Cover Page
Cover Page - shares | 6 Months Ended | |
Jun. 30, 2019 | Jul. 31, 2019 | |
Cover page. | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2019 | |
Document Transition Report | false | |
Entity File Number | 1-10890 | |
Entity Registrant Name | HORACE MANN EDUCATORS CORPORATION | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 37-0911756 | |
Entity Address, Address Line One | 1 Horace Mann Plaza | |
Entity Address, City or Town | Springfield | |
Entity Address, State or Province | IL | |
Entity Address, Postal Zip Code | 62715-0001 | |
City Area Code | 217 | |
Local Phone Number | 789-2500 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Shell Company | false | |
Title of 12(b) Security | Common Stock, $0.001 par value | |
Trading Symbol | HMN | |
Security Exchange Name | NYSE | |
Entity Common Stock, Shares Outstanding | 41,198,167 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0000850141 | |
Current Fiscal Year End Date | --12-31 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Investments | ||
Fixed maturity securities, available for sale, at fair value (amortized cost 2019, $5,241,755; 2018, $7,373,911) | $ 5,534,270 | $ 7,515,318 |
Equity securities, at fair value | 100,143 | 111,750 |
Limited partnership interests | 351,515 | 328,516 |
Short-term and other investments | 433,688 | 295,093 |
Total investments | 6,419,616 | 8,250,677 |
Cash | 7,616 | 11,906 |
Deferred policy acquisition costs | 279,041 | 298,742 |
Deposit asset on reinsurance | 2,315,330 | 0 |
Goodwill | 29,458 | 47,396 |
Other assets | 417,460 | 422,047 |
Separate Account (variable annuity) assets | 2,310,886 | 2,001,128 |
Total assets | 11,779,407 | 11,031,896 |
Policy liabilities | ||
Investment contract and life policy reserves | 5,776,769 | 5,711,193 |
Unpaid claims and claim expenses | 398,339 | 396,714 |
Unearned premiums | 270,163 | 276,225 |
Total policy liabilities | 6,445,271 | 6,384,132 |
Other policyholder funds | 821,880 | 767,988 |
Other liabilities | 403,812 | 290,358 |
Long-term debt | 297,881 | 297,740 |
Separate Account (variable annuity) liabilities | 2,310,886 | 2,001,128 |
Total liabilities | 10,279,730 | 9,741,346 |
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, 2019, 66,036,205; 2018, 65,820,369 | 66 | 66 |
Additional paid-in capital | 476,353 | 475,109 |
Retained earnings | 1,318,329 | 1,216,582 |
Accumulated other comprehensive income (loss), net of tax: | ||
Net unrealized investment gains on fixed maturity securities | 203,077 | 96,941 |
Net funded status of benefit plans | (12,185) | (12,185) |
Treasury stock, at cost, 2019, 24,850,484 shares; 2018, 24,850,484 shares | (485,963) | (485,963) |
Total shareholders’ equity | 1,499,677 | 1,290,550 |
Total liabilities and shareholders’ equity | $ 11,779,407 | $ 11,031,896 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Fixed maturities, available for sale, amortized cost (in usd) | $ 5,241,755 | $ 7,373,911 |
Preferred stock, par value (in usd 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 value (in usd per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common stock, shares issued | 66,036,205 | 65,820,369 |
Treasury stock (in shares) | 24,850,484 | 24,850,484 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Revenues | ||||
Insurance premiums and contract charges earned | $ 208,096 | $ 205,610 | $ 417,881 | $ 408,608 |
Net investment income | 93,458 | 97,101 | 186,258 | 188,965 |
Net investment gains (losses) | 146,333 | 735 | 153,750 | (919) |
Other income | 3,591 | 2,811 | 6,802 | 5,092 |
Total revenues | 451,478 | 306,257 | 764,691 | 601,746 |
Benefits, losses and expenses | ||||
Benefits, claims and settlement expenses | 152,692 | 168,278 | 292,076 | 311,840 |
Interest credited | 53,594 | 51,071 | 106,516 | 101,105 |
DAC amortization expense | 31,648 | 26,586 | 56,621 | 53,291 |
Operating expenses | 55,252 | 50,218 | 109,305 | 98,387 |
Interest expense | 3,312 | 3,291 | 6,615 | 6,464 |
Other expense | 28,025 | 0 | 28,025 | 0 |
Total benefits, losses and expenses | 324,523 | 299,444 | 599,158 | 571,087 |
Income before income taxes | 126,955 | 6,813 | 165,533 | 30,659 |
Income tax expense | 33,133 | 896 | 39,545 | 4,587 |
Net income | $ 93,822 | $ 5,917 | $ 125,988 | $ 26,072 |
Net income per share | ||||
Basic (in usd per share) | $ 2.25 | $ 0.14 | $ 3.02 | $ 0.63 |
Diluted (in usd per share) | $ 2.24 | $ 0.14 | $ 3.01 | $ 0.63 |
Weighted average number of shares and equivalent shares | ||||
Basic (in shares) | 41,762 | 41,600 | 41,685 | 41,531 |
Diluted (in shares) | 41,921 | 41,735 | 41,851 | 41,659 |
Net investment gains (losses) | ||||
Total other-than-temporary impairment losses on securities | $ (34) | $ (1,177) | $ (271) | $ (1,287) |
Portion of losses recognized in other comprehensive income (loss) | 0 | 0 | 0 | 0 |
Net other-than-temporary impairment losses on securities recognized in earnings | (34) | (1,177) | (271) | (1,287) |
Sales and other, net | 142,067 | 1,789 | 146,905 | 3,992 |
Change in fair value - equity securities | 3,441 | (1,156) | 6,948 | (6,342) |
Change in fair value and gains (losses) realized on settlements - derivative instruments | 859 | 1,279 | 168 | 2,718 |
Net investment gains (losses) | $ 146,333 | $ 735 | $ 153,750 | $ (919) |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Comprehensive income (loss) | ||||
Net income | $ 93,822 | $ 5,917 | $ 125,988 | $ 26,072 |
Other comprehensive income (loss), net of tax: | ||||
Change in net unrealized investment gains (losses) on fixed maturity securities | (7,762) | (52,444) | 106,136 | (159,540) |
Change in net funded status of benefit plans | 0 | 0 | 0 | 0 |
Cumulative effect of change in accounting principle | 0 | 0 | 0 | (15,041) |
Other comprehensive income (loss) | (7,762) | (52,444) | 106,136 | (174,581) |
Total | $ 86,060 | $ (46,527) | $ 232,124 | $ (148,509) |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands | Total | Common stock [Member] | Additional paid-in capital [Member] | Retained earnings [Member] | Accumulated other comprehensive income (loss), net of tax [Member] | Treasury stock, at cost [Member] |
Beginning balance at Dec. 31, 2017 | $ 65 | $ 464,246 | $ 1,231,177 | $ 286,960 | $ (480,875) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Options exercised | 0 | |||||
Conversion of common stock units | 0 | |||||
Conversion of restricted stock units | 1 | |||||
Options exercised and conversion of common stock units and restricted stock units | 2,259 | |||||
Share-based compensation expense | 4,147 | |||||
Net income | $ 26,072 | 26,072 | ||||
Dividends | (23,985) | |||||
Change in net unrealized investment gains on fixed maturity securities | (159,540) | (159,540) | ||||
Change in net funded status of benefit plans | 0 | 0 | ||||
Cumulative effect of change in accounting principle | (15,041) | 15,041 | (15,041) | |||
Acquisition of shares | (86) | |||||
Ending balance at Jun. 30, 2018 | 1,350,441 | 66 | 470,652 | 1,248,305 | 112,379 | (480,961) |
Beginning balance at Mar. 31, 2018 | 66 | 466,277 | 1,254,394 | 164,823 | (480,881) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Options exercised | 0 | |||||
Conversion of common stock units | 0 | |||||
Conversion of restricted stock units | 0 | |||||
Options exercised and conversion of common stock units and restricted stock units | 2,384 | |||||
Share-based compensation expense | 1,991 | |||||
Net income | 5,917 | 5,917 | ||||
Dividends | (12,006) | |||||
Change in net unrealized investment gains on fixed maturity securities | (52,444) | (52,444) | ||||
Change in net funded status of benefit plans | 0 | 0 | ||||
Cumulative effect of change in accounting principle | 0 | 0 | 0 | |||
Acquisition of shares | (80) | |||||
Ending balance at Jun. 30, 2018 | 1,350,441 | 66 | 470,652 | 1,248,305 | 112,379 | (480,961) |
Beginning balance at Dec. 31, 2018 | 1,290,550 | 66 | 475,109 | 1,216,582 | 84,756 | (485,963) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Options exercised | 0 | |||||
Conversion of common stock units | 0 | |||||
Conversion of restricted stock units | 0 | |||||
Options exercised and conversion of common stock units and restricted stock units | (1,761) | |||||
Share-based compensation expense | 3,005 | |||||
Net income | 125,988 | 125,988 | ||||
Dividends | (24,241) | |||||
Change in net unrealized investment gains on fixed maturity securities | 106,136 | 106,136 | ||||
Change in net funded status of benefit plans | 0 | 0 | ||||
Cumulative effect of change in accounting principle | 0 | 0 | 0 | |||
Acquisition of shares | 0 | |||||
Ending balance at Jun. 30, 2019 | 1,499,677 | 66 | 476,353 | 1,318,329 | 190,892 | (485,963) |
Beginning balance at Mar. 31, 2019 | 66 | 474,336 | 1,236,621 | 198,654 | (485,963) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Options exercised | 0 | |||||
Conversion of common stock units | 0 | |||||
Conversion of restricted stock units | 0 | |||||
Options exercised and conversion of common stock units and restricted stock units | 344 | |||||
Share-based compensation expense | 1,673 | |||||
Net income | 93,822 | 93,822 | ||||
Dividends | (12,114) | |||||
Change in net unrealized investment gains on fixed maturity securities | (7,762) | (7,762) | ||||
Change in net funded status of benefit plans | 0 | 0 | ||||
Cumulative effect of change in accounting principle | 0 | 0 | 0 | |||
Acquisition of shares | 0 | |||||
Ending balance at Jun. 30, 2019 | $ 1,499,677 | $ 66 | $ 476,353 | $ 1,318,329 | $ 190,892 | $ (485,963) |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) (Parenthetical) - $ / shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Statement of Stockholders' Equity [Abstract] | ||||
Cash dividends (in usd per share) | $ 0.2875 | $ 0.285 | $ 0.575 | $ 0.57 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash flows - operating activities | ||
Premiums collected | $ 396,887 | $ 392,103 |
Policyholder benefits paid | (275,437) | (272,769) |
Policy acquisition and other operating expenses paid | (161,863) | (141,620) |
Income taxes paid | (78) | (7,393) |
Investment income collected | 139,210 | 184,749 |
Interest expense paid | (6,440) | (6,190) |
Other | 5,557 | 2,429 |
Net cash provided by operating activities | 97,836 | 151,309 |
Fixed maturity securities | ||
Purchases | (644,104) | (551,984) |
Sales | 501,739 | 190,023 |
Maturities, paydowns, calls and redemptions | 342,998 | 383,090 |
Equity securities | ||
Purchases | (5,282) | (6,028) |
Sales and repayments | 17,122 | 5,783 |
Limited partnership interests | ||
Purchases | (29,357) | (33,031) |
Sales | 15,029 | 9,457 |
Change in short-term and other investments, net | (156,748) | (109,711) |
Acquisition of business, net of cash acquired | (18,198) | 0 |
Net cash provided by (used in) investing activities | 23,199 | (112,401) |
Cash flows - financing activities | ||
Dividends paid to shareholders | (23,630) | (23,320) |
Acquisition of treasury stock | 0 | (86) |
Proceeds from exercise of stock options | 722 | 2,460 |
Withholding tax payments on RSUs tendered | (3,366) | (2,155) |
Annuity contracts: variable, fixed and FHLB funding agreements | ||
Deposits | 266,310 | 199,074 |
Benefits, withdrawals and net transfers to Separate Account (variable annuity) assets | (214,243) | (218,694) |
Life policy accounts | ||
Deposits | 4,638 | 3,163 |
Withdrawals and surrenders | (1,733) | (2,525) |
Change in deposit asset on reinsurance, net | (134,682) | 0 |
Change in book overdrafts | (19,341) | 3,795 |
Net cash used in financing activities | (125,325) | (38,288) |
Net increase (decrease) in cash | (4,290) | 620 |
Cash at beginning of period | 11,906 | 7,627 |
Cash at end of period | $ 7,616 | $ 8,247 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The accompanying unaudited consolidated financial statements of Horace Mann Educators Corporation (HMEC; and together with its subsidiaries, the Company or Horace Mann) have been prepared in conformity with accounting principles generally accepted in the U.S. (GAAP) and with the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and disclosures normally included in annual financial statements prepared in conformity with GAAP, but are not required for interim reporting purposes, have been omitted. The Company believes that these consolidated financial statements contain all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to present fairly the Company’s consolidated financial position as of June 30, 2019 , the consolidated results of operations, comprehensive income (loss), changes in shareholders’ equity and cash flows for the six month periods ended June 30, 2019 and 2018 . The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The subsidiaries of HMEC market and underwrite personal lines of property and casualty insurance products (primarily personal lines of automobile and property insurance), retirement products (primarily tax-qualified annuities) 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. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes to consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 . The results of operations for the three and six month periods ended June 30, 2019 are not necessarily indicative of the results to be expected for the full year. Investment Contract and Life Policy Reserves The following table summarizes investment contract and life policy reserves. ($ in thousands) June 30, 2019 December 31, 2018 Investment contract reserves $ 4,605,272 $ 4,555,856 Life policy reserves 1,171,497 1,155,337 Total $ 5,776,769 $ 5,711,193 Accumulated Other Comprehensive Income (Loss) Accumulated other comprehensive income (loss) (AOCI) represents the accumulated change in shareholders’ equity from transactions and other events and circumstances from non-shareholder sources. For the Company, AOCI includes the after tax change in net unrealized investment gains (losses) on fixed maturity securities and the after tax change in net funded status of benefit plans for the periods as shown in the Consolidated Statements of Changes in Shareholders’ Equity. The following tables reconcile these components. ($ in thousands) Net Unrealized Investment Gains (Losses) on Fixed Maturity Securities (1)(2) Net Funded Status of Benefit Plans (1) Total (1) Beginning balance, April 1, 2019 $ 210,839 $ (12,185 ) $ 198,654 Other comprehensive income (loss) before reclassifications 107,163 — 107,163 Amounts reclassified from AOCI (114,925 ) — (114,925 ) Net current period other comprehensive income (loss) (7,762 ) — (7,762 ) Ending balance, June 30, 2019 $ 203,077 $ (12,185 ) $ 190,892 Beginning balance, January 1, 2019 $ 96,941 $ (12,185 ) $ 84,756 Other comprehensive income (loss) before reclassifications 227,466 — 227,466 Amounts reclassified from AOCI (121,330 ) — (121,330 ) Net current period other comprehensive income (loss) 106,136 — 106,136 Ending balance, June 30, 2019 $ 203,077 $ (12,185 ) $ 190,892 ________________ (1) All amounts are net of tax. (2) The pretax amounts reclassified from AOCI, $145,474 thousand and $153,582 thousand , are included in net investment gains (losses) and the related income tax expenses, $30,549 thousand and $32,252 thousand , are included in income tax expense in the Consolidated Statements of Operations for the three and six month periods ended June 30, 2019 , respectively. ($ in thousands) Net Unrealized Investment (1)(2) Net Funded Status of (1) Total (1)(3) Beginning balance, April 1, 2018, $ 178,040 $ (13,217 ) $ 164,823 Other comprehensive income (loss) before reclassifications (52,873 ) — (52,873 ) Amounts reclassified from AOCI 429 — 429 Net current period other comprehensive income (loss) (52,444 ) — (52,444 ) Ending balance, June 30, 2018 $ 125,596 $ (13,217 ) $ 112,379 Beginning balance, January 1, 2018 $ 300,177 $ (13,217 ) $ 286,960 Other comprehensive income (loss) before reclassifications (162,412 ) — (162,412 ) Amounts reclassified from AOCI 2,872 — 2,872 Cumulative effect of change in accounting principle (3) (15,041 ) — (15,041 ) Net current period other comprehensive income (loss) (174,581 ) — (174,581 ) Ending balance, June 30, 2018 $ 125,596 $ (13,217 ) $ 112,379 ________________ (1) All amounts are net of tax. (2) The pretax amounts reclassified from AOCI, $(544) thousand and $(3,636) thousand , are included in Net investment gains (losses) and the related income tax expenses, $(115) thousand and $(764) thousand , are included in Income tax expense in the Consolidated Statements of Operations for the three and six month periods ended June 30, 2018 , respectively. (3) The Company adopted guidance on January 1, 2018 that resulted in reclassifying $15,041 thousand of after tax net unrealized gains on equity securities from AOCI to Retained earnings. Comparative information for elements that are not required to be reclassified in their entirety to net income in the same reporting period is disclosed in Note 3. Adopted Accounting Standards Accounting for Leases Effective for the quarter ended March 31, 2019, the Company adopted guidance for leases and elected to utilize a cumulative-effect adjustment to the opening balance of retained earnings. Accordingly, the Company’s reporting for the comparative periods prior to adoption continue to be presented in the financial statements in accordance with previous lease accounting guidance. The Company elected to apply all practical expedients in the guidance for transition for leases in effect at adoption, including using hindsight to determine the lease term of existing leases, the option to not reassess whether an existing contract is a lease or contains a lease and whether the lease is an operating or finance lease. The adoption of the guidance resulted in the Company recognizing an initial $14,499 thousand lease liability equal to the present value of lease payments and an initial $13,908 thousand right-of-use (ROU) asset, which is the corresponding lease liability adjusted for qualifying accrued lease payments. The lease liability and ROU asset are reported in Other liabilities and Other assets on the Consolidated Balance Sheets. The impact of these changes at adoption had no impact on net income or shareholders' equity . Simplifying the Test for Goodwill Impairment Effective for the quarter ended June 30, 2019, the Company adopted guidance to simplify the accounting for goodwill impairment. Adoption of this guidance removed Step 2 of the goodwill impairment test, which required a hypothetical purchase price allocation. Goodwill impairment is now the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Pending Accounting Standards Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued guidance to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments, including reinsurance receivables, held by companies. The new guidance replaces the incurred loss impairment methodology for financial instruments other than available for sale debt securities and requires an organization to measure and recognize all current expected credit losses (CECL) for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Companies will need to utilize forward-looking information to better estimate their credit losses. Companies will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. Any credit losses related to available for sale debt securities will be recorded through an allowance for credit losses with this allowance having a limit equal to the amount by which fair value is below amortized cost. The guidance also requires enhanced qualitative and quantitative disclosures to provide additional information about the amounts recorded in the financial statements. This guidance is effective for annual and interim reporting periods beginning after December 15, 2019. Early adoption is permitted beginning after December 15, 2018. Upon adoption, the guidance will be applied using the modified-retrospective approach, by which a cumulative-effect adjustment will be made to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The guidance will have the most impact on the Company’s available for sale fixed maturity securities portfolio. However, as the Company’s fixed maturity securities portfolio is weighted towards higher rated bonds (97.1% investment grade, based on fair value, with an average quality rating of A+ at June 30, 2019), the Company does not expect that the effect of adoption will be material. Accounting for Long-Duration Insurance Contracts In August 2018, the FASB issued accounting and disclosure guidance that contains targeted improvements to the accounting for long-duration insurance contracts. Under the new guidance, the cash flow assumptions used to measure the liability for future policy benefits for traditional insurance contracts will be required to be updated at least annually with changes recognized as a benefit expense (i.e., assumptions will no longer be locked-in). Insurance entities will be required to use a standard discount rate to measure the liabilities that will be equivalent to the yield from a high-quality bond. The new guidance also changes the amortization of deferred acquisition costs (DAC) to be on a constant-level basis over the expected term of the related contracts with no interest accruing on the DAC balance. The new guidance also introduces a new category of contract features associated with deposit type contracts referred to as market risk benefits (MRBs). Contract features meeting the definition of a MRB will be measured at fair value. New disclosures will be required for long-duration insurance contracts in order to provide better transparency into the exposure of insurance entities and the drivers of their results. For public business entities, the guidance is effective for annual reporting periods beginning after December 15, 2020, including interim periods within those years. With regards to the liability for future policy benefits and DAC, the guidance applies to contracts in force as of the beginning of the earliest period presented and may be applied retrospectively. With regards to MRBs, the guidance is to be applied retrospectively at the beginning of the earliest period presented. Early adoption is permitted. Management is evaluating the impact this guidance will have on the results of operations and financial position of the Company. |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2019 | |
Business Combinations [Abstract] | |
Acquisitions | The Company and Benefit Consultants Group, Inc. (BCG) entered into a Stock Purchase Agreement under which the Company acquired all of the outstanding capital stock of BCG with a transaction valued at $25 million . The acquisition was approved by the Company’s Board and closed on January 2, 2019. The acquisition of BCG gave rise to recognition of intangible assets of $16.2 million and goodwill of $10.1 million as a result of the purchase accounting. The intangible assets are reported as Other assets in the Consolidated Balance Sheets. Intangible assets that are amortizable have lives of 10 to 16 years. On July 1, 2019, the Company completed its acquisition of all the equity interests in National Teachers Associates Life Insurance Company (NTA) pursuant to a Purchase Agreement (Agreement) dated as of December 10, 2018, by and among the Company and Ellard Family Holdings, Inc., Brian M. Ellard and The JCE Exempt Trust. The purchase price of the transaction was $425 million which includes $20 million representing NTA’s share of "adjusted earnings" (as determined in accordance with the terms of the Agreement) from July 1, 2018 to July 1, 2019. As a result of the acquisition, NTA became a wholly owned subsidiary of the Company. NTA provides supplemental insurance products, including heart and cancer, to the education market. NTA's results will be reported in a newly created operating segment titled "Supplemental". |
Investments
Investments | 6 Months Ended |
Jun. 30, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Fixed Maturity Securities The Company’s investment portfolio is comprised primarily of fixed maturity securities. Amortized cost, net unrealized investment gains (losses) and fair values of all fixed maturity securities in the portfolio were as follows: ($ in thousands) Amortized Cost Unrealized Gains Unrealized Losses Fair Value June 30, 2019 Fixed maturity securities U.S. Government and federally sponsored agency obligations: (1) Mortgage-backed securities $ 550,059 $ 37,900 $ 1,201 $ 586,758 Other, including U.S. Treasury securities 546,396 20,574 533 566,437 Municipal bonds 1,472,794 127,700 801 1,599,693 Foreign government bonds 45,303 2,064 — 47,367 Corporate bonds 1,226,962 96,535 2,211 1,321,286 Other mortgage-backed securities 1,400,241 20,786 8,298 1,412,729 Totals $ 5,241,755 $ 305,559 $ 13,044 $ 5,534,270 December 31, 2018 Fixed maturity securities U.S. Government and federally sponsored agency obligations: (1) Mortgage-backed securities $ 778,038 $ 22,724 $ 13,321 $ 787,441 Other, including U.S. Treasury securities 835,096 16,127 17,681 833,542 Municipal bonds 1,884,313 133,150 13,494 2,003,969 Foreign government bonds 83,343 2,321 760 84,904 Corporate bonds 2,054,105 64,296 38,891 2,079,510 Other mortgage-backed securities 1,739,016 10,467 23,531 1,725,952 Totals $ 7,373,911 $ 249,085 $ 107,678 $ 7,515,318 ________________ (1) Fair value includes securities issued by Federal National Mortgage Association (FNMA) of $370,182 thousand and $441,308 thousand ; Federal Home Loan Mortgage Corporation (FHLMC) of $256,531 thousand and $417,308 thousand ; and Government National Mortgage Association (GNMA) of $79,141 thousand and $96,466 thousand as of June 30, 2019 and December 31, 2018 , respectively. The following table presents the fair value and gross unrealized losses of securities in an unrealized loss position at June 30, 2019 and December 31, 2018 , respectively. The Company views the decrease in fair value of all of the securities with unrealized losses at June 30, 2019 -- which was driven largely by increasing interest rates, spread widening, financial market illiquidity and/or market volatility from the date of acquisition -- as temporary. For fixed maturity securities, management does not have the intent to sell the securities and it is not more likely than not the Company will be required to sell the securities before the anticipated recovery of their amortized cost bases, and management expects to recover the entire amortized cost bases of the fixed maturity securities. Therefore, it was determined that the unrealized losses on the securities presented in the table below were not other-than-temporarily impaired as of June 30, 2019 . ($ in thousands) 12 Months or Less More than 12 Months Total Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses June 30, 2019 Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 10,504 $ 27 $ 44,564 $ 1,174 $ 55,068 $ 1,201 Other 11,463 32 37,575 501 49,038 533 Municipal bonds 16,900 93 34,031 708 50,931 801 Foreign government bonds — — — — — — Corporate bonds 27,858 518 32,997 1,693 60,855 2,211 Other mortgage-backed securities 391,170 3,895 277,694 4,403 668,864 8,298 Total $ 457,895 $ 4,565 $ 426,861 $ 8,479 $ 884,756 $ 13,044 Number of positions with a gross unrealized loss 143 156 299 Fair value as a percentage of total fixed maturity securities fair value 8.3 % 7.7 % 16.0 % December 31, 2018 Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 193,447 $ 5,026 $ 157,295 $ 8,295 $ 350,742 $ 13,321 Other 263,497 6,746 246,213 10,935 509,710 17,681 Municipal bonds 291,869 7,603 95,297 5,891 387,166 13,494 Foreign government bonds 16,250 760 — — 16,250 760 Corporate bonds 818,519 27,429 99,171 11,462 917,690 38,891 Other mortgage-backed securities 913,858 16,076 291,442 7,455 1,205,300 23,531 Total $ 2,497,440 $ 63,640 $ 889,418 $ 44,038 $ 3,386,858 $ 107,678 Number of positions with a gross unrealized loss 1,052 359 1,411 Fair value as a percentage of total fixed maturity securities fair value 33.2 % 11.8 % 45.0 % Fixed maturity securities with an investment grade rating represented 84.0% of the gross unrealized losses as of June 30, 2019 . With respect to fixed maturity 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 their amortized cost bases. Limited Partnership Interests As of June 30, 2019 and December 31, 2018 , the carrying value of equity method limited partnerships totaled $351,515 thousand and $328,516 thousand , respectively. Principal factors influencing carrying value appreciation or decline include operating performance, comparable public company earnings multiples, capitalization rates and the economic environment. The Company recognizes an impairment loss for equity method limited partnerships when evidence demonstrates that the loss is other than temporary. Evidence of a loss in value that is other than temporary may include the absence of an ability to recover the carrying amount of the investment or the inability of the investee to sustain a level of earnings that would justify the carrying amount of the investment. Credit Losses The following table summarizes the cumulative amounts related to the Company’s credit loss component of other-than-temporary impairment (OTTI) losses on fixed maturity securities held as of June 30, 2019 and 2018 that the Company did not intend to sell as of those dates, and it was not more likely than not that the Company would be required to sell the securities before the anticipated recovery of the amortized cost bases, for which the non-credit portions of OTTI losses were recognized in OCI: ($ in thousands) Six Months Ended 2019 2018 Cumulative credit loss (1) Beginning of period $ 1,529 $ 3,825 New credit losses — — Increases to previously recognized credit losses — 246 Losses related to securities sold or paid down during the period — — End of period $ 1,529 $ 4,071 ________________ (1) The cumulative credit loss amounts exclude OTTI 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 of Fixed Maturity 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. ($ in thousands) Percent of Total Fair Value June 30, 2019 June 30, 2019 December 31, 2018 Fair Value Amortized Cost Estimated expected maturity: Due in 1 year or less 4.7 % 4.8 % $ 258,331 $ 252,586 Due after 1 year through 5 years 26.7 % 22.8 % 1,478,291 1,439,296 Due after 5 years through 10 years 29.6 % 32.8 % 1,638,887 1,555,825 Due after 10 years through 20 years 25.6 % 26.5 % 1,414,857 1,316,715 Due after 20 years 13.4 % 13.1 % 743,904 677,333 Total 100.0 % 100.0 % $ 5,534,270 $ 5,241,755 Average option-adjusted duration, in years 5.6 5.9 Sales of Fixed Maturity and Equity Securities Proceeds received from sales of fixed maturity 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 period were: ($ in thousands) Three Months Ended Six Months Ended 2019 (1) 2018 2019 (1) 2018 Fixed maturity securities Proceeds received $ 442,015 $ 100,129 $ 501,739 $ 190,023 Gross gains realized 147,774 2,352 148,316 4,022 Gross losses realized (5,976 ) (1,584 ) (6,081 ) (1,637 ) Equity securities Proceeds received $ 1,633 $ 3,735 $ 17,122 $ 5,783 Gross gains realized 389 977 5,134 1,593 Gross losses realized (166 ) (147 ) (510 ) (181 ) ________________ (1) Gross gains realized presented above include a $135.3 million realized investment gain associated with a transfer of investments to a reinsurer as consideration paid during the second quarter of 2019 in connection with the reinsurance of a $2.9 billion block of in force fixed and variable annuity business. See Notes 6 and 13 for further information. Net Investment Gains (Losses) The following table reconciles net investment gains (losses) pretax by transaction type: ($ in thousands) Three Months Ended Six Months Ended 2019 2018 2019 2018 Impairment write-downs $ — $ — $ — $ — Change in intent write-downs (34 ) (1,177 ) (271 ) (1,287 ) Net OTTI losses recognized in earnings (34 ) (1,177 ) (271 ) (1,287 ) Sales and other, net 142,067 1,789 146,905 3,992 Change in fair value - equity securities 3,441 (1,156 ) 6,948 (6,342 ) Change in fair value and gains (losses) realized on settlements - derivative instruments 859 1,279 168 2,718 Net investment gains (losses) $ 146,333 $ 735 $ 153,750 $ (919 ) Net Unrealized Investment Gains (Losses) on Fixed Maturity Securities The following table reconciles net unrealized investment gains (losses) on fixed maturity securities, net of tax, included in AOCI, before the impact of DAC: ($ in thousands) Three Months Ended Six Months Ended 2019 2018 2019 2018 Net unrealized investment gains (losses) on fixed maturity securities, net of tax Beginning of period $ 245,319 $ 206,293 $ 111,712 $ 286,176 Change in net unrealized investment gains (losses) on fixed maturity securities 100,693 (61,724 ) 240,705 (129,009 ) Reclassification of net investment (gains) losses on securities to net income (114,925 ) 429 (121,330 ) 2,872 Cumulative effect of change in accounting principle (1) — — — (15,041 ) End of period $ 231,087 $ 144,998 $ 231,087 $ 144,998 ________________ (1) Effective January 1, 2018, with the adoption of new accounting guidance for recognition and measurement of financial instruments, available for sale equity securities were reclassified to equity securities at fair value and the related net unrealized gains were reclassified from AOCI to Retained earnings. 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 instruments that were subject to a master netting arrangement for the Company. ($ in thousands) Gross Amounts Offset in the Net Amounts of Assets/ Liabilities Presented in the Gross Amounts Not Offset in the Consolidated Balance Sheets Gross Amounts Consolidated Balance Sheets Consolidated Balance Sheets Financial Instruments Cash Collateral Received Net Amount June 30, 2019 Asset derivatives: Free-standing derivatives $ 8,753 $ — $ 8,753 $ — $ 8,663 $ 90 December 31, 2018 Asset derivatives: Free-standing derivatives $ 2,647 $ — $ 2,647 $ — $ 1,868 $ 779 Deposits At June 30, 2019 and December 31, 2018 , fixed maturity securities with a fair value of $18,073 thousand and $17,695 thousand , 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 June 30, 2019 and December 31, 2018 , fixed maturity securities with a fair value of $787,421 thousand and $740,016 thousand , respectively, were on deposit with the Federal Home Loan Bank of Chicago (FHLB) as collateral for amounts subject to funding agreements, advances and borrowings which were equal to $725,000 thousand at June 30, 2019 and $675,000 thousand at December 31, 2018 . The deposited securities are included in Fixed maturity securities on the Company’s Consolidated Balance Sheets. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | The Company is required under GAAP to disclose estimated fair values for certain financial and nonfinancial assets and liabilities. Fair values of the Company’s insurance contracts other than annuity contracts (which are investment contracts) are not required to be disclosed. However, the estimated fair values of liabilities under all insurance contracts are taken into consideration in the Company’s overall management of interest rate risk through the matching of investment maturities with amounts due under insurance contracts. Information regarding the three-level hierarchy presented below and the valuation methodologies utilized by the Company to estimate fair values at each reporting date is included in Note 3 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 . Financial Instruments Measured and Carried at Fair Value The following table presents the Company’s fair value hierarchy for those assets and liabilities measured and carried at fair value on a recurring basis. At June 30, 2019 , Level 3 invested assets comprised 4.0% of the Company’s total investment portfolio at fair value. ($ in thousands) Fair Value Measurements at Carrying Fair Reporting Date Using Amount Value Level 1 Level 2 Level 3 June 30, 2019 Financial Assets Investments Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 586,758 $ 586,758 $ — $ 584,070 $ 2,688 Other, including U.S. Treasury securities 566,437 566,437 16,288 550,149 — Municipal bonds 1,599,693 1,599,693 — 1,552,709 46,984 Foreign government bonds 47,367 47,367 — 47,367 — Corporate bonds 1,321,286 1,321,286 13,997 1,228,067 79,222 Other mortgage-backed securities 1,412,729 1,412,729 — 1,286,979 125,750 Total fixed maturity securities 5,534,270 5,534,270 30,285 5,249,341 254,644 Equity securities 100,143 100,143 57,530 42,544 69 Short-term investments 247,872 247,872 246,872 1,000 — Other investments 24,503 24,503 — 24,503 — Totals $ 5,906,788 $ 5,906,788 $ 334,687 $ 5,317,388 $ 254,713 Separate Account (variable annuity) assets (1) $ 2,310,886 $ 2,310,886 $ 2,310,886 $ — $ — Financial Liabilities Investment contract and life policy reserves, embedded derivatives $ 940 $ 940 $ — $ 940 $ — Other policyholder funds, embedded derivatives $ 85,961 $ 85,961 $ — $ — $ 85,961 December 31, 2018 Financial Assets Investments Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 787,441 $ 787,441 $ — $ 784,224 $ 3,217 Other, including U.S. Treasury securities 833,542 833,542 13,291 820,251 — Municipal bonds 2,003,969 2,003,969 — 1,956,438 47,531 Foreign government bonds 84,904 84,904 — 84,904 — Corporate bonds 2,079,510 2,079,510 12,281 1,986,487 80,742 Other mortgage-backed securities 1,725,952 1,725,952 — 1,608,958 116,994 Total fixed maturity securities 7,515,318 7,515,318 25,572 7,241,262 248,484 Equity securities 111,750 111,750 64,330 47,415 5 Short-term investments 122,222 122,222 117,296 4,926 — Other investments 16,147 16,147 — 16,147 — Totals $ 7,765,437 $ 7,765,437 $ 207,198 $ 7,309,750 $ 248,489 Separate Account (variable annuity) assets (1) $ 2,001,128 $ 2,001,128 $ 2,001,128 $ — $ — Financial Liabilities Investment contract and life policy reserves, embedded derivatives $ 248 $ 248 $ — $ 248 $ — Other policyholder funds, embedded derivatives $ 78,700 $ 78,700 $ — $ — $ 78,700 ________________ (1) Separate Account (variable annuity) liabilities are equal to the estimated fair value of the Separate Account (variable annuity) assets. During the six month periods ended June 30, 2019 and 2018, there were no transfers between Level 1 and Level 2. The following table presents reconciliations for the periods indicated for all Level 3 assets and liabilities measured at fair value on a recurring basis. ($ in thousands) Financial Assets Financial Liabilities (1) Municipal Bonds Corporate Bonds Other Mortgage- Backed Securities (2) Total Fixed Maturity Securities Equity Securities Total Beginning balance, April 1, 2019 $ 47,756 $ 82,482 $ 135,790 $ 266,028 $ 5 $ 266,033 $ 84,629 Transfers into Level 3 (3) — 2,808 — 2,808 64 2,872 — Transfers out of Level 3 (3) — (4,876 ) — (4,876 ) — (4,876 ) — Total gains or losses Net investment gains (losses) included in net income related to financial assets — — — — — — — Net realized (gains) losses included in net income related to financial liabilities — — — — — — 371 Net unrealized investment gains (losses) included in OCI (537 ) 1,961 2,807 4,231 — 4,231 — Purchases — 1,566 — 1,566 — 1,566 — Issuances — — — — — — 2,431 Sales — — (607 ) (607 ) — (607 ) — Settlements — — — — — — — Paydowns, maturities and distributions (235 ) (4,719 ) (9,552 ) (14,506 ) — (14,506 ) (1,470 ) Ending balance, June 30, 2019 $ 46,984 $ 79,222 $ 128,438 $ 254,644 $ 69 $ 254,713 $ 85,961 Beginning balance, January 1, 2019 $ 47,531 $ 80,742 $ 120,211 $ 248,484 $ 5 $ 248,489 $ 78,700 Transfers into Level 3 (3) — 5,882 21,934 27,816 64 27,880 — Transfers out of Level 3 (3) — (4,876 ) — (4,876 ) — (4,876 ) — Total gains or losses Net investment gains (losses) included in — — — — — — — Net realized (gains) losses included in net — — — — — — 4,705 Net unrealized investment gains (losses) included in OCI (193 ) 4,510 2,655 6,972 — 6,972 — Purchases — 1,566 — 1,566 — 1,566 — Issuances — — — — — — 5,449 Sales — — (607 ) (607 ) — (607 ) — Settlements — — — — — — — Paydowns, maturities and distributions (354 ) (8,602 ) (15,755 ) (24,711 ) — (24,711 ) (2,893 ) Ending balance, June 30, 2019 $ 46,984 $ 79,222 $ 128,438 $ 254,644 $ 69 $ 254,713 $ 85,961 ________________ (1) Represents embedded derivatives, all related to the Company's fixed indexed annuity products, reported in Other policyholder funds in the Company’s Consolidated Balance Sheets. (2) Includes U.S. Government and federally sponsored agency obligations for mortgage-backed securities and other mortgage-backed securities. (3) Transfers into and out of Level 3 during the three and six month periods ended June 30, 2019 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. ($ in thousands) Financial Assets Financial (1) Municipal Corporate Other Mortgage- (2) Total Equity Total Beginning balance, April 1, 2018 $ 49,748 $ 78,780 $ 115,334 $ 243,862 $ 6 $ 243,868 $ 78,486 Transfers into Level 3 (3) — 29,709 18,322 48,031 — 48,031 — Transfers out of Level 3 (3) — (11,279 ) (4,230 ) (15,509 ) — (15,509 ) — Total gains or losses Net investment gains (losses) included in — (246 ) — (246 ) — (246 ) — Net realized (gains) losses included in net income related to financial liabilities — — — — — — (1,291 ) Net unrealized investment gains 397 (700 ) 1,659 1,356 — 1,356 — Purchases — — — — — — — Issuances — — — — — — 2,107 Sales — — — — — — — Settlements — — — — — — — Paydowns, maturities and distributions (224 ) (3,601 ) (2,024 ) (5,849 ) — (5,849 ) (1,514 ) Ending balance, June 30, 2018 $ 49,921 $ 92,663 $ 129,061 $ 271,645 $ 6 $ 271,651 $ 77,788 Beginning balance, January 1, 2018 $ 49,328 $ 72,979 $ 107,944 $ 230,251 $ 6 $ 230,257 $ 80,733 Transfers into Level 3 (3) — 40,487 33,144 73,631 — 73,631 — Transfers out of Level 3 (3) — (11,279 ) (4,230 ) (15,509 ) — (15,509 ) — Total gains or losses Net investment gains (losses) included in — (246 ) — (246 ) 3 (243 ) — Net (gains) losses included in net income related to financial liabilities — — — — — — (3,513 ) Net unrealized investment gains 840 (1,587 ) 637 (110 ) — (110 ) — Purchases — — — — — — — Issuances — — — — — — 3,439 Sales — — — — (3 ) (3 ) — Settlements — — — — — — — Paydowns, maturities and distributions (247 ) (7,691 ) (8,434 ) (16,372 ) — (16,372 ) (2,871 ) Ending balance, June 30, 2018 $ 49,921 $ 92,663 $ 129,061 $ 271,645 $ 6 $ 271,651 $ 77,788 ________________ (1) Represents embedded derivatives, all related to the Company’s fixed indexed annuity products, reported in Other policyholder funds in the Company’s Consolidated Balance Sheets. (2) Includes U.S. Government and federally sponsored agency obligations for mortgage-backed securities and other mortgage-backed securities. (3) Transfers into and out of Level 3 during the three and six month periods ended June 30, 2018 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. For the six month period ended June 30, 2019 , the Company had no net losses on Level 3 securities. For the six month period ended June 30, 2018 , the Company had a realized net loss on two Level 3 securities of $243 thousand . For the three and six month periods ended June 30, 2019 , net investment losses of $371 thousand and $4,705 thousand were included in earnings that were attributable to the changes in the fair value of Level 3 liabilities (embedded derivatives) still held; for the three and six month periods ended June 30, 2018 , the respective gain amounts were $1,291 thousand and $3,513 thousand . The valuation techniques and significant unobservable inputs used in the fair value measurement for financial assets and liabilities classified as Level 3 are subject to the control processes as described in Note 3 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 . Generally, valuation techniques for fixed maturity securities include spread pricing, matrix pricing and discounted cash flow methodologies; include inputs such as quoted prices for identical or similar securities that are less liquid; and are based on lower levels of trading activity than securities classified as Level 2. The valuation techniques and significant unobservable inputs used in the fair value measurement for equity securities classified as Level 3 use similar valuation techniques and significant unobservable inputs as those used for fixed maturity securities. The sensitivity of the estimated fair values to changes in the significant unobservable inputs for fixed maturity and equity securities included in Level 3 generally relate to interest rate spreads, illiquidity premiums and default rates. Significant spread widening in isolation will adversely impact the overall valuation, while significant spread tightening will lead to substantial valuation increases. Significant increases (decreases) in illiquidity premiums in isolation will result in substantially lower (higher) valuations. Significant increases (decreases) in expected default rates in isolation will result in substantially lower (higher) valuations. Financial Instruments Not Carried at Fair Value; Disclosure Required The Company has various other financial assets and financial liabilities used in the normal course of business that are not carried at fair value, but for which fair value disclosure is required. The following table presents the carrying value, fair value and fair value hierarchy of these financial assets and financial liabilities. ($ in thousands) Fair Value Measurements at Carrying Fair Reporting Date Using Amount Value Level 1 Level 2 Level 3 June 30, 2019 Financial Assets Investments Other investments $ 161,313 $ 166,023 $ — $ — $ 166,023 Financial Liabilities Investment contract and life policy reserves, fixed annuity contracts 4,605,272 4,529,317 — — 4,529,317 Investment contract and life policy reserves, account values on life contracts 90,239 93,366 — — 93,366 Other policyholder funds 735,919 735,919 — 676,460 59,459 Long-term debt 297,881 315,938 — 315,938 — December 31, 2018 Financial Assets Investments Other investments $ 156,725 $ 161,449 $ — $ — $ 161,449 Financial Liabilities Investment contract and life policy reserves, fixed annuity contracts 4,555,849 4,478,338 — — 4,478,338 Investment contract and life policy reserves, 87,229 90,402 — — 90,402 Other policyholder funds 689,287 689,287 — 626,325 62,962 Long-term debt 297,740 291,938 — 291,938 — |
Derivative Instruments
Derivative Instruments | 6 Months Ended |
Jun. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | The Company offers fixed indexed annuity (FIA) products, 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. The Company also offers indexed universal life (IUL) products which 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 changes in fair value included in Net 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 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 FIA are accounted for as a "series of embedded derivatives" over the expected life of the applicable contract with a corresponding reserve recorded. For IUL, the embedded derivative represents a single year liability for the index return. The Company carries all derivative instruments at fair value in the Consolidated Balance Sheets. The Company elected to not use hedge accounting for derivative transactions related to the FIA and IUL products. As a result, the Company recognizes the purchased call options and the embedded derivatives related to the provision of a contingent return at fair value, with changes in the fair value recognized immediately as Net investment gains (losses) in the Consolidated Statements of Operations. The fair values of derivative instruments, including derivative instruments embedded in FIA and IUL contracts, are presented in the Consolidated Balance Sheets as follows: ($ in thousands) June 30, 2019 December 31, 2018 Assets Derivative instruments, included in Short-term and other investments $ 8,753 $ 2,647 Liabilities FIA - embedded derivatives, included in Other policyholder funds $ 85,961 $ 78,700 IUL - embedded derivatives, included in Investment contract and life policy reserves 940 248 In general, the change in the fair value of the embedded derivatives related to FIA 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 the embedded derivatives represent the rights of the policyholder to receive index credits over the entire period the FIA contracts 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: ($ in thousands) Three Months Ended Six Months Ended 2019 2018 2019 2018 Change in fair value of derivatives: (1) Revenues Net investment gains (losses) $ 1,375 $ (2 ) $ 5,429 $ (851 ) Change in fair value of embedded derivatives: Revenues Net investment gains (losses) $ (516 ) $ 1,281 $ (5,261 ) $ 3,569 ________________ (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 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 Global Inc. (S&P)/Moody's Investors Service, Inc. (Moody's) long-term credit rating of "BBB+/A1" 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: ($ in thousands) June 30, 2019 December 31, 2018 Credit Rating Notional Fair Notional Fair Counterparty S&P Moody's Amount Value Amount Value Bank of America, N.A. A+ Aa2 $ 156,800 $ 3,560 $ 144,500 $ 870 Barclays Bank PLC A A2 72,500 1,696 28,500 247 Citigroup Inc. BBB+ A3 — — — — Credit Suisse International A+ A1 16,100 295 16,100 55 Societe Generale A 55,000 3,202 89,100 1,475 Total $ 300,400 $ 8,753 $ 278,200 $ 2,647 As of June 30, 2019 and December 31, 2018 , the Company held $8,663 thousand and $1,868 thousand , 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 $250 thousand per counterparty. |
Property and Casualty Unpaid Cl
Property and Casualty Unpaid Claims and Claim Expenses | 6 Months Ended |
Jun. 30, 2019 | |
Insurance Loss Reserves [Abstract] | |
Property and Casualty Unpaid Claims and Claim Expenses | The following table is a summary reconciliation of the beginning and ending Property and Casualty unpaid claims and claim expense reserves for the periods indicated. The table presents reserves on both gross and net (after reinsurance) bases. The total net Property and Casualty insurance claims and claim expense incurred amounts are reflected in the Consolidated Statements of Operations. The end of the period gross reserve (before reinsurance) balances and the reinsurance recoverable balances are reflected on a gross basis in the Consolidated Balance Sheets. ($ in thousands) Three Months Ended Six Months Ended 2019 2018 2019 2018 Property and Casualty Beginning gross reserves (1) $ 359,701 $ 331,255 $ 367,180 $ 319,182 Less: reinsurance recoverables 78,328 62,917 89,725 57,409 Net reserves, beginning of period (2) 281,373 268,338 277,455 261,773 Incurred claims and claim expenses: Claims occurring in the current period 134,411 147,005 253,178 267,993 Decrease in estimated reserves for claims occurring in prior periods (3) (2,000 ) — (4,000 ) (300 ) Total claims and claim expenses incurred (4) 132,411 147,005 249,178 267,693 Claims and claim expense payments for claims occurring during: Current period 83,755 80,403 129,469 127,451 Prior periods 39,512 45,006 106,647 112,081 Total claims and claim expense payments 123,267 125,409 236,116 239,532 Net reserves, end of period (2) 290,517 289,934 290,517 289,934 Plus: reinsurance recoverables 77,345 62,883 77,345 62,883 Ending gross reserves (1) $ 367,862 $ 352,817 $ 367,862 $ 352,817 ________________ (1) Unpaid claims and claim expenses as reported in the Consolidated Balance Sheets also include reserves for Life and Retirement of $30,477 thousand and $27,016 thousand as of June 30, 2019 and 2018 , respectively, in addition to Property and Casualty 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. (4) Benefits, claims and settlement expenses as reported in the Consolidated Statements of Operations also include amounts for Life and Retirement of $20,281 thousand and $42,898 thousand for the three and six month periods ended June 30, 2019 , respectively, in addition to Property and Casualty amounts. Benefits, claims and settlement expenses for Life and Retirement were $21,273 thousand and $44,147 thousand for the three and six month periods ended June 30, 2018 , respectively. Net favorable development of total reserves for Property and Casualty claims occurring in prior years was $4.0 million and $0.3 million for the six month periods ended June 30, 2019 and 2018 , respectively. The favorable development for the six month period ended June 30, 2019 was the result of favorable loss trends in auto and homeowners loss emergence for accident years 2018 and prior. The favorable development for the six month period ended June 30, 2018 was predominately the result of favorable loss trends in homeowners emergence for accident years 2017 and prior. |
Debt
Debt | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Debt | enior Notes due 2025 (Senior Notes due 2025) and the FHLB borrowing are described in Note 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 . Credit Agreement with Financial Institutions (Bank Credit Facility ) On June 21, 2019, the Company, as borrower, replaced its current line of credit with a new five-year Credit Agreement (Bank Credit Facility). The new Bank Credit Facility increased the amount available on this senior revolving credit facility to $225 million from $150 million . PNC Capital Markets, LLC and JPMorgan Chase Bank, N.A. served as joint leads on the new agreement, with The Northern Trust Company, U.S. Bank National Association, KeyBank National Association, Comerica Bank and Illinois National Bank participating in the syndicate. Terms and conditions of the new Bank Credit Facility are substantially consistent with the prior agreement, with an interest rate based on LIBOR plus 115 basis points. On July 1, 2019, the Company utilized the senior revolving credit facility to partially fund the acquisition of NTA. As of August 1, 2019, the amount outstanding on the senior revolving credit facility was $135 million . The unused portion of the Bank Credit Facility is subject to a variable commitment fee, which was 0.15% on an annual basis at June 30, 2019 . |
Deposit Asset on Reinsurance
Deposit Asset on Reinsurance | 6 Months Ended |
Jun. 30, 2019 | |
Reinsurance Disclosures [Abstract] | |
Deposit Asset on Reinsurance | In the second quarter of 2019, the Company reinsured a $2.9 billion block of in force fixed and variable annuity business with a minimum crediting rate of 4.5% . This represented approximately 50% of the Company’s in force fixed annuity account balances. The arrangement contains investment guidelines and a trust to help meet the Company’s risk management objectives. The annuity reinsurance transaction was effective April 1, 2019. Under the agreement, approximately $2.2 billion of fixed annuity reserves were reinsured on a coinsurance basis for consideration of approximately $2.3 billion which resulted in recognition of an after tax realized investment gain of $106.9 million . The separate account assets and liabilities of approximately $0.7 billion were reinsured on a modified coinsurance basis and thus, remain on the Company’s consolidated financial statements, but the related results of operations are fully reinsured. The Company determined that the reinsurance agreement does not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk. Therefore, the Company recognizes the reinsurance agreement using the deposit method of accounting. The assets transferred to the reinsurer as consideration paid is reported as a Deposit asset on reinsurance. As amounts are received or paid, consistent with the underlying reinsured contracts, the Deposit asset on reinsurance is adjusted. The Deposit asset on reinsurance is accreted to the estimated ultimate cash flows using the interest method and the adjustment is reported as Net investment income. |
Reinsurance
Reinsurance | 6 Months Ended |
Jun. 30, 2019 | |
Insurance [Abstract] | |
Reinsurance | The Company recognizes the cost of reinsurance premiums over the contract periods for such premiums in proportion to the insurance protection provided. Amounts recoverable from reinsurers for unpaid claims and claim settlement expenses, including estimated amounts for unsettled claims, claims incurred but not yet reported and policy benefits, are estimated in a manner consistent with the insurance liability associated with the policy. The effects of reinsurance on premiums written and contract deposits; premiums and contract charges earned; and benefits, claims and settlement expenses were as follows: ($ in thousands) Gross Amount Ceded to Other Companies (1) Assumed from Other Companies Net Amount Three months ended June 30, 2019 Premiums written and contract deposits (2) $ 314,897 $ 6,028 $ 2,822 $ 311,691 Premiums and contract charges earned 213,415 8,155 2,836 208,096 Benefits, claims and settlement expenses 153,436 2,797 2,053 152,692 Three months ended June 30, 2018 Premiums written and contract deposits (2) $ 305,864 $ 5,483 $ 1,341 $ 301,722 Premiums and contract charges earned 209,892 5,505 1,223 205,610 Benefits, claims and settlement expenses 170,459 3,330 1,149 168,278 Six months ended June 30, 2019 Premiums written and contract deposits (2) $ 613,990 $ 11,876 $ 4,971 $ 607,085 Premiums and contract charges earned 426,671 13,977 5,187 417,881 Benefits, claims and settlement expenses 295,488 7,089 3,677 292,076 Six months ended June 30, 2018 Premiums written and contract deposits (2) $ 594,680 $ 10,997 $ 2,047 $ 585,730 Premiums and contract charges earned 417,629 11,033 2,012 408,608 Benefits, claims and settlement expenses 322,427 12,344 1,757 311,840 ________________ (1) Excludes the annuity reinsurance agreement accounted for under the deposit method that is discussed in Note 6. (2) This measure is not based on accounting principles generally accepted in the U.S. (non-GAAP). An explanation of this non-GAAP measure is contained in the Glossary of Selected Terms included as an exhibit in the Company's reports filed with the SEC. |
Commitments
Commitments | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments | 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 $157.4 million and $145.4 million at June 30, 2019 and December 31, 2018 , respectively. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Segment Information | The Company conducts and manages its business through four segments. The three operating segments, representing the major lines of insurance business, are: Property and Casualty, primarily personal lines automobile and property insurance products; Retirement, primarily tax-qualified fixed and variable annuities; and Life, life insurance. The Company does not allocate the impact of corporate-level transactions to these operating segments, consistent with the basis for management’s evaluation of the results of those segments, but classifies those items in the fourth segment, Corporate and Other. In addition to ongoing transactions such as corporate debt service, net investment gains (losses) and certain public company expenses, such items also have included corporate debt retirement costs, when applicable. Summarized financial information for these segments is as follows: ($ in thousands) Three Months Ended Six Months Ended 2019 2018 2019 2018 Insurance premiums and contract charges earned Property and Casualty $ 171,303 $ 167,333 $ 342,143 $ 332,791 Retirement 6,931 7,825 15,509 15,893 Life 29,862 30,452 60,229 59,924 Total $ 208,096 $ 205,610 $ 417,881 $ 408,608 Net investment income Property and Casualty $ 12,643 $ 10,300 $ 22,861 $ 19,816 Retirement 62,684 67,787 127,423 131,956 Life 18,324 19,166 36,376 37,506 Corporate and Other (14 ) 42 (37 ) 78 Intersegment eliminations (179 ) (194 ) (365 ) (391 ) Total $ 93,458 $ 97,101 $ 186,258 $ 188,965 Net income (loss) Property and Casualty $ 5,101 $ (10,896 ) $ 20,153 $ (1,174 ) Retirement (25,045 ) 14,141 (12,894 ) 25,562 Life 5,239 5,879 8,516 9,666 Corporate and Other 108,527 (3,207 ) 110,213 (7,982 ) Total $ 93,822 $ 5,917 $ 125,988 $ 26,072 ($ in thousands) June 30, 2019 December 31, 2018 Assets Property and Casualty $ 1,281,344 $ 1,236,362 Retirement 8,493,089 7,866,969 Life 1,911,569 1,821,351 Corporate and Other 145,022 149,014 Intersegment eliminations (51,617 ) (41,800 ) Total $ 11,779,407 $ 11,031,896 |
Operating Leases
Operating Leases | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Operating Leases | The Company has various operating lease agreements, primarily for real estate (claims and marketing offices in a few states) as well as for computer equipment and copier machines. Such leases have remaining lease terms of 1 years to 6 years, some of which may include options to extend the leases for up to 10 years. The components of lease expense were as follows: ($ in thousands) Three Months Ended Six Months Ended Operating lease cost $ 791 $ 1,600 Short-term lease cost 27 51 Total lease cost $ 818 $ 1,651 Supplemental cash flow information related to operating leases was as follows: ($ in thousands) Three Months Ended Six Months Ended Cash paid for amounts included in the measurement of lease liabilities $ 575 $ 1,341 Supplemental balance sheet information related to operating leases was as follows: ($ in thousands, except lease term and discount rate) June 30, 2019 Assets Right of use assets, included in Other assets $ 12,692 Liabilities Operating lease liabilities, included in Other liabilities $ 13,429 Weighted Average Remaining Lease Term 5.00 Weighted Average Discount Rate 4.10 % Future minimum lease payments under non-cancellable operating leases as of June 30, 2019 were as follows: ($ in thousands) Year Ending December 31, 2019 (excluding the six months ended June 30, 2019) $ 1,448 2020 3,108 2021 3,028 2022 2,943 2023 2,246 Thereafter 2,111 Total future minimum lease payments 14,884 Less imputed interest (1,455 ) Total $ 13,429 As of June 30, 2019 , the Company has no additional operating leases that have not yet commenced. |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 6 Months Ended |
Jun. 30, 2019 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Cash Flow Information | Non-cash investing activities include $2.1 billion of investments and policy loans transferred to a reinsurer as consideration paid during the second quarter of 2019 in connection with the Company’s reinsurance of a $2.9 billion block of in force fixed and variable annuity business. See Note 6 for further information. Non-cash investing activities in respect to modifications or exchanges of fixed maturity securities was insignificant for the six months ended June 30, 2019 and 2018, respectively. |
Goodwill
Goodwill | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | The Company conducts impairment testing for goodwill at least annually, or more often if events, changes or circumstances indicate that the carrying amount may not be recoverable. See Note 1 in the Company's Annual Report on Form 10-K for the year ended 2018 for further description of impairment testing. The annuity reinsurance transaction described in Note 6 triggered the requirement to evaluate the goodwill associated with the annuity business of the Retirement segment. For the evaluation, the fair value of the Retirement segment was measured using a discounted cash flow method. The carrying value exceeded the fair value, resulting in a $28,025 thousand non-cash impairment charge during the quarter ended June 30, 2019 which represented the entire balance of the goodwill associated with the annuity business of the Retirement segment. The impairment charge was reported as Other expense in the Consolidated Statement of Operations. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The accompanying unaudited consolidated financial statements of Horace Mann Educators Corporation (HMEC; and together with its subsidiaries, the Company or Horace Mann) have been prepared in conformity with accounting principles generally accepted in the U.S. (GAAP) and with the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and disclosures normally included in annual financial statements prepared in conformity with GAAP, but are not required for interim reporting purposes, have been omitted. The Company believes that these consolidated financial statements contain all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to present fairly the Company’s consolidated financial position as of June 30, 2019 , the consolidated results of operations, comprehensive income (loss), changes in shareholders’ equity and cash flows for the six month periods ended June 30, 2019 and 2018 . The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The subsidiaries of HMEC market and underwrite personal lines of property and casualty insurance products (primarily personal lines of automobile and property insurance), retirement products (primarily tax-qualified annuities) 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. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes to consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 . The results of operations for the three and six month periods ended June 30, 2019 are not necessarily indicative of the results to be expected for the full year. |
Accumulated Other Comprehensive Income (Loss) | Comparative information for elements that are not required to be reclassified in their entirety to net income in the same reporting period is disclosed in Note 3. Accumulated Other Comprehensive Income (Loss) |
Adopted and Pending Accounting Standards | Adopted Accounting Standards Accounting for Leases Effective for the quarter ended March 31, 2019, the Company adopted guidance for leases and elected to utilize a cumulative-effect adjustment to the opening balance of retained earnings. Accordingly, the Company’s reporting for the comparative periods prior to adoption continue to be presented in the financial statements in accordance with previous lease accounting guidance. The Company elected to apply all practical expedients in the guidance for transition for leases in effect at adoption, including using hindsight to determine the lease term of existing leases, the option to not reassess whether an existing contract is a lease or contains a lease and whether the lease is an operating or finance lease. The adoption of the guidance resulted in the Company recognizing an initial $14,499 thousand lease liability equal to the present value of lease payments and an initial $13,908 thousand right-of-use (ROU) asset, which is the corresponding lease liability adjusted for qualifying accrued lease payments. The lease liability and ROU asset are reported in Other liabilities and Other assets on the Consolidated Balance Sheets. The impact of these changes at adoption had no impact on net income or shareholders' equity . Simplifying the Test for Goodwill Impairment Effective for the quarter ended June 30, 2019, the Company adopted guidance to simplify the accounting for goodwill impairment. Adoption of this guidance removed Step 2 of the goodwill impairment test, which required a hypothetical purchase price allocation. Goodwill impairment is now the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Pending Accounting Standards Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued guidance to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments, including reinsurance receivables, held by companies. The new guidance replaces the incurred loss impairment methodology for financial instruments other than available for sale debt securities and requires an organization to measure and recognize all current expected credit losses (CECL) for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Companies will need to utilize forward-looking information to better estimate their credit losses. Companies will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. Any credit losses related to available for sale debt securities will be recorded through an allowance for credit losses with this allowance having a limit equal to the amount by which fair value is below amortized cost. The guidance also requires enhanced qualitative and quantitative disclosures to provide additional information about the amounts recorded in the financial statements. This guidance is effective for annual and interim reporting periods beginning after December 15, 2019. Early adoption is permitted beginning after December 15, 2018. Upon adoption, the guidance will be applied using the modified-retrospective approach, by which a cumulative-effect adjustment will be made to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The guidance will have the most impact on the Company’s available for sale fixed maturity securities portfolio. However, as the Company’s fixed maturity securities portfolio is weighted towards higher rated bonds (97.1% investment grade, based on fair value, with an average quality rating of A+ at June 30, 2019), the Company does not expect that the effect of adoption will be material. Accounting for Long-Duration Insurance Contracts In August 2018, the FASB issued accounting and disclosure guidance that contains targeted improvements to the accounting for long-duration insurance contracts. Under the new guidance, the cash flow assumptions used to measure the liability for future policy benefits for traditional insurance contracts will be required to be updated at least annually with changes recognized as a benefit expense (i.e., assumptions will no longer be locked-in). Insurance entities will be required to use a standard discount rate to measure the liabilities that will be equivalent to the yield from a high-quality bond. The new guidance also changes the amortization of deferred acquisition costs (DAC) to be on a constant-level basis over the expected term of the related contracts with no interest accruing on the DAC balance. The new guidance also introduces a new category of contract features associated with deposit type contracts referred to as market risk benefits (MRBs). Contract features meeting the definition of a MRB will be measured at fair value. New disclosures will be required for long-duration insurance contracts in order to provide better transparency into the exposure of insurance entities and the drivers of their results. For public business entities, the guidance is effective for annual reporting periods beginning after December 15, 2020, including interim periods within those years. With regards to the liability for future policy benefits and DAC, the guidance applies to contracts in force as of the beginning of the earliest period presented and may be applied retrospectively. With regards to MRBs, the guidance is to be applied retrospectively at the beginning of the earliest period presented. Early adoption is permitted. Management is evaluating the impact this guidance will have on the results of operations and financial position of the Company. |
Basis of Presentation (Tables)
Basis of Presentation (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Investment Contract And Life Policy Reserves | The following table summarizes investment contract and life policy reserves. ($ in thousands) June 30, 2019 December 31, 2018 Investment contract reserves $ 4,605,272 $ 4,555,856 Life policy reserves 1,171,497 1,155,337 Total $ 5,776,769 $ 5,711,193 |
Accumulated Other Comprehensive Income (Loss) | The following tables reconcile these components. ($ in thousands) Net Unrealized Investment Gains (Losses) on Fixed Maturity Securities (1)(2) Net Funded Status of Benefit Plans (1) Total (1) Beginning balance, April 1, 2019 $ 210,839 $ (12,185 ) $ 198,654 Other comprehensive income (loss) before reclassifications 107,163 — 107,163 Amounts reclassified from AOCI (114,925 ) — (114,925 ) Net current period other comprehensive income (loss) (7,762 ) — (7,762 ) Ending balance, June 30, 2019 $ 203,077 $ (12,185 ) $ 190,892 Beginning balance, January 1, 2019 $ 96,941 $ (12,185 ) $ 84,756 Other comprehensive income (loss) before reclassifications 227,466 — 227,466 Amounts reclassified from AOCI (121,330 ) — (121,330 ) Net current period other comprehensive income (loss) 106,136 — 106,136 Ending balance, June 30, 2019 $ 203,077 $ (12,185 ) $ 190,892 ________________ (1) All amounts are net of tax. (2) The pretax amounts reclassified from AOCI, $145,474 thousand and $153,582 thousand , are included in net investment gains (losses) and the related income tax expenses, $30,549 thousand and $32,252 thousand , are included in income tax expense in the Consolidated Statements of Operations for the three and six month periods ended June 30, 2019 , respectively. |
Investments (Tables)
Investments (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Unrealized gains and losses on fixed maturities and equity securities | mortized cost, net unrealized investment gains (losses) and fair values of all fixed maturity securities in the portfolio were as follows: ($ in thousands) Amortized Cost Unrealized Gains Unrealized Losses Fair Value June 30, 2019 Fixed maturity securities U.S. Government and federally sponsored agency obligations: (1) Mortgage-backed securities $ 550,059 $ 37,900 $ 1,201 $ 586,758 Other, including U.S. Treasury securities 546,396 20,574 533 566,437 Municipal bonds 1,472,794 127,700 801 1,599,693 Foreign government bonds 45,303 2,064 — 47,367 Corporate bonds 1,226,962 96,535 2,211 1,321,286 Other mortgage-backed securities 1,400,241 20,786 8,298 1,412,729 Totals $ 5,241,755 $ 305,559 $ 13,044 $ 5,534,270 December 31, 2018 Fixed maturity securities U.S. Government and federally sponsored agency obligations: (1) Mortgage-backed securities $ 778,038 $ 22,724 $ 13,321 $ 787,441 Other, including U.S. Treasury securities 835,096 16,127 17,681 833,542 Municipal bonds 1,884,313 133,150 13,494 2,003,969 Foreign government bonds 83,343 2,321 760 84,904 Corporate bonds 2,054,105 64,296 38,891 2,079,510 Other mortgage-backed securities 1,739,016 10,467 23,531 1,725,952 Totals $ 7,373,911 $ 249,085 $ 107,678 $ 7,515,318 ________________ (1) Fair value includes securities issued by Federal National Mortgage Association (FNMA) of $370,182 thousand and $441,308 thousand ; Federal Home Loan Mortgage Corporation (FHLMC) of $256,531 thousand and $417,308 thousand ; and Government National Mortgage Association (GNMA) of $79,141 thousand and $96,466 thousand as of June 30, 2019 and December 31, 2018 , respectively. |
Summary of fair value and gross unrealized losses of fixed maturity securities and equity securities in an unrealized loss position | The following table presents the fair value and gross unrealized losses of securities in an unrealized loss position at June 30, 2019 and December 31, 2018 , respectively. The Company views the decrease in fair value of all of the securities with unrealized losses at June 30, 2019 -- which was driven largely by increasing interest rates, spread widening, financial market illiquidity and/or market volatility from the date of acquisition -- as temporary. For fixed maturity securities, management does not have the intent to sell the securities and it is not more likely than not the Company will be required to sell the securities before the anticipated recovery of their amortized cost bases, and management expects to recover the entire amortized cost bases of the fixed maturity securities. Therefore, it was determined that the unrealized losses on the securities presented in the table below were not other-than-temporarily impaired as of June 30, 2019 . ($ in thousands) 12 Months or Less More than 12 Months Total Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses June 30, 2019 Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 10,504 $ 27 $ 44,564 $ 1,174 $ 55,068 $ 1,201 Other 11,463 32 37,575 501 49,038 533 Municipal bonds 16,900 93 34,031 708 50,931 801 Foreign government bonds — — — — — — Corporate bonds 27,858 518 32,997 1,693 60,855 2,211 Other mortgage-backed securities 391,170 3,895 277,694 4,403 668,864 8,298 Total $ 457,895 $ 4,565 $ 426,861 $ 8,479 $ 884,756 $ 13,044 Number of positions with a gross unrealized loss 143 156 299 Fair value as a percentage of total fixed maturity securities fair value 8.3 % 7.7 % 16.0 % December 31, 2018 Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 193,447 $ 5,026 $ 157,295 $ 8,295 $ 350,742 $ 13,321 Other 263,497 6,746 246,213 10,935 509,710 17,681 Municipal bonds 291,869 7,603 95,297 5,891 387,166 13,494 Foreign government bonds 16,250 760 — — 16,250 760 Corporate bonds 818,519 27,429 99,171 11,462 917,690 38,891 Other mortgage-backed securities 913,858 16,076 291,442 7,455 1,205,300 23,531 Total $ 2,497,440 $ 63,640 $ 889,418 $ 44,038 $ 3,386,858 $ 107,678 Number of positions with a gross unrealized loss 1,052 359 1,411 Fair value as a percentage of total fixed maturity securities fair value 33.2 % 11.8 % 45.0 % |
Summary of cumulative credit losses | The following table summarizes the cumulative amounts related to the Company’s credit loss component of other-than-temporary impairment (OTTI) losses on fixed maturity securities held as of June 30, 2019 and 2018 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 OTTI losses were recognized in OCI: ($ in thousands) Six Months Ended 2019 2018 Cumulative credit loss (1) Beginning of period $ 1,529 $ 3,825 New credit losses — — Increases to previously recognized credit losses — 246 Losses related to securities sold or paid down during the period — — End of period $ 1,529 $ 4,071 ________________ (1) The cumulative credit loss amounts exclude OTTI 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. ($ in thousands) Percent of Total Fair Value June 30, 2019 June 30, 2019 December 31, 2018 Fair Value Amortized Cost Estimated expected maturity: Due in 1 year or less 4.7 % 4.8 % $ 258,331 $ 252,586 Due after 1 year through 5 years 26.7 % 22.8 % 1,478,291 1,439,296 Due after 5 years through 10 years 29.6 % 32.8 % 1,638,887 1,555,825 Due after 10 years through 20 years 25.6 % 26.5 % 1,414,857 1,316,715 Due after 20 years 13.4 % 13.1 % 743,904 677,333 Total 100.0 % 100.0 % $ 5,534,270 $ 5,241,755 Average option-adjusted duration, in years 5.6 5.9 |
Proceeds received from sales of fixed maturities and equity securities | Proceeds received from sales of fixed maturity 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 period were: ($ in thousands) Three Months Ended Six Months Ended 2019 (1) 2018 2019 (1) 2018 Fixed maturity securities Proceeds received $ 442,015 $ 100,129 $ 501,739 $ 190,023 Gross gains realized 147,774 2,352 148,316 4,022 Gross losses realized (5,976 ) (1,584 ) (6,081 ) (1,637 ) Equity securities Proceeds received $ 1,633 $ 3,735 $ 17,122 $ 5,783 Gross gains realized 389 977 5,134 1,593 Gross losses realized (166 ) (147 ) (510 ) (181 ) ________________ (1) Gross gains realized presented above include a $135.3 million realized investment gain associated with a transfer of investments to a reinsurer as consideration paid during the second quarter of 2019 in connection with the reinsurance of a $2.9 billion block of in force fixed and variable annuity business. See Notes 6 and 13 for further information. |
Net Realized Investment Gains (Losses) | The following table reconciles net investment gains (losses) pretax by transaction type: ($ in thousands) Three Months Ended Six Months Ended 2019 2018 2019 2018 Impairment write-downs $ — $ — $ — $ — Change in intent write-downs (34 ) (1,177 ) (271 ) (1,287 ) Net OTTI losses recognized in earnings (34 ) (1,177 ) (271 ) (1,287 ) Sales and other, net 142,067 1,789 146,905 3,992 Change in fair value - equity securities 3,441 (1,156 ) 6,948 (6,342 ) Change in fair value and gains (losses) realized on settlements - derivative instruments 859 1,279 168 2,718 Net investment gains (losses) $ 146,333 $ 735 $ 153,750 $ (919 ) |
Reconciliation of net unrealized investment gains (losses) on fixed maturity securities and equity securities | The following table reconciles net unrealized investment gains (losses) on fixed maturity securities, net of tax, included in AOCI, before the impact of DAC: ($ in thousands) Three Months Ended Six Months Ended 2019 2018 2019 2018 Net unrealized investment gains (losses) on fixed maturity securities, net of tax Beginning of period $ 245,319 $ 206,293 $ 111,712 $ 286,176 Change in net unrealized investment gains (losses) on fixed maturity securities 100,693 (61,724 ) 240,705 (129,009 ) Reclassification of net investment (gains) losses on securities to net income (114,925 ) 429 (121,330 ) 2,872 Cumulative effect of change in accounting principle (1) — — — (15,041 ) End of period $ 231,087 $ 144,998 $ 231,087 $ 144,998 ________________ (1) Effective January 1, 2018, with the adoption of new accounting guidance for recognition and measurement of financial instruments, available for sale equity securities were reclassified to equity securities at fair value and the related net unrealized gains were reclassified from AOCI to Retained earnings. |
Offsetting assets and liability | The following table presents instruments that were subject to a master netting arrangement for the Company. ($ in thousands) Gross Amounts Offset in the Net Amounts of Assets/ Liabilities Presented in the Gross Amounts Not Offset in the Consolidated Balance Sheets Gross Amounts Consolidated Balance Sheets Consolidated Balance Sheets Financial Instruments Cash Collateral Received Net Amount June 30, 2019 Asset derivatives: Free-standing derivatives $ 8,753 $ — $ 8,753 $ — $ 8,663 $ 90 December 31, 2018 Asset derivatives: Free-standing derivatives $ 2,647 $ — $ 2,647 $ — $ 1,868 $ 779 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
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 June 30, 2019 , Level 3 invested assets comprised 4.0% of the Company’s total investment portfolio at fair value. ($ in thousands) Fair Value Measurements at Carrying Fair Reporting Date Using Amount Value Level 1 Level 2 Level 3 June 30, 2019 Financial Assets Investments Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 586,758 $ 586,758 $ — $ 584,070 $ 2,688 Other, including U.S. Treasury securities 566,437 566,437 16,288 550,149 — Municipal bonds 1,599,693 1,599,693 — 1,552,709 46,984 Foreign government bonds 47,367 47,367 — 47,367 — Corporate bonds 1,321,286 1,321,286 13,997 1,228,067 79,222 Other mortgage-backed securities 1,412,729 1,412,729 — 1,286,979 125,750 Total fixed maturity securities 5,534,270 5,534,270 30,285 5,249,341 254,644 Equity securities 100,143 100,143 57,530 42,544 69 Short-term investments 247,872 247,872 246,872 1,000 — Other investments 24,503 24,503 — 24,503 — Totals $ 5,906,788 $ 5,906,788 $ 334,687 $ 5,317,388 $ 254,713 Separate Account (variable annuity) assets (1) $ 2,310,886 $ 2,310,886 $ 2,310,886 $ — $ — Financial Liabilities Investment contract and life policy reserves, embedded derivatives $ 940 $ 940 $ — $ 940 $ — Other policyholder funds, embedded derivatives $ 85,961 $ 85,961 $ — $ — $ 85,961 December 31, 2018 Financial Assets Investments Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 787,441 $ 787,441 $ — $ 784,224 $ 3,217 Other, including U.S. Treasury securities 833,542 833,542 13,291 820,251 — Municipal bonds 2,003,969 2,003,969 — 1,956,438 47,531 Foreign government bonds 84,904 84,904 — 84,904 — Corporate bonds 2,079,510 2,079,510 12,281 1,986,487 80,742 Other mortgage-backed securities 1,725,952 1,725,952 — 1,608,958 116,994 Total fixed maturity securities 7,515,318 7,515,318 25,572 7,241,262 248,484 Equity securities 111,750 111,750 64,330 47,415 5 Short-term investments 122,222 122,222 117,296 4,926 — Other investments 16,147 16,147 — 16,147 — Totals $ 7,765,437 $ 7,765,437 $ 207,198 $ 7,309,750 $ 248,489 Separate Account (variable annuity) assets (1) $ 2,001,128 $ 2,001,128 $ 2,001,128 $ — $ — Financial Liabilities Investment contract and life policy reserves, embedded derivatives $ 248 $ 248 $ — $ 248 $ — Other policyholder funds, embedded derivatives $ 78,700 $ 78,700 $ — $ — $ 78,700 ________________ (1) Separate Account (variable annuity) liabilities are equal to the estimated fair value of the Separate Account (variable annuity) assets. |
Table for reconciliations for all Level 3 assets measured at fair value on a recurring basis | The following table presents reconciliations for the periods indicated for all Level 3 assets and liabilities measured at fair value on a recurring basis. ($ in thousands) Financial Assets Financial Liabilities (1) Municipal Bonds Corporate Bonds Other Mortgage- Backed Securities (2) Total Fixed Maturity Securities Equity Securities Total Beginning balance, April 1, 2019 $ 47,756 $ 82,482 $ 135,790 $ 266,028 $ 5 $ 266,033 $ 84,629 Transfers into Level 3 (3) — 2,808 — 2,808 64 2,872 — Transfers out of Level 3 (3) — (4,876 ) — (4,876 ) — (4,876 ) — Total gains or losses Net investment gains (losses) included in net income related to financial assets — — — — — — — Net realized (gains) losses included in net income related to financial liabilities — — — — — — 371 Net unrealized investment gains (losses) included in OCI (537 ) 1,961 2,807 4,231 — 4,231 — Purchases — 1,566 — 1,566 — 1,566 — Issuances — — — — — — 2,431 Sales — — (607 ) (607 ) — (607 ) — Settlements — — — — — — — Paydowns, maturities and distributions (235 ) (4,719 ) (9,552 ) (14,506 ) — (14,506 ) (1,470 ) Ending balance, June 30, 2019 $ 46,984 $ 79,222 $ 128,438 $ 254,644 $ 69 $ 254,713 $ 85,961 Beginning balance, January 1, 2019 $ 47,531 $ 80,742 $ 120,211 $ 248,484 $ 5 $ 248,489 $ 78,700 Transfers into Level 3 (3) — 5,882 21,934 27,816 64 27,880 — Transfers out of Level 3 (3) — (4,876 ) — (4,876 ) — (4,876 ) — Total gains or losses Net investment gains (losses) included in — — — — — — — Net realized (gains) losses included in net — — — — — — 4,705 Net unrealized investment gains (losses) included in OCI (193 ) 4,510 2,655 6,972 — 6,972 — Purchases — 1,566 — 1,566 — 1,566 — Issuances — — — — — — 5,449 Sales — — (607 ) (607 ) — (607 ) — Settlements — — — — — — — Paydowns, maturities and distributions (354 ) (8,602 ) (15,755 ) (24,711 ) — (24,711 ) (2,893 ) Ending balance, June 30, 2019 $ 46,984 $ 79,222 $ 128,438 $ 254,644 $ 69 $ 254,713 $ 85,961 ________________ (1) Represents embedded derivatives, all related to the Company's fixed indexed annuity products, reported in Other policyholder funds in the Company’s Consolidated Balance Sheets. (2) Includes U.S. Government and federally sponsored agency obligations for mortgage-backed securities and other mortgage-backed securities. (3) Transfers into and out of Level 3 during the three and six month periods ended June 30, 2019 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. |
Summary of fair value assets and liabilities measured on nonrecurring basis | 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. ($ in thousands) Fair Value Measurements at Carrying Fair Reporting Date Using Amount Value Level 1 Level 2 Level 3 June 30, 2019 Financial Assets Investments Other investments $ 161,313 $ 166,023 $ — $ — $ 166,023 Financial Liabilities Investment contract and life policy reserves, fixed annuity contracts 4,605,272 4,529,317 — — 4,529,317 Investment contract and life policy reserves, account values on life contracts 90,239 93,366 — — 93,366 Other policyholder funds 735,919 735,919 — 676,460 59,459 Long-term debt 297,881 315,938 — 315,938 — December 31, 2018 Financial Assets Investments Other investments $ 156,725 $ 161,449 $ — $ — $ 161,449 Financial Liabilities Investment contract and life policy reserves, fixed annuity contracts 4,555,849 4,478,338 — — 4,478,338 Investment contract and life policy reserves, 87,229 90,402 — — 90,402 Other policyholder funds 689,287 689,287 — 626,325 62,962 Long-term debt 297,740 291,938 — 291,938 — |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
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, are presented in the Consolidated Balance Sheets as follows: ($ in thousands) June 30, 2019 December 31, 2018 Assets Derivative instruments, included in Short-term and other investments $ 8,753 $ 2,647 Liabilities FIA - embedded derivatives, included in Other policyholder funds $ 85,961 $ 78,700 IUL - embedded derivatives, included in Investment contract and life policy reserves 940 248 |
Derivative Instruments, Gain (Loss) | The changes in fair value of derivatives included in the Consolidated Statements of Operations were as follows: ($ in thousands) Three Months Ended Six Months Ended 2019 2018 2019 2018 Change in fair value of derivatives: (1) Revenues Net investment gains (losses) $ 1,375 $ (2 ) $ 5,429 $ (851 ) Change in fair value of embedded derivatives: Revenues Net investment gains (losses) $ (516 ) $ 1,281 $ (5,261 ) $ 3,569 ________________ (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: ($ in thousands) June 30, 2019 December 31, 2018 Credit Rating Notional Fair Notional Fair Counterparty S&P Moody's Amount Value Amount Value Bank of America, N.A. A+ Aa2 $ 156,800 $ 3,560 $ 144,500 $ 870 Barclays Bank PLC A A2 72,500 1,696 28,500 247 Citigroup Inc. BBB+ A3 — — — — Credit Suisse International A+ A1 16,100 295 16,100 55 Societe Generale A 55,000 3,202 89,100 1,475 Total $ 300,400 $ 8,753 $ 278,200 $ 2,647 |
Property and Casualty Unpaid _2
Property and Casualty Unpaid Claims and Claim Expenses (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Insurance Loss Reserves [Abstract] | |
Reconciliation of property and casualty unpaid claims and claim expenses | The end of the period gross reserve (before reinsurance) balances and the reinsurance recoverable balances are reflected on a gross basis in the Consolidated Balance Sheets. ($ in thousands) Three Months Ended Six Months Ended 2019 2018 2019 2018 Property and Casualty Beginning gross reserves (1) $ 359,701 $ 331,255 $ 367,180 $ 319,182 Less: reinsurance recoverables 78,328 62,917 89,725 57,409 Net reserves, beginning of period (2) 281,373 268,338 277,455 261,773 Incurred claims and claim expenses: Claims occurring in the current period 134,411 147,005 253,178 267,993 Decrease in estimated reserves for claims occurring in prior periods (3) (2,000 ) — (4,000 ) (300 ) Total claims and claim expenses incurred (4) 132,411 147,005 249,178 267,693 Claims and claim expense payments for claims occurring during: Current period 83,755 80,403 129,469 127,451 Prior periods 39,512 45,006 106,647 112,081 Total claims and claim expense payments 123,267 125,409 236,116 239,532 Net reserves, end of period (2) 290,517 289,934 290,517 289,934 Plus: reinsurance recoverables 77,345 62,883 77,345 62,883 Ending gross reserves (1) $ 367,862 $ 352,817 $ 367,862 $ 352,817 ________________ (1) Unpaid claims and claim expenses as reported in the Consolidated Balance Sheets also include reserves for Life and Retirement of $30,477 thousand and $27,016 thousand as of June 30, 2019 and 2018 , respectively, in addition to Property and Casualty 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. (4) Benefits, claims and settlement expenses as reported in the Consolidated Statements of Operations also include amounts for Life and Retirement of $20,281 thousand and $42,898 thousand for the three and six month periods ended June 30, 2019 , respectively, in addition to Property and Casualty amounts. Benefits, claims and settlement expenses for Life and Retirement were $21,273 thousand and $44,147 thousand for the three and six month periods ended June 30, 2018 , respectively. |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Summary of Indebtedness outstanding | Indebtedness outstanding was as follows: ($ in thousands) June 30, 2019 December 31, 2018 Short-term debt: Bank Credit Facility, expires June 21, 2024 $ — $ — Long-term debt: 4.50% Senior Notes, due December 1, 2025. Aggregate principal amount of $250,000 thousand less unaccrued discount of $458 and $488 thousand (4.5% imputed rate) and unamortized debt issuance costs of $1,661 thousand and $1,772 thousand 247,881 247,740 FHLB borrowing 50,000 50,000 Total $ 297,881 $ 297,740 |
Reinsurance (Tables)
Reinsurance (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Insurance [Abstract] | |
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: ($ in thousands) Gross Amount Ceded to Other Companies (1) Assumed from Other Companies Net Amount Three months ended June 30, 2019 Premiums written and contract deposits (2) $ 314,897 $ 6,028 $ 2,822 $ 311,691 Premiums and contract charges earned 213,415 8,155 2,836 208,096 Benefits, claims and settlement expenses 153,436 2,797 2,053 152,692 Three months ended June 30, 2018 Premiums written and contract deposits (2) $ 305,864 $ 5,483 $ 1,341 $ 301,722 Premiums and contract charges earned 209,892 5,505 1,223 205,610 Benefits, claims and settlement expenses 170,459 3,330 1,149 168,278 Six months ended June 30, 2019 Premiums written and contract deposits (2) $ 613,990 $ 11,876 $ 4,971 $ 607,085 Premiums and contract charges earned 426,671 13,977 5,187 417,881 Benefits, claims and settlement expenses 295,488 7,089 3,677 292,076 Six months ended June 30, 2018 Premiums written and contract deposits (2) $ 594,680 $ 10,997 $ 2,047 $ 585,730 Premiums and contract charges earned 417,629 11,033 2,012 408,608 Benefits, claims and settlement expenses 322,427 12,344 1,757 311,840 ________________ (1) Excludes the annuity reinsurance agreement accounted for under the deposit method that is discussed in Note 6. (2) This measure is not based on accounting principles generally accepted in the U.S. (non-GAAP). An explanation of this non-GAAP measure is contained in the Glossary of Selected Terms included as an exhibit in the Company's reports filed with the SEC. |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Summarized financial information for these segments | Summarized financial information for these segments is as follows: ($ in thousands) Three Months Ended Six Months Ended 2019 2018 2019 2018 Insurance premiums and contract charges earned Property and Casualty $ 171,303 $ 167,333 $ 342,143 $ 332,791 Retirement 6,931 7,825 15,509 15,893 Life 29,862 30,452 60,229 59,924 Total $ 208,096 $ 205,610 $ 417,881 $ 408,608 Net investment income Property and Casualty $ 12,643 $ 10,300 $ 22,861 $ 19,816 Retirement 62,684 67,787 127,423 131,956 Life 18,324 19,166 36,376 37,506 Corporate and Other (14 ) 42 (37 ) 78 Intersegment eliminations (179 ) (194 ) (365 ) (391 ) Total $ 93,458 $ 97,101 $ 186,258 $ 188,965 Net income (loss) Property and Casualty $ 5,101 $ (10,896 ) $ 20,153 $ (1,174 ) Retirement (25,045 ) 14,141 (12,894 ) 25,562 Life 5,239 5,879 8,516 9,666 Corporate and Other 108,527 (3,207 ) 110,213 (7,982 ) Total $ 93,822 $ 5,917 $ 125,988 $ 26,072 ($ in thousands) June 30, 2019 December 31, 2018 Assets Property and Casualty $ 1,281,344 $ 1,236,362 Retirement 8,493,089 7,866,969 Life 1,911,569 1,821,351 Corporate and Other 145,022 149,014 Intersegment eliminations (51,617 ) (41,800 ) Total $ 11,779,407 $ 11,031,896 |
Operating Leases (Tables)
Operating Leases (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Lease, Cost | The components of lease expense were as follows: ($ in thousands) Three Months Ended Six Months Ended Operating lease cost $ 791 $ 1,600 Short-term lease cost 27 51 Total lease cost $ 818 $ 1,651 |
Schedule of Cash Flow, Supplemental Disclosures | Supplemental cash flow information related to operating leases was as follows: ($ in thousands) Three Months Ended Six Months Ended Cash paid for amounts included in the measurement of lease liabilities $ 575 $ 1,341 |
Lessee, Operating Lease, Disclosure | Supplemental balance sheet information related to operating leases was as follows: ($ in thousands, except lease term and discount rate) June 30, 2019 Assets Right of use assets, included in Other assets $ 12,692 Liabilities Operating lease liabilities, included in Other liabilities $ 13,429 Weighted Average Remaining Lease Term 5.00 Weighted Average Discount Rate 4.10 % |
Lessee, Operating Lease, Liability, Maturity | Future minimum lease payments under non-cancellable operating leases as of June 30, 2019 were as follows: ($ in thousands) Year Ending December 31, 2019 (excluding the six months ended June 30, 2019) $ 1,448 2020 3,108 2021 3,028 2022 2,943 2023 2,246 Thereafter 2,111 Total future minimum lease payments 14,884 Less imputed interest (1,455 ) Total $ 13,429 |
Basis of Presentation - Investm
Basis of Presentation - Investment Contract and Life Policy Reserves (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Investment contract reserves | $ 4,605,272 | $ 4,555,856 |
Life policy reserves | 1,171,497 | 1,155,337 |
Total | $ 5,776,769 | $ 5,711,193 |
Basis of Presentation - Accumul
Basis of Presentation - Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | $ 1,290,550 | |||
Other comprehensive income (loss) before reclassifications | $ (107,163) | $ 52,873 | (227,466) | $ 162,412 |
Amounts reclassified from AOCI | (114,925) | 429 | (121,330) | 2,872 |
Net current period other comprehensive income (loss) | (7,762) | (52,444) | 106,136 | (174,581) |
Cumulative effect of change in accounting principle | 0 | 0 | 0 | (15,041) |
Ending balance | 1,499,677 | 1,350,441 | 1,499,677 | 1,350,441 |
Other income tax expense (benefit) | 30,549 | (115) | 32,252 | (764) |
Total [Member] | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | 198,654 | 164,823 | 84,756 | 286,960 |
Cumulative effect of change in accounting principle | 0 | 0 | 0 | (15,041) |
Ending balance | 190,892 | 112,379 | 190,892 | 112,379 |
Net Unrealized Investment Gains (Losses) on Securities [Member] | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | 210,839 | 178,040 | 96,941 | 300,177 |
Other comprehensive income (loss) before reclassifications | (107,163) | 52,873 | (227,466) | 162,412 |
Amounts reclassified from AOCI | (114,925) | 429 | (121,330) | 2,872 |
Net current period other comprehensive income (loss) | (7,762) | (52,444) | 106,136 | (174,581) |
Cumulative effect of change in accounting principle | (15,041) | |||
Ending balance | 203,077 | 125,596 | 203,077 | 125,596 |
Pretax reclassification amounts from accumulated other comprehensive income (loss) | 145,474 | (544) | 153,582 | (3,636) |
Net Funded Status of Benefit Plans [Member] | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | (12,185) | (13,217) | (12,185) | (13,217) |
Other comprehensive income (loss) before reclassifications | 0 | 0 | 0 | 0 |
Amounts reclassified from AOCI | 0 | 0 | 0 | 0 |
Net current period other comprehensive income (loss) | 0 | 0 | 0 | 0 |
Cumulative effect of change in accounting principle | 0 | |||
Ending balance | $ (12,185) | $ (13,217) | $ (12,185) | $ (13,217) |
Basis of Presentation - Narrati
Basis of Presentation - Narrative (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Jan. 01, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Right of use assets, included in Other assets | $ 12,692 | $ 14,499 |
Operating lease liabilities, included in Other liabilities | $ 13,429 | $ 13,908 |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) - USD ($) $ in Thousands | Jul. 01, 2019 | Jan. 02, 2019 | Jun. 30, 2019 | Dec. 31, 2018 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 29,458 | $ 47,396 | ||
Benefit Consultants Group Inc. | ||||
Business Acquisition [Line Items] | ||||
Transaction value | $ 25,000 | |||
Finite-lived intangible assets acquired | 16,200 | |||
Goodwill | $ 10,100 | |||
Minimum | Benefit Consultants Group Inc. | ||||
Business Acquisition [Line Items] | ||||
Acquired finite-lived intangible assets, useful lives | 10 years | |||
Maximum | Benefit Consultants Group Inc. | ||||
Business Acquisition [Line Items] | ||||
Acquired finite-lived intangible assets, useful lives | 16 years | |||
Subsequent Event [Member] | NTA | ||||
Business Acquisition [Line Items] | ||||
Transaction value | $ 425,000 | |||
Transaction value, share of adjusted earnings | $ 20,000 |
Investments - Summary of Fair V
Investments - Summary of Fair Value and Amortized Costs (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Unrealized gains and losses on fixed maturities and equity securities | ||
Amortized Cost | $ 5,241,755 | $ 7,373,911 |
Fair Value | 5,534,270 | 7,515,318 |
Federal National Mortgage Association Certificates and Obligations (FNMA) | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Fair Value | 370,182 | 441,308 |
Federal Home Loan Mortgage Corporation Certificates and Obligations (FHLMC) | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Fair Value | 256,531 | 417,308 |
Government National Mortgage Association Certificates and Obligations (GNMA) | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Fair Value | 79,141 | 96,466 |
Total Fixed Maturity Securities | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Amortized Cost | 5,241,755 | 7,373,911 |
Unrealized Gains | 305,559 | 249,085 |
Unrealized Losses | 13,044 | 107,678 |
Fair Value | 5,534,270 | 7,515,318 |
Mortgage-backed securities | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Amortized Cost | 550,059 | 778,038 |
Unrealized Gains | 37,900 | 22,724 |
Unrealized Losses | 1,201 | 13,321 |
Fair Value | 586,758 | 787,441 |
Other, including U.S. Treasury securities | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Amortized Cost | 546,396 | 835,096 |
Unrealized Gains | 20,574 | 16,127 |
Unrealized Losses | 533 | 17,681 |
Fair Value | 566,437 | 833,542 |
Municipal bonds | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Amortized Cost | 1,472,794 | 1,884,313 |
Unrealized Gains | 127,700 | 133,150 |
Unrealized Losses | 801 | 13,494 |
Fair Value | 1,599,693 | 2,003,969 |
Foreign government bonds | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Amortized Cost | 45,303 | 83,343 |
Unrealized Gains | 2,064 | 2,321 |
Unrealized Losses | 0 | 760 |
Fair Value | 47,367 | 84,904 |
Corporate bonds | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Amortized Cost | 1,226,962 | 2,054,105 |
Unrealized Gains | 96,535 | 64,296 |
Unrealized Losses | 2,211 | 38,891 |
Fair Value | 1,321,286 | 2,079,510 |
Other mortgage-backed securities | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Amortized Cost | 1,400,241 | 1,739,016 |
Unrealized Gains | 20,786 | 10,467 |
Unrealized Losses | 8,298 | 23,531 |
Fair Value | $ 1,412,729 | $ 1,725,952 |
Investments - Fair Value and Gr
Investments - Fair Value and Gross Unrealized Losses (Details) $ in Thousands | Jun. 30, 2019USD ($)security | Dec. 31, 2018USD ($)security |
Fixed maturity securities, Fair Value | ||
Fixed maturity securities, Fair Value, 12 Months or Less | $ 457,895 | |
Fixed maturity securities, Fair Value, More than 12 Months | 426,861 | |
Fixed maturity securities, Fair Value, Total | 884,756 | |
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 4,565 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 8,479 | |
Fixed maturity securities, Gross Unrealized Losses, Total | $ 13,044 | |
Number of positions with a gross unrealized loss, 12 Months or Less | security | 143 | 1,052 |
Number of position with a gross unrealized loss, more than 12 months | security | 156 | 359 |
Number of position with a gross unrealized loss, Total | security | 299 | 1,411 |
Fair value as a percentage of total fixed maturities and equity securities fair value, 12 Months or Less | 8.30% | 33.20% |
Fair value as a percentage of total fixed maturities and equity securities fair value, more than 12 months | 7.70% | 11.80% |
Fair value as a percentage of total fixed maturities and equity securities fair value, Total | 16.00% | 45.00% |
Mortgage-backed securities | ||
Fixed maturity securities, Fair Value | ||
Fixed maturity securities, Fair Value, 12 Months or Less | $ 10,504 | $ 193,447 |
Fixed maturity securities, Fair Value, More than 12 Months | 44,564 | 157,295 |
Fixed maturity securities, Fair Value, Total | 55,068 | 350,742 |
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 27 | 5,026 |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 1,174 | 8,295 |
Fixed maturity securities, Gross Unrealized Losses, Total | 1,201 | 13,321 |
Other | ||
Fixed maturity securities, Fair Value | ||
Fixed maturity securities, Fair Value, 12 Months or Less | 11,463 | 263,497 |
Fixed maturity securities, Fair Value, More than 12 Months | 37,575 | 246,213 |
Fixed maturity securities, Fair Value, Total | 49,038 | 509,710 |
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 32 | 6,746 |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 501 | 10,935 |
Fixed maturity securities, Gross Unrealized Losses, Total | 533 | 17,681 |
Municipal bonds | ||
Fixed maturity securities, Fair Value | ||
Fixed maturity securities, Fair Value, 12 Months or Less | 16,900 | 291,869 |
Fixed maturity securities, Fair Value, More than 12 Months | 34,031 | 95,297 |
Fixed maturity securities, Fair Value, Total | 50,931 | 387,166 |
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 93 | 7,603 |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 708 | 5,891 |
Fixed maturity securities, Gross Unrealized Losses, Total | 801 | 13,494 |
Foreign government bonds | ||
Fixed maturity securities, Fair Value | ||
Fixed maturity securities, Fair Value, 12 Months or Less | 0 | 16,250 |
Fixed maturity securities, Fair Value, More than 12 Months | 0 | 0 |
Fixed maturity securities, Fair Value, Total | 0 | 16,250 |
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 0 | 760 |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 0 | 0 |
Fixed maturity securities, Gross Unrealized Losses, Total | 0 | 760 |
Corporate bonds | ||
Fixed maturity securities, Fair Value | ||
Fixed maturity securities, Fair Value, 12 Months or Less | 27,858 | 818,519 |
Fixed maturity securities, Fair Value, More than 12 Months | 32,997 | 99,171 |
Fixed maturity securities, Fair Value, Total | 60,855 | 917,690 |
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 518 | 27,429 |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 1,693 | 11,462 |
Fixed maturity securities, Gross Unrealized Losses, Total | 2,211 | 38,891 |
Other mortgage-backed securities | ||
Fixed maturity securities, Fair Value | ||
Fixed maturity securities, Fair Value, 12 Months or Less | 391,170 | 913,858 |
Fixed maturity securities, Fair Value, More than 12 Months | 277,694 | 291,442 |
Fixed maturity securities, Fair Value, Total | 668,864 | 1,205,300 |
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 3,895 | 16,076 |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 4,403 | 7,455 |
Fixed maturity securities, Gross Unrealized Losses, Total | $ 8,298 | 23,531 |
Total Fixed Maturity Securities | ||
Fixed maturity securities, Fair Value | ||
Fixed maturity securities, Fair Value, 12 Months or Less | 2,497,440 | |
Fixed maturity securities, Fair Value, More than 12 Months | 889,418 | |
Fixed maturity securities, Fair Value, Total | 3,386,858 | |
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 63,640 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 44,038 | |
Fixed maturity securities, Gross Unrealized Losses, Total | $ 107,678 |
Investments - Rollforward of OT
Investments - Rollforward of OTTI Losses (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cumulative credit loss | ||
Beginning of period | $ 1,529 | $ 3,825 |
New credit losses | 0 | 0 |
Increases to previously recognized credit losses | 0 | 246 |
Losses related to securities sold or paid down during the period | 0 | 0 |
End of period | $ 1,529 | $ 4,071 |
Investments - Distribution of F
Investments - Distribution of Fixed Maturity Securities by Expected Maturity (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Dec. 31, 2018 | |
Percent of Total Fair Value | ||
Due in 1 year or less, Percent of Total Fair Value | 4.70% | 4.80% |
Due after 1 year through 5 years, Percent of Total Fair Value | 26.70% | 22.80% |
Due after 5 years through 10 years, Percent of Total Fair Value | 29.60% | 32.80% |
Due after 10 years through 20 years, Percent of Total Fair Value | 25.60% | 26.50% |
Due after 20 years, Percent of Total Fair Value | 13.40% | 13.10% |
Total, Percent of Total Fair Value | 100.00% | 100.00% |
Fair Value | ||
Due in 1 year or less, Fair Value | $ 258,331 | |
Due after 1 year through 5 years, Fair Value | 1,478,291 | |
Due after 5 years through 10 years, Fair Value | 1,638,887 | |
Due after 10 years through 20 years, Fair Value | 1,414,857 | |
Due after 20 years, Fair Value | 743,904 | |
Fair Value | 5,534,270 | $ 7,515,318 |
Amortized Cost | ||
Due in 1 year or less, Amortized Cost | 252,586 | |
Due after 1 year through 5 years, Amortized Cost | 1,439,296 | |
Due after 5 years through 10 years, Amortized Cost | 1,555,825 | |
Due after 10 years through 20 years, Amortized Cost | 1,316,715 | |
Due after 20 years, Amortized Cost | 677,333 | |
Total, Amortized Cost | $ 5,241,755 | $ 7,373,911 |
Average option-adjusted duration, in years | 5 years 7 months 6 days | 5 years 10 months 24 days |
Investments - Summary of Procee
Investments - Summary of Proceeds and Gains (Losses) Realized on Securities (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Debt Securities, Available-for-sale [Line Items] | ||||
Proceeds received, Fixed maturity securities | $ 442,015 | $ 100,129 | $ 501,739 | $ 190,023 |
Proceeds received, Equity securities | 1,633 | 3,735 | 17,122 | 5,783 |
Investment gain realized on transfer | 135,300 | |||
Reinsurance block of in-force fixed and variable annuity business | 2,900,000 | 2,900,000 | ||
Fixed maturity securities | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Gross gains realized | 147,774 | 2,352 | 148,316 | 4,022 |
Gross losses realized | (5,976) | (1,584) | (6,081) | (1,637) |
Equity securities | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Gross gains realized | 389 | 977 | 5,134 | 1,593 |
Gross losses realized | $ (166) | $ (147) | $ (510) | $ (181) |
Investments - Reconciliation of
Investments - Reconciliation of Net Unrealized Investment Gains (Losses) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | $ 1,290,550 | |||
Change in net unrealized investment gains (losses) on securities | $ (7,762) | $ (52,444) | 106,136 | $ (159,540) |
Cumulative effect of change in accounting principle | 0 | 0 | 0 | (15,041) |
Ending balance | 1,499,677 | 1,350,441 | 1,499,677 | 1,350,441 |
Net Unrealized Investment Gains (Losses) on Securities [Member] | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | 210,839 | 178,040 | 96,941 | 300,177 |
Cumulative effect of change in accounting principle | (15,041) | |||
Ending balance | 203,077 | 125,596 | 203,077 | 125,596 |
Net Unrealized Investment Gains (Losses) on Securities [Member] | Fixed maturity securities | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | 245,319 | 206,293 | 111,712 | 286,176 |
Change in net unrealized investment gains (losses) on securities | 100,693 | (61,724) | 240,705 | (129,009) |
Reclassification of net investment (gains) losses on securities to net income | (114,925) | 429 | (121,330) | 2,872 |
Ending balance | $ 231,087 | $ 144,998 | $ 231,087 | $ 144,998 |
Investments - Offsetting of Ass
Investments - Offsetting of Assets and Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Asset derivatives: | ||
Net Amounts of Assets/Liabilities Presented in the Consolidated Balance Sheets | $ 8,753 | $ 2,647 |
Free-standing derivatives | ||
Asset derivatives: | ||
Gross Amounts | 8,753 | 2,647 |
Gross Amounts Offset in the Consolidated Balance Sheets | 0 | 0 |
Net Amounts of Assets/Liabilities Presented in the Consolidated Balance Sheets | 8,753 | 2,647 |
Gross Amounts Not Offset in the Consolidated Balance Sheets, Financial Instruments | 0 | 0 |
Gross Amounts Not Offset in the Consolidated Balance Sheets, Cash Collateral Received | 8,663 | 1,868 |
Net Amount | $ 90 | $ 779 |
Investments - Narrative (Detail
Investments - Narrative (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Investment Holdings [Line Items] | ||
Limited partnership interests | $ 351,515 | $ 328,516 |
Investment Grade Rate | 84.00% | |
Fair value of issued securities | $ 5,534,270 | 7,515,318 |
FHLB funding agreements | 725,000 | 675,000 |
Federal Home Loans Bank Of Chicago | ||
Investment Holdings [Line Items] | ||
Fair value of issued securities | 787,421 | 740,016 |
Governmental Agencies as Required by Law in Various States | ||
Investment Holdings [Line Items] | ||
Fair value of issued securities | $ 18,073 | $ 17,695 |
Investments - Net Realized Gain
Investments - Net Realized Gain (Losses) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Investments, Debt and Equity Securities [Abstract] | ||||
Impairment write-downs | $ 0 | $ 0 | $ 0 | $ 0 |
Change in intent write-downs | (34) | (1,177) | (271) | (1,287) |
Net OTTI losses recognized in earnings | (34) | (1,177) | (271) | (1,287) |
Sales and other, net | 142,067 | 1,789 | 146,905 | 3,992 |
Change in fair value - equity securities | 3,441 | (1,156) | 6,948 | (6,342) |
Change in fair value and gains (losses) realized on settlements - derivative instruments | 859 | 1,279 | 168 | 2,718 |
Net investment gains (losses) | $ 146,333 | $ 735 | $ 153,750 | $ (919) |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Financial Instruments Measured and Carried at Fair Value (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | $ 5,534,270,000 | $ 7,515,318,000 |
Mortgage-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 586,758,000 | 787,441,000 |
Other, including U.S. Treasury securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 566,437,000 | 833,542,000 |
Municipal bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 1,599,693,000 | 2,003,969,000 |
Foreign government bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 47,367,000 | 84,904,000 |
Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 1,321,286,000 | 2,079,510,000 |
Other mortgage-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 1,412,729,000 | 1,725,952,000 |
Carrying Amount | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 5,906,788,000 | 7,765,437,000 |
Separate Account (variable annuity) assets | 2,310,886,000 | 2,001,128,000 |
Investment contract and life policy reserves, embedded derivatives | 940,000 | 248,000 |
Other policyholder funds, embedded derivatives | 85,961,000 | 78,700,000 |
Carrying Amount | Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 5,534,270,000 | 7,515,318,000 |
Carrying Amount | Short-term investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 247,872,000 | 122,222,000 |
Carrying Amount | Mortgage-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 586,758,000 | 787,441,000 |
Carrying Amount | Other, including U.S. Treasury securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 566,437,000 | 833,542,000 |
Carrying Amount | Municipal bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 1,599,693,000 | 2,003,969,000 |
Carrying Amount | Foreign government bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 47,367,000 | 84,904,000 |
Carrying Amount | Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 1,321,286,000 | 2,079,510,000 |
Carrying Amount | Other mortgage-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 1,412,729,000 | 1,725,952,000 |
Carrying Amount | Equity securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 100,143,000 | 111,750,000 |
Carrying Amount | Other investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 24,503,000 | 16,147,000 |
Fair Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 5,906,788,000 | 7,765,437,000 |
Separate Account (variable annuity) assets | 2,310,886,000 | 2,001,128,000 |
Investment contract and life policy reserves, embedded derivatives | 940,000 | 248,000 |
Other policyholder funds, embedded derivatives | 85,961,000 | 78,700,000 |
Fair Value | Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 5,534,270,000 | 7,515,318,000 |
Fair Value | Short-term investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 247,872,000 | 122,222,000 |
Fair Value | Mortgage-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 586,758,000 | 787,441,000 |
Fair Value | Other, including U.S. Treasury securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 566,437,000 | 833,542,000 |
Fair Value | Municipal bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 1,599,693,000 | 2,003,969,000 |
Fair Value | Foreign government bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 47,367,000 | 84,904,000 |
Fair Value | Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 1,321,286,000 | 2,079,510,000 |
Fair Value | Other mortgage-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 1,412,729,000 | 1,725,952,000 |
Fair Value | Equity securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 100,143,000 | 111,750,000 |
Fair Value | Other investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 24,503,000 | 16,147,000 |
Fair Value | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 334,687,000 | 207,198,000 |
Separate Account (variable annuity) assets | 2,310,886,000 | 2,001,128,000 |
Investment contract and life policy reserves, embedded derivatives | 0 | 0 |
Other policyholder funds, embedded derivatives | 0 | 0 |
Fair Value | Level 1 | Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 30,285,000 | 25,572,000 |
Fair Value | Level 1 | Short-term investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 246,872,000 | 117,296,000 |
Fair Value | Level 1 | Mortgage-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 0 | 0 |
Fair Value | Level 1 | Other, including U.S. Treasury securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 16,288,000 | 13,291,000 |
Fair Value | Level 1 | Municipal bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 0 | 0 |
Fair Value | Level 1 | Foreign government bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 0 | 0 |
Fair Value | Level 1 | Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 13,997,000 | 12,281,000 |
Fair Value | Level 1 | Other mortgage-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 0 | 0 |
Fair Value | Level 1 | Equity securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 57,530,000 | 64,330,000 |
Fair Value | Level 1 | Other investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 0 | 0 |
Fair Value | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 5,317,388,000 | 7,309,750,000 |
Separate Account (variable annuity) assets | 0 | 0 |
Investment contract and life policy reserves, embedded derivatives | 940,000 | 248,000 |
Other policyholder funds, embedded derivatives | 0 | 0 |
Fair Value | Level 2 | Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 5,249,341,000 | 7,241,262,000 |
Fair Value | Level 2 | Short-term investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 1,000,000 | 4,926,000 |
Fair Value | Level 2 | Mortgage-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 584,070,000 | 784,224,000 |
Fair Value | Level 2 | Other, including U.S. Treasury securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 550,149,000 | 820,251,000 |
Fair Value | Level 2 | Municipal bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 1,552,709,000 | 1,956,438,000 |
Fair Value | Level 2 | Foreign government bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 47,367,000 | 84,904,000 |
Fair Value | Level 2 | Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 1,228,067,000 | 1,986,487,000 |
Fair Value | Level 2 | Other mortgage-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 1,286,979,000 | 1,608,958,000 |
Fair Value | Level 2 | Equity securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 42,544,000 | 47,415,000 |
Fair Value | Level 2 | Other investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 24,503,000 | 16,147,000 |
Fair Value | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 254,713,000 | 248,489,000 |
Separate Account (variable annuity) assets | 0 | 0 |
Investment contract and life policy reserves, embedded derivatives | 0 | 0 |
Other policyholder funds, embedded derivatives | 85,961,000 | 78,700,000 |
Fair Value | Level 3 | Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 254,644,000 | 248,484,000 |
Fair Value | Level 3 | Short-term investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 0 | 0 |
Fair Value | Level 3 | Mortgage-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 2,688,000 | 3,217,000 |
Fair Value | Level 3 | Other, including U.S. Treasury securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 0 | 0 |
Fair Value | Level 3 | Municipal bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 46,984,000 | 47,531,000 |
Fair Value | Level 3 | Foreign government bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 0 | 0 |
Fair Value | Level 3 | Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 79,222,000 | 80,742,000 |
Fair Value | Level 3 | Other mortgage-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 125,750,000 | 116,994,000 |
Fair Value | Level 3 | Equity securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | 69,000 | 5,000 |
Fair Value | Level 3 | Other investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of issued securities | $ 0 | $ 0 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Rollforward of Instruments Measured on Recurring Basis (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Financial Assets | ||||
Beginning balance | $ 266,033 | $ 243,868 | $ 248,489 | $ 230,257 |
Transfers into Level 3 | 2,872 | 48,031 | 27,880 | 73,631 |
Transfers out of Level 3 | (4,876) | (15,509) | (4,876) | (15,509) |
Total gains or losses | ||||
Net realized investment gains (losses) included in net income related to financial assets | 0 | (246) | 0 | (243) |
Net unrealized investment gains (losses) included in other comprehensive income | 4,231 | 1,356 | 6,972 | (110) |
Purchases | 1,566 | 0 | 1,566 | 0 |
Issuances | 0 | 0 | 0 | 0 |
Sales | (607) | 0 | (607) | (3) |
Settlements | 0 | 0 | 0 | 0 |
Paydowns, maturities and distributions | (14,506) | (5,849) | (24,711) | (16,372) |
Ending balance | 254,713 | 271,651 | 254,713 | 271,651 |
Financial Liabilities | ||||
Beginning balance | 84,629 | 78,486 | 78,700 | 80,733 |
Transfers into Level 3 | 0 | 0 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 | 0 | 0 |
Total gains or losses | ||||
Net realized gains (losses) included in net income related to financial liabilities | 371 | (1,291) | 4,705 | (3,513) |
Net unrealized investment gains (losses) included in other comprehensive income | 0 | 0 | 0 | 0 |
Purchases | 0 | 0 | 0 | 0 |
Issuances | 2,431 | 2,107 | 5,449 | 3,439 |
Sales | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Paydowns, maturities and distributions | (1,470) | (1,514) | (2,893) | (2,871) |
Ending balance | 85,961 | 77,788 | 85,961 | 77,788 |
Total Fixed Maturity Securities | ||||
Financial Assets | ||||
Beginning balance | 266,028 | 243,862 | 248,484 | 230,251 |
Transfers into Level 3 | 2,808 | 48,031 | 27,816 | 73,631 |
Transfers out of Level 3 | (4,876) | (15,509) | (4,876) | (15,509) |
Total gains or losses | ||||
Net realized investment gains (losses) included in net income related to financial assets | 0 | (246) | 0 | (246) |
Net unrealized investment gains (losses) included in other comprehensive income | 4,231 | 1,356 | 6,972 | (110) |
Purchases | 1,566 | 0 | 1,566 | 0 |
Issuances | 0 | 0 | 0 | 0 |
Sales | (607) | 0 | (607) | 0 |
Settlements | 0 | 0 | 0 | 0 |
Paydowns, maturities and distributions | (14,506) | (5,849) | (24,711) | (16,372) |
Ending balance | 254,644 | 271,645 | 254,644 | 271,645 |
Municipal bonds | ||||
Financial Assets | ||||
Beginning balance | 47,756 | 49,748 | 47,531 | 49,328 |
Transfers into Level 3 | 0 | 0 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 | 0 | 0 |
Total gains or losses | ||||
Net realized investment gains (losses) included in net income related to financial assets | 0 | 0 | 0 | 0 |
Net unrealized investment gains (losses) included in other comprehensive income | (537) | 397 | (193) | 840 |
Purchases | 0 | 0 | 0 | 0 |
Issuances | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Paydowns, maturities and distributions | (235) | (224) | (354) | (247) |
Ending balance | 46,984 | 49,921 | 46,984 | 49,921 |
Corporate bonds | ||||
Financial Assets | ||||
Beginning balance | 82,482 | 78,780 | 80,742 | 72,979 |
Transfers into Level 3 | 2,808 | 29,709 | 5,882 | 40,487 |
Transfers out of Level 3 | (4,876) | (11,279) | (4,876) | (11,279) |
Total gains or losses | ||||
Net realized investment gains (losses) included in net income related to financial assets | 0 | (246) | 0 | (246) |
Net unrealized investment gains (losses) included in other comprehensive income | 1,961 | (700) | 4,510 | (1,587) |
Purchases | 1,566 | 0 | 1,566 | 0 |
Issuances | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Paydowns, maturities and distributions | (4,719) | (3,601) | (8,602) | (7,691) |
Ending balance | 79,222 | 92,663 | 79,222 | 92,663 |
Mortgage-Backed Securities | ||||
Financial Assets | ||||
Beginning balance | 135,790 | 115,334 | 120,211 | 107,944 |
Transfers into Level 3 | 0 | 18,322 | 21,934 | 33,144 |
Transfers out of Level 3 | 0 | (4,230) | 0 | (4,230) |
Total gains or losses | ||||
Net realized investment gains (losses) included in net income related to financial assets | 0 | 0 | 0 | 0 |
Net unrealized investment gains (losses) included in other comprehensive income | 2,807 | 1,659 | 2,655 | 637 |
Purchases | 0 | 0 | 0 | 0 |
Issuances | 0 | 0 | 0 | 0 |
Sales | (607) | 0 | (607) | 0 |
Settlements | 0 | 0 | 0 | 0 |
Paydowns, maturities and distributions | (9,552) | (2,024) | (15,755) | (8,434) |
Ending balance | 128,438 | 129,061 | 128,438 | 129,061 |
Equity securities | ||||
Financial Assets | ||||
Beginning balance | 5 | 6 | 5 | 6 |
Transfers into Level 3 | 64 | 0 | 64 | 0 |
Transfers out of Level 3 | 0 | 0 | 0 | 0 |
Total gains or losses | ||||
Net realized investment gains (losses) included in net income related to financial assets | 0 | 0 | 0 | 3 |
Net unrealized investment gains (losses) included in other comprehensive income | 0 | 0 | 0 | 0 |
Purchases | 0 | 0 | 0 | 0 |
Issuances | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | (3) |
Settlements | 0 | 0 | 0 | 0 |
Paydowns, maturities and distributions | 0 | 0 | 0 | 0 |
Ending balance | $ 69 | $ 6 | $ 69 | $ 6 |
Fair Value of Financial Instr_5
Fair Value of Financial Instruments - Financial Instrument Not Carried at Fair Value (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Level 1 | ||
Investments | ||
Other investments | $ 0 | $ 0 |
Financial Liabilities | ||
Investment contract and life policy reserves, fixed annuity contracts | 0 | 0 |
Investment contract and life policy reserves, account values on life contracts | 0 | 0 |
Other policyholder funds | 0 | 0 |
Long-term debt | 0 | 0 |
Level 2 | ||
Investments | ||
Other investments | 0 | 0 |
Financial Liabilities | ||
Investment contract and life policy reserves, fixed annuity contracts | 0 | 0 |
Investment contract and life policy reserves, account values on life contracts | 0 | 0 |
Other policyholder funds | 676,460 | 626,325 |
Long-term debt | 315,938 | 291,938 |
Level 3 | ||
Investments | ||
Other investments | 166,023 | 161,449 |
Financial Liabilities | ||
Investment contract and life policy reserves, fixed annuity contracts | 4,529,317 | 4,478,338 |
Investment contract and life policy reserves, account values on life contracts | 93,366 | 90,402 |
Other policyholder funds | 59,459 | 62,962 |
Long-term debt | 0 | 0 |
Carrying Amount | ||
Investments | ||
Other investments | 161,313 | 156,725 |
Financial Liabilities | ||
Investment contract and life policy reserves, fixed annuity contracts | 4,605,272 | 4,555,849 |
Investment contract and life policy reserves, account values on life contracts | 90,239 | 87,229 |
Other policyholder funds | 735,919 | 689,287 |
Long-term debt | 297,881 | 297,740 |
Fair Value | ||
Investments | ||
Other investments | 166,023 | 161,449 |
Financial Liabilities | ||
Investment contract and life policy reserves, fixed annuity contracts | 4,529,317 | 4,478,338 |
Investment contract and life policy reserves, account values on life contracts | 93,366 | 90,402 |
Other policyholder funds | 735,919 | 689,287 |
Long-term debt | $ 315,938 | $ 291,938 |
Fair Value of Financial Instr_6
Fair Value of Financial Instruments - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Fair Value of Financial Instruments (Textual) [Abstract] | ||||
Net realized investment gains (losses) included in net income related to financial assets | $ 0 | $ (246) | $ 0 | $ (243) |
Level 3 | ||||
Fair Value of Financial Instruments (Textual) [Abstract] | ||||
Percentage of invested assets in total investment portfolio Level 3 recurring | 4.00% | 4.00% | ||
Net realized investment losses | $ (371) | $ (1,291) | $ (4,705) | $ (3,513) |
Derivative Instruments - Fair V
Derivative Instruments - Fair Value of Derivatives in Consolidated Balance Sheets (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Assets | ||
Derivative instruments, included in Short-term and other investments | $ 8,753 | $ 2,647 |
Short-term and other investments | ||
Assets | ||
Derivative instruments, included in Short-term and other investments | 8,753 | 2,647 |
Other policyholder funds | ||
Liabilities | ||
FIA - embedded derivatives, included in Other policyholder funds | 85,961 | 78,700 |
Investment contract and life policy reserves | ||
Liabilities | ||
IUL - embedded derivatives, included in Investment contract and life policy reserves | $ 940 | $ 248 |
Derivative Instruments - Fair_2
Derivative Instruments - Fair Value of Derivatives Included in Consolidated Statements of Operations (Details) - Revenues - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Change in fair value of derivatives: | ||||
Net investment gains (losses) | $ 1,375 | $ (2) | $ 5,429 | $ (851) |
Change in fair value of embedded derivatives: | ||||
Net investment gains (losses) | $ (516) | $ 1,281 | $ (5,261) | $ 3,569 |
Derivative Instruments - Notion
Derivative Instruments - Notional and Fair Value Amounts of Derivative Instruments (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Derivative [Line Items] | ||
Notional Amount | $ 300,400 | $ 278,200 |
Fair Value | 8,753 | 2,647 |
Bank of America, N.A. | ||
Derivative [Line Items] | ||
Notional Amount | 156,800 | 144,500 |
Fair Value | 3,560 | 870 |
Barclays Bank PLC | ||
Derivative [Line Items] | ||
Notional Amount | 72,500 | 28,500 |
Fair Value | 1,696 | 247 |
Citigroup Inc. | ||
Derivative [Line Items] | ||
Notional Amount | 0 | 0 |
Fair Value | 0 | 0 |
Credit Suisse International | ||
Derivative [Line Items] | ||
Notional Amount | 16,100 | 16,100 |
Fair Value | 295 | 55 |
Societe Generale | ||
Derivative [Line Items] | ||
Notional Amount | 55,000 | 89,100 |
Fair Value | $ 3,202 | $ 1,475 |
Derivative Instruments - Narrat
Derivative Instruments - Narrative (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Dec. 31, 2018 | |
Derivatives, Fair Value [Line Items] | ||
Expected contract term | 10 years | |
Maximum exposure | $ 250,000 | |
Other liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of collateral | $ 8,663,000 | $ 1,868,000 |
Property and Casualty Unpaid _3
Property and Casualty Unpaid Claims and Claim Expenses - Summary of Reinsurance Reserve Balances (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Segment Reporting Information [Line Items] | ||||
Beginning Gross reserves | $ 396,714 | |||
Claims and claim expense payments for claims occurring during: | ||||
Ending Gross reserves | $ 398,339 | 398,339 | ||
Benefits, claims and settlement expenses | 152,692 | $ 168,278 | 292,076 | $ 311,840 |
Property and Casualty | ||||
Segment Reporting Information [Line Items] | ||||
Beginning Gross reserves | 359,701 | 331,255 | 367,180 | 319,182 |
Less: reinsurance recoverables | 78,328 | 62,917 | 89,725 | 57,409 |
Net reserves, beginning of year | 281,373 | 268,338 | 277,455 | 261,773 |
Incurred claims and claim expenses: | ||||
Claims occurring in the current period | 134,411 | 147,005 | 253,178 | 267,993 |
Decrease in estimated reserves for claims occurring in prior years | (2,000) | 0 | (4,000) | (300) |
Total claims and claim expenses incurred | 132,411 | 147,005 | 249,178 | 267,693 |
Claims and claim expense payments for claims occurring during: | ||||
Current period | 83,755 | 80,403 | 129,469 | 127,451 |
Prior periods | 39,512 | 45,006 | 106,647 | 112,081 |
Total claims and claim expense payments | 123,267 | 125,409 | 236,116 | 239,532 |
Net reserves, end of year | 290,517 | 289,934 | 290,517 | 289,934 |
Plus: reinsurance recoverables | 77,345 | 62,883 | 77,345 | 62,883 |
Ending Gross reserves | 367,862 | 352,817 | 367,862 | 352,817 |
Life and Annuity segments | ||||
Claims and claim expense payments for claims occurring during: | ||||
Net reserves, end of year | 30,477 | 27,016 | 30,477 | 27,016 |
Benefits, claims and settlement expenses | $ 20,281 | $ 21,273 | $ 42,898 | $ 44,147 |
Property and Casualty Unpaid _4
Property and Casualty Unpaid Claims and Claim Expenses - Narrative (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Insurance Loss Reserves [Abstract] | ||
Favorable development of total reserves for property and casualty claims occurring in prior years | $ 4 | $ 0.3 |
Deposit Asset on Reinsurance -
Deposit Asset on Reinsurance - Narrative (Details) - USD ($) $ in Thousands | Apr. 01, 2019 | Jun. 30, 2019 | Dec. 31, 2018 |
Effects of Reinsurance [Line Items] | |||
Reinsurance block of in-force fixed and variable annuity business | $ 2,900,000 | ||
Fixed annuity reserves reinsured on a coinsurance basis | $ 2,200,000 | ||
Deposit asset on reinsurance | 2,300,000 | 2,315,330 | $ 0 |
Investment gain realized, net of tax | $ 106,900 | ||
Separate account asset | 2,310,886 | 2,001,128 | |
Separate account liability | $ 2,310,886 | $ 2,001,128 | |
Reinsurance Deposit Receivable [Member] | Third Party Reinsurer Risk [Member] | |||
Effects of Reinsurance [Line Items] | |||
Concentration risk, percent | 50.00% | ||
Reinsurance Contract Modified Coinsurance Basis [Member] | |||
Effects of Reinsurance [Line Items] | |||
Separate account asset | $ 700,000 | ||
Separate account liability | $ 700,000 | ||
Minimum | |||
Effects of Reinsurance [Line Items] | |||
Minimum crediting rating | 4.50% |
Debt - Summary of Indebtedness
Debt - Summary of Indebtedness (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Short-term debt: | ||
Bank Credit Facility, expires June 21, 2024 | $ 0 | $ 0 |
Long-term debt: | ||
Long-term debt | 297,881,000 | 297,740,000 |
Debt and Lease Obligation | 297,881,000 | 297,740,000 |
Senior Notes 4.50% [Member] | ||
Long-term debt: | ||
Long-term debt | 247,881,000 | 247,740,000 |
Unamortized discount | $ 458,000 | 488,000 |
Stated rate | 4.50% | |
Face amount | $ 250,000,000 | |
Unamortized debt issuance costs | 1,661,000 | 1,772,000 |
Federal Home Loan Bank Advances [Member] | ||
Long-term debt: | ||
Long-term debt | $ 50,000,000 | $ 50,000,000 |
Debt - Narrative (Details)
Debt - Narrative (Details) - USD ($) | 6 Months Ended | |||
Jun. 30, 2019 | Aug. 01, 2019 | Jun. 21, 2019 | Jun. 20, 2019 | |
Senior Notes 4.50% [Member] | ||||
Debt Instrument [Line Items] | ||||
Stated rate | 4.50% | |||
Line of Credit [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt term | 5 years | |||
Borrowing capacity | $ 150,000,000 | $ 225,000,000 | ||
Commitment fee percent | 0.15% | |||
London Interbank Offered Rate (LIBOR) [Member] | Line of Credit [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 1.15% | |||
Subsequent Event [Member] | Line of Credit [Member] | ||||
Debt Instrument [Line Items] | ||||
Long-term Line of Credit | $ 135,000,000 |
Reinsurance - Summary of Reinsu
Reinsurance - Summary of Reinsurance Activity (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Gross Amount | ||||
Premiums written and contract deposits, Gross Amount | $ 314,897 | $ 305,864 | $ 613,990 | $ 594,680 |
Premiums and contract charges earned, Gross Amount | 213,415 | 209,892 | 426,671 | 417,629 |
Benefits, claims and settlement expenses, Gross Amount | 153,436 | 170,459 | 295,488 | 322,427 |
Ceded to Other Companies | ||||
Premiums written and contract deposits, Ceded to Other Companies | 6,028 | 5,483 | 11,876 | 10,997 |
Premiums and contract charges earned, Ceded to Other Companies | 8,155 | 5,505 | 13,977 | 11,033 |
Benefits, claims and settlement expenses, Ceded to Other Companies | 2,797 | 3,330 | 7,089 | 12,344 |
Assumed from Other Companies | ||||
Premiums written and contract deposits, Assumed from Other Companies | 2,822 | 1,341 | 4,971 | 2,047 |
Premiums and contract charges earned, Assumed from Other Companies | 2,836 | 1,223 | 5,187 | 2,012 |
Benefits, claims and settlement expenses, Assumed from Other Companies | 2,053 | 1,149 | 3,677 | 1,757 |
Net Amount | ||||
Premiums written and contract deposits, Net Amount | 311,691 | 301,722 | 607,085 | 585,730 |
Premiums and contract charges earned, Net Amount | 208,096 | 205,610 | 417,881 | 408,608 |
Benefits, claims and settlement expenses, Net Amount | $ 152,692 | $ 168,278 | $ 292,076 | $ 311,840 |
Commitments - Narrative (Detail
Commitments - Narrative (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Commitments and Contingencies Disclosure [Abstract] | ||
Unfunded commitments to purchase investments | $ 157.4 | $ 145.4 |
Segment Information - Summary o
Segment Information - Summary of Segment Activity (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($)segment | Jun. 30, 2018USD ($) | Dec. 31, 2018USD ($) | |
Segment Reporting Information [Line Items] | |||||
Number of reportable segments | segment | 4 | ||||
Number of operating segments | segment | 3 | ||||
Summarized financial information for these segments | |||||
Insurance premiums and contract charges earned | $ 208,096 | $ 205,610 | $ 417,881 | $ 408,608 | |
Net investment income | 93,458 | 97,101 | 186,258 | 188,965 | |
Net income (loss) | 93,822 | 5,917 | 125,988 | 26,072 | |
Assets | 11,779,407 | 11,779,407 | $ 11,031,896 | ||
Intersegment eliminations | |||||
Summarized financial information for these segments | |||||
Net investment income | (179) | (194) | (365) | (391) | |
Assets | (51,617) | (51,617) | (41,800) | ||
Property and Casualty | |||||
Summarized financial information for these segments | |||||
Insurance premiums and contract charges earned | 171,303 | 167,333 | 342,143 | 332,791 | |
Property and Casualty | Operating segments | |||||
Summarized financial information for these segments | |||||
Net investment income | 12,643 | 10,300 | 22,861 | 19,816 | |
Net income (loss) | 5,101 | (10,896) | 20,153 | (1,174) | |
Assets | 1,281,344 | 1,281,344 | 1,236,362 | ||
Retirement | |||||
Summarized financial information for these segments | |||||
Insurance premiums and contract charges earned | 6,931 | 7,825 | 15,509 | 15,893 | |
Retirement | Operating segments | |||||
Summarized financial information for these segments | |||||
Net investment income | 62,684 | 67,787 | 127,423 | 131,956 | |
Net income (loss) | (25,045) | 14,141 | (12,894) | 25,562 | |
Assets | 8,493,089 | 8,493,089 | 7,866,969 | ||
Life | |||||
Summarized financial information for these segments | |||||
Insurance premiums and contract charges earned | 29,862 | 30,452 | 60,229 | 59,924 | |
Life | Operating segments | |||||
Summarized financial information for these segments | |||||
Net investment income | 18,324 | 19,166 | 36,376 | 37,506 | |
Net income (loss) | 5,239 | 5,879 | 8,516 | 9,666 | |
Assets | 1,911,569 | 1,911,569 | 1,821,351 | ||
Corporate and Other | |||||
Summarized financial information for these segments | |||||
Net investment income | (14) | 42 | (37) | 78 | |
Net income (loss) | 108,527 | $ (3,207) | 110,213 | $ (7,982) | |
Assets | $ 145,022 | $ 145,022 | $ 149,014 |
Operating Leases - Components o
Operating Leases - Components of Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019 | Jun. 30, 2019 | |
Leases [Abstract] | ||
Operating lease cost | $ 791 | $ 1,600 |
Short-term lease cost | 27 | 51 |
Total lease cost | $ 818 | $ 1,651 |
Operating Leases - Narrative (D
Operating Leases - Narrative (Details) | Jun. 30, 2019 |
Leases [Abstract] | |
Renewal term | 10 years |
Lessee, Lease, Description [Line Items] | |
Weighted Average Remaining Lease Term | 5 years |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Weighted Average Remaining Lease Term | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Weighted Average Remaining Lease Term | 6 years |
Operating Leases - Supplemental
Operating Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019 | Jun. 30, 2019 | |
Leases [Abstract] | ||
Cash paid for amounts included in the measurement of lease liabilities | $ 575 | $ 1,341 |
Operating Leases - Balance Shee
Operating Leases - Balance Sheet Information (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Jan. 01, 2019 |
Leases [Abstract] | ||
Right of use assets, included in Other assets | $ 12,692 | $ 14,499 |
Operating lease liabilities, included in Other liabilities | $ 13,429 | $ 13,908 |
Weighted Average Remaining Lease Term | 5 years | |
Weighted Average Discount Rate | 4.10% |
Operating Leases - Future Minim
Operating Leases - Future Minimum Operating Lease Payments (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Jan. 01, 2019 |
Leases [Abstract] | ||
2019 (excluding the six months ended June 30, 2019) | $ 1,448 | |
2020 | 3,108 | |
2021 | 3,028 | |
2022 | 2,943 | |
2023 | 2,246 | |
Thereafter | 2,111 | |
Total future minimum lease payments | 14,884 | |
Less imputed interest | (1,455) | |
Total | $ 13,429 | $ 13,908 |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information - Narrative (Details) $ in Billions | 3 Months Ended |
Jun. 30, 2019USD ($) | |
Supplemental Cash Flow Elements [Abstract] | |
Transfer of investments and policy loans | $ 2.1 |
Reinsurance block of in-force fixed and variable annuity business | $ 2.9 |
Goodwill - Narrative (Details)
Goodwill - Narrative (Details) $ in Thousands | 3 Months Ended |
Jun. 30, 2019USD ($) | |
Retirement | |
Goodwill [Line Items] | |
Goodwill impairment charge | $ 28,025 |