Document And Entity Information
Document And Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Feb. 15, 2016 | Jun. 30, 2015 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2015 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY | ||
Entity Registrant Name | HORACE MANN EDUCATORS CORP /DE/ | ||
Entity Central Index Key | 850,141 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 1,498.1 | ||
Trading Symbol | HMN | ||
Entity Common Stock, Shares Outstanding | 40,394,145 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | |
Investments | |||
Fixed maturities, available for sale, at fair value (amortized cost 2015, $6,785,626; 2014, $6,375,237) | $ 7,091,340 | $ 6,893,090 | |
Equity securities, available for sale, at fair value (cost 2015, $95,722; 2014, $99,904) | 99,797 | 110,655 | |
Short-term and other investments | 456,893 | 399,722 | |
Total investments | 7,648,030 | 7,403,467 | |
Cash | 15,509 | 11,675 | |
Deferred policy acquisition costs | 253,176 | 215,082 | |
Goodwill | 47,396 | 47,396 | |
Other assets | 294,510 | 277,350 | |
Separate Account (variable annuity) assets | [1] | 1,800,722 | 1,813,557 |
Total assets | 10,059,343 | 9,768,527 | |
Policy liabilities | |||
Investment contract and life policy reserves | 5,126,842 | 4,802,271 | |
Unpaid claims and claim expenses | 323,720 | 325,784 | |
Unearned premiums | 232,841 | 223,413 | |
Total policy liabilities | 5,683,403 | 5,351,468 | |
Other policyholder funds | 692,652 | 606,738 | |
Other liabilities | 368,559 | 422,362 | |
Short-term debt | 0 | 38,000 | |
Long-term debt, current and noncurrent | 249,346 | 199,939 | |
Separate Account (variable annuity) liabilities | 1,800,722 | 1,813,557 | |
Total liabilities | 8,794,682 | 8,432,064 | |
Preferred stock, $0.001 par value, authorized 1,000,000 shares; none issued | 0 | 0 | |
Common stock, $0.001 par value, authorized 75,000,000 shares; issued, 2015, 64,537,554; 2014, 64,245,048 | 65 | 64 | |
Additional paid-in capital | 442,648 | 422,232 | |
Retained earnings | 1,116,277 | 1,065,318 | |
Accumulated other comprehensive income (loss), net of taxes: | |||
Net unrealized gains on fixed maturities and equity securities | [2],[3] | 175,167 | 297,554 |
Net funded status of pension and other postretirement benefit obligations | [2] | (11,794) | (12,953) |
Treasury stock, at cost, 2015, 23,971,522 shares; 2014, 23,308,430 shares | (457,702) | (435,752) | |
Total shareholders' equity | 1,264,661 | 1,336,463 | |
Total liabilities and shareholders' equity | $ 10,059,343 | $ 9,768,527 | |
[1] | Separate Account (variable annuity) liabilities are set equal to Separate Account (variable annuity) assets. | ||
[2] | All amounts are net of tax. | ||
[3] | The pretax amounts reclassified from accumulated other comprehensive income, $11,667, $10,943 and $22,245, are included in net realized investment gains and losses and the related tax expenses, $4,083, $3,830 and $7,786, are included in income tax expense in the Consolidated Statements of Operations for the years ended December 31, 2015, 2014 and 2013, respectively. |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Fixed maturities, available for sale, amortized cost | $ 6,785,626 | $ 6,375,237 | ||
Equity securities, available for sale, cost | $ 95,722 | $ 99,904 | ||
Preferred stock, par value | $ 0.001 | $ 0.001 | ||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 | ||
Preferred stock, shares issued | 0 | 0 | ||
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 75,000,000 | 75,000,000 | ||
Common stock, shares issued | 64,537,554 | 64,245,048 | ||
Treasury stock, shares | 23,971,522 | 23,308,430 | 23,117,554 | 22,943,925 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Revenues | |||
Insurance premiums and contract charges earned | $ 731,880 | $ 715,760 | $ 690,938 |
Net investment income | 332,600 | 329,815 | 313,610 |
Net realized investment gains | 12,713 | 10,917 | 22,245 |
Other income | 3,255 | 4,193 | 4,474 |
Total revenues | 1,080,448 | 1,060,685 | 1,031,267 |
Benefits, losses and expenses | |||
Benefits, claims and settlement expenses | 496,364 | 468,426 | 448,317 |
Interest credited | 182,842 | 176,139 | 169,893 |
Policy acquisition expenses amortized | 98,919 | 93,817 | 84,643 |
Operating expenses | 157,411 | 161,992 | 160,112 |
Interest expense | 13,122 | 14,198 | 14,236 |
Debt retirement costs | 2,338 | 0 | 0 |
Total benefits, losses and expenses | 950,996 | 914,572 | 877,201 |
Income before income taxes | 129,452 | 146,113 | 154,066 |
Income tax expense | 35,970 | 41,870 | 43,173 |
Net income | $ 93,482 | $ 104,243 | $ 110,893 |
Net income per share | |||
Basic | $ 2.23 | $ 2.5 | $ 2.75 |
Diluted | $ 2.20 | $ 2.47 | $ 2.66 |
Weighted average number of shares and equivalent shares | |||
Basic | 41,914,864 | 41,646,281 | 40,376,562 |
Diluted | 42,424,806 | 42,230,559 | 41,633,240 |
Net realized investment gains | |||
Total other-than-temporary impairment losses on securities | $ (23,796) | $ (6,385) | $ (1,532) |
Portion of losses recognized in other comprehensive income (loss) | (4,300) | 0 | 0 |
Net other-than-temporary impairment losses on securities recognized in earnings | (19,496) | (6,385) | (1,532) |
Realized gains, net | 32,209 | 17,302 | 23,777 |
Total | $ 12,713 | $ 10,917 | $ 22,245 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Comprehensive income (loss) | ||||||||||||||||
Net income | $ 21,040 | $ 21,984 | $ 16,183 | $ 34,275 | $ 30,068 | $ 25,357 | $ 20,452 | $ 28,366 | $ 34,287 | $ 23,599 | $ 25,995 | $ 27,012 | $ 93,482 | $ 104,243 | $ 110,893 | |
Other comprehensive income (loss), net of taxes: | ||||||||||||||||
Change in net unrealized gains and losses on fixed maturities and equity securities | [1],[2] | (122,387) | 163,564 | (248,410) | ||||||||||||
Change in net funded status of pension and other postretirement benefit obligations | [1] | 1,159 | (1,177) | 3,535 | ||||||||||||
Other comprehensive income (loss) | [1] | (121,228) | 162,387 | (244,875) | ||||||||||||
Total | $ (27,746) | $ 266,630 | $ (133,982) | |||||||||||||
[1] | All amounts are net of tax. | |||||||||||||||
[2] | The pretax amounts reclassified from accumulated other comprehensive income, $11,667, $10,943 and $22,245, are included in net realized investment gains and losses and the related tax expenses, $4,083, $3,830 and $7,786, are included in income tax expense in the Consolidated Statements of Operations for the years ended December 31, 2015, 2014 and 2013, respectively. |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common stock | Additional paid-in capital | Retained earnings | Accumulated other comprehensive income (loss), net of taxes | Treasury stock, at cost | |
Beginning balance at Dec. 31, 2012 | $ 62 | $ 383,135 | $ 921,969 | $ 367,089 | $ (426,452) | ||
Options exercised, 2015, 85,532 shares; 2014, 435,665 shares; 2013, 1,158,537 shares | 2 | ||||||
Conversion of common stock units, 2015, 8,293 shares; 2014, 10,834 shares; 2013, 11,851 shares | 0 | ||||||
Conversion of restricted stock units, 2015, 198,681 shares; 2014, 169,444 shares; 2013, 146,930 shares | 0 | ||||||
Options exercised and conversion of common stock units and restricted stock units | 22,502 | ||||||
Share-based compensation expense | 1,419 | ||||||
Net income | $ 110,893 | 110,893 | |||||
Cash dividends, 2015, $1.00 per share; 2014, $0.92 per share; 2013, $0.78 per share | (32,550) | ||||||
Change in net unrealized gains on fixed maturities and equity securities | (248,410) | [1],[2] | (248,410) | ||||
Change in net funded status of pension and other postretirement benefit obligations | 3,535 | [1] | 3,535 | ||||
Acquisition of shares, 2015, 663,092 shares; 2014, 190,876 shares; 2013, 173,629 shares | (3,889) | ||||||
Ending balance at Dec. 31, 2013 | 1,099,305 | 64 | 407,056 | 1,000,312 | 122,214 | (430,341) | |
Options exercised, 2015, 85,532 shares; 2014, 435,665 shares; 2013, 1,158,537 shares | 0 | ||||||
Conversion of common stock units, 2015, 8,293 shares; 2014, 10,834 shares; 2013, 11,851 shares | 0 | ||||||
Conversion of restricted stock units, 2015, 198,681 shares; 2014, 169,444 shares; 2013, 146,930 shares | 0 | ||||||
Options exercised and conversion of common stock units and restricted stock units | 13,906 | ||||||
Share-based compensation expense | 1,270 | ||||||
Net income | 104,243 | 104,243 | |||||
Cash dividends, 2015, $1.00 per share; 2014, $0.92 per share; 2013, $0.78 per share | (39,237) | ||||||
Change in net unrealized gains on fixed maturities and equity securities | 163,564 | [1],[2] | 163,564 | ||||
Change in net funded status of pension and other postretirement benefit obligations | (1,177) | [1] | (1,177) | ||||
Acquisition of shares, 2015, 663,092 shares; 2014, 190,876 shares; 2013, 173,629 shares | (5,411) | ||||||
Ending balance at Dec. 31, 2014 | 1,336,463 | 64 | 422,232 | 1,065,318 | 284,601 | (435,752) | |
Options exercised, 2015, 85,532 shares; 2014, 435,665 shares; 2013, 1,158,537 shares | 0 | ||||||
Conversion of common stock units, 2015, 8,293 shares; 2014, 10,834 shares; 2013, 11,851 shares | 0 | ||||||
Conversion of restricted stock units, 2015, 198,681 shares; 2014, 169,444 shares; 2013, 146,930 shares | 1 | ||||||
Options exercised and conversion of common stock units and restricted stock units | 13,605 | ||||||
Share-based compensation expense | 6,811 | ||||||
Net income | 93,482 | 93,482 | |||||
Cash dividends, 2015, $1.00 per share; 2014, $0.92 per share; 2013, $0.78 per share | (42,523) | ||||||
Change in net unrealized gains on fixed maturities and equity securities | (122,387) | [1],[2] | (122,387) | ||||
Change in net funded status of pension and other postretirement benefit obligations | 1,159 | [1] | 1,159 | ||||
Acquisition of shares, 2015, 663,092 shares; 2014, 190,876 shares; 2013, 173,629 shares | (21,950) | ||||||
Ending balance at Dec. 31, 2015 | $ 1,264,661 | $ 65 | $ 442,648 | $ 1,116,277 | $ 163,373 | $ (457,702) | |
[1] | All amounts are net of tax. | ||||||
[2] | The pretax amounts reclassified from accumulated other comprehensive income, $11,667, $10,943 and $22,245, are included in net realized investment gains and losses and the related tax expenses, $4,083, $3,830 and $7,786, are included in income tax expense in the Consolidated Statements of Operations for the years ended December 31, 2015, 2014 and 2013, respectively. |
CONSOLIDATED STATEMENTS OF CHA7
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Common stock, par value beginning balance | $ 0.001 | $ 0.001 | $ 0.001 |
Options exercised, shares | 85,532 | 435,665 | 1,158,537 |
Conversion of common stock units, shares | 8,293 | 10,834 | 11,851 |
Conversion of restricted stock units, shares | 198,681 | 169,444 | 146,930 |
Cash dividends, per share | $ 1 | $ 0.92 | $ 0.78 |
Treasury stock, beginning balance, shares | 23,308,430 | 23,117,554 | 22,943,925 |
Treasury stock, acquisition of shares | 663,092 | 190,876 | 173,629 |
Treasury stock, ending balance, shares | 23,971,522 | 23,308,430 | 23,117,554 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Cash flows - operating activities | |||
Premiums collected | $ 723,705 | $ 707,275 | $ 688,355 |
Policyholder benefits paid | (534,359) | (486,295) | (476,103) |
Policy acquisition and other operating expenses paid | (267,854) | (262,765) | (251,293) |
Federal income taxes paid | (24,861) | (29,195) | (33,672) |
Investment income collected | 330,034 | 324,252 | 311,712 |
Interest expense paid | (13,521) | (13,902) | (13,825) |
Other | (6,101) | (17,437) | (19,238) |
Net cash provided by operating activities | 207,043 | 221,933 | 205,936 |
Fixed maturities | |||
Purchases | (1,490,376) | (1,309,267) | (1,212,937) |
Sales | 445,100 | 261,696 | 298,045 |
Maturities, paydowns, calls and redemptions | 683,335 | 451,074 | 504,921 |
Purchase of other invested assets | (38,018) | (16,041) | (35,000) |
Net cash provided by (used in) short-term and other investments | (15,890) | 47,023 | (153,355) |
Net cash used in investing activities | (415,849) | (565,515) | (598,326) |
Cash flows - financing activities | |||
Dividends paid to shareholders | (42,523) | (39,237) | (32,550) |
Proceeds from issuance of Senior Notes due 2025 | 246,937 | 0 | 0 |
Redemption of Senior Notes due 2016 | (127,292) | 0 | 0 |
Maturity of Senior Notes due 2015 | (75,000) | 0 | 0 |
Principal repayment on Bank Credit Facility | (38,000) | 0 | 0 |
Acquisition of treasury stock | (21,950) | (5,411) | (3,889) |
Exercise of stock options | 1,629 | 8,252 | 19,336 |
Annuity contracts: variable, fixed and FHLB funding agreements | |||
Deposits | 623,021 | 730,632 | 673,057 |
Benefits, withdrawals and net transfers to Separate Account (variable annuity) assets | (354,735) | (326,374) | (278,350) |
Life policy accounts | |||
Deposits | 1,455 | 1,093 | 1,636 |
Withdrawals and surrenders | (3,985) | (4,883) | (4,734) |
Cash received (paid) related to repurchase agreements | 0 | (25,848) | 25,848 |
Change in bank overdrafts | 3,083 | (1,156) | (4,956) |
Net cash provided by financing activities | 212,640 | 337,068 | 395,398 |
Net increase (decrease) in cash | 3,834 | (6,514) | 3,008 |
Cash at beginning of period | 11,675 | 18,189 | 15,181 |
Cash at end of period | $ 15,509 | $ 11,675 | $ 18,189 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Significant Accounting Policies | NOTE 1 - Summary of Significant Accounting Policies The accompanying consolidated financial statements have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) and with the rules and regulations of the Securities and Exchange Commission (“SEC”), specifically Regulation S-X and the instructions to Form 10-K. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (1) the reported amounts of assets and liabilities, (2) disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and (3) the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The consolidated financial statements include the accounts of Horace Mann Educators Corporation and its wholly-owned subsidiaries (“HMEC”; and together with its subsidiaries, the “Company” or “Horace Mann”). HMEC and its subsidiaries have common management, share office facilities and are parties to intercompany service agreements for management, administrative, utilization of personnel, financial, investment advisory, underwriting, claims adjusting, agency and data processing services. Under these agreements, costs have been allocated among the companies in conformity with GAAP. In addition, certain of the subsidiaries have entered into intercompany reinsurance agreements. HMEC and its subsidiaries file a consolidated federal income tax return, and there are related tax sharing agreements. All significant intercompany balances and transactions have been eliminated in consolidation. The subsidiaries of HMEC market and underwrite personal lines of property and casualty (primarily personal lines automobile and homeowners) insurance, retirement annuities (primarily tax-qualified products) and life insurance, primarily to K-12 teachers, administrators and other employees of public schools and their families. HMEC’s principal operating subsidiaries are Horace Mann Life Insurance Company, Horace Mann Insurance Company, Teachers Insurance Company, Horace Mann Property & Casualty Insurance Company and Horace Mann Lloyds. The Company has evaluated subsequent events through the date these consolidated financial statements were issued. There were no subsequent events requiring adjustment to the financial statements or disclosure. In the year ended December 31, 2015 (specifically, in the first quarter), the Company recorded a reduction in incentive compensation expense due to an immaterial out-of-period correction of an error related to the valuation of restricted common stock units. The $3,012 after tax ($4,634 pretax) adjustment increased net income for each of the segments as follows: property and casualty, $2,056; annuity, $519; and life, $437. The Company invests primarily in fixed maturity securities (“fixed maturities”). This category includes primarily bonds and notes, but also includes redeemable preferred stocks. These securities are classified as available for sale and carried at fair value. The net adjustment for unrealized gains and losses on all securities available for sale, carried at fair value, is recorded as a separate component of accumulated other comprehensive income within shareholders' equity, net of applicable deferred taxes and the related impact on deferred policy acquisition costs associated with annuity contracts and life insurance products with account values that would have occurred if the securities had been sold at their aggregate fair value and the proceeds reinvested at current yields. Equity securities are classified as available for sale and carried at fair value. This category includes nonredeemable preferred stocks and common stocks. Short-term and other investments are comprised of short-term fixed income securities, generally carried at cost which approximates fair value; derivative instruments (all call options), carried at fair value; policy loans, carried at unpaid principal balances; mortgage loans, carried at unpaid principal; certain alternative investments (primarily investments in limited partnerships) which are accounted for as equity method investments; and restricted Federal Home Loan Bank membership and activity stocks, carried at redemption value which approximates fair value. The Company invests in fixed maturity securities and alternative investment funds that could qualify as variable interest entities, including corporate securities, mortgage-backed securities and asset-backed securities. Such securities have been reviewed and determined not to be subject to consolidation as the Company is not the primary beneficiary of these securities as the Company does not have the power to direct the activities that most significantly impact the entities’ performance. Interest income is recognized as earned. Investment income reflects amortization of premiums and accrual of discounts on an effective-yield basis. Realized gains and losses arising from the disposal (recorded on a trade date basis) or impairment of securities are determined based upon specific identification of securities. The Company evaluates all investments in its portfolio for other-than-temporary declines in value as described in the following section. The Company's methodology of assessing other-than-temporary impairments is based on security-specific facts and circumstances as of the balance sheet date. Based on these facts, for fixed maturity securities if (1) the Company has the intent to sell the fixed maturity security, (2) it is more likely than not the Company will be required to sell the fixed maturity security before the anticipated recovery of the amortized cost basis, or (3) management does not expect to recover the entire cost basis of the fixed maturity security, an other-than-temporary impairment is considered to have occurred. For equity securities, if (1) the Company does not have the ability and intent to hold the security for the recovery of cost or (2) recovery of cost is not expected within a reasonable period of time, an other-than-temporary impairment is considered to have occurred. Additionally, if events become known that call into question whether the security issuer has the ability to honor its contractual commitments, such security holding will be evaluated to determine whether or not such security has suffered an other-than-temporary decline in value. The Company reviews the fair value of all investments in its portfolio on a monthly basis to assess whether an other-than-temporary decline in value has occurred. These reviews, in conjunction with the Company's investment managers' monthly credit reports and relevant factors such as (1) the financial condition and near-term prospects of the issuer, (2) the length of time and extent to which the fair value has been less than amortized cost for fixed maturity securities or cost for equity securities, (3) for fixed maturity securities, the Company’s intent to sell a security or whether it is more likely than not the Company will be required to sell the security before the anticipated recovery in the amortized cost basis; and for equity securities, the Company’s ability and intent to hold the security for the recovery of cost or if recovery of cost is not expected within a reasonable period of time, (4) the stock price trend of the issuer, (5) the market leadership position of the issuer, (6) the debt ratings of the issuer, and (7) the cash flows and liquidity of the issuer or the underlying cash flows for asset-backed securities, are all considered in the impairment assessment. A write-down of an investment is recorded when a decline in the fair value of that investment is deemed to be other-than-temporary, with a realized investment loss charged to income for the period for the full loss amount for all equity securities and for the credit-related loss portion associated with impaired fixed maturity securities. The amount of the total other-than-temporary impairment related to non-credit factors for fixed maturity securities is recognized in other comprehensive income, net of applicable taxes, unless the Company has the intent to sell the security or if it is more likely than not the Company will be required to sell the security before the anticipated recovery of the amortized cost basis. With respect to fixed income securities involving securitized financial assets primarily asset-backed and commercial mortgage-backed securities in the Company’s portfolio a significant portion of the fair values is determined by observable inputs. In addition, the securitized financial asset securities’ underlying collateral cash flows are stress tested to determine if there has been any adverse change in the expected cash flows. A decline in fair value below amortized cost is not assumed to be other-than-temporary for fixed maturity investments with unrealized losses due to spread widening, market illiquidity or changes in interest rates where there exists a reasonable expectation based on the Company’s consideration of all objective information available that the Company will recover the entire cost basis of the security and the Company does not have the intent to sell the investment before maturity or a market recovery is realized and it is more likely than not the Company will not be required to sell the investment. An other-than-temporary impairment loss will be recognized based upon all relevant facts and circumstances for each investment, as appropriate. Additional considerations for certain types of securities include the following: Corporate Fixed Maturity Securities Judgments regarding whether a corporate fixed maturity security is other-than-temporarily impaired include analyzing the issuer’s financial condition and whether there has been a decline in the issuer’s ability to service the specific security. The analysis of the security issuer is based on asset coverage, cash flow multiples or other industry standards. Several factors assessed include, but are not limited to, credit quality ratings, cash flow sustainability, liquidity, financial strength, industry and market position. Sources of information include, but are not limited to, management projections, independent consultants, external analysts’ research, peer analysis and the Company’s internal analysis. If the Company has concerns regarding the viability of the issuer or its ability to service the specific security after this assessment, a cash flow analysis is prepared to determine if the present value of future cash flows has declined below the amortized cost of the fixed maturity security. This analysis to determine an estimate of ultimate recovery value is combined with the estimated timing to recovery and any other applicable cash flows that are expected. If a cash flow analysis estimate is not feasible, then the market’s view of cash flows implied by the period end fair value, market discount rates and effective yield are the primary factors used to estimate a recovery value. Mortgage-Backed Securities Not Issued By the U.S. Government or Federally Sponsored Agencies The Company uses an estimate of future cash flows expected to be collected to evaluate its mortgage-backed securities for other-than-temporary impairment. The determination of cash flow estimates is inherently subjective and methodologies may vary depending on facts and circumstances specific to the security. All reasonably available information relevant to the collectability of the security, including past events, current conditions, and reasonable and supportable assumptions and forecasts, are considered when developing the estimate of cash flows expected to be collected. Information includes, but is not limited to, debt-servicing, missed refinancing opportunities and geography. Loan level characteristics such as issuer, FICO score, payment terms, level of documentation, property or residency type, and economic outlook are also utilized in financial models, along with historical performance, to estimate or measure the loan’s propensity to default. Additionally, financial models take into account loan age, lease rollovers, rent volatilities, vacancy rates and exposure to refinancing as additional drivers of default. For transactions where loan level data is not available, financial models use a proxy based on the collateral characteristics. Loss severity is a function of multiple factors including, but not limited to, the unpaid balance, interest rate, mortgage insurance ratios, assessed property value at origination, change in property valuation and loan-to-value ratio at origination. Prepayment speeds, both actual and estimated, cost of capital rates and debt service ratios are also considered. The cash flows generated by the collateral securing these securities are then estimated with these default, loss severity and prepayment assumptions. These collateral cash flows are then utilized, along with consideration for the issue’s position in the overall structure, to estimate the cash flows associated with the residential or commercial mortgage-backed security held by the Company. Municipal Bonds The Company’s municipal bond portfolio consists primarily of special revenue bonds, which present unique considerations in evaluating other-than-temporary impairments, but also includes general obligation bonds. The Company evaluates special revenue bonds for other-than-temporary impairment based on guarantees associated with the repayment from revenues generated by the specified revenue-generating activity associated with the purpose of the bonds. Judgments regarding whether a municipal bond is other-than-temporarily impaired include analyzing the issuer’s financial condition and whether there has been a decline in the overall financial condition of the issuer or its ability to service the specific security. Security credit ratings are reviewed with emphasis on the economy, finances, debt and management of the municipal issuer. Certain securities may be guaranteed by the mono-line credit insurers or other forms of guarantee. While not relied upon in the initial security purchase decision, insurance benefits are considered in the assessments for other-than-temporary impairment, including the credit-worthiness of the guarantor. Municipalities possess unique powers, along with a special legal standing and protections, that enable them to act quickly to restore budgetary balance and fiscal integrity. These powers include the sovereign power to tax, access to one-time revenue sources, capacity to issue or restructure debt, and ability to shift spending to other authorities. State governments often provide secondary support to local governments in times of financial stress and the federal government has provided assistance to state governments during recessions. If the Company has concerns regarding the viability of the municipal issuer or its ability to service the specific security after this analysis, a cash flow analysis is prepared to determine a present value and whether it has declined below the amortized cost of the security. If a cash flow analysis is not feasible, then the market’s view of the period end fair value, market discount rates and effective yield are the primary factors used to estimate the present value. Credit Losses The Company estimates the amount of the credit loss component of a fixed maturity security impairment as the difference between amortized cost and the present value of the expected cash flows of the security. The present value is determined using the best estimate cash flows discounted at the effective interest rate implicit to the security at the date of purchase or the current yield to accrete an asset-backed or floating rate security. The methodology and assumptions for establishing the best estimate cash flows vary depending on the type of security. Corporate fixed maturity security and municipal bond cash flow estimates are derived from scenario-based outcomes of expected restructurings or the disposition of assets using specific facts and other circumstances, including timing, security interests and loss severity and when not reasonably estimable, such securities are impaired to fair value as management’s best estimate of the present value of future cash flows. The cash flow estimates for mortgage-backed and other structured securities are based on security specific facts and circumstances that may include collateral characteristics, expectations of delinquency and default rates, loss severity and prepayment speeds, and structural support, including subordination and guarantees. December 31, 2015 2014 Annuity $ 178,300 $ 143,522 Life 48,191 44,400 Property and casualty 26,685 27,160 Total $ 253,176 $ 215,082 Policy acquisition costs, consisting of commissions, policy issuance and other costs which are incremental and directly related to the successful acquisition of new or renewal business, are capitalized and amortized on a basis consistent with the type of insurance coverage. For all investment (annuity) contracts, acquisition costs are amortized over 20 years in proportion to estimated gross profits. Capitalized acquisition costs are amortized in proportion to estimated gross profits over 20 years for certain life insurance products with account values and over 30 years for indexed universal life contracts. For other individual life contracts, acquisition costs are amortized in proportion to anticipated premiums over the terms of the insurance policies (10, 15, 20 or 30 years). For property and casualty policies, acquisition costs are amortized over the terms of the insurance policies (6 or 12 months). The Company periodically reviews the assumptions and estimates used in capitalizing policy acquisition costs and also periodically reviews its estimations of gross profits, a process sometimes referred to as “unlocking”. The most significant assumptions that are involved in the estimation of annuity gross profits include interest rate spreads, future financial market performance, business surrender/lapse rates, expenses and the impact of realized investment gains and losses. For the variable deposit portion of the annuity segment, the Company amortizes policy acquisition costs utilizing a future financial market performance assumption of a 10% reversion to the mean approach with a 200 basis point corridor around the mean during the reversion period, representing a cap and a floor on the Company’s long-term assumption. The Company’s practice with regard to returns on Separate Accounts assumes that long-term appreciation in the financial market is not changed by short-term market fluctuations, but is only changed when sustained deviations are experienced. The Company monitors these fluctuations and only changes the assumption when its long-term expectation changes. In the event actual experience differs significantly from assumptions or assumptions are significantly revised, the Company may be required to record a material charge or credit to current period amortization expense for the period in which the adjustment is made. Year Ended December 31, 2015 2014 2013 Increase (decrease) to amortization: Annuity $ 3,403 $ 1,224 $ (3,700 ) Life (34 ) (131 ) 126 Total $ 3,369 $ 1,093 $ (3,574 ) Deferred policy acquisition costs for investment contracts and life insurance products with account values are adjusted for the impact on estimated future gross profits as if net unrealized investment gains and losses had been realized at the balance sheet date. This adjustment reduced the DAC asset by $38,819 and $67,932 at December 31, 2015 and 2014, respectively. The after tax impact of this adjustment is included in accumulated other comprehensive income (net unrealized gains and losses on fixed maturities and equity securities) within shareholders' equity. DAC is reviewed for recoverability from future income, including investment income, and costs which are deemed unrecoverable are expensed in the period in which the determination is made. No such costs were deemed unrecoverable during the years ended December 31, 2015, 2014 and 2013. When the Company was acquired in 1989, intangible assets were recorded in the application of purchase accounting to recognize the value of acquired insurance in force and goodwill. In addition, goodwill was recorded in 1994 related to the purchase of Horace Mann Property & Casualty Insurance Company. The value of acquired insurance in force was fully amortized prior to December 31, 2009. Goodwill represents the excess of the amounts paid to acquire a business over the fair value of its net assets at the date of acquisition. Goodwill is not amortized, but is tested for impairment at the reporting unit level at least annually or more frequently if events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. A reporting unit is defined as an operating segment or a business unit one level below an operating segment, if separate financial information is prepared and regularly reviewed by management at that level. The Company’s reporting units, for which goodwill has been allocated, are equivalent to the Company’s operating segments. The goodwill impairment test, as defined in the accounting guidance, allows an entity 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 a reporting unit is less than its carrying amount. If an entity determines it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the entity follows a two-step process. In the first step, the fair value of a reporting unit is compared to its carrying value. If the carrying value of a reporting unit exceeds its fair value, the second step of the impairment test is performed for purposes of confirming and measuring the impairment. In the second step, the fair value of the reporting unit is allocated to all of the assets and liabilities of the reporting unit to determine an implied goodwill value. If the carrying amount of the reporting unit goodwill exceeds the implied goodwill value, an impairment loss would be recognized in an amount equal to that excess. Annuity $ 28,025 Life 9,911 Property and casualty 9,460 Total $ 47,396 The Company completed its annual goodwill assessment for the individual reporting units as of October 1, 2015 and did not utilize the option to perform an initial assessment of qualitative factors. The first step of the Company’s analysis indicated that fair value exceeded carrying value for all reporting units. The process of evaluating goodwill for impairment required management to make multiple judgments and assumptions to determine the fair value of each reporting unit, including discounted cash flow calculations, the level of the Company’s own share price and assumptions that market participants would make in valuing each reporting unit. Fair value estimates were based primarily on an in-depth analysis of historical experience, projected future cash flows and relevant discount rates, which considered market participant inputs and the relative risk associated with the projected cash flows. Other assumptions included levels of economic capital, future business growth, earnings projections and assets under management for each reporting unit. Estimates of fair value are subject to assumptions that are sensitive to change and represent the Company’s reasonable expectation regarding future developments. The Company also considered other valuation techniques such as peer company price-to-earnings and price-to-book multiples. As part of the Company’s October 1, 2015 goodwill analysis, the Company compared the fair value of the aggregated reporting units to the market capitalization of the Company. The difference between the aggregated fair value of the reporting units and the market capitalization of the Company was attributed to several factors, most notably market sentiment, trading volume and transaction premium. The amount of the transaction premium was determined to be reasonable based on insurance industry and Company-specific facts and circumstances. There were no other events or material changes in circumstances during 2015 that indicated that a material change in the fair value of the Company’s reporting units had occurred. Any amount of goodwill determined to be impaired will be recorded as an expense in the period in which the impairment determination is made. During each year from 2013 through 2015, the Company completed the required annual testing; no impairment charges were necessary as a result of such assessments. The assessment of goodwill recoverability requires significant judgment and is subject to inherent uncertainty. The use of different assumptions, within a reasonable range, could cause the fair value to be below carrying value. Subsequent goodwill assessments could result in impairment, particularly for any reporting unit with at-risk goodwill, due to the impact of a volatile financial market on earnings, discount rate assumptions, liquidity and market capitalization. Property and equipment are carried at cost less accumulated depreciation, which is calculated on the straight-line method based on the estimated useful lives of the assets. The estimated life for real estate is identified by specific property and ranges from 20 to 45 years. The estimated useful lives of leasehold improvements and other property and equipment, including capitalized software, generally range from 2 to 10 years. December 31, 2015 2014 Property and equipment $ 107,876 $ 108,056 Less: accumulated depreciation 82,236 77,027 Total $ 25,640 $ 31.029 Separate Account assets represent variable annuity contractholder funds invested in various mutual funds. Separate Account assets are recorded at fair value primarily based on market quotations of the underlying securities. Separate Account liabilities are equal to the estimated fair value of Separate Account assets. The investment income, gains and losses of these accounts accrue directly to the contractholders and are not included in the operations of the Company. The activity of the Separate Accounts is not reflected in the Consolidated Statements of Operations except for (1) contract charges earned, (2) the activity related to contract guarantees, which are benefits on existing variable annuity contracts, and (3) the impact of financial market performance on the amortization of deferred policy acquisition costs. The Company’s contract charges earned include fees charged to the Separate Accounts, including mortality charges, risk charges, policy administration fees, investment management fees and surrender charges. December 31, 2015 2014 Investment contract reserves $ 4,072,102 $ 3,774,457 Life policy reserves 1,054,740 1,027,814 Total $ 5,126,842 $ 4,802,271 Liabilities for future benefits on life and annuity policies are established in amounts adequate to meet the estimated future obligations on policies in force. Liabilities for future policy benefits on certain life insurance policies are computed using the net level premium method including assumptions as to investment yields, mortality, persistency, expenses and other assumptions based on the Company’s experience, including a provision for adverse deviation. These assumptions are established at the time the policy is issued and are intended to estimate the experience for the period the policy benefits are payable. If experience is less favorable than the assumptions, additional liabilities may be established, resulting in a charge to income for that period. At December 31, 2015, reserve investment yield assumptions ranged from 3.5% to 8.0%. Liabilities for future benefits on annuity contracts and certain long-duration life insurance contracts are carried at accumulated policyholder values without reduction for potential surrender or withdrawal charges. The liability also includes provisions for the unearned portion of certain policy charges. A guaranteed minimum death benefit (“GMDB”) generally provides an additional benefit if the contractholder dies and the variable annuity contract value is less than a contractually defined amount. The Company has estimated and recorded a GMDB reserve on variable annuity contracts in accordance with accounting guidance. Contractually defined amounts vary from contract to contract based on the date the contract was entered into as well as the GMDB feature elected by the contractholder. December 31, 2015 2014 GMDB reserve $ 358 $ 278 Aggregate in-the-money death benefits under the GMDB provision 35,563 29,866 Variable annuity contract value distribution based on GMDB feature: No guarantee 32 % 31 % Return of premium guarantee 62 % 63 % Guarantee of premium roll-up at an annual rate of 3% or 5% 6 % 6 % Total 100 % 100 % In 2014, the Company began offering fixed indexed annuity (“FIA”) products with interest crediting strategies linked to the Standard & Poor’s 500 Index and the Dow Jones Industrial Average. The Company purchases call options on the applicable indices as an investment to provide the income needed to fund the annual index credits on the indexed products. These products are deferred fixed annuities with a guaranteed minimum interest rate plus a contingent return based on equity market performance and are considered hybrid financial instruments under the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 815 “Derivatives and Hedging”. The Company elected to not use hedge accounting for derivative transactions related to the FIA products. As a result, the Company records the purchased call options and the embedded derivative related to the provision of a contingent return at fair value, with changes in fair value reported in Net Realized Investment Gains and Losses in the Consolidated Statements of Operations. The embedded derivative is bifurcated from the host contract and included in Other Policyholder Funds in the Consolidated Balance Sheets. The host contract is accounted for as a debt instrument in accordance with ASC Topic 944 “Financial Services Insurance” and is included in Investment Contract and Life Policy Reserves in the Consolidated Balance Sheets with any discount to the minimum account value being accreted using the effective yield method. In the Consolidated Statements of Operations, accreted interest for FIA products and benefit claims on these products incurred during the reporting period are included in Benefits, Claims and Settlement Expenses. In October 2015, the Company began offering indexed universal life (“IUL”) products as part of its product portfolio with interest crediting strategies linked to the Standard & Poor’s 500 Index and the Dow Jones Industrial Average as well as a fixed option. The Company purchases call options monthly to hedge the potential liabilities arising in IUL accounts. The Company elected to not use hedge accounting for derivative transactions related to the IUL products. As a result, the Company records the purchased call options and the embedded derivative related to the provision of a contingent return at fair value, with changes in fair value reported in Net Realized Investment Gains and Losses in the Consolidated Statements of Operations. IUL policies with a balance in one or more indexed accounts are considered to have an embedded derivative. The benefit reserve for the host contract is measured using the retrospective deposit method, which for Horace Mann’s IUL product is equal to the account balance. The embedded derivative is bifurcated from the host contract, carried at fair value and included in Investment Contract and Life Policy Reserves in the Consolidated Balance Sheets. More information regarding the determination of fair value of the FIA and IUL embedded derivatives and purchased call options, the only derivative instruments utilized by the Company, is included in “Note 3 Fair Value of Financial Instruments”. Liabilities for property and casualty unpaid claims and claim expenses include provisions for payments to be made on reported claims, claims incurred but not yet reported and associated settlement expenses. All of the Company's reserves for property and casualty unpaid claims and claim expenses are carried at the full value of estimated liabilities and are not discounted for interest expected to be earned on reserves. Estimated amounts of salvage and subrogation on unpaid property and casualty cl |
Investments
Investments | 12 Months Ended |
Dec. 31, 2015 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | NOTE 2 - Investments The Company’s investment portfolio includes free-standing derivative financial instruments (currently over the counter (“OTC”) index call option contracts) to economically hedge risk associated with its fixed indexed annuity and indexed universal life products’ contingent liabilities. The Company’s fixed indexed annuity and indexed universal life products include embedded derivative features that are discussed in “Note 1 Summary of Significant Accounting Policies Investment Contract and Life Policy Reserves Policy Liabilities for Fixed Indexed Annuities and Indexed Universal Life Policies”. The Company's investment portfolio included no other free-standing derivative financial instruments (futures, forwards, swaps, option contracts or other financial instruments with similar characteristics), and there were no other embedded derivative features related to the Company’s insurance products during the three years ended December 31, 2015. Net Investment Income The components of net investment income for the following periods were: Year Ended December 31, 2015 2014 2013 Fixed maturities $ 326,207 $ 317,756 $ 304,024 Equity securities 4,355 4,849 3,698 Short-term and other investments 9,187 8,459 8,242 Other invested assets (equity method investments) 1,984 7,229 5,902 Total investment income 341,733 338,293 321,866 Investment expenses (9,133 ) (8,478 ) (8,256 ) Net investment income $ 332,600 $ 329,815 $ 313,610 Realized Investment Gains (Losses) Net realized investment gains (losses) for the following periods were: Year Ended December 31, 2015 2014 2013 Fixed maturities $ 10,289 $ 8,150 $ 18,480 Equity securities 1,378 2,793 3,765 Short-term investments and other 1,046 (26 ) - Net realized investment gains $ 12,713 $ 10,917 $ 22,245 The Company, from time to time, sells invested assets subsequent to the balance sheet date that were considered temporarily impaired at the balance sheet date. Such sales are due to issuer specific events occurring subsequent to the balance sheet date that result in a change in the Company’s intent or ability to hold an invested asset. The types of events that may result in a sale include significant changes in the economic facts and circumstances related to the invested asset, significant unforeseen changes in liquidity needs, or changes in the Company’s investment strategy. Fixed Maturities and Equity Securities The Company’s investment portfolio is comprised primarily of fixed maturity securities (“fixed maturities”) and also includes equity securities. The amortized cost or cost, unrealized investment gains and losses, fair values and other-than-temporary impairment (“OTTI”) included in accumulated other comprehensive income (loss) (“AOCI”) of all fixed maturities and equity securities in the portfolio were as follows: Amortized Unrealized Unrealized Fair OTTI in Cost/Cost Gains Losses Value AOCI (1) December 31, 2015 Fixed maturity securities U.S. Government and federally sponsored agency obligations (2): Mortgage-backed securities $ 461,862 $ 44,413 $ 1,861 $ 504,414 $ - Other, including U.S. Treasury securities 532,373 21,153 7,415 546,111 - Municipal bonds 1,553,603 165,680 10,340 1,708,943 (4,140 ) Foreign government bonds 67,441 6,288 112 73,617 - Corporate bonds 2,687,376 140,873 48,834 2,779,415 - Other mortgage-backed securities 1,482,971 16,830 20,961 1,478,840 1,382 Totals $ 6,785,626 $ 395,237 $ 89,523 $ 7,091,340 $ (2,758 ) Equity securities (3) $ 95,722 $ 8,405 $ 4,330 $ 99,797 $ - December 31, 2014 Fixed maturity securities U.S. Government and federally sponsored agency obligations (2): Mortgage-backed securities $ 484,561 $ 52,555 $ 1,390 $ 535,726 $ - Other, including U.S. Treasury securities 512,596 28,652 3,049 538,199 - Municipal bonds 1,462,717 189,533 4,428 1,647,822 - Foreign government bonds 52,552 6,984 - 59,536 - Corporate bonds 2,608,633 237,372 11,256 2,834,749 - Other mortgage-backed securities 1,254,178 28,772 5,892 1,277,058 2,879 Totals $ 6,375,237 $ 543,868 $ 26,015 $ 6,893,090 $ 2,879 Equity securities (3) $ 99,904 $ 14,159 $ 3,408 $ 110,655 $ - (1) Related to securities for which an unrealized loss was bifurcated to distinguish the credit-related portion and the portion driven by other market factors. Represents the amount of other-than-temporary impairment losses in AOCI which was not included in earnings; amounts also include unrealized gains/(losses) on such impaired securities relating to changes in the fair value of those securities subsequent to the impairment measurement date. (2) Fair value includes securities issued by Federal National Mortgage Association (“FNMA”) of $231,294 and $302,222; Federal Home Loan Mortgage Corporation (“FHLMC”) of $363,957 and $432,432; and Government National Mortgage Association (“GNMA”) of $130,940 and $137,867 as of December 31, 2015 and 2014, respectively. (3) Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds. Compared to December 31, 2014, the decrease in net unrealized gains at December 31, 2015 was due to wider credit spreads across most asset classes and a slight increase in U.S. Treasury rates, which resulted in a decrease in net unrealized gains for virtually all classes of the Company’s fixed maturity securities holdings. The following table presents the fair value and gross unrealized losses of fixed maturities and equity securities in an unrealized loss position at December 31, 2015 and 2014, respectively. The Company views the decrease in value of all of the securities with unrealized losses at December 31, 2015 which was driven largely by changes in interest rates, spread widening, financial market illiquidity and/or market volatility from the date of acquisition as temporary. For fixed maturity securities, management does not have the intent to sell the securities and it is not more likely than not the Company will be required to sell the securities before the anticipated recovery of the amortized cost bases, and management expects to recover the entire amortized cost bases of the fixed maturity securities. For equity securities, the Company has the ability and intent to hold the securities for the recovery of cost and recovery of cost is expected within a reasonable period of time. Therefore, no impairment of these securities was recorded at December 31, 2015. 12 months or less More than 12 months Total Gross Gross Gross Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses December 31, 2015 Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 48,097 $ 1,748 $ 1,595 $ 113 $ 49,692 $ 1,861 Other 248,478 7,338 1,921 77 250,399 7,415 Municipal bonds 168,939 5,382 21,717 4,958 190,656 10,340 Foreign government bonds 11,867 112 - - 11,867 112 Corporate bonds 858,647 37,244 50,340 11,590 908,987 48,834 Other mortgage-backed securities 929,268 19,165 140,561 1,796 1,069,829 20,961 Total fixed maturity securities 2,265,296 70,989 216,134 18,534 2,481,430 89,523 Equity securities (1) 38,764 3,022 8,379 1,308 47,143 4,330 Combined totals $ 2,304,060 $ 74,011 $ 224,513 $ 19,842 $ 2,528,573 $ 93,853 Number of positions with a gross unrealized loss 684 78 762 Fair value as a percentage of total fixed maturities and equity securities fair value 32.0 % 3.1 % 35.1 % December 31, 2014 Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 2 $ - $ 39,809 $ 1,390 $ 39,811 $ 1,390 Other 10,317 34 117,615 3,015 127,932 3,049 Municipal bonds 31,821 200 59,715 4,228 91,536 4,428 Foreign government bonds - - - - - - Corporate bonds 213,612 6,883 76,099 4,373 289,711 11,256 Other mortgage-backed securities 477,877 4,797 88,663 1,095 566,540 5,892 Total fixed maturity securities 733,629 11,914 381,901 14,101 1,115,530 26,015 Equity securities (1) 12,955 2,568 6,635 840 19,590 3,408 Combined totals $ 746,584 $ 14,482 $ 388,536 $ 14,941 $ 1,135,120 $ 29,423 Number of positions with a gross unrealized loss 234 112 346 Fair value as a percentage of total fixed maturities and equity securities fair value 10.7 % 5.5 % 16.2 % (1) Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds. Fixed maturities and equity securities with an investment grade rating represented 75% of the gross unrealized loss as of December 31, 2015. With respect to fixed income securities involving securitized financial assets, the underlying collateral cash flows were stress tested to determine there was no adverse change in the present value of cash flows below the amortized cost basis. Credit Losses The following table summarizes the cumulative amounts related to the Company’s credit loss component of the other-than-temporary impairment losses on fixed maturity securities held as of December 31, 2015 and 2014 that the Company did not intend to sell as of those dates, and it was not more likely than not that the Company would be required to sell the securities before the anticipated recovery of the amortized cost bases, for which the non-credit portions of the other-than-temporary impairment losses were recognized in other comprehensive income (loss): Year Ended December 31, 2015 2014 Cumulative credit loss (1) Beginning of period $ 2,877 $ 4,097 New credit losses 4,967 280 Losses related to securities sold or paid down during the period - (1,500 ) End of period $ 7,844 $ 2,877 (1) The cumulative credit loss amounts exclude other-than-temporary impairment losses on securities held as of the periods indicated that the Company intended to sell or it was more likely than not that the Company would be required to sell the security before the recovery of the amortized cost basis. Maturities/Sales of Fixed Maturities and Equity Securities The following table presents the distribution of the Company’s fixed maturity securities portfolio by estimated expected maturity. Estimated expected maturities differ from contractual maturities, reflecting assumptions regarding borrowers' utilization of the right to call or prepay obligations with or without call or prepayment penalties. For structured securities, including mortgage-backed securities and other asset-backed securities, estimated expected maturities consider broker-dealer survey prepayment assumptions and are verified for consistency with the interest rate and economic environments. December 31, 2015 Percent of Amortized Fair Total Fair Cost Value Value Estimated expected maturity: Due in 1 year or less $ 210,171 $ 219,639 3.1 % Due after 1 year through 5 years 1,641,139 1,715,078 24.2 Due after 5 years through 10 years 2,688,583 2,809,712 39.6 Due after 10 years through 20 years 1,420,578 1,484,580 20.9 Due after 20 years 825,155 862,331 12.2 Total $ 6,785,626 $ 7,091,340 100.0 % Average option-adjusted duration, in years 5.8 Proceeds received from sales of fixed maturities and equity securities, each determined using the specific identification method, and gross gains and gross losses realized as a result of those sales for each year were: Year Ended December 31, 2015 2014 2013 Fixed maturity securities Proceeds received $ 445,100 $ 261,696 $ 298,045 Gross gains realized 22,476 13,224 17,177 Gross losses realized (5,487 ) (6,325 ) (4,945 ) Equity securities Proceeds received $ 31,621 $ 17,194 $ 18,643 Gross gains realized 6,604 3,206 4,368 Gross losses realized (672 ) (482 ) (616 ) Unrealized Gains and Losses on Fixed Maturities and Equity Securities Net unrealized gains and losses are computed as the difference between fair value and amortized cost for fixed maturities or cost for equity securities. The following table reconciles the net unrealized investment gains and losses, net of tax, included in accumulated other comprehensive income (loss), before the impact on deferred policy acquisition costs: Year Ended December 31, 2015 2014 2013 Net unrealized investment gains (losses) on fixed maturity securities, net of tax Beginning of period $ 336,604 $ 146,489 $ 423,004 Change in unrealized investment gains and losses (131,202 ) 195,413 (264,503 ) Reclassification of net realized investment (gains) losses to net income (6,688 ) (5,298 ) (12,012 ) End of period $ 198,714 $ 336,604 $ 146,489 Net unrealized investment gains (losses) on equity securities, net of tax Beginning of period $ 6,988 $ 4,618 $ 720 Change in unrealized investment gains and losses (3,443 ) 4,185 6,345 Reclassification of net realized investment (gains) losses to net income (896 ) (1,815 ) (2,447 ) End of period $ 2,649 $ 6,988 $ 4,618 Investment in Entities Exceeding 10% of Shareholders' Equity At December 31, 2015 and 2014, there were no investments which exceeded 10% of total shareholders' equity in entities other than obligations of the U.S. Government and federally sponsored government agencies and authorities. Offsetting of Assets and Liabilities The Company’s derivative instruments (call options) are subject to enforceable master netting arrangements. Collateral support agreements associated with each master netting arrangement provide that the Company will receive or pledge financial collateral in the event minimum thresholds have been reached. The following table presents the instruments that were subject to a master netting arrangement for the Company. Net Amounts of Assets/ Gross Liabilities Gross Amounts Not Offset Amounts Presented in the Consolidated Offset in the in the Balance Sheets Consolidated Consolidated Cash Gross Balance Balance Financial Collateral Net Amounts Sheets Sheets Instruments Received Amount December 31, 2015 Asset derivatives Free-standing derivatives $ 2,501 $ - $ 2,501 $ - $ 2,617 $ (116) December 31, 2014 Asset derivatives Free-standing derivatives 2,458 - 2,458 - 1,955 503 Deposits At December 31, 2015 and 2014, securities with a fair value of $18,312 and $18,361, respectively, were on deposit with governmental agencies as required by law in various states in which the insurance subsidiaries of HMEC conduct business. In addition, at December 31, 2015 and 2014, securities with a fair value of $621,077 and $539,235, respectively, were on deposit with the Federal Home Loan Bank of Chicago (“FHLB”) as collateral for amounts subject to funding agreements which were equal to $575,000 and $500,000, respectively. The deposited securities are included in Fixed Maturities on the Company’s Consolidated Balance Sheets. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | NOTE 3 - Fair Value of Financial Instruments The Company is required under GAAP to disclose estimated fair values for certain financial and nonfinancial assets and liabilities. Fair values of the Company’s insurance contracts other than annuity contracts are not required to be disclosed. However, the estimated fair values of liabilities under all insurance contracts are taken into consideration in the Company’s overall management of interest rate risk through the matching of investment maturities with amounts due under insurance contracts. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between knowledgeable, unrelated and willing market participants on the measurement date. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. The Company categorizes its financial and nonfinancial assets and liabilities into a three-level hierarchy based on the priority of the inputs to the valuation technique. The three levels of inputs that may be used to measure fair value are: Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities include fixed maturity and equity securities (both common stock and preferred stock) that are traded in an active exchange market, as well as U.S. Treasury securities. Level 2 Unadjusted observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for the assets or liabilities. Level 2 assets and liabilities include fixed maturity securities (1) with quoted prices that are traded less frequently than exchange-traded instruments or (2) values based on discounted cash flows with observable inputs. This category generally includes certain U.S. Government and agency mortgage-backed securities, non-agency structured securities, corporate fixed maturity securities, preferred stocks and derivative securities. Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, certain discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation and for which the significant inputs are unobservable. This category generally includes certain private debt and equity investments, as well as embedded derivatives. When the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. As a result, a Level 3 fair value measurement may include inputs that are observable (Level 1 or Level 2) and unobservable (Level 3). Net transfers into or out of each of the three levels are reported as having occurred at the end of the reporting period in which the transfers were determined. The following discussion describes the valuation methodologies used for financial assets and financial liabilities measured at fair value. The techniques utilized in estimating the fair values are affected by the assumptions used, including discount rates and estimates of the amount and timing of future cash flows. The use of different methodologies, assumptions and inputs may have a material effect on the estimated fair values of the Company’s securities holdings. Care should be exercised in deriving conclusions about the Company’s business, its value or financial position based on the fair value information of financial and nonfinancial assets and liabilities presented below. Fair value estimates are made at a specific point in time, based on available market information and judgments about the financial asset or financial liability, including estimates of timing, amount of expected future cash flows and the credit standing of the issuer. In some cases, the fair value estimates cannot be substantiated by comparison to independent markets. In addition, the disclosed fair value may not be realized in the immediate settlement of the financial asset or financial liability. The disclosed fair values do not reflect any premium or discount that could result from offering for sale at one time an entire holding of a particular financial asset or financial liability. In periods of market disruption, the ability to observe prices and inputs may be reduced for many instruments. This condition could cause an instrument to be reclassified from Level 1 to Level 2 or from Level 2 to Level 3. Potential taxes and other expenses that would be incurred in an actual sale or settlement are not reflected in amounts disclosed. Investments For fixed maturity securities, each month the Company obtains fair value prices from its investment managers and custodian bank. Fair values for the Company’s fixed maturity securities are based primarily on prices provided by its investment managers as well as its custodian bank for certain securities. The prices from the custodian bank are compared to prices from the investment managers. Differences in prices between the sources that the Company considers significant are researched and the Company utilizes the price that it considers most representative of an exit price. Both the investment managers and the custodian bank use a variety of independent, nationally recognized pricing sources to determine market valuations. Each designate specific pricing services or indexes for each sector of the market based upon the provider’s expertise. Typical inputs used by these pricing sources include, but are not limited to, reported trades, benchmark yield curves, benchmarking of like securities, ratings designations, sector groupings, issuer spreads, bids, offers, and/or estimated cash flows and prepayment speeds. When the pricing sources cannot provide fair value determinations, the Company obtains non-binding price quotes from broker-dealers. The broker-dealers’ valuation methodology is sometimes matrix-based, using indicative evaluation measures and adjustments for specific security characteristics and market sentiment. The market inputs utilized in the evaluation measures and adjustments include: benchmark yield curves, reported trades, broker/dealer quotes, ratings and corresponding issuer spreads, two-sided markets, benchmark securities, bids, offers, reference data, and industry and economic events. The extent of the use of each market input depends on the market sector and the market conditions. Depending on the security, the priority of the use of inputs may change or some market inputs may not be relevant. For some securities, additional inputs may be necessary. The Company analyzes price and market valuations received to verify reasonableness, to understand the key assumptions used and their sources, to conclude the prices obtained are appropriate, and to determine an appropriate fair value hierarchy level based upon trading activity and the observability of market inputs. Based on this evaluation and investment class analysis, each security is classified into Level 1, 2, or 3. The Company has in place certain control processes to determine the reasonableness of the financial asset fair values. These processes are designed to ensure (1) the values received are reasonable and accurately recorded, (2) the data inputs and valuation techniques utilized are appropriate and consistently applied, and (3) the assumptions are reasonable and consistent with the objective of determining fair value. For example, on a continuing basis, the Company assesses the reasonableness of individual security values received from pricing sources that vary from certain thresholds. The Company’s fixed maturity securities portfolio is primarily publicly traded, which allows for a high percentage of the portfolio to be priced through pricing services. Approximately 91% of the portfolio, based on fair value, was priced through pricing services or index priced as of both December 31, 2015 and 2014. The remainder of the portfolio was priced by broker-dealers or pricing models. When non-binding broker-dealer quotes could be corroborated by comparison to other vendor quotes, pricing models or analyses, the securities were generally classified as Level 2, otherwise they were classified as Level 3. There were no significant changes to the valuation process during 2015. At December 31, 2015, all of the equity securities portfolio was priced from observable market quotations. Fair values of equity securities have been determined by the Company from observable market quotations, when available. When a public quotation is not available, equity securities are valued by using non-binding broker quotes or through the use of pricing models or analyses that are based on market information regarding interest rates, credit spreads and liquidity. The underlying source data for calculating the matrix of credit spreads relative to the U.S. Treasury curve are nationally recognized indices. In addition, credit rating (or credit quality equivalent information) of securities is also factored into a pricing matrix. These inputs are based on assumptions deemed appropriate given the circumstances and are believed to be consistent with what other market participants would use when pricing such securities. There were no significant changes to the valuation process in 2015. Short-term and other investments are comprised of short-term fixed income securities, derivative instruments (all call options), policy loans, mortgage loans, and restricted FHLB membership and activity stocks, as well as certain alternative investments which are accounted for as equity method investments and therefore excluded from the fair value tabular disclosures. In summary, the following investments are carried at fair value: · Fixed maturity securities, as described above. · Equity securities, as described above. · Short-term fixed income securities Because of the nature of these assets, carrying amounts generally approximate fair values. · Derivative instruments, all call options Fair values are based on the amount of cash expected to be received to settle each derivative instrument on the reporting date. These amounts are obtained from each of the counterparties using industry accepted valuation models and observable inputs. Significant inputs include contractual terms, underlying index prices, market volatilities, interest rates and dividend yields. · FHLB membership and activity stocks Fair value is based on redemption value, which is equal to par value. The following investments are not carried at fair value; disclosure is provided: · Policy loans Fair value is based on estimates using discounted cash flow analysis and current interest rates being offered for new loans. · Mortgage loans Fair value is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and the same remaining maturities. Separate Account (Variable Annuity) Assets and Liabilities Separate Account assets are carried at fair value and . Fair values of these assets are based primarily on market quotations of the underlying securities. Investment performance related to these assets is fully offset by corresponding amounts credited to contractholders with the liability reflected within Separate Account liabilities. Separate Account liabilities are equal to the estimated fair value of Separate Account assets. Investment Contract and Life Policy Reserves The fair values of fixed annuity contract liabilities and policyholder account balances on life contracts are equal to the discounted estimated future cash flows (using the Company's current interest rates for similar products including consideration of minimum guaranteed interest rates). The Company carries these financial liabilities at cost. Also included in investment contract and life policy reserves are embedded derivatives related to the Company’s indexed universal life product, which was introduced in October 2015. The fair value of these embedded derivatives is estimated to be equal to the fair value of the current call options purchased to hedge the liability. The Company carries these embedded derivatives at fair value. Other Policyholder Funds Other policyholder funds are liabilities related to supplementary contracts without life contingencies and dividend accumulations, as well as balances outstanding under funding agreements with the FHLB and embedded derivatives related to fixed indexed annuities. Except for embedded derivatives, each of these components is carried at cost, which management believes is a reasonable estimate of fair value due to the relatively short duration of these items, based on the Company’s past experience. The fair value of the embedded derivatives, all related to the Company’s FIA products, is estimated at each valuation date by (1) projecting policy contract values and minimum guaranteed contract values over the expected lives of the contracts and (2) discounting the excess of the projected contract value amounts at the applicable risk free interest rates adjusted for the Company’s nonperformance risk related to those liabilities. The projections of policy contract values are based on the Company’s best estimate assumptions for future contract growth and decrements. The assumptions for future contract growth include the expected index credits which are derived from the fair values of the underlying call options purchased to fund such index credits and the expected costs of annual call options that will be purchased in the future to fund index credits beyond the next contract anniversary. Projections of minimum guaranteed contract values include the same best estimate assumptions for contract decrements used to project policy contract values. Short-term Debt Short-term debt is carried at amortized cost, which management believes is a reasonable estimate of fair value due to the liquidity and short duration of these variable rate instruments. Long-term Debt The Company carries long-term debt at amortized cost. The fair value of long-term debt is estimated based on unadjusted quoted market prices of the Company’s securities or unadjusted market prices based on similar publicly traded issues when trading activity for the Company’s securities is not sufficient to provide a market price. Financial Instruments Measured and Carried at Fair Value The following table presents the Company’s fair value hierarchy for those assets and liabilities measured and carried at fair value on a recurring basis. At December 31, 2015, these Level 3 invested assets comprised approximately 2.3% of the Company’s total investment portfolio fair value. Fair Value Measurements at Carrying Fair Reporting Date Using Amount Value Level 1 Level 2 Level 3 December 31, 2015 Financial Assets Investments Fixed maturities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 504,414 $ 504,414 $ - $ 504,414 $ - Other, including U.S. Treasury securities 546,111 546,111 14,258 531,853 - Municipal bonds 1,708,943 1,708,943 - 1,678,564 30,379 Foreign government bonds 73,617 73,617 - 73,617 - Corporate bonds 2,779,415 2,779,415 10,195 2,701,645 67,575 Other mortgage-backed securities 1,478,840 1,478,840 - 1,403,374 75,466 Total fixed maturities 7,091,340 7,091,340 24,453 6,893,467 173,420 Equity securities 99,797 99,797 86,088 13,703 6 Short-term investments 174,152 174,152 169,764 4,388 - Other investments 14,001 14,001 - 14,001 - Totals 7,379,290 7,379,290 280,305 6,925,559 173,426 Separate Account (variable annuity) assets (1) 1,800,722 1,800,722 1,800,722 - - Financial Liabilities Investment contract and life policy reserves, embedded derivatives 14 14 - 14 - Other policyholder funds, embedded derivatives 39,021 39,021 - - 39,021 December 31, 2014 Financial Assets Investments Fixed maturities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 535,726 $ 535,726 $ - $ 535,726 $ - Other, including U.S. Treasury securities 538,199 538,199 17,857 520,342 - Municipal bonds 1,647,822 1,647,822 - 1,634,194 13,628 Foreign government bonds 59,536 59,536 - 59,536 - Corporate bonds 2,834,749 2,834,749 10,524 2,749,508 74,717 Other mortgage-backed securities 1,277,058 1,277,058 - 1,194,109 82,949 Total fixed maturities 6,893,090 6,893,090 28,381 6,693,415 171,294 Equity securities 110,655 110,655 92,140 18,509 6 Short-term investments 142,039 142,039 142,039 - - Other investments 12,458 12,458 - 12,458 - Totals 7,158,242 7,158,242 262,560 6,724,382 171,300 Separate Account (variable annuity) assets (1) 1,813,557 1,813,557 1,813,557 - - Financial Liabilities Investment contract and life policy reserves, embedded derivatives - - - - - Other policyholder funds, embedded derivatives 20,049 20,049 - - 20,049 (1) Separate Account (variable annuity) liabilities are set equal to Separate Account (variable annuity) assets. As of December 31, 2014, the Company transferred one equity security into Level 1 from Level 2. The Company did not have any other transfers between Levels 1 and 2 during the years ended December 31, 2015 and 2014. The following tables present reconciliations for the periods indicated for all Level 3 assets and liabilities measured at fair value on a recurring basis. Financial Financial Assets Liabilities(1) Municipal Bonds Corporate Bonds Other Mortgage- Backed Securities Total Fixed Maturities Equity Securities Total Beginning balance, January 1, 2015 $ 13,628 $ 74,717 $ 82,949 $ 171,294 $ 6 $ 171,300 $ 20,049 Transfers into Level 3 (2) 16,326 5,729 15,685 37,740 - 37,740 - Transfers out of Level 3 (2) - (1,351 ) (9,663 ) (11,014 ) - (11,014 ) - Total gains or losses Net realized gains (losses) included in net income related to financial assets - 1,087 - 1,087 (3 ) 1,084 - Net realized (gains) losses included in net income related to financial liabilities - - - - - - (2,528 ) Net unrealized gains (losses) included in other comprehensive income 782 (1,935 ) (854 ) (2,007 ) 4 (2,003 ) - Purchases - - - - - - - Issuances - - - - - - 23,595 Sales - (476 ) - (476 ) (1 ) (477 ) - Settlements - - - - - - - Paydowns, maturities and distributions (357 ) (10,196 ) (12,651 ) (23,204 ) - (23,204 ) (2,095 ) Ending balance, December 31, 2015 $ 30,379 $ 67,575 $ 75,466 $ 173,420 $ 6 $ 173,426 $ 39,021 Beginning balance, January 1, 2014 $ 2,694 $ 60,826 $ 46,009 $ 109,529 $ 6 $ 109,535 $ - Transfers into Level 3 (2) 10,056 20,649 42,108 72,813 - 72,813 - Transfers out of Level 3 (2) - (3,510 ) (519 ) (4,029 ) - (4,029 ) - Total gains or losses Net realized gains (losses) included in net income related to financial assets - - (26 ) (26 ) - (26 ) - Net realized (gains) losses included in net income related to financial liabilities - - - - - - 1,157 Net unrealized gains (losses) included in other comprehensive income 1,191 3,611 118 4,920 - 4,920 - Purchases - - - - - - - Issuances - - - - - - 19,338 Sales - - - - - - - Settlements - - - - - - - Paydowns, maturities and distributions (313 ) (6,859 ) (4,741 ) (11,913 ) - (11,913 ) (446 ) Ending balance, December 31, 2014 $ 13,628 $ 74,717 $ 82,949 $ 171,294 $ 6 $ 171,300 $ 20,049 (1) Represents embedded derivatives, all related to the Company’s FIA products, reported in Other Policyholder Funds in the Company’s Consolidated Balance Sheets. ( 2) Transfers into and out of Level 3 during the years ended December 31, 2015 and 2014 were attributable to changes in the availability of observable market information for individual fixed maturity securities. The Company’s policy is to recognize transfers into and transfers out of the levels as having occurred at the end of the reporting period in which the transfers were determined. At December 31, 2015 and 2014, there were no realized gains or losses included in earnings that were attributable to changes in the fair value of Level 3 assets still held. For the years ended December 31, 2015 and 2014, realized gains/(losses) of $2,528 and ($1,157), respectively, were included in earnings that were attributable to the changes in the fair value of Level 3 liabilities (embedded derivatives) still held. The valuation techniques and significant unobservable inputs used in the fair value measurement for financial assets classified as Level 3 are subject to the control processes as previously described in this note for “Investments”. Generally, valuation techniques for fixed maturity securities include spread pricing, matrix pricing and discounted cash flow methodologies; include inputs such as quoted prices for identical or similar securities that are less liquid; and are based on lower levels of trading activity than securities classified as Level 2. The valuation techniques and significant unobservable inputs used in the fair value measurement for equity securities classified as Level 3 use similar valuation techniques and significant unobservable inputs as fixed maturities. The sensitivity of the estimated fair values to changes in the significant unobservable inputs for fixed maturities and equity securities included in Level 3 generally relates to interest rate spreads, illiquidity premiums and default rates. Significant spread widening in isolation will adversely impact the overall valuation, while significant spread tightening will lead to substantial valuation increases. Significant increases (decreases) in illiquidity premiums in isolation will result in substantially lower (higher) valuations. Significant increases (decreases) in expected default rates in isolation will result in substantially lower (higher) valuations. Financial Instruments Not Carried at Fair Value; Disclosure Required The Company has various other financial assets and financial liabilities used in the normal course of business that are not carried at fair value, but for which fair value disclosure is required. The following table presents the carrying value, fair value and fair value hierarchy of these financial assets and financial liabilities. Fair Value Measurements at Carrying Fair Reporting Date Using Amount Value Level 1 Level 2 Level 3 December 31, 2015 Financial Assets Investments Other investments $ 148,759 $ 153,228 $ - $ - $ 153,228 Financial Liabilities Investment contract and life policy reserves, fixed annuity contracts 4,072,102 4,049,840 - - 4,049,840 Investment contract and life policy reserves, account values on life contracts 77,429 81,360 - - 81,360 Other policyholder funds 653,631 653,631 - 575,104 78,527 Short-term debt - - - - - Long-term debt 249,346 252,700 252,700 - - December 31, 2014 Financial Assets Investments Other investments $ 145,409 $ 149,792 $ - $ - $ 149,792 Financial Liabilities Investment contract and life policy reserves, fixed annuity contracts 3,774,457 3,691,123 - - 3,691,123 Investment contract and life policy reserves, account values on life contracts 77,415 81,461 - - 81,461 Other policyholder funds 586,689 586,689 - 500,080 86,609 Short-term debt 38,000 38,000 - 38,000 - Long-term debt 199,939 209,495 209,495 - - |
Derivative Instruments
Derivative Instruments | 12 Months Ended |
Dec. 31, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | NOTE 4 - Derivative Instruments In February 2014, the Company began offering fixed indexed annuity products (“FIA”), which are deferred fixed annuities that guarantee the return of principal to the contractholder and credit interest based on a percentage of the gain in a specified market index. In October 2015, the Company began offering indexed universal life products (“IUL”), which also credit interest based on a percentage of the gain in a specified market index. When deposits are received for FIA and IUL contracts, a portion is used to purchase derivatives consisting of call options on the applicable market indices to fund the index credits due to FIA and IUL policyholders. For the Company, substantially all such call options are one-year options purchased to match the funding requirements of the underlying contracts. The call options are carried at fair value with the change in fair value included in Net Realized Investment Gains (Losses), a component of revenues, in the Consolidated Statements of Operations. The change in fair value of derivatives includes the gains or losses recognized at the expiration of the option term or early termination and the changes in fair value for open positions. Call options are not purchased to fund the index liabilities which may arise after the next annuity deposit anniversary date. On the respective anniversary dates of the indexed deposits, the index used to compute the annual index credit is reset and new one-year call options are purchased to fund the next annual index credit. The cost of these purchases is managed through the terms of the FIA and IUL contracts, which permit changes to index return caps, participation rates and/or asset fees, subject to guaranteed minimums on each contract’s anniversary date. By adjusting the index return caps, participation rates or asset fees, crediting rates generally can be managed except in cases where the contractual features would prevent further modifications. The future annual index credits on fixed indexed annuities are treated as a “series of embedded derivatives” over the expected life of the applicable contract with a corresponding reserve recorded. For the indexed universal life contract, the embedded derivative represents a single year liability for the index return. The Company carries all derivative instruments as assets or liabilities in the Consolidated Balance Sheets at fair value. The Company elected to not use hedge accounting for derivative transactions related to the FIA and IUL products. As a result, the Company records the purchased call options and the embedded derivative related to the provision of a contingent return at fair value, with changes in the fair value of the derivatives recognized immediately in the Consolidated Statements of Operations. The fair values of derivative instruments, including derivative instruments embedded in FIA and IUL contracts, presented in the Consolidated Balance Sheets were as follows: December 31, 2015 2014 Assets Derivative instruments, included in Short-term and Other Investments $ 2,501 $ 2,458 Liabilities Fixed indexed annuities - embedded derivatives, included in Other Policyholder Funds 39,021 20,049 Indexed universal life - embedded derivatives, included in Investment Contract and Life Policy Reserves 14 - In general, the change in the fair value of the embedded derivatives related to the fixed indexed annuities will not correspond to the change in fair value of the purchased call options because the purchased call options are one-year options while the options valued in those embedded derivatives represent the rights of the policyholder to receive index credits over the entire period the fixed indexed annuities are expected to be in force, which typically exceeds 10 years. The changes in fair value of derivatives included in the Consolidated Statements of Operations were as follows: Year Ended December 31, 2015 2014 2013 Change in fair value of derivatives (1): Revenues Net realized investment gains (losses) $ (1,483 ) $ 995 $ - Change in fair value of embedded derivatives: Revenues Net realized investment gains (losses) 2,529 (1,157 ) - (1) Includes the gains or losses recognized at the expiration of the option term or early termination and the changes in fair value for open options. The Company’s strategy attempts to mitigate any potential risk of loss under these agreements through a regular monitoring process, which evaluates the program's effectiveness. The Company is exposed to risk of loss in the event of nonperformance by the counterparties and, accordingly, option contracts are purchased from multiple counterparties, which are evaluated for creditworthiness prior to purchase of the contracts. All of these options have been purchased from nationally recognized financial institutions with a Standard and Poor's/Moody’s long-term credit rating of “BBB+/Baa1” or higher at the time of purchase and the maximum credit exposure to any single counterparty is subject to concentration limits. The Company also obtains credit support agreements that allow it to request the counterparty to provide collateral when the fair value of the exposure to the counterparty exceeds specified amounts. The notional amount and fair value of call options by counterparty and each counterparty's long-term credit ratings were as follows: December 31, 2015 December 31, 2014 Credit Rating (1) Notional Fair Notional Fair Counterparty S&P Moody’s Amount Value Amount Value Bank of America, N.A. A+ A1 $ 17,000 $ 5 $ 8,700 $ 439 Barclays Bank PLC A- A2 7,600 137 5,000 70 Citigroup Inc. BBB+ Baa1 17,300 845 - - Credit Suisse International A A1- 12,000 167 27,500 1,193 Societe Generale A A2 80,800 1,347 25,400 756 Total $ 134,700 $ 2,501 $ 66,600 $ 2,458 (1) As assigned by Standard & Poor’s Corporation (“S&P”) and Moody’s Investors Service, Inc. (“Moody’s”). As of December 31, 2015 and 2014, the Company held $2,617 and $1,955, respectively, of cash received from counterparties for derivative collateral, which is included in Other Liabilities on the Consolidated Balance Sheets. This derivative collateral limits the Company’s maximum amount of economic loss due to credit risk that would be incurred if parties to the call options failed completely to perform according to the terms of the contracts to $250,000 per counterparty. |
Property and Casualty Unpaid Cl
Property and Casualty Unpaid Claims and Claim Expenses | 12 Months Ended |
Dec. 31, 2015 | |
Insurance Loss Reserves [Abstract] | |
Property and Casualty Unpaid Claims and Claim Expenses | NOTE 5 - Property and Casualty Unpaid Claims and Claim Expenses The following table is a summary reconciliation of the beginning and ending property and casualty unpaid claims and claim expense reserves for the periods indicated. The table presents reserves on both gross and net (after reinsurance) bases. The total net property and casualty insurance claims and claim expense incurred amounts are reflected in the Consolidated Statements of Operations. The end of the year gross reserve (before reinsurance) balances and the reinsurance recoverable balances are reflected on a gross basis in the Consolidated Balance Sheets. Year Ended December 31, 2015 2014 2013 Property and casualty segment Gross reserves, beginning of year (1) $ 311,097 $ 275,809 $ 274,542 Less: reinsurance recoverables 43,740 14,107 13,705 Net reserves, beginning of year (2) 267,357 261,702 260,837 Incurred claims and claim expenses: Claims occurring in the current year 432,811 416,512 403,589 Decrease in estimated reserves for claims occurring in prior years (3) (12,500 ) (17,000 ) (17,988 ) Total claims and claim expenses incurred (4) 420,311 399,512 385,601 Claims and claim expense payments for claims occurring during: Current year 294,449 273,699 265,831 Prior years 141,982 120,158 118,905 Total claims and claim expense payments 436,431 393,857 384,736 Net reserves, end of year (2) 251,237 267,357 261,702 Plus: reinsurance recoverables 50,332 43,740 14,107 Gross reserves, end of year (1) $ 301,569 $ 311,097 $ 275,809 (1) Unpaid Claims and Claim Expenses as reported in the Consolidated Balance Sheets also include reserves for the life and annuity segments of $22,151, $14,687, $15,818 and $14,853 as of December 31, 2015, 2014, 2013 and 2012, respectively, in addition to property and casualty segment reserves. (2) Reserves net of anticipated reinsurance recoverables. (3) Shows the amounts by which the Company decreased its reserves in each of the periods indicated for claims occurring in previous periods to reflect subsequent information on such claims and changes in their projected final settlement costs. Also refer to the paragraphs below for additional information regarding the reserve development recorded in 2015, 2014 and 2013. (4) Benefits, claims and settlement expenses as reported in the Consolidated Statements of Operations also include amounts for the life and annuity segments of $76,053, $68,914 and $62,716 for the years ended December 31, 2015, 2014 and 2013, respectively, in addition to the property and casualty segment amounts. Underwriting results of the property and casualty segment are significantly influenced by estimates of the Company's ultimate liability for insured events. There is a high degree of uncertainty inherent in the estimates of ultimate losses underlying the liability for unpaid claims and claim settlement expenses. This inherent uncertainty is particularly significant for liability-related exposures due to the extended period, often many years, that transpires between a loss event, receipt of related claims data from policyholders and ultimate settlement of the claim. Reserves for property and casualty claims include provisions for payments to be made on reported claims (“case reserves”), claims incurred but not yet reported (“IBNR”) and associated settlement expenses (together, “loss reserves”). The process by which these reserves are established requires reliance upon estimates based on known facts and on interpretations of circumstances, including the Company's experience with similar cases and historical trends involving claim payments and related patterns, pending levels of unpaid claims and product mix, as well as other factors including court decisions, economic conditions, public attitudes and medical costs. The Company believes the property and casualty loss reserves are appropriately established based on available facts, laws, and regulations. The Company calculates and records a single best estimate of the reserve (which is equal to the actuarial point estimate) as of each balance sheet date, for each line of business and its coverages for reported losses and for IBNR losses and as a result believes no other estimate is better than the recorded amount. Due to uncertainties involved, the ultimate cost of losses may vary materially from recorded amounts. The Company continually updates loss estimates using both quantitative and qualitative information from its reserving actuaries and information derived from other sources. Adjustments may be required as information develops which varies from experience, or, in some cases, augments data which previously were not considered sufficient for use in determining liabilities. The effects of these adjustments may be significant and are charged or credited to income in the period in which the adjustments are made. Numerous risk factors will affect more than one product line. One of these factors is changes in claim department practices, including claim closure rates, number of claims closed without payment, the use of third-party claim adjusters and the level of needed case reserve estimated by the adjuster. Other risk factors include changes in claim frequency, changes in claim severity, regulatory and legislative actions, court actions, changes in economic conditions and trends (e.g. medical costs, labor rates and the cost of materials), the occurrence of unusually large or frequent catastrophic loss events, timeliness of claim reporting, the state in which the claim occurred and degree of claimant fraud. The extent of the impact of a risk factor will also vary by coverages within a product line. Individual risk factors are also subject to interactions with other risk factors within product line coverages. While all product lines are exposed to these risks, there are some loss types or product lines for which the financial effect will be more significant. For instance, given the relatively large proportion (approximately 75% as of December 31, 2015) of the Company’s reserves that are in the longer-tail automobile liability coverages, regulatory and court actions, changes in economic conditions and trends, and medical costs could be expected to impact this product line more extensively than others. Reserves are established for claims as they occur for each line of business based on estimates of the ultimate cost to settle the claims. The actual loss results are compared to prior estimates and differences are recorded as reestimates. The primary actuarial techniques (development of paid loss dollars, development of reported loss dollars, methods based on expected loss ratios and methods utilizing frequency and severity of claims) used to estimate reserves and provide for losses are applied to actual paid losses and reported losses (paid losses plus individual case reserves set by claim adjusters) for an accident year to create an estimate of how losses are likely to develop over time. An accident year refers to classifying claims based on the year in which the claim occurred. For estimating short-tail coverage reserves (e.g. homeowners and automobile physical damage), which comprise approximately 20% of the Company’s total loss reserves as of December 31, 2015, the primary actuarial technique utilized is the development of paid loss dollars due to the relatively quick claim settlement period. As it relates to estimating long-tail coverage reserves (primarily related to automobile liability), which comprise approximately 80% of the Company’s total loss reserves as of December 31, 2015, the primary actuarial technique utilized is the development of reported loss dollars due to the relatively long claim settlement period. In all of the loss estimation techniques referred to above, a ratio (development factor) is calculated which compares current results to results in the prior period for each accident year. Various development factors, based on historical results, are multiplied by the current experience to estimate the development of losses of each accident year from the current time period into the next time period. The development factors for the next time period for each accident year are compounded over the remaining calendar years to calculate an estimate of ultimate losses for each accident year. Occasionally, unusual aberrations in loss patterns are caused by factors such as changes in claim reporting, settlement patterns, unusually large losses, process changes, legal or regulatory environment changes, and other influences. In these instances, analyses of alternate development factor selections are performed to evaluate the effect of these factors, and actuarial judgment is applied to make appropriate development factor assumptions needed to develop a best estimate of ultimate losses. Paid losses are then subtracted from estimated ultimate losses to determine the indicated loss reserves. The difference between indicated reserves and recorded reserves is the amount of reserve reestimate. Reserves are reestimated quarterly. When new development factors are calculated from actual losses, and they differ from estimated development factors used in previous reserve estimates, assumptions about losses and required reserves are revised based on the new development factors. Changes to reserves are recorded in the period in which development factor changes result in reserve reestimates. Numerous actuarial estimates of the types described above are prepared each quarter to monitor losses for each line of business, including the line’s individual coverages; for reported losses and IBNR. Often, several different estimates are prepared for each detailed component, incorporating alternative analyses of changing claim settlement patterns and other influences on losses, from which the Company selects the best estimate for each component, occasionally incorporating additional analyses and actuarial judgment, as described above. These estimates also incorporate the historical impact of inflation into reserve estimates, the implicit assumption being that a multi-year average development factor represents an adequate provision. Based on the Company’s review of these estimates, as well as the review of the independent reserve studies, the best estimate of required reserves for each line of business, including the line’s individual coverages, is determined by management and is recorded for each accident year, then the required reserves for each component are summed to create the reserve balances carried on the Company’s Consolidated Balance Sheets. Based on the Company’s products and coverages, historical experience, and modeling of various actuarial methodologies used to develop reserve estimates, the Company estimates that the potential variability of the property and casualty loss reserves within a reasonable probability of other possible outcomes may be approximately plus or minus 6% of reserves, which equates to plus or minus approximately $10,000 of net income as of December 31, 2015. Although this evaluation reflects the most likely outcomes, it is possible the final outcome may fall below or above these estimates. Net favorable development of total reserves for property and casualty claims occurring in prior years was $12,500 in 2015, $17,000 in 2014 and $17,988 in 2013. The favorable development in both 2014 and 2013 was predominantly the result of favorable frequency and severity trends in automobile liability loss emergence for accident years 2011 and prior. In 2015, the favorable development was predominantly the result of favorable frequency and severity trends in automobile liability loss emergence for accident years 2013 and prior, as well as favorable severity trends in property for accident years 2013 and prior. The Company completes a detailed study of property and casualty reserves based on information available at the end of each quarter and year. Trends of reported losses (paid amounts and case reserves on claims reported to the Company) for each accident year are reviewed and ultimate loss costs for those accident years are estimated. The Company engages an independent property and casualty actuarial consulting firm to prepare an independent study of the Company's property and casualty reserves at December 31 of each year, supplemented by other analyses throughout the year. The result of the independent actuarial study at December 31, 2015 was consistent with management’s analysis and selected estimates and did not result in any adjustments to the Company’s recorded property and casualty reserves. Based on an assessment of the relative weight given to emerging trends resulting from recent business process changes, pricing, underwriting and claims handling, at both December 31, 2015 and 2014 the Company recorded property and casualty reserves toward the higher end (upper quartile) of a reasonable range of reserve estimates. At the time each of the reserve analyses was performed, the Company believed that each estimate was based upon sound methodology and such methodologies were appropriately applied and that there were no trends which indicated the likelihood of future loss reserve development. The financial impact of the net reserve development was therefore accounted for in the period that the development was determined. No other adjustments were made in the determination of the liabilities during the periods covered by these consolidated financial statements. Management believes that, based on data currently available, it has reasonably estimated the Company's ultimate losses. |
Reinsurance and Catastrophes
Reinsurance and Catastrophes | 12 Months Ended |
Dec. 31, 2015 | |
Insurance [Abstract] | |
Reinsurance and Catastrophes | NOTE 6 - Reinsurance and Catastrophes In the normal course of business, the Company’s insurance subsidiaries assume and cede reinsurance with other insurers. Reinsurance is ceded primarily to limit losses from large events and to permit recovery of a portion of direct losses; however, such a transfer does not relieve the originating insurance company of primary liability. The Company is a national underwriter and therefore has exposure to catastrophic losses in certain coastal states and other regions throughout the U.S. Catastrophes can be caused by various events including hurricanes, windstorms, hail, severe winter weather, wildfires and earthquakes, and the frequency and severity of catastrophes are inherently unpredictable. The financial impact from catastrophic losses results from both the total amount of insured exposure in the area affected by the catastrophe as well as the severity of the event. The Company seeks to reduce its exposure to catastrophe losses through the geographic diversification of its insurance coverage, deductibles, maximum coverage limits and the purchase of catastrophe reinsurance. The Company’s net catastrophe losses incurred of approximately $44,429, $37,500 and $40,225 for the years ended December 31, 2015, 2014 and 2013, respectively, reflected losses from winter storm events in the first part of each year, wind/hail/tornado events in the spring and summer months of each year, as well as losses from several storms recorded in the fourth quarter of 2015. The total amounts of reinsurance recoverable on unpaid insurance reserves classified as assets and reported in Other Assets in the Consolidated Balance Sheets were as follows: December 31, 2015 2014 Reinsurance recoverables on reserves and unpaid claims Property and casualty Reinsurance companies $ 9,026 $ 7,772 State insurance facilities 41,306 35,968 Life and health 9,780 9,592 Total $ 60,112 $ 53,332 The Company recognizes the cost of reinsurance premiums over the contract periods for such premiums in proportion to the insurance protection provided. Amounts recoverable from reinsurers for unpaid claims and claim settlement expenses, including estimated amounts for unsettled claims, claims incurred but not yet reported and policy benefits, are estimated in a manner consistent with the insurance liability associated with the policy. The effects of reinsurance on premiums written and contract deposits; premiums and contract charges earned; and benefits, claims and settlement expenses were as follows: Ceded to Assumed Gross Other from Other Net Amount Companies Companies Amount Year ended December 31, 2015 Premiums written and contract deposits $ 1,277,066 $24,737 $4,184 $ 1,256,513 Premiums and contract charges earned 752,798 25,077 4,159 731,880 Benefits, claims and settlement expenses 508,904 16,221 3,681 496,364 Year ended December 31, 2014 Premiums written and contract deposits 1,191,123 27,144 3,676 1,167,655 Premiums and contract charges earned 739,281 27,276 3,755 715,760 Benefits, claims and settlement expenses 504,550 39,236 3,112 468,426 Year ended December 31, 2013 Premiums written and contract deposits 1,120,852 30,115 3,456 1,094,193 Premiums and contract charges earned 717,494 29,990 3,434 690,938 Benefits, claims and settlement expenses 455,298 10,018 3,037 448,317 There were no losses from uncollectible reinsurance recoverables in the three years ended December 31, 2015. Past due reinsurance recoverables as of December 31, 2015 were not material. The Company maintains catastrophe excess of loss reinsurance coverage. For 2015, the Company’s catastrophe excess of loss coverage consisted of one contract and it provided 95% coverage for catastrophe losses above a retention of $25,000 per occurrence up to $175,000 per occurrence. This contract consisted of three layers, each of which provided for one mandatory reinstatement. The layers were $25,000 excess of $25,000, $40,000 excess of $50,000 and $85,000 excess of $90,000. For liability coverages, in 2015, the Company reinsured each loss above a retention of $900 with coverage up to $2,500 on a per occurrence basis and $20,000 in a clash event. (A clash cover is a reinsurance casualty excess contract requiring two or more casualty coverages or policies issued by the Company to be involved in the same loss occurrence for coverage to apply.) For property coverages, in 2015 the Company reinsured each loss above a retention of $900 up to $2,500 on a per risk basis, including catastrophe losses. Also, the Company could submit to the reinsurers three per risk losses from the same occurrence for a total of $4,800 of property recovery in any one event. The maximum individual life insurance risk retained by the Company is $300 on any individual life, while either $100 or $125 is retained on each group life policy depending on the type of coverage. Excess amounts are reinsured. The Company also maintains a life catastrophe reinsurance program. For 2015, the Company reinsured 100% of the catastrophe risk in excess of $1,000 up to $35,000 per occurrence, with one reinstatement. The Company’s life catastrophe risk reinsurance program covers acts of terrorism and includes nuclear, biological and chemical explosions but excludes other acts of war. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Debt | NOTE 7 - Debt Indebtedness and scheduled maturities consisted of the following: Effective Interest Final December 31, Rates Maturity 2015 2014 Short-term debt Bank Credit Facility Variable 2019 $ - $ 38,000 Long-term debt, current and noncurrent (1) 4.50% Senior Notes, Aggregate principal amount of 4.5% 2025 249,346 - 6.05% Senior Notes, Aggregate principal amount of 6.1% 2015 - 74,989 6.85% Senior Notes, Aggregate principal amount of 6.9% 2016 - 124,950 Total $ 249,346 $ 237,939 (1) The Company designates debt obligations as “long-term” based on maturity date at issuance. Credit Agreement with Financial Institutions (“Bank Credit Facility” In 2014, HMEC’s Bank Credit Agreement (the “Bank Credit Facility”) was amended and restated to extend the commitment termination date to July 30, 2019 from the previous termination date of October 6, 2015 and to decrease the interest rate spread relative to Eurodollar base rates. The financial covenants within the agreement were not changed. The Bank Credit Facility is by and between HMEC, certain financial institutions named therein and JPMorgan Chase Bank, N.A., as administrative agent, and provides for unsecured borrowings of up to $150,000. Interest accrues at varying spreads relative to prime or Eurodollar base rates and is payable monthly or quarterly depending on the applicable base rate (Eurodollar base rate plus 1.15%). The unused portion of the Bank Credit Facility is subject to a variable commitment fee, which was 0.15% on an annual basis at December 31, 2015. On June 15, 2015, the Senior Notes due 2015 matured and the Company repaid the $75,000 aggregate principal amount initially utilizing $75,000 of additional borrowing under the existing Bank Credit Facility. In November 2015, the Company repaid the Bank Credit Facility balance in full utilizing a portion of the net proceeds from the issuance of the 4.50% Senior Notes due 2025, as described below. 4.50% Senior Notes due 2025 (“Senior Notes due 2025”) On November 23, 2015, the Company issued $250,000 aggregate principal amount of 4.50% senior notes, which will mature on December 1, 2025, issued at a discount of 0.265% resulting in an effective yield of 4.533%. Interest on the Senior Notes due 2025 is payable semi-annually at a rate of 4.50%. The Senior Notes due 2025 are redeemable in whole or in part, at any time, at the Company's option, at a redemption price equal to the greater of (1) 100% of the principal amount of the notes being redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted, on a semi-annual basis, at the Treasury yield (as defined in the indenture) plus 35 basis points, plus, in either of the above cases, accrued interest to the date of redemption. The net proceeds from the sale of the Senior Notes due 2025 were used to (1) repay the $113,000 balance on the Bank Credit Facility, (2) redeem the Senior Notes due 2016, as described below, and (3) for general corporate purposes. 6.05% Senior Notes due 2015 (“Senior Notes due 2015”) On June 15, 2015, the Senior Notes due 2015 matured and the Company repaid the $75,000 aggregate principal amount initially utilizing $75,000 of additional borrowing under the existing Bank Credit Facility. 6.85% Senior Notes due 2016 (“Senior Notes due 2016”) On December 23, 2015, the Company redeemed all of its outstanding Senior Notes due 2016, $125,000 aggregate principal amount, at a cost of $127,292. The redemption was funded utilizing a portion of the net proceeds from the issuance of the 4.50% Senior Notes due 2025. Debt Retirement Charges The redemption of the Senior Notes due 2016 resulted in a pretax charge to income for the year ended December 31, 2015 of $2,338. The repayment of the Senior Notes due 2015 on the maturity date resulted in no pretax charges to income for the year ended December 31, 2015. Covenants The Company is in compliance with all of the financial covenants contained in the Senior Notes due 2025 indenture and the Bank Credit Facility agreement, consisting primarily of relationships of (1) debt to capital, (2) net worth, as defined in the financial covenants, (3) insurance subsidiaries' risk-based capital and (4) securities subject to funding agreements and repurchase agreements. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 8 - Income Taxes The income tax assets and liabilities included in Other Assets and Other Liabilities, respectively, in the Consolidated Balance Sheets were as follows: December 31, 2015 2014 Income tax (asset) liability Current $ 1,000 $ (1,195 ) Deferred 201,208 261,784 Deferred tax assets and liabilities are recognized for all future tax consequences attributable to “temporary differences” between the financial statement carrying value of existing assets and liabilities and their respective tax bases. There are no deferred tax liabilities that have not been recognized. The “temporary differences” that gave rise to the deferred tax balances were as follows: December 31, 2015 2014 Deferred tax assets Unearned premium reserve reduction $ 17,402 $ 15,721 Compensation accruals 13,737 14,765 Impaired securities 7,635 3,327 Other comprehensive income - net funded status of pension and other postretirement benefit obligations 6,375 7,009 Discounting of unpaid claims and claim expense tax reserves 3,213 4,090 Postretirement benefits other than pensions 664 870 Other, net 1,189 - Total gross deferred tax assets 50,215 45,782 Deferred tax liabilities Other comprehensive income - net unrealized gains on fixed maturities and equity securities 112,934 185,011 Deferred policy acquisition costs 85,341 70,796 Life insurance future policy benefit reserve 30,177 25,914 Investment related adjustments 18,709 20,064 Intangible assets 4,262 4,262 Other, net - 1,519 Total gross deferred tax liabilities 251,423 307,566 Net deferred tax liability $ 201,208 $ 261,784 The Company evaluated sources and character of income, including historical earnings, loss carryback potential, taxable income from future reversals of existing taxable temporary differences, future taxable income exclusive of reversing temporary differences, and taxable income from prudent and feasible tax planning strategies. Although realization of deferred tax assets is not assured, the Company believes it is more likely than not that gross deferred tax assets will be fully realized and that a valuation allowance with respect to the realization of the total gross deferred tax assets was not necessary as of December 31, 2015 and 2014. At December 31, 2015, the Company did not have any loss carryforwards or credits. The components of income tax expense were as follows: Year Ended December 31, 2015 2014 2013 Current $ 29,885 $ 32,295 $ 31,610 Deferred 6,085 9,575 11,563 Total income tax expense $ 35,970 $ 41,870 $ 43,173 Income tax expense for the following periods differed from the expected tax computed by applying the federal corporate tax rate of 35% to income before income taxes as follows: Ye ar Ended December 31, 2015 2014 2013 Expected federal tax on income $ 45,308 $ 51,140 $ 53,923 Add (deduct) tax effects of: Tax-exempt interest (6,678 ) (6,849 ) (6,829 ) Dividend received deduction (3,564 ) (3,566 ) (3,382 ) Other, net 904 1,145 (539 ) Income tax expense provided on income $ 35,970 $ 41,870 $ 43,173 The Company’s federal income tax returns for years prior to 2012 are no longer subject to examination by the Internal Revenue Service (“IRS”). The Company recognizes tax benefits from tax return positions only if it is more likely than not the position will be sustainable, upon examination, on its technical merits and any relevant administrative practices or precedents. As a result, the Company applies a more likely than not recognition threshold for all tax uncertainties. The Company records liabilities for uncertain tax filing positions where it is more likely than not that the position will not be sustainable upon audit by taxing authorities. These liabilities are reevaluated routinely and are adjusted appropriately based upon changes in facts or law. The Company has no unrecorded liabilities from uncertain tax filing positions. HMEC and its subsidiaries file a consolidated federal income tax return. The federal income tax sharing agreements between HMEC and its subsidiaries, as approved by the Board of Directors, provide that tax on income is charged to each subsidiary as if it were filing a separate tax return with the limitation that each subsidiary will receive the benefit of any losses or tax credits to the extent utilized in the consolidated tax return. Intercompany balances are settled quarterly with a final settlement after filing the consolidated federal income tax return with the IRS. A reconciliation of the beginning and ending amounts of unrecognized tax benefits, excluding interest and penalties, is as follows: Yea r Ended December 31, 2015 2014 2013 Balance as of the beginning of the year $ 656 $ 641 $ - Additions based on tax positions related to the current year 398 259 641 Settlements in tax positions for prior years (15 ) (244 ) - Balance as of the end of the year $ 1,039 $ 656 $ 641 The Company’s effective tax rate would be affected to the extent there were unrecognized tax benefits that could be recognized. There are no positions for which it is reasonably possible that the total amount of unrecognized tax benefit will significantly increase within the next 12 months. The Company classifies all tax related interest and penalties as income tax expense. Interest and penalties were both immaterial in each of the years ended December 31, 2015, 2014 and 2013. |
Shareholders' Equity and Common
Shareholders' Equity and Common Stock Equivalents | 12 Months Ended |
Dec. 31, 2015 | |
Shareholders Equity And Stock Options [Abstract] | |
Shareholders' Equity and Common Stock Equivalents | NOTE 9 - Shareholders' Equity and Common Stock Equivalents Share Repurchase Programs and Treasury Shares Held (Common Stock) In December 2011, HMEC’s Board of Directors (the “Board”) authorized a share repurchase program allowing repurchases of up to $50,000 (the “2011 Plan”). In September 2015, the Board authorized an additional share repurchase program allowing repurchases of up to $50,000 (the “2015 Plan”) to begin following the completion of the 2011 Plan. Both share repurchase programs authorize the repurchase of HMEC’s common shares in open market or privately negotiated transactions, from time to time, depending on market conditions. The share repurchase programs do not have expiration dates and may be limited or terminated at any time without notice. During 2013, the Company repurchased 173,629 shares of its common stock, or 0.4% of the outstanding shares on December 31, 2012, at an aggregate cost of $3,889, or an average price of $22.38 per share, under the 2011 Plan. During 2014, the Company repurchased 190,876 shares of its common stock, or 0.5% of the outstanding shares on December 31, 2013, at an aggregate cost of $5,411, or an average price of $28.33 per share, under the 2011 Plan. During 2015, the Company repurchased 663,092 shares of its common stock, or 1.6% of the outstanding shares on December 31, 2014, at an aggregate cost of $21,950, or an average price of $33.08 per share, under the 2011 Plan. In total and through December 31, 2015, 2,098,200 shares were repurchased under the 2011 Plan at an average price of $23.35 per share. The repurchase of shares was financed through use of cash. As of December 31, 2015, $51,010 remained authorized for future share repurchases under the combined 2011 Plan and 2015 Plan authorizations. At December 31, 2015, the Company held 23,971,522 shares in treasury. Authorization of Preferred Stock In 1996, the shareholders of HMEC approved authorization of 1,000,000 shares of $0.001 par value preferred stock. The Board of Directors is authorized to (1) direct the issuance of the preferred stock in one or more series, (2) fix the dividend rate, conversion or exchange rights, redemption price and liquidation preference, of any series of the preferred stock, (3) fix the number of shares for any series and (4) increase or decrease the number of shares of any series. No shares of preferred stock were outstanding at December 31, 2015 and 2014. 2010 Comprehensive Executive Compensation Plan In 2010, the shareholders of HMEC approved the 2010 Comprehensive Executive Compensation Plan (the “Comprehensive Plan”). The purpose of the Comprehensive Plan is to aid the Company in attracting, retaining, motivating and rewarding employees and non-employee Directors; to provide for equitable and competitive compensation opportunities, including deferral opportunities; to encourage long-term service; to recognize individual contributions and reward achievement of Company goals; and to promote the creation of long-term value for the Company’s shareholders by closely aligning the interests of plan participants with those of shareholders. The Comprehensive Plan authorizes share-based and cash-based incentives for plan participants. In 2012, the shareholders of HMEC approved the implementation of a fungible share pool under which grants of full value shares will count against the share limit as two and one half shares for every share subject to a full value award. In 2015, the shareholders of HMEC approved an amendment and restatement of the Comprehensive Plan which included an increase of 3.25 million in the number of shares of common stock reserved for issuance under the Comprehensive Plan. As of December 31, 2015, approximately 3.9 million shares were available for grant under the Comprehensive Plan. Shares of common stock issued under the Comprehensive Plan may be either authorized and unissued shares of HMEC or shares that have been reacquired by HMEC; however, new shares have been issued historically. December 31, 2015 2014 2013 Common stock units related to deferred compensation for Directors 85,200 87,993 118,062 Common stock units related to deferred compensation for employees 55,443 69,598 111,981 Stock options 669,693 634,437 956,814 Restricted common stock units related to incentive compensation 1,442,325 1,590,138 1,663,190 Total 2,252,661 2,382,166 2,850,047 Director Common Stock Units Deferred compensation of Directors is in the form of common stock units, which represent an equal number of common shares to be issued in the future. The outstanding units of Directors serving on the Board accrue dividends at the same rate as dividends paid to HMEC’s shareholders; outstanding units of retired Directors do not accrue dividends. These dividends are reinvested into additional common stock units. Employee Common Stock Units Deferred compensation of employees is in the form of common stock units, which represent an equal number of common shares to be issued in the future. Distributions of employee deferred compensation are allowed to be either in common shares or cash. Through December 31, 2015, all distributions have been in cash. The outstanding units accrue dividends at the same rate as dividends paid to HMEC’s shareholders. These dividends are reinvested into additional common stock units. Stock Options Options to purchase shares of HMEC common stock may be granted to executive officers, other employees and Directors. The options become exercisable in installments based on service generally beginning in the first year from the date of grant and generally become fully vested 4 years from the date of grant. The options generally expire 7 to 10 years from the date of grant. The exercise price of the option is equal to the market price of HMEC’s common stock on the date of grant resulting in a grant date intrinsic value of $0. Weighted Average Range of Options Option Price Option Prices Vested and per Share per Share Outstanding Exercisable December 31, 2014 $ 21.22 $ 6.91-$30.24 634,437 208,578 Granted $ 32.44 $32.35-$33.41 142,908 - Vested $ 21.23 $13.83-$30.24 - 158,586 Exercised $ 17.71 $13.83-$28.88 (85,532 ) (85,532 ) Forfeited $ 23.10 $17.01-$28.88 (22,120 ) - Expired - - - - December 31, 2015 $ 24.00 $ 6.91-$33.41 669,693 281,632 December 31, 2015 Total Outstanding Options Vested and Exercisable Options Weighted Weighted Weighted Weighted Range of Average Average Average Average Option Prices Option Price Remaining Option Price Remaining per Share Options per Share Term Options per Share Term $ 6.91-$17.01 103,368 $16.14 1.9 years 103,368 $16.14 1.9 years $17.32-$22.69 257,921 $19.32 3.7 years 139,216 $18.98 3.6 years $28.88-$33.41 308,404 $30.54 8.6 years 39,048 $28.94 8.1 years Total $ 6.91-$33.41 669,693 $24.00 5.7 years 281,632 $19.32 3.6 years The weighted average exercise prices of vested and exercisable options as of December 31, 2014 and 2013 were $17.20 and $15.78, respectively. As of December 31, 2015, based on a closing stock price of $33.18 per share, the aggregate intrinsic (in-the-money) values of vested options and all options outstanding were $3,904 and $6,152, respectively. Restricted Common Stock Units Restricted common stock units may be granted to executive officers, other employees and Directors and represent an equal number of common shares to be issued in the future. The restricted common stock units vest in installments based on service or attainment of performance criteria generally beginning in the first year from the date of grant and generally become fully vested 1 to 5 years from the date of grant. The outstanding units accrue dividends at the same rate as dividends paid to HMEC’s shareholders. These dividends are reinvested into additional restricted common stock units. Total Outstanding Units Vested Units Weighted Average Weighted Average Grant Date Fair Grant Date Fair Units Value per Unit Units Value per Unit December 31, 2014 1,590,138 $21.34 853,054 $14.36 Granted (1) 225,180 $34.42 - - Vested - - 303,057 $19.39 Forfeited (66,794 ) $25.60 - - Distributed (2) (306,199 ) $16.13 (306,199 ) $16.13 December 31, 2015 1,442,325 $24.29 849,912 $15.51 (1) Includes dividends reinvested into additional restricted common stock units. (2) Includes distributed units which were utilized to satisfy withholding taxes due on the distribution. |
Statutory Information and Restr
Statutory Information and Restrictions | 12 Months Ended |
Dec. 31, 2015 | |
Insurance [Abstract] | |
Statutory Information and Restrictions | NOTE 10 - Statutory Information and Restrictions The insurance departments of various states in which the insurance subsidiaries of HMEC are domiciled recognize as net income and surplus those amounts determined in conformity with statutory accounting principles prescribed or permitted by the insurance departments, which differ in certain respects from GAAP. December 31, 2015 2014 Statutory capital and surplus of insurance subsidiaries $ 883,870 $ 861,421 Increase (decrease) due to: Deferred policy acquisition costs 253,176 215,082 Difference in policyholder reserves 95,536 87,345 Goodwill 47,396 47,396 Investment fair value adjustments on fixed maturities 314,705 519,593 Difference in investment reserves 120,795 118,633 Federal income tax liability (224,492 ) (290,034 ) Net funded status of pension and other postretirement benefit obligations (18,213 ) (20,027 ) Non-admitted assets and other, net 21,691 18,528 Shareholders' equity of parent company and non-insurance subsidiaries 19,543 16,465 Parent company short-term and long-term debt (249,346 ) (237,939 ) Shareholders' equity as reported herein $ 1,264,661 $ 1,336,463 Year Ended December 31, 2015 2014 2013 Statutory net income of insurance subsidiaries $ 87,619 $ 97,875 $ 98,905 Net loss of non-insurance companies (4,474 ) (3,906 ) (4,583 ) Interest expense (13,122 ) (14,198 ) (14,236 ) Debt retirement costs (2,338 ) - - Tax benefit of interest expense and other parent company current tax adjustments 6,829 6,371 6,030 Combined net income 74,514 86,142 86,116 Increase (decrease) due to: Deferred policy acquisition costs 13,249 16,828 17,177 Policyholder benefits 14,065 15,284 19,038 Federal income tax expense (6,678 ) (10,548 ) (12,735 ) Investment reserves 7,339 3,574 6,818 Other adjustments, net (9,007 ) (7,037 ) (5,521 ) Net income as reported herein $ 93,482 $ 104,243 $ 110,893 HMEC has principal insurance subsidiaries domiciled in Illinois and Texas. The statutory financial statements of these subsidiaries are prepared in accordance with accounting principles prescribed or permitted by the Illinois Department of Insurance and the Texas Department of Insurance, as applicable. Prescribed statutory accounting principles include a variety of publications of the National Association of Insurance Commissioners (the “NAIC”), as well as state laws, regulations and general administrative rules. The NAIC has risk-based capital guidelines to evaluate the adequacy of statutory capital and surplus in relation to risks assumed in investments, reserving policies, and volume and types of insurance business written. At December 31, 2015 and 2014, the minimum statutory-basis capital and surplus required to be maintained by HMEC’s insurance subsidiaries was $139,949 and $135,797, respectively. At December 31, 2015 and 2014, statutory capital and surplus of each of the Company’s insurance subsidiaries was above required levels. The restricted net assets of HMEC’s insurance subsidiaries were $18,312 and $18,361 as of December 31, 2015 and 2014, respectively. The minimum statutory-basis capital and surplus amount at each date is the total estimated authorized control level risk-based capital for all of HMEC’s insurance subsidiaries combined. Authorized control level risk-based capital represents the minimum level of statutory-basis capital and surplus necessary before the insurance commissioner in the respective state of domicile is authorized to take whatever regulatory actions considered necessary to protect the best interests of the policyholders and creditors of the insurer. The amount of restricted net assets represents the combined fair value of securities on deposit with governmental agencies for the insurance subsidiaries as required by law in various states in which the insurance subsidiaries of HMEC conduct business. HMEC relies largely on dividends from its insurance subsidiaries to meet its obligations for payment of principal and interest on debt, dividends to shareholders and parent company operating expenses, including tax payments pursuant to tax sharing agreements. Payments for share repurchase programs also have this dependency. HMEC’s insurance subsidiaries are subject to various regulatory restrictions which limit the amount of annual dividends or other distributions, including loans or cash advances, available to HMEC without prior approval of the insurance regulatory authorities. As a result, HMEC may not be able to receive dividends from such subsidiaries at times and in amounts necessary to pay desired dividends to shareholders. The aggregate amount of dividends that may be paid in 2016 from all of HMEC’s insurance subsidiaries without prior regulatory approval is approximately $90,000. As disclosed in the reconciliation of the statutory capital and surplus of insurance subsidiaries to the consolidated GAAP shareholders’ equity, the insurance subsidiaries have statutory capital and surplus of $883,870 as of December 31, 2015, which is subject to regulatory restrictions. The parent company equity is not restricted. At December 31, 2015, HMEC had $13,237 of liquid assets, comprised of investments and cash, which could be used to fund debt interest, general corporate obligations, as well as dividend payments to shareholders. If necessary, HMEC also has other potential sources of liquidity that could provide for additional funding to meet corporate obligations or pay shareholder dividends, which include a revolving line of credit, as well as issuances of various securities. At the time of this Annual Report on Form 10-K and during each of the years in the three year period ended December 31, 2015, the Company had no financial reinsurance agreements in effect. |
Pension Plans and Other Postret
Pension Plans and Other Postretirement Benefits | 12 Months Ended |
Dec. 31, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
Pension Plans and Other Postretirement Benefits | NOTE 11 - Pension Plans and Other Postretirement Benefits The Company sponsors three qualified and two non-qualified retirement plans. Substantially all employees participate in the 401(k) plan and through December 31, 2014 participated in the non-contributory defined contribution plan. Both the qualified and the non-qualified defined benefit plans have been frozen since 2002. All participants in both frozen plans are 100% vested in their accrued benefit and all non-qualified defined benefit plan participants are receiving payment. Certain employees participate in a non-qualified defined contribution plan. Qualified Plans All employees participate in the 401(k) plan and receive a 100% vested 3% “safe harbor” company contribution based on employees’ eligible earnings. Effective January 1, 2015 the Company began matching each dollar of employee contributions up to a 5% maximum in addition to maintaining the automatic 3% “safe harbor” contribution. The new matching company contribution vests after 5 years of service. The 401(k) plan is fully funded. Prior to 2015, employees participated in a defined contribution plan after one year of service; contributions were made based on eligible earnings and years of service and were credited to each employee’s individual plan account. The majority of employees received a 5% contribution. Accounts vested after 3 years of service. The Company terminated this fully funded defined contribution plan on December 31, 2014 and all participant accounts became 100% vested. The majority of the plan assets were distributed to participants in 2015. In 2002, participants’ ceased accruing benefits for earnings and years of service in the frozen defined benefit plan. A substantial number of those participants are former employees of the Company who are not eligible to receive an immediate annuity benefit until age 65 and/or are not eligible for a lump sum distribution. In November 2014, the Company announced a cash-out election period or “window” ending in December 2014, for terminated vested participants with accrued lump sum values under $100. During the window, 385 former employees elected to receive a total of approximately $4,200 in lump sum distributions, resulting in approximately $1,600 of additional settlement expense in 2014. The Company’s policy for the frozen defined benefit plan is to contribute to the plan amounts which are actuarially determined to provide sufficient funding to meet future benefit payments as defined by federal laws and regulations. For all three qualified plans, all assets are held in their respective plan trusts. Non-qualified Plans The non-qualified plans were established for specific employees whose otherwise eligible earnings exceeded the statutory limits under the qualified plans. Benefit accruals under the non-qualified defined benefit plan were frozen in 2002 and all participants are currently in payment status. Both the non-qualified frozen defined benefit plan and the non-qualified contribution plan are unfunded plans with the Company’s contributions made at the time payments are made to participants. Total Expense and Contribution Plans’ Information Total expense recorded for the qualified and non-qualified defined contribution, 401(k), defined benefit and supplemental retirement plans was $8,899, $11,850 and $10,295 for the years ended December 31, 2015, 2014 and 2013, respectively. Contributions to employees' accounts under the qualified defined contribution plan, the 401(k) plan and the non-qualified defined contribution plan, as well as total assets of the plans, were as follows: Year Ended December 31, 2015 2014 2013 401(k) plan Contributions to employees’ accounts $ 6,466 $ 2,753 $ 2,781 Total assets at the end of the year 161,956 132,053 134,897 Qualified defined contribution plan Contributions to employees’ accounts - 4,580 4,616 Total assets at the end of the year 9,088 123,008 135,097 Non-qualified defined contribution plan Contributions to employees’ accounts 122 74 110 Total assets at the end of the year - - - Defined Benefit Plan and Supplemental Retirement Plans The following tables summarize the funded status of the defined benefit and supplemental retirement pension plans as of December 31, 2015, 2014 and 2013 (the measurement dates) and identify (1) the assumptions used to determine the projected benefit obligation and (2) the components of net pension cost for the defined benefit plan and supplemental retirement plans for the following periods: Supplemental Defined Benefit Plan Defined Benefit Plans December 31, December 31, 2015 2014 2013 2015 2014 2013 Change in benefit obligation: Projected benefit obligation at beginning of year $ 34,279 $ 39,483 $ 40,994 $ 18,524 $ 16,706 $ 18,192 Service cost 450 360 360 - - - Interest cost 1,189 1,679 1,369 654 716 616 Plan amendments - - - - - - Actuarial loss (gain) (1,371 ) 1,254 624 (845 ) 2,431 (783 ) Benefits paid (3,314 ) (1,737 ) (1,715 ) (1,329 ) (1,329 ) (1,319 ) Settlements - (6,760 ) (2,149 ) - - - Projected benefit obligation at end of year $ 31,233 $ 34,279 $ 39,483 $ 17,004 $ 18,524 $ 16,706 Change in plan assets: Fair value of plan assets at beginning of year $ 31,408 $ 35,879 $ 32,757 $ - $ - $ - Actual return on plan assets 200 2,535 4,396 - - - Employer contributions - 2,000 3,103 1,329 1,329 1,319 Benefits paid (3,314 ) (1,737 ) (1,715 ) (1,329 ) (1,329 ) (1,319 ) Expenses paid (627 ) (509 ) (513 ) - - - Settlements - (6,760 ) (2,149 ) - - - Fair value of plan assets at end of year $ 27,667 $ 31,408 $ 35,879 $ - $ - $ - Funded status $ (3,566 ) $ (2,871 ) $ (3,604 ) $ (17,004 ) $ (18,524 ) $ (16,706 ) Prepaid (accrued) benefit expense $ 9,265 $ 10,656 $ 12,331 $ (11,622 ) $ (12,024 ) $ (12,479 ) Total amount recognized in Consolidated Balance Sheets, all in Other Liabilities $ (3,566 ) $ (2,871 ) $ (3,604 ) $ (17,004 ) $ (18,524 ) $ (16,706 ) Amounts recognized in accumulated other comprehensive income (loss) (“AOCI”): Prior service cost $ - $ - $ - $ - $ - $ - Net actuarial loss 12,831 13,527 15,935 5,382 6,500 4,227 Total amount recognized in AOCI $ 12,831 $ 13,527 $ 15,935 $ 5,382 $ 6,500 $ 4,227 Information for pension plans with an accumulated benefit obligation greater than plan assets: Projected benefit obligation $ 31,233 $ 34,279 $ 39,483 $ 17,004 $ 18,524 $ 16,706 Accumulated benefit obligation 31,233 34,279 39,483 17,004 18,524 16,706 Fair value of plan assets 27,667 31,408 35,879 - - - The change in the Company’s AOCI for the defined benefit plans for the year ended December 31, 2015 was primarily attributable to an increase in the discount rate, partially offset by the performance of plan assets. The change in the Company’s AOCI for the defined benefit plans for the year ended December 31, 2014 was primarily attributable to loss recognition in 2014, due to settlement accounting as well as loss amortization included in net periodic benefit cost for 2014. This loss recognition was partially offset by liability losses in 2014 due to a decrease in the discount rate as well as a change in the mortality assumption. The change in the Company’s AOCI for the defined benefit plans for the year ended December 31, 2013 was primarily attributable to the performance of the plan assets and an increase in the discount rate, which was partially offset by a change in the mortality assumption. Supplemental Defined Benefit Plan Defined Benefit Plans Year Ended December 31, Year Ended December 31, 2015 2014 2013 2015 2014 2013 Components of net periodic pension (income) expense: Service cost: Benefit accrual $ - $ - $ - $ - $ - $ - Other expenses 450 360 360 - - - Interest cost 1,189 1,679 1,369 654 716 616 Expected return on plan assets (1,875 ) (2,402 ) (2,238 ) - - - Settlement loss - 2,668 867 - - - Amortization of: Prior service cost - - - - - 124 Actuarial loss 1,626 1,371 1,602 273 157 203 Net periodic pension expense $ 1,390 $ 3,676 $ 1,960 $ 927 $ 873 $ 943 Changes in plan assets and benefit obligations included in other comprehensive income (loss): Prior service cost $ - $ - $ - $ - $ - $ - Net actuarial loss (gain) 930 (1,037 ) (1,888 ) (845 ) 2,431 (783 ) Amortization of: Prior service cost - - - - (2 ) (124 ) Actuarial loss (1,626 ) (1,371 ) (1,602 ) (273 ) (157 ) (203 ) Total recognized in other comprehensive income (loss) $ (696 ) $ (2,408 ) $ (3,490 ) $ (1,118 ) $ 2,272 $ (1,110 ) Weighted average assumptions used to determine expense: Discount rate 3.66 % 4.46 % 3.51 % 3.66 % 4.46 % 3.51 % Expected return on plan assets 6.75 % 7.50 % 7.50 % * * * Annual rate of salary increase * * * * * * Weighted average assumptions used to determine benefit obligations as of December 31: Discount rate 4.20 % 3.66 % 4.46 % 4.20 % 3.66 % 4.46 % Expected return on plan assets 6.75 % 7.50 % 7.50 % * * * Annual rate of salary increase * * * * * * * Not applicable. The discount rates at December 31, 2015 were based on the average yield for long-term, high-grade securities available during the benefit payout period. To set its discount rate, the Company looks to leading indicators, including the Mercer Above Mean Yield Curve. The assumption for the long-term rate of return on plan assets was determined by considering actual investment experience during the lifetime of the plan, balanced with reasonable expectations of future growth considering the various classes of assets and percentage allocation for each asset class. The Company has an investment policy for the defined benefit pension plan that aligns the assets within the plan’s trust to an approximate allocation of 50% equity and 50% fixed income funds. Management believes this allocation will produce the targeted long-term rate of return on assets necessary for payment of future benefit obligations, while providing adequate liquidity for payments to current beneficiaries. Assets are reviewed against the defined benefit pension plan’s investment policy and the trustee has been directed to adjust invested assets at least quarterly to maintain the target allocation percentages. Fair values of the equity security funds and fixed income funds have been determined from public quotations. The following table presents the fair value hierarchy for the Company’s defined benefit pension plan assets, excluding cash held. Fair Value Measurements at Reporting Date Using Total Level 1 Level 2 Level 3 December 31, 2015 Asset category Equity security funds (1) United States $ 10,844 $ - $ 10,844 $ - International 2,681 - 2,681 - Fixed income funds 13,720 - 13,720 - Total $ 27,245 $ - $ 27,245 $ - December 31, 2014 Asset category Equity security funds (1) United States $ 12,718 $ - $ 12,718 $ - International 2,790 - 2,790 - Fixed income funds 15,591 - 15,591 - Total $ 31,099 $ - $ 31,099 $ - (1) None of the trust fund assets for the defined benefit pension plan have been invested in shares of HMEC’s common stock. There were no Level 3 assets held during the years ended December 31, 2015 and 2014. In 2016, the Company expects amortization of net losses of $1,351 and $233 for the defined benefit plan and the supplemental retirement plans, respectively, and expects no amortization of prior service cost for the supplemental retirement plans to be included in net periodic pension expense. Postretirement Benefits Other than Pensions In addition to providing pension benefits, as further described below, prior to 2015 the Company also provided certain health care and life insurance benefits to a closed group of eligible employees (pre-age 65 and former employees). Postretirement benefits other than pensions of active and retired employees were accrued as expense over the employees' service years. As of December 31, 2006, upon discontinuation of retiree medical benefits, Health Reimbursement Accounts (“HRAs”) were established for eligible participants and totaled $7,310. As of December 31, 2015, the balance of the previously established HRAs was $1,896. Funding of HRAs was $523, $252 and $181 for the years ended December 31, 2015, 2014 and 2013, respectively. In December 2013, the Company announced the elimination of postretirement medical coverage for all remaining eligible participants effective March 31, 2014. As a result of this plan change, prior service cost was amortized over the average working lifetime of active eligible participants. In November 2014, the Company announced it would no longer sponsor the retiree group life benefit as of December 2014 and offered a conversion option to individual policies. This was the last remaining postretirement benefit other than pensions. As a result of the changes in the plan for other postretirement benefits, the Company recorded a reduction in its expenses of $2,980 and $196 for the years ended December 31, 2014 and 2013, respectively. The following table presents the funded status of postretirement benefits other than pensions of active and retired employees (including employees on disability more than 2 years) as of December 31, 2014 and 2013 (the measurement dates) reconciled with amounts recognized in the Company's Consolidated Balance Sheets. The tables present postretirement expenses and liabilities only for those years in which the Company incurred expenses or accrued liabilities. December 31, 2014 2013 Change in accumulated postretirement benefit obligations: Accumulated postretirement benefit obligations at beginning of year $ 1,130 $ 2,862 Changes during fiscal year: Service cost - - Interest cost 46 92 Plan amendment - (1,393 ) Settlements (965 ) - Employer payments net of participant contributions (95 ) (491 ) Actuarial (gain) loss (116 ) 60 Accumulated postretirement benefit obligations at end of year $ - $ 1,130 Unfunded status $ - $ (1,130 ) Total amount recognized in Consolidated Balance Sheets, all in Other Liabilities $ - $ (1,130 ) Amounts recognized in accumulated other comprehensive income (loss) (“AOCI”): Prior service cost (credit) $ - $ (1,341 ) Net actuarial loss (gain) - (604 ) Total amount recognized in AOCI $ - $ (1,945 ) Year Ended December 31, 2014 2013 Components of net periodic benefit: Service cost $ - $ - Interest cost 46 92 Curtailment gain (713 ) - Settlement gain (1,439 ) - Amortization of prior service cost (628 ) (52 ) Amortization of prior gain (246 ) (236 ) Net periodic income $ (2,980 ) $ (196 ) Sensitivity Analysis and Assumptions for Postretirement Benefits Other than Pensions A one percentage point change in the assumed health care cost trend rate for each year would change the accumulated postretirement benefit obligations as follows: December 31, 2014 2013 Accumulated postretirement benefit obligations Effect of a one percentage point increase * $ - Effect of a one percentage point decrease * - Service and interest cost components of the net Effect of a one percentage point increase * $ 2 Effect of a one percentage point decrease * (2 ) Weighted average assumptions used to determine Discount rate 3.66 % 4.46 % Healthcare cost trend rate * * Rate to which the cost trend rate is assumed to decline * * Year the rate is assumed to reach the ultimate trend rate * * Expected return on plan assets * * Weighted average assumptions used to determine net periodic Discount rate 4.46 % 3.51 % Healthcare cost trend rate * 7.50 % Rate to which the cost trend rate is assumed to decline * 5.00 % Year the rate is assumed to reach the ultimate trend rate * 2022 Expected return on plan assets * * * Not applicable. The discount rates were based on the average yield for long-term, high-grade securities available during the benefit payout period. To set its discount rate, the Company looks to leading indicators, including the Mercer Above Mean Yield Curve. 2016 Contributions In 2016, there is no minimum funding requirement for the Company’s defined benefit plan. The following table discloses that minimum funding requirement and the expected full year contributions for the Company’s plans. Defined Benefit Pension Plans Defined Supplemental Benefit Defined Benefit Plan Plans Minimum funding requirement for 2016 $ - N/A Expected contributions (approximations) for the year ended December 31, 2016 as of the time of this Form 10-K (1) - $ 1,319 N/A - Not applicable. (1) HMEC’s Annual Report on Form 10-K for the year ended December 31, 2015. Estimated Future Benefit Payments The Company’s defined benefit plan may be subject to settlement accounting. Assumptions for both the number of individuals retiring in a calendar year and their elections regarding lump sum distributions are significant factors impacting the payout patterns for each of the plans below. Therefore, actual results could vary from the estimates shown. Estimated future benefit payments as of December 31, 2015 were as follows: 2016 2017 2018 2019 2020 2021-2025 Pension plans Defined benefit plan $ 3,207 $ 2,716 $ 2,645 $ 3,042 $ 2,485 $11,148 Supplemental retirement plans 1,319 1,308 1,295 1,281 1,264 5,995 |
Contingencies and Commitments
Contingencies and Commitments | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies and Commitments | NOTE 12 - Contingencies and Commitments Lawsuits and Legal Proceedings Companies in the insurance industry have been subject to substantial litigation resulting from claims, disputes and other matters. For instance, they have faced expensive claims, including class action lawsuits, alleging, among other things, improper sales practices and improper claims settlement procedures. Negotiated settlements of certain such actions have had a material adverse effect on many insurance companies. At the time of this Annual Report on Form 10-K, the Company does not have pending litigation from which there is a reasonable possibility of material loss. Assessments for Insolvencies of Unaffiliated Insurance Companies The Company is contingently liable for possible assessments under regulatory requirements pertaining to potential insolvencies of unaffiliated insurance companies. Liabilities, which are established based upon regulatory guidance, have generally been insignificant. Leases The Company has entered into various operating lease agreements, primarily for real estate (claims and marketing offices in a few states, as well as portions of the home office complex) and also for computer equipment and copy machines. Rental expenses were $2,872, $2,823 and $2,838 for the years ended December 31, 2015, 2014 and 2013, respectively. Future minimum lease payments under leases expiring subsequent to December 31, 2015 are as follows: As of December 31, 2015 2016 2017 2018 2019 2020 2021- 2025 2026 and beyond Minimum operating lease payments $ 2,494 $ 2,360 $ 2,390 $ 2,289 $ 1,526 $ 2,761 $ - Investment Commitments From time to time, the Company has outstanding commitments to purchase investments and/or commitments to lend funds under bridge loans. Unfunded commitments to purchase investments were $147,139 and $50,256 for the years ended December 31, 2015 and 2014, respectively. |
Supplementary Data on Cash Flow
Supplementary Data on Cash Flows | 12 Months Ended |
Dec. 31, 2015 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplementary Data on Cash Flows | NOTE 13 - Supplementary Data on Cash Flows A reconciliation of net income to net cash provided by operating activities as presented in the Consolidated Statements of Cash Flows is as follows: Year Ended December 31, 2015 2014 2013 Cash flows from operating activities Net income $ 93,482 $ 104,243 $ 110,893 Adjustments to reconcile net income to net cash provided by operating activities: Realized investment gains (12,713 ) (10,917 ) (22,245 ) Increase in accrued investment income (2,566 ) (5,563 ) (1,898 ) (Decrease) increase in accrued expenses (5,798 ) 1,513 1,157 Depreciation and amortization 7,734 7,958 7,680 Increase in insurance liabilities 145,313 153,423 143,542 Increase in premium receivables (8,641 ) (3,638 ) (4,018 ) Increase in deferred policy acquisition costs (8,981 ) (12,662 ) (14,659 ) (Increase) decrease in reinsurance recoverables (748 ) 1,570 (1,289 ) Increase in income tax liabilities 8,935 9,745 7,099 Debt retirement costs 2,338 - - Other (11,312 ) (23,739 ) (20,326 ) Total adjustments 113,561 117,690 95,043 Net cash provided by operating activities $ 207,043 $ 221,933 $ 205,936 The Company’s redemption of debt in 2015 resulted in non-cash financing charges of $45. |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2015 | |
Segment Reporting [Abstract] | |
Segment Information | NOTE 14 - Segment Information The Company conducts and manages its business through four segments. The three operating segments, representing the major lines of insurance business, are: property and casualty insurance, primarily personal lines automobile and homeowners products; retirement annuity products, primarily tax-qualified fixed and variable deposits; and life insurance. The Company does not allocate the impact of corporate-level transactions to the insurance segments, consistent with the basis for management’s evaluation of the results of those segments, but classifies those items in the fourth segment, corporate and other. In addition to ongoing transactions such as corporate debt service, realized investment gains and losses and certain public company expenses, such items also have included corporate debt retirement costs/gains, when applicable. The accounting policies of the segments are the same as those described in “Note 1 Summary of Significant Accounting Policies”. The Company accounts for intersegment transactions, primarily the allocation of operating and agency costs from the corporate and other segment to the property and casualty, annuity and life segments, on a direct cost basis. Summarized financial information for these segments is as follows: Year Ended December 31, 2015 2014 2013 Insurance premiums and contract charges earned Property and casualty $ 595,958 $ 581,828 $ 561,954 Annuity 25,378 25,540 22,575 Life 110,544 108,392 106,409 Total $ 731,880 $ 715,760 $ 690,938 Net investment income Property and casualty $ 33,461 $ 36,790 $ 36,208 Annuity 228,378 222,071 208,419 Life 71,614 71,865 69,932 Corporate and other 38 14 7 Intersegment eliminations (891 ) (925 ) (956 ) Total $ 332,600 $ 329,815 $ 313,610 Net income (loss) Property and casualty $ 40,043 $ 46,907 $ 44,433 Annuity 43,384 45,336 44,719 Life 14,982 17,503 20,339 Corporate and other (4,927 ) (5,503 ) 1,402 Total $ 93,482 $ 104,243 $ 110,893 December 31, 2015 2014 2013 Assets Property and casualty $ 1,098,415 $ 1,107,962 $ 1,001,561 Annuity 7,001,411 6,683,473 5,963,348 Life 1,862,719 1,858,150 1,743,084 Corporate and other 134,006 155,678 154,557 Intersegment eliminations (37,208 ) (36,736 ) (35,878 ) Total $ 10,059,343 $ 9,768,527 $ 8,826,672 Additional significant financial information for these segments is as follows: Year Ended December 31, 2015 2014 2013 Policy acquisition expenses amortized Property and casualty $ 73,173 $ 71,327 $ 68,516 Annuity 18,155 14,781 7,957 Life 7,591 7,709 8,170 Total $ 98,919 $ 93,817 $ 84,643 Income tax expense (benefit) Property and casualty $ 11,274 $ 13,944 $ 12,740 Annuity 19,873 21,319 18,531 Life 7,951 9,432 10,919 Corporate and other (3,128 ) (2,825 ) 983 Total $ 35,970 $ 41,870 $ 43,173 |
Unaudited Selected Quarterly Fi
Unaudited Selected Quarterly Financial Data | 12 Months Ended |
Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |
Unaudited Selected Quarterly Financial Data | NOTE 15 - Unaudited Selected Quarterly Financial Data Selected quarterly financial data is presented below. Three Months Ended December 31, September 30, June 30, March 31, 2015 Insurance premiums written and contract deposits $ 305,186 $ 326,198 $ 319,394 $ 305,735 Total revenues 276,106 265,753 268,470 270,119 Net income 21,040 21,984 16,183 34,275 Per share information Basic Net income $ 0.51 $ 0.53 $ 0.39 $ 0.82 Shares of common stock - weighted average (1) 41,564 41,852 41,990 41,950 Diluted Net income $ 0.50 $ 0.52 $ 0.38 $ 0.81 Shares of common stock and equivalent shares - weighted average (1) 42,127 42,305 42,425 42,300 2014 Insurance premiums written and contract deposits $ 292,241 $ 322,746 $ 292,393 $ 260,275 Total revenues 269,157 265,520 264,743 261,265 Net income 30,068 25,357 20,452 28,366 Per share information Basic Net income $ 0.72 $ 0.61 $ 0.49 $ 0.69 Shares of common stock - weighted average (1) 41,748 41,514 41,432 41,180 Diluted Net income $ 0.71 $ 0.60 $ 0.48 $ 0.67 Shares of common stock and equivalent shares - weighted average (1) 42,362 42,319 42,310 42,259 2013 Insurance premiums written and contract deposits $ 275,379 $ 306,033 $ 267,703 $ 245,078 Total revenues 259,215 251,884 265,637 254,531 Net income 34,287 23,599 25,995 27,012 Per share information Basic Net income $ 0.84 $ 0.59 $ 0.65 $ 0.68 Shares of common stock - weighted average (1) 40,818 40,001 39,768 39,527 Diluted Net income $ 0.81 $ 0.57 $ 0.63 $ 0.66 Shares of common stock and equivalent shares - weighted average (1) 42,205 41,732 41,395 41,088 (1) Rounded to thousands. |
Schedule I Summary of Investmen
Schedule I Summary of Investments-Other Than Investments in Related Parties | 12 Months Ended |
Dec. 31, 2015 | |
Summary of Investments, Other than Investments in Related Parties [Abstract] | |
Summary of Investments-Other Than Investments in Related Parties | SCHEDULE I SUMMARY OF INVESTMENTS-OTHER THAN INVESTMENTS IN RELATED PARTIES December 31, 2015 (Dollars in thousands) Amount Shown in Fair Balance Type of Investments Cost (1) Value Sheet Fixed maturities U.S. Government and federally sponsored agency obligations $ 994,235 $ 1,050,525 $ 1,050,525 States, municipalities and political subdivisions 1,553,603 1,708,943 1,708,943 Foreign government bonds 67,441 73,617 73,617 Public utilities 155,973 174,831 174,831 Other bonds 4,014,374 4,083,424 4,083,424 Total fixed maturity securities 6,785,626 7,091,340 7,091,340 Equity securities Non-redeemable preferred stocks 16,268 15,790 15,790 Common stocks 59,450 64,721 64,721 Closed-end fund 20,004 19,286 19,286 Total equity securities 95,722 99,797 99,797 Short-term investments 174,152 XXX 174,152 Policy loans 148,696 XXX 148,696 Derivative instruments 2,501 XXX 2,501 Mortgage loans 63 XXX 63 Other 131,481 XXX 131,481 Total investments $ 7,338,241 XXX $ 7,648,030 (1) Bonds at original cost reduced by repayments and adjusted for amortization of premiums or accrual of discounts and impairment in value of specifically identified investments. See accompanying Report of Independent Registered Public Accounting Firm. |
Condensed Financial Information
Condensed Financial Information of Registrant | 12 Months Ended |
Dec. 31, 2015 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
Condensed Financial Information of Registrant | SCHEDULE II (Parent Company Only) BALANCE SHEETS As of December 31, 2015 and 2014 (Dollars in thousands, except per share data) December 31, 2015 2014 ASSETS Investments and cash $ 13,237 $ 28,640 Investment in subsidiaries 1,451,290 1,515,769 Other assets 60,114 58,365 Total assets $ 1,524,641 $ 1,602,774 LIABILITIES AND SHAREHOLDERS’ EQUITY Short-term debt $ - $ 38,000 Long-term debt, current and noncurrent 249,346 199,939 Other liabilities 10,634 28,372 Total liabilities 259,980 266,311 Preferred stock, $0.001 par value, authorized 1,000,000 shares; none issued - - Common stock, $0.001 par value, authorized 75,000,000 shares; issued, 2015, 64,537,554; 2014, 64,245,048 65 64 Additional paid-in capital 442,648 422,232 Retained earnings 1,116,277 1,065,318 Accumulated other comprehensive income (loss), net of taxes: Net unrealized gains on fixed maturities and equity securities 175,167 297,554 Net funded status of pension and other postretirement benefit obligations (11,794 ) (12,953 ) Treasury stock, at cost, 2015, 23,971,522 shares; 2014, 23,308,430 shares (457,702 ) (435,752 ) Total shareholders' equity 1,264,661 1,336,463 Total liabilities and shareholders' equity $ 1,524,641 $ 1,602,774 See accompanying Note to Condensed Financial Statements. See accompanying Report of Independent Registered Public Accounting Firm. SCHEDULE II HORACE MANN EDUCATORS CORPORATION (Parent Company Only) STATEMENTS OF OPERATIONS (Dollars in thousands) Year Ended December 31, 2015 2014 2013 Revenues Net investment income $ 33 $ 10 $ 6 Realized investment gains - - 208 Total revenues 33 10 214 Expenses Interest 13,122 14,198 14,236 Debt retirement costs 2,338 - - Other 5,153 5,071 4,832 Total expenses 20,613 19,269 19,068 Loss before income tax benefit and equity in net earnings of subsidiaries (20,580 ) (19,259 ) (18,854 ) Income tax benefit (7,202 ) (6,734 ) (6,599 ) Loss before equity in net earnings of subsidiaries (13,378 ) (12,525 ) (12,255 ) Equity in net earnings of subsidiaries 106,860 116,768 123,148 Net income $ 93,482 $ 104,243 $ 110,893 See accompanying Note to Condensed Financial Statements. See accompanying Report of Independent Registered Public Accounting Firm. SCHEDULE II HORACE MANN EDUCATORS CORPORATION (Parent Company Only) STATEMENTS OF CASH FLOWS (Dollars in thousands) Year Ended December 31, 2015 2014 2013 Cash flows - operating activities Interest expense paid $ (13,521 ) $ (13,902 ) $ (13,825 ) Federal income taxes recovered 6,539 8,740 5,996 Cash dividends received from subsidiaries 50,000 46,000 41,000 Other, net, including settlement of payables to subsidiaries (2,223 ) (188 ) (21,235 ) Net cash provided by operating activities 40,795 40,650 11,936 Cash flows - investing activities Net (increase) decrease in investments 15,402 (4,647 ) 5,488 Net cash provided by (used in) investing activities 15,402 (4,647 ) 5,488 Cash flows - financing activities Dividends paid to shareholders (42,523 ) (39,237 ) (32,550 ) Proceeds from issuance of Senior Notes due 2025 246,937 - - Redemption of Senior Notes due 2016 (127,292 ) - - Maturity of Senior Notes due 2015 (75,000 ) - - Principal repayment on Bank Credit Facility (38,000 ) - - Acquisition of treasury stock (21,950 ) (5,411 ) (3,889 ) Exercise of stock options 1,629 8,252 19,336 Net cash used in financing activities (56,199 ) (36,396 ) (17,103 ) Net increase (decrease) in cash (2 ) (393 ) 321 Cash at beginning of period 77 470 149 Cash at end of period $ 75 $ 77 $ 470 See accompanying Note to Condensed Financial Statements. See accompanying Report of Independent Registered Public Accounting Firm. SCHEDULE II HORACE MANN EDUCATORS CORPORATION (Parent Company Only) CONDENSED FINANCIAL INFORMATION OF REGISTRANT NOTE TO CONDENSED FINANCIAL STATEMENTS The accompanying condensed financial statements should be read in conjunction with the Consolidated Financial Statements and the accompanying notes thereto. |
Schedule III and VI Supplementa
Schedule III and VI Supplementary Insurance Information Supplemental Information Concerning Property and Casualty Insurance Operations | 12 Months Ended |
Dec. 31, 2015 | |
Supplemental Information for Property, Casualty Insurance Underwriters [Abstract] | |
Schedule III and VI Supplementary Insurance Information Supplemental Information Concerning Property and Casualty Insurance Operations | SCHEDULE III & VI (COMBINED) SCHEDULE III: SUPPLEMENTARY INSURANCE INFORMATION SCHEDULE VI: SUPPLEMENTAL INFORMATION CONCERNING PROPERTY AND CASUALTY INSURANCE OPERATIONS (Dollars in thousands) Column identification for Schedule III: A B C D E F G H I J K Schedule VI: A B C D E F G H I J K Discount, Other Benefits, Claims and claim Amortization Paid Deferred Future policy if any, policy Premium claims adjustment expenses of deferred claims policy benefits, deducted in claims and revenue/ Net and incurred related to policy Other and claim acquisition claims previous Unearned benefits premium investment settlement Current Prior acquisition operating adjustment Premiums Segment costs claim expenses column premiums payable earned income expenses year years costs expenses expense written Year Ended December 31, 2015 Property and casualty $ 26,685 $ 301,569 $ 0 $ 230,201 $ - $ 595,958 $ 33,461 $ 420,311 $ 432,811 $ (12,500 ) $ 73,173 $ 84,785 $ 436,431 $ 605,753 Annuity 178,300 4,082,217 xxx 734 689,116 25,378 228,378 141,893 xxx xxx 18,155 32,555 xxx xxx Life 48,191 1,066,776 xxx 1,906 3,536 110,544 71,614 117,002 xxx xxx 7,591 35,470 xxx xxx Other, including consolidating eliminations N/A N/A xxx N/A N/A N/A (853 ) N/A xxx xxx N/A 20,061 xxx xxx Total $ 253,176 $ 5,450,562 xxx $ 232,841 $ 692,652 $ 731,880 $ 332,600 $ 679,206 xxx xxx $ 98,919 $ 172,871 xxx xxx Year Ended December 31, 2014 Property and casualty $ 27,160 $ 311,097 $ 0 $ 220,406 $ - $ 581,828 $ 36,790 $ 399,512 $ 416,512 $ (17,000 ) $ 71,327 $ 88,305 $ 393,857 $ 584,393 Annuity 143,522 3,781,260 xxx 708 603,267 25,540 222,071 134,760 xxx xxx 14,781 33,210 xxx xxx Life 44,400 1,035,698 xxx 2,299 3,471 108,392 71,865 110,293 xxx xxx 7,709 36,421 xxx xxx Other, including consolidating eliminations N/A N/A xxx N/A N/A N/A (911 ) N/A xxx xxx N/A 18,254 xxx xxx Total $ 215,082 $ 5,128,055 xxx $ 223,413 $ 606,738 $ 715,760 $ 329,815 $ 644,565 xxx xxx $ 93,817 $ 176,190 xxx xxx Year Ended December 31, 2013 Property and casualty $ 26,048 $ 275,809 $ 0 $ 217,841 $ - $ 561,954 $ 36,208 $ 385,601 $ 403,589 $ (17,988 ) $ 68,516 $ 87,064 $ 384,736 $ 570,363 Annuity 170,749 3,523,901 xxx 562 342,795 22,575 208,419 128,768 xxx xxx 7,957 34,004 xxx xxx Life 48,558 1,008,369 xxx 2,711 3,497 106,409 69,932 103,841 xxx xxx 8,170 34,394 xxx xxx Other, including consolidating eliminations N/A N/A xxx N/A N/A N/A (949 ) N/A xxx xxx N/A 18,886 xxx xxx Total $ 245,355 $ 4,808,079 xxx $ 221,114 $ 346,292 $ 690,938 $ 313,610 $ 618,210 xxx xxx $ 84,643 $ 174,348 xxx xxx N/A - Not applicable. See accompanying Report of Independent Registered Public Accounting Firm. |
Reinsurance
Reinsurance | 12 Months Ended |
Dec. 31, 2015 | |
Supplemental Schedule of Reinsurance Premiums for Insurance Companies [Abstract] | |
Reinsurance | SCHEDULE IV HORACE MANN EDUCATORS CORPORATION REINSURANCE (Dollars in thousands) Column A Column B Column C Column D Column E Column F Ceded to Assumed Percentage Gross Other from Other Net of Amount Amount Companies Companies Amount Assumed to Net Year ended December 31, 2015 Life insurance in force $ 16,504,539 $ 3,625,946 $ - $ 12,878,593 - Premiums Property and casualty $ 610,347 $ 18,548 $ 4,159 $ 595,958 0.7 % Annuity 25,378 - - 25,378 - Life 117,073 6,529 - 110,544 - Total premiums $ 752,798 $ 25,077 $ 4,159 $ 731,880 0.6 % Year ended December 31, 2014 Life insurance in force $ 15,800,701 $ 3,360,016 $ - $ 12,440,685 - Premiums Property and casualty $ 599,230 $ 21,157 $ 3,755 $ 581,828 0.6 % Annuity 25,540 - - 25,540 - Life 114,511 6,119 - 108,392 - Total premiums $ 739,281 $ 27,276 $ 3,755 $ 715,760 0.5 % Year ended December 31, 2013 Life insurance in force $ 15,102,466 $ 3,231,421 $ - $ 11,871,045 - Premiums Property and casualty $ 582,780 $ 24,260 $ 3,434 $ 561,954 0.6 % Annuity 22,575 - - 22,575 - Life 112,139 5,730 - 106,409 - Total premiums $ 717,494 $ 29,990 $ 3,434 $ 690,938 0.5 % Note: Premiums above include insurance premiums earned and contract charges earned. See accompanying Report of Independent Registered Public Accounting Firm. |
Summary of Significant Accoun28
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) and with the rules and regulations of the Securities and Exchange Commission (“SEC”), specifically Regulation S-X and the instructions to Form 10-K. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (1) the reported amounts of assets and liabilities, (2) disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and (3) the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The consolidated financial statements include the accounts of Horace Mann Educators Corporation and its wholly-owned subsidiaries (“HMEC”; and together with its subsidiaries, the “Company” or “Horace Mann”). HMEC and its subsidiaries have common management, share office facilities and are parties to intercompany service agreements for management, administrative, utilization of personnel, financial, investment advisory, underwriting, claims adjusting, agency and data processing services. Under these agreements, costs have been allocated among the companies in conformity with GAAP. In addition, certain of the subsidiaries have entered into intercompany reinsurance agreements. HMEC and its subsidiaries file a consolidated federal income tax return, and there are related tax sharing agreements. All significant intercompany balances and transactions have been eliminated in consolidation. The subsidiaries of HMEC market and underwrite personal lines of property and casualty (primarily personal lines automobile and homeowners) insurance, retirement annuities (primarily tax-qualified products) and life insurance, primarily to K-12 teachers, administrators and other employees of public schools and their families. HMEC’s principal operating subsidiaries are Horace Mann Life Insurance Company, Horace Mann Insurance Company, Teachers Insurance Company, Horace Mann Property & Casualty Insurance Company and Horace Mann Lloyds. The Company has evaluated subsequent events through the date these consolidated financial statements were issued. There were no subsequent events requiring adjustment to the financial statements or disclosure. In the year ended December 31, 2015 (specifically, in the first quarter), the Company recorded a reduction in incentive compensation expense due to an immaterial out-of-period correction of an error related to the valuation of restricted common stock units. The $3,012 after tax ($4,634 pretax) adjustment increased net income for each of the segments as follows: property and casualty, $2,056; annuity, $519; and life, $437. |
Investments | Investments The Company invests primarily in fixed maturity securities (“fixed maturities”). This category includes primarily bonds and notes, but also includes redeemable preferred stocks. These securities are classified as available for sale and carried at fair value. The net adjustment for unrealized gains and losses on all securities available for sale, carried at fair value, is recorded as a separate component of accumulated other comprehensive income within shareholders' equity, net of applicable deferred taxes and the related impact on deferred policy acquisition costs associated with annuity contracts and life insurance products with account values that would have occurred if the securities had been sold at their aggregate fair value and the proceeds reinvested at current yields. Equity securities are classified as available for sale and carried at fair value. This category includes nonredeemable preferred stocks and common stocks. Short-term and other investments are comprised of short-term fixed income securities, generally carried at cost which approximates fair value; derivative instruments (all call options), carried at fair value; policy loans, carried at unpaid principal balances; mortgage loans, carried at unpaid principal; certain alternative investments (primarily investments in limited partnerships) which are accounted for as equity method investments; and restricted Federal Home Loan Bank membership and activity stocks, carried at redemption value which approximates fair value. The Company invests in fixed maturity securities and alternative investment funds that could qualify as variable interest entities, including corporate securities, mortgage-backed securities and asset-backed securities. Such securities have been reviewed and determined not to be subject to consolidation as the Company is not the primary beneficiary of these securities as the Company does not have the power to direct the activities that most significantly impact the entities’ performance. Interest income is recognized as earned. Investment income reflects amortization of premiums and accrual of discounts on an effective-yield basis. Realized gains and losses arising from the disposal (recorded on a trade date basis) or impairment of securities are determined based upon specific identification of securities. The Company evaluates all investments in its portfolio for other-than-temporary declines in value as described in the following section. |
Other-than-temporary Impairment of Investments | Other-than-temporary Impairment of Investments The Company's methodology of assessing other-than-temporary impairments is based on security-specific facts and circumstances as of the balance sheet date. Based on these facts, for fixed maturity securities if (1) the Company has the intent to sell the fixed maturity security, (2) it is more likely than not the Company will be required to sell the fixed maturity security before the anticipated recovery of the amortized cost basis, or (3) management does not expect to recover the entire cost basis of the fixed maturity security, an other-than-temporary impairment is considered to have occurred. For equity securities, if (1) the Company does not have the ability and intent to hold the security for the recovery of cost or (2) recovery of cost is not expected within a reasonable period of time, an other-than-temporary impairment is considered to have occurred. Additionally, if events become known that call into question whether the security issuer has the ability to honor its contractual commitments, such security holding will be evaluated to determine whether or not such security has suffered an other-than-temporary decline in value. The Company reviews the fair value of all investments in its portfolio on a monthly basis to assess whether an other-than-temporary decline in value has occurred. These reviews, in conjunction with the Company's investment managers' monthly credit reports and relevant factors such as (1) the financial condition and near-term prospects of the issuer, (2) the length of time and extent to which the fair value has been less than amortized cost for fixed maturity securities or cost for equity securities, (3) for fixed maturity securities, the Company’s intent to sell a security or whether it is more likely than not the Company will be required to sell the security before the anticipated recovery in the amortized cost basis; and for equity securities, the Company’s ability and intent to hold the security for the recovery of cost or if recovery of cost is not expected within a reasonable period of time, (4) the stock price trend of the issuer, (5) the market leadership position of the issuer, (6) the debt ratings of the issuer, and (7) the cash flows and liquidity of the issuer or the underlying cash flows for asset-backed securities, are all considered in the impairment assessment. A write-down of an investment is recorded when a decline in the fair value of that investment is deemed to be other-than-temporary, with a realized investment loss charged to income for the period for the full loss amount for all equity securities and for the credit-related loss portion associated with impaired fixed maturity securities. The amount of the total other-than-temporary impairment related to non-credit factors for fixed maturity securities is recognized in other comprehensive income, net of applicable taxes, unless the Company has the intent to sell the security or if it is more likely than not the Company will be required to sell the security before the anticipated recovery of the amortized cost basis. With respect to fixed income securities involving securitized financial assets primarily asset-backed and commercial mortgage-backed securities in the Company’s portfolio a significant portion of the fair values is determined by observable inputs. In addition, the securitized financial asset securities’ underlying collateral cash flows are stress tested to determine if there has been any adverse change in the expected cash flows. A decline in fair value below amortized cost is not assumed to be other-than-temporary for fixed maturity investments with unrealized losses due to spread widening, market illiquidity or changes in interest rates where there exists a reasonable expectation based on the Company’s consideration of all objective information available that the Company will recover the entire cost basis of the security and the Company does not have the intent to sell the investment before maturity or a market recovery is realized and it is more likely than not the Company will not be required to sell the investment. An other-than-temporary impairment loss will be recognized based upon all relevant facts and circumstances for each investment, as appropriate. Additional considerations for certain types of securities include the following: Corporate Fixed Maturity Securities Judgments regarding whether a corporate fixed maturity security is other-than-temporarily impaired include analyzing the issuer’s financial condition and whether there has been a decline in the issuer’s ability to service the specific security. The analysis of the security issuer is based on asset coverage, cash flow multiples or other industry standards. Several factors assessed include, but are not limited to, credit quality ratings, cash flow sustainability, liquidity, financial strength, industry and market position. Sources of information include, but are not limited to, management projections, independent consultants, external analysts’ research, peer analysis and the Company’s internal analysis. If the Company has concerns regarding the viability of the issuer or its ability to service the specific security after this assessment, a cash flow analysis is prepared to determine if the present value of future cash flows has declined below the amortized cost of the fixed maturity security. This analysis to determine an estimate of ultimate recovery value is combined with the estimated timing to recovery and any other applicable cash flows that are expected. If a cash flow analysis estimate is not feasible, then the market’s view of cash flows implied by the period end fair value, market discount rates and effective yield are the primary factors used to estimate a recovery value. Mortgage-Backed Securities Not Issued By the U.S. Government or Federally Sponsored Agencies The Company uses an estimate of future cash flows expected to be collected to evaluate its mortgage-backed securities for other-than-temporary impairment. The determination of cash flow estimates is inherently subjective and methodologies may vary depending on facts and circumstances specific to the security. All reasonably available information relevant to the collectability of the security, including past events, current conditions, and reasonable and supportable assumptions and forecasts, are considered when developing the estimate of cash flows expected to be collected. Information includes, but is not limited to, debt-servicing, missed refinancing opportunities and geography. Loan level characteristics such as issuer, FICO score, payment terms, level of documentation, property or residency type, and economic outlook are also utilized in financial models, along with historical performance, to estimate or measure the loan’s propensity to default. Additionally, financial models take into account loan age, lease rollovers, rent volatilities, vacancy rates and exposure to refinancing as additional drivers of default. For transactions where loan level data is not available, financial models use a proxy based on the collateral characteristics. Loss severity is a function of multiple factors including, but not limited to, the unpaid balance, interest rate, mortgage insurance ratios, assessed property value at origination, change in property valuation and loan-to-value ratio at origination. Prepayment speeds, both actual and estimated, cost of capital rates and debt service ratios are also considered. The cash flows generated by the collateral securing these securities are then estimated with these default, loss severity and prepayment assumptions. These collateral cash flows are then utilized, along with consideration for the issue’s position in the overall structure, to estimate the cash flows associated with the residential or commercial mortgage-backed security held by the Company. Municipal Bonds The Company’s municipal bond portfolio consists primarily of special revenue bonds, which present unique considerations in evaluating other-than-temporary impairments, but also includes general obligation bonds. The Company evaluates special revenue bonds for other-than-temporary impairment based on guarantees associated with the repayment from revenues generated by the specified revenue-generating activity associated with the purpose of the bonds. Judgments regarding whether a municipal bond is other-than-temporarily impaired include analyzing the issuer’s financial condition and whether there has been a decline in the overall financial condition of the issuer or its ability to service the specific security. Security credit ratings are reviewed with emphasis on the economy, finances, debt and management of the municipal issuer. Certain securities may be guaranteed by the mono-line credit insurers or other forms of guarantee. While not relied upon in the initial security purchase decision, insurance benefits are considered in the assessments for other-than-temporary impairment, including the credit-worthiness of the guarantor. Municipalities possess unique powers, along with a special legal standing and protections, that enable them to act quickly to restore budgetary balance and fiscal integrity. These powers include the sovereign power to tax, access to one-time revenue sources, capacity to issue or restructure debt, and ability to shift spending to other authorities. State governments often provide secondary support to local governments in times of financial stress and the federal government has provided assistance to state governments during recessions. If the Company has concerns regarding the viability of the municipal issuer or its ability to service the specific security after this analysis, a cash flow analysis is prepared to determine a present value and whether it has declined below the amortized cost of the security. If a cash flow analysis is not feasible, then the market’s view of the period end fair value, market discount rates and effective yield are the primary factors used to estimate the present value. Credit Losses The Company estimates the amount of the credit loss component of a fixed maturity security impairment as the difference between amortized cost and the present value of the expected cash flows of the security. The present value is determined using the best estimate cash flows discounted at the effective interest rate implicit to the security at the date of purchase or the current yield to accrete an asset-backed or floating rate security. The methodology and assumptions for establishing the best estimate cash flows vary depending on the type of security. Corporate fixed maturity security and municipal bond cash flow estimates are derived from scenario-based outcomes of expected restructurings or the disposition of assets using specific facts and other circumstances, including timing, security interests and loss severity and when not reasonably estimable, such securities are impaired to fair value as management’s best estimate of the present value of future cash flows. The cash flow estimates for mortgage-backed and other structured securities are based on security specific facts and circumstances that may include collateral characteristics, expectations of delinquency and default rates, loss severity and prepayment speeds, and structural support, including subordination and guarantees. |
Deferred Policy Acquisition Costs | Deferred Policy Acquisition Costs December 31, 2015 2014 Annuity $ 178,300 $ 143,522 Life 48,191 44,400 Property and casualty 26,685 27,160 Total $ 253,176 $ 215,082 Policy acquisition costs, consisting of commissions, policy issuance and other costs which are incremental and directly related to the successful acquisition of new or renewal business, are capitalized and amortized on a basis consistent with the type of insurance coverage. For all investment (annuity) contracts, acquisition costs are amortized over 20 years in proportion to estimated gross profits. Capitalized acquisition costs are amortized in proportion to estimated gross profits over 20 years for certain life insurance products with account values and over 30 years for indexed universal life contracts. For other individual life contracts, acquisition costs are amortized in proportion to anticipated premiums over the terms of the insurance policies (10, 15, 20 or 30 years). For property and casualty policies, acquisition costs are amortized over the terms of the insurance policies (6 or 12 months). The Company periodically reviews the assumptions and estimates used in capitalizing policy acquisition costs and also periodically reviews its estimations of gross profits, a process sometimes referred to as “unlocking”. The most significant assumptions that are involved in the estimation of annuity gross profits include interest rate spreads, future financial market performance, business surrender/lapse rates, expenses and the impact of realized investment gains and losses. For the variable deposit portion of the annuity segment, the Company amortizes policy acquisition costs utilizing a future financial market performance assumption of a 10% reversion to the mean approach with a 200 basis point corridor around the mean during the reversion period, representing a cap and a floor on the Company’s long-term assumption. The Company’s practice with regard to returns on Separate Accounts assumes that long-term appreciation in the financial market is not changed by short-term market fluctuations, but is only changed when sustained deviations are experienced. The Company monitors these fluctuations and only changes the assumption when its long-term expectation changes. In the event actual experience differs significantly from assumptions or assumptions are significantly revised, the Company may be required to record a material charge or credit to current period amortization expense for the period in which the adjustment is made. Year Ended December 31, 2015 2014 2013 Increase (decrease) to amortization: Annuity $ 3,403 $ 1,224 $ (3,700 ) Life (34 ) (131 ) 126 Total $ 3,369 $ 1,093 $ (3,574 ) Deferred policy acquisition costs for investment contracts and life insurance products with account values are adjusted for the impact on estimated future gross profits as if net unrealized investment gains and losses had been realized at the balance sheet date. This adjustment reduced the DAC asset by $38,819 and $67,932 at December 31, 2015 and 2014, respectively. The after tax impact of this adjustment is included in accumulated other comprehensive income (net unrealized gains and losses on fixed maturities and equity securities) within shareholders' equity. DAC is reviewed for recoverability from future income, including investment income, and costs which are deemed unrecoverable are expensed in the period in which the determination is made. No such costs were deemed unrecoverable during the years ended December 31, 2015, 2014 and 2013. |
Goodwill and Value of Acquired Insurance In Force | Goodwill and Value of Acquired Insurance In Force When the Company was acquired in 1989, intangible assets were recorded in the application of purchase accounting to recognize the value of acquired insurance in force and goodwill. In addition, goodwill was recorded in 1994 related to the purchase of Horace Mann Property & Casualty Insurance Company. The value of acquired insurance in force was fully amortized prior to December 31, 2009. Goodwill represents the excess of the amounts paid to acquire a business over the fair value of its net assets at the date of acquisition. Goodwill is not amortized, but is tested for impairment at the reporting unit level at least annually or more frequently if events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. A reporting unit is defined as an operating segment or a business unit one level below an operating segment, if separate financial information is prepared and regularly reviewed by management at that level. The Company’s reporting units, for which goodwill has been allocated, are equivalent to the Company’s operating segments. The goodwill impairment test, as defined in the accounting guidance, allows an entity 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 a reporting unit is less than its carrying amount. If an entity determines it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the entity follows a two-step process. In the first step, the fair value of a reporting unit is compared to its carrying value. If the carrying value of a reporting unit exceeds its fair value, the second step of the impairment test is performed for purposes of confirming and measuring the impairment. In the second step, the fair value of the reporting unit is allocated to all of the assets and liabilities of the reporting unit to determine an implied goodwill value. If the carrying amount of the reporting unit goodwill exceeds the implied goodwill value, an impairment loss would be recognized in an amount equal to that excess. Annuity $ 28,025 Life 9,911 Property and casualty 9,460 Total $ 47,396 The Company completed its annual goodwill assessment for the individual reporting units as of October 1, 2015 and did not utilize the option to perform an initial assessment of qualitative factors. The first step of the Company’s analysis indicated that fair value exceeded carrying value for all reporting units. The process of evaluating goodwill for impairment required management to make multiple judgments and assumptions to determine the fair value of each reporting unit, including discounted cash flow calculations, the level of the Company’s own share price and assumptions that market participants would make in valuing each reporting unit. Fair value estimates were based primarily on an in-depth analysis of historical experience, projected future cash flows and relevant discount rates, which considered market participant inputs and the relative risk associated with the projected cash flows. Other assumptions included levels of economic capital, future business growth, earnings projections and assets under management for each reporting unit. Estimates of fair value are subject to assumptions that are sensitive to change and represent the Company’s reasonable expectation regarding future developments. The Company also considered other valuation techniques such as peer company price-to-earnings and price-to-book multiples. As part of the Company’s October 1, 2015 goodwill analysis, the Company compared the fair value of the aggregated reporting units to the market capitalization of the Company. The difference between the aggregated fair value of the reporting units and the market capitalization of the Company was attributed to several factors, most notably market sentiment, trading volume and transaction premium. The amount of the transaction premium was determined to be reasonable based on insurance industry and Company-specific facts and circumstances. There were no other events or material changes in circumstances during 2015 that indicated that a material change in the fair value of the Company’s reporting units had occurred. Any amount of goodwill determined to be impaired will be recorded as an expense in the period in which the impairment determination is made. During each year from 2013 through 2015, the Company completed the required annual testing; no impairment charges were necessary as a result of such assessments. The assessment of goodwill recoverability requires significant judgment and is subject to inherent uncertainty. The use of different assumptions, within a reasonable range, could cause the fair value to be below carrying value. Subsequent goodwill assessments could result in impairment, particularly for any reporting unit with at-risk goodwill, due to the impact of a volatile financial market on earnings, discount rate assumptions, liquidity and market capitalization. |
Property and Equipment | Property and Equipment Property and equipment are carried at cost less accumulated depreciation, which is calculated on the straight-line method based on the estimated useful lives of the assets. The estimated life for real estate is identified by specific property and ranges from 20 to 45 years. The estimated useful lives of leasehold improvements and other property and equipment, including capitalized software, generally range from 2 to 10 years. December 31, 2015 2014 Property and equipment $ 107,876 $ 108,056 Less: accumulated depreciation 82,236 77,027 Total $ 25,640 $ 31.029 |
Separate Account (Variable Annuity) Assets and Liabilities | Separate Account (Variable Annuity) Assets and Liabilities Separate Account assets represent variable annuity contractholder funds invested in various mutual funds. Separate Account assets are recorded at fair value primarily based on market quotations of the underlying securities. Separate Account liabilities are equal to the estimated fair value of Separate Account assets. The investment income, gains and losses of these accounts accrue directly to the contractholders and are not included in the operations of the Company. The activity of the Separate Accounts is not reflected in the Consolidated Statements of Operations except for (1) contract charges earned, (2) the activity related to contract guarantees, which are benefits on existing variable annuity contracts, and (3) the impact of financial market performance on the amortization of deferred policy acquisition costs. The Company’s contract charges earned include fees charged to the Separate Accounts, including mortality charges, risk charges, policy administration fees, investment management fees and surrender charges. |
Future Policy Benefits, Interest-sensitive Life Contract Liabilities and Annuity Contract Liabilities | Investment Contract and Life Policy Reserves December 31, 2015 2014 Investment contract reserves $ 4,072,102 $ 3,774,457 Life policy reserves 1,054,740 1,027,814 Total $ 5,126,842 $ 4,802,271 Liabilities for future benefits on life and annuity policies are established in amounts adequate to meet the estimated future obligations on policies in force. Liabilities for future policy benefits on certain life insurance policies are computed using the net level premium method including assumptions as to investment yields, mortality, persistency, expenses and other assumptions based on the Company’s experience, including a provision for adverse deviation. These assumptions are established at the time the policy is issued and are intended to estimate the experience for the period the policy benefits are payable. If experience is less favorable than the assumptions, additional liabilities may be established, resulting in a charge to income for that period. At December 31, 2015, reserve investment yield assumptions ranged from 3.5% to 8.0%. Liabilities for future benefits on annuity contracts and certain long-duration life insurance contracts are carried at accumulated policyholder values without reduction for potential surrender or withdrawal charges. The liability also includes provisions for the unearned portion of certain policy charges. A guaranteed minimum death benefit (“GMDB”) generally provides an additional benefit if the contractholder dies and the variable annuity contract value is less than a contractually defined amount. The Company has estimated and recorded a GMDB reserve on variable annuity contracts in accordance with accounting guidance. Contractually defined amounts vary from contract to contract based on the date the contract was entered into as well as the GMDB feature elected by the contractholder. December 31, 2015 2014 GMDB reserve $ 358 $ 278 Aggregate in-the-money death benefits under the GMDB provision 35,563 29,866 Variable annuity contract value distribution based on GMDB feature: No guarantee 32 % 31 % Return of premium guarantee 62 % 63 % Guarantee of premium roll-up at an annual rate of 3% or 5% 6 % 6 % Total 100 % 100 % |
Policy Liabilities for Fixed Indexed Annuities and Indexed Universal Life Policies | Reserves for Fixed Indexed Annuities and Indexed Universal Life Policies In 2014, the Company began offering fixed indexed annuity (“FIA”) products with interest crediting strategies linked to the Standard & Poor’s 500 Index and the Dow Jones Industrial Average. The Company purchases call options on the applicable indices as an investment to provide the income needed to fund the annual index credits on the indexed products. These products are deferred fixed annuities with a guaranteed minimum interest rate plus a contingent return based on equity market performance and are considered hybrid financial instruments under the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 815 “Derivatives and Hedging”. The Company elected to not use hedge accounting for derivative transactions related to the FIA products. As a result, the Company records the purchased call options and the embedded derivative related to the provision of a contingent return at fair value, with changes in fair value reported in Net Realized Investment Gains and Losses in the Consolidated Statements of Operations. The embedded derivative is bifurcated from the host contract and included in Other Policyholder Funds in the Consolidated Balance Sheets. The host contract is accounted for as a debt instrument in accordance with ASC Topic 944 “Financial Services Insurance” and is included in Investment Contract and Life Policy Reserves in the Consolidated Balance Sheets with any discount to the minimum account value being accreted using the effective yield method. In the Consolidated Statements of Operations, accreted interest for FIA products and benefit claims on these products incurred during the reporting period are included in Benefits, Claims and Settlement Expenses. In October 2015, the Company began offering indexed universal life (“IUL”) products as part of its product portfolio with interest crediting strategies linked to the Standard & Poor’s 500 Index and the Dow Jones Industrial Average as well as a fixed option. The Company purchases call options monthly to hedge the potential liabilities arising in IUL accounts. The Company elected to not use hedge accounting for derivative transactions related to the IUL products. As a result, the Company records the purchased call options and the embedded derivative related to the provision of a contingent return at fair value, with changes in fair value reported in Net Realized Investment Gains and Losses in the Consolidated Statements of Operations. IUL policies with a balance in one or more indexed accounts are considered to have an embedded derivative. The benefit reserve for the host contract is measured using the retrospective deposit method, which for Horace Mann’s IUL product is equal to the account balance. The embedded derivative is bifurcated from the host contract, carried at fair value and included in Investment Contract and Life Policy Reserves in the Consolidated Balance Sheets. More information regarding the determination of fair value of the FIA and IUL embedded derivatives and purchased call options, the only derivative instruments utilized by the Company, is included in “Note 3 Fair Value of Financial Instruments”. |
Unpaid Claims and Claim Expenses | Unpaid Claims and Claim Expenses Liabilities for property and casualty unpaid claims and claim expenses include provisions for payments to be made on reported claims, claims incurred but not yet reported and associated settlement expenses. All of the Company's reserves for property and casualty unpaid claims and claim expenses are carried at the full value of estimated liabilities and are not discounted for interest expected to be earned on reserves. Estimated amounts of salvage and subrogation on unpaid property and casualty claims are deducted from the liability for unpaid claims. Due to the nature of the Company's personal lines business, the Company has no exposure to losses related to claims for toxic waste cleanup, other environmental remediation or asbestos-related illnesses other than claims under homeowners insurance policies for environmentally related items such as mold. |
Other Policyholder Funds | Other Policyholder Funds Other Policyholder Funds includes supplementary contracts without life contingencies and dividend accumulations, as well as balances outstanding under the funding agreements with the Federal Home Loan Bank of Chicago (“FHLB”) and embedded derivatives related to fixed indexed annuities. Except for embedded derivatives, each of these components is carried at cost. Embedded derivatives are carried at fair value. Amounts received and repaid under the FHLB funding agreements are classified in the financing activities section of the Company’s Consolidated Statements of Cash Flows combined with annuity contract deposits and disbursements, respectively. Federal Home Loan Bank Funding Agreements In 2013, one of the Company's subsidiaries, Horace Mann Life Insurance Company (“HMLIC”), became a member of the FHLB, which provides HMLIC with access to collateralized borrowings and other FHLB products. As membership requires the ownership of member stock, in June 2013, HMLIC purchased common stock to meet the membership requirement. Any borrowing from the FHLB requires the purchase of FHLB activity-based common stock in an amount equal to 5.0% of the borrowing, or a lower percentage such as 2.0% based on the Reduced Capitalization Advance Program. For FHLB advances and funding agreements combined, HMEC's Board of Directors has authorized a maximum amount equal to 10% of HMLIC’s admitted assets using prescribed statutory accounting principles. On both September 18, 2014 and December 27, 2013, the Company received $250,000 under funding agreements and on December 28, 2015, an additional $75,000 was received under a funding agreement. For the total $575,000 received, $250,000 matures on September 13, 2019, $125,000 matures on December 15, 2023 and $200,000 matures on January 16, 2026. Interest on the funding agreements accrues at an annual weighted average rate of 0.30% as of December 31, 2015. |
Insurance Premiums and Contract Charges Earned | Insurance Premiums and Contract Charges Earned Property and casualty insurance premiums are recognized as revenue ratably over the related contract periods in proportion to the risks insured. The unexpired portions of these property and casualty premiums are recorded as unearned premiums, using the monthly pro rata method. Premiums and contract charges for life insurance contracts with account values and investment (annuity) contracts consist of charges for the cost of insurance, policy administration and withdrawals. Premiums for long-term traditional life policies are recognized as revenues when due over the premium-paying period. Contract deposits to investment contracts and life insurance contracts with account values represent funds deposited by policyholders and are not included in the Company's premiums or contract charges earned. |
Share-Based Compensation | Share-Based Compensation The Company grants stock options and both service-based and performance-based restricted common stock units (“RSUs”) to executive officers, other employees and Directors in an effort to attract and retain individuals while also aligning compensation with the interests of the Company’s shareholders. Additional information regarding the Company's share-based compensation plans is contained in “Note 9 Shareholders' Equity and Common Stock Equivalents”. Stock options are accounted for under the fair value method of accounting using a Black-Scholes valuation model to measure stock option expense at the date of grant. The fair value of RSUs is measured at the market price of the Company’s common stock on the date of grant, with the exception of market-based performance awards, for which the Company uses a Monte Carlo simulation model to determine fair value for purposes of measuring RSU expense. For the years ended December 31, 2015, 2014 and 2013, the Company recognized $1,285, $1,270 and $1,419, respectively, in stock option expense as a result of the vesting of stock options during the respective periods. For the years ended December 31, 2015, 2014 and 2013, the Company recognized $892, $6,132 and $6,954, respectively, in RSU expense as a result of the earning and/or vesting of RSUs during the respective periods. See additional information regarding the 2015 RSU expense in “Note 1 Summary of Significant Accounting Policies Basis of Presentation”. In 2015, 2014 and 2013, the Company granted stock options as quantified in the table below, which also provides the weighted average grant date fair value for stock options granted in each year. Year Ended December 31, 2015 2014 2013 Number of stock options granted 142,908 175,632 245,424 Weighted average grant date fair value of stock options granted $ 11.18 $ 9.01 $ 8.25 Weighted average assumptions: Risk-free interest rate 1.7 % 1.9 % 1.0 % Expected dividend yield 2.6 % 2.5 % 2.7 % Expected life, in years 7.2 5.7 5.8 Expected volatility (based on historical volatility) 42.8 % 40.3 % 54.5 % The weighted average fair value of nonvested stock options outstanding on December 31, 2015 was $9.35. Total unrecognized compensation expense relating to the nonvested stock options outstanding as of December 31, 2015 was approximately $2,300. This amount will be recognized as expense over the remainder of the vesting period, which is scheduled to be 2016 through 2019. Expense is reflected on a straight-line basis over the vesting period for the entire award. Total unrecognized compensation expense relating to RSUs outstanding as of December 31, 2015 was approximately $6,900. This amount will be recognized as expense over the remainder of the earning and vesting period, which is scheduled to be 2016 through 2019. Expense is reflected on a straight-line basis from the date of grant through the end of the vesting period for the entire award. |
Income Taxes | Income Taxes The Company uses the asset and liability method for calculating deferred federal income taxes. Income tax provisions are generally based on income reported for financial statement purposes. The provisions for federal income taxes for the years ended December 31, 2015, 2014 and 2013 included amounts currently payable and deferred income taxes resulting from the cumulative differences in the Company's assets and liabilities, determined on a tax return versus financial statement basis. Deferred tax assets and liabilities include provisions for unrealized investment gains and losses as well as the net funded status of pension and other postretirement benefit obligations with the changes for each period included in the respective components of accumulated other comprehensive income (loss) within shareholders' equity. |
Earnings Per Share | Earnings Per Share Basic earnings per share is computed based on the weighted average number of common shares outstanding plus the weighted average number of fully vested restricted stock units and common stock units payable as shares of HMEC common stock. Diluted earnings per share is computed based on the weighted average number of common shares and common stock equivalents outstanding, to the extent dilutive. The Company’s common stock equivalents relate to outstanding common stock options, deferred compensation common stock units and incentive compensation restricted common stock units, which are described in “Note 9 Shareholders’ Equity and Common Stock Equivalents”. Year Ended December 31, 2015 2014 2013 Basic: Net income for the period $ 93,482 $ 104,243 $ 110,893 Weighted average number of common shares during the period (in thousands) 41,915 41,646 40,377 Net income per share - basic $ 2.23 $ 2.50 $ 2.75 Diluted: Net income for the period $ 93,482 $ 104,243 $ 110,893 Weighted average number of common shares during the period (in thousands) 41,915 41,646 40,377 Weighted average number of common equivalent shares to reflect the dilutive effect of common stock equivalent securities (in thousands): Stock options 158 137 211 Common stock units related to deferred compensation for employees 55 70 112 Restricted common stock units related to incentive compensation 297 378 933 Total common and common equivalent shares adjusted to calculate diluted earnings per share (in thousands) 42,425 42,231 41,633 Net income per share - diluted $ 2.20 $ 2.47 $ 2.66 Options to purchase 166,036 shares of common stock at $28.91 to $33.41 per share were granted in 2013 through 2015 but were not included in the computation of 2015 diluted earnings per share because of their anti-dilutive effect as a result of the effect of unrecognized compensation cost. The options, which expire in 2020 through 2025, were still outstanding at December 31, 2015. |
Comprehensive Income (Loss) and Accumulated Other Comprehensive Income (Loss) | Comprehensive Income (Loss) and Accumulated Other Comprehensive Income (Loss) Comprehensive income (loss) represents the change in shareholders’ equity during a reporting period from transactions and other events and circumstances from non-shareholder sources. For the Company, comprehensive income (loss) is equal to net income plus or minus the after tax change in net unrealized gains and losses on fixed maturities and equity securities and the after tax change in net funded status of pension and other postretirement benefit obligations for the period as shown in the Consolidated Statements of Changes in Shareholders' Equity. Accumulated other comprehensive income (loss) represents the accumulated change in shareholders’ equity from these transactions and other events and circumstances from non-shareholder sources as shown in the Consolidated Balance Sheets. In the Consolidated Balance Sheets, the Company recognizes the funded status of defined benefit pension plans and other postretirement benefit plans as a component of accumulated other comprehensive income (loss), net of tax. Comprehensive Income (Loss) Year Ended December 31, 2015 2014 2013 Net income $ 93,482 $ 104,243 $ 110,893 Other comprehensive income (loss): Change in net unrealized gains and losses on fixed maturities and equity securities: Net unrealized holding gains and losses on fixed maturities and equity securities arising during the period (178,035 ) 264,136 (363,350 ) Less: reclassification adjustment for net gains included in income before income tax 11,667 10,943 22,245 Total, before tax (189,702 ) 253,193 (385,595 ) Income tax expense (benefit) (67,315 ) 89,629 (137,185 ) Total, net of tax (122,387 ) 163,564 (248,410 ) Change in net funded status of pension and other postretirement benefit obligations: Before tax 1,815 (1,810 ) 5,645 Income tax expense (benefit) 656 (633 ) 2,110 Total, net of tax 1,159 (1,177 ) 3,535 Total comprehensive income (loss) $ (27,746 ) $ 266,630 $ (133,982 ) Accumulated Other Comprehensive Income (Loss) Unrealized Gains and Losses on Fixed Maturities and Equity Defined Securities (1)(2) Benefit Plans (1) Total (1) Beginning balance, January 1, 2015 $ 297,554 $ (12,953 ) $ 284,601 Other comprehensive income (loss) before reclassifications (114,803 ) 1,159 (113,644 ) Amounts reclassified from accumulated other comprehensive income (loss) (7,584 ) - (7,584 ) Net current period other comprehensive income (loss) (122,387 ) 1,159 (121,228 ) Ending balance, December 31, 2015 $ 175,167 $ (11,794 ) $ 163,373 Beginning balance, January 1, 2014 $ 133,990 $ (11,776 ) $ 122,214 Other comprehensive income (loss) before reclassifications 170,677 (1,177 ) 169,500 Amounts reclassified from accumulated other comprehensive income (loss) (7,113 ) - (7,113 ) Net current period other comprehensive income (loss) 163,564 (1,177 ) 162,387 Ending balance, December 31, 2014 $ 297,554 $ (12,953 ) $ 284,601 Beginning balance, January 1, 2013 $ 382,400 $ (15,311 ) $ 367,089 Other comprehensive income (loss) before reclassifications (233,951 ) 3,535 (230,416 ) Amounts reclassified from accumulated other comprehensive income (loss) (14,459 ) - (14,459 ) Net current period other comprehensive income (loss) (248,410 ) 3,535 (244,875 ) Ending balance, December 31, 2013 $ 133,990 $ (11,776 ) $ 122,214 (1) All amounts are net of tax. (2) The pretax amounts reclassified from accumulated other comprehensive income, $11,667, $10,943 and $22,245, are included in net realized investment gains and losses and the related tax expenses, $4,083, $3,830 and $7,786, are included in income tax expense in the Consolidated Statements of Operations for the years ended December 31, 2015, 2014 and 2013, respectively. Comparative information for elements that are not required to be reclassified in their entirety to net income in the same reporting period is located in “Note 2 Investments Unrealized Gains and Losses on Fixed Maturities and Equity Securities”. |
Statements of Cash Flows | Statements of Cash Flows For purposes of the Consolidated Statements of Cash Flows, cash constitutes cash on deposit at banks. |
Reclassification | Reclassification The Company has reclassified the presentation of certain prior period information to conform with the 2015 presentation. |
Summary of Significant Accoun29
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Deferred policy acquisition costs asset by segment | The Company’s deferred policy acquisition costs (“DAC”) asset by segment was as follows: December 31, 2015 2014 Annuity $ 178,300 $ 143,522 Life 48,191 44,400 Property and casualty 26,685 27,160 Total $ 253,176 $ 215,082 |
Adjustment to amortization expenses | The Company recorded the following adjustments to amortization expense as a result of evaluating actual experience and prospective assumptions, the impact of unlocking: Year Ended December 31, 2015 2014 2013 Increase (decrease) to amortization: Annuity $ 3,403 $ 1,224 $ (3,700 ) Life (34 ) (131 ) 126 Total $ 3,369 $ 1,093 $ (3,574 ) |
Allocation of goodwill by reporting unit | The allocation of goodwill by reporting unit is as follows: Annuity $ 28,025 Life 9,911 Property and casualty 9,460 Total $ 47,396 |
Property and Equipment | The following amounts are included in Other Assets in the Consolidated Balance Sheets: December 31, 2015 2014 Property and equipment $ 107,876 $ 108,056 Less: accumulated depreciation 82,236 77,027 Total $ 25,640 $ 31.029 |
Investment Contract And Life Policy Reserves | This table summarizes the Company’s investment contract and life policy reserves. December 31, 2015 2014 Investment contract reserves $ 4,072,102 $ 3,774,457 Life policy reserves 1,054,740 1,027,814 Total $ 5,126,842 $ 4,802,271 |
Summary of guaranteed minimum death benefit | The Company regularly monitors the GMDB reserve considering fluctuations in the financial market. The Company has a relatively low exposure to GMDB risk as shown below. December 31, 2015 2014 GMDB reserve $ 358 $ 278 Aggregate in-the-money death benefits under the GMDB provision 35,563 29,866 Variable annuity contract value distribution based on GMDB feature: No guarantee 32 % 31 % Return of premium guarantee 62 % 63 % Guarantee of premium roll-up at an annual rate of 3% or 5% 6 % 6 % Total 100 % 100 % |
Stock options fair value pricing model weighted-average assumptions | The fair value of stock options granted was estimated on the respective dates of grant using the Black-Scholes option pricing model with the weighted average assumptions shown in the following table. Year Ended December 31, 2015 2014 2013 Number of stock options granted 142,908 175,632 245,424 Weighted average grant date fair value of stock options granted $ 11.18 $ 9.01 $ 8.25 Weighted average assumptions: Risk-free interest rate 1.7 % 1.9 % 1.0 % Expected dividend yield 2.6 % 2.5 % 2.7 % Expected life, in years 7.2 5.7 5.8 Expected volatility (based on historical volatility) 42.8 % 40.3 % 54.5 % |
Computations of net income per share on both basic and diluted bases, including reconciliations of the numerators and denominators | The computations of net income per share on both basic and diluted bases, including reconciliations of the numerators and denominators, were as follows: Year Ended December 31, 2015 2014 2013 Basic: Net income for the period $ 93,482 $ 104,243 $ 110,893 Weighted average number of common shares during the period (in thousands) 41,915 41,646 40,377 Net income per share - basic $ 2.23 $ 2.50 $ 2.75 Diluted: Net income for the period $ 93,482 $ 104,243 $ 110,893 Weighted average number of common shares during the period (in thousands) 41,915 41,646 40,377 Weighted average number of common equivalent shares to reflect the dilutive effect of common stock equivalent securities (in thousands): Stock options 158 137 211 Common stock units related to deferred compensation for employees 55 70 112 Restricted common stock units related to incentive compensation 297 378 933 Total common and common equivalent shares adjusted to calculate diluted earnings per share (in thousands) 42,425 42,231 41,633 Net income per share - diluted $ 2.20 $ 2.47 $ 2.66 |
Components of comprehensive income | The components of comprehensive income (loss) were as follows: Year Ended December 31, 2015 2014 2013 Net income $ 93,482 $ 104,243 $ 110,893 Other comprehensive income (loss): Change in net unrealized gains and losses on fixed maturities and equity securities: Net unrealized holding gains and losses on fixed maturities and equity securities arising during the period (178,035 ) 264,136 (363,350 ) Less: reclassification adjustment for net gains included in income before income tax 11,667 10,943 22,245 Total, before tax (189,702 ) 253,193 (385,595 ) Income tax expense (benefit) (67,315 ) 89,629 (137,185 ) Total, net of tax (122,387 ) 163,564 (248,410 ) Change in net funded status of pension and other postretirement benefit obligations: Before tax 1,815 (1,810 ) 5,645 Income tax expense (benefit) 656 (633 ) 2,110 Total, net of tax 1,159 (1,177 ) 3,535 Total comprehensive income (loss) $ (27,746 ) $ 266,630 $ (133,982 ) |
Accumulated Other Comprehensive Income (Loss) | The following table reconciles the components of accumulated other comprehensive income (loss) for the periods indicated. Unrealized Gains and Losses on Fixed Maturities and Equity Defined Securities (1)(2) Benefit Plans (1) Total (1) Beginning balance, January 1, 2015 $ 297,554 $ (12,953 ) $ 284,601 Other comprehensive income (loss) before reclassifications (114,803 ) 1,159 (113,644 ) Amounts reclassified from accumulated other comprehensive income (loss) (7,584 ) - (7,584 ) Net current period other comprehensive income (loss) (122,387 ) 1,159 (121,228 ) Ending balance, December 31, 2015 $ 175,167 $ (11,794 ) $ 163,373 Beginning balance, January 1, 2014 $ 133,990 $ (11,776 ) $ 122,214 Other comprehensive income (loss) before reclassifications 170,677 (1,177 ) 169,500 Amounts reclassified from accumulated other comprehensive income (loss) (7,113 ) - (7,113 ) Net current period other comprehensive income (loss) 163,564 (1,177 ) 162,387 Ending balance, December 31, 2014 $ 297,554 $ (12,953 ) $ 284,601 Beginning balance, January 1, 2013 $ 382,400 $ (15,311 ) $ 367,089 Other comprehensive income (loss) before reclassifications (233,951 ) 3,535 (230,416 ) Amounts reclassified from accumulated other comprehensive income (loss) (14,459 ) - (14,459 ) Net current period other comprehensive income (loss) (248,410 ) 3,535 (244,875 ) Ending balance, December 31, 2013 $ 133,990 $ (11,776 ) $ 122,214 (1) All amounts are net of tax. (2) The pretax amounts reclassified from accumulated other comprehensive income, $11,667, $10,943 and $22,245, are included in net realized investment gains and losses and the related tax expenses, $4,083, $3,830 and $7,786, are included in income tax expense in the Consolidated Statements of Operations for the years ended December 31, 2015, 2014 and 2013, respectively. |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Investments, Debt and Equity Securities [Abstract] | |
Components of net investment income | The components of net investment income for the following periods were: Year Ended December 31, 2015 2014 2013 Fixed maturities $ 326,207 $ 317,756 $ 304,024 Equity securities 4,355 4,849 3,698 Short-term and other investments 9,187 8,459 8,242 Other invested assets (equity method investments) 1,984 7,229 5,902 Total investment income 341,733 338,293 321,866 Investment expenses (9,133 ) (8,478 ) (8,256 ) Net investment income $ 332,600 $ 329,815 $ 313,610 |
Summary of realized investment gains (losses) | Net realized investment gains (losses) for the following periods were: Year Ended December 31, 2015 2014 2013 Fixed maturities $ 10,289 $ 8,150 $ 18,480 Equity securities 1,378 2,793 3,765 Short-term investments and other 1,046 (26 ) - Net realized investment gains $ 12,713 $ 10,917 $ 22,245 |
Unrealized gains and losses on fixed maturities and equity securities | The amortized cost or cost, unrealized investment gains and losses, fair values and other-than-temporary impairment (“OTTI”) included in accumulated other comprehensive income (loss) (“AOCI”) of all fixed maturities and equity securities in the portfolio were as follows: Amortized Unrealized Unrealized Fair OTTI in Cost/Cost Gains Losses Value AOCI (1) December 31, 2015 Fixed maturity securities U.S. Government and federally sponsored agency obligations (2): Mortgage-backed securities $ 461,862 $ 44,413 $ 1,861 $ 504,414 $ - Other, including U.S. Treasury securities 532,373 21,153 7,415 546,111 - Municipal bonds 1,553,603 165,680 10,340 1,708,943 (4,140 ) Foreign government bonds 67,441 6,288 112 73,617 - Corporate bonds 2,687,376 140,873 48,834 2,779,415 - Other mortgage-backed securities 1,482,971 16,830 20,961 1,478,840 1,382 Totals $ 6,785,626 $ 395,237 $ 89,523 $ 7,091,340 $ (2,758 ) Equity securities (3) $ 95,722 $ 8,405 $ 4,330 $ 99,797 $ - December 31, 2014 Fixed maturity securities U.S. Government and federally sponsored agency obligations (2): Mortgage-backed securities $ 484,561 $ 52,555 $ 1,390 $ 535,726 $ - Other, including U.S. Treasury securities 512,596 28,652 3,049 538,199 - Municipal bonds 1,462,717 189,533 4,428 1,647,822 - Foreign government bonds 52,552 6,984 - 59,536 - Corporate bonds 2,608,633 237,372 11,256 2,834,749 - Other mortgage-backed securities 1,254,178 28,772 5,892 1,277,058 2,879 Totals $ 6,375,237 $ 543,868 $ 26,015 $ 6,893,090 $ 2,879 Equity securities (3) $ 99,904 $ 14,159 $ 3,408 $ 110,655 $ - (1) Related to securities for which an unrealized loss was bifurcated to distinguish the credit-related portion and the portion driven by other market factors. Represents the amount of other-than-temporary impairment losses in AOCI which was not included in earnings; amounts also include unrealized gains/(losses) on such impaired securities relating to changes in the fair value of those securities subsequent to the impairment measurement date. (2) Fair value includes securities issued by Federal National Mortgage Association (“FNMA”) of $231,294 and $302,222; Federal Home Loan Mortgage Corporation (“FHLMC”) of $363,957 and $432,432; and Government National Mortgage Association (“GNMA”) of $130,940 and $137,867 as of December 31, 2015 and 2014, respectively. (3) Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds. |
Summary of fair value and gross unrealized losses of fixed maturity securities and equity securities in an unrealized loss position | For equity securities, the Company has the ability and intent to hold the securities for the recovery of cost and recovery of cost is expected within a reasonable period of time. Therefore, no impairment of these securities was recorded at December 31, 2015. 12 months or less More than 12 months Total Gross Gross Gross Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses December 31, 2015 Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 48,097 $ 1,748 $ 1,595 $ 113 $ 49,692 $ 1,861 Other 248,478 7,338 1,921 77 250,399 7,415 Municipal bonds 168,939 5,382 21,717 4,958 190,656 10,340 Foreign government bonds 11,867 112 - - 11,867 112 Corporate bonds 858,647 37,244 50,340 11,590 908,987 48,834 Other mortgage-backed securities 929,268 19,165 140,561 1,796 1,069,829 20,961 Total fixed maturity securities 2,265,296 70,989 216,134 18,534 2,481,430 89,523 Equity securities (1) 38,764 3,022 8,379 1,308 47,143 4,330 Combined totals $ 2,304,060 $ 74,011 $ 224,513 $ 19,842 $ 2,528,573 $ 93,853 Number of positions with a gross unrealized loss 684 78 762 Fair value as a percentage of total fixed maturities and equity securities fair value 32.0 % 3.1 % 35.1 % December 31, 2014 Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 2 $ - $ 39,809 $ 1,390 $ 39,811 $ 1,390 Other 10,317 34 117,615 3,015 127,932 3,049 Municipal bonds 31,821 200 59,715 4,228 91,536 4,428 Foreign government bonds - - - - - - Corporate bonds 213,612 6,883 76,099 4,373 289,711 11,256 Other mortgage-backed securities 477,877 4,797 88,663 1,095 566,540 5,892 Total fixed maturity securities 733,629 11,914 381,901 14,101 1,115,530 26,015 Equity securities (1) 12,955 2,568 6,635 840 19,590 3,408 Combined totals $ 746,584 $ 14,482 $ 388,536 $ 14,941 $ 1,135,120 $ 29,423 Number of positions with a gross unrealized loss 234 112 346 Fair value as a percentage of total fixed maturities and equity securities fair value 10.7 % 5.5 % 16.2 % (1) Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds. |
Summary of cumulative credit losses | The following table summarizes the cumulative amounts related to the Company’s credit loss component of the other-than-temporary impairment losses on fixed maturity securities held as of December 31, 2015 and 2014 that the Company did not intend to sell as of those dates, and it was not more likely than not that the Company would be required to sell the securities before the anticipated recovery of the amortized cost bases, for which the non-credit portions of the other-than-temporary impairment losses were recognized in other comprehensive income (loss): Year Ended December 31, 2015 2014 Cumulative credit loss (1) Beginning of period $ 2,877 $ 4,097 New credit losses 4,967 280 Losses related to securities sold or paid down during the period - (1,500 ) End of period $ 7,844 $ 2,877 (1) The cumulative credit loss amounts exclude other-than-temporary impairment losses on securities held as of the periods indicated that the Company intended to sell or it was more likely than not that the Company would be required to sell the security before the recovery of the amortized cost basis. |
Distribution of the Company's fixed maturity portfolio by estimated expected maturity | The following table presents the distribution of the Company’s fixed maturity securities portfolio by estimated expected maturity. Estimated expected maturities differ from contractual maturities, reflecting assumptions regarding borrowers' utilization of the right to call or prepay obligations with or without call or prepayment penalties. For structured securities, including mortgage-backed securities and other asset-backed securities, estimated expected maturities consider broker-dealer survey prepayment assumptions and are verified for consistency with the interest rate and economic environments. December 31, 2015 Percent of Amortized Fair Total Fair Cost Value Value Estimated expected maturity: Due in 1 year or less $ 210,171 $ 219,639 3.1 % Due after 1 year through 5 years 1,641,139 1,715,078 24.2 Due after 5 years through 10 years 2,688,583 2,809,712 39.6 Due after 10 years through 20 years 1,420,578 1,484,580 20.9 Due after 20 years 825,155 862,331 12.2 Total $ 6,785,626 $ 7,091,340 100.0 % Average option-adjusted duration, in years 5.8 |
Proceeds received from sales of fixed maturities and equity securities | Proceeds received from sales of fixed maturities and equity securities, each determined using the specific identification method, and gross gains and gross losses realized as a result of those sales for each year were: Year Ended December 31, 2015 2014 2013 Fixed maturity securities Proceeds received $ 445,100 $ 261,696 $ 298,045 Gross gains realized 22,476 13,224 17,177 Gross losses realized (5,487 ) (6,325 ) (4,945 ) Equity securities Proceeds received $ 31,621 $ 17,194 $ 18,643 Gross gains realized 6,604 3,206 4,368 Gross losses realized (672 ) (482 ) (616 ) |
Reconciliation of net unrealized investment gains (losses) on fixed maturity securities and equity securities | The following table reconciles the net unrealized investment gains and losses, net of tax, included in accumulated other comprehensive income (loss), before the impact on deferred policy acquisition costs: Year Ended December 31, 2015 2014 2013 Net unrealized investment gains (losses) on fixed maturity securities, net of tax Beginning of period $ 336,604 $ 146,489 $ 423,004 Change in unrealized investment gains and losses (131,202 ) 195,413 (264,503 ) Reclassification of net realized investment (gains) losses to net income (6,688 ) (5,298 ) (12,012 ) End of period $ 198,714 $ 336,604 $ 146,489 Net unrealized investment gains (losses) on equity securities, net of tax Beginning of period $ 6,988 $ 4,618 $ 720 Change in unrealized investment gains and losses (3,443 ) 4,185 6,345 Reclassification of net realized investment (gains) losses to net income (896 ) (1,815 ) (2,447 ) End of period $ 2,649 $ 6,988 $ 4,618 |
Offsetting assets and liability | The following table presents the instruments that were subject to a master netting arrangement for the Company. Net Amounts of Assets/ Gross Liabilities Gross Amounts Not Offset Amounts Presented in the Consolidated Offset in the in the Balance Sheets Consolidated Consolidated Cash Gross Balance Balance Financial Collateral Net Amounts Sheets Sheets Instruments Received Amount December 31, 2015 Asset derivatives Free-standing derivatives $ 2,501 $ - $ 2,501 $ - $ 2,617 $ (116) December 31, 2014 Asset derivatives Free-standing derivatives 2,458 - 2,458 - 1,955 503 |
Fair Value of Financial Instr31
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
Summary of Company's fair value hierarchy measured at recurring basis | The following table presents the Company’s fair value hierarchy for those assets and liabilities measured and carried at fair value on a recurring basis. At December 31, 2015, these Level 3 invested assets comprised approximately 2.3% of the Company’s total investment portfolio fair value. Fair Value Measurements at Carrying Fair Reporting Date Using Amount Value Level 1 Level 2 Level 3 December 31, 2015 Financial Assets Investments Fixed maturities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 504,414 $ 504,414 $ - $ 504,414 $ - Other, including U.S. Treasury securities 546,111 546,111 14,258 531,853 - Municipal bonds 1,708,943 1,708,943 - 1,678,564 30,379 Foreign government bonds 73,617 73,617 - 73,617 - Corporate bonds 2,779,415 2,779,415 10,195 2,701,645 67,575 Other mortgage-backed securities 1,478,840 1,478,840 - 1,403,374 75,466 Total fixed maturities 7,091,340 7,091,340 24,453 6,893,467 173,420 Equity securities 99,797 99,797 86,088 13,703 6 Short-term investments 174,152 174,152 169,764 4,388 - Other investments 14,001 14,001 - 14,001 - Totals 7,379,290 7,379,290 280,305 6,925,559 173,426 Separate Account (variable annuity) assets (1) 1,800,722 1,800,722 1,800,722 - - Financial Liabilities Investment contract and life policy reserves, embedded derivatives 14 14 - 14 - Other policyholder funds, embedded derivatives 39,021 39,021 - - 39,021 December 31, 2014 Financial Assets Investments Fixed maturities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 535,726 $ 535,726 $ - $ 535,726 $ - Other, including U.S. Treasury securities 538,199 538,199 17,857 520,342 - Municipal bonds 1,647,822 1,647,822 - 1,634,194 13,628 Foreign government bonds 59,536 59,536 - 59,536 - Corporate bonds 2,834,749 2,834,749 10,524 2,749,508 74,717 Other mortgage-backed securities 1,277,058 1,277,058 - 1,194,109 82,949 Total fixed maturities 6,893,090 6,893,090 28,381 6,693,415 171,294 Equity securities 110,655 110,655 92,140 18,509 6 Short-term investments 142,039 142,039 142,039 - - Other investments 12,458 12,458 - 12,458 - Totals 7,158,242 7,158,242 262,560 6,724,382 171,300 Separate Account (variable annuity) assets (1) 1,813,557 1,813,557 1,813,557 - - Financial Liabilities Investment contract and life policy reserves, embedded derivatives - - - - - Other policyholder funds, embedded derivatives 20,049 20,049 - - 20,049 (1) Separate Account (variable annuity) liabilities are set equal to Separate Account (variable annuity) assets. |
Table for reconciliations for all Level 3 assets measured at fair value on a recurring basis | The following tables present reconciliations for the periods indicated for all Level 3 assets and liabilities measured at fair value on a recurring basis. Financial Financial Assets Liabilities(1) Municipal Bonds Corporate Bonds Other Mortgage- Backed Securities Total Fixed Maturities Equity Securities Total Beginning balance, January 1, 2015 $ 13,628 $ 74,717 $ 82,949 $ 171,294 $ 6 $ 171,300 $ 20,049 Transfers into Level 3 (2) 16,326 5,729 15,685 37,740 - 37,740 - Transfers out of Level 3 (2) - (1,351 ) (9,663 ) (11,014 ) - (11,014 ) - Total gains or losses Net realized gains (losses) included in net income related to financial assets - 1,087 - 1,087 (3 ) 1,084 - Net realized (gains) losses included in net income related to financial liabilities - - - - - - (2,528 ) Net unrealized gains (losses) included in other comprehensive income 782 (1,935 ) (854 ) (2,007 ) 4 (2,003 ) - Purchases - - - - - - - Issuances - - - - - - 23,595 Sales - (476 ) - (476 ) (1 ) (477 ) - Settlements - - - - - - - Paydowns, maturities and distributions (357 ) (10,196 ) (12,651 ) (23,204 ) - (23,204 ) (2,095 ) Ending balance, December 31, 2015 $ 30,379 $ 67,575 $ 75,466 $ 173,420 $ 6 $ 173,426 $ 39,021 Beginning balance, January 1, 2014 $ 2,694 $ 60,826 $ 46,009 $ 109,529 $ 6 $ 109,535 $ - Transfers into Level 3 (2) 10,056 20,649 42,108 72,813 - 72,813 - Transfers out of Level 3 (2) - (3,510 ) (519 ) (4,029 ) - (4,029 ) - Total gains or losses Net realized gains (losses) included in net income related to financial assets - - (26 ) (26 ) - (26 ) - Net realized (gains) losses included in net income related to financial liabilities - - - - - - 1,157 Net unrealized gains (losses) included in other comprehensive income 1,191 3,611 118 4,920 - 4,920 - Purchases - - - - - - - Issuances - - - - - - 19,338 Sales - - - - - - - Settlements - - - - - - - Paydowns, maturities and distributions (313 ) (6,859 ) (4,741 ) (11,913 ) - (11,913 ) (446 ) Ending balance, December 31, 2014 $ 13,628 $ 74,717 $ 82,949 $ 171,294 $ 6 $ 171,300 $ 20,049 (1) Represents embedded derivatives, all related to the Company’s FIA products, reported in Other Policyholder Funds in the Company’s Consolidated Balance Sheets. ( 2) Transfers into and out of Level 3 during the years ended December 31, 2015 and 2014 were attributable to changes in the availability of observable market information for individual fixed maturity securities. The Company’s policy is to recognize transfers into and transfers out of the levels as having occurred at the end of the reporting period in which the transfers were determined. |
Carrying value, fair value and fair value hierarchy of financial assets and financial liabilities | The following table presents the carrying value, fair value and fair value hierarchy of these financial assets and financial liabilities. Fair Value Measurements at Carrying Fair Reporting Date Using Amount Value Level 1 Level 2 Level 3 December 31, 2015 Financial Assets Investments Other investments $ 148,759 $ 153,228 $ - $ - $ 153,228 Financial Liabilities Investment contract and life policy reserves, fixed annuity contracts 4,072,102 4,049,840 - - 4,049,840 Investment contract and life policy reserves, account values on life contracts 77,429 81,360 - - 81,360 Other policyholder funds 653,631 653,631 - 575,104 78,527 Short-term debt - - - - - Long-term debt 249,346 252,700 252,700 - - December 31, 2014 Financial Assets Investments Other investments $ 145,409 $ 149,792 $ - $ - $ 149,792 Financial Liabilities Investment contract and life policy reserves, fixed annuity contracts 3,774,457 3,691,123 - - 3,691,123 Investment contract and life policy reserves, account values on life contracts 77,415 81,461 - - 81,461 Other policyholder funds 586,689 586,689 - 500,080 86,609 Short-term debt 38,000 38,000 - 38,000 - Long-term debt 199,939 209,495 209,495 - - |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The fair values of derivative instruments, including derivative instruments embedded in FIA and IUL contracts, presented in the Consolidated Balance Sheets were as follows: December 31, 2015 2014 Assets Derivative instruments, included in Short-term and Other Investments $ 2,501 $ 2,458 Liabilities Fixed indexed annuities - embedded derivatives, included in Other Policyholder Funds 39,021 20,049 Indexed universal life - embedded derivatives, included in Investment Contract and Life Policy Reserves 14 - |
Derivative Instruments, Gain (Loss) | The changes in fair value of derivatives included in the Consolidated Statements of Operations were as follows: Year Ended December 31, 2015 2014 2013 Change in fair value of derivatives (1): Revenues Net realized investment gains (losses) $ (1,483 ) $ 995 $ - Change in fair value of embedded derivatives: Revenues Net realized investment gains (losses) 2,529 (1,157 ) - (1) Includes the gains or losses recognized at the expiration of the option term or early termination and the changes in fair value for open options. |
Financing Receivable Credit Quality Indicators | The notional amount and fair value of call options by counterparty and each counterparty's long-term credit ratings were as follows: December 31, 2015 December 31, 2014 Credit Rating (1) Notional Fair Notional Fair Counterparty S&P Moody’s Amount Value Amount Value Bank of America, N.A. A+ A1 $ 17,000 $ 5 $ 8,700 $ 439 Barclays Bank PLC A- A2 7,600 137 5,000 70 Citigroup Inc. BBB+ Baa1 17,300 845 - - Credit Suisse International A A1- 12,000 167 27,500 1,193 Societe Generale A A2 80,800 1,347 25,400 756 Total $ 134,700 $ 2,501 $ 66,600 $ 2,458 (1) As assigned by Standard & Poor’s Corporation (“S&P”) and Moody’s Investors Service, Inc. (“Moody’s”). |
Property and Casualty Unpaid 33
Property and Casualty Unpaid Claims and Claim Expenses (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Insurance Loss Reserves [Abstract] | |
Reconciliation of property and casualty unpaid claims and claim expenses | The end of the year gross reserve (before reinsurance) balances and the reinsurance recoverable balances are reflected on a gross basis in the Consolidated Balance Sheets. Year Ended December 31, 2015 2014 2013 Property and casualty segment Gross reserves, beginning of year (1) $ 311,097 $ 275,809 $ 274,542 Less: reinsurance recoverables 43,740 14,107 13,705 Net reserves, beginning of year (2) 267,357 261,702 260,837 Incurred claims and claim expenses: Claims occurring in the current year 432,811 416,512 403,589 Decrease in estimated reserves for claims occurring in prior years (3) (12,500 ) (17,000 ) (17,988 ) Total claims and claim expenses incurred (4) 420,311 399,512 385,601 Claims and claim expense payments for claims occurring during: Current year 294,449 273,699 265,831 Prior years 141,982 120,158 118,905 Total claims and claim expense payments 436,431 393,857 384,736 Net reserves, end of year (2) 251,237 267,357 261,702 Plus: reinsurance recoverables 50,332 43,740 14,107 Gross reserves, end of year (1) $ 301,569 $ 311,097 $ 275,809 (1) Unpaid Claims and Claim Expenses as reported in the Consolidated Balance Sheets also include reserves for the life and annuity segments of $22,151, $14,687, $15,818 and $14,853 as of December 31, 2015, 2014, 2013 and 2012, respectively, in addition to property and casualty segment reserves. (2) Reserves net of anticipated reinsurance recoverables. (3) Shows the amounts by which the Company decreased its reserves in each of the periods indicated for claims occurring in previous periods to reflect subsequent information on such claims and changes in their projected final settlement costs. Also refer to the paragraphs below for additional information regarding the reserve development recorded in 2015, 2014 and 2013. (4) Benefits, claims and settlement expenses as reported in the Consolidated Statements of Operations also include amounts for the life and annuity segments of $76,053, $68,914 and $62,716 for the years ended December 31, 2015, 2014 and 2013, respectively, in addition to the property and casualty segment amounts. |
Reinsurance and Catastrophes (T
Reinsurance and Catastrophes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Insurance [Abstract] | |
Summary of reinsurance recoverable on unpaid insurance reserves | The total amounts of reinsurance recoverable on unpaid insurance reserves classified as assets and reported in Other Assets in the Consolidated Balance Sheets were as follows: December 31, 2015 2014 Reinsurance recoverables on reserves and unpaid claims Property and casualty Reinsurance companies $ 9,026 $ 7,772 State insurance facilities 41,306 35,968 Life and health 9,780 9,592 Total $ 60,112 $ 53,332 |
Effects of reinsurance on premiums and benefits | The effects of reinsurance on premiums written and contract deposits; premiums and contract charges earned; and benefits, claims and settlement expenses were as follows: Ceded to Assumed Gross Other from Other Net Amount Companies Companies Amount Year ended December 31, 2015 Premiums written and contract deposits $ 1,277,066 $24,737 $4,184 $ 1,256,513 Premiums and contract charges earned 752,798 25,077 4,159 731,880 Benefits, claims and settlement expenses 508,904 16,221 3,681 496,364 Year ended December 31, 2014 Premiums written and contract deposits 1,191,123 27,144 3,676 1,167,655 Premiums and contract charges earned 739,281 27,276 3,755 715,760 Benefits, claims and settlement expenses 504,550 39,236 3,112 468,426 Year ended December 31, 2013 Premiums written and contract deposits 1,120,852 30,115 3,456 1,094,193 Premiums and contract charges earned 717,494 29,990 3,434 690,938 Benefits, claims and settlement expenses 455,298 10,018 3,037 448,317 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Summary of Indebtedness outstanding | Indebtedness and scheduled maturities consisted of the following: Effective Interest Final December 31, Rates Maturity 2015 2014 Short-term debt Bank Credit Facility Variable 2019 $ - $ 38,000 Long-term debt, current and noncurrent (1) 4.50% Senior Notes, Aggregate principal amount of 4.5% 2025 249,346 - 6.05% Senior Notes, Aggregate principal amount of 6.1% 2015 - 74,989 6.85% Senior Notes, Aggregate principal amount of 6.9% 2016 - 124,950 Total $ 249,346 $ 237,939 (1) The Company designates debt obligations as “long-term” based on maturity date at issuance. |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Summary of income tax assets and liabilities | The income tax assets and liabilities included in Other Assets and Other Liabilities, respectively, in the Consolidated Balance Sheets were as follows: December 31, 2015 2014 Income tax (asset) liability Current $ 1,000 $ (1,195 ) Deferred 201,208 261,784 |
Summary of deferred tax assets and liabilities | The “temporary differences” that gave rise to the deferred tax balances were as follows: December 31, 2015 2014 Deferred tax assets Unearned premium reserve reduction $ 17,402 $ 15,721 Compensation accruals 13,737 14,765 Impaired securities 7,635 3,327 Other comprehensive income - net funded status of pension and other postretirement benefit obligations 6,375 7,009 Discounting of unpaid claims and claim expense tax reserves 3,213 4,090 Postretirement benefits other than pensions 664 870 Other, net 1,189 - Total gross deferred tax assets 50,215 45,782 Deferred tax liabilities Other comprehensive income - net unrealized gains on fixed maturities and equity securities 112,934 185,011 Deferred policy acquisition costs 85,341 70,796 Life insurance future policy benefit reserve 30,177 25,914 Investment related adjustments 18,709 20,064 Intangible assets 4,262 4,262 Other, net - 1,519 Total gross deferred tax liabilities 251,423 307,566 Net deferred tax liability $ 201,208 $ 261,784 |
Income Taxes Expenses | The components of income tax expense were as follows: Year Ended December 31, 2015 2014 2013 Current $ 29,885 $ 32,295 $ 31,610 Deferred 6,085 9,575 11,563 Total income tax expense $ 35,970 $ 41,870 $ 43,173 |
Income Taxes Expenses Reconciliation | Income tax expense for the following periods differed from the expected tax computed by applying the federal corporate tax rate of 35% to income before income taxes as follows: Ye ar Ended December 31, 2015 2014 2013 Expected federal tax on income $ 45,308 $ 51,140 $ 53,923 Add (deduct) tax effects of: Tax-exempt interest (6,678 ) (6,849 ) (6,829 ) Dividend received deduction (3,564 ) (3,566 ) (3,382 ) Other, net 904 1,145 (539 ) Income tax expense provided on income $ 35,970 $ 41,870 $ 43,173 |
Unrecognized tax benefits, excluding interest and penalties | A reconciliation of the beginning and ending amounts of unrecognized tax benefits, excluding interest and penalties, is as follows: Yea r Ended December 31, 2015 2014 2013 Balance as of the beginning of the year $ 656 $ 641 $ - Additions based on tax positions related to the current year 398 259 641 Settlements in tax positions for prior years (15 ) (244 ) - Balance as of the end of the year $ 1,039 $ 656 $ 641 |
Shareholders' Equity and Comm37
Shareholders' Equity and Common Stock Equivalents (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Shareholders Equity And Stock Options [Abstract] | |
Summary of stock units and stock options outstanding under the Comprehensive Plan | As further described in the paragraphs below, outstanding stock units and stock options under the Comprehensive Plan were as follows: December 31, 2015 2014 2013 Common stock units related to deferred compensation for Directors 85,200 87,993 118,062 Common stock units related to deferred compensation for employees 55,443 69,598 111,981 Stock options 669,693 634,437 956,814 Restricted common stock units related to incentive compensation 1,442,325 1,590,138 1,663,190 Total 2,252,661 2,382,166 2,850,047 |
Summary of changes in outstanding options | Changes in outstanding options were as follows: Weighted Average Range of Options Option Price Option Prices Vested and per Share per Share Outstanding Exercisable December 31, 2014 $ 21.22 $ 6.91-$30.24 634,437 208,578 Granted $ 32.44 $32.35-$33.41 142,908 - Vested $ 21.23 $13.83-$30.24 - 158,586 Exercised $ 17.71 $13.83-$28.88 (85,532 ) (85,532 ) Forfeited $ 23.10 $17.01-$28.88 (22,120 ) - Expired - - - - December 31, 2015 $ 24.00 $ 6.91-$33.41 669,693 281,632 |
Summary of options outstanding segregated by ranges of exercise prices | Option information segregated by ranges of exercise prices was as follows: December 31, 2015 Total Outstanding Options Vested and Exercisable Options Weighted Weighted Weighted Weighted Range of Average Average Average Average Option Prices Option Price Remaining Option Price Remaining per Share Options per Share Term Options per Share Term $ 6.91-$17.01 103,368 $16.14 1.9 years 103,368 $16.14 1.9 years $17.32-$22.69 257,921 $19.32 3.7 years 139,216 $18.98 3.6 years $28.88-$33.41 308,404 $30.54 8.6 years 39,048 $28.94 8.1 years Total $ 6.91-$33.41 669,693 $24.00 5.7 years 281,632 $19.32 3.6 years |
Summary of changes in outstanding restricted common stock units | Changes in outstanding restricted common stock units were as follows: Total Outstanding Units Vested Units Weighted Average Weighted Average Grant Date Fair Grant Date Fair Units Value per Unit Units Value per Unit December 31, 2014 1,590,138 $21.34 853,054 $14.36 Granted (1) 225,180 $34.42 - - Vested - - 303,057 $19.39 Forfeited (66,794 ) $25.60 - - Distributed (2) (306,199 ) $16.13 (306,199 ) $16.13 December 31, 2015 1,442,325 $24.29 849,912 $15.51 (1) Includes dividends reinvested into additional restricted common stock units. (2) Includes distributed units which were utilized to satisfy withholding taxes due on the distribution. |
Statutory Information and Res38
Statutory Information and Restrictions (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Insurance [Abstract] | |
Statutory surplus and subsidiary dividend restrictions | Reconciliations of statutory capital and surplus and net income, as determined using statutory accounting principles, to the amounts included in the accompanying consolidated financial statements are as follows: December 31, 2015 2014 Statutory capital and surplus of insurance subsidiaries $ 883,870 $ 861,421 Increase (decrease) due to: Deferred policy acquisition costs 253,176 215,082 Difference in policyholder reserves 95,536 87,345 Goodwill 47,396 47,396 Investment fair value adjustments on fixed maturities 314,705 519,593 Difference in investment reserves 120,795 118,633 Federal income tax liability (224,492 ) (290,034 ) Net funded status of pension and other postretirement benefit obligations (18,213 ) (20,027 ) Non-admitted assets and other, net 21,691 18,528 Shareholders' equity of parent company and non-insurance subsidiaries 19,543 16,465 Parent company short-term and long-term debt (249,346 ) (237,939 ) Shareholders' equity as reported herein $ 1,264,661 $ 1,336,463 Year Ended December 31, 2015 2014 2013 Statutory net income of insurance subsidiaries $ 87,619 $ 97,875 $ 98,905 Net loss of non-insurance companies (4,474 ) (3,906 ) (4,583 ) Interest expense (13,122 ) (14,198 ) (14,236 ) Debt retirement costs (2,338 ) - - Tax benefit of interest expense and other parent company current tax adjustments 6,829 6,371 6,030 Combined net income 74,514 86,142 86,116 Increase (decrease) due to: Deferred policy acquisition costs 13,249 16,828 17,177 Policyholder benefits 14,065 15,284 19,038 Federal income tax expense (6,678 ) (10,548 ) (12,735 ) Investment reserves 7,339 3,574 6,818 Other adjustments, net (9,007 ) (7,037 ) (5,521 ) Net income as reported herein $ 93,482 $ 104,243 $ 110,893 |
Pension Plans and Other Postr39
Pension Plans and Other Postretirement Benefits (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Defined Benefit Plan Disclosure [Line Items] | |
Summary of contributions to qualified defined contribution plan, 401(k), non-qualified defined contribution plan and total assets of the plans | Contributions to employees' accounts under the qualified defined contribution plan, the 401(k) plan and the non-qualified defined contribution plan, as well as total assets of the plans, were as follows: Year Ended December 31, 2015 2014 2013 401(k) plan Contributions to employees’ accounts $ 6,466 $ 2,753 $ 2,781 Total assets at the end of the year 161,956 132,053 134,897 Qualified defined contribution plan Contributions to employees’ accounts - 4,580 4,616 Total assets at the end of the year 9,088 123,008 135,097 Non-qualified defined contribution plan Contributions to employees’ accounts 122 74 110 Total assets at the end of the year - - - |
Defined benefit plan and the supplemental defined benefit plans | The change in the Company’s AOCI for the defined benefit plans for the year ended December 31, 2013 was primarily attributable to the performance of the plan assets and an increase in the discount rate, which was partially offset by a change in the mortality assumption. Supplemental Defined Benefit Plan Defined Benefit Plans Year Ended December 31, Year Ended December 31, 2015 2014 2013 2015 2014 2013 Components of net periodic pension (income) expense: Service cost: Benefit accrual $ - $ - $ - $ - $ - $ - Other expenses 450 360 360 - - - Interest cost 1,189 1,679 1,369 654 716 616 Expected return on plan assets (1,875 ) (2,402 ) (2,238 ) - - - Settlement loss - 2,668 867 - - - Amortization of: Prior service cost - - - - - 124 Actuarial loss 1,626 1,371 1,602 273 157 203 Net periodic pension expense $ 1,390 $ 3,676 $ 1,960 $ 927 $ 873 $ 943 Changes in plan assets and benefit obligations included in other comprehensive income (loss): Prior service cost $ - $ - $ - $ - $ - $ - Net actuarial loss (gain) 930 (1,037 ) (1,888 ) (845 ) 2,431 (783 ) Amortization of: Prior service cost - - - - (2 ) (124 ) Actuarial loss (1,626 ) (1,371 ) (1,602 ) (273 ) (157 ) (203 ) Total recognized in other comprehensive income (loss) $ (696 ) $ (2,408 ) $ (3,490 ) $ (1,118 ) $ 2,272 $ (1,110 ) Weighted average assumptions used to determine expense: Discount rate 3.66 % 4.46 % 3.51 % 3.66 % 4.46 % 3.51 % Expected return on plan assets 6.75 % 7.50 % 7.50 % * * * Annual rate of salary increase * * * * * * Weighted average assumptions used to determine benefit obligations as of December 31: Discount rate 4.20 % 3.66 % 4.46 % 4.20 % 3.66 % 4.46 % Expected return on plan assets 6.75 % 7.50 % 7.50 % * * * Annual rate of salary increase * * * * * * * Not applicable. |
Fair value hierarchy for the Company's defined benefit pension plan assets | Fair values of the equity security funds and fixed income funds have been determined from public quotations. The following table presents the fair value hierarchy for the Company’s defined benefit pension plan assets, excluding cash held. Fair Value Measurements at Reporting Date Using Total Level 1 Level 2 Level 3 December 31, 2015 Asset category Equity security funds (1) United States $ 10,844 $ - $ 10,844 $ - International 2,681 - 2,681 - Fixed income funds 13,720 - 13,720 - Total $ 27,245 $ - $ 27,245 $ - December 31, 2014 Asset category Equity security funds (1) United States $ 12,718 $ - $ 12,718 $ - International 2,790 - 2,790 - Fixed income funds 15,591 - 15,591 - Total $ 31,099 $ - $ 31,099 $ - (1) None of the trust fund assets for the defined benefit pension plan have been invested in shares of HMEC’s common stock. |
Summary of change in accumulated postretirement benefit obligations | A one percentage point change in the assumed health care cost trend rate for each year would change the accumulated postretirement benefit obligations as follows: December 31, 2014 2013 Accumulated postretirement benefit obligations Effect of a one percentage point increase * $ - Effect of a one percentage point decrease * - Service and interest cost components of the net Effect of a one percentage point increase * $ 2 Effect of a one percentage point decrease * (2 ) Weighted average assumptions used to determine Discount rate 3.66 % 4.46 % Healthcare cost trend rate * * Rate to which the cost trend rate is assumed to decline * * Year the rate is assumed to reach the ultimate trend rate * * Expected return on plan assets * * Weighted average assumptions used to determine net periodic Discount rate 4.46 % 3.51 % Healthcare cost trend rate * 7.50 % Rate to which the cost trend rate is assumed to decline * 5.00 % Year the rate is assumed to reach the ultimate trend rate * 2022 Expected return on plan assets * * * Not applicable. |
Summary of minimum funding requirement and the expected full year contributions for the Company's plans | The following table discloses that minimum funding requirement and the expected full year contributions for the Company’s plans. Defined Benefit Pension Plans Defined Supplemental Benefit Defined Benefit Plan Plans Minimum funding requirement for 2016 $ - N/A Expected contributions (approximations) for the year ended December 31, 2016 as of the time of this Form 10-K (1) - $ 1,319 N/A - Not applicable. (1) HMEC’s Annual Report on Form 10-K for the year ended December 31, 2015. |
Estimated future benefit payments | Estimated future benefit payments as of December 31, 2015 were as follows: 2016 2017 2018 2019 2020 2021-2025 Pension plans Defined benefit plan $ 3,207 $ 2,716 $ 2,645 $ 3,042 $ 2,485 $11,148 Supplemental retirement plans 1,319 1,308 1,295 1,281 1,264 5,995 |
Postretirement Benefit Costs [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Funded status of the defined benefit, supplemental retirement pension plans and postretirement benefits other than pensions | The following table presents the funded status of postretirement benefits other than pensions of active and retired employees (including employees on disability more than 2 years) as of December 31, 2014 and 2013 (the measurement dates) reconciled with amounts recognized in the Company's Consolidated Balance Sheets. The tables present postretirement expenses and liabilities only for those years in which the Company incurred expenses or accrued liabilities. December 31, 2014 2013 Change in accumulated postretirement benefit obligations: Accumulated postretirement benefit obligations at beginning of year $ 1,130 $ 2,862 Changes during fiscal year: Service cost - - Interest cost 46 92 Plan amendment - (1,393 ) Settlements (965 ) - Employer payments net of participant contributions (95 ) (491 ) Actuarial (gain) loss (116 ) 60 Accumulated postretirement benefit obligations at end of year $ - $ 1,130 Unfunded status $ - $ (1,130 ) Total amount recognized in Consolidated Balance Sheets, all in Other Liabilities $ - $ (1,130 ) Amounts recognized in accumulated other comprehensive income (loss) (“AOCI”): Prior service cost (credit) $ - $ (1,341 ) Net actuarial loss (gain) - (604 ) Total amount recognized in AOCI $ - $ (1,945 ) Year Ended December 31, 2014 2013 Components of net periodic benefit: Service cost $ - $ - Interest cost 46 92 Curtailment gain (713 ) - Settlement gain (1,439 ) - Amortization of prior service cost (628 ) (52 ) Amortization of prior gain (246 ) (236 ) Net periodic income $ (2,980 ) $ (196 ) |
Pension Plan [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Funded status of the defined benefit, supplemental retirement pension plans and postretirement benefits other than pensions | The following tables summarize the funded status of the defined benefit and supplemental retirement pension plans as of December 31, 2015, 2014 and 2013 (the measurement dates) and identify (1) the assumptions used to determine the projected benefit obligation and (2) the components of net pension cost for the defined benefit plan and supplemental retirement plans for the following periods: Supplemental Defined Benefit Plan Defined Benefit Plans December 31, December 31, 2015 2014 2013 2015 2014 2013 Change in benefit obligation: Projected benefit obligation at beginning of year $ 34,279 $ 39,483 $ 40,994 $ 18,524 $ 16,706 $ 18,192 Service cost 450 360 360 - - - Interest cost 1,189 1,679 1,369 654 716 616 Plan amendments - - - - - - Actuarial loss (gain) (1,371 ) 1,254 624 (845 ) 2,431 (783 ) Benefits paid (3,314 ) (1,737 ) (1,715 ) (1,329 ) (1,329 ) (1,319 ) Settlements - (6,760 ) (2,149 ) - - - Projected benefit obligation at end of year $ 31,233 $ 34,279 $ 39,483 $ 17,004 $ 18,524 $ 16,706 Change in plan assets: Fair value of plan assets at beginning of year $ 31,408 $ 35,879 $ 32,757 $ - $ - $ - Actual return on plan assets 200 2,535 4,396 - - - Employer contributions - 2,000 3,103 1,329 1,329 1,319 Benefits paid (3,314 ) (1,737 ) (1,715 ) (1,329 ) (1,329 ) (1,319 ) Expenses paid (627 ) (509 ) (513 ) - - - Settlements - (6,760 ) (2,149 ) - - - Fair value of plan assets at end of year $ 27,667 $ 31,408 $ 35,879 $ - $ - $ - Funded status $ (3,566 ) $ (2,871 ) $ (3,604 ) $ (17,004 ) $ (18,524 ) $ (16,706 ) Prepaid (accrued) benefit expense $ 9,265 $ 10,656 $ 12,331 $ (11,622 ) $ (12,024 ) $ (12,479 ) Total amount recognized in Consolidated Balance Sheets, all in Other Liabilities $ (3,566 ) $ (2,871 ) $ (3,604 ) $ (17,004 ) $ (18,524 ) $ (16,706 ) Amounts recognized in accumulated other comprehensive income (loss) (“AOCI”): Prior service cost $ - $ - $ - $ - $ - $ - Net actuarial loss 12,831 13,527 15,935 5,382 6,500 4,227 Total amount recognized in AOCI $ 12,831 $ 13,527 $ 15,935 $ 5,382 $ 6,500 $ 4,227 Information for pension plans with an accumulated benefit obligation greater than plan assets: Projected benefit obligation $ 31,233 $ 34,279 $ 39,483 $ 17,004 $ 18,524 $ 16,706 Accumulated benefit obligation 31,233 34,279 39,483 17,004 18,524 16,706 Fair value of plan assets 27,667 31,408 35,879 - - - |
Contingencies and Commitments (
Contingencies and Commitments (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Summary of future minimum lease payments | Future minimum lease payments under leases expiring subsequent to December 31, 2015 are as follows: As of December 31, 2015 2016 2017 2018 2019 2020 2021- 2025 2026 and beyond Minimum operating lease payments $ 2,494 $ 2,360 $ 2,390 $ 2,289 $ 1,526 $ 2,761 $ - |
Supplementary Data on Cash Fl41
Supplementary Data on Cash Flows (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Supplemental Cash Flow Elements [Abstract] | |
Reconciliation of net income to net cash provided by operating activities | A reconciliation of net income to net cash provided by operating activities as presented in the Consolidated Statements of Cash Flows is as follows: Year Ended December 31, 2015 2014 2013 Cash flows from operating activities Net income $ 93,482 $ 104,243 $ 110,893 Adjustments to reconcile net income to net cash provided by operating activities: Realized investment gains (12,713 ) (10,917 ) (22,245 ) Increase in accrued investment income (2,566 ) (5,563 ) (1,898 ) (Decrease) increase in accrued expenses (5,798 ) 1,513 1,157 Depreciation and amortization 7,734 7,958 7,680 Increase in insurance liabilities 145,313 153,423 143,542 Increase in premium receivables (8,641 ) (3,638 ) (4,018 ) Increase in deferred policy acquisition costs (8,981 ) (12,662 ) (14,659 ) (Increase) decrease in reinsurance recoverables (748 ) 1,570 (1,289 ) Increase in income tax liabilities 8,935 9,745 7,099 Debt retirement costs 2,338 - - Other (11,312 ) (23,739 ) (20,326 ) Total adjustments 113,561 117,690 95,043 Net cash provided by operating activities $ 207,043 $ 221,933 $ 205,936 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Segment Reporting [Abstract] | |
Summarized financial information for these segments | Summarized financial information for these segments is as follows: Year Ended December 31, 2015 2014 2013 Insurance premiums and contract charges earned Property and casualty $ 595,958 $ 581,828 $ 561,954 Annuity 25,378 25,540 22,575 Life 110,544 108,392 106,409 Total $ 731,880 $ 715,760 $ 690,938 Net investment income Property and casualty $ 33,461 $ 36,790 $ 36,208 Annuity 228,378 222,071 208,419 Life 71,614 71,865 69,932 Corporate and other 38 14 7 Intersegment eliminations (891 ) (925 ) (956 ) Total $ 332,600 $ 329,815 $ 313,610 Net income (loss) Property and casualty $ 40,043 $ 46,907 $ 44,433 Annuity 43,384 45,336 44,719 Life 14,982 17,503 20,339 Corporate and other (4,927 ) (5,503 ) 1,402 Total $ 93,482 $ 104,243 $ 110,893 December 31, 2015 2014 2013 Assets Property and casualty $ 1,098,415 $ 1,107,962 $ 1,001,561 Annuity 7,001,411 6,683,473 5,963,348 Life 1,862,719 1,858,150 1,743,084 Corporate and other 134,006 155,678 154,557 Intersegment eliminations (37,208 ) (36,736 ) (35,878 ) Total $ 10,059,343 $ 9,768,527 $ 8,826,672 |
Additional significant financial information for these segments | Additional significant financial information for these segments is as follows: Year Ended December 31, 2015 2014 2013 Policy acquisition expenses amortized Property and casualty $ 73,173 $ 71,327 $ 68,516 Annuity 18,155 14,781 7,957 Life 7,591 7,709 8,170 Total $ 98,919 $ 93,817 $ 84,643 Income tax expense (benefit) Property and casualty $ 11,274 $ 13,944 $ 12,740 Annuity 19,873 21,319 18,531 Life 7,951 9,432 10,919 Corporate and other (3,128 ) (2,825 ) 983 Total $ 35,970 $ 41,870 $ 43,173 |
Unaudited Selected Quarterly 43
Unaudited Selected Quarterly Financial Data (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |
Selected quarterly financial data | Selected quarterly financial data is presented below. Three Months Ended December 31, September 30, June 30, March 31, 2015 Insurance premiums written and contract deposits $ 305,186 $ 326,198 $ 319,394 $ 305,735 Total revenues 276,106 265,753 268,470 270,119 Net income 21,040 21,984 16,183 34,275 Per share information Basic Net income $ 0.51 $ 0.53 $ 0.39 $ 0.82 Shares of common stock - weighted average (1) 41,564 41,852 41,990 41,950 Diluted Net income $ 0.50 $ 0.52 $ 0.38 $ 0.81 Shares of common stock and equivalent shares - weighted average (1) 42,127 42,305 42,425 42,300 2014 Insurance premiums written and contract deposits $ 292,241 $ 322,746 $ 292,393 $ 260,275 Total revenues 269,157 265,520 264,743 261,265 Net income 30,068 25,357 20,452 28,366 Per share information Basic Net income $ 0.72 $ 0.61 $ 0.49 $ 0.69 Shares of common stock - weighted average (1) 41,748 41,514 41,432 41,180 Diluted Net income $ 0.71 $ 0.60 $ 0.48 $ 0.67 Shares of common stock and equivalent shares - weighted average (1) 42,362 42,319 42,310 42,259 2013 Insurance premiums written and contract deposits $ 275,379 $ 306,033 $ 267,703 $ 245,078 Total revenues 259,215 251,884 265,637 254,531 Net income 34,287 23,599 25,995 27,012 Per share information Basic Net income $ 0.84 $ 0.59 $ 0.65 $ 0.68 Shares of common stock - weighted average (1) 40,818 40,001 39,768 39,527 Diluted Net income $ 0.81 $ 0.57 $ 0.63 $ 0.66 Shares of common stock and equivalent shares - weighted average (1) 42,205 41,732 41,395 41,088 (1) Rounded to thousands. |
Summary of Significant Accoun44
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Deferred policy acquisition costs asset by segment | ||
Total | $ 253,176 | $ 215,082 |
Annuity [Member] | ||
Deferred policy acquisition costs asset by segment | ||
Total | 178,300 | 143,522 |
Life [Member] | ||
Deferred policy acquisition costs asset by segment | ||
Total | 48,191 | 44,400 |
Property and casualty [Member] | ||
Deferred policy acquisition costs asset by segment | ||
Total | $ 26,685 | $ 27,160 |
Summary of Significant Accoun45
Summary of Significant Accounting Policies (Details 1) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Adjustment to deferred policy acquisition costs amortization expenses | |||
Total | $ 3,369 | $ 1,093 | $ (3,574) |
Annuity Segment [Member] | |||
Adjustment to deferred policy acquisition costs amortization expenses | |||
Total | 3,403 | 1,224 | (3,700) |
Life Insurance Product Line [Member] | |||
Adjustment to deferred policy acquisition costs amortization expenses | |||
Total | $ (34) | $ (131) | $ 126 |
Summary of Significant Accoun46
Summary of Significant Accounting Policies (Details 2) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Allocation of goodwill by reporting unit | ||
Goodwill | $ 47,396 | $ 47,396 |
Annuity Segment [Member] | ||
Allocation of goodwill by reporting unit | ||
Goodwill | 28,025 | |
Life Insurance Product Line [Member] | ||
Allocation of goodwill by reporting unit | ||
Goodwill | 9,911 | |
Property, Liability and Casualty Insurance Product Line [Member] | ||
Allocation of goodwill by reporting unit | ||
Goodwill | $ 9,460 |
Summary of Significant Accoun47
Summary of Significant Accounting Policies (Details 3) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Property and Equipment | ||
Property and equipment | $ 107,876 | $ 108,056 |
Less: accumulated depreciation | 82,236 | 77,027 |
Total | $ 25,640 | $ 31,029 |
Summary of Significant Accoun48
Summary of Significant Accounting Policies (Details 4) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Fixed annuity contract liabilities | $ 4,072,102 | $ 3,774,457 |
Life policy reserves | 1,054,740 | 1,027,814 |
Total | $ 5,126,842 | $ 4,802,271 |
Summary of Significant Accoun49
Summary of Significant Accounting Policies (Details 5) - Guaranteed Minimum Death Benefit [Member] - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Summary Of Guaranteed Minimum Death Benefit [Abstract] | ||
GMDB reserve | $ 358 | $ 278 |
Aggregate in-the-money death benefits under the GMDB provision | $ 35,563 | $ 29,866 |
Variable annuity contract value distribution based on GMDB feature: | ||
No guarantee | 32.00% | 31.00% |
Return of premium guarantee | 62.00% | 63.00% |
Guarantee of premium roll-up at an annual rate of 3% or 5% | 6.00% | 6.00% |
Total | 100.00% | 100.00% |
Summary of Significant Accoun50
Summary of Significant Accounting Policies (Details 6) - $ / shares | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Schedule Of Share Based Payment Award Stock Options Valuation Assumptions [Abstract] | |||
Number of stock options granted | 142,908 | 175,632 | 245,424 |
Weighted average grant date fair value of stock options granted | $ 11.18 | $ 9.01 | $ 8.25 |
Weighted average assumptions: | |||
Risk-free interest rate | 1.70% | 1.90% | 1.00% |
Expected dividend yield | 2.60% | 2.50% | 2.70% |
Expected life, in years | 7 years 2 months 12 days | 5 years 8 months 12 days | 5 years 9 months 18 days |
Expected volatility (based on historical volatility) | 42.80% | 40.30% | 54.50% |
Summary of Significant Accoun51
Summary of Significant Accounting Policies (Details 7) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Basic: | |||||||||||||||
Net income for the period | $ 21,040 | $ 21,984 | $ 16,183 | $ 34,275 | $ 30,068 | $ 25,357 | $ 20,452 | $ 28,366 | $ 34,287 | $ 23,599 | $ 25,995 | $ 27,012 | $ 93,482 | $ 104,243 | $ 110,893 |
Weighted average number of common shares during the period | 41,564,000 | 41,852,000 | 41,990,000 | 41,950,000 | 41,748,000 | 41,514,000 | 41,432,000 | 41,180,000 | 40,818,000 | 40,001,000 | 39,768,000 | 39,527,000 | 41,914,864 | 41,646,281 | 40,376,562 |
Net income per share - basic | $ 0.51 | $ 0.53 | $ 0.39 | $ 0.82 | $ 0.72 | $ 0.61 | $ 0.49 | $ 0.69 | $ 0.84 | $ 0.59 | $ 0.65 | $ 0.68 | $ 2.23 | $ 2.5 | $ 2.75 |
Diluted: | |||||||||||||||
Net income for the period | $ 21,040 | $ 21,984 | $ 16,183 | $ 34,275 | $ 30,068 | $ 25,357 | $ 20,452 | $ 28,366 | $ 34,287 | $ 23,599 | $ 25,995 | $ 27,012 | $ 93,482 | $ 104,243 | $ 110,893 |
Weighted average number of common shares during the period | 41,564,000 | 41,852,000 | 41,990,000 | 41,950,000 | 41,748,000 | 41,514,000 | 41,432,000 | 41,180,000 | 40,818,000 | 40,001,000 | 39,768,000 | 39,527,000 | 41,914,864 | 41,646,281 | 40,376,562 |
Weighted average number of common equivalent shares to reflect the dilutive effect of common stock equivalent securities (in thousands): | |||||||||||||||
Stock options | 158,000 | 137,000 | 211,000 | ||||||||||||
Common stock units related to deferred compensation for employees | 55,000 | 70,000 | 112,000 | ||||||||||||
Restricted common stock units related to incentive compensation | 297,000 | 378,000 | 933,000 | ||||||||||||
Total common and common equivalent shares adjusted to calculate diluted earnings per share | 42,127,000 | 42,305,000 | 42,425,000 | 42,300,000 | 42,362,000 | 42,319,000 | 42,310,000 | 42,259,000 | 42,205,000 | 41,732,000 | 41,395,000 | 41,088,000 | 42,424,806 | 42,230,559 | 41,633,240 |
Net income per share - diluted | $ 0.50 | $ 0.52 | $ 0.38 | $ 0.81 | $ 0.71 | $ 0.60 | $ 0.48 | $ 0.67 | $ 0.81 | $ 0.57 | $ 0.63 | $ 0.66 | $ 2.20 | $ 2.47 | $ 2.66 |
Summary of Significant Accoun52
Summary of Significant Accounting Policies (Details 8) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | ||||||||||||||||
Net income | $ 21,040 | $ 21,984 | $ 16,183 | $ 34,275 | $ 30,068 | $ 25,357 | $ 20,452 | $ 28,366 | $ 34,287 | $ 23,599 | $ 25,995 | $ 27,012 | $ 93,482 | $ 104,243 | $ 110,893 | |
Change in net unrealized gains and losses on fixed maturities and equity securities | ||||||||||||||||
Net unrealized holding gains and losses on fixed maturities and equity securities arising during the period | (178,035) | 264,136 | (363,350) | |||||||||||||
Less: reclassification adjustment for net gains included in income before income tax | 11,667 | 10,943 | 22,245 | |||||||||||||
Total, before tax | (189,702) | 253,193 | (385,595) | |||||||||||||
Income tax expense (benefit) | (67,315) | 89,629 | (137,185) | |||||||||||||
Total, net of tax | [1],[2] | (122,387) | 163,564 | (248,410) | ||||||||||||
Change in net funded status of pension and other postretirement benefit obligations | ||||||||||||||||
Before tax | 1,815 | (1,810) | 5,645 | |||||||||||||
Income tax expense (benefit) | 656 | (633) | 2,110 | |||||||||||||
Total, net of tax | [1] | 1,159 | (1,177) | 3,535 | ||||||||||||
Total comprehensive income (loss) | $ (27,746) | $ 266,630 | $ (133,982) | |||||||||||||
[1] | All amounts are net of tax. | |||||||||||||||
[2] | The pretax amounts reclassified from accumulated other comprehensive income, $11,667, $10,943 and $22,245, are included in net realized investment gains and losses and the related tax expenses, $4,083, $3,830 and $7,786, are included in income tax expense in the Consolidated Statements of Operations for the years ended December 31, 2015, 2014 and 2013, respectively. |
Summary of Significant Accoun53
Summary of Significant Accounting Policies (Details 9) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Unrealized Gains and Losses on Fixed Maturities and Equity Securities | ||||
Beginning balance | [1],[2] | $ 297,554 | $ 133,990 | $ 382,400 |
Other comprehensive income (loss) before reclassifications | [1],[2] | (114,803) | 170,677 | (233,951) |
Amounts reclassified from accumulated other comprehensive income (loss) | [1],[2] | (7,584) | (7,113) | (14,459) |
Net current period other comprehensive income (loss) | [1],[2] | (122,387) | 163,564 | (248,410) |
Ending balance | [1],[2] | 175,167 | 297,554 | 133,990 |
Defined Benefit Plans | ||||
Beginning balance | [1] | (12,953) | (11,776) | (15,311) |
Other comprehensive income (loss) before reclassifications | [1] | 1,159 | (1,177) | 3,535 |
Amounts reclassified from accumulated other comprehensive income (loss) | [1] | 0 | 0 | 0 |
Change in net funded status of pension and other postretirement benefit obligations | [1] | 1,159 | (1,177) | 3,535 |
Ending balance | [1] | (11,794) | (12,953) | (11,776) |
Beginning balance | [1] | 284,601 | 122,214 | 367,089 |
Other comprehensive income (loss) before reclassifications | [1] | (113,644) | 169,500 | (230,416) |
Amounts reclassified from accumulated other comprehensive income (loss) | [1] | (7,584) | (7,113) | (14,459) |
Net current period other comprehensive income (loss) | [1] | (121,228) | 162,387 | (244,875) |
Ending balance | [1] | $ 163,373 | $ 284,601 | $ 122,214 |
[1] | All amounts are net of tax. | |||
[2] | The pretax amounts reclassified from accumulated other comprehensive income, $11,667, $10,943 and $22,245, are included in net realized investment gains and losses and the related tax expenses, $4,083, $3,830 and $7,786, are included in income tax expense in the Consolidated Statements of Operations for the years ended December 31, 2015, 2014 and 2013, respectively. |
Summary of Significant Accoun54
Summary of Significant Accounting Policies (Details Textual) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI for Sale of Securities, before Tax | $ 11,667 | $ 10,943 | $ 22,245 |
Other Tax Expense (Benefit) | 4,083 | 3,830 | 7,786 |
Quantifying Misstatement in Current Year Financial Statements, Amount | $ 3,012 | ||
Acquisition Costs Amortization In Years For Individual Life Contracts Term One | 10 years | ||
Acquisition Costs Amortization In Years For Individual Life Contracts Term Two | 15 years | ||
Acquisition Costs Amortization In Years For Individual Life Contracts Term Three | 20 years | ||
Acquisition Costs Amortization In Years For Individual Life Contracts Term Four | 30 years | ||
Amortization Period Of Acquisition Costs Related To Property And Casualty Policy Term One | 6 months | ||
Amortization Period Of Acquisition Costs Related To Property And Casualty Policy Term Two | 12 months | ||
Percentage Of Reversion To Mean Approach Utilized To Amortize Policy Acquisition Costs | 10.00% | ||
Federal Home Loan Bank Advances Branch Off hlb Bank Borrowings Description | Any borrowing from the FHLB requires the purchase of FHLB activity-based common stock in an amount equal to 5.0% of the borrowing, or a lower percentage such as 2.0% based on the Reduced Capitalization Advance Program. | ||
Federal Home Loan Bank, Advances, Branch of FHLB Bank, Interest Rate | 0.30% | ||
Allocated Share-based Compensation Expense | $ 1,285 | 1,270 | 1,419 |
Weighted Average Fair Value Of Nonvested Options Outstanding | $ 9.35 | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 166,036 | ||
Earnings Per Share, Potentially Dilutive Securities | $28.91 to $33.41 | ||
Federal Home Loan Bank Advances Branch Of FHLB Bank Additional Amount Of Advances By Branch | $ 75,000 | ||
Un Allocated Share Based Compensation Expense | 6,900 | ||
Quantifying Misstatement In Current Year Financial Statements Amount Pretax | $ 4,634 | ||
Acquisition Costs Amortization In Years For Indexed Universal Life Contracts | 30 years | ||
Acquisition Costs Amortization In Years For Annuity Contracts | 20 years | ||
Nonvested [Member] | |||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Total | $ 2,300 | ||
Restricted Stock Units (RSUs) [Member] | |||
Allocated Share-based Compensation Expense | 892 | 6,132 | $ 6,954 |
Maturing On December 15, 2023 [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank, Amount of Advances | 125,000 | ||
Maturing On September 13, 2019 [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank, Amount of Advances | 250,000 | ||
Maturing On January 16, 2026 [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank, Amount of Advances | $ 200,000 | ||
Maximum [Member] | |||
Reserve Investment Yield Assumption Life | 8.00% | ||
Minimum [Member] | |||
Reserve Investment Yield Assumption Life | 3.50% | ||
Lease hold Improvements And Other Property And Equipment [Member] | Maximum [Member] | |||
Property, Plant and Equipment, Useful Life | 10 years | ||
Lease hold Improvements And Other Property And Equipment [Member] | Minimum [Member] | |||
Property, Plant and Equipment, Useful Life | 2 years | ||
Real Estate Property [Member] | Maximum [Member] | |||
Property, Plant and Equipment, Useful Life | 45 years | ||
Real Estate Property [Member] | Minimum [Member] | |||
Property, Plant and Equipment, Useful Life | 20 years | ||
Investment Contracts [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank, Amount of Advances | $ 575,000 | ||
Interest Sensitive Life Contracts [Member] | |||
Deferred Policy Acquisition Cost Ending Impact Of Unrealized Investment Gains Losses | $ 38,819 | $ 67,932 | |
Amortization Period Of Acquisition Costs Related To Interest Sensitive Life Contracts | 20 years | ||
Property and casualty [Member] | |||
Quantifying Misstatement in Current Year Financial Statements, Amount | $ 2,056 | ||
Annuity [Member] | |||
Quantifying Misstatement in Current Year Financial Statements, Amount | 519 | ||
Life [Member] | |||
Quantifying Misstatement in Current Year Financial Statements, Amount | $ 437 |
Investments (Details)
Investments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Components of net investment income | |||
Total investment income | $ 341,733 | $ 338,293 | $ 321,866 |
Investment expenses | (9,133) | (8,478) | (8,256) |
Net investment income | 332,600 | 329,815 | 313,610 |
Equity Securities [Member] | |||
Components of net investment income | |||
Total investment income | 4,355 | 4,849 | 3,698 |
Fixed Maturities [Member] | |||
Components of net investment income | |||
Total investment income | 326,207 | 317,756 | 304,024 |
Short Term And Other Investments [Member] | |||
Components of net investment income | |||
Total investment income | 9,187 | 8,459 | 8,242 |
Other Invested Asset [Member] | |||
Components of net investment income | |||
Total investment income | $ 1,984 | $ 7,229 | $ 5,902 |
Investments (Details 1)
Investments (Details 1) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Summary of realized investment gains (losses) | |||
Net realized investment gains | $ 12,713 | $ 10,917 | $ 22,245 |
Fixed Maturities [Member] | |||
Summary of realized investment gains (losses) | |||
Net realized investment gains | 10,289 | 8,150 | 18,480 |
Equity Securities [Member] | |||
Summary of realized investment gains (losses) | |||
Net realized investment gains | 1,378 | 2,793 | 3,765 |
Short Term And Other Investments [Member] | |||
Summary of realized investment gains (losses) | |||
Net realized investment gains | $ 1,046 | $ (26) | $ 0 |
Investments (Details 2)
Investments (Details 2) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | ||
Unrealized gains and losses on fixed maturities and equity securities | |||
Amortized Cost/Cost | $ 6,785,626 | $ 6,375,237 | |
Amortized Cost/Cost, Equity securities | 95,722 | 99,904 | |
Unrealized Gains | 395,237 | 543,868 | |
Unrealized Losses | 89,523 | 26,015 | |
Fair Value | 7,091,340 | 6,893,090 | |
Fair Value, Equity securities | 99,797 | 110,655 | |
OTTI in AOCI | [1] | (2,758) | 2,879 |
Mortgage-backed securities [Member] | |||
Unrealized gains and losses on fixed maturities and equity securities | |||
Amortized Cost/Cost | [2] | 461,862 | 484,561 |
Unrealized Gains | [2] | 44,413 | 52,555 |
Unrealized Losses | [2] | 1,861 | 1,390 |
Fair Value | [2] | 504,414 | 535,726 |
OTTI in AOCI | [1],[2] | 0 | 0 |
Other, including U.S. Treasury Securities [Member] | |||
Unrealized gains and losses on fixed maturities and equity securities | |||
Amortized Cost/Cost | [2] | 532,373 | 512,596 |
Unrealized Gains | [2] | 21,153 | 28,652 |
Unrealized Losses | [2] | 7,415 | 3,049 |
Fair Value | [2] | 546,111 | 538,199 |
OTTI in AOCI | [1],[2] | 0 | 0 |
Municipal bonds [Member] | |||
Unrealized gains and losses on fixed maturities and equity securities | |||
Amortized Cost/Cost | 1,553,603 | 1,462,717 | |
Unrealized Gains | 165,680 | 189,533 | |
Unrealized Losses | 10,340 | 4,428 | |
Fair Value | 1,708,943 | 1,647,822 | |
OTTI in AOCI | [1] | (4,140) | 0 |
Foreign government bonds [Member] | |||
Unrealized gains and losses on fixed maturities and equity securities | |||
Amortized Cost/Cost | 67,441 | 52,552 | |
Unrealized Gains | 6,288 | 6,984 | |
Unrealized Losses | 112 | 0 | |
Fair Value | 73,617 | 59,536 | |
OTTI in AOCI | [1] | 0 | 0 |
Corporate bonds [Member] | |||
Unrealized gains and losses on fixed maturities and equity securities | |||
Amortized Cost/Cost | 2,687,376 | 2,608,633 | |
Unrealized Gains | 140,873 | 237,372 | |
Unrealized Losses | 48,834 | 11,256 | |
Fair Value | 2,779,415 | 2,834,749 | |
OTTI in AOCI | [1] | 0 | 0 |
Other mortgage-backed securities [Member] | |||
Unrealized gains and losses on fixed maturities and equity securities | |||
Amortized Cost/Cost | 1,482,971 | 1,254,178 | |
Unrealized Gains | 16,830 | 28,772 | |
Unrealized Losses | 20,961 | 5,892 | |
Fair Value | 1,478,840 | 1,277,058 | |
OTTI in AOCI | [1] | 1,382 | 2,879 |
Equity securities [Member] | |||
Unrealized gains and losses on fixed maturities and equity securities | |||
Amortized Cost/Cost, Equity securities | [3] | 95,722 | 99,904 |
Unrealized Gains | [3] | 8,405 | 14,159 |
Unrealized Losses | [3] | 4,330 | 3,408 |
Fair Value, Equity securities | [3] | 99,797 | 110,655 |
OTTI in AOCI | [1],[3] | $ 0 | $ 0 |
[1] | Related to securities for which an unrealized loss was bifurcated to distinguish the credit-related portion and the portion driven by other market factors. Represents the amount of other-than-temporary impairment losses in AOCI which was not included in earnings; amounts also include unrealized gains/(losses) on such impaired securities relating to changes in the fair value of those securities subsequent to the impairment measurement date. | ||
[2] | Fair value includes securities issued by Federal National Mortgage Association (“FNMA”) of $231,294 and $302,222; Federal Home Loan Mortgage Corporation (“FHLMC”) of $363,957 and $432,432; and Government National Mortgage Association (“GNMA”) of $130,940 and $137,867 as of December 31, 2015 and 2014, respectively. | ||
[3] | Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds. |
Investments (Details 3)
Investments (Details 3) $ in Thousands | Dec. 31, 2015USD ($)Number | Dec. 31, 2014USD ($)Number | |
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | $ 2,304,060 | $ 746,584 | |
Fixed maturity securities, Fair Value, More than 12 Months | 224,513 | 388,536 | |
Fixed maturity securities, Fair Value, Total | 2,528,573 | 1,135,120 | |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 74,011 | 14,482 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 19,842 | 14,941 | |
Fixed maturity securities, Gross Unrealized Losses, Total | $ 93,853 | $ 29,423 | |
Number of positions with a gross unrealized loss position, 12 Months or Less | Number | 684 | 234 | |
Number of position with a gross unrealized loss position, more than 12 months | Number | 78 | 112 | |
Number of position with a gross unrealized loss position, Total | Number | 762 | 346 | |
Fair value as a percentage of total fixed maturities and equity securities fair value, 12 Months or Less | 32.00% | 10.70% | |
Fair value as a percentage of total fixed maturities and equity securities fair value, more than 12 months | 3.10% | 5.50% | |
Fair value as a percentage of total fixed maturities and equity securities fair value, Total | 35.10% | 16.20% | |
Mortgage-backed securities [Member] | |||
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | $ 48,097 | $ 2 | |
Fixed maturity securities, Fair Value, More than 12 Months | 1,595 | 39,809 | |
Fixed maturity securities, Fair Value, Total | 49,692 | 39,811 | |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 1,748 | 0 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 113 | 1,390 | |
Fixed maturity securities, Gross Unrealized Losses, Total | 1,861 | 1,390 | |
Other [Member] | |||
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | 248,478 | 10,317 | |
Fixed maturity securities, Fair Value, More than 12 Months | 1,921 | 117,615 | |
Fixed maturity securities, Fair Value, Total | 250,399 | 127,932 | |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 7,338 | 34 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 77 | 3,015 | |
Fixed maturity securities, Gross Unrealized Losses, Total | 7,415 | 3,049 | |
Municipal bonds [Member] | |||
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | 168,939 | 31,821 | |
Fixed maturity securities, Fair Value, More than 12 Months | 21,717 | 59,715 | |
Fixed maturity securities, Fair Value, Total | 190,656 | 91,536 | |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 5,382 | 200 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 4,958 | 4,228 | |
Fixed maturity securities, Gross Unrealized Losses, Total | 10,340 | 4,428 | |
Foreign government bonds [Member] | |||
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | 11,867 | 0 | |
Fixed maturity securities, Fair Value, More than 12 Months | 0 | 0 | |
Fixed maturity securities, Fair Value, Total | 11,867 | 0 | |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 112 | 0 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 0 | 0 | |
Fixed maturity securities, Gross Unrealized Losses, Total | 112 | 0 | |
Corporate bonds [Member] | |||
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | 858,647 | 213,612 | |
Fixed maturity securities, Fair Value, More than 12 Months | 50,340 | 76,099 | |
Fixed maturity securities, Fair Value, Total | 908,987 | 289,711 | |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 37,244 | 6,883 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 11,590 | 4,373 | |
Fixed maturity securities, Gross Unrealized Losses, Total | 48,834 | 11,256 | |
Other mortgage-backed securities [Member] | |||
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | 929,268 | 477,877 | |
Fixed maturity securities, Fair Value, More than 12 Months | 140,561 | 88,663 | |
Fixed maturity securities, Fair Value, Total | 1,069,829 | 566,540 | |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 19,165 | 4,797 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 1,796 | 1,095 | |
Fixed maturity securities, Gross Unrealized Losses, Total | 20,961 | 5,892 | |
Total fixed maturity securities [Member] | |||
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | 2,265,296 | 733,629 | |
Fixed maturity securities, Fair Value, More than 12 Months | 216,134 | 381,901 | |
Fixed maturity securities, Fair Value, Total | 2,481,430 | 1,115,530 | |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 70,989 | 11,914 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 18,534 | 14,101 | |
Fixed maturity securities, Gross Unrealized Losses, Total | 89,523 | 26,015 | |
Equity securities [Member] | |||
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | [1] | 38,764 | 12,955 |
Fixed maturity securities, Fair Value, More than 12 Months | [1] | 8,379 | 6,635 |
Fixed maturity securities, Fair Value, Total | [1] | 47,143 | 19,590 |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | [1] | 3,022 | 2,568 |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | [1] | 1,308 | 840 |
Fixed maturity securities, Gross Unrealized Losses, Total | [1] | $ 4,330 | $ 3,408 |
[1] | Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds. |
Investments (Details 4)
Investments (Details 4) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | ||
Cumulative credit loss | |||
Beginning of period | [1] | $ 2,877 | $ 4,097 |
New credit losses | [1] | 4,967 | 280 |
Losses related to securities sold or paid down during the period | [1] | 0 | (1,500) |
End of period | [1] | $ 7,844 | $ 2,877 |
[1] | The cumulative credit loss amounts exclude other-than-temporary impairment losses on securities held as of the periods indicated that the Company intended to sell or it was more likely than not that the Company would be required to sell the security before the recovery of the amortized cost basis. |
Investments (Details 5)
Investments (Details 5) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Estimated expected maturity: | ||
Due in 1 year or less, Percent of Total Fair Value | 3.10% | |
Due in 1 year or less, Amortized Cost | $ 210,171 | |
Due in 1 year or less, Fair Value | $ 219,639 | |
Due after 1 year through 5 years, Percent of Total Fair Value | 24.20% | |
Due after 1 year through 5 years, Amortized Cost | $ 1,641,139 | |
Due after 1 year through 5 years, Fair Value | $ 1,715,078 | |
Due after 5 years through 10 years, Percent of Total Fair Value | 39.60% | |
Due after 5 years through 10 years, Amortized Cost | $ 2,688,583 | |
Due after 5 years through 10 years, Fair Value | $ 2,809,712 | |
Due after 10 years through 20 years, Percent of Total Fair Value | 20.90% | |
Due after 10 years through 20 years, Amortized Cost | $ 1,420,578 | |
Due after 10 years through 20 years, Fair Value | $ 1,484,580 | |
Due after 20 years, Percent of Total Fair Value | 12.20% | |
Due after 20 years, Amortized Cost | $ 825,155 | |
Due after 20 years, Fair Value | $ 862,331 | |
Total, Percent of Total Fair Value | 100.00% | |
Total, Amortized Cost | $ 6,785,626 | $ 6,375,237 |
Fair Value | $ 7,091,340 | $ 6,893,090 |
Average option-adjusted duration, in years | 5 years 9 months 18 days |
Investments (Details 6)
Investments (Details 6) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Proceeds received from sales of fixed maturities and equity securities | |||
Proceeds received, Fixed maturity securities | $ 445,100 | $ 261,696 | $ 298,045 |
Proceeds received, Equity securities | 31,621 | 17,194 | 18,643 |
Fixed maturity securities [Member] | |||
Proceeds received from sales of fixed maturities and equity securities | |||
Gross gains realized | 22,476 | 13,224 | 17,177 |
Gross losses realized | (5,487) | (6,325) | (4,945) |
Equity securities [Member] | |||
Proceeds received from sales of fixed maturities and equity securities | |||
Gross gains realized | 6,604 | 3,206 | 4,368 |
Gross losses realized | $ (672) | $ (482) | $ (616) |
Investments (Details 7)
Investments (Details 7) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Net unrealized investment gains (losses) on fixed maturity securities, net of tax | ||||
Reclassification of net realized investment (gains) losses to net income | [1],[2] | $ 7,584 | $ 7,113 | $ 14,459 |
Fixed Maturity Securities [Member] | ||||
Net unrealized investment gains (losses) on fixed maturity securities, net of tax | ||||
Beginning of period | 336,604 | 146,489 | 423,004 | |
Change in unrealized investment gains and losses | (131,202) | 195,413 | (264,503) | |
Reclassification of net realized investment (gains) losses to net income | (6,688) | (5,298) | (12,012) | |
End of period | 198,714 | 336,604 | 146,489 | |
Equity securities [Member] | ||||
Net unrealized investment gains (losses) on fixed maturity securities, net of tax | ||||
Beginning of period | 6,988 | 4,618 | 720 | |
Change in unrealized investment gains and losses | (3,443) | 4,185 | 6,345 | |
Reclassification of net realized investment (gains) losses to net income | (896) | (1,815) | (2,447) | |
End of period | $ 2,649 | $ 6,988 | $ 4,618 | |
[1] | All amounts are net of tax. | |||
[2] | The pretax amounts reclassified from accumulated other comprehensive income, $11,667, $10,943 and $22,245, are included in net realized investment gains and losses and the related tax expenses, $4,083, $3,830 and $7,786, are included in income tax expense in the Consolidated Statements of Operations for the years ended December 31, 2015, 2014 and 2013, respectively. |
Investments (Details 8)
Investments (Details 8) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Asset derivatives: | ||
Derivatives Asset, Net Amount | $ 2,501 | $ 2,458 |
Free-standing derivatives [Member] | ||
Asset derivatives: | ||
Derivatives Asset, Gross Amounts | 2,501 | 2,458 |
Derivatives Asset, Gross Amounts Offset in the Consolidated Balance Sheet | 0 | 0 |
Derivatives Asset, Net Amounts of Assets Presented in the Consolidated Balance Sheet | 2,501 | 2,458 |
Derivatives Asset, Gross Amounts Not Offset in the Consolidated Balance Sheet, Financial Instruments | 0 | 0 |
Derivatives Asset, Gross Amounts Not Offset in the Consolidated Balance Sheet, Cash Collateral Received | 2,617 | 1,955 |
Derivatives Asset, Net Amount | $ (116) | $ 503 |
Investments (Details Textual)
Investments (Details Textual) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Investments (Textual) [Abstract] | ||
Fair value of issued securities | $ 7,091,340 | $ 6,893,090 |
Investments (Additional Textual) [Abstract] | ||
Federal Home Loan Bank Funding Agreements | $ 575,000 | 500,000 |
Investment Grade Rate | 75.00% | |
Federal Home Loans Bank Of Chicago [Member] | ||
Investments (Textual) [Abstract] | ||
Fair value of issued securities | $ 621,077 | 539,235 |
Governmental Agencies as Required by Law in Various States [Member] | ||
Investments (Textual) [Abstract] | ||
Fair value of issued securities | 18,312 | 18,361 |
Federal National Mortgage Association Certificates and Obligations (FNMA) [Member] | ||
Investments (Textual) [Abstract] | ||
Fair value of issued securities | 231,294 | 302,222 |
Federal Home Loan Mortgage Corporation Certificates and Obligations (FHLMC) [Member] | ||
Investments (Textual) [Abstract] | ||
Fair value of issued securities | 363,957 | 432,432 |
Government National Mortgage Association Certificates and Obligations (GNMA) [Member] | ||
Investments (Textual) [Abstract] | ||
Fair value of issued securities | $ 130,940 | $ 137,867 |
Fair Value of Financial Instr65
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | |
U.S. Government and federally sponsored agency obligations: | |||
Carrying Amount | $ 7,379,290 | $ 7,158,242 | |
Fair Value | 7,379,290 | 7,158,242 | |
Investments, Carrying Amount | 7,648,030 | 7,403,467 | |
Investments, Fair Value | 153,228 | 149,792 | |
Separate Account (variable annuity) assets | [1] | 1,800,722 | 1,813,557 |
Separate Account (variable annuity) assets, Fair Value | [1] | 1,800,722 | 1,813,557 |
Investment contract and life policy reserves, embedded derivatives, Carrying Amount | 14 | 0 | |
Investment contract and life policy reserves, embedded derivatives, Fair Value Disclosure | 14 | 0 | |
Other policyholder funds, embedded derivatives, Carrying Amount | 39,021 | 20,049 | |
Other policyholder funds, embedded derivatives, Fair Value Disclosure | 39,021 | 20,049 | |
Recurring [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Carrying Amount | 7,091,340 | 6,893,090 | |
Fair Value | 7,091,340 | 6,893,090 | |
Short-term investments [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Investments, Carrying Amount | 174,152 | 142,039 | |
Investments, Fair Value | 174,152 | 142,039 | |
Mortgage-backed securities [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Carrying Amount | 504,414 | 535,726 | |
Fair Value | 504,414 | 535,726 | |
Other, including U.S. Treasury Securities [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Carrying Amount | 546,111 | 538,199 | |
Fair Value | 546,111 | 538,199 | |
Municipal bonds [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Carrying Amount | 1,708,943 | 1,647,822 | |
Fair Value | 1,708,943 | 1,647,822 | |
Foreign government bonds [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Carrying Amount | 73,617 | 59,536 | |
Fair Value | 73,617 | 59,536 | |
Corporate bonds [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Carrying Amount | 2,779,415 | 2,834,749 | |
Fair Value | 2,779,415 | 2,834,749 | |
Other mortgage-backed securities [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Carrying Amount | 1,478,840 | 1,277,058 | |
Fair Value | 1,478,840 | 1,277,058 | |
Equity securities [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Carrying Amount | 99,797 | 110,655 | |
Fair Value | 99,797 | 110,655 | |
Other Investment [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Investments, Carrying Amount | 14,001 | 12,458 | |
Investments, Fair Value | 14,001 | 12,458 | |
Level 1 [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 280,305 | 262,560 | |
Investments, Fair Value | 0 | 0 | |
Separate Account (variable annuity) assets, Fair Value | [1] | 1,800,722 | 1,813,557 |
Investment contract and life policy reserves, embedded derivatives, Fair Value Disclosure | 0 | 0 | |
Other policyholder funds, embedded derivatives, Fair Value Disclosure | 0 | 0 | |
Level 1 [Member] | Recurring [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 24,453 | 28,381 | |
Level 1 [Member] | Short-term investments [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Investments, Fair Value | 169,764 | 142,039 | |
Level 1 [Member] | Mortgage-backed securities [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 0 | 0 | |
Level 1 [Member] | Other, including U.S. Treasury Securities [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 14,258 | 17,857 | |
Level 1 [Member] | Municipal bonds [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 0 | 0 | |
Level 1 [Member] | Foreign government bonds [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 0 | 0 | |
Level 1 [Member] | Corporate bonds [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 10,195 | 10,524 | |
Level 1 [Member] | Other mortgage-backed securities [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 0 | 0 | |
Level 1 [Member] | Equity securities [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 86,088 | 92,140 | |
Level 1 [Member] | Other Investment [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Investments, Fair Value | 0 | 0 | |
Level 2 [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 6,925,559 | 6,724,382 | |
Investments, Fair Value | 0 | 0 | |
Separate Account (variable annuity) assets, Fair Value | [1] | 0 | 0 |
Investment contract and life policy reserves, embedded derivatives, Fair Value Disclosure | 14 | 0 | |
Other policyholder funds, embedded derivatives, Fair Value Disclosure | 0 | 0 | |
Level 2 [Member] | Recurring [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 6,893,467 | 6,693,415 | |
Level 2 [Member] | Short-term investments [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Investments, Fair Value | 4,388 | 0 | |
Level 2 [Member] | Mortgage-backed securities [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 504,414 | 535,726 | |
Level 2 [Member] | Other, including U.S. Treasury Securities [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 531,853 | 520,342 | |
Level 2 [Member] | Municipal bonds [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 1,678,564 | 1,634,194 | |
Level 2 [Member] | Foreign government bonds [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 73,617 | 59,536 | |
Level 2 [Member] | Corporate bonds [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 2,701,645 | 2,749,508 | |
Level 2 [Member] | Other mortgage-backed securities [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 1,403,374 | 1,194,109 | |
Level 2 [Member] | Equity securities [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 13,703 | 18,509 | |
Level 2 [Member] | Other Investment [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Investments, Fair Value | 14,001 | 12,458 | |
Level 3 [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 173,426 | 171,300 | |
Investments, Fair Value | 153,228 | 149,792 | |
Separate Account (variable annuity) assets, Fair Value | [1] | 0 | 0 |
Investment contract and life policy reserves, embedded derivatives, Fair Value Disclosure | 0 | 0 | |
Other policyholder funds, embedded derivatives, Fair Value Disclosure | 39,021 | 20,049 | |
Level 3 [Member] | Recurring [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 173,420 | 171,294 | |
Level 3 [Member] | Short-term investments [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Investments, Fair Value | 0 | 0 | |
Level 3 [Member] | Mortgage-backed securities [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 0 | 0 | |
Level 3 [Member] | Other, including U.S. Treasury Securities [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 0 | 0 | |
Level 3 [Member] | Municipal bonds [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 30,379 | 13,628 | |
Level 3 [Member] | Foreign government bonds [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 0 | 0 | |
Level 3 [Member] | Corporate bonds [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 67,575 | 74,717 | |
Level 3 [Member] | Other mortgage-backed securities [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 75,466 | 82,949 | |
Level 3 [Member] | Equity securities [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 6 | 6 | |
Level 3 [Member] | Other Investment [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Investments, Fair Value | $ 0 | $ 0 | |
[1] | Separate Account (variable annuity) liabilities are set equal to Separate Account (variable annuity) assets. |
Fair Value of Financial Instr66
Fair Value of Financial Instruments (Details 1) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | ||
Financial Assets | |||
Beginning balance | $ 171,300 | $ 109,535 | |
Transfers into Level 3 | [1] | 37,740 | 72,813 |
Transfers out of Level 3 | [1] | (11,014) | (4,029) |
Total gains or losses | |||
Net realized gains (losses) included in net income related to financial assets | 1,084 | (26) | |
Net unrealized gains (losses) included in other comprehensive income | (2,003) | 4,920 | |
Purchases | 0 | 0 | |
Issuances | 0 | 0 | |
Sales | (477) | 0 | |
Settlements | 0 | 0 | |
Paydowns, maturities and distributions | (23,204) | (11,913) | |
Ending balance | 173,426 | 171,300 | |
Financial Liabilities | |||
Beginning balance | [2] | 20,049 | 0 |
Transfers into Level 3 | [2] | 0 | 0 |
Transfers out of Level 3 | [2] | 0 | 0 |
Gain Or Losses Net | |||
Net realized (gains) losses included in net income related to financial liabilities | [2] | (2,528) | 1,157 |
Net unrealized gains (losses) included in other comprehensive income | [2] | 0 | 0 |
Purchases | [2] | 0 | 0 |
Issuances | [2] | 23,595 | 19,338 |
Sales | [2] | 0 | 0 |
Settlements | [2] | 0 | 0 |
Paydowns, maturities and distributions | [2] | (2,095) | (446) |
Ending balance | [2] | 39,021 | 20,049 |
Municipal bonds [Member] | |||
Financial Assets | |||
Beginning balance | 13,628 | 2,694 | |
Transfers into Level 3 | [1] | 16,326 | 10,056 |
Transfers out of Level 3 | [1] | 0 | 0 |
Total gains or losses | |||
Net realized gains (losses) included in net income related to financial assets | 0 | 0 | |
Net unrealized gains (losses) included in other comprehensive income | 782 | 1,191 | |
Purchases | 0 | 0 | |
Issuances | 0 | 0 | |
Sales | 0 | 0 | |
Settlements | 0 | 0 | |
Paydowns, maturities and distributions | (357) | (313) | |
Ending balance | 30,379 | 13,628 | |
Corporate bonds [Member] | |||
Financial Assets | |||
Beginning balance | 74,717 | 60,826 | |
Transfers into Level 3 | [1] | 5,729 | 20,649 |
Transfers out of Level 3 | [1] | (1,351) | (3,510) |
Total gains or losses | |||
Net realized gains (losses) included in net income related to financial assets | 1,087 | 0 | |
Net unrealized gains (losses) included in other comprehensive income | (1,935) | 3,611 | |
Purchases | 0 | 0 | |
Issuances | 0 | 0 | |
Sales | (476) | 0 | |
Settlements | 0 | 0 | |
Paydowns, maturities and distributions | (10,196) | (6,859) | |
Ending balance | 67,575 | 74,717 | |
Other mortgage-backed securities [Member] | |||
Financial Assets | |||
Beginning balance | 82,949 | 46,009 | |
Transfers into Level 3 | [1] | 15,685 | 42,108 |
Transfers out of Level 3 | [1] | (9,663) | (519) |
Total gains or losses | |||
Net realized gains (losses) included in net income related to financial assets | 0 | (26) | |
Net unrealized gains (losses) included in other comprehensive income | (854) | 118 | |
Purchases | 0 | 0 | |
Issuances | 0 | 0 | |
Sales | 0 | 0 | |
Settlements | 0 | 0 | |
Paydowns, maturities and distributions | (12,651) | (4,741) | |
Ending balance | 75,466 | 82,949 | |
Total Fixed Maturities [Member] | |||
Financial Assets | |||
Beginning balance | 171,294 | 109,529 | |
Transfers into Level 3 | [1] | 37,740 | 72,813 |
Transfers out of Level 3 | [1] | (11,014) | (4,029) |
Total gains or losses | |||
Net realized gains (losses) included in net income related to financial assets | 1,087 | (26) | |
Net unrealized gains (losses) included in other comprehensive income | (2,007) | 4,920 | |
Purchases | 0 | 0 | |
Issuances | 0 | 0 | |
Sales | (476) | 0 | |
Settlements | 0 | 0 | |
Paydowns, maturities and distributions | (23,204) | (11,913) | |
Ending balance | 173,420 | 171,294 | |
Equity securities [Member] | |||
Financial Assets | |||
Beginning balance | 6 | 6 | |
Transfers into Level 3 | [1] | 0 | 0 |
Transfers out of Level 3 | [1] | 0 | 0 |
Total gains or losses | |||
Net realized gains (losses) included in net income related to financial assets | (3) | 0 | |
Net unrealized gains (losses) included in other comprehensive income | 4 | 0 | |
Purchases | 0 | 0 | |
Issuances | 0 | 0 | |
Sales | (1) | 0 | |
Settlements | 0 | 0 | |
Paydowns, maturities and distributions | 0 | 0 | |
Ending balance | $ 6 | $ 6 | |
[1] | Transfers into and out of Level 3 during the years ended December 31, 2015 and 2014 were attributable to changes in the availability of observable market information for individual fixed maturity securities. The Company’s policy is to recognize transfers into and transfers out of the levels as having occurred at the end of the reporting period in which the transfers were determined. | ||
[2] | Represents embedded derivatives, all related to the Company's FIA products, reported in Other Policyholder Funds in the Company's Consolidated Balance Sheets. |
Fair Value of Financial Instr67
Fair Value of Financial Instruments (Details 2) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Investments | ||
Other investments, Carrying Amount | $ 148,759 | $ 145,409 |
Other investments, Fair Value | 153,228 | 149,792 |
Financial Liabilities | ||
Investment contract and life policy reserves, fixed annuity contracts, Carrying Amount | 4,072,102 | 3,774,457 |
Investment contract and life policy reserves, fixed annuity contracts, Fair value | 4,049,840 | 3,691,123 |
Investment contract and life policy reserves, account values on life contracts, Carrying Amount | 77,429 | 77,415 |
Investment contract and life policy reserves, account values on life contracts, Fair value | 81,360 | 81,461 |
Other policyholder funds, Carrying Amount | 653,631 | 586,689 |
Other policyholder funds, Fair Value | 653,631 | 586,689 |
Short-term debt, Carrying Amount | 0 | 38,000 |
Short-term debt, Fair Value | 0 | 38,000 |
Long-term debt, Carrying Amount | 249,346 | 199,939 |
Long-term debt, Fair Value | 252,700 | 209,495 |
Level 1 [Member] | ||
Investments | ||
Other investments, Fair Value | 0 | 0 |
Financial Liabilities | ||
Investment contract and life policy reserves, fixed annuity contracts, Fair value | 0 | 0 |
Investment contract and life policy reserves, account values on life contracts, Fair value | 0 | 0 |
Other policyholder funds, Fair Value | 0 | 0 |
Short-term debt, Fair Value | 0 | 0 |
Long-term debt, Fair Value | 252,700 | 209,495 |
Level 2 [Member] | ||
Investments | ||
Other investments, Fair Value | 0 | 0 |
Financial Liabilities | ||
Investment contract and life policy reserves, fixed annuity contracts, Fair value | 0 | 0 |
Investment contract and life policy reserves, account values on life contracts, Fair value | 0 | 0 |
Other policyholder funds, Fair Value | 575,104 | 500,080 |
Short-term debt, Fair Value | 0 | 38,000 |
Long-term debt, Fair Value | 0 | 0 |
Level 3 [Member] | ||
Investments | ||
Other investments, Fair Value | 153,228 | 149,792 |
Financial Liabilities | ||
Investment contract and life policy reserves, fixed annuity contracts, Fair value | 4,049,840 | 3,691,123 |
Investment contract and life policy reserves, account values on life contracts, Fair value | 81,360 | 81,461 |
Other policyholder funds, Fair Value | 78,527 | 86,609 |
Short-term debt, Fair Value | 0 | 0 |
Long-term debt, Fair Value | $ 0 | $ 0 |
Fair Value of Financial Instr68
Fair Value of Financial Instruments (Details Textual) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Fair Value of Financial Instruments (Textual) [Abstract] | |||
Embedded Derivative, Gain (Loss) on Embedded Derivative Total | $ 2,529 | $ (1,157) | $ 0 |
Percentage Of Investment Portfolio Fair Value Pricing Services Or Index Price | 91.00% | 91.00% | |
Level 3 [Member] | |||
Fair Value of Financial Instruments (Textual) [Abstract] | |||
Embedded Derivative, Gain (Loss) on Embedded Derivative Total | $ 2,528 | $ (1,157) | |
Percentage Of Invested Assets In Total Investment Portfolio Level3 Recurring | 2.30% |
Derivative Instruments (Details
Derivative Instruments (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Assets | ||
Derivative instruments, included in Short-term and Other Investments | $ 2,501 | $ 2,458 |
Liabilities | ||
Fixed indexed annuities - embedded derivatives, included in Other Policyholder Funds | 39,021 | 20,049 |
Indexed universal life - embedded derivatives, included in Investment Contract and Life Policy Reserves | $ 14 | $ 0 |
Derivative Instruments (Detai70
Derivative Instruments (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Change in fair value of derivatives: | ||||
Net realized investment gains (losses) | [1] | $ (1,483) | $ 995 | $ 0 |
Change in fair value of embedded derivatives: | ||||
Net realized investment gains (losses) | $ 2,529 | $ (1,157) | $ 0 | |
[1] | Includes the gains or losses recognized at the expiration of the option term or early termination and the changes in fair value for open options. |
Derivative Instruments (Detai71
Derivative Instruments (Details 2) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | ||
Derivative [Line Items] | |||
Notional Amount | $ 134,700 | $ 66,600 | |
Fair Value | 2,501 | 2,458 | |
Bank of America, N.A. [Member] | |||
Derivative [Line Items] | |||
Notional Amount | 17,000 | 8,700 | |
Fair Value | 5 | 439 | |
Credit Suisse International [Member] | |||
Derivative [Line Items] | |||
Notional Amount | 12,000 | 27,500 | |
Fair Value | 167 | 1,193 | |
Societe Generale [Member] | |||
Derivative [Line Items] | |||
Notional Amount | 80,800 | 25,400 | |
Fair Value | 1,347 | 756 | |
Barclays Bank PLC [Member] | |||
Derivative [Line Items] | |||
Notional Amount | 7,600 | 5,000 | |
Fair Value | 137 | 70 | |
Citigroup Inc [Member] | |||
Derivative [Line Items] | |||
Notional Amount | 17,300 | 0 | |
Fair Value | $ 845 | $ 0 | |
Moody's [Member] | Bank of America, N.A. [Member] | |||
Derivative [Line Items] | |||
Credit Rating | [1] | A1 | |
Moody's [Member] | Societe Generale [Member] | |||
Derivative [Line Items] | |||
Credit Rating | [1] | A2 | |
Moody's [Member] | Barclays Bank PLC [Member] | |||
Derivative [Line Items] | |||
Credit Rating | [1] | A2 | |
Moody's [Member] | Credit Suisse International [Member] | |||
Derivative [Line Items] | |||
Credit Rating | [1] | A1 | |
Moody's [Member] | Citigroup Inc [Member] | |||
Derivative [Line Items] | |||
Credit Rating | [1] | Baa1 | |
Standard & Poor's [Member] | Bank of America, N.A. [Member] | |||
Derivative [Line Items] | |||
Credit Rating | [1] | A+ | |
Standard & Poor's [Member] | Credit Suisse International [Member] | |||
Derivative [Line Items] | |||
Credit Rating | [1] | A | |
Standard & Poor's [Member] | Societe Generale [Member] | |||
Derivative [Line Items] | |||
Credit Rating | [1] | A | |
Standard & Poor's [Member] | Barclays Bank PLC [Member] | |||
Derivative [Line Items] | |||
Credit Rating | [1] | A- | |
Standard & Poor's [Member] | Citigroup Inc [Member] | |||
Derivative [Line Items] | |||
Credit Rating | [1] | BBB+ | |
[1] | As assigned by Standard & Poor’s Corporation (“S&P”) and Moody’s Investors Service, Inc. (“Moody’s”). |
Derivative Instruments (Detai72
Derivative Instruments (Details Textual) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Derivatives, Fair Value [Line Items] | ||
Concentration Risk, Credit Risk, Financial Instrument, Maximum Exposure | $ 250,000 | |
Fixed Indexed Annuities Term Minimum | 10 years | |
Other Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Asset, Fair Value of Collateral | $ 2,617 | $ 1,955 |
Property and Casualty Unpaid 73
Property and Casualty Unpaid Claims and Claim Expenses (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Gross reserves, beginning of year | $ 325,784 | |||
Less: reinsurance recoverables | 53,332 | |||
Incurred claims and claim expenses: | ||||
Claims occurring in the current year | 0 | $ 0 | $ 0 | |
Decrease in estimated reserves for claims occurring in prior years | 0 | 0 | 0 | |
Claims and claim expense payments for claims occurring during: | ||||
Plus: reinsurance recoverables | 60,112 | 53,332 | ||
Gross reserves, end of year | 323,720 | 325,784 | ||
Property, Liability and Casualty Insurance Product Line [Member] | ||||
Gross reserves, beginning of year | [1] | 311,097 | 275,809 | 274,542 |
Less: reinsurance recoverables | 43,740 | 14,107 | 13,705 | |
Net reserves, beginning of year | [2] | 267,357 | 261,702 | 260,837 |
Incurred claims and claim expenses: | ||||
Claims occurring in the current year | 432,811 | 416,512 | 403,589 | |
Decrease in estimated reserves for claims occurring in prior years | [3] | (12,500) | (17,000) | (17,988) |
Total claims and claim expenses incurred | [4] | 420,311 | 399,512 | 385,601 |
Claims and claim expense payments for claims occurring during: | ||||
Current year | 294,449 | 273,699 | 265,831 | |
Prior years | 141,982 | 120,158 | 118,905 | |
Total claims and claim expense payments | 436,431 | 393,857 | 384,736 | |
Net reserves, end of year | [2] | 251,237 | 267,357 | 261,702 |
Plus: reinsurance recoverables | 50,332 | 43,740 | 14,107 | |
Gross reserves, end of year | [1] | $ 301,569 | $ 311,097 | $ 275,809 |
[1] | Unpaid Claims and Claim Expenses as reported in the Consolidated Balance Sheets also include reserves for the life and annuity segments of $22,151, $14,687, $15,818 and $14,853 as of December 31, 2015, 2014, 2013 and 2012, respectively, in addition to property and casualty segment reserves. | |||
[2] | Reserves net of anticipated reinsurance recoverables. | |||
[3] | Shows the amounts by which the Company decreased its reserves in each of the periods indicated for claims occurring in previous periods to reflect subsequent information on such claims and changes in their projected final settlement costs. Also refer to the paragraphs below for additional information regarding the reserve development recorded in 2015, 2014 and 2013. | |||
[4] | Benefits, claims and settlement expenses as reported in the Consolidated Statements of Operations also include amounts for the life and annuity segments of $76,053, $68,914 and $62,716 for the years ended December 31, 2015, 2014 and 2013, respectively, in addition to the property and casualty segment amounts. |
Property and Casualty Unpaid 74
Property and Casualty Unpaid Claims and Claim Expenses (Details Textual) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Automobile Liability Coverage Percent Reserves | 75.00% | |||
Short tail coverage reserves as a percentage of total reserves. | 20.00% | |||
Policyholder Benefits and Claims Incurred, Net | $ 496,364 | $ 468,426 | $ 448,317 | |
Long Tail Coverage Reserves as Percentage of Reserves | 80.00% | |||
Potential Variability of Property and Casualty Loss Reserves | 6.00% | |||
Probability of Other Possible Outcomes Possible Impact on Net Income | $ 10,000 | |||
Favorable development of total reserves for property and casualty claims occurring in prior years | 12,500 | 17,000 | 17,988 | |
Life and Annuity Segments Combined [Member] | ||||
Liability for Unpaid Claims and Claims Adjustment Expense, Net | 22,151 | 14,687 | 15,818 | $ 14,853 |
Policyholder Benefits and Claims Incurred, Net | $ 76,053 | $ 68,914 | $ 62,716 |
Reinsurance and Catastrophes (D
Reinsurance and Catastrophes (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Summary of reinsurance recoverable on unpaid insurance reserves | ||
Reinsurance Recoverables | $ 60,112 | $ 53,332 |
Reinsurance companies [Member] | ||
Summary of reinsurance recoverable on unpaid insurance reserves | ||
Reinsurance Recoverables | 9,026 | 7,772 |
State insurance facilities [Member] | ||
Summary of reinsurance recoverable on unpaid insurance reserves | ||
Reinsurance Recoverables | 41,306 | 35,968 |
Life and health [Member] | ||
Summary of reinsurance recoverable on unpaid insurance reserves | ||
Reinsurance Recoverables | $ 9,780 | $ 9,592 |
Reinsurance and Catastrophes 76
Reinsurance and Catastrophes (Details 1) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Effects of reinsurance on premiums and benefits | |||
Premiums written and contract deposits, Gross Amount | $ 1,277,066 | $ 1,191,123 | $ 1,120,852 |
Premiums written and contract deposits, Ceded to Other Companies | 24,737 | 27,144 | 30,115 |
Premiums written and contract deposits, Assumed from Other Companies | 4,184 | 3,676 | 3,456 |
Premiums written and contract deposits, Net Amount | 1,256,513 | 1,167,655 | 1,094,193 |
Premiums and contract charges earned, Gross Amount | 752,798 | 739,281 | 717,494 |
Premiums and contract charges earned, Ceded to Other Companies | 25,077 | 27,276 | 29,990 |
Premiums and contract charges earned, Assumed from Other Companies | 4,159 | 3,755 | 3,434 |
Premiums and contract charges earned, Net Amount | 731,880 | 715,760 | 690,938 |
Benefits, claims and settlement expenses, Gross Amount | 508,904 | 504,550 | 455,298 |
Benefits, claims and settlement expenses, Ceded to Other Companies | 16,221 | 39,236 | 10,018 |
Benefits, claims and settlement expenses, Assumed from Other Companies | 3,681 | 3,112 | 3,037 |
Benefits, claims and settlement expenses, Net Amount | $ 496,364 | $ 468,426 | $ 448,317 |
Reinsurance and Catastrophes 77
Reinsurance and Catastrophes (Details Textual) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Reinsurance Recoverable on Unpaid Insurance Reserves [Line Items] | |||
Losses Incurred For Catastrophe Claims Carrying Amount | $ 44,429 | $ 37,500 | $ 40,225 |
Percentage Of Coverage For Catastrophe Losses Above Retention Amount | 95.00% | ||
Coverage Above Retention Per Occurrence Under Layer One Catastrophe Reinsurance | $ 25,000 | ||
Retention Base Amount Per Occurrence Under Layer One | 25,000 | ||
Coverage Above Retention Per Occurrence Under Layer Two Catastrophe Reinsurance | 40,000 | ||
Retention Base Amount Per Occurrence Under Layer Two | 50,000 | ||
Coverage Above Retention Per Occurrence Under Layer Three Catastrophe Reinsurance | 85,000 | ||
Retention Base Amount Per Occurrence Under Layer Three | 90,000 | ||
Amount Of Maximum Individual Life Insurance Risk Retained | 300 | ||
Reinsured Amount Of Each Loss Above Retention In Clash Event | 20,000 | ||
Amount Of Property Recovery Related To Risk Losses | $ 4,800 | ||
Percentage of Life Reinsured Catastrophe Risk In Excess Specified Retention Per Occurrence Amount | 100.00% | ||
Maximum [Member] | |||
Reinsurance Recoverable on Unpaid Insurance Reserves [Line Items] | |||
Retention Amount Per Occurrence Related To Catastrophe Losses | $ 175,000 | ||
Amount Of Maximum Group Life Policy Insurance Risk Retained | 125 | ||
Liability coverages, Company reinsured each loss above a retention per occurrence | 2,500 | ||
Amount of Life Catastrophe Risk in Excess of Per Occurrence | 35,000 | ||
Maximum [Member] | Property, Liability and Casualty Insurance Product Line [Member] | |||
Reinsurance Recoverable on Unpaid Insurance Reserves [Line Items] | |||
Reinsured Amount Of Each Property Loss Above Retention Per Occurrence | 2,500 | ||
Minimum [Member] | |||
Reinsurance Recoverable on Unpaid Insurance Reserves [Line Items] | |||
Retention Amount Per Occurrence Related To Catastrophe Losses | 25,000 | ||
Amount Life Catastrophe Risk Retention Per Occurrence | 1,000 | ||
Minimum [Member] | Property, Liability and Casualty Insurance Product Line [Member] | |||
Reinsurance Recoverable on Unpaid Insurance Reserves [Line Items] | |||
Retention Amount Of Each Property Loss Per Occurrence | $ 900 |
Debt (Details)
Debt (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | ||
Short-term debt: | |||
Bank Credit Facility | $ 0 | $ 38,000 | |
Long-term debt, current and noncurrent: | |||
Long-term debt | 249,346 | 199,939 | |
Total | [1] | $ 249,346 | 237,939 |
Final Maturity | 2,019 | ||
Senior Note 4.50 % [Member] | |||
Long-term debt, current and noncurrent: | |||
Long-term debt | [1] | $ 249,346 | 0 |
Debt Effective Interest Rates | [1] | 4.50% | |
Final Maturity | [1] | 2,025 | |
Senior Note 6.05 % [Member] | |||
Long-term debt, current and noncurrent: | |||
Long-term debt | [1] | $ 0 | 74,989 |
Debt Effective Interest Rates | [1] | 6.10% | |
Final Maturity | [1] | 2,015 | |
Senior Note 6.85 % [Member] | |||
Long-term debt, current and noncurrent: | |||
Long-term debt | [1] | $ 0 | $ 124,950 |
Debt Effective Interest Rates | [1] | 6.90% | |
Final Maturity | [1] | 2,016 | |
[1] | The Company designates debt obligations as “long-term” based on maturity date at issuance. |
Debt (Details Textual)
Debt (Details Textual) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Debt | |||
Repayments of Lines of Credit | $ 38,000,000 | $ 0 | $ 0 |
Redemption of Senior Notes due 2016 | 127,292,000 | 0 | $ 0 |
Redemption Of Senior Notes Pretax Charge | $ 2,338,000 | ||
Current Unsecured Bank Credit Facility [Member] | |||
Debt | |||
Line of Credit Facility, Expiration Date | Jul. 30, 2019 | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 150,000,000 | ||
Variable Commitment Fee Charge On Unused Portion Of Credit Facility | 0.15% | ||
Debt Instrument, Basis Spread on Variable Rate | 1.15% | ||
Senior Notes 2015 [Member] | |||
Debt | |||
Debt Instrument, Interest Rate, Stated Percentage | 4.50% | ||
Debt Instrument, Face Amount | $ 75,000,000 | ||
Debt Instrument, Maturity Date | Jun. 15, 2015 | ||
HMEC's Bank Credit Facility [Member] | |||
Debt | |||
Line of Credit Facility, Expiration Date | Oct. 6, 2015 | ||
Repayments of Lines of Credit | $ 113,000 | ||
Senior Notes 2025 [Member] | |||
Debt | |||
Debt Instrument, Interest Rate, Stated Percentage | 4.50% | ||
Senior Note 6.05 % [Member] | Senior Notes 2015 [Member] | |||
Debt | |||
Debt Instrument, Unamortized Discount | $ 0 | 11,000 | |
Debt Instrument, Interest Rate, Stated Percentage | 6.05% | ||
Debt Instrument, Face Amount | $ 75,000,000 | ||
Debt Instrument, Maturity Date | Jun. 15, 2015 | ||
Senior Note 6.85 % [Member] | Senior Notes 2016 [Member] | |||
Debt | |||
Debt Instrument, Unamortized Discount | $ 0 | $ 50,000 | |
Debt Instrument, Interest Rate, Stated Percentage | 6.85% | ||
Debt Instrument, Face Amount | $ 125,000,000 | ||
Debt Instrument, Repurchase Date | Dec. 23, 2015 | ||
Senior Note 6.85 % [Member] | Senior Notes 2025 [Member] | |||
Debt | |||
Debt Instrument, Interest Rate, Stated Percentage | 4.50% | ||
Senior Note 4.50 % [Member] | Senior Notes 2025 [Member] | |||
Debt | |||
Debt Instrument, Unamortized Discount | $ 654,000 | ||
Debt Instrument, Interest Rate, Stated Percentage | 4.50% | ||
Debt Instrument, Face Amount | $ 250,000,000 | ||
Debt Instrument, Maturity Date | Dec. 1, 2025 | ||
Debt Instrument, Interest Rate, Effective Percentage | 4.533% | ||
Debt Instrument Percentage Of Discount On Issuance | 0.265% | ||
Percentage Spread On Treasury Rate Used To Calculate Redemption Price | 35 basis points |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Income tax (asset) liability | ||
Current | $ 1,000 | $ (1,195) |
Deferred | $ 201,208 | $ 261,784 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Deferred tax assets | ||
Unearned premium reserve reduction | $ 17,402 | $ 15,721 |
Compensation accruals | 13,737 | 14,765 |
Impaired securities | 7,635 | 3,327 |
Other comprehensive income - net funded status of pension and other postretirement benefit obligations | 6,375 | 7,009 |
Discounting of unpaid claims and claim expense tax reserves | 3,213 | 4,090 |
Postretirement benefits other than pensions | 664 | 870 |
Other, net | 1,189 | 0 |
Total gross deferred tax assets | 50,215 | 45,782 |
Deferred tax liabilities | ||
Other comprehensive income - net unrealized gains on fixed maturities and equity securities | 112,934 | 185,011 |
Deferred policy acquisition costs | 85,341 | 70,796 |
Life insurance future policy benefit reserve | 30,177 | 25,914 |
Investment related adjustments | 18,709 | 20,064 |
Intangible assets | 4,262 | 4,262 |
Other, net | 0 | 1,519 |
Total gross deferred tax liabilities | 251,423 | 307,566 |
Net deferred tax liability | $ 201,208 | $ 261,784 |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Taxes [Line Items] | |||
Current | $ 29,885 | $ 32,295 | $ 31,610 |
Deferred | 6,085 | 9,575 | 11,563 |
Total income tax expense | $ 35,970 | $ 41,870 | $ 43,173 |
Income Taxes (Details 3)
Income Taxes (Details 3) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Taxes [Line Items] | |||
Expected federal tax on income | $ 45,308 | $ 51,140 | $ 53,923 |
Add (deduct) tax effects of: | |||
Tax-exempt interest | (6,678) | (6,849) | (6,829) |
Dividend received deduction | (3,564) | (3,566) | (3,382) |
Other, net | 904 | 1,145 | (539) |
Income tax expense provided on income | $ 35,970 | $ 41,870 | $ 43,173 |
Income Taxes (Details 4)
Income Taxes (Details 4) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Taxes [Line Items] | |||
Balance as of the beginning of the year | $ 656 | $ 641 | $ 0 |
Additions based on tax positions related to the current year | 398 | 259 | 641 |
Settlements in tax positions for prior years | (15) | (244) | 0 |
Balance as of the end of the year | $ 1,039 | $ 656 | $ 641 |
Income Taxes (Details Textual)
Income Taxes (Details Textual) | 12 Months Ended |
Dec. 31, 2015 | |
Income Taxes [Line Items] | |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 35.00% |
Shareholders' Equity and Comm86
Shareholders' Equity and Common Stock Equivalents (Details) - shares | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock options | 669,693 | 634,437 | 956,814 |
Restricted common stock units related to incentive compensation | 1,442,325 | 1,590,138 | 1,663,190 |
Total | 2,252,661 | 2,382,166 | 2,850,047 |
Restricted Stock Units (RSUs) [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Common stock units related to deferred compensation | 85,200 | 87,993 | 118,062 |
Employee Stock Option [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Common stock units related to deferred compensation | 55,443 | 69,598 | 111,981 |
Shareholders' Equity and Comm87
Shareholders' Equity and Common Stock Equivalents (Details 1) - $ / shares | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Summary of changes in outstanding options | |||
Weighted Average Option Price per Share, Beginning Balance | $ 21.22 | ||
Weighted Average Option Price per Share, Options Granted | 32.44 | ||
Weighted Average Option Price per Share, Options Vested | 21.23 | ||
Weighted Average Option Price per Share, Options Exercised | 17.71 | ||
Weighted Average Option Price per Share, Options Forfeited | 23.10 | ||
Weighted Average Option Price per Share, Options Expired | 0 | ||
Weighted Average Option Price per Share, Ending Balance | 24 | $ 21.22 | |
Range of Option Prices per Share, Expired | $ 0 | ||
Options Outstanding, Beginning Balance | 634,437 | 956,814 | |
Options Outstanding, Granted | 142,908 | 175,632 | 245,424 |
Options Outstanding, Vested | 0 | ||
Options Outstanding, Exercised | 85,532 | 435,665 | 1,158,537 |
Options Outstanding, Forfeited | (22,120) | ||
Options Outstanding, Expired | 0 | ||
Options Outstanding, Ending Balance | 669,693 | 634,437 | 956,814 |
Options Vested and Exercisable, Beginning Balance | 208,578 | ||
Options Vested and Exercisable, Granted | 0 | ||
Options Vested and Exercisable, Vested | 158,586 | ||
Options Vested and Exercisable, Exercisable | (85,532) | ||
Options Vested and Exercisable, Forfeited | 0 | ||
Options Vested and Exercisable, Expired | 0 | ||
Options Vested and Exercisable, Ending Balance | 281,632 | 208,578 | |
Minimum [Member] | |||
Summary of changes in outstanding options | |||
Range of Option Prices per Share, Beginning Balance | $ 6.91 | ||
Range of Option Prices per Share, Granted | 32.35 | ||
Range of Option Prices per Share, Vested | 13.83 | ||
Range of Option Prices per Share, Exercised | 13.83 | ||
Range of Option Prices per Share, Forfeited | 17.01 | ||
Range of Option Prices per Share, Ending Balance | 6.91 | $ 6.91 | |
Maximum [Member] | |||
Summary of changes in outstanding options | |||
Range of Option Prices per Share, Beginning Balance | 30.24 | ||
Range of Option Prices per Share, Granted | 33.41 | ||
Range of Option Prices per Share, Vested | 30.24 | ||
Range of Option Prices per Share, Exercised | 28.88 | ||
Range of Option Prices per Share, Forfeited | 28.88 | ||
Range of Option Prices per Share, Ending Balance | $ 33.41 | $ 30.24 |
Shareholders' Equity and Comm88
Shareholders' Equity and Common Stock Equivalents (Details 2) - $ / shares | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Summary of options outstanding segregated by ranges of exercise prices | |||
Total Outstanding Options, Options | 669,693 | 634,437 | 956,814 |
Total Outstanding Options, Weighted Average Option Price per Share | $ 24 | $ 21.22 | |
Total Outstanding Options, Weighted Average Remaining Term | 5 years 8 months 12 days | ||
Vested and Exercisable Options | 281,632 | 208,578 | |
Vested and Exercisable Options, Weighted Average Option Price per Share | $ 19.32 | $ 17.20 | $ 15.78 |
Vested and Exercisable Options, Weighted Average Remaining Term | 3 years 7 months 6 days | ||
Exercise Price Range Range One [Member] | |||
Summary of options outstanding segregated by ranges of exercise prices | |||
Total Outstanding Options, Options | 103,368 | ||
Total Outstanding Options, Weighted Average Option Price per Share | $ 16.14 | ||
Total Outstanding Options, Weighted Average Remaining Term | 1 year 10 months 24 days | ||
Vested and Exercisable Options | 103,368 | ||
Vested and Exercisable Options, Weighted Average Option Price per Share | $ 16.14 | ||
Vested and Exercisable Options, Weighted Average Remaining Term | 1 year 10 months 24 days | ||
Exercise Price Range Range One [Member] | Minimum [Member] | |||
Summary of options outstanding segregated by ranges of exercise prices | |||
Total Outstanding Options, Weighted Average Option Price per Share | $ 6.91 | ||
Exercise Price Range Range One [Member] | Maximum [Member] | |||
Summary of options outstanding segregated by ranges of exercise prices | |||
Total Outstanding Options, Weighted Average Option Price per Share | $ 17.01 | ||
Exercise Price Range Range Two [Member] | |||
Summary of options outstanding segregated by ranges of exercise prices | |||
Total Outstanding Options, Options | 257,921 | ||
Total Outstanding Options, Weighted Average Option Price per Share | $ 19.32 | ||
Total Outstanding Options, Weighted Average Remaining Term | 3 years 8 months 12 days | ||
Vested and Exercisable Options | 139,216 | ||
Vested and Exercisable Options, Weighted Average Option Price per Share | $ 18.98 | ||
Vested and Exercisable Options, Weighted Average Remaining Term | 3 years 7 months 6 days | ||
Exercise Price Range Range Two [Member] | Minimum [Member] | |||
Summary of options outstanding segregated by ranges of exercise prices | |||
Total Outstanding Options, Weighted Average Option Price per Share | $ 17.32 | ||
Exercise Price Range Range Two [Member] | Maximum [Member] | |||
Summary of options outstanding segregated by ranges of exercise prices | |||
Total Outstanding Options, Weighted Average Option Price per Share | $ 22.69 | ||
Exercise Price Range Range Three [Member] | |||
Summary of options outstanding segregated by ranges of exercise prices | |||
Total Outstanding Options, Options | 308,404 | ||
Total Outstanding Options, Weighted Average Option Price per Share | $ 30.54 | ||
Total Outstanding Options, Weighted Average Remaining Term | 8 years 7 months 6 days | ||
Vested and Exercisable Options | 39,048 | ||
Vested and Exercisable Options, Weighted Average Option Price per Share | $ 28.94 | ||
Vested and Exercisable Options, Weighted Average Remaining Term | 8 years 1 month 6 days | ||
Exercise Price Range Range Three [Member] | Minimum [Member] | |||
Summary of options outstanding segregated by ranges of exercise prices | |||
Total Outstanding Options, Weighted Average Option Price per Share | $ 28.88 | ||
Exercise Price Range Range Three [Member] | Maximum [Member] | |||
Summary of options outstanding segregated by ranges of exercise prices | |||
Total Outstanding Options, Weighted Average Option Price per Share | 33.41 | ||
Exercise Price Range Range Four [Member] | Minimum [Member] | |||
Summary of options outstanding segregated by ranges of exercise prices | |||
Total Outstanding Options, Weighted Average Option Price per Share | 6.91 | ||
Exercise Price Range Range Four [Member] | Maximum [Member] | |||
Summary of options outstanding segregated by ranges of exercise prices | |||
Total Outstanding Options, Weighted Average Option Price per Share | $ 33.41 |
Shareholders' Equity and Comm89
Shareholders' Equity and Common Stock Equivalents (Details 3) | 12 Months Ended | |
Dec. 31, 2015$ / sharesshares | ||
Summary of changes in outstanding restricted common stock units | ||
Beginning balance, Total Outstanding, Units | shares | 1,590,138 | |
Granted, Total Outstanding Units | shares | 225,180 | [1] |
Vested, Total Outstanding Units | shares | 0 | |
Forfeited, Total Outstanding Units | shares | (66,794) | |
Distributed, Total Outstanding Units | shares | (306,199) | [2] |
Ending balance, Total Outstanding, Units | shares | 1,442,325 | |
Beginning balance, Total Outstanding, Weighted Average Grant Date Fair Value per Unit | $ / shares | $ 21.34 | |
Granted, Total Outstanding, Weighted Average Grant Date Fair Value per Unit | $ / shares | 34.42 | [1] |
Vested, Total Outstanding, Weighted Average Grant Date Fair Value per Unit | $ / shares | 0 | |
Forfeited, Total Outstanding, Weighted Average Grant Date Fair Value per Unit | $ / shares | 25.60 | |
Distributed, Total Outstanding, Weighted Average Grant Date Fair Value per Unit | $ / shares | 16.13 | [2] |
Ending balance, Total Outstanding, Weighted Average Grant Date Fair Value per Unit | $ / shares | $ 24.29 | |
Beginning balance, Vested, Units | shares | 853,054 | |
Granted, Vested, Units | shares | 0 | [1] |
Vested, Vested, Units | shares | 303,057 | |
Forfeited, Vested, Units | shares | 0 | |
Distributed, Vested, Units | shares | (306,199) | [2] |
Ending balance, Vested, Units | shares | 849,912 | |
Beginning balance, Vested, Weighted Average Grant Date Fair Value per Unit | $ / shares | $ 14.36 | |
Granted, Weighted Average Grant Date Fair Value per Unit | $ / shares | 0 | [1] |
Vested, Weighted Average Grant Date Fair Value per Unit | $ / shares | 19.39 | |
Forfeited, Weighted Average Grant Date Fair Value per Unit | $ / shares | 0 | |
Distributed, Vested, Weighted Average Grant Date Fair Value per Unit | $ / shares | 16.13 | [2] |
Ending balance, Vested, Weighted Average Grant Date Fair Value per Unit | $ / shares | $ 15.51 | |
[1] | Includes dividends reinvested into additional restricted common stock units. | |
[2] | Includes distributed units which were utilized to satisfy withholding taxes due on the distribution. |
Shareholders' Equity and Comm90
Shareholders' Equity and Common Stock Equivalents (Details Textual) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2011 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Percentage Of Outstanding Common Stock Repurchased Period Two | 0.40% | ||||
Percentage Of Outstanding Common Stock Repurchased Period Three | 0.50% | ||||
Percentage Of Outstanding Common Stock Repurchased Period Four | 1.60% | ||||
Treasury Stock Value Acquired Cost Method For Period Two | $ 3,889 | ||||
Treasury Stock Value Acquired Cost Method For Period Three | 5,411 | ||||
Treasury Stock Value Acquired Cost Method For Period Four | $ 21,950 | ||||
Treasury Stock Acquired Average Cost Per Share For Period Two | $ 22.38 | ||||
Treasury Stock Acquired Average Cost Per Share For Period Three | 28.33 | ||||
Treasury Stock Acquired Average Cost Per share For Period Four | 33.08 | ||||
Treasury Stock Acquired Average Cost Per Share For Period Total | $ 23.35 | ||||
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 51,010 | ||||
Treasury Stock, Number of Shares Held | 23,971,522 | ||||
Preferred Stock, Shares Authorized | 1,000,000 | 1,000,000 | |||
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Grant Date Intrinsic Value | 0 | ||||
Common Stock Closing Market Price Per Share | 33.18 | ||||
Share Based Compensation Arrangement By Share Based Payment Award Options Vested And Exercisable Weighted Average Exercise Price | $ 19.32 | $ 17.20 | $ 15.78 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Aggregate Intrinsic Value | $ 3,904 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value | $ 6,152 | ||||
Minimum [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period | 7 years | ||||
Minimum [Member] | Employee Stock Option [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 4 years | ||||
Minimum [Member] | Restricted Stock Units (RSUs) [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 1 year | ||||
Maximum [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period | 10 years | ||||
Maximum [Member] | Restricted Stock Units (RSUs) [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 5 years | ||||
Common Stock [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Treasury Stock Shares For Period Two | 173,629 | ||||
Treasury Stock Shares For Period Three | 190,876 | ||||
Treasury Stock Shares For Period Four | 663,092 | ||||
Treasury Stock Shares Total | 2,098,200 | ||||
2010 Comprehensive Executive Compensation Plan [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 3,900,000 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized | 3,250,000 | ||||
2011 Equity Incentive Plan [Member] | Common Stock [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock Repurchase Program, Authorized Amount | $ 50,000 | ||||
2015 Equity Incentive Plan [Member] | Common Stock [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock Repurchase Program, Authorized Amount | $ 50,000 |
Statutory Information and Res91
Statutory Information and Restrictions (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Statutory Information and Restrictions [Line Items] | |||||||||||||||
Statutory capital and surplus of insurance subsidiaries | $ 883,870 | $ 861,421 | $ 883,870 | $ 861,421 | |||||||||||
Deferred policy acquisition costs | 253,176 | 215,082 | 253,176 | 215,082 | |||||||||||
Difference in policyholder reserves | 95,536 | 87,345 | 95,536 | 87,345 | |||||||||||
Goodwill | 47,396 | 47,396 | 47,396 | 47,396 | |||||||||||
Investment fair value adjustments on fixed maturities | 314,705 | 519,593 | 314,705 | 519,593 | |||||||||||
Difference in investment reserves | 120,795 | 118,633 | 120,795 | 118,633 | |||||||||||
Federal income tax liability | (224,492) | (290,034) | (224,492) | (290,034) | |||||||||||
Net funded status of pension and other postretirement benefit obligations | (18,213) | (20,027) | (18,213) | (20,027) | |||||||||||
Non-admitted assets and other, net | 21,691 | 18,528 | 21,691 | 18,528 | |||||||||||
Shareholders' equity of parent company and non-insurance subsidiaries | 19,543 | 16,465 | 19,543 | 16,465 | |||||||||||
Parent company short-term and long-term debt | (249,346) | (237,939) | (249,346) | (237,939) | |||||||||||
Total shareholders' equity | 1,264,661 | 1,336,463 | $ 1,099,305 | 1,264,661 | 1,336,463 | $ 1,099,305 | |||||||||
Statutory net income of insurance subsidiaries | 87,619 | 97,875 | 98,905 | ||||||||||||
Net loss of non-insurance companies | (4,474) | (3,906) | (4,583) | ||||||||||||
Interest expense | (13,122) | (14,198) | (14,236) | ||||||||||||
Debt retirement costs | (2,338) | 0 | 0 | ||||||||||||
Tax benefit of interest expense and other parent company current tax adjustments | 6,829 | 6,371 | 6,030 | ||||||||||||
Combined net income | 74,514 | 86,142 | 86,116 | ||||||||||||
Increase (decrease) due to: | |||||||||||||||
Deferred policy acquisition costs | 13,249 | 16,828 | 17,177 | ||||||||||||
Policyholder benefits | 14,065 | 15,284 | 19,038 | ||||||||||||
Federal income tax expense | (6,678) | (10,548) | (12,735) | ||||||||||||
Investment reserves | 7,339 | 3,574 | 6,818 | ||||||||||||
Other adjustments, net | (9,007) | (7,037) | (5,521) | ||||||||||||
Net income as reported herein | $ 21,040 | $ 21,984 | $ 16,183 | $ 34,275 | $ 30,068 | $ 25,357 | $ 20,452 | $ 28,366 | $ 34,287 | $ 23,599 | $ 25,995 | $ 27,012 | $ 93,482 | $ 104,243 | $ 110,893 |
Statutory Information and Res92
Statutory Information and Restrictions (Details Textual) pure in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Minimum statutory-basis capital and surplus | $ 139,949 | $ 135,797 |
Restricted net assets of HMEC's insurance subsidiaries | 18,312 | 18,361 |
Aggregate amount of dividends | 90,000 | |
Statutory capital and surplus of insurance subsidiaries | 883,870 | $ 861,421 |
Liquid assets of parent company | $ 13,237 | |
Number of financial reinsurance agreements | 0 |
Pension Plans and Other Postr93
Pension Plans and Other Postretirement Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Qualified Defined Contribution Plan [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Contributions to employees' accounts | $ 0 | $ 4,580 | $ 4,616 |
Total assets at the end of the year | 9,088 | 123,008 | 135,097 |
401 K Plan [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Contributions to employees' accounts | 6,466 | 2,753 | 2,781 |
Total assets at the end of the year | 161,956 | 132,053 | 134,897 |
Non Qualified Defined Contribution Plan [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Contributions to employees' accounts | 122 | 74 | 110 |
Total assets at the end of the year | $ 0 | $ 0 | $ 0 |
Pension Plans and Other Postr94
Pension Plans and Other Postretirement Benefits (Details 1) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Defined Benefit Plan [Member] | |||
Change in benefit obligation: | |||
Projected benefit obligation at beginning of year | $ 34,279 | $ 39,483 | $ 40,994 |
Service cost | 450 | 360 | 360 |
Interest cost | 1,189 | 1,679 | 1,369 |
Plan amendments | 0 | 0 | 0 |
Actuarial loss (gain) | (1,371) | 1,254 | 624 |
Benefits paid | (3,314) | (1,737) | (1,715) |
Settlements | 0 | (6,760) | (2,149) |
Projected benefit obligation at end of year | 31,233 | 34,279 | 39,483 |
Change in plan assets: | |||
Fair value of plan assets at beginning of year | 31,408 | 35,879 | 32,757 |
Actual return on plan assets | 200 | 2,535 | 4,396 |
Employer contributions | 0 | 2,000 | 3,103 |
Benefits paid | (3,314) | (1,737) | (1,715) |
Expenses paid | (627) | (509) | (513) |
Settlements | 0 | (6,760) | (2,149) |
Fair value of plan assets at end of year | 27,667 | 31,408 | 35,879 |
Funded status | (3,566) | (2,871) | (3,604) |
Prepaid (accrued) benefit expense | 9,265 | 10,656 | 12,331 |
Total amount recognized in Consolidated Balance Sheets, all in Other Liabilities | (3,566) | (2,871) | (3,604) |
Amounts recognized in accumulated other comprehensive income (loss) (“AOCI”): | |||
Prior service cost | 0 | 0 | 0 |
Net actuarial loss | 12,831 | 13,527 | 15,935 |
Total amount recognized in AOCI | 12,831 | 13,527 | 15,935 |
Information for pension plans with an accumulated benefit obligation greater than plan assets: | |||
Projected benefit obligation | 31,233 | 34,279 | 39,483 |
Accumulated benefit obligation | 31,233 | 34,279 | 39,483 |
Fair value of plan assets | 27,667 | 31,408 | 35,879 |
Supplemental Defined Benefit Plans [Member] | |||
Change in benefit obligation: | |||
Projected benefit obligation at beginning of year | 18,524 | 16,706 | 18,192 |
Service cost | 0 | 0 | 0 |
Interest cost | 654 | 716 | 616 |
Plan amendments | 0 | 0 | 0 |
Actuarial loss (gain) | (845) | 2,431 | (783) |
Benefits paid | (1,329) | (1,329) | (1,319) |
Settlements | 0 | 0 | 0 |
Projected benefit obligation at end of year | 17,004 | 18,524 | 16,706 |
Change in plan assets: | |||
Fair value of plan assets at beginning of year | 0 | 0 | 0 |
Actual return on plan assets | 0 | 0 | 0 |
Employer contributions | 1,329 | 1,329 | 1,319 |
Benefits paid | (1,329) | (1,329) | (1,319) |
Expenses paid | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 |
Fair value of plan assets at end of year | 0 | 0 | 0 |
Funded status | (17,004) | (18,524) | (16,706) |
Prepaid (accrued) benefit expense | (11,622) | (12,024) | (12,479) |
Total amount recognized in Consolidated Balance Sheets, all in Other Liabilities | (17,004) | (18,524) | (16,706) |
Amounts recognized in accumulated other comprehensive income (loss) (“AOCI”): | |||
Prior service cost | 0 | 0 | 0 |
Net actuarial loss | 5,382 | 6,500 | 4,227 |
Total amount recognized in AOCI | 5,382 | 6,500 | 4,227 |
Information for pension plans with an accumulated benefit obligation greater than plan assets: | |||
Projected benefit obligation | 17,004 | 18,524 | 16,706 |
Accumulated benefit obligation | 17,004 | 18,524 | 16,706 |
Fair value of plan assets | $ 0 | $ 0 | $ 0 |
Pension Plans and Other Postr95
Pension Plans and Other Postretirement Benefits (Details 2) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Amortization of: | ||||
Total recognized in other comprehensive income (loss) | $ (1,815) | $ 1,810 | $ (5,645) | |
Weighted-average assumptions used to determine expense: | ||||
Discount rate | 4.46% | 3.51% | ||
Expected return on plan assets | [1] | 0.00% | 0.00% | |
Weighted-average assumptions used to determine benefit obligations as of December 31: | ||||
Discount rate | 3.66% | 4.46% | ||
Expected return on plan assets | [1] | 0.00% | 0.00% | |
Defined Benefit Plan [Member] | ||||
Service cost: | ||||
Benefit accrual | 0 | $ 0 | $ 0 | |
Other expenses | 450 | 360 | 360 | |
Interest cost | 1,189 | 1,679 | 1,369 | |
Expected return on plan assets | (1,875) | (2,402) | (2,238) | |
Settlement loss | 0 | 2,668 | 867 | |
Amortization of: | ||||
Prior service cost | 0 | 0 | 0 | |
Actuarial loss | 1,626 | 1,371 | 1,602 | |
Net periodic pension expense | 1,390 | 3,676 | 1,960 | |
Changes in plan assets and benefit obligations included in other comprehensive income (loss): | ||||
Prior service cost | 0 | 0 | 0 | |
Net actuarial loss (gain) | 930 | (1,037) | (1,888) | |
Amortization of: | ||||
Prior service cost | 0 | 0 | 0 | |
Actuarial loss | (1,626) | (1,371) | (1,602) | |
Total recognized in other comprehensive income (loss) | $ (696) | $ (2,408) | $ (3,490) | |
Weighted-average assumptions used to determine expense: | ||||
Discount rate | 3.66% | 4.46% | 3.51% | |
Expected return on plan assets | 6.75% | 7.50% | 7.50% | |
Annual rate of salary increase | [1] | |||
Weighted-average assumptions used to determine benefit obligations as of December 31: | ||||
Discount rate | 4.20% | 3.66% | 4.46% | |
Expected return on plan assets | 6.75% | 7.50% | 7.50% | |
Annual rate of salary increase | [1] | |||
Supplemental Defined Benefit Plans [Member] | ||||
Service cost: | ||||
Benefit accrual | $ 0 | $ 0 | $ 0 | |
Other expenses | 0 | 0 | 0 | |
Interest cost | 654 | 716 | 616 | |
Expected return on plan assets | 0 | 0 | 0 | |
Settlement loss | 0 | 0 | 0 | |
Amortization of: | ||||
Prior service cost | 0 | 0 | 124 | |
Actuarial loss | 273 | 157 | 203 | |
Net periodic pension expense | 927 | 873 | 943 | |
Changes in plan assets and benefit obligations included in other comprehensive income (loss): | ||||
Prior service cost | 0 | 0 | 0 | |
Net actuarial loss (gain) | (845) | 2,431 | (783) | |
Amortization of: | ||||
Prior service cost | 0 | (2) | (124) | |
Actuarial loss | (273) | (157) | (203) | |
Total recognized in other comprehensive income (loss) | $ (1,118) | $ 2,272 | $ (1,110) | |
Weighted-average assumptions used to determine expense: | ||||
Discount rate | 3.66% | 4.46% | 3.51% | |
Expected return on plan assets | [1] | |||
Annual rate of salary increase | [1] | |||
Weighted-average assumptions used to determine benefit obligations as of December 31: | ||||
Discount rate | 4.20% | 3.66% | 4.46% | |
Expected return on plan assets | [1] | |||
Annual rate of salary increase | [1] | |||
[1] | Not applicable. |
Pension Plans and Other Postr96
Pension Plans and Other Postretirement Benefits (Details 3) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | |
Defined Benefit Plan Disclosure [Line Items] | |||
Total | $ 27,245 | $ 31,099 | |
Fixed Income Funds [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total | 13,720 | 15,591 | |
United States [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total | [1] | 10,844 | 12,718 |
International [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total | [1] | 2,681 | 2,790 |
Level 1 [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total | 0 | 0 | |
Level 1 [Member] | Fixed Income Funds [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total | 0 | 0 | |
Level 1 [Member] | United States [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total | [1] | 0 | 0 |
Level 1 [Member] | International [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total | [1] | 0 | 0 |
Level 2 [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total | 27,245 | 31,099 | |
Level 2 [Member] | Fixed Income Funds [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total | 13,720 | 15,591 | |
Level 2 [Member] | United States [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total | [1] | 10,844 | 12,718 |
Level 2 [Member] | International [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total | [1] | 2,681 | 2,790 |
Level 3 [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total | 0 | 0 | |
Level 3 [Member] | Fixed Income Funds [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total | 0 | 0 | |
Level 3 [Member] | United States [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total | [1] | 0 | 0 |
Level 3 [Member] | International [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Total | [1] | $ 0 | $ 0 |
[1] | None of the trust fund assets for the defined benefit pension plan have been invested in shares of HMEC’s common stock. |
Pension Plans and Other Postr97
Pension Plans and Other Postretirement Benefits (Details 4) - Postretirement Benefit Costs [Member] - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Change in accumulated postretirement benefit obligations: | ||
Accumulated postretirement benefit obligations at beginning of year | $ 1,130 | $ 2,862 |
Changes during fiscal year | ||
Service cost | 0 | 0 |
Interest cost | 46 | 92 |
Plan amendment | 0 | (1,393) |
Settlements | (965) | 0 |
Employer payments net of participant contributions | (95) | (491) |
Actuarial (gain) loss | (116) | 60 |
Accumulated postretirement benefit obligations at end of year | 0 | 1,130 |
Unfunded status | 0 | (1,130) |
Total amount recognized in Consolidated Balance Sheets, all in Other Liabilities | 0 | (1,130) |
Amounts recognized in accumulated other comprehensive income (loss) (“AOCI”): | ||
Prior service cost (credit) | 0 | (1,341) |
Net actuarial loss (gain) | 0 | (604) |
Total amount recognized in AOCI | $ 0 | $ (1,945) |
Pension Plans and Other Postr98
Pension Plans and Other Postretirement Benefits (Details 5) - Postretirement Benefit Costs [Member] - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Components of net periodic benefit: | ||
Service cost | $ 0 | $ 0 |
Interest cost | 46 | 92 |
Curtailment gain | (713) | 0 |
Settlement gain | (1,439) | 0 |
Amortization of prior service cost | (628) | (52) |
Amortization of prior gain | (246) | (236) |
Net periodic income | $ (2,980) | $ (196) |
Pension Plans and Other Postr99
Pension Plans and Other Postretirement Benefits (Details 6) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | |||
Accumulated postretirement benefit obligations and Service and interest cost components of the net periodic postretirement benefit expense | ||||
Accumulated postretirement benefit obligations Effect of a one percentage point increase | $ 0 | [1] | $ 0 | |
Accumulated postretirement benefit obligations Effect of a one percentage point decrease | 0 | [1] | 0 | |
Service and interest cost components of the net periodic postretirement benefit expense Effect of a one percentage point increase | 0 | [1] | 2 | |
Service and interest cost components of the net periodic postretirement benefit expense Effect of a one percentage point decrease | $ 0 | [1] | $ (2) | |
Weighted-average assumptions used to determine benefit obligations as of December 31: | ||||
Discount rate | 3.66% | 4.46% | ||
Healthcare cost trend rate | [1] | 0 | 0 | |
Rate to which the cost trend rate is assumed to decline (ultimate trend rate) | [1] | 0 | 0 | |
Year the rate is assumed to reach the ultimate trend rate | [1] | |||
Expected return on plan assets | [1] | 0 | 0 | |
Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31: | ||||
Discount rate | 4.46% | 3.51% | ||
Healthcare cost trend rate | 0.00% | [1] | 7.50% | |
Rate to which the cost trend rate is assumed to decline (ultimate trend rate) | 0.00% | [1] | 5.00% | |
Year the rate is assumed to reach the ultimate trend rate | 2,022 | |||
Expected return on plan assets | [1] | 0.00% | 0.00% | |
[1] | Not applicable. |
Pension Plans and Other Post100
Pension Plans and Other Postretirement Benefits (Details 7) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015USD ($) | ||
Defined Benefit Plan [Member] | ||
Minimum funding requirement for 2016 | $ 0 | |
Expected contributions (approximations) for the year ended December 31, 2016 as of the time of this Form 10-K (1) | 0 | [1] |
Supplemental Defined Benefit Plans [Member] | ||
Minimum funding requirement for 2016 | 0 | |
Expected contributions (approximations) for the year ended December 31, 2016 as of the time of this Form 10-K (1) | $ 1,319 | [1] |
[1] | HMEC’s Annual Report on Form 10-K for the year ended December 31, 2015. |
Pension Plans and Other Post101
Pension Plans and Other Postretirement Benefits (Details 8) $ in Thousands | Dec. 31, 2015USD ($) |
Defined Benefit Plan [Member] | |
2,016 | $ 3,207 |
2,017 | 2,716 |
2,018 | 2,645 |
2,019 | 3,042 |
2,020 | 2,485 |
2021-2025 | 11,148 |
Supplemental Defined Benefit Plans [Member] | |
2,016 | 1,319 |
2,017 | 1,308 |
2,018 | 1,295 |
2,019 | 1,281 |
2,020 | 1,264 |
2021-2025 | $ 5,995 |
Pension Plans and Other Post102
Pension Plans and Other Postretirement Benefits (Details Textual) - USD ($) $ in Thousands | 2 Months Ended | 12 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2006 | |
Pension Plans and Other Postretirement Benefits Additional Textual [Abstract] | |||||
Minimum Years of Service Required | 1 year | ||||
Pension Expense | $ 8,899 | $ 11,850 | $ 10,295 | ||
Health Reimbursement Account Balance | 1,896 | $ 7,310 | |||
Reduction in Expenses Due to Change in Plan | 2,980 | 196 | |||
Health Reimbursement Accounts Funding | $ 252 | $ 523 | $ 252 | $ 181 | |
Debt Securities [Member] | |||||
Pension Plans and Other Postretirement Benefits Additional Textual [Abstract] | |||||
Defined Benefit Plan, Target Allocation Percentage | 50% fixed income funds | ||||
Equity Securities [Member] | |||||
Pension Plans and Other Postretirement Benefits Additional Textual [Abstract] | |||||
Defined Benefit Plan, Target Allocation Percentage | 50% equity | ||||
Qualified Defined Contribution Plan [Member] | |||||
Pension Plans and Other Postretirement Benefits Additional Textual [Abstract] | |||||
Employer Contribution as Percentage of Eligible Compensation | 5.00% | ||||
Minimum Years of Service Required | 3 years | ||||
Employee Vesting Percentage | 100.00% | ||||
401 K Plan [Member] | |||||
Pension Plans and Other Postretirement Benefits Additional Textual [Abstract] | |||||
Employee Vesting Percentage | 100.00% | ||||
Defined Contribution Plan, Employer Matching Contribution, Percent of Employees' Gross Pay | 3.00% | ||||
Deferred Compensation Arrangement with Individual, Requisite Service Period | 5 years | ||||
Defined Benefit Plan, Estimated Future Employer Contributions in Current Fiscal Year, Description | Effective January 1, 2015 the Company began matching each dollar of employee contributions up to a 5% maximum in addition to maintaining the automatic 3% safe harbor contribution. | ||||
Defined Benefit Plan [Member] | |||||
Pension Plans and Other Postretirement Benefits Additional Textual [Abstract] | |||||
Defined Benefit Plan Termination Benefits Terminated Participants Minimum Accrued Lump Sum Values | 100 | ||||
Deferred Compensation Arrangement with Individual, Cash Award Granted, Amount | 4,200 | $ 4,200 | |||
Deferred Compensation Arrangement with Individual, Compensation Expense | $ 1,600 | ||||
Defined Benefit Plan, Future Amortization of Gain (Loss) | $ 1,351 | ||||
Supplemental Defined Benefit Plans [Member] | |||||
Pension Plans and Other Postretirement Benefits Additional Textual [Abstract] | |||||
Defined Benefit Plan, Future Amortization of Gain (Loss) | $ 233 |
Contingencies and Commitment103
Contingencies and Commitments (Details) $ in Thousands | Dec. 31, 2015USD ($) |
2,016 | $ 2,494 |
2,017 | 2,360 |
2,018 | 2,390 |
2,019 | 2,289 |
2,020 | 1,526 |
2021-2025 | 2,761 |
2026 and beyond | $ 0 |
Contingencies and Commitment104
Contingencies and Commitments (Details Textual) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Commitments And Contingencies Disclosure [Line Items] | |||
Rental expenses | $ 2,872 | $ 2,823 | $ 2,838 |
Purchase Commitment, Remaining Minimum Amount Committed | $ 147,139 | $ 50,256 |
Supplementary Data on Cash F105
Supplementary Data on Cash Flows (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Cash flows from operating activities | |||||||||||||||
Net income | $ 21,040 | $ 21,984 | $ 16,183 | $ 34,275 | $ 30,068 | $ 25,357 | $ 20,452 | $ 28,366 | $ 34,287 | $ 23,599 | $ 25,995 | $ 27,012 | $ 93,482 | $ 104,243 | $ 110,893 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||
Realized investment gains | (12,713) | (10,917) | (22,245) | ||||||||||||
Increase in accrued investment income | (2,566) | (5,563) | (1,898) | ||||||||||||
(Decrease) increase in accrued expenses | (5,798) | 1,513 | 1,157 | ||||||||||||
Depreciation and amortization | 7,734 | 7,958 | 7,680 | ||||||||||||
Increase in insurance liabilities | 145,313 | 153,423 | 143,542 | ||||||||||||
Increase in premium receivables | (8,641) | (3,638) | (4,018) | ||||||||||||
Increase in deferred policy acquisition costs | (8,981) | (12,662) | (14,659) | ||||||||||||
(Increase) decrease in reinsurance recoverables | (748) | 1,570 | (1,289) | ||||||||||||
Increase in income tax liabilities | 8,935 | 9,745 | 7,099 | ||||||||||||
Debt retirement costs | 2,338 | 0 | 0 | ||||||||||||
Other | (11,312) | (23,739) | (20,326) | ||||||||||||
Total adjustments | 113,561 | 117,690 | 95,043 | ||||||||||||
Net cash provided by operating activities | $ 207,043 | $ 221,933 | $ 205,936 |
Supplementary Data on Cash F106
Supplementary Data on Cash Flows (Details Textual) $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Non Cash Financing Charges | $ 45 |
Segment Information (Details)
Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Summarized financial information for these segments | |||||||||||||||
Insurance premiums and contract charges earned | $ 731,880 | $ 715,760 | $ 690,938 | ||||||||||||
Net investment income | 332,600 | 329,815 | 313,610 | ||||||||||||
Net income (loss) | $ 21,040 | $ 21,984 | $ 16,183 | $ 34,275 | $ 30,068 | $ 25,357 | $ 20,452 | $ 28,366 | $ 34,287 | $ 23,599 | $ 25,995 | $ 27,012 | 93,482 | 104,243 | 110,893 |
Assets | 10,059,343 | 9,768,527 | 8,826,672 | 10,059,343 | 9,768,527 | 8,826,672 | |||||||||
Intersegment Eliminations [Member] | |||||||||||||||
Summarized financial information for these segments | |||||||||||||||
Net investment income | (891) | (925) | (956) | ||||||||||||
Assets | (37,208) | (36,736) | (35,878) | (37,208) | (36,736) | (35,878) | |||||||||
Property and casualty [Member] | |||||||||||||||
Summarized financial information for these segments | |||||||||||||||
Insurance premiums and contract charges earned | 595,958 | 581,828 | 561,954 | ||||||||||||
Net investment income | 33,461 | 36,790 | 36,208 | ||||||||||||
Net income (loss) | 40,043 | 46,907 | 44,433 | ||||||||||||
Assets | 1,098,415 | 1,107,962 | 1,001,561 | 1,098,415 | 1,107,962 | 1,001,561 | |||||||||
Annuity [Member] | |||||||||||||||
Summarized financial information for these segments | |||||||||||||||
Insurance premiums and contract charges earned | 25,378 | 25,540 | 22,575 | ||||||||||||
Net investment income | 228,378 | 222,071 | 208,419 | ||||||||||||
Net income (loss) | 43,384 | 45,336 | 44,719 | ||||||||||||
Assets | 7,001,411 | 6,683,473 | 5,963,348 | 7,001,411 | 6,683,473 | 5,963,348 | |||||||||
Life [Member] | |||||||||||||||
Summarized financial information for these segments | |||||||||||||||
Insurance premiums and contract charges earned | 110,544 | 108,392 | 106,409 | ||||||||||||
Net investment income | 71,614 | 71,865 | 69,932 | ||||||||||||
Net income (loss) | 14,982 | 17,503 | 20,339 | ||||||||||||
Assets | 1,862,719 | 1,858,150 | 1,743,084 | 1,862,719 | 1,858,150 | 1,743,084 | |||||||||
Corporate and other [Member] | |||||||||||||||
Summarized financial information for these segments | |||||||||||||||
Net investment income | 38 | 14 | 7 | ||||||||||||
Net income (loss) | (4,927) | (5,503) | 1,402 | ||||||||||||
Assets | $ 134,006 | $ 155,678 | $ 154,557 | $ 134,006 | $ 155,678 | $ 154,557 |
Segment Information (Details 1)
Segment Information (Details 1) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Policy acquisition expenses amortized | $ 98,919 | $ 93,817 | $ 84,643 |
Income tax expense (benefit) | 35,970 | 41,870 | 43,173 |
Property and casualty [Member] | |||
Policy acquisition expenses amortized | 73,173 | 71,327 | 68,516 |
Income tax expense (benefit) | 11,274 | 13,944 | 12,740 |
Annuity [Member] | |||
Policy acquisition expenses amortized | 18,155 | 14,781 | 7,957 |
Income tax expense (benefit) | 19,873 | 21,319 | 18,531 |
Life [Member] | |||
Policy acquisition expenses amortized | 7,591 | 7,709 | 8,170 |
Income tax expense (benefit) | 7,951 | 9,432 | 10,919 |
Corporate and Other [Member] | |||
Income tax expense (benefit) | $ (3,128) | $ (2,825) | $ 983 |
Segment Information (Details Te
Segment Information (Details Textual) | 12 Months Ended |
Dec. 31, 2015Number | |
Business Segments | 4 |
Number of Operating Segments | 3 |
Unaudited Selected Quarterly110
Unaudited Selected Quarterly Financial Data (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Insurance premiums written and contract deposits | $ 305,186 | $ 326,198 | $ 319,394 | $ 305,735 | $ 292,241 | $ 322,746 | $ 292,393 | $ 260,275 | $ 275,379 | $ 306,033 | $ 267,703 | $ 245,078 | |||
Total revenues | 276,106 | 265,753 | 268,470 | 270,119 | 269,157 | 265,520 | 264,743 | 261,265 | 259,215 | 251,884 | 265,637 | 254,531 | $ 1,080,448 | $ 1,060,685 | $ 1,031,267 |
Net income | $ 21,040 | $ 21,984 | $ 16,183 | $ 34,275 | $ 30,068 | $ 25,357 | $ 20,452 | $ 28,366 | $ 34,287 | $ 23,599 | $ 25,995 | $ 27,012 | $ 93,482 | $ 104,243 | $ 110,893 |
Basic | |||||||||||||||
Net income | $ 0.51 | $ 0.53 | $ 0.39 | $ 0.82 | $ 0.72 | $ 0.61 | $ 0.49 | $ 0.69 | $ 0.84 | $ 0.59 | $ 0.65 | $ 0.68 | $ 2.23 | $ 2.5 | $ 2.75 |
Shares of common stock - weighted average (1) | 41,564,000 | 41,852,000 | 41,990,000 | 41,950,000 | 41,748,000 | 41,514,000 | 41,432,000 | 41,180,000 | 40,818,000 | 40,001,000 | 39,768,000 | 39,527,000 | 41,914,864 | 41,646,281 | 40,376,562 |
Diluted | |||||||||||||||
Net income | $ 0.50 | $ 0.52 | $ 0.38 | $ 0.81 | $ 0.71 | $ 0.60 | $ 0.48 | $ 0.67 | $ 0.81 | $ 0.57 | $ 0.63 | $ 0.66 | $ 2.20 | $ 2.47 | $ 2.66 |
Shares of common stock and equivalent shares - weighted average (1) | 42,127,000 | 42,305,000 | 42,425,000 | 42,300,000 | 42,362,000 | 42,319,000 | 42,310,000 | 42,259,000 | 42,205,000 | 41,732,000 | 41,395,000 | 41,088,000 | 42,424,806 | 42,230,559 | 41,633,240 |
Schedule I Summary of Invest111
Schedule I Summary of Investments-Other Than Investments in Related Parties (Details) $ in Thousands | Dec. 31, 2015USD ($) | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | ||
Total investments, Cost | $ 7,338,241 | [1] |
Total investments, Fair Value | 0 | |
Total investments, Amount shown in Balance Sheet | 7,648,030 | |
Fixed Maturities [Member] | ||
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | ||
Total investments, Cost | 6,785,626 | [1] |
Total investments, Fair Value | 7,091,340 | |
Total investments, Amount shown in Balance Sheet | 7,091,340 | |
Equity Securities [Member] | ||
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | ||
Total investments, Cost | 95,722 | [1] |
Total investments, Fair Value | 99,797 | |
Total investments, Amount shown in Balance Sheet | 99,797 | |
U.S. Government and federally sponsored agency obligations [Member] | Fixed Maturities [Member] | ||
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | ||
Total investments, Cost | 994,235 | [1] |
Total investments, Fair Value | 1,050,525 | |
Total investments, Amount shown in Balance Sheet | 1,050,525 | |
States, municipalities and political subdivisions [Member] | Fixed Maturities [Member] | ||
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | ||
Total investments, Cost | 1,553,603 | [1] |
Total investments, Fair Value | 1,708,943 | |
Total investments, Amount shown in Balance Sheet | 1,708,943 | |
Foreign government bonds [Member] | Fixed Maturities [Member] | ||
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | ||
Total investments, Cost | 67,441 | [1] |
Total investments, Fair Value | 73,617 | |
Total investments, Amount shown in Balance Sheet | 73,617 | |
Public utilities [Member] | Fixed Maturities [Member] | ||
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | ||
Total investments, Cost | 155,973 | [1] |
Total investments, Fair Value | 174,831 | |
Total investments, Amount shown in Balance Sheet | 174,831 | |
Other bonds [Member] | Fixed Maturities [Member] | ||
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | ||
Total investments, Cost | 4,014,374 | [1] |
Total investments, Fair Value | 4,083,424 | |
Total investments, Amount shown in Balance Sheet | 4,083,424 | |
Non-redeemable Preferred Stock [Member] | Equity Securities [Member] | ||
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | ||
Total investments, Cost | 16,268 | [1] |
Total investments, Fair Value | 15,790 | |
Total investments, Amount shown in Balance Sheet | 15,790 | |
Common Stocks [Member] | Equity Securities [Member] | ||
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | ||
Total investments, Cost | 59,450 | [1] |
Total investments, Fair Value | 64,721 | |
Total investments, Amount shown in Balance Sheet | 64,721 | |
Closed-end fund [Member] | Equity Securities [Member] | ||
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | ||
Total investments, Cost | 20,004 | [1] |
Total investments, Fair Value | 19,286 | |
Total investments, Amount shown in Balance Sheet | 19,286 | |
Short-term Investments [Member] | ||
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | ||
Total investments, Cost | 174,152 | [1] |
Total investments, Fair Value | 0 | |
Total investments, Amount shown in Balance Sheet | 174,152 | |
Policy Loans [Member] | ||
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | ||
Total investments, Cost | 148,696 | [1] |
Total investments, Fair Value | 0 | |
Total investments, Amount shown in Balance Sheet | 148,696 | |
Mortgages loan [Member] | ||
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | ||
Total investments, Cost | 63 | [1] |
Total investments, Fair Value | 0 | |
Total investments, Amount shown in Balance Sheet | 63 | |
Derivative instruments [Member] | ||
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | ||
Total investments, Cost | 2,501 | [1] |
Total investments, Fair Value | 0 | |
Total investments, Amount shown in Balance Sheet | 2,501 | |
Other [Member] | ||
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | ||
Total investments, Cost | 131,481 | [1] |
Total investments, Fair Value | 0 | |
Total investments, Amount shown in Balance Sheet | $ 131,481 | |
[1] | Bonds at original cost reduced by repayments and adjusted for amortization of premiums or accrual of discounts and impairment in value of specifically identified investments. |
Schedule II Condensed Financial
Schedule II Condensed Financial Information of Registrant (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
ASSETS | |||||
Other assets | $ 294,510 | $ 277,350 | |||
Total assets | 10,059,343 | 9,768,527 | $ 8,826,672 | ||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||
Long-term debt, current and noncurrent | 249,346 | 199,939 | |||
Other liabilities | 368,559 | 422,362 | |||
Total liabilities | 8,794,682 | 8,432,064 | |||
Preferred stock, $0.001 par value, authorized 1,000,000 shares; none issued | 0 | 0 | |||
Common stock, $0.001 par value, authorized 75,000,000 shares; issued, 2015, 64,537,554; 2014, 64,245,048 | 65 | 64 | |||
Additional paid-in capital | 442,648 | 422,232 | |||
Retained earnings | 1,116,277 | 1,065,318 | |||
Accumulated other comprehensive income (loss), net of taxes: | |||||
Net unrealized gains on fixed maturities and equity securities | [1],[2] | 175,167 | 297,554 | 133,990 | $ 382,400 |
Net funded status of pension and other postretirement benefit obligations | [1] | (11,794) | (12,953) | (11,776) | $ (15,311) |
Treasury stock, at cost, 2015, 23,971,522 shares; 2014, 23,308,430 shares | (457,702) | (435,752) | |||
Total shareholders' equity | 1,264,661 | 1,336,463 | $ 1,099,305 | ||
Total liabilities and shareholders' equity | 10,059,343 | 9,768,527 | |||
Parent Company [Member] | |||||
ASSETS | |||||
Investments and cash | 13,237 | 28,640 | |||
Investment in subsidiaries | 1,451,290 | 1,515,769 | |||
Other assets | 60,114 | 58,365 | |||
Total assets | 1,524,641 | 1,602,774 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||
Short-term debt | 0 | 38,000 | |||
Long-term debt, current and noncurrent | 249,346 | 199,939 | |||
Other liabilities | 10,634 | 28,372 | |||
Total liabilities | 259,980 | 266,311 | |||
Preferred stock, $0.001 par value, authorized 1,000,000 shares; none issued | 0 | 0 | |||
Common stock, $0.001 par value, authorized 75,000,000 shares; issued, 2015, 64,537,554; 2014, 64,245,048 | 65 | 64 | |||
Additional paid-in capital | 442,648 | 422,232 | |||
Retained earnings | 1,116,277 | 1,065,318 | |||
Accumulated other comprehensive income (loss), net of taxes: | |||||
Net unrealized gains on fixed maturities and equity securities | 175,167 | 297,554 | |||
Net funded status of pension and other postretirement benefit obligations | (11,794) | (12,953) | |||
Treasury stock, at cost, 2015, 23,971,522 shares; 2014, 23,308,430 shares | (457,702) | (435,752) | |||
Total shareholders' equity | 1,264,661 | 1,336,463 | |||
Total liabilities and shareholders' equity | $ 1,524,641 | $ 1,602,774 | |||
[1] | All amounts are net of tax. | ||||
[2] | The pretax amounts reclassified from accumulated other comprehensive income, $11,667, $10,943 and $22,245, are included in net realized investment gains and losses and the related tax expenses, $4,083, $3,830 and $7,786, are included in income tax expense in the Consolidated Statements of Operations for the years ended December 31, 2015, 2014 and 2013, respectively. |
Schedule II Condensed Financ113
Schedule II Condensed Financial Information of Registrant (Parenthetical) (Details) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Condensed Financial Statements, Captions [Line Items] | ||||
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | ||
Preferred Stock, Shares Authorized | 1,000,000 | 1,000,000 | ||
Preferred Stock, Shares Issued | 0 | 0 | ||
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 75,000,000 | 75,000,000 | ||
Common Stock, Shares, Issued | 64,537,554 | 64,245,048 | ||
Treasury Stock, Shares | 23,971,522 | 23,308,430 | 23,117,554 | 22,943,925 |
Parent Company [Member] | ||||
Condensed Financial Statements, Captions [Line Items] | ||||
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | ||
Preferred Stock, Shares Authorized | 1,000,000 | 1,000,000 | ||
Preferred Stock, Shares Issued | 0 | 0 | ||
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | ||
Common Stock, Shares Authorized | 75,000,000 | 75,000,000 | ||
Common Stock, Shares, Issued | 64,537,554 | 64,245,048 | ||
Treasury Stock, Shares | 23,971,522 | 23,308,430 |
Schedule II Condensed Financ114
Schedule II Condensed Financial Information of Registrant (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Revenues | |||||||||||||||
Net investment income | $ 332,600 | $ 329,815 | $ 313,610 | ||||||||||||
Realized investment gains | 12,713 | 10,917 | 22,245 | ||||||||||||
Total revenues | $ 276,106 | $ 265,753 | $ 268,470 | $ 270,119 | $ 269,157 | $ 265,520 | $ 264,743 | $ 261,265 | $ 259,215 | $ 251,884 | $ 265,637 | $ 254,531 | 1,080,448 | 1,060,685 | 1,031,267 |
Expenses | |||||||||||||||
Interest | 13,122 | 14,198 | 14,236 | ||||||||||||
Debt retirement costs | 2,338 | 0 | 0 | ||||||||||||
Total expenses | 950,996 | 914,572 | 877,201 | ||||||||||||
Income tax benefit | 35,970 | 41,870 | 43,173 | ||||||||||||
Net income | $ 21,040 | $ 21,984 | $ 16,183 | $ 34,275 | $ 30,068 | $ 25,357 | $ 20,452 | $ 28,366 | $ 34,287 | $ 23,599 | $ 25,995 | $ 27,012 | 93,482 | 104,243 | 110,893 |
Parent Company [Member] | |||||||||||||||
Revenues | |||||||||||||||
Net investment income | 33 | 10 | 6 | ||||||||||||
Realized investment gains | 0 | 0 | 208 | ||||||||||||
Total revenues | 33 | 10 | 214 | ||||||||||||
Expenses | |||||||||||||||
Interest | 13,122 | 14,198 | 14,236 | ||||||||||||
Debt retirement costs | 2,338 | 0 | 0 | ||||||||||||
Other | 5,153 | 5,071 | 4,832 | ||||||||||||
Total expenses | 20,613 | 19,269 | 19,068 | ||||||||||||
Loss before income tax benefit and equity in net earnings of subsidiaries | (20,580) | (19,259) | (18,854) | ||||||||||||
Income tax benefit | (7,202) | (6,734) | (6,599) | ||||||||||||
Loss before equity in net earnings of subsidiaries | (13,378) | (12,525) | (12,255) | ||||||||||||
Equity in net earnings of subsidiaries | 106,860 | 116,768 | 123,148 | ||||||||||||
Net income | $ 93,482 | $ 104,243 | $ 110,893 |
Schedule II Condensed Financ115
Schedule II Condensed Financial Information of Registrant (Details 2) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Cash flows - operating activities | |||
Interest expense paid | $ (13,521) | $ (13,902) | $ (13,825) |
Federal income taxes recovered | 24,861 | 29,195 | 33,672 |
Other, net, including settlement of payables to subsidiaries | (6,101) | (17,437) | (19,238) |
Net cash provided by operating activities | 207,043 | 221,933 | 205,936 |
Cash flows - investing activities | |||
Net cash provided by (used in) investing activities | (415,849) | (565,515) | (598,326) |
Cash flows - financing activities | |||
Dividends paid to shareholders | (42,523) | (39,237) | (32,550) |
Proceeds from issuance of Senior Notes due 2025 | 246,937 | 0 | 0 |
Redemption of Senior Notes due 2016 | 127,292 | 0 | 0 |
Maturity of Senior Notes due 2015 | (75,000) | 0 | 0 |
Principal repayment on Bank Credit Facility | (38,000) | 0 | 0 |
Exercise of stock options | 1,629 | 8,252 | 19,336 |
Net cash used in financing activities | 212,640 | 337,068 | 395,398 |
Net increase (decrease) in cash | 3,834 | (6,514) | 3,008 |
Cash at beginning of period | 11,675 | 18,189 | 15,181 |
Cash at end of period | 15,509 | 11,675 | 18,189 |
Parent Company [Member] | |||
Cash flows - operating activities | |||
Interest expense paid | (13,521) | (13,902) | (13,825) |
Federal income taxes recovered | 6,539 | 8,740 | 5,996 |
Cash dividends received from subsidiaries | 50,000 | 46,000 | 41,000 |
Other, net, including settlement of payables to subsidiaries | (2,223) | (188) | (21,235) |
Net cash provided by operating activities | 40,795 | 40,650 | 11,936 |
Cash flows - investing activities | |||
Net (increase) decrease in investments | 15,402 | (4,647) | 5,488 |
Net cash provided by (used in) investing activities | 15,402 | (4,647) | 5,488 |
Cash flows - financing activities | |||
Dividends paid to shareholders | (42,523) | (39,237) | (32,550) |
Proceeds from issuance of Senior Notes due 2025 | 246,937 | 0 | 0 |
Redemption of Senior Notes due 2016 | (127,292) | 0 | 0 |
Maturity of Senior Notes due 2015 | (75,000) | 0 | 0 |
Principal repayment on Bank Credit Facility | (38,000) | 0 | 0 |
Acquisition of treasury stock | (21,950) | (5,411) | (3,889) |
Exercise of stock options | 1,629 | 8,252 | 19,336 |
Net cash used in financing activities | (56,199) | (36,396) | (17,103) |
Net increase (decrease) in cash | (2) | (393) | 321 |
Cash at beginning of period | 77 | 470 | 149 |
Cash at end of period | $ 75 | $ 77 | $ 470 |
Schedule III and VI Suppleme116
Schedule III and VI Supplementary Insurance Information Supplemental Information Concerning Property and Casualty Insurance Operations (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Supplementary Insurance Information, by Segment [Line Items] | ||||
Deferred policy acquisition costs | $ 253,176 | $ 215,082 | $ 245,355 | |
Future policy benefits, claims and claims expenses | 5,450,562 | 5,128,055 | 4,808,079 | |
Discount, if any, deducted in previous column | 0 | 0 | 0 | |
Unearned premiums | 232,841 | 223,413 | 221,114 | |
Other policy claims and benefits payable | 692,652 | 606,738 | 346,292 | |
Premium revenue/ premium earned | 731,880 | 715,760 | 690,938 | |
Net investment income | 332,600 | 329,815 | 313,610 | |
Benefits, claims and settlement expenses | 679,206 | 644,565 | 618,210 | |
Claims and claims adjustment expense incurred related to current year | 0 | 0 | 0 | |
Claims and claims adjustment expense incurred related to prior years | 0 | 0 | 0 | |
Amortization of deferred policy acquisition costs | 98,919 | 93,817 | 84,643 | |
Other operating expenses | 172,871 | 176,190 | 174,348 | |
Paid claims and claims adjustment expense | 0 | 0 | 0 | |
Premiums written | 0 | 0 | 0 | |
Property and casualty [Member] | ||||
Supplementary Insurance Information, by Segment [Line Items] | ||||
Deferred policy acquisition costs | 26,685 | 27,160 | 26,048 | |
Future policy benefits, claims and claims expenses | 301,569 | 311,097 | 275,809 | |
Discount, if any, deducted in previous column | 0 | 0 | 0 | |
Unearned premiums | 230,201 | 220,406 | 217,841 | |
Other policy claims and benefits payable | 0 | 0 | 0 | |
Premium revenue/ premium earned | 595,958 | 581,828 | 561,954 | |
Net investment income | 33,461 | 36,790 | 36,208 | |
Benefits, claims and settlement expenses | 420,311 | 399,512 | 385,601 | |
Claims and claims adjustment expense incurred related to current year | 432,811 | 416,512 | 403,589 | |
Claims and claims adjustment expense incurred related to prior years | [1] | (12,500) | (17,000) | (17,988) |
Amortization of deferred policy acquisition costs | 73,173 | 71,327 | 68,516 | |
Other operating expenses | 84,785 | 88,305 | 87,064 | |
Paid claims and claims adjustment expense | 436,431 | 393,857 | 384,736 | |
Premiums written | 605,753 | 584,393 | 570,363 | |
Annuity [Member] | ||||
Supplementary Insurance Information, by Segment [Line Items] | ||||
Deferred policy acquisition costs | 178,300 | 143,522 | 170,749 | |
Future policy benefits, claims and claims expenses | 4,082,217 | 3,781,260 | 3,523,901 | |
Discount, if any, deducted in previous column | 0 | 0 | 0 | |
Unearned premiums | 734 | 708 | 562 | |
Other policy claims and benefits payable | 689,116 | 603,267 | 342,795 | |
Premium revenue/ premium earned | 25,378 | 25,540 | 22,575 | |
Net investment income | 228,378 | 222,071 | 208,419 | |
Benefits, claims and settlement expenses | 141,893 | 134,760 | 128,768 | |
Claims and claims adjustment expense incurred related to current year | 0 | 0 | 0 | |
Claims and claims adjustment expense incurred related to prior years | 0 | 0 | 0 | |
Amortization of deferred policy acquisition costs | 18,155 | 14,781 | 7,957 | |
Other operating expenses | 32,555 | 33,210 | 34,004 | |
Paid claims and claims adjustment expense | 0 | 0 | 0 | |
Premiums written | 0 | 0 | 0 | |
Life [Member] | ||||
Supplementary Insurance Information, by Segment [Line Items] | ||||
Deferred policy acquisition costs | 48,191 | 44,400 | 48,558 | |
Future policy benefits, claims and claims expenses | 1,066,776 | 1,035,698 | 1,008,369 | |
Discount, if any, deducted in previous column | 0 | 0 | 0 | |
Unearned premiums | 1,906 | 2,299 | 2,711 | |
Other policy claims and benefits payable | 3,536 | 3,471 | 3,497 | |
Premium revenue/ premium earned | 110,544 | 108,392 | 106,409 | |
Net investment income | 71,614 | 71,865 | 69,932 | |
Benefits, claims and settlement expenses | 117,002 | 110,293 | 103,841 | |
Claims and claims adjustment expense incurred related to current year | 0 | 0 | 0 | |
Claims and claims adjustment expense incurred related to prior years | 0 | 0 | 0 | |
Amortization of deferred policy acquisition costs | 7,591 | 7,709 | 8,170 | |
Other operating expenses | 35,470 | 36,421 | 34,394 | |
Paid claims and claims adjustment expense | 0 | 0 | 0 | |
Premiums written | 0 | 0 | 0 | |
Other, including consolidating eliminations [Member] | ||||
Supplementary Insurance Information, by Segment [Line Items] | ||||
Deferred policy acquisition costs | 0 | 0 | 0 | |
Future policy benefits, claims and claims expenses | 0 | 0 | 0 | |
Discount, if any, deducted in previous column | 0 | 0 | 0 | |
Unearned premiums | 0 | 0 | 0 | |
Other policy claims and benefits payable | 0 | 0 | 0 | |
Premium revenue/ premium earned | 0 | 0 | 0 | |
Net investment income | (853) | (911) | (949) | |
Benefits, claims and settlement expenses | 0 | 0 | 0 | |
Claims and claims adjustment expense incurred related to current year | 0 | 0 | 0 | |
Claims and claims adjustment expense incurred related to prior years | 0 | 0 | 0 | |
Amortization of deferred policy acquisition costs | 0 | 0 | 0 | |
Other operating expenses | 20,061 | 18,254 | 18,886 | |
Paid claims and claims adjustment expense | 0 | 0 | 0 | |
Premiums written | $ 0 | $ 0 | $ 0 | |
[1] | Shows the amounts by which the Company decreased its reserves in each of the periods indicated for claims occurring in previous periods to reflect subsequent information on such claims and changes in their projected final settlement costs. Also refer to the paragraphs below for additional information regarding the reserve development recorded in 2015, 2014 and 2013. |
Reinsurance (Details)
Reinsurance (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items] | |||
Life Insurance in Force, Gross Amount | $ 16,504,539 | $ 15,800,701 | $ 15,102,466 |
Life Insurance in Force, Ceded to Other Companies | 3,625,946 | 3,360,016 | 3,231,421 |
Life Insurance in Force, Assumed from Other Companies | 0 | 0 | 0 |
Life Insurance in Force, Net Amount | $ 12,878,593 | $ 12,440,685 | $ 11,871,045 |
Life Insurance in Force, Percentage of Amount Assumed to Net | 0.00% | 0.00% | 0.00% |
Premiums | |||
Gross Amount | $ 752,798 | $ 739,281 | $ 717,494 |
Ceded to Other Companies | 25,077 | 27,276 | 29,990 |
Assumed from Other Companies | 4,159 | 3,755 | 3,434 |
Net Amount | $ 731,880 | $ 715,760 | $ 690,938 |
Percentage of Amount Assumed to Net | 0.60% | 0.50% | 0.50% |
Property and casualty [Member] | |||
Premiums | |||
Gross Amount | $ 610,347 | $ 599,230 | $ 582,780 |
Ceded to Other Companies | 18,548 | 21,157 | 24,260 |
Assumed from Other Companies | 4,159 | 3,755 | 3,434 |
Net Amount | $ 595,958 | $ 581,828 | $ 561,954 |
Percentage of Amount Assumed to Net | 0.70% | 0.60% | 0.60% |
Annuity [Member] | |||
Premiums | |||
Gross Amount | $ 25,378 | $ 25,540 | $ 22,575 |
Ceded to Other Companies | 0 | 0 | 0 |
Assumed from Other Companies | 0 | 0 | 0 |
Net Amount | $ 25,378 | $ 25,540 | $ 22,575 |
Percentage of Amount Assumed to Net | 0.00% | 0.00% | 0.00% |
Life [Member] | |||
Premiums | |||
Gross Amount | $ 117,073 | $ 114,511 | $ 112,139 |
Ceded to Other Companies | 6,529 | 6,119 | 5,730 |
Assumed from Other Companies | 0 | 0 | 0 |
Net Amount | $ 110,544 | $ 108,392 | $ 106,409 |
Percentage of Amount Assumed to Net | 0.00% | 0.00% | 0.00% |