Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | May 09, 2019 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | BRIGHTHOUSE LIFE INSURANCE Co OF NY | |
Entity Central Index Key | 0001167609 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --12-31 | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 200,000 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Investments: | ||
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $2,623,070 and $2,469,801, respectively) | $ 2,664,864 | $ 2,433,633 |
Mortgage loans (net of valuation allowances of $2,006 and $1,937, respectively) | 467,193 | 448,105 |
Other invested assets, principally at estimated fair value | 48,176 | 35,815 |
Total investments | 3,180,233 | 2,917,553 |
Cash and cash equivalents | 208,781 | 120,130 |
Accrued investment income | 22,784 | 20,605 |
Premiums, reinsurance and other receivables | 574,277 | 580,480 |
Deferred policy acquisition costs and value of business acquired | 178,073 | 185,586 |
Other assets | 33,133 | 37,348 |
Separate account assets | 4,559,757 | 4,268,423 |
Total assets | 8,757,038 | 8,130,125 |
Liabilities | ||
Future policy benefits | 723,951 | 718,599 |
Policyholder account balances | 1,812,080 | 1,692,498 |
Other policy-related balances | 9,033 | 9,288 |
Payables For Collateral Under Securities Loaned And Other Transactions | 36,791 | 23,581 |
Current income tax payable | 1,804 | 1,755 |
Deferred income tax liability | 118,816 | 107,853 |
Other liabilities | 538,759 | 471,490 |
Separate account liabilities | 4,559,757 | 4,268,423 |
Total liabilities | 7,800,991 | 7,293,487 |
Contingencies, Commitments and Guarantees (Note 9) | ||
Stockholder's Equity | ||
Common stock, par value $10 per share; 200,000 shares authorized, issued and outstanding | 2,000 | 2,000 |
Additional paid-in capital | 490,931 | 415,931 |
Retained earnings (deficit) | 432,267 | 433,778 |
Accumulated other comprehensive income (loss) | 30,849 | (15,071) |
Total stockholder's equity | 956,047 | 836,638 |
Total liabilities and stockholder's equity | $ 8,757,038 | $ 8,130,125 |
Consolidated Balance Sheets (_2
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Assets | ||
Amortized cost of fixed maturity securities available-for-sale | $ 2,623,070 | $ 2,469,801 |
Mortgage loans valuation allowances | $ 2,006 | $ 1,937 |
Stockholder's Equity | ||
Common stock, par value | $ 10 | $ 10 |
Common stock, shares authorized | 200,000 | 200,000 |
Common stock, shares issued | 200,000 | 200,000 |
Common stock, shares outstanding | 200,000 | 200,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenues | ||
Premiums | $ 9,032 | $ 10,293 |
Universal life and investment-type product policy fees | 23,250 | 25,986 |
Net investment income | 26,493 | 23,931 |
Other revenues | (20,323) | (12,544) |
Net investment gains (losses) | (452) | (2,355) |
Net derivative gains (losses) | (3,245) | (44,262) |
Total revenues | 34,755 | 1,049 |
Expenses | ||
Policyholder benefits and claims | 9,459 | (1,541) |
Interest credited to policyholder account balances | 8,258 | 9,232 |
Amortization of deferred policy acquisition costs and value of business acquired | 903 | (3,323) |
Other expenses | 18,890 | 15,727 |
Total expenses | 37,510 | 20,095 |
Income (loss) before provision for income tax | (2,755) | (19,046) |
Provision for income tax expense (benefit) | (1,244) | (4,676) |
Net income (loss) | (1,511) | (14,370) |
Comprehensive income (loss) | $ 44,409 | $ (44,660) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings (Deficit) | Accumulated Other Comprehensive Income (Loss) |
Beginning Balance at Dec. 31, 2017 | $ 843,487 | $ 2,000 | $ 415,931 | $ 395,928 | $ 29,628 |
Net income (loss) | (14,370) | (14,370) | |||
Other comprehensive income (loss), net of income tax | (30,290) | (30,290) | |||
Ending Balance at Mar. 31, 2018 | 798,827 | 2,000 | 415,931 | 381,558 | (662) |
Beginning Balance at Dec. 31, 2018 | 836,638 | 2,000 | 415,931 | 433,778 | (15,071) |
Net income (loss) | (1,511) | (1,511) | |||
Capital contribution | 75,000 | 75,000 | |||
Other comprehensive income (loss), net of income tax | 45,920 | 45,920 | |||
Ending Balance at Mar. 31, 2019 | $ 956,047 | $ 2,000 | $ 490,931 | $ 432,267 | $ 30,849 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Statement of Cash Flows [Abstract] | ||
Net cash provided by (used in) operating activities | $ 3,673 | $ 23,949 |
Cash flows from investing activities | ||
Sales, maturities and repayments of fixed maturity securities | 70,442 | 77,753 |
Sales, maturities and repayments of mortgage loans | 1,618 | 2,399 |
Purchases of fixed maturity securities | (157,155) | (141,218) |
Purchases of mortgage loans | (22,322) | (14,445) |
Cash received in connection with freestanding derivatives | 23,716 | 212 |
Cash paid in connection with freestanding derivatives | (2,827) | (29,892) |
Net change in short-term investments | 3 | (7,978) |
Net change in other invested assets | 6,943 | 425 |
Net cash provided by (used in) investing activities | (79,582) | (112,744) |
Cash flows from financing activities | ||
Policyholder account balances: Deposits | 131,693 | 117,755 |
Policyholder account balances: Withdrawals | (55,343) | (33,962) |
Net change in payables for collateral under derivative transactions | 13,210 | 10,830 |
Capital contribution | 75,000 | 0 |
Net cash provided by (used in) financing activities | 164,560 | 94,623 |
Change in cash, cash equivalents and restricted cash | 88,651 | 5,828 |
Cash, cash equivalents and restricted cash, beginning of period | 120,130 | 86,154 |
Cash, cash equivalents and restricted cash, end of period | 208,781 | 91,982 |
Supplemental disclosures of cash flow information | ||
Net cash paid (received) for income tax | $ 0 | $ 4 |
Business, Basis of Presentation
Business, Basis of Presentation and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business, Basis of Presentation and Summary of Significant Accounting Policies | 1. Business, Basis of Presentation and Summary of Significant Accounting Policies Business “BHNY” and the “Company” refer to Brighthouse Life Insurance Company of NY, a New York domiciled life insurance company. Brighthouse Life Insurance Company of NY is a wholly-owned subsidiary of Brighthouse Life Insurance Company, which is an indirect wholly-owned subsidiary of Brighthouse Financial, Inc. (“BHF” together with its subsidiaries and affiliates, “Brighthouse Financial”). The Company is licensed to transact business in the state of New York. BHNY markets and/or administers traditional life, universal life, variable annuity and fixed annuity products to individuals. The Company is organized into two segments: Annuities; and Life. In addition, the Company reports certain of its results of operations in Corporate & Other. In 2016, MetLife, Inc. (together with its subsidiaries and affiliates, “MetLife”) announced its plan to pursue the separation of a substantial portion of its former U.S. retail business (the “Separation”). In connection with the Separation, 80.8% of MetLife, Inc.’s interest in BHF was distributed to holders of MetLife, Inc.’s common stock. On June 14, 2018, MetLife, Inc. divested its remaining shares of BHF common stock (the “MetLife Divestiture”). As a result, MetLife, Inc. and its subsidiaries and affiliates are no longer considered related parties subsequent to the MetLife Divestiture. Basis of Presentation The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported on the interim condensed financial statements. In applying these policies and estimates, management makes subjective and complex judgments that frequently require assumptions about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to the Company’s business and operations. Actual results could differ from these estimates. Reclassifications Certain amounts in the prior year periods’ interim condensed financial statements and related footnotes thereto have been reclassified to conform with the 2019 presentation as may be discussed throughout the Notes to the Interim Condensed Financial Statements. Since the Company is a member of a controlled group of affiliated companies, its results may not be indicative of those of a stand-alone entity. The accompanying interim condensed financial statements are unaudited and reflect all adjustments (including normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented in conformity with GAAP. Interim results are not necessarily indicative of full year performance. The December 31, 2018 balance sheet data was derived from audited financial statements included in BHNY’s Annual Report on Form 10-K for the year ended December 31, 2018 (the “2018 Annual Report”), which include all disclosures required by GAAP. Therefore, these interim condensed financial statements should be read in conjunction with the financial statements of the Company included in the 2018 Annual Report. Adoption of New Accounting Pronouncements Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or are not expected to have a material impact on the Company’s financial statements. There were no ASUs adopted during the first quarter of 2019 which had a material impact on the Company’s financial statements. ASUs issued but not yet adopted as of March 31, 2019 are summarized in the table below. Standard Description Effective Date Impact on Financial Statements ASU 2018-12, Financial Services-Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts The amendments to Topic 944 will result in significant changes to the accounting for long-duration insurance contracts. These changes (1) require all guarantees that qualify as market risk benefits to be measured at fair value, (2) require more frequent updating of assumptions and modify existing discount rate requirements for certain insurance liabilities, (3) modify the methods of amortization for deferred acquisition costs, and (4) require new qualitative and quantitative disclosures around insurance contract asset and liability balances and the judgments, assumptions and methods used to measure those balances. January 1, 2021 using a modified retrospective method for the new market risk benefit guidance and prospective methods for the increased frequency of updating assumptions, the new discount rate requirements and deferred policy acquisition costs (“DAC”) amortization changes. Early adoption is permitted. The Company is in the early stages of evaluating the new guidance and therefore is unable to estimate the impact to its financial statements. The most significant impact will be the measurement of liabilities for variable annuity guarantees. ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments The amendments to Topic 326 replace the incurred loss impairment methodology for certain financial instruments with one that reflects expected credit losses based on historical loss information, current conditions, and reasonable and supportable forecasts. The new guidance also requires that an other-than- temporary impairment (“OTTI”) on a debt security will be recognized as an allowance going forward, such that improvements in expected future cash flows after an impairment will no longer be reflected as a prospective yield adjustment through net investment income, but rather a reversal of the previous impairment and recognized through realized investment gains and losses. January 1, 2020 using the modified retrospective method (with early adoption permitted beginning January 1, 2019) The Company is currently evaluating the impact of this guidance on its financial statements, with the most significant impact expected to be earlier recognition of credit losses on mortgage loan investments. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Segment Information | 2. Segment Information The Company is organized into two segments: Annuities and Life. In addition, the Company reports certain of its results of operations in Corporate & Other. Annuities The Annuities segment consists of a variety of variable, fixed, index-linked and income annuities designed to address contract holders’ needs for protected wealth accumulation on a tax-deferred basis, wealth transfer and income security. Life The Life segment consists of insurance products and services, including term, whole and universal life products designed to address policyholders’ needs for financial security and protected wealth transfer, which may be provided on a tax-advantaged basis. Corporate & Other Corporate & Other contains the excess capital not allocated to the segments and expenses associated with certain legal proceedings and income tax audit issues. Corporate & Other also includes the elimination of intersegment amounts and a portion of MetLife’s former U.S. insurance business sold direct to consumers, which is no longer being offered for new sales. Financial Measures and Segment Accounting Policies Adjusted earnings is a financial measure used by management to evaluate performance, allocate resources and facilitate comparisons to industry results. Consistent with GAAP guidance for segment reporting, adjusted earnings is also used to measure segment performance. The Company believes the presentation of adjusted earnings, as the Company measures it for management purposes, enhances the understanding of its performance by highlighting the results of operations and the underlying profitability drivers of the business. Adjusted earnings should not be viewed as a substitute for net income (loss). Adjusted earnings, which may be positive or negative, focuses on the Company’s primary businesses principally by excluding the impact of market volatility, which could distort trends. The following are significant items excluded from total revenues, net of income tax, in calculating adjusted earnings: • Net investment gains (losses); • Net derivative gains (losses) except earned income on derivatives and amortization of premium on derivatives that are hedges of investments or that are used to replicate certain investments, but do not qualify for hedge accounting treatment; and • Certain variable annuity guaranteed minimum income benefits (“GMIBs”) fees (“GMIB Fees”) and amortization of unearned revenue related to net investment gains (losses) and net derivative gains (losses). The following are significant items excluded from total expenses, net of income tax, in calculating adjusted earnings: • Amounts associated with benefits and hedging costs related to GMIBs (“GMIB Costs”); • Amounts associated with periodic crediting rate adjustments based on the total return of a contractually referenced pool of assets and market value adjustments associated with surrenders or terminations of contracts (“Market Value Adjustments”); and • Amortization of DAC and value of business acquired related to: (i) net investment gains (losses), (ii) net derivative gains (losses), (iii) GMIB Fees and GMIB Costs and (iv) Market Value Adjustments. The tax impact of the adjustments mentioned above is calculated net of the statutory tax rate, which could differ from the Company’s effective tax rate. Set forth in the tables below is certain financial information with respect to the Company’s segments, as well as Corporate & Other, for the three months ended March 31, 2019 and 2018 and at March 31, 2019 and December 31, 2018 . The segment accounting policies are the same as those used to prepare the Company’s condensed financial statements, except for the adjustments to calculate adjusted earnings described above. In addition, segment accounting policies include the methods of capital allocation described below. Segment investment and capitalization targets are based on statutory oriented risk principles and metrics. Segment invested assets backing liabilities are based on net statutory liabilities plus excess capital. For the variable annuity business, the excess capital held is based on the target statutory total asset requirement consistent with the Company’s variable annuity risk management strategy. For insurance businesses other than variable annuities, excess capital held is based on a percentage of required statutory risk-based capital. Assets in excess of those allocated to the segments, if any, are held in Corporate & Other. Segment net investment income reflects the performance of each segment’s respective invested assets. Operating Results Three Months Ended March 31, 2019 Annuities Life Corporate & Other Total (In thousands) Pre-tax adjusted earnings $ (4,979 ) $ (4,256 ) $ (553 ) $ (9,788 ) Provision for income tax expense (benefit) (1,468 ) (894 ) (359 ) (2,721 ) Adjusted earnings $ (3,511 ) $ (3,362 ) $ (194 ) (7,067 ) Adjustments for: Net investment gains (losses) (452 ) Net derivative gains (losses) (3,245 ) Other adjustments to net income 10,730 Provision for income tax (expense) benefit (1,477 ) Net income (loss) $ (1,511 ) Interest revenue $ 17,772 $ 8,304 $ 509 Operating Results Three Months Ended March 31, 2018 Annuities Life Corporate & Other Total (In thousands) Pre-tax adjusted earnings $ 5,430 $ 8,014 $ 2,262 $ 15,706 Provision for income tax expense (benefit) 657 1,683 281 2,621 Adjusted earnings $ 4,773 $ 6,331 $ 1,981 13,085 Adjustments for: Net investment gains (losses) (2,355 ) Net derivative gains (losses) (44,262 ) Other adjustments to net income 11,865 Provision for income tax (expense) benefit 7,297 Net income (loss) $ (14,370 ) Interest revenue $ 14,803 $ 8,839 $ 371 The following table presents total revenues with respect to the Company’s segments, as well as Corporate & Other: Three Months Ended 2019 2018 (In thousands) Annuities $ 21,887 $ 27,638 Life 12,647 15,696 Corporate & Other 670 1,024 Adjustments (449 ) (43,309 ) Total $ 34,755 $ 1,049 The following table presents total assets with respect to the Company’s segments, as well as Corporate & Other, at: March 31, 2019 December 31, 2018 (In thousands) Annuities $ 7,539,919 $ 7,034,394 Life 1,124,314 1,083,641 Corporate & Other 92,805 12,090 Total $ 8,757,038 $ 8,130,125 |
Insurance
Insurance | 3 Months Ended |
Mar. 31, 2019 | |
Insurance [Abstract] | |
Insurance | 3. Insurance Guarantees As discussed in Notes 1 and 3 of the Notes to the Financial Statements included in the 2018 Annual Report, the Company issues variable annuity contracts with guaranteed minimum benefits. Guaranteed minimum accumulation benefits (“GMABs”), the non-life contingent portion of guaranteed minimum withdrawal benefits (“GMWBs”) and certain portions of GMIBs that do not require the policyholder to annuitize are accounted for as embedded derivatives in policyholder account balances and are further discussed in Note 5 . Information regarding the Company’s guarantee exposure was as follows at: March 31, 2019 December 31, 2018 In the Event of Death At Annuitization In the Event of Death At Annuitization (Dollars in thousands) Annuity Contracts (1), (2) Variable Annuity Guarantees Total account value (3) $ 4,564,444 $ 3,703,604 $ 4,274,326 $ 3,483,668 Separate account value $ 4,557,551 $ 3,702,932 $ 4,266,520 $ 3,482,829 Net amount at risk $ 22,344 (4) $ 211,888 (5) $ 193,102 (4) $ 274,632 (5) Average attained age of contract holders 68 years 67 years 67 years 67 years ______________ (1) The Company’s annuity contracts with guarantees may offer more than one type of guarantee in each contract. Therefore, the amounts listed above may not be mutually exclusive. (2) Includes direct business, but excludes offsets from hedging or reinsurance, if any. Therefore, the net amount at risk presented reflects the economic exposures of living and death benefit guarantees associated with variable annuities, but not necessarily their impact on the Company. See Note 5 of t he Notes to the Financial Statements included in the 2018 Annual Report for a discussion of guaranteed minimum benefits which have been reinsured. (3) Includes the contract holder’s investments in the general account and separate account, if applicable. (4) Defined as the death benefit less the total account value, as of the balance sheet date. It represents the amount of the claim that the Company would incur if death claims were filed on all contracts on the balance sheet date and includes any additional contractual claims associated with riders purchased to assist with covering income taxes payable upon death. (5) Defined as the amount (if any) that would be required to be added to the total account value to purchase a lifetime income stream, based on current annuity rates, equal to the minimum amount provided under the guaranteed benefit. This amount represents the Company’s potential economic exposure to such guarantees in the event all contract holders were to annuitize on the balance sheet date, even though the contracts contain terms that allow annuitization of the guaranteed amount only after the 10th anniversary of the contract, which not all contract holders have achieved. |
Investments
Investments | 3 Months Ended |
Mar. 31, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | 4. Investments See Note 1 of the Notes to the Financial Statements included in the 2018 Annual Report for a description of the Company’s accounting policies for investments and Note 6 for information about the fair value hierarchy for investments and the related valuation methodologies. Fixed Maturity Securities Available-for-sale (“AFS”) Fixed Maturity Securities AFS by Sector The following table presents the fixed maturity securities AFS by sector at: March 31, 2019 December 31, 2018 Amortized Gross Unrealized Estimated Amortized Gross Unrealized Estimated Gains Temporary OTTI Gains Temporary OTTI (In thousands) Fixed maturity securities: (1) U.S. corporate $ 916,754 $ 21,416 $ 7,539 $ — $ 930,631 $ 890,676 $ 5,402 $ 23,034 $ — $ 873,044 U.S. government and agency 504,101 15,524 4,269 — 515,356 511,255 9,961 13,697 — 507,519 Foreign corporate 374,509 6,641 7,194 — 373,956 368,149 1,473 17,258 — 352,364 CMBS 336,322 7,335 1,216 — 342,441 325,491 1,481 4,121 — 322,851 RMBS 315,454 6,879 1,973 — 320,360 200,827 4,643 2,882 — 202,588 ABS 83,618 262 489 — 83,391 79,806 158 1,133 — 78,831 State and political subdivision 65,995 6,168 70 — 72,093 66,131 4,777 1,083 — 69,825 Foreign government 26,317 692 373 — 26,636 27,466 140 995 — 26,611 Total fixed maturity securities $ 2,623,070 $ 64,917 $ 23,123 $ — $ 2,664,864 $ 2,469,801 $ 28,035 $ 64,203 $ — $ 2,433,633 __________________ (1) Redeemable preferred stock is reported within foreign corporate fixed maturity securities. Included within fixed maturity securities are structured securities including residential mortgage-backed securities (“RMBS”), commercial mortgage-backed securities (“CMBS”) and asset-backed securities (“ABS”) (collectively, “Structured Securities”). The Company did not hold non-income producing fixed maturity securities at both March 31, 2019 and December 31, 2018 . Maturities of Fixed Maturity Securities The amortized cost and estimated fair value of fixed maturity securities, by contractual maturity date, were as follows at March 31, 2019 : Due in One Year or Less Due After One Year Through Five Years Due After Five Years Through Ten Years Due After Ten Years Structured Securities Total Fixed Maturity Securities (In thousands) Amortized cost $ 56,296 $ 342,812 $ 898,149 $ 590,419 $ 735,394 $ 2,623,070 Estimated fair value $ 56,866 $ 344,578 $ 906,709 $ 610,519 $ 746,192 $ 2,664,864 Actual maturities may differ from contractual maturities due to the exercise of call or prepayment options. Fixed maturity securities not due at a single maturity date have been presented in the year of final contractual maturity. Structured Securities are shown separately, as they are not due at a single maturity. Continuous Gross Unrealized Losses for Fixed Maturity Securities AFS by Sector The following table presents the estimated fair value and gross unrealized losses of fixed maturity securities AFS in an unrealized loss position, aggregated by sector and by length of time that the securities have been in a continuous unrealized loss position at: March 31, 2019 December 31, 2018 Less than 12 Months Equal to or Greater than 12 Months Less than 12 Months Equal to or Greater than 12 Months Estimated Fair Value Gross Unrealized Losses Estimated Fair Value Gross Unrealized Losses Estimated Fair Value Gross Unrealized Losses Estimated Fair Value Gross Unrealized Losses (Dollars in thousands) Fixed maturity securities: U.S. corporate $ 54,218 $ 1,415 $ 213,094 $ 6,124 $ 483,424 $ 15,849 $ 131,812 $ 7,185 U.S. government and agency — — 264,905 4,269 102,447 1,925 296,265 11,772 Foreign corporate 68,008 3,251 102,547 3,943 194,924 10,156 72,803 7,102 CMBS 8,975 58 67,525 1,158 119,412 1,909 44,775 2,212 RMBS 72,806 130 46,591 1,843 57,510 1,746 28,573 1,136 ABS 39,489 389 11,104 100 51,028 985 11,699 148 State and political subdivision 6,175 25 7,815 45 18,260 744 13,999 339 Foreign government 10,645 373 — — 7,435 716 6,782 279 Total fixed maturity securities $ 260,316 $ 5,641 $ 713,581 $ 17,482 $ 1,034,440 $ 34,030 $ 606,708 $ 30,173 Total number of securities in an unrealized loss position 108 181 364 146 Evaluation of AFS Securities for OTTI and Evaluating Temporarily Impaired AFS Securities Evaluation and Measurement Methodologies Management considers a wide range of factors about the security issuer and uses its best judgment in evaluating the cause of the decline in the estimated fair value of the security and in assessing the prospects for near-term recovery. Inherent in management’s evaluation of the security are assumptions and estimates about the operations of the issuer and its future earnings potential. Considerations used in the impairment evaluation process include, but are not limited to: (i) the length of time and the extent to which the estimated fair value has been below amortized cost; (ii) the potential for impairments when the issuer is experiencing significant financial difficulties; (iii) the potential for impairments in an entire industry sector or sub-sector; (iv) the potential for impairments in certain economically depressed geographic locations; (v) the potential for impairments where the issuer, series of issuers or industry has suffered a catastrophic loss or has exhausted natural resources; (vi) whether the Company has the intent to sell or will more likely than not be required to sell a particular security before the decline in estimated fair value below amortized cost recovers; (vii) with respect to Structured Securities, changes in forecasted cash flows after considering the quality of underlying collateral, expected prepayment speeds, current and forecasted loss severity, consideration of the payment terms of the underlying assets backing a particular security, and the payment priority within the tranche structure of the security; (viii) the potential for impairments due to weakening of foreign currencies on non-functional currency denominated fixed maturity securities that are near maturity; and (ix) other subjective factors, including concentrations and information obtained from regulators and rating agencies. For securities in an unrealized loss position, an OTTI is recognized in earnings when it is anticipated that the amortized cost will not be recovered. When either: (i) the Company has the intent to sell the security; or (ii) it is more likely than not that the Company will be required to sell the security before recovery, the OTTI recognized in earnings is the entire difference between the security’s amortized cost and estimated fair value. If neither of these conditions exists, the difference between the amortized cost of the security and the present value of projected future cash flows expected to be collected is recognized as an OTTI in earnings (“credit loss”). If the estimated fair value is less than the present value of projected future cash flows expected to be collected, this portion of OTTI related to other-than-credit factors (“noncredit loss”) is recorded in other comprehensive income (“OCI”). Current Period Evaluation Based on the Company’s current evaluation of its AFS securities in an unrealized loss position in accordance with its impairment policy, and the Company’s current intentions and assessments (as applicable to the type of security) about holding, selling and any requirements to sell these securities, the Company concluded that these securities were not other-than-temporarily impaired at March 31, 2019 . Gross unrealized losses on fixed maturity securities decreased $41.1 million during the three months ended March 31, 2019 to $23.1 million . The decrease in gross unrealized losses for the three months ended March 31, 2019 was primarily attributable to decreasing longer-term interest rates and narrowing credit spreads. At March 31, 2019 , $940 thousand of the total $23.1 million of gross unrealized losses were from one fixed maturity security with an unrealized loss position of 20% or more of amortized cost for six months or greater. Mortgage Loans Mortgage Loans by Portfolio Segment Mortgage loans are summarized as follows at: March 31, 2019 December 31, 2018 Carrying Value % of Total Carrying Value % of Total (Dollars in thousands) Mortgage loans: Commercial $ 319,650 68.4 % $ 310,681 69.3 % Agricultural 149,549 32.0 139,361 31.1 Subtotal 469,199 100.4 450,042 100.4 Valuation allowances (1) (2,006 ) (0.4 ) (1,937 ) (0.4 ) Total mortgage loans, net $ 467,193 100.0 % $ 448,105 100.0 % __________________ (1) The valuation allowances were primarily from collective evaluation (non-specific loan related). Information on commercial and agricultural mortgage loans is presented in the tables below. Valuation Allowance Methodology Mortgage loans are considered to be impaired when it is probable that, based upon current information and events, the Company will be unable to collect all amounts due under the loan agreement. Specific valuation allowances are established using the same methodology for both portfolio segments as the excess carrying value of a loan over either (i) the present value of expected future cash flows discounted at the loan’s original effective interest rate, (ii) the estimated fair value of the loan’s underlying collateral if the loan is in the process of foreclosure or otherwise collateral dependent, or (iii) the loan’s observable market price. A common evaluation framework is used for establishing non-specific valuation allowances for both loan portfolio segments; however, a separate non-specific valuation allowance is calculated and maintained for each loan portfolio segment that is based on inputs unique to each loan portfolio segment. Non-specific valuation allowances are established for pools of loans with similar risk characteristics where a property-specific or market-specific risk has not been identified, but for which the Company expects to incur a credit loss. These evaluations are based upon several loan portfolio segment-specific factors, including the Company’s experience for loan losses, defaults and loss severity, and loss expectations for loans with similar risk characteristics. These evaluations are revised as conditions change and new information becomes available. Credit Quality of Commercial Mortgage Loans The credit quality of commercial mortgage loans was as follows at: Recorded Investment Debt Service Coverage Ratios % of Total > 1.20x 1.00x - 1.20x < 1.00x Total (Dollars in thousands) March 31, 2019 Loan-to-value ratios: Less than 65% $ 277,674 $ 5,000 $ 13,448 $ 296,122 92.7 % 65% to 75% 19,240 — — 19,240 6.0 76% to 80% 4,288 — — 4,288 1.3 Total $ 301,202 $ 5,000 $ 13,448 $ 319,650 100.0 % December 31, 2018 Loan-to-value ratios: Less than 65% $ 273,681 $ 5,000 $ 13,447 $ 292,128 94.0 % 65% to 75% 14,257 — — 14,257 4.6 76% to 80% 4,296 — — 4,296 1.4 Total $ 292,234 $ 5,000 $ 13,447 $ 310,681 100.0 % Credit Quality of Agricultural Mortgage Loans The credit quality of agricultural mortgage loans was as follows at: March 31, 2019 December 31, 2018 Recorded Investment % of Total Recorded Investment % of Total (Dollars in thousands) Loan-to-value ratios: Less than 65% $ 141,731 94.8 % $ 133,884 96.1 % 65% to 75% 7,818 5.2 5,477 3.9 Total $ 149,549 100.0 % $ 139,361 100.0 % Past Due, Nonaccrual and Modified Mortgage Loans The Company has a high quality, well performing mortgage loan portfolio, with all mortgage loans classified as performing at both March 31, 2019 and December 31, 2018 . The Company defines delinquency consistent with industry practice, when mortgage loans are past due as follows: commercial mortgage loans — 60 days and agricultural mortgage loans — 90 days. The Company had no commercial or agricultural mortgage loans past due and no commercial or agricultural mortgage loans in nonaccrual status at either March 31, 2019 or December 31, 2018 . During both the three months ended March 31, 2019 and 2018 , the Company did not have any mortgage loans modified in a troubled debt restructuring. Cash Equivalents The carrying value of cash equivalents, which includes securities and other investments with an original or remaining maturity of three months or less at the time of purchase, was $0 and $89.9 million at March 31, 2019 and December 31, 2018 , respectively. Net Unrealized Investment Gains (Losses) Unrealized investment gains (losses) on fixed maturity securities and the effect on DAC, deferred sales inducements (“DSI”) and future policy benefits, that would result from the realization of the unrealized gains (losses), are included in net unrealized investment gains (losses) in accumulated other comprehensive income (“AOCI”). The components of net unrealized investment gains (losses), included in AOCI, were as follows: March 31, 2019 December 31, 2018 (In thousands) Fixed maturity securities $ 41,793 $ (36,166 ) Derivatives 4,756 5,791 Subtotal 46,549 (30,375 ) Amounts allocated from: DAC and DSI (7,500 ) 11,299 Deferred income tax benefit (expense) (8,200 ) 4,005 Net unrealized investment gains (losses) $ 30,849 $ (15,071 ) The changes in net unrealized investment gains (losses) were as follows: Three Months Ended (In thousands) Balance, December 31, 2018 $ (15,071 ) Unrealized investment gains (losses) during the period 76,924 Unrealized investment gains (losses) relating to: DAC and DSI (18,799 ) Deferred income tax benefit (expense) (12,205 ) Balance, March 31, 2019 $ 30,849 Change in net unrealized investment gains (losses) $ 45,920 Concentrations of Credit Risk There were no investments in any counterparty that were greater than 10% of the Company’s equity, other than the U.S. government and its agencies, at both March 31, 2019 and December 31, 2018 . Invested Assets on Deposit and Pledged as Collateral Invested assets on deposit and pledged as collateral are presented below at estimated fair value: March 31, 2019 December 31, 2018 (In thousands) Invested assets on deposit (regulatory deposits) $ 1,530 $ 1,482 Invested assets pledged as collateral (1) 8,652 158 Total invested assets on deposit and pledged as collateral (2) $ 10,182 $ 1,640 __________________ (1) The Company has pledged invested assets in connection with derivative transactions (see Note 5 ). (2) The Company held no restricted cash at both March 31, 2019 and December 31, 2018. Variable Interest Entities The Company has invested in legal entities that are variable interest entities (“VIEs”). VIEs are consolidated when the investor is the primary beneficiary. A primary beneficiary is the variable interest holder in a VIE with both the power to direct the activities of the VIE that most significantly impact the economic performance of the VIE and the obligation to absorb losses, or the right to receive benefits that could potentially be significant to the VIE. There were no material VIEs for which the Company has concluded that it is the primary beneficiary at March 31, 2019 or December 31, 2018. The Company’s investments in unconsolidated VIEs are described below. Fixed Maturity Securities The Company invests in U.S. corporate bonds, foreign corporate bonds, and Structured Securities issued by VIEs. The Company is not obligated to provide any financial or other support to these VIEs, other than the original investment. The Company’s involvement with these entities is limited to that of a passive investor. The Company has no unilateral right to appoint or remove the servicer, special servicer, or investment manager, which are generally viewed as having the power to direct the activities that most significantly impact the economic performance of the VIE, nor does the Company function in any of these roles. The Company does not have the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the entity; as a result, the Company has determined it is not the primary beneficiary, or consolidator, of the VIE. The Company’s maximum exposure to loss on these fixed maturity securities is limited to the amortized cost of these investments. See “— Fixed Maturity Securities AFS” for information on these securities. March 31, 2019 December 31, 2018 Carrying Maximum Carrying Maximum (In thousands) Fixed maturity securities $ 489,002 $ 480,919 $ 409,699 $ 409,699 Net Investment Income The components of net investment income were as follows: Three Months Ended 2019 2018 (In thousands) Investment income: Fixed maturity securities $ 22,913 $ 20,365 Mortgage loans 3,899 4,191 Cash, cash equivalents and short-term investments 387 158 Other 350 96 Subtotal 27,549 24,810 Less: Investment expenses 1,056 879 Net investment income $ 26,493 $ 23,931 See “— Related Party Investment Transactions” for discussion of related party investment expenses. Net Investment Gains (Losses) Components of Net Investment Gains (Losses) The components of net investment gains (losses) were as follows: Three Months Ended 2019 2018 (In thousands) Fixed maturity securities $ (468 ) $ (2,839 ) Mortgage loans (69 ) (82 ) Other 85 566 Total net investment gains (losses) $ (452 ) $ (2,355 ) Gains (losses) from foreign currency transactions included within net investment gains (losses) were $10 thousand and $414 thousand for the three months ended March 31, 2019 and 2018 , respectively. Sales or Disposals of Fixed Maturity Securities Investment gains and losses on sales of securities are determined on a specific identification basis. Proceeds from sales or disposals of fixed maturity securities and the components of fixed maturity securities net investment gains (losses) were as shown in the table below. Three Months Ended 2019 2018 (In thousands) Proceeds $ 55,477 $ 53,561 Gross investment gains $ 150 $ 15 Gross investment losses (618 ) (2,854 ) Net investment gains (losses) $ (468 ) $ (2,839 ) Related Party Investment Transactions The Company receives investment administrative services from MetLife Investment Advisors, LLC, which was considered a related party investment manager until the completion of the MetLife Divestiture. The related investment administrative service charges were $0 and $766 thousand for the three months ended March 31, 2019 and 2018, respectively. All of the charges reported as related party activity in 2018 occurred prior to the MetLife Divestiture. See Note 1 regarding the MetLife Divestiture. |
Derivatives
Derivatives | 3 Months Ended |
Mar. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | 5. Derivatives Accounting for Derivatives Freestanding Derivatives Freestanding derivatives are carried on the Company’s balance sheet either as assets within other invested assets or as liabilities within other liabilities at estimated fair value. The Company does not offset the estimated fair value amounts recognized for derivatives executed with the same counterparty under the same master netting agreement. If a derivative is not designated as an accounting hedge or its use in managing risk does not qualify for hedge accounting, changes in the estimated fair value of the derivative are reported in net derivative gains (losses). Hedge Accounting The Company primarily designates derivatives as a hedge of a forecasted transaction or a variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge). When a derivative is designated as a cash flow hedge and is determined to be highly effective, changes in fair value are recorded in OCI and subsequently reclassified into the statement of operations when the Company’s earnings are affected by the variability in cash flows of the hedged item. To qualify for hedge accounting, at the inception of the hedging relationship, the Company formally documents its risk management objective and strategy for undertaking the hedging transaction, as well as its designation of the hedge. In its hedge documentation, the Company sets forth how the hedging instrument is expected to hedge the designated risks related to the hedged item and sets forth the method that will be used to retrospectively and prospectively assess the hedging instrument’s effectiveness. A derivative designated as a hedging instrument must be assessed as being highly effective in offsetting the designated risk of the hedged item. Hedge effectiveness is formally assessed at inception and at least quarterly throughout the life of the designated hedging relationship. The Company discontinues hedge accounting prospectively when: (i) it is determined that the derivative is no longer highly effective in offsetting changes in the cash flows of a hedged item; (ii) the derivative expires, is sold, terminated, or exercised; (iii) it is no longer probable that the hedged forecasted transaction will occur; or (iv) the derivative is de-designated as a hedging instrument. When hedge accounting is discontinued because it is determined that the derivative is not highly effective in offsetting changes in the cash flows of a hedged item, the derivative continues to be carried on the balance sheet at its estimated fair value, with changes in estimated fair value recognized in net derivative gains (losses). Provided the hedged forecasted transaction is still probable of occurrence, the changes in estimated fair value of derivatives recorded in OCI related to discontinued cash flow hedges are released into the statement of operations when the Company’s earnings are affected by the variability in cash flows of the hedged item. In all other situations in which hedge accounting is discontinued, the derivative is carried at its estimated fair value on the balance sheet, with changes in its estimated fair value recognized in the current period as net derivative gains (losses). Embedded Derivatives The Company sells variable and index-linked annuities and is a party to certain reinsurance agreements that have embedded derivatives. The Company assesses each identified embedded derivative to determine whether it is required to be bifurcated and measured at fair value, separately from the host contract. The Company bifurcates embedded derivatives when a separate instrument with the same terms as the embedded derivative would qualify as a derivative instrument, the terms of the embedded derivative are not clearly and closely related to the economic characteristics of the host contract and the underlying contract is not already measured at estimated fair value with changes recorded in earnings. See “— Future Policy Benefit Liabilities and Policyholder Account Balances”, “— Index-Linked Annuities” and “— Reinsurance” in the Note 1 of the Notes to the Financial Statements included in the 2018 Annual Report for additional information on the accounting policies for embedded derivatives bifurcated from variable annuity and reinsurance host contracts. Derivative Strategies The Company is exposed to various risks relating to its ongoing business operations, including interest rate, foreign currency exchange rate, credit and equity market. The Company uses a variety of strategies to manage these risks, including the use of derivatives. Derivatives are financial instruments with values derived from interest rates, foreign currency exchange rates, credit spreads and/or other financial indices. Derivatives may be exchange-traded or contracted in the over-the-counter (“OTC”) market. Certain of the Company’s OTC derivatives are bilateral contracts between two counterparties (“OTC-bilateral”). The types of derivatives the Company uses include swaps and option contracts. Interest Rate Derivatives The Company purchases interest rate caps to protect against rises in long-term interest rates. The Company utilizes interest rate caps in nonqualifying hedging relationships. Foreign Currency Exchange Rate Derivatives The Company uses foreign currency swaps to reduce the risk from fluctuations in foreign currency exchange rates associated with its assets denominated in foreign currencies. In a foreign currency swap transaction, the Company agrees with another party to exchange, at specified intervals, the difference between one currency and another at a fixed exchange rate, generally set at inception, calculated by reference to an agreed upon notional amount. The notional amount of each currency is exchanged at the inception and termination of the currency swap by each party. The Company utilizes foreign currency swaps in cash flow and nonqualifying hedging relationships. Equity Derivatives The Company uses equity index options to reduce exposure to rising equity markets associated with fixed annuities with equity indexed returns. The Company utilizes equity index options in nonqualifying hedging relationships. Primary Risks Managed by Derivatives The following table presents the primary underlying risk exposure, gross notional amount, and estimated fair value of the Company’s derivatives, excluding embedded derivatives, held at: March 31, 2019 December 31, 2018 Primary Underlying Risk Exposure Gross Notional Estimated Fair Value Gross Notional Estimated Fair Value Assets Liabilities Assets Liabilities (In thousands) Derivatives Designated as Hedging Instruments: Cash flow hedges: Foreign currency swaps Foreign currency exchange rate $ 83,513 $ 4,563 $ 130 $ 82,704 $ 5,649 $ 187 Derivatives Not Designated or Not Qualifying as Hedging Instruments: Interest rate caps Interest rate 800,000 4,772 — 800,000 9,284 — Foreign currency swaps Foreign currency exchange rate 17,892 3,191 96 28,133 3,395 144 Equity index options Equity market 2,307,473 35,487 9,969 2,154,321 10,389 96 Total non-designated or nonqualifying derivatives 3,125,365 43,450 10,065 2,982,454 23,068 240 Total $ 3,208,878 $ 48,013 $ 10,195 $ 3,065,158 $ 28,717 $ 427 The following tables present the amount and location of gains (losses) recognized for derivatives and gains (losses) pertaining to hedged items presented in net derivative gains (losses): Net Derivative Gains (Losses) Recognized for Derivatives (1), (4) Net Derivative Gains (Losses) Recognized for Hedged Items (2), (4) Net Investment Income (5) Amount of Gains (Losses) deferred in AOCI (In thousands) Three Months Ended March 31, 2019 Derivatives Designated as Hedging Instruments: Cash flow hedges (3): Foreign currency exchange rate derivatives $ — $ — $ 270 $ (1,035 ) Total cash flow hedges — — 270 (1,035 ) Derivatives Not Designated or Not Qualifying as Hedging Instruments: Interest rate derivatives (4,512 ) — — — Foreign currency exchange rate derivatives (36 ) 88 — — Equity derivatives 36,116 — — — Embedded derivatives (34,901 ) — — — Total non-qualifying hedges (3,333 ) 88 — — Total $ (3,333 ) $ 88 $ 270 $ (1,035 ) Three Months Ended March 31, 2018 Derivatives Designated as Hedging Instruments: Cash flow hedges (3): Foreign currency exchange rate derivatives $ 6 $ — $ 186 $ (2,674 ) Total cash flow hedges 6 — 186 (2,674 ) Derivatives Not Designated or Not Qualifying as Hedging Instruments: Interest rate derivatives (4,002 ) — — — Foreign currency exchange rate derivatives (972 ) 152 — — Equity derivatives (8,736 ) — — — Embedded derivatives (30,710 ) — — — Total non-qualifying hedges (44,420 ) 152 — — Total $ (44,414 ) $ 152 $ 186 $ (2,674 ) ______________ (1) Includes gains (losses) reclassified from AOCI primarily for terminated cash flow hedges. (2) Includes foreign currency transaction gains (losses) on hedged items in cash flow and nonqualifying hedging relationships. (3) All components of each derivative's gain or loss were included in the assessment of hedge effectiveness. (4) Total net derivative gains (losses) were ($3.2) million and ($44.3) million for the three months ended March 31, 2019 and 2018 respectively. (5) Total net investment income was ($452) thousand and ($2.4) million for the three months ended March 31, 2019 and 2018 respectively. At March 31, 2019 and December 31, 2018 , the balance in AOCI associated with foreign currency swaps designated and qualifying as cash flow hedges was $4.8 million and $5.8 million , respectively. Counterparty Credit Risk The Company may be exposed to credit-related losses in the event of nonperformance by its counterparties to derivatives. Generally, the current credit exposure of the Company’s derivatives is limited to the net positive estimated fair value of derivatives at the reporting date after taking into consideration the existence of master netting or similar agreements and any collateral received pursuant to such agreements. The Company manages its credit risk related to derivatives by entering into transactions with creditworthy counterparties and establishing and monitoring exposure limits. The Company’s OTC-bilateral derivative transactions are generally governed by International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreements which provide for legally enforceable set-off and close-out netting of exposures to specific counterparties in the event of early termination of a transaction, which includes, but is not limited to, events of default and bankruptcy. In the event of an early termination, the Company is permitted to set off receivables from the counterparty against payables to the same counterparty arising out of all included transactions. Substantially all of the Company’s ISDA Master Agreements also include Credit Support Annex provisions which require both the pledging and accepting of collateral in connection with its OTC-bilateral derivatives. See Note 6 for a description of the impact of credit risk on the valuation of derivatives. The estimated fair values of the Company’s net derivative assets and net derivative liabilities after the application of master netting agreements and collateral were as follows at: March 31, 2019 December 31, 2018 Derivatives Subject to a Master Netting Arrangement or a Similar Arrangement Assets Liabilities Assets Liabilities (In thousands) Gross estimated fair value of derivatives: OTC-bilateral (1) $ 48,331 $ 10,160 $ 29,006 $ 411 Total gross estimated fair value of derivatives (1) 48,331 10,160 29,006 411 Amounts offset on the balance sheets — — — — Estimated fair value of derivatives presented on the balance sheets (1) 48,331 10,160 29,006 411 Gross amounts not offset on the balance sheets: Gross estimated fair value of derivatives: (2) OTC-bilateral (3,825 ) (3,825 ) (365 ) (365 ) Cash collateral: (3) OTC-bilateral (34,235 ) — (23,197 ) — Securities collateral: (4) OTC-bilateral (2,875 ) (6,335 ) (2,212 ) (46 ) Net amount after application of master netting agreements and collateral $ 7,396 $ — $ 3,232 $ — ______________ (1) At March 31, 2019 and December 31, 2018 , derivative assets included income or (expense) accruals reported in accrued investment income or in other liabilities of $318 thousand and $289 thousand , respectively, and derivative liabilities included (income) or expense accruals reported in accrued investment income or in other liabilities of ($35) thousand and ($16) thousand , respectively. (2) Estimated fair value of derivatives is limited to the amount that is subject to set-off and includes income or expense accruals. (3) Cash collateral received is included in cash and cash equivalents or in short-term investments, and the obligation to return it is included in payables for collateral transactions on the balance sheet. The amount of cash collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreements. At March 31, 2019 and December 31, 2018 , the Company received excess cash collateral of $2.6 million and $384 thousand , respectively, and did not provide any excess cash collateral, which is not included in the table above due to the foregoing limitation. (4) Securities collateral received by the Company is held in separate custodial accounts and is not recorded on the balance sheet. Subject to certain constraints, the Company is permitted by contract to sell or re-pledge this collateral, but at March 31, 2019 , none of the collateral had been sold or re-pledged. Securities collateral pledged by the Company is reported in fixed maturity securities on the balance sheet. Subject to certain constraints, the counterparties are permitted by contract to sell or re-pledge this collateral. The amount of securities collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreements and cash collateral. At March 31, 2019 and December 31, 2018 , the Company received excess securities collateral with an estimated fair value of $3.9 million and $78 thousand , respectively, and provided excess securities collateral with an estimated fair value of $2.3 million and $112 thousand , respectively, for its OTC-bilateral derivatives. The Company’s collateral arrangements for its OTC-bilateral derivatives generally require the counterparty in a net liability position, after considering the effect of netting agreements, to pledge collateral when the amount owed by that counterparty reaches a minimum transfer amount. In addition, the Company’s netting agreements for derivatives contain provisions that require both the Company and the counterparty to maintain a specific investment grade credit rating from each of Moody’s Investors Service and Standard & Poor’s Global Ratings 500 Index. If a party’s financial strength or credit ratings were to fall below that specific investment grade credit rating, that party would be in violation of these provisions, and the other party to the derivatives could terminate the transactions and demand immediate settlement and payment based on such party’s reasonable valuation of the derivatives. At March 31, 2019 and December 31, 2018 , the Company held OTC-bilateral derivatives that are in a net liability position after considering the effect of netting agreements with an estimated fair value of $6.3 million and $46 thousand , respectively. At March 31, 2019 and December 31, 2018 , the Company provided collateral with an estimated fair value of $8.7 million and $158 thousand , respectively. The Company’s collateral agreements require both parties to be fully collateralized, as such, the Company would not be required to post additional collateral as a result of a downgrade in its financial strength rating. Embedded Derivatives The Company issues certain insurance contracts that contain embedded derivatives that are required to be separated from their host contracts and measured at fair value. These host contracts principally include: variable annuities with guaranteed minimum benefits, including GMWBs, GMABs and certain GMIBs; related party ceded reinsurance of guaranteed minimum benefits related to GMWBs, GMABs and certain GMIBs; and fixed annuities with equity-indexed returns. The following table presents the estimated fair value and balance sheet location of the Company’s embedded derivatives that have been separated from their host contracts at: Balance Sheet Location March 31, 2019 December 31, 2018 (In thousands) Embedded derivatives within asset host contracts: Ceded guaranteed minimum benefits Premiums, reinsurance and other receivables $ 295,107 $ 298,112 Embedded derivatives within liability host contracts: Direct guaranteed minimum benefits Policyholder account balances $ (33,520 ) $ (18,811 ) Fixed annuities with equity indexed returns Policyholder account balances 66,887 5,617 Embedded derivatives within liability host contracts $ 33,367 $ (13,194 ) The following table presents changes in estimated fair value related to embedded derivatives: Three Months Ended 2019 2018 (In thousands) Net derivative gains (losses) (1), (2) $ (34,901 ) $ (30,710 ) ______________ (1) The valuation of direct guaranteed minimum benefits includes a nonperformance risk adjustment. The amounts included in net derivative gains (losses) in connection with this adjustment were ($3.4) million and ($1.1) million for the three months ended March 31, 2019 , and 2018 , respectively. In addition, the valuation of ceded guaranteed minimum benefits includes a nonperformance risk adjustment. The amounts included in net derivative gains (losses) in connection with this adjustment were $19.8 million and ($600) thousand for the three months ended March 31, 2019 and 2018 , respectively. (2) See Note 10 for discussion of related party net derivative gains (losses). |
Fair Value
Fair Value | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value | 6. Fair Value Considerable judgment is often required in interpreting market data to develop estimates of fair value, and the use of different assumptions or valuation methodologies may have a material effect on the estimated fair value amounts. Recurring Fair Value Measurements The assets and liabilities measured at estimated fair value on a recurring basis and their corresponding placement in the fair value hierarchy, are presented below. Investments that do not have a readily determinable fair value and are measured at net asset value (or equivalent) as a practical expedient to estimated fair value are excluded from the fair value hierarchy. March 31, 2019 Fair Value Hierarchy Level 1 Level 2 Level 3 Total (In thousands) Assets Fixed maturity securities: U.S. corporate $ — $ 926,863 $ 3,768 $ 930,631 U.S. government and agency 391,637 123,719 — 515,356 Foreign corporate — 363,999 9,957 373,956 CMBS — 337,733 4,708 342,441 RMBS — 320,360 — 320,360 ABS — 77,922 5,469 83,391 State and political subdivision — 72,093 — 72,093 Foreign government — 26,636 — 26,636 Total fixed maturity securities 391,637 2,249,325 23,902 2,664,864 Derivative assets: (1) Interest rate — 4,772 — 4,772 Foreign currency exchange rate — 7,754 — 7,754 Equity market — 35,487 — 35,487 Total derivative assets — 48,013 — 48,013 Embedded derivatives within asset host contracts (2) — — 295,107 295,107 Separate account assets — 4,559,757 — 4,559,757 Total assets $ 391,637 $ 6,857,095 $ 319,009 $ 7,567,741 Liabilities Derivative liabilities: (1) Foreign currency exchange rate $ — $ 226 $ — $ 226 Equity market — 9,969 — 9,969 Total derivative liabilities — 10,195 — 10,195 Embedded derivatives within liability host contracts (2) — — 33,367 33,367 Total liabilities $ — $ 10,195 $ 33,367 $ 43,562 December 31, 2018 Fair Value Hierarchy Level 1 Level 2 Level 3 Total Estimated (In thousands) Assets Fixed maturity securities: U.S. corporate $ — $ 869,498 $ 3,546 $ 873,044 U.S. government and agency 389,491 118,028 — 507,519 Foreign corporate — 342,600 9,764 352,364 CMBS — 318,120 4,731 322,851 RMBS — 202,588 — 202,588 ABS — 78,831 — 78,831 State and political subdivision — 69,825 — 69,825 Foreign government — 26,611 — 26,611 Total fixed maturity securities 389,491 2,026,101 18,041 2,433,633 Derivative assets: (1) Interest rate — 9,284 — 9,284 Foreign currency exchange rate — 8,572 472 9,044 Equity market — 10,389 — 10,389 Total derivative assets — 28,245 472 28,717 Embedded derivatives within asset host contracts (2) — — 298,112 298,112 Separate account assets — 4,268,423 — 4,268,423 Total assets $ 389,491 $ 6,322,769 $ 316,625 $ 7,028,885 Liabilities Derivative liabilities: (1) Foreign currency exchange rate $ — $ 331 $ — $ 331 Equity market — 96 — 96 Total derivative liabilities — 427 — 427 Embedded derivatives within liability host contracts (2) — — (13,194 ) (13,194 ) Total liabilities $ — $ 427 $ (13,194 ) $ (12,767 ) ______________ (1) Derivative assets are presented within other invested assets on the balance sheets and derivative liabilities are presented within other liabilities on the balance sheets. The amounts are presented gross in the tables above to reflect the presentation on the balance sheets. (2) Embedded derivatives within asset host contracts are presented within premiums, reinsurance and other receivables and other invested assets on the balance sheets. Embedded derivatives within liability host contracts are presented within policyholder account balances on the balance sheets. Valuation Controls and Procedures The Company monitors and provides oversight of valuation controls and policies for securities, mortgage loans and derivatives, which are primarily executed by its valuation service providers. The valuation methodologies used to determine fair values prioritize the use of observable market prices and market-based parameters and determines that judgmental valuation adjustments, when applied, are based upon established policies and are applied consistently over time. The valuation methodologies for securities, mortgage loans and derivatives are reviewed on an ongoing basis and revised when necessary. In addition, the Chief Accounting Officer periodically reports to the Audit Committee of Brighthouse Financial’s Board of Directors regarding compliance with fair value accounting standards. The fair value of financial assets and financial liabilities is based on quoted market prices, where available. The Company assesses whether prices received represent a reasonable estimate of fair value through controls designed to ensure valuations represent an exit price. Valuation service providers perform several controls, including certain monthly controls, which include, but are not limited to, analysis of portfolio returns to corresponding benchmark returns, comparing a sample of executed prices of securities sold to the fair value estimates, reviewing the bid/ask spreads to assess activity, comparing prices from multiple independent pricing services and ongoing due diligence to confirm that independent pricing services use market-based parameters. The process includes a determination of the observability of inputs used in estimated fair values received from independent pricing services or brokers by assessing whether these inputs can be corroborated by observable market data. Independent non-binding broker quotes, also referred to herein as “consensus pricing,” are used for non-significant portion of the portfolio. Prices received from independent brokers are assessed to determine if they represent a reasonable estimate of fair value by considering such pricing relative to the current market dynamics and current pricing for similar financial instruments. Valuation service providers also apply a formal process to challenge any prices received from independent pricing services that are not considered representative of estimated fair value. If prices received from independent pricing services are not considered reflective of market activity or representative of estimated fair value, independent non-binding broker quotations are obtained. If obtaining an independent non-binding broker quotation is unsuccessful, valuation service providers will use the last available price. The Company reviews outputs of the valuation service providers’ controls and performs additional controls, including certain monthly controls, which include but are not limited to, performing balance sheet analytics to assess reasonableness of period to period pricing changes, including any price adjustments. Price adjustments are applied if prices or quotes received from independent pricing services or brokers are not considered reflective of market activity or representative of estimated fair value. The Company did not have significant price adjustments during the three months ended March 31, 2019 . Determination of Fair Value Fixed Maturity Securities The fair values for actively traded marketable bonds, primarily U.S. government and agency securities, are determined using the quoted market prices and are classified as Level 1 assets. For fixed maturity securities classified as Level 2 assets, fair values are determined using either a market or income approach and are valued based on a variety of observable inputs as described below. U.S. corporate and foreign corporate securities: Fair value is determined using third-party commercial pricing services, with the primary inputs being quoted prices in markets that are not active, benchmark yields, spreads off benchmark yields, new issuances, issuer rating, trades of identical or comparable securities, or duration. Privately-placed securities are valued using the additional key inputs: market yield curve, call provisions, observable prices and spreads for similar public or private securities that incorporate the credit quality and industry sector of the issuer, and delta spread adjustments to reflect specific credit-related issues. U.S. government and agency, state and political subdivision and foreign government securities: Fair value is determined using third-party commercial pricing services, with the primary inputs being quoted prices in markets that are not active, benchmark U.S. Treasury yield or other yields, spread off the U.S. Treasury yield curve for the identical security, issuer ratings and issuer spreads, broker dealer quotes, and comparable securities that are actively traded. Structured Securities: Fair value is determined using third-party commercial pricing services, with the primary inputs being quoted prices in markets that are not active, spreads for actively traded securities, spreads off benchmark yields, expected prepayment speeds and volumes, current and forecasted loss severity, ratings, geographic region, weighted average coupon and weighted average maturity, average delinquency rates and debt-service coverage ratios. Other issuance-specific information is also used, including, but not limited to; collateral type, structure of the security, vintage of the loans, payment terms of the underlying asset, payment priority within tranche, and deal performance. Derivatives The fair values for OTC-bilateral derivatives and OTC-cleared derivatives classified as Level 2 assets or liabilities, fair values are determined using the income approach. Valuations of non-option-based derivatives utilize present value techniques, whereas valuations of option-based derivatives utilize option pricing models which are based on market standard valuation methodologies and a variety of observable inputs. The significant inputs to the pricing models for most OTC-bilateral derivatives are inputs that are observable in the market or can be derived principally from, or corroborated by, observable market data. Certain OTC-bilateral derivatives may rely on inputs that are significant to the estimated fair value that are not observable in the market or cannot be derived principally from, or corroborated by, observable market data. These unobservable inputs may involve significant management judgment or estimation. Even though unobservable, these inputs are based on assumptions deemed appropriate given the circumstances and management believes they are consistent with what other market participants would use when pricing such instruments. Most inputs for OTC-bilateral derivatives are mid-market inputs but, in certain cases, liquidity adjustments are made when they are deemed more representative of exit value. Market liquidity, as well as the use of different methodologies, assumptions and inputs, may have a material effect on the estimated fair values of the Company’s derivatives and could materially affect net income. The credit risk of both the counterparty and the Company are considered in determining the estimated fair value for all OTC-bilateral derivatives, and any potential credit adjustment is based on the net exposure by counterparty after taking into account the effects of netting agreements and collateral arrangements. The Company values its OTC-bilateral derivatives using standard swap curves which may include a spread to the risk-free rate, depending upon specific collateral arrangements. This credit spread is appropriate for those parties that execute trades at pricing levels consistent with similar collateral arrangements. As the Company and its significant derivative counterparties generally execute trades at such pricing levels and hold sufficient collateral, additional credit risk adjustments are not currently required in the valuation process. The Company’s ability to consistently execute at such pricing levels is in part due to the netting agreements and collateral arrangements that are in place with all of its significant derivative counterparties. An evaluation of the requirement to make additional credit risk adjustments is performed by the Company each reporting period. Embedded Derivatives Embedded derivatives principally include certain direct variable annuity guarantees and certain affiliated ceded reinsurance agreements related to such variable annuity guarantees. Embedded derivatives are recorded at estimated fair value with changes in estimated fair value reported in net income. The Company issues certain variable annuity products with guaranteed minimum benefits. GMWBs, GMABs and certain GMIBs contain embedded derivatives, which are measured at estimated fair value separately from the host variable annuity contract, with changes in estimated fair value reported in net derivative gains (losses). These embedded derivatives are classified within policyholder account balances on the balance sheets. The Company determines the fair value of these embedded derivatives by estimating the present value of projected future benefits minus the present value of projected future fees using actuarial and capital market assumptions including expectations of policyholder behavior. The calculation is based on in-force business, and is performed using standard actuarial valuation software which projects future cash flows from the embedded derivative over multiple risk neutral stochastic scenarios using observable risk-free rates. The percentage of fees included in the initial fair value measurement is not updated in subsequent periods. Capital market assumptions, such as risk-free rates and implied volatilities, are based on market prices for publicly traded instruments to the extent that prices for such instruments are observable. Implied volatilities beyond the observable period are extrapolated based on observable implied volatilities and historical volatilities. Actuarial assumptions, including mortality, lapse, withdrawal and utilization, are unobservable and are reviewed at least annually based on actuarial studies of historical experience. The valuation of these guarantee liabilities includes nonperformance risk adjustments and adjustments for a risk margin related to non-capital market inputs. The nonperformance adjustment is determined by taking into consideration publicly available information relating to spreads in the secondary market for BHF’s debt. These observable spreads are then adjusted to reflect the priority of these liabilities and claims paying ability of the issuing insurance subsidiaries as compared to BHF’s overall financial strength. Risk margins are established to capture the non-capital market risks of the instrument which represent the additional compensation a market participant would require to assume the risks related to the uncertainties of such actuarial assumptions as annuitization, premium persistency, partial withdrawal and surrenders. The establishment of risk margins requires the use of significant management judgment, including assumptions of the amount and cost of capital needed to cover the guarantees. Transfers Into or Out of Level 3: Assets and liabilities are transferred into Level 3 when a significant input cannot be corroborated with market observable data. This occurs when market activity decreases significantly and underlying inputs cannot be observed, current prices are not available, and/or when there are significant variances in quoted prices, thereby affecting transparency. Assets and liabilities are transferred out of Level 3 when circumstances change such that a significant input can be corroborated with market observable data. This may be due to a significant increase in market activity, a specific event, or one or more significant input(s) becoming observable. Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3) The following table presents certain quantitative information about the significant unobservable inputs used in the fair value measurement, and the sensitivity of the estimated fair value to changes in those inputs, for the more significant asset and liability classes measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at: March 31, 2019 December 31, 2018 Impact of Increase in Input on Estimated Valuation Techniques Significant Unobservable Inputs Range Embedded derivatives Direct, assumed and ceded guaranteed minimum benefits • Option pricing techniques • Mortality rates 0.02% - 11.31% 0.02% - 11% Decrease (1) • Lapse rates 0.25% - 16% 0.25% - 16% Decrease (2) • Utilization rates 0% - 25% 0% - 25% Increase (3) • Withdrawal rates 0.25% - 10% 0.25% - 10% (4) • Long-term equity volatilities 16.50% - 22% 16.50% - 22% Increase (5) • Nonperformance risk spread 1.31% - 2.45% 1.91% - 2.66% Decrease (6) ______________ (1) Mortality rates vary by age and by demographic characteristics such as gender. Range shown reflects the mortality rate for policyholders between 35 and 90 years old, which represents the majority of the business with living benefits. Mortality rate assumptions are set based on company experience and include an assumption for mortality improvement. (2) Range reflects base lapse rates for major product categories for duration 1-20, which represents majority of business with living benefit riders. Base lapse rates are adjusted at the contract level based on a comparison of the actuarially calculated guaranteed values and the current policyholder account value, as well as other factors, such as the applicability of any surrender charges. A dynamic lapse function reduces the base lapse rate when the guaranteed amount is greater than the account value as in-the-money contracts are less likely to lapse. Lapse rates are also generally assumed to be lower in periods when a surrender charge applies. (3) The utilization rate assumption estimates the percentage of contract holders with a GMIB or lifetime withdrawal benefit who will elect to utilize the benefit upon becoming eligible in a given year. The range shown represents the floor and cap of the GMIB dynamic election rates across varying levels of in-the-money. For lifetime withdrawal guarantee riders, the assumption is that everyone will begin withdrawals once account value reaches zero which is equivalent to a 100% utilization rate. Utilization rates may vary by the type of guarantee, the amount by which the guaranteed amount is greater than the account value, the contract’s withdrawal history and by the age of the policyholder. (4) The withdrawal rate represents the percentage of account balance that any given policyholder will elect to withdraw from the contract each year. The withdrawal rate assumption varies by age and duration of the contract, and also by other factors such as benefit type. For any given contract, withdrawal rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative. For GMWBs, any increase (decrease) in withdrawal rates results in an increase (decrease) in the estimated fair value of the guarantees. For GMABs and GMIBs, any increase (decrease) in withdrawal rates results in a decrease (increase) in the estimated fair value. (5) Long-term equity volatilities represent equity volatility beyond the period for which observable equity volatilities are available. For any given contract, long-term equity volatility rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative. (6) Nonperformance risk spread varies by duration. For any given contract, multiple nonperformance risk spreads will apply, depending on the duration of the cash flow being discounted for purposes of valuing the embedded derivative. The Company does not develop unobservable inputs used in measuring fair value for all other assets and liabilities classified within Level 3; therefore, these are not included in the table above. The other Level 3 assets and liabilities primarily included fixed maturity securities and derivatives. For fixed maturity securities valued based on non-binding broker quotes, an increase (decrease) in credit spreads would result in a higher (lower) fair value. For derivatives valued based on third-party pricing models, an increase (decrease) in credit spreads would generally result in a higher (lower) fair value. The following tables summarize the change of all assets and (liabilities) measured at estimated fair value on a recurring basis using significant unobservable inputs (Level 3): Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Fixed Maturity Securities Corporate (1) Structured Securities Net Derivatives (2) Net Embedded (In thousands) Three Months Ended March 31, 2019 Balance, beginning of period $ 13,310 $ 4,731 $ 472 $ 311,306 Total realized/unrealized gains (losses) included in net income (loss) (4) (5) 2 (32 ) — (34,901 ) Total realized/unrealized gains (losses) included in AOCI 403 78 — — Purchases (6) — — — — Sales (6) (48 ) (29 ) — — Issuances (6) — — — — Settlements (6) — — — (14,665 ) Transfers into Level 3 (7) 263 5,429 — — Transfers out of Level 3 (7) (205 ) — (472 ) — Balance, end of period $ 13,725 $ 10,177 $ — $ 261,740 Three Months Ended March 31, 2018 Balance, beginning of period $ 95,950 $ 19,557 $ — $ 347,633 Total realized/unrealized gains (losses) included in net income (loss) (4) (5) 1 109 — (30,710 ) Total realized/unrealized gains (losses) included in AOCI (772 ) 119 — — Purchases (6) 783 1,955 — — Sales (6) (716 ) (403 ) — — Issuances (6) — — — — Settlements (6) — — — (5,912 ) Transfers into Level 3 (7) — — — — Transfers out of Level 3 (7) (3,166 ) — — — Balance, end of period $ 92,080 $ 21,337 $ — $ 311,011 Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at March 31, 2019 (8) $ 4 $ (32 ) $ — $ 13,080 Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at March 31, 2018 (8) $ 1 $ 109 $ — $ (33,063 ) ______________ (1) Comprised of U.S. and foreign corporate securities. (2) Freestanding derivative assets and liabilities are presented net for purposes of the rollforward. (3) Embedded derivative assets and liabilities are presented net for purposes of the rollforward. (4) Amortization of premium/accretion of discount is included within net investment income. Impairments charged to net income (loss) on securities are included in net investment gains (losses). Lapses associated with net embedded derivatives are included in net derivative gains (losses). Substantially all realized/unrealized gains (losses) included in net income (loss) for net embedded derivatives are reported in net derivative gains (losses). (5) Interest accruals, as well as cash interest coupons received, are excluded from the rollforward. (6) Items purchased/issued and then sold/settled in the same period are excluded from the rollforward. Fees attributed to embedded derivatives are included in settlements. (7) Gains and losses, in net income (loss) and OCI, are calculated assuming transfers into and/or out of Level 3 occurred at the beginning of the period. Items transferred into and then out of Level 3 in the same period are excluded from the rollforward. (8) Changes in unrealized gains (losses) included in net income (loss) relate to assets and liabilities still held at the end of the respective periods. Substantially all changes in unrealized gains (losses) included in net income (loss) for net embedded derivatives are reported in net derivative gains (losses). Fair Value of Financial Instruments Carried at Other Than Fair Value The following tables provide fair value information for financial instruments that are carried on the balance sheet at amounts other than fair value. These tables exclude the following financial instruments: cash and cash equivalents, accrued investment income and payables for collateral under derivative transactions. The estimated fair value of the excluded financial instruments, which are primarily classified in Level 2, approximates carrying value as they are short-term in nature such that the Company believes there is minimal risk of material changes in interest rates or credit quality. All remaining balance sheet amounts excluded from the tables below are not considered financial instruments subject to this disclosure. The carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy, are summarized as follows at: March 31, 2019 Fair Value Hierarchy Carrying Level 1 Level 2 Level 3 Total Estimated Fair Value (In thousands) Assets Mortgage loans $ 467,193 $ — $ — $ 472,882 $ 472,882 Premiums, reinsurance and other receivables $ 18,415 $ — $ 4,055 $ 13,021 $ 17,076 Liabilities Policyholder account balances $ 1,014,394 $ — $ — $ 938,827 $ 938,827 Other liabilities $ 81,790 $ — $ 81,790 $ — $ 81,790 December 31, 2018 Fair Value Hierarchy Carrying Level 1 Level 2 Level 3 Total Estimated Fair Value (In thousands) Assets Mortgage loans $ 448,105 $ — $ — $ 447,510 $ 447,510 Premiums, reinsurance and other receivables $ 20,001 $ — $ 2,314 $ 15,512 $ 17,826 Liabilities Policyholder account balances $ 1,056,419 $ — $ — $ 949,916 $ 949,916 Other liabilities $ 10,399 $ — $ 10,399 $ — $ 10,399 |
Equity
Equity | 3 Months Ended |
Mar. 31, 2019 | |
Equity [Abstract] | |
Equity | 7. Equity Capital Transactions During the three months ended March 31, 2019, the Company received a cash capital contribution of $75 million from Brighthouse Life Insurance Company. Accumulated Other Comprehensive Income (Loss) Information regarding changes in the balances of each component of AOCI was as follows: Three Months Ended Unrealized Unrealized Total (In thousands) Balance, December 31, 2018 $ (20,503 ) $ 5,432 $ (15,071 ) OCI before reclassifications 58,689 (1,035 ) 57,654 Deferred income tax benefit (expense) (12,325 ) 217 (12,108 ) AOCI before reclassifications, net of income tax 25,861 4,614 30,475 Amounts reclassified from AOCI 471 — 471 Deferred income tax benefit (expense) (97 ) — (97 ) Amounts reclassified from AOCI, net of income tax 374 — 374 Balance, March 31, 2019 $ 26,235 $ 4,614 $ 30,849 Three Months Ended Unrealized Unrealized Total (In thousands) Balance, December 31, 2017 $ 29,323 $ 305 $ 29,628 OCI before reclassifications (38,499 ) (2,674 ) (41,173 ) Deferred income tax benefit (expense) 8,083 562 8,645 AOCI before reclassifications, net of income tax (1,093 ) (1,807 ) (2,900 ) Amounts reclassified from AOCI 2,839 (6 ) 2,833 Deferred income tax benefit (expense) (596 ) 1 (595 ) Amounts reclassified from AOCI, net of income tax 2,243 (5 ) 2,238 Balance, March 31, 2018 $ 1,150 $ (1,812 ) $ (662 ) ______________ (1) See Note 4 for information on offsets to investments related to DAC and DSI. Information regarding amounts reclassified out of each component of AOCI was as follows: AOCI Components Amounts Reclassified from AOCI Statements of Operations and Comprehensive Income (Loss) Locations Three Months Ended 2019 2018 (In thousands) Net unrealized investment gains (losses): Net unrealized investment gains (losses) $ (465 ) $ (2,839 ) Net investment gains (losses) Net unrealized investment gains (losses) (6 ) — Net derivative gains (losses) Net unrealized investment gains (losses), before income tax (471 ) (2,839 ) Income tax (expense) benefit 97 596 Net unrealized investment gains (losses), net of income tax (374 ) (2,243 ) Unrealized gains (losses) on derivatives - cash flow hedges: Foreign currency swaps — 6 Net derivative gains (losses) Gains (losses) on cash flow hedges, before income tax — 6 Income tax (expense) benefit — (1 ) Gains (losses) on cash flow hedges, net of income tax — 5 Total reclassifications, net of income tax $ (374 ) $ (2,238 ) |
Other Revenues and Other Expens
Other Revenues and Other Expenses | 3 Months Ended |
Mar. 31, 2019 | |
Other Income and Expenses [Abstract] | |
Other Revenues and Other Expenses | 8. Other Revenues and Other Expenses Other Revenues The Company has entered into contracts with mutual funds, fund managers, and their affiliates (collectively, the “Funds”) whereby the Company is paid monthly or quarterly fees (“12b-1 fees”) for providing certain services to customers and distributors of the Funds. The 12b-1 fees are generally equal to a fixed percentage of the average daily balance of the customer’s investment in a fund. The percentage is specified in the contract between the Company and the Funds. Payments are generally collected when due and are neither refundable nor able to offset future fees. To earn these fees, the Company performs services such as responding to phone inquiries, maintaining records, providing information to distributors and shareholders about fund performance and providing training to account managers and sales agents. The passage of time reflects the satisfaction of the Company’s performance obligations to the Funds and is used to recognize revenue associated with 12b-1 fees. Other revenues consisted primarily of 12b-1 fees of $3.1 million and $3.5 million for the three months ended March 31, 2019 and 2018 , respectively, of which all were reported in the Annuities segment. Other Expenses Information on other expenses was as follows: Three Months Ended 2019 2018 (In thousands) Compensation $ 4,667 $ 3,510 Contracted services and other labor costs 2,596 1,837 Transition services agreements 3,784 2,947 Establishment costs 1,482 — Premium and other taxes, licenses and fees 704 1,043 Volume related costs, excluding compensation, net of DAC capitalization 3,998 5,264 Other 1,659 1,126 Total other expenses $ 18,890 $ 15,727 Related Party Expenses See Note 10 for a discussion of related party expenses included in the table above. |
Contingencies, Commitments and
Contingencies, Commitments and Guarantees | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies, Commitments and Guarantees | 9. Contingencies, Commitments and Guarantees Contingencies Litigation Sales Practices Claims Over the past several years, the Company has faced claims and regulatory inquiries and investigations, alleging improper marketing or sales of individual life insurance policies, annuities, or other products. The Company continues to defend vigorously against the claims in these matters. The Company believes adequate provision has been made in its financial statements for all probable and reasonably estimable losses for sales practices matters. Summary Various litigation, claims and assessments against the Company, in addition to those discussed previously and those otherwise provided for in the Company’s financial statements, have arisen in the course of the Company’s business, including, but not limited to, in connection with its activities as an insurer, investor and taxpayer. Further, state insurance regulatory authorities and other federal and state authorities regularly make inquiries and conduct investigations concerning the Company’s compliance with applicable insurance and other laws and regulations. It is not possible to predict the ultimate outcome of all pending investigations and legal proceedings. In some of the matters referred to previously, large and/or indeterminate amounts, including punitive and treble damages, are sought. Although, in light of these considerations it is possible that an adverse outcome in certain cases could have a material effect upon the Company’s financial position, based on information currently known by the Company’s management, in its opinion, the outcomes of such pending investigations and legal proceedings are not likely to have such an effect. However, given the large and/or indeterminate amounts sought in certain of these matters and the inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could, from time to time, have a material effect on the Company’s net income or cash flows in particular quarterly or annual periods. Commitments Mortgage Loan Commitments The Company commits to lend funds under mortgage loan commitments. The amounts of these mortgage loan commitments were $21.8 million and $7.6 million at March 31, 2019 and December 31, 2018 , respectively. Commitments to Fund Private Corporate Bond Investments The Company commits to lend funds under private corporate bond investments. The amounts of these unfunded commitments were $3.5 million and $11.4 million at March 31, 2019 and December 31, 2018 , respectively. Guarantees In the normal course of its business, the Company has provided certain indemnities, guarantees and commitments to third parties such that it may be required to make payments now or in the future. In the context of acquisition, disposition, investment and other transactions, the Company has provided indemnities and guarantees, including those related to tax, environmental and other specific liabilities and other indemnities and guarantees that are triggered by, among other things, breaches of representations, warranties or covenants provided by the Company. In addition, in the normal course of business, the Company provides indemnifications to counterparties in contracts with triggers similar to the foregoing, as well as for certain other liabilities, such as third-party lawsuits. These obligations are often subject to time limitations that vary in duration, including contractual limitations and those that arise by operation of law, such as applicable statutes of limitation. In some cases, the maximum potential obligation under the indemnities and guarantees is subject to a contractual limitation, while in other cases such limitations are not specified or applicable. Since certain of these obligations are not subject to limitations, the Company does not believe that it is possible to determine the maximum potential amount that could become due under these guarantees in the future. Management believes that it is unlikely the Company will have to make any material payments under these indemnities, guarantees, or commitments. In addition, the Company indemnifies its directors and officers as provided in its charters and by-laws. Also, the Company indemnifies its agents for liabilities incurred as a result of their representation of the Company’s interests. Since these indemnities are generally not subject to limitation with respect to duration or amount, the Company does not believe that it is possible to determine the maximum potential amount that could become due under these indemnities in the future. The Company had no liability for indemnities, guarantees and commitments at both March 31, 2019 and December 31, 2018 . |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 10. Related Party Transactions The Company has various existing arrangements with its Brighthouse affiliates and had previous arrangements with MetLife for services necessary to conduct its activities. Certain of the MetLife services have continued, however, MetLife was no longer considered a related party upon the completion of the MetLife Divestiture on June 14, 2018 (see Note 1 ). The Company has related party investment and equity transactions (see Notes 4 and 7). Other material arrangements between the Company and its related parties not disclosed elsewhere are as follows: Reinsurance Agreements The Company enters into reinsurance agreements primarily as a purchaser of reinsurance for its various insurance products. The Company participates in reinsurance activities in order to limit losses, minimize exposure to significant risks and provide additional capacity for future growth. Information regarding the significant effects of related party reinsurance included on the interim condensed statements of operations and comprehensive income (loss) was as follows: Three Months Ended 2019 2018 (In thousands) Premiums Reinsurance ceded $ (10,210 ) $ (8,112 ) Universal life and investment-type product policy fees Reinsurance ceded $ (803 ) $ (1,043 ) Other revenues Reinsurance ceded $ (23,508 ) $ (15,936 ) Policyholder benefits and claims Reinsurance ceded $ (8,213 ) $ (24,732 ) Information regarding the significant effects of ceded related party reinsurance included on the interim condensed balance sheets was as follows at: March 31, 2019 December 31, 2018 (In thousands) Assets Premiums, reinsurance and other receivables $ 522,891 $ 534,487 Liabilities Other liabilities $ 420,568 $ 429,656 The Company cedes risks to Brighthouse Life Insurance Company related to guaranteed minimum benefit guarantees written directly by the Company. These ceded reinsurance agreements contain embedded derivatives and changes in the estimated fair value are included within net derivative gains (losses). The embedded derivatives associated with the cessions are included within premiums, reinsurance and other receivables and were $295.1 million and $298.1 million at March 31, 2019 and December 31, 2018 , respectively. Net derivative gains (losses) associated with the embedded derivatives were ($3.5) million and ($45.8) million for the three months ended March 31, 2019 and 2018 , respectively. Shared Services and Overhead Allocations Brighthouse affiliates currently provide and previously MetLife provided the Company certain services, which include, but are not limited to, treasury, financial planning and analysis, legal, human resources, tax planning, internal audit, financial reporting and information technology. Costs incurred under these arrangements with Brighthouse affiliates, as well as with MetLife prior to the MetLife Divestiture, were $15.1 million and $9.7 million for the three months ended March 31, 2019 and 2018 , respectively, and were recorded in other expenses. Revenues received from affiliates related to these agreements, recorded in universal life and investment-type product policy fees, were $2.9 million and $3.2 million for the three months ended March 31, 2019 and 2018 , respectively. The Company had net receivables (payables) from/to affiliates, related to the items discussed above, of ($941) thousand and $622 thousand at March 31, 2019 and December 31, 2018 , respectively. Brighthouse affiliates incur costs related to the establishment of services and infrastructure to replace those previously provided by MetLife. The Company is charged a fee to reflect the value of the available infrastructure and services provided by these costs. While management believes the method used to allocate expenses under this arrangement is reasonable, the allocated expenses may not be indicative of those of a stand-alone entity. If expenses were allocated to the Company under this arrangement as incurred by Brighthouse affiliates, the Company would have incurred additional expenses of ($260) thousand for the three months ended March 31, 2019 . The Company would have incurred no additional expenses under this arrangement for the three months ended March 31, 2018 . Broker-Dealer Transactions The related party expense for the Company was commissions collected on the sale of variable products by the Company and passed through to the broker-dealer. The related party revenue for the Company was fee income from trusts and mutual funds whose shares serve as investment options of policyholders of the Company. Fee income received from affiliates related to these transactions and recorded in other revenues was $2.8 million and $3.2 million for the three months ended March 31, 2019 and 2018 , respectively. Commission expenses incurred from affiliates related to these transactions and recorded in other expenses was $14.7 million and $13.1 million for the three months ended March 31, 2019 and 2018 , respectively. The Company also had related party fee income receivables of $993 thousand and $951 thousand at March 31, 2019 and December 31, 2018 , respectively. |
Business, Basis of Presentati_2
Business, Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Use of Estimates, Policy [Policy Text Block] | The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported on the interim condensed financial statements. In applying these policies and estimates, management makes subjective and complex judgments that frequently require assumptions about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to the Company’s business and operations. Actual results could differ from these estimates. |
Consolidation of Subsidiaries, Policy [Policy Text Block] | Reclassifications Certain amounts in the prior year periods’ interim condensed financial statements and related footnotes thereto have been reclassified to conform with the 2019 presentation as may be discussed throughout the Notes to the Interim Condensed Financial Statements. Since the Company is a member of a controlled group of affiliated companies, its results may not be indicative of those of a stand-alone entity. The accompanying interim condensed financial statements are unaudited and reflect all adjustments (including normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented in conformity with GAAP. Interim results are not necessarily indicative of full year performance. The December 31, 2018 balance sheet data was derived from audited financial statements included in BHNY’s Annual Report on Form 10-K for the year ended December 31, 2018 (the “2018 Annual Report”), which include all disclosures required by GAAP. Therefore, these interim condensed financial statements should be read in conjunction with the financial statements of the Company included in the 2018 Annual Report. |
New Accounting Pronouncements, Policy [Policy Text Block] | Adoption of New Accounting Pronouncements Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or are not expected to have a material impact on the Company’s financial statements. There were no ASUs adopted during the first quarter of 2019 which had a material impact on the Company’s financial statements. ASUs issued but not yet adopted as of March 31, 2019 are summarized in the table below. Standard Description Effective Date Impact on Financial Statements ASU 2018-12, Financial Services-Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts The amendments to Topic 944 will result in significant changes to the accounting for long-duration insurance contracts. These changes (1) require all guarantees that qualify as market risk benefits to be measured at fair value, (2) require more frequent updating of assumptions and modify existing discount rate requirements for certain insurance liabilities, (3) modify the methods of amortization for deferred acquisition costs, and (4) require new qualitative and quantitative disclosures around insurance contract asset and liability balances and the judgments, assumptions and methods used to measure those balances. January 1, 2021 using a modified retrospective method for the new market risk benefit guidance and prospective methods for the increased frequency of updating assumptions, the new discount rate requirements and deferred policy acquisition costs (“DAC”) amortization changes. Early adoption is permitted. The Company is in the early stages of evaluating the new guidance and therefore is unable to estimate the impact to its financial statements. The most significant impact will be the measurement of liabilities for variable annuity guarantees. ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments The amendments to Topic 326 replace the incurred loss impairment methodology for certain financial instruments with one that reflects expected credit losses based on historical loss information, current conditions, and reasonable and supportable forecasts. The new guidance also requires that an other-than- temporary impairment (“OTTI”) on a debt security will be recognized as an allowance going forward, such that improvements in expected future cash flows after an impairment will no longer be reflected as a prospective yield adjustment through net investment income, but rather a reversal of the previous impairment and recognized through realized investment gains and losses. January 1, 2020 using the modified retrospective method (with early adoption permitted beginning January 1, 2019) The Company is currently evaluating the impact of this guidance on its financial statements, with the most significant impact expected to be earlier recognition of credit losses on mortgage loan investments. |
Investments, Policy [Policy Text Block] | Actual maturities may differ from contractual maturities due to the exercise of call or prepayment options. Fixed maturity securities not due at a single maturity date have been presented in the year of final contractual maturity. Structured Securities are shown separately, as they are not due at a single maturity. Past Due, Nonaccrual and Modified Mortgage Loans The Company defines delinquency consistent with industry practice, when mortgage loans are past due as follows: commercial mortgage loans — 60 days and agricultural mortgage loans — 90 days. Variable Interest Entities The Company has invested in legal entities that are variable interest entities (“VIEs”). VIEs are consolidated when the investor is the primary beneficiary. A primary beneficiary is the variable interest holder in a VIE with both the power to direct the activities of the VIE that most significantly impact the economic performance of the VIE and the obligation to absorb losses, or the right to receive benefits that could potentially be significant to the VIE. There were no material VIEs for which the Company has concluded that it is the primary beneficiary at March 31, 2019 or December 31, 2018. |
Derivatives, Policy [Policy Text Block] | Accounting for Derivatives Freestanding Derivatives Freestanding derivatives are carried on the Company’s balance sheet either as assets within other invested assets or as liabilities within other liabilities at estimated fair value. The Company does not offset the estimated fair value amounts recognized for derivatives executed with the same counterparty under the same master netting agreement. If a derivative is not designated as an accounting hedge or its use in managing risk does not qualify for hedge accounting, changes in the estimated fair value of the derivative are reported in net derivative gains (losses). Hedge Accounting The Company primarily designates derivatives as a hedge of a forecasted transaction or a variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge). When a derivative is designated as a cash flow hedge and is determined to be highly effective, changes in fair value are recorded in OCI and subsequently reclassified into the statement of operations when the Company’s earnings are affected by the variability in cash flows of the hedged item. To qualify for hedge accounting, at the inception of the hedging relationship, the Company formally documents its risk management objective and strategy for undertaking the hedging transaction, as well as its designation of the hedge. In its hedge documentation, the Company sets forth how the hedging instrument is expected to hedge the designated risks related to the hedged item and sets forth the method that will be used to retrospectively and prospectively assess the hedging instrument’s effectiveness. A derivative designated as a hedging instrument must be assessed as being highly effective in offsetting the designated risk of the hedged item. Hedge effectiveness is formally assessed at inception and at least quarterly throughout the life of the designated hedging relationship. The Company discontinues hedge accounting prospectively when: (i) it is determined that the derivative is no longer highly effective in offsetting changes in the cash flows of a hedged item; (ii) the derivative expires, is sold, terminated, or exercised; (iii) it is no longer probable that the hedged forecasted transaction will occur; or (iv) the derivative is de-designated as a hedging instrument. When hedge accounting is discontinued because it is determined that the derivative is not highly effective in offsetting changes in the cash flows of a hedged item, the derivative continues to be carried on the balance sheet at its estimated fair value, with changes in estimated fair value recognized in net derivative gains (losses). Provided the hedged forecasted transaction is still probable of occurrence, the changes in estimated fair value of derivatives recorded in OCI related to discontinued cash flow hedges are released into the statement of operations when the Company’s earnings are affected by the variability in cash flows of the hedged item. In all other situations in which hedge accounting is discontinued, the derivative is carried at its estimated fair value on the balance sheet, with changes in its estimated fair value recognized in the current period as net derivative gains (losses). Embedded Derivatives The Company sells variable and index-linked annuities and is a party to certain reinsurance agreements that have embedded derivatives. The Company assesses each identified embedded derivative to determine whether it is required to be bifurcated and measured at fair value, separately from the host contract. The Company bifurcates embedded derivatives when a separate instrument with the same terms as the embedded derivative would qualify as a derivative instrument, the terms of the embedded derivative are not clearly and closely related to the economic characteristics of the host contract and the underlying contract is not already measured at estimated fair value with changes recorded in earnings. See “— Future Policy Benefit Liabilities and Policyholder Account Balances”, “— Index-Linked Annuities” and “— Reinsurance” in the Note 1 of the Notes to the Financial Statements included in the 2018 Annual Report for additional information on the accounting policies for embedded derivatives bifurcated from variable annuity and reinsurance host contracts. Derivatives are financial instruments with values derived from interest rates, foreign currency exchange rates, credit spreads and/or other financial indices. Derivatives may be exchange-traded or contracted in the over-the-counter (“OTC”) market. Certain of the Company’s OTC derivatives are bilateral contracts between two counterparties (“OTC-bilateral”). The types of derivatives the Company uses include swaps and option contracts. Derivative Strategies Counterparty Credit Risk The Company may be exposed to credit-related losses in the event of nonperformance by its counterparties to derivatives. Generally, the current credit exposure of the Company’s derivatives is limited to the net positive estimated fair value of derivatives at the reporting date after taking into consideration the existence of master netting or similar agreements and any collateral received pursuant to such agreements. The Company manages its credit risk related to derivatives by entering into transactions with creditworthy counterparties and establishing and monitoring exposure limits. The Company’s OTC-bilateral derivative transactions are generally governed by International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreements which provide for legally enforceable set-off and close-out netting of exposures to specific counterparties in the event of early termination of a transaction, which includes, but is not limited to, events of default and bankruptcy. In the event of an early termination, the Company is permitted to set off receivables from the counterparty against payables to the same counterparty arising out of all included transactions. Substantially all of the Company’s ISDA Master Agreements also include Credit Support Annex provisions which require both the pledging and accepting of collateral in connection with its OTC-bilateral derivatives. |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Segment Reporting Information, by Segment | Operating Results Three Months Ended March 31, 2019 Annuities Life Corporate & Other Total (In thousands) Pre-tax adjusted earnings $ (4,979 ) $ (4,256 ) $ (553 ) $ (9,788 ) Provision for income tax expense (benefit) (1,468 ) (894 ) (359 ) (2,721 ) Adjusted earnings $ (3,511 ) $ (3,362 ) $ (194 ) (7,067 ) Adjustments for: Net investment gains (losses) (452 ) Net derivative gains (losses) (3,245 ) Other adjustments to net income 10,730 Provision for income tax (expense) benefit (1,477 ) Net income (loss) $ (1,511 ) Interest revenue $ 17,772 $ 8,304 $ 509 Operating Results Three Months Ended March 31, 2018 Annuities Life Corporate & Other Total (In thousands) Pre-tax adjusted earnings $ 5,430 $ 8,014 $ 2,262 $ 15,706 Provision for income tax expense (benefit) 657 1,683 281 2,621 Adjusted earnings $ 4,773 $ 6,331 $ 1,981 13,085 Adjustments for: Net investment gains (losses) (2,355 ) Net derivative gains (losses) (44,262 ) Other adjustments to net income 11,865 Provision for income tax (expense) benefit 7,297 Net income (loss) $ (14,370 ) Interest revenue $ 14,803 $ 8,839 $ 371 The following table presents total assets with respect to the Company’s segments, as well as Corporate & Other, at: March 31, 2019 December 31, 2018 (In thousands) Annuities $ 7,539,919 $ 7,034,394 Life 1,124,314 1,083,641 Corporate & Other 92,805 12,090 Total $ 8,757,038 $ 8,130,125 |
Reconciliation of Revenue from Segments to Consolidated | The following table presents total revenues with respect to the Company’s segments, as well as Corporate & Other: Three Months Ended 2019 2018 (In thousands) Annuities $ 21,887 $ 27,638 Life 12,647 15,696 Corporate & Other 670 1,024 Adjustments (449 ) (43,309 ) Total $ 34,755 $ 1,049 |
Insurance (Tables)
Insurance (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Insurance [Abstract] | |
Guarantees related to Annuity, Universal and Variable Life Contracts | Information regarding the Company’s guarantee exposure was as follows at: March 31, 2019 December 31, 2018 In the Event of Death At Annuitization In the Event of Death At Annuitization (Dollars in thousands) Annuity Contracts (1), (2) Variable Annuity Guarantees Total account value (3) $ 4,564,444 $ 3,703,604 $ 4,274,326 $ 3,483,668 Separate account value $ 4,557,551 $ 3,702,932 $ 4,266,520 $ 3,482,829 Net amount at risk $ 22,344 (4) $ 211,888 (5) $ 193,102 (4) $ 274,632 (5) Average attained age of contract holders 68 years 67 years 67 years 67 years ______________ (1) The Company’s annuity contracts with guarantees may offer more than one type of guarantee in each contract. Therefore, the amounts listed above may not be mutually exclusive. (2) Includes direct business, but excludes offsets from hedging or reinsurance, if any. Therefore, the net amount at risk presented reflects the economic exposures of living and death benefit guarantees associated with variable annuities, but not necessarily their impact on the Company. See Note 5 of t he Notes to the Financial Statements included in the 2018 Annual Report for a discussion of guaranteed minimum benefits which have been reinsured. (3) Includes the contract holder’s investments in the general account and separate account, if applicable. (4) Defined as the death benefit less the total account value, as of the balance sheet date. It represents the amount of the claim that the Company would incur if death claims were filed on all contracts on the balance sheet date and includes any additional contractual claims associated with riders purchased to assist with covering income taxes payable upon death. (5) Defined as the amount (if any) that would be required to be added to the total account value to purchase a lifetime income stream, based on current annuity rates, equal to the minimum amount provided under the guaranteed benefit. This amount represents the Company’s potential economic exposure to such guarantees in the event all contract holders were to annuitize on the balance sheet date, even though the contracts contain terms that allow annuitization of the guaranteed amount only after the 10th anniversary of the contract, which not all contract holders have achieved. |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Fixed Maturity and Equity Securities Available-for-Sale | The following table presents the fixed maturity securities AFS by sector at: March 31, 2019 December 31, 2018 Amortized Gross Unrealized Estimated Amortized Gross Unrealized Estimated Gains Temporary OTTI Gains Temporary OTTI (In thousands) Fixed maturity securities: (1) U.S. corporate $ 916,754 $ 21,416 $ 7,539 $ — $ 930,631 $ 890,676 $ 5,402 $ 23,034 $ — $ 873,044 U.S. government and agency 504,101 15,524 4,269 — 515,356 511,255 9,961 13,697 — 507,519 Foreign corporate 374,509 6,641 7,194 — 373,956 368,149 1,473 17,258 — 352,364 CMBS 336,322 7,335 1,216 — 342,441 325,491 1,481 4,121 — 322,851 RMBS 315,454 6,879 1,973 — 320,360 200,827 4,643 2,882 — 202,588 ABS 83,618 262 489 — 83,391 79,806 158 1,133 — 78,831 State and political subdivision 65,995 6,168 70 — 72,093 66,131 4,777 1,083 — 69,825 Foreign government 26,317 692 373 — 26,636 27,466 140 995 — 26,611 Total fixed maturity securities $ 2,623,070 $ 64,917 $ 23,123 $ — $ 2,664,864 $ 2,469,801 $ 28,035 $ 64,203 $ — $ 2,433,633 __________________ (1) Redeemable preferred stock is reported within foreign corporate fixed maturity securities. Included within fixed maturity securities are structured securities including residential mortgage-backed securities (“RMBS”), commercial mortgage-backed securities (“CMBS”) and asset-backed securities (“ABS”) (collectively, “Structured Securities”). |
Available-for-sale fixed maturity securities by contractual maturity date | The amortized cost and estimated fair value of fixed maturity securities, by contractual maturity date, were as follows at March 31, 2019 : Due in One Year or Less Due After One Year Through Five Years Due After Five Years Through Ten Years Due After Ten Years Structured Securities Total Fixed Maturity Securities (In thousands) Amortized cost $ 56,296 $ 342,812 $ 898,149 $ 590,419 $ 735,394 $ 2,623,070 Estimated fair value $ 56,866 $ 344,578 $ 906,709 $ 610,519 $ 746,192 $ 2,664,864 |
Continuous Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale | The following table presents the estimated fair value and gross unrealized losses of fixed maturity securities AFS in an unrealized loss position, aggregated by sector and by length of time that the securities have been in a continuous unrealized loss position at: March 31, 2019 December 31, 2018 Less than 12 Months Equal to or Greater than 12 Months Less than 12 Months Equal to or Greater than 12 Months Estimated Fair Value Gross Unrealized Losses Estimated Fair Value Gross Unrealized Losses Estimated Fair Value Gross Unrealized Losses Estimated Fair Value Gross Unrealized Losses (Dollars in thousands) Fixed maturity securities: U.S. corporate $ 54,218 $ 1,415 $ 213,094 $ 6,124 $ 483,424 $ 15,849 $ 131,812 $ 7,185 U.S. government and agency — — 264,905 4,269 102,447 1,925 296,265 11,772 Foreign corporate 68,008 3,251 102,547 3,943 194,924 10,156 72,803 7,102 CMBS 8,975 58 67,525 1,158 119,412 1,909 44,775 2,212 RMBS 72,806 130 46,591 1,843 57,510 1,746 28,573 1,136 ABS 39,489 389 11,104 100 51,028 985 11,699 148 State and political subdivision 6,175 25 7,815 45 18,260 744 13,999 339 Foreign government 10,645 373 — — 7,435 716 6,782 279 Total fixed maturity securities $ 260,316 $ 5,641 $ 713,581 $ 17,482 $ 1,034,440 $ 34,030 $ 606,708 $ 30,173 Total number of securities in an unrealized loss position 108 181 364 146 |
Disclosure of Mortgage Loans Net of Valuation Allowance | Mortgage loans are summarized as follows at: March 31, 2019 December 31, 2018 Carrying Value % of Total Carrying Value % of Total (Dollars in thousands) Mortgage loans: Commercial $ 319,650 68.4 % $ 310,681 69.3 % Agricultural 149,549 32.0 139,361 31.1 Subtotal 469,199 100.4 450,042 100.4 Valuation allowances (1) (2,006 ) (0.4 ) (1,937 ) (0.4 ) Total mortgage loans, net $ 467,193 100.0 % $ 448,105 100.0 % __________________ (1) The valuation allowances were primarily from collective evaluation (non-specific loan related). |
Disclosure of the mortgage loans portfolio segment by the recorded investment, prior to valuation allowances, by credit quality indicator categories | The credit quality of agricultural mortgage loans was as follows at: March 31, 2019 December 31, 2018 Recorded Investment % of Total Recorded Investment % of Total (Dollars in thousands) Loan-to-value ratios: Less than 65% $ 141,731 94.8 % $ 133,884 96.1 % 65% to 75% 7,818 5.2 5,477 3.9 Total $ 149,549 100.0 % $ 139,361 100.0 % The credit quality of commercial mortgage loans was as follows at: Recorded Investment Debt Service Coverage Ratios % of Total > 1.20x 1.00x - 1.20x < 1.00x Total (Dollars in thousands) March 31, 2019 Loan-to-value ratios: Less than 65% $ 277,674 $ 5,000 $ 13,448 $ 296,122 92.7 % 65% to 75% 19,240 — — 19,240 6.0 76% to 80% 4,288 — — 4,288 1.3 Total $ 301,202 $ 5,000 $ 13,448 $ 319,650 100.0 % December 31, 2018 Loan-to-value ratios: Less than 65% $ 273,681 $ 5,000 $ 13,447 $ 292,128 94.0 % 65% to 75% 14,257 — — 14,257 4.6 76% to 80% 4,296 — — 4,296 1.4 Total $ 292,234 $ 5,000 $ 13,447 $ 310,681 100.0 % |
Components of net unrealized investment gains (losses) included in accumulated other comprehensive income (loss) | The components of net unrealized investment gains (losses), included in AOCI, were as follows: March 31, 2019 December 31, 2018 (In thousands) Fixed maturity securities $ 41,793 $ (36,166 ) Derivatives 4,756 5,791 Subtotal 46,549 (30,375 ) Amounts allocated from: DAC and DSI (7,500 ) 11,299 Deferred income tax benefit (expense) (8,200 ) 4,005 Net unrealized investment gains (losses) $ 30,849 $ (15,071 ) The changes in net unrealized investment gains (losses) were as follows: Three Months Ended (In thousands) Balance, December 31, 2018 $ (15,071 ) Unrealized investment gains (losses) during the period 76,924 Unrealized investment gains (losses) relating to: DAC and DSI (18,799 ) Deferred income tax benefit (expense) (12,205 ) Balance, March 31, 2019 $ 30,849 Change in net unrealized investment gains (losses) $ 45,920 |
Invested Assets on Deposit, Held in Trust and Pledged as Collateral | Invested assets on deposit and pledged as collateral are presented below at estimated fair value: March 31, 2019 December 31, 2018 (In thousands) Invested assets on deposit (regulatory deposits) $ 1,530 $ 1,482 Invested assets pledged as collateral (1) 8,652 158 Total invested assets on deposit and pledged as collateral (2) $ 10,182 $ 1,640 __________________ (1) The Company has pledged invested assets in connection with derivative transactions (see Note 5 ). (2) The Company held no restricted cash at both March 31, 2019 and December 31, 2018. |
Variable Interest Entities | The Company’s maximum exposure to loss on these fixed maturity securities is limited to the amortized cost of these investments. See “— Fixed Maturity Securities AFS” for information on these securities. March 31, 2019 December 31, 2018 Carrying Maximum Carrying Maximum (In thousands) Fixed maturity securities $ 489,002 $ 480,919 $ 409,699 $ 409,699 |
The Components of Net Investment Income | The components of net investment income were as follows: Three Months Ended 2019 2018 (In thousands) Investment income: Fixed maturity securities $ 22,913 $ 20,365 Mortgage loans 3,899 4,191 Cash, cash equivalents and short-term investments 387 158 Other 350 96 Subtotal 27,549 24,810 Less: Investment expenses 1,056 879 Net investment income $ 26,493 $ 23,931 |
The components of net investment gains (losses) | The components of net investment gains (losses) were as follows: Three Months Ended 2019 2018 (In thousands) Fixed maturity securities $ (468 ) $ (2,839 ) Mortgage loans (69 ) (82 ) Other 85 566 Total net investment gains (losses) $ (452 ) $ (2,355 ) |
Proceeds from sales or disposals of fixed maturity and equity securities and the components of fixed maturity and equity securities net investment gains and losses | Proceeds from sales or disposals of fixed maturity securities and the components of fixed maturity securities net investment gains (losses) were as shown in the table below. Three Months Ended 2019 2018 (In thousands) Proceeds $ 55,477 $ 53,561 Gross investment gains $ 150 $ 15 Gross investment losses (618 ) (2,854 ) Net investment gains (losses) $ (468 ) $ (2,839 ) |
Derivatives (Tables)
Derivatives (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging Activities Disclosure [Text Block] | 5. Derivatives Accounting for Derivatives Freestanding Derivatives Freestanding derivatives are carried on the Company’s balance sheet either as assets within other invested assets or as liabilities within other liabilities at estimated fair value. The Company does not offset the estimated fair value amounts recognized for derivatives executed with the same counterparty under the same master netting agreement. If a derivative is not designated as an accounting hedge or its use in managing risk does not qualify for hedge accounting, changes in the estimated fair value of the derivative are reported in net derivative gains (losses). Hedge Accounting The Company primarily designates derivatives as a hedge of a forecasted transaction or a variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge). When a derivative is designated as a cash flow hedge and is determined to be highly effective, changes in fair value are recorded in OCI and subsequently reclassified into the statement of operations when the Company’s earnings are affected by the variability in cash flows of the hedged item. To qualify for hedge accounting, at the inception of the hedging relationship, the Company formally documents its risk management objective and strategy for undertaking the hedging transaction, as well as its designation of the hedge. In its hedge documentation, the Company sets forth how the hedging instrument is expected to hedge the designated risks related to the hedged item and sets forth the method that will be used to retrospectively and prospectively assess the hedging instrument’s effectiveness. A derivative designated as a hedging instrument must be assessed as being highly effective in offsetting the designated risk of the hedged item. Hedge effectiveness is formally assessed at inception and at least quarterly throughout the life of the designated hedging relationship. The Company discontinues hedge accounting prospectively when: (i) it is determined that the derivative is no longer highly effective in offsetting changes in the cash flows of a hedged item; (ii) the derivative expires, is sold, terminated, or exercised; (iii) it is no longer probable that the hedged forecasted transaction will occur; or (iv) the derivative is de-designated as a hedging instrument. When hedge accounting is discontinued because it is determined that the derivative is not highly effective in offsetting changes in the cash flows of a hedged item, the derivative continues to be carried on the balance sheet at its estimated fair value, with changes in estimated fair value recognized in net derivative gains (losses). Provided the hedged forecasted transaction is still probable of occurrence, the changes in estimated fair value of derivatives recorded in OCI related to discontinued cash flow hedges are released into the statement of operations when the Company’s earnings are affected by the variability in cash flows of the hedged item. In all other situations in which hedge accounting is discontinued, the derivative is carried at its estimated fair value on the balance sheet, with changes in its estimated fair value recognized in the current period as net derivative gains (losses). Embedded Derivatives The Company sells variable and index-linked annuities and is a party to certain reinsurance agreements that have embedded derivatives. The Company assesses each identified embedded derivative to determine whether it is required to be bifurcated and measured at fair value, separately from the host contract. The Company bifurcates embedded derivatives when a separate instrument with the same terms as the embedded derivative would qualify as a derivative instrument, the terms of the embedded derivative are not clearly and closely related to the economic characteristics of the host contract and the underlying contract is not already measured at estimated fair value with changes recorded in earnings. See “— Future Policy Benefit Liabilities and Policyholder Account Balances”, “— Index-Linked Annuities” and “— Reinsurance” in the Note 1 of the Notes to the Financial Statements included in the 2018 Annual Report for additional information on the accounting policies for embedded derivatives bifurcated from variable annuity and reinsurance host contracts. Derivative Strategies The Company is exposed to various risks relating to its ongoing business operations, including interest rate, foreign currency exchange rate, credit and equity market. The Company uses a variety of strategies to manage these risks, including the use of derivatives. Derivatives are financial instruments with values derived from interest rates, foreign currency exchange rates, credit spreads and/or other financial indices. Derivatives may be exchange-traded or contracted in the over-the-counter (“OTC”) market. Certain of the Company’s OTC derivatives are bilateral contracts between two counterparties (“OTC-bilateral”). The types of derivatives the Company uses include swaps and option contracts. Interest Rate Derivatives The Company purchases interest rate caps to protect against rises in long-term interest rates. The Company utilizes interest rate caps in nonqualifying hedging relationships. Foreign Currency Exchange Rate Derivatives The Company uses foreign currency swaps to reduce the risk from fluctuations in foreign currency exchange rates associated with its assets denominated in foreign currencies. In a foreign currency swap transaction, the Company agrees with another party to exchange, at specified intervals, the difference between one currency and another at a fixed exchange rate, generally set at inception, calculated by reference to an agreed upon notional amount. The notional amount of each currency is exchanged at the inception and termination of the currency swap by each party. The Company utilizes foreign currency swaps in cash flow and nonqualifying hedging relationships. Equity Derivatives The Company uses equity index options to reduce exposure to rising equity markets associated with fixed annuities with equity indexed returns. The Company utilizes equity index options in nonqualifying hedging relationships. Primary Risks Managed by Derivatives The following table presents the primary underlying risk exposure, gross notional amount, and estimated fair value of the Company’s derivatives, excluding embedded derivatives, held at: March 31, 2019 December 31, 2018 Primary Underlying Risk Exposure Gross Notional Estimated Fair Value Gross Notional Estimated Fair Value Assets Liabilities Assets Liabilities (In thousands) Derivatives Designated as Hedging Instruments: Cash flow hedges: Foreign currency swaps Foreign currency exchange rate $ 83,513 $ 4,563 $ 130 $ 82,704 $ 5,649 $ 187 Derivatives Not Designated or Not Qualifying as Hedging Instruments: Interest rate caps Interest rate 800,000 4,772 — 800,000 9,284 — Foreign currency swaps Foreign currency exchange rate 17,892 3,191 96 28,133 3,395 144 Equity index options Equity market 2,307,473 35,487 9,969 2,154,321 10,389 96 Total non-designated or nonqualifying derivatives 3,125,365 43,450 10,065 2,982,454 23,068 240 Total $ 3,208,878 $ 48,013 $ 10,195 $ 3,065,158 $ 28,717 $ 427 The following tables present the amount and location of gains (losses) recognized for derivatives and gains (losses) pertaining to hedged items presented in net derivative gains (losses): Net Derivative Gains (Losses) Recognized for Derivatives (1), (4) Net Derivative Gains (Losses) Recognized for Hedged Items (2), (4) Net Investment Income (5) Amount of Gains (Losses) deferred in AOCI (In thousands) Three Months Ended March 31, 2019 Derivatives Designated as Hedging Instruments: Cash flow hedges (3): Foreign currency exchange rate derivatives $ — $ — $ 270 $ (1,035 ) Total cash flow hedges — — 270 (1,035 ) Derivatives Not Designated or Not Qualifying as Hedging Instruments: Interest rate derivatives (4,512 ) — — — Foreign currency exchange rate derivatives (36 ) 88 — — Equity derivatives 36,116 — — — Embedded derivatives (34,901 ) — — — Total non-qualifying hedges (3,333 ) 88 — — Total $ (3,333 ) $ 88 $ 270 $ (1,035 ) Three Months Ended March 31, 2018 Derivatives Designated as Hedging Instruments: Cash flow hedges (3): Foreign currency exchange rate derivatives $ 6 $ — $ 186 $ (2,674 ) Total cash flow hedges 6 — 186 (2,674 ) Derivatives Not Designated or Not Qualifying as Hedging Instruments: Interest rate derivatives (4,002 ) — — — Foreign currency exchange rate derivatives (972 ) 152 — — Equity derivatives (8,736 ) — — — Embedded derivatives (30,710 ) — — — Total non-qualifying hedges (44,420 ) 152 — — Total $ (44,414 ) $ 152 $ 186 $ (2,674 ) ______________ (1) Includes gains (losses) reclassified from AOCI primarily for terminated cash flow hedges. (2) Includes foreign currency transaction gains (losses) on hedged items in cash flow and nonqualifying hedging relationships. (3) All components of each derivative's gain or loss were included in the assessment of hedge effectiveness. (4) Total net derivative gains (losses) were ($3.2) million and ($44.3) million for the three months ended March 31, 2019 and 2018 respectively. (5) Total net investment income was ($452) thousand and ($2.4) million for the three months ended March 31, 2019 and 2018 respectively. At March 31, 2019 and December 31, 2018 , the balance in AOCI associated with foreign currency swaps designated and qualifying as cash flow hedges was $4.8 million and $5.8 million , respectively. Counterparty Credit Risk The Company may be exposed to credit-related losses in the event of nonperformance by its counterparties to derivatives. Generally, the current credit exposure of the Company’s derivatives is limited to the net positive estimated fair value of derivatives at the reporting date after taking into consideration the existence of master netting or similar agreements and any collateral received pursuant to such agreements. The Company manages its credit risk related to derivatives by entering into transactions with creditworthy counterparties and establishing and monitoring exposure limits. The Company’s OTC-bilateral derivative transactions are generally governed by International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreements which provide for legally enforceable set-off and close-out netting of exposures to specific counterparties in the event of early termination of a transaction, which includes, but is not limited to, events of default and bankruptcy. In the event of an early termination, the Company is permitted to set off receivables from the counterparty against payables to the same counterparty arising out of all included transactions. Substantially all of the Company’s ISDA Master Agreements also include Credit Support Annex provisions which require both the pledging and accepting of collateral in connection with its OTC-bilateral derivatives. See Note 6 for a description of the impact of credit risk on the valuation of derivatives. The estimated fair values of the Company’s net derivative assets and net derivative liabilities after the application of master netting agreements and collateral were as follows at: March 31, 2019 December 31, 2018 Derivatives Subject to a Master Netting Arrangement or a Similar Arrangement Assets Liabilities Assets Liabilities (In thousands) Gross estimated fair value of derivatives: OTC-bilateral (1) $ 48,331 $ 10,160 $ 29,006 $ 411 Total gross estimated fair value of derivatives (1) 48,331 10,160 29,006 411 Amounts offset on the balance sheets — — — — Estimated fair value of derivatives presented on the balance sheets (1) 48,331 10,160 29,006 411 Gross amounts not offset on the balance sheets: Gross estimated fair value of derivatives: (2) OTC-bilateral (3,825 ) (3,825 ) (365 ) (365 ) Cash collateral: (3) OTC-bilateral (34,235 ) — (23,197 ) — Securities collateral: (4) OTC-bilateral (2,875 ) (6,335 ) (2,212 ) (46 ) Net amount after application of master netting agreements and collateral $ 7,396 $ — $ 3,232 $ — ______________ (1) At March 31, 2019 and December 31, 2018 , derivative assets included income or (expense) accruals reported in accrued investment income or in other liabilities of $318 thousand and $289 thousand , respectively, and derivative liabilities included (income) or expense accruals reported in accrued investment income or in other liabilities of ($35) thousand and ($16) thousand , respectively. (2) Estimated fair value of derivatives is limited to the amount that is subject to set-off and includes income or expense accruals. (3) Cash collateral received is included in cash and cash equivalents or in short-term investments, and the obligation to return it is included in payables for collateral transactions on the balance sheet. The amount of cash collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreements. At March 31, 2019 and December 31, 2018 , the Company received excess cash collateral of $2.6 million and $384 thousand , respectively, and did not provide any excess cash collateral, which is not included in the table above due to the foregoing limitation. (4) Securities collateral received by the Company is held in separate custodial accounts and is not recorded on the balance sheet. Subject to certain constraints, the Company is permitted by contract to sell or re-pledge this collateral, but at March 31, 2019 , none of the collateral had been sold or re-pledged. Securities collateral pledged by the Company is reported in fixed maturity securities on the balance sheet. Subject to certain constraints, the counterparties are permitted by contract to sell or re-pledge this collateral. The amount of securities collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreements and cash collateral. At March 31, 2019 and December 31, 2018 , the Company received excess securities collateral with an estimated fair value of $3.9 million and $78 thousand , respectively, and provided excess securities collateral with an estimated fair value of $2.3 million and $112 thousand , respectively, for its OTC-bilateral derivatives. The Company’s collateral arrangements for its OTC-bilateral derivatives generally require the counterparty in a net liability position, after considering the effect of netting agreements, to pledge collateral when the amount owed by that counterparty reaches a minimum transfer amount. In addition, the Company’s netting agreements for derivatives contain provisions that require both the Company and the counterparty to maintain a specific investment grade credit rating from each of Moody’s Investors Service and Standard & Poor’s Global Ratings 500 Index. If a party’s financial strength or credit ratings were to fall below that specific investment grade credit rating, that party would be in violation of these provisions, and the other party to the derivatives could terminate the transactions and demand immediate settlement and payment based on such party’s reasonable valuation of the derivatives. At March 31, 2019 and December 31, 2018 , the Company held OTC-bilateral derivatives that are in a net liability position after considering the effect of netting agreements with an estimated fair value of $6.3 million and $46 thousand , respectively. At March 31, 2019 and December 31, 2018 , the Company provided collateral with an estimated fair value of $8.7 million and $158 thousand , respectively. The Company’s collateral agreements require both parties to be fully collateralized, as such, the Company would not be required to post additional collateral as a result of a downgrade in its financial strength rating. Embedded Derivatives The Company issues certain insurance contracts that contain embedded derivatives that are required to be separated from their host contracts and measured at fair value. These host contracts principally include: variable annuities with guaranteed minimum benefits, including GMWBs, GMABs and certain GMIBs; related party ceded reinsurance of guaranteed minimum benefits related to GMWBs, GMABs and certain GMIBs; and fixed annuities with equity-indexed returns. The following table presents the estimated fair value and balance sheet location of the Company’s embedded derivatives that have been separated from their host contracts at: Balance Sheet Location March 31, 2019 December 31, 2018 (In thousands) Embedded derivatives within asset host contracts: Ceded guaranteed minimum benefits Premiums, reinsurance and other receivables $ 295,107 $ 298,112 Embedded derivatives within liability host contracts: Direct guaranteed minimum benefits Policyholder account balances $ (33,520 ) $ (18,811 ) Fixed annuities with equity indexed returns Policyholder account balances 66,887 5,617 Embedded derivatives within liability host contracts $ 33,367 $ (13,194 ) The following table presents changes in estimated fair value related to embedded derivatives: Three Months Ended 2019 2018 (In thousands) Net derivative gains (losses) (1), (2) $ (34,901 ) $ (30,710 ) ______________ (1) The valuation of direct guaranteed minimum benefits includes a nonperformance risk adjustment. The amounts included in net derivative gains (losses) in connection with this adjustment were ($3.4) million and ($1.1) million for the three months ended March 31, 2019 , and 2018 , respectively. In addition, the valuation of ceded guaranteed minimum benefits includes a nonperformance risk adjustment. The amounts included in net derivative gains (losses) in connection with this adjustment were $19.8 million and ($600) thousand for the three months ended March 31, 2019 and 2018 , respectively. (2) See Note 10 for discussion of related party net derivative gains (losses). |
Schedule of Derivatives Instruments Statements of Financial Performance and Financial Position, Location | The following table presents the primary underlying risk exposure, gross notional amount, and estimated fair value of the Company’s derivatives, excluding embedded derivatives, held at: March 31, 2019 December 31, 2018 Primary Underlying Risk Exposure Gross Notional Estimated Fair Value Gross Notional Estimated Fair Value Assets Liabilities Assets Liabilities (In thousands) Derivatives Designated as Hedging Instruments: Cash flow hedges: Foreign currency swaps Foreign currency exchange rate $ 83,513 $ 4,563 $ 130 $ 82,704 $ 5,649 $ 187 Derivatives Not Designated or Not Qualifying as Hedging Instruments: Interest rate caps Interest rate 800,000 4,772 — 800,000 9,284 — Foreign currency swaps Foreign currency exchange rate 17,892 3,191 96 28,133 3,395 144 Equity index options Equity market 2,307,473 35,487 9,969 2,154,321 10,389 96 Total non-designated or nonqualifying derivatives 3,125,365 43,450 10,065 2,982,454 23,068 240 Total $ 3,208,878 $ 48,013 $ 10,195 $ 3,065,158 $ 28,717 $ 427 |
Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) [Table Text Block] | The following tables present the amount and location of gains (losses) recognized for derivatives and gains (losses) pertaining to hedged items presented in net derivative gains (losses): Net Derivative Gains (Losses) Recognized for Derivatives (1), (4) Net Derivative Gains (Losses) Recognized for Hedged Items (2), (4) Net Investment Income (5) Amount of Gains (Losses) deferred in AOCI (In thousands) Three Months Ended March 31, 2019 Derivatives Designated as Hedging Instruments: Cash flow hedges (3): Foreign currency exchange rate derivatives $ — $ — $ 270 $ (1,035 ) Total cash flow hedges — — 270 (1,035 ) Derivatives Not Designated or Not Qualifying as Hedging Instruments: Interest rate derivatives (4,512 ) — — — Foreign currency exchange rate derivatives (36 ) 88 — — Equity derivatives 36,116 — — — Embedded derivatives (34,901 ) — — — Total non-qualifying hedges (3,333 ) 88 — — Total $ (3,333 ) $ 88 $ 270 $ (1,035 ) Three Months Ended March 31, 2018 Derivatives Designated as Hedging Instruments: Cash flow hedges (3): Foreign currency exchange rate derivatives $ 6 $ — $ 186 $ (2,674 ) Total cash flow hedges 6 — 186 (2,674 ) Derivatives Not Designated or Not Qualifying as Hedging Instruments: Interest rate derivatives (4,002 ) — — — Foreign currency exchange rate derivatives (972 ) 152 — — Equity derivatives (8,736 ) — — — Embedded derivatives (30,710 ) — — — Total non-qualifying hedges (44,420 ) 152 — — Total $ (44,414 ) $ 152 $ 186 $ (2,674 ) ______________ (1) Includes gains (losses) reclassified from AOCI primarily for terminated cash flow hedges. (2) Includes foreign currency transaction gains (losses) on hedged items in cash flow and nonqualifying hedging relationships. (3) All components of each derivative's gain or loss were included in the assessment of hedge effectiveness. |
Components of Net Derivatives Gains (Losses) | The following tables present the amount and location of gains (losses) recognized for derivatives and gains (losses) pertaining to hedged items presented in net derivative gains (losses): Net Derivative Gains (Losses) Recognized for Derivatives (1), (4) Net Derivative Gains (Losses) Recognized for Hedged Items (2), (4) Net Investment Income (5) Amount of Gains (Losses) deferred in AOCI (In thousands) Three Months Ended March 31, 2019 Derivatives Designated as Hedging Instruments: Cash flow hedges (3): Foreign currency exchange rate derivatives $ — $ — $ 270 $ (1,035 ) Total cash flow hedges — — 270 (1,035 ) Derivatives Not Designated or Not Qualifying as Hedging Instruments: Interest rate derivatives (4,512 ) — — — Foreign currency exchange rate derivatives (36 ) 88 — — Equity derivatives 36,116 — — — Embedded derivatives (34,901 ) — — — Total non-qualifying hedges (3,333 ) 88 — — Total $ (3,333 ) $ 88 $ 270 $ (1,035 ) Three Months Ended March 31, 2018 Derivatives Designated as Hedging Instruments: Cash flow hedges (3): Foreign currency exchange rate derivatives $ 6 $ — $ 186 $ (2,674 ) Total cash flow hedges 6 — 186 (2,674 ) Derivatives Not Designated or Not Qualifying as Hedging Instruments: Interest rate derivatives (4,002 ) — — — Foreign currency exchange rate derivatives (972 ) 152 — — Equity derivatives (8,736 ) — — — Embedded derivatives (30,710 ) — — — Total non-qualifying hedges (44,420 ) 152 — — Total $ (44,414 ) $ 152 $ 186 $ (2,674 ) ______________ (1) Includes gains (losses) reclassified from AOCI primarily for terminated cash flow hedges. (2) Includes foreign currency transaction gains (losses) on hedged items in cash flow and nonqualifying hedging relationships. (3) All components of each derivative's gain or loss were included in the assessment of hedge effectiveness. (4) Total net derivative gains (losses) were ($3.2) million and ($44.3) million for the three months ended March 31, 2019 and 2018 respectively. (5) Total net investment income was ($452) thousand and ($2.4) million for the three months ended March 31, 2019 and 2018 respectively. The following table presents changes in estimated fair value related to embedded derivatives: Three Months Ended 2019 2018 (In thousands) Net derivative gains (losses) (1), (2) $ (34,901 ) $ (30,710 ) ______________ (1) The valuation of direct guaranteed minimum benefits includes a nonperformance risk adjustment. The amounts included in net derivative gains (losses) in connection with this adjustment were ($3.4) million and ($1.1) million for the three months ended March 31, 2019 , and 2018 , respectively. In addition, the valuation of ceded guaranteed minimum benefits includes a nonperformance risk adjustment. The amounts included in net derivative gains (losses) in connection with this adjustment were $19.8 million and ($600) thousand for the three months ended March 31, 2019 and 2018 , respectively. (2) See Note 10 for discussion of related party net derivative gains (losses). |
Estimated Fair Value of Derivative Assets and Liabilities after Master Netting Agreements and Cash Collateral | The estimated fair values of the Company’s net derivative assets and net derivative liabilities after the application of master netting agreements and collateral were as follows at: March 31, 2019 December 31, 2018 Derivatives Subject to a Master Netting Arrangement or a Similar Arrangement Assets Liabilities Assets Liabilities (In thousands) Gross estimated fair value of derivatives: OTC-bilateral (1) $ 48,331 $ 10,160 $ 29,006 $ 411 Total gross estimated fair value of derivatives (1) 48,331 10,160 29,006 411 Amounts offset on the balance sheets — — — — Estimated fair value of derivatives presented on the balance sheets (1) 48,331 10,160 29,006 411 Gross amounts not offset on the balance sheets: Gross estimated fair value of derivatives: (2) OTC-bilateral (3,825 ) (3,825 ) (365 ) (365 ) Cash collateral: (3) OTC-bilateral (34,235 ) — (23,197 ) — Securities collateral: (4) OTC-bilateral (2,875 ) (6,335 ) (2,212 ) (46 ) Net amount after application of master netting agreements and collateral $ 7,396 $ — $ 3,232 $ — ______________ (1) At March 31, 2019 and December 31, 2018 , derivative assets included income or (expense) accruals reported in accrued investment income or in other liabilities of $318 thousand and $289 thousand , respectively, and derivative liabilities included (income) or expense accruals reported in accrued investment income or in other liabilities of ($35) thousand and ($16) thousand , respectively. (2) Estimated fair value of derivatives is limited to the amount that is subject to set-off and includes income or expense accruals. (3) Cash collateral received is included in cash and cash equivalents or in short-term investments, and the obligation to return it is included in payables for collateral transactions on the balance sheet. The amount of cash collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreements. At March 31, 2019 and December 31, 2018 , the Company received excess cash collateral of $2.6 million and $384 thousand , respectively, and did not provide any excess cash collateral, which is not included in the table above due to the foregoing limitation. (4) Securities collateral received by the Company is held in separate custodial accounts and is not recorded on the balance sheet. Subject to certain constraints, the Company is permitted by contract to sell or re-pledge this collateral, but at March 31, 2019 , none of the collateral had been sold or re-pledged. Securities collateral pledged by the Company is reported in fixed maturity securities on the balance sheet. Subject to certain constraints, the counterparties are permitted by contract to sell or re-pledge this collateral. The amount of securities collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreements and cash collateral. At March 31, 2019 and December 31, 2018 , the Company received excess securities collateral with an estimated fair value of $3.9 million and $78 thousand , respectively, and provided excess securities collateral with an estimated fair value of $2.3 million and $112 thousand , respectively, for its OTC-bilateral derivatives. |
Estimated Fair Value of Derivative Assets and Liabilities after Master Netting Agreements and Cash Collateral | The estimated fair values of the Company’s net derivative assets and net derivative liabilities after the application of master netting agreements and collateral were as follows at: March 31, 2019 December 31, 2018 Derivatives Subject to a Master Netting Arrangement or a Similar Arrangement Assets Liabilities Assets Liabilities (In thousands) Gross estimated fair value of derivatives: OTC-bilateral (1) $ 48,331 $ 10,160 $ 29,006 $ 411 Total gross estimated fair value of derivatives (1) 48,331 10,160 29,006 411 Amounts offset on the balance sheets — — — — Estimated fair value of derivatives presented on the balance sheets (1) 48,331 10,160 29,006 411 Gross amounts not offset on the balance sheets: Gross estimated fair value of derivatives: (2) OTC-bilateral (3,825 ) (3,825 ) (365 ) (365 ) Cash collateral: (3) OTC-bilateral (34,235 ) — (23,197 ) — Securities collateral: (4) OTC-bilateral (2,875 ) (6,335 ) (2,212 ) (46 ) Net amount after application of master netting agreements and collateral $ 7,396 $ — $ 3,232 $ — ______________ (1) At March 31, 2019 and December 31, 2018 , derivative assets included income or (expense) accruals reported in accrued investment income or in other liabilities of $318 thousand and $289 thousand , respectively, and derivative liabilities included (income) or expense accruals reported in accrued investment income or in other liabilities of ($35) thousand and ($16) thousand , respectively. (2) Estimated fair value of derivatives is limited to the amount that is subject to set-off and includes income or expense accruals. (3) Cash collateral received is included in cash and cash equivalents or in short-term investments, and the obligation to return it is included in payables for collateral transactions on the balance sheet. The amount of cash collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreements. At March 31, 2019 and December 31, 2018 , the Company received excess cash collateral of $2.6 million and $384 thousand , respectively, and did not provide any excess cash collateral, which is not included in the table above due to the foregoing limitation. (4) Securities collateral received by the Company is held in separate custodial accounts and is not recorded on the balance sheet. Subject to certain constraints, the Company is permitted by contract to sell or re-pledge this collateral, but at March 31, 2019 , none of the collateral had been sold or re-pledged. Securities collateral pledged by the Company is reported in fixed maturity securities on the balance sheet. Subject to certain constraints, the counterparties are permitted by contract to sell or re-pledge this collateral. The amount of securities collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreements and cash collateral. At March 31, 2019 and December 31, 2018 , the Company received excess securities collateral with an estimated fair value of $3.9 million and $78 thousand , respectively, and provided excess securities collateral with an estimated fair value of $2.3 million and $112 thousand , respectively, for its OTC-bilateral derivatives. |
Schedule of Derivative Instruments | The following table presents the estimated fair value and balance sheet location of the Company’s embedded derivatives that have been separated from their host contracts at: Balance Sheet Location March 31, 2019 December 31, 2018 (In thousands) Embedded derivatives within asset host contracts: Ceded guaranteed minimum benefits Premiums, reinsurance and other receivables $ 295,107 $ 298,112 Embedded derivatives within liability host contracts: Direct guaranteed minimum benefits Policyholder account balances $ (33,520 ) $ (18,811 ) Fixed annuities with equity indexed returns Policyholder account balances 66,887 5,617 Embedded derivatives within liability host contracts $ 33,367 $ (13,194 ) |
Fair Value (Tables)
Fair Value (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Recurring Fair Value Measurements | March 31, 2019 Fair Value Hierarchy Level 1 Level 2 Level 3 Total (In thousands) Assets Fixed maturity securities: U.S. corporate $ — $ 926,863 $ 3,768 $ 930,631 U.S. government and agency 391,637 123,719 — 515,356 Foreign corporate — 363,999 9,957 373,956 CMBS — 337,733 4,708 342,441 RMBS — 320,360 — 320,360 ABS — 77,922 5,469 83,391 State and political subdivision — 72,093 — 72,093 Foreign government — 26,636 — 26,636 Total fixed maturity securities 391,637 2,249,325 23,902 2,664,864 Derivative assets: (1) Interest rate — 4,772 — 4,772 Foreign currency exchange rate — 7,754 — 7,754 Equity market — 35,487 — 35,487 Total derivative assets — 48,013 — 48,013 Embedded derivatives within asset host contracts (2) — — 295,107 295,107 Separate account assets — 4,559,757 — 4,559,757 Total assets $ 391,637 $ 6,857,095 $ 319,009 $ 7,567,741 Liabilities Derivative liabilities: (1) Foreign currency exchange rate $ — $ 226 $ — $ 226 Equity market — 9,969 — 9,969 Total derivative liabilities — 10,195 — 10,195 Embedded derivatives within liability host contracts (2) — — 33,367 33,367 Total liabilities $ — $ 10,195 $ 33,367 $ 43,562 December 31, 2018 Fair Value Hierarchy Level 1 Level 2 Level 3 Total Estimated (In thousands) Assets Fixed maturity securities: U.S. corporate $ — $ 869,498 $ 3,546 $ 873,044 U.S. government and agency 389,491 118,028 — 507,519 Foreign corporate — 342,600 9,764 352,364 CMBS — 318,120 4,731 322,851 RMBS — 202,588 — 202,588 ABS — 78,831 — 78,831 State and political subdivision — 69,825 — 69,825 Foreign government — 26,611 — 26,611 Total fixed maturity securities 389,491 2,026,101 18,041 2,433,633 Derivative assets: (1) Interest rate — 9,284 — 9,284 Foreign currency exchange rate — 8,572 472 9,044 Equity market — 10,389 — 10,389 Total derivative assets — 28,245 472 28,717 Embedded derivatives within asset host contracts (2) — — 298,112 298,112 Separate account assets — 4,268,423 — 4,268,423 Total assets $ 389,491 $ 6,322,769 $ 316,625 $ 7,028,885 Liabilities Derivative liabilities: (1) Foreign currency exchange rate $ — $ 331 $ — $ 331 Equity market — 96 — 96 Total derivative liabilities — 427 — 427 Embedded derivatives within liability host contracts (2) — — (13,194 ) (13,194 ) Total liabilities $ — $ 427 $ (13,194 ) $ (12,767 ) ______________ (1) Derivative assets are presented within other invested assets on the balance sheets and derivative liabilities are presented within other liabilities on the balance sheets. The amounts are presented gross in the tables above to reflect the presentation on the balance sheets. (2) Embedded derivatives within asset host contracts are presented within premiums, reinsurance and other receivables and other invested assets on the balance sheets. Embedded derivatives within liability host contracts are presented within policyholder account balances on the balance sheets. |
Fair Value Inputs, Quantitative Information | The following table presents certain quantitative information about the significant unobservable inputs used in the fair value measurement, and the sensitivity of the estimated fair value to changes in those inputs, for the more significant asset and liability classes measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at: March 31, 2019 December 31, 2018 Impact of Increase in Input on Estimated Valuation Techniques Significant Unobservable Inputs Range Embedded derivatives Direct, assumed and ceded guaranteed minimum benefits • Option pricing techniques • Mortality rates 0.02% - 11.31% 0.02% - 11% Decrease (1) • Lapse rates 0.25% - 16% 0.25% - 16% Decrease (2) • Utilization rates 0% - 25% 0% - 25% Increase (3) • Withdrawal rates 0.25% - 10% 0.25% - 10% (4) • Long-term equity volatilities 16.50% - 22% 16.50% - 22% Increase (5) • Nonperformance risk spread 1.31% - 2.45% 1.91% - 2.66% Decrease (6) ______________ (1) Mortality rates vary by age and by demographic characteristics such as gender. Range shown reflects the mortality rate for policyholders between 35 and 90 years old, which represents the majority of the business with living benefits. Mortality rate assumptions are set based on company experience and include an assumption for mortality improvement. (2) Range reflects base lapse rates for major product categories for duration 1-20, which represents majority of business with living benefit riders. Base lapse rates are adjusted at the contract level based on a comparison of the actuarially calculated guaranteed values and the current policyholder account value, as well as other factors, such as the applicability of any surrender charges. A dynamic lapse function reduces the base lapse rate when the guaranteed amount is greater than the account value as in-the-money contracts are less likely to lapse. Lapse rates are also generally assumed to be lower in periods when a surrender charge applies. (3) The utilization rate assumption estimates the percentage of contract holders with a GMIB or lifetime withdrawal benefit who will elect to utilize the benefit upon becoming eligible in a given year. The range shown represents the floor and cap of the GMIB dynamic election rates across varying levels of in-the-money. For lifetime withdrawal guarantee riders, the assumption is that everyone will begin withdrawals once account value reaches zero which is equivalent to a 100% utilization rate. Utilization rates may vary by the type of guarantee, the amount by which the guaranteed amount is greater than the account value, the contract’s withdrawal history and by the age of the policyholder. (4) The withdrawal rate represents the percentage of account balance that any given policyholder will elect to withdraw from the contract each year. The withdrawal rate assumption varies by age and duration of the contract, and also by other factors such as benefit type. For any given contract, withdrawal rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative. For GMWBs, any increase (decrease) in withdrawal rates results in an increase (decrease) in the estimated fair value of the guarantees. For GMABs and GMIBs, any increase (decrease) in withdrawal rates results in a decrease (increase) in the estimated fair value. (5) Long-term equity volatilities represent equity volatility beyond the period for which observable equity volatilities are available. For any given contract, long-term equity volatility rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative. (6) Nonperformance risk spread varies by duration. For any given contract, multiple nonperformance risk spreads will apply, depending on the duration of the cash flow being discounted for purposes of valuing the embedded derivative. |
Fair Value, Measured on Recurring Basis, Unobservable Input Reconciliation | The following tables summarize the change of all assets and (liabilities) measured at estimated fair value on a recurring basis using significant unobservable inputs (Level 3): Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Fixed Maturity Securities Corporate (1) Structured Securities Net Derivatives (2) Net Embedded (In thousands) Three Months Ended March 31, 2019 Balance, beginning of period $ 13,310 $ 4,731 $ 472 $ 311,306 Total realized/unrealized gains (losses) included in net income (loss) (4) (5) 2 (32 ) — (34,901 ) Total realized/unrealized gains (losses) included in AOCI 403 78 — — Purchases (6) — — — — Sales (6) (48 ) (29 ) — — Issuances (6) — — — — Settlements (6) — — — (14,665 ) Transfers into Level 3 (7) 263 5,429 — — Transfers out of Level 3 (7) (205 ) — (472 ) — Balance, end of period $ 13,725 $ 10,177 $ — $ 261,740 Three Months Ended March 31, 2018 Balance, beginning of period $ 95,950 $ 19,557 $ — $ 347,633 Total realized/unrealized gains (losses) included in net income (loss) (4) (5) 1 109 — (30,710 ) Total realized/unrealized gains (losses) included in AOCI (772 ) 119 — — Purchases (6) 783 1,955 — — Sales (6) (716 ) (403 ) — — Issuances (6) — — — — Settlements (6) — — — (5,912 ) Transfers into Level 3 (7) — — — — Transfers out of Level 3 (7) (3,166 ) — — — Balance, end of period $ 92,080 $ 21,337 $ — $ 311,011 Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at March 31, 2019 (8) $ 4 $ (32 ) $ — $ 13,080 Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at March 31, 2018 (8) $ 1 $ 109 $ — $ (33,063 ) ______________ (1) Comprised of U.S. and foreign corporate securities. (2) Freestanding derivative assets and liabilities are presented net for purposes of the rollforward. (3) Embedded derivative assets and liabilities are presented net for purposes of the rollforward. (4) Amortization of premium/accretion of discount is included within net investment income. Impairments charged to net income (loss) on securities are included in net investment gains (losses). Lapses associated with net embedded derivatives are included in net derivative gains (losses). Substantially all realized/unrealized gains (losses) included in net income (loss) for net embedded derivatives are reported in net derivative gains (losses). (5) Interest accruals, as well as cash interest coupons received, are excluded from the rollforward. (6) Items purchased/issued and then sold/settled in the same period are excluded from the rollforward. Fees attributed to embedded derivatives are included in settlements. (7) Gains and losses, in net income (loss) and OCI, are calculated assuming transfers into and/or out of Level 3 occurred at the beginning of the period. Items transferred into and then out of Level 3 in the same period are excluded from the rollforward. (8) Changes in unrealized gains (losses) included in net income (loss) relate to assets and liabilities still held at the end of the respective periods. Substantially all changes in unrealized gains (losses) included in net income (loss) for net embedded derivatives are reported in net derivative gains (losses). |
Fair Value of Financial Instruments Carried at Other Than Fair Value | The carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy, are summarized as follows at: March 31, 2019 Fair Value Hierarchy Carrying Level 1 Level 2 Level 3 Total Estimated Fair Value (In thousands) Assets Mortgage loans $ 467,193 $ — $ — $ 472,882 $ 472,882 Premiums, reinsurance and other receivables $ 18,415 $ — $ 4,055 $ 13,021 $ 17,076 Liabilities Policyholder account balances $ 1,014,394 $ — $ — $ 938,827 $ 938,827 Other liabilities $ 81,790 $ — $ 81,790 $ — $ 81,790 December 31, 2018 Fair Value Hierarchy Carrying Level 1 Level 2 Level 3 Total Estimated Fair Value (In thousands) Assets Mortgage loans $ 448,105 $ — $ — $ 447,510 $ 447,510 Premiums, reinsurance and other receivables $ 20,001 $ — $ 2,314 $ 15,512 $ 17,826 Liabilities Policyholder account balances $ 1,056,419 $ — $ — $ 949,916 $ 949,916 Other liabilities $ 10,399 $ — $ 10,399 $ — $ 10,399 |
Equity (Tables)
Equity (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Equity [Abstract] | |
Components of Accumulated Other Comprehensive Income (Loss) | Information regarding changes in the balances of each component of AOCI was as follows: Three Months Ended Unrealized Unrealized Total (In thousands) Balance, December 31, 2018 $ (20,503 ) $ 5,432 $ (15,071 ) OCI before reclassifications 58,689 (1,035 ) 57,654 Deferred income tax benefit (expense) (12,325 ) 217 (12,108 ) AOCI before reclassifications, net of income tax 25,861 4,614 30,475 Amounts reclassified from AOCI 471 — 471 Deferred income tax benefit (expense) (97 ) — (97 ) Amounts reclassified from AOCI, net of income tax 374 — 374 Balance, March 31, 2019 $ 26,235 $ 4,614 $ 30,849 Three Months Ended Unrealized Unrealized Total (In thousands) Balance, December 31, 2017 $ 29,323 $ 305 $ 29,628 OCI before reclassifications (38,499 ) (2,674 ) (41,173 ) Deferred income tax benefit (expense) 8,083 562 8,645 AOCI before reclassifications, net of income tax (1,093 ) (1,807 ) (2,900 ) Amounts reclassified from AOCI 2,839 (6 ) 2,833 Deferred income tax benefit (expense) (596 ) 1 (595 ) Amounts reclassified from AOCI, net of income tax 2,243 (5 ) 2,238 Balance, March 31, 2018 $ 1,150 $ (1,812 ) $ (662 ) ______________ (1) See Note 4 for information on offsets to investments related to DAC and DSI. |
Reclassification out of Accumulated Other Comprehensive Income (Loss) | Information regarding amounts reclassified out of each component of AOCI was as follows: AOCI Components Amounts Reclassified from AOCI Statements of Operations and Comprehensive Income (Loss) Locations Three Months Ended 2019 2018 (In thousands) Net unrealized investment gains (losses): Net unrealized investment gains (losses) $ (465 ) $ (2,839 ) Net investment gains (losses) Net unrealized investment gains (losses) (6 ) — Net derivative gains (losses) Net unrealized investment gains (losses), before income tax (471 ) (2,839 ) Income tax (expense) benefit 97 596 Net unrealized investment gains (losses), net of income tax (374 ) (2,243 ) Unrealized gains (losses) on derivatives - cash flow hedges: Foreign currency swaps — 6 Net derivative gains (losses) Gains (losses) on cash flow hedges, before income tax — 6 Income tax (expense) benefit — (1 ) Gains (losses) on cash flow hedges, net of income tax — 5 Total reclassifications, net of income tax $ (374 ) $ (2,238 ) |
Other Revenues and Other Expe_2
Other Revenues and Other Expenses Other Revenues and Other Expenses (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Other Income and Expenses [Abstract] | |
Schedule of Other Operating Cost and Expense, by Component [Table Text Block] | Information on other expenses was as follows: Three Months Ended 2019 2018 (In thousands) Compensation $ 4,667 $ 3,510 Contracted services and other labor costs 2,596 1,837 Transition services agreements 3,784 2,947 Establishment costs 1,482 — Premium and other taxes, licenses and fees 704 1,043 Volume related costs, excluding compensation, net of DAC capitalization 3,998 5,264 Other 1,659 1,126 Total other expenses $ 18,890 $ 15,727 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Related Party Transactions [Abstract] | |
Effects of reinsurance | Information regarding the significant effects of related party reinsurance included on the interim condensed statements of operations and comprehensive income (loss) was as follows: Three Months Ended 2019 2018 (In thousands) Premiums Reinsurance ceded $ (10,210 ) $ (8,112 ) Universal life and investment-type product policy fees Reinsurance ceded $ (803 ) $ (1,043 ) Other revenues Reinsurance ceded $ (23,508 ) $ (15,936 ) Policyholder benefits and claims Reinsurance ceded $ (8,213 ) $ (24,732 ) Information regarding the significant effects of ceded related party reinsurance included on the interim condensed balance sheets was as follows at: March 31, 2019 December 31, 2018 (In thousands) Assets Premiums, reinsurance and other receivables $ 522,891 $ 534,487 Liabilities Other liabilities $ 420,568 $ 429,656 |
Business, Basis of Presentati_3
Business, Basis of Presentation and Summary of Significant Accounting Policies (Narrative) (Details) - segment | 3 Months Ended | |
Mar. 31, 2019 | Aug. 04, 2017 | |
Instrument [Line Items] | ||
Number of segments | 2 | |
Spinoff [Member] | ||
Instrument [Line Items] | ||
Common Stock Distribution by Parent | 80.80% |
Segment Information (Operating
Segment Information (Operating Results) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Segment Reporting Information [Line Items] | ||
Pre-tax adjusted earnings | $ (2,755) | $ (19,046) |
Provision for income tax expense (benefit) | (1,244) | (4,676) |
Net investment gains (losses) | (452) | (2,355) |
Net derivative gains (losses) | (3,245) | (44,262) |
Other adjustments to net income | (20,323) | (12,544) |
Net income (loss) | (1,511) | (14,370) |
Annuities | ||
Segment Reporting Information [Line Items] | ||
Interest revenue | 17,772 | 14,803 |
Life | ||
Segment Reporting Information [Line Items] | ||
Interest revenue | 8,304 | 8,839 |
Corporate & Other | ||
Segment Reporting Information [Line Items] | ||
Interest revenue | 509 | 371 |
Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Pre-tax adjusted earnings | (9,788) | 15,706 |
Provision for income tax expense (benefit) | (2,721) | 2,621 |
Adjusted earnings | (7,067) | 13,085 |
Operating Segments | Annuities | ||
Segment Reporting Information [Line Items] | ||
Pre-tax adjusted earnings | (4,979) | 5,430 |
Provision for income tax expense (benefit) | (1,468) | 657 |
Adjusted earnings | (3,511) | 4,773 |
Operating Segments | Life | ||
Segment Reporting Information [Line Items] | ||
Pre-tax adjusted earnings | (4,256) | 8,014 |
Provision for income tax expense (benefit) | (894) | 1,683 |
Adjusted earnings | (3,362) | 6,331 |
Operating Segments | Corporate & Other | ||
Segment Reporting Information [Line Items] | ||
Pre-tax adjusted earnings | (553) | 2,262 |
Provision for income tax expense (benefit) | (359) | 281 |
Adjusted earnings | (194) | 1,981 |
Segment Reconciling Items | ||
Segment Reporting Information [Line Items] | ||
Provision for income tax expense (benefit) | (1,477) | 7,297 |
Net investment gains (losses) | (452) | (2,355) |
Net derivative gains (losses) | (3,245) | (44,262) |
Other adjustments to net income | $ 10,730 | $ 11,865 |
Segment Information (Reconcilia
Segment Information (Reconciliation of Operating Revenues to Total Revenues) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenues | $ 34,755 | $ 1,049 |
Annuities | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenues | 21,887 | 27,638 |
Life | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenues | 12,647 | 15,696 |
Corporate & Other | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenues | 670 | 1,024 |
Segment Reconciling Items | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenues | $ (449) | $ (43,309) |
Segment Information (Total Asse
Segment Information (Total Assets) (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Segment Reporting Information [Line Items] | ||
Total assets | $ 8,757,038 | $ 8,130,125 |
Annuities | ||
Segment Reporting Information [Line Items] | ||
Total assets | 7,539,919 | 7,034,394 |
Life | ||
Segment Reporting Information [Line Items] | ||
Total assets | 1,124,314 | 1,083,641 |
Corporate & Other | ||
Segment Reporting Information [Line Items] | ||
Total assets | $ 92,805 | $ 12,090 |
Segment Information (Narrative)
Segment Information (Narrative) (Details) | 3 Months Ended |
Mar. 31, 2019segment | |
Segment Reporting [Abstract] | |
Number of segments | 2 |
Insurance (Guarantees Related t
Insurance (Guarantees Related to Annuity Contracts) (Details) - Variable Annuity Guarantees - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Guaranteed Death Benefits | ||
Net Amount at Risk by Product and Guarantee [Line Items] | ||
Total account value (3) | $ 4,564,444 | $ 4,274,326 |
Separate account value | 4,557,551 | 4,266,520 |
Net amount at risk | $ 22,344 | $ 193,102 |
Average attained age of contract holders | 68 years | 67 years |
Guaranteed Annuitization Benefits | ||
Net Amount at Risk by Product and Guarantee [Line Items] | ||
Total account value (3) | $ 3,703,604 | $ 3,483,668 |
Separate account value | 3,702,932 | 3,482,829 |
Net amount at risk | $ 211,888 | $ 274,632 |
Average attained age of contract holders | 67 years | 67 years |
Investments (Fixed Maturity Sec
Investments (Fixed Maturity Securities AFS by Sector) (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Debt Securities, Available for Sale Securities [Abstract] | ||
Amortized Cost | $ 2,623,070 | $ 2,469,801 |
Debt Securities, Available-for-sale | 2,664,864 | 2,433,633 |
Fixed maturity securities | ||
Debt Securities, Available for Sale Securities [Abstract] | ||
Amortized Cost | 2,623,070 | 2,469,801 |
Gross Unrealized Gain | 64,917 | 28,035 |
Gross Unrealized Temporary Loss | 23,123 | 64,203 |
Gross Unrealized OTTI Loss | 0 | 0 |
Debt Securities, Available-for-sale | 2,664,864 | 2,433,633 |
U.S. corporate | ||
Debt Securities, Available for Sale Securities [Abstract] | ||
Amortized Cost | 916,754 | 890,676 |
Gross Unrealized Gain | 21,416 | 5,402 |
Gross Unrealized Temporary Loss | 7,539 | 23,034 |
Gross Unrealized OTTI Loss | 0 | 0 |
Debt Securities, Available-for-sale | 930,631 | 873,044 |
U.S. government and agency | ||
Debt Securities, Available for Sale Securities [Abstract] | ||
Amortized Cost | 504,101 | 511,255 |
Gross Unrealized Gain | 15,524 | 9,961 |
Gross Unrealized Temporary Loss | 4,269 | 13,697 |
Gross Unrealized OTTI Loss | 0 | 0 |
Debt Securities, Available-for-sale | 515,356 | 507,519 |
Foreign corporate | ||
Debt Securities, Available for Sale Securities [Abstract] | ||
Amortized Cost | 374,509 | 368,149 |
Gross Unrealized Gain | 6,641 | 1,473 |
Gross Unrealized Temporary Loss | 7,194 | 17,258 |
Gross Unrealized OTTI Loss | 0 | 0 |
Debt Securities, Available-for-sale | 373,956 | 352,364 |
CMBS | ||
Debt Securities, Available for Sale Securities [Abstract] | ||
Amortized Cost | 336,322 | 325,491 |
Gross Unrealized Gain | 7,335 | 1,481 |
Gross Unrealized Temporary Loss | 1,216 | 4,121 |
Gross Unrealized OTTI Loss | 0 | 0 |
Debt Securities, Available-for-sale | 342,441 | 322,851 |
RMBS | ||
Debt Securities, Available for Sale Securities [Abstract] | ||
Amortized Cost | 315,454 | 200,827 |
Gross Unrealized Gain | 6,879 | 4,643 |
Gross Unrealized Temporary Loss | 1,973 | 2,882 |
Gross Unrealized OTTI Loss | 0 | 0 |
Debt Securities, Available-for-sale | 320,360 | 202,588 |
ABS | ||
Debt Securities, Available for Sale Securities [Abstract] | ||
Amortized Cost | 83,618 | 79,806 |
Gross Unrealized Gain | 262 | 158 |
Gross Unrealized Temporary Loss | 489 | 1,133 |
Gross Unrealized OTTI Loss | 0 | 0 |
Debt Securities, Available-for-sale | 83,391 | 78,831 |
State and political subdivision | ||
Debt Securities, Available for Sale Securities [Abstract] | ||
Amortized Cost | 65,995 | 66,131 |
Gross Unrealized Gain | 6,168 | 4,777 |
Gross Unrealized Temporary Loss | 70 | 1,083 |
Gross Unrealized OTTI Loss | 0 | 0 |
Debt Securities, Available-for-sale | 72,093 | 69,825 |
Foreign government | ||
Debt Securities, Available for Sale Securities [Abstract] | ||
Amortized Cost | 26,317 | 27,466 |
Gross Unrealized Gain | 692 | 140 |
Gross Unrealized Temporary Loss | 373 | 995 |
Gross Unrealized OTTI Loss | 0 | 0 |
Debt Securities, Available-for-sale | $ 26,636 | $ 26,611 |
Investments (Maturities of Fixe
Investments (Maturities of Fixed Maturity Securities) (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Available-for-sale Securities, Debt Maturities [Abstract] | ||
Amortized Cost, Due in one Year or less | $ 56,296 | |
Amortized Cost, Due after one year through five years | 342,812 | |
Amortized Cost, Due after five years through ten years | 898,149 | |
Amortized cost, Due after ten years | 590,419 | |
Amortized Cost, Structured Securities | 735,394 | |
Amortized Cost, Subtotal | 2,623,070 | $ 2,469,801 |
Estimated Fair Value, Due in one year or less | 56,866 | |
Estimated Fair Value, Due after one year through five years | 344,578 | |
Estimated Fair Value, Due after five years through ten years | 906,709 | |
Estimated Fair Value, Due after ten years | 610,519 | |
Estimated Fair Value, Structured Securities | 746,192 | |
Debt Securities, Available-for-sale | $ 2,664,864 | $ 2,433,633 |
Investments (Continuous Gross U
Investments (Continuous Gross Unrealized Losses for Fixed Maturity Securities AFS by Sector) (Details) $ in Thousands | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) |
Continuous Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale | ||
Total number of securities in an unrealized loss position less than 12 months | 108 | 364 |
Total number of securities in an unrealized loss position equal to or greater than 12 months | 181 | 146 |
Fixed maturity securities | ||
Continuous Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale | ||
Less than 12 months Estimated Fair Value | $ 260,316 | $ 1,034,440 |
Less than 12 Months Gross Unrealized Loss | 5,641 | 34,030 |
Equal to or Greater than 12 Months Estimated Fair Value | 713,581 | 606,708 |
Equal to or Greater than 12 Months Gross Unrealized Loss | 17,482 | 30,173 |
U.S. corporate | ||
Continuous Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale | ||
Less than 12 months Estimated Fair Value | 54,218 | 483,424 |
Less than 12 Months Gross Unrealized Loss | 1,415 | 15,849 |
Equal to or Greater than 12 Months Estimated Fair Value | 213,094 | 131,812 |
Equal to or Greater than 12 Months Gross Unrealized Loss | 6,124 | 7,185 |
U.S. government and agency | ||
Continuous Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale | ||
Less than 12 months Estimated Fair Value | 0 | 102,447 |
Less than 12 Months Gross Unrealized Loss | 0 | 1,925 |
Equal to or Greater than 12 Months Estimated Fair Value | 264,905 | 296,265 |
Equal to or Greater than 12 Months Gross Unrealized Loss | 4,269 | 11,772 |
Foreign corporate | ||
Continuous Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale | ||
Less than 12 months Estimated Fair Value | 68,008 | 194,924 |
Less than 12 Months Gross Unrealized Loss | 3,251 | 10,156 |
Equal to or Greater than 12 Months Estimated Fair Value | 102,547 | 72,803 |
Equal to or Greater than 12 Months Gross Unrealized Loss | 3,943 | 7,102 |
CMBS | ||
Continuous Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale | ||
Less than 12 months Estimated Fair Value | 8,975 | 119,412 |
Less than 12 Months Gross Unrealized Loss | 58 | 1,909 |
Equal to or Greater than 12 Months Estimated Fair Value | 67,525 | 44,775 |
Equal to or Greater than 12 Months Gross Unrealized Loss | 1,158 | 2,212 |
RMBS | ||
Continuous Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale | ||
Less than 12 months Estimated Fair Value | 72,806 | 57,510 |
Less than 12 Months Gross Unrealized Loss | 130 | 1,746 |
Equal to or Greater than 12 Months Estimated Fair Value | 46,591 | 28,573 |
Equal to or Greater than 12 Months Gross Unrealized Loss | 1,843 | 1,136 |
ABS | ||
Continuous Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale | ||
Less than 12 months Estimated Fair Value | 39,489 | 51,028 |
Less than 12 Months Gross Unrealized Loss | 389 | 985 |
Equal to or Greater than 12 Months Estimated Fair Value | 11,104 | 11,699 |
Equal to or Greater than 12 Months Gross Unrealized Loss | 100 | 148 |
State and political subdivision | ||
Continuous Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale | ||
Less than 12 months Estimated Fair Value | 6,175 | 18,260 |
Less than 12 Months Gross Unrealized Loss | 25 | 744 |
Equal to or Greater than 12 Months Estimated Fair Value | 7,815 | 13,999 |
Equal to or Greater than 12 Months Gross Unrealized Loss | 45 | 339 |
Foreign government | ||
Continuous Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale | ||
Less than 12 months Estimated Fair Value | 10,645 | 7,435 |
Less than 12 Months Gross Unrealized Loss | 373 | 716 |
Equal to or Greater than 12 Months Estimated Fair Value | 0 | 6,782 |
Equal to or Greater than 12 Months Gross Unrealized Loss | $ 0 | $ 279 |
Investments (Mortgage Loans by
Investments (Mortgage Loans by Portfolio Segment) (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Loans and Leases Receivable Disclosure [Line Items] | ||
Carrying value | $ 469,199 | $ 450,042 |
Mortgage loans, gross as a percentage of total mortgage loans, net | 100.40% | 100.40% |
Mortgage loans valuation allowances | $ (2,006) | $ (1,937) |
Mortgage loans valuation allowances as a percentage of total mortgage loans, net | (0.40%) | (0.40%) |
Total mortgage loans, net | $ 467,193 | $ 448,105 |
Total mortgage loans, net as a percentage of total mortgage loans, net | 100.00% | 100.00% |
Mortgage Loans | Commercial | ||
Loans and Leases Receivable Disclosure [Line Items] | ||
Carrying value | $ 319,650 | $ 310,681 |
Mortgage loans, gross as a percentage of total mortgage loans, net | 68.40% | 69.30% |
Mortgage Loans | Agricultural | ||
Loans and Leases Receivable Disclosure [Line Items] | ||
Carrying value | $ 149,549 | $ 139,361 |
Mortgage loans, gross as a percentage of total mortgage loans, net | 32.00% | 31.10% |
Investments (Credit Quality of
Investments (Credit Quality of Commercial Mortgage Loans) (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Financing Receivable, Recorded Investment [Line Items] | ||
Recorded investment | $ 469,199 | $ 450,042 |
% of Total | 100.00% | 100.00% |
Less than 65% | ||
Financing Receivable, Recorded Investment [Line Items] | ||
% of Total | 92.70% | 94.00% |
65% to 75% | ||
Financing Receivable, Recorded Investment [Line Items] | ||
% of Total | 6.00% | 4.60% |
76% to 80% | ||
Financing Receivable, Recorded Investment [Line Items] | ||
% of Total | 1.30% | 1.40% |
Mortgage Loans | Commercial | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Recorded investment | $ 319,650 | $ 310,681 |
Mortgage Loans | Commercial | Less than 65% | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Recorded investment | 296,122 | 292,128 |
Mortgage Loans | Commercial | 65% to 75% | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Recorded investment | 19,240 | 14,257 |
Mortgage Loans | Commercial | 76% to 80% | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Recorded investment | 4,288 | 4,296 |
Mortgage Loans | Commercial | Greater than 1.20x | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Recorded investment | 301,202 | 292,234 |
Mortgage Loans | Commercial | Greater than 1.20x | Less than 65% | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Recorded investment | 277,674 | 273,681 |
Mortgage Loans | Commercial | Greater than 1.20x | 65% to 75% | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Recorded investment | 19,240 | 14,257 |
Mortgage Loans | Commercial | Greater than 1.20x | 76% to 80% | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Recorded investment | 4,288 | 4,296 |
Mortgage Loans | Commercial | 1.00x - 1.20x | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Recorded investment | 5,000 | 5,000 |
Mortgage Loans | Commercial | 1.00x - 1.20x | Less than 65% | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Recorded investment | 5,000 | 5,000 |
Mortgage Loans | Commercial | 1.00x - 1.20x | 65% to 75% | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Recorded investment | 0 | 0 |
Mortgage Loans | Commercial | 1.00x - 1.20x | 76% to 80% | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Recorded investment | 0 | 0 |
Mortgage Loans | Commercial | Less than 1.00x | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Recorded investment | 13,448 | 13,447 |
Mortgage Loans | Commercial | Less than 1.00x | Less than 65% | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Recorded investment | 13,448 | 13,447 |
Mortgage Loans | Commercial | Less than 1.00x | 65% to 75% | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Recorded investment | 0 | 0 |
Mortgage Loans | Commercial | Less than 1.00x | 76% to 80% | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Recorded investment | $ 0 | $ 0 |
Investments (Credit Quality o_2
Investments (Credit Quality of Agricultural Mortgage Loans) (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Financing Receivable, Allowance for Credit Losses [Line items] | ||
Recorded investment | $ 469,199 | $ 450,042 |
% of Total | 100.00% | 100.00% |
Less than 65% | ||
Financing Receivable, Allowance for Credit Losses [Line items] | ||
% of Total | 94.80% | 96.10% |
65% to 75% | ||
Financing Receivable, Allowance for Credit Losses [Line items] | ||
% of Total | 5.20% | 3.90% |
Mortgage Loans | Agricultural | ||
Financing Receivable, Allowance for Credit Losses [Line items] | ||
Recorded investment | $ 149,549 | $ 139,361 |
Mortgage Loans | Agricultural | Less than 65% | ||
Financing Receivable, Allowance for Credit Losses [Line items] | ||
Recorded investment | 141,731 | 133,884 |
Mortgage Loans | Agricultural | 65% to 75% | ||
Financing Receivable, Allowance for Credit Losses [Line items] | ||
Recorded investment | $ 7,818 | $ 5,477 |
Investments (Net Unrealized Inv
Investments (Net Unrealized Investment Gains (Losses)) (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Components of net unrealized investment gains (losses) included in accumulated other comprehensive loss | ||
Fixed maturity securities | $ 41,793 | $ (36,166) |
Derivatives | 4,756 | 5,791 |
Subtotal | 46,549 | (30,375) |
DAC and DSI | (7,500) | 11,299 |
Deferred income tax benefit (expense) | (8,200) | 4,005 |
Net unrealized investment gains (losses) | $ 30,849 | $ (15,071) |
Investments (Changes in Net Unr
Investments (Changes in Net Unrealized Investment Gains (Losses)) (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Changes In Net Unrealized Investment Gains Losses Included In Accumulated Other Comprehensive Loss [Abstract] | |
Balance, December 31, 2018 | $ (15,071) |
Unrealized investment gains (losses) during the period | 76,924 |
Unrealized investment gains (losses) relating to: | |
DAC and DSI | (18,799) |
Deferred income tax benefit (expense) | (12,205) |
Balance, March 31, 2019 | 30,849 |
Change in net unrealized investment gains (losses) | $ 45,920 |
Investments (Invested Assets on
Investments (Invested Assets on Deposit, Held In Trust and Pledged as Collateral) (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Investments, Debt and Equity Securities [Abstract] | ||
Invested assets on deposit (regulatory deposits) | $ 1,530 | $ 1,482 |
Invested assets pledged as collateral (1) | 8,652 | 158 |
Total invested assets on deposit and pledged as collateral (2) | $ 10,182 | $ 1,640 |
Investments (Variable Interest
Investments (Variable Interest Entities) (Details) - Fixed maturity securities - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Variable Interest Entity [Line Items] | ||
Carrying Amount | $ 489,002 | $ 409,699 |
Maximum Exposure to Loss | $ 480,919 | $ 409,699 |
Investments (Net Investment Inc
Investments (Net Investment Income) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Net Investment Income [Line Items] | ||
Less: Investment expenses | $ 1,056 | $ 879 |
Net investment income | 26,493 | 23,931 |
Fixed maturity securities | ||
Net Investment Income [Line Items] | ||
Gross Investment Income, Operating | 22,913 | 20,365 |
Mortgage loans | ||
Net Investment Income [Line Items] | ||
Gross Investment Income, Operating | 3,899 | 4,191 |
Cash, cash equivalents and short-term investments | ||
Net Investment Income [Line Items] | ||
Gross Investment Income, Operating | 387 | 158 |
Other | ||
Net Investment Income [Line Items] | ||
Gross Investment Income, Operating | 350 | 96 |
Subtotal | ||
Net Investment Income [Line Items] | ||
Gross Investment Income, Operating | $ 27,549 | $ 24,810 |
Investments (Components of Net
Investments (Components of Net Investment Gains (Losses)) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Marketable Securities, Gain (Loss) [Abstract] | ||
Fixed maturity securities | $ (468) | $ (2,839) |
Other net investment gains (losses): | ||
Mortgage loans | (69) | (82) |
Other | 85 | 566 |
Total net investment gains (losses) | $ (452) | $ (2,355) |
Investments (Sales or Disposals
Investments (Sales or Disposals of Fixed Maturity Securities) (Details) - Debt Securities [Member] - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Components of Sales or Disposals of Fixed Maturity and Equity Securities | ||
Proceeds | $ 55,477 | $ 53,561 |
Gross investment gains | 150 | 15 |
Gross investment losses | (618) | (2,854) |
Total OTTI losses recognized in earnings: | ||
Net investment gains (losses) | $ (468) | $ (2,839) |
Investments (Fixed Maturity S_2
Investments (Fixed Maturity Securities AFS - Narrative) (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Summary of Certain Fixed Maturity Securities [Abstract] | ||
Debt Securities, Available-for-sale | $ 2,664,864 | $ 2,433,633 |
Non-Income Producing Debt Securities | ||
Summary of Certain Fixed Maturity Securities [Abstract] | ||
Debt Securities, Available-for-sale | 0 | 0 |
Gross Unrealized Gain Loss | $ 0 | $ 0 |
Investments (Continuous Gross_2
Investments (Continuous Gross Unrealized Losses for Fixed Maturity Securities AFS by Sector - Narrative) (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($)Contracts | |
Debt Securities, Available-for-sale [Line Items] | |
Fixed maturity securities available-for-sale with gross unrealized loss of equal to or greater than stated percentage | 20.00% |
Fixed maturity securities | |
Debt Securities, Available-for-sale [Line Items] | |
Change in Gross Unrealized Termporary Loss | $ (41,100) |
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss | 23,100 |
20% or more | Six months or greater | Fixed maturity securities | |
Debt Securities, Available-for-sale [Line Items] | |
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss | $ 940 |
Number of Securities | Contracts | 1 |
Investments (Mortgage Loans - N
Investments (Mortgage Loans - Narrative) (Details) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2019Contracts | Mar. 31, 2019Contracts | Mar. 31, 2018Contracts | Dec. 31, 2018Contracts | |
Financing Receivable, Recorded Investment, Aging [Abstract] | ||||
Percentage of mortgage loans classified as performing | 100.00% | 100.00% | 100.00% | |
Number of mortgage loans modified in troubled debt restructuring | 0 | 0 | 0 | 0 |
Commercial | ||||
Financing Receivable, Recorded Investment, Aging [Abstract] | ||||
Number of loans past due | 0 | 0 | 0 | |
Recorded investment of loans in nonaccrual status | 0 | 0 | 0 | |
Agricultural | ||||
Financing Receivable, Recorded Investment, Aging [Abstract] | ||||
Number of loans past due | 0 | 0 | 0 | |
Recorded investment of loans in nonaccrual status | 0 | 0 | 0 |
Investments (Cash Equivalents -
Investments (Cash Equivalents - Narrative) (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Investments, Debt and Equity Securities [Abstract] | ||
Cash equivalents | $ 0 | $ 89.9 |
Investments (Concentrations of
Investments (Concentrations of Credit Risk - Narrative) (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Investments, Debt and Equity Securities [Abstract] | ||
Investments in any counterparty that were greater than 10% of equity | $ 0 | $ 0 |
Securities holdings exposure in single issuer greater than stated percentage of Company's equity | 10.00% |
Investments (Variable Interes_2
Investments (Variable Interest Entities - Narrative) (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Variable Interest Entity, Consolidated, Carrying Amount, Assets and Liabilities, Net [Abstract] | |
Variable interest, consoldidated carrying amount assets and liabilities net | $ 0 |
Investments (Net Investment I_2
Investments (Net Investment Income & Net Investment Gains (Losses) - Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Investments, Debt and Equity Securities [Abstract] | ||
Gains (losses) from foreign currency transactions | $ 10 | $ 414 |
Investments (Related Party Inve
Investments (Related Party Investment Transactions - Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Related Party Transaction [Line Items] | ||
Related party investment administrative services | $ 15,100 | $ 9,700 |
Metlife Investment Advisors, LLC | ||
Related Party Transaction [Line Items] | ||
Related party investment administrative services | $ 0 | $ 766 |
Derivatives (Primary Risks Mana
Derivatives (Primary Risks Managed by Derivatives) (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Derivatives, Fair Value [Line Items] | ||
Gross Notional Amount | $ 3,208,878 | $ 3,065,158 |
Derivative Asset, Fair Value, Gross Asset | 48,013 | 28,717 |
Derivative Liability, Fair Value, Gross Liability | 10,195 | 427 |
Derivatives Designated as Hedging Instruments: | Cash flow hedges: | Foreign currency swaps | ||
Derivatives, Fair Value [Line Items] | ||
Gross Notional Amount | 83,513 | 82,704 |
Derivative Asset, Fair Value, Gross Asset | 4,563 | 5,649 |
Derivative Liability, Fair Value, Gross Liability | 130 | 187 |
Derivatives Not Designated or Not Qualifying as Hedging Instruments: | ||
Derivatives, Fair Value [Line Items] | ||
Gross Notional Amount | 3,125,365 | 2,982,454 |
Derivative Asset, Fair Value, Gross Asset | 43,450 | 23,068 |
Derivative Liability, Fair Value, Gross Liability | 10,065 | 240 |
Derivatives Not Designated or Not Qualifying as Hedging Instruments: | Interest rate caps | ||
Derivatives, Fair Value [Line Items] | ||
Gross Notional Amount | 800,000 | 800,000 |
Derivative Asset, Fair Value, Gross Asset | 4,772 | 9,284 |
Derivative Liability, Fair Value, Gross Liability | 0 | 0 |
Derivatives Not Designated or Not Qualifying as Hedging Instruments: | Equity index options | ||
Derivatives, Fair Value [Line Items] | ||
Gross Notional Amount | 2,307,473 | 2,154,321 |
Derivative Asset, Fair Value, Gross Asset | 35,487 | 10,389 |
Derivative Liability, Fair Value, Gross Liability | 9,969 | 96 |
Derivatives Not Designated or Not Qualifying as Hedging Instruments: | Foreign currency swaps | ||
Derivatives, Fair Value [Line Items] | ||
Gross Notional Amount | 17,892 | 28,133 |
Derivative Asset, Fair Value, Gross Asset | 3,191 | 3,395 |
Derivative Liability, Fair Value, Gross Liability | $ 96 | $ 144 |
Derivatives Derivatives (NQ, CF
Derivatives Derivatives (NQ, CF, FV) Details (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Derivative Instruments, Gain (Loss) [Line items] | ||
Net Derivative Gains (Losses) Recognized for Hedged Items (2), (4) | $ 88 | $ 152 |
Amount of Gains (Losses) deferred in AOCI | (1,035) | (2,674) |
Derivatives Not Designated or Not Qualifying as Hedging Instruments: | ||
Derivative Instruments, Gain (Loss) [Line items] | ||
Net Derivative Gains (Losses) Recognized for Hedged Items (2), (4) | 88 | 152 |
Amount of Gains (Losses) deferred in AOCI | 0 | 0 |
Cash flow hedges (3): | ||
Derivative Instruments, Gain (Loss) [Line items] | ||
Net Derivative Gains (Losses) Recognized for Hedged Items (2), (4) | 0 | 0 |
Amount of Gains (Losses) deferred in AOCI | (1,035) | (2,674) |
Net Derivative Gains (Losses) Recognized for Derivatives (1), (4) | ||
Derivative Instruments, Gain (Loss) [Line items] | ||
Derivative, Gain (Losses) on Derivative, Net | (3,333) | (44,414) |
Net Derivative Gains (Losses) Recognized for Derivatives (1), (4) | Derivatives Not Designated or Not Qualifying as Hedging Instruments: | ||
Derivative Instruments, Gain (Loss) [Line items] | ||
Derivative, Gain (Losses) on Derivative, Net | (3,333) | (44,420) |
Net Derivative Gains (Losses) Recognized for Derivatives (1), (4) | Cash flow hedges (3): | ||
Derivative Instruments, Gain (Loss) [Line items] | ||
Derivative, Gain (Losses) on Derivative, Net | 0 | 6 |
Net Investment Income (5) | ||
Derivative Instruments, Gain (Loss) [Line items] | ||
Derivative, Gain (Losses) on Derivative, Net | 270 | 186 |
Net Investment Income (5) | Derivatives Not Designated or Not Qualifying as Hedging Instruments: | ||
Derivative Instruments, Gain (Loss) [Line items] | ||
Derivative, Gain (Losses) on Derivative, Net | 0 | 0 |
Net Investment Income (5) | Cash flow hedges (3): | ||
Derivative Instruments, Gain (Loss) [Line items] | ||
Derivative, Gain (Losses) on Derivative, Net | 270 | 186 |
Interest rate derivatives | Derivatives Not Designated or Not Qualifying as Hedging Instruments: | ||
Derivative Instruments, Gain (Loss) [Line items] | ||
Net Derivative Gains (Losses) Recognized for Hedged Items (2), (4) | 0 | 0 |
Amount of Gains (Losses) deferred in AOCI | 0 | 0 |
Interest rate derivatives | Net Derivative Gains (Losses) Recognized for Derivatives (1), (4) | Derivatives Not Designated or Not Qualifying as Hedging Instruments: | ||
Derivative Instruments, Gain (Loss) [Line items] | ||
Derivative, Gain (Losses) on Derivative, Net | (4,512) | (4,002) |
Interest rate derivatives | Net Investment Income (5) | Derivatives Not Designated or Not Qualifying as Hedging Instruments: | ||
Derivative Instruments, Gain (Loss) [Line items] | ||
Derivative, Gain (Losses) on Derivative, Net | 0 | 0 |
Foreign currency exchange rate derivatives | Derivatives Not Designated or Not Qualifying as Hedging Instruments: | ||
Derivative Instruments, Gain (Loss) [Line items] | ||
Net Derivative Gains (Losses) Recognized for Hedged Items (2), (4) | 88 | 152 |
Amount of Gains (Losses) deferred in AOCI | 0 | 0 |
Foreign currency exchange rate derivatives | Cash flow hedges (3): | ||
Derivative Instruments, Gain (Loss) [Line items] | ||
Net Derivative Gains (Losses) Recognized for Hedged Items (2), (4) | 0 | 0 |
Amount of Gains (Losses) deferred in AOCI | (1,035) | (2,674) |
Foreign currency exchange rate derivatives | Net Derivative Gains (Losses) Recognized for Derivatives (1), (4) | Derivatives Not Designated or Not Qualifying as Hedging Instruments: | ||
Derivative Instruments, Gain (Loss) [Line items] | ||
Derivative, Gain (Losses) on Derivative, Net | (36) | (972) |
Foreign currency exchange rate derivatives | Net Derivative Gains (Losses) Recognized for Derivatives (1), (4) | Cash flow hedges (3): | ||
Derivative Instruments, Gain (Loss) [Line items] | ||
Derivative, Gain (Losses) on Derivative, Net | 0 | 6 |
Foreign currency exchange rate derivatives | Net Investment Income (5) | Derivatives Not Designated or Not Qualifying as Hedging Instruments: | ||
Derivative Instruments, Gain (Loss) [Line items] | ||
Derivative, Gain (Losses) on Derivative, Net | 0 | 0 |
Foreign currency exchange rate derivatives | Net Investment Income (5) | Cash flow hedges (3): | ||
Derivative Instruments, Gain (Loss) [Line items] | ||
Derivative, Gain (Losses) on Derivative, Net | 270 | 186 |
Equity derivatives | Derivatives Not Designated or Not Qualifying as Hedging Instruments: | ||
Derivative Instruments, Gain (Loss) [Line items] | ||
Net Derivative Gains (Losses) Recognized for Hedged Items (2), (4) | 0 | 0 |
Amount of Gains (Losses) deferred in AOCI | 0 | 0 |
Equity derivatives | Net Derivative Gains (Losses) Recognized for Derivatives (1), (4) | Derivatives Not Designated or Not Qualifying as Hedging Instruments: | ||
Derivative Instruments, Gain (Loss) [Line items] | ||
Derivative, Gain (Losses) on Derivative, Net | 36,116 | (8,736) |
Equity derivatives | Net Investment Income (5) | Derivatives Not Designated or Not Qualifying as Hedging Instruments: | ||
Derivative Instruments, Gain (Loss) [Line items] | ||
Derivative, Gain (Losses) on Derivative, Net | 0 | 0 |
Embedded derivatives | Derivatives Not Designated or Not Qualifying as Hedging Instruments: | ||
Derivative Instruments, Gain (Loss) [Line items] | ||
Net Derivative Gains (Losses) Recognized for Hedged Items (2), (4) | 0 | 0 |
Amount of Gains (Losses) deferred in AOCI | 0 | 0 |
Embedded derivatives | Net Derivative Gains (Losses) Recognized for Derivatives (1), (4) | Derivatives Not Designated or Not Qualifying as Hedging Instruments: | ||
Derivative Instruments, Gain (Loss) [Line items] | ||
Derivative, Gain (Losses) on Derivative, Net | (34,901) | (30,710) |
Embedded derivatives | Net Investment Income (5) | Derivatives Not Designated or Not Qualifying as Hedging Instruments: | ||
Derivative Instruments, Gain (Loss) [Line items] | ||
Derivative, Gain (Losses) on Derivative, Net | $ 0 | $ 0 |
Derivatives (Derivatives Subjec
Derivatives (Derivatives Subject to a Master Netting Arrangement or a Similar Arrangement) (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Offsetting Assets [Line Items] | ||
Derivative Asset, Fair Value, Gross Asset Excluding Accruals | $ 48,331 | $ 29,006 |
Derivative Liability, Fair Value, Gross Liability Excluding Accruals | 10,160 | 411 |
Amounts offset in the consoilidated balance sheets, Assets | 0 | 0 |
Amounts offset in the consoilidated balance sheets, Liabilities | 0 | 0 |
Estimated fair value of derivative assets presented in the consolidated balance sheets | 48,331 | 29,006 |
Estimated fair value of derivative liabilities presented in the consolidated balance sheets | 10,160 | 411 |
Net amount of derivative assets after application of master netting agreements and cash collateral | 7,396 | 3,232 |
Net amount of derivative liabilities after application of master netting agreements and cash collateral | 0 | 0 |
OTC-bilateral (1) | ||
Offsetting Assets [Line Items] | ||
Derivative Asset, Fair Value, Gross Asset Excluding Accruals | 48,331 | 29,006 |
Derivative Liability, Fair Value, Gross Liability Excluding Accruals | 10,160 | 411 |
Gross estimated fair value of derivative assets | (3,825) | (365) |
Gross estimated fair value of derivative liabilities | (3,825) | (365) |
Cash collateral on derivative assets | (34,235) | (23,197) |
Cash collateral on derivative liabilities | 0 | 0 |
Securities collateral on derivative assets | (2,875) | (2,212) |
Securities collateral on derivative liabilities | $ (6,335) | $ (46) |
Derivatives (Embedded Derivativ
Derivatives (Embedded Derivatives) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Embedded Derivative, Fair Value of Embedded Derivative, Net [Abstract] | |||
Embedded derivatives within liability host contracts | $ 33,367 | $ (13,194) | |
Premiums, reinsurance and other receivables | Ceded guaranteed minimum benefits | |||
Embedded Derivative, Fair Value of Embedded Derivative, Net [Abstract] | |||
Embedded derivatives within asset host contracts | 295,107 | 298,112 | |
Policyholder account balances | Direct guaranteed minimum benefits | |||
Embedded Derivative, Fair Value of Embedded Derivative, Net [Abstract] | |||
Embedded derivatives within liability host contracts | (33,520) | (18,811) | |
Policyholder account balances | Fixed Annuity | |||
Embedded Derivative, Fair Value of Embedded Derivative, Net [Abstract] | |||
Embedded derivatives within liability host contracts | 66,887 | $ 5,617 | |
Net Derivative Gain (Loss) | |||
Derivatives, Fair Value [Line Items] | |||
Embedded Derivative, Gain (Loss) on Embedded Derivative, Net | $ (34,901) | $ (30,710) |
Derivatives (NQ, FV, CF - Narra
Derivatives (NQ, FV, CF - Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||
Gain (Loss) on Derivative Instruments, Net, Pretax | $ (3,245) | $ (44,262) | |
Net investment gains (losses) | (452) | $ (2,355) | |
Accumulated Other Comprehensive Income (Loss), Cumulative Changes in Net Gain (Loss) from Cash Flow Hedges, Effect Net of Tax | $ 4,800 | $ 5,800 |
Derivatives (Credit Risk on Fre
Derivatives (Credit Risk on Freestanding Derivatives - Narrative) (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Credit Derivatives [Line Items] | ||
Derivative Asset, Fair Value, Gross Asset | $ 48,013 | $ 28,717 |
Derivative Liability, Fair Value, Gross Liability | 10,195 | 427 |
Derivative, Collateral, Obligation to Return Cash | 2,600 | 384 |
Customer Securities for which Entity has Right to Sell or Repledge, Fair Value of Securities Sold or Repledged | 0 | |
Estimated Fair Value of Derivatives in Net Liability Position | 6,300 | 46 |
Accrued Liabilities | ||
Credit Derivatives [Line Items] | ||
Derivative Asset, Fair Value, Gross Asset | 318 | 289 |
Derivative Liability, Fair Value, Gross Liability | 0 | (16) |
Fixed Maturities | ||
Credit Derivatives [Line Items] | ||
Collateral Already Posted, Aggregate Fair Value | 8,700 | 158 |
Over the Counter | ||
Credit Derivatives [Line Items] | ||
Derivative, Collateral, Obligation to Return Securities | 3,900 | 78 |
Derivative, Collateral, Right to Reclaim Securities | $ 2,300 | $ 112 |
Derivatives (Embedded Derivat_2
Derivatives (Embedded Derivatives - Narrative) (Details) - Nonperformance Risk - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Direct And Assumed Guaranteed Minimum Benefit | ||
Embedded Derivative [Line Items] | ||
Embedded Derivative, Gain (Loss) on Embedded Derivative, Net | $ (3,400) | $ (1,100) |
Ceded guaranteed minimum benefits | ||
Embedded Derivative [Line Items] | ||
Embedded Derivative, Gain (Loss) on Embedded Derivative, Net | $ 19,800 | $ (600) |
Fair Value (Recurring Fair Valu
Fair Value (Recurring Fair Value Measurements) (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Assets [Abstract] | ||
Debt Securities, Available-for-sale | $ 2,664,864 | $ 2,433,633 |
Derivative assets | 48,013 | 28,717 |
Separate account assets | 4,559,757 | 4,268,423 |
Liabilities [Abstract] | ||
Derivative liabilities | 10,195 | 427 |
Embedded derivatives within liability host contracts | 33,367 | (13,194) |
Recurring | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 2,664,864 | 2,433,633 |
Derivative assets | 48,013 | 28,717 |
Embedded derivatives within asset host contracts | 295,107 | 298,112 |
Separate account assets | 4,559,757 | 4,268,423 |
Total assets | 7,567,741 | 7,028,885 |
Liabilities [Abstract] | ||
Derivative liabilities | 10,195 | 427 |
Embedded derivatives within liability host contracts | 33,367 | (13,194) |
Total liabilities | 43,562 | (12,767) |
Recurring | Interest rate derivatives | ||
Assets [Abstract] | ||
Derivative assets | 4,772 | 9,284 |
Recurring | Foreign currency exchange rate | ||
Assets [Abstract] | ||
Derivative assets | 7,754 | 9,044 |
Liabilities [Abstract] | ||
Derivative liabilities | 226 | 331 |
Recurring | Equity derivatives | ||
Assets [Abstract] | ||
Derivative assets | 35,487 | 10,389 |
Liabilities [Abstract] | ||
Derivative liabilities | 9,969 | 96 |
Recurring | U.S. corporate | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 930,631 | 873,044 |
Recurring | U.S. government and agency | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 515,356 | 507,519 |
Recurring | Foreign corporate | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 373,956 | 352,364 |
Recurring | CMBS | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 342,441 | 322,851 |
Recurring | RMBS | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 320,360 | 202,588 |
Recurring | ABS | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 83,391 | 78,831 |
Recurring | State and political subdivision | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 72,093 | 69,825 |
Recurring | Foreign government | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 26,636 | 26,611 |
Recurring | Level 1 | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 391,637 | 389,491 |
Derivative assets | 0 | 0 |
Embedded derivatives within asset host contracts | 0 | 0 |
Separate account assets | 0 | 0 |
Total assets | 391,637 | 389,491 |
Liabilities [Abstract] | ||
Derivative liabilities | 0 | 0 |
Embedded derivatives within liability host contracts | 0 | 0 |
Total liabilities | 0 | 0 |
Recurring | Level 1 | Interest rate derivatives | ||
Assets [Abstract] | ||
Derivative assets | 0 | 0 |
Recurring | Level 1 | Foreign currency exchange rate | ||
Assets [Abstract] | ||
Derivative assets | 0 | 0 |
Liabilities [Abstract] | ||
Derivative liabilities | 0 | 0 |
Recurring | Level 1 | Equity derivatives | ||
Assets [Abstract] | ||
Derivative assets | 0 | 0 |
Liabilities [Abstract] | ||
Derivative liabilities | 0 | 0 |
Recurring | Level 1 | U.S. corporate | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 0 | 0 |
Recurring | Level 1 | U.S. government and agency | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 391,637 | 389,491 |
Recurring | Level 1 | Foreign corporate | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 0 | 0 |
Recurring | Level 1 | CMBS | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 0 | 0 |
Recurring | Level 1 | RMBS | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 0 | 0 |
Recurring | Level 1 | ABS | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 0 | 0 |
Recurring | Level 1 | State and political subdivision | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 0 | 0 |
Recurring | Level 1 | Foreign government | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 0 | 0 |
Recurring | Level 2 | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 2,249,325 | 2,026,101 |
Derivative assets | 48,013 | 28,245 |
Embedded derivatives within asset host contracts | 0 | 0 |
Separate account assets | 4,559,757 | 4,268,423 |
Total assets | 6,857,095 | 6,322,769 |
Liabilities [Abstract] | ||
Derivative liabilities | 10,195 | 427 |
Embedded derivatives within liability host contracts | 0 | 0 |
Total liabilities | 10,195 | 427 |
Recurring | Level 2 | Interest rate derivatives | ||
Assets [Abstract] | ||
Derivative assets | 4,772 | 9,284 |
Recurring | Level 2 | Foreign currency exchange rate | ||
Assets [Abstract] | ||
Derivative assets | 7,754 | 8,572 |
Liabilities [Abstract] | ||
Derivative liabilities | 226 | 331 |
Recurring | Level 2 | Equity derivatives | ||
Assets [Abstract] | ||
Derivative assets | 35,487 | 10,389 |
Liabilities [Abstract] | ||
Derivative liabilities | 9,969 | 96 |
Recurring | Level 2 | U.S. corporate | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 926,863 | 869,498 |
Recurring | Level 2 | U.S. government and agency | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 123,719 | 118,028 |
Recurring | Level 2 | Foreign corporate | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 363,999 | 342,600 |
Recurring | Level 2 | CMBS | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 337,733 | 318,120 |
Recurring | Level 2 | RMBS | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 320,360 | 202,588 |
Recurring | Level 2 | ABS | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 77,922 | 78,831 |
Recurring | Level 2 | State and political subdivision | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 72,093 | 69,825 |
Recurring | Level 2 | Foreign government | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 26,636 | 26,611 |
Recurring | Level 3 | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 23,902 | 18,041 |
Derivative assets | 0 | 472 |
Embedded derivatives within asset host contracts | 295,107 | 298,112 |
Separate account assets | 0 | 0 |
Total assets | 319,009 | 316,625 |
Liabilities [Abstract] | ||
Derivative liabilities | 0 | 0 |
Embedded derivatives within liability host contracts | 33,367 | (13,194) |
Total liabilities | 33,367 | (13,194) |
Recurring | Level 3 | Interest rate derivatives | ||
Assets [Abstract] | ||
Derivative assets | 0 | 0 |
Recurring | Level 3 | Foreign currency exchange rate | ||
Assets [Abstract] | ||
Derivative assets | 0 | 472 |
Liabilities [Abstract] | ||
Derivative liabilities | 0 | 0 |
Recurring | Level 3 | Equity derivatives | ||
Assets [Abstract] | ||
Derivative assets | 0 | 0 |
Liabilities [Abstract] | ||
Derivative liabilities | 0 | 0 |
Recurring | Level 3 | U.S. corporate | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 3,768 | 3,546 |
Recurring | Level 3 | U.S. government and agency | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 0 | 0 |
Recurring | Level 3 | Foreign corporate | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 9,957 | 9,764 |
Recurring | Level 3 | CMBS | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 4,708 | 4,731 |
Recurring | Level 3 | RMBS | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 0 | 0 |
Recurring | Level 3 | ABS | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 5,469 | 0 |
Recurring | Level 3 | State and political subdivision | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | 0 | 0 |
Recurring | Level 3 | Foreign government | ||
Assets [Abstract] | ||
Debt Securities, Available-for-sale | $ 0 | $ 0 |
Fair Value (Assets and Liabilit
Fair Value (Assets and Liabilities Measured - Quantitative Information) (Details) - Level 3 | Mar. 31, 2019 | Dec. 31, 2018 |
Measurement Input, Mortality Rate | Minimum | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Embedded Derivative Liability, Measurement Input | 0.0002 | 0.0002 |
Measurement Input, Mortality Rate | Maximum | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Embedded Derivative Liability, Measurement Input | 0.1131 | 0.1100 |
Measurement Input, Lapse Rate | Minimum | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Embedded Derivative Liability, Measurement Input | 0.0025 | 0.0025 |
Measurement Input, Lapse Rate | Maximum | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Embedded Derivative Liability, Measurement Input | 0.1600 | 0.1600 |
Measurement Input, Utilization Rate | Minimum | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Embedded Derivative Liability, Measurement Input | 0 | 0 |
Measurement Input, Utilization Rate | Maximum | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Embedded Derivative Liability, Measurement Input | 0.2500 | 0.2500 |
Measurement Input, Withdrawal Rate | Minimum | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Embedded Derivative Liability, Measurement Input | 0.0025 | 0.0025 |
Measurement Input, Withdrawal Rate | Maximum | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Embedded Derivative Liability, Measurement Input | 0.1000 | 0.1000 |
Measurement Input, Long Term Equity Volatilities | Minimum | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Embedded Derivative Liability, Measurement Input | 0.1650 | 0.1650 |
Measurement Input, Long Term Equity Volatilities | Maximum | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Embedded Derivative Liability, Measurement Input | 0.2200 | 0.2200 |
Measurement Input, Entity Credit Risk | Minimum | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Embedded Derivative Liability, Measurement Input | 0.0131 | 0.0191 |
Measurement Input, Entity Credit Risk | Maximum | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Embedded Derivative Liability, Measurement Input | 0.0245 | 0.0266 |
Fair Value (Unobservable Input
Fair Value (Unobservable Input Reconciliation) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
NetDerivatives [Member] | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||
Balance, beginning of period | $ 472 | $ 0 |
Total realized/unrealized gains (losses) included in net income (loss) (4) (5) | 0 | 0 |
Total realized/unrealized gains (losses) included in AOCI | 0 | 0 |
Purchases (6) | 0 | 0 |
Sales (6) | 0 | 0 |
Issuances (6) | 0 | 0 |
Settlements (6) | 0 | 0 |
Transfers into Level 3 (7) | 0 | 0 |
Transfers out of Level 3 (7) | (472) | 0 |
Balance, end of period | 0 | 0 |
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at end of period | 0 | 0 |
Net Embedded Derivatives (3) | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||
Balance, beginning of period | 311,306 | 347,633 |
Total realized/unrealized gains (losses) included in net income (loss) (4) (5) | (34,901) | (30,710) |
Total realized/unrealized gains (losses) included in AOCI | 0 | 0 |
Purchases (6) | 0 | 0 |
Sales (6) | 0 | 0 |
Issuances (6) | 0 | 0 |
Settlements (6) | (14,665) | (5,912) |
Transfers into Level 3 (7) | 0 | 0 |
Transfers out of Level 3 (7) | 0 | 0 |
Balance, end of period | 261,740 | 311,011 |
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at end of period | 13,080 | (33,063) |
Corporate (1) | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance, beginning of period | 13,310 | 95,950 |
Total realized/unrealized gains (losses) included in net income (loss) (4) (5) | 2 | 1 |
Total realized/unrealized gains (losses) included in AOCI | 403 | (772) |
Purchases (6) | 0 | 783 |
Sales (6) | (48) | (716) |
Issuances (6) | 0 | 0 |
Settlements (6) | 0 | 0 |
Transfers into Level 3 (7) | 263 | 0 |
Transfers out of Level 3 (7) | (205) | (3,166) |
Balance, end of period | 13,725 | 92,080 |
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at end of period | 4 | 1 |
Structured Securities | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance, beginning of period | 4,731 | 19,557 |
Total realized/unrealized gains (losses) included in net income (loss) (4) (5) | (32) | 109 |
Total realized/unrealized gains (losses) included in AOCI | 78 | 119 |
Purchases (6) | 0 | 1,955 |
Sales (6) | (29) | (403) |
Issuances (6) | 0 | 0 |
Settlements (6) | 0 | 0 |
Transfers into Level 3 (7) | 5,429 | 0 |
Transfers out of Level 3 (7) | 0 | 0 |
Balance, end of period | 10,177 | 21,337 |
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at end of period | $ (32) | $ 109 |
Fair Value (Financial Instrumen
Fair Value (Financial Instruments Carried at Other Than Fair Value) (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Carrying Value | ||
Assets | ||
Mortgage loans | $ 467,193 | $ 448,105 |
Premiums, reinsurance and other receivables | 18,415 | 20,001 |
Liabilities | ||
Policyholder account balances | 1,014,394 | 1,056,419 |
Other liabilities | 81,790 | 10,399 |
Estimate of Fair Value Measurement | ||
Assets | ||
Mortgage loans | 472,882 | 447,510 |
Premiums, reinsurance and other receivables | 17,076 | 17,826 |
Liabilities | ||
Policyholder account balances | 938,827 | 949,916 |
Other liabilities | 81,790 | 10,399 |
Estimate of Fair Value Measurement | Level 1 | ||
Assets | ||
Mortgage loans | 0 | 0 |
Premiums, reinsurance and other receivables | 0 | 0 |
Liabilities | ||
Policyholder account balances | 0 | 0 |
Other liabilities | 0 | 0 |
Estimate of Fair Value Measurement | Level 2 | ||
Assets | ||
Mortgage loans | 0 | 0 |
Premiums, reinsurance and other receivables | 4,055 | 2,314 |
Liabilities | ||
Policyholder account balances | 0 | 0 |
Other liabilities | 81,790 | 10,399 |
Estimate of Fair Value Measurement | Level 3 | ||
Assets | ||
Mortgage loans | 472,882 | 447,510 |
Premiums, reinsurance and other receivables | 13,021 | 15,512 |
Liabilities | ||
Policyholder account balances | 938,827 | 949,916 |
Other liabilities | $ 0 | $ 0 |
Equity (Capital Transactions) (
Equity (Capital Transactions) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Equity [Abstract] | ||
Capital contribution | $ 75,000 | $ 0 |
Equity (Components of Accumulat
Equity (Components of Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Balance, beginning of period | $ (15,071) | $ 29,628 |
OCI before reclassifications | 57,654 | (41,173) |
Deferred income tax benefit (expense) | (12,108) | 8,645 |
AOCI before reclassifications, net of income tax | 30,475 | (2,900) |
Amounts reclassified from AOCI | 471 | 2,833 |
Deferred income tax benefit (expense) | (97) | (595) |
Amounts reclassified from AOCI, net of income tax | 374 | 2,238 |
Balance, end of period | 30,849 | (662) |
Unrealized Investment Gains (Losses), Net of Related Offsets (1) | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Balance, beginning of period | (20,503) | 29,323 |
OCI before reclassifications | 58,689 | (38,499) |
Deferred income tax benefit (expense) | (12,325) | 8,083 |
AOCI before reclassifications, net of income tax | 25,861 | (1,093) |
Amounts reclassified from AOCI | 471 | 2,839 |
Deferred income tax benefit (expense) | (97) | (596) |
Amounts reclassified from AOCI, net of income tax | 374 | 2,243 |
Balance, end of period | 26,235 | 1,150 |
Unrealized Gains (Losses) on Derivatives | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Balance, beginning of period | 5,432 | 305 |
OCI before reclassifications | (1,035) | (2,674) |
Deferred income tax benefit (expense) | 217 | 562 |
AOCI before reclassifications, net of income tax | 4,614 | (1,807) |
Amounts reclassified from AOCI | 0 | (6) |
Deferred income tax benefit (expense) | 0 | 1 |
Amounts reclassified from AOCI, net of income tax | 0 | (5) |
Balance, end of period | $ 4,614 | $ (1,812) |
Equity (Reclassifications Out o
Equity (Reclassifications Out of Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Gain (Loss) on Investments | $ (452) | $ (2,355) |
Net derivative gains (losses) | (3,245) | (44,262) |
Net unrealized investment gains (losses), before income tax | (2,755) | (19,046) |
Income tax (expense) benefit | 1,244 | 4,676 |
Net income (loss) | (1,511) | (14,370) |
Reclassification out of Accumulated Other Comprehensive Income | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Net income (loss) | (374) | (2,238) |
Reclassification out of Accumulated Other Comprehensive Income | Net unrealized investment gains (losses): | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Gain (Loss) on Investments | (465) | (2,839) |
Net derivative gains (losses) | (6) | 0 |
Net unrealized investment gains (losses), before income tax | (471) | (2,839) |
Income tax (expense) benefit | 97 | 596 |
Net income (loss) | (374) | (2,243) |
Reclassification out of Accumulated Other Comprehensive Income | Unrealized gains (losses) on derivatives - cash flow hedges: | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Net unrealized investment gains (losses), before income tax | 0 | 6 |
Income tax (expense) benefit | 0 | (1) |
Net income (loss) | 0 | 5 |
Reclassification out of Accumulated Other Comprehensive Income | Unrealized gains (losses) on derivatives - cash flow hedges: | Foreign currency swaps | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Net derivative gains (losses) | $ 0 | $ 6 |
Other Expenses (Other Expenses)
Other Expenses (Other Expenses) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Other Income and Expenses [Abstract] | ||
Compensation | $ 4,667 | $ 3,510 |
Contracted services and other labor costs | 2,596 | 1,837 |
Transition services agreements | 3,784 | 2,947 |
Establishment costs | 1,482 | 0 |
Premium and other taxes, licenses and fees | 704 | 1,043 |
Volume related costs, excluding compensation, net of DAC capitalization | 3,998 | 5,264 |
Other | 1,659 | 1,126 |
Total other expenses | $ 18,890 | $ 15,727 |
Other Revenues and Other Expe_3
Other Revenues and Other Expenses Other Revenues (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Distribution Service [Member] | ||
Revenue from Contract with Customer, Including Assessed Tax | $ 3.1 | $ 3.5 |
Contingencies, Commitments an_2
Contingencies, Commitments and Guarantees (Commitments and Guarantees - Narrative) (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Liabilities for indemnities, guarantees and commitments | $ 0 | $ 0 |
Mortgage Loan Commitments | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Liability | 21,800,000 | 7,600,000 |
Commitments to Fund Private Corporate Bond Investments | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Liability | $ 3,500,000 | $ 11,400,000 |
Related Party Transactions (Eff
Related Party Transactions (Effects of Affiliated Reinsurance on Statements of Operations) (Details) - Affiliated Entity - Ceded - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Premiums | ||
Reinsurance ceded | $ (10,210) | $ (8,112) |
Universal life and investment-type product policy fees | ||
Reinsurance ceded | (803) | (1,043) |
Other revenues | ||
Reinsurance ceded | (23,508) | (15,936) |
Policyholder benefits and claims | ||
Reinsurance ceded | $ (8,213) | $ (24,732) |
Related Party Transactions (E_2
Related Party Transactions (Effects of Affiliated Reinsurance on Balance Sheets) (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Assets: | ||
Premiums, reinsurance and other receivables | $ 574,277 | $ 580,480 |
Liabilities: | ||
Other liabilities | 538,759 | 471,490 |
Ceded | Affiliated Entity | ||
Assets: | ||
Premiums, reinsurance and other receivables | 522,891 | 534,487 |
Liabilities: | ||
Other liabilities | $ 420,568 | $ 429,656 |
Related Party Transactions (Rei
Related Party Transactions (Reinsurance Transactions - Narrative) (Details) - Affiliated Entity - Ceded guaranteed minimum benefits - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Embedded Derivative, Fair Value of Embedded Derivative Asset | $ 295.1 | $ 298.1 | |
Net derivatives gains (losses) | $ (3.5) | $ (45.8) |
Related Party Transactions Rela
Related Party Transactions Related Party Transactions (Shared Services and Overhead Allocations - Narrative) (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Related Party Transaction, Selling, General and Administrative Expenses from Transactions with Related Party | $ 15,100,000 | $ 9,700,000 | |
Insurance Commissions and Fees | 23,250,000 | 25,986,000 | |
Costs and Expenses, Related Party | (260,000) | 0 | |
All Services and Transactions Except Broker Dealer Activities [Member] | |||
Related Party Transaction, Due from (to) Related Party | (941,000) | $ 622,000 | |
Affiliated Entity | |||
Insurance Commissions and Fees | $ 2,900,000 | $ 3,200,000 |
Related Party Transactions Re_2
Related Party Transactions Related Party Transactions (Broker Dealer Transactions - Narrative) (Details) - Broker Dealer Activities [Member] - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Revenue from Related Parties | $ 2,800 | $ 3,200 | |
Related Party Transaction, Expenses from Transactions with Related Party | 14,700 | $ 13,100 | |
Due from Related Parties | $ 993 | $ 951 |