 | 54,696 | ||||||||||||||||||||||||
Prior year (s) | (25,441 | ) | (56,891 | ) | ||||||||||||||||||||||
Total incurred losses | 103,185 | 277,988 | ||||||||||||||||||||||||
Paid losses related to: | ||||||||||||||||||||||||||
Current year | 76,377 | 67,069 | ||||||||||||||||||||||||
Prior year (s) | 39,693 | 270,749 | ||||||||||||||||||||||||
Total paid losses | 116,070 | 337,818 | ||||||||||||||||||||||||
Balance as of December 31, 2012, net of reinsurance | 189,995 | 1,195,931 | ||||||||||||||||||||||||
Plus: Reinsurance ceded and other (1) | 2,612 | 33,494 | ||||||||||||||||||||||||
Balance as of December 31, 2012, gross of reinsurance | $ | 192,607 | $ | 1,229,425 | ||||||||||||||||||||||
Less: Reinsurance ceded and other (1) | (2,612 | ) | (33,494 | ) | ||||||||||||||||||||||
Balance as of January 1, 2013, net of reinsurance | 189,995 | 1,195,931 | ||||||||||||||||||||||||
Incurred losses related to: | ||||||||||||||||||||||||||
Current year | 116,735 | 275,567 | ||||||||||||||||||||||||
Prior year’s interest | 7,388 | 53,255 | ||||||||||||||||||||||||
Prior year (s) | (12,207 | ) | (29,995 | ) | ||||||||||||||||||||||
Total incurred losses | 111,916 | 298,827 | ||||||||||||||||||||||||
Paid losses related to: | ||||||||||||||||||||||||||
Current year | 72,794 | 68,769 | ||||||||||||||||||||||||
Prior year (s) | 41,891 | 262,215 | ||||||||||||||||||||||||
Total paid losses | 114,685 | 330,984 | ||||||||||||||||||||||||
Balance as of December 31, 2013, net of reinsurance | 187,226 | 1,163,774 | ||||||||||||||||||||||||
Plus: Reinsurance ceded and other (1) | 2,296 | 34,642 | ||||||||||||||||||||||||
Balance as of December 31, 2013 gross of reinsurance | $ | 189,522 | $ | 1,198,416 | ||||||||||||||||||||||
Less: Reinsurance ceded and other (1) | (2,296 | ) | (34,642 | ) | ||||||||||||||||||||||
Balance as of January 1, 2014, net of reinsurance | 187,226 | 1,163,774 | ||||||||||||||||||||||||
Incurred losses related to: | ||||||||||||||||||||||||||
Current year | 119,725 | 278,082 | ||||||||||||||||||||||||
Prior year’s interest | 7,187 | 50,610 | ||||||||||||||||||||||||
Prior year (s) | (14,875 | ) | (34,238 | ) | ||||||||||||||||||||||
Total incurred losses | 112,037 | 294,454 | ||||||||||||||||||||||||
Paid losses related to: | ||||||||||||||||||||||||||
Current year | 74,687 | 78,411 | ||||||||||||||||||||||||
Prior year (s) | 39,322 | 248,166 | ||||||||||||||||||||||||
Total paid losses | 114,009 | 326,577 | ||||||||||||||||||||||||
Balance as of December 31, 2014, net of reinsurance | 185,254 | 1,131,651 | ||||||||||||||||||||||||
Plus: Reinsurance ceded and other (1) | 3,265 | 37,284 | ||||||||||||||||||||||||
Balance as of December 31, 2014 gross of reinsurance | $ | 188,519 | $ | 1,168,935 | ||||||||||||||||||||||
-1 | Reinsurance ceded and other includes claims and benefits payable balances that have either been (a) reinsured to third parties, (b) established for claims related expenses whose subsequent payment is not recorded as a paid claim, or (c) reserves established for obligations that would persist even if contracts were cancelled (such as extension of benefits), which cannot be analyzed appropriately under a roll-forward approach. | |||||||||||||||||||||||||
Short Duration Contracts | ||||||||||||||||||||||||||
The Company’s short duration contracts are comprised of group term life, group disability, medical, dental, credit disability. The principal products and services included in these categories are described in the summary of significant accounting policies. See Note 2 for further information. | ||||||||||||||||||||||||||
Case and IBNR reserves are developed using actuarial principles and assumptions that consider, among other things, contractual requirements, historical utilization trends and payment patterns, benefit changes, medical inflation, seasonality, membership, product mix, legislative and regulatory environment, economic factors, disabled life mortality and claim termination rates and other relevant factors. The Company consistently applies the principles and assumptions listed above from year to year, while also giving due consideration to the potential variability of these factors. | ||||||||||||||||||||||||||
Since case and IBNR reserves include estimates developed from various actuarial methods, the Company’s actual losses incurred may be more or less than the Company’s previously developed estimates. As shown in the table above, if the amounts listed on the line labeled “Incurred losses related to: Prior years” are negative (redundant) this means that the Company’s actual losses incurred related to prior years for these lines were less than the estimates previously made by the Company. If the line labeled “Incurred losses related to: Prior years” are positive (deficient) this means that the Company’s actual losses incurred related to prior years for these lines were greater than the estimates previously made by the Company. | ||||||||||||||||||||||||||
The group term life case and IBNR reserve redundancies in all years are due to actual mortality rates running below those assumed in prior year reserves, and actual recovery rates running higher than those assumed in prior year reserves. | ||||||||||||||||||||||||||
Group disability case and IBNR reserves show redundancies in all years due to actual claim recovery rates exceeding those assumed in prior year reserves. | ||||||||||||||||||||||||||
The Company’s group disability products include short and long term disability coverage. Case and IBNR reserves for long-term disability claims have been discounted at 5.25% for claims incurred in 2010 and prior years, and between 4.25% and 4.75% for claims incurred after 2010. The amount of discounts deducted from outstanding reserves as of December 31, 2014 and 2013 are $344,012 and $365,234 respectively. | ||||||||||||||||||||||||||
Long Duration Contracts | ||||||||||||||||||||||||||
The Company’s long duration contracts are primarily comprised of preneed life insurance and annuity policies, life insurance policies (no longer offered), and FFG and LTC disposed businesses. The principal products and services included in these categories are described in the summary of significant accounting policies. See Note 2 for further information. | ||||||||||||||||||||||||||
Preneed Business — no longer offered | ||||||||||||||||||||||||||
Interest and discount rates for preneed life insurance vary by year of issuance and product, and ranged from 4.7% to 7.3% in 2014 and 2013 before provisions for adverse deviation, which ranged from 0.2% to 0.5% in both 2014 and 2013. | ||||||||||||||||||||||||||
Interest and discount rates for traditional life insurance vary by year of issuance and products and were 7.5% grading to 5.3% over 20 years in 2014 and 2013 with the exception of a block of pre-1980 business which had a level 8.8% discount rate in 2014 and 2013. | ||||||||||||||||||||||||||
Mortality assumptions are based upon pricing assumptions and modified to allow for provisions for adverse deviation. Surrender rates vary by product and are based upon pricing assumptions. | ||||||||||||||||||||||||||
Future policy benefit increases on preneed life insurance policies ranged from 1.0% to 7.0% in 2014 and 2013. Some policies have future policy benefit increases that are guaranteed or tied to equal some measure of inflation. The inflation assumption for most of these inflation-linked benefits was 3.0% in both 2014 and 2013 with the exception of most policies issued in 2005 through 2007 where the assumption was 2.3%. | ||||||||||||||||||||||||||
The reserves for preneed annuities are based on assumed interest rates credited on deferred annuities, which vary by year of issue, and ranged from 1.0% to 5.5% in 2014 and 2013. Withdrawal charges, if any, can range from 7.0% to 0.0% and grade to zero over a period of seven years. | ||||||||||||||||||||||||||
FFG and LTC | ||||||||||||||||||||||||||
Reserves for businesses previously disposed of by FFG and LTC are included in the Company’s reserves in accordance with the insurance guidance. The Company maintains an offsetting reinsurance recoverable related to these reserves. See Note 9 for further information. | ||||||||||||||||||||||||||
Retirement_and_Other_Employee_
Retirement and Other Employee Benefits | 12 Months Ended |
Dec. 31, 2014 | |
Retirement and Other Employee Benefits | |
Retirement and Other Employee Benefits | |
11.Retirement and Other Employee Benefits | |
The Parent sponsors a non-contributory, qualified defined benefit pension plan and certain non-contributory, non-qualified post retirement benefits covering employees who meet eligibility requirements as to age and length of service. Plan assets of the qualified defined benefit plan are not specifically identified by each participating subsidiary. Therefore, a breakdown of plan assets is not reflected in these consolidated financial statements. The Company has no legal obligation for benefits under these plans. The benefits are based on years of service and career compensation. The Parent’s pension plan funding policy is to contribute amounts to the plan sufficient to meet the minimum funding requirements set forth in the Employee Retirement Income Security Act of 1974, plus additional amounts as the Parent may determine to be appropriate from time to time up to the maximum permitted, and to charge each subsidiary an allocable amount based on its employee pensionable earnings. Pension costs allocated to the Company amounted to $5,591, $8,321 and $8,143 for 2014, 2013 and 2012, respectively. | |
As of January 1, 2014, the Parent’s Pension and Executive Pension Plans are no longer offered to new hires. Current employees will not be affected and will continue to accrue benefits under the Parent’s Pension and Executive Pension Plans. Employees who are currently eligible, but not yet participating in the Parent’s Pension and Executive Pension Plans, will remain eligible to participate in the future once they meet the Parent’s Pension and Executive Pension Plans’ requirements. | |
The Parent sponsors a defined contribution plan covering substantially all employees. The defined contribution plan provides benefits payable to participants on retirement or disability and to beneficiaries of participants in the event of the participant’s death. The amounts expensed by the Company related to this plan were $6,006, $5,781 and $5,790 for 2014, 2013 and 2012, respectively. | |
With respect to retirement benefits, the Company participates in other health care and life insurance benefit plans (postretirement benefits) for retired employees, sponsored by the Parent. On July 1, 2011, the Parent terminated certain health care benefits for employees who do not qualify for “grandfathered” status and will no longer offer these benefits to new hires. The Parent contribution, plan design and other terms of remaining benefits will not change for those grandfathered employees. The Parent has the right to modify or terminate these benefits. During 2014, 2013 and 2012 the Company incurred expenses related to postretirement benefits of $179, $321 and $309, respectively. | |
Deferred_Acquisition_Costs
Deferred Acquisition Costs | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Deferred Acquisition Costs | |||||||||||
Deferred Acquisition Costs | |||||||||||
12.Deferred Acquisition Costs | |||||||||||
Information about deferred acquisition costs is as follows: | |||||||||||
Years Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Beginning balance | $ | 24,521 | $ | 20,600 | $ | 18,637 | |||||
Costs deferred | 33,126 | 32,359 | 28,993 | ||||||||
Amortization | (31,212 | ) | (28,438 | ) | (27,030 | ) | |||||
Ending balance | $ | 26,435 | $ | 24,521 | $ | 20,600 | |||||
Goodwill_VOBA_and_Other_Intang
Goodwill, VOBA and Other Intangible Assets | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Goodwill, VOBA and Other Intangible Assets | ||||||||||||||||||||
Goodwill, VOBA and Other Intangible Assets | ||||||||||||||||||||
13.Goodwill, VOBA and Other Intangible Assets | ||||||||||||||||||||
Information about goodwill is as follows: | ||||||||||||||||||||
Goodwill for the Years Ended | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||
Goodwill | $ | 156,817 | $ | 156,817 | $ | 156,817 | ||||||||||||||
Accumulated impairment loss | (139,532 | ) | (139,532 | ) | (139,532 | ) | ||||||||||||||
Balance as of December 31: | $ | 17,285 | $ | 17,285 | $ | 17,285 | ||||||||||||||
In accordance with the goodwill guidance, goodwill is deemed to have an indefinite life and should not be amortized, but rather must be tested, at least annually, for impairment. In addition, goodwill should be tested for impairment between annual tests if an event occurs or circumstances change that would “more likely than not” reduce the estimated fair value of the Company below its carrying value. | ||||||||||||||||||||
The goodwill impairment test has two steps. Step 1 of the test identifies potential impairments, by comparing the estimated fair value of the Company to its net book value. If the estimated fair value exceeds its net book value, there is no impairment of goodwill and Step 2 is unnecessary. However, if the net book value exceeds the estimated fair value, then Step 1 is failed, and Step 2 is performed to determine the amount of the potential impairment. Step 2 utilizes acquisition accounting guidance and requires the fair value calculation of all individual assets and liabilities of the Company (excluding goodwill, but including any unrecognized intangible assets). The net fair value of assets less liabilities is then compared to the Company’s total estimated fair value as calculated in Step 1. The excess of fair value over the net asset value equals the implied fair value of goodwill. The implied fair value of goodwill is then compared to the carrying value of goodwill to determine the Company’s goodwill impairment. Alternatively, the amended intangibles- goodwill and other guidance provides the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of an entity is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that its fair value is less than its carrying amount, then performing the two-step impairment test is unnecessary. However, if an entity concludes otherwise, then it is required to perform the first step of the two-step impairment test, described above. | ||||||||||||||||||||
In the fourth quarters of 2014, 2013 and 2012, the Company conducted our annual assessments of goodwill. During the year ended December 31, 2014, the Company changed its annual testing date from November 30 to October 1. With respect to its annual goodwill testing date, management believes that this voluntary change in accounting method is preferable as it better aligns the annual impairment testing date with the Company’s strategic planning cycle, which is a significant element in the testing process. This change in annual testing date does not delay, accelerate or avoid an impairment charge. | ||||||||||||||||||||
In 2014, 2013 and 2012, the Company performed a Step 1 test. Based on these tests, it was determined that goodwill was not impaired. | ||||||||||||||||||||
Information about VOBA is as follows: | ||||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||
Beginning balance | $ | 11,555 | $ | 13,105 | $ | 14,833 | ||||||||||||||
Amortization, net of interest accrued | (1,426 | ) | (1,550 | ) | (1,728 | ) | ||||||||||||||
Ending balance | $ | 10,129 | $ | 11,555 | $ | 13,105 | ||||||||||||||
As of December 31, 2014, the entire outstanding balance of VOBA relates to the Company’s preneed business. VOBA in this business assumes an interest rate ranging from 5.4% to 7.5%. | ||||||||||||||||||||
At December 31, 2014 the estimated amortization of VOBA for the next five years and thereafter is as follows: | ||||||||||||||||||||
Year | Amount | |||||||||||||||||||
2015 | $ | 1,323 | ||||||||||||||||||
2016 | 1,227 | |||||||||||||||||||
2017 | 1,131 | |||||||||||||||||||
2018 | 961 | |||||||||||||||||||
2019 | 874 | |||||||||||||||||||
Thereafter | 4,613 | |||||||||||||||||||
Total | $ | 10,129 | ||||||||||||||||||
Information about other intangible assets is as follows: | ||||||||||||||||||||
As of December 31, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Carrying | Accumulated | Net Other | Carrying | Accumulated | Net Other | |||||||||||||||
Value | Amortization | Intangible | Value | Amortization | Intangible | |||||||||||||||
Assets | Assets | |||||||||||||||||||
Contract based intangibles | $ | 38,020 | $ | (23,260 | ) | $ | 14,760 | $ | 38,020 | $ | (21,472 | ) | $ | 16,548 | ||||||
Other intangible assets amortization was $1,788 for 2014, 2013 and 2012. | ||||||||||||||||||||
Other intangible assets that have finite lives are amortized over their useful lives. The estimated amortization of other intangible assets, which mainly include customers contracts, are as follows: | ||||||||||||||||||||
Year | Amount | |||||||||||||||||||
2015 | $ | 1,788 | ||||||||||||||||||
2016 | 1,788 | |||||||||||||||||||
2017 | 1,788 | |||||||||||||||||||
2018 | 1,788 | |||||||||||||||||||
2019 | 1,788 | |||||||||||||||||||
Thereafter | 5,820 | |||||||||||||||||||
Total other intangible assets with finite lives | $ | 14,760 | ||||||||||||||||||
Accumulated_Other_Comprehensiv
Accumulated Other Comprehensive Income | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Accumulated Other Comprehensive Income | |||||||||||||
Accumulated Other Comprehensive Income | |||||||||||||
14.Accumulated Other Comprehensive Income | |||||||||||||
Certain amounts included in the consolidated statements of comprehensive income are net of reclassification adjustments. The following tables summarize those reclassification adjustments (net of taxes): | |||||||||||||
Year Ended December 31, 2014 | |||||||||||||
Unrealized | OTTI | Accumulated | |||||||||||
gains on | other | ||||||||||||
securities | comprehensive | ||||||||||||
income | |||||||||||||
Balance at December 31, 2013 | $ | 171,346 | $ | 8,755 | $ | 180,101 | |||||||
Other comprehensive income before reclassifications | 93,163 | 1,557 | 94,720 | ||||||||||
Amounts reclassified from accumulated other comprehensive income | 9,013 | (16 | ) | 8,997 | |||||||||
Net current-period other comprehensive income | 102,176 | 1,541 | 103,717 | ||||||||||
Balance at December 31, 2014 | $ | 273,522 | $ | 10,296 | $ | 283,818 | |||||||
Year Ended December 31, 2013 | |||||||||||||
Unrealized | OTTI | Accumulated | |||||||||||
gains on | other | ||||||||||||
securities | comprehensive | ||||||||||||
income | |||||||||||||
Balance at December 31, 2012 | $ | 311,354 | $ | 9,236 | $ | 320,590 | |||||||
Other comprehensive loss before reclassifications | (147,640 | ) | (1,513 | ) | (149,153 | ) | |||||||
Amounts reclassified from accumulated other comprehensive income | 7,632 | 1,032 | 8,664 | ||||||||||
Net current-period other comprehensive loss | (140,008 | ) | (481 | ) | (140,489 | ) | |||||||
Balance at December 31, 2013 | $ | 171,346 | $ | 8,755 | $ | 180,101 | |||||||
Year Ended December 31, 2012 | |||||||||||||
Unrealized | OTTI | Accumulated | |||||||||||
gains on | other | ||||||||||||
securities | comprehensive | ||||||||||||
income | |||||||||||||
Balance at December 31, 2011 | $ | 211,368 | $ | 5,743 | $ | 217,111 | |||||||
Other comprehensive income before reclassifications | 96,013 | 3,524 | 99,537 | ||||||||||
Amounts reclassified from accumulated other comprehensive income | 3,973 | (31 | ) | 3,942 | |||||||||
Net current-period other comprehensive income | 99,986 | 3,493 | 103,479 | ||||||||||
Balance at December 31, 2012 | $ | 311,354 | $ | 9,236 | $ | 320,590 | |||||||
The following tables summarize the reclassifications out of accumulated other comprehensive income: | |||||||||||||
Amount reclassified from accumulated | Affected line item in the | ||||||||||||
other comprehensive income | |||||||||||||
Details about accumulated other | Years Ended December 31, | statement where net | |||||||||||
comprehensive income components | 2014 | 2013 | 2012 | income is presented | |||||||||
Unrealized gains on securities | $ | 13,866 | $ | 11,741 | $ | 6,113 | Net realized gains on investments, excluding other-than-temporary impairment losses | ||||||
(4,853 | ) | (4,109 | ) | (2,140 | ) | Provision for income taxes | |||||||
$ | 9,013 | $ | 7,632 | $ | 3,973 | Net of tax | |||||||
OTTI | $ | (24 | ) | $ | 1,588 | $ | (47 | ) | Portion of net (gain) loss recognized in other comprehensive income, before taxes | ||||
8 | (556 | ) | 16 | Provision for income taxes | |||||||||
$ | (16 | ) | $ | 1,032 | $ | (31 | ) | Net of tax | |||||
Total reclassifications for the period | $ | 8,997 | $ | 8,664 | $ | 3,942 | Net of tax | ||||||
Related_Party_Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2014 | |
Related Party Transactions | |
Related Party Transactions | |
15.Related Party Transactions | |
The Company receives various services from the Parent and its affiliates. These services include assistance in benefit plan administration, corporate insurance, accounting, tax, information technology, auditing, investment, actuarial and other administrative functions. The net fees paid for these services to the Parent and its affiliates for the years ended December 31, 2014, 2013 and 2012, were $78,347, $68,848 and $78,866, respectively. | |
Administrative expenses allocated for the Company may be greater or less than the expenses that would be incurred if the Company were operating as a separate company. | |
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Commitments and Contingencies. | |||||
Commitments and Contingencies | |||||
16.Commitments and Contingencies | |||||
The Company leases office space and equipment under operating lease arrangements. Certain facility leases contain escalation clauses based on increases in the lessors’ operating expenses. At December 31, 2014, the aggregate future minimum lease payments under these operating lease agreements that have initial or non-cancelable terms in excess of one year are: | |||||
2015 | $ | 5,829 | |||
2016 | 5,628 | ||||
2017 | 5,151 | ||||
2018 | 4,600 | ||||
2019 | 3,975 | ||||
Thereafter | 59,991 | ||||
Total minimum future lease payments (a) | $ | 85,174 | |||
(a) | Minimum future lease payments exclude $10,887 of sublease rental income. | ||||
Rent expense was $6,182, $6,225 and $6,377 for 2014, 2013 and 2012, respectively. Sublease income was $193 in 2014. There was no sublease income for 2013 and 2012. | |||||
The Company is involved in litigation in the ordinary course of business, both as a defendant and as a plaintiff. The Company may from time to time be subject to a variety of legal and regulatory actions relating to the Company’s current and past business operations. | |||||
Although the Company cannot predict the outcome of any action, it is possible that the outcome of such matters could have a material adverse effect on the Company’s consolidated results of operations or cash flows for an individual reporting period. However, based on currently available information, management does not believe that any pending matters are likely to have a material adverse effect, individually or in the aggregate, on the Company’s financial condition. | |||||
Schedule_ISummary_of_Investmen
Schedule I-Summary of Investments Other-Than-Investments in Related Parties | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Schedule I-Summary of Investments Other-Than-Investments in Related Parties | |||||||||||
Schedule I-Summary of Investments Other-Than-Investments in Related Parties | |||||||||||
Union Security Insurance Company | |||||||||||
at December 31, 2014 | |||||||||||
Schedule I—Summary of Investments Other –Than–Investments in Related Parties | |||||||||||
Cost or | Fair Value | Amount at which | |||||||||
Amortized Cost | shown in balance | ||||||||||
sheet | |||||||||||
(in thousands) | |||||||||||
Fixed maturity securities: | |||||||||||
United States Government and government agencies and authorities | $ | 19,221 | $ | 19,475 | $ | 19,475 | |||||
States, municipalities and political subdivisions | 42,745 | 45,788 | 45,788 | ||||||||
Foreign governments | 19,061 | 21,824 | 21,824 | ||||||||
Asset-backed | 684 | 734 | 734 | ||||||||
Commercial mortgage-backed | 3,794 | 3,896 | 3,896 | ||||||||
Residential mortgage-backed | 65,090 | 72,026 | 72,026 | ||||||||
Corporate | 2,099,296 | 2,514,945 | 2,514,945 | ||||||||
Total fixed maturity securities | 2,249,891 | 2,678,688 | 2,678,688 | ||||||||
Equity securities: | |||||||||||
Common stocks | 92 | 414 | 414 | ||||||||
Non-redeemable preferred stocks | 122,255 | 135,332 | 135,332 | ||||||||
Total equity securities | 122,347 | 135,746 | 135,746 | ||||||||
Commercial mortgage loans on real estate, at amortized cost | 499,814 | 569,754 | 499,814 | ||||||||
Policy loans | 11,663 | 11,663 | 11,663 | ||||||||
Short-term investments | 64,104 | 64,104 | 64,104 | ||||||||
Collateral held/pledged under securities agreements | 42,941 | 42,941 | 42,941 | ||||||||
Other investments | 109,740 | 109,740 | 109,740 | ||||||||
Total investments | $ | 3,100,500 | $ | 3,612,636 | $ | 3,542,696 | |||||
Schedule_IIISupplementary_Insu
Schedule III-Supplementary Insurance Information | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||
Schedule III-Supplementary Insurance Information | |||||||||||||||||||||||||||||
Schedule III-Supplementary Insurance Information | |||||||||||||||||||||||||||||
Union Security Insurance Company | |||||||||||||||||||||||||||||
for the years ended December 31, 2014, 2013 & 2012 | |||||||||||||||||||||||||||||
Schedule III—Supplementary Insurance Information | |||||||||||||||||||||||||||||
Deferred | Future | Unearned | Claims and | Premium | Net | Benefits | Amortization | Other* | |||||||||||||||||||||
acquisition | policy | premiums | benefits | revenues | investment | claims, losses | of deferred | operating | |||||||||||||||||||||
costs | benefits and | payable | income | and | policy | expenses | |||||||||||||||||||||||
expenses | settlement | acquisition | |||||||||||||||||||||||||||
expenses | costs | ||||||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||||
2014 | $ | 26,435 | $ | 2,906,706 | $ | 34,355 | $ | 1,717,938 | $ | 1,035,467 | $ | 180,734 | $ | 746,101 | $ | 31,212 | $ | 357,839 | |||||||||||
2013 | $ | 24,521 | $ | 2,743,876 | $ | 30,535 | $ | 1,679,730 | $ | 1,001,631 | $ | 182,960 | $ | 745,247 | $ | 28,438 | $ | 349,782 | |||||||||||
2012 | $ | 20,600 | $ | 2,804,648 | $ | 30,021 | $ | 1,695,090 | $ | 1,007,986 | $ | 198,728 | $ | 731,862 | $ | 27,030 | $ | 348,020 | |||||||||||
* Includes amortization of value of business acquired and underwriting, general and administration expenses. | |||||||||||||||||||||||||||||
Schedule_IV_Reinsurance
Schedule IV - Reinsurance | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Schedule IV - Reinsurance | ||||||||||||||||
Schedule IV - Reinsurance | ||||||||||||||||
Union Security Insurance Company | ||||||||||||||||
for the year ended December 31, 2014 | ||||||||||||||||
Schedule IV - Reinsurance | ||||||||||||||||
Direct amount | Ceded to other | Assumed from other | Net amount | Percentage | ||||||||||||
Companies | Companies | of amount | ||||||||||||||
assumed to | ||||||||||||||||
net | ||||||||||||||||
Life Insurance in Force | $ | 74,650,477 | $ | 10,021,852 | $ | 1,010,223 | $ | 65,638,848 | 1.5 | % | ||||||
Premiums: | ||||||||||||||||
Life insurance | $ | 279,488 | $ | 77,978 | $ | 4,831 | $ | 206,341 | 2.3 | % | ||||||
Accident and health insurance | 763,290 | 87,282 | 153,118 | 829,126 | 18.5 | % | ||||||||||
Total earned premiums | $ | 1,042,778 | $ | 165,260 | $ | 157,949 | $ | 1,035,467 | 15.3 | % | ||||||
Benefits: | ||||||||||||||||
Life insurance | $ | 374,582 | $ | 229,548 | $ | 19,317 | $ | 164,351 | 11.8 | % | ||||||
Accident and health insurance | 829,675 | 396,127 | 148,202 | 581,750 | 25.5 | % | ||||||||||
Total policyholder benefits | $ | 1,204,257 | $ | 625,675 | $ | 167,519 | $ | 746,101 | 22.5 | % | ||||||
Union Security Insurance Company | ||||||||||||||||
for the year ended December 31, 2013 | ||||||||||||||||
Schedule IV - Reinsurance | ||||||||||||||||
Direct amount | Ceded to other | Assumed from | Net amount | Percentage | ||||||||||||
Companies | other Companies | of amount | ||||||||||||||
assumed to | ||||||||||||||||
net | ||||||||||||||||
Life Insurance in Force | $ | 73,382,530 | $ | 10,129,336 | $ | 954,647 | $ | 64,207,841 | 1.5 | % | ||||||
Premiums: | ||||||||||||||||
Life insurance | $ | 275,659 | $ | 81,965 | $ | 4,983 | $ | 198,677 | 2.5 | % | ||||||
Accident and health insurance | 755,076 | 97,819 | 145,697 | 802,954 | 18.1 | % | ||||||||||
Total earned premiums | $ | 1,030,735 | $ | 179,784 | $ | 150,680 | $ | 1,001,631 | 15.0 | % | ||||||
Benefits: | ||||||||||||||||
Life insurance | $ | 380,798 | $ | 237,530 | $ | 20,624 | $ | 163,892 | 12.6 | % | ||||||
Accident and health insurance | 537,002 | 97,064 | 141,417 | 581,355 | 24.3 | % | ||||||||||
Total policyholder benefits | $ | 917,800 | $ | 334,594 | $ | 162,041 | $ | 745,247 | 21.7 | % | ||||||
Union Security Insurance Company | ||||||||||||||||
for the year ended December 31, 2012 | ||||||||||||||||
Schedule IV - Reinsurance | ||||||||||||||||
Direct amount | Ceded to other | Assumed from | Net amount | Percentage | ||||||||||||
Companies | other Companies | of amount | ||||||||||||||
assumed to | ||||||||||||||||
net | ||||||||||||||||
Life Insurance in Force | $ | 71,453,196 | $ | 10,860,008 | $ | 981,157 | $ | 61,574,345 | 1.6 | % | ||||||
Premiums: | ||||||||||||||||
Life insurance | $ | 279,385 | $ | 89,869 | $ | 8,176 | $ | 197,692 | 4.1 | % | ||||||
Accident and health insurance | 760,390 | 100,033 | 149,937 | 810,294 | 18.5 | % | ||||||||||
Total earned premiums | $ | 1,039,775 | $ | 189,902 | $ | 158,113 | $ | 1,007,986 | 15.7 | % | ||||||
Benefits: | ||||||||||||||||
Life insurance | $ | 392,126 | $ | 253,829 | $ | 21,674 | $ | 159,971 | 13.5 | % | ||||||
Accident and health insurance | 486,912 | 51,151 | 136,130 | 571,891 | 23.8 | % | ||||||||||
Total policyholder benefits | $ | 879,038 | $ | 304,980 | $ | 157,804 | $ | 731,862 | 21.6 | % | ||||||
Schedule_VValuation_and_Qualif
Schedule V-Valuation and Qualifying Accounts | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Schedule V-Valuation and Qualifying Accounts | |||||||||||||||||
Schedule V-Valuation and Qualifying Accounts | |||||||||||||||||
Union Security Insurance Company | |||||||||||||||||
as of December 31, 2014, 2013 and 2012 | |||||||||||||||||
Schedule V—Valuation and Qualifying Accounts | |||||||||||||||||
Additions | |||||||||||||||||
Balance at | Charged to | Charged | Deductions | Balance at | |||||||||||||
Beginning of | Costs and | to Other | End of | ||||||||||||||
Year | Expenses | Accounts | Year | ||||||||||||||
2014:00:00 | |||||||||||||||||
Valuation allowance for mortgage loans on real estate | $ | 2,047 | $ | (583 | ) | $ | 0 | $ | 0 | $ | 1,464 | ||||||
Valuation allowance for uncollectible agents balances | 4,462 | (64 | ) | 0 | (2 | ) | 4,400 | ||||||||||
Valuation allowance for uncollectible accounts | 22 | 10 | 0 | 0 | 32 | ||||||||||||
Total | $ | 6,531 | $ | (637 | ) | $ | 0 | $ | (2 | ) | $ | 5,896 | |||||
2013:00:00 | |||||||||||||||||
Valuation allowance for mortgage loans on real estate | $ | 3,646 | $ | (1,599 | ) | $ | 0 | $ | 0 | $ | 2,047 | ||||||
Valuation allowance for uncollectible agents balances | 4,530 | (68 | ) | 0 | 0 | 4,462 | |||||||||||
Valuation allowance for uncollectible accounts | 16 | 6 | 0 | 0 | 22 | ||||||||||||
Total | $ | 8,192 | $ | (1,661 | ) | $ | 0 | $ | 0 | $ | 6,531 | ||||||
2012:00:00 | |||||||||||||||||
Valuation allowance for mortgage loans on real estate | $ | 5,381 | $ | (1,735 | ) | $ | 0 | $ | 0 | $ | 3,646 | ||||||
Valuation allowance for uncollectible agents balances | 4,655 | (67 | ) | 0 | 58 | 4,530 | |||||||||||
Valuation allowance for uncollectible accounts | 43 | (27 | ) | 0 | 0 | 16 | |||||||||||
Total | $ | 10,079 | $ | (1,829 | ) | $ | 0 | $ | 58 | $ | 8,192 | ||||||
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | |
Basis of Presentation | |
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Amounts are presented in United States of America (“U.S.”) dollars and all amounts are in thousands, except for number of shares, per share amounts and number of securities in an unrealized loss position. | |
Principles of Consolidation | |
Principles of Consolidation | |
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All inter-company transactions and balances are eliminated in consolidation. | |
Use of Estimates | |
Use of Estimates | |
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. The items on the Company’s balance sheets affected by the use of estimates include but are not limited to, investments, premiums and accounts receivable, reinsurance recoverables, deferred acquisition costs (“DAC”), deferred income taxes and associated valuation allowances, goodwill, valuation of business acquired (“VOBA”), future policy benefits and expenses, unearned premiums, claims and benefits payable, deferred gain on disposal of businesses, and commitments and contingencies. The estimates are sensitive to market conditions, investment yields, mortality, morbidity, commissions and other acquisition expenses, policyholder behavior and other factors. Actual results could differ from the estimates recorded. The Company believes all amounts reported are reasonable and adequate. | |
Comprehensive Income (Loss) | |
Comprehensive Income (Loss) | |
Comprehensive income (loss) is comprised of net income, net unrealized gains and losses on securities classified as available for sale and net unrealized gains and losses on other-than-temporarily impaired securities, less deferred income taxes. | |
Reclassifications | |
Reclassifications | |
Certain prior period amounts have been reclassified to conform to the 2014 presentation. | |
Fair Value | |
Fair Value | |
The Company uses an exit price for its fair value measurements. An exit price is defined as the amount received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In measuring fair value, the Company gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. See Note 4 for further information. | |
Investments | |
Investments | |
Fixed maturity and equity securities are classified as available for sale, as defined in the investments guidance, and reported at fair value. If the fair value is higher than the amortized cost for fixed maturity securities or the purchase cost for equity securities, the excess is an unrealized gain; and, if lower than cost, the difference is an unrealized loss. Net unrealized gains and losses on securities classified as available for sale, less deferred income taxes, are included in accumulated other comprehensive income (“AOCI”). | |
Commercial mortgage loans on real estate are reported at unpaid balances, adjusted for amortization of premium or discount, less allowance for losses. The allowance is based on management’s analysis of factors including actual loan loss experience, specific events based on geographical, political or economic conditions, industry experience, loan groupings that have probable and estimable losses and individually impaired loan loss analysis. A loan is considered individually impaired when it becomes probable the Company will be unable to collect all amounts due, including principal and interest, according to the contractual terms of the loan agreement. Indicative factors of impairment include, but are not limited to, whether the loan is current, the value of the collateral and the financial position of the borrower. If a loan is individually impaired, the Company uses one of the following valuation methods based on the individual loan’s facts and circumstances to measure the impairment amount: (1) the present value of expected future cash flows, (2) the loan’s observable market price, or (3) the fair value of collateral. Changes in the allowance for loan losses are recorded in net realized losses on investments, excluding other-than-temporary impairment (“OTTI”) losses. | |
The Company places loans on non-accrual status after 90 days of delinquent payments (unless the loans are both well secured and in the process of collection). A loan may be placed on non-accrual status before this time if information is available that suggests its impairment is probable. | |
Policy loans are reported at unpaid principal balances, which do not exceed the cash surrender value of the underlying policies. | |
Short-term investments include money market funds and short maturity investments. These amounts are reported at cost, which approximates fair value. | |
The Company engages in collateralized transactions in which fixed maturity securities, especially bonds issued by the U.S. government, government agencies and authorities, and U.S. corporations, are loaned to selected broker/dealers. The collateral held under these securities lending transactions is reported at fair value and the obligation is reported at the amount of the collateral received. The difference between the collateral held and obligations under securities lending is recorded as an unrealized loss and is included as part of AOCI. | |
Other investments consist primarily of investments in joint ventures and partnerships. The joint ventures and partnerships are valued according to the equity method of accounting. In applying the equity method the Company uses financial information provided by the investee, generally on a three month lag. | |
The Company monitors its investment portfolio to identify investments that may be other-than-temporarily impaired. In addition, securities, aggregated by issuer, whose market price is equal to 80% or less of their original purchase price or which had a discrete credit event resulting in the debtor defaulting or seeking bankruptcy protection are added to a potential write-down list, which is discussed at quarterly meetings attended by members of the Company’s investment, accounting and finance departments. See Note 3 for further information. | |
Realized gains and losses on sales of investments are recognized on the specific identification basis. | |
Investment income is recorded as earned and reported net of investment expenses. The Company uses the interest method to recognize interest income on its commercial mortgage loans. | |
The Company anticipates prepayments of principal in the calculation of the effective yield for mortgage-backed securities and structured securities. The retrospective method is used to adjust the effective yield. | |
Cash and Cash Equivalents | |
Cash and Cash Equivalents | |
The Company considers cash on hand, all operating cash and working capital cash to be cash equivalents. These amounts are carried at cost, which approximates fair value. Cash balances are reviewed at the end of each reporting period to determine if negative cash balances exist. If negative cash balances do exist, the cash accounts are netted with other positive cash accounts of the same bank provided the right of offset exists between the accounts. If the right of offset does not exist, the negative cash balances are reclassified to accounts payable. | |
Uncollectible Receivable Balance | |
Uncollectible Receivable Balance | |
The Company maintains allowances for doubtful accounts for probable losses resulting from the inability to collect payments. | |
Reinsurance | |
Reinsurance | |
Reinsurance recoverables include amounts related to paid benefits and estimated amounts related to unpaid policy and contract claims, future policyholder benefits and policyholder contract deposits. The cost of reinsurance is recognized over the terms of the underlying reinsured policies using assumptions consistent with those used to account for the policies. Amounts recoverable from reinsurers are estimated in a manner consistent with claim and claim adjustment expense reserves or future policy benefits reserves and are reported in the consolidated balance sheets. The cost of reinsurance related to long-duration contracts is recognized over the life of the underlying reinsured policies. The ceding of insurance does not discharge the Company’s primary liability to insureds, thus a credit exposure exists to the extent that any reinsurer is unable to meet the obligation assumed in the reinsurance agreements. To mitigate this exposure to reinsurance insolvencies, the Company evaluates the financial condition of its reinsurers and holds collateral (in the form of funds withheld, trusts, and letters of credit) as security under the reinsurance agreements. An allowance for doubtful accounts is recorded on the basis of periodic evaluations of balances due from reinsurers (net of collateral), reinsurer solvency, management’s experience and current economic conditions. | |
Funds withheld under reinsurance represent amounts contractually held from assuming companies in accordance with reinsurance agreements. | |
Reinsurance premiums assumed are calculated based upon payments received from ceding companies together with accrual estimates, which are based on both payments received and in force policy information received from ceding companies. Any subsequent differences arising on such estimates are recorded in the period in which they are determined. | |
Income Taxes | |
Income Taxes | |
The Company reports its taxable income in a consolidated federal income tax return along with other affiliated subsidiaries of the Parent. Income tax expense or benefit is allocated among the affiliated subsidiaries by applying corporate income tax rates to taxable income or loss determined on a separate return basis according to a tax allocation agreement. Entities with losses record current tax benefits to the extent such losses are recognized in the consolidated federal tax return. | |
Current federal income taxes are recognized based upon amounts estimated to be payable or recoverable as a result of taxable operations for the current year. Deferred income taxes are recorded for temporary differences between the financial reporting basis and income tax basis of assets and liabilities, based on enacted tax laws and statutory tax rates applicable to the periods in which the Company expects the temporary differences to reverse. A valuation allowance is established for deferred tax assets when it is more likely than not that an amount will not be realized. | |
The Company classifies net interest expense related to tax matters and any applicable penalties as a component of income tax expense. | |
Deferred Acquisition Costs | |
Deferred Acquisition Costs | |
Only direct incremental costs associated with the successful acquisition of new or renewal insurance contracts are deferred to the extent that such costs are deemed recoverable from future premiums or gross profits. Acquisition costs primarily consist of commissions and compensation to sales representatives. Certain direct response advertising expenses are deferred when the primary purpose of the advertising is to elicit sales to customers who can be shown to have specifically responded to the advertising and the direct response advertising results in probable future benefits. | |
Premium deficiency testing is performed annually and generally reviewed quarterly. Such testing involves the use of best estimate assumptions including the anticipation of investment income to determine if anticipated future policy premiums are adequate to recover all DAC and related claims, benefits and expenses. To the extent a premium deficiency exists, it is recognized immediately by a charge to the consolidated statement of operations and a corresponding reduction in DAC. If the premium deficiency is greater than unamortized DAC, a liability will be accrued for the excess deficiency. | |
Long Duration Contracts | |
Acquisition costs for preneed life insurance policies and certain life insurance policies no longer offered are deferred and amortized in proportion to anticipated premiums over the premium-paying period. These acquisition costs consist primarily of first year commissions paid to agents. | |
Acquisition costs relating to group worksite insurance products consist primarily of first year commissions to brokers, costs of issuing new certificates, and compensation to sales representatives. These acquisition costs are front-end loaded, thus they are deferred and amortized over the estimated terms of the underlying contracts. | |
For preneed investment-type annuities, DAC is amortized in proportion to the present value of estimated gross profits from investment, mortality, expense margins and surrender charges over the estimated life of the policy or contract. The assumptions used for the estimates are consistent with those used in computing the policy or contract liabilities. | |
Acquisition costs on Fortis Financial Group (“FFG”) and Long-Term Care (“LTC”) disposed businesses were written off when the businesses were sold. | |
Short Duration Contracts | |
Acquisition costs relating to monthly pay credit insurance business consist mainly of direct response advertising costs and are deferred and amortized over the estimated average terms and balances of the underlying contracts. | |
Acquisition costs relating to group term life, group disability, group dental and group vision consist primarily of compensation to sales representatives. These acquisition costs are front-end loaded; thus, they are deferred and amortized over the estimated terms of the underlying contracts. | |
Property and Equipment | |
Property and Equipment | |
Property and equipment are included in other assets and reported at cost less accumulated depreciation. Depreciation is calculated on a straight-line basis over estimated useful lives with a maximum of 39.5 years for buildings, a maximum of 7 years for furniture and a maximum of 5 years for equipment. Expenditures for maintenance and repairs are charged to income as incurred. Expenditures for improvements are capitalized and depreciated over the remaining useful life of the asset. | |
Property and equipment also includes capitalized software costs, which represent costs directly related to obtaining, developing or upgrading internal use software. Such costs are capitalized and amortized using the straight-line method over their estimated useful lives, not to exceed 20 years. Property and equipment are assessed for impairment when impairment indicators exist. | |
Goodwill | |
Goodwill | |
Goodwill represents the excess of acquisition costs over the net fair value of identifiable assets acquired and liabilities assumed in a business combination. Goodwill is deemed to have an indefinite life and is not amortized, but rather is tested at least annually for impairment. The Company reviews goodwill annually in the fourth quarter for impairment, or more frequently if indicators of impairment exist. The Company regularly assesses whether any indicators of impairment exist. Such indicators include, but are not limited to: significant adverse change in legal factors, adverse action or assessment by a regulator, unanticipated competition, loss of key personnel, or a significant decline in expected future cash flows due to changes in company-specific factors or the broader business climate. The evaluation of such factors requires considerable management judgment. | |
At the time of the annual goodwill test, the Company has the option to first assess qualitative factors to determine whether it is necessary to perform the current two-step goodwill impairment test. The Company is required to perform step one if it determines qualitatively that it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value is less than its carrying amount, including goodwill. Otherwise, no further testing is required. | |
If the Company does not take the option to perform the qualitative assessment or the qualitative assessment performed indicates that it is more likely than not that the fair value is less than the carrying value, the Company will then compare its estimated fair value with its net book value (“Step 1”). If the estimated fair value exceeds its net book value, goodwill is deemed not to be impaired, and no further testing is necessary. If the net book value exceeds its estimated fair value, the Company would perform a second test to measure the amount of impairment, if any. To determine the amount of any impairment, the Company would determine the implied fair value of goodwill in the same manner as if the Company were being acquired in a business combination (“Step 2”). Specifically, the Company would determine the fair value of all of the assets and liabilities, including any unrecognized intangible assets, in a hypothetical calculation that would yield the implied fair value of goodwill. If the implied fair value of goodwill is less than the recorded goodwill, the Company would record an impairment charge for the difference. | |
In 2014 and 2013, the Company did not take the option to perform a qualitative assessment, thus Step 1 was performed and we concluded the estimated fair value exceeded its respective book value and therefore goodwill was not impaired. See Note 4 & 13 for further information. | |
Value of Businesses Acquired | |
Value of Businesses Acquired | |
VOBA is an identifiable intangible asset representing the value of the insurance businesses acquired. The amount is determined using best estimates for mortality, lapse, maintenance expenses and investment returns at date of purchase. The amount determined represents the purchase price paid to the seller for producing the business. Similar to the amortization of DAC, the amortization of VOBA is over the premium payment period for traditional life insurance policies. For all other products, the amortization of VOBA is over the expected lifetime of the policies. | |
VOBA is tested annually in the fourth quarter for recoverability. If it is determined that future policy premiums and investment income or gross profits are not adequate to cover related losses or loss expenses, then an expense is reported in current earnings. Based on 2014 and 2013 testing, future policy premiums and investment income or gross profits were deemed adequate to cover related losses or loss expenses. | |
Other Assets | |
Other Assets | |
Other assets primarily include prepaid items. | |
Other Intangible Assets | |
Other Intangible Assets | |
Other intangible assets that have finite lives, including but not limited to, customer contracts, are amortized over their estimated useful lives. Other intangible assets deemed to have indefinite useful lives, primarily certain state licenses, are not amortized and are subject to at least annual impairment tests. At the time of the annual impairment test, the Company has the option to first assess qualitative factors to determine whether it is necessary to perform a quantitative impairment test for indefinite-lived intangible assets. Impairment exists if the carrying amount of the indefinite-lived other intangible asset exceeds its fair value. For other intangible assets with finite lives, impairment is recognized if the carrying amount is not recoverable and exceeds the fair value of the other intangible asset. Generally other intangible assets with finite lives are only tested for impairment if there are indicators (“triggers”) of impairment identified. Triggers include, but are not limited to, a significant adverse change in the extent, manner or length of time in which the other intangible asset is being used or a significant adverse change in legal factors or in the business climate that could affect the value of the other intangible asset. In certain cases, the Company does perform an annual impairment test for other intangible assets with finite lives even if there are no triggers present. There were no impairments of finite-lived or indefinite-lived other intangible assets in either 2014 or 2013. | |
Amortization expense is included in underwriting, general and administrative expenses in the consolidated statements of operations. | |
Separate Accounts | |
Separate Accounts | |
Assets and liabilities associated with separate accounts relate to premium and annuity considerations for variable life and annuity products for which the contract-holder, rather than the Company, bears the investment risk. Separate account assets (with matching liabilities) are reported at fair value. Revenues and expenses related to the separate account assets and liabilities, to the extent of benefits paid or provided to the separate account policyholders, are excluded from the amounts reported in the accompanying consolidated statements of operations because the accounts are administered by reinsurers. | |
Reserves | |
Reserves | |
Reserves are established in accordance with GAAP, using generally accepted actuarial methods. Factors used in their calculation include experience derived from historical claim payments and actuarial assumptions. Such assumptions and other factors include trends, the incidence of incurred claims, the extent to which all claims have been reported, and internal claims processing charges. The process used in computing reserves cannot be exact, particularly for liability coverages, since actual claim costs are dependent upon such complex factors as inflation, changes in doctrines of legal liabilities and damage awards. The methods of making such estimates and establishing the related liabilities are periodically reviewed and updated. | |
Reserves do not represent an exact calculation of exposure, but instead represent our best estimates of what we expect the ultimate settlement and administration of a claim or group of claims will cost based on facts and circumstances known at the time of calculation. The adequacy of reserves may be impacted by future trends in claims severity, frequency, judicial theories of liability and other factors. These variables are affected by both external and internal events, including but not limited to: changes in the economic cycle, changes in the social perception of the value of work, emerging medical perceptions regarding physiological or psychological causes of disability, emerging health issues and new methods of treatment or accommodation, inflation, judicial trends, legislative changes and claims handling procedures. | |
Many of these items are not directly quantifiable. Reserve estimates are refined as experience develops. Adjustments to reserves, both positive and negative, are reflected in the consolidated statement of operations in the period in which such estimates are updated. Because establishment of reserves is an inherently uncertain process involving estimates of future losses, there can be no certainty that ultimate losses will not exceed existing claims reserves. Future loss development could require reserves to be increased, which could have a material adverse effect on our earnings in the periods in which such increases are made. However, based on information currently available, we believe our reserve estimates are adequate. | |
Long Duration Contracts | |
The Company’s long duration contracts include preneed life insurance policies and annuity contracts, traditional life insurance policies no longer offered, policies disposed of via reinsurance (FFG and LTC contracts), group worksite policies, group life conversion policies and certain medical policies. | |
Future policy benefits and expense reserves for LTC, certain life and annuity insurance policies no longer offered, the traditional life insurance contracts within FFG, group worksite contracts and group life conversions are equal to the present value of future benefits to policyholders plus related expenses less the present value of the future net premiums. These amounts are estimated based on assumptions as to the expected investment yield, inflation, mortality, morbidity and withdrawal rates as well as other assumptions that are based on the Company’s experience. These assumptions reflect anticipated trends and include provisions for possible unfavorable deviations. | |
Future policy benefits and expense reserves for preneed investment-type annuities, and the variable life insurance and investment-type annuity contracts in FFG consist of policy account balances before applicable surrender charges and certain deferred policy initiation fees that are being recognized in income over the terms of the policies. Policy benefits charged to expense during the period include amounts paid in excess of policy account balances and interest credited to policy account balances. An unearned revenue reserve is also recorded for those preneed investment-type annuities which represent the balance of the excess of gross premiums over net premiums that is still recognized in future years’ income in a constant relationship to estimated gross profits. | |
Future policy benefits and expense reserves for preneed life insurance contracts are reported at the present value of future benefits to policyholders and related expenses less the present value of future net premiums. Reserve assumptions are selected using best estimates for expected investment yield, inflation, mortality and withdrawal rates. These assumptions reflect current trends, are based on Company experience and include provision for possible unfavorable deviation. An unearned revenue reserve is also recorded for these contracts which represents the balance of the excess of gross premiums over net premiums that is still to be recognized in future years’ income in a constant relationship to insurance in force. | |
Reserves for group worksite policies include case reserves and incurred but not reported (“IBNR”) reserves which equal the net present value of the expected future claims payments. Worksite group disability reserves are discounted to the valuation date at the valuation interest rate. The valuation interest rate is reviewed quarterly by taking into consideration actual and expected earned rates on our asset portfolio. | |
Risks related to the reserves recorded for policies under FFG and LTC have been 100% ceded via reinsurance. While the Company has not been released from the contractual obligation to the policyholders, changes in and deviations from economic mortality, morbidity, and expense assumptions used in the calculation of these reserves will not directly affect our results of operations unless there is a default by the assuming reinsurer. | |
Changes in the estimated liabilities are reported as a charge or credit to policyholder benefits as the estimates are revised. | |
Short Duration Contracts | |
The Company’s short duration contracts include group term life contracts, group disability contracts, medical contracts, dental contracts, vision contracts and credit disability contracts. For short duration contracts, claims and benefits payable reserves are recorded when insured events occur. The liability is based on the expected ultimate cost of settling the claims. The claims and benefits payable reserves include: (1) case reserves for known but unpaid claims as of the balance sheet date; (2) IBNR reserves for claims where the insured event has occurred but has not been reported to the Company as of the balance sheet date; and (3) loss adjustment expense reserves for the expected handling costs of settling the claims. | |
For group disability, the case reserves and the IBNR reserves are recorded at an amount equal to the net present value of the expected future claims payments. Group long-term disability and group term life waiver of premiums reserves are discounted to the valuation date at the valuation interest rate. The valuation interest rate is reviewed quarterly by taking into consideration actual and expected earned rates on our asset portfolio. Group long term disability and group term life reserve adequacy studies are performed annually, and morbidity and mortality assumptions are adjusted where appropriate. | |
Changes in the estimated liabilities are recorded as a charge or credit to policyholder benefits as estimates are revised. | |
Deferred Gain on Disposal of Businesses | |
Deferred Gain on Disposal of Businesses | |
The Company recorded a deferred gain on disposal of businesses utilizing reinsurance. On March 1, 2000, the Company sold its LTC business using a coinsurance contract. On April 2, 2001, the Company sold its FFG business using coinsurance and a modified coinsurance contract. Since the form of sale did not discharge the Company’s primary liability to the insureds, the gain on these disposals was deferred and reported as a liability. The liability is decreased and recognized as revenue over the estimated life of the contracts’ terms. The Company reviews and evaluates the estimates affecting the deferred gain on disposal of businesses annually or when significant information affecting the estimates becomes known to the Company, and adjusts the revenue recognized accordingly. Based on the Company’s 2014 annual review, the Company re-established $12,851 of the FFG deferred gain. There were no adjustments to the estimates affecting the deferred gain in 2013. | |
Premiums | |
Premiums | |
Long Duration Contracts | |
Currently, the Company’s long duration contracts which are actively being sold are group worksite insurance policies. Revenues are recognized ratably as earned income over the premium-paying periods of the policies for the group worksite insurance products. | |
For life insurance policies previously sold by the preneed business (no longer offered), revenue is recognized when due from policyholders. | |
For investment-type annuity contracts previously sold by the preneed business (no longer offered), revenues consist of charges assessed against policy balances. | |
Premiums for LTC insurance and traditional life insurance contracts within FFG are recognized as revenue when due from the policyholder. For universal life insurance and investment-type annuity contracts within FFG, revenues consist of charges assessed against policy balances. For the FFG and LTC businesses previously sold, all revenue is ceded. | |
Short Duration Contracts | |
The Company’s short duration contracts are those on which the Company recognizes over the contract term in proportion to the amount of insurance protection provided. The Company’s short duration contracts primarily include group term life, group disability, medical, dental, vision and credit disability. | |
Total Other-Than-Temporary Impairment Losses | |
Total Other-Than-Temporary Impairment Losses | |
For debt securities with credit losses and non-credit losses or gains, total OTTI losses is the total of the decline in fair value from either the most recent OTTI determination or a prior period end in which the fair value declined until the current period end valuation date. This amount does not include any securities that had fair value increases. For equity securities and debt securities that the Company has the intent to sell or if it is more likely than not that it will be required to sell for equity securities that have an OTTI or for debt securities if there are only credit losses, total other-than-temporary impairment losses is the total amount by which the fair value of the security is less than its amortized cost basis at the period end valuation date and the decline in fair value is deemed to be other-than-temporary. | |
Fees and Other Income | |
Fees and Other Income | |
Income earned on preneed life insurance policies with discretionary death benefit growth issued after 2008 is presented within fees and other income. | |
The Company also derives fees and other income from providing administrative services. These fees are recognized monthly when services are performed. | |
Underwriting, General and Administrative Expenses | |
Underwriting, General and Administrative Expenses | |
Underwriting, general and administrative expenses consist primarily of commissions, premium taxes, licenses, fees, salaries and personnel benefits and other general operating expenses. | |
Leases | |
Leases | |
The Company records expenses for operating leases on a straight-line basis over the lease term. | |
Contingencies | |
Contingencies | |
The Company evaluates each contingent matter separately. A loss contingency is recorded if reasonably estimable and probable. The Company establishes reserves for these contingencies at the best estimate, or if no one estimated number within the range of possible losses is more probable than any other, the Company records an estimated reserve at the low end of the estimated range. Contingencies affecting the Company primarily relate to litigation matters which are inherently difficult to evaluate and are subject to significant changes. The Company believes the contingent amounts recorded are reasonable. | |
Recent Accounting Pronouncements - Adopted and Not Yet Adopted | |
Recent Accounting Pronouncements—Adopted | |
On January 1, 2014, the Company adopted the new guidance on presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The amendments in this guidance state that an unrecognized tax benefit, or a portion thereof, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. An exception to this guidance would be where a net operating loss carryforward or similar tax loss or credit carryforward would not be available under the tax law to settle any additional income taxes that would result from the disallowance of a tax position, or the tax law does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose. In such a case, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The adoption of this new presentation guidance did not impact the Company’s financial position or results of operations. | |
On January 1, 2014, the Company adopted the other expenses guidance that addresses how health insurers should recognize and classify in their statements of operations fees mandated by the Affordable Care Act. The Affordable Care Act imposes an annual fee on health insurers for each calendar year beginning on or after January 1, 2014. The amendments specify that the liability for the fee should be estimated and recorded in full once the entity provides qualifying health insurance in the applicable calendar year in which the fee is payable with a corresponding deferred cost that is amortized to expense ratably over the calendar year during which it is payable. For the calendar year ended December 31, 2014, the Company ratably recorded $5,642 in underwriting, general and administrative expenses in the consolidated statements of operations, and paid, in full, the final assessment during the third quarter of 2014. | |
Recent Accounting Pronouncements — Not Yet Adopted | |
In May 2014, the Financial Accounting Standards Board (“FASB”) issued amended guidance on revenue recognition. The amended guidance affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. Insurance contracts are within the scope of other standards and therefore are specifically excluded from the scope of the amended revenue recognition guidance. The core principle of the amended guidance is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve the core principle, the entity applies a five step process outlined in the amended guidance. The amended guidance also includes a cohesive set of disclosure requirements. The amended guidance is effective for interim and annual periods beginning after December 15, 2016 and early adoption is not permitted. Therefore, the Company is required to adopt the guidance on January 1, 2017. An entity can choose to apply the amended guidance using either the full retrospective approach or a modified retrospective approach. The Company is currently evaluating the requirements of the revenue recognition guidance as it relates to its non-insurance contract revenue and the potential impact on the Company’s financial position and results of operations. | |
Investments_Tables
Investments (Tables) | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Investments. | ||||||||||||||||||||
Schedule of cost or amortized cost, gross unrealized gains and losses, fair value and OTTI of fixed maturity and equity securities | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Cost or | Gross | Gross | Fair Value | OTTI in | ||||||||||||||||
Amortized | Unrealized | Unrealized | AOCI (a) | |||||||||||||||||
Cost | Gains | Losses | ||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||
United States Government and government agencies and authorities | $ | 19,221 | $ | 255 | $ | (1 | ) | $ | 19,475 | $ | 0 | |||||||||
States, municipalities and political subdivisions | 42,745 | 3,043 | 0 | 45,788 | 0 | |||||||||||||||
Foreign governments | 19,061 | 2,763 | 0 | 21,824 | 0 | |||||||||||||||
Asset-backed | 684 | 50 | 0 | 734 | 0 | |||||||||||||||
Commercial mortgage-backed | 3,794 | 102 | 0 | 3,896 | 0 | |||||||||||||||
Residential mortgage-backed | 65,090 | 6,948 | (12 | ) | 72,026 | 2,386 | ||||||||||||||
Corporate | 2,099,296 | 418,393 | (2,744 | ) | 2,514,945 | 13,455 | ||||||||||||||
Total fixed maturity securities | $ | 2,249,891 | $ | 431,554 | $ | (2,757 | ) | $ | 2,678,688 | $ | 15,841 | |||||||||
Equity securities: | ||||||||||||||||||||
Common stocks | $ | 92 | $ | 322 | $ | 0 | $ | 414 | $ | 0 | ||||||||||
Non-redeemable preferred stocks | 122,255 | 13,350 | (273 | ) | 135,332 | 0 | ||||||||||||||
Total equity securities | $ | 122,347 | $ | 13,672 | $ | (273 | ) | $ | 135,746 | $ | 0 | |||||||||
December 31, 2013 | ||||||||||||||||||||
Cost or | Gross | Gross | Fair Value | OTTI in | ||||||||||||||||
Amortized | Unrealized | Unrealized | AOCI (a) | |||||||||||||||||
Cost | Gains | Losses | ||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||
United States Government and government agencies and authorities | $ | 22,562 | $ | 269 | $ | 0 | $ | 22,831 | $ | 0 | ||||||||||
States, municipalities and political subdivisions | 46,457 | 2,284 | (197 | ) | 48,544 | 0 | ||||||||||||||
Foreign governments | 22,381 | 2,072 | 0 | 24,453 | 0 | |||||||||||||||
Asset-backed | 789 | 62 | 0 | 851 | 0 | |||||||||||||||
Commercial mortgage-backed | 5,223 | 314 | 0 | 5,537 | 0 | |||||||||||||||
Residential mortgage-backed | 72,219 | 5,878 | (355 | ) | 77,742 | 2,482 | ||||||||||||||
Corporate | 2,146,023 | 269,657 | (3,154 | ) | 2,412,526 | 10,988 | ||||||||||||||
Total fixed maturity securities | $ | 2,315,654 | $ | 280,536 | $ | (3,706 | ) | $ | 2,592,484 | $ | 13,470 | |||||||||
Equity securities: | ||||||||||||||||||||
Common stocks | $ | 92 | $ | 326 | $ | 0 | $ | 418 | $ | 0 | ||||||||||
Non-redeemable preferred stocks | 94,375 | 7,559 | (2,086 | ) | 99,848 | 0 | ||||||||||||||
Total equity securities | $ | 94,467 | $ | 7,885 | $ | (2,086 | ) | $ | 100,266 | $ | 0 | |||||||||
(a) | Represents the amount of OTTI recognized in accumulated other comprehensive income (“AOCI”). Amount includes unrealized gains and losses on impaired securities relating to changes in the value of such securities subsequent to the impairment measurement date. | |||||||||||||||||||
Schedule of cost or amortized cost and fair value of fixed maturity securities by contractual maturity | ||||||||||||||||||||
The cost or amortized cost and fair value of fixed maturity securities at December 31, 2014 by contractual maturity are shown below. | ||||||||||||||||||||
Cost or | Fair Value | |||||||||||||||||||
Amortized | ||||||||||||||||||||
Cost | ||||||||||||||||||||
Due in one year or less | $ | 42,655 | $ | 43,046 | ||||||||||||||||
Due after one year through five years | 347,499 | 379,562 | ||||||||||||||||||
Due after five years through ten years | 382,654 | 412,697 | ||||||||||||||||||
Due after ten years | 1,407,515 | 1,766,727 | ||||||||||||||||||
Total | 2,180,323 | 2,602,032 | ||||||||||||||||||
Asset-backed | 684 | 734 | ||||||||||||||||||
Commercial mortgage-backed | 3,794 | 3,896 | ||||||||||||||||||
Residential mortgage-backed | 65,090 | 72,026 | ||||||||||||||||||
Total | $ | 2,249,891 | $ | 2,678,688 | ||||||||||||||||
Schedule of major categories of net investment income | ||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||
Fixed maturity securities | $ | 136,005 | $ | 143,493 | $ | 152,637 | ||||||||||||||
Equity securities | 6,932 | 5,984 | 5,676 | |||||||||||||||||
Commercial mortgage loans on real estate | 33,403 | 36,336 | 39,767 | |||||||||||||||||
Policy loans | 778 | 802 | 789 | |||||||||||||||||
Short-term investments | 9 | 22 | 57 | |||||||||||||||||
Other investments | 10,617 | 3,580 | 6,314 | |||||||||||||||||
Cash and cash equivalents | 4 | 1 | 0 | |||||||||||||||||
Total investment income | 187,748 | 190,218 | 205,240 | |||||||||||||||||
Investment expenses | (7,014 | ) | (7,258 | ) | (6,512 | ) | ||||||||||||||
Net investment income | $ | 180,734 | $ | 182,960 | $ | 198,728 | ||||||||||||||
Summary of proceeds from sales of available-for-sale securities and the gross realized gains and gross realized losses | ||||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||
Proceeds from sales | $ | 294,502 | $ | 438,984 | $ | 320,471 | ||||||||||||||
Gross realized gains | 16,833 | 23,898 | 11,995 | |||||||||||||||||
Gross realized losses | 1,083 | 11,173 | 4,046 | |||||||||||||||||
Schedule of net realized gains (losses), including other-than-temporary impairments | ||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||
Net realized gains (losses) related to sales and other: | ||||||||||||||||||||
Fixed maturity securities | $ | 16,820 | $ | 4,554 | $ | 10,496 | ||||||||||||||
Equity securities | (328 | ) | 8,793 | (2,203 | ) | |||||||||||||||
Commercial mortgage loans on real estate | 32 | 1,599 | 1,734 | |||||||||||||||||
Short-term investments | 0 | 0 | (1 | ) | ||||||||||||||||
Other investments | (159 | ) | (1,457 | ) | 0 | |||||||||||||||
Total net realized gains related to sales and other | 16,365 | 13,489 | 10,026 | |||||||||||||||||
Net realized losses related to other-than-temporary impairments: | ||||||||||||||||||||
Fixed maturity securities | (24 | ) | (1,865 | ) | (14 | ) | ||||||||||||||
Equity securities | 0 | 0 | (39 | ) | ||||||||||||||||
Total net realized losses related to other-than-temporary impairments | (24 | ) | (1,865 | ) | (53 | ) | ||||||||||||||
Total net realized gains | $ | 16,341 | $ | 11,624 | $ | 9,973 | ||||||||||||||
Schedule of credit loss impairments on fixed maturity securities for which a portion of the OTTI loss was recognized in AOCI | ||||||||||||||||||||
Years ended December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||
Balance, beginning of year | $ | 14,164 | $ | 26,970 | $ | 29,374 | ||||||||||||||
Additions for credit loss impairments recognized in the current period on securities previously impaired | 24 | 87 | 14 | |||||||||||||||||
Reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security | (461 | ) | (123 | ) | (403 | ) | ||||||||||||||
Reductions for credit loss impairments previously recognized on securities which matured, paid down, prepaid or were sold during the period | (260 | ) | (12,770 | ) | (2,015 | ) | ||||||||||||||
Balance, end of year | $ | 13,467 | $ | 14,164 | $ | 26,970 | ||||||||||||||
Schedule of gross unrealized losses on fixed maturity securities and equity securities | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Less than 12 months | 12 Months or More | Total | ||||||||||||||||||
Fair Value | Unrealized | Fair Value | Unrealized | Fair Value | Unrealized | |||||||||||||||
Losses | Losses | Losses | ||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||
United States Government and government agencies and authorities | $ | 1,889 | $ | (1 | ) | $ | 0 | $ | 0 | $ | 1,889 | $ | (1 | ) | ||||||
Residential mortgage-backed | 0 | 0 | 526 | (12 | ) | 526 | (12 | ) | ||||||||||||
Corporate | 98,644 | (2,327 | ) | 5,295 | (417 | ) | 103,939 | (2,744 | ) | |||||||||||
Total fixed maturity securities | $ | 100,533 | $ | (2,328 | ) | $ | 5,821 | $ | (429 | ) | $ | 106,354 | $ | (2,757 | ) | |||||
Equity securities: | ||||||||||||||||||||
Non-redeemable preferred stocks | $ | 1,417 | $ | (14 | ) | $ | 4,454 | $ | (259 | ) | $ | 5,871 | $ | (273 | ) | |||||
December 31, 2013 | ||||||||||||||||||||
Less than 12 months | 12 Months or More | Total | ||||||||||||||||||
Fair Value | Unrealized | Fair Value | Unrealized | Fair Value | Unrealized | |||||||||||||||
Losses | Losses | Losses | ||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||
States, municipalities and political subdivisions | $ | 7,278 | $ | (197 | ) | $ | 0 | $ | 0 | $ | 7,278 | $ | (197 | ) | ||||||
Residential mortgage-backed | 25,457 | (331 | ) | 520 | (24 | ) | 25,977 | (355 | ) | |||||||||||
Corporate | 160,115 | (3,078 | ) | 4,343 | (76 | ) | 164,458 | (3,154 | ) | |||||||||||
Total fixed maturity securities | $ | 192,850 | $ | (3,606 | ) | $ | 4,863 | $ | (100 | ) | $ | 197,713 | $ | (3,706 | ) | |||||
Equity securities: | ||||||||||||||||||||
Non-redeemable preferred stocks | $ | 38,711 | $ | (1,970 | ) | $ | 3,524 | $ | (116 | ) | $ | 42,235 | $ | (2,086 | ) | |||||
Schedule of cost or amortized cost and fair value of available-for-sale fixed maturity securities in an unrealized loss position | ||||||||||||||||||||
The cost or amortized cost and fair value of available for sale fixed maturity securities in an unrealized loss position at December 31, 2014, by contractual maturity, is shown below: | ||||||||||||||||||||
Cost or | Fair Value | |||||||||||||||||||
Amortized Cost | ||||||||||||||||||||
Due after one year through five years | $ | 27,058 | $ | 26,666 | ||||||||||||||||
Due after five years through ten years | 40,342 | 39,773 | ||||||||||||||||||
Due after ten years | 41,173 | 39,389 | ||||||||||||||||||
Total | 108,573 | 105,828 | ||||||||||||||||||
Residential mortgage-backed | 538 | 526 | ||||||||||||||||||
Total | $ | 109,111 | $ | 106,354 | ||||||||||||||||
Summary of loan-to-value and average debt-service coverage ratios | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Loan-to-Value | Carrying | % of Gross | Debt-Service | |||||||||||||||||
Value | Mortgage | Coverage ratio | ||||||||||||||||||
Loans | ||||||||||||||||||||
70% and less | $ | 447,941 | 89.4 | % | 1.99 | |||||||||||||||
71 – 80% | 40,651 | 8.1 | % | 1.28 | ||||||||||||||||
81 – 95% | 6,155 | 1.2 | % | 0.99 | ||||||||||||||||
Greater than 95% | 6,531 | 1.3 | % | 0.43 | ||||||||||||||||
Gross commercial mortgage loans | 501,278 | 100 | % | 1.9 | ||||||||||||||||
Less valuation allowance | (1,464 | ) | ||||||||||||||||||
Net commercial mortgage loans | $ | 499,814 | ||||||||||||||||||
December 31, 2013 | ||||||||||||||||||||
Loan-to-Value | Carrying | % of Gross | Debt-Service | |||||||||||||||||
Value | Mortgage | Coverage ratio | ||||||||||||||||||
Loans | ||||||||||||||||||||
70% and less | $ | 497,411 | 88.2 | % | 2.08 | |||||||||||||||
71 – 80% | 41,943 | 7.4 | % | 1.6 | ||||||||||||||||
81 – 95% | 18,687 | 3.3 | % | 1.35 | ||||||||||||||||
Greater than 95% | 6,374 | 1.1 | % | 0.85 | ||||||||||||||||
Gross commercial mortgage loans | 564,415 | 100 | % | 2.01 | ||||||||||||||||
Less valuation allowance | (2,047 | ) | ||||||||||||||||||
Net commercial mortgage loans | $ | 562,368 | ||||||||||||||||||
Fair_Value_Disclosures_Tables
Fair Value Disclosures (Tables) | 12 Months Ended | |||||||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||||||
Fair Value Disclosures | ||||||||||||||||||||||||||
Schedule of the Company's fair value hierarchy for recurring basis assets and liabilities | ||||||||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||
Financial Assets | ||||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||||
United States Government and government agencies and authorities | $ | 19,475 | $ | 0 | $ | 19,475 | $ | 0 | ||||||||||||||||||
State, municipalities and political subdivisions | 45,788 | 0 | 45,788 | 0 | ||||||||||||||||||||||
Foreign governments | 21,824 | 0 | 21,824 | 0 | ||||||||||||||||||||||
Asset-backed | 734 | 0 | 734 | 0 | ||||||||||||||||||||||
Commercial mortgage-backed | 3,896 | 0 | 3,694 | 202 | ||||||||||||||||||||||
Residential mortgage-backed | 72,026 | 0 | 72,026 | 0 | ||||||||||||||||||||||
Corporate | 2,514,945 | 0 | 2,492,920 | 22,025 | ||||||||||||||||||||||
Equity securities: | ||||||||||||||||||||||||||
Common stocks | 414 | 414 | 0 | 0 | ||||||||||||||||||||||
Non-redeemable preferred stocks | 135,332 | 0 | 134,332 | 1,000 | ||||||||||||||||||||||
Short-term investments | 64,104 | 61,150 | (b) | 2,954 | (c) | 0 | ||||||||||||||||||||
Collateral held/pledged under securities agreements | 33,541 | 30,315 | (b) | 3,226 | (c) | 0 | ||||||||||||||||||||
Cash equivalents | 1 | 1 | (b) | 0 | 0 | |||||||||||||||||||||
Other assets | 692 | 0 | 0 | 692 | (d) | |||||||||||||||||||||
Assets held in separate accounts | 1,683,739 | 1,645,964 | (a) | 37,775 | (c) | 0 | ||||||||||||||||||||
Total financial assets | $ | 4,596,511 | $ | 1,737,844 | $ | 2,834,748 | $ | 23,919 | ||||||||||||||||||
Financial Liabilities | ||||||||||||||||||||||||||
Liabilities related to separate accounts | $ | 1,683,739 | $ | 1,645,964 | (a) | $ | 37,775 | (c) | $ | 0 | ||||||||||||||||
December 31, 2013 | ||||||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||
Financial Assets | ||||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||||
United States Government and government agencies and authorities | $ | 22,831 | $ | 0 | $ | 22,831 | $ | 0 | ||||||||||||||||||
State, municipalities and political subdivisions | 48,544 | 0 | 48,544 | 0 | ||||||||||||||||||||||
Foreign governments | 24,453 | 0 | 24,453 | 0 | ||||||||||||||||||||||
Asset-backed | 851 | 0 | 851 | 0 | ||||||||||||||||||||||
Commercial mortgage-backed | 5,537 | 0 | 5,238 | 299 | ||||||||||||||||||||||
Residential mortgage-backed | 77,742 | 0 | 76,858 | 884 | ||||||||||||||||||||||
Corporate | 2,412,526 | 0 | 2,389,402 | 23,124 | ||||||||||||||||||||||
Equity securities: | ||||||||||||||||||||||||||
Common stocks | 418 | 418 | 0 | 0 | ||||||||||||||||||||||
Non-redeemable preferred stocks | 99,848 | 0 | 98,400 | 1,448 | ||||||||||||||||||||||
Short-term investments | 64,457 | 64,407 | (b) | 50 | 0 | |||||||||||||||||||||
Collateral held/pledged under securities agreements | 32,832 | 29,678 | (b) | 3,154 | (c) | 0 | ||||||||||||||||||||
Cash equivalents | 10,501 | 10,501 | (b) | 0 | 0 | |||||||||||||||||||||
Other assets | 2,016 | 0 | 0 | 2,016 | (d) | |||||||||||||||||||||
Assets held in separate accounts | 1,714,839 | 1,660,079 | (a) | 54,760 | (c) | 0 | ||||||||||||||||||||
Total financial assets | $ | 4,517,395 | $ | 1,765,083 | $ | 2,724,541 | $ | 27,771 | ||||||||||||||||||
Financial Liabilities | ||||||||||||||||||||||||||
Liabilities related to separate accounts | $ | 1,714,839 | $ | 1,660,079 | (a) | $ | 54,760 | (c) | $ | 0 | ||||||||||||||||
(a) | Mainly includes mutual funds. | |||||||||||||||||||||||||
(b) | Mainly includes money market funds. | |||||||||||||||||||||||||
(c) | Mainly includes fixed maturity securities. | |||||||||||||||||||||||||
(d) | Mainly includes the Consumer Price Index Cap Derivatives (“CPI Caps”). | |||||||||||||||||||||||||
Summary of the change in balance sheet carrying value associated with Level 3 financial assets carried at fair value | ||||||||||||||||||||||||||
Year Ended December 31, 2014 | ||||||||||||||||||||||||||
Balance, | Total | Net | Purchases | Sales | Transfers | Transfers | Balance, | |||||||||||||||||||
beginning | (losses) gains | unrealized | in (3) | out (3) | end of | |||||||||||||||||||||
of period | (realized/ | (losses) gains | period | |||||||||||||||||||||||
unrealized) | included in | |||||||||||||||||||||||||
included in | other | |||||||||||||||||||||||||
earnings (1) | comprehensive | |||||||||||||||||||||||||
income (2) | ||||||||||||||||||||||||||
Fixed Maturity Securities | ||||||||||||||||||||||||||
Commercial mortgage-backed | $ | 299 | $ | 0 | $ | (9 | ) | $ | 0 | $ | (88 | ) | $ | 0 | $ | 0 | $ | 202 | ||||||||
Residential mortgage-backed | 884 | 0 | 0 | 0 | 0 | 0 | (884 | ) | 0 | |||||||||||||||||
Corporate | 23,124 | (117 | ) | 471 | 4,733 | (1,653 | ) | 217 | (4,750 | ) | 22,025 | |||||||||||||||
Equity Securities | ||||||||||||||||||||||||||
Non-redeemable preferred stocks | 1,448 | 134 | (134 | ) | 0 | (448 | ) | 0 | 0 | 1,000 | ||||||||||||||||
Other assets | 2,016 | (1,324 | ) | 0 | 0 | 0 | 0 | 0 | 692 | |||||||||||||||||
Total level 3 assets | $ | 27,771 | $ | (1,307 | ) | $ | 328 | $ | 4,733 | $ | (2,189 | ) | $ | 217 | $ | (5,634 | ) | $ | 23,919 | |||||||
Year Ended December 31, 2013 | ||||||||||||||||||||||||||
Balance, | Total | Net | Purchases | Sales | Transfers | Transfers | Balance, | |||||||||||||||||||
beginning | (losses) gains | unrealized | in (3) | out (3) | end of | |||||||||||||||||||||
of period | (realized/ | losses | period | |||||||||||||||||||||||
unrealized) | included in | |||||||||||||||||||||||||
included in | other | |||||||||||||||||||||||||
earnings (1) | comprehensive | |||||||||||||||||||||||||
income (2) | ||||||||||||||||||||||||||
Fixed Maturity Securities | ||||||||||||||||||||||||||
Foreign governments | $ | 569 | $ | 0 | $ | (17 | ) | $ | 0 | $ | 0 | $ | 0 | $ | (552 | ) | $ | 0 | ||||||||
Commercial mortgage-backed | 638 | 5 | (11 | ) | 0 | (333 | ) | 0 | 0 | 299 | ||||||||||||||||
Residential mortgage-backed | 1,141 | (8 | ) | (26 | ) | 0 | (223 | ) | 0 | 0 | 884 | |||||||||||||||
Corporate | 32,376 | 1,462 | (1,803 | ) | 1,597 | (4,700 | ) | 2,085 | (7,893 | ) | 23,124 | |||||||||||||||
Equity Securities | ||||||||||||||||||||||||||
Non-redeemable preferred stocks | 10 | 7 | (81 | ) | 2,306 | (1,173 | ) | 389 | (10 | ) | 1,448 | |||||||||||||||
Other assets | 5,110 | (3,094 | ) | 0 | 0 | 0 | 0 | 0 | 2,016 | |||||||||||||||||
Total level 3 assets | $ | 39,844 | $ | (1,628 | ) | $ | (1,938 | ) | $ | 3,903 | $ | (6,429 | ) | $ | 2,474 | $ | (8,455 | ) | $ | 27,771 | ||||||
-1 | Included as part of net realized gains on investments in the consolidated statement of operations. | |||||||||||||||||||||||||
-2 | Included as part of change in unrealized gains on securities in the consolidated statement of comprehensive income. | |||||||||||||||||||||||||
-3 | Transfers are primarily attributable to changes in the availability of observable market information and re-evaluation of the observability of pricing inputs. | |||||||||||||||||||||||||
Schedule of carrying value, fair value amount and hierarchy level of the financial instruments that are not recognized or are not carried at fair value | ||||||||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||||||||
Fair Value | ||||||||||||||||||||||||||
Carrying Value | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
Financial Assets | ||||||||||||||||||||||||||
Commercial mortgage loans on real estate | $ | 499,814 | $ | 569,754 | $ | 0 | $ | 0 | $ | 569,754 | ||||||||||||||||
Policy loans | 11,663 | 11,663 | 11,663 | 0 | 0 | |||||||||||||||||||||
Other investments | 944 | 944 | 0 | 0 | 944 | |||||||||||||||||||||
Total financial assets | $ | 512,421 | $ | 582,361 | $ | 11,663 | $ | 0 | $ | 570,698 | ||||||||||||||||
Financial Liabilities | ||||||||||||||||||||||||||
Policy reserves under investment products (Individual and group annuities, subject to discretionary withdrawal) (1) | $ | 227,240 | $ | 255,472 | $ | 0 | $ | 0 | $ | 255,472 | ||||||||||||||||
Obligation under securities agreements | 42,941 | 42,941 | 42,941 | 0 | 0 | |||||||||||||||||||||
Total financial liabilities | $ | 270,181 | $ | 298,413 | $ | 42,941 | $ | 0 | $ | 255,472 | ||||||||||||||||
December 31, 2013 | ||||||||||||||||||||||||||
Fair Value | ||||||||||||||||||||||||||
Carrying Value | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
Financial Assets | ||||||||||||||||||||||||||
Commercial mortgage loans on real estate | $ | 562,368 | $ | 632,820 | $ | 0 | $ | 0 | $ | 632,820 | ||||||||||||||||
Policy loans | 12,461 | 12,461 | 12,461 | 0 | 0 | |||||||||||||||||||||
Total financial assets | $ | 574,829 | $ | 645,281 | $ | 12,461 | $ | 0 | $ | 632,820 | ||||||||||||||||
Financial Liabilities | ||||||||||||||||||||||||||
Policy reserves under investment products (Individual and group annuities, subject to discretionary withdrawal) (1) | $ | 236,508 | $ | 250,660 | $ | 0 | $ | 0 | $ | 250,660 | ||||||||||||||||
Obligation under securities agreements | 42,229 | 42,229 | 42,229 | 0 | 0 | |||||||||||||||||||||
Total financial liabilities | $ | 278,737 | $ | 292,889 | $ | 42,229 | $ | 0 | $ | 250,660 | ||||||||||||||||
(1) Only the fair value of the Company’s policy reserves for investment-type contracts (those without significant mortality or morbidity risk) are reflected in the table above. | ||||||||||||||||||||||||||
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Income Taxes | |||||||||||
Schedule of Company's current and deferred federal tax expense | |||||||||||
Year Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Current expense | $ | 31,688 | $ | 2,693 | $ | 23,415 | |||||
Deferred expense | 3,311 | 27,384 | 17,877 | ||||||||
Total income tax expense | $ | 34,999 | $ | 30,077 | $ | 41,292 | |||||
Schedule of reconciliation of the federal income tax rate to the Company's effective income tax rate | |||||||||||
December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Federal income tax rate: | 35 | % | 35 | % | 35 | % | |||||
Reconciling items: | |||||||||||
Dividends-received deduction | (2.6 | ) | (2.5 | ) | (1.7 | ) | |||||
Tax exempt interest | (0.4 | ) | (0.3 | ) | (0.2 | ) | |||||
Change in liability for prior years’ taxes | (0.3 | ) | 0.2 | (2.1 | ) | ||||||
Permanent nondeductible expenses | 0.3 | 0.3 | 0.3 | ||||||||
Nondeductible health insurer fee | 1.9 | 0 | 0 | ||||||||
Other | (0.3 | ) | (0.3 | ) | 0.3 | ||||||
Effective income tax rate | 33.6 | % | 32.4 | % | 31.6 | % | |||||
Schedule of reconciliation of the beginning and ending amounts of unrecognized tax benefits | |||||||||||
Years Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Balance at beginning of year | $ | (382 | ) | $ | (776 | ) | $ | (2,187 | ) | ||
Additions based on tax positions related to the current year | 0 | (92 | ) | 0 | |||||||
Reductions based on tax positions related to the current year | 21 | 10 | 42 | ||||||||
Additions for tax positions of prior years | (703 | ) | (381 | ) | (1,585 | ) | |||||
Reductions for tax positions of prior years | 131 | 857 | 2,043 | ||||||||
Settlements | 858 | 0 | 911 | ||||||||
Balance at end of year | $ | (75 | ) | $ | (382 | ) | $ | (776 | ) | ||
Schedule of significant deferred tax assets and deferred tax liabilities | |||||||||||
December 31, | |||||||||||
2014 | 2013 | ||||||||||
Deferred Tax Assets | |||||||||||
Deferred gain on disposal of businesses | $ | 23,672 | $ | 21,883 | |||||||
Investments, net | 45,270 | 48,551 | |||||||||
Deferred acquisition costs | 11,687 | 13,466 | |||||||||
Compensation related | 1,150 | 1,598 | |||||||||
Employee and post-retirement benefits | 3,553 | 1,642 | |||||||||
Total deferred tax asset | 85,332 | 87,140 | |||||||||
Deferred Tax Liabilities | |||||||||||
Net unrealized appreciation on securities | (154,852 | ) | (99,002 | ) | |||||||
Policyholder and separate account reserves | (4,848 | ) | (2,058 | ) | |||||||
Accrued liabilities | (1,938 | ) | (1,934 | ) | |||||||
Other | (5,147 | ) | (6,388 | ) | |||||||
Total deferred tax liability | (166,785 | ) | (109,382 | ) | |||||||
Net deferred income tax liability | $ | (81,453 | ) | $ | (22,242 | ) | |||||
Premiums_and_Accounts_Receivab1
Premiums and Accounts Receivable (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Premiums and Accounts Receivable | ||||||||
Schedule of receivables net of an allowance for uncollectible items | As of December 31, | |||||||
2014 | 2013 | |||||||
Insurance premiums receivable | $ | 64,352 | $ | 58,872 | ||||
Other receivables | 17,547 | 16,916 | ||||||
Allowance for uncollectible amounts | (4,432 | ) | (4,484 | ) | ||||
Total | $ | 77,467 | $ | 71,304 | ||||
Statutory_Information_Tables
Statutory Information (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Statutory Information | |||||||||||
Schedule of statutory net income and capital and surplus | |||||||||||
Years Ended and at | |||||||||||
December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Statutory net income | $ | 67,287 | $ | 85,356 | $ | 95,272 | |||||
Statutory capital and surplus | $ | 415,720 | $ | 436,457 | $ | 459,009 | |||||
Reinsurance_Tables
Reinsurance (Tables) | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||
Reinsurance | |||||||||||||||||||||||||||||
Schedule of reinsurance recoverables | |||||||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||||||
Ceded future policyholder benefits and expenses | $ | 1,797,057 | $ | 1,560,436 | |||||||||||||||||||||||||
Ceded unearned premium | 25,389 | 17,792 | |||||||||||||||||||||||||||
Ceded claims and benefits payable | 319,790 | 247,777 | |||||||||||||||||||||||||||
Ceded paid losses | 11,972 | 11,375 | |||||||||||||||||||||||||||
Total | $ | 2,154,208 | $ | 1,837,380 | |||||||||||||||||||||||||
Schedule of reinsurance recoverable grouped by A.M. Best rating | The following table provides the reinsurance recoverable as of December 31, 2014 grouped by A.M. Best rating: | ||||||||||||||||||||||||||||
A. M. Best ratings | Ceded future | Ceded | Ceded claims | Ceded | Total | ||||||||||||||||||||||||
of reinsurer | policyholder | unearned | and benefits | paid | |||||||||||||||||||||||||
benefits and | premiums | payable | losses | ||||||||||||||||||||||||||
expense | |||||||||||||||||||||||||||||
A++ or A+ | $ | 1,158,636 | $ | 25,217 | $ | 295,587 | $ | 239 | $ | 1,479,679 | |||||||||||||||||||
A or A- | 601,782 | 37 | 16,696 | 26 | 618,541 | ||||||||||||||||||||||||
B++ or B+ | 36,315 | 135 | 244 | 0 | 36,694 | ||||||||||||||||||||||||
Not rated | 324 | 0 | 7,263 | 11,707 | 19,294 | ||||||||||||||||||||||||
Reinsurance recoverable | $ | 1,797,057 | $ | 25,389 | $ | 319,790 | $ | 11,972 | $ | 2,154,208 | |||||||||||||||||||
Schedule of effect of reinsurance on premiums earned and benefits incurred | |||||||||||||||||||||||||||||
Years Ended December 31, | |||||||||||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||||||||||
Long | Short | Total | Long | Short | Total | Long | Short | Total | |||||||||||||||||||||
Duration | Duration | Duration | Duration | Duration | Duration | ||||||||||||||||||||||||
Direct earned premiums | $ | 202,992 | $ | 839,786 | $ | 1,042,778 | $ | 207,159 | $ | 823,576 | $ | 1,030,735 | $ | 212,727 | $ | 827,048 | $ | 1,039,775 | |||||||||||
Premiums assumed | 8,400 | 149,549 | 157,949 | 9,709 | 140,971 | 150,680 | 11,983 | 146,130 | 158,113 | ||||||||||||||||||||
Premiums ceded | (151,491 | ) | (13,769 | ) | (165,260 | ) | (164,698 | ) | (15,086 | ) | (179,784 | ) | (175,042 | ) | (14,860 | ) | (189,902 | ) | |||||||||||
Net earned premiums | $ | 59,901 | $ | 975,566 | $ | 1,035,467 | $ | 52,170 | $ | 949,461 | $ | 1,001,631 | $ | 49,668 | $ | 958,318 | $ | 1,007,986 | |||||||||||
Direct policyholder benefits | $ | 661,461 | $ | 542,796 | $ | 1,204,257 | $ | 369,169 | $ | 548,631 | $ | 917,800 | $ | 344,022 | $ | 535,016 | $ | 879,038 | |||||||||||
Policyholder benefits assumed | 21,922 | 145,597 | 167,519 | 23,556 | 138,485 | 162,041 | 24,519 | 133,285 | 157,804 | ||||||||||||||||||||
Policyholder benefits ceded | (616,370 | ) | (9,305 | ) | (625,675 | ) | (325,982 | ) | (8,612 | ) | (334,594 | ) | (297,768 | ) | (7,212 | ) | (304,980 | ) | |||||||||||
Net policyholder benefits | $ | 67,013 | $ | 679,088 | $ | 746,101 | $ | 66,743 | $ | 678,504 | $ | 745,247 | $ | 70,773 | $ | 661,089 | $ | 731,862 | |||||||||||
Reserves_Tables
Reserves (Tables) | 12 Months Ended | |||||||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||||||
Reserves | ||||||||||||||||||||||||||
Schedule of reserve information of major product lines | ||||||||||||||||||||||||||
December 31, 2014 | December 31, 2013 | |||||||||||||||||||||||||
Claims and Benefits | Claims and Benefits | |||||||||||||||||||||||||
Payable | Payable | |||||||||||||||||||||||||
Future | Unearned | Case | Incurred | Future | Unearned | Case | Incurred | |||||||||||||||||||
Policy | Premiums | Reserves | But Not | Policy | Premiums | Reserves | But Not | |||||||||||||||||||
Benefits and | Reported | Benefits and | Reported | |||||||||||||||||||||||
Expenses | Reserves | Expenses | Reserves | |||||||||||||||||||||||
Long Duration Contracts: | ||||||||||||||||||||||||||
Preneed funeral life insurance policies and investment-type annuity contracts | $ | 906,864 | $ | 42 | $ | 5,737 | $ | 3,021 | $ | 976,837 | $ | 101 | $ | 4,189 | $ | 3,003 | ||||||||||
Life insurance no longer offered | 251,495 | 525 | 1,485 | 1,163 | 258,513 | 528 | 1,140 | 2,521 | ||||||||||||||||||
FFG, LTC and other disposed businesses | 1,714,854 | 25,227 | 265,886 | 34,869 | 1,474,858 | 17,623 | 205,524 | 26,351 | ||||||||||||||||||
All other | 33,493 | 370 | 13,616 | 9,707 | 33,668 | 461 | 14,595 | 8,324 | ||||||||||||||||||
Short Duration Contracts: | ||||||||||||||||||||||||||
Group term life | 0 | 2,780 | 160,789 | 27,730 | 0 | 4,039 | 161,042 | 28,480 | ||||||||||||||||||
Group disability | 0 | 1,430 | 1,063,982 | 104,953 | 0 | 2,435 | 1,086,870 | 111,546 | ||||||||||||||||||
Medical | 0 | 22 | 1,412 | 726 | 0 | 244 | 1,895 | 1,205 | ||||||||||||||||||
Dental | 0 | 3,773 | 2,106 | 16,448 | 0 | 4,921 | 2,245 | 16,787 | ||||||||||||||||||
Credit disability | 0 | 14 | 0 | 1,962 | 0 | 2 | 0 | 2,203 | ||||||||||||||||||
All other | 0 | 172 | 360 | 1,986 | 0 | 181 | 245 | 1,565 | ||||||||||||||||||
Total | $ | 2,906,706 | $ | 34,355 | $ | 1,515,373 | $ | 202,565 | $ | 2,743,876 | $ | 30,535 | $ | 1,477,745 | $ | 201,985 | ||||||||||
Schedule of most significant claims and benefits payable | ||||||||||||||||||||||||||
Group | Group | |||||||||||||||||||||||||
Term | Disability | |||||||||||||||||||||||||
Life | ||||||||||||||||||||||||||
Balance as of December 31, 2011, gross of reinsurance | 205,989 | 1,288,470 | ||||||||||||||||||||||||
Less: Reinsurance ceded and other (1) | (3,109 | ) | (32,709 | ) | ||||||||||||||||||||||
Balance as of January 1, 2012, net of reinsurance | 202,880 | 1,255,761 | ||||||||||||||||||||||||
Incurred losses related to: | ||||||||||||||||||||||||||
Current year | 121,051 | 280,183 | ||||||||||||||||||||||||
Prior year’s interest | 7,575 | 54,696 | ||||||||||||||||||||||||
Prior year (s) | (25,441 | ) | (56,891 | ) | ||||||||||||||||||||||
Total incurred losses | 103,185 | 277,988 | ||||||||||||||||||||||||
Paid losses related to: | ||||||||||||||||||||||||||
Current year | 76,377 | 67,069 | ||||||||||||||||||||||||
Prior year (s) | 39,693 | 270,749 | ||||||||||||||||||||||||
Total paid losses | 116,070 | 337,818 | ||||||||||||||||||||||||
Balance as of December 31, 2012, net of reinsurance | 189,995 | 1,195,931 | ||||||||||||||||||||||||
Plus: Reinsurance ceded and other (1) | 2,612 | 33,494 | ||||||||||||||||||||||||
Balance as of December 31, 2012, gross of reinsurance | $ | 192,607 | $ | 1,229,425 | ||||||||||||||||||||||
Less: Reinsurance ceded and other (1) | (2,612 | ) | (33,494 | ) | ||||||||||||||||||||||
Balance as of January 1, 2013, net of reinsurance | 189,995 | 1,195,931 | ||||||||||||||||||||||||
Incurred losses related to: | ||||||||||||||||||||||||||
Current year | 116,735 | 275,567 | ||||||||||||||||||||||||
Prior year’s interest | 7,388 | 53,255 | ||||||||||||||||||||||||
Prior year (s) | (12,207 | ) | (29,995 | ) | ||||||||||||||||||||||
Total incurred losses | 111,916 | 298,827 | ||||||||||||||||||||||||
Paid losses related to: | ||||||||||||||||||||||||||
Current year | 72,794 | 68,769 | ||||||||||||||||||||||||
Prior year (s) | 41,891 | 262,215 | ||||||||||||||||||||||||
Total paid losses | 114,685 | 330,984 | ||||||||||||||||||||||||
Balance as of December 31, 2013, net of reinsurance | 187,226 | 1,163,774 | ||||||||||||||||||||||||
Plus: Reinsurance ceded and other (1) | 2,296 | 34,642 | ||||||||||||||||||||||||
Balance as of December 31, 2013 gross of reinsurance | $ | 189,522 | $ | 1,198,416 | ||||||||||||||||||||||
Less: Reinsurance ceded and other (1) | (2,296 | ) | (34,642 | ) | ||||||||||||||||||||||
Balance as of January 1, 2014, net of reinsurance | 187,226 | 1,163,774 | ||||||||||||||||||||||||
Incurred losses related to: | ||||||||||||||||||||||||||
Current year | 119,725 | 278,082 | ||||||||||||||||||||||||
Prior year’s interest | 7,187 | 50,610 | ||||||||||||||||||||||||
Prior year (s) | (14,875 | ) | (34,238 | ) | ||||||||||||||||||||||
Total incurred losses | 112,037 | 294,454 | ||||||||||||||||||||||||
Paid losses related to: | ||||||||||||||||||||||||||
Current year | 74,687 | 78,411 | ||||||||||||||||||||||||
Prior year (s) | 39,322 | 248,166 | ||||||||||||||||||||||||
Total paid losses | 114,009 | 326,577 | ||||||||||||||||||||||||
Balance as of December 31, 2014, net of reinsurance | 185,254 | 1,131,651 | ||||||||||||||||||||||||
Plus: Reinsurance ceded and other (1) | 3,265 | 37,284 | ||||||||||||||||||||||||
Balance as of December 31, 2014 gross of reinsurance | $ | 188,519 | $ | 1,168,935 | ||||||||||||||||||||||
-1 | Reinsurance ceded and other includes claims and benefits payable balances that have either been (a) reinsured to third parties, (b) established for claims related expenses whose subsequent payment is not recorded as a paid claim, or (c) reserves established for obligations that would persist even if contracts were cancelled (such as extension of benefits), which cannot be analyzed appropriately under a roll-forward approach. | |||||||||||||||||||||||||
Deferred_Acquisition_Costs_Tab
Deferred Acquisition Costs (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Deferred Acquisition Costs | |||||||||||
Schedule of deferred acquisition costs | |||||||||||
Years Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Beginning balance | $ | 24,521 | $ | 20,600 | $ | 18,637 | |||||
Costs deferred | 33,126 | 32,359 | 28,993 | ||||||||
Amortization | (31,212 | ) | (28,438 | ) | (27,030 | ) | |||||
Ending balance | $ | 26,435 | $ | 24,521 | $ | 20,600 | |||||
Goodwill_VOBA_and_Other_Intang1
Goodwill, VOBA and Other Intangible Assets (Tables) | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Goodwill, VOBA and Other Intangible Assets | ||||||||||||||||||||
Schedule of Goodwill | ||||||||||||||||||||
Goodwill for the Years Ended | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||
Goodwill | $ | 156,817 | $ | 156,817 | $ | 156,817 | ||||||||||||||
Accumulated impairment loss | (139,532 | ) | (139,532 | ) | (139,532 | ) | ||||||||||||||
Balance as of December 31: | $ | 17,285 | $ | 17,285 | $ | 17,285 | ||||||||||||||
VOBA | ||||||||||||||||||||
VOBA and Other Intangible Assets | ||||||||||||||||||||
Schedule of information about intangible assets | ||||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||
Beginning balance | $ | 11,555 | $ | 13,105 | $ | 14,833 | ||||||||||||||
Amortization, net of interest accrued | (1,426 | ) | (1,550 | ) | (1,728 | ) | ||||||||||||||
Ending balance | $ | 10,129 | $ | 11,555 | $ | 13,105 | ||||||||||||||
Schedule of estimated amortization for the next five years and thereafter | ||||||||||||||||||||
At December 31, 2014 the estimated amortization of VOBA for the next five years and thereafter is as follows: | ||||||||||||||||||||
Year | Amount | |||||||||||||||||||
2015 | $ | 1,323 | ||||||||||||||||||
2016 | 1,227 | |||||||||||||||||||
2017 | 1,131 | |||||||||||||||||||
2018 | 961 | |||||||||||||||||||
2019 | 874 | |||||||||||||||||||
Thereafter | 4,613 | |||||||||||||||||||
Total | $ | 10,129 | ||||||||||||||||||
Contract based intangibles | ||||||||||||||||||||
VOBA and Other Intangible Assets | ||||||||||||||||||||
Schedule of information about intangible assets | ||||||||||||||||||||
As of December 31, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Carrying | Accumulated | Net Other | Carrying | Accumulated | Net Other | |||||||||||||||
Value | Amortization | Intangible | Value | Amortization | Intangible | |||||||||||||||
Assets | Assets | |||||||||||||||||||
Contract based intangibles | $ | 38,020 | $ | (23,260 | ) | $ | 14,760 | $ | 38,020 | $ | (21,472 | ) | $ | 16,548 | ||||||
Schedule of estimated amortization for the next five years and thereafter | ||||||||||||||||||||
Year | Amount | |||||||||||||||||||
2015 | $ | 1,788 | ||||||||||||||||||
2016 | 1,788 | |||||||||||||||||||
2017 | 1,788 | |||||||||||||||||||
2018 | 1,788 | |||||||||||||||||||
2019 | 1,788 | |||||||||||||||||||
Thereafter | 5,820 | |||||||||||||||||||
Total other intangible assets with finite lives | $ | 14,760 | ||||||||||||||||||
Accumulated_Other_Comprehensiv1
Accumulated Other Comprehensive Income (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Accumulated Other Comprehensive Income | |||||||||||||
Schedule of components of accumulated other comprehensive income, net of tax | |||||||||||||
Year Ended December 31, 2014 | |||||||||||||
Unrealized | OTTI | Accumulated | |||||||||||
gains on | other | ||||||||||||
securities | comprehensive | ||||||||||||
income | |||||||||||||
Balance at December 31, 2013 | $ | 171,346 | $ | 8,755 | $ | 180,101 | |||||||
Other comprehensive income before reclassifications | 93,163 | 1,557 | 94,720 | ||||||||||
Amounts reclassified from accumulated other comprehensive income | 9,013 | (16 | ) | 8,997 | |||||||||
Net current-period other comprehensive income | 102,176 | 1,541 | 103,717 | ||||||||||
Balance at December 31, 2014 | $ | 273,522 | $ | 10,296 | $ | 283,818 | |||||||
Year Ended December 31, 2013 | |||||||||||||
Unrealized | OTTI | Accumulated | |||||||||||
gains on | other | ||||||||||||
securities | comprehensive | ||||||||||||
income | |||||||||||||
Balance at December 31, 2012 | $ | 311,354 | $ | 9,236 | $ | 320,590 | |||||||
Other comprehensive loss before reclassifications | (147,640 | ) | (1,513 | ) | (149,153 | ) | |||||||
Amounts reclassified from accumulated other comprehensive income | 7,632 | 1,032 | 8,664 | ||||||||||
Net current-period other comprehensive loss | (140,008 | ) | (481 | ) | (140,489 | ) | |||||||
Balance at December 31, 2013 | $ | 171,346 | $ | 8,755 | $ | 180,101 | |||||||
Year Ended December 31, 2012 | |||||||||||||
Unrealized | OTTI | Accumulated | |||||||||||
gains on | other | ||||||||||||
securities | comprehensive | ||||||||||||
income | |||||||||||||
Balance at December 31, 2011 | $ | 211,368 | $ | 5,743 | $ | 217,111 | |||||||
Other comprehensive income before reclassifications | 96,013 | 3,524 | 99,537 | ||||||||||
Amounts reclassified from accumulated other comprehensive income | 3,973 | (31 | ) | 3,942 | |||||||||
Net current-period other comprehensive income | 99,986 | 3,493 | 103,479 | ||||||||||
Balance at December 31, 2012 | $ | 311,354 | $ | 9,236 | $ | 320,590 | |||||||
Summary of the reclassifications out of accumulated other comprehensive income | |||||||||||||
Amount reclassified from accumulated | Affected line item in the | ||||||||||||
other comprehensive income | |||||||||||||
Details about accumulated other | Years Ended December 31, | statement where net | |||||||||||
comprehensive income components | 2014 | 2013 | 2012 | income is presented | |||||||||
Unrealized gains on securities | $ | 13,866 | $ | 11,741 | $ | 6,113 | Net realized gains on investments, excluding other-than-temporary impairment losses | ||||||
(4,853 | ) | (4,109 | ) | (2,140 | ) | Provision for income taxes | |||||||
$ | 9,013 | $ | 7,632 | $ | 3,973 | Net of tax | |||||||
OTTI | $ | (24 | ) | $ | 1,588 | $ | (47 | ) | Portion of net (gain) loss recognized in other comprehensive income, before taxes | ||||
8 | (556 | ) | 16 | Provision for income taxes | |||||||||
$ | (16 | ) | $ | 1,032 | $ | (31 | ) | Net of tax | |||||
Total reclassifications for the period | $ | 8,997 | $ | 8,664 | $ | 3,942 | Net of tax | ||||||
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Commitments and Contingencies. | |||||
Schedule of aggregate future minimum lease payments under operating lease agreements | |||||
2015 | $ | 5,829 | |||
2016 | 5,628 | ||||
2017 | 5,151 | ||||
2018 | 4,600 | ||||
2019 | 3,975 | ||||
Thereafter | 59,991 | ||||
Total minimum future lease payments (a) | $ | 85,174 | |||
(a) | Minimum future lease payments exclude $10,887 of sublease rental income. | ||||
. | |||||
Nature_of_Operations_Details
Nature of Operations (Details) | 12 Months Ended |
Dec. 31, 2013 | |
item | |
Nature of Operations | |
Number of dental companies merged into the operations of the Company | 9 |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Investments | ||
Delinquency period to place loans on non-accrual status | 90 days | |
Period after which financial information provided by the equity method investee was used by the entity | 3 months | |
Other-than-temporary impairment threshold, percentage of market price to original purchase price | 80.00% | |
Other Intangible Assets | ||
Impairments of finite-lived or indefinite-lived other intangible assets | $0 | $0 |
Long Duration Contracts | ||
Percentage of risks related to reserves recorded for policies under FFG, LTC and life insurance no longer offered, ceded via reinsurance | 100.00% | |
Deferred gain on disposal of businesses | ||
Adjustments to estimates affecting deferred gain on disposal of businesses | $12,851 | $0 |
Buildings | Maximum | ||
Property and equipment | ||
Estimated useful lives | 39 years 6 months | |
Furniture | Maximum | ||
Property and equipment | ||
Estimated useful lives | 7 years | |
Equipment | Maximum | ||
Property and equipment | ||
Estimated useful lives | 5 years | |
Capitalized software costs | Maximum | ||
Property and equipment | ||
Estimated useful lives | 20 years |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details 2) (USD $) | 12 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2014 |
Summary of Significant Accounting Policies | |
Mandated fees under Affordable Care Act | $5,642 |
Investments_Details
Investments (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Investments | ||
Cost or Amortized Cost | $3,100,500 | |
Fair Value | 3,612,636 | |
Fixed maturity securities | ||
Investments | ||
Cost or Amortized Cost | 2,249,891 | 2,315,654 |
Gross Unrealized Gains | 431,554 | 280,536 |
Gross Unrealized Losses | -2,757 | -3,706 |
Fair Value | 2,678,688 | 2,592,484 |
Fixed maturity securities | OTTI | Available-for-sale securities. | ||
Investments | ||
OTTI in AOCI | 15,841 | 13,470 |
Fixed maturity securities | United States Government and government agencies and authorities. | ||
Investments | ||
Cost or Amortized Cost | 19,221 | 22,562 |
Gross Unrealized Gains | 255 | 269 |
Gross Unrealized Losses | -1 | 0 |
Fair Value | 19,475 | 22,831 |
Fixed maturity securities | United States Government and government agencies and authorities. | OTTI | Available-for-sale securities. | ||
Investments | ||
OTTI in AOCI | 0 | 0 |
Fixed maturity securities | States, municipalities and political subdivisions | ||
Investments | ||
Cost or Amortized Cost | 42,745 | 46,457 |
Gross Unrealized Gains | 3,043 | 2,284 |
Gross Unrealized Losses | 0 | -197 |
Fair Value | 45,788 | 48,544 |
Fixed maturity securities | States, municipalities and political subdivisions | OTTI | Available-for-sale securities. | ||
Investments | ||
OTTI in AOCI | 0 | 0 |
Fixed maturity securities | Foreign governments | ||
Investments | ||
Cost or Amortized Cost | 19,061 | 22,381 |
Gross Unrealized Gains | 2,763 | 2,072 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 21,824 | 24,453 |
Fixed maturity securities | Foreign governments | OTTI | Available-for-sale securities. | ||
Investments | ||
OTTI in AOCI | 0 | 0 |
Fixed maturity securities | Asset-backed | ||
Investments | ||
Cost or Amortized Cost | 684 | 789 |
Gross Unrealized Gains | 50 | 62 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 734 | 851 |
Fixed maturity securities | Asset-backed | OTTI | Available-for-sale securities. | ||
Investments | ||
OTTI in AOCI | 0 | 0 |
Fixed maturity securities | Commercial mortgage-backed | ||
Investments | ||
Cost or Amortized Cost | 3,794 | 5,223 |
Gross Unrealized Gains | 102 | 314 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 3,896 | 5,537 |
Fixed maturity securities | Commercial mortgage-backed | OTTI | Available-for-sale securities. | ||
Investments | ||
OTTI in AOCI | 0 | 0 |
Fixed maturity securities | Residential mortgage-backed | ||
Investments | ||
Cost or Amortized Cost | 65,090 | 72,219 |
Gross Unrealized Gains | 6,948 | 5,878 |
Gross Unrealized Losses | -12 | -355 |
Fair Value | 72,026 | 77,742 |
Fixed maturity securities | Residential mortgage-backed | OTTI | Available-for-sale securities. | ||
Investments | ||
OTTI in AOCI | 2,386 | 2,482 |
Fixed maturity securities | Corporate | ||
Investments | ||
Cost or Amortized Cost | 2,099,296 | 2,146,023 |
Gross Unrealized Gains | 418,393 | 269,657 |
Gross Unrealized Losses | -2,744 | -3,154 |
Fair Value | 2,514,945 | 2,412,526 |
Fixed maturity securities | Corporate | OTTI | Available-for-sale securities. | ||
Investments | ||
OTTI in AOCI | 13,455 | 10,988 |
Equity securities | ||
Investments | ||
Cost or Amortized Cost | 122,347 | 94,467 |
Gross Unrealized Gains | 13,672 | 7,885 |
Gross Unrealized Losses | -273 | -2,086 |
Fair Value | 135,746 | 100,266 |
Equity securities | OTTI | Available-for-sale securities. | ||
Investments | ||
OTTI in AOCI | 0 | 0 |
Equity securities | Common Stock | ||
Investments | ||
Cost or Amortized Cost | 92 | 92 |
Gross Unrealized Gains | 322 | 326 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 414 | 418 |
Equity securities | Common Stock | OTTI | Available-for-sale securities. | ||
Investments | ||
OTTI in AOCI | 0 | 0 |
Equity securities | Non-redeemable preferred stocks | ||
Investments | ||
Cost or Amortized Cost | 122,255 | 94,375 |
Gross Unrealized Gains | 13,350 | 7,559 |
Gross Unrealized Losses | -273 | -2,086 |
Fair Value | 135,332 | 99,848 |
Equity securities | Non-redeemable preferred stocks | OTTI | Available-for-sale securities. | ||
Investments | ||
OTTI in AOCI | $0 | $0 |
Investments_Details_2
Investments (Details 2) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Investments | ||
Fair Value | 3,612,636 | |
Cost or Amortized Cost | 3,100,500 | |
Pre-refunded bonds | ||
Investments | ||
Fair Value | 8,367 | 11,265 |
Credit concentration | Corporate fixed maturity and equity securities | Investment rated as investment grade | Energy Sector | ||
Investments | ||
Concentration percentage | 96.00% | 93.00% |
Investment portfolio | Credit concentration | Corporate fixed maturity and equity securities | Energy Sector | ||
Investments | ||
Cost or Amortized Cost | 314,978 | 316,582 |
Gross Unrealized Gains | 43,072 | 36,092 |
Investment portfolio | Credit concentration | Corporate fixed maturity and equity securities | Other individual European countries | Maximum | ||
Investments | ||
Concentration percentage | 2.00% | 2.00% |
Investment portfolio | Credit concentration | States, municipalities and political subdivisions | Municipal revenue bonds | ||
Investments | ||
Concentration percentage | 39.00% | 43.00% |
Investment portfolio | Credit concentration | States, municipalities and political subdivisions | Municipal revenue bonds | Individual U. S. states | Maximum | ||
Investments | ||
Concentration percentage | 0.50% | 0.50% |
Investment portfolio | Credit concentration | States, municipalities and political subdivisions | Corporate fixed maturity and equity securities | United Kingdom | ||
Investments | ||
Concentration percentage | 6.00% | 6.00% |
Investments_Details_3
Investments (Details 3) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Cost or Amortized Cost | ||
Total | $2,249,891 | $2,315,654 |
Fair Value | ||
Total | 2,678,688 | 2,592,484 |
Fixed maturity securities | ||
Cost or Amortized Cost | ||
Due in one year or less | 42,655 | |
Due after one year through five years | 347,499 | |
Due after five years through ten years | 382,654 | |
Due after ten years | 1,407,515 | |
Total Cost or Amortized Cost, Contractual maturity | 2,180,323 | |
Fair Value | ||
Due in one year or less | 43,046 | |
Due after one year through five years | 379,562 | |
Due after five years through ten years | 412,697 | |
Due after ten years | 1,766,727 | |
Total Fair Value, Contractual maturity | 2,602,032 | |
Asset-backed | ||
Cost or Amortized Cost | ||
Cost or Amortized Cost | 684 | |
Fair Value | ||
Fair Value | 734 | |
Commercial mortgage-backed | ||
Cost or Amortized Cost | ||
Cost or Amortized Cost | 3,794 | |
Fair Value | ||
Fair Value | 3,896 | |
Residential mortgage-backed | ||
Cost or Amortized Cost | ||
Cost or Amortized Cost | 65,090 | |
Fair Value | ||
Fair Value | $72,026 |
Investments_Details_4
Investments (Details 4) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Major categories of net investment income | |||
Total investment income | $187,748 | $190,218 | $205,240 |
Investment expenses | -7,014 | -7,258 | -6,512 |
Net investment income | 180,734 | 182,960 | 198,728 |
Investment non-income producing | 0 | 0 | 0 |
Fixed maturity securities | |||
Major categories of net investment income | |||
Total investment income | 136,005 | 143,493 | 152,637 |
Equity securities | |||
Major categories of net investment income | |||
Total investment income | 6,932 | 5,984 | 5,676 |
Commercial mortgage loans on real estate | |||
Major categories of net investment income | |||
Total investment income | 33,403 | 36,336 | 39,767 |
Policy loans | |||
Major categories of net investment income | |||
Total investment income | 778 | 802 | 789 |
Short-term investments | |||
Major categories of net investment income | |||
Total investment income | 9 | 22 | 57 |
Other investment | |||
Major categories of net investment income | |||
Total investment income | 10,617 | 3,580 | 6,314 |
Cash and cash equivalents | |||
Major categories of net investment income | |||
Total investment income | $4 | $1 | $0 |
Investments_Details_5
Investments (Details 5) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Available-for-sale securities, proceeds and realized gains (losses) included in earnings | |||
Proceeds from sales | $294,502 | $438,984 | $320,471 |
Gross realized gains | 16,833 | 23,898 | 11,995 |
Gross realized losses | $1,083 | $11,173 | $4,046 |
Other information | |||
Average period of time for which securities were traded continuously at a price below book value for securities sold at a loss | 11 months |
Investments_Details_6
Investments (Details 6) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Net realized gains (losses) related to sales and other | |||
Total net realized gains related to sales and other | $16,365 | $13,489 | $10,026 |
Total net realized losses related to other-than-temporary impairments | -24 | -1,865 | -53 |
Total net realized gains | 16,341 | 11,624 | 9,973 |
Fixed maturity securities | |||
Net realized gains (losses) related to sales and other | |||
Total net realized gains related to sales and other | 16,820 | 4,554 | 10,496 |
Total net realized losses related to other-than-temporary impairments | -24 | -1,865 | -14 |
Equity securities | |||
Net realized gains (losses) related to sales and other | |||
Total net realized gains related to sales and other | -328 | 8,793 | -2,203 |
Total net realized losses related to other-than-temporary impairments | 0 | 0 | -39 |
Commercial mortgage loans on real estate | |||
Net realized gains (losses) related to sales and other | |||
Total net realized gains related to sales and other | 32 | 1,599 | 1,734 |
Short-term investments | |||
Net realized gains (losses) related to sales and other | |||
Total net realized gains related to sales and other | 0 | 0 | -1 |
Other investment | |||
Net realized gains (losses) related to sales and other | |||
Total net realized gains related to sales and other | ($159) | ($1,457) | $0 |
Investments_Details_7
Investments (Details 7) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Other-Than-Temporary Impairments | |||
Other than temporary Impairments | $55 | $1,969 | $53 |
OTTI recognized in earnings | 24 | 1,865 | 53 |
Portion of net (gain) loss recognize in other comprehensive loss, before taxes | 31 | 104 | 0 |
Fixed maturity securities | |||
Other-Than-Temporary Impairments | |||
OTTI recognized in earnings | 24 | 1,865 | 14 |
Credit loss impairments on fixed maturity securities for which a portion of the OTTI loss was recognized in AOCI | |||
Balance, beginning of year | 14,164 | 26,970 | 29,374 |
Additions for credit loss impairments recognized in the current period on securities previously impaired | 24 | 87 | 14 |
Reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security | -461 | -123 | -403 |
Reductions for credit loss impairments previously recognized on securities which matured, paid down, prepaid or were sold during the period | -260 | -12,770 | -2,015 |
Balance, end of year | $13,467 | $14,164 | $26,970 |
Investments_Details_8
Investments (Details 8) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
item | item | |
Fair value of securities in a continuous unrealized loss position | ||
Fair value of securities in a continuous unrealized loss position, Total | $106,354 | |
Unrealized losses on securities in a continuous unrealized loss position | ||
Total gross unrealized losses as a percentage of the aggregate fair value of the related securities | 3.00% | 2.00% |
Percentage of gross unrealized losses in a continuous loss position for less than twelve months | 77.00% | 96.00% |
Number of individual securities comprising total gross unrealized losses | 96 | 151 |
Fixed maturity securities | ||
Fair value of securities in a continuous unrealized loss position | ||
Fair value of securities in a continuous unrealized loss position, Less than 12 months | 100,533 | 192,850 |
Fair value of securities in a continuous unrealized loss position, 12 months or more | 5,821 | 4,863 |
Fair value of securities in a continuous unrealized loss position, Total | 106,354 | 197,713 |
Unrealized losses on securities in a continuous unrealized loss position | ||
Unrealized losses on securities in a continuous unrealized loss position, Less than 12 months | -2,328 | -3,606 |
Unrealized losses on securities in a continuous unrealized loss position, 12 months or more | -429 | -100 |
Unrealized losses on securities in a continuous unrealized loss position, Total | -2,757 | -3,706 |
Fixed maturity securities | States, municipalities and political subdivisions | ||
Fair value of securities in a continuous unrealized loss position | ||
Fair value of securities in a continuous unrealized loss position, Less than 12 months | 1,889 | 7,278 |
Fair value of securities in a continuous unrealized loss position, 12 months or more | 0 | 0 |
Fair value of securities in a continuous unrealized loss position, Total | 1,889 | 7,278 |
Unrealized losses on securities in a continuous unrealized loss position | ||
Unrealized losses on securities in a continuous unrealized loss position, Less than 12 months | -1 | -197 |
Unrealized losses on securities in a continuous unrealized loss position, 12 months or more | 0 | 0 |
Unrealized losses on securities in a continuous unrealized loss position, Total | -1 | -197 |
Fixed maturity securities | Residential mortgage-backed | ||
Fair value of securities in a continuous unrealized loss position | ||
Fair value of securities in a continuous unrealized loss position, Less than 12 months | 0 | 25,457 |
Fair value of securities in a continuous unrealized loss position, 12 months or more | 526 | 520 |
Fair value of securities in a continuous unrealized loss position, Total | 526 | 25,977 |
Unrealized losses on securities in a continuous unrealized loss position | ||
Unrealized losses on securities in a continuous unrealized loss position, Less than 12 months | 0 | -331 |
Unrealized losses on securities in a continuous unrealized loss position, 12 months or more | -12 | -24 |
Unrealized losses on securities in a continuous unrealized loss position, Total | -12 | -355 |
Fixed maturity securities | Corporate | ||
Fair value of securities in a continuous unrealized loss position | ||
Fair value of securities in a continuous unrealized loss position, Less than 12 months | 98,644 | 160,115 |
Fair value of securities in a continuous unrealized loss position, 12 months or more | 5,295 | 4,343 |
Fair value of securities in a continuous unrealized loss position, Total | 103,939 | 164,458 |
Unrealized losses on securities in a continuous unrealized loss position | ||
Unrealized losses on securities in a continuous unrealized loss position, Less than 12 months | -2,327 | -3,078 |
Unrealized losses on securities in a continuous unrealized loss position, 12 months or more | -417 | -76 |
Unrealized losses on securities in a continuous unrealized loss position, Total | -2,744 | -3,154 |
Fixed maturity securities | Corporate | Industrial Sector | ||
Unrealized losses on securities in a continuous unrealized loss position | ||
Unrealized losses on securities in a continuous unrealized loss position, 12 months or more | -387 | |
Percentage of gross unrealized losses in a continuous loss position for twelve months or more | 93.00% | |
Equity securities | Non-redeemable preferred stocks | ||
Fair value of securities in a continuous unrealized loss position | ||
Fair value of securities in a continuous unrealized loss position, Less than 12 months | 1,417 | 38,711 |
Fair value of securities in a continuous unrealized loss position, 12 months or more | 4,454 | 3,524 |
Fair value of securities in a continuous unrealized loss position, Total | 5,871 | 42,235 |
Unrealized losses on securities in a continuous unrealized loss position | ||
Unrealized losses on securities in a continuous unrealized loss position, Less than 12 months | -14 | -1,970 |
Unrealized losses on securities in a continuous unrealized loss position, 12 months or more | -259 | -116 |
Unrealized losses on securities in a continuous unrealized loss position, Total | ($273) | -2,086 |
Investments_Details_9
Investments (Details 9) (USD $) | 12 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2014 |
Cost or Amortized Cost | |
Total | $109,111 |
Fair Value | |
Fair value of securities in a continuous unrealized loss position, Total | 106,354 |
Fixed maturity securities | |
Cost or Amortized Cost | |
Due after one year through five years | 27,058 |
Due after five years through ten years | 40,342 |
Due after ten years | 41,173 |
Total | 108,573 |
Fair Value | |
Due after one year through five years | 26,666 |
Due after five years through ten years | 39,773 |
Due after ten years | 39,389 |
Total Fair Value, Contractual maturity | 105,828 |
Residential mortgage-backed | |
Cost or Amortized Cost | |
Cost or Amortized Cost | 538 |
Fair Value | |
Fair Value | $526 |
Other information | |
Percentage of securities with sub-prime exposure | 7.90% |
Residential mortgage-backed | Subprime mortgage collateral | Investment rated as investment grade | Credit concentration | |
Other information | |
Concentration percentage | 23.00% |
Residential mortgage-backed | Subprime mortgage collateral | Fixed income portfolio | Credit concentration | |
Other information | |
Concentration percentage | 0.20% |
Residential mortgage-backed | Subprime Mortgage Collateral and Total Unrealized Gains | Credit concentration | |
Other information | |
Concentration percentage | 0.60% |
Investments_Details_10
Investments (Details 10) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Commercial mortgage loans | ||
Net commercial mortgage loans | 499,814 | 562,368 |
70% and less | Maximum | ||
Commercial mortgage loans | ||
Loan-to-value percentage | 70.00% | 70.00% |
71 - 80% | Minimum | ||
Commercial mortgage loans | ||
Loan-to-value percentage | 71.00% | 71.00% |
71 - 80% | Maximum | ||
Commercial mortgage loans | ||
Loan-to-value percentage | 80.00% | 80.00% |
81 - 95% | Minimum | ||
Commercial mortgage loans | ||
Loan-to-value percentage | 81.00% | 81.00% |
81 - 95% | Maximum | ||
Commercial mortgage loans | ||
Loan-to-value percentage | 95.00% | 95.00% |
Greater than 95% | Minimum | ||
Commercial mortgage loans | ||
Loan-to-value percentage | 95.00% | 95.00% |
Commercial mortgage loans | ||
Commercial mortgage loans | ||
Commercial mortgage loans | 501,278 | 564,415 |
Less valuation allowance | -1,464 | -2,047 |
Net commercial mortgage loans | 499,814 | 562,368 |
% of Gross Mortgage Loans (as a percent) | 100.00% | 100.00% |
Debt-Service Coverage Ratio | 1.9 | 2.01 |
Commercial mortgage loans | Minimum | ||
Commercial mortgage loans | ||
Commercial mortgage loans | 77 | 22 |
Commercial mortgage loans | Maximum | ||
Commercial mortgage loans | ||
Commercial mortgage loans | 12,251 | 12,500 |
Commercial mortgage loans | 70% and less | ||
Commercial mortgage loans | ||
Commercial mortgage loans | 447,941 | 497,411 |
% of Gross Mortgage Loans (as a percent) | 89.40% | 88.20% |
Debt-Service Coverage Ratio | 1.99 | 2.08 |
Commercial mortgage loans | 71 - 80% | ||
Commercial mortgage loans | ||
Commercial mortgage loans | 40,651 | 41,943 |
% of Gross Mortgage Loans (as a percent) | 8.10% | 7.40% |
Debt-Service Coverage Ratio | 1.28 | 1.6 |
Commercial mortgage loans | 81 - 95% | ||
Commercial mortgage loans | ||
Commercial mortgage loans | 6,155 | 18,687 |
% of Gross Mortgage Loans (as a percent) | 1.20% | 3.30% |
Debt-Service Coverage Ratio | 0.99 | 1.35 |
Commercial mortgage loans | Greater than 95% | ||
Commercial mortgage loans | ||
Commercial mortgage loans | 6,531 | 6,374 |
% of Gross Mortgage Loans (as a percent) | 1.30% | 1.10% |
Debt-Service Coverage Ratio | 0.43 | 0.85 |
Commercial mortgage loans | Investment portfolio | Geographic concentration risk | California, New York and Utah | ||
Commercial mortgage loans | ||
Concentration percentage | 39.00% |
Investments_Details_11
Investments (Details 11) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Investments | |||
Minimum percentage of securities received as collateral | 102.00% | ||
Collateral held under securities lending | $42,941 | $42,232 | |
Liability to the borrower for collateral | 42,941 | 42,229 | |
CPI CAPs | |||
Investments | |||
Derivative assets included in other assets | 692 | 2,016 | |
Loss on derivatives included in earnings | 1,324 | 3,094 | 1,917 |
Fixed maturity securities | |||
Investments | |||
Fixed maturity securities on deposit with various governmental authorities | 11,592 | 11,792 | |
Investment purchases commitments | |||
Investments | |||
Commercial mortgage loans | 13,650 | ||
Real estate joint ventures | 50 | ||
Commercial mortgage loans | |||
Investments | |||
Commercial mortgage loan valuation allowance for losses | -1,464 | -2,047 | |
Decrease in loan valuation allowance | 583 | 1,599 | |
Commercial mortgage loans | $501,278 | $564,415 |
Fair_Value_Disclosures_Details
Fair Value Disclosures (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Financial Assets | ||
Transfers from level 1 to level 2 financial assets | $0 | |
Transfers from level 2 to level 1 financial assets | 0 | |
Total | ||
Financial Liabilities | ||
Liabilities related to separate accounts | 298,413 | 292,889 |
Level 1 | ||
Financial Liabilities | ||
Liabilities related to separate accounts | 42,941 | 42,229 |
Level 2 | ||
Financial Liabilities | ||
Liabilities related to separate accounts | 0 | 0 |
Level 3 | ||
Financial Liabilities | ||
Liabilities related to separate accounts | 255,472 | 250,660 |
Recurring basis | Total | ||
Financial Assets | ||
Total financial assets | 4,596,511 | 4,517,395 |
Financial Liabilities | ||
Liabilities related to separate accounts | 1,683,739 | 1,714,839 |
Recurring basis | Total | Fixed maturity securities | United States Government and government agencies and authorities. | ||
Financial Assets | ||
Total financial assets | 19,475 | 22,831 |
Recurring basis | Total | Fixed maturity securities | States, municipalities and political subdivisions | ||
Financial Assets | ||
Total financial assets | 45,788 | 48,544 |
Recurring basis | Total | Fixed maturity securities | Foreign governments | ||
Financial Assets | ||
Total financial assets | 21,824 | 24,453 |
Recurring basis | Total | Fixed maturity securities | Asset-backed | ||
Financial Assets | ||
Total financial assets | 734 | 851 |
Recurring basis | Total | Fixed maturity securities | Commercial mortgage-backed | ||
Financial Assets | ||
Total financial assets | 3,896 | 5,537 |
Recurring basis | Total | Fixed maturity securities | Residential mortgage-backed | ||
Financial Assets | ||
Total financial assets | 72,026 | 77,742 |
Recurring basis | Total | Fixed maturity securities | Corporate | ||
Financial Assets | ||
Total financial assets | 2,514,945 | 2,412,526 |
Recurring basis | Total | Equity securities | Common Stock | ||
Financial Assets | ||
Total financial assets | 414 | 418 |
Recurring basis | Total | Equity securities | Non-redeemable preferred stocks | ||
Financial Assets | ||
Total financial assets | 135,332 | 99,848 |
Recurring basis | Total | Short-term investments | ||
Financial Assets | ||
Total financial assets | 64,104 | 64,457 |
Recurring basis | Total | Collateral held/pledged under securities agreements | ||
Financial Assets | ||
Total financial assets | 33,541 | 32,832 |
Recurring basis | Total | Cash equivalents | ||
Financial Assets | ||
Total financial assets | 1 | 10,501 |
Recurring basis | Total | Other assets. | ||
Financial Assets | ||
Total financial assets | 692 | 2,016 |
Recurring basis | Total | Assets held in separate accounts | ||
Financial Assets | ||
Total financial assets | 1,683,739 | 1,714,839 |
Recurring basis | Level 1 | ||
Financial Assets | ||
Total financial assets | 1,737,844 | 1,765,083 |
Financial Liabilities | ||
Liabilities related to separate accounts | 1,645,964 | 1,660,079 |
Recurring basis | Level 1 | Fixed maturity securities | United States Government and government agencies and authorities. | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Recurring basis | Level 1 | Fixed maturity securities | States, municipalities and political subdivisions | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Recurring basis | Level 1 | Fixed maturity securities | Foreign governments | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Recurring basis | Level 1 | Fixed maturity securities | Asset-backed | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Recurring basis | Level 1 | Fixed maturity securities | Commercial mortgage-backed | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Recurring basis | Level 1 | Fixed maturity securities | Residential mortgage-backed | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Recurring basis | Level 1 | Fixed maturity securities | Corporate | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Recurring basis | Level 1 | Equity securities | Common Stock | ||
Financial Assets | ||
Total financial assets | 414 | 418 |
Recurring basis | Level 1 | Equity securities | Non-redeemable preferred stocks | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Recurring basis | Level 1 | Short-term investments | ||
Financial Assets | ||
Total financial assets | 61,150 | 64,407 |
Recurring basis | Level 1 | Collateral held/pledged under securities agreements | ||
Financial Assets | ||
Total financial assets | 30,315 | 29,678 |
Recurring basis | Level 1 | Cash equivalents | ||
Financial Assets | ||
Total financial assets | 1 | 10,501 |
Recurring basis | Level 1 | Other assets. | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Recurring basis | Level 1 | Assets held in separate accounts | ||
Financial Assets | ||
Total financial assets | 1,645,964 | 1,660,079 |
Recurring basis | Level 2 | ||
Financial Assets | ||
Total financial assets | 2,834,748 | 2,724,541 |
Financial Liabilities | ||
Liabilities related to separate accounts | 37,775 | 54,760 |
Recurring basis | Level 2 | Fixed maturity securities | United States Government and government agencies and authorities. | ||
Financial Assets | ||
Total financial assets | 19,475 | 22,831 |
Recurring basis | Level 2 | Fixed maturity securities | States, municipalities and political subdivisions | ||
Financial Assets | ||
Total financial assets | 45,788 | 48,544 |
Recurring basis | Level 2 | Fixed maturity securities | Foreign governments | ||
Financial Assets | ||
Total financial assets | 21,824 | 24,453 |
Recurring basis | Level 2 | Fixed maturity securities | Asset-backed | ||
Financial Assets | ||
Total financial assets | 734 | 851 |
Recurring basis | Level 2 | Fixed maturity securities | Commercial mortgage-backed | ||
Financial Assets | ||
Total financial assets | 3,694 | 5,238 |
Recurring basis | Level 2 | Fixed maturity securities | Residential mortgage-backed | ||
Financial Assets | ||
Total financial assets | 72,026 | 76,858 |
Recurring basis | Level 2 | Fixed maturity securities | Corporate | ||
Financial Assets | ||
Total financial assets | 2,492,920 | 2,389,402 |
Recurring basis | Level 2 | Equity securities | Common Stock | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Recurring basis | Level 2 | Equity securities | Non-redeemable preferred stocks | ||
Financial Assets | ||
Total financial assets | 134,332 | 98,400 |
Recurring basis | Level 2 | Short-term investments | ||
Financial Assets | ||
Total financial assets | 2,954 | 50 |
Recurring basis | Level 2 | Collateral held/pledged under securities agreements | ||
Financial Assets | ||
Total financial assets | 3,226 | 3,154 |
Recurring basis | Level 2 | Cash equivalents | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Recurring basis | Level 2 | Other assets. | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Recurring basis | Level 2 | Assets held in separate accounts | ||
Financial Assets | ||
Total financial assets | 37,775 | 54,760 |
Recurring basis | Level 3 | ||
Financial Assets | ||
Total financial assets | 23,919 | 27,771 |
Financial Liabilities | ||
Liabilities related to separate accounts | 0 | 0 |
Recurring basis | Level 3 | Fixed maturity securities | United States Government and government agencies and authorities. | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Recurring basis | Level 3 | Fixed maturity securities | States, municipalities and political subdivisions | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Recurring basis | Level 3 | Fixed maturity securities | Foreign governments | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Recurring basis | Level 3 | Fixed maturity securities | Asset-backed | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Recurring basis | Level 3 | Fixed maturity securities | Commercial mortgage-backed | ||
Financial Assets | ||
Total financial assets | 202 | 299 |
Recurring basis | Level 3 | Fixed maturity securities | Residential mortgage-backed | ||
Financial Assets | ||
Total financial assets | 0 | 884 |
Recurring basis | Level 3 | Fixed maturity securities | Corporate | ||
Financial Assets | ||
Total financial assets | 22,025 | 23,124 |
Recurring basis | Level 3 | Equity securities | Common Stock | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Recurring basis | Level 3 | Equity securities | Non-redeemable preferred stocks | ||
Financial Assets | ||
Total financial assets | 1,000 | 1,448 |
Recurring basis | Level 3 | Short-term investments | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Recurring basis | Level 3 | Collateral held/pledged under securities agreements | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Recurring basis | Level 3 | Cash equivalents | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Recurring basis | Level 3 | Other assets. | ||
Financial Assets | ||
Total financial assets | 692 | 2,016 |
Recurring basis | Level 3 | Assets held in separate accounts | ||
Financial Assets | ||
Total financial assets | $0 | $0 |
Fair_Value_Disclosures_Details1
Fair Value Disclosures (Details 2) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Changes in balance sheet carrying value associated with Level 3 financial assets carried at fair value | ||
Balance, beginning of period | $27,771 | $39,844 |
Total (losses) gains (realized/unrealized) included in earnings | -1,307 | -1,628 |
Net unrealized gains (losses) included in other comprehensive income | 328 | -1,938 |
Purchases | 4,733 | 3,903 |
Sales | -2,189 | -6,429 |
Transfers in | 217 | 2,474 |
Transfers out | -5,634 | -8,455 |
Balance, end of period | 23,919 | 27,771 |
Foreign governments | ||
Changes in balance sheet carrying value associated with Level 3 financial assets carried at fair value | ||
Balance, beginning of period | 569 | |
Total (losses) gains (realized/unrealized) included in earnings | 0 | |
Net unrealized gains (losses) included in other comprehensive income | -17 | |
Purchases | 0 | |
Sales | 0 | |
Transfers in | 0 | |
Transfers out | -552 | |
Balance, end of period | 0 | |
Commercial mortgage-backed | ||
Changes in balance sheet carrying value associated with Level 3 financial assets carried at fair value | ||
Balance, beginning of period | 299 | 638 |
Total (losses) gains (realized/unrealized) included in earnings | 0 | 5 |
Net unrealized gains (losses) included in other comprehensive income | -9 | -11 |
Purchases | 0 | 0 |
Sales | -88 | -333 |
Transfers in | 0 | 0 |
Transfers out | 0 | 0 |
Balance, end of period | 202 | 299 |
Residential mortgage-backed | ||
Changes in balance sheet carrying value associated with Level 3 financial assets carried at fair value | ||
Balance, beginning of period | 884 | 1,141 |
Total (losses) gains (realized/unrealized) included in earnings | 0 | -8 |
Net unrealized gains (losses) included in other comprehensive income | 0 | -26 |
Purchases | 0 | 0 |
Sales | 0 | -223 |
Transfers in | 0 | 0 |
Transfers out | -884 | 0 |
Balance, end of period | 0 | 884 |
Corporate | ||
Changes in balance sheet carrying value associated with Level 3 financial assets carried at fair value | ||
Balance, beginning of period | 23,124 | 32,376 |
Total (losses) gains (realized/unrealized) included in earnings | -117 | 1,462 |
Net unrealized gains (losses) included in other comprehensive income | 471 | -1,803 |
Purchases | 4,733 | 1,597 |
Sales | -1,653 | -4,700 |
Transfers in | 217 | 2,085 |
Transfers out | -4,750 | -7,893 |
Balance, end of period | 22,025 | 23,124 |
Non-redeemable preferred stocks | ||
Changes in balance sheet carrying value associated with Level 3 financial assets carried at fair value | ||
Balance, beginning of period | 1,448 | 10 |
Total (losses) gains (realized/unrealized) included in earnings | 134 | 7 |
Net unrealized gains (losses) included in other comprehensive income | -134 | -81 |
Purchases | 0 | 2,306 |
Sales | -448 | -1,173 |
Transfers in | 0 | 389 |
Transfers out | 0 | -10 |
Balance, end of period | 1,000 | 1,448 |
Other assets. | ||
Changes in balance sheet carrying value associated with Level 3 financial assets carried at fair value | ||
Balance, beginning of period | 2,016 | 5,110 |
Total (losses) gains (realized/unrealized) included in earnings | -1,324 | -3,094 |
Net unrealized gains (losses) included in other comprehensive income | 0 | 0 |
Purchases | 0 | 0 |
Sales | 0 | 0 |
Transfers in | 0 | 0 |
Transfers out | 0 | 0 |
Balance, end of period | $692 | $2,016 |
Fair_Value_Disclosures_Details2
Fair Value Disclosures (Details 3) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | |||
Fair value disclosure | |||
Cost | $3,612,636 | ||
Other intangible assets | 14,760 | 16,548 | |
Non-recurring basis | |||
Fair value disclosure | |||
Goodwill | 0 | 0 | 0 |
Other intangible assets | 0 | 0 | 0 |
Single broker quotes | Level 3 | |||
Fair value disclosure | |||
Cost | 12,029 | 13,821 | |
Independent and non-binding broker quotes | Level 3 | |||
Fair value disclosure | |||
Cost | $11,198 | $11,934 |
Fair_Value_Disclosures_Details3
Fair Value Disclosures (Details 4) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Financial Assets | ||
Commercial mortgage loans on real estate | $499,814 | $562,368 |
Policy loans | 11,663 | 12,461 |
Total | ||
Financial Assets | ||
Commercial mortgage loans on real estate | 569,754 | 632,820 |
Policy loans | 11,663 | 12,461 |
Other investment | 944 | |
Total financial assets | 582,361 | 645,281 |
Financial Liabilities | ||
Policy reserves under investment products (Individual and group annuities, subject to discretionary withdrawal) | 255,472 | 250,660 |
Obligation under securities agreement | 42,941 | 42,229 |
Total financial liabilities | 298,413 | 292,889 |
Level 1 | ||
Financial Assets | ||
Commercial mortgage loans on real estate | 0 | 0 |
Policy loans | 11,663 | 12,461 |
Other investment | 0 | |
Total financial assets | 11,663 | 12,461 |
Financial Liabilities | ||
Policy reserves under investment products (Individual and group annuities, subject to discretionary withdrawal) | 0 | 0 |
Obligation under securities agreement | 42,941 | 42,229 |
Total financial liabilities | 42,941 | 42,229 |
Level 2 | ||
Financial Assets | ||
Commercial mortgage loans on real estate | 0 | 0 |
Policy loans | 0 | 0 |
Other investment | 0 | |
Total financial assets | 0 | 0 |
Financial Liabilities | ||
Policy reserves under investment products (Individual and group annuities, subject to discretionary withdrawal) | 0 | 0 |
Obligation under securities agreement | 0 | 0 |
Total financial liabilities | 0 | 0 |
Level 3 | ||
Financial Assets | ||
Commercial mortgage loans on real estate | 569,754 | 632,820 |
Policy loans | 0 | 0 |
Other investment | 944 | |
Total financial assets | 570,698 | 632,820 |
Financial Liabilities | ||
Policy reserves under investment products (Individual and group annuities, subject to discretionary withdrawal) | 255,472 | 250,660 |
Obligation under securities agreement | 0 | 0 |
Total financial liabilities | 255,472 | 250,660 |
Carrying Value | ||
Financial Assets | ||
Commercial mortgage loans on real estate | 499,814 | 562,368 |
Policy loans | 11,663 | 12,461 |
Other investment | 944 | |
Total financial assets | 512,421 | 574,829 |
Financial Liabilities | ||
Policy reserves under investment products (Individual and group annuities, subject to discretionary withdrawal) | 227,240 | 236,508 |
Obligation under securities agreement | 42,941 | 42,229 |
Total financial liabilities | $270,181 | $278,737 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Current expense: | |||
Current expense | $31,688 | $2,693 | $23,415 |
Deferred expense (benefit): | |||
Deferred expense | 3,311 | 27,384 | 17,877 |
Total income tax expense | $34,999 | $30,077 | $41,292 |
Reconciliation of the federal income tax rate to the Company's effective income tax rate | |||
Federal income tax rate (as a percent): | 35.00% | 35.00% | 35.00% |
Reconciling items: | |||
Dividends received deduction (as a percent) | -2.60% | -2.50% | -1.70% |
Tax exempt interest (as a percent) | -0.40% | -0.30% | -0.20% |
Change in liability for prior years' taxes (as a percent) | -0.30% | 0.20% | -2.10% |
Permanent nondeductible expenses (as a percent) | 0.30% | 0.30% | 0.30% |
Nondeductible health insurer fee | 1.90% | 0.00% | 0.00% |
Other (as a percent) | -0.30% | -0.30% | 0.30% |
Effective income tax rate (as a percent) | 33.60% | 32.40% | 31.60% |
Income_Taxes_Details_2
Income Taxes (Details 2) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Reconciliation of the beginning and ending amounts of unrecognized tax benefits | |||
Balance at beginning of year | ($382) | ($776) | ($2,187) |
Additions based on tax positions related to the current year | 0 | -92 | 0 |
Reductions based on tax positions related to the current year | 21 | 10 | 42 |
Additions for tax positions of prior years | -703 | -381 | -1,585 |
Reductions for tax positions of prior years | 131 | 857 | 2,043 |
Settlements | 858 | 0 | 911 |
Balance at end of year | -75 | -382 | -776 |
Total unrecognized tax benefit that would impact the Company's consolidated effective tax rate if recognized | 108 | 448 | 240 |
Interest expense (income) related to income tax matters | -127 | 21 | -564 |
Interest accrued related to income tax matters | 13 | 140 | |
Penalties accrued related to income tax matters | $0 |
Income_Taxes_Details_3
Income Taxes (Details 3) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Deferred Tax Assets | ||
Deferred gain on disposal of businesses | $23,672 | $21,883 |
Investments, net | 45,270 | 48,551 |
Deferred acquisition costs | 11,687 | 13,466 |
Compensation related | 1,150 | 1,598 |
Employee and post-retirement benefits | 3,553 | 1,642 |
Total deferred tax asset | 85,332 | 87,140 |
Deferred Tax Liabilities | ||
Net unrealized appreciation on securities | -154,852 | -99,002 |
Policyholder and separate account reserves | -4,848 | -2,058 |
Accrued liabilities | -1,938 | -1,934 |
Other | -5,147 | -6,388 |
Total deferred tax liability | -166,785 | -109,382 |
Net deferred income tax liability | -81,453 | -22,242 |
Net operating or capital loss carryforwards | 0 | |
Cumulative valuation allowance against deferred tax assets | $0 |
Premiums_and_Accounts_Receivab2
Premiums and Accounts Receivable (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Premiums and Accounts Receivable | ||
Insurance premiums receivable | $64,352 | $58,872 |
Other receivables | 17,547 | 16,916 |
Allowance for uncollectible amounts | -4,432 | -4,484 |
Total | $77,467 | $71,304 |
Stockholders_Equity_Details
Stockholder's Equity (Details) (USD $) | 12 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Stockholder's Equity | |||
Authorized shares of common stock | 1,000,000 | 1,000,000 | |
Common stock, shares issued | 1,000,000 | 1,000,000 | |
Common stock, shares outstanding | 1,000,000 | 1,000,000 | |
Common stock, average par value (in dollars per share) | $5 | $5 | |
Dividends paid | $97,000 | $101,000 | $115,800 |
Statutory_Information_Details
Statutory Information (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Statutory Information | |||
Dividend declared and paid | $97,000 | $101,000 | $115,800 |
Kansas Department of Commerce | |||
Statutory Information | |||
Statutory net income | 67,287 | 85,356 | 95,272 |
Statutory capital and surplus | 415,720 | 436,457 | 459,009 |
Dividend declared and paid | 97,000 | 101,000 | |
Ordinary dividend declared and paid | 29,860 | ||
Extraordinary dividends paid | 71,140 | ||
Minimum dividend as percentage of insurers' surplus to be considered as extraordinary dividend | 10.00% | ||
TAC of the Company subject to RBC Requirements | 449,569 | ||
Corresponding Authorized Control | 78,870 | ||
Kansas Department of Commerce | Forecast | |||
Statutory Information | |||
Maximum dividend to parent under state regulatory requirements without permission from Kansas regulators | $35,498 | ||
Kansas Department of Commerce | Minimum | |||
Statutory Information | |||
RBC Ratio under Company Action Level (as a percent) | 100.00% | ||
Kansas Department of Commerce | Maximum | |||
Statutory Information | |||
RBC Ratio under Authorized Control Level (as a percent) | 100.00% | ||
RBC Ratio under Company Action Level (as a percent) | 200.00% |
Reinsurance_Details
Reinsurance (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
item | ||
Reinsurance recoverables | ||
Ceded future policyholder benefits and expenses | $1,797,057 | $1,560,436 |
Ceded unearned premium | 25,389 | 17,792 |
Ceded claims and benefits payable | 319,790 | 247,777 |
Ceded paid losses | 11,972 | 11,375 |
Total | 2,154,208 | 1,837,380 |
The Hartford and John Hancock | ||
Reinsurance recoverables | ||
Total | 2,045,518 | |
Number of reinsurers with the largest reinsurance recoverable balances | 2 | |
A. M. Best ratings of reinsurer, A++ or A+ | ||
Reinsurance recoverables | ||
Ceded future policyholder benefits and expenses | 1,158,636 | |
Ceded unearned premium | 25,217 | |
Ceded claims and benefits payable | 295,587 | |
Ceded paid losses | 239 | |
Total | 1,479,679 | |
A. M. Best ratings of reinsurer, A or A- | ||
Reinsurance recoverables | ||
Ceded future policyholder benefits and expenses | 601,782 | |
Ceded unearned premium | 37 | |
Ceded claims and benefits payable | 16,696 | |
Ceded paid losses | 26 | |
Total | 618,541 | |
A. M. Best ratings of reinsurer, B++ or B+ | ||
Reinsurance recoverables | ||
Ceded future policyholder benefits and expenses | 36,315 | |
Ceded unearned premium | 135 | |
Ceded claims and benefits payable | 244 | |
Ceded paid losses | 0 | |
Total | 36,694 | |
Not rated | ||
Reinsurance recoverables | ||
Ceded future policyholder benefits and expenses | 324 | |
Ceded unearned premium | 0 | |
Ceded claims and benefits payable | 7,263 | |
Ceded paid losses | 11,707 | |
Total | $19,294 |
Reinsurance_Details_2
Reinsurance (Details 2) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Life Insurance in Force | |||
Direct earned premiums | $1,042,778 | $1,030,735 | $1,039,775 |
Premiums assumed | 157,949 | 150,680 | 158,113 |
Premiums ceded | -165,260 | -179,784 | -189,902 |
Net earned premiums | 1,035,467 | 1,001,631 | 1,007,986 |
Direct policyholder benefits | 1,204,257 | 917,800 | 879,038 |
Policyholder benefits assumed | 167,519 | 162,041 | 157,804 |
Policyholder benefits ceded | -625,675 | -334,594 | -304,980 |
Net policyholder benefits | 746,101 | 745,247 | 731,862 |
Reinsurance invested assets | |||
Life Insurance in Force | |||
Invested assets held in trusts | 810,419 | 843,181 | |
Long Duration Contracts | |||
Life Insurance in Force | |||
Direct earned premiums | 202,992 | 207,159 | 212,727 |
Premiums assumed | 8,400 | 9,709 | 11,983 |
Premiums ceded | -151,491 | -164,698 | -175,042 |
Net earned premiums | 59,901 | 52,170 | 49,668 |
Direct policyholder benefits | 661,461 | 369,169 | 344,022 |
Policyholder benefits assumed | 21,922 | 23,556 | 24,519 |
Policyholder benefits ceded | -616,370 | -325,982 | -297,768 |
Net policyholder benefits | 67,013 | 66,743 | 70,773 |
Short Duration Contracts | |||
Life Insurance in Force | |||
Direct earned premiums | 839,786 | 823,576 | 827,048 |
Premiums assumed | 149,549 | 140,971 | 146,130 |
Premiums ceded | -13,769 | -15,086 | -14,860 |
Net earned premiums | 975,566 | 949,461 | 958,318 |
Direct policyholder benefits | 542,796 | 548,631 | 535,016 |
Policyholder benefits assumed | 145,597 | 138,485 | 133,285 |
Policyholder benefits ceded | -9,305 | -8,612 | -7,212 |
Net policyholder benefits | $679,088 | $678,504 | $661,089 |
Reinsurance_Details_3
Reinsurance (Details 3) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2005 | Dec. 31, 2014 | Dec. 31, 2013 |
item | |||
Reinsurance recoverables | |||
Reinsurance recoverables | 2,154,208 | $1,837,380 | |
Forethought Life Insurance Company | |||
Reinsurance recoverables | |||
Period of time entity obligated to discontinue writing new preneed insurance policies | 10 years | ||
FFG division | The Hartford | |||
Reinsurance recoverables | |||
Reinsurance recoverables | 575,625 | 585,108 | |
FFG division | The Hartford | Minimum | |||
Reinsurance recoverables | |||
Number of reinsurer insolvency for making company responsible for administering reinsurance business | 1 | ||
LTC Operations | John Hancock | |||
Reinsurance recoverables | |||
Reinsurance recoverables | 1,469,893 | $1,143,731 |
Reserves_Details
Reserves (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Claims and Benefits Payable | ||
Future Policy Benefits and Expenses | $2,906,706 | $2,743,876 |
Unearned Premiums | 34,355 | 30,535 |
Case Reserves | 1,515,373 | 1,477,745 |
Incurred But Not Reported Reserves | 202,565 | 201,985 |
Preneed funeral life insurance policies and investment-type annuity contracts | ||
Claims and Benefits Payable | ||
Future Policy Benefits and Expenses | 906,864 | 976,837 |
Unearned Premiums | 42 | 101 |
Case Reserves | 5,737 | 4,189 |
Incurred But Not Reported Reserves | 3,021 | 3,003 |
Traditional life insurance | ||
Claims and Benefits Payable | ||
Future Policy Benefits and Expenses | 251,495 | 258,513 |
Unearned Premiums | 525 | 528 |
Case Reserves | 1,485 | 1,140 |
Incurred But Not Reported Reserves | 1,163 | 2,521 |
FFG, LTC and other disposed businesses | ||
Claims and Benefits Payable | ||
Future Policy Benefits and Expenses | 1,714,854 | 1,474,858 |
Unearned Premiums | 25,227 | 17,623 |
Case Reserves | 265,886 | 205,524 |
Incurred But Not Reported Reserves | 34,869 | 26,351 |
All other, long duration contracts | ||
Claims and Benefits Payable | ||
Future Policy Benefits and Expenses | 33,493 | 33,668 |
Unearned Premiums | 370 | 461 |
Case Reserves | 13,616 | 14,595 |
Incurred But Not Reported Reserves | 9,707 | 8,324 |
Group Term Life | ||
Claims and Benefits Payable | ||
Future Policy Benefits and Expenses | 0 | 0 |
Unearned Premiums | 2,780 | 4,039 |
Case Reserves | 160,789 | 161,042 |
Incurred But Not Reported Reserves | 27,730 | 28,480 |
Group Disability | ||
Claims and Benefits Payable | ||
Future Policy Benefits and Expenses | 0 | 0 |
Unearned Premiums | 1,430 | 2,435 |
Case Reserves | 1,063,982 | 1,086,870 |
Incurred But Not Reported Reserves | 104,953 | 111,546 |
Medical | ||
Claims and Benefits Payable | ||
Future Policy Benefits and Expenses | 0 | 0 |
Unearned Premiums | 22 | 244 |
Case Reserves | 1,412 | 1,895 |
Incurred But Not Reported Reserves | 726 | 1,205 |
Dental | ||
Claims and Benefits Payable | ||
Future Policy Benefits and Expenses | 0 | 0 |
Unearned Premiums | 3,773 | 4,921 |
Case Reserves | 2,106 | 2,245 |
Incurred But Not Reported Reserves | 16,448 | 16,787 |
Credit disability | ||
Claims and Benefits Payable | ||
Future Policy Benefits and Expenses | 0 | 0 |
Unearned Premiums | 14 | 2 |
Case Reserves | 0 | 0 |
Incurred But Not Reported Reserves | 1,962 | 2,203 |
All other, short duration contracts | ||
Claims and Benefits Payable | ||
Future Policy Benefits and Expenses | 0 | 0 |
Unearned Premiums | 172 | 181 |
Case Reserves | 360 | 245 |
Incurred But Not Reported Reserves | $1,986 | $1,565 |
Reserves_Details_2
Reserves (Details 2) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Paid losses related to: | |||
Balance at the end of the period, gross of reinsurance | $1,717,938 | $1,679,730 | |
Group Term Life | |||
Changes in Company's product lines with the most significant claims and benefits payable balances | |||
Balance at the beginning of the period, gross of reinsurance | 189,522 | 192,607 | 205,989 |
Less: Reinsurance ceded and other | -2,296 | -2,612 | -3,109 |
Balance at the beginning of the period, net of reinsurance | 187,226 | 189,995 | 202,880 |
Incurred losses related to: | |||
Current year | 119,725 | 116,735 | 121,051 |
Prior year's interest | 7,187 | 7,388 | 7,575 |
Prior year(s) | -14,875 | -12,207 | -25,441 |
Total incurred losses | 112,037 | 111,916 | 103,185 |
Paid losses related to: | |||
Current year | 74,687 | 72,794 | 76,377 |
Prior year(s) | 39,322 | 41,891 | 39,693 |
Total paid losses | 114,009 | 114,685 | 116,070 |
Balance at the end of the period, net of reinsurance | 185,254 | 187,226 | 189,995 |
Plus: Reinsurance ceded and other | 3,265 | 2,296 | 2,612 |
Balance at the end of the period, gross of reinsurance | 188,519 | 189,522 | 192,607 |
Group Disability | |||
Changes in Company's product lines with the most significant claims and benefits payable balances | |||
Balance at the beginning of the period, gross of reinsurance | 1,198,416 | 1,229,425 | 1,288,470 |
Less: Reinsurance ceded and other | -34,642 | -33,494 | -32,709 |
Balance at the beginning of the period, net of reinsurance | 1,163,774 | 1,195,931 | 1,255,761 |
Incurred losses related to: | |||
Current year | 278,082 | 275,567 | 280,183 |
Prior year's interest | 50,610 | 53,255 | 54,696 |
Prior year(s) | -34,238 | -29,995 | -56,891 |
Total incurred losses | 294,454 | 298,827 | 277,988 |
Paid losses related to: | |||
Current year | 78,411 | 68,769 | 67,069 |
Prior year(s) | 248,166 | 262,215 | 270,749 |
Total paid losses | 326,577 | 330,984 | 337,818 |
Balance at the end of the period, net of reinsurance | 1,131,651 | 1,163,774 | 1,195,931 |
Plus: Reinsurance ceded and other | 37,284 | 34,642 | 33,494 |
Balance at the end of the period, gross of reinsurance | $1,168,935 | $1,198,416 | $1,229,425 |
Reserves_Details_3
Reserves (Details 3) (USD $) | 12 Months Ended | 36 Months Ended | ||||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2007 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 |
Minimum | ||||||
Short Duration Contracts | ||||||
Short duration contracts, discount rate (as a percent) | 4.25% | 4.25% | 4.25% | 4.25% | ||
Group Disability | ||||||
Short Duration Contracts | ||||||
Short duration contracts, discount rate (as a percent) | 5.25% | |||||
Short duration contracts, discount | 344,012 | 365,234 | ||||
Group Disability | Maximum | ||||||
Short Duration Contracts | ||||||
Short duration contracts, discount rate (as a percent) | 4.75% | 4.75% | 4.75% | 4.75% | ||
Preneed life insurance | ||||||
Long Duration Contracts | ||||||
Interest rate assumption, low end of range | 4.70% | 4.70% | ||||
Interest rate assumption, high end of range | 7.30% | 7.30% | ||||
Future policy benefit increases, low end of range (as a percent) | 1.00% | 1.00% | ||||
Future policy benefit increases, high end of range (as a percent) | 7.00% | 7.00% | ||||
Future policy benefit increases tied to inflation (as a percent) | 3.00% | 3.00% | 2.30% | |||
Preneed life insurance | Minimum | ||||||
Long Duration Contracts | ||||||
Percentage of adverse deviation in interest and discount rate for preneed life insurance | 0.20% | 0.20% | ||||
Preneed life insurance | Maximum | ||||||
Long Duration Contracts | ||||||
Percentage of adverse deviation in interest and discount rate for preneed life insurance | 0.50% | 0.50% | ||||
Preneed annuities | ||||||
Long Duration Contracts | ||||||
Interest rate assumption, low end of range | 1.00% | 1.00% | ||||
Interest rate assumption, high end of range | 5.50% | 5.50% | ||||
Interest rate assumption | 0.00% | 0.00% | ||||
Period of grading of interest and discount rates | 7 years | 7 years | ||||
Withdrawal charges assumption, low end of range | 0.00% | 0.00% | ||||
Withdrawal charges assumption, high end of range | 7.00% | 7.00% | ||||
Traditional life insurance | ||||||
Long Duration Contracts | ||||||
Discount rate, low end of range | 5.30% | 5.30% | ||||
Discount rate, high end of range | 7.50% | 7.50% | ||||
Period of grading of interest and discount rates | 20 years | 20 years | ||||
Block of pre-1980 traditional life insurance business | ||||||
Long Duration Contracts | ||||||
Discount rate | 8.80% | 8.80% |
Retirement_and_Other_Employee_1
Retirement and Other Employee Benefits (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Defined benefit pension plan | |||
Retirement and Other Employee Benefits | |||
Obligation for defined benefit plans | $0 | ||
Pension costs under defined benefit plan | 5,591 | 8,321 | 8,143 |
Amount expensed under defined contribution plan | 6,006 | 5,781 | 5,790 |
Postretirement benefits | |||
Retirement and Other Employee Benefits | |||
Pension costs under defined benefit plan | $179 | $321 | $309 |
Deferred_Acquisition_Costs_Det
Deferred Acquisition Costs (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Changes in deferred acquisition costs | |||
Beginning balance | $24,521 | $20,600 | $18,637 |
Costs deferred | 33,126 | 32,359 | 28,993 |
Amortization | -31,212 | -28,438 | -27,030 |
Ending balance | $26,435 | $24,521 | $20,600 |
Goodwill_VOBA_and_Other_Intang2
Goodwill, VOBA and Other Intangible Assets (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | |||
Goodwill | |||
Goodwill | $156,817 | $156,817 | $156,817 |
Accumulated impairment loss | -139,532 | -139,532 | -139,532 |
Goodwill | $17,285 | $17,285 | $17,285 |
Goodwill_VOBA_and_Other_Intang3
Goodwill, VOBA and Other Intangible Assets (Details 2) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Changes in VOBA | |||
Beginning balance | $11,555 | $13,105 | $14,833 |
Amortization, net of interest accrued | -1,426 | -1,550 | -1,728 |
Ending balance | $10,129 | $11,555 | $13,105 |
Goodwill_VOBA_and_Other_Intang4
Goodwill, VOBA and Other Intangible Assets (Details 3) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
VOBA and Other Intangible Assets | |||
Intangible assets amortization | $1,788 | $1,788 | $1,788 |
VOBA | |||
VOBA and Other Intangible Assets | |||
2015 | 1,323 | ||
2016 | 1,227 | ||
2017 | 1,131 | ||
2018 | 961 | ||
2019 | 874 | ||
Thereafter | 4,613 | ||
Total intangible assets, net | 10,129 | ||
VOBA | Minimum | |||
VOBA and Other Intangible Assets | |||
Interest rate assumed for VOBA (as a percent) | 5.40% | ||
VOBA | Maximum | |||
VOBA and Other Intangible Assets | |||
Interest rate assumed for VOBA (as a percent) | 7.50% | ||
Contract based intangibles | |||
VOBA and Other Intangible Assets | |||
2015 | 1,788 | ||
2016 | 1,788 | ||
2017 | 1,788 | ||
2018 | 1,788 | ||
2019 | 1,788 | ||
Thereafter | 5,820 | ||
Total intangible assets, net | $14,760 | $16,548 |
Goodwill_VOBA_and_Other_Intang5
Goodwill, VOBA and Other Intangible Assets (Details 4) (Contract based intangibles, USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Contract based intangibles | ||
Other Intangible Assets | ||
Carrying Value | $38,020 | $38,020 |
Accumulated Amortization | -23,260 | -21,472 |
Total intangible assets, net | $14,760 | $16,548 |
Accumulated_Other_Comprehensiv2
Accumulated Other Comprehensive Income (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Accumulated other comprehensive income | |||
Balance at the beginning of the period | $180,101 | $320,590 | $217,111 |
Other comprehensive income before reclassifications | 94,720 | -149,153 | 99,537 |
Amounts reclassified from accumulated other comprehensive income | 8,997 | 8,664 | 3,942 |
Total other comprehensive income (loss) | 103,717 | -140,489 | 103,479 |
Balance at the end of the period | 283,818 | 180,101 | 320,590 |
Unrealized gains on securities | |||
Accumulated other comprehensive income | |||
Balance at the beginning of the period | 171,346 | 311,354 | 211,368 |
Other comprehensive income before reclassifications | 93,163 | -147,640 | 96,013 |
Amounts reclassified from accumulated other comprehensive income | 9,013 | 7,632 | 3,973 |
Total other comprehensive income (loss) | 102,176 | -140,008 | 99,986 |
Balance at the end of the period | 273,522 | 171,346 | 311,354 |
OTTI | |||
Accumulated other comprehensive income | |||
Balance at the beginning of the period | 8,755 | 9,236 | 5,743 |
Other comprehensive income before reclassifications | 1,557 | -1,513 | 3,524 |
Amounts reclassified from accumulated other comprehensive income | -16 | 1,032 | -31 |
Total other comprehensive income (loss) | 1,541 | -481 | 3,493 |
Balance at the end of the period | $10,296 | $8,755 | $9,236 |
Accumulated_Other_Comprehensiv3
Accumulated Other Comprehensive Income (Details 2) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Amount reclassified from accumulated other comprehensive income | |||
Net realized gains on investments, excluding other-than-temporary impairment losses | $16,365 | $13,489 | $10,026 |
Portion of net (gain) loss recognized in other comprehensive income, before taxes | -31 | -104 | 0 |
Provision for income taxes | -34,999 | -30,077 | -41,292 |
Net income | 69,178 | 62,764 | 89,405 |
Reclassified from accumulated other comprehensive income | |||
Amount reclassified from accumulated other comprehensive income | |||
Net income | 8,997 | 8,664 | 3,942 |
Unrealized gains on securities | Reclassified from accumulated other comprehensive income | |||
Amount reclassified from accumulated other comprehensive income | |||
Net realized gains on investments, excluding other-than-temporary impairment losses | 13,866 | 11,741 | 6,113 |
Provision for income taxes | -4,853 | -4,109 | -2,140 |
Net income | 9,013 | 7,632 | 3,973 |
OTTI | Reclassified from accumulated other comprehensive income | |||
Amount reclassified from accumulated other comprehensive income | |||
Portion of net (gain) loss recognized in other comprehensive income, before taxes | -24 | 1,588 | -47 |
Provision for income taxes | 8 | -556 | 16 |
Net income | ($16) | $1,032 | ($31) |
Related_Party_Transactions_Det
Related Party Transactions (Details) (Parent and its affiliates, USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Parent and its affiliates | |||
Related party transactions | |||
Net fees paid for services provided | $78,347 | $68,848 | $78,866 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Future minimum lease payments under operating lease agreements | |||
2015 | $5,829 | ||
2016 | 5,628 | ||
2017 | 5,151 | ||
2018 | 4,600 | ||
2019 | 3,975 | ||
Thereafter | 59,991 | ||
Total minimum future lease payments | 85,174 | ||
Sublease rental income | 10,887 | ||
Rent expense under operating lease | 6,182 | 6,225 | 6,377 |
Sublease income | $193 | $0 | $0 |
Schedule_ISummary_of_Investmen1
Schedule I-Summary of Investments Other-Than-Investments in Related Parties (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | $3,100,500 | |
Fair Value | 3,612,636 | |
Amount at which shown in balance sheet | 3,542,696 | 3,491,053 |
Fixed maturity securities | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 2,249,891 | |
Fair Value | 2,678,688 | |
Amount at which shown in balance sheet | 2,678,688 | |
United States Government and government agencies and authorities. | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 19,221 | |
Fair Value | 19,475 | |
Amount at which shown in balance sheet | 19,475 | |
States, municipalities and political subdivisions | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 42,745 | |
Fair Value | 45,788 | |
Amount at which shown in balance sheet | 45,788 | |
Foreign governments | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 19,061 | |
Fair Value | 21,824 | |
Amount at which shown in balance sheet | 21,824 | |
Asset-backed | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 684 | |
Fair Value | 734 | |
Amount at which shown in balance sheet | 734 | |
Commercial mortgage-backed | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 3,794 | |
Fair Value | 3,896 | |
Amount at which shown in balance sheet | 3,896 | |
Residential mortgage-backed | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 65,090 | |
Fair Value | 72,026 | |
Amount at which shown in balance sheet | 72,026 | |
Corporate | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 2,099,296 | |
Fair Value | 2,514,945 | |
Amount at which shown in balance sheet | 2,514,945 | |
Equity securities | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 122,347 | |
Fair Value | 135,746 | |
Amount at which shown in balance sheet | 135,746 | |
Common Stock | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 92 | |
Fair Value | 414 | |
Amount at which shown in balance sheet | 414 | |
Non-redeemable preferred stocks | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 122,255 | |
Fair Value | 135,332 | |
Amount at which shown in balance sheet | 135,332 | |
Commercial mortgage loans on real estate | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 499,814 | |
Fair Value | 569,754 | |
Amount at which shown in balance sheet | 499,814 | |
Policy loans | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 11,663 | |
Fair Value | 11,663 | |
Amount at which shown in balance sheet | 11,663 | |
Short-term investments | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 64,104 | |
Fair Value | 64,104 | |
Amount at which shown in balance sheet | 64,104 | |
Collateral held/pledged under securities agreements | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 42,941 | |
Fair Value | 42,941 | |
Amount at which shown in balance sheet | 42,941 | |
Other investments. | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 109,740 | |
Fair Value | 109,740 | |
Amount at which shown in balance sheet | $109,740 |
Schedule_IIISupplementary_Insu1
Schedule III-Supplementary Insurance Information (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Schedule III-Supplementary Insurance Information | |||
Deferred acquisition costs | $26,435 | $24,521 | $20,600 |
Future policy benefits and expenses | 2,906,706 | 2,743,876 | 2,804,648 |
Unearned premiums | 34,355 | 30,535 | 30,021 |
Claims and benefits payable | 1,717,938 | 1,679,730 | 1,695,090 |
Premium revenues | 1,035,467 | 1,001,631 | 1,007,986 |
Net investment income | 180,734 | 182,960 | 198,728 |
Benefits claims, losses and settlement expenses | 746,101 | 745,247 | 731,862 |
Amortization of deferred policy acquisition costs | 31,212 | 28,438 | 27,030 |
Other operating expenses | $357,839 | $349,782 | $348,020 |
Schedule_IV_Reinsurance_Detail
Schedule IV - Reinsurance (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Life Insurance in Force | |||
Direct amount | $74,650,477 | $73,382,530 | $71,453,196 |
Ceded to other Companies | 10,021,852 | 10,129,336 | 10,860,008 |
Assumed from other Companies | 1,010,223 | 954,647 | 981,157 |
Net amount | 65,638,848 | 64,207,841 | 61,574,345 |
Percentage of amount assumed to net | 1.50% | 1.50% | 1.60% |
Premiums: | |||
Direct amount | 1,042,778 | 1,030,735 | 1,039,775 |
Ceded to other Companies | 165,260 | 179,784 | 189,902 |
Assumed from other Companies | 157,949 | 150,680 | 158,113 |
Net earned premiums | 1,035,467 | 1,001,631 | 1,007,986 |
Percentage of amount assumed to net | 15.30% | 15.00% | 15.70% |
Benefits: | |||
Direct policyholder benefits | 1,204,257 | 917,800 | 879,038 |
Ceded to other Companies | 625,675 | 334,594 | 304,980 |
Assumed from other companies | 167,519 | 162,041 | 157,804 |
Net policyholder benefits | 746,101 | 745,247 | 731,862 |
Percentage of amount assumed to net | 22.50% | 21.70% | 21.60% |
Life insurance | |||
Premiums: | |||
Direct amount | 279,488 | 275,659 | 279,385 |
Ceded to other Companies | 77,978 | 81,965 | 89,869 |
Assumed from other Companies | 4,831 | 4,983 | 8,176 |
Net earned premiums | 206,341 | 198,677 | 197,692 |
Percentage of amount assumed to net | 2.30% | 2.50% | 4.10% |
Benefits: | |||
Direct policyholder benefits | 374,582 | 380,798 | 392,126 |
Ceded to other Companies | 229,548 | 237,530 | 253,829 |
Assumed from other companies | 19,317 | 20,624 | 21,674 |
Net policyholder benefits | 164,351 | 163,892 | 159,971 |
Percentage of amount assumed to net | 11.80% | 12.60% | 13.50% |
Accident and health insurance | |||
Premiums: | |||
Direct amount | 763,290 | 755,076 | 760,390 |
Ceded to other Companies | 87,282 | 97,819 | 100,033 |
Assumed from other Companies | 153,118 | 145,697 | 149,937 |
Net earned premiums | 829,126 | 802,954 | 810,294 |
Percentage of amount assumed to net | 18.50% | 18.10% | 18.50% |
Benefits: | |||
Direct policyholder benefits | 829,675 | 537,002 | 486,912 |
Ceded to other Companies | 396,127 | 97,064 | 51,151 |
Assumed from other companies | 148,202 | 141,417 | 136,130 |
Net policyholder benefits | $581,750 | $581,355 | $571,891 |
Percentage of amount assumed to net | 25.50% | 24.30% | 23.80% |
Schedule_VValuation_and_Qualif1
Schedule V-Valuation and Qualifying Accounts (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Movement in valuation and qualifying accounts | |||
Balance at Beginning of Year | $6,531 | $8,192 | $10,079 |
Charged to Costs and Expenses | -637 | -1,661 | -1,829 |
Charged to Other Accounts | 0 | 0 | 0 |
Deductions | -2 | 0 | 58 |
Balance at End of Year | 5,896 | 6,531 | 8,192 |
Valuation allowance for mortgage loans on real estate | |||
Movement in valuation and qualifying accounts | |||
Balance at Beginning of Year | 2,047 | 3,646 | 5,381 |
Charged to Costs and Expenses | -583 | -1,599 | -1,735 |
Charged to Other Accounts | 0 | 0 | 0 |
Deductions | 0 | 0 | 0 |
Balance at End of Year | 1,464 | 2,047 | 3,646 |
Valuation allowance for uncollectible agents balances | |||
Movement in valuation and qualifying accounts | |||
Balance at Beginning of Year | 4,462 | 4,530 | 4,655 |
Charged to Costs and Expenses | -64 | -68 | -67 |
Charged to Other Accounts | 0 | 0 | 0 |
Deductions | -2 | 0 | 58 |
Balance at End of Year | 4,400 | 4,462 | 4,530 |
Valuation allowance for uncollectible accounts | |||
Movement in valuation and qualifying accounts | |||
Balance at Beginning of Year | 22 | 16 | 43 |
Charged to Costs and Expenses | 10 | 6 | -27 |
Charged to Other Accounts | 0 | 0 | 0 |
Deductions | 0 | 0 | 0 |
Balance at End of Year | $32 | $22 | $16 |