Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2022 | Oct. 31, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2022 | |
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 | |
Title of 12(b) Security | Common Stock, $0.001 par value | |
Trading Symbol | HMN | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 40,898,295 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0000850141 | |
Current Fiscal Year End Date | --12-31 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Investments | ||
Fixed maturity securities, available for sale, at fair value (amortized cost, net 2022, $5,904.1; 2021, $5,797.7) | $ 5,272.1 | $ 6,239.3 |
Equity securities at fair value | 113.8 | 147.2 |
Limited partnership interests | 997.5 | 712.8 |
Short-term and other investments | 254.6 | 350.2 |
Total investments | 6,638 | 7,449.5 |
Cash | 36.2 | 133.7 |
Deferred policy acquisition costs | 440.1 | 248 |
Reinsurance balances receivable | 497.5 | 153.2 |
Deposit asset on reinsurance | 2,525.6 | 2,481.5 |
Intangible assets | 192.2 | 145.4 |
Goodwill | 56.3 | 43.5 |
Other assets | 328.6 | 288.1 |
Separate Account variable annuity assets | 2,599.6 | 3,441 |
Total assets | 13,314.1 | 14,383.9 |
Policy liabilities | ||
Investment contract and policy reserves | 7,068.1 | 6,577.8 |
Unpaid claims and claim expenses | 481.9 | 425.9 |
Unearned premiums | 266.5 | 255.1 |
Total policy liabilities | 7,816.5 | 7,258.8 |
Other policyholder funds | 1,000.7 | 945.9 |
Other liabilities | 322.8 | 428.2 |
Short-term debt | 249 | 249 |
Long-term debt | 248.9 | 253.6 |
Separate Account variable annuity liabilities | 2,599.6 | 3,441 |
Total liabilities | 12,237.5 | 12,576.5 |
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, 2022, 66,612,323; 2021, 66,436,821 | 0.1 | 0.1 |
Additional paid-in capital | 500.4 | 495.3 |
Retained earnings | 1,500.4 | 1,524.9 |
Accumulated other comprehensive income (loss), net of tax: | ||
Net unrealized investment gains (losses) on fixed maturity securities | (396.7) | 290.7 |
Net funded status of benefit plans | (10.2) | (10.2) |
Treasury stock, at cost, 2022, 25,714,153 shares; 2021, 25,043,337 shares | (517.4) | (493.4) |
Total shareholders’ equity | 1,076.6 | 1,807.4 |
Total liabilities and shareholders’ equity | $ 13,314.1 | $ 14,383.9 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Fixed maturities, available for sale, amortized cost | $ 5,904.1 | $ 5,797.7 |
Preferred stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 75,000,000 | 75,000,000 |
Common stock, shares issued (in shares) | 66,612,323 | 66,436,821 |
Treasury stock (in shares) | 25,714,153 | 25,043,337 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS (UNAUDITED) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenues | ||||
Net premiums and contract charges earned | $ 257.8 | $ 225.4 | $ 769.5 | $ 678.8 |
Net investment income | 97.6 | 103.7 | 300.7 | 308.4 |
Net investment losses | (12.8) | (6.5) | (43.8) | (10.6) |
Other income | 0.4 | 7 | 9.7 | 22.1 |
Total revenues | 343 | 329.6 | 1,036.1 | 998.7 |
Benefits, losses and expenses | ||||
Benefits, claims and settlement expenses | 173.6 | 164.8 | 558.2 | 446.2 |
Interest credited | 45.9 | 51.9 | 129.1 | 153.7 |
Operating expenses | 75.6 | 64.3 | 229.7 | 182.8 |
DAC unlocking and amortization expense | 23.3 | 22.9 | 76.7 | 70.5 |
Intangible asset amortization expense | 4.2 | 3.3 | 12.6 | 9.8 |
Interest expense | 5.3 | 3.4 | 13.5 | 10.4 |
Total benefits, losses and expenses | 327.9 | 310.6 | 1,019.8 | 873.4 |
Income before income taxes | 15.1 | 19 | 16.3 | 125.3 |
Income tax expense | 1.2 | 2.7 | 0.4 | 23 |
Net income | $ 13.9 | $ 16.3 | $ 15.9 | $ 102.3 |
Net income per share | ||||
Basic (in usd per share) | $ 0.33 | $ 0.39 | $ 0.38 | $ 2.44 |
Diluted (in usd per share) | $ 0.33 | $ 0.39 | $ 0.38 | $ 2.43 |
Weighted average number of shares and equivalent shares | ||||
Basic (in shares) | 41.4 | 42 | 41.7 | 42 |
Diluted (in shares) | 41.6 | 42.2 | 41.9 | 42.2 |
Net income | $ 13.9 | $ 16.3 | $ 15.9 | $ 102.3 |
Other comprehensive income (loss), net of tax: | ||||
Change in net unrealized investment losses on fixed maturity securities | (176.3) | (25.3) | (687.4) | (59.4) |
Change in net funded status of benefit plans | 0 | 0 | 0 | 0 |
Other comprehensive loss | (176.3) | (25.3) | (687.4) | (59.4) |
Comprehensive income (loss) | $ (162.4) | $ (9) | $ (671.5) | $ 42.9 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Millions | Total | Common stock, $0.001 par value | Additional paid-in capital | Retained earnings | Accumulated other comprehensive income (loss), net of tax: | Treasury stock, at cost |
Beginning balance at Dec. 31, 2020 | $ 0.1 | $ 488.4 | $ 1,434.6 | $ 355.1 | $ (488.1) | |
Increase (Decrease) in Stockholders' Equity | ||||||
Options exercised and conversion of common stock units and restricted stock units | (1) | |||||
Share-based compensation expense | 5.5 | |||||
Net income | $ 102.3 | 102.3 | ||||
Dividends, 2022, $0.32 per share; 2021, $0.31 per share | (39.4) | |||||
Change in net unrealized investment losses on fixed maturity securities | (59.4) | |||||
Acquisition of shares | (1.7) | |||||
Ending balance at Sep. 30, 2021 | 1,796.4 | 0.1 | 492.9 | 1,497.5 | 295.7 | (489.8) |
Beginning balance at Jun. 30, 2021 | 0.1 | 490.7 | 1,494.4 | 321 | (489.6) | |
Increase (Decrease) in Stockholders' Equity | ||||||
Options exercised and conversion of common stock units and restricted stock units | 0.2 | |||||
Share-based compensation expense | 2 | |||||
Net income | 16.3 | 16.3 | ||||
Dividends, 2022, $0.32 per share; 2021, $0.31 per share | (13.2) | |||||
Change in net unrealized investment losses on fixed maturity securities | (25.3) | |||||
Acquisition of shares | (0.2) | |||||
Ending balance at Sep. 30, 2021 | 1,796.4 | 0.1 | 492.9 | 1,497.5 | 295.7 | (489.8) |
Beginning balance at Dec. 31, 2021 | 1,807.4 | 0.1 | 495.3 | 1,524.9 | 280.5 | (493.4) |
Increase (Decrease) in Stockholders' Equity | ||||||
Options exercised and conversion of common stock units and restricted stock units | (1.1) | |||||
Share-based compensation expense | 6.2 | |||||
Net income | 15.9 | 15.9 | ||||
Dividends, 2022, $0.32 per share; 2021, $0.31 per share | (40.4) | |||||
Change in net unrealized investment losses on fixed maturity securities | (687.4) | |||||
Acquisition of shares | (24) | |||||
Ending balance at Sep. 30, 2022 | 1,076.6 | 0.1 | 500.4 | 1,500.4 | (406.9) | (517.4) |
Beginning balance at Jun. 30, 2022 | 0.1 | 498.1 | 1,499.9 | (230.6) | (507.4) | |
Increase (Decrease) in Stockholders' Equity | ||||||
Options exercised and conversion of common stock units and restricted stock units | 0.2 | |||||
Share-based compensation expense | 2.1 | |||||
Net income | 13.9 | 13.9 | ||||
Dividends, 2022, $0.32 per share; 2021, $0.31 per share | (13.4) | |||||
Change in net unrealized investment losses on fixed maturity securities | (176.3) | |||||
Acquisition of shares | (10) | |||||
Ending balance at Sep. 30, 2022 | $ 1,076.6 | $ 0.1 | $ 500.4 | $ 1,500.4 | $ (406.9) | $ (517.4) |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) (Parenthetical) - $ / shares | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Statement of Stockholders' Equity [Abstract] | ||
Common stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
Cash dividends (in usd per share) | $ 0.32 | $ 0.31 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash flows - operating activities | ||
Net income | $ 15.9 | $ 102.3 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Net investment losses | 43.8 | 10.6 |
Depreciation and intangible asset amortization | 20.7 | 16.7 |
Share-based compensation expense | 6.7 | 6 |
Income from equity method investments, net of dividends or distributions | 2.1 | (31.1) |
Changes in: | ||
Insurance liabilities | 403.3 | 75.1 |
Amounts due under reinsurance agreements | (344.3) | (1.6) |
Income tax liabilities | (6) | 2.3 |
Other operating assets and liabilities | (31) | (9) |
Other, net | 4.6 | 6.8 |
Net cash provided by operating activities | 115.8 | 178.1 |
Fixed maturity securities | ||
Purchases | (901.3) | (1,228.1) |
Sales | 529.9 | 319.2 |
Maturities, paydowns, calls and redemptions | 428.8 | 631.5 |
Equity securities | ||
Purchases | (4.5) | (45) |
Sales and repayments | 7 | 1 |
Limited partnership interests | ||
Purchases | (332.3) | (202.1) |
Sales | 45.5 | 69.4 |
Change in short-term and other investments, net | 95.4 | 103.1 |
Acquisition of business, net of cash acquired | (164.4) | 0 |
Net cash used in investing activities | (295.9) | (351) |
Cash flows - financing activities | ||
Dividends paid to shareholders | (39.5) | (38.6) |
FHLB borrowings | 0 | 1 |
Principal repayment on FHLB borrowings | (5) | (50) |
Acquisition of treasury stock | (24) | (1.7) |
Proceeds from exercise of stock options | 0 | 0.3 |
Withholding tax payments on RSUs tendered | (2.4) | (2) |
Annuity contracts: variable, fixed and FHLB funding agreements: | ||
Deposits | 516.7 | 833.2 |
Benefits, withdrawals and net transfers to Separate Account variable annuity assets | (340.6) | (342.1) |
Principal repayment on FHLB funding agreements | (94) | (204) |
Life policy accounts: | ||
Deposits | 7.7 | 6.7 |
Withdrawals and surrenders | (2.8) | (3) |
Change in deposit asset on reinsurance | (32.4) | (17.2) |
Net increase in reverse repurchase agreements | 95.2 | 0 |
Change in book overdrafts | 3.7 | 8.2 |
Net cash provided by financing activities | 82.6 | 190.8 |
Net increase (decrease) in cash | (97.5) | 17.9 |
Cash at beginning of period | 133.7 | 22.3 |
Cash at end of period | $ 36.2 | $ 40.2 |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Significant Accounting Policies | Basis of Presentation and Significant Accounting Policies Business Horace Mann Educators Corporation is a holding company for insurance subsidiaries that market and underwrite personal lines of property and casualty insurance products (primarily personal lines of auto and property insurance), life insurance products, retirement products (primarily tax-qualified fixed and variable annuities), voluntary supplemental insurance products (primarily cancer, heart, hospital, supplemental disability and accident coverages), and employer-sponsored group benefit products (primarily short-term and long-term group disability, and group term life coverages), primarily to K-12 teachers, administrators and other employees of public schools and their families (collectively, HMEC, the Company or Horace Mann). As described in Note 2, the Company acquired Madison National Life Insurance Company, Inc. (Madison National) effective January 1, 2022. In conjunction with the acquisition, management changed how it manages and conducts its business resulting in three operating segments: (1) Property & Casualty, (2) Life & Retirement, and (3) Supplemental & Group Benefits (which includes the results of Madison National). Basis of Presentation The accompanying Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America (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. These Consolidated Financial Statements and Notes thereto should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in Part II - Item 8 of the Company's Annual Report on Form 10-K for the year ended December 31, 2021. The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the full year. The accompanying Consolidated Financial Statements and Notes thereto are unaudited and reflect all adjustments (generally consisting only of normal recurring accruals) which are, in the opinion of management, necessary for the fair presentation of the consolidated financial position, results of operations and cash flows for the interim periods. The Company's significant accounting policies are summarized in Part II - Item 8, Note 1 of the Company's Annual Report on Form 10-K for the year ended December 31, 2021. The Company has reclassified the presentation of certain prior period information to conform to the current year's presentation. Consolidation All intercompany transactions and balances between HMEC and its subsidiaries and affiliates have been eliminated. Accounting Policies Reverse Repurchase Agreements Beginning in the second quarter of 2022, the Company entered into reverse repurchase agreements to sell securities for cash. Such reverse repurchase agreements are primarily used as a financing tool for general corporate purposes and may be used as a tool to enhance yield on the investment portfolio. A reverse repurchase agreement is a transaction in which one party (transferor) agrees to sell securities to another party (transferee) in return for cash (or securities), with a simultaneous agreement to repurchase the same securities (or substantially similar securities) at a specified price on a specified date. These transactions are generally short-term in nature, and therefore, the carrying amounts of these instruments approximate fair value. In connection with reverse repurchase agreements, the Company transfers primarily U.S. government, government agency and corporate securities and receives cash. For reverse repurchase agreements, the Company receives cash in an amount equal to at least 95% of the fair value of the securities transferred (i.e., the collateral), and the agreements with third parties contain contractual provisions to allow for additional collateral to be obtained when necessary. The Company accounts for reverse repurchase agreements as secured borrowings. The securities transferred under reverse repurchase agreements are included in Fixed maturity securities with the obligation to repurchase those securities reported in Other liabilities on the Company's Consolidated Balance Sheets. The fair value of the collateral was $95.8 million as of September 30, 2022 and $0 as of December 31, 2021. The obligation for securities sold under reverse repurchase agreements was a net amount of $95.2 million as of September 30, 2022 and $0 as of December 31, 2021. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the reporting date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The most significant critical accounting estimates include valuation of hard-to-value fixed maturity securities, evaluation of credit loss impairments for fixed maturity securities, evaluation of goodwill and intangible assets for impairment, valuation of annuity and life deferred policy acquisition costs, valuation of liabilities for property and casualty unpaid claims and claim expenses, valuation of certain investment contracts and policy reserves and valuation of assets acquired and liabilities assumed under purchase accounting and purchase price allocation. Future Adoption of New Accounting Standards Accounting for Long-Duration Insurance Contracts In August 2018, the FASB issued targeted improvements to the accounting and disclosure guidance for long-duration insurance contracts (i.e., ASU 2018-12). The guidance in ASU 2018-12 (ASU) significantly changes how insurers account for long-duration insurance contracts. The guidance in the ASU also significantly expands the disclosure requirements for long-duration insurance contracts. The Company will adopt the ASU effective January 1, 2023, using the modified retrospective transition method where permitted, and apply the guidance as of January 1, 2021 (and record transition adjustments as of January 1, 2021) in the Company’s 2023 consolidated financial statements. Prior periods presented (years 2021 and 2022) will be adjusted to apply the new method of accounting retrospectively under the ASU. While the requirements of the ASU represent a significant change from existing GAAP, the adoption of the ASU will not impact cash flows on the Company’s policies, or the underlying economics of the Company’s business. The Company's insurance subsidiaries' risk-based capital amounts and ratios, and regulatory dividends will not be impacted as the National Association of Insurance Commissioners has rejected the adoption of ASU 2018-12. The Company has created a governance framework and is managing a detailed implementation plan to support timely application of the guidance in the ASU. The Company has made progress and continues to refine key accounting policy decisions, technology solutions and internal controls. These activities include, but are not limited to, modifications of actuarial valuation, accounting and financial reporting processes and systems including internal controls. The table below summarizes the areas of significant change and each significant area of change for the method of adoption and expected impact to the Company's results of operations and financial condition as a result from adopting the ASU at transition and subsequent to the effective date. Area of significant change Impacts at transition (January 1, 2021) Impacts subsequent to the effective date Cash flow assumptions for measuring the liability for future policy benefits Under current accounting guidance, assumptions for traditional long-duration insurance contracts (e.g., mortality, lapses, etc.), are locked-in at issuance. The new guidance requires insurers to review, and if necessary, update the cash flow assumptions used to measure liabilities for future policy benefits periodically. The change in the liability estimate as a result of updating cash flow assumptions will be recognized in net income. The Company expects to adopt this guidance on a modified retrospective basis as of the earliest period presented in the year of adoption. Upon adoption, there will be an adjustment to retained earnings as a result of capping the net premium ratio at 100%. The Company expects the impact of such adjustment will likely result in an after-tax decrease to retained earnings of less than $5 million. The Company does not expect any material impacts to its results of operations subsequent to the effective date of the ASU. Discount rate assumption for measuring the liability for future policy benefits Under current accounting guidance, the-then current discount rate is locked-in at issuance. The new guidance requires insurers to update the discount rate assumption used to measure liabilities for future policy benefits at each reporting period, and the discount rate utilized must be based on an upper-medium grade fixed income instrument yield. The change in the liability estimate as a result of updating the discount rate assumption will be recognized in other comprehensive income. The Company expects to adopt this guidance on a modified retrospective basis as of the earliest period presented in the year of adoption. Upon adoption, there will be an adjustment to accumulated other comprehensive income (AOCI) as a result of remeasuring in force contract liabilities using a standard discount rate to measure the liabilities that will be equivalent to the yield from a high-quality bond and the adjustment will largely reflect the difference between discount rates locked-in at contract inception versus current discount rates at transition. The Company currently estimates that the transition date impact from adoption is likely to result in an after-tax decrease to AOCI in a range between $475 million and $525 million. The Company expects material impacts to AOCI subsequent to the effective date of the ASU due to subsequent increases and decreases in discount rates. Market risk benefits Under current accounting guidance, certain benefit features of annuity contracts (e.g., GMDB, etc.) are accounted for using a benefit ratio methodology. The new guidance created a new category of benefit features called market risk benefits that will be measured at fair value with changes in fair value attributable to a change in the instrument-specific credit risk recognized in other comprehensive income. The Company will adopt this guidance on a retrospective basis as of the earliest period presented in the year of adoption. Upon adoption, the Company expects an impact to AOCI for the cumulative effect of changes in the instrument-specific credit risk between contract issue date and transition date and retained earnings for the difference between fair value and carrying value at the transition date, excluding the changes in the instrument-specific credit risk. The Company is currently evaluating the impact of these adjustments but anticipates they will likely reduce AOCI and retained earnings by less than $15 million after-tax. Subsequent to the effective date of the ASU, the Company expects market risk benefits will add volatility to benefits expense which could be material. The Company is currently evaluating the impacts of these adjustments subsequent to the effective date of the ASU. Deferred policy acquisition costs (DAC) including shadow DAC Under current accounting guidance, for all annuity contracts, DAC is amortized over 20 years in proportion to estimated gross profits. For individual life contracts, DAC is amortized in proportion to anticipated premiums over the terms of the insurance policies (10, 15, 20, 30) years. For IUL, DAC is amortized in proportion to estimated gross profits over 30 years. The new guidance requires DAC and other balances to be amortized on a constant level basis over the expected term of the related contracts. The Company expects to adopt this guidance on a modified retrospective basis as of the earliest period presented in the year of adoption. Upon adoption, the Company expects an adjustment to AOCI for the removal of cumulative adjustments to DAC associated with unrealized investment gains and losses previously recorded in AOCI. The impact of this adjustment will likely result in an after-tax increase to AOCI in a range between $70 million and $75 million upon adoption. Subsequent to the effective date of the ASU, the Company expects a significant reduction in volatility of DAC unlocking due to the removal of investment performance and market impacts and an insignificant decrease in amortization expense due to the treatment of interest expense and method of amortizing DAC. |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions | Acquisitions Effective January 1, 2022, the Company acquired all the equity interests in Madison National pursuant to a Stock Purchase Agreement (Agreement) dated as of July 14, 2021. The final adjusted purchase price of the transaction was $172.3 million. The seller of Madison National has a potential earn-out of up to $12.5 million payable in cash, if specified financial targets are achieved by the end of 2023. As a result of the acquisition, Madison National became a wholly owned subsidiary of the Company. Madison National is a leading writer of employer-sponsored benefits provided to educators by K-12 school districts. Founded in 1961 and headquartered in Madison, Wisconsin, Madison National offers short-term and long-term group disability, group term life, and worksite solutions products, including accident and critical illness. Madison National's results are being reported in the operating segment titled "Supplemental & Group Benefits". The amount of revenues and pretax income for Madison National since the date of acquisition included in the Company's Consolidated Statement of Operations for the nine months ended September 30, 2022 are $106.7 million and $8.8 million (inclusive of the $3.5 million non-cash impact from amortization of intangible assets under purchase accounting), respectively. The Company anticipates completing the process of estimating the fair value of Madison National assets acquired and liabilities assumed, including, but not limited to, intangible assets, policy reserves and certain tax-related balances by year end. Accordingly, the Company’s preliminary estimates and the allocation of the final adjusted purchase price to the assets acquired and liabilities assumed are subject to change as the Company completes the process. In accordance with Accounting Standards Codification (ASC) 805, Business Combinations, changes if any, to the preliminary estimates and allocation of the final adjusted purchase price will be reported in the Company’s consolidated financial statements as an adjustment to the opening balance sheet. Based on the Company’s preliminary allocation of the final adjusted purchase price, the fair values of the assets acquired and liabilities assumed were as follows: ($ in millions) Assets: Investments $ 90.4 Cash and short-term investments 123.4 Reinsurance recoverable 356.0 Intangible assets (1) 59.4 Other assets 23.2 Liabilities: Investment contract and policy reserves 274.5 Unpaid claims and claim expenses 48.2 Unearned premiums 1.5 Other policyholder funds 152.8 Other liabilities 15.9 Total identifiable net assets acquired 159.5 Goodwill (2) 12.8 Purchase price $ 172.3 (1) Intangible assets consist of the value of business acquired, value of customer relationships and state licenses. The intangible assets that are amortizable have estimated lives of one (2) The amount of goodwill that is expected to be deductible for federal income tax purposes is $18.6 million. |
Investments
Investments | 9 Months Ended |
Sep. 30, 2022 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Net Investment Income The components of net investment income for the following periods were as follows: ($ in millions) Three Months Ended Nine Months Ended 2022 2021 2022 2021 Fixed maturity securities $ 63.9 $ 59.8 $ 184.5 $ 177.2 Equity securities 1.8 1.4 7.1 3.8 Limited partnership interests 5.1 16.8 31.3 51.1 Short-term and other investments 2.8 2.8 8.2 8.5 Investment expenses (2.7) (2.7) (7.8) (7.3) Net investment income - investment portfolio 70.9 78.1 223.3 233.3 Investment income - deposit asset on reinsurance 26.7 25.6 77.4 75.1 Total net investment income $ 97.6 $ 103.7 $ 300.7 $ 308.4 Net Investment Losses Net investment losses for the following periods were as follows: ($ in millions) Three Months Ended Nine Months Ended 2022 2021 2022 2021 Fixed maturity securities $ (10.7) $ (4.0) $ (15.9) $ (7.9) Equity securities (4.4) (1.0) (32.5) 0.7 Short-term investments and other 2.3 (1.5) 4.6 (3.4) Net investment losses $ (12.8) $ (6.5) $ (43.8) $ (10.6) The Company, from time to time, sells fixed maturity securities subsequent to the reporting date that were considered temporarily impaired at such reporting date. Such sales are due to issuer-specific events occurring subsequent to the reporting date that result in a change in the Company's intent to sell a fixed maturity security. The types of events that may result in a sale include significant changes in the economic facts and circumstances related to the invested asset, significant unforeseen changes in liquidity needs, or changes in the Company's investment strategy. Net Investment Losses by Transaction Type The following table reconciles net investment losses by transaction type: ($ in millions) Three Months Ended Nine Months Ended 2022 2021 2022 2021 Credit loss impairments $ (0.6) $ (6.6) $ (2.8) $ (7.7) Intent-to-sell impairments (6.2) — (7.6) (2.1) Total impairments (6.8) (6.6) (10.4) (9.8) Sales and other, net (3.9) 2.7 (3.9) 2.2 Change in fair value - equity securities (4.4) (1.1) (34.1) 0.4 Change in fair value and gains (losses) realized on settlements - derivatives 2.3 (1.5) 4.6 (3.4) Net investment losses $ (12.8) $ (6.5) $ (43.8) $ (10.6) Allowance for Credit Loss Impairments on Fixed Maturity Securities The following table presents changes in the allowance for credit loss impairments on fixed maturity securities classified as available for sale for the category of other asset-backed securities (no other categories of fixed maturity securities have an allowance for credit loss impairments): ($ in millions) Three Months Ended Nine Months Ended 2022 2021 2022 2021 Beginning balance $ 9.5 $ 1.1 $ 7.7 $ — Credit losses on fixed maturity securities for which credit losses were not previously reported — 6.6 — 7.7 Net increase related to credit losses previously reported 0.6 — 2.8 — Reduction of credit allowances related to sales — — — — Write-offs — — (0.4) — Ending balance $ 10.1 $ 7.7 $ 10.1 $ 7.7 Fixed Maturity Securities The Company's investment portfolio is comprised primarily of fixed maturity securities. Amortized cost, net, gross unrealized investment gains (losses) and fair values of all fixed maturity securities in the portfolio were as follows: ($ in millions) Amortized Gross Unrealized Gross Unrealized Fair September 30, 2022 Fixed maturity securities U.S. Government and federally sponsored agency obligations: (1) Mortgage-backed securities $ 643.7 $ 1.5 $ 66.1 $ 579.1 Other, including U.S. Treasury securities 408.3 0.4 66.0 342.7 Municipal bonds 1,440.9 14.5 147.5 1,307.9 Foreign government bonds 37.2 — 1.7 35.5 Corporate bonds 2,228.8 10.0 311.0 1,927.8 Other asset-backed securities 1,145.2 2.9 69.0 1,079.1 Totals $ 5,904.1 $ 29.3 $ 661.3 $ 5,272.1 December 31, 2021 Fixed maturity securities U.S. Government and federally sponsored agency obligations: (1) Mortgage-backed securities $ 612.1 $ 51.9 $ 1.5 $ 662.5 Other, including U.S. Treasury securities 342.5 27.7 4.3 365.9 Municipal bonds 1,519.7 184.4 0.7 1,703.4 Foreign government bonds 40.2 3.4 — 43.6 Corporate bonds 2,217.7 176.2 5.2 2,388.7 Other asset-backed securities 1,065.5 16.6 6.9 1,075.2 Totals $ 5,797.7 $ 460.2 $ 18.6 $ 6,239.3 (1) Fair value includes securities issued by Federal National Mortgage Association (FNMA) of $337.5 million and $376.7 million; Federal Home Loan Mortgage Corporation (FHLMC) of $271.1 million and $326.5 million; and Government National Mortgage Association (GNMA) of $90.2 million and $112.1 million as of September 30, 2022 and December 31, 2021, respectively. The following table presents the fair value and gross unrealized losses for fixed maturity securities in an unrealized loss position at September 30, 2022 and December 31, 2021, respectively. The Company views the decrease in fair value of all of the fixed maturity securities with unrealized losses at September 30, 2022 — which was driven largely by increasing interest rates, spread widening, financial market illiquidity and/or market volatility from the date of acquisition — as temporary. As of September 30, 2022, the Company has not made the decision to sell and it is not more likely than not the Company will be required to sell the fixed maturity securities with unrealized losses before an anticipated recovery in value. There has been a significant increase in interest rates since December 31, 2021, driven mostly by increases in U.S. Treasury rates, though credit spreads also widened. The 10-year U.S. Treasury yield increased 232 basis points for the nine months ended September 30, 2022, rising from 1.51% at December 31, 2021 to 3.83% at September 30, 2022. Additionally, credit spreads widened during the same time period, with investment grade and high yield wider by 69 and 233 basis points, respectively. These upward movements in rates caused market yields in the Company's portfolios to rise sharply, with downward pressure on prices. Investment grade and high yield total returns for the nine months ended September 30, 2022 were down 18.3% and 14.6%, respectively. The Bloomberg Barclays Index Yield-to-Worst for Investment Grade rose 3.4% for the nine months ended September 30, 2022, ending at 5.7%, while the High Yield Index increased by 5.5% to 9.7%. The Company's portfolios generated sizable unrealized losses as a result of sharp increases in interest rates. Therefore, it was determined that the unrealized losses on the fixed maturity securities presented in the table below were not indicative of any impairments as of September 30, 2022. ($ in millions) 12 Months or Less More than 12 Months Total Fair Value Gross Fair Value Gross Fair Value Gross September 30, 2022 Fixed maturity securities U.S. Government and federally Mortgage-backed securities $ 472.2 $ 51.5 $ 51.3 $ 14.6 $ 523.5 $ 66.1 Other 266.6 36.6 58.0 29.4 324.6 66.0 Municipal bonds 1,035.5 143.5 9.7 4.0 1,045.2 147.5 Foreign government bonds 35.4 1.7 — — 35.4 1.7 Corporate bonds 1,496.6 280.0 80.3 31.0 1,576.9 311.0 Other asset-backed securities 776.2 52.4 213.9 16.6 990.1 69.0 Total $ 4,082.5 $ 565.7 $ 413.2 $ 95.6 $ 4,495.7 $ 661.3 Number of positions with a gross unrealized loss 3,002 303 3,305 Fair value as a percentage of total fixed maturity securities at fair value 77.4 % 7.8 % 85.2 % December 31, 2021 Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 67.4 $ 1.3 $ 3.9 $ 0.2 $ 71.3 $ 1.5 Other 59.5 1.7 35.1 2.6 94.6 4.3 Municipal bonds 56.8 0.7 0.6 — 57.4 0.7 Foreign government bonds — — — — — — Corporate bonds 220.7 3.8 44.1 1.4 264.8 5.2 Other asset-backed securities 379.0 3.8 128.2 3.1 507.2 6.9 Total $ 783.4 $ 11.3 $ 211.9 $ 7.3 $ 995.3 $ 18.6 Number of positions with a gross unrealized loss 516 122 638 Fair value as a percentage of total fixed maturity securities at fair value 12.6 % 3.4 % 16.0 % Fixed maturity securities with an investment grade rating represented 94.9% of the gross unrealized losses as of September 30, 2022. 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 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, estimated expected maturities consider broker-dealer survey prepayment assumptions and are verified for consistency with the interest rate and economic environments. ($ in millions) Percent of Total Fair Value September 30, 2022 September 30, 2022 December 31, 2021 Fair Amortized Estimated expected maturity: Due in 1 year or less 3.9 % 4.0 % $ 204.0 $ 204.6 Due after 1 year through 5 years 26.0 27.0 1,369.3 1,439.0 Due after 5 years through 10 years 28.3 27.7 1,492.6 1,621.7 Due after 10 years through 20 years 25.5 23.9 1,348.3 1,551.8 Due after 20 years 16.3 17.4 857.9 1,087.0 Total 100.0 % 100.0 % $ 5,272.1 $ 5,904.1 Average option-adjusted duration, in years 6.5 6.7 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 as follows: ($ in millions) Three Months Ended Nine Months Ended 2022 2021 2022 2021 Fixed maturity securities Proceeds received $ 164.6 $ 155.4 $ 529.9 $ 319.2 Gross gains realized 1.1 3.2 4.7 6.2 Gross losses realized (5.0) (0.7) (10.2) (4.3) Equity securities Proceeds received $ 0.2 $ 0.3 $ 6.0 $ 1.0 Gross gains realized — 0.1 1.7 0.3 Gross losses realized — — (0.1) — 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 accumulated other comprehensive income (AOCI), before the impact of DAC: ($ in millions) Three Months Ended Nine Months Ended 2022 2021 2022 2021 Net unrealized investment gains (losses) Beginning of period $ (283.2) $ 399.4 $ 348.9 $ 439.8 Change in net unrealized investment gains (228.0) (34.9) (886.5) (77.0) Reclassification of net investment losses 11.9 3.9 38.3 5.6 End of period $ (499.3) $ 368.4 $ (499.3) $ 368.4 Limited Partnership Interests Investments in limited partnership interests are accounted for using the equity method of accounting (EMA) and include interests in commercial mortgage loan funds, private equity funds, infrastructure debt funds, infrastructure equity funds and other funds. Principal factors influencing carrying amount appreciation or decline include operating performance, comparable public company earnings multiples, capitalization rates and the economic environment. The Company recognizes an impairment loss for EMA limited partnership interests 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. The carrying amounts of EMA limited partnership interests were as follows: ($ in millions) September 30, 2022 December 31, 2021 Commercial mortgage loan funds $ 601.5 $ 346.8 Private equity funds 73.4 74.0 Infrastructure equity funds 70.2 58.3 Infrastructure debt funds 67.4 62.4 Other funds (1) 185.0 171.3 Total $ 997.5 $ 712.8 (1) Other funds consist primarily of limited partnership interests in corporate mezzanine, venture capital and other fund strategies. Offsetting of Assets and Liabilities The Company's derivatives 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 Company’s reverse repurchase agreements are also subject to enforceable master netting arrangements but there was no offsetting in their presentation in the Company’s Consolidated Balance Sheets. Information regarding the Company's derivatives is contained in Part II - Item 8, Note 5 in the Company's Annual Report on Form 10-K for the year ended December 31, 2021. The following table presents instruments that were subject to a master netting arrangement for the Company. ($ in millions) Gross Net Amounts Gross Amounts Not Offset Gross Financial Cash Net September 30, 2022 Asset derivatives: Free-standing derivatives $ 2.0 $ — $ 2.0 $ — $ 1.8 $ 0.2 December 31, 2021 Asset derivatives: Free-standing derivatives $ 10.7 $ — $ 10.7 $ 4.5 $ 6.4 $ (0.2) Deposits At September 30, 2022 and December 31, 2021, fixed maturity securities with a fair value of $30.0 million and $26.2 million, respectively, were on deposit with governmental agencies as required by law in various states for which the insurance subsidiaries of HMEC conduct business. In addition, at September 30, 2022 and December 31, 2021, fixed maturity securities with a fair value of $920.7 million and $870.1 million, 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 $842.5 million at September 30, 2022 and $787.5 million at December 31, 2021. The deposited securities are reported as Fixed maturity securities on the Company’s Consolidated Balance Sheets. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | The Company is required to disclose estimated fair values for certain financial and nonfinancial assets and liabilities. Fair values of the Company’s insurance contracts other than annuity contracts (which are investment contracts) and EMA limited partnership interests are not required to be disclosed. However, the estimated fair values of liabilities under all insurance contracts are taken into consideration in the Company’s overall management of interest rate risk through the matching of investment maturities with amounts due under insurance contracts. Information regarding the three-level fair value hierarchy presented below and the valuation methodologies utilized by the Company to estimate fair values at each reporting date is included in Part II - Item 8, Note 4 of the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. Financial Instruments Measured and Carried at Fair Value on a Recurring Basis The following table presents the Company's fair value hierarchy for financial assets and financial liabilities measured and carried at fair value on a recurring basis. During the nine months ended September 30, 2022 and 2021, there were no transfers between Level 1 and Level 2. At September 30, 2022, Level 3 invested assets comprised 7.4% of the Company’s total investment portfolio at fair value. ($ in millions) Carrying Fair Fair Value Measurements at Level 1 Level 2 Level 3 September 30, 2022 Financial Assets Investments Fixed maturity securities U.S. Government and federally Mortgage-backed securities $ 579.1 $ 579.1 $ — $ 576.5 $ 2.6 Other, including U.S. Treasury securities 342.8 342.7 24.5 318.2 — Municipal bonds 1,307.9 1,307.9 — 1,254.6 53.3 Foreign government bonds 35.4 35.5 — 35.5 — Corporate bonds 1,927.8 1,927.8 12.8 1,675.2 239.8 Other asset-backed securities 1,079.1 1,079.1 — 974.5 104.6 Total fixed maturity securities 5,272.1 5,272.1 37.3 4,834.5 400.3 Equity securities 113.8 113.8 22.4 89.4 2.0 Short-term investments 51.4 51.4 49.0 2.4 — Other investments 34.0 34.0 — 34.0 — Totals $ 5,471.3 $ 5,471.3 $ 108.7 $ 4,960.3 $ 402.3 Separate Account variable annuity assets (1) $ 2,599.6 $ 2,599.6 $ 2,599.6 $ — $ — Financial Liabilities Investment contract and policy reserves, embedded derivatives $ 0.4 $ 0.4 $ — $ 0.4 $ — Other policyholder funds, embedded derivatives $ 89.9 $ 89.9 $ — $ — $ 89.9 December 31, 2021 Financial Assets Investments Fixed maturity securities U.S. Government and federally Mortgage-backed securities $ 662.5 $ 662.5 $ — $ 662.5 $ — Other, including U.S. Treasury securities 365.9 365.9 17.7 348.2 — Municipal bonds 1,703.4 1,703.4 — 1,642.6 60.8 Foreign government bonds 43.6 43.6 — 43.6 — Corporate bonds 2,388.7 2,388.7 14.9 2,163.5 210.3 Other asset-backed securities 1,075.2 1,075.2 — 976.3 98.9 Total fixed maturity securities 6,239.3 6,239.3 32.6 5,836.7 370.0 Equity securities 147.2 147.2 35.2 110.6 1.4 Short-term investments 157.8 157.8 157.8 — — Other investments 43.6 43.6 — 43.6 — Totals $ 6,587.9 $ 6,587.9 $ 225.6 $ 5,990.9 $ 371.4 Separate Account (variable annuity) assets (1) $ 3,441.0 $ 3,441.0 $ 3,441.0 $ — $ — Financial Liabilities Investment contract and policy reserves, embedded derivatives $ 2.1 $ 2.1 $ — $ 2.1 $ — Other policyholder funds, embedded derivatives $ 106.6 $ 106.6 $ — $ — $ 106.6 (1) Separate Account variable annuity assets represent contractholder funds invested in various actively traded mutual funds that have daily quoted net asset values that are readily determinable for identical assets that the Company can access. Separate Account variable annuity liabilities are equal to the estimated fair value of the Separate Account variable annuity assets. Changes in Level 3 Fair Value Measurements The reconciliation for all financial assets and financial liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) were as follows: ($ in millions) Financial Assets Financial Liabilities (1) Municipal Corporate Mortgage-Backed and Other Asset- Backed Securities (2) Total Equity Total Beginning balance, July 1, 2022 $ 51.0 $ 270.5 $ 97.1 $ 418.6 $ 1.4 $ 420.0 $ 93.2 Transfers into Level 3 (3) — 20.5 12.2 32.7 0.8 33.5 — Transfers out of Level 3 (3) — (34.8) — (34.8) — (34.8) — Total gains or losses Net investment gains (losses) included in net income related to financial assets — — (0.8) (0.8) (0.1) (0.9) — Net investment (gains) losses included in net income related to financial liabilities — — — — — — (4.6) Net unrealized investment gains (losses) included in OCI (5.3) (7.4) (3.9) (16.6) — (16.6) — Purchases 0.2 8.4 7.9 16.5 — 16.5 — Issuances — — — — — — 2.7 Sales — — — — — — — Settlements — — — — — — — Paydowns, maturities and distributions 7.4 (17.4) (5.3) (15.3) (0.1) (15.4) (1.4) Ending balance, September 30, 2022 $ 53.3 $ 239.8 $ 107.2 $ 400.3 $ 2.0 $ 402.3 $ 89.9 Beginning balance, January 1, 2022 $ 60.8 $ 210.3 $ 98.9 $ 370.0 $ 1.4 $ 371.4 $ 106.6 Transfers into Level 3 (3) — 144.0 34.5 178.5 0.8 179.3 — Transfers out of Level 3 (3) (3.2) (34.9) (4.8) (42.9) — (42.9) — Total gains or losses Net investment gains (losses) included in net income related to financial assets — — (3.1) (3.1) (0.1) (3.2) — Net investment (gains) losses included in net income related to financial liabilities — — — — — — (14.4) Net unrealized investment gains (losses) included in OCI (11.6) (18.7) (11.3) (41.6) — (41.6) — Purchases 0.2 13.3 7.9 21.4 — 21.4 — Issuances — — — — — — 4.8 Sales — — (2.1) (2.1) — (2.1) — Settlements — — — — — — — Paydowns, maturities and distributions 7.1 (74.2) (12.8) (79.9) (0.1) (80.0) (7.1) Ending balance, September 30, 2022 $ 53.3 $ 239.8 $ 107.2 $ 400.3 $ 2.0 $ 402.3 $ 89.9 (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 asset-backed securities. (3) Transfers into and out of Level 3 during the three and nine months ended September 30, 2022 were related to changes in the primary pricing source and changes in observability of external information used in determining fair value. The Company's policy is to recognize transfers into and out of the levels as having occurred at the end of the reporting period in which the transfers were determined. ($ in millions) Financial Assets Financial (1) Municipal Corporate Mortgage-Backed and Other Asset- Backed Securities (2) Total Equity Total Beginning balance, July 1, 2021 $ 58.6 $ 150.5 $ 115.5 $ 324.6 $ 0.3 $ 324.9 $ 108.9 Transfers into Level 3 (3) — 55.7 4.0 59.7 — 59.7 — Transfers out of Level 3 (3) — — — — — — — Total gains or losses Net investment gains (losses) included in net income related to financial assets — — (6.6) (6.6) 0.1 (6.5) — Net investment (gains) losses included in net income related to financial liabilities — — — — — — 0.7 Net unrealized investment gains (losses) included in OCI (0.3) (0.1) 6.6 6.2 — 6.2 — Purchases — — — — — — — Issuances — — — — — — 1.4 Sales — — — — — — — Settlements — — — — — — — Paydowns, maturities and distributions (0.1) (1.1) (21.0) (22.2) — (22.2) (4.3) Ending balance, September 30, 2021 $ 58.2 $ 205.0 $ 98.5 $ 361.7 $ 0.4 $ 362.1 $ 106.7 Beginning balance, January 1, 2021 $ 59.6 $ 155.8 $ 139.4 $ 354.8 $ 0.3 $ 355.1 $ 104.5 Transfers into Level 3 (3) — 108.3 10.2 118.5 — 118.5 — Transfers out of Level 3 (3) — (56.7) (19.2) (75.9) — (75.9) — Total gains or losses Net investment gains (losses) included in net income related to financial assets — — (7.7) (7.7) 0.1 (7.6) — Net investment (gains) losses included in net income related to financial liabilities — — — — — — 8.2 Net unrealized investment gains (losses) included in OCI (0.9) 1.0 8.7 8.8 — 8.8 — Purchases — — — — — — — Issuances — — — — — — 3.3 Sales — — — — — — — Settlements — — — — — — — Paydowns, maturities and distributions (0.5) (3.4) (32.9) (36.8) — (36.8) (9.3) Ending balance, September 30, 2021 $ 58.2 $ 205.0 $ 98.5 $ 361.7 $ 0.4 $ 362.1 $ 106.7 (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 asset-backed securities. (3) Transfers into and out of Level 3 during the three and nine months ended September 30, 2021 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 out of the levels as having occurred at the end of the reporting period in which the transfers were determined. For the three and nine months ended September 30, 2022, the Company had net investment losses of $0.9 million and $3.2 million that were included in net income and were primarily attributable to credit loss impairments for Level 3 financial assets. For the three and nine months ended September 30, 2022, the Company had net investment gains of $4.6 million and $14.4 million that were included in net income and were attributable to changes in the fair value of Level 3 financial liabilities. Quantitative Information about Level 3 Fair Value Measurements The following table provides quantitative information about the significant unobservable inputs for recurring fair value measurements categorized within Level 3. ($ in millions) Financial Fair Value at September 30, 2022 Valuation Technique(s) Unobservable Inputs Range (Weighted Average) and Single Point Best Estimate (1) Municipal bonds $ 53.3 discounted cash flow option adjusted spread 330 - 446 bps Corporate bonds 239.8 discounted cash flow N spread (2) 363 bps discounted cash flow T spread (3) 16 - 403 bps discounted cash flow yield 3.8% - 11.2% discounted cash flow exit cap rate 6.2% discounted cash flow occupancy rate 31.0% - 100.0% discounted cash flow option adjusted spread 242 - 393 bps discounted cash flow weighted average cost of capital 5.0% discounted cash flow discount rate 11.3% - 12.0% market comparable EV / Fwd EBITDA (x) 5.1x Mortgage-backed and other asset-backed securities 107.2 discounted cash flow discount margin 30.4% discounted cash flow discount rate 16.0% - 21.0% discounted cash flow median comparable yield 17.2% - 33.1% discounted cash flow yield 7.0% - 7.4% discounted cash flow LIBOR 1.0% discounted cash flow PDI spread 6.8% discounted cash flow SBL spread 4.5% discounted cash flow weighting 17.0% - 83.0% discounted cash flow CPR 20.0% discounted cash flow default rate annual 4.0% discounted cash flow recovery 65.0% discounted cash flow N spread 463 bps discounted cash flow T Spread 226 bps Equity securities 2.0 black-scholes volatility low 32.0% - high 47.0% ($ in millions) Financial Fair Value at September 30, 2022 Valuation Technique(s) Unobservable Inputs Range (Weighted Average) and Single Point Best Estimate (1) Derivatives $ 89.9 discounted cash flow lapse rate 5.3% mortality multiplier (4) 66.8% option budget 0.9% - 3.3% non-performance adjustment (5) 5.0% (1) When a range of unobservable inputs is not readily available, the Company uses a single point best estimate. (2) "N spread" is the interpolated weighted average life point on the swap curve. (3) "T spread" is a specific point on the OTR curve. (4) Mortality multiplier is applied to the Annuity 2000 table. (5) Determined as a percentage of the risk-free rate. The valuation techniques and significant unobservable inputs used in the fair value measurement for financial assets and financial liabilities classified as Level 3 are subject to the control processes as described in Part II - Item 8, Note 4 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. 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 include: benchmark yield, liquidity premium, estimated cash flows, prepayment and default speeds, spreads, weighted average life and credit rating. Significant spread widening in isolation will adversely impact the overall valuation, while significant 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 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. These financial assets and financial liabilities are further described in Part II - Item 8, Note 4 in the Company's Annual Report on Form 10-K for the year ended December 31, 2021. The following table presents the carrying amount, fair value and fair value hierarchy of these financial assets and financial liabilities. ($ in millions) Carrying Fair Fair Value Measurements at Level 1 Level 2 Level 3 September 30, 2022 Financial Assets Other investments $ 169.1 $ 172.5 $ — $ — $ 172.5 Deposit asset on reinsurance 2,525.6 2,164.9 — — 2,164.9 Financial Liabilities Investment contract and policy reserves, fixed annuity contracts 5,005.8 5,068.8 — — 5,068.8 Investment contract and policy reserves, account values on life contracts 109.5 119.3 — — 119.3 Other policyholder funds 910.8 910.8 — 857.9 52.9 Short-term debt 249.0 249.0 — — 249.0 Long-term debt 248.9 249.5 — 249.5 — December 31, 2021 Financial Assets Other investments $ 148.8 $ 152.4 $ — $ — $ 152.4 Deposit asset on reinsurance 2,481.5 2,935.1 — — 2,935.1 Financial Liabilities Investment contract and policy reserves, fixed annuity contracts 4,941.3 5,004.9 — — 5,004.9 Investment contract and policy reserves, account values on life contracts 105.4 115.4 — — 115.4 Other policyholder funds 839.3 839.3 — 782.8 56.5 Short-term debt 249.0 249.0 — — 249.0 Long-term debt 253.6 277.4 — 277.4 — |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets The Company conducts impairment testing for goodwill and intangible assets at least annually, or more often if events, changes or circumstances indicate that the carrying amount may not be recoverable. See Part II - Item 8, Note 1 in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 for more information regarding impairment testing. The carrying amount of goodwill by reporting unit as of September 30, 2022 was as follows: ($ in millions) December 31, 2021 Impairment Acquisition September 30, 2022 Property & Casualty $ 9.5 $ — $ — $ 9.5 Life & Retirement 14.4 — — 14.4 Supplemental & Group Benefits 19.6 — 12.8 32.4 Total $ 43.5 $ — $ 12.8 $ 56.3 As of September 30, 2022, the outstanding amounts of definite-lived intangible assets subject to amortization are attributable to the acquisitions of Benefit Consultants Group, Inc. (BCG) and NTA Life Enterprises, LLC (NTA) during 2019, as well as the acquisition of Madison National during 2022. The acquisitions of BCG, NTA and Madison National resulted in initial recognition of definite-lived intangible assets subject to amortization in the amounts of $14.1 million, $160.4 million and $56.5 million, respectively. As of September 30, 2022 the outstanding amounts of definite-lived intangible assets subject to amortization were as follows: ($ in millions) Weighted Average Useful Life (in Years) At inception: Value of business acquired 28 $ 100.1 Value of distribution acquired 17 54.0 Value of agency relationships 14 17.0 Value of customer relationships 10 59.9 Total 20 231.0 Accumulated amortization and impairments: Value of business acquired (26.6) Value of distribution acquired (13.8) Value of agency relationships (7.7) Value of customer relationships (4.5) Total (52.6) Net intangible assets subject to amortization: $ 178.4 With regards to the definite-lived intangible assets in the table above, the value of business acquired intangible asset represents the present value of the expected underwriting profit within policies that were in force on the date of acquisition. The value of distribution acquired intangible asset represents the present value of future business to be written by the existing agency force. The value of agency relationships intangible asset represents the present value of the commission overrides retained by NTA. The value of customer relationships intangible asset represents the present value of the expected profits from existing BCG customers in force at the date of acquisition as well as the present value of future business to be produced by Madison National's existing independent producing brokers. All of the aforementioned definite-lived intangible assets were valued using the income approach. Estimated future amortization of the Company's definite-lived intangible assets were as follows: ($ in millions) Year Ending December 31, 2022 (excluding the nine months ended September 30, 2022) $ 4.1 2023 15.5 2024 15.1 2025 14.8 2026 14.5 Thereafter 114.4 Total $ 178.4 The value of business acquired intangible asset is being amortized by product based on the present value of future premiums to be received. The value of distribution acquired intangible asset is being amortized on a straight-line basis. The value of agency relationships intangible asset is being amortized based on the present value of future premiums to be received. The value of customer relationships intangible assets are being amortized based on the present value of future profits to be received for BCG and based on the present value of future premiums for Madison National. Indefinite-lived intangible assets not subject to amortization as of September 30, 2022 were as follows: ($ in millions) Trade names $ 7.9 State licenses 5.9 Total $ 13.8 The trade names intangible asset represents the present value of future savings accruing to NTA and BCG by virtue of not having to pay royalties for the use of the trade names, valued using the relief from royalty method. The state licenses intangible asset represents the regulatory licenses held by NTA and Madison National that were valued using the cost approach. |
Unpaid Claims and Claim Expense
Unpaid Claims and Claim Expenses | 9 Months Ended |
Sep. 30, 2022 | |
Insurance Loss Reserves [Abstract] | |
Unpaid Claims and Claim Expenses | Unpaid Claims and Claim Expenses The following table is a summary reconciliation of the beginning and ending Property & Casualty unpaid claims and claim expense reserves for the periods indicated. The table presents reserves on both a gross and net (after reinsurance) basis. The total net Property & 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 reinsurance recoverable balances) are reflected on a gross basis in the Consolidated Balance Sheets. ($ in millions) Three Months Ended Nine Months Ended 2022 2021 2022 2021 Property & Casualty Beginning gross reserves (1) $ 378.4 $ 368.4 $ 362.4 $ 372.2 Less: reinsurance recoverables 109.8 108.9 110.3 112.9 Net reserves, beginning of period (2) 268.6 259.5 252.1 259.3 Incurred claims and claim expenses: Claims occurring in the current period 120.3 132.5 372.8 345.4 Increase (decrease) in estimated reserves for claims occurring in prior periods (3) 2.0 (3.0) 8.0 (7.2) Total claims and claim expenses incurred (4) 122.3 129.5 380.8 338.2 Claims and claim expense payments for claims occurring during: Current period 102.8 96.8 221.1 210.3 Prior periods 29.7 26.4 153.4 121.4 Total claims and claim expense payments 132.5 123.2 374.5 331.7 Net reserves, end of period (2) 258.4 265.8 258.4 265.8 Plus: reinsurance recoverables 109.0 109.6 109.0 109.6 Ending gross reserves (1) $ 367.4 $ 375.4 $ 367.4 $ 375.4 (1) Unpaid claims and claim expenses as reported in the Consolidated Balance Sheets also include reserves for Life & Retirement and Supplemental & Group Benefits of $114.5 million and $64.7 million as of September 30, 2022 and 2021, respectively, in addition to Property & Casualty reserves. (2) Reserves net of anticipated reinsurance recoverables. (3) Shows the amounts by which the Company increased (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 & Retirement and Supplemental & Group Benefits of $51.3 million and $177.4 million for the three and nine months ended September 30, 2022, respectively, in addition to Property & Casualty amounts. Benefits, claims and settlement expenses for Life & Retirement and Supplemental & Group Benefits of $35.3 million and $108.0 million for the three and nine months ended September 30, 2021, respectively. |
Reinsurance
Reinsurance | 9 Months Ended |
Sep. 30, 2022 | |
Insurance [Abstract] | |
Reinsurance | Reinsurance The Company recognizes the cost of reinsurance premiums over the contract periods for such premiums in proportion to the insurance protection provided. Amounts recoverable from reinsurers for unpaid claims and claim settlement expenses, including estimated amounts for unsettled claims, claims incurred but not yet reported and policy benefits, are estimated in a manner consistent with the insurance liability associated with the policy. The effects of reinsurance on net premiums written and contract deposits; net premiums and contract charges earned; and benefits, claims and settlement expenses were as follows: ($ in millions) Direct Ceded to Other Companies (1) Assumed Net Three months ended September 30, 2022 Net premiums written and contract deposits (2) $ 390.3 $ 15.4 $ 13.4 $ 388.3 Net premiums and contract charges earned 262.0 17.6 13.4 257.8 Benefits, claims and settlement expenses 177.3 8.4 4.7 173.6 Three months ended September 30, 2021 Net premiums written and contract deposits (2) $ 366.0 $ 5.5 $ 2.6 $ 363.1 Net premiums and contract charges earned 230.9 8.1 2.6 225.4 Benefits, claims and settlement expenses 164.5 1.5 1.8 164.8 Nine months ended September 30, 2022 Net premiums written and contract deposits (2) $ 1,124.4 $ 46.7 $ 39.5 $ 1,117.2 Net premiums and contract charges earned 783.4 53.5 39.6 769.5 Benefits, claims and settlement expenses 577.4 34.2 15.0 558.2 Nine months ended September 30, 2021 Net premiums written and contract deposits (2) $ 1,037.8 $ 17.0 $ 6.6 $ 1,027.4 Net premiums and contract charges earned 696.6 24.6 6.8 678.8 Benefits, claims and settlement expenses 444.7 3.0 4.5 446.2 (1) Excludes the annuity reinsurance transaction accounted for using the deposit method. (2) This measure is not based on accounting principles generally accepted in the United States of America (non-GAAP). An explanation of this non-GAAP measure is contained in the Glossary of Selected Terms included as Exhibit 99.1 in the Company's reports filed with the SEC. |
Commitments
Commitments | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments | Commitments Investment Commitments The Company has outstanding commitments to fund investments primarily in limited partnership interests. Such unfunded commitments were $715.5 million and $858.1 million as of September 30, 2022 and December 31, 2021, respectively. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information The Company conducts and manages its business in four reporting segments. The three operating segments, representing the major lines of business, are: (1) Property & Casualty (primarily personal lines of auto and property insurance products), (2) Life & Retirement (primarily tax-qualified fixed and variable annuities as well as life insurance products), and (3) Supplemental & Group Benefits (primarily cancer, heart, hospital, supplemental disability, accident, short-term and long-term group disability, and group term life coverages). The Company does not allocate the impact of corporate-level transactions to these operating segments, consistent with the basis for management's evaluation of the results of those segments, but classifies those items in the fourth segment, Corporate & Other. In addition to ongoing transactions such as corporate debt service, net investment gains (losses) and certain public company expenses, such items in Corporate & Other have also included corporate debt retirement costs, when applicable. In 2021 and prior, the Company conducted and managed its business through four operating segments: (1) Property & Casualty, (2) Supplemental, (3) Retirement, and (4) Life. The change in operating segments in 2022 aligns with leadership assignments and how the Company makes operating decisions and assesses performance as well as maintaining discrete financial information to evaluate performance and allocate resources. Accordingly, the presentation of prior period segment information has been reclassified to conform to the current year's presentation. Summarized financial information for these segments is as follows: ($ in millions) Three Months Ended Nine Months Ended 2022 2021 2022 2021 Net premiums and contract charges earned Property & Casualty $ 152.4 $ 153.3 $ 452.5 $ 464.1 Life & Retirement 37.1 40.4 109.7 118.3 Supplemental & Group Benefits 68.3 31.7 207.3 96.4 Total $ 257.8 $ 225.4 $ 769.5 $ 678.8 Net investment income Property & Casualty $ 8.0 $ 11.3 $ 22.9 $ 43.8 Life & Retirement 81.4 85.8 254.0 247.4 Supplemental & Group Benefits 8.7 7.2 25.4 19.0 Corporate & Other — — — — Intersegment eliminations (0.5) (0.6) (1.6) (1.8) Total $ 97.6 $ 103.7 $ 300.7 $ 308.4 Net income (loss) Property & Casualty $ (2.5) $ (4.7) $ (19.4) $ 42.5 Life & Retirement 12.7 19.1 41.8 47.0 Supplemental & Group Benefits 19.2 11.5 43.6 34.8 Corporate & Other (15.5) (9.6) (50.1) (22.0) Total $ 13.9 $ 16.3 $ 15.9 $ 102.3 ($ in millions) September 30, 2022 December 31, 2021 Assets Property & Casualty $ 1,052.1 $ 1,243.4 Life & Retirement 10,719.4 12,064.7 Supplemental & Group Benefits 1,431.7 858.8 Corporate & Other 177.9 281.8 Intersegment eliminations (67.0) (64.8) Total $ 13,314.1 $ 14,383.9 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
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 table reconciles these components. ($ in millions) Net Unrealized Investment Gains (Losses) on Securities (1) Net Funded Status of Benefit Plans (1) Total (1) Beginning balance, July 1, 2022 $ (220.4) $ (10.2) $ (230.6) Other comprehensive loss before reclassifications (188.2) — (188.2) Amounts reclassified from AOCI (2) 11.9 — 11.9 Net current period other comprehensive loss (176.3) — (176.3) Ending balance, September 30, 2022 $ (396.7) $ (10.2) $ (406.9) Beginning balance, July 1, 2021 $ 332.2 $ (11.2) $ 321.0 Other comprehensive income before reclassifications (29.3) — (29.3) Amounts reclassified from AOCI (3) 4.0 — 4.0 Net current period other comprehensive income (25.3) — (25.3) Ending balance, September 30, 2021 $ 306.9 $ (11.2) $ 295.7 Beginning balance, January 1, 2022 $ 290.7 $ (10.2) $ 280.5 Other comprehensive loss before reclassifications (725.7) — (725.7) Amounts reclassified from AOCI (2) 38.3 — 38.3 Net current period other comprehensive loss (687.4) — (687.4) Ending balance, September 30, 2022 $ (396.7) $ (10.2) $ (406.9) Beginning balance, January 1, 2021 $ 366.3 $ (11.2) $ 355.1 Other comprehensive loss before reclassifications (65.0) — (65.0) Amounts reclassified from AOCI (3) 5.6 — 5.6 Net current period other comprehensive loss (59.4) — (59.4) Ending balance, September 30, 2021 $ 306.9 $ (11.2) $ 295.7 (1) All amounts are net of tax. (2) The pretax amounts reclassified from AOCI, $(15.0) million and $(48.4) million, are included in Net investment gains losses and the related income tax benefits, $(3.2) million and $(10.2) million, are included in income tax expense in the Consolidated Statements of Operations for the three and nine months ended September 30, 2022, respectively. (3) The pretax amounts reclassified from AOCI, $(5.0) million and $(7.1) million, are included in Net investment losses and the related income tax benefits, $(1.0) million and $(1.5) million, are included in income tax expense in the Consolidated Statements of Operations for the three and nine months ended September 30, 2021, respectively. Comparative information for elements that are not required to be reclassified in their entirety to net income in the same reporting period is disclosed in Note 3. |
Supplemental Consolidated Cash
Supplemental Consolidated Cash and Cash Flow Information | 9 Months Ended |
Sep. 30, 2022 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Consolidated Cash and Cash Flow Information | Supplemental Consolidated Cash and Cash Flow Information ($ in millions) September 30, 2022 December 31, 2021 Cash $ 35.2 $ 133.0 Restricted cash 1.0 0.7 Total cash and restricted cash reported in the Consolidated Balance Sheets $ 36.2 $ 133.7 ($ in millions) Nine Months Ended 2022 2021 Cash paid for: Interest $ 9.1 $ 7.3 Income taxes 6.4 20.2 Non-cash investing activities with respect to modifications or exchanges of fixed maturity securities as well as paid-in-kind activity for policy loans were insignificant for the three and nine months ended September 30, 2022 and 2021, respectively. |
Basis of Presentation and Sig_2
Basis of Presentation and Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America (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. These Consolidated Financial Statements and Notes thereto should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in Part II - Item 8 of the Company's Annual Report on Form 10-K for the year ended December 31, 2021. The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the full year. The accompanying Consolidated Financial Statements and Notes thereto are unaudited and reflect all adjustments (generally consisting only of normal recurring accruals) which are, in the opinion of management, necessary for the fair presentation of the consolidated financial position, results of operations and cash flows for the interim periods. The Company's significant accounting policies are summarized in Part II - Item 8, Note 1 of the Company's Annual Report on Form 10-K for the year ended December 31, 2021. The Company has reclassified the presentation of certain prior period information to conform to the current year's presentation. |
Consolidation | Consolidation All intercompany transactions and balances between HMEC and its subsidiaries and affiliates have been eliminated. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the reporting date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The most significant critical accounting estimates include valuation of hard-to-value fixed maturity securities, evaluation of credit loss impairments for fixed maturity securities, evaluation of goodwill and intangible assets for impairment, valuation of annuity and life deferred policy acquisition costs, valuation of liabilities for property and casualty unpaid claims and claim expenses, valuation of certain investment contracts and policy reserves and valuation of assets acquired and liabilities assumed under purchase accounting and purchase price allocation. |
Future Adoption of New Accounting Standards | Future Adoption of New Accounting Standards Accounting for Long-Duration Insurance Contracts In August 2018, the FASB issued targeted improvements to the accounting and disclosure guidance for long-duration insurance contracts (i.e., ASU 2018-12). The guidance in ASU 2018-12 (ASU) significantly changes how insurers account for long-duration insurance contracts. The guidance in the ASU also significantly expands the disclosure requirements for long-duration insurance contracts. The Company will adopt the ASU effective January 1, 2023, using the modified retrospective transition method where permitted, and apply the guidance as of January 1, 2021 (and record transition adjustments as of January 1, 2021) in the Company’s 2023 consolidated financial statements. Prior periods presented (years 2021 and 2022) will be adjusted to apply the new method of accounting retrospectively under the ASU. While the requirements of the ASU represent a significant change from existing GAAP, the adoption of the ASU will not impact cash flows on the Company’s policies, or the underlying economics of the Company’s business. The Company's insurance subsidiaries' risk-based capital amounts and ratios, and regulatory dividends will not be impacted as the National Association of Insurance Commissioners has rejected the adoption of ASU 2018-12. The Company has created a governance framework and is managing a detailed implementation plan to support timely application of the guidance in the ASU. The Company has made progress and continues to refine key accounting policy decisions, technology solutions and internal controls. These activities include, but are not limited to, modifications of actuarial valuation, accounting and financial reporting processes and systems including internal controls. The table below summarizes the areas of significant change and each significant area of change for the method of adoption and expected impact to the Company's results of operations and financial condition as a result from adopting the ASU at transition and subsequent to the effective date. Area of significant change Impacts at transition (January 1, 2021) Impacts subsequent to the effective date Cash flow assumptions for measuring the liability for future policy benefits Under current accounting guidance, assumptions for traditional long-duration insurance contracts (e.g., mortality, lapses, etc.), are locked-in at issuance. The new guidance requires insurers to review, and if necessary, update the cash flow assumptions used to measure liabilities for future policy benefits periodically. The change in the liability estimate as a result of updating cash flow assumptions will be recognized in net income. The Company expects to adopt this guidance on a modified retrospective basis as of the earliest period presented in the year of adoption. Upon adoption, there will be an adjustment to retained earnings as a result of capping the net premium ratio at 100%. The Company expects the impact of such adjustment will likely result in an after-tax decrease to retained earnings of less than $5 million. The Company does not expect any material impacts to its results of operations subsequent to the effective date of the ASU. Discount rate assumption for measuring the liability for future policy benefits Under current accounting guidance, the-then current discount rate is locked-in at issuance. The new guidance requires insurers to update the discount rate assumption used to measure liabilities for future policy benefits at each reporting period, and the discount rate utilized must be based on an upper-medium grade fixed income instrument yield. The change in the liability estimate as a result of updating the discount rate assumption will be recognized in other comprehensive income. The Company expects to adopt this guidance on a modified retrospective basis as of the earliest period presented in the year of adoption. Upon adoption, there will be an adjustment to accumulated other comprehensive income (AOCI) as a result of remeasuring in force contract liabilities using a standard discount rate to measure the liabilities that will be equivalent to the yield from a high-quality bond and the adjustment will largely reflect the difference between discount rates locked-in at contract inception versus current discount rates at transition. The Company currently estimates that the transition date impact from adoption is likely to result in an after-tax decrease to AOCI in a range between $475 million and $525 million. The Company expects material impacts to AOCI subsequent to the effective date of the ASU due to subsequent increases and decreases in discount rates. Market risk benefits Under current accounting guidance, certain benefit features of annuity contracts (e.g., GMDB, etc.) are accounted for using a benefit ratio methodology. The new guidance created a new category of benefit features called market risk benefits that will be measured at fair value with changes in fair value attributable to a change in the instrument-specific credit risk recognized in other comprehensive income. The Company will adopt this guidance on a retrospective basis as of the earliest period presented in the year of adoption. Upon adoption, the Company expects an impact to AOCI for the cumulative effect of changes in the instrument-specific credit risk between contract issue date and transition date and retained earnings for the difference between fair value and carrying value at the transition date, excluding the changes in the instrument-specific credit risk. The Company is currently evaluating the impact of these adjustments but anticipates they will likely reduce AOCI and retained earnings by less than $15 million after-tax. Subsequent to the effective date of the ASU, the Company expects market risk benefits will add volatility to benefits expense which could be material. The Company is currently evaluating the impacts of these adjustments subsequent to the effective date of the ASU. Deferred policy acquisition costs (DAC) including shadow DAC Under current accounting guidance, for all annuity contracts, DAC is amortized over 20 years in proportion to estimated gross profits. For individual life contracts, DAC is amortized in proportion to anticipated premiums over the terms of the insurance policies (10, 15, 20, 30) years. For IUL, DAC is amortized in proportion to estimated gross profits over 30 years. The new guidance requires DAC and other balances to be amortized on a constant level basis over the expected term of the related contracts. The Company expects to adopt this guidance on a modified retrospective basis as of the earliest period presented in the year of adoption. Upon adoption, the Company expects an adjustment to AOCI for the removal of cumulative adjustments to DAC associated with unrealized investment gains and losses previously recorded in AOCI. The impact of this adjustment will likely result in an after-tax increase to AOCI in a range between $70 million and $75 million upon adoption. Subsequent to the effective date of the ASU, the Company expects a significant reduction in volatility of DAC unlocking due to the removal of investment performance and market impacts and an insignificant decrease in amortization expense due to the treatment of interest expense and method of amortizing DAC. |
Basis of Presentation and Sig_3
Basis of Presentation and Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of changes in accounting policies | Area of significant change Impacts at transition (January 1, 2021) Impacts subsequent to the effective date Cash flow assumptions for measuring the liability for future policy benefits Under current accounting guidance, assumptions for traditional long-duration insurance contracts (e.g., mortality, lapses, etc.), are locked-in at issuance. The new guidance requires insurers to review, and if necessary, update the cash flow assumptions used to measure liabilities for future policy benefits periodically. The change in the liability estimate as a result of updating cash flow assumptions will be recognized in net income. The Company expects to adopt this guidance on a modified retrospective basis as of the earliest period presented in the year of adoption. Upon adoption, there will be an adjustment to retained earnings as a result of capping the net premium ratio at 100%. The Company expects the impact of such adjustment will likely result in an after-tax decrease to retained earnings of less than $5 million. The Company does not expect any material impacts to its results of operations subsequent to the effective date of the ASU. Discount rate assumption for measuring the liability for future policy benefits Under current accounting guidance, the-then current discount rate is locked-in at issuance. The new guidance requires insurers to update the discount rate assumption used to measure liabilities for future policy benefits at each reporting period, and the discount rate utilized must be based on an upper-medium grade fixed income instrument yield. The change in the liability estimate as a result of updating the discount rate assumption will be recognized in other comprehensive income. The Company expects to adopt this guidance on a modified retrospective basis as of the earliest period presented in the year of adoption. Upon adoption, there will be an adjustment to accumulated other comprehensive income (AOCI) as a result of remeasuring in force contract liabilities using a standard discount rate to measure the liabilities that will be equivalent to the yield from a high-quality bond and the adjustment will largely reflect the difference between discount rates locked-in at contract inception versus current discount rates at transition. The Company currently estimates that the transition date impact from adoption is likely to result in an after-tax decrease to AOCI in a range between $475 million and $525 million. The Company expects material impacts to AOCI subsequent to the effective date of the ASU due to subsequent increases and decreases in discount rates. Market risk benefits Under current accounting guidance, certain benefit features of annuity contracts (e.g., GMDB, etc.) are accounted for using a benefit ratio methodology. The new guidance created a new category of benefit features called market risk benefits that will be measured at fair value with changes in fair value attributable to a change in the instrument-specific credit risk recognized in other comprehensive income. The Company will adopt this guidance on a retrospective basis as of the earliest period presented in the year of adoption. Upon adoption, the Company expects an impact to AOCI for the cumulative effect of changes in the instrument-specific credit risk between contract issue date and transition date and retained earnings for the difference between fair value and carrying value at the transition date, excluding the changes in the instrument-specific credit risk. The Company is currently evaluating the impact of these adjustments but anticipates they will likely reduce AOCI and retained earnings by less than $15 million after-tax. Subsequent to the effective date of the ASU, the Company expects market risk benefits will add volatility to benefits expense which could be material. The Company is currently evaluating the impacts of these adjustments subsequent to the effective date of the ASU. Deferred policy acquisition costs (DAC) including shadow DAC Under current accounting guidance, for all annuity contracts, DAC is amortized over 20 years in proportion to estimated gross profits. For individual life contracts, DAC is amortized in proportion to anticipated premiums over the terms of the insurance policies (10, 15, 20, 30) years. For IUL, DAC is amortized in proportion to estimated gross profits over 30 years. The new guidance requires DAC and other balances to be amortized on a constant level basis over the expected term of the related contracts. The Company expects to adopt this guidance on a modified retrospective basis as of the earliest period presented in the year of adoption. Upon adoption, the Company expects an adjustment to AOCI for the removal of cumulative adjustments to DAC associated with unrealized investment gains and losses previously recorded in AOCI. The impact of this adjustment will likely result in an after-tax increase to AOCI in a range between $70 million and $75 million upon adoption. Subsequent to the effective date of the ASU, the Company expects a significant reduction in volatility of DAC unlocking due to the removal of investment performance and market impacts and an insignificant decrease in amortization expense due to the treatment of interest expense and method of amortizing DAC. |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Summary of assets acquired and liabilities assumed | Based on the Company’s preliminary allocation of the final adjusted purchase price, the fair values of the assets acquired and liabilities assumed were as follows: ($ in millions) Assets: Investments $ 90.4 Cash and short-term investments 123.4 Reinsurance recoverable 356.0 Intangible assets (1) 59.4 Other assets 23.2 Liabilities: Investment contract and policy reserves 274.5 Unpaid claims and claim expenses 48.2 Unearned premiums 1.5 Other policyholder funds 152.8 Other liabilities 15.9 Total identifiable net assets acquired 159.5 Goodwill (2) 12.8 Purchase price $ 172.3 (1) Intangible assets consist of the value of business acquired, value of customer relationships and state licenses. The intangible assets that are amortizable have estimated lives of one (2) The amount of goodwill that is expected to be deductible for federal income tax purposes is $18.6 million. |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Investments, Debt and Equity Securities [Abstract] | |
Components of net investment income | The components of net investment income for the following periods were as follows: ($ in millions) Three Months Ended Nine Months Ended 2022 2021 2022 2021 Fixed maturity securities $ 63.9 $ 59.8 $ 184.5 $ 177.2 Equity securities 1.8 1.4 7.1 3.8 Limited partnership interests 5.1 16.8 31.3 51.1 Short-term and other investments 2.8 2.8 8.2 8.5 Investment expenses (2.7) (2.7) (7.8) (7.3) Net investment income - investment portfolio 70.9 78.1 223.3 233.3 Investment income - deposit asset on reinsurance 26.7 25.6 77.4 75.1 Total net investment income $ 97.6 $ 103.7 $ 300.7 $ 308.4 |
Schedule of net investment losses | Net investment losses for the following periods were as follows: ($ in millions) Three Months Ended Nine Months Ended 2022 2021 2022 2021 Fixed maturity securities $ (10.7) $ (4.0) $ (15.9) $ (7.9) Equity securities (4.4) (1.0) (32.5) 0.7 Short-term investments and other 2.3 (1.5) 4.6 (3.4) Net investment losses $ (12.8) $ (6.5) $ (43.8) $ (10.6) The following table reconciles net investment losses by transaction type: ($ in millions) Three Months Ended Nine Months Ended 2022 2021 2022 2021 Credit loss impairments $ (0.6) $ (6.6) $ (2.8) $ (7.7) Intent-to-sell impairments (6.2) — (7.6) (2.1) Total impairments (6.8) (6.6) (10.4) (9.8) Sales and other, net (3.9) 2.7 (3.9) 2.2 Change in fair value - equity securities (4.4) (1.1) (34.1) 0.4 Change in fair value and gains (losses) realized on settlements - derivatives 2.3 (1.5) 4.6 (3.4) Net investment losses $ (12.8) $ (6.5) $ (43.8) $ (10.6) |
Schedule of allowance for credit loss impairments on fixed maturity securities | The following table presents changes in the allowance for credit loss impairments on fixed maturity securities classified as available for sale for the category of other asset-backed securities (no other categories of fixed maturity securities have an allowance for credit loss impairments): ($ in millions) Three Months Ended Nine Months Ended 2022 2021 2022 2021 Beginning balance $ 9.5 $ 1.1 $ 7.7 $ — Credit losses on fixed maturity securities for which credit losses were not previously reported — 6.6 — 7.7 Net increase related to credit losses previously reported 0.6 — 2.8 — Reduction of credit allowances related to sales — — — — Write-offs — — (0.4) — Ending balance $ 10.1 $ 7.7 $ 10.1 $ 7.7 |
Schedule of available-for-sale securities reconciliation | Amortized cost, net, gross unrealized investment gains (losses) and fair values of all fixed maturity securities in the portfolio were as follows: ($ in millions) Amortized Gross Unrealized Gross Unrealized Fair September 30, 2022 Fixed maturity securities U.S. Government and federally sponsored agency obligations: (1) Mortgage-backed securities $ 643.7 $ 1.5 $ 66.1 $ 579.1 Other, including U.S. Treasury securities 408.3 0.4 66.0 342.7 Municipal bonds 1,440.9 14.5 147.5 1,307.9 Foreign government bonds 37.2 — 1.7 35.5 Corporate bonds 2,228.8 10.0 311.0 1,927.8 Other asset-backed securities 1,145.2 2.9 69.0 1,079.1 Totals $ 5,904.1 $ 29.3 $ 661.3 $ 5,272.1 December 31, 2021 Fixed maturity securities U.S. Government and federally sponsored agency obligations: (1) Mortgage-backed securities $ 612.1 $ 51.9 $ 1.5 $ 662.5 Other, including U.S. Treasury securities 342.5 27.7 4.3 365.9 Municipal bonds 1,519.7 184.4 0.7 1,703.4 Foreign government bonds 40.2 3.4 — 43.6 Corporate bonds 2,217.7 176.2 5.2 2,388.7 Other asset-backed securities 1,065.5 16.6 6.9 1,075.2 Totals $ 5,797.7 $ 460.2 $ 18.6 $ 6,239.3 (1) Fair value includes securities issued by Federal National Mortgage Association (FNMA) of $337.5 million and $376.7 million; Federal Home Loan Mortgage Corporation (FHLMC) of $271.1 million and $326.5 million; and Government National Mortgage Association (GNMA) of $90.2 million and $112.1 million as of September 30, 2022 and December 31, 2021, respectively. |
Summary of fair value and gross unrealized losses of fixed maturity securities and equity securities in an unrealized loss position | Therefore, it was determined that the unrealized losses on the fixed maturity securities presented in the table below were not indicative of any impairments as of September 30, 2022. ($ in millions) 12 Months or Less More than 12 Months Total Fair Value Gross Fair Value Gross Fair Value Gross September 30, 2022 Fixed maturity securities U.S. Government and federally Mortgage-backed securities $ 472.2 $ 51.5 $ 51.3 $ 14.6 $ 523.5 $ 66.1 Other 266.6 36.6 58.0 29.4 324.6 66.0 Municipal bonds 1,035.5 143.5 9.7 4.0 1,045.2 147.5 Foreign government bonds 35.4 1.7 — — 35.4 1.7 Corporate bonds 1,496.6 280.0 80.3 31.0 1,576.9 311.0 Other asset-backed securities 776.2 52.4 213.9 16.6 990.1 69.0 Total $ 4,082.5 $ 565.7 $ 413.2 $ 95.6 $ 4,495.7 $ 661.3 Number of positions with a gross unrealized loss 3,002 303 3,305 Fair value as a percentage of total fixed maturity securities at fair value 77.4 % 7.8 % 85.2 % December 31, 2021 Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 67.4 $ 1.3 $ 3.9 $ 0.2 $ 71.3 $ 1.5 Other 59.5 1.7 35.1 2.6 94.6 4.3 Municipal bonds 56.8 0.7 0.6 — 57.4 0.7 Foreign government bonds — — — — — — Corporate bonds 220.7 3.8 44.1 1.4 264.8 5.2 Other asset-backed securities 379.0 3.8 128.2 3.1 507.2 6.9 Total $ 783.4 $ 11.3 $ 211.9 $ 7.3 $ 995.3 $ 18.6 Number of positions with a gross unrealized loss 516 122 638 Fair value as a percentage of total fixed maturity securities at fair value 12.6 % 3.4 % 16.0 % |
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, estimated expected maturities consider broker-dealer survey prepayment assumptions and are verified for consistency with the interest rate and economic environments. ($ in millions) Percent of Total Fair Value September 30, 2022 September 30, 2022 December 31, 2021 Fair Amortized Estimated expected maturity: Due in 1 year or less 3.9 % 4.0 % $ 204.0 $ 204.6 Due after 1 year through 5 years 26.0 27.0 1,369.3 1,439.0 Due after 5 years through 10 years 28.3 27.7 1,492.6 1,621.7 Due after 10 years through 20 years 25.5 23.9 1,348.3 1,551.8 Due after 20 years 16.3 17.4 857.9 1,087.0 Total 100.0 % 100.0 % $ 5,272.1 $ 5,904.1 Average option-adjusted duration, in years 6.5 6.7 |
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 as follows: ($ in millions) Three Months Ended Nine Months Ended 2022 2021 2022 2021 Fixed maturity securities Proceeds received $ 164.6 $ 155.4 $ 529.9 $ 319.2 Gross gains realized 1.1 3.2 4.7 6.2 Gross losses realized (5.0) (0.7) (10.2) (4.3) Equity securities Proceeds received $ 0.2 $ 0.3 $ 6.0 $ 1.0 Gross gains realized — 0.1 1.7 0.3 Gross losses realized — — (0.1) — |
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 accumulated other comprehensive income (AOCI), before the impact of DAC: ($ in millions) Three Months Ended Nine Months Ended 2022 2021 2022 2021 Net unrealized investment gains (losses) Beginning of period $ (283.2) $ 399.4 $ 348.9 $ 439.8 Change in net unrealized investment gains (228.0) (34.9) (886.5) (77.0) Reclassification of net investment losses 11.9 3.9 38.3 5.6 End of period $ (499.3) $ 368.4 $ (499.3) $ 368.4 |
Schedule of carrying amounts of equity method limited partnership interests | The carrying amounts of EMA limited partnership interests were as follows: ($ in millions) September 30, 2022 December 31, 2021 Commercial mortgage loan funds $ 601.5 $ 346.8 Private equity funds 73.4 74.0 Infrastructure equity funds 70.2 58.3 Infrastructure debt funds 67.4 62.4 Other funds (1) 185.0 171.3 Total $ 997.5 $ 712.8 (1) Other funds consist primarily of limited partnership interests in corporate mezzanine, venture capital and other fund strategies. |
Offsetting assets and liability | The following table presents instruments that were subject to a master netting arrangement for the Company. ($ in millions) Gross Net Amounts Gross Amounts Not Offset Gross Financial Cash Net September 30, 2022 Asset derivatives: Free-standing derivatives $ 2.0 $ — $ 2.0 $ — $ 1.8 $ 0.2 December 31, 2021 Asset derivatives: Free-standing derivatives $ 10.7 $ — $ 10.7 $ 4.5 $ 6.4 $ (0.2) |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
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 financial assets and financial liabilities measured and carried at fair value on a recurring basis. During the nine months ended September 30, 2022 and 2021, there were no transfers between Level 1 and Level 2. At September 30, 2022, Level 3 invested assets comprised 7.4% of the Company’s total investment portfolio at fair value. ($ in millions) Carrying Fair Fair Value Measurements at Level 1 Level 2 Level 3 September 30, 2022 Financial Assets Investments Fixed maturity securities U.S. Government and federally Mortgage-backed securities $ 579.1 $ 579.1 $ — $ 576.5 $ 2.6 Other, including U.S. Treasury securities 342.8 342.7 24.5 318.2 — Municipal bonds 1,307.9 1,307.9 — 1,254.6 53.3 Foreign government bonds 35.4 35.5 — 35.5 — Corporate bonds 1,927.8 1,927.8 12.8 1,675.2 239.8 Other asset-backed securities 1,079.1 1,079.1 — 974.5 104.6 Total fixed maturity securities 5,272.1 5,272.1 37.3 4,834.5 400.3 Equity securities 113.8 113.8 22.4 89.4 2.0 Short-term investments 51.4 51.4 49.0 2.4 — Other investments 34.0 34.0 — 34.0 — Totals $ 5,471.3 $ 5,471.3 $ 108.7 $ 4,960.3 $ 402.3 Separate Account variable annuity assets (1) $ 2,599.6 $ 2,599.6 $ 2,599.6 $ — $ — Financial Liabilities Investment contract and policy reserves, embedded derivatives $ 0.4 $ 0.4 $ — $ 0.4 $ — Other policyholder funds, embedded derivatives $ 89.9 $ 89.9 $ — $ — $ 89.9 December 31, 2021 Financial Assets Investments Fixed maturity securities U.S. Government and federally Mortgage-backed securities $ 662.5 $ 662.5 $ — $ 662.5 $ — Other, including U.S. Treasury securities 365.9 365.9 17.7 348.2 — Municipal bonds 1,703.4 1,703.4 — 1,642.6 60.8 Foreign government bonds 43.6 43.6 — 43.6 — Corporate bonds 2,388.7 2,388.7 14.9 2,163.5 210.3 Other asset-backed securities 1,075.2 1,075.2 — 976.3 98.9 Total fixed maturity securities 6,239.3 6,239.3 32.6 5,836.7 370.0 Equity securities 147.2 147.2 35.2 110.6 1.4 Short-term investments 157.8 157.8 157.8 — — Other investments 43.6 43.6 — 43.6 — Totals $ 6,587.9 $ 6,587.9 $ 225.6 $ 5,990.9 $ 371.4 Separate Account (variable annuity) assets (1) $ 3,441.0 $ 3,441.0 $ 3,441.0 $ — $ — Financial Liabilities Investment contract and policy reserves, embedded derivatives $ 2.1 $ 2.1 $ — $ 2.1 $ — Other policyholder funds, embedded derivatives $ 106.6 $ 106.6 $ — $ — $ 106.6 (1) Separate Account variable annuity assets represent contractholder funds invested in various actively traded mutual funds that have daily quoted net asset values that are readily determinable for identical assets that the Company can access. 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 reconciliation for all financial assets and financial liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) were as follows: ($ in millions) Financial Assets Financial Liabilities (1) Municipal Corporate Mortgage-Backed and Other Asset- Backed Securities (2) Total Equity Total Beginning balance, July 1, 2022 $ 51.0 $ 270.5 $ 97.1 $ 418.6 $ 1.4 $ 420.0 $ 93.2 Transfers into Level 3 (3) — 20.5 12.2 32.7 0.8 33.5 — Transfers out of Level 3 (3) — (34.8) — (34.8) — (34.8) — Total gains or losses Net investment gains (losses) included in net income related to financial assets — — (0.8) (0.8) (0.1) (0.9) — Net investment (gains) losses included in net income related to financial liabilities — — — — — — (4.6) Net unrealized investment gains (losses) included in OCI (5.3) (7.4) (3.9) (16.6) — (16.6) — Purchases 0.2 8.4 7.9 16.5 — 16.5 — Issuances — — — — — — 2.7 Sales — — — — — — — Settlements — — — — — — — Paydowns, maturities and distributions 7.4 (17.4) (5.3) (15.3) (0.1) (15.4) (1.4) Ending balance, September 30, 2022 $ 53.3 $ 239.8 $ 107.2 $ 400.3 $ 2.0 $ 402.3 $ 89.9 Beginning balance, January 1, 2022 $ 60.8 $ 210.3 $ 98.9 $ 370.0 $ 1.4 $ 371.4 $ 106.6 Transfers into Level 3 (3) — 144.0 34.5 178.5 0.8 179.3 — Transfers out of Level 3 (3) (3.2) (34.9) (4.8) (42.9) — (42.9) — Total gains or losses Net investment gains (losses) included in net income related to financial assets — — (3.1) (3.1) (0.1) (3.2) — Net investment (gains) losses included in net income related to financial liabilities — — — — — — (14.4) Net unrealized investment gains (losses) included in OCI (11.6) (18.7) (11.3) (41.6) — (41.6) — Purchases 0.2 13.3 7.9 21.4 — 21.4 — Issuances — — — — — — 4.8 Sales — — (2.1) (2.1) — (2.1) — Settlements — — — — — — — Paydowns, maturities and distributions 7.1 (74.2) (12.8) (79.9) (0.1) (80.0) (7.1) Ending balance, September 30, 2022 $ 53.3 $ 239.8 $ 107.2 $ 400.3 $ 2.0 $ 402.3 $ 89.9 (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 asset-backed securities. (3) Transfers into and out of Level 3 during the three and nine months ended September 30, 2022 were related to changes in the primary pricing source and changes in observability of external information used in determining fair value. The Company's policy is to recognize transfers into and out of the levels as having occurred at the end of the reporting period in which the transfers were determined. ($ in millions) Financial Assets Financial (1) Municipal Corporate Mortgage-Backed and Other Asset- Backed Securities (2) Total Equity Total Beginning balance, July 1, 2021 $ 58.6 $ 150.5 $ 115.5 $ 324.6 $ 0.3 $ 324.9 $ 108.9 Transfers into Level 3 (3) — 55.7 4.0 59.7 — 59.7 — Transfers out of Level 3 (3) — — — — — — — Total gains or losses Net investment gains (losses) included in net income related to financial assets — — (6.6) (6.6) 0.1 (6.5) — Net investment (gains) losses included in net income related to financial liabilities — — — — — — 0.7 Net unrealized investment gains (losses) included in OCI (0.3) (0.1) 6.6 6.2 — 6.2 — Purchases — — — — — — — Issuances — — — — — — 1.4 Sales — — — — — — — Settlements — — — — — — — Paydowns, maturities and distributions (0.1) (1.1) (21.0) (22.2) — (22.2) (4.3) Ending balance, September 30, 2021 $ 58.2 $ 205.0 $ 98.5 $ 361.7 $ 0.4 $ 362.1 $ 106.7 Beginning balance, January 1, 2021 $ 59.6 $ 155.8 $ 139.4 $ 354.8 $ 0.3 $ 355.1 $ 104.5 Transfers into Level 3 (3) — 108.3 10.2 118.5 — 118.5 — Transfers out of Level 3 (3) — (56.7) (19.2) (75.9) — (75.9) — Total gains or losses Net investment gains (losses) included in net income related to financial assets — — (7.7) (7.7) 0.1 (7.6) — Net investment (gains) losses included in net income related to financial liabilities — — — — — — 8.2 Net unrealized investment gains (losses) included in OCI (0.9) 1.0 8.7 8.8 — 8.8 — Purchases — — — — — — — Issuances — — — — — — 3.3 Sales — — — — — — — Settlements — — — — — — — Paydowns, maturities and distributions (0.5) (3.4) (32.9) (36.8) — (36.8) (9.3) Ending balance, September 30, 2021 $ 58.2 $ 205.0 $ 98.5 $ 361.7 $ 0.4 $ 362.1 $ 106.7 (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 asset-backed securities. (3) Transfers into and out of Level 3 during the three and nine months ended September 30, 2021 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 out of the levels as having occurred at the end of the reporting period in which the transfers were determined. |
Fair value measurement inputs and valuation techniques | The following table provides quantitative information about the significant unobservable inputs for recurring fair value measurements categorized within Level 3. ($ in millions) Financial Fair Value at September 30, 2022 Valuation Technique(s) Unobservable Inputs Range (Weighted Average) and Single Point Best Estimate (1) Municipal bonds $ 53.3 discounted cash flow option adjusted spread 330 - 446 bps Corporate bonds 239.8 discounted cash flow N spread (2) 363 bps discounted cash flow T spread (3) 16 - 403 bps discounted cash flow yield 3.8% - 11.2% discounted cash flow exit cap rate 6.2% discounted cash flow occupancy rate 31.0% - 100.0% discounted cash flow option adjusted spread 242 - 393 bps discounted cash flow weighted average cost of capital 5.0% discounted cash flow discount rate 11.3% - 12.0% market comparable EV / Fwd EBITDA (x) 5.1x Mortgage-backed and other asset-backed securities 107.2 discounted cash flow discount margin 30.4% discounted cash flow discount rate 16.0% - 21.0% discounted cash flow median comparable yield 17.2% - 33.1% discounted cash flow yield 7.0% - 7.4% discounted cash flow LIBOR 1.0% discounted cash flow PDI spread 6.8% discounted cash flow SBL spread 4.5% discounted cash flow weighting 17.0% - 83.0% discounted cash flow CPR 20.0% discounted cash flow default rate annual 4.0% discounted cash flow recovery 65.0% discounted cash flow N spread 463 bps discounted cash flow T Spread 226 bps Equity securities 2.0 black-scholes volatility low 32.0% - high 47.0% ($ in millions) Financial Fair Value at September 30, 2022 Valuation Technique(s) Unobservable Inputs Range (Weighted Average) and Single Point Best Estimate (1) Derivatives $ 89.9 discounted cash flow lapse rate 5.3% mortality multiplier (4) 66.8% option budget 0.9% - 3.3% non-performance adjustment (5) 5.0% (1) When a range of unobservable inputs is not readily available, the Company uses a single point best estimate. (2) "N spread" is the interpolated weighted average life point on the swap curve. (3) "T spread" is a specific point on the OTR curve. (4) Mortality multiplier is applied to the Annuity 2000 table. (5) Determined as a percentage of the risk-free rate. |
Summary of fair value assets and liabilities measured on nonrecurring basis | The following table presents the carrying amount, fair value and fair value hierarchy of these financial assets and financial liabilities. ($ in millions) Carrying Fair Fair Value Measurements at Level 1 Level 2 Level 3 September 30, 2022 Financial Assets Other investments $ 169.1 $ 172.5 $ — $ — $ 172.5 Deposit asset on reinsurance 2,525.6 2,164.9 — — 2,164.9 Financial Liabilities Investment contract and policy reserves, fixed annuity contracts 5,005.8 5,068.8 — — 5,068.8 Investment contract and policy reserves, account values on life contracts 109.5 119.3 — — 119.3 Other policyholder funds 910.8 910.8 — 857.9 52.9 Short-term debt 249.0 249.0 — — 249.0 Long-term debt 248.9 249.5 — 249.5 — December 31, 2021 Financial Assets Other investments $ 148.8 $ 152.4 $ — $ — $ 152.4 Deposit asset on reinsurance 2,481.5 2,935.1 — — 2,935.1 Financial Liabilities Investment contract and policy reserves, fixed annuity contracts 4,941.3 5,004.9 — — 5,004.9 Investment contract and policy reserves, account values on life contracts 105.4 115.4 — — 115.4 Other policyholder funds 839.3 839.3 — 782.8 56.5 Short-term debt 249.0 249.0 — — 249.0 Long-term debt 253.6 277.4 — 277.4 — |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill | The carrying amount of goodwill by reporting unit as of September 30, 2022 was as follows: ($ in millions) December 31, 2021 Impairment Acquisition September 30, 2022 Property & Casualty $ 9.5 $ — $ — $ 9.5 Life & Retirement 14.4 — — 14.4 Supplemental & Group Benefits 19.6 — 12.8 32.4 Total $ 43.5 $ — $ 12.8 $ 56.3 |
Summary of finite-lived intangible assets | As of September 30, 2022 the outstanding amounts of definite-lived intangible assets subject to amortization were as follows: ($ in millions) Weighted Average Useful Life (in Years) At inception: Value of business acquired 28 $ 100.1 Value of distribution acquired 17 54.0 Value of agency relationships 14 17.0 Value of customer relationships 10 59.9 Total 20 231.0 Accumulated amortization and impairments: Value of business acquired (26.6) Value of distribution acquired (13.8) Value of agency relationships (7.7) Value of customer relationships (4.5) Total (52.6) Net intangible assets subject to amortization: $ 178.4 |
Future amortization expense | Estimated future amortization of the Company's definite-lived intangible assets were as follows: ($ in millions) Year Ending December 31, 2022 (excluding the nine months ended September 30, 2022) $ 4.1 2023 15.5 2024 15.1 2025 14.8 2026 14.5 Thereafter 114.4 Total $ 178.4 |
Summary of indefinite-lived intangible assets | Indefinite-lived intangible assets not subject to amortization as of September 30, 2022 were as follows: ($ in millions) Trade names $ 7.9 State licenses 5.9 Total $ 13.8 |
Unpaid Claims and Claim Expen_2
Unpaid Claims and Claim Expenses (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Insurance Loss Reserves [Abstract] | |
Reconciliation of property and casualty unpaid claims and claim expense | The end of the period gross reserve (before reinsurance balances and reinsurance recoverable balances) are reflected on a gross basis in the Consolidated Balance Sheets. ($ in millions) Three Months Ended Nine Months Ended 2022 2021 2022 2021 Property & Casualty Beginning gross reserves (1) $ 378.4 $ 368.4 $ 362.4 $ 372.2 Less: reinsurance recoverables 109.8 108.9 110.3 112.9 Net reserves, beginning of period (2) 268.6 259.5 252.1 259.3 Incurred claims and claim expenses: Claims occurring in the current period 120.3 132.5 372.8 345.4 Increase (decrease) in estimated reserves for claims occurring in prior periods (3) 2.0 (3.0) 8.0 (7.2) Total claims and claim expenses incurred (4) 122.3 129.5 380.8 338.2 Claims and claim expense payments for claims occurring during: Current period 102.8 96.8 221.1 210.3 Prior periods 29.7 26.4 153.4 121.4 Total claims and claim expense payments 132.5 123.2 374.5 331.7 Net reserves, end of period (2) 258.4 265.8 258.4 265.8 Plus: reinsurance recoverables 109.0 109.6 109.0 109.6 Ending gross reserves (1) $ 367.4 $ 375.4 $ 367.4 $ 375.4 (1) Unpaid claims and claim expenses as reported in the Consolidated Balance Sheets also include reserves for Life & Retirement and Supplemental & Group Benefits of $114.5 million and $64.7 million as of September 30, 2022 and 2021, respectively, in addition to Property & Casualty reserves. (2) Reserves net of anticipated reinsurance recoverables. (3) Shows the amounts by which the Company increased (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 & Retirement and Supplemental & Group Benefits of $51.3 million and $177.4 million for the three and nine months ended September 30, 2022, respectively, in addition to Property & Casualty amounts. Benefits, claims and settlement expenses for Life & Retirement and Supplemental & Group Benefits of $35.3 million and $108.0 million for the three and nine months ended September 30, 2021, respectively. |
Reinsurance (Tables)
Reinsurance (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Insurance [Abstract] | |
Effects of reinsurance on premiums and benefits | The effects of reinsurance on net premiums written and contract deposits; net premiums and contract charges earned; and benefits, claims and settlement expenses were as follows: ($ in millions) Direct Ceded to Other Companies (1) Assumed Net Three months ended September 30, 2022 Net premiums written and contract deposits (2) $ 390.3 $ 15.4 $ 13.4 $ 388.3 Net premiums and contract charges earned 262.0 17.6 13.4 257.8 Benefits, claims and settlement expenses 177.3 8.4 4.7 173.6 Three months ended September 30, 2021 Net premiums written and contract deposits (2) $ 366.0 $ 5.5 $ 2.6 $ 363.1 Net premiums and contract charges earned 230.9 8.1 2.6 225.4 Benefits, claims and settlement expenses 164.5 1.5 1.8 164.8 Nine months ended September 30, 2022 Net premiums written and contract deposits (2) $ 1,124.4 $ 46.7 $ 39.5 $ 1,117.2 Net premiums and contract charges earned 783.4 53.5 39.6 769.5 Benefits, claims and settlement expenses 577.4 34.2 15.0 558.2 Nine months ended September 30, 2021 Net premiums written and contract deposits (2) $ 1,037.8 $ 17.0 $ 6.6 $ 1,027.4 Net premiums and contract charges earned 696.6 24.6 6.8 678.8 Benefits, claims and settlement expenses 444.7 3.0 4.5 446.2 (1) Excludes the annuity reinsurance transaction accounted for using the deposit method. (2) This measure is not based on accounting principles generally accepted in the United States of America (non-GAAP). An explanation of this non-GAAP measure is contained in the Glossary of Selected Terms included as Exhibit 99.1 in the Company's reports filed with the SEC. |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Summarized financial information for these segments | Summarized financial information for these segments is as follows: ($ in millions) Three Months Ended Nine Months Ended 2022 2021 2022 2021 Net premiums and contract charges earned Property & Casualty $ 152.4 $ 153.3 $ 452.5 $ 464.1 Life & Retirement 37.1 40.4 109.7 118.3 Supplemental & Group Benefits 68.3 31.7 207.3 96.4 Total $ 257.8 $ 225.4 $ 769.5 $ 678.8 Net investment income Property & Casualty $ 8.0 $ 11.3 $ 22.9 $ 43.8 Life & Retirement 81.4 85.8 254.0 247.4 Supplemental & Group Benefits 8.7 7.2 25.4 19.0 Corporate & Other — — — — Intersegment eliminations (0.5) (0.6) (1.6) (1.8) Total $ 97.6 $ 103.7 $ 300.7 $ 308.4 Net income (loss) Property & Casualty $ (2.5) $ (4.7) $ (19.4) $ 42.5 Life & Retirement 12.7 19.1 41.8 47.0 Supplemental & Group Benefits 19.2 11.5 43.6 34.8 Corporate & Other (15.5) (9.6) (50.1) (22.0) Total $ 13.9 $ 16.3 $ 15.9 $ 102.3 ($ in millions) September 30, 2022 December 31, 2021 Assets Property & Casualty $ 1,052.1 $ 1,243.4 Life & Retirement 10,719.4 12,064.7 Supplemental & Group Benefits 1,431.7 858.8 Corporate & Other 177.9 281.8 Intersegment eliminations (67.0) (64.8) Total $ 13,314.1 $ 14,383.9 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Schedule of accumulated other comprehensive income (loss) | The following table reconciles these components. ($ in millions) Net Unrealized Investment Gains (Losses) on Securities (1) Net Funded Status of Benefit Plans (1) Total (1) Beginning balance, July 1, 2022 $ (220.4) $ (10.2) $ (230.6) Other comprehensive loss before reclassifications (188.2) — (188.2) Amounts reclassified from AOCI (2) 11.9 — 11.9 Net current period other comprehensive loss (176.3) — (176.3) Ending balance, September 30, 2022 $ (396.7) $ (10.2) $ (406.9) Beginning balance, July 1, 2021 $ 332.2 $ (11.2) $ 321.0 Other comprehensive income before reclassifications (29.3) — (29.3) Amounts reclassified from AOCI (3) 4.0 — 4.0 Net current period other comprehensive income (25.3) — (25.3) Ending balance, September 30, 2021 $ 306.9 $ (11.2) $ 295.7 Beginning balance, January 1, 2022 $ 290.7 $ (10.2) $ 280.5 Other comprehensive loss before reclassifications (725.7) — (725.7) Amounts reclassified from AOCI (2) 38.3 — 38.3 Net current period other comprehensive loss (687.4) — (687.4) Ending balance, September 30, 2022 $ (396.7) $ (10.2) $ (406.9) Beginning balance, January 1, 2021 $ 366.3 $ (11.2) $ 355.1 Other comprehensive loss before reclassifications (65.0) — (65.0) Amounts reclassified from AOCI (3) 5.6 — 5.6 Net current period other comprehensive loss (59.4) — (59.4) Ending balance, September 30, 2021 $ 306.9 $ (11.2) $ 295.7 (1) All amounts are net of tax. (2) The pretax amounts reclassified from AOCI, $(15.0) million and $(48.4) million, are included in Net investment gains losses and the related income tax benefits, $(3.2) million and $(10.2) million, are included in income tax expense in the Consolidated Statements of Operations for the three and nine months ended September 30, 2022, respectively. (3) The pretax amounts reclassified from AOCI, $(5.0) million and $(7.1) million, are included in Net investment losses and the related income tax benefits, $(1.0) million and $(1.5) million, are included in income tax expense in the Consolidated Statements of Operations for the three and nine months ended September 30, 2021, respectively. |
Supplemental Consolidated Cas_2
Supplemental Consolidated Cash and Cash Flow Information (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of cash and cash equivalents | ($ in millions) September 30, 2022 December 31, 2021 Cash $ 35.2 $ 133.0 Restricted cash 1.0 0.7 Total cash and restricted cash reported in the Consolidated Balance Sheets $ 36.2 $ 133.7 |
Schedule of restrictions on cash and cash equivalents | ($ in millions) September 30, 2022 December 31, 2021 Cash $ 35.2 $ 133.0 Restricted cash 1.0 0.7 Total cash and restricted cash reported in the Consolidated Balance Sheets $ 36.2 $ 133.7 |
Schedule of supplemental cash flow information | ($ in millions) Nine Months Ended 2022 2021 Cash paid for: Interest $ 9.1 $ 7.3 Income taxes 6.4 20.2 |
Basis of Presentation and Sig_4
Basis of Presentation and Significant Accounting Policies (Details) $ in Millions | 9 Months Ended | ||
Sep. 30, 2022 USD ($) segment | Dec. 31, 2021 USD ($) | Jan. 01, 2021 USD ($) | |
Securities Financing Transaction | |||
Number of operating segments | segment | 3 | ||
Securities sold under agreement to repurchase, cash received (in percent) | 95% | ||
Securities sold under agreements to repurchase | $ 95.2 | ||
Securities sold under agreements to repurchase, accrued interest | $ 0 | ||
Retained earnings | (1,500.4) | (1,524.9) | |
Accumulated other comprehensive income | 10.2 | 10.2 | |
Adjustments | Scenario, Plan | |||
Securities Financing Transaction | |||
Retained earnings | $ 5 | ||
Adjustments | Scenario, Plan | Market Risk | |||
Securities Financing Transaction | |||
Accumulated other comprehensive income | (15) | ||
Adjustments | Scenario, Plan | Minimum | Discount Rate | |||
Securities Financing Transaction | |||
Accumulated other comprehensive income | (475) | ||
Adjustments | Scenario, Plan | Minimum | Deferred Acquisition Costs | |||
Securities Financing Transaction | |||
Accumulated other comprehensive income | 70 | ||
Adjustments | Scenario, Plan | Maximum | Discount Rate | |||
Securities Financing Transaction | |||
Accumulated other comprehensive income | (525) | ||
Adjustments | Scenario, Plan | Maximum | Deferred Acquisition Costs | |||
Securities Financing Transaction | |||
Accumulated other comprehensive income | $ 75 | ||
Fair Value | |||
Securities Financing Transaction | |||
Securities sold under agreements to repurchase | $ 95.8 | $ 0 |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) - Madison National - USD ($) $ in Millions | 9 Months Ended | |
Jan. 01, 2022 | Sep. 30, 2022 | |
Business Acquisition | ||
Purchase price | $ 172.3 | |
Business acquisition, contingent consideration, liability | $ 12.5 | |
Revenue of acquiree since acquisition date, actual | $ 106.7 | |
Earnings or loss of acquiree since acquisition date, actual | 8.8 | |
Noncash amortization of intangible assets | $ 3.5 |
Acquisitions - Identifiable Ass
Acquisitions - Identifiable Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions | Jan. 01, 2022 | Sep. 30, 2022 | Dec. 31, 2021 |
Liabilities: | |||
Goodwill | $ 56.3 | $ 43.5 | |
Goodwill expected to be deductible for tax purposes | $ 18.6 | ||
Madison National | |||
Assets: | |||
Investments | 90.4 | ||
Cash and short-term investments | 123.4 | ||
Reinsurance recoverable | 356 | ||
Intangible assets | 59.4 | $ 56.5 | |
Other assets | 23.2 | ||
Liabilities: | |||
Investment contract and policy reserves | 274.5 | ||
Unpaid claims and claim expenses | 48.2 | ||
Unearned premiums | 1.5 | ||
Other policyholder funds | 152.8 | ||
Other liabilities | 15.9 | ||
Total identifiable net assets acquired | 159.5 | ||
Goodwill | 12.8 | ||
Purchase price | $ 172.3 | ||
Minimum | Madison National | |||
Liabilities: | |||
Acquired finite-lived intangible assets, useful lives | 1 year | ||
Maximum | Madison National | |||
Liabilities: | |||
Acquired finite-lived intangible assets, useful lives | 10 years |
Investments - Net Investment In
Investments - Net Investment Income (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Net Investment Income | ||||
Total net investment income | $ 97.6 | $ 103.7 | $ 300.7 | $ 308.4 |
Investment Portfolio | ||||
Net Investment Income | ||||
Investment expenses | (2.7) | (2.7) | (7.8) | (7.3) |
Total net investment income | 70.9 | 78.1 | 223.3 | 233.3 |
Deposit Asset on Reinsurance | ||||
Net Investment Income | ||||
Total net investment income | 26.7 | 25.6 | 77.4 | 75.1 |
Fixed maturity securities | Investment Portfolio | ||||
Net Investment Income | ||||
Net investment income | 63.9 | 59.8 | 184.5 | 177.2 |
Equity securities | Investment Portfolio | ||||
Net Investment Income | ||||
Net investment income | 1.8 | 1.4 | 7.1 | 3.8 |
Limited partnership interests | Investment Portfolio | ||||
Net Investment Income | ||||
Net investment income | 5.1 | 16.8 | 31.3 | 51.1 |
Short-term and other investments | Investment Portfolio | ||||
Net Investment Income | ||||
Net investment income | $ 2.8 | $ 2.8 | $ 8.2 | $ 8.5 |
Investments - Net Investment Lo
Investments - Net Investment Losses (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Gain (Loss) on Securities | ||||
Net investment losses | $ (12.8) | $ (6.5) | $ (43.8) | $ (10.6) |
Fixed maturity securities | ||||
Gain (Loss) on Securities | ||||
Net investment losses | (10.7) | (4) | (15.9) | (7.9) |
Equity securities | ||||
Gain (Loss) on Securities | ||||
Net investment losses | (4.4) | (1) | (32.5) | 0.7 |
Short-term investments and other | ||||
Gain (Loss) on Securities | ||||
Net investment losses | $ 2.3 | $ (1.5) | $ 4.6 | $ (3.4) |
Investments - Net Investment _2
Investments - Net Investment Losses by Transaction Type (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Investments, Debt and Equity Securities [Abstract] | ||||
Write-offs | $ (0.6) | $ (6.6) | $ (2.8) | $ (7.7) |
Intent-to-sell impairments | (6.2) | 0 | (7.6) | (2.1) |
Total impairments | (6.8) | (6.6) | (10.4) | (9.8) |
Sales and other, net | (3.9) | 2.7 | (3.9) | 2.2 |
Change in fair value - equity securities | (4.4) | (1.1) | (34.1) | 0.4 |
Change in fair value and gains (losses) realized on settlements - derivatives | 2.3 | (1.5) | 4.6 | (3.4) |
Net investment losses | $ (12.8) | $ (6.5) | $ (43.8) | $ (10.6) |
Investments- Allowance for Cred
Investments- Allowance for Credit Loss Impairments on Fixed Maturity Securities (Details) - Fixed maturity securities - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Jun. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | |
Debt Securities, Available-for-sale, Allowance for Credit Loss | ||||||||
Beginning balance | $ 10.1 | $ 7.7 | $ 10.1 | $ 7.7 | $ 9.5 | $ 7.7 | $ 1.1 | $ 0 |
Credit losses on fixed maturity securities for which credit losses were not previously reported | 0 | 6.6 | 0 | 7.7 | ||||
Net increase related to credit losses previously reported | 0.6 | 0 | 2.8 | 0 | ||||
Reduction of credit allowances related to sales | 0 | 0 | 0 | 0 | ||||
Write-offs | 0 | 0 | (0.4) | 0 | ||||
Ending balance | $ 10.1 | $ 7.7 | $ 10.1 | $ 7.7 |
Investments - Summary of Fair V
Investments - Summary of Fair Value and Amortized Costs (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Unrealized gains and losses on fixed maturities and equity securities | ||
Amortized Cost, net | $ 5,904.1 | $ 5,797.7 |
Fair Value | 5,272.1 | 6,239.3 |
Total | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Amortized Cost, net | 5,904.1 | 5,797.7 |
Gross Unrealized Gains | 29.3 | 460.2 |
Gross Unrealized Losses | 661.3 | 18.6 |
Fair Value | 5,272.1 | 6,239.3 |
Mortgage-backed securities | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Amortized Cost, net | 643.7 | 612.1 |
Gross Unrealized Gains | 1.5 | 51.9 |
Gross Unrealized Losses | 66.1 | 1.5 |
Fair Value | 579.1 | 662.5 |
Other, including U.S. Treasury securities | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Amortized Cost, net | 408.3 | 342.5 |
Gross Unrealized Gains | 0.4 | 27.7 |
Gross Unrealized Losses | 66 | 4.3 |
Fair Value | 342.7 | 365.9 |
Municipal bonds | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Amortized Cost, net | 1,440.9 | 1,519.7 |
Gross Unrealized Gains | 14.5 | 184.4 |
Gross Unrealized Losses | 147.5 | 0.7 |
Fair Value | 1,307.9 | 1,703.4 |
Foreign government bonds | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Amortized Cost, net | 37.2 | 40.2 |
Gross Unrealized Gains | 0 | 3.4 |
Gross Unrealized Losses | 1.7 | 0 |
Fair Value | 35.5 | 43.6 |
Corporate bonds | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Amortized Cost, net | 2,228.8 | 2,217.7 |
Gross Unrealized Gains | 10 | 176.2 |
Gross Unrealized Losses | 311 | 5.2 |
Fair Value | 1,927.8 | 2,388.7 |
Other asset-backed securities | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Amortized Cost, net | 1,145.2 | 1,065.5 |
Gross Unrealized Gains | 2.9 | 16.6 |
Gross Unrealized Losses | 69 | 6.9 |
Fair Value | 1,079.1 | 1,075.2 |
FNMA | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Fair Value | 337.5 | 376.7 |
FHLMC | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Fair Value | 271.1 | 326.5 |
GNMA | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Fair Value | $ 90.2 | $ 112.1 |
Investments - Fair Value and Gr
Investments - Fair Value and Gross Unrealized Losses (Details) $ in Millions | Sep. 30, 2022 USD ($) security | Dec. 31, 2021 USD ($) security |
Fixed maturity securities, Gross Unrealized Losses | ||
Number of positions with a gross unrealized loss, 12 Months or Less (security) | security | 3,002 | 516 |
Number of positions with a gross unrealized loss, more than 12 months (security) | security | 303 | 122 |
Number of positions with a gross unrealized loss, Total (security) | security | 3,305 | 638 |
Fair value as a percentage of total fixed maturities and equity securities fair value, 12 Months or Less (percent) | 77.40% | 12.60% |
Fair value as a percentage of total fixed maturities and equity securities fair value, more than 12 months (percent) | 7.80% | 3.40% |
Fair value as a percentage of total fixed maturities and equity securities fair value, Total (percent) | 85.20% | 16% |
Total | ||
Fixed maturity securities, Fair Value | ||
Fixed maturity securities, Fair Value, 12 Months or Less | $ 4,082.5 | $ 783.4 |
Fixed maturity securities, Fair Value, More than 12 Months | 413.2 | 211.9 |
Fixed maturity securities, Fair Value, Total | 4,495.7 | 995.3 |
Fixed maturity securities, Gross Unrealized Losses | ||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 565.7 | 11.3 |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 95.6 | 7.3 |
Fixed maturity securities, Gross Unrealized Losses, Total | 661.3 | 18.6 |
Mortgage-backed securities | ||
Fixed maturity securities, Fair Value | ||
Fixed maturity securities, Fair Value, 12 Months or Less | 472.2 | 67.4 |
Fixed maturity securities, Fair Value, More than 12 Months | 51.3 | 3.9 |
Fixed maturity securities, Fair Value, Total | 523.5 | 71.3 |
Fixed maturity securities, Gross Unrealized Losses | ||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 51.5 | 1.3 |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 14.6 | 0.2 |
Fixed maturity securities, Gross Unrealized Losses, Total | 66.1 | 1.5 |
Other | ||
Fixed maturity securities, Fair Value | ||
Fixed maturity securities, Fair Value, 12 Months or Less | 266.6 | 59.5 |
Fixed maturity securities, Fair Value, More than 12 Months | 58 | 35.1 |
Fixed maturity securities, Fair Value, Total | 324.6 | 94.6 |
Fixed maturity securities, Gross Unrealized Losses | ||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 36.6 | 1.7 |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 29.4 | 2.6 |
Fixed maturity securities, Gross Unrealized Losses, Total | 66 | 4.3 |
Municipal bonds | ||
Fixed maturity securities, Fair Value | ||
Fixed maturity securities, Fair Value, 12 Months or Less | 1,035.5 | 56.8 |
Fixed maturity securities, Fair Value, More than 12 Months | 9.7 | 0.6 |
Fixed maturity securities, Fair Value, Total | 1,045.2 | 57.4 |
Fixed maturity securities, Gross Unrealized Losses | ||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 143.5 | 0.7 |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 4 | 0 |
Fixed maturity securities, Gross Unrealized Losses, Total | 147.5 | 0.7 |
Foreign government bonds | ||
Fixed maturity securities, Fair Value | ||
Fixed maturity securities, Fair Value, 12 Months or Less | 35.4 | 0 |
Fixed maturity securities, Fair Value, More than 12 Months | 0 | 0 |
Fixed maturity securities, Fair Value, Total | 35.4 | 0 |
Fixed maturity securities, Gross Unrealized Losses | ||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 1.7 | 0 |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 0 | 0 |
Fixed maturity securities, Gross Unrealized Losses, Total | 1.7 | 0 |
Corporate bonds | ||
Fixed maturity securities, Fair Value | ||
Fixed maturity securities, Fair Value, 12 Months or Less | 1,496.6 | 220.7 |
Fixed maturity securities, Fair Value, More than 12 Months | 80.3 | 44.1 |
Fixed maturity securities, Fair Value, Total | 1,576.9 | 264.8 |
Fixed maturity securities, Gross Unrealized Losses | ||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 280 | 3.8 |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 31 | 1.4 |
Fixed maturity securities, Gross Unrealized Losses, Total | 311 | 5.2 |
Other asset-backed securities | ||
Fixed maturity securities, Fair Value | ||
Fixed maturity securities, Fair Value, 12 Months or Less | 776.2 | 379 |
Fixed maturity securities, Fair Value, More than 12 Months | 213.9 | 128.2 |
Fixed maturity securities, Fair Value, Total | 990.1 | 507.2 |
Fixed maturity securities, Gross Unrealized Losses | ||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 52.4 | 3.8 |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 16.6 | 3.1 |
Fixed maturity securities, Gross Unrealized Losses, Total | $ 69 | $ 6.9 |
Investments - Narrative (Detail
Investments - Narrative (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Investment Holdings | ||
Investment grade rating | 94.90% | |
Fair Value | $ 5,272.1 | $ 6,239.3 |
FHLB funding agreements | $ 842.5 | $ 787.5 |
Investment Grade | ||
Investment Holdings | ||
Increase in credit spread (percent) | 0.69% | |
Decrease in total returns (percent) | 18.30% | |
Increase to Bloomberg Barclays Index Yield-To-Worst (percent) | 3.40% | |
Bloomberg Barclays Index Yield-to-Worst | 5.70% | |
High Yield | ||
Investment Holdings | ||
Increase in credit spread (percent) | 2.33% | |
Decrease in total returns (percent) | 14.60% | |
Increase to Bloomberg Barclays Index Yield-To-Worst (percent) | 5.50% | |
Bloomberg Barclays Index Yield-to-Worst | 9.70% | |
10-year U.S. Treasury | ||
Investment Holdings | ||
Increase in interest rates | 2.32% | |
Federal interest rate on securities (percent) | 3.83% | 1.51% |
FHLB of Chicago | ||
Investment Holdings | ||
Fair Value | $ 920.7 | $ 870.1 |
Governmental Agencies as Required by Law in Various States | ||
Investment Holdings | ||
Fair Value | $ 30 | $ 26.2 |
Investments - Distribution of F
Investments - Distribution of Fixed Maturity Securities by Expected Maturity (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Percent of Total Fair Value | ||
Due in 1 year Or less (percent) | 3.90% | 4% |
Due after 1 year through 5 years (percent) | 26% | 27% |
Due after 5 years through 10 years (percent) | 28.30% | 27.70% |
Due after 10 years through 20 years (percent) | 25.50% | 23.90% |
Due after 20 years (percent) | 16.30% | 17.40% |
Total (percent) | 100% | 100% |
Fair Value | ||
Due in 1 year or less | $ 204 | |
Due after 1 year through 5 years | 1,369.3 | |
Due after 5 years through 10 years | 1,492.6 | |
Due after 10 years through 20 years | 1,348.3 | |
Due after 20 years | 857.9 | |
Total | 5,272.1 | $ 6,239.3 |
Amortized Cost, net | ||
Due in 1 year or less | 204.6 | |
Due after 1 year through 5 years | 1,439 | |
Due after 5 years through 10 years | 1,621.7 | |
Due after 10 years through 20 years | 1,551.8 | |
Due after 20 years | 1,087 | |
Amortized Cost, net | $ 5,904.1 | $ 5,797.7 |
Average option-adjusted duration, in years | 6 years 6 months | 6 years 8 months 12 days |
Investments - Sales of Fixed Ma
Investments - Sales of Fixed Maturity and Equity Securities (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Fixed maturity securities | ||||
Proceeds received | $ 164.6 | $ 155.4 | $ 529.9 | $ 319.2 |
Gross gains realized | 1.1 | 3.2 | 4.7 | 6.2 |
Gross losses realized | (5) | (0.7) | (10.2) | (4.3) |
Equity securities | ||||
Proceeds received | 0.2 | 0.3 | 6 | 1 |
Gross gains realized | 0 | 0.1 | 1.7 | 0.3 |
Gross losses realized | $ 0 | $ 0 | $ (0.1) | $ 0 |
Investments - Reconciliation of
Investments - Reconciliation of Net Unrealized Investment Gains (Losses) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Net unrealized investment gains (losses) on fixed maturity securities, net of tax | ||||
Beginning balance | $ 1,807.4 | |||
Ending balance | $ 1,076.6 | $ 1,796.4 | 1,076.6 | $ 1,796.4 |
Net unrealized investment gains (losses) on securities | ||||
Net unrealized investment gains (losses) on fixed maturity securities, net of tax | ||||
Beginning balance | (220.4) | 332.2 | 290.7 | 366.3 |
Ending balance | (396.7) | 306.9 | (396.7) | 306.9 |
Net unrealized investment gains (losses) on securities | Fixed maturity securities | ||||
Net unrealized investment gains (losses) on fixed maturity securities, net of tax | ||||
Beginning balance | (283.2) | 399.4 | 348.9 | 439.8 |
Change in net unrealized investment gains (losses) on fixed maturity securities | (228) | (34.9) | (886.5) | (77) |
Reclassification of net investment losses on fixed maturity securities to net income | 11.9 | 3.9 | 38.3 | 5.6 |
Ending balance | $ (499.3) | $ 368.4 | $ (499.3) | $ 368.4 |
Investments - Carrying Amount o
Investments - Carrying Amount of Equity Method Limited Partnership Interests (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Schedule of Equity Method Investments | ||
Limited partnership interests | $ 997.5 | $ 712.8 |
Commercial mortgage loan funds | ||
Schedule of Equity Method Investments | ||
Limited partnership interests | 601.5 | 346.8 |
Private equity funds | ||
Schedule of Equity Method Investments | ||
Limited partnership interests | 73.4 | 74 |
Infrastructure equity funds | ||
Schedule of Equity Method Investments | ||
Limited partnership interests | 70.2 | 58.3 |
Infrastructure debt funds | ||
Schedule of Equity Method Investments | ||
Limited partnership interests | 67.4 | 62.4 |
Other funds | ||
Schedule of Equity Method Investments | ||
Limited partnership interests | $ 185 | $ 171.3 |
Investments - Offsetting of Ass
Investments - Offsetting of Assets and Liabilities (Details) - Free-standing derivatives - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Asset derivatives: | ||
Gross Amounts | $ 2 | $ 10.7 |
Gross Amounts Offset in the Consolidated Balance Sheets | 0 | 0 |
Net Amounts of Assets/ Liabilities Presented in the Consolidated Balance Sheets | 2 | 10.7 |
Gross Amounts Not Offset in the Consolidated Balance Sheets, Financial Instruments | 0 | 4.5 |
Gross Amounts Not Offset in the Consolidated Balance Sheets, Cash Collateral Received | 1.8 | 6.4 |
Net Amount | $ 0.2 | |
Net Amount | $ (0.2) |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||||
Percentage of level 3 invested assets in total investment portfolio | 7.40% | 7.40% | ||
Net investment gains (losses) included in net income related to financial assets | $ 0.9 | $ 6.5 | $ 3.2 | $ 7.6 |
Net investment gains (losses) included in net income related to financial liabilities | $ 4.6 | $ 0.7 | $ 14.4 | $ 8.2 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Financial Instruments Measured and Carried at Fair Value (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Financial Assets | ||
Total fixed maturity securities | $ 5,272.1 | $ 6,239.3 |
Equity securities | 113.8 | 147.2 |
Mortgage-backed securities | ||
Financial Assets | ||
Total fixed maturity securities | 579.1 | 662.5 |
Other, including U.S. Treasury securities | ||
Financial Assets | ||
Total fixed maturity securities | 342.7 | 365.9 |
Municipal bonds | ||
Financial Assets | ||
Total fixed maturity securities | 1,307.9 | 1,703.4 |
Foreign government bonds | ||
Financial Assets | ||
Total fixed maturity securities | 35.5 | 43.6 |
Corporate bonds | ||
Financial Assets | ||
Total fixed maturity securities | 1,927.8 | 2,388.7 |
Other asset-backed securities | ||
Financial Assets | ||
Total fixed maturity securities | 1,079.1 | 1,075.2 |
Carrying Amount | ||
Financial Assets | ||
Equity securities | 113.8 | 147.2 |
Short-term investments | 51.4 | 157.8 |
Other investments | 34 | 43.6 |
Totals | 5,471.3 | 6,587.9 |
Separate Account variable annuity assets | 2,599.6 | 3,441 |
Financial Liabilities | ||
Investment contract and policy reserves, embedded derivatives | 0.4 | 2.1 |
Other policyholder funds, embedded derivatives | 89.9 | 106.6 |
Carrying Amount | Recurring | ||
Financial Assets | ||
Total fixed maturity securities | 5,272.1 | 6,239.3 |
Carrying Amount | Mortgage-backed securities | ||
Financial Assets | ||
Total fixed maturity securities | 579.1 | 662.5 |
Carrying Amount | Other, including U.S. Treasury securities | ||
Financial Assets | ||
Total fixed maturity securities | 342.8 | 365.9 |
Carrying Amount | Municipal bonds | ||
Financial Assets | ||
Total fixed maturity securities | 1,307.9 | 1,703.4 |
Carrying Amount | Foreign government bonds | ||
Financial Assets | ||
Total fixed maturity securities | 35.4 | 43.6 |
Carrying Amount | Corporate bonds | ||
Financial Assets | ||
Total fixed maturity securities | 1,927.8 | 2,388.7 |
Carrying Amount | Other asset-backed securities | ||
Financial Assets | ||
Total fixed maturity securities | 1,079.1 | 1,075.2 |
Fair Value | ||
Financial Assets | ||
Equity securities | 113.8 | 147.2 |
Short-term investments | 51.4 | 157.8 |
Other investments | 34 | 43.6 |
Totals | 5,471.3 | 6,587.9 |
Separate Account variable annuity assets | 2,599.6 | 3,441 |
Financial Liabilities | ||
Investment contract and policy reserves, embedded derivatives | 0.4 | 2.1 |
Other policyholder funds, embedded derivatives | 89.9 | 106.6 |
Fair Value | Recurring | ||
Financial Assets | ||
Total fixed maturity securities | 5,272.1 | 6,239.3 |
Fair Value | Mortgage-backed securities | ||
Financial Assets | ||
Total fixed maturity securities | 579.1 | 662.5 |
Fair Value | Other, including U.S. Treasury securities | ||
Financial Assets | ||
Total fixed maturity securities | 342.7 | 365.9 |
Fair Value | Municipal bonds | ||
Financial Assets | ||
Total fixed maturity securities | 1,307.9 | 1,703.4 |
Fair Value | Foreign government bonds | ||
Financial Assets | ||
Total fixed maturity securities | 35.5 | 43.6 |
Fair Value | Corporate bonds | ||
Financial Assets | ||
Total fixed maturity securities | 1,927.8 | 2,388.7 |
Fair Value | Other asset-backed securities | ||
Financial Assets | ||
Total fixed maturity securities | 1,079.1 | 1,075.2 |
Fair Value | Level 1 | ||
Financial Assets | ||
Equity securities | 22.4 | 35.2 |
Short-term investments | 49 | 157.8 |
Other investments | 0 | 0 |
Totals | 108.7 | 225.6 |
Separate Account variable annuity assets | 2,599.6 | 3,441 |
Financial Liabilities | ||
Investment contract and policy reserves, embedded derivatives | 0 | 0 |
Other policyholder funds, embedded derivatives | 0 | 0 |
Fair Value | Level 1 | Recurring | ||
Financial Assets | ||
Total fixed maturity securities | 37.3 | 32.6 |
Fair Value | Level 1 | Mortgage-backed securities | ||
Financial Assets | ||
Total fixed maturity securities | 0 | 0 |
Fair Value | Level 1 | Other, including U.S. Treasury securities | ||
Financial Assets | ||
Total fixed maturity securities | 24.5 | 17.7 |
Fair Value | Level 1 | Municipal bonds | ||
Financial Assets | ||
Total fixed maturity securities | 0 | 0 |
Fair Value | Level 1 | Foreign government bonds | ||
Financial Assets | ||
Total fixed maturity securities | 0 | 0 |
Fair Value | Level 1 | Corporate bonds | ||
Financial Assets | ||
Total fixed maturity securities | 12.8 | 14.9 |
Fair Value | Level 1 | Other asset-backed securities | ||
Financial Assets | ||
Total fixed maturity securities | 0 | 0 |
Fair Value | Level 2 | ||
Financial Assets | ||
Equity securities | 89.4 | 110.6 |
Short-term investments | 2.4 | 0 |
Other investments | 34 | 43.6 |
Totals | 4,960.3 | 5,990.9 |
Separate Account variable annuity assets | 0 | 0 |
Financial Liabilities | ||
Investment contract and policy reserves, embedded derivatives | 0.4 | 2.1 |
Other policyholder funds, embedded derivatives | 0 | 0 |
Fair Value | Level 2 | Recurring | ||
Financial Assets | ||
Total fixed maturity securities | 4,834.5 | 5,836.7 |
Fair Value | Level 2 | Mortgage-backed securities | ||
Financial Assets | ||
Total fixed maturity securities | 576.5 | 662.5 |
Fair Value | Level 2 | Other, including U.S. Treasury securities | ||
Financial Assets | ||
Total fixed maturity securities | 318.2 | 348.2 |
Fair Value | Level 2 | Municipal bonds | ||
Financial Assets | ||
Total fixed maturity securities | 1,254.6 | 1,642.6 |
Fair Value | Level 2 | Foreign government bonds | ||
Financial Assets | ||
Total fixed maturity securities | 35.5 | 43.6 |
Fair Value | Level 2 | Corporate bonds | ||
Financial Assets | ||
Total fixed maturity securities | 1,675.2 | 2,163.5 |
Fair Value | Level 2 | Other asset-backed securities | ||
Financial Assets | ||
Total fixed maturity securities | 974.5 | 976.3 |
Fair Value | Level 3 | ||
Financial Assets | ||
Equity securities | 2 | 1.4 |
Short-term investments | 0 | 0 |
Other investments | 0 | 0 |
Totals | 402.3 | 371.4 |
Separate Account variable annuity assets | 0 | 0 |
Financial Liabilities | ||
Investment contract and policy reserves, embedded derivatives | 0 | 0 |
Other policyholder funds, embedded derivatives | 89.9 | 106.6 |
Fair Value | Level 3 | Recurring | ||
Financial Assets | ||
Total fixed maturity securities | 400.3 | 370 |
Fair Value | Level 3 | Mortgage-backed securities | ||
Financial Assets | ||
Total fixed maturity securities | 2.6 | 0 |
Fair Value | Level 3 | Other, including U.S. Treasury securities | ||
Financial Assets | ||
Total fixed maturity securities | 0 | 0 |
Fair Value | Level 3 | Municipal bonds | ||
Financial Assets | ||
Total fixed maturity securities | 53.3 | 60.8 |
Fair Value | Level 3 | Foreign government bonds | ||
Financial Assets | ||
Total fixed maturity securities | 0 | 0 |
Fair Value | Level 3 | Corporate bonds | ||
Financial Assets | ||
Total fixed maturity securities | 239.8 | 210.3 |
Fair Value | Level 3 | Other asset-backed securities | ||
Financial Assets | ||
Total fixed maturity securities | $ 104.6 | $ 98.9 |
Fair Value of Financial Instr_5
Fair Value of Financial Instruments - Rollforward of Instruments Measured on Recurring Basis (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Financial Assets | ||||
Beginning balance | $ 420 | $ 324.9 | $ 371.4 | $ 355.1 |
Transfers into Level 3 | 33.5 | 59.7 | 179.3 | 118.5 |
Transfers out of Level 3 | (34.8) | 0 | (42.9) | (75.9) |
Total gains or losses | ||||
Net investment losses included in net income related to financial assets | (0.9) | (6.5) | (3.2) | (7.6) |
Net unrealized investment gains (losses) included in OCI | (16.6) | 6.2 | (41.6) | 8.8 |
Purchases | 16.5 | 0 | 21.4 | 0 |
Issuances | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | (2.1) | 0 |
Settlements | 0 | 0 | 0 | 0 |
Paydowns, maturities and distributions | (15.4) | (22.2) | (80) | (36.8) |
Ending balance | 402.3 | 362.1 | 402.3 | 362.1 |
Financial Liabilities | ||||
Beginning balance | 93.2 | 108.9 | 106.6 | 104.5 |
Transfers into Level 3 | 0 | 0 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 | 0 | 0 |
Total gains or losses | ||||
Net investment (gains) losses included in net income related to financial liabilities | (4.6) | (0.7) | (14.4) | (8.2) |
Net unrealized investment gains (losses) included in OCI | 0 | 0 | 0 | 0 |
Purchases | 0 | 0 | 0 | 0 |
Issuances | 2.7 | 1.4 | 4.8 | 3.3 |
Sales | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Paydowns, maturities and distributions | (1.4) | (4.3) | (7.1) | (9.3) |
Ending balance | 89.9 | 106.7 | 89.9 | 106.7 |
Municipal bonds | ||||
Financial Assets | ||||
Beginning balance | 51 | 58.6 | 60.8 | 59.6 |
Transfers into Level 3 | 0 | 0 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 | (3.2) | 0 |
Total gains or losses | ||||
Net investment losses included in net income related to financial assets | 0 | 0 | 0 | 0 |
Net unrealized investment gains (losses) included in OCI | (5.3) | (0.3) | (11.6) | (0.9) |
Purchases | 0.2 | 0 | 0.2 | 0 |
Issuances | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Paydowns, maturities and distributions | 7.4 | (0.1) | 7.1 | (0.5) |
Ending balance | 53.3 | 58.2 | 53.3 | 58.2 |
Corporate bonds | ||||
Financial Assets | ||||
Beginning balance | 270.5 | 150.5 | 210.3 | 155.8 |
Transfers into Level 3 | 20.5 | 55.7 | 144 | 108.3 |
Transfers out of Level 3 | (34.8) | 0 | (34.9) | (56.7) |
Total gains or losses | ||||
Net investment losses included in net income related to financial assets | 0 | 0 | 0 | 0 |
Net unrealized investment gains (losses) included in OCI | (7.4) | (0.1) | (18.7) | 1 |
Purchases | 8.4 | 0 | 13.3 | 0 |
Issuances | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Paydowns, maturities and distributions | (17.4) | (1.1) | (74.2) | (3.4) |
Ending balance | 239.8 | 205 | 239.8 | 205 |
Mortgage Backed and Other Asset- Backed Securities | ||||
Financial Assets | ||||
Beginning balance | 97.1 | 115.5 | 98.9 | 139.4 |
Transfers into Level 3 | 12.2 | 4 | 34.5 | 10.2 |
Transfers out of Level 3 | 0 | 0 | (4.8) | (19.2) |
Total gains or losses | ||||
Net investment losses included in net income related to financial assets | (0.8) | (6.6) | (3.1) | (7.7) |
Net unrealized investment gains (losses) included in OCI | (3.9) | 6.6 | (11.3) | 8.7 |
Purchases | 7.9 | 0 | 7.9 | 0 |
Issuances | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | (2.1) | 0 |
Settlements | 0 | 0 | 0 | 0 |
Paydowns, maturities and distributions | (5.3) | (21) | (12.8) | (32.9) |
Ending balance | 107.2 | 98.5 | 107.2 | 98.5 |
Total Fixed Maturity Securities | ||||
Financial Assets | ||||
Beginning balance | 418.6 | 324.6 | 370 | 354.8 |
Transfers into Level 3 | 32.7 | 59.7 | 178.5 | 118.5 |
Transfers out of Level 3 | (34.8) | 0 | (42.9) | (75.9) |
Total gains or losses | ||||
Net investment losses included in net income related to financial assets | (0.8) | (6.6) | (3.1) | (7.7) |
Net unrealized investment gains (losses) included in OCI | (16.6) | 6.2 | (41.6) | 8.8 |
Purchases | 16.5 | 0 | 21.4 | 0 |
Issuances | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | (2.1) | 0 |
Settlements | 0 | 0 | 0 | 0 |
Paydowns, maturities and distributions | (15.3) | (22.2) | (79.9) | (36.8) |
Ending balance | 400.3 | 361.7 | 400.3 | 361.7 |
Equity securities | ||||
Financial Assets | ||||
Beginning balance | 1.4 | 0.3 | 1.4 | 0.3 |
Transfers into Level 3 | 0.8 | 0 | 0.8 | 0 |
Transfers out of Level 3 | 0 | 0 | 0 | 0 |
Total gains or losses | ||||
Net investment losses included in net income related to financial assets | (0.1) | 0.1 | (0.1) | 0.1 |
Net unrealized investment gains (losses) included in OCI | 0 | 0 | 0 | 0 |
Purchases | 0 | 0 | 0 | 0 |
Issuances | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Paydowns, maturities and distributions | (0.1) | 0 | (0.1) | 0 |
Ending balance | $ 2 | $ 0.4 | $ 2 | $ 0.4 |
Fair Value of Financial Instr_6
Fair Value of Financial Instruments - Quantitative Information about Level 3 Fair Value Measurements (Details) | Sep. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) |
Fair Value Measurement Inputs and Valuation Techniques | ||
Fair Value | $ 5,272,100,000 | $ 6,239,300,000 |
Equity securities at fair value | 113,800,000 | 147,200,000 |
Fair Value | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Equity securities at fair value | 113,800,000 | 147,200,000 |
Derivatives embedded in fixed indexed annuity products | 89,900,000 | 106,600,000 |
Municipal bonds | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Fair Value | 1,307,900,000 | 1,703,400,000 |
Municipal bonds | Fair Value | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Fair Value | 1,307,900,000 | 1,703,400,000 |
Corporate bonds | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Fair Value | 1,927,800,000 | 2,388,700,000 |
Corporate bonds | Fair Value | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Fair Value | 1,927,800,000 | 2,388,700,000 |
Level 3 | Fair Value | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Equity securities at fair value | 2,000,000 | 1,400,000 |
Derivatives embedded in fixed indexed annuity products | 89,900,000 | 106,600,000 |
Level 3 | Municipal bonds | Fair Value | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Fair Value | 53,300,000 | 60,800,000 |
Level 3 | Corporate bonds | Fair Value | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Fair Value | $ 239,800,000 | $ 210,300,000 |
Level 3 | Corporate bonds | exit cap rate | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt securities, measurement input | 0.062 | |
Level 3 | Corporate bonds | EV / Fwd EBITDA (x) | market comparable | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt securities, measurement input | 5.1 | |
Level 3 | Mortgage-backed and other asset-backed securities | Fair Value | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Fair Value | $ 107,200,000 | |
Minimum | Level 3 | volatility | black-scholes | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Equity securities, measurement input | 0.320 | |
Minimum | Level 3 | option budget | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Derivatives embedded in fixed indexed annuity products, measurement input | 0.009 | |
Minimum | Level 3 | Municipal bonds | option adjusted spread | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt securities, measurement input | 0.0330 | |
Minimum | Level 3 | Corporate bonds | option adjusted spread | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt securities, measurement input | 0.0242 | |
Minimum | Level 3 | Corporate bonds | N spread | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt securities, measurement input | 0.0363 | |
Minimum | Level 3 | Corporate bonds | T Spread | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt securities, measurement input | 0.0016 | |
Minimum | Level 3 | Corporate bonds | yield | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt securities, measurement input | 0.038 | |
Minimum | Level 3 | Corporate bonds | occupancy rate | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt securities, measurement input | 0.310 | |
Minimum | Level 3 | Corporate bonds | discount rate | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt securities, measurement input | 0.113 | |
Minimum | Level 3 | Mortgage-backed and other asset-backed securities | discounted cash flow | London Interbank Offered Rate (LIBOR) | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt securities, measurement input | 0.010 | |
Minimum | Level 3 | Mortgage-backed and other asset-backed securities | N spread | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt securities, measurement input | 0.0463 | |
Minimum | Level 3 | Mortgage-backed and other asset-backed securities | T Spread | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt securities, measurement input | 0.0226 | |
Minimum | Level 3 | Mortgage-backed and other asset-backed securities | yield | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt securities, measurement input | 0.070 | |
Minimum | Level 3 | Mortgage-backed and other asset-backed securities | discount rate | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt securities, measurement input | 0.160 | |
Minimum | Level 3 | Mortgage-backed and other asset-backed securities | discount margin | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt securities, measurement input | 0.304 | |
Minimum | Level 3 | Mortgage-backed and other asset-backed securities | median comparable yield | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt securities, measurement input | 0.172 | |
Minimum | Level 3 | Mortgage-backed and other asset-backed securities | PDI spread | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt securities, measurement input | 0.068 | |
Minimum | Level 3 | Mortgage-backed and other asset-backed securities | SBL spread | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt securities, measurement input | 0.045 | |
Minimum | Level 3 | Mortgage-backed and other asset-backed securities | weighting | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt securities, measurement input | 0.170 | |
Minimum | Level 3 | Mortgage-backed and other asset-backed securities | CPR | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt securities, measurement input | 0.200 | |
Minimum | Level 3 | Mortgage-backed and other asset-backed securities | default rate annual | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt securities, measurement input | 0.040 | |
Minimum | Level 3 | Mortgage-backed and other asset-backed securities | recovery | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt securities, measurement input | 0.650 | |
Maximum | Level 3 | volatility | black-scholes | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Equity securities, measurement input | 0.470 | |
Maximum | Level 3 | option budget | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Derivatives embedded in fixed indexed annuity products, measurement input | 0.033 | |
Maximum | Level 3 | Municipal bonds | option adjusted spread | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt securities, measurement input | 0.0446 | |
Maximum | Level 3 | Corporate bonds | option adjusted spread | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt securities, measurement input | 0.0393 | |
Maximum | Level 3 | Corporate bonds | T Spread | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt securities, measurement input | 0.0403 | |
Maximum | Level 3 | Corporate bonds | yield | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt securities, measurement input | 0.112 | |
Maximum | Level 3 | Corporate bonds | occupancy rate | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt securities, measurement input | 1 | |
Maximum | Level 3 | Corporate bonds | discount rate | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt securities, measurement input | 0.120 | |
Maximum | Level 3 | Mortgage-backed and other asset-backed securities | yield | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt securities, measurement input | 0.074 | |
Maximum | Level 3 | Mortgage-backed and other asset-backed securities | discount rate | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt securities, measurement input | 0.210 | |
Maximum | Level 3 | Mortgage-backed and other asset-backed securities | median comparable yield | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt securities, measurement input | 0.331 | |
Maximum | Level 3 | Mortgage-backed and other asset-backed securities | weighting | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt securities, measurement input | 0.830 | |
Weighted Average | Level 3 | lapse rate | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Derivatives embedded in fixed indexed annuity products, measurement input | 0.053 | |
Weighted Average | Level 3 | mortality multiplier | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Derivatives embedded in fixed indexed annuity products, measurement input | 0.668 | |
Weighted Average | Level 3 | non-performance adjustment | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Derivatives embedded in fixed indexed annuity products, measurement input | 0.050 | |
Weighted Average | Level 3 | Corporate bonds | weighted average cost of capital | discounted cash flow | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt securities, measurement input | 0.050 |
Fair Value of Financial Instr_7
Fair Value of Financial Instruments - Financial Instrument Not Carried at Fair Value (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Level 1 | ||
Investments | ||
Other investments | $ 0 | $ 0 |
Deposit asset on reinsurance | 0 | 0 |
Financial Liabilities | ||
Investment contract and policy reserves, fixed annuity contracts | 0 | 0 |
Investment contract and policy reserves, account values on life contracts | 0 | 0 |
Other policyholder funds | 0 | 0 |
Short-term debt | 0 | 0 |
Long-term debt | 0 | 0 |
Level 2 | ||
Investments | ||
Other investments | 0 | 0 |
Deposit asset on reinsurance | 0 | 0 |
Financial Liabilities | ||
Investment contract and policy reserves, fixed annuity contracts | 0 | 0 |
Investment contract and policy reserves, account values on life contracts | 0 | 0 |
Other policyholder funds | 857.9 | 782.8 |
Short-term debt | 0 | 0 |
Long-term debt | 249.5 | 277.4 |
Level 3 | ||
Investments | ||
Other investments | 172.5 | 152.4 |
Deposit asset on reinsurance | 2,164.9 | 2,935.1 |
Financial Liabilities | ||
Investment contract and policy reserves, fixed annuity contracts | 5,068.8 | 5,004.9 |
Investment contract and policy reserves, account values on life contracts | 119.3 | 115.4 |
Other policyholder funds | 52.9 | 56.5 |
Short-term debt | 249 | 249 |
Long-term debt | 0 | 0 |
Carrying Amount | ||
Investments | ||
Other investments | 169.1 | 148.8 |
Deposit asset on reinsurance | 2,525.6 | 2,481.5 |
Financial Liabilities | ||
Investment contract and policy reserves, fixed annuity contracts | 5,005.8 | 4,941.3 |
Investment contract and policy reserves, account values on life contracts | 109.5 | 105.4 |
Other policyholder funds | 910.8 | 839.3 |
Short-term debt | 249 | 249 |
Long-term debt | 248.9 | 253.6 |
Fair Value | ||
Investments | ||
Other investments | 172.5 | 152.4 |
Deposit asset on reinsurance | 2,164.9 | 2,935.1 |
Financial Liabilities | ||
Investment contract and policy reserves, fixed annuity contracts | 5,068.8 | 5,004.9 |
Investment contract and policy reserves, account values on life contracts | 119.3 | 115.4 |
Other policyholder funds | 910.8 | 839.3 |
Short-term debt | 249 | 249 |
Long-term debt | $ 249.5 | $ 277.4 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Goodwill Rollforward (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Goodwill [Roll Forward] | |
Beginning balance | $ 43.5 |
Impairment | 0 |
Acquisition | 12.8 |
Ending balance | 56.3 |
Property & Casualty | |
Goodwill [Roll Forward] | |
Beginning balance | 9.5 |
Impairment | 0 |
Acquisition | 0 |
Ending balance | 9.5 |
Life & Retirement | |
Goodwill [Roll Forward] | |
Beginning balance | 14.4 |
Impairment | 0 |
Acquisition | 0 |
Ending balance | 14.4 |
Supplemental & Group Benefits | |
Goodwill [Roll Forward] | |
Beginning balance | 19.6 |
Impairment | 0 |
Acquisition | 12.8 |
Ending balance | $ 32.4 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Narrative (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Jan. 01, 2022 |
BCG | ||
Goodwill | ||
Acquired finite-lived intangible assets | $ 14.1 | |
NTA | ||
Goodwill | ||
Acquired finite-lived intangible assets | 160.4 | |
Madison National | ||
Goodwill | ||
Acquired finite-lived intangible assets | $ 56.5 | $ 59.4 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Summary of Finite-Lived Intangible Assets (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Finite-Lived Intangible Assets | |
Weighted Average useful Life (in Years) | 20 years |
At inception | $ 231 |
Accumulated amortization | (52.6) |
Total | $ 178.4 |
Value of business acquired | |
Finite-Lived Intangible Assets | |
Weighted Average useful Life (in Years) | 28 years |
At inception | $ 100.1 |
Accumulated amortization | $ (26.6) |
Value of distribution acquired | |
Finite-Lived Intangible Assets | |
Weighted Average useful Life (in Years) | 17 years |
At inception | $ 54 |
Accumulated amortization | $ (13.8) |
Value of agency relationships | |
Finite-Lived Intangible Assets | |
Weighted Average useful Life (in Years) | 14 years |
At inception | $ 17 |
Accumulated amortization | $ (7.7) |
Value of customer relationships | |
Finite-Lived Intangible Assets | |
Weighted Average useful Life (in Years) | 10 years |
At inception | $ 59.9 |
Accumulated amortization | $ (4.5) |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets - Estimated Future Amortization (Details) $ in Millions | Sep. 30, 2022 USD ($) |
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule | |
2022 (excluding the nine months ended September 30, 2022) | $ 4.1 |
2023 | 15.5 |
2024 | 15.1 |
2025 | 14.8 |
2026 | 14.5 |
Thereafter | 114.4 |
Total | $ 178.4 |
Goodwill and Intangible Asset_6
Goodwill and Intangible Assets - Summary of Indefinite-Lived Intangibles (Details) $ in Millions | Sep. 30, 2022 USD ($) |
Indefinite-lived Intangible Assets | |
Indefinite-lived intangible assets | $ 13.8 |
Trade names | |
Indefinite-lived Intangible Assets | |
Indefinite-lived intangible assets | 7.9 |
State licenses | |
Indefinite-lived Intangible Assets | |
Indefinite-lived intangible assets | $ 5.9 |
Unpaid Claims and Claim Expen_3
Unpaid Claims and Claim Expenses - Summary of Reinsurance Reserve Balances (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Segment Reporting Information | ||||
Beginning gross reserves | $ 425.9 | |||
Claims and claim expense payments for claims occurring during: | ||||
Ending gross reserves | $ 481.9 | 481.9 | ||
Benefits, claims and settlement expenses | 173.6 | $ 164.8 | 558.2 | $ 446.2 |
Property & Casualty | ||||
Segment Reporting Information | ||||
Beginning gross reserves | 378.4 | 368.4 | 362.4 | 372.2 |
Less: reinsurance recoverables | 109.8 | 108.9 | 110.3 | 112.9 |
Net reserves, beginning of period | 268.6 | 259.5 | 252.1 | 259.3 |
Incurred claims and claim expenses: | ||||
Claims occurring in the current period | 120.3 | 132.5 | 372.8 | 345.4 |
Decrease in estimated reserves for claims occurring in prior periods | 2 | (3) | 8 | (7.2) |
Total claims and claim expenses incurred | 122.3 | 129.5 | 380.8 | 338.2 |
Claims and claim expense payments for claims occurring during: | ||||
Current period | 102.8 | 96.8 | 221.1 | 210.3 |
Prior periods | 29.7 | 26.4 | 153.4 | 121.4 |
Total claims and claim expense payments | 132.5 | 123.2 | 374.5 | 331.7 |
Net reserves, end of period | 258.4 | 265.8 | 258.4 | 265.8 |
Plus: reinsurance recoverables | 109 | 109.6 | 109 | 109.6 |
Ending gross reserves | 367.4 | 375.4 | 367.4 | 375.4 |
Life and Annuity Segments | ||||
Claims and claim expense payments for claims occurring during: | ||||
Net reserves, end of period | 114.5 | 64.7 | 114.5 | 64.7 |
Benefits, claims and settlement expenses | $ 51.3 | $ 35.3 | $ 177.4 | $ 108 |
Unpaid Claims and Claim Expen_4
Unpaid Claims and Claim Expenses - Narrative (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Sep. 30, 2021 |
Insurance Loss Reserves [Abstract] | ||
Favorable development of total reserves for property and casualty claims occurring in prior years | $ 8 | $ 7.2 |
Reinsurance - Summary of Reinsu
Reinsurance - Summary of Reinsurance Activity (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Direct Amount | ||||
Net premiums written and contract deposits, Direct Amount | $ 390.3 | $ 366 | $ 1,124.4 | $ 1,037.8 |
Net premiums and contract charges earned, Direct Amount | 262 | 230.9 | 783.4 | 696.6 |
Benefits, claims and settlement expenses, Direct Amount | 177.3 | 164.5 | 577.4 | 444.7 |
Ceded to Other Companies | ||||
Net premiums written and contract deposits, Ceded to Other Companies | 15.4 | 5.5 | 46.7 | 17 |
Net premiums and contract charges earned, Ceded to Other Companies | 17.6 | 8.1 | 53.5 | 24.6 |
Benefits, claims and settlement expenses, Ceded to Other Companies | 8.4 | 1.5 | 34.2 | 3 |
Assumed from Other Companies | ||||
Net premiums written and contract deposits, Assumed from Other Companies | 13.4 | 2.6 | 39.5 | 6.6 |
Net premiums and contract charges earned, Assumed from Other Companies | 13.4 | 2.6 | 39.6 | 6.8 |
Benefits, claims and settlement expenses, Assumed from Other Companies | 4.7 | 1.8 | 15 | 4.5 |
Net Amount | ||||
Net premiums written and contract deposits, Net Amount | 388.3 | 363.1 | 1,117.2 | 1,027.4 |
Net premiums and contract charges earned, Net Amount | 257.8 | 225.4 | 769.5 | 678.8 |
Benefits, claims and settlement expenses, Net Amount | $ 173.6 | $ 164.8 | $ 558.2 | $ 446.2 |
Commitments (Details)
Commitments (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Commitments and Contingencies Disclosure [Abstract] | ||
Unfunded commitments to purchase investments | $ 715.5 | $ 858.1 |
Segment Information - Narrative
Segment Information - Narrative (Details) | 9 Months Ended |
Sep. 30, 2022 segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 4 |
Number of operating segments | 3 |
Segment Information - Summary o
Segment Information - Summary of Segment Activity (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Segment Reporting Information | |||||
Net premiums and contract charges earned | $ 257.8 | $ 225.4 | $ 769.5 | $ 678.8 | |
Net investment income | 97.6 | 103.7 | 300.7 | 308.4 | |
Net income (loss) | 13.9 | 16.3 | 15.9 | 102.3 | |
Assets | 13,314.1 | 13,314.1 | $ 14,383.9 | ||
Intersegment eliminations | |||||
Segment Reporting Information | |||||
Net investment income | (0.5) | (0.6) | (1.6) | (1.8) | |
Assets | (67) | (67) | (64.8) | ||
Property & Casualty | Operating segments | |||||
Segment Reporting Information | |||||
Net premiums and contract charges earned | 152.4 | 153.3 | 452.5 | 464.1 | |
Net investment income | 8 | 11.3 | 22.9 | 43.8 | |
Net income (loss) | (2.5) | (4.7) | (19.4) | 42.5 | |
Assets | 1,052.1 | 1,052.1 | 1,243.4 | ||
Life & Retirement | Operating segments | |||||
Segment Reporting Information | |||||
Net premiums and contract charges earned | 37.1 | 40.4 | 109.7 | 118.3 | |
Net investment income | 81.4 | 85.8 | 254 | 247.4 | |
Net income (loss) | 12.7 | 19.1 | 41.8 | 47 | |
Assets | 10,719.4 | 10,719.4 | 12,064.7 | ||
Supplemental & Group Benefits | Operating segments | |||||
Segment Reporting Information | |||||
Net premiums and contract charges earned | 68.3 | 31.7 | 207.3 | 96.4 | |
Net investment income | 8.7 | 7.2 | 25.4 | 19 | |
Net income (loss) | 19.2 | 11.5 | 43.6 | 34.8 | |
Assets | 1,431.7 | 1,431.7 | 858.8 | ||
Corporate & Other | |||||
Segment Reporting Information | |||||
Net investment income | 0 | 0 | 0 | 0 | |
Net income (loss) | (15.5) | $ (9.6) | (50.1) | $ (22) | |
Assets | $ 177.9 | $ 177.9 | $ 281.8 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Net unrealized investment gains (losses) on fixed maturity securities, net of tax | ||||
Beginning balance | $ 1,807.4 | |||
Other comprehensive loss before reclassifications | $ (188.2) | $ (29.3) | (725.7) | $ (65) |
Amounts reclassified from AOCI | 11.9 | 4 | 38.3 | 5.6 |
Other comprehensive loss | (176.3) | (25.3) | (687.4) | (59.4) |
Ending balance | 1,076.6 | 1,796.4 | 1,076.6 | 1,796.4 |
Pretax reclassification amounts from AOCI, tax | (3.2) | (1) | (10.2) | (1.5) |
Total | ||||
Net unrealized investment gains (losses) on fixed maturity securities, net of tax | ||||
Beginning balance | (230.6) | 321 | 280.5 | 355.1 |
Ending balance | (406.9) | 295.7 | (406.9) | 295.7 |
Net Unrealized Investment Gains (Losses) on Securities | ||||
Net unrealized investment gains (losses) on fixed maturity securities, net of tax | ||||
Beginning balance | (220.4) | 332.2 | 290.7 | 366.3 |
Other comprehensive loss before reclassifications | (188.2) | (29.3) | (725.7) | (65) |
Amounts reclassified from AOCI | 11.9 | 4 | 38.3 | 5.6 |
Other comprehensive loss | (176.3) | (25.3) | (687.4) | (59.4) |
Ending balance | (396.7) | 306.9 | (396.7) | 306.9 |
Pretax reclassification amounts from accumulated other comprehensive income (loss) | (15) | (5) | (48.4) | (7.1) |
Net Funded Status of Benefit Plans | ||||
Net unrealized investment gains (losses) on fixed maturity securities, net of tax | ||||
Beginning balance | (10.2) | (11.2) | (10.2) | (11.2) |
Other comprehensive loss before reclassifications | 0 | 0 | 0 | 0 |
Amounts reclassified from AOCI | 0 | 0 | 0 | 0 |
Other comprehensive loss | 0 | 0 | 0 | 0 |
Ending balance | $ (10.2) | $ (11.2) | $ (10.2) | $ (11.2) |
Supplemental Consolidated Cas_3
Supplemental Consolidated Cash and Cash Flow Information (Details) - USD ($) $ in Millions | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Supplemental Cash Flow Elements [Abstract] | ||||
Cash | $ 35.2 | $ 133 | ||
Restricted cash | 1 | 0.7 | ||
Total cash and restricted cash reported in the Consolidated Balance Sheets | 36.2 | $ 40.2 | $ 133.7 | $ 22.3 |
Interest | 9.1 | 7.3 | ||
Income taxes | $ 6.4 | $ 20.2 |