Summary Of Significant Accounting Policies (Policy) | 12 Months Ended |
Dec. 31, 2015 |
Summary Of Significant Accounting Policies [Abstract] | |
Organization, Principles Of Consolidation, And Basis Of Presentation | 1 . SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization, principles of consolidation, and basis of presentation StanCorp, headquartered in Portland, Oregon, is a holding company and conducts business through wholly-owned operating subsidiaries throughout the United States. Through its subsidiaries, StanCorp has the authority to underwrite insurance products in all 50 states. The Company collectively views and operates its businesses as Insurance Services and Asset Management. Insurance Services contains two reportable product segments, Employee Benefits and Individual Disability. Asset Management is a separate reportable segment. See “Note 5 —Segments.” StanCorp has the following wholly-owned operating subsidiaries: Standard Insurance Company ( “Standard”), The Standard Life Insurance Company of New York, Standard Retirement Services, Inc. (“Standard Retirement Services”), StanCorp Equities, Inc. (“StanCorp Equities”), StanCorp Mortgage Investors, LLC (“StanCorp Mortgage Investors”), StanCorp Inv estment Advisers, Inc. (“StanCorp Investment Advisers”), StanCorp Real Estate, LLC (“StanCorp Real Estate”), Standard Management, In c. (“Standard Management”) and StanCap Insurance Company, Inc. (“ StanCap Insurance Company”) . Standard, the Company’s larges t subsidiary, underwrites group and individual disability insurance and annuity products, group life and accidental death and dismemberment (“AD&D”) insurance, and provides group dental and group vision insurance, absence management services and retirement plan products. Founded in 1906, Standard is domiciled in Oregon, licensed in all states except New York, and licensed in the District of Columbia and the U.S. territories of Guam, Puerto Rico and the Virgin Islands. The Standard Life Insurance Company of New York was organized in 2000 and is licensed to provide group and individual disability insurance, group life and AD&D insurance, group dental insurance and vision insurance in New York. The Standard is a service mark of StanCorp and its subsidiaries and is used as a brand mark and marketing name by Standard and The Standard Life Insurance Company of New York. Standard Retirement Services administers and services StanCorp’s retirement plans group annuity contracts and trust products. Retirement plan produ cts are offered in all 50 states through Standard or Standard Retirement Services. StanCorp Equities is a limited business broker-dealer and member of the Financial Industry Regulatory Authority. As a wholesaler, StanCorp Equities activities are limited to soliciting and supporting third-party broker-dealers and investment advisers that offer or advise their retirement plan clients on using an unregistered group annuity contract or a mutual fund trust platform. StanCorp Mortgage Investors originates and ser vices fixed-rate commercial mortgage loans for the investment portfolios of the Company’s insurance subsidiaries. StanCorp Mortgage Investors also generates additional fee income from the origination and servicing of commercial mortgage loans participated to institutional investors. StanCorp Investment Advisers is a Securities and Exchange Commission (“SEC”) registered investment adviser providing performance analysis, fund selection support, model portfolios and other investment management services. In January 2015, StanCorp reached an agreement to sell the assets of its private client wealth management business within StanCorp Investment Advisers to a third party. The sale was completed during the second quarter of 2015. StanCorp Investment Advisers remains a wholly-owned subsidiary of StanCorp. StanCorp Real Estate is a property management company that owns and manages the Hillsboro, Oregon home office properties and other properties held for investment and held for sale. StanCorp Real Estate also ma nages the Portland, Oregon home office properties. Standard Management manages certain real estate properties held for sale from time to time in conjunction with the Company’s real estate business. StanCap Insurance Company is a pure captive insurance comp any domiciled in Oregon. Effective September 30, 2014, StanCap Insurance Company entered into a reinsurance agreement with Standard to reinsure Standard’s group life and AD&D insurance business. Standard holds interests in tax-advantaged investments. The c arrying value of these interests was $310.3 million at December 31, 2015 and $277.0 million at December 31, 2014. The majority of the tax-advantaged investments qualify as affordable housing investments and are accounted for under the proportional amortiza tion method (“PAM”). The carrying value of the investments accounted for under PAM was $303.8 million and $257.5 million at December 31, 2015 and December 31, 2014, respectively. For tax-advantaged investments with state premium tax credits, the state prem ium tax credits and the related investment losses are recorded in net investment income. The Company believes this presentation accurately matches the cost and benefits for these investments. Tax-advantaged investments that do not qualify as affordable housing investments are accounted for under the equity method of accounting. The Company adopted Accountin g Standards Update (“ASU”) No. 2014-01, Accounting for Investments in Qualified Affordable Housing Projects as of January 1, 2015, which permits entities to account for investments in qualified affordable housing projects under PAM. Under PAM, the cost of the investment is amortized in each period in proportion to the tax credits and the tax benefits from tax losses received in that period to total benefits to be received over the life of the investment and allows the amortization of the investment and the tax benefits to be recorded in income taxes on the consolidated statements of income . The Company adopted this ASU retrospectively and applied this guida nce to all prior periods presented in the comparative financial statements. The adoption of this ASU changes the timing of the benefit realized in net income, but does not change the cumulative total benefit to net income over the life of the investments. The following tables set forth the affected financial statement line items that were adjusted compared to the financial results as originally reported as of December 31, 2014 and 2013: STANCORP FINANCIAL GROUP, INC. CONSOLIDATED STATEMENTS OF INCOME AFFECTED LINE ITEMS ADJUSTED FOR ASU NO. 2014-01 Years ended December 31, 2014 2013 (Dollars in millions—except per share data) Adjusted As Originally Reported Adjusted As Originally Reported Net investment income $ 617.2 $ 600.9 $ 643.5 $ 629.9 Income before income taxes 305.1 286.9 329.5 313.0 Income taxes 94.8 67.6 103.9 84.5 Net income 210.3 219.3 225.6 228.5 Net income per common share: Basic $ 4.89 $ 5.10 $ 5.10 $ 5.16 Diluted 4.84 5.05 5.07 5.13 STANCORP FINANCIAL GROUP, INC. CONSOLIDATED BALANCE SHEETS AFFECTED LINE ITEMS ADJUSTED FOR ASU NO. 2014-01 December 31, 2014 (In millions) Adjusted As Originally Reported A S S E T S Other invested assets $ 301.6 $ 320.9 L I A B I L I T I E S A N D S H A R E H O L D E R S’ E Q U I T Y Deferred tax liabilities, net $ 60.0 $ 63.1 Retained earnings 2,036.0 2,052.2 STANCORP FINANCIAL GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS AFFECTED LINE ITEMS ADJUSTED FOR ASU NO. 2014-01 Years ended December 31, 2014 2013 (In millions) Adjusted As Originally Reported Adjusted As Originally Reported Operating: Net income $ 210.3 $ 219.3 $ 225.6 $ 228.5 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 145.1 115.4 135.9 112.9 Deferred income taxes 10.4 10.7 10.1 13.4 Other, net (36.3) (17.8) (43.3) (29.4) The consolidated financial statements include StanCorp and its subsidiaries. Intercompany balances and transactions have been eliminated on a consolidated basis. |
Use Of Estimates | Use of estimates The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) which require management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosures of contingent assets and con tingent liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The estimates most susceptible to material changes due to significant judgment are those used in determining invest ment valuations, the reserves for future policy benefits and claims, DAC, VOBA and other intangible assets, pension and postretirement benefit plans and the provision for income taxes. The results of these estimates are critical because they affect the Com pany’s profitability and may affect key indicators used to measure the Company’s performance. These estimates have a material effect on the Company’s results of operations and financial condition. |
Investment Valuations Fixed Maturity Securities-Available-For-Sale ("Fixed Maturity Securities") | Investment Valuations Fixed Maturity Securities —Available -for-sale (“Fixed Maturity Securities”) Capital gains and losses for fixed maturity securities are recognized using the specific identification method. If the fair value of a fixed maturity security declines below its amortized cost, the Company assesses w hether the decline is other than temporary. In the Company’s quarterly impairment analysis, management evaluates whether a decline in fair value of the fixed maturity security is other than temporary by considering the following factors: The nature of the fixed maturity security. The duration until maturity. The duration and extent the fair value has been below amortized cost. The financial quality of the issuer. Estimates regarding the issuer’s ability to make the scheduled payments associated with the fix ed maturity security. The Company’s intent to sell or whether it is more likely than not it will be required to sell a fixed maturity security before recovery of the security’s cost basis through the evaluation of facts and circumstances including, but not limited to, decisions to rebalance the Company’s portfolio, current cash flow needs and sales of securities to capitalize on favorable pricing. If it is determined an other-than-temporary impairment (“OTTI”) exists and the Company does not have the intent to sell the security and determines that it is not more likely than not that it will be required to sell the security, the Company separates the OTTI of fixed maturity securities into an OTTI related to credit loss and an OTTI related to noncredit loss. T he OTTI related to credit loss represents the portion of losses equal to the difference between the present value of expected cash flows, discounted using the pre-impairment yields, and the amortized cost basis. All other changes in value represent the OTT I related to noncredit loss. The OTTI related to credit loss is recognized in earnings in the current period, while the OTTI related to noncredit loss is deemed recoverable and is recognized in other comprehensive income (loss). The cost basis of the fixed maturity security is permanently adjusted to reflect the credit loss. Once an impairment has been recorded, the Company continues to review the OTTI securities for further potential impairment. The Company will continue to evaluate its holdings; however, the Company currently expects the fair values of its investments to recover either prior to their maturity dates or upon maturity. Should the credit quality of the Company’s fixed maturity securities significantly decline, there could be a material adverse effect on the Company’s business, financial position, results of operations or cash flows. In conjunction with determining the extent of credit losses associated with fixed maturity securities, the Company utilizes certain information in order to determin e the present value of expected cash flows discounted using pre-impairment yields. The information includes, but is not limited to, original scheduled contractual cash flows, current market spread information, risk-free rates, fundamentals of the industry and sector in which the issuer operates, and general market information. Fixed maturity securities are classified as available-for-sale and are carried at fair value on the consolidated balance sheets. See “Note 9 —Fair Value” for a detailed explanation of the valuation methods the Company uses to calculate the fair value of its financial instruments. Valuation adjustments for fixed maturity securities not accounted for as OTTI are reported as net increases or decreases to other comprehensive income (los s), net of tax, on the consolidated statements of comprehensive income. Interest Income The Company r ecognizes interest income and prepayment fess when earned in investment income. Interest income is recognized using an effective yield method giving effect to amortization of premiums and accretion of discounts. |
Commercial Mortgage Loans | Commercial Mortgage Loans Commercial mortgage loans are sta ted at amortized cost less a loan loss allowance for probable uncollectible amounts. The commercial mortgage loan loss allowance is estimated based on evaluating known and inherent risks in the loan portfolio and consists of a general and a specific loan l oss allowance. Impairment Evaluation The Company continuously monitors its commercial mortgage loan portfolio for potential impairment by evaluating the portfolio and individual loans. Key factors that are monitored are as follows: Loan loss experience. Delinquency history. Debt coverage ratio. Loan-to-value ratio. Refinancing and restructuring history. Request for payment forbearance history. If the analysis above indicates a loan might be impaired, it is further analyzed through the consideration of th e following additional factors: Delinquency status. Foreclosure status. Restructuring status. Borrower history. If it is determined a loan is impaired, a specific allowance is recorded. General Loan Loss Allowance The general loan loss allowance is based on the Company’s analysis of factors including changes in the size and composition of the loan portfolio, debt coverage ratios, loan-to-value ratios, actual loan loss experience and individual loan analysis. Specific Loan Loss Allowance An impaired comme rcial mortgage loan is a loan where the Company does not expect to receive contractual principal and interest in accordance with the terms of the original loan agreement. A specific allowance for losses is recorded when a loan is considered to be impaired and it is probable that all amounts due will not be collected based on the terms of the original agreement. The Company also holds specific loan loss allowances on certain performing commercial mortgage loans that it continues to monitor and evaluate. Impa ired commercial mortgage loans without specific allowances for losses are those for which the Company has determined that it remains probable that all amounts due will be collected although the timing or nature may be outside the original agreement terms. In addition, for impaired commercial mortgage loans, the Company evaluates the cost to dispose of the underlying collateral, any significant out of pocket expenses the loan may incur and other quantitative information management has concerning the loan. Po rtions of loans that are deemed uncollectible are charged-off against the allowance, and recoveries, if any, are credited to the allowance. See “Note 10 —Investments—Commercial Mortgage Loans.” Interest Income The Company records interest income in net investment income and continues to recognize interest income on delinquent commercial mortgage loans until the loans are more than 90 days delinquent. Interest income and accrued interest receivable are reversed when a loan is more than 90 days delinquent . For loans that are less than 90 days delinquent, management may reverse interest income and accrued interest receivable if there is a question on the collectability of the interest. Interest income on loans in the 90-day delinquent category is recognized in the period the cash is collected. The Company resumes the recognition of interest income when the loan becomes less than 90 days delinquent and management determines it is probable that the loan will remain performing. |
Real Estate | Real Estate Real estate is comprised of two components: real estate investments and real estate acquired in satisfaction of debt through foreclosure or acceptance of deeds in lieu of foreclosure on commercial mortgage loans (“Real Estate Owned”). Real estate investments are recorded at the lower of cost or net realizable value. The Company generally depreciates real estate investments using the straight-line depreciation method with useful lives varying from 30 to 40 years. The Company records impairments when it is determined that the decline in fair value of an investment below its carrying value is other than temporary. The impairment is recorded to net capital losses, and the carrying value of the investment is adjusted to reflect the impairment. There were no impairments recorde d on real estate investments for 2015 , 2014 or 2013 . Real Estate Owned is initially recorded at net realizable value, which includes an estimate for disposal costs. This amount may be adjusted in a subsequent period as additional information is received. Real Estate Owned is initially considered an i nvestment held for sale and is expected to be sold within one year from acquisition. For any real estate expected to be sold, an impairment is recorded if the Company does not expect the investment to recover its carrying value prior to the expected date o f sale. Once an impairment has been recorded, the Company continues to review the investment for further potential impairment. Impairments recorded on Real Estate Owned were $2.2 million, $5.2 million and $8.7 million for 2015 , 2014 and 2013 , re spectively. Total real estate was $25.4 million and $37.0 million at December 31, 2015 and 2014 , respectively. Accumulated depreciation for real estate totaled $13.6 million and $12.0 million at December 31, 2015 and 2014 , respectivel y. |
All Other Invested Assets | Other Invested Assets Other invested assets include tax-advantaged investments, derivative financial instruments, policy loans and common stock. Valuation adjustments for these investments are recognized using the specific identification method. |
Tax-Advantaged Investments | Tax-advantaged Investments The Company’s tax-advantaged investments are structured as limited partnerships. The Company has purchased tax-advantaged investments opportunistically due to the higher risk-adjusted returns. The primary sources of investment re turn are tax credits and the tax benefits from tax losses. Tax-advantaged investments that do not qualify as affordable housing investments are accounted for under the equity method of accounting. Under the equity method of accounting, tax credits receive d from these investments are reported in the consolidated statements of income as a reduction of income taxes. The Company’s share of the operating losses of the limited partnerships decreases the carrying value of the investments and is reported as a comp onent of net investment income. The Company performs an impairment analysis at least quarterly for all tax-advantaged investments. If the net present value of expected future cash flows of a tax-advantaged investment is less than the current book value of the investment, the Company evaluates whether a decline in value is other than temporary. If it is determined an OTTI exists, the investment is written down to the net present value of expected future cash flows and the OTTI is recognized as a capital los s in the period in which it was determined to be impaired. |
DerivativesPolicyTextBlock | Derivative Instruments The Company uses derivative financial instruments to mitigate business risks including interest rate risk exposure. The Company has the following derivatives: interest rate swaps, index-based interest guarantees embedded in indexed annuities (“index-based interest guarantees”) and Standard & Poor’s (“S&P”) 500 Index call spread options (“S&P 500 Index options”). T he Company use s interest rate swaps to reduce the risks from changes in interest rates, to manage interest rate exposures arising from asset and liability mismatches, to protect against variability in future cash flows, and to protect the value of investments held on the consolidated balance sheets. These interest rate swa ps are designed to qualify for hedge accounting as cash flow and fair value hedges. Valuations for interest rate swaps are sensitive to changes in the interest rate environment. Interest rate swaps are recognized as either other invested assets or other li abilities and are reported at fair value. To qualify for hedge accounting, the Company documents the risk management objective and strategy for undertaking the hedging transaction and the designation of the hedge as either a cash flow hedge or a fair value hedge at the inception of the hedging transaction. Included in this documentation is a description of how the interest rate swap is expected to hedge the designated risk related to specific assets or liabilities and a description of the method that will b e used to retrospectively and prospectively assess the hedge effectiveness, the method that will be used to measure ineffectiveness and how ineffectiveness will be recorded. A derivative instrument designated as part of a hedging relationship must be asses sed as being highly effective in offsetting the designated risk of the hedged item. Hedge effectiveness is assessed at inception and at least quarterly throughout the life of the designated hedging relationship, using qualitative and quantitative methods. Qualitative methods include comparison of critical terms of the interest rate swap to the hedged item. Quantitative methods include regression or other statistical analysis of changes in the fair value or cash flows associated with the hedge relationship. If the Company disposes of a hedged item, the Company will terminate the related interest rate swap and recognize a capital gain or loss on termination. In the consolidated balance sheets, the Company offsets fair value amounts recognized for interest rate swaps. See “Note 11—Derivative Financial Instruments.” Index-based interest guarantees and S &P 500 Index options do not qualify for hedge accounting. The Company sells indexed annuities, which permit the holder to elect a fixed interest rate return or an indexed return, where interest credited to the contracts is based on the performance of the S&P 500 Index, subject to an upper limit or cap and minimum guarantees. Policyholders may elect to rebalance between interest crediting options at renewal dates ann ually. At each renewal date, the Company has the opportunity to re-price the indexed component by changing the cap, subject to minimum guarantees. The Company estimates the fair value of the index-based interest guarantees for the current period and for al l future reset periods until contract maturity. Changes in the fair value of the index-based interest guarantees are recorded in interest credited. The Company purchases S&P 500 Index options for its interest crediting strategy used in its indexed annuity product. The S&P 500 Index options are purchased from investment banks and are selected in a manner that supports the amount of interest that is expected to be credited in the current year to annuity policyholder accounts that are dependent on the perform ance of the S&P 500 Index. The purchase of S&P 500 Index options is a pivotal part of the Company’s risk management strategy for indexed annuity products. The S&P 500 Index options are exclusively used for risk management. Changes in the fair value of S&P 500 Index options are recorded in net investment income. Cash settlement activity of derivative contracts is reported in the consolidated statements of cash flows as a component of proceeds from or acquisition of other invested assets . |
Policy Loans | Policy Loans Polic y loans are stated at their aggregate unpaid principal balances and are secured by policy cash values. |
Common Stock of FHLB | Common Stock In the second quarter of 2015, the Federal Home Loan Bank (“FHLB”) of Seattle completed its merger with the FHLB of Des Moines. The merger has not had a material effect on the Company’s business, financial position, results of operations, cash flows or existing funding agreements with the FHLB, and is not anticipated to impact the Company’s utilization of the FHLB program or its products in t he future. At December 31, 2015 , Standard owned $20.9 million of FHLB of Des Moines common stock related to its membership and activity in the FHLB of Des Moines. The FHLB of Des Moines common stock is carried at par value and accounted for under the cost me thod. The Company periodically evaluates FHLB of Des Moines common stock for OTTI. The Company’s determination of whether this investment is impaired is based on its assessment of the ultimate recoverability of cost rather than by recognizing temporary dec lines in value. The Company did not record OTTI related to the FHLB of Des Moines common stock for 2015 . The Company did not record OTTI related to the FHLB of Seattle common stock for 2014 . |
Cash And Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include cash and investments purchased with original maturities of three months or less at the time of acquisition. The carrying amount of cash equivalents approximates the fair value of those instruments. |
DAC, VOBA And Other Intangible Assets | DAC, VOBA and Other Intangible Assets DAC, VOBA a nd other acquisition related intangible assets are generally originated through the issuance of new business or the purchase of existing business, either by purchasing blocks of insurance policies from other insurers or by the outright purchase of other co mpanies. The Company’s intangible assets are subject to impairment tests on an annual basis or more frequently if circumstances indicate that carrying values may not be recoverable. The Company defers certain acquisition costs that vary with and are direct ly related to the origination of new business and placing that business in-force. Certain costs related to obtaining new business and acquiring business through reinsurance agreements have been deferred and are amortized to accomplish matching against rela ted future premiums or gross profits as appropriate. The Company normally defers certain acquisition-related commissions and incentive payments, certain costs of policy issuance and underwriting, and certain printing costs. Assumptions used in developing D AC and amortization amounts each period include the amount of business in-force, expected future persistency, withdrawals, interest rates and profitability. These assumptions are modified to reflect actual experience when appropriate. Additional amortizati on of DAC is charged to current earnings to the extent it is determined that future premiums or gross profits are not adequate to cover the remaining amounts deferred. Changes in actual persistency are reflected in the calculated DAC balance. Costs that ar e not directly associated with the acquisition of new business are not deferred as DAC and are charged to expense as incurred. Generally, annual commissions are considered expenses and are not deferred. DAC for group and individual disability insurance pro ducts and group life insurance products is amortized over the life of related policies in proportion to future premiums . The Company amortizes DAC for group disability and life insurance products over the initial premium rate guarantee period, which averag es 2.5 years. DAC for individual disability insurance products is amortized in proportion to future premiums over the life of the contract, averaging 20 to 25 years with approximately 50 % and 75 % expected to be amortized by years 10 and 15 , respectively. T he Company’s individual deferred annuities and group annuity products are classified as investment contracts. DAC related to these products is amortized over the life of related policies in proportion to expected gross profits . For the Company’s individual deferred annuities, DAC is generally amortized over 30 years with approximately 53 % and 93 % expected to be amortized by years 5 and 15 , respectively. DAC for group annuity products is amortized over 10 years with approximately 73 % expected to be amortized by year 5 . VOBA primarily represents the discounted future profits of business assumed through reinsurance agreements. The Company has established VOBA for a block of individual disability insurance business assumed from Minnesota Life Insuran ce Company (“Minnesota Life”) and a block of group disability and group life insurance business assumed from Teachers Insurance and Annuity Association of America (“TIAA”). VOBA is generally amortized in proportion to future premiums for group and individu al disability insurance products and group life insurance products. However, the VOBA related to the TIAA transaction associated with an in-force block of group long term disability insurance claims for which no ongoing premium is received is amortized in proportion to expected gross profits. If actual premiums or future profitability are inconsistent with the Company’s assumptions, the Company could be required to make adjustments to VOBA and related amortization. The VOBA associated with the TIAA transact ion is amortized in proportion to expected gross profits with an amortization period of up to 20 years. For the VOBA associated with the Minnesota Life block of business assumed, the amortization period is up to 30 years and is amortized in proportion to f uture premiums. Key assumptions, which will affect the determination of expected gross profits for determining DAC and VOBA balances, include: Persistency. Interest rates, which affect both investment income and interest credited. Stock market performance. Capital gains and losses. Claim termination rates. Amount of business in-force. These assumptions are modified to reflect actual experience when appropriate. Although a change in a single assumption may have an impact on the calculated amortization of DAC or VOBA for balances associated with investment contracts, it is the relationship of that change to the changes in other key assumptions that determines the ultimate impact on DAC or VOBA amortization. Because actual results and trends related to t hese assumptions vary from those assumed, the Company revises these assumptions annually to reflect its current best estimate of expected gross profits. As a result of this process, known as “unlocking,” the cumulative balances of DAC and VOBA are adjusted with an offsetting increase or decrease to income to reflect changes in the period of the revision. An unlocking event generally occurs as a result of actual experience or future expectations differing from previous estimates. As a result of unlocking, th e amortization schedule for future periods is also adjusted. Significant, unanticipated changes in key assumptions, which affect the determination of expected gross profits, may result in a large unlocking event that could have a material adverse effect o n the Company’s financial position or results of operations. The Company’s other intangible assets are subject to amortization and consist of certain customer lists from Asset Management business es acquired and an individual disability marketing agreement . Customer lists have a combined estimated weighted-average remaining life of approximately 4.3 years and will be fully amortized by the end of 2022 . The marketing agreement accompanied the Minnesota Life transaction and provides access to Minnesota Life a gents, some of whom now market Standard’s individual disability insurance products. The Minnesota Life marketing agreement will be fully amortized by the end of 2023 . |
Property And Equipment, Net | Property and Equipment, Net The following table sets forth the major classifications of the Company’s property and equipment and accumulated depreciation: December 31, (In millions) 2015 2014 Home office properties $ 133.2 $ 139.4 Office furniture and equipment 45.8 48.6 Capitalized software 190.1 173.0 Leasehold improvements 15.7 14.9 Property and equipment, gross 384.8 375.9 Less: accumulated depreciation 295.6 296.6 Property and equipment, net $ 89.2 $ 79.3 Property and equipment are stated at cost less accumulated depreciation. The Company depreciates property and equipment using the straight-line method over the estimated useful lives with a half-year convention. The estimated useful lives are generally 40 years for properties, range from three to ten years for equipment and range from three to five years for capitalized software. Leasehold improvements are depreciated over the lesser of the estimated useful life of the asset or the life of the lease. Depreci ation expe nse for 2015 , 2014 and 2013 was $ 15.6 million, $ 17.8 million and $ 19.9 million, respectively. The Company reviews property and equipment for impairment when circumstances or events indicate the carrying amount of the asset may not be recoverable and recognizes a charge to earnings if an asset is impaired. Non-affiliated tenants leased 39.0 %, 34.2 % and 3 3 .8 % of the corporate headquarters in Portland, Oregon at December 31, 2015 , 2014 and 2013 , respectively. Income from the leases is included in net investment income. |
Separate Account | Separate Account Separate account assets and liabilities represent segregated funds held for the exclusive benefit of contract holders. The activities of the account primarily relate to contract holder-directed 401(k) agreements . Standard charges the separate account with asset management and plan administration fees associated with the contracts. Separate account assets are carried at fair value and separate account liabilities are carried at the amount of the related assets. |
Reserves For Future Policy Benefits And Claims | R eserves for Future Policy Benefits and Claims Benefits and expenses are matched with recognized premiums to result in recognition of profits over the life of the contracts. The match is accomplished by recording a provision for future policy benefits and u npaid claims and claim adjustment expenses. For most of the Company’s product lines, management establishes and carries as a liability actuarially determined reserves that are calculated to meet the Company’s obligations for future policy benefits and clai ms. These reserves do not represent an exact calculation of the Company’s future benefit liabilities but are instead estimates based on assumptions and considerations concerning a number of factors, which include: The amount of premiums that the Company wi ll receive in the future. The rate of return on assets the Company purchases with premiums received. Expected number and severity of claims. Expenses. Persistency, which is the measurement of the percentage of premiums remaining in - force from year to year. In particular, the Company’s group and individual long term disability insurance reserv es are sensitive to assumptions and considerations regarding the following factors: Claim incidence rates for incurred but not reported claim reserves. Claim termination rates. Discount rates used to value expected future claim payments. Persistency rates. The amount of mont hly benefit paid to the insured less reinsurance recoveries and other offsets. Expense rates including inflation. Historical delay in repor ting of claims incurred. Assumptions may vary by: Age, gender and, for individual policies, occupation class of the claimant. Year of issue for policy reserves or incurred date for claim reserves. Time elapsed since disablement. Contract provisions and lim itations. |
Other Policyholder Funds | Other Policyholder Funds Other policyholder funds are liabilities for investment-type contracts and are based on the policy account balances including accumulated interest. Other policyholder funds also include amounts related to advanced premium s of $ 185.6 million and $ 18 8.3 million at December 31, 2015 and 2014 , respectively , and premiums on deposit and experience rated liabilities totaling $ 182.7 million and $ 187.0 million at December 31, 2015 and 2014 , respectively. |
Recognition Of Premiums | Recognition of Premiums Premiums from group life and group and individual disability contracts are recognized as revenue when due. Investment-type contract fee revenues consist of charges for policy administration and surrender charges assessed during the period. Charges related to services to be performed are deferred until earned. The amounts received in excess of premiums and fees are unearned and includ ed in other policyholder funds o n the consolidated balance sheets. Experience rated refunds are computed in accordanc e with the terms of the contracts with certain group policyholders and are accounted for as an adjustment to premiums. |
Income Taxes | Income Taxes The Company files a U.S. consolidated income tax return that includes all subsidiaries. The Company’s U.S. income tax is calculated using regular corporate income tax rates on a tax base determined by laws and regulations administered by the Internal Revenue Service (“IRS”). The Company also files corporate income tax returns in various states. The provision f or income taxes includes amounts currently payable and deferred amounts that result from temporary differences between financial reporting and tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates exp ected to apply when the temporary differences are expected to reverse. GAAP requires management to use a more likely than not standard to evaluate whether, based on available evidence, each deferred tax asset will be realized. A valuation allowance is reco rded to reduce a deferred tax asset to the amount expected to be realized. Management is required to determine whether tax return positions are more likely than not to be sustained upon audit by taxing authorities. Tax benefits of uncertain tax positions, as determined and measured by this interpretation, cannot be recognized in the Company’s financial statements. The Company records interest paid on income tax liabilities as interest expense and income tax penalties incurred as an operating expense . |
Other Comprehensive Income | Other Comprehensive Income Other comprehensive income includes changes in unrealized capital gains and losses on fixed maturity securities, net of the related tax effects, changes in unrealized prior service costs and credits and net gains and losses associated with the Company’s employee benefit plans, net of the related tax effects and unrealized gains and losses on cash flow hedges, net of the related tax effects . |
Accounting Pronouncements- Income Statement [Table Text Block] | Accounting Pronouncements ASU No. 2014-09, Revenue from Contracts with Customers In May 2014, the Financial Accounting Standard Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers . The main objective of ASU No. 2014-09 is to provide a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. This ASU does not apply to insurance co ntracts, financial instruments, and various other topics within the FASB Accounting Standards Codification. The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. In August 2015, the FASB issued ASU No. 2015-14, which deferred the effective date of ASU No. 2014-09 for annual reporting period s and inte rim reporting periods within those annual periods beginning after December 15, 2017. Early adoption is permitted. The Company’s revenue is primarily from insurance contracts and financial instruments; therefore, the Company does not expect this A SU to have a material effect on its financial position, results of operations or cash flows . ASU No. 2015-01, Income Statement – Extraordinary and Unusual Items In January 2015, the FASB issued ASU No. 2015-01, Income Statement – Extraordinary and Unusual Items . The main objective of ASU No. 2015-01 is to eliminate from GAAP the concept of extraordinary items, however; the requirement to disclose unusual and infrequent items still exists. Under this guidance, an entity will no longer segregate extraordinar y items from the results of ordinary operations; separately present an extraordinary item on its income statement, net of tax, after income from continuing operations; and disclose income taxes and earnings-per-share data applicable to an extraordinary ite m. The ASU affects the reporting and disclosure requirements for an event that is unusual in nature or that occurs infrequently. ASU No. 2015-01 is effective for annual periods and interim reporting periods within those annual periods beginning after Decem ber 15, 2015. Early adoption is permitted if guidance is applied as of the beginning of the annual period of adoption. The Company does not expect this ASU to have a material effect on its financial position, results of operations or cash flows. ASU No. 2 015-03, Interest – Imputation of Interest (Subtopic 835-30) Simplifying the Presentation of Debt Issuance Costs In April 2015, the FASB issued ASU No. 2015-03, Interest – Imputation of Interest (Subtopic 835-30) Simplifying the Presentation of Debt Issuanc e Costs. The main objective of ASU No. 2015-03 is to simplify the presentation of debt issuance costs by requiring debt issuance costs be considered a direct reduction in the carrying value of the debt liability for presentation purposes. Amortization of d ebt issuance costs will be reported as interest expense. ASU No. 2015-03 is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Early adoption is permitted. As of December 31, 2015, the Company ha d $3.5 million in debt issuance costs. The Company does not expect this ASU to have a material effect on its financial position, results of operations or cash flows. ASU No. 2015-09, Insurance – Disclosures about Short-Duration Contracts In June 2015, the FASB issued ASU No. 2015-09, Disclosures about Short-Duration Contracts. The main objective of ASU No. 2015-09 is to develop targeted improvements to disclosures about short-duration insurance contracts. Under this guidance, insurance entities are require d to disclose aggregated or disaggregated information on frequency and severity of claims, discounting, and include incurred and paid claims development tables. ASU No. 2015-09 is effective for annual periods beginning after December 15, 201 5 and interim p eriods within those annual periods beginning after December 15, 2016 . Early adoption is permitted. The Company is currently evaluating this ASU for applicability and additional disclosures. The Company does not expect this ASU to have a material effect on its financial position, results of operations or cash flows. ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10) Recognition and Measurement of Financial Assets and Financial Liabilities In January 2016, the FASB issued ASU No. 2016-01, Rec ognition and Measurement of Financial Assets and Financial Liabilities. The main objective of ASU No. 2016-01 is to develop targeted improvements to the reporting model for financial instruments. Under this guidance, entities will be required to recognize changes in fair value in net income for equity investments measured at fair value, amend disclosures for fair value of financial instruments, evaluate the need for valuation allowance on a deferred tax asset related to available-for-sale securities in comb ination with other deferred tax assets, and simplify the impairment assessment of equity investments. ASU No. 2016-01 is effective for annual periods and interim periods within those annual periods beginning after December 15, 2017. Early adoption is only permitted if the entity presents separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk if the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. The Company is currently evaluating this ASU for applicability and additional disclosures. The Company does not expect this ASU to have a material effect on its financial posit ion, results of operations or cash flows. ASU No. 2016-02, Leases (Topic 840) In February 2016, the FASB issued ASU No. 2016-02, Leases. The main objective of ASU No. 2016-02 provides a new comprehensive model for lease accounting. Under this guidance, lessees and lessors should apply a “right-of-use” model in accounting for all leases (including subleases) and eliminates the concept of operating leases and off-balance sheet leases. ASU No. 2016-02 is effective for annual periods and interim periods within those annual periods beginning after December 15, 2018 and interim reporting periods within those annual periods beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating this ASU for applicability and additional disclosures. The Company does not expect this ASU to have a material effect on its financial position, results of operations or cash flows. |