DOCUMENT_AND_ENTITY_INFORMATIO
DOCUMENT AND ENTITY INFORMATION (USD $) | 12 Months Ended | ||
In Billions, except Share data, unless otherwise specified | Dec. 31, 2014 | Feb. 11, 2015 | Jun. 30, 2014 |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | CNO Financial Group, Inc. | ||
Entity Central Index Key | 1224608 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Current Fiscal Year End Date | -19 | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Voluntary Filers | No | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Amendment Flag | FALSE | ||
Entity Public Float | $3.80 | ||
Entity Common Stock, Shares Outstanding | 200,194,506 |
CONSOLIDATED_BALANCE_SHEET
CONSOLIDATED BALANCE SHEET (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Investments: | ||
Fixed maturities, available for sale, at fair value (amortized cost: 2014 - $18,408.1; 2013 - $21,891.8) | $20,634.90 | $23,204.60 |
Equity securities at fair value (cost: 2014 - $400.5; 2013 - $206.7) | 419 | 223 |
Mortgage loans | 1,691.90 | 1,729.50 |
Policy loans | 106.9 | 277 |
Trading securities | 244.9 | 247.6 |
Investments held by variable interest entities | 1,367.10 | 1,046.70 |
Other invested assets | 443.6 | 423.3 |
Total investments | 24,908.30 | 27,151.70 |
Cash and cash equivalents - unrestricted | 611.6 | 699 |
Cash and cash equivalents held by variable interest entities | 68.3 | 104.3 |
Accrued investment income | 242.9 | 286.9 |
Present value of future profits | 489.4 | 679.3 |
Deferred acquisition costs | 770.6 | 968.1 |
Reinsurance receivables | 2,991.10 | 3,392.10 |
Income tax assets, net | 758.7 | 1,147.20 |
Assets held in separate accounts | 5.6 | 10.3 |
Other assets | 337.7 | 341.7 |
Total assets | 31,184.20 | 34,780.60 |
Liabilities for insurance products: | ||
Policyholder account balances | 10,707.20 | 12,776.40 |
Future policy benefits | 10,835.40 | 11,222.50 |
Liability for policy and contract claims | 468.7 | 566 |
Unearned and advanced premiums | 291.8 | 300.6 |
Liabilities related to separate accounts | 5.6 | 10.3 |
Other liabilities | 587.6 | 590.6 |
Payable to reinsurer | 0 | 590.3 |
Investment borrowings | 1,519.20 | 1,900 |
Borrowings related to variable interest entities | 1,286.10 | 1,012.30 |
Notes payable – direct corporate obligations | 794.4 | 856.4 |
Total liabilities | 26,496 | 29,825.40 |
Commitments and Contingencies | ||
Shareholders' equity: | ||
Common stock ($0.01 par value, 8,000,000,000 shares authorized, shares issued and outstanding: 2014 – 203,324,458; 2013 – 220,323,823) | 2 | 2.2 |
Additional paid-in capital | 3,732.40 | 4,092.80 |
Accumulated other comprehensive income | 825.3 | 731.8 |
Retained earnings | 128.5 | 128.4 |
Total shareholders' equity | 4,688.20 | 4,955.20 |
Total liabilities and shareholders' equity | $31,184.20 | $34,780.60 |
CONSOLIDATED_BALANCE_SHEET_Par
CONSOLIDATED BALANCE SHEET (Parentheticals) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, except Share data, unless otherwise specified | ||
Investments: | ||
Fixed maturities, available for sale, amortized cost | $18,408.10 | $21,891.80 |
Equity securities cost | $400.50 | $206.70 |
Shareholders' equity: | ||
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized (in shares) | 8,000,000,000 | 8,000,000,000 |
Common stock, shares issued (in shares) | 203,324,458 | 220,323,823 |
Common stock, shares outstanding (in shares) | 203,324,458 | 220,323,823 |
CONSOLIDATED_STATEMENT_OF_OPER
CONSOLIDATED STATEMENT OF OPERATIONS (USD $) | 12 Months Ended | ||
In Millions, except Share data in Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Revenues: | |||
Insurance policy income | $2,629.70 | $2,744.70 | $2,755.40 |
Net investment income (loss): | |||
General account assets | 1,301 | 1,405.80 | 1,398.50 |
Policyholder and reinsurer accounts and other special-purpose portfolios | 126.4 | 258.2 | 87.9 |
Realized investment gains (losses): | |||
Net realized investment gains, excluding impairment losses | 64 | 45 | 118.9 |
Other-than-temporary impairment losses: | |||
Total other-than-temporary impairment losses | -27.3 | -11.6 | -37.8 |
Portion of other-than-temporary impairment losses recognized in accumulated other comprehensive income | 0 | 0 | 0 |
Net impairment losses recognized | -27.3 | -11.6 | -37.8 |
Total realized gains | 36.7 | 33.4 | 81.1 |
Fee revenue and other income | 50.9 | 34 | 19.8 |
Total revenues | 4,144.70 | 4,476.10 | 4,342.70 |
Benefits and expenses: | |||
Insurance policy benefits | 2,586.20 | 2,839.70 | 2,763.90 |
Net loss on sale of subsidiary and (gain) loss on reinsurance transactions | 239.8 | 98.4 | 0 |
Interest expense | 92.8 | 105.3 | 114.6 |
Amortization | 247.4 | 296.3 | 289 |
Loss on extinguishment or modification of debt | 0.6 | 65.4 | 200.2 |
Other operating costs and expenses | 802.8 | 766.2 | 819.3 |
Total benefits and expenses | 3,969.60 | 4,171.30 | 4,187 |
Income before income taxes | 175.1 | 304.8 | 155.7 |
Income tax expense (benefit): | |||
Tax expense on period income | 159.2 | 128.3 | 106.2 |
Valuation allowance for deferred tax assets and other tax items | -35.5 | -301.5 | -171.5 |
Net income | $51.40 | $478 | $221 |
Basic: | |||
Weighted average shares outstanding (in shares) | 212,917 | 221,628 | 233,685 |
Net income (in dollars per share) | $0.24 | $2.16 | $0.95 |
Diluted: | |||
Weighted average shares outstanding (in shares) | 217,655 | 232,702 | 281,427 |
Net income (in dollars per share) | $0.24 | $2.06 | $0.83 |
CONSOLIDATED_STATEMENT_OF_COMP
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Statement of Comprehensive Income [Abstract] | |||
Net income (loss) | $51.40 | $478 | $221 |
Other comprehensive income, before tax: | |||
Unrealized gains (losses) for the period | 942.9 | -1,627.40 | 1,336.20 |
Amortization of present value of future profits and deferred acquisition costs | -113.5 | 175.2 | -107.1 |
Amount related to premium deficiencies assuming the net unrealized gains had been realized | -624.6 | 774.2 | -531 |
Reclassification adjustments: | |||
For net realized investment gains included in net income (loss) | -59 | -39.8 | -68.7 |
For amortization of the present value of future profits and deferred acquisition costs related to net realized investment gains included in net income (loss) | 1 | 1.6 | 6.5 |
Unrealized gains (losses) on investments | 146.8 | -716.2 | 635.9 |
Change related to deferred compensation plan | -1.4 | 0.8 | 0.4 |
Other comprehensive income (loss) before tax | 145.4 | -715.4 | 636.3 |
Income tax (expense) benefit related to items of accumulated other comprehensive income | -51.9 | 249.8 | -220.5 |
Other comprehensive income (loss), net of tax | 93.5 | -465.6 | 415.8 |
Comprehensive income (loss) | $144.90 | $12.40 | $636.80 |
CONSOLIDATED_STATEMENT_OF_SHAR
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (USD $) | Total | Common Stock Including Additional Paid in Capital [Member] | Accumulated other comprehensive income [Member] | Retained earnings (accumulated deficit) [Member] |
In Millions, unless otherwise specified | ||||
Balance, beginning of period at Dec. 31, 2011 | $4,613.80 | $4,364.30 | $781.60 | ($532.10) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 221 | 221 | ||
Change in unrealized appreciation (depreciation) of investments (net of applicable income tax expense (benefit)) | 407.8 | 407.8 | ||
Change in noncredit component of impairment losses on fixed maturities, available for sale (net of applicable income tax expense (benefit)) | 8 | 8 | ||
Extinguishment of beneficial conversion feature related to the repurchase of convertible debentures | -24 | -24 | ||
Cost of common stock and warrants repurchased | -180.2 | -180.2 | ||
Dividends on common stock | -13.9 | -13.9 | ||
Stock options, restricted stock and performance units | 16.8 | 16.8 | ||
Balance, end of period at Dec. 31, 2012 | 5,049.30 | 4,176.90 | 1,197.40 | -325 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 478 | 478 | ||
Change in unrealized appreciation (depreciation) of investments (net of applicable income tax expense (benefit)) | -463.7 | -463.7 | ||
Change in noncredit component of impairment losses on fixed maturities, available for sale (net of applicable income tax expense (benefit)) | -1.9 | -1.9 | ||
Extinguishment of beneficial conversion feature related to the repurchase of convertible debentures | -12.6 | -12.6 | ||
Cost of common stock and warrants repurchased | -118.4 | -118.4 | ||
Dividends on common stock | -24.6 | -24.6 | ||
Conversion of convertible debentures | 24.9 | 24.9 | ||
Stock options, restricted stock and performance units | 24.2 | 24.2 | ||
Balance, end of period at Dec. 31, 2013 | 4,955.20 | 4,095 | 731.8 | 128.4 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 51.4 | 51.4 | ||
Change in unrealized appreciation (depreciation) of investments (net of applicable income tax expense (benefit)) | 94.2 | 94.2 | ||
Change in noncredit component of impairment losses on fixed maturities, available for sale (net of applicable income tax expense (benefit)) | -0.7 | -0.7 | ||
Cost of common stock and warrants repurchased | -376.5 | -376.5 | ||
Dividends on common stock | -51.3 | -51.3 | ||
Stock options, restricted stock and performance units | 15.9 | 15.9 | ||
Balance, end of period at Dec. 31, 2014 | $4,688.20 | $3,734.40 | $825.30 | $128.50 |
CONSOLIDATED_STATEMENT_OF_SHAR1
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Parentheticals) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Statement of Stockholders' Equity [Abstract] | |||
Change in unrealized appreciation (depreciation) of investments, applicable income tax expense (benefit) | $52.30 | ($248.70) | $216.10 |
Change in noncredit component of impairment losses on fixed maturities, available for sale, applicable income tax expense (benefit) | ($0.40) | ($1.10) | $4.40 |
CONSOLIDATED_STATEMENT_OF_CASH
CONSOLIDATED STATEMENT OF CASH FLOWS (USD $) | 12 Months Ended | |||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Cash flows from operating activities: | ||||
Insurance policy income | $2,407.90 | $2,464.90 | $2,419.70 | |
Net investment income | 1,279 | 1,387.70 | 1,385.80 | |
Fee revenue and other income | 50.9 | 34 | 19.8 | |
Insurance policy benefits | -1,968.40 | -2,093.80 | -2,096.50 | |
Payment to reinsurer pursuant to long-term care business reinsured | -590.3 | 0 | 0 | |
Interest expense | -81.7 | -95.9 | -109 | |
Deferrable policy acquisition costs | -242.8 | -222.8 | -191.7 | |
Other operating costs | -728.8 | -745.7 | -786.7 | |
Taxes | -4 | -8 | -6.5 | |
Net cash from operating activities | 121.8 | [1] | 720.4 | 634.9 |
Cash flows from investing activities: | ||||
Sales of investments | 2,090 | 2,315.80 | 2,057.60 | |
Maturities and redemptions of investments | 1,618.20 | 2,491.90 | 1,967.40 | |
Purchases of investments | -3,731.60 | -5,367.10 | -4,271.10 | |
Net sales of trading securities | 4.9 | 30 | 60.4 | |
Change in cash and cash equivalents held by variable interest entities | 36 | -50.1 | 20.2 | |
Cash and cash equivalents held by subsidiary prior to being sold | -164.7 | 0 | 0 | |
Proceeds from sale of subsidiary | 231 | 0 | 0 | |
Other | -27.5 | -23 | -31.6 | |
Net cash provided (used) by investing activities | 56.3 | -602.5 | -197.1 | |
Cash flows from financing activities: | ||||
Issuance of notes payable, net | 0 | 0 | 944.5 | |
Payments on notes payable | -62.9 | -126.9 | -810.6 | |
Expenses related to extinguishment or modification of debt | -0.6 | -61.6 | -183 | |
Amount paid to extinguish the beneficial conversion feature associated with repurchase of convertible debentures | 0 | -12.6 | -24 | |
Issuance of common stock | 5 | 15.1 | 3.1 | |
Payments to repurchase common stock and warrants | -376.5 | -118.4 | -180.2 | |
Common stock dividends paid | -51 | -24.4 | -13.9 | |
Amounts received for deposit products | 1,295.40 | 1,298.10 | 1,296.70 | |
Withdrawals from deposit products | -1,347.30 | -1,464.40 | -1,544.90 | |
Issuance of investment borrowings: | ||||
Federal Home Loan Bank | 350 | 500 | 375 | |
Related to variable interest entities | 358.5 | 376.3 | 246.7 | |
Payments on investment borrowings: | ||||
Federal Home Loan Bank | -367.7 | -250.5 | -375 | |
Related to variable interest entities and other | -88.8 | -132.1 | -0.9 | |
Investment borrowings - repurchase agreements, net | 20.4 | 0 | -24.8 | |
Net cash used by financing activities | -265.5 | -1.4 | -291.3 | |
Net increase (decrease) in cash and cash equivalents | -87.4 | 116.5 | 146.5 | |
Cash and cash equivalents, beginning of year | 699 | 582.5 | 436 | |
Cash and cash equivalents, end of year | $611.60 | $699 | $582.50 | |
[1] | Cash flows from operating activities reflect outflows in 2014 due to the payment to reinsurer to transfer certain long-term care business. |
BUSINESS_AND_BASIS_OF_PRESENTA
BUSINESS AND BASIS OF PRESENTATION | 12 Months Ended | |
Dec. 31, 2014 | ||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
BUSINESS AND BASIS OF PRESENTATION | BUSINESS AND BASIS OF PRESENTATION | |
CNO Financial Group, Inc., a Delaware corporation ("CNO"), is a holding company for a group of insurance companies operating throughout the United States that develop, market and administer health insurance, annuity, individual life insurance and other insurance products. The terms "CNO Financial Group, Inc.", "CNO", the "Company", "we", "us", and "our" as used in these financial statements refer to CNO and its subsidiaries. Such terms, when used to describe insurance business and products, refer to the insurance business and products of CNO's insurance subsidiaries. | ||
We focus on serving middle-income pre-retiree and retired Americans, which we believe are attractive, underserved, high growth markets. We sell our products through three distribution channels: career agents, independent producers (some of whom sell one or more of our product lines exclusively) and direct marketing. | ||
Prior to 2014, the Company managed its business through the following operating segments: Bankers Life, Washington National and Colonial Penn, which are defined on the basis of product distribution; Other CNO Business, comprised primarily of products we no longer sell actively; and corporate operations, comprised of holding company activities and certain noninsurance company businesses. As a result of the sale of Conseco Life Insurance Company ("CLIC") which was completed on July 1, 2014 (as further described in the note to the consolidated financial statements entitled "Sale of Subsidiary") and the coinsurance agreements to cede certain long-term care business effective December 31, 2013, management has changed the manner in which it disaggregates the Company's operations for making operating decisions and assessing performance. In periods prior to 2014: (i) the results in the Washington National segment have been adjusted to include the results from the business in the Other CNO Business segment that are being retained; (ii) the Other CNO Business segment included only the long-term care business that was ceded effective December 31, 2013 and the overhead expense of CLIC that is expected to continue after the completion of the sale; and (iii) the CLIC business being sold is excluded from our analysis of business segment results. Beginning on January 1, 2014: (i) the overhead expense of CLIC that is expected to continue after the completion of the sale has been reallocated primarily to the Bankers Life and Washington National segments; (ii) there is no longer an Other CNO Business segment; and (iii) the CLIC business being sold continues to be excluded from our analysis of business segment results. After the completion of the sale of CLIC: (i) the Bankers Life segment includes the results of certain life insurance business that was recaptured from Wilton Reassurance Company ("Wilton Re"); and (ii) the revenues and expenses associated with a transition services agreement and a special support services agreement with Wilton Re are included in our non-operating earnings. Under such agreements, we will receive $30 million in the year ending June 30, 2015 and $20 million in the year ending June 30, 2016. In addition, certain services will continue to be provided in the three years ending June 30, 2019 for an annual fee of $.2 million. The income we receive from these services agreements will offset certain of our overhead costs. If we are not successful in reducing our overhead costs to the same extent as the reduction in fees to be received from Wilton Re over the period of the agreements, our results of operations will be adversely affected. Our prior period segment disclosures have been revised to reflect management's current view of the Company's operating segments. The Company’s insurance segments are described below: | ||
• | Bankers Life, which markets and distributes Medicare supplement insurance, interest-sensitive life insurance, traditional life insurance, fixed annuities and long-term care insurance products to the middle-income senior market through a dedicated field force of career agents and sales managers supported by a network of community-based sales offices. The Bankers Life segment includes primarily the business of Bankers Life and Casualty Company ("Bankers Life"). Bankers Life also markets and distributes Medicare Advantage plans primarily through distribution arrangements with Humana, Inc. and United HealthCare and Medicare Part D prescription drug plans ("PDP") primarily through a distribution arrangement with Coventry Health Care ("Coventry"). | |
• | Washington National, which markets and distributes supplemental health (including specified disease, accident and hospital indemnity insurance products) and life insurance to middle-income consumers at home and at the worksite. These products are marketed through Performance Matters Associates of Texas, Inc. (a wholly owned subsidiary) and through independent marketing organizations and insurance agencies including worksite marketing. The products being marketed are underwritten by Washington National Insurance Company ("Washington National"). This segment's business also includes certain closed blocks of annuities and Medicare supplement policies which are no longer being actively marketed by this segment and were primarily issued or acquired by Washington National. | |
• | Colonial Penn, which markets primarily graded benefit and simplified issue life insurance directly to customers in the senior middle-income market through television advertising, direct mail, the internet and telemarketing. The Colonial Penn segment includes primarily the business of Colonial Penn Life Insurance Company ("Colonial Penn"). | |
We prepare our financial statements in accordance with accounting principles generally accepted in the United States of America ("GAAP"). | ||
The accompanying financial statements include the accounts of the Company and its subsidiaries. Our consolidated financial statements exclude transactions between us and our consolidated affiliates, or among our consolidated affiliates. | ||
When we prepare financial statements in conformity with GAAP, we are required to make estimates and assumptions that significantly affect reported amounts of various assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting periods. For example, we use significant estimates and assumptions to calculate values for deferred acquisition costs, the present value of future profits, fair value measurements of certain investments (including derivatives), other-than-temporary impairments of investments, assets and liabilities related to income taxes, liabilities for insurance products, liabilities related to litigation and guaranty fund assessment accruals. If our future experience differs from these estimates and assumptions, our financial statements would be materially affected. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | ||||||
Dec. 31, 2014 | |||||||
Accounting Policies [Abstract] | |||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Investments | |||||||
Fixed maturity securities include available for sale bonds and redeemable preferred stocks. We carry these investments at estimated fair value. We record any unrealized gain or loss, net of tax and related adjustments, as a component of shareholders’ equity. | |||||||
Equity securities include available for sale investments in common stock and non-redeemable preferred stock. We carry these investments at estimated fair value. We record any unrealized gain or loss, net of tax and related adjustments, as a component of shareholders' equity. | |||||||
Mortgage loans held in our investment portfolio are carried at amortized unpaid balances, net of provisions for estimated losses. Interest income is accrued on the principal amount of the loan based on the loan's contractual interest rate. Payment terms specified for mortgage loans may include a prepayment penalty for unscheduled payoff of the investment. Prepayment penalties are recognized as investment income when received. | |||||||
Policy loans are stated at current unpaid principal balances. Policy loans are collateralized by the cash surrender value of the life insurance policy. Interest income is recorded as earned using the contractual interest rate. | |||||||
Trading securities include: (i) investments purchased with the intent of selling in the near team to generate income; (ii) investments supporting certain insurance liabilities (including investments backing the market strategies of our multibucket annuity products) and certain reinsurance agreements; and (iii) certain fixed maturity securities containing embedded derivatives for which we have elected the fair value option. The change in fair value of the income generating investments and investments supporting insurance liabilities and reinsurance agreements is recognized in income from policyholder and reinsurer accounts and other special-purpose portfolios (a component of net investment income). The change in fair value of securities with embedded derivatives is recognized in realized investment gains (losses). Investment income related to investments supporting certain insurance liabilities and certain reinsurance agreements is substantially offset by the change in insurance policy benefits related to certain products and agreements. | |||||||
Other invested assets include: (i) call options purchased in an effort to offset or hedge the effects of certain policyholder benefits related to our fixed index annuity and life insurance products; (ii) Company-owned life insurance ("COLI"); and (iii) certain non-traditional investments. We carry the call options at estimated fair value as further described in the section of this note entitled "Accounting for Derivatives". We carry COLI at its cash surrender value which approximates its net realizable value. Non-traditional investments include investments in certain limited partnerships and hedge funds which are accounted for using the equity method; and promissory notes, which are accounted for using the cost method. In accounting for limited partnerships and hedge funds, we consistently use the most recently available financial information provided by the general partner or manager of each of these investments, which is one to three months prior to the end of our reporting period. | |||||||
Interest income on fixed maturity securities is recognized when earned using a constant effective yield method giving effect to amortization of premiums and accretion of discounts. Prepayment fees are recognized when earned. Dividends on equity securities are recognized when declared. | |||||||
When we sell a security (other than trading securities), we report the difference between the sale proceeds and amortized cost (determined based on specific identification) as a realized investment gain or loss. | |||||||
We regularly evaluate our investments for possible impairment as further described in the note to the consolidated financial statements entitled "Investments". | |||||||
When a security defaults (including mortgage loans) or securities are other-than-temporarily impaired, our policy is to discontinue the accrual of interest and eliminate all previous interest accruals, if we determine that such amounts will not be ultimately realized in full. | |||||||
Cash and Cash Equivalents | |||||||
Cash and cash equivalents include commercial paper, invested cash and other investments purchased with original maturities of less than three months. We carry them at amortized cost, which approximates estimated fair value. | |||||||
Deferred Acquisition Costs | |||||||
Deferred acquisition costs represent incremental direct costs related to the successful acquisition of new or renewal insurance contracts. For interest-sensitive life or annuity products, we amortize these costs in relation to the estimated gross profits using the interest rate credited to the underlying policies. For other products, we amortize these costs in relation to future anticipated premium revenue using the projected investment earnings rate. | |||||||
When we realize a gain or loss on investments backing our interest-sensitive life or annuity products, we adjust the amortization to reflect the change in estimated gross profits from the products due to the gain or loss realized and the effect on future investment yields. We also adjust deferred acquisition costs for the change in amortization that would have been recorded if our fixed maturity securities, available for sale, had been sold at their stated aggregate fair value and the proceeds reinvested at current yields. We limit the total adjustment related to the impact of unrealized losses to the total of costs capitalized plus interest related to insurance policies issued in a particular year. We include the impact of this adjustment in accumulated other comprehensive income (loss) within shareholders' equity. | |||||||
We regularly evaluate the recoverability of the unamortized balance of the deferred acquisition costs. We consider estimated future gross profits or future premiums, expected mortality or morbidity, interest earned and credited rates, persistency and expenses in determining whether the balance is recoverable. If we determine a portion of the unamortized balance is not recoverable, it is charged to amortization expense. In certain cases, the unamortized balance of the deferred acquisition costs may not be deficient in the aggregate, but our estimates of future earnings indicate that profits would be recognized in early periods and losses in later periods. In this case, we increase the amortization of the deferred acquisition costs over the period of profits, by an amount necessary to offset losses that are expected to be recognized in the later years. | |||||||
Present Value of Future Profits | |||||||
The present value of future profits is the value assigned to the right to receive future cash flows from policyholder insurance contracts existing at September 10, 2003 (the "Effective Date", the effective date of the bankruptcy reorganization of Conseco, Inc., an Indiana corporation (our "Predecessor")). The discount rate we used to determine the present value of future profits was 12 percent. The balance of this account is amortized and evaluated for recovery in the same manner as described above for deferred acquisition costs. We also adjust the present value of future profits for the change in amortization that would have been recorded if the fixed maturity securities, available for sale, had been sold at their stated aggregate fair value and the proceeds reinvested at current yields, similar to the manner described above for deferred acquisition costs. We limit the total adjustment related to the impact of unrealized losses to the total present value of future profits plus interest. | |||||||
Assets Held in Separate Accounts | |||||||
Separate accounts are funds on which investment income and gains or losses accrue directly to certain policyholders. The assets of these accounts are legally segregated. They are not subject to the claims that may arise out of any other business of CNO. We report separate account assets at fair value; the underlying investment risks are assumed by the contractholders. We record the related liabilities at amounts equal to the separate account assets. We record the fees earned for administrative and contractholder services performed for the separate accounts in insurance policy income. | |||||||
Recognition of Insurance Policy Income and Related Benefits and Expenses on Insurance Contracts | |||||||
For interest-sensitive life and annuity contracts that do not involve significant mortality or morbidity risk, the amounts collected from policyholders are considered deposits and are not included in revenue. Revenues for these contracts consist of charges for policy administration, cost of insurance charges and surrender charges assessed against policyholders' account balances. Such revenues are recognized when the service or coverage is provided, or when the policy is surrendered. | |||||||
We establish liabilities for annuity and interest-sensitive life products equal to the accumulated policy account values, which include an accumulation of deposit payments plus credited interest, less withdrawals and the amounts assessed against the policyholder through the end of the period. In addition, policyholder account values for certain interest-sensitive life products are impacted by our assumptions related to changes of certain non-guaranteed elements that we are allowed to make under the terms of the policy, such as cost of insurance charges, expense loads, credited interest rates and policyholder bonuses. Sales inducements provided to the policyholders of these products are recognized as liabilities over the period that the contract must remain in force to qualify for the inducement. The options attributed to the policyholder related to our fixed index annuity products are accounted for as embedded derivatives as described in the section of this note entitled "Accounting for Derivatives". | |||||||
Premiums from individual life products (other than interest-sensitive life contracts) and health products are recognized when due. When premiums are due over a significantly shorter period than the period over which benefits are provided, any gross premium in excess of the net premium (i.e., the portion of the gross premium required to provide for all expected future benefits and expenses) is deferred and recognized into revenue in a constant relationship to insurance in force. Benefits are recorded as an expense when they are incurred. | |||||||
We establish liabilities for traditional life, accident and health insurance, and life contingent payment annuity products using mortality tables in general use in the United States, which are modified to reflect the Company's actual experience when appropriate. We establish liabilities for accident and health insurance products using morbidity tables based on the Company's actual or expected experience. These reserves are computed at amounts that, with additions from estimated future premiums received and with interest on such reserves at estimated future rates, are expected to be sufficient to meet our obligations under the terms of the policy. Liabilities for future policy benefits are computed on a net-level premium method based upon assumptions as to future claim costs, investment yields, mortality, morbidity, withdrawals, policy dividends and maintenance expenses determined when the policies were issued (or with respect to policies inforce at August 31, 2003, the Company's best estimate of such assumptions on the Effective Date). We make an additional provision to allow for potential adverse deviation for some of our assumptions. Once established, assumptions on these products are generally not changed unless a premium deficiency exists. In that case, a premium deficiency reserve is recognized and the future pattern of reserve changes is modified to reflect the relationship of premiums to benefits based on the current best estimate of future claim costs, investment yields, mortality, morbidity, withdrawals, policy dividends and maintenance expenses, determined without an additional provision for potential adverse deviation. | |||||||
We establish claim reserves based on our estimate of the loss to be incurred on reported claims plus estimates of incurred but unreported claims based on our past experience. | |||||||
Accounting for Long-term Care Premium Rate Increases | |||||||
Many of our long-term care policies have been subject to premium rate increases. In some cases, these premium rate increases were materially consistent with the assumptions we used to value the particular block of business at the Effective Date. With respect to certain premium rate increases, some of our policyholders were provided an option to cease paying their premiums and receive a non-forfeiture option in the form of a paid-up policy with limited benefits. In addition, our policyholders could choose to reduce their coverage amounts and premiums in the same proportion, when permitted by our contracts or as required by regulators. The following describes how we account for these policyholder options: | |||||||
• | Premium rate increases - If premium rate increases reflect a change in our previous rate increase assumptions, the new assumptions are not reflected prospectively in our reserves. Instead, the additional premium revenue resulting from the rate increase is recognized as earned and original assumptions continue to be used to determine changes to liabilities for insurance products unless a premium deficiency exists. | ||||||
• | Benefit reductions - A policyholder may choose reduced coverage with a proportionate reduction in premium, when permitted by our contracts. This option does not require additional underwriting. Benefit reductions are treated as a partial lapse of coverage, and the balance of our reserves and deferred insurance acquisition costs is reduced in proportion to the reduced coverage. | ||||||
• | Non-forfeiture benefits offered in conjunction with a rate increase - In some cases, non-forfeiture benefits are offered to policyholders who wish to lapse their policies at the time of a significant rate increase. In these cases, exercise of this option is treated as an extinguishment of the original contract and issuance of a new contract. The balance of our reserves and deferred insurance acquisition costs are released, and a reserve for the new contract is established. | ||||||
Some of our policyholders may receive a non-forfeiture benefit if they cease paying their premiums pursuant to their original contract (or pursuant to changes made to their original contract as a result of a litigation settlement made prior to the Effective Date or an order issued by the Florida Office of Insurance Regulation). In these cases, exercise of this option is treated as the exercise of a policy benefit, and the reserve for premium paying benefits is reduced, and the reserve for the non-forfeiture benefit is adjusted to reflect the election of this benefit. | |||||||
Accounting for Certain Marketing and Reinsurance Agreements | |||||||
Bankers Life has entered into various distribution and marketing agreements with other insurance companies to use Bankers Life's career agents to distribute prescription drug and Medicare Advantage plans. These agreements allow Bankers Life to offer these products to current and potential future policyholders without investment in management and infrastructure. We receive fee income related to the plans sold through our distribution channels. We account for these distribution agreements as follows: | |||||||
• | We recognize distribution income based on either: (i) a fixed fee per contract sold; or (ii) a percentage of premiums collected. This fee income is recognized over the calendar year term of the contract. | ||||||
• | We also pay commissions to our agents who sell the plans. These payments are deferred and amortized over the term of the contract. | ||||||
Prior to its termination in August 2013, we had a quota-share reinsurance agreement with Coventry that provided Bankers Life with 50 percent of the net premiums and related policy benefits of certain PDP business sold through Bankers Life's career agency force. We accounted for the quota-share agreement as follows: | |||||||
• | We recognized premium revenue evenly over the period of the underlying Medicare Part D contracts. | ||||||
• | We recognized policyholder benefits and assumed commission expense as incurred. | ||||||
• | We recognized risk-share premium adjustments consistent with Coventry's risk-share agreement with the Centers for Medicare and Medicaid Services. | ||||||
Reinsurance | |||||||
In the normal course of business, we seek to limit our loss exposure on any single insured or to certain groups of policies by ceding reinsurance to other insurance enterprises. We currently retain no more than $.8 million of mortality risk on any one policy. We diversify the risk of reinsurance loss by using a number of reinsurers that have strong claims-paying ratings. In each case, the ceding CNO subsidiary is directly liable for claims reinsured in the event the assuming company is unable to pay. | |||||||
The cost of reinsurance ceded totaled $176.7 million, $212.1 million and $220.0 million in 2014, 2013 and 2012, respectively. We deduct this cost from insurance policy income. Reinsurance recoveries netted against insurance policy benefits totaled $195.3 million, $196.2 million and $210.2 million in 2014, 2013 and 2012, respectively. | |||||||
From time-to-time, we assume insurance from other companies. Any costs associated with the assumption of insurance are amortized consistent with the method used to amortize deferred acquisition costs. Reinsurance premiums assumed totaled $35.0 million, $37.4 million and $69.4 million in 2014, 2013 and 2012, respectively. Reinsurance premiums included amounts assumed pursuant to marketing and quota-share agreements with Coventry of $6.8 million, $19.7 million and $49.9 million, in 2014, 2013 and 2012 respectively. As further described above, we received a notice of Coventry's intent to terminate the PDP quota-share reinsurance agreement in August 2013. The premiums collected from Coventry in 2014 represented adjustments to premiums on such business related to periods prior to the termination of the agreement. | |||||||
In December 2013, two of our insurance subsidiaries with long-term care business in the former Other CNO Business segment entered into 100% coinsurance agreements ceding $495 million of long-term care reserves to Beechwood Re Ltd. ("BRe"). Pursuant to the agreements, the insurance subsidiaries paid an additional premium of $96.9 million to BRe and an amount equal to the related net liabilities. The insurance subsidiaries' ceded reserve credits are secured by assets in market-value trusts subject to a 7% over-collateralization, investment guidelines and periodic true-up provisions. Future payments into the trusts to maintain collateral requirements are the responsibility of BRe. We recognized a pre-tax loss of $98.4 million in 2013 to reflect: (i) the known loss (or premium deficiency) on the business, as we will not be recognizing additional income in future periods to recover the unamortized additional premium which will be paid to BRe; and (ii) other transaction costs. | |||||||
In the second quarter of 2014, we recaptured a block of interest-sensitive life business that was previously ceded under a modified coinsurance agreement. The recapture of this block resulted in a gain related to reinsurance transaction of $3.8 million. | |||||||
As further described in the note to the financial statements entitled "Sale of Subsidiary", we recaptured a block of life insurance business in 2014 that was previously ceded under a coinsurance agreement. | |||||||
Income Taxes | |||||||
Our income tax expense includes deferred income taxes arising from temporary differences between the financial reporting and tax bases of assets and liabilities, capital loss carryforwards and net operating loss carryforwards ("NOLs"). Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which temporary differences are expected to be recovered or paid. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in earnings in the period when the changes are enacted. | |||||||
A reduction of the net carrying amount of deferred tax assets by establishing a valuation allowance is required if, based on the available evidence, it is more likely than not that such assets will not be realized. In assessing the need for a valuation allowance, all available evidence, both positive and negative, shall be considered to determine whether, based on the weight of that evidence, a valuation allowance for deferred tax assets is needed. This assessment requires significant judgment and considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of carryforward periods, our experience with operating loss and tax credit carryforwards expiring unused, and tax planning strategies. We evaluate the need to establish a valuation allowance for our deferred income tax assets on an ongoing basis. The realization of our deferred tax assets depends upon generating sufficient future taxable income of the appropriate type during the periods in which our temporary differences become deductible and before our capital loss carryforwards and life and non-life NOLs expire. | |||||||
At December 31, 2014, our valuation allowance for our net deferred tax assets was $246.0 million, as we have determined that it is more likely than not that a portion of our deferred tax assets will not be realized. This determination was made by evaluating each component of the deferred tax assets and assessing the effects of limitations and/or interpretations on the value of such component to be fully recognized in the future. | |||||||
Investments in Variable Interest Entities | |||||||
We have concluded that we are the primary beneficiary with respect to certain variable interest entities ("VIEs"), which are consolidated in our financial statements. | |||||||
All such VIEs are collateralized loan trusts that were established to issue securities to finance the purchase of corporate loans and other permitted investments (including two new VIEs which were consolidated in 2014, one new VIE which was consolidated in 2013 and one new VIE which was consolidated in 2012). The assets held by the trusts are legally isolated and not available to the Company. The liabilities of the VIEs are expected to be satisfied from the cash flows generated by the underlying loans held by the trusts, not from the assets of the Company. The Company has no financial obligation to the VIEs beyond its investment in each VIE. | |||||||
The investment portfolios held by the VIEs are primarily comprised of commercial bank loans to corporate obligors which are almost entirely rated below-investment grade. Refer to the note to the consolidated financial statements entitled "Investments in Variable Interest Entities" for additional information about VIEs. | |||||||
Investment borrowings | |||||||
Two of the Company's insurance subsidiaries (Washington National and Bankers Life) are members of the Federal Home Loan Bank ("FHLB"). As members of the FHLB, Washington National and Bankers Life have the ability to borrow on a collateralized basis from the FHLB. Washington National and Bankers Life are required to hold certain minimum amounts of FHLB common stock as a condition of membership in the FHLB, and additional amounts based on the amount of the borrowings. At December 31, 2014, the carrying value of the FHLB common stock was $73.5 million. As of December 31, 2014, collateralized borrowings from the FHLB totaled $1.5 billion and the proceeds were used to purchase fixed maturity securities. The borrowings are classified as investment borrowings in the accompanying consolidated balance sheet. The borrowings are collateralized by investments with an estimated fair value of $1.8 billion at December 31, 2014, which are maintained in a custodial account for the benefit of the FHLB. Substantially all of such investments are classified as fixed maturities, available for sale, in our consolidated balance sheet. | |||||||
The following summarizes the terms of the borrowings from the FHLB by Washington National and Bankers Life (dollars in millions): | |||||||
Amount | Maturity | Interest rate at | |||||
borrowed | date | December 31, 2014 | |||||
$ | 50 | Oct-15 | Variable rate – 0.511% | ||||
100 | Jun-16 | Variable rate – 0.610% | |||||
75 | Jun-16 | Variable rate – 0.417% | |||||
100 | Oct-16 | Variable rate – 0.413% | |||||
50 | Nov-16 | Variable rate – 0.505% | |||||
50 | Nov-16 | Variable rate – 0.640% | |||||
57.7 | Jun-17 | Variable rate – 0.587% | |||||
50 | Aug-17 | Variable rate – 0.432% | |||||
75 | Aug-17 | Variable rate – 0.383% | |||||
100 | Oct-17 | Variable rate – 0.661% | |||||
50 | Nov-17 | Variable rate – 0.744% | |||||
50 | Jan-18 | Variable rate – 0.579% | |||||
50 | Jan-18 | Variable rate – 0.571% | |||||
50 | Feb-18 | Variable rate – 0.542% | |||||
50 | Feb-18 | Variable rate – 0.322% | |||||
22 | Feb-18 | Variable rate – 0.566% | |||||
100 | May-18 | Variable rate – 0.620% | |||||
50 | Jul-18 | Variable rate – 0.703% | |||||
50 | Aug-18 | Variable rate – 0.352% | |||||
50 | Jan-19 | Variable rate – 0.649% | |||||
50 | Feb-19 | Variable rate – 0.322% | |||||
100 | Mar-19 | Variable rate – 0.642% | |||||
21.8 | Jul-19 | Variable rate – 0.655% | |||||
21.8 | Jun-20 | Fixed rate – 1.960% | |||||
28.2 | Aug-21 | Fixed rate – 2.550% | |||||
26.8 | Mar-23 | Fixed rate – 2.160% | |||||
20.5 | Jun-25 | Fixed rate – 2.940% | |||||
$ | 1,498.80 | ||||||
The variable rate borrowings are pre-payable on each interest reset date without penalty. The fixed rate borrowings are pre-payable subject to payment of a yield maintenance fee based on prevailing market interest rates. At December 31, 2014, the aggregate yield maintenance fee to prepay all fixed rate borrowings was $1.2 million. | |||||||
Interest expense of $18.7 million, $27.9 million and $28.0 million in 2014, 2013 and 2012, respectively, was recognized related to total borrowings from the FHLB. | |||||||
In addition to our borrowings from the FHLB, we may enter into repurchase agreements to increase our investment return as part of our investment strategy. Pursuant to such agreements, the Company sells securities subject to an obligation to repurchase the same securities. Under these arrangements, the Company may transfer legal control over the assets but still retain effective control through an agreement that both entitles and obligates the Company to repurchase the assets. As a result, these repurchase agreements are accounted for as collateralized financing arrangements (i.e., secured borrowings) and not as a sale and subsequent repurchase of securities. Such borrowings totaled $20.4 million at December 31, 2014 and mature prior to June 30, 2015. We had no such borrowings outstanding at December 31, 2013. | |||||||
The primary risks associated with short-term collateralized borrowings are: (i) a substantial decline in the market value of the margined security; and (ii) that a counterparty may be unable to perform under the terms of the contract or be unwilling to extend such financing in future periods especially if the liquidity or value of the margined security has declined. Exposure is limited to any depreciation in value of the related securities. | |||||||
Accounting for Derivatives | |||||||
Our fixed index annuity products provide a guaranteed minimum rate of return and a higher potential return that is based on a percentage (the "participation rate") of the amount of increase in the value of a particular index, such as the Standard & Poor's 500 Index, over a specified period. Typically, on each policy anniversary date, a new index period begins. We are generally able to change the participation rate at the beginning of each index period during a policy year, subject to contractual minimums. The Company accounts for the options attributed to the policyholder for the estimated life of the annuity contract as embedded derivatives. These accounting requirements often create volatility in the earnings from these products. We typically buy call options (including call spreads) referenced to the applicable indices in an effort to offset or hedge potential increases to policyholder benefits resulting from increases in the particular index to which the policy's return is linked. | |||||||
We utilize United States Treasury interest rate futures primarily to hedge interest rate risk related to anticipated mortgage loan transactions. | |||||||
In periods prior to the second quarter of 2014, we were required to establish an embedded derivative related to a modified coinsurance agreement which ceded the risks of a block of interest sensitive life business. We recaptured this block in the second quarter of 2014 resulting in a gain of $3.8 million. Prior to the recapture of this block, we maintained the investments related to the modified coinsurance agreement in our trading securities account, which we carried at estimated fair value with changes in such value recognized as investment income. Such trading securities were sold in the second quarter of 2014 in conjunction with the reinsurance recapture. | |||||||
We purchase certain fixed maturity securities that contain embedded derivatives that are required to be bifurcated from the instrument and held at fair value on the consolidated balance sheet. We have elected the fair value option to carry the entire security at fair value with changes in fair value reported in net income for operational ease. | |||||||
Multibucket Annuity Products | |||||||
The Company's multibucket annuity is an annuity product that credits interest based on the experience of a particular market strategy. Policyholders allocate their annuity premium payments to several different market strategies based on different asset classes within the Company's investment portfolio. Interest is credited to this product based on the market return of the given strategy, less management fees, and funds may be moved between different strategies. The Company guarantees a minimum return of premium plus approximately 3 percent per annum over the life of the contract. The investments backing the market strategies of these products are designated by the Company as trading securities. The change in the fair value of these securities is recognized as investment income (classified as income from policyholder and reinsurer accounts and other special-purpose portfolios), which is substantially offset by the change in insurance policy benefits for these products. We hold insurance liabilities of $43.4 million and $45.8 million related to multibucket annuity products as of December 31, 2014 and 2013, respectively. | |||||||
Sales Inducements | |||||||
Certain of our annuity products offer sales inducements to contract holders in the form of enhanced crediting rates or bonus payments in the initial period of the contract. Certain of our life insurance products offer persistency bonuses credited to the contract holders balance after the policy has been outstanding for a specified period of time. These enhanced rates and persistency bonuses are considered sales inducements in accordance with GAAP. Such amounts are deferred and amortized in the same manner as deferred acquisition costs. Sales inducements deferred totaled $5.1 million, $5.0 million and $4.4 million during 2014, 2013 and 2012, respectively. Amounts amortized totaled $12.4 million, $22.9 million and $27.1 million during 2014, 2013 and 2012, respectively. The unamortized balance of deferred sales inducements was $67.4 million and $108.6 million at December 31, 2014 and 2013, respectively. The balance of insurance liabilities for persistency bonus benefits was $1.5 million and $28.9 million at December 31, 2014 and 2013, respectively. | |||||||
Out-of-Period Adjustments | |||||||
In 2014, we recorded the net effect of an out-of-period adjustment related to the calculation of incentive compensation accruals which increased other operating costs and expenses by $2.4 million, decreased tax expense by $.8 million and decreased our net income by $1.6 million (or 1 cent per diluted share). In 2013 we recorded the net effect of out-of-period adjustment which increased our insurance policy benefits by $4.7 million, increased amortization expense by $2.1 million, increased other operating costs and expenses by $1.5 million, decreased tax expense by $.7 million and decreased our net income by $7.6 million (or 3 cents per diluted share). We evaluated these adjustments taking into account both qualitative and quantitative factors and considered the impact of these adjustments in relation to each period, as well as the periods in which they originated. The impact of recognizing these adjustments in prior years was not significant to any individual period. Management believes these adjustments are immaterial to the consolidated financial statements and all previously issued financial statements. | |||||||
Recently Issued Accounting Standards | |||||||
Pending Accounting Standards | |||||||
In April 2014, the Financial Accounting Standards Board (the "FASB") issued authoritative guidance changing the criteria for reporting discontinued operations. Under the revised guidance, only disposals of a component or a group of components, including those classified as held for sale, which represent a strategic shift that has or will have a major effect on a company's operations and financial results will be reported as discontinued operations. The guidance is effective prospectively for new disposals occurring after January 1, 2015. | |||||||
In May 2014, the FASB issued authoritative guidance for recognizing revenue from contracts with customers. Certain contracts with customers are specifically excluded from this guidance, including insurance contracts. The core principle of the new guidance is that an entity should recognize revenue when it transfers promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The guidance will be effective for the Company on January 1, 2017 and permits two methods of transition upon adoption; full retrospective and modified retrospective. Under the full retrospective method, prior periods would be restated under the new revenue standard, providing for comparability in all periods presented. Under the modified retrospective method, prior periods would not be restated. Instead, revenues and other disclosures for pre-2017 periods would be provided in the notes to the financial statements as previously reported under the current revenue standard. The Company is currently assessing the impact the guidance will have upon adoption. | |||||||
In June 2014, the FASB issued authoritative guidance on the accounting and disclosure of repurchase-to-maturity transactions and repurchase financings. Under this new accounting guidance, repurchase-to-maturity transactions will be accounted for as secured borrowings rather than sales of an asset, and transfers of financial assets with a contemporaneous repurchase financing arrangement will no longer be evaluated to determine whether they should be accounted for on a combined basis as forward contracts. The new guidance also prescribes additional disclosures particularly on the nature of collateral pledged in the repurchase agreement accounted for as a secured borrowing. The new guidance is effective beginning on January 1, 2015. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements. | |||||||
In August 2014, the FASB issued authoritative guidance related to measuring the financial assets and the financial liabilities of a consolidated collateralized financing entity which provides a measurement alternative for an entity that consolidates collateralized financing entities. A collateralized financing entity is a variable interest entity with no more than nominal equity that holds financial assets and issues beneficial interests in those financial assets; the beneficial interests have contractual recourse only to the related assets of the collateralized financing entity and are classified as financial liabilities. If elected, the alternative method results in the reporting entity measuring both the financial assets and the financial liabilities of the collateralized financing entity using the more observable of the two fair value measurements, which effectively removes measurement differences between the financial assets and the financial liabilities of the collateralized financing entity previously recorded as net income (loss) attributable to non-controlling and other beneficial interests and as an adjustment to appropriated retained earnings. The reporting entity continues to measure its own beneficial interests in the collateralized financing entity (other than those that represent compensation for services) at fair value. The guidance is effective for interim and annual periods beginning after December 15, 2015. A reporting entity may apply the guidance using a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the annual period of adoption. A reporting entity may also apply the guidance retrospectively to all relevant prior periods. Early adoption is permitted. The Company is currently assessing the impact the guidance will have upon adoption. | |||||||
Adopted Accounting Standards | |||||||
In July 2013, the FASB issued authoritative guidance regarding the financial statement presentation of an unrecognized tax benefit when a NOL carryforward, a similar tax loss or a tax credit carryforward exists. Such guidance requires an unrecognized tax benefit, or a portion of an unrecognized tax benefit, to be presented in the financial statements as a reduction to a deferred tax asset for a NOL carryforward, a similar tax loss, or a tax credit carryforward, except under certain circumstances as further described in the guidance. Such guidance does not require new recurring disclosures. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of this guidance did not have a material impact on our consolidated financial statements. |
INVESTMENTS
INVESTMENTS | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||
INVESTMENTS | INVESTMENTS | ||||||||||||||||||||||||
At December 31, 2014, the amortized cost, gross unrealized gains and losses, estimated fair value and other-than-temporary impairments in accumulated other comprehensive income of fixed maturities, available for sale, and equity securities were as follows (dollars in millions): | |||||||||||||||||||||||||
Amortized | Gross | Gross | Estimated | Other-than-temporary impairments included in accumulated other comprehensive income | |||||||||||||||||||||
cost | unrealized | unrealized | fair | ||||||||||||||||||||||
gains | losses | value | |||||||||||||||||||||||
Investment grade (a): | |||||||||||||||||||||||||
Corporate securities | $ | 11,177.10 | $ | 1,710.50 | $ | (42.1 | ) | $ | 12,845.50 | $ | — | ||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | 138.8 | 30.2 | (.1 | ) | 168.9 | — | |||||||||||||||||||
States and political subdivisions | 1,960.60 | 299.3 | (.7 | ) | 2,259.20 | — | |||||||||||||||||||
Debt securities issued by foreign governments | 1.8 | 0.1 | — | 1.9 | — | ||||||||||||||||||||
Asset-backed securities | 720.7 | 52 | (1.6 | ) | 771.1 | — | |||||||||||||||||||
Collateralized debt obligations | 314.9 | 2.4 | (3.4 | ) | 313.9 | — | |||||||||||||||||||
Commercial mortgage-backed securities | 1,179.70 | 80.9 | (.5 | ) | 1,260.10 | — | |||||||||||||||||||
Mortgage pass-through securities | 4.2 | 0.4 | — | 4.6 | — | ||||||||||||||||||||
Collateralized mortgage obligations | 571.1 | 23.1 | (.6 | ) | 593.6 | — | |||||||||||||||||||
Total investment grade fixed maturities, available for sale | 16,068.90 | 2,198.90 | (49.0 | ) | 18,218.80 | — | |||||||||||||||||||
Below-investment grade (a): | |||||||||||||||||||||||||
Corporate securities | 1,139.30 | 29.2 | (43.0 | ) | 1,125.50 | — | |||||||||||||||||||
States and political subdivisions | 20.6 | 0.2 | (2.3 | ) | 18.5 | — | |||||||||||||||||||
Asset-backed securities | 465.9 | 33.8 | (1.8 | ) | 497.9 | — | |||||||||||||||||||
Collateralized debt obligations | 10.4 | 0.2 | — | 10.6 | — | ||||||||||||||||||||
Commercial mortgage-backed securities | 15.3 | 0.9 | — | 16.2 | — | ||||||||||||||||||||
Collateralized mortgage obligations | 687.7 | 60.4 | (.7 | ) | 747.4 | (3.2 | ) | ||||||||||||||||||
Total below-investment grade fixed maturities, available for sale | 2,339.20 | 124.7 | (47.8 | ) | 2,416.10 | (3.2 | ) | ||||||||||||||||||
Total fixed maturities, available for sale | $ | 18,408.10 | $ | 2,323.60 | $ | (96.8 | ) | $ | 20,634.90 | $ | (3.2 | ) | |||||||||||||
Equity securities | $ | 400.5 | $ | 19.1 | $ | (.6 | ) | $ | 419 | ||||||||||||||||
_______________ | |||||||||||||||||||||||||
(a) | Investment ratings – Investment ratings are assigned the second lowest rating by Nationally Recognized Statistical Rating Organizations ("NRSROs") (Moody's Investor Services, Inc. ("Moody's"), Standard & Poor's Corporation ("S&P") or Fitch Ratings ("Fitch")), or if not rated by such firms, the rating assigned by the National Association of Insurance Commissioners (the "NAIC"). NAIC designations of "1" or "2" include fixed maturities generally rated investment grade (rated "Baa3" or higher by Moody's or rated "BBB-" or higher by S&P and Fitch). NAIC designations of "3" through "6" are referred to as below-investment grade (which generally are rated "Ba1" or lower by Moody's or rated "BB+" or lower by S&P and Fitch). References to investment grade or below-investment grade throughout our consolidated financial statements are determined as described above. | ||||||||||||||||||||||||
The NAIC evaluates the fixed maturity investments of insurers for regulatory and capital assessment purposes and assigns securities to one of six credit quality categories called NAIC designations, which are used by insurers when preparing their annual statements based on statutory accounting principles. The NAIC designations are generally similar to the credit quality designations of the NRSROs for marketable fixed maturity securities, except for certain structured securities. However, certain structured securities rated below investment grade by the NRSROs can be assigned NAIC 1 or NAIC 2 designations dependent on the cost basis of the holding relative to estimated recoverable amounts as determined by the NAIC. The following summarizes the NAIC designations and NRSRO equivalent ratings: | |||||||||||||||||||||||||
NAIC Designation | NRSRO Equivalent Rating | ||||||||||||||||||||||||
1 | AAA/AA/A | ||||||||||||||||||||||||
2 | BBB | ||||||||||||||||||||||||
3 | BB | ||||||||||||||||||||||||
4 | B | ||||||||||||||||||||||||
5 | CCC and lower | ||||||||||||||||||||||||
6 | In or near default | ||||||||||||||||||||||||
A summary of our fixed maturity securities, available for sale, by NAIC designations (or for fixed maturity securities held by non-insurance entities, based on NRSRO ratings) as of December 31, 2014 is as follows (dollars in millions): | |||||||||||||||||||||||||
NAIC designation | Amortized cost | Estimated fair value | Percentage of total estimated fair value | ||||||||||||||||||||||
1 | $ | 8,930.80 | $ | 10,158.60 | 49.2 | % | |||||||||||||||||||
2 | 8,294.00 | 9,310.10 | 45.1 | ||||||||||||||||||||||
3 | 800.6 | 800.6 | 3.9 | ||||||||||||||||||||||
4 | 350.2 | 334.5 | 1.6 | ||||||||||||||||||||||
5 | 32.5 | 31.1 | 0.2 | ||||||||||||||||||||||
6 | — | — | — | ||||||||||||||||||||||
$ | 18,408.10 | $ | 20,634.90 | 100 | % | ||||||||||||||||||||
At December 31, 2013, the amortized cost, gross unrealized gains and losses, estimated fair value and other-than-temporary impairments in accumulated other comprehensive income of fixed maturities, available for sale, and equity securities were as follows (dollars in millions): | |||||||||||||||||||||||||
Amortized | Gross | Gross | Estimated | Other-than-temporary impairments included in accumulated other comprehensive income | |||||||||||||||||||||
cost | unrealized | unrealized | fair | ||||||||||||||||||||||
gains | losses | value | |||||||||||||||||||||||
Investment grade (a): | |||||||||||||||||||||||||
Corporate securities | $ | 13,404.10 | $ | 1,086.20 | $ | (125.8 | ) | $ | 14,364.50 | $ | — | ||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | 71.1 | 2.6 | (.6 | ) | 73.1 | — | |||||||||||||||||||
States and political subdivisions | 2,130.20 | 106.8 | (38.5 | ) | 2,198.50 | — | |||||||||||||||||||
Asset-backed securities | 869.9 | 41.6 | (3.9 | ) | 907.6 | — | |||||||||||||||||||
Collateralized debt obligations | 259.4 | 7.4 | (.1 | ) | 266.7 | — | |||||||||||||||||||
Commercial mortgage-backed securities | 1,517.10 | 97.7 | (5.8 | ) | 1,609.00 | — | |||||||||||||||||||
Mortgage pass-through securities | 12.7 | 0.7 | — | 13.4 | — | ||||||||||||||||||||
Collateralized mortgage obligations | 936.2 | 34.3 | (1.3 | ) | 969.2 | — | |||||||||||||||||||
Total investment grade fixed maturities, available for sale | 19,200.70 | 1,377.30 | (176.0 | ) | 20,402.00 | — | |||||||||||||||||||
Below-investment grade (a): | |||||||||||||||||||||||||
Corporate securities | 1,314.50 | 53.4 | (32.7 | ) | 1,335.20 | — | |||||||||||||||||||
States and political subdivisions | 6.4 | — | (.5 | ) | 5.9 | — | |||||||||||||||||||
Asset-backed securities | 523.5 | 34.3 | (3.3 | ) | 554.5 | — | |||||||||||||||||||
Collateralized debt obligations | 27.6 | 0.1 | (.4 | ) | 27.3 | — | |||||||||||||||||||
Collateralized mortgage obligations | 819.1 | 60.9 | (.3 | ) | 879.7 | (4.3 | ) | ||||||||||||||||||
Total below-investment grade fixed maturities, available for sale | 2,691.10 | 148.7 | (37.2 | ) | 2,802.60 | (4.3 | ) | ||||||||||||||||||
Total fixed maturities, available for sale | $ | 21,891.80 | $ | 1,526.00 | $ | (213.2 | ) | $ | 23,204.60 | $ | (4.3 | ) | |||||||||||||
Equity securities | $ | 206.7 | $ | 16.3 | $ | — | $ | 223 | |||||||||||||||||
Accumulated other comprehensive income is primarily comprised of the net effect of unrealized appreciation (depreciation) on our investments. These amounts, included in shareholders' equity as of December 31, 2014 and 2013, were as follows (dollars in millions): | |||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
Net unrealized appreciation (depreciation) on fixed maturity securities, available for sale, on which an other-than-temporary impairment loss has been recognized | $ | 5.3 | $ | 6.5 | |||||||||||||||||||||
Net unrealized gains on all other investments | 2,207.70 | 1,322.60 | |||||||||||||||||||||||
Adjustment to present value of future profits (a) | (149.9 | ) | (47.7 | ) | |||||||||||||||||||||
Adjustment to deferred acquisition costs | (390.5 | ) | (137.0 | ) | |||||||||||||||||||||
Adjustment to insurance liabilities | (381.4 | ) | — | ||||||||||||||||||||||
Unrecognized net loss related to deferred compensation plan | (8.5 | ) | (7.1 | ) | |||||||||||||||||||||
Deferred income tax liabilities | (457.4 | ) | (405.5 | ) | |||||||||||||||||||||
Accumulated other comprehensive income | $ | 825.3 | $ | 731.8 | |||||||||||||||||||||
________ | |||||||||||||||||||||||||
(a) | The present value of future profits is the value assigned to the right to receive future cash flows from contracts existing at September 10, 2003, the date our Predecessor emerged from bankruptcy. | ||||||||||||||||||||||||
At December 31, 2014, adjustments to the present value of future profits, deferred acquisition costs, insurance liabilities and deferred tax assets included $(128.8) million, $(142.2) million, $(381.4) million and $232.1 million, respectively, for premium deficiencies that would exist on certain blocks of business (primarily long-term care products) if unrealized gains on the assets backing such products had been realized and the proceeds from the sales of such assets were invested at then current yields. | |||||||||||||||||||||||||
At December 31, 2013, adjustments to the present value of future profits and deferred tax assets included $(27.8) million and $9.9 million, respectively, for premium deficiencies that would exist on certain long-term health products if unrealized gains on the assets backing such products had been realized and the proceeds from the sales of such assets were invested at then current yields. | |||||||||||||||||||||||||
Below-Investment Grade Securities | |||||||||||||||||||||||||
At December 31, 2014, the amortized cost of the Company's below-investment grade fixed maturity securities was $2,339.2 million, or 13 percent of the Company's fixed maturity portfolio. The estimated fair value of the below-investment grade portfolio was $2,416.1 million, or 103 percent of the amortized cost. | |||||||||||||||||||||||||
Below-investment grade corporate debt securities typically have different characteristics than investment grade corporate debt securities. Based on historical performance, probability of default by the borrower is significantly greater for below-investment grade corporate debt securities and in many cases severity of loss is relatively greater as such securities are generally unsecured and often subordinated to other indebtedness of the issuer. Also, issuers of below-investment grade corporate debt securities frequently have higher levels of debt relative to investment-grade issuers, hence, all other things being equal, are generally more sensitive to adverse economic conditions. The Company attempts to reduce the overall risk related to its investment in below-investment grade securities, as in all investments, through careful credit analysis, strict investment policy guidelines, and diversification by issuer and/or guarantor and by industry. | |||||||||||||||||||||||||
Contractual Maturity | |||||||||||||||||||||||||
The following table sets forth the amortized cost and estimated fair value of fixed maturities, available for sale, at December 31, 2014, by contractual maturity. Actual maturities will differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without penalties. In addition, structured securities (such as asset-backed securities, collateralized debt obligations, commercial mortgage-backed securities, mortgage pass-through securities and collateralized mortgage obligations, collectively referred to as "structured securities") frequently include provisions for periodic principal payments and permit periodic unscheduled payments. | |||||||||||||||||||||||||
Amortized | Estimated | ||||||||||||||||||||||||
cost | fair | ||||||||||||||||||||||||
value | |||||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||
Due in one year or less | $ | 216.5 | $ | 220 | |||||||||||||||||||||
Due after one year through five years | 1,966.50 | 2,152.30 | |||||||||||||||||||||||
Due after five years through ten years | 2,689.50 | 2,879.60 | |||||||||||||||||||||||
Due after ten years | 9,565.70 | 11,167.60 | |||||||||||||||||||||||
Subtotal | 14,438.20 | 16,419.50 | |||||||||||||||||||||||
Structured securities | 3,969.90 | 4,215.40 | |||||||||||||||||||||||
Total fixed maturities, available for sale | $ | 18,408.10 | $ | 20,634.90 | |||||||||||||||||||||
Net Investment Income | |||||||||||||||||||||||||
Net investment income consisted of the following (dollars in millions): | |||||||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||||||
General account assets: | |||||||||||||||||||||||||
Fixed maturities | $ | 1,175.80 | $ | 1,290.30 | $ | 1,281.10 | |||||||||||||||||||
Equity securities | 13.9 | 7 | 4.2 | ||||||||||||||||||||||
Mortgage loans | 104.2 | 96.3 | 99.8 | ||||||||||||||||||||||
Policy loans | 11 | 17.3 | 17.1 | ||||||||||||||||||||||
Other invested assets | 17.1 | 14.4 | 14.4 | ||||||||||||||||||||||
Cash and cash equivalents | 0.6 | 0.5 | 0.6 | ||||||||||||||||||||||
Policyholder and reinsurer accounts and other special-purpose portfolios: | |||||||||||||||||||||||||
Trading securities (a) | 14.8 | 12.8 | 26.3 | ||||||||||||||||||||||
Options related to fixed index products: | |||||||||||||||||||||||||
Option income | 118.9 | 77.4 | 0.4 | ||||||||||||||||||||||
Change in value of options | (49.4 | ) | 100.1 | 25.1 | |||||||||||||||||||||
Other special-purpose portfolios | 42.1 | 67.9 | 36.1 | ||||||||||||||||||||||
Gross investment income | 1,449.00 | 1,684.00 | 1,505.10 | ||||||||||||||||||||||
Less investment expenses | 21.6 | 20 | 18.7 | ||||||||||||||||||||||
Net investment income | $ | 1,427.40 | $ | 1,664.00 | $ | 1,486.40 | |||||||||||||||||||
_________________ | |||||||||||||||||||||||||
(a) | Changes in the estimated fair value for trading securities still held as of the end of the respective years and included in net investment income were $3.4 million, $.4 million and $4.9 million for the years ended December 31, 2014, 2013 and 2012, respectively. | ||||||||||||||||||||||||
The estimated fair value of fixed maturity investments and mortgage loans not accruing investment income totaled nil and $.5 million at December 31, 2014 and 2013, respectively. | |||||||||||||||||||||||||
Net Realized Investment Gains (Losses) | |||||||||||||||||||||||||
The following table sets forth the net realized investment gains (losses) for the periods indicated (dollars in millions): | |||||||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||||||
Fixed maturity securities, available for sale: | |||||||||||||||||||||||||
Gross realized gains on sale | $ | 64.4 | $ | 57.7 | $ | 115.4 | |||||||||||||||||||
Gross realized losses on sale | (13.0 | ) | (11.4 | ) | (15.4 | ) | |||||||||||||||||||
Impairments: | |||||||||||||||||||||||||
Total other-than-temporary impairment losses | — | (7.1 | ) | (1.0 | ) | ||||||||||||||||||||
Other-than-temporary impairment losses recognized in accumulated other comprehensive income | — | — | — | ||||||||||||||||||||||
Net impairment losses recognized | — | (7.1 | ) | (1.0 | ) | ||||||||||||||||||||
Net realized investment gains from fixed maturities | 51.4 | 39.2 | 99 | ||||||||||||||||||||||
Equity securities | 10.1 | 4.8 | 0.1 | ||||||||||||||||||||||
Commercial mortgage loans | (.1 | ) | (1.1 | ) | (3.7 | ) | |||||||||||||||||||
Impairments of mortgage loans and other investments | (27.3 | ) | (4.5 | ) | (36.8 | ) | |||||||||||||||||||
Other (a) | 2.6 | (5.0 | ) | 22.5 | |||||||||||||||||||||
Net realized investment gains (losses) | $ | 36.7 | $ | 33.4 | $ | 81.1 | |||||||||||||||||||
_________________ | |||||||||||||||||||||||||
(a) | Changes in the estimated fair value for trading securities for we have elected the fair value option still held as of the end of the respective years and included in net realized investment gains (losses) were $7.8 million, $(3.0) million and $20.1 million for the years ended December 31, 2014, 2013 and 2012, respectively. | ||||||||||||||||||||||||
During 2014, we recognized net realized investment gains of $36.7 million, which were comprised of: (i) $54.4 million of net gains from the sales of investments (primarily fixed maturities) with proceeds of $2.1 billion; (ii) the increase in fair value of certain fixed maturity investments with embedded derivatives of $7.6 million; (iii) the increase in fair value of embedded derivatives related to a modified coinsurance agreement of $2.0 million; and (iv) $27.3 million of writedowns of mortgage loans and other investments for other than temporary declines in fair value recognized through net income. | |||||||||||||||||||||||||
During 2013, we recognized net realized investment gains of $33.4 million, which were comprised of: (i) $51.8 million of net gains from the sales of investments (primarily fixed maturities) with proceeds of $2.3 billion; (ii) the decrease in fair value of certain fixed maturity investments with embedded derivatives of $6.8 million; and (iii) $11.6 million of writedowns of investments for other than temporary declines in fair value recognized through net income. | |||||||||||||||||||||||||
During 2012, we recognized net realized investment gains of $81.1 million, which were comprised of: (i) $98.8 million of net gains from the sales of investments (primarily fixed maturities) with proceeds of $2.1 billion; (ii) the increase in fair value of certain fixed maturity investments with embedded derivatives of $20.1 million; and (iii) $37.8 million of writedowns of investments for other than temporary declines in fair value recognized through net income. | |||||||||||||||||||||||||
At December 31, 2014, there were no fixed maturity securities in default or considered nonperforming. | |||||||||||||||||||||||||
During 2014, the $13.0 million of realized losses on sales of $233.7 million of fixed maturity securities, available for sale, included: (i) $.7 million of losses related to the sales of securities issued by state and political subdivisions; and (ii) $12.3 million of additional losses primarily related to various corporate securities. Securities are generally sold at a loss following unforeseen issue-specific events or conditions or shifts in perceived risks. These reasons include but are not limited to: (i) changes in the investment environment; (ii) expectation that the market value could deteriorate further; (iii) desire to reduce our exposure to an asset class, an issuer or an industry; (iv) prospective or actual changes in credit quality; or (v) changes in expected cash flows. | |||||||||||||||||||||||||
During 2014, we recognized $27.3 million of impairment losses recorded in earnings which included: (i) a $6.8 million writedown of commercial mortgage loans as a result of our intent to sell the loans; (ii) $19.1 million of impairments related to two legacy private company investments where earnings and cash flows have not met the expectations assumed in our previous valuations; and (iii) $1.4 million of losses on other investments following unforeseen issue-specific events or conditions. | |||||||||||||||||||||||||
During 2013, the $11.4 million of realized losses on sales of $477.5 million of fixed maturity securities, available for sale, included: (i) $2.5 million of losses related to the sales of mortgage-backed securities and asset-backed securities; and (ii) $8.9 million of additional losses primarily related to various corporate securities. | |||||||||||||||||||||||||
During 2013, the $11.6 million of other-than-temporary impairments we recorded in earnings included: (i) $5.0 million of losses on a corporate security; (ii) $2.5 million of losses on an equity security; and (iii) $4.1 million of losses primarily related to fixed maturity securities following unforeseen issue-specific events or conditions. | |||||||||||||||||||||||||
During 2012, the $15.4 million of realized losses on sales of $402.5 million of fixed maturity securities, available for sale, included: (i) $5.2 million of losses related to the sales of mortgage-backed securities and asset-backed securities; and (ii) $10.2 million of additional losses primarily related to various corporate securities. | |||||||||||||||||||||||||
During 2012, the $37.8 million of other-than-temporary impairments we recorded in earnings included: (i) $5.4 million of losses related to certain commercial mortgage loans; (ii) $29.9 million of losses on equity securities primarily related to investments obtained through the commutation of an investment made by our Predecessor; and (iii) $2.5 million of losses on other investments following unforeseen issue-specific events or conditions. | |||||||||||||||||||||||||
Our fixed maturity investments are generally purchased in the context of various long-term strategies, including funding insurance liabilities, so we do not generally seek to generate short-term realized gains through the purchase and sale of such securities. In certain circumstances, including those in which securities are selling at prices which exceed our view of their underlying economic value, or when it is possible to reinvest the proceeds to better meet our long-term asset-liability objectives, we may sell certain securities. | |||||||||||||||||||||||||
The following summarizes the investments sold at a loss during 2014 which had been continuously in an unrealized loss position exceeding 20 percent of the amortized cost basis prior to the sale for the period indicated (dollars in millions): | |||||||||||||||||||||||||
At date of sale | |||||||||||||||||||||||||
Number | Amortized cost | Fair value | |||||||||||||||||||||||
of issuers | |||||||||||||||||||||||||
Less than 6 months prior to sale | 1 | $ | 0.5 | $ | 0.4 | ||||||||||||||||||||
Greater than or equal to 6 months and less than 12 months prior to sale | 1 | 0.2 | 0.2 | ||||||||||||||||||||||
Greater than 12 months prior to sale | 2 | 5.2 | 3.9 | ||||||||||||||||||||||
4 | $ | 5.9 | $ | 4.5 | |||||||||||||||||||||
We regularly evaluate all of our investments with unrealized losses for possible impairment. Our assessment of whether unrealized losses are "other than temporary" requires significant judgment. Factors considered include: (i) the extent to which fair value is less than the cost basis; (ii) the length of time that the fair value has been less than cost; (iii) whether the unrealized loss is event driven, credit-driven or a result of changes in market interest rates or risk premium; (iv) the near-term prospects for specific events, developments or circumstances likely to affect the value of the investment; (v) the investment's rating and whether the investment is investment-grade and/or has been downgraded since its purchase; (vi) whether the issuer is current on all payments in accordance with the contractual terms of the investment and is expected to meet all of its obligations under the terms of the investment; (vii) whether we intend to sell the investment or it is more likely than not that circumstances will require us to sell the investment before recovery occurs; (viii) the underlying current and prospective asset and enterprise values of the issuer and the extent to which the recoverability of the carrying value of our investment may be affected by changes in such values; (ix) projections of, and unfavorable changes in, cash flows on structured securities including mortgage-backed and asset-backed securities; (x) our best estimate of the value of any collateral; and (xi) other objective and subjective factors. | |||||||||||||||||||||||||
Future events may occur, or additional information may become available, which may necessitate future realized losses in our portfolio. Significant losses could have a material adverse effect on our consolidated financial statements in future periods. | |||||||||||||||||||||||||
Impairment losses on equity securities are recognized in net income. The manner in which impairment losses on fixed maturity securities, available for sale, are recognized in the financial statements is dependent on the facts and circumstances related to the specific security. If we intend to sell a security or it is more likely than not that we would be required to sell a security before the recovery of its amortized cost, the security is other-than-temporarily impaired and the full amount of the impairment is recognized as a loss through earnings. If we do not expect to recover the amortized cost basis, we do not plan to sell the security, and if it is not more likely than not that we would be required to sell a security before the recovery of its amortized cost, less any current period credit loss, the recognition of the other-than-temporary impairment is bifurcated. We recognize the credit loss portion in net income and the noncredit loss portion in accumulated other comprehensive income. | |||||||||||||||||||||||||
We estimate the amount of the credit loss component of a fixed maturity security impairment as the difference between amortized cost and the present value of the expected cash flows of the security. The present value is determined using the best estimate of future cash flows discounted at the effective interest rate implicit to the security at the date of purchase or the current yield to accrete an asset-backed or floating rate security. The methodology and assumptions for establishing the best estimate of future cash flows vary depending on the type of security. | |||||||||||||||||||||||||
For most structured securities, cash flow estimates are based on bond specific facts and circumstances that may include collateral characteristics, expectations of delinquency and default rates, loss severity, prepayment speeds and structural support, including excess spread, subordination and guarantees. For corporate bonds, cash flow estimates are derived from scenario-based outcomes of expected corporate restructurings or the disposition of assets using bond specific facts and circumstances. The previous amortized cost basis less the impairment recognized in net income becomes the security's new cost basis. We accrete the new cost basis to the estimated future cash flows over the expected remaining life of the security, except when the security is in default or considered nonperforming. | |||||||||||||||||||||||||
The remaining noncredit impairment, which is recorded in accumulated other comprehensive income, is the difference between the security's estimated fair value and our best estimate of future cash flows discounted at the effective interest rate prior to impairment. The remaining noncredit impairment typically represents changes in the market interest rates, current market liquidity and risk premiums. As of December 31, 2014, other-than-temporary impairments included in accumulated other comprehensive income of $3.2 million (before taxes and related amortization) related to structured securities. | |||||||||||||||||||||||||
Mortgage loans are impaired when it is probable that we will not collect the contractual principal and interest on the loan. We measure impairment based upon the difference between the carrying value of the loan and the estimated fair value of the collateral securing the loan less cost to sell. | |||||||||||||||||||||||||
The following table summarizes the amount of credit losses recognized in earnings on fixed maturity securities, available for sale, held at the beginning of the period, for which a portion of the other-than-temporary impairment was also recognized in accumulated other comprehensive income for years ended December 31, 2014, 2013 and 2012 (dollars in millions): | |||||||||||||||||||||||||
Year ended | |||||||||||||||||||||||||
December 31, | |||||||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||||||
Credit losses on fixed maturity securities, available for sale, beginning of period | $ | (1.3 | ) | $ | (1.6 | ) | $ | (2.0 | ) | ||||||||||||||||
Add: credit losses on other-than-temporary impairments not previously recognized | — | — | — | ||||||||||||||||||||||
Less: credit losses on securities sold | 0.3 | 0.3 | 0.4 | ||||||||||||||||||||||
Less: credit losses on securities impaired due to intent to sell (a) | — | — | — | ||||||||||||||||||||||
Add: credit losses on previously impaired securities | — | — | — | ||||||||||||||||||||||
Less: increases in cash flows expected on previously impaired securities | — | — | — | ||||||||||||||||||||||
Credit losses on fixed maturity securities, available for sale, end of period | $ | (1.0 | ) | $ | (1.3 | ) | $ | (1.6 | ) | ||||||||||||||||
__________ | |||||||||||||||||||||||||
(a) | Represents securities for which the amount previously recognized in accumulated other comprehensive income was recognized in earnings because we intend to sell the security or we more likely than not will be required to sell the security before recovery of its amortized cost basis. | ||||||||||||||||||||||||
Investments with Unrealized Losses | |||||||||||||||||||||||||
The following table sets forth the amortized cost and estimated fair value of those fixed maturities, available for sale, with unrealized losses at December 31, 2014, by contractual maturity. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties. Structured securities frequently include provisions for periodic principal payments and permit periodic unscheduled payments. | |||||||||||||||||||||||||
Amortized | Estimated | ||||||||||||||||||||||||
cost | fair | ||||||||||||||||||||||||
value | |||||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||
Due in one year or less | $ | 7.8 | $ | 7.8 | |||||||||||||||||||||
Due after one year through five years | 170.7 | 165.3 | |||||||||||||||||||||||
Due after five years through ten years | 508.4 | 474.4 | |||||||||||||||||||||||
Due after ten years | 758.2 | 709.4 | |||||||||||||||||||||||
Subtotal | 1,445.10 | 1,356.90 | |||||||||||||||||||||||
Structured securities | 502.8 | 494.2 | |||||||||||||||||||||||
Total | $ | 1,947.90 | $ | 1,851.10 | |||||||||||||||||||||
The following summarizes the investments in our portfolio rated below-investment grade which have been continuously in an unrealized loss position exceeding 20 percent of the cost basis for the period indicated as of December 31, 2014 (dollars in millions): | |||||||||||||||||||||||||
Number | Cost | Unrealized | Estimated | ||||||||||||||||||||||
of issuers | basis | loss | fair value | ||||||||||||||||||||||
Less than 6 months | 6 | $ | 40.9 | $ | (10.3 | ) | $ | 30.6 | |||||||||||||||||
Greater than 12 months (a) | 1 | 14.1 | (4.5 | ) | 9.6 | ||||||||||||||||||||
7 | $ | 55 | $ | (14.8 | ) | $ | 40.2 | ||||||||||||||||||
________________ | |||||||||||||||||||||||||
(a) | With respect to the security which has been in an unrealized position for greater than 12 months, we have analyzed the issuer's financial performance and determined we expect to recover the entire amortized cost. | ||||||||||||||||||||||||
The following table summarizes the gross unrealized losses and fair values of our investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that such securities have been in a continuous unrealized loss position, at December 31, 2014 (dollars in millions): | |||||||||||||||||||||||||
Less than 12 months | 12 months or greater | Total | |||||||||||||||||||||||
Description of securities | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
value | losses | value | losses | value | losses | ||||||||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | $ | 12.1 | $ | (.1 | ) | $ | 4.6 | $ | — | $ | 16.7 | $ | (.1 | ) | |||||||||||
States and political subdivisions | 13.2 | (.3 | ) | 44.5 | (2.7 | ) | 57.7 | (3.0 | ) | ||||||||||||||||
Corporate securities | 985 | (65.9 | ) | 297.5 | (19.2 | ) | 1,282.50 | (85.1 | ) | ||||||||||||||||
Asset-backed securities | 91.2 | (1.3 | ) | 60.5 | (2.1 | ) | 151.7 | (3.4 | ) | ||||||||||||||||
Collateralized debt obligations | 184.2 | (3.4 | ) | — | — | 184.2 | (3.4 | ) | |||||||||||||||||
Commercial mortgage-backed securities | 46.7 | (.5 | ) | — | — | 46.7 | (.5 | ) | |||||||||||||||||
Mortgage pass-through securities | 0.5 | — | 0.1 | — | 0.6 | — | |||||||||||||||||||
Collateralized mortgage obligations | 79 | (.8 | ) | 32 | (.5 | ) | 111 | (1.3 | ) | ||||||||||||||||
Total fixed maturities, available for sale | $ | 1,411.90 | $ | (72.3 | ) | $ | 439.2 | $ | (24.5 | ) | $ | 1,851.10 | $ | (96.8 | ) | ||||||||||
Equity securities | $ | 13.2 | $ | (.6 | ) | $ | 0.5 | $ | — | $ | 13.7 | $ | (.6 | ) | |||||||||||
The following table summarizes the gross unrealized losses and fair values of our investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that such securities have been in a continuous unrealized loss position, at December 31, 2013 (dollars in millions): | |||||||||||||||||||||||||
Less than 12 months | 12 months or greater | Total | |||||||||||||||||||||||
Description of securities | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
value | losses | value | losses | value | losses | ||||||||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | $ | 23.8 | $ | (.6 | ) | $ | — | $ | — | $ | 23.8 | $ | (.6 | ) | |||||||||||
States and political subdivisions | 473.6 | (30.3 | ) | 79.2 | (8.7 | ) | 552.8 | (39.0 | ) | ||||||||||||||||
Corporate securities | 2,432.40 | (137.7 | ) | 170.3 | (20.8 | ) | 2,602.70 | (158.5 | ) | ||||||||||||||||
Asset-backed securities | 308.4 | (6.5 | ) | 32.5 | (.7 | ) | 340.9 | (7.2 | ) | ||||||||||||||||
Collateralized debt obligations | 46.7 | (.5 | ) | — | — | 46.7 | (.5 | ) | |||||||||||||||||
Commercial mortgage-backed securities | 161.8 | (5.8 | ) | — | — | 161.8 | (5.8 | ) | |||||||||||||||||
Mortgage pass-through securities | 1.6 | — | 1.6 | — | 3.2 | — | |||||||||||||||||||
Collateralized mortgage obligations | 121.8 | (1.6 | ) | 2.2 | — | 124 | (1.6 | ) | |||||||||||||||||
Total fixed maturities, available for sale | $ | 3,570.10 | $ | (183.0 | ) | $ | 285.8 | $ | (30.2 | ) | $ | 3,855.90 | $ | (213.2 | ) | ||||||||||
Equity securities | $ | 0.5 | $ | — | $ | — | $ | — | $ | 0.5 | $ | — | |||||||||||||
Based on management's current assessment of investments with unrealized losses at December 31, 2014, the Company believes the issuers of the securities will continue to meet their obligations (or with respect to equity-type securities, the investment value will recover to its cost basis). While we do not have the intent to sell securities with unrealized losses and it is not more likely than not that we will be required to sell securities with unrealized losses prior to their anticipated recovery, our intent on an individual security may change, based upon market or other unforeseen developments. In such instances, if a loss is recognized from a sale subsequent to a balance sheet date due to these unexpected developments, the loss is recognized in the period in which we had the intent to sell the security before its anticipated recovery. | |||||||||||||||||||||||||
Structured Securities | |||||||||||||||||||||||||
At December 31, 2014 fixed maturity investments included structured securities with an estimated fair value of $4.2 billion (or 20 percent of all fixed maturity securities). The yield characteristics of structured securities generally differ in some respects from those of traditional corporate fixed-income securities or government securities. For example, interest and principal payments on structured securities may occur more frequently, often monthly. In many instances, we are subject to variability in the amount and timing of principal and interest payments. For example, in many cases, partial prepayments may occur at the option of the issuer and prepayment rates are influenced by a number of factors that cannot be predicted with certainty, including: the relative sensitivity of prepayments on the underlying assets backing the security to changes in interest rates and asset values; the availability and cost of alternative financing; a variety of economic, geographic and other factors; the timing, pace and proceeds of liquidations of defaulted collateral; and various security-specific structural considerations (for example, the repayment priority of a given security in a securitization structure). In addition, the total amount of payments for non-agency structured securities may be affected by changes to cumulative default rates or loss severities of the related collateral. | |||||||||||||||||||||||||
Historically, the rate of prepayments on structured securities has tended to increase when prevailing interest rates have declined significantly in absolute terms and also relative to the interest rates on the underlying collateral. The yields recognized on structured securities purchased at a discount to par will generally increase (relative to the stated rate) when the underlying collateral prepays faster than expected. The yields recognized on structured securities purchased at a premium will decrease (relative to the stated rate) when the underlying collateral prepays faster than expected. When interest rates decline, the proceeds from prepayments may be reinvested at lower rates than we were earning on the prepaid securities. When interest rates increase, prepayments may decrease below expected levels. When this occurs, the average maturity and duration of structured securities increases, decreasing the yield on structured securities purchased at discounts and increasing the yield on those purchased at a premium because of a decrease in the annual amortization of premium. | |||||||||||||||||||||||||
For structured securities included in fixed maturities, available for sale, that were purchased at a discount or premium, we recognize investment income using an effective yield based on anticipated future prepayments and the estimated final maturity of the securities. Actual prepayment experience is periodically reviewed and effective yields are recalculated when differences arise between the prepayments originally anticipated and the actual prepayments received and currently anticipated. For credit sensitive mortgage-backed and asset-backed securities, and for securities that can be prepaid or settled in a way that we would not recover substantially all of our investment, the effective yield is recalculated on a prospective basis. Under this method, the amortized cost basis in the security is not immediately adjusted and a new yield is applied prospectively. For all other structured and asset-backed securities, the effective yield is recalculated when changes in assumptions are made, and reflected in our income on a retrospective basis. Under this method, the amortized cost basis of the investment in the securities is adjusted to the amount that would have existed had the new effective yield been applied since the acquisition of the securities. Such adjustments were not significant in 2014. | |||||||||||||||||||||||||
For purchased credit impaired securities, at acquisition, the difference between the undiscounted expected future cash flows and the recorded investment in the securities represents the initial accretable yield, which is to be accreted into net investment income over the securities’ remaining lives on a level-yield basis. Subsequently, effective yields recognized on purchased credit impaired securities are recalculated and adjusted prospectively to reflect changes in the contractual benchmark interest rates on variable rate securities and any significant increases in undiscounted expected future cash flows arising due to reasons other than interest rate changes. Significant decreases in expected cash flows arising from credit events would result in impairment if such security's fair value is below amortized cost. | |||||||||||||||||||||||||
The following table sets forth the par value, amortized cost and estimated fair value of structured securities, summarized by interest rates on the underlying collateral, at December 31, 2014 (dollars in millions): | |||||||||||||||||||||||||
Par | Amortized | Estimated | |||||||||||||||||||||||
value | cost | fair value | |||||||||||||||||||||||
Below 4 percent | $ | 1,160.70 | $ | 887.8 | $ | 908 | |||||||||||||||||||
4 percent – 5 percent | 759.5 | 717.6 | 757.7 | ||||||||||||||||||||||
5 percent – 6 percent | 1,880.00 | 1,760.10 | 1,882.20 | ||||||||||||||||||||||
6 percent – 7 percent | 533.6 | 496.5 | 544.7 | ||||||||||||||||||||||
7 percent – 8 percent | 85.3 | 87 | 101.3 | ||||||||||||||||||||||
8 percent and above | 20 | 20.9 | 21.5 | ||||||||||||||||||||||
Total structured securities | $ | 4,439.10 | $ | 3,969.90 | $ | 4,215.40 | |||||||||||||||||||
The amortized cost and estimated fair value of structured securities at December 31, 2014, summarized by type of security, were as follows (dollars in millions): | |||||||||||||||||||||||||
Estimated fair value | |||||||||||||||||||||||||
Type | Amortized | Amount | Percent | ||||||||||||||||||||||
cost | of fixed | ||||||||||||||||||||||||
maturities | |||||||||||||||||||||||||
Pass-throughs, sequential and equivalent securities | $ | 969.4 | $ | 1,033.40 | 5 | % | |||||||||||||||||||
Planned amortization classes, target amortization classes and accretion-directed bonds | 243.3 | 262 | 1.3 | ||||||||||||||||||||||
Commercial mortgage-backed securities | 1,195.00 | 1,276.30 | 6.2 | ||||||||||||||||||||||
Asset-backed securities | 1,186.60 | 1,269.00 | 6.1 | ||||||||||||||||||||||
Collateralized debt obligations | 325.3 | 324.5 | 1.6 | ||||||||||||||||||||||
Other | 50.3 | 50.2 | 0.2 | ||||||||||||||||||||||
Total structured securities | $ | 3,969.90 | $ | 4,215.40 | 20.4 | % | |||||||||||||||||||
Pass-throughs, sequentials and equivalent securities have unique prepayment variability characteristics. Pass-through securities typically return principal to the holders based on cash payments from the underlying mortgage obligations. Sequential securities return principal to tranche holders in a detailed hierarchy. Planned amortization classes, targeted amortization classes and accretion-directed bonds adhere to fixed schedules of principal payments as long as the underlying mortgage loans experience prepayments within certain estimated ranges. In most circumstances, changes in prepayment rates are first absorbed by support or companion classes insulating the timing of receipt of cash flows from the consequences of both faster prepayments (average life shortening) and slower prepayments (average life extension). | |||||||||||||||||||||||||
Commercial mortgage-backed securities are secured by commercial real estate mortgages, generally income producing properties that are managed for profit. Property types include multi-family dwellings including apartments, retail centers, hotels, restaurants, hospitals, nursing homes, warehouses, and office buildings. While most commercial mortgage-backed securities have call protection features whereby underlying borrowers may not prepay their mortgages for stated periods of time without incurring prepayment penalties, recoveries on defaulted collateral may result in involuntary prepayments. | |||||||||||||||||||||||||
Commercial Mortgage Loans | |||||||||||||||||||||||||
At December 31, 2014, the mortgage loan balance was primarily comprised of commercial mortgage loans. Approximately 13 percent, 10 percent and 7 percent of the mortgage loan balance were on properties located in California, Texas and Maryland, respectively. No other state comprised greater than five percent of the mortgage loan balance. None of the commercial mortgage loan balance was noncurrent at December 31, 2014. Our commercial mortgage loan portfolio is comprised of large commercial mortgage loans. We do not hold groups of smaller-balance homogeneous loans. Our loans have risk characteristics that are individually unique. Accordingly, we measure potential losses on a loan-by-loan basis rather than establishing an allowance for losses on mortgage loans. | |||||||||||||||||||||||||
The following table provides the carrying value and estimated fair value of our outstanding mortgage loans and the underlying collateral as of December 31, 2014 (dollars in millions): | |||||||||||||||||||||||||
Estimated fair | |||||||||||||||||||||||||
value | |||||||||||||||||||||||||
Loan-to-value ratio (a) | Carrying value | Mortgage loans | Collateral | ||||||||||||||||||||||
Less than 60% | $ | 745.8 | $ | 787.4 | $ | 1,694.10 | |||||||||||||||||||
60% to 70% | 376.9 | 387.1 | 587 | ||||||||||||||||||||||
Greater than 70% to 80% | 425.3 | 441.6 | 574.8 | ||||||||||||||||||||||
Greater than 80% to 90% | 139.6 | 147.8 | 165.2 | ||||||||||||||||||||||
Greater than 90% | 4.3 | 5 | 4.7 | ||||||||||||||||||||||
Total | $ | 1,691.90 | $ | 1,768.90 | $ | 3,025.80 | |||||||||||||||||||
________________ | |||||||||||||||||||||||||
(a) | Loan-to-value ratios are calculated as the ratio of: (i) the carrying value of the commercial mortgage loans; to (ii) the estimated fair value of the underlying collateral. | ||||||||||||||||||||||||
Other Investment Disclosures | |||||||||||||||||||||||||
Life insurance companies are required to maintain certain investments on deposit with state regulatory authorities. Such assets had aggregate carrying values of $42.3 million and $65.6 million at December 31, 2014 and 2013, respectively. | |||||||||||||||||||||||||
CNO had no fixed maturity investments that were in excess of 10 percent of shareholders' equity at December 31, 2014 and 2013. |
FAIR_VALUE_MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended | ||||||||||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS | ||||||||||||||||||||||||||||||||||||
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and, therefore, represents an exit price, not an entry price. We carry certain assets and liabilities at fair value on a recurring basis, including fixed maturities, equity securities, trading securities, investments held by VIEs, derivatives, cash and cash equivalents, separate account assets and embedded derivatives. We carry our COLI policy, which is invested in a series of mutual funds, at its cash surrender value and our hedge fund investments at their net asset values; in both cases, we believe these values approximate their fair values. In addition, we disclose fair value for certain financial instruments, including mortgage loans and policy loans, policyholder account balances, investment borrowings, notes payable and borrowings related to VIEs. | |||||||||||||||||||||||||||||||||||||
The degree of judgment utilized in measuring the fair value of financial instruments is largely dependent on the level to which pricing is based on observable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our view of market assumptions in the absence of observable market data. Financial instruments with readily available active quoted prices would be considered to have fair values based on the highest level of observable inputs, and little judgment would be utilized in measuring fair value. Financial instruments that rarely trade would often have fair value based on a lower level of observable inputs, and more judgment would be utilized in measuring fair value. | |||||||||||||||||||||||||||||||||||||
Valuation Hierarchy | |||||||||||||||||||||||||||||||||||||
There is a three-level hierarchy for valuing assets or liabilities at fair value based on whether inputs are observable or unobservable. | |||||||||||||||||||||||||||||||||||||
• | Level 1 – includes assets and liabilities valued using inputs that are unadjusted quoted prices in active markets for identical assets or liabilities. Our Level 1 assets primarily include cash and exchange traded securities. | ||||||||||||||||||||||||||||||||||||
• | Level 2 – includes assets and liabilities valued using inputs that are quoted prices for similar assets in an active market, quoted prices for identical or similar assets in a market that is not active, observable inputs, or observable inputs that can be corroborated by market data. Level 2 assets and liabilities include those financial instruments that are valued by independent pricing services using models or other valuation methodologies. These models consider various inputs such as credit rating, maturity, corporate credit spreads, reported trades and other inputs that are observable or derived from observable information in the marketplace or are supported by transactions executed in the marketplace. Financial assets in this category primarily include: certain publicly registered and privately placed corporate fixed maturity securities; certain government or agency securities; certain mortgage and asset-backed securities; certain equity securities; most investments held by our consolidated VIEs; certain mutual fund and hedge fund investments; most short-term investments; and non-exchange-traded derivatives such as call options. Financial liabilities in this category include investment borrowings, notes payable and borrowings related to VIEs. | ||||||||||||||||||||||||||||||||||||
• | Level 3 – includes assets and liabilities valued using unobservable inputs that are used in model-based valuations that contain management assumptions. Level 3 assets and liabilities include those financial instruments whose fair value is estimated based on broker/dealer quotes, pricing services or internally developed models or methodologies utilizing significant inputs not based on, or corroborated by, readily available market information. Financial assets in this category include certain corporate securities (primarily certain below-investment grade privately placed securities), certain structured securities, mortgage loans, and other less liquid securities. Financial liabilities in this category include our insurance liabilities for interest-sensitive products, which includes embedded derivatives (including embedded derivatives related to our fixed index annuity products and to a modified coinsurance arrangement) since their values include significant unobservable inputs including actuarial assumptions. | ||||||||||||||||||||||||||||||||||||
At each reporting date, we classify assets and liabilities into the three input levels based on the lowest level of input that is significant to the measurement of fair value for each asset and liability reported at fair value. This classification is impacted by a number of factors, including the type of financial instrument, whether the financial instrument is new to the market and not yet established, the characteristics specific to the transaction and overall market conditions. Our assessment of the significance of a particular input to the fair value measurement and the ultimate classification of each asset and liability requires judgment and is subject to change from period to period based on the observability of the valuation inputs. Any transfers between levels are reported as having occurred at the beginning of the period. There were no transfers between Level 1 and Level 2 in 2014 and 2013. | |||||||||||||||||||||||||||||||||||||
The vast majority of our fixed maturity and equity securities, including those held in trading portfolios and those held by consolidated VIEs, short-term and separate account assets use Level 2 inputs for the determination of fair value. These fair values are obtained primarily from independent pricing services, which use Level 2 inputs for the determination of fair value. Substantially all of our Level 2 fixed maturity securities and separate account assets were valued from independent pricing services. Third party pricing services normally derive security prices through recently reported trades for identical or similar securities making adjustments through the reporting date based upon available market observable information. If there are no recently reported trades, the third party pricing services may use matrix or model processes to develop a security price where future cash flow expectations are discounted at an estimated risk-adjusted market rate. The number of prices obtained for a given security is dependent on the Company's analysis of such prices as further described below. | |||||||||||||||||||||||||||||||||||||
For securities that are not priced by pricing services and may not be reliably priced using pricing models, we obtain broker quotes. These broker quotes are non-binding and represent an exit price, but assumptions used to establish the fair value may not be observable and therefore represent Level 3 inputs. Approximately 26 percent of our Level 3 fixed maturity securities were valued using unadjusted broker quotes or broker-provided valuation inputs. The remaining Level 3 fixed maturity investments do not have readily determinable market prices and/or observable inputs. For these securities, we use internally developed valuations. Key assumptions used to determine fair value for these securities may include risk premiums, projected performance of underlying collateral and other factors involving significant assumptions which may not be reflective of an active market. For certain investments, we use a matrix or model process to develop a security price where future cash flow expectations are discounted at an estimated market rate. The pricing matrix incorporates term interest rates as well as a spread level based on the issuer's credit rating, other factors relating to the issuer, and the security's maturity. In some instances issuer-specific spread adjustments, which can be positive or negative, are made based upon internal analysis of security specifics such as liquidity, deal size, and time to maturity. | |||||||||||||||||||||||||||||||||||||
As the Company is responsible for the determination of fair value, we have control processes designed to ensure that the fair values received from third-party pricing sources are reasonable and the valuation techniques and assumptions used appear reasonable and consistent with prevailing market conditions. Additionally, when inputs are provided by third-party pricing sources, we have controls in place to review those inputs for reasonableness. As part of these controls, we perform monthly quantitative and qualitative analysis on the prices received from third parties to determine whether the prices are reasonable estimates of fair value. The Company's analysis includes: (i) a review of the methodology used by third party pricing services; (ii) where available, a comparison of multiple pricing services' valuations for the same security; (iii) a review of month to month price fluctuations; (iv) a review to ensure valuations are not unreasonably dated; and (v) back testing to compare actual purchase and sale transactions with valuations received from third parties. As a result of such procedures, the Company may conclude the prices received from third parties are not reflective of current market conditions. In those instances, we may request additional pricing quotes or apply internally developed valuations. However, the number of instances is insignificant and the aggregate change in value of such investments is not materially different from the original prices received. | |||||||||||||||||||||||||||||||||||||
The categorization of the fair value measurements of our investments priced by independent pricing services was based upon the Company's judgment of the inputs or methodologies used by the independent pricing services to value different asset classes. Such inputs typically include: benchmark yields, reported trades, broker dealer quotes, issuer spreads, benchmark securities, bids, offers and reference data. The Company categorizes such fair value measurements based upon asset classes and the underlying observable or unobservable inputs used to value such investments. | |||||||||||||||||||||||||||||||||||||
The fair value measurements for derivative instruments, including embedded derivatives requiring bifurcation, are determined based on the consideration of several inputs including closing exchange or over-the-counter market price quotations; time value and volatility factors underlying options; market interest rates; and non-performance risk. For certain embedded derivatives, we use actuarial assumptions in the determination of fair value. | |||||||||||||||||||||||||||||||||||||
The categorization of fair value measurements, by input level, for our financial instruments carried at fair value on a recurring basis at December 31, 2014 is as follows (dollars in millions): | |||||||||||||||||||||||||||||||||||||
Quoted prices in active markets | Significant other observable inputs | Significant unobservable inputs | Total | ||||||||||||||||||||||||||||||||||
for identical assets or liabilities | (Level 2) | (Level 3) | |||||||||||||||||||||||||||||||||||
(Level 1) | |||||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||
Fixed maturities, available for sale: | |||||||||||||||||||||||||||||||||||||
Corporate securities | $ | — | $ | 13,605.10 | $ | 365.9 | $ | 13,971.00 | |||||||||||||||||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | — | 168.9 | — | 168.9 | |||||||||||||||||||||||||||||||||
States and political subdivisions | — | 2,242.20 | 35.5 | 2,277.70 | |||||||||||||||||||||||||||||||||
Debt securities issued by foreign governments | — | 1.9 | — | 1.9 | |||||||||||||||||||||||||||||||||
Asset-backed securities | — | 1,209.80 | 59.2 | 1,269.00 | |||||||||||||||||||||||||||||||||
Collateralized debt obligations | — | 324.5 | — | 324.5 | |||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | — | 1,275.10 | 1.2 | 1,276.30 | |||||||||||||||||||||||||||||||||
Mortgage pass-through securities | — | 4.2 | 0.4 | 4.6 | |||||||||||||||||||||||||||||||||
Collateralized mortgage obligations | — | 1,341.00 | — | 1,341.00 | |||||||||||||||||||||||||||||||||
Total fixed maturities, available for sale | — | 20,172.70 | 462.2 | 20,634.90 | |||||||||||||||||||||||||||||||||
Equity securities - corporate securities | 216.9 | 174.1 | 28 | 419 | |||||||||||||||||||||||||||||||||
Trading securities: | |||||||||||||||||||||||||||||||||||||
Corporate securities | — | 24.3 | — | 24.3 | |||||||||||||||||||||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | — | 3.7 | — | 3.7 | |||||||||||||||||||||||||||||||||
Asset-backed securities | — | 24 | — | 24 | |||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | — | 131 | 28.6 | 159.6 | |||||||||||||||||||||||||||||||||
Mortgage pass-through securities | — | 0.1 | — | 0.1 | |||||||||||||||||||||||||||||||||
Collateralized mortgage obligations | — | 29.7 | — | 29.7 | |||||||||||||||||||||||||||||||||
Equity securities | 3.5 | — | — | 3.5 | |||||||||||||||||||||||||||||||||
Total trading securities | 3.5 | 212.8 | 28.6 | 244.9 | |||||||||||||||||||||||||||||||||
Investments held by variable interest entities - corporate securities | — | 1,367.10 | — | 1,367.10 | |||||||||||||||||||||||||||||||||
Other invested assets - derivatives | 1.4 | 107.2 | — | 108.6 | |||||||||||||||||||||||||||||||||
Assets held in separate accounts | — | 5.6 | — | 5.6 | |||||||||||||||||||||||||||||||||
Total assets carried at fair value by category | $ | 221.8 | $ | 22,039.50 | $ | 518.8 | $ | 22,780.10 | |||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||
Future policy benefits - embedded derivatives associated with fixed index annuity products | $ | — | $ | — | $ | 1,081.50 | $ | 1,081.50 | |||||||||||||||||||||||||||||
The categorization of fair value measurements, by input level, for our financial instruments carried at fair value on a recurring basis at December 31, 2013 is as follows (dollars in millions): | |||||||||||||||||||||||||||||||||||||
Quoted prices in active markets | Significant other observable inputs | Significant unobservable inputs | Total | ||||||||||||||||||||||||||||||||||
for identical assets or liabilities | (Level 2) | (Level 3) | |||||||||||||||||||||||||||||||||||
(Level 1) | |||||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||
Fixed maturities, available for sale: | |||||||||||||||||||||||||||||||||||||
Corporate securities | $ | — | $ | 15,340.10 | $ | 359.6 | $ | 15,699.70 | |||||||||||||||||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | — | 73.1 | — | 73.1 | |||||||||||||||||||||||||||||||||
States and political subdivisions | — | 2,204.40 | — | 2,204.40 | |||||||||||||||||||||||||||||||||
Asset-backed securities | — | 1,419.90 | 42.2 | 1,462.10 | |||||||||||||||||||||||||||||||||
Collateralized debt obligations | — | 47.3 | 246.7 | 294 | |||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | — | 1,609.00 | — | 1,609.00 | |||||||||||||||||||||||||||||||||
Mortgage pass-through securities | — | 11.8 | 1.6 | 13.4 | |||||||||||||||||||||||||||||||||
Collateralized mortgage obligations | — | 1,848.90 | — | 1,848.90 | |||||||||||||||||||||||||||||||||
Total fixed maturities, available for sale | — | 22,554.50 | 650.1 | 23,204.60 | |||||||||||||||||||||||||||||||||
Equity securities - corporate securities | 79.6 | 118.9 | 24.5 | 223 | |||||||||||||||||||||||||||||||||
Trading securities: | |||||||||||||||||||||||||||||||||||||
Corporate securities | — | 45.2 | — | 45.2 | |||||||||||||||||||||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | — | 4.6 | — | 4.6 | |||||||||||||||||||||||||||||||||
States and political subdivisions | — | 14.1 | — | 14.1 | |||||||||||||||||||||||||||||||||
Asset-backed securities | — | 24.3 | — | 24.3 | |||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | — | 125.8 | — | 125.8 | |||||||||||||||||||||||||||||||||
Mortgage pass-through securities | — | 0.1 | — | 0.1 | |||||||||||||||||||||||||||||||||
Collateralized mortgage obligations | — | 31.1 | — | 31.1 | |||||||||||||||||||||||||||||||||
Equity securities | 2.4 | — | — | 2.4 | |||||||||||||||||||||||||||||||||
Total trading securities | 2.4 | 245.2 | — | 247.6 | |||||||||||||||||||||||||||||||||
Investments held by variable interest entities - corporate securities | — | 1,046.70 | — | 1,046.70 | |||||||||||||||||||||||||||||||||
Other invested assets - derivatives | 0.6 | 156.2 | — | 156.8 | |||||||||||||||||||||||||||||||||
Assets held in separate accounts | — | 10.3 | — | 10.3 | |||||||||||||||||||||||||||||||||
Total assets carried at fair value by category | $ | 82.6 | $ | 24,131.80 | $ | 674.6 | $ | 24,889.00 | |||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||
Future policy benefits - embedded derivatives associated with fixed index annuity products | $ | — | $ | — | $ | 903.7 | $ | 903.7 | |||||||||||||||||||||||||||||
Other liabilities - embedded derivatives associated with modified coinsurance agreement | — | — | 1.8 | 1.8 | |||||||||||||||||||||||||||||||||
Total liabilities carried at fair value by category | $ | — | $ | — | $ | 905.5 | $ | 905.5 | |||||||||||||||||||||||||||||
For those financial instruments disclosed at fair value, we use the following methods and assumptions to determine the estimated fair values: | |||||||||||||||||||||||||||||||||||||
Mortgage loans and policy loans. We discount future expected cash flows based on interest rates currently being offered for similar loans with similar risk characteristics. We aggregate loans with similar characteristics in our calculations. The fair value of policy loans approximates their carrying value. | |||||||||||||||||||||||||||||||||||||
Company-owned life insurance is backed by a series of mutual funds and is carried at cash surrender value which approximates estimated fair value. | |||||||||||||||||||||||||||||||||||||
Alternative investment funds are carried at their net asset values which approximates estimated fair value. | |||||||||||||||||||||||||||||||||||||
Cash and cash equivalents include commercial paper, invested cash and other investments purchased with original maturities of less than three months. We carry them at amortized cost, which approximates estimated fair value. | |||||||||||||||||||||||||||||||||||||
Liabilities for policyholder account balances. We discount future expected cash flows based on interest rates currently being offered for similar contracts with similar maturities. | |||||||||||||||||||||||||||||||||||||
Investment borrowings, notes payable and borrowings related to variable interest entities. For publicly traded debt, we use current fair values. For other notes, we use discounted cash flow analyses based on our current incremental borrowing rates for similar types of borrowing arrangements. | |||||||||||||||||||||||||||||||||||||
The fair value measurements for our financial instruments disclosed at fair value on a recurring basis are as follows (dollars in millions): | |||||||||||||||||||||||||||||||||||||
December 31, 2014 | |||||||||||||||||||||||||||||||||||||
Quoted prices in active markets for identical assets or liabilities | Significant other observable inputs | Significant unobservable inputs | Total estimated fair value | Total carrying amount | |||||||||||||||||||||||||||||||||
(Level 1) | (Level 2) | (Level 3) | |||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||
Mortgage loans | $ | — | $ | — | $ | 1,768.90 | $ | 1,768.90 | $ | 1,691.90 | |||||||||||||||||||||||||||
Policy loans | — | — | 106.9 | 106.9 | 106.9 | ||||||||||||||||||||||||||||||||
Other invested assets: | |||||||||||||||||||||||||||||||||||||
Company-owned life insurance | — | 157.6 | — | 157.6 | 157.6 | ||||||||||||||||||||||||||||||||
Alternative investment funds | — | 102.8 | — | 102.8 | 102.8 | ||||||||||||||||||||||||||||||||
Cash and cash equivalents: | |||||||||||||||||||||||||||||||||||||
Unrestricted | 549.6 | 62 | — | 611.6 | 611.6 | ||||||||||||||||||||||||||||||||
Held by variable interest entities | 68.3 | — | — | 68.3 | 68.3 | ||||||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||
Policyholder account balances (a) | — | — | 10,707.20 | 10,707.20 | 10,707.20 | ||||||||||||||||||||||||||||||||
Investment borrowings | — | 1,520.40 | — | 1,520.40 | 1,519.20 | ||||||||||||||||||||||||||||||||
Borrowings related to variable interest entities | — | 1,229.20 | — | 1,229.20 | 1,286.10 | ||||||||||||||||||||||||||||||||
Notes payable – direct corporate obligations | — | 807.4 | — | 807.4 | 794.4 | ||||||||||||||||||||||||||||||||
31-Dec-13 | |||||||||||||||||||||||||||||||||||||
Quoted prices in active markets for identical assets or liabilities | Significant other observable inputs | Significant unobservable inputs | Total estimated fair value | Total carrying amount | |||||||||||||||||||||||||||||||||
(Level 1) | (Level 2) | (Level 3) | |||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||
Mortgage loans | $ | — | $ | — | $ | 1,749.50 | $ | 1,749.50 | $ | 1,729.50 | |||||||||||||||||||||||||||
Policy loans | — | — | 277 | 277 | 277 | ||||||||||||||||||||||||||||||||
Other invested assets: | |||||||||||||||||||||||||||||||||||||
Company-owned life insurance | — | 144.8 | — | 144.8 | 144.8 | ||||||||||||||||||||||||||||||||
Alternative investment funds | — | 67.6 | — | 67.6 | 67.6 | ||||||||||||||||||||||||||||||||
Cash and cash equivalents: | |||||||||||||||||||||||||||||||||||||
Unrestricted | 457.8 | 241.2 | — | 699 | 699 | ||||||||||||||||||||||||||||||||
Held by variable interest entities | 104.3 | — | — | 104.3 | 104.3 | ||||||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||
Policyholder account balances (a) | — | — | 12,776.40 | 12,776.40 | 12,776.40 | ||||||||||||||||||||||||||||||||
Investment borrowings | — | 1,948.50 | — | 1,948.50 | 1,900.00 | ||||||||||||||||||||||||||||||||
Borrowings related to variable interest entities | — | 993.7 | — | 993.7 | 1,012.30 | ||||||||||||||||||||||||||||||||
Notes payable – direct corporate obligations | — | 872.5 | — | 872.5 | 856.4 | ||||||||||||||||||||||||||||||||
____________________ | |||||||||||||||||||||||||||||||||||||
(a) | The estimated fair value of insurance liabilities for policyholder account balances was approximately equal to its carrying value at December 31, 2014 and 2013. This was because interest rates credited on the vast majority of account balances approximate current rates paid on similar products and because these rates are not generally guaranteed beyond one year. | ||||||||||||||||||||||||||||||||||||
The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the year ended December 31, 2014 (dollars in millions): | |||||||||||||||||||||||||||||||||||||
December 31, 2014 | |||||||||||||||||||||||||||||||||||||
Beginning balance as of December 31, 2013 | Purchases, sales, issuances and settlements, net (b) | Total realized and unrealized gains (losses) included in net income | Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | Transfers into Level 3 (a) | Transfers out of Level 3 (a) | Assets of CLIC sold | Ending balance as of December 31, 2014 | Amount of total gains (losses) for the year ended December 31, 2014 included in our net income relating to assets and liabilities still held as of the reporting date | |||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||
Fixed maturities, available for sale: | |||||||||||||||||||||||||||||||||||||
Corporate securities | $ | 359.6 | $ | 70 | $ | — | $ | 20.1 | $ | 36.8 | $ | (69.4 | ) | $ | (51.2 | ) | $ | 365.9 | $ | — | |||||||||||||||||
States and political subdivisions | — | (1.8 | ) | — | 3 | 36.5 | — | (2.2 | ) | 35.5 | — | ||||||||||||||||||||||||||
Asset-backed securities | 42.2 | 7.6 | — | 5.1 | 14 | — | (9.7 | ) | 59.2 | — | |||||||||||||||||||||||||||
Collateralized debt obligations | 246.7 | — | — | — | — | (246.7 | ) | — | — | — | |||||||||||||||||||||||||||
Commercial mortgage-backed securities | — | 1.1 | — | 0.1 | — | — | — | 1.2 | — | ||||||||||||||||||||||||||||
Mortgage pass-through securities | 1.6 | (1.2 | ) | — | — | — | — | — | 0.4 | — | |||||||||||||||||||||||||||
Total fixed maturities, available for sale | 650.1 | 75.7 | — | 28.3 | 87.3 | (316.1 | ) | (63.1 | ) | 462.2 | — | ||||||||||||||||||||||||||
Equity securities - corporate securities | 24.5 | 3.5 | — | — | — | — | — | 28 | — | ||||||||||||||||||||||||||||
Trading securities - commercial mortgage-backed securities | — | 29 | — | (.4 | ) | — | — | — | 28.6 | (.4 | ) | ||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||
Future policy benefits - embedded derivatives associated with fixed index annuity products | (903.7 | ) | (104.3 | ) | (73.5 | ) | — | — | — | — | (1,081.5 | ) | (73.5 | ) | |||||||||||||||||||||||
Other liabilities - embedded derivatives associated with modified coinsurance agreement | (1.8 | ) | 1.8 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Total liabilities | (905.5 | ) | (102.5 | ) | (73.5 | ) | — | — | — | — | (1,081.5 | ) | (73.5 | ) | |||||||||||||||||||||||
_________ | |||||||||||||||||||||||||||||||||||||
(a) | Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate. | ||||||||||||||||||||||||||||||||||||
(b) | Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts. The following summarizes such activity for the year ended December 31, 2014 (dollars in millions): | ||||||||||||||||||||||||||||||||||||
Purchases | Sales | Issuances | Settlements | Purchases, sales, issuances and settlements, net | |||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||
Fixed maturities, available for sale: | |||||||||||||||||||||||||||||||||||||
Corporate securities | $ | 71.7 | $ | (1.7 | ) | $ | — | $ | — | $ | 70 | ||||||||||||||||||||||||||
States and political subdivisions | — | (1.8 | ) | — | — | (1.8 | ) | ||||||||||||||||||||||||||||||
Asset-backed securities | 9.9 | (2.3 | ) | — | — | 7.6 | |||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | 1.1 | — | — | — | 1.1 | ||||||||||||||||||||||||||||||||
Mortgage pass-through securities | 1.1 | (2.3 | ) | — | — | (1.2 | ) | ||||||||||||||||||||||||||||||
Total fixed maturities, available for sale | 83.8 | (8.1 | ) | — | — | 75.7 | |||||||||||||||||||||||||||||||
Equity securities - corporate securities | 3.5 | — | — | — | 3.5 | ||||||||||||||||||||||||||||||||
Trading securities - commercial mortgage-backed securities | 29 | — | — | — | 29 | ||||||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||
Future policy benefits - embedded derivatives associated with fixed index annuity products | (121.9 | ) | 7.5 | (45.9 | ) | 56 | (104.3 | ) | |||||||||||||||||||||||||||||
Other liabilities - embedded derivatives associated with modified coinsurance agreement | — | 3.4 | (1.6 | ) | — | 1.8 | |||||||||||||||||||||||||||||||
Total liabilities | (121.9 | ) | 10.9 | (47.5 | ) | 56 | (102.5 | ) | |||||||||||||||||||||||||||||
The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the year ended December 31, 2013 (dollars in millions): | |||||||||||||||||||||||||||||||||||||
December 31, 2013 | |||||||||||||||||||||||||||||||||||||
Beginning balance as of December 31, 2012 | Purchases, sales, issuances and settlements, net (b) | Total realized and unrealized gains (losses) included in net income | Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | Transfers into Level 3 (a) | Transfers out of Level 3 (a) | Ending balance as of December 31, 2013 | Amount of total gains (losses) for the year ended December 31, 2013 included in our net income relating to assets and liabilities still held as of the reporting date | ||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||
Fixed maturities, available for sale: | |||||||||||||||||||||||||||||||||||||
Corporate securities | $ | 355.5 | $ | 34 | $ | (.3 | ) | $ | (9.8 | ) | $ | 13.2 | $ | (33.0 | ) | $ | 359.6 | $ | — | ||||||||||||||||||
States and political subdivisions | 13.1 | — | — | — | — | (13.1 | ) | — | — | ||||||||||||||||||||||||||||
Asset-backed securities | 44 | 1.6 | 0.1 | (3.6 | ) | 0.1 | — | 42.2 | — | ||||||||||||||||||||||||||||
Collateralized debt obligations | 324 | (85.4 | ) | 0.2 | 7.9 | — | — | 246.7 | — | ||||||||||||||||||||||||||||
Commercial mortgage-backed securities | 6.2 | — | — | — | — | (6.2 | ) | — | — | ||||||||||||||||||||||||||||
Mortgage pass-through securities | 1.9 | (.3 | ) | — | — | — | — | 1.6 | — | ||||||||||||||||||||||||||||
Collateralized mortgage obligations | 16.9 | — | — | — | — | (16.9 | ) | — | — | ||||||||||||||||||||||||||||
Total fixed maturities, available for sale | 761.6 | (50.1 | ) | — | (5.5 | ) | 13.3 | (69.2 | ) | 650.1 | — | ||||||||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||||||||||||||
Corporate securities | 0.1 | 24.5 | — | (.1 | ) | — | — | 24.5 | — | ||||||||||||||||||||||||||||
Venture capital investments | 2.8 | — | (2.5 | ) | (.3 | ) | — | — | — | — | |||||||||||||||||||||||||||
Total equity securities | 2.9 | 24.5 | (2.5 | ) | (.4 | ) | — | — | 24.5 | — | |||||||||||||||||||||||||||
Trading securities: | |||||||||||||||||||||||||||||||||||||
States and political subdivisions | 0.6 | — | — | — | — | (.6 | ) | — | — | ||||||||||||||||||||||||||||
Collateralized debt obligations | 7.3 | (7.7 | ) | 0.6 | (.2 | ) | — | — | — | (.2 | ) | ||||||||||||||||||||||||||
Collateralized mortgage obligations | 5.8 | — | — | — | — | (5.8 | ) | — | — | ||||||||||||||||||||||||||||
Total trading securities | 13.7 | (7.7 | ) | 0.6 | (.2 | ) | — | (6.4 | ) | — | (.2 | ) | |||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||
Future policy benefits - embedded derivatives associated with fixed index annuity products | (734.0 | ) | (219.0 | ) | 49.3 | — | — | — | (903.7 | ) | 49.3 | ||||||||||||||||||||||||||
Other liabilities - embedded derivatives associated with modified coinsurance agreement | (5.5 | ) | 3.7 | — | — | — | — | (1.8 | ) | — | |||||||||||||||||||||||||||
Total liabilities | (739.5 | ) | (215.3 | ) | 49.3 | — | — | — | (905.5 | ) | 49.3 | ||||||||||||||||||||||||||
____________ | |||||||||||||||||||||||||||||||||||||
(a) | Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate. | ||||||||||||||||||||||||||||||||||||
(b) | Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts. The following summarizes such activity for the year ended December 31, 2013 (dollars in millions): | ||||||||||||||||||||||||||||||||||||
Purchases | Sales | Issuances | Settlements | Purchases, sales, issuances and settlements, net | |||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||
Fixed maturities, available for sale: | |||||||||||||||||||||||||||||||||||||
Corporate securities | $ | 44 | $ | (10.0 | ) | $ | — | $ | — | $ | 34 | ||||||||||||||||||||||||||
Asset-backed securities | 22 | (20.4 | ) | — | — | 1.6 | |||||||||||||||||||||||||||||||
Collateralized debt obligations | 6 | (91.4 | ) | — | — | (85.4 | ) | ||||||||||||||||||||||||||||||
Mortgage pass-through securities | — | (.3 | ) | — | — | (.3 | ) | ||||||||||||||||||||||||||||||
Total fixed maturities, available for sale | 72 | (122.1 | ) | — | — | (50.1 | ) | ||||||||||||||||||||||||||||||
Equity securities - corporate securities | 24.5 | — | — | — | 24.5 | ||||||||||||||||||||||||||||||||
Trading securities - collateralized debt obligations | — | (7.7 | ) | — | — | (7.7 | ) | ||||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||
Future policy benefits - embedded derivatives associated with fixed index annuity products | (105.6 | ) | 1.4 | (156.3 | ) | 41.5 | (219.0 | ) | |||||||||||||||||||||||||||||
Other liabilities - embedded derivatives associated with modified coinsurance agreement | — | 3.7 | — | — | 3.7 | ||||||||||||||||||||||||||||||||
Total liabilities | (105.6 | ) | 5.1 | (156.3 | ) | 41.5 | (215.3 | ) | |||||||||||||||||||||||||||||
At December 31, 2014, 85 percent of our Level 3 fixed maturities, available for sale, were investment grade and 79 percent of our Level 3 fixed maturities, available for sale, consisted of corporate securities. | |||||||||||||||||||||||||||||||||||||
Realized and unrealized investment gains and losses presented in the preceding tables represent gains and losses during the time the applicable financial instruments were classified as Level 3. | |||||||||||||||||||||||||||||||||||||
Realized and unrealized gains (losses) on Level 3 assets are primarily reported in either net investment income for policyholder and reinsurer accounts and other special-purpose portfolios, net realized investment gains (losses) or insurance policy benefits within the consolidated statement of operations or accumulated other comprehensive income within shareholders' equity based on the stated accounting policy for the instrument. | |||||||||||||||||||||||||||||||||||||
The amount presented for gains (losses) included in our net loss for assets and liabilities still held as of the reporting date primarily represents impairments for fixed maturities, available for sale, changes in fair value of trading securities and certain derivatives and changes in fair value of embedded derivative instruments included in liabilities for insurance products that exist as of the reporting date. | |||||||||||||||||||||||||||||||||||||
The following table provides additional information about the significant unobservable (Level 3) inputs developed internally by the Company to determine fair value for certain assets and liabilities carried at fair value at December 31, 2014 (dollars in millions): | |||||||||||||||||||||||||||||||||||||
Fair value at December 31, 2014 | Valuation technique(s) | Unobservable inputs | Range (weighted average) | ||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||
Corporate securities (a) | $ | 312.1 | Discounted cash flow analysis | Discount margins | 1.48% - 5.83% (2.58%) | ||||||||||||||||||||||||||||||||
Asset-backed securities (b) | 30.6 | Discounted cash flow analysis | Discount margins | 1.99% - 4.15% (2.95%) | |||||||||||||||||||||||||||||||||
Equity security (c) | 28 | Market approach | Projected cash flows | Not applicable | |||||||||||||||||||||||||||||||||
Other assets categorized as Level 3 (d) | 148.1 | Unadjusted third-party price source | Not applicable | Not applicable | |||||||||||||||||||||||||||||||||
Total | 518.8 | ||||||||||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||
Future policy benefits (e) | 1,081.50 | Discounted projected embedded derivatives | Projected portfolio yields | 5.15% - 5.61% (5.42%) | |||||||||||||||||||||||||||||||||
Discount rates | 0.00 - 2.74% (1.78%) | ||||||||||||||||||||||||||||||||||||
Surrender rates | 1.98% - 47.88% (14.16%) | ||||||||||||||||||||||||||||||||||||
________________________________ | |||||||||||||||||||||||||||||||||||||
(a) | Corporate securities - The significant unobservable input used in the fair value measurement of our corporate securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement. | ||||||||||||||||||||||||||||||||||||
(b) | Asset-backed securities - The significant unobservable input used in the fair value measurement of these asset-backed securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement. | ||||||||||||||||||||||||||||||||||||
(c) | Equity security - This equity security represents an investment in a company that is constructing a manufacturing facility. The significant unobservable input is the cash flows that will be generated upon completion of the manufacturing facility. Given the nature of this investment, the best current indicator of value is the cost basis of the investment, which we believe approximates market value. | ||||||||||||||||||||||||||||||||||||
(d) | Other assets categorized as Level 3 - For these assets, there were no adjustments to quoted market prices obtained from third-party pricing sources. | ||||||||||||||||||||||||||||||||||||
(e) | Future policy benefits - The significant unobservable inputs used in the fair value measurement of our embedded derivatives associated with fixed index annuity products are projected portfolio yields, discount rates and surrender rates. Increases (decreases) in projected portfolio yields in isolation would lead to a higher (lower) fair value measurement. The discount rate is based on the Treasury rate adjusted by a margin. Increases (decreases) in the discount rates would lead to a lower (higher) fair value measurement. Assumed surrender rates are used to project how long the contracts remain in force. Generally, the longer the contracts are assumed to be in force the higher the fair value of the embedded derivative. | ||||||||||||||||||||||||||||||||||||
The following table provides additional information about the significant unobservable (Level 3) inputs developed internally by the Company to determine fair value for certain assets and liabilities carried at fair value at December 31, 2013 (dollars in millions): | |||||||||||||||||||||||||||||||||||||
Fair value at December 31, 2013 | Valuation technique(s) | Unobservable inputs | Range (weighted average) | ||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||
Corporate securities (a) | $ | 260.3 | Discounted cash flow analysis | Discount margins | 1.65% - 2.90% (2.36%) | ||||||||||||||||||||||||||||||||
Asset-backed securities (b) | 35.1 | Discounted cash flow analysis | Discount margins | 2.03% - 4.20% (3.09%) | |||||||||||||||||||||||||||||||||
Collateralized debt obligations (c) | 240.7 | Discounted cash flow analysis | Recoveries | 64% - 67% (65.8%) | |||||||||||||||||||||||||||||||||
Constant prepayment rate | 20% | ||||||||||||||||||||||||||||||||||||
Discount margins | .95% - 2.00% (1.32%) | ||||||||||||||||||||||||||||||||||||
Annual default rate | 1.14% - 5.57% (3.05%) | ||||||||||||||||||||||||||||||||||||
Portfolio CCC % | 1.52% - 21.79% (12.57%) | ||||||||||||||||||||||||||||||||||||
Equity security (d) | 24.5 | Market approach | Projected cash flows | Not applicable | |||||||||||||||||||||||||||||||||
Other assets categorized as Level 3 (e) | 114 | Unadjusted third-party price source | Not applicable | Not applicable | |||||||||||||||||||||||||||||||||
Total | 674.6 | ||||||||||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||
Future policy benefits (f) | 905.5 | Discounted projected embedded derivatives | Projected portfolio yields | 5.35% - 6.63% (5.60%) | |||||||||||||||||||||||||||||||||
Discount rates | 0.00 - 4.64% (2.47%) | ||||||||||||||||||||||||||||||||||||
Surrender rates | 2.80% - 54.60% (14.39%) | ||||||||||||||||||||||||||||||||||||
________________________________ | |||||||||||||||||||||||||||||||||||||
(a) | Corporate securities - The significant unobservable input used in the fair value measurement of our corporate securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement. | ||||||||||||||||||||||||||||||||||||
(b) | Asset-backed securities - The significant unobservable input used in the fair value measurement of these asset-backed securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement. | ||||||||||||||||||||||||||||||||||||
(c) | Collateralized debt obligations - The significant unobservable inputs used in the fair value measurement of our collateralized debt obligations relate to collateral performance, including default rate, recoveries and constant prepayment rate, as well as discount margins of the underlying collateral. Significant increases (decreases) in default rate in isolation would result in a significantly lower (higher) fair value measurement. Generally, a significant increase (decrease) in the constant prepayment rate and recoveries in isolation would result in a significantly higher (lower) fair value measurement. Generally a significant increase (decrease) in discount margin in isolation would result in a significantly lower (higher) fair value measurement. Generally, a change in the assumption used for the annual default rate is accompanied by a directionally similar change in the assumption used for discount margins and portfolio CCC % and a directionally opposite change in the assumption used for constant prepayment rate and recoveries. A tranche's payment priority and investment cost basis could alter generalized fair value outcomes. | ||||||||||||||||||||||||||||||||||||
(d) | Equity security - This equity security represents an investment in a company that is constructing a manufacturing facility. The significant unobservable input is the cash flows that will be generated upon completion of the manufacturing facility. Given the nature of this investment, the best current indicator of value is the cost basis of the investment, which we believe approximates market value. | ||||||||||||||||||||||||||||||||||||
(e) | Other assets categorized as Level 3 - For these assets, there were no adjustments to quoted market prices obtained from third-party pricing sources. | ||||||||||||||||||||||||||||||||||||
(f) | Future policy benefits - The significant unobservable inputs used in the fair value measurement of our embedded derivatives associated with fixed index annuity products are projected portfolio yields, discount rates and surrender rates. Increases (decreases) in projected portfolio yields in isolation would lead to a higher (lower) fair value measurement. The discount rate is based on the Treasury rate adjusted by a margin. Increases (decreases) in the discount rates would lead to a lower (higher) fair value measurement. Assumed surrender rates are used to project how long the contracts remain in force. Generally, the longer the contracts are assumed to be in force the higher the fair value of the embedded derivative. |
LIABILITIES_FOR_INSURANCE_PROD
LIABILITIES FOR INSURANCE PRODUCTS | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Insurance [Abstract] | ||||||||||||||||
LIABILITIES FOR INSURANCE PRODUCTS | LIABILITIES FOR INSURANCE PRODUCTS | |||||||||||||||
Our future policy benefits are summarized as follows (dollars in millions): | ||||||||||||||||
Withdrawal assumption | Morbidity assumption | Mortality assumption | Interest rate assumption | 2014 | 2013 | |||||||||||
Long-term care | Company experience | Company experience | Company experience | 6% | $ | 5,385.20 | $ | 4,999.70 | ||||||||
Traditional life insurance contracts | Company experience | Company experience | (a) | 5% | 2,175.80 | 2,517.50 | ||||||||||
Accident and health contracts | Company experience | Company experience | Company experience | 5% | 2,519.10 | 2,466.80 | ||||||||||
Interest-sensitive life insurance contracts | Company experience | Company experience | Company experience | 5% | 47.6 | 526.5 | ||||||||||
Annuities and supplemental contracts with life contingencies | Company experience | Company experience | (b) | 4% | 707.7 | 712 | ||||||||||
Total | $ | 10,835.40 | $ | 11,222.50 | ||||||||||||
____________________ | ||||||||||||||||
(a) | Principally, modifications of: (i) the 1965 ‑ 70 and 1975 - 80 Basic Tables; and (ii) the 1941, 1958 and 1980 Commissioners' Standard Ordinary Tables; as well as Company experience. | |||||||||||||||
(b) | Principally, modifications of: (i) the 1971 Individual Annuity Mortality Table; (ii) the 1983 Table "A"; and (iii) the Annuity 2000 Mortality Table; as well as Company experience. | |||||||||||||||
Our policyholder account balances are summarized as follows (dollars in millions): | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Fixed index annuities | $ | 4,496.90 | $ | 4,093.90 | ||||||||||||
Other annuities | 5,280.80 | 6,013.00 | ||||||||||||||
Interest-sensitive life insurance contracts | 929.5 | 2,669.50 | ||||||||||||||
Total | $ | 10,707.20 | $ | 12,776.40 | ||||||||||||
The Company establishes reserves for insurance policy benefits based on assumptions as to investment yields, mortality, morbidity, withdrawals, lapses and maintenance expenses. These reserves include amounts for estimated future payment of claims based on actuarial assumptions. The balance includes provision for the Company's best estimate of the future policyholder benefits to be incurred on this business, given recent and expected future changes in experience. | ||||||||||||||||
Changes in the unpaid claims reserve (included in claims payable) and disabled life reserves related to accident and health insurance (included in the liability for future policy benefits) were as follows (dollars in millions): | ||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||
Balance, beginning of year | $ | 1,710.10 | $ | 1,679.30 | $ | 1,637.30 | ||||||||||
Less reinsurance receivables | (164.1 | ) | (27.4 | ) | (21.7 | ) | ||||||||||
Net balance, beginning of year | 1,546.00 | 1,651.90 | 1,615.60 | |||||||||||||
Incurred claims related to: | ||||||||||||||||
Current year | 1,468.10 | 1,511.10 | 1,570.10 | |||||||||||||
Prior years (a) | (39.9 | ) | (162.3 | ) | (56.4 | ) | ||||||||||
Total incurred | 1,428.20 | 1,348.80 | 1,513.70 | |||||||||||||
Interest on claim reserves | 70.5 | 75.2 | 77.8 | |||||||||||||
Paid claims related to: | ||||||||||||||||
Current year | 848.7 | 870 | 891.3 | |||||||||||||
Prior years | 641.5 | 659.9 | 663.9 | |||||||||||||
Total paid | 1,490.20 | 1,529.90 | 1,555.20 | |||||||||||||
Net balance, end of year | 1,554.50 | 1,546.00 | 1,651.90 | |||||||||||||
Add reinsurance receivables | 125 | 164.1 | 27.4 | |||||||||||||
Balance, end of year | $ | 1,679.50 | $ | 1,710.10 | $ | 1,679.30 | ||||||||||
___________ | ||||||||||||||||
(a) | The reserves and liabilities we establish are necessarily based on estimates, assumptions and prior years' statistics. Such amounts will fluctuate based upon the estimation procedures used to determine the amount of unpaid losses. It is possible that actual claims will exceed our reserves and have a material adverse effect on our results of operations and financial condition. |
INCOME_TAXES
INCOME TAXES | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||
INCOME TAXES | INCOME TAXES | ||||||||||||
The components of income tax expense (benefit) were as follows (dollars in millions): | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Current tax expense | $ | 15.6 | $ | 8.2 | $ | 12.5 | |||||||
Deferred tax expense | 143.6 | 120.1 | 93.7 | ||||||||||
Tax expense on period income | 159.2 | 128.3 | 106.2 | ||||||||||
Tax expense related to the sale of CLIC | 14.2 | — | — | ||||||||||
Deferred taxes on expired capital loss carryforwards | — | 159.4 | — | ||||||||||
Change in valuation allowance | (48.8 | ) | (472.1 | ) | (171.5 | ) | |||||||
Other items | (.9 | ) | 11.2 | — | |||||||||
Total income tax expense (benefit) | $ | 123.7 | $ | (173.2 | ) | $ | (65.3 | ) | |||||
A reconciliation of the U.S. statutory corporate tax rate to the estimated annual effective rate reflected in the consolidated statement of operations is as follows: | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
U.S. statutory corporate rate | 35 | % | 35 | % | 35 | % | |||||||
Valuation allowance | (27.9 | ) | (154.9 | ) | (110.1 | ) | |||||||
Expired capital loss carryforwards (which were fully offset by a corresponding reduction in the valuation allowance) | — | 52.3 | — | ||||||||||
Non-taxable income and nondeductible benefits, net | (.9 | ) | 5 | 32.3 | |||||||||
State taxes | 1.5 | 1.9 | 1.4 | ||||||||||
Impact of the sale of CLIC | 66.3 | — | — | ||||||||||
Other items | (3.4 | ) | 3.9 | (.5 | ) | ||||||||
Effective tax rate | 70.6 | % | (56.8 | )% | (41.9 | )% | |||||||
The components of the Company's income tax assets and liabilities are summarized below (dollars in millions): | |||||||||||||
2014 | 2013 | ||||||||||||
Deferred tax assets: | |||||||||||||
Net federal operating loss carryforwards | $ | 1,048.40 | $ | 1,240.20 | |||||||||
Net state operating loss carryforwards | 15.2 | 20 | |||||||||||
Tax credits | 47.2 | 43.9 | |||||||||||
Capital loss carryforwards | — | 13.4 | |||||||||||
Investments | 59.7 | 74.3 | |||||||||||
Insurance liabilities | 585.9 | 723.8 | |||||||||||
Other | 67.3 | 64.7 | |||||||||||
Gross deferred tax assets | 1,823.70 | 2,180.30 | |||||||||||
Deferred tax liabilities: | |||||||||||||
Present value of future profits and deferred acquisition costs | (320.5 | ) | (306.8 | ) | |||||||||
Accumulated other comprehensive income | (457.4 | ) | (405.5 | ) | |||||||||
Gross deferred tax liabilities | (777.9 | ) | (712.3 | ) | |||||||||
Net deferred tax assets before valuation allowance | 1,045.80 | 1,468.00 | |||||||||||
Valuation allowance | (246.0 | ) | (294.8 | ) | |||||||||
Net deferred tax assets | 799.8 | 1,173.20 | |||||||||||
Current income taxes accrued | (41.1 | ) | (26.0 | ) | |||||||||
Income tax assets, net | $ | 758.7 | $ | 1,147.20 | |||||||||
Our income tax expense includes deferred income taxes arising from temporary differences between the financial reporting and tax bases of assets and liabilities, capital loss carryforwards and NOLs. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which temporary differences are expected to be recovered or paid. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in earnings in the period when the changes are enacted. | |||||||||||||
A reduction of the net carrying amount of deferred tax assets by establishing a valuation allowance is required if, based on the available evidence, it is more likely than not that such assets will not be realized. In assessing the need for a valuation allowance, all available evidence, both positive and negative, shall be considered to determine whether, based on the weight of that evidence, a valuation allowance for deferred tax assets is needed. This assessment requires significant judgment and considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of carryforward periods, our experience with operating loss and tax credit carryforwards expiring unused, and tax planning strategies. We evaluate the need to establish a valuation allowance for our deferred income tax assets on an ongoing basis. The realization of our deferred tax assets depends upon generating sufficient future taxable income of the appropriate type during the periods in which our temporary differences become deductible and before our life and non-life NOLs expire. | |||||||||||||
Based on our assessment, it appears more likely than not that $799.8 million of our total deferred tax assets of $1,045.8 million will be realized through future taxable earnings. Accordingly, we have established a deferred tax valuation allowance of $246.0 million at December 31, 2014. We will continue to assess the need for a valuation allowance in the future. If future results are less than projected, an increase to the valuation allowance may be required to reduce the deferred tax asset, which could have a material impact on our results of operations in the period in which it is recorded. | |||||||||||||
We use a deferred tax valuation model to assess the need for a valuation allowance. Our model is adjusted to reflect changes in our projections of future taxable income including changes resulting from investment trading strategies, reinsurance transactions and the impact of the sale of CLIC. Our estimates of future taxable income are based on evidence we consider to be objective and verifiable. | |||||||||||||
At December 31, 2014, our projection of future taxable income for purposes of determining the valuation allowance is based on our adjusted average annual taxable income for the last three years plus: (i) a 3 percent core growth factor (consistent with the prior year assumption); and (ii) an additional 1 percent increase which primarily reflects the impact of the investment trading strategies completed in 2013 (which grade off over time). The aggregate 4 percent factor is used to increase taxable income annually over the next five years, and level taxable income is assumed thereafter. In the projections used for our December 31, 2014 analysis, our three year average taxable income increased to approximately $320 million, compared to $315 million in our prior projections. Approximately $50 million of the current three year average relates to non-life taxable income and $270 million relates to life income. | |||||||||||||
Based on our assessment, we recognized a reduction to the allowance for deferred tax assets of $48.8 million in 2014. We have evaluated the recovery of our deferred tax assets and assessed the effect of limitations and/or interpretations on their value and have concluded that it is more likely than not that the value recognized will be fully realized in the future. | |||||||||||||
Changes in our valuation allowance are summarized as follows (dollars in millions): | |||||||||||||
Balance, December 31, 2011 | $ | 938.4 | |||||||||||
Decrease in 2012 | (171.5 | ) | (a) | ||||||||||
Balance, December 31, 2012 | 766.9 | ||||||||||||
Decrease in 2013 | (472.1 | ) | (b) | ||||||||||
Balance, December 31, 2013 | 294.8 | ||||||||||||
Decrease in 2014 | (48.8 | ) | (c) | ||||||||||
Balance, December 31, 2014 | $ | 246 | |||||||||||
___________________ | |||||||||||||
(a) | The 2012 reduction to the deferred tax valuation allowance primarily resulted from the impact of recent higher levels of income when projecting future taxable income. | ||||||||||||
(b) | The 2013 reduction to the deferred tax valuation allowance primarily resulted from the impact of higher levels of income on projected future taxable income, the expiration of capital loss carryforwards, a settlement with the Internal Revenue Service (the "IRS") related to the classification of a portion of the cancellation of indebtedness income and the execution of certain investment trading strategies. | ||||||||||||
(c) | The 2014 reduction to the deferred tax valuation allowance primarily resulted from tax examination adjustments and the tax gain on the sale of CLIC. | ||||||||||||
Recovery of our deferred tax asset is dependent on achieving the level of future taxable income projected in our deferred tax valuation model and failure to do so could result in an increase in the valuation allowance in a future period. Any future increase in the valuation allowance may result in additional income tax expense and reduce shareholders' equity, and such an increase could have a significant impact upon our earnings in the future. | |||||||||||||
The Internal Revenue Code (the "Code") limits the extent to which losses realized by a non-life entity (or entities) may offset income from a life insurance company (or companies) to the lesser of: (i) 35 percent of the income of the life insurance company; or (ii) 35 percent of the total loss of the non-life entities (including NOLs of the non-life entities). There is no similar limitation on the extent to which losses realized by a life insurance entity (or entities) may offset income from a non-life entity (or entities). This limitation is the primary reason a valuation allowance for non-life NOL carryforwards is required. | |||||||||||||
Section 382 of the Code imposes limitations on a corporation's ability to use its NOLs when the company undergoes an ownership change. Future transactions and the timing of such transactions could cause an ownership change for Section 382 income tax purposes. Such transactions may include, but are not limited to, additional repurchases under our securities repurchase program, issuances of common stock and acquisitions or sales of shares of CNO stock by certain holders of our shares, including persons who have held, currently hold or may accumulate in the future five percent or more of our outstanding common stock for their own account. Many of these transactions are beyond our control. If an additional ownership change were to occur for purposes of Section 382, we would be required to calculate an annual restriction on the use of our NOLs to offset future taxable income. The annual restriction would be calculated based upon the value of CNO's equity at the time of such ownership change, multiplied by a federal long-term tax exempt rate (2.80 percent at December 31, 2014), and the annual restriction could limit our ability to use a substantial portion of our NOLs to offset future taxable income. We regularly monitor ownership change (as calculated for purposes of Section 382) and, as of December 31, 2014, we were below the 50 percent ownership change level that would trigger further impairment of our ability to utilize our NOLs. | |||||||||||||
On January 20, 2009, the Company's Board of Directors adopted a Section 382 Rights Agreement designed to protect shareholder value by preserving the value of our tax assets primarily associated with tax NOLs under Section 382. The Section 382 Rights Agreement was adopted to reduce the likelihood of an ownership change occurring by deterring the acquisition of stock that would create "5 percent shareholders" as defined in Section 382. On December 6, 2011, the Company's Board of Directors amended the Section 382 Rights Agreement to, among other things, (i) extend the final expiration date of the Amended Rights Agreement to December 6, 2014, (ii) update the purchase price of the rights described below, (iii) provide for a new series of preferred stock relating to the rights that is substantially identical to the prior series of preferred stock, (iv) provide for a 4.99 percent ownership threshold relating to any Company 382 Securities (as defined below), and amend other provisions to reflect best practices for tax benefit preservation plans, including updates to certain definitions. On November 13, 2014, the Company entered into the Second Amended and Restated Section 382 Rights Agreement which extends the final expiration date of the Amended Section 382 Rights Agreement to December 31, 2017, updates the purchase price of the Rights and provides for a new series of preferred stock relating to the Rights that is substantially identical to the prior series of preferred stock. The Company expects to submit the Second Amended Rights Agreement to the Company’s stockholders for approval at the Company’s 2015 annual meeting. | |||||||||||||
Under the Section 382 Rights Agreement, one right was distributed for each share of our common stock outstanding as of the close of business on January 30, 2009 and for each share issued after that date. Pursuant to the Amended Section 382 Rights Agreement, if any person or group (subject to certain exemptions) becomes an owner of more than 4.99 percent of the Company's outstanding common stock (or any other interest in the Company that would be treated as "stock" under applicable Section 382 regulations) without the approval of the Board of Directors, there would be a triggering event causing significant dilution in the voting power and economic ownership of that person or group. Shareholders who held more than 4.99 percent of the Company's outstanding common stock as of December 6, 2011 will trigger a dilutive event only if they acquire additional shares exceeding one percent of our outstanding shares without prior approval from the Board of Directors. | |||||||||||||
On May 11, 2010, our shareholders approved an amendment to CNO's certificate of incorporation designed to prevent certain transfers of common stock which could otherwise adversely affect our ability to use our NOLs (the "Original Section 382 Charter Amendment"). Subject to the provisions set forth in the Original Section 382 Charter Amendment, transfers of our common stock would be void and of no effect if the effect of the purported transfer would be to: (i) increase the direct or indirect ownership of our common stock by any person or public group (as such term is defined in the regulations under Section 382) from less than 5% to 5% or more of our common stock; (ii) increase the percentage of our common stock owned directly or indirectly by a person or public group owning or deemed to own 5% or more of our common stock; or (iii) create a new public group. | |||||||||||||
On May 8, 2013, our shareholders approved an amendment (the “Extended Section 382 Charter Amendment”) to CNO’s certificate of incorporation to: (i) extend the term of the Original Section 382 Charter Amendment for three years until December 31, 2016, (ii) provide for a 4.99% percent ownership threshold relating to our stock, and (iii) amend certain other provisions of the Original Section 382 Charter Amendment, including updates to certain definitions, for consistency with the Amended Section 382 Rights Agreement. | |||||||||||||
As of December 31, 2014, we had $3.0 billion of federal NOLs. The following table summarizes the expiration dates of our loss carryforwards assuming the IRS ultimately agrees with the position we have taken with respect to the loss on our investment in Conseco Senior Health Insurance Company ("CSHI") (dollars in millions): | |||||||||||||
Year of expiration | Net operating loss carryforwards | Total loss | |||||||||||
Life | Non-life | carryforwards | |||||||||||
2022 | $ | 112.1 | $ | — | $ | 112.1 | |||||||
2023 | 742.6 | 1,983.00 | 2,725.60 | ||||||||||
2025 | — | 91.5 | 91.5 | ||||||||||
2026 | — | 207.4 | 207.4 | ||||||||||
2027 | — | 4.9 | 4.9 | ||||||||||
2028 | — | 203.7 | 203.7 | ||||||||||
2029 | — | 146.6 | 146.6 | ||||||||||
2032 | — | 44 | 44 | ||||||||||
Subtotal | 854.7 | 2,681.10 | 3,535.80 | ||||||||||
Less: | |||||||||||||
Unrecognized tax benefits | (342.9 | ) | (197.4 | ) | (540.3 | ) | |||||||
Total | $ | 511.8 | $ | 2,483.70 | $ | 2,995.50 | |||||||
We had deferred tax assets related to NOLs for state income taxes of $15.2 million and $20.0 million at December 31, 2014 and 2013, respectively. The related state NOLs are available to offset future state taxable income in certain states through 2025. | |||||||||||||
We recognized an $878 million ordinary loss on our investment in CSHI which was worthless when it was transferred to an independent trust in 2008. Of this loss, $742 million has been reported as a life loss and $136 million as a non-life loss. The IRS disagreed with our ordinary loss treatment and believes that it should be treated as a capital loss, subject to a five year carryover. We are seeking resolution of this matter through early referral to appeals, a process that seeks to resolve disputes with the IRS. If the IRS position is ultimately determined to be correct, $473 million would have expired unused in 2013. Due to this uncertainty, we have not recognized the tax benefit related to this loss of $166.0 million. However, if this unrecognized tax benefit had been recognized, we would also have increased our valuation allowance by $34.0 million at December 31, 2014. | |||||||||||||
A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2014 and 2013 is as follows (dollars in millions): | |||||||||||||
Years ended December 31, | |||||||||||||
2014 | 2013 | ||||||||||||
Balance at beginning of year | $ | 226.7 | $ | 310.5 | |||||||||
Increase based on tax positions taken in prior years | 10.9 | 35.6 | |||||||||||
Decrease based on tax positions taken in prior years | — | (27.0 | ) | ||||||||||
Increase based on tax positions taken in the current year | — | 47.6 | |||||||||||
Decrease in unrecognized tax benefits related to settlements with taxing authorities | (8.9 | ) | (140.0 | ) | |||||||||
Balance at end of year | $ | 228.7 | $ | 226.7 | |||||||||
As of December 31, 2014 and 2013, $155.4 million and $156.0 million, respectively, of our unrecognized tax benefits, if recognized, would affect the effective tax rate. The remaining balances relate to timing differences which, if recognized, would have no effect on the Company's tax expense. The Company recognizes interest related to unrecognized tax benefits as income tax expense in the consolidated statement of operations. Such amounts were not significant in each of the three years ended December 31, 2014. The liability for accrued interest was $2.4 million and $1.8 million at December 31, 2014 and 2013, respectively. | |||||||||||||
Tax years 2004 and 2008 through 2014 are open to examination by the IRS. The Company's various state income tax returns are generally open for tax years 2011 through 2014 based on the individual state statutes of limitation. Generally, for tax years which generate NOLs, capital losses or tax credit carryforwards, the statute of limitations does not close until the expiration of the statute of limitations for the tax year in which such carryforwards are utilized. | |||||||||||||
In accordance with GAAP, we are precluded from recognizing the tax benefits of any tax windfall upon the exercise of a stock option or the vesting of restricted stock unless such deduction resulted in actual cash savings to the Company. Because of the Company's NOLs, no cash savings have occurred. NOL carryforwards of $30.9 million related to deductions for stock options and restricted stock will be reflected in additional paid-in capital if realized. |
NOTES_PAYABLE_DIRECT_CORPORATE
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Debt Disclosure [Abstract] | ||||||||
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS | NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS | |||||||
The following notes payable were direct corporate obligations of the Company as of December 31, 2014 and 2013 (dollars in millions): | ||||||||
2014 | 2013 | |||||||
Senior Secured Credit Agreement (as defined below) | $ | 522.1 | $ | 581.5 | ||||
6.375% Senior Secured Notes due October 2020 (the "6.375% Notes") | 275 | 275 | ||||||
7.0% Debentures | — | 3.5 | ||||||
Unamortized discount on Senior Secured Credit Agreement | (2.7 | ) | (3.6 | ) | ||||
Direct corporate obligations | $ | 794.4 | $ | 856.4 | ||||
In the third quarter of 2012, as further discussed below, we completed a comprehensive recapitalization plan. The following table sets forth the sources and uses of cash from the recapitalization transactions (dollars in millions): | ||||||||
Sources: | ||||||||
Senior Secured Credit Agreement | $ | 669.5 | ||||||
Issuance of 6.375% Notes | 275 | |||||||
Total sources | $ | 944.5 | ||||||
Uses: | ||||||||
Cash on hand for general corporate purposes | $ | 13.7 | ||||||
Repurchase of $200 million principal amount of 7.0% Debentures pursuant to Debenture Repurchase Agreement | 355.1 | |||||||
Repayment of a previous senior secured credit agreement | 223.8 | |||||||
Repayment of $275.0 million principal amount of 9.0% Notes, including redemption premium | 322.7 | |||||||
Debt issuance costs | 23.1 | |||||||
Accrued interest | 6.1 | |||||||
Total uses | $ | 944.5 | ||||||
Senior Secured Credit Agreement | ||||||||
On September 28, 2012, the Company entered into a new senior secured credit agreement, providing for: (i) a $425.0 million six-year term loan facility ($390.9 million remained outstanding at December 31, 2014); (ii) a $250.0 million four-year term loan facility ($131.2 million remained outstanding at December 31, 2014); and (iii) a $50.0 million three-year revolving credit facility, with JPMorgan Chase Bank, N.A., as administrative agent (the "Agent"), and the lenders from time to time party thereto (the "Senior Secured Credit Agreement"). The Senior Secured Credit Agreement is guaranteed by the Subsidiary Guarantors (as defined below) and secured by a first-priority lien (which ranks pari passu with the liens securing the 6.375% Notes) on substantially all of the Company's and the Subsidiary Guarantors' assets. As of December 31, 2014, no amounts have been borrowed under the revolving credit facility. The net proceeds from the Senior Secured Credit Agreement, together with the net proceeds from the 6.375% Notes, were used to repay other outstanding indebtedness, as further described below, and for general corporate purposes. | ||||||||
The revolving credit facility includes an uncommitted subfacility for swingline loans of up to $5.0 million, and up to $5.0 million of the revolving credit facility is available for the issuance of letters of credit. The six-year term loan facility amortizes in quarterly installments in amounts resulting in an annual amortization of 1% and the four-year term loan facility amortizes in quarterly installments resulting in an annual amortization of 20% during the first and second years and 30% during the third and fourth years. Subject to certain conditions, the Company may incur additional incremental loans under the Senior Secured Credit Agreement in an amount of up to $250.0 million. | ||||||||
On May 30, 2014, the Company completed an amendment to the Senior Secured Credit Agreement to waive the requirement that the net proceeds in excess of $125 million received from the sale of CLIC be used to prepay amounts outstanding under the Senior Secured Credit Agreement. | ||||||||
In May 2013, we amended our Senior Secured Credit Agreement. Pursuant to the amended terms, the applicable interest rates were decreased. The new interest rates with respect to loans under: (i) the six-year term loan facility are, at the Company's option, equal to a eurodollar rate, plus 2.75% per annum, or a base rate, plus 1.75% per annum, subject to a eurodollar rate "floor" of 1.00% and a base rate "floor" of 2.25% (previously a eurodollar rate, plus 3.75% per annum, or a base rate, plus 2.75% per annum, subject to a eurodollar rate "floor" of 1.25% and a base rate "floor" of 2.25%); (ii) the four-year term loan facility are, at the Company's option, equal to a eurodollar rate, plus 2.25% per annum, or a base rate, plus 1.25% per annum, subject to a eurodollar rate "floor" of .75% and a base rate "floor" of 2.00% (previously a eurodollar rate, plus 3.25% per annum, or a base rate, plus 2.25% per annum, subject to a eurodollar rate "floor" of 1.00% and a base rate "floor" of 2.00%); and (iii) the revolving credit facility will be, at the Company's option, equal to a eurodollar rate, plus 3.00% per annum, or a base rate, plus 2.00% per annum, in each case, with respect to revolving credit facility borrowings only, subject to certain step-downs based on the debt to total capitalization ratio of the Company (previously a eurodollar rate, plus 3.50% per annum, or a base rate, plus 2.50% per annum, subject to certain step-downs based on the debt to total capitalization ratio of the Company). At December 31, 2014, the interest rates on the six-year term loan facility and the four-year term loan facility were 3.75% and 3.00%, respectively. | ||||||||
Other changes made in May 2013 to the Senior Secured Credit Agreement included modifications of mandatory prepayments resulting from certain restricted payments made (including any common stock dividends and share repurchases) as defined in the Senior Secured Credit Agreement. Pursuant to the amended terms, the amount of the mandatory prepayment is: (a) 100% of the amount of certain restricted payments provided that if, as of the end of the fiscal quarter immediately preceding such restricted payment, the debt to total capitalization ratio is: (x) equal to or less than 25.0% but greater than 20.0%, the prepayment requirement shall be reduced to 33.33% (previously less than or equal to 22.5% but greater than 17.5%); or (y) equal to or less than 20.0%, the prepayment requirement shall not apply (previously equal to or less than 17.5%). | ||||||||
Mandatory prepayments of the Senior Secured Credit Agreement will be required, subject to certain exceptions, in an amount equal to: (i) 100% of the net cash proceeds from certain asset sales or casualty events; (ii) 100% of the net cash proceeds received by the Company or any of its restricted subsidiaries from certain debt issuances; and (iii) 100% of the amount of certain restricted payments made (including any common stock dividends and share repurchases) as defined in the Senior Secured Credit Agreement provided that if, as of the end of the fiscal quarter immediately preceding such restricted payment, the debt to total capitalization ratio is: (x) equal to or less than 25.0%, but greater than 20.0%, the prepayment requirement shall be reduced to 33.33%; or (y) equal to or less than 20.0%, the prepayment requirement shall not apply. | ||||||||
Notwithstanding the foregoing, no mandatory prepayments pursuant to item (i) in the preceding paragraph shall be required if: (x) the debt to total capitalization ratio is equal or less than 20% and (y) either (A) the financial strength rating of certain of the Company's insurance subsidiaries is equal to or better than A- (stable) from A.M. Best Company or (B) the Senior Secured Credit Agreement is rated equal or better than BBB- (stable) from S&P and Baa3 (stable) by Moody's. | ||||||||
In 2014, we made $59.4 million of scheduled quarterly principal payments due under the Senior Secured Credit Agreement. In the first six months of 2013, we made mandatory prepayments of $20.4 million in an amount equal to 33.33% of our share repurchases and common stock dividend payments, as required under the terms of our Senior Secured Credit Agreement. No mandatory prepayments were required in the second half of 2013 as our debt to total capitalization ratio, as defined in the Senior Secured Credit Agreement, was below 20.0 percent. We also made additional payments of $42.7 million in 2013 to cover the remaining portion of the scheduled quarterly principal payments due under the Senior Secured Credit Agreement. In 2012, as required under the terms of the Senior Secured Credit Agreement, we made mandatory prepayments of $28.4 million due to repurchases of our common stock and payment of a common stock dividend. We also made an additional payment of $2.0 million to cover the remaining portion of the scheduled quarterly principal payments. | ||||||||
The Senior Secured Credit Agreement contains covenants that limit the Company's ability to take certain actions and perform certain activities, including (each subject to exceptions as set forth in the Senior Secured Credit Agreement): | ||||||||
• | limitations on debt (including, without limitation, guarantees and other contingent obligations); | |||||||
• | limitations on issuances of disqualified capital stock; | |||||||
• | limitations on liens and further negative pledges; | |||||||
• | limitations on sales, transfers and other dispositions of assets; | |||||||
• | limitations on transactions with affiliates; | |||||||
• | limitations on changes in the nature of the Company's business; | |||||||
• | limitations on mergers, consolidations and acquisitions; | |||||||
• | limitations on dividends and other distributions, stock repurchases and redemptions and other restricted payments; | |||||||
• | limitations on investments and acquisitions; | |||||||
• | limitations on prepayment of certain debt; | |||||||
• | limitations on modifications or waivers of certain debt documents and charter documents; | |||||||
• | investment portfolio requirements for insurance subsidiaries; | |||||||
• | limitations on restrictions affecting subsidiaries; | |||||||
• | limitations on holding company activities; and | |||||||
• | limitations on changes in accounting policies. | |||||||
The Senior Secured Credit Agreement requires the Company to maintain (each as calculated in accordance with the Senior Secured Credit Agreement): (i) a debt to total capitalization ratio of not more than 27.5 percent (such ratio was 17.2 percent at December 31, 2014); (ii) an interest coverage ratio of not less than 2.50 to 1.00 for each rolling four quarters (such ratio was 15.75 to 1.00 for the four quarters ended December 31, 2014); (iii) an aggregate ratio of total adjusted capital to company action level risk-based capital for the Company's insurance subsidiaries of not less than 250 percent (such ratio was 434 percent at December 31, 2014); and (iv) a combined statutory capital and surplus for the Company's insurance subsidiaries of at least $1,300.0 million (combined statutory capital and surplus at December 31, 2014, was $1,868 million). | ||||||||
The Senior Secured Credit Agreement provides for customary events of default (subject in certain cases to customary grace and cure periods), which include nonpayment, incorrectness of any representation or warranty in any material respect, breach of covenants in the Senior Secured Credit Agreement or other loan documents, cross default to certain other indebtedness, certain events of bankruptcy and insolvency, certain ERISA events, a failure to pay certain judgments, certain material regulatory events, the occurrence of a change of control, and the invalidity of any material provision of any loan document or material lien or guarantee granted under the loan documents. If an event of default under the Senior Secured Credit Agreement occurs and is continuing, the Agent may accelerate the amounts and terminate all commitments outstanding under the Senior Secured Credit Agreement and may exercise remedies in respect of the collateral. | ||||||||
In connection with the execution of the Senior Secured Credit Agreement, the Company and the Subsidiary Guarantors entered into a guarantee and security agreement, dated as of September 28, 2012 (the "Guarantee and Security Agreement"), by and among the Company, the Subsidiary Guarantors and the Agent, pursuant to which the Subsidiary Guarantors guaranteed all of the obligations of the Company under the Senior Secured Credit Agreement and the Company and the Subsidiary Guarantors pledged substantially all of their assets to secure the Senior Secured Credit Agreement, subject to certain exceptions as set forth in the Guarantee and Security Agreement. | ||||||||
6.375% Notes | ||||||||
On September 28, 2012, we issued $275.0 million in aggregate principal amount of 6.375% Notes pursuant to an Indenture, dated as of September 28, 2012 (the "6.375% Indenture"), among the Company, the subsidiary guarantors party thereto (the "Subsidiary Guarantors") and Wilmington Trust, National Association, as trustee (the "Trustee") and as collateral agent (the "Collateral Agent"). The net proceeds from the issuance of the 6.375% Notes, together with the net proceeds from the Senior Secured Credit Agreement, were used to repay other outstanding indebtedness and for general corporate purposes. The 6.375% Notes mature on October 1, 2020. Interest on the 6.375% Notes accrues at a rate of 6.375% per annum and is payable semiannually in arrears on April 1 and October 1 of each year, commencing on April 1, 2013. The 6.375% Notes and the guarantees thereof (the "Guarantees") are senior secured obligations of the Company and the Subsidiary Guarantors and rank equally in right of payment with all of the Company's and the Subsidiary Guarantors' existing and future senior obligations, and senior to all of the Company's and the Subsidiary Guarantors' future subordinated indebtedness. The 6.375% Notes are secured by a first-priority lien on substantially all of the assets of the Company and the Subsidiary Guarantors, subject to certain exceptions. The 6.375% Notes and the Guarantees are pari passu with respect to security and in right of payment with all of the Company's and the Subsidiary Guarantors' existing and future secured indebtedness under the Senior Secured Credit Agreement. The 6.375% Notes are structurally subordinated to all of the liabilities and preferred stock of each of the Company's insurance subsidiaries, which are not guarantors of the 6.375% Notes. | ||||||||
The Company may redeem all or part of the 6.375% Notes beginning on October 1, 2015, at the redemption prices set forth in the 6.375% Indenture. The Company may also redeem all or part of the 6.375% Notes at any time and from time to time prior to October 1, 2015, at a price equal to 100% of the aggregate principal amount of the 6.375% Notes to be redeemed, plus a "make-whole" premium and accrued and unpaid interest to, but not including, the redemption date. In addition, prior to October 1, 2015, the Company may redeem up to 35% of the aggregate principal amount of the 6.375% Notes with the net cash proceeds of certain equity offerings at a price equal to 106.375% of the aggregate principal amount of the 6.375% Notes to be redeemed, plus accrued and unpaid interest to, but not including, the redemption date. | ||||||||
Upon the occurrence of a Change of Control (as defined in the 6.375% Indenture), each holder of the 6.375% Notes may require the Company to repurchase all or a portion of the 6.375% Notes in cash at a price equal to 101% of the aggregate principal amount of the 6.375% Notes to be repurchased, plus accrued and unpaid interest, if any, to, but not including, the date of repurchase. | ||||||||
The 6.375% Indenture contains covenants that, among other things, limit (subject to certain exceptions) the Company's ability and the ability of the Company's Restricted Subsidiaries (as defined in the 6.375% Indenture) to: | ||||||||
• | incur or guarantee additional indebtedness or issue preferred stock; | |||||||
• | pay dividends or make other distributions to shareholders; | |||||||
• | purchase or redeem capital stock or subordinated indebtedness; | |||||||
• | make investments; | |||||||
• | create liens; | |||||||
• | incur restrictions on the Company's ability and the ability of its Restricted Subsidiaries to pay dividends or make other payments to the Company; | |||||||
• | sell assets, including capital stock of the Company's subsidiaries; | |||||||
• | consolidate or merge with or into other companies or transfer all or substantially all of the Company's assets; and | |||||||
• | engage in transactions with affiliates. | |||||||
The 6.375% Indenture provides for customary events of default (subject in certain cases to customary grace and cure periods), which include nonpayment, breach of covenants in the 6.375% Indenture, failure to pay at maturity or acceleration of other indebtedness, a failure to pay certain judgments and certain events of bankruptcy and insolvency. Generally, if an event of default occurs, the Trustee or holders of at least 25% in principal amount of the then outstanding 6.375% Notes may declare the principal of and accrued but unpaid interest, including any additional interest, on all of the 6.375% Notes to be due and payable. | ||||||||
Under the 6.375% Indenture, the Company can make Restricted Payments (as such term is defined in the 6.375% Indenture) up to a calculated limit, provided that the Company's pro forma risk-based capital ratio exceeds 225% after giving effect to the Restricted Payment and certain other conditions are met. Restricted Payments include, among other items, repurchases of common stock and cash dividends on common stock (to the extent such dividends exceed $30.0 million in the aggregate in any calendar year). | ||||||||
The limit of Restricted Payments permitted under the 6.375% Indenture is the sum of (x) 50% of the Company's "Net Excess Cash Flow" (as defined in the 6.375% Indenture) for the period (taken as one accounting period) from July 1, 2012 to the end of the Company's most recently ended fiscal quarter for which financial statements are available at the time of such Restricted Payment, (y) $175.0 million and (z) certain other amounts specified in the 6.375% Indenture. Based on the provisions set forth in the 6.375% Indenture and the Company's Net Excess Cash Flow for the period from July 1, 2012 through December 31, 2014, the Company could have made additional Restricted Payments under this 6.375% Indenture covenant of approximately $75 million as of December 31, 2014. This limitation on Restricted Payments does not apply if the Debt to Total Capitalization Ratio (as defined in the 6.375% Indenture) as of the last day of the Company's most recently ended fiscal quarter for which financial statements are available that immediately precedes the date of any Restricted Payment, calculated immediately after giving effect to such Restricted Payment and any related transactions on a pro forma basis, is equal to or less than 17.5%. | ||||||||
The amendment to the Senior Secured Credit Agreement on May 30, 2014, did not impact the restrictions set forth in the 6.375% Indenture regarding the Company’s use of the proceeds from the sale of CLIC. Under the Indenture, the net proceeds received by the Company from the sale of CLIC (defined as "Net Available Cash" under the Indenture) may be used to: (i) reinvest in or acquire assets to be used in the insurance business or a related business; or (ii) repay the Senior Secured Credit Agreement. Under the Indenture, any Net Available Cash not so reinvested or applied within 365 days after the closing of the sale of CLIC must be used to make an offer to purchase the outstanding notes at par and, in the interim, may only be invested as set forth in the Indenture. The Company currently plans to use the cash received from the sale of CLIC as permitted under the 6.375 Indenture including the investment on July 1, 2014, of $28.0 million to recapture a block of life insurance business from Wilton Re. | ||||||||
In connection with the issuance of the 6.375% Notes and execution of the 6.375% Indenture, the Company and the Subsidiary Guarantors entered into a security agreement, dated as of September 28, 2012 (the "Security Agreement"), by and among the Company, the Subsidiary Guarantors and the Collateral Agent, pursuant to which the Company and the Subsidiary Guarantors pledged substantially all of their assets to secure their obligations under the 6.375% Notes and the 6.375% Indenture, subject to certain exceptions as set forth in the Security Agreement. | ||||||||
Pari Passu Intercreditor Agreement | ||||||||
In connection with the issuance of the 6.375% Notes and entry into the Senior Secured Credit Agreement, the Agent and the Collateral Agent, as authorized representative with respect to the 6.375% Notes, entered into a Pari Passu Intercreditor Agreement, dated as of September 28, 2012 (the "Intercreditor Agreement"), which sets forth agreements with respect to the first-priority liens granted by the Company and the Subsidiary Guarantors pursuant to the 6.375% Indenture and the Senior Secured Credit Agreement. | ||||||||
Under the Intercreditor Agreement, any actions that may be taken with respect to the collateral that secures the 6.375% Notes and the Senior Secured Credit Agreement, including the ability to cause the commencement of enforcement proceedings against such collateral, to control such proceedings and to approve amendments to releases of such collateral from the lien of, and waive past defaults under, such documents relating to such collateral, will be at the direction of the authorized representative of the lenders under the Senior Secured Credit Agreement until the earliest of: (i) the Company's obligations under the Senior Secured Credit Agreement (or refinancings thereof) are discharged; (ii) the earlier of (x) the date on which the outstanding principal amount of loans and commitments under the Senior Secured Credit Agreement is less than $25.0 million and (y) the date on which the outstanding principal amount of another tranche of first-priority indebtedness exceeds the principal amount of loans and commitments under the Senior Secured Credit Agreement; and (iii) 180 days after the occurrence of both an event of default under the 6.375% Indenture and the authorized representative of the holders of the New Notes making certain representations as described in the Intercreditor Agreement, unless the authorized representative of the lenders under the Senior Secured Credit Agreement has commenced and is diligently pursuing enforcement action with respect to the collateral or the grantor of the security interest in that collateral (whether the Company or the applicable Subsidiary Guarantor) is then a debtor under or with respect to (or otherwise subject to) any insolvency or liquidation proceeding. | ||||||||
9.0% Notes | ||||||||
On December 21, 2010, we issued $275.0 million aggregate principal amount of 9.0% Senior Secured Notes due January 2018 (the "9.0% Notes"). The net proceeds of $267.0 million were used to repay certain indebtedness. The Company could redeem all or part of the 9.0% Notes at any time and from time to time prior to January 15, 2014, at a price equal to 100% of the aggregate principal amount of the 9.0% Notes to be redeemed plus a "make-whole" premium and accrued and unpaid interest. | ||||||||
On September 28, 2012, the Company completed the cash tender offer for $273.8 million aggregate principal amount of the 9.0% Notes and received consents from such holders to proposed amendments to the indenture governing the 9.0% Notes (the "9.0% Indenture"). In addition, on September 28, 2012 (the "Initial Payment Date"), the Company, the Subsidiary Guarantors and Wilmington Trust, National Association (as successor by merger to Wilmington Trust FSB), as trustee, executed a first supplemental indenture to the 9.0% Indenture (the "Supplemental Indenture") that eliminated substantially all of the restrictive covenants contained in the 9.0% Indenture and certain events of default and related provisions. The Supplemental Indenture became effective upon execution, and the amendments to the 9.0% Indenture became operative on the Initial Payment Date upon acceptance of and payment for the tendered 9.0% Notes by the Company. | ||||||||
On the Initial Payment Date, the Company paid an aggregate of $326.3 million (using a portion of the net proceeds from its offering of the 6.375% Notes, together with borrowings under the Senior Secured Credit Agreement) in order to purchase the 9.0% Notes tendered prior to the Initial Payment Date (representing, in the aggregate, tender offer consideration of approximately $313.1 million, consent payments of approximately $8.2 million and accrued and unpaid interest to, but not including, the Initial Payment Date of approximately $5.0 million). The remaining $1.2 million of 9.0% Notes were redeemed on October 29, 2012. | ||||||||
7.0% Debentures | ||||||||
From November 2009 through May 2010, we issued $293.0 million aggregate principal amount of our 7.0% Senior Debentures due 2016 (the "7.0% Debentures"). The Company used the net proceeds from the issuance of the 7.0% Debentures to retire outstanding indebtedness. | ||||||||
The 7.0% Debentures ranked equally in right of payment with all of the Company's unsecured and unsubordinated obligations. The 7.0% Debentures were governed by an Indenture dated as of October 16, 2009 between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee. The 7.0% Debentures bore interest at a rate of 7.0% per annum, payable semi-annually on June 30 and December 30 of each year. The 7.0% Debentures would have matured on December 30, 2016. The 7.0% Debentures were not convertible prior to June 30, 2013, except under limited circumstances. Commencing on June 30, 2013, the 7.0% Debentures were convertible into shares of our common stock at the option of the holder at any time, subject to certain exceptions and subject to our right to terminate such conversion rights under certain circumstances relating to the sale price of our common stock. As further described below, we elected to terminate the conversion rights in July 2013. | ||||||||
On September 4, 2012, the Company entered into a Debenture Repurchase Agreement (the "Debenture Repurchase Agreement") with Paulson Credit Opportunities Master Ltd. and Paulson Recovery Master Fund Ltd. (collectively, the "Paulson Holders"), funds managed by Paulson & Co. Inc., ("Paulson") that held $200.0 million in aggregate principal amount of the Company's 7.0% Debentures. Pursuant to the Debenture Repurchase Agreement, the Company purchased from each of the Paulson Holders the 7.0% Debentures held by such Paulson Holders, for a cash purchase price of $355.1 million that provided for a 2.8% discount to the estimated fair market value of the 7.0% Debentures as defined in the Debenture Repurchase Agreement. | ||||||||
On March 28, 2013, the Company completed the cash tender offer (the "Offer") for $59.3 million aggregate principal amount of its 7.0% Debentures for an aggregate purchase price of $124.8 million. The Offer was conducted as part of our previously announced securities repurchase program. Pursuant to the terms of the Offer, holders of the 7.0% Debentures who tendered their 7.0% Debentures prior to the expiration date, received, for each $1,000 principal amount of such 7.0% Debentures, a cash purchase price equal to the sum of: (i) the average volume weighted average price of our common stock (as defined in the Offer) ($11.2393 at the close of trading on March 27, 2013) multiplied by 183.5145; plus (ii) a fixed cash amount of $61.25. The final purchase price per $1,000 principal amount of 7.0% Debentures was $2,123.82. In addition to the purchase price, holders received accrued and unpaid interest on any 7.0% Debentures that were tendered to, but excluding, the settlement date of the Offer. | ||||||||
In May 2013, we repurchased $4.5 million principal amount of the 7.0% Debentures for an aggregate purchase price of $9.4 million. | ||||||||
On July 1, 2013, the Company issued a conversion right termination notice to holders of the 7.0% Debentures. The Company elected to terminate the right to convert the 7.0% Debentures into shares of its common stock, effective as of July 30, 2013. Holders of the 7.0% Debentures were able to exercise their conversion right at any time on or prior to the close of business on July 30, 2013. Holders exercising their conversion right received 184.3127 shares of common stock per $1,000 principal amount of 7.0% Debentures converted. The 7.0% Debentures submitted for conversion were deemed paid in full and the Company has no further obligation with respect to such 7.0% Debentures. Holders of $25.7 million in aggregate principal amount of the 7.0% Debentures exercised their conversion right and received 4.7 million shares of our common stock. | ||||||||
On May 30, 2014, we repurchased the remaining $3.5 million principal amount of the 7.0% Debentures for a purchase price of $3.7 million. | ||||||||
Previous Senior Secured Credit Agreement | ||||||||
In the first nine months of 2012, as required under the terms of a previous senior secured credit agreement, we made mandatory prepayments of $31.4 million due to repurchases of our common stock and payment of a common stock dividend. | ||||||||
In September 2012, the Company used a portion of the net proceeds from its offering of the 6.375% Notes, together with borrowings under the Senior Secured Credit Agreement to repay the remaining $223.8 million principal amount outstanding under its previous senior secured credit agreement. | ||||||||
Senior Health Note | ||||||||
In connection with the Transfer, the Company issued the Senior Health Note due November 12, 2013 (the "Senior Health Note") payable to Senior Health. The Senior Health Note was unsecured and had an interest rate of 6.0% payable quarterly, beginning on March 15, 2009. We were required to make annual principal payments of $25.0 million beginning on November 12, 2009. The Company made a $25.0 million scheduled payment on the Senior Health Note in 2011, 2010 and 2009. In March 2012, we paid in full the remaining $50.0 million principal balance on the Senior Health Note, which had been scheduled to mature in November 2013. The repayment in full of the Senior Health Note removed the previous restriction on our ability to pay cash dividends on our common stock. | ||||||||
Loss on Extinguishment of Debt | ||||||||
In 2014, we recognized a loss on extinguishment or modification of debt totaling $.6 million consisting of: | ||||||||
(i) | $.4 million of expenses related to the amendment of the Senior Secured Credit Agreement; and | |||||||
(ii) | $.2 million related to the repurchase of the remaining principal amount of the 7.0% Debentures. | |||||||
In 2013, we recognized a loss on extinguishment of debt totaling $65.4 million consisting of: | ||||||||
(i) | $2.9 million related to the amendment of the Senior Secured Credit Agreement and the write-off of unamortized discount and issuance costs associated with prepayments on the Senior Secured Credit Agreement; and | |||||||
(ii) | $62.5 million as a result of the Offer and repurchase of 7.0% Debentures described above, the write-off of unamortized discount and issuance costs associated with the 7.0% Debentures that were repurchased and other transaction costs. Additional paid-in capital was also reduced by $12.6 million to extinguish the beneficial conversion feature associated with a portion of the 7.0% Debentures that were repurchased. | |||||||
In 2012, we recognized a loss on extinguishment of debt totaling $200.2 million consisting of: | ||||||||
(i) | $136.5 million due to our repurchase of $200.0 million principal amount of 7.0% Debentures pursuant to the Debenture Repurchase Agreement described above and the write-off of unamortized discount and issuance costs associated with the 7.0% Debentures. Additional paid-in capital was also reduced by $24.0 million to extinguish the beneficial conversion feature associated with a portion of the 7.0% Debentures that were repurchased. As the Code limits the deduction to taxable income for losses on the redemption of convertible debt, a minimal tax benefit was recognized related to the repurchase of the 7.0% Debentures; | |||||||
(ii) | $58.2 million related to the Offer and consent solicitation for the 9.0% Notes; the write-off of unamortized issuance costs related to the 9.0% Notes; and other transaction costs; | |||||||
(iii) | $5.1 million representing the write-off of unamortized discount and issuance costs associated with repayments of a previous senior secured credit agreement; and | |||||||
(iv) $.4 million representing the write-off of unamortized discount and issuance costs associated with payments on our Senior Secured Credit Agreement. | ||||||||
Scheduled Repayment of our Direct Corporate Obligations | ||||||||
The scheduled repayment of our direct corporate obligations was as follows at December 31, 2014 (dollars in millions): | ||||||||
Year ending December 31, | ||||||||
2015 | $ | 79.2 | ||||||
2016 | 60.5 | |||||||
2017 | 4.3 | |||||||
2018 | 378.1 | |||||||
2019 | — | |||||||
Thereafter | 275 | |||||||
$ | 797.1 | |||||||
LITIGATION_AND_OTHER_LEGAL_PRO
LITIGATION AND OTHER LEGAL PROCEEDINGS | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Commitments and Contingencies Disclosure [Abstract] | ||||
LITIGATION AND OTHER LEGAL PROCEEDINGS | LITIGATION AND OTHER LEGAL PROCEEDINGS | |||
Legal Proceedings | ||||
The Company and its subsidiaries are involved in various legal actions in the normal course of business, in which claims for compensatory and punitive damages are asserted, some for substantial amounts. We recognize an estimated loss from these loss contingencies when we believe it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Some of the pending matters have been filed as purported class actions and some actions have been filed in certain jurisdictions that permit punitive damage awards that are disproportionate to the actual damages incurred. The amounts sought in certain of these actions are often large or indeterminate and the ultimate outcome of certain actions is difficult to predict. In the event of an adverse outcome in one or more of these matters, there is a possibility that the ultimate liability may be in excess of the liabilities we have established and could have a material adverse effect on our business, financial condition, results of operations and cash flows. In addition, the resolution of pending or future litigation may involve modifications to the terms of outstanding insurance policies or could impact the timing and amount of rate increases, which could adversely affect the future profitability of the related insurance policies. Based upon information presently available, and in light of legal, factual and other defenses available to the Company and its subsidiaries, the Company does not believe that it is probable that the ultimate liability from either pending or threatened legal actions, after consideration of existing loss provisions, will have a material adverse effect on the Company's consolidated financial condition, operating results or cash flows. However, given the inherent difficulty in predicting the outcome of legal proceedings, there exists the possibility that such legal actions could have a material adverse effect on the Company's consolidated financial condition, operating results or cash flows. | ||||
In addition to the inherent difficulty of predicting litigation outcomes, particularly those that will be decided by a jury, some matters purport to seek substantial or an unspecified amount of damages for unsubstantiated conduct spanning several years based on complex legal theories and damages models. The alleged damages typically are indeterminate or not factually supported in the complaint, and, in any event, the Company's experience indicates that monetary demands for damages often bear little relation to the ultimate loss. In some cases, plaintiffs are seeking to certify classes in the litigation and class certification either has been denied or is pending and we have filed oppositions to class certification or sought to decertify a prior class certification. In addition, for many of these cases: (i) there is uncertainty as to the outcome of pending appeals or motions; (ii) there are significant factual issues to be resolved; and/or (iii) there are novel legal issues presented. Accordingly, the Company cannot reasonably estimate the possible loss or range of loss in excess of amounts accrued, if any, or predict the timing of the eventual resolution of these matters. The Company reviews these matters on an ongoing basis. When assessing reasonably possible and probable outcomes, the Company bases its assessment on the expected ultimate outcome following all appeals. | ||||
Regulatory Examinations and Fines | ||||
Insurance companies face significant risks related to regulatory investigations and actions. Regulatory investigations generally result from matters related to sales or underwriting practices, payment of contingent or other sales commissions, claim payments and procedures, product design, product disclosure, additional premium charges for premiums paid on a periodic basis, denial or delay of benefits, charging excessive or impermissible fees on products, procedures related to canceling policies, changing the way cost of insurance charges are calculated for certain life insurance products or recommending unsuitable products to customers. We are, in the ordinary course of our business, subject to various examinations, inquiries and information requests from state, federal and other authorities. The ultimate outcome of these regulatory actions (including the costs of complying with information requests and policy reviews) cannot be predicted with certainty. In the event of an unfavorable outcome in one or more of these matters, the ultimate liability may be in excess of liabilities we have established and we could suffer significant reputational harm as a result of these matters, which could also have a material adverse effect on our business, financial condition, results of operations or cash flows. | ||||
In August 2011, we were notified of an examination to be done on behalf of a number of states for the purpose of determining compliance with unclaimed property laws by the Company and its subsidiaries. Such examination has included inquiries related to the use of data available on the U.S. Social Security Administration's Death Master File to identify instances where benefits under life insurance policies, annuities and retained asset accounts are payable. We are continuing to provide information to the examiners in response to their requests. A total of 38 states and the District of Columbia are currently participating in this examination. | ||||
Guaranty Fund Assessments | ||||
The balance sheet at December 31, 2014, included: (i) accruals of $23.7 million, representing our estimate of all known assessments that will be levied against the Company's insurance subsidiaries by various state guaranty associations based on premiums written through December 31, 2014; and (ii) receivables of $23.6 million that we estimate will be recovered through a reduction in future premium taxes as a result of such assessments. At December 31, 2013, such guaranty fund assessment accruals were $24.0 million and such receivables were $24.9 million. These estimates are subject to change when the associations determine more precisely the losses that have occurred and how such losses will be allocated among the insurance companies. We recognized expense for such assessments of $1.1 million, $2.7 million and $4.3 million in 2014, 2013 and 2012, respectively. | ||||
Guarantees | ||||
In accordance with the terms of the employment agreements of two of the Company's former chief executive officers, certain wholly-owned subsidiaries of the Company are the guarantors of the former executives' nonqualified supplemental retirement benefits. The liability for such benefits was $27.2 million and $25.9 million at December 31, 2014 and 2013, respectively, and is included in the caption "Other liabilities" in the consolidated balance sheet. | ||||
Leases and Certain Other Long-Term Commitments | ||||
The Company rents office space, equipment and computer software under noncancellable operating lease agreements. In addition, the Company has entered into certain sponsorship agreements which require future payments. Total expense pursuant to these lease and sponsorship agreements was $50.4 million, $44.3 million and $47.5 million in 2014, 2013 and 2012, respectively. Future required minimum payments as of December 31, 2014, were as follows (dollars in millions): | ||||
2015 | $ | 47.3 | ||
2016 | 34.8 | |||
2017 | 21.2 | |||
2018 | 17.6 | |||
2019 | 6.9 | |||
Thereafter | 11.1 | |||
Total | $ | 138.9 | ||
AGENT_DEFERRED_COMPENSATION_PL
AGENT DEFERRED COMPENSATION PLAN | 12 Months Ended | |||||
Dec. 31, 2014 | ||||||
Compensation and Retirement Disclosure [Abstract] | ||||||
AGENT DEFERRED COMPENSATION PLAN | AGENT DEFERRED COMPENSATION PLAN | |||||
For our agent deferred compensation plan, it is our policy to immediately recognize changes in the actuarial benefit obligation resulting from either actual experience being different than expected or from changes in actuarial assumptions. | ||||||
One of our insurance subsidiaries has a noncontributory, unfunded deferred compensation plan for qualifying members of its career agency force. Benefits are based on years of service and career earnings. The actuarial measurement date of this deferred compensation plan is December 31. The liability recognized in the consolidated balance sheet for the agent deferred compensation plan was $175.1 million and $142.7 million at December 31, 2014 and 2013, respectively. Expenses incurred on this plan were $36.3 million, $(2.9) million and $20.5 million during 2014, 2013 and 2012, respectively (including the recognition of gains (losses) of $(24.3) million, $17.2 million and $(7.5) million in 2014, 2013 and 2012, respectively, primarily resulting from: (i) changes in the discount rate assumption used to determine the deferred compensation plan liability to reflect current investment yields; and (ii) changes in mortality table assumptions). We purchased COLI as an investment vehicle to fund the agent deferred compensation plan. The COLI assets are not assets of the agent deferred compensation plan, and as a result, are accounted for outside the plan and are recorded in the consolidated balance sheet as other invested assets. The carrying value of the COLI assets was $157.6 million and $144.8 million at December 31, 2014 and 2013, respectively. Changes in the cash surrender value (which approximates net realizable value) of the COLI assets are recorded as net investment income and totaled $5.7 million, $19.7 million and $9.0 million in 2014, 2013 and 2012, respectively. | ||||||
We used the following assumptions for the deferred compensation plan to calculate: | ||||||
2014 | 2013 | |||||
Benefit obligations: | ||||||
Discount rate | 4.15 | % | 4.75 | % | ||
Net periodic cost: | ||||||
Discount rate | 4.75 | % | 4 | % | ||
The discount rate is based on the yield of a hypothetical portfolio of high quality debt instruments which could effectively settle plan benefits on a present value basis as of the measurement date. At December 31, 2014, for our deferred compensation plan for qualifying members of our career agency force, we assumed a 4.0 percent annual increase in compensation until the participant's assumed retirement date (ranging from ages 60 to 65 and completion of five years of service). | ||||||
The benefits expected to be paid pursuant to our agent deferred compensation plan as of December 31, 2014 were as follows (dollars in millions): | ||||||
2015 | $ | 6.5 | ||||
2016 | 6.8 | |||||
2017 | 7.1 | |||||
2018 | 7.7 | |||||
2019 | 8 | |||||
2020 - 2024 | 47.4 | |||||
The Company has a qualified defined contribution plan for which substantially all employees are eligible. Company contributions, which match a portion of certain voluntary employee contributions to the plan, totaled $5.1 million, $4.6 million and $4.5 million in 2014, 2013 and 2012, respectively. Employer matching contributions are discretionary. |
DERIVATIVES
DERIVATIVES | 12 Months Ended | |||||||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||
DERIVATIVES | DERIVATIVES | |||||||||||||||||||||||||
Our freestanding and embedded derivatives, which are not designated as hedging instruments, are summarized as follows (dollars in millions): | ||||||||||||||||||||||||||
Fair value | ||||||||||||||||||||||||||
Balance sheet classification | 2014 | 2013 | ||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||
Fixed index call options | Other invested assets | $ | 107.2 | $ | 156.2 | |||||||||||||||||||||
Interest futures | Other invested assets | — | 0.2 | |||||||||||||||||||||||
Total assets | $ | 107.2 | $ | 156.4 | ||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||
Interest futures | Other invested assets | $ | 0.2 | $ | — | |||||||||||||||||||||
Fixed index annuities - embedded derivative | Future policy benefits | 1,081.50 | 903.7 | |||||||||||||||||||||||
Reinsurance payable - embedded derivative | Future policy benefits | — | 1.8 | |||||||||||||||||||||||
Total liabilities | $ | 1,081.70 | $ | 905.5 | ||||||||||||||||||||||
The activity associated with freestanding derivative instruments is measured as either the notional or the number of contracts. The activity associated with the fixed index annuity embedded derivatives are shown by the number of policies. The following table represents activity associated with derivative instruments as of the dates indicated: | ||||||||||||||||||||||||||
Measurement | December 31, 2013 | Additions | Maturities/terminations | December 31, 2014 | ||||||||||||||||||||||
Interest futures | Contracts | 186 | 4,847 | (4,631 | ) | 402 | ||||||||||||||||||||
Fixed index annuities - embedded derivative | Policies | 90,408 | 9,830 | (7,053 | ) | 93,185 | ||||||||||||||||||||
Fixed index call options | Notional (a) | $ | 2,284.80 | $ | 2,430.20 | $ | (2,311.1 | ) | $ | 2,403.90 | ||||||||||||||||
_________________ | ||||||||||||||||||||||||||
(a) Dollars in millions. | ||||||||||||||||||||||||||
The following table provides the pre-tax gains (losses) recognized in net income for derivative instruments, which are not designated as hedges for the periods indicated (dollars in millions): | ||||||||||||||||||||||||||
Income statement classification | 2014 | 2013 | 2012 | |||||||||||||||||||||||
Fixed index call options | Net investment income from policyholder and reinsurer accounts and other special-purpose portfolios | $ | 69.5 | $ | 177.5 | $ | 25.5 | |||||||||||||||||||
Interest futures | Net realized investments gains (losses) | (7.0 | ) | (.4 | ) | (.2 | ) | |||||||||||||||||||
Fixed index annuities - embedded derivative | Insurance policy benefits | (73.5 | ) | 49.3 | (15.2 | ) | ||||||||||||||||||||
Reinsurance payable - embedded derivative | Net investment income from policyholder and reinsurer accounts and other special-purpose portfolios | (1.4 | ) | 3.7 | (2.4 | ) | ||||||||||||||||||||
Total | $ | (12.4 | ) | $ | 230.1 | $ | 7.7 | |||||||||||||||||||
Derivative Counterparty Risk | ||||||||||||||||||||||||||
If the counterparties to the call options fail to meet their obligations, we may recognize a loss. We limit our exposure to such a loss by diversifying among several counterparties believed to be strong and creditworthy. At December 31, 2014, all of our counterparties were rated "A-" or higher by S&P. The interest rate future contracts are effected through regulated exchanges. Such positions are marked to market and margined on a daily basis. The Company has minimal exposure to credit-related losses in the event of nonperformance. | ||||||||||||||||||||||||||
The Company and its subsidiaries are parties to master netting arrangements with its counterparties related to entering into various derivative contracts. Exchange-traded derivatives require margin accounts which we offset. | ||||||||||||||||||||||||||
The following table summarizes information related to derivatives with master netting arrangements or collateral as of December 31, 2014 and 2013 (dollars in millions): | ||||||||||||||||||||||||||
Gross amounts not offset in the balance sheet | ||||||||||||||||||||||||||
Gross amounts recognized | Gross amounts offset in the balance sheet | Net amounts of assets presented in the balance sheet | Financial instruments | Cash collateral received | Net amount | |||||||||||||||||||||
December 31, 2014: | ||||||||||||||||||||||||||
Fixed index call options | $ | 107.2 | $ | — | $ | 107.2 | $ | — | $ | — | $ | 107.2 | ||||||||||||||
Interest futures | (.2 | ) | 1.5 | 1.3 | — | — | 1.3 | |||||||||||||||||||
December 31, 2013: | ||||||||||||||||||||||||||
Fixed index call options | 156.2 | — | 156.2 | — | — | 156.2 | ||||||||||||||||||||
Interest futures | 0.2 | 0.4 | 0.6 | — | — | 0.6 | ||||||||||||||||||||
Repurchase agreements | ||||||||||||||||||||||||||
We may enter into agreements under which we sell securities subject to an obligation to repurchase the same securities. These repurchase agreements are accounted for as collateralized financing arrangements and not as a sale and subsequent repurchase of securities. The obligation to repurchase the securities is reflected as investment borrowings in the Company's consolidated balance sheet, while the securities underlying the repurchase agreements remain in the respective investment asset accounts. There is no offsetting or netting of the investment securities assets with the repurchase agreement liabilities. In addition, as the Company does not currently have any outstanding reverse repurchase agreements, there is no such offsetting to be done with the repurchase agreements. | ||||||||||||||||||||||||||
The right of offset for a repurchase agreement resembles a secured borrowing, whereby the collateral would be used to settle the fair value of the repurchase agreement should the Company be in default under the agreement (e.g., fails to make an interest payment to the counterparty). If the counterparty were to default (e.g., declare bankruptcy), the Company could cancel the repurchase agreement (i.e., cease payment of principal and interest), and attempt collection on the amount of collateral value in excess of the repurchase agreement fair value. The collateral is held by a third party financial institution in the counterparty's custodial account. The counterparty has the right to sell or repledge the investment securities. | ||||||||||||||||||||||||||
The following table summarizes information related to repurchase agreements as of December 31, 2014 (dollars in millions): | ||||||||||||||||||||||||||
Gross amounts not offset in the balance sheet | ||||||||||||||||||||||||||
Gross amounts of recognized liabilities | Gross amounts offset in the balance sheet | Net amounts of liabilities presented in the balance sheet | Financial instruments | Cash collateral pledged | Net amount | |||||||||||||||||||||
December 31, 2014: | ||||||||||||||||||||||||||
Repurchase agreements (a) | $ | 20.4 | $ | — | $ | 20.4 | $ | 20.4 | $ | — | $ | — | ||||||||||||||
_________________ | ||||||||||||||||||||||||||
(a) | As of December 31, 2014, these agreements were collateralized by investment securities with a fair value of $25.3 million. There were no repurchase agreements outstanding at December 31, 2013. |
SHAREHOLDERS_EQUITY
SHAREHOLDERS' EQUITY | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||
SHAREHOLDERS' EQUITY | SHAREHOLDERS' EQUITY | ||||||||||||||||
Changes in the number of shares of common stock outstanding were as follows (shares in thousands): | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Balance, beginning of year | 220,324 | 221,502 | 241,305 | ||||||||||||||
Treasury stock purchased and retired | (18,489 | ) | (8,949 | ) | (21,533 | ) | |||||||||||
Conversion of 7.0% Debentures | — | 4,739 | — | ||||||||||||||
Stock options exercised | 916 | 2,087 | 1,191 | ||||||||||||||
Restricted and performance stock vested (a) | 573 | 945 | 539 | ||||||||||||||
Balance, end of year | 203,324 | 220,324 | 221,502 | ||||||||||||||
____________________ | |||||||||||||||||
(a) | In 2014, 2013 and 2012, such amount was reduced by 257 thousand, 472 thousand and 237 thousand shares, respectively, which were tendered to the Company for the payment of required federal and state tax withholdings owed on the vesting of restricted and performance stock. | ||||||||||||||||
In May 2011, the Company announced a common share repurchase program of up to $100.0 million. In February 2012, June 2012, December 2012, December 2013 and November 2014, the Company's Board of Directors approved, in aggregate, an additional $1,200.0 million to repurchase the Company's outstanding securities. In 2014, 2013 and 2012 we repurchased 18.5 million, 8.9 million and 21.5 million shares, respectively, of common stock for $319.1 million, $118.4 million and $180.2 million under the securities repurchase program. In addition, in September 2014, we repurchased all outstanding common stock warrants for $57.4 million under the securities repurchase program. Such warrants had been held by Paulson on behalf of several investment funds and accounts managed by them, and were issued in conjunction with a private sale of our common stock in 2009. In 2013, the Company also purchased $63.8 million aggregate principal amount of our 7.0% Debentures as further discussed in the note to the consolidated financial statements entitled "Notes Payable - Direct Corporate Obligations". Such purchases were made pursuant to our securities repurchase program. The Company had remaining repurchase authority of $420.9 million as of December 31, 2014. | |||||||||||||||||
In May 2012, we initiated a common stock dividend program. In 2014, 2013 and 2012, dividends declared and paid on common stock totaled $51.0 million ($0.24 per common share), $24.4 million ($0.11 per common share) and $13.9 million ($0.06 per common share), respectively. In March 2014, the Company increased its quarterly common stock dividend to $0.06 per share from $0.03 per share. | |||||||||||||||||
The Company has a long-term incentive plan which permits the grant of CNO incentive or non-qualified stock options, restricted stock awards, stock appreciation rights, performance shares or units and certain other equity-based awards to certain directors, officers and employees of the Company and certain other individuals who perform services for the Company. As of December 31, 2014, 8.6 million shares remained available for issuance under the plan. Our stock option awards are generally granted with an exercise price equal to the market price of the Company's stock on the date of grant. For options granted in 2006 and prior years, our stock option awards generally vested on a graded basis over a four year service term and expire ten years from the date of grant. Our stock option awards granted in 2007 through 2009 generally vested on a graded basis over a three year service term and expire five years from the date of grant. Our stock options granted in 2010 through 2014 generally vest on a graded basis over a three year service term and expire seven years from the date of grant. The vesting periods for our restricted stock awards range from immediate vesting to a period of three years. | |||||||||||||||||
A summary of the Company's stock option activity and related information for 2014 is presented below (shares in thousands; dollars in millions, except per share amounts): | |||||||||||||||||
Shares | Weighted average exercise price | Weighted average remaining life (in years) | Aggregate intrinsic value | ||||||||||||||
Outstanding at the beginning of the year | 5,579 | $ | 10.64 | ||||||||||||||
Options granted | 1,014 | 19.1 | |||||||||||||||
Exercised | (917 | ) | 5.47 | $ | 3.8 | ||||||||||||
Forfeited or terminated | (665 | ) | 20.07 | ||||||||||||||
Outstanding at the end of the year | 5,011 | 12.04 | 4.3 | $ | 32.1 | ||||||||||||
Options exercisable at the end of the year | 2,030 | 2.7 | $ | 12.1 | |||||||||||||
Available for future grant | 8,571 | ||||||||||||||||
A summary of the Company's stock option activity and related information for 2013 is presented below (shares in thousands; dollars in millions, except per share amounts): | |||||||||||||||||
Shares | Weighted average exercise price | Weighted average remaining life (in years) | Aggregate intrinsic value | ||||||||||||||
Outstanding at the beginning of the year | 6,655 | $ | 9.72 | ||||||||||||||
Options granted | 1,447 | 11.01 | |||||||||||||||
Exercised | (2,087 | ) | 7.27 | $ | 6 | ||||||||||||
Forfeited or terminated | (436 | ) | 13.95 | ||||||||||||||
Outstanding at the end of the year | 5,579 | 10.64 | 4 | $ | 32.5 | ||||||||||||
Options exercisable at the end of the year | 2,529 | 2.1 | $ | 13.9 | |||||||||||||
Available for future grant | 9,099 | ||||||||||||||||
A summary of the Company's stock option activity and related information for 2012 is presented below (shares in thousands; dollars in millions, except per share amounts): | |||||||||||||||||
Shares | Weighted average exercise price | Weighted average remaining life (in years) | Aggregate intrinsic value | ||||||||||||||
Outstanding at the beginning of the year | 7,712 | $ | 10.13 | ||||||||||||||
Options granted | 1,389 | 7.55 | |||||||||||||||
Exercised | (1,191 | ) | 3.14 | $ | 2.7 | ||||||||||||
Forfeited or terminated | (1,255 | ) | 16.13 | ||||||||||||||
Outstanding at the end of the year | 6,655 | 9.72 | 3.4 | $ | 30.2 | ||||||||||||
Options exercisable at the end of the year | 3,715 | 1.7 | $ | 15.5 | |||||||||||||
Available for future grant | 9,713 | ||||||||||||||||
We recognized compensation expense related to stock options totaling $7.9 million ($5.1 million after income taxes) in 2014, $7.2 million ($4.7 million after income taxes) in 2013 and $6.7 million ($4.4 million after income taxes) in 2012. Compensation expense related to stock options reduced both basic and diluted earnings per share by two cents in each of the three years ended December 31, 2014. At December 31, 2014, the unrecognized compensation expense for non-vested stock options totaled $8.7 million which is expected to be recognized over a weighted average period of 1.7 years. Cash received by the Company from the exercise of stock options was $5.0 million, $15.1 million and $3.1 million during 2014, 2013 and 2012, respectively. | |||||||||||||||||
The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option valuation model with the following weighted average assumptions: | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Grants | Grants | Grants | |||||||||||||||
Weighted average risk-free interest rates | 1.6 | % | 0.8 | % | 0.9 | % | |||||||||||
Weighted average dividend yields | 1.3 | % | 0.7 | % | — | % | |||||||||||
Volatility factors | 51 | % | 107 | % | 108 | % | |||||||||||
Weighted average expected life (in years) | 4.8 | 4.8 | 4.7 | ||||||||||||||
Weighted average fair value per share | $ | 7.65 | $ | 8.02 | $ | 5.76 | |||||||||||
The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The dividend yield is based on the Company's history and expectation of dividend payouts. Volatility factors are based on the weekly historical volatility of the Company's common stock equal to the expected life of the option or since our emergence from bankruptcy in September 2003. The expected life is based on the average of the graded vesting period and the contractual terms of the option. | |||||||||||||||||
The exercise price was equal to the market price of our stock on the date of grant for all options granted in 2014, 2013 and 2012. | |||||||||||||||||
The following table summarizes information about stock options outstanding at December 31, 2014 (shares in thousands): | |||||||||||||||||
Options outstanding | Options exercisable | ||||||||||||||||
Range of exercise prices | Number outstanding | Remaining life (in years) | Average exercise price | Number exercisable | Average exercise price | ||||||||||||
$6.45 - $6.77 | 521 | 2.2 | $ | 6.45 | 520 | $ | 6.45 | ||||||||||
$7.38 - $7.74 | 1,580 | 3.8 | 7.47 | 1,027 | 7.44 | ||||||||||||
$8.29 - $12.34 | 1,396 | 5.1 | 10.78 | 31 | 8.29 | ||||||||||||
$12.74 - $18.27 | 83 | 5.9 | 15.4 | — | — | ||||||||||||
$19.15 - $25.45 | 1,431 | 4.6 | 20.18 | 452 | 22.41 | ||||||||||||
5,011 | 2,030 | ||||||||||||||||
During 2014, 2013 and 2012, the Company granted .1 million, .2 million and .7 million restricted shares, respectively, of CNO common stock to certain directors, officers and employees of the Company at a weighted average fair value of $17.15 per share, $12.00 per share and $7.35 per share, respectively. The fair value of such grants totaled $1.9 million, $2.1 million and $5.0 million in 2014, 2013 and 2012, respectively. Such amounts are recognized as compensation expense over the vesting period of the restricted stock. A summary of the Company's non-vested restricted stock activity for 2014 is presented below (shares in thousands): | |||||||||||||||||
Shares | Weighted average grant date fair value | ||||||||||||||||
Non-vested shares, beginning of year | 521 | $ | 8.29 | ||||||||||||||
Granted | 113 | 17.15 | |||||||||||||||
Vested | (396 | ) | 9.22 | ||||||||||||||
Forfeited | (2 | ) | 10.19 | ||||||||||||||
Non-vested shares, end of year | 236 | 10.95 | |||||||||||||||
At December 31, 2014, the unrecognized compensation expense for non-vested restricted stock totaled $1.4 million which is expected to be recognized over a weighted average period of 1.6 years. At December 31, 2013, the unrecognized compensation expense for non-vested restricted stock totaled $2.5 million. We recognized compensation expense related to restricted stock awards totaling $3.0 million, $4.5 million and $4.5 million in 2014, 2013 and 2012, respectively. The fair value of restricted stock that vested during 2014, 2013 and 2012 was $3.7 million, $5.6 million and $4.4 million, respectively. | |||||||||||||||||
Authoritative guidance also requires us to estimate the amount of unvested stock-based awards that will be forfeited in future periods and reduce the amount of compensation expense recognized over the applicable service period to reflect this estimate. We periodically evaluate our forfeiture assumptions to more accurately reflect our actual forfeiture experience. | |||||||||||||||||
The Company does not currently recognize tax benefits resulting from tax deductions in excess of the compensation expense recognized because of NOLs which are available to offset future taxable income. | |||||||||||||||||
In 2014, 2013 and 2012 the Company granted performance units totaling 283,630, 424,400 and 406,500, respectively, pursuant to its long-term incentive plan to certain officers of the Company. The criteria for payment for such awards are based on certain company-wide performance levels that must be achieved within a specified performance time (generally three years), each as defined in the award. Unless antidilutive, the diluted weighted average shares outstanding would reflect the number of performance units expected to be issued, using the treasury stock method. | |||||||||||||||||
A summary of the Company's performance units is presented below (shares in thousands): | |||||||||||||||||
Total shareholder return awards | Operating return on equity awards | Pre-tax operating income awards | |||||||||||||||
Awards outstanding at December 31, 2011 | — | — | 836 | ||||||||||||||
Granted in 2012 | 203 | — | 203 | ||||||||||||||
Forfeited | (10 | ) | — | (62 | ) | ||||||||||||
Awards outstanding at December 31, 2012 | 193 | — | 977 | ||||||||||||||
Granted in 2013 | 212 | 212 | — | ||||||||||||||
Additional shares issued pursuant to achieving certain performance criteria (a) | — | — | 223 | ||||||||||||||
Shares vested in 2013 | — | — | (668 | ) | |||||||||||||
Forfeited | (23 | ) | (8 | ) | (62 | ) | |||||||||||
Awards outstanding at December 31, 2013 | 382 | 204 | 470 | ||||||||||||||
Granted in 2014 | 142 | 142 | — | ||||||||||||||
Additional shares issued pursuant to achieving certain performance criteria (a) | — | — | 142 | ||||||||||||||
Shares vested in 2014 | — | — | (434 | ) | |||||||||||||
Forfeited | (5 | ) | (3 | ) | (2 | ) | |||||||||||
Awards outstanding at December 31, 2014 | 519 | 343 | 176 | ||||||||||||||
_________________________ | |||||||||||||||||
(a) The performance units provide for a payout of up to 150 percent of the award if certain performance levels are achieved. | |||||||||||||||||
The grant date fair value of the performance units awarded was $5.2 million and $4.4 million in 2014 and 2013, respectively. We recognized compensation expense of $4.7 million, $3.4 million and $3.8 million in 2014, 2013 and 2012, respectively, related to the performance units. | |||||||||||||||||
As further discussed in the footnote to the consolidated financial statements entitled "Income Taxes", the Company's Board of Directors adopted the Section 382 Rights Agreement on January 20, 2009 and amended and extended the Section 382 Rights Agreement on December 6, 2011 and November 13, 2014. The Section 382 Rights Agreement, as amended, is designed to protect shareholder value by preserving the value of our tax assets primarily associated with NOLs. At the time the Section 382 Rights Agreement was adopted, the Company declared a dividend of one preferred share purchase right (a "Right") for each outstanding share of common stock. The dividend was payable on January 30, 2009, to the shareholders of record as of the close of business on that date and a Right is also attached to each share of CNO common stock issued after that date. Pursuant to the Section 382 Rights Agreement, as amended, each Right entitles the shareholder to purchase from the Company one one-thousandth of a share of Series C Junior Participating Preferred Stock, par value $.01 per share (the "Junior Preferred Stock") of the Company at a price of $25.00 per one one-thousandth of a share of Junior Preferred Stock. The description and terms of the Rights are set forth in the Section 382 Rights Agreement, as amended. The Rights would become exercisable in the event any person or group (subject to certain exemptions) becomes an owner of more than 4.99 percent of the outstanding stock of CNO (a "Threshold Holder") without the approval of the Board of Directors or an existing shareholder who is currently a Threshold Holder acquires additional shares exceeding one percent of our outstanding shares without prior approval from the Board of Directors. | |||||||||||||||||
A reconciliation of net income and shares used to calculate basic and diluted earnings per share is as follows (dollars in millions and shares in thousands): | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Net income (loss) for basic earnings per share | $ | 51.4 | $ | 478 | $ | 221 | |||||||||||
Add: interest expense on 7.0% Debentures, net of income taxes | — | 1.6 | 12.2 | ||||||||||||||
Net income (loss) for diluted earnings per share | $ | 51.4 | $ | 479.6 | $ | 233.2 | |||||||||||
Shares: | |||||||||||||||||
Weighted average shares outstanding for basic earnings per share | 212,917 | 221,628 | 233,685 | ||||||||||||||
Effect of dilutive securities on weighted average shares: | |||||||||||||||||
7.0% Debentures | — | 5,780 | 44,037 | ||||||||||||||
Stock options, restricted stock and performance units | 2,505 | 2,776 | 2,762 | ||||||||||||||
Warrants (a) | 2,233 | 2,518 | 943 | ||||||||||||||
Dilutive potential common shares | 4,738 | 11,074 | 47,742 | ||||||||||||||
Weighted average shares outstanding for diluted earnings per share | 217,655 | 232,702 | 281,427 | ||||||||||||||
________ | |||||||||||||||||
(a) | All outstanding warrants were repurchased in September 2014 as further discussed above. Accordingly, the warrants will have no dilutive effect in periods beginning after September 30, 2014. | ||||||||||||||||
Basic earnings per common share is computed by dividing net income by the weighted average number of common shares outstanding for the period. Restricted shares (including our performance units) are not included in basic earnings per share until vested. Diluted earnings per share reflect the potential dilution that could occur if outstanding stock options and warrants were exercised and restricted stock was vested. The dilution from options, warrants and restricted shares is calculated using the treasury stock method. Under this method, we assume the proceeds from the exercise of the options and warrants (or the unrecognized compensation expense with respect to restricted stock and performance units) will be used to purchase shares of our common stock at the average market price during the period, reducing the dilutive effect of the exercise of the options and warrants (or the vesting of the restricted stock and performance units). Initially, the 7.0% Debentures were convertible into 182.1494 shares of our common stock for each $1,000 principal amount of 7.0% Debentures, which was equivalent to an initial conversion price of approximately $5.49 per share. The conversion rate was subject to adjustment following the occurrence of certain events (including the payment of dividends on our common stock) in accordance with the terms of an indenture dated as of October 16, 2009. On July 1, 2013, the Company issued a conversion right termination notice to holders of the 7.0% Debentures and the right to convert the 7.0% Debentures into shares of its common stock was terminated effective July 30, 2013 as further discussed in the note to the consolidated financial statements entitled "Notes Payable - Direct Corporate Obligations". |
OTHER_OPERATING_STATEMENT_DATA
OTHER OPERATING STATEMENT DATA | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Insurance [Abstract] | ||||||||||||
OTHER OPERATING STATEMENT DATA | OTHER OPERATING STATEMENT DATA | |||||||||||
Insurance policy income consisted of the following (dollars in millions): | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Direct premiums collected | $ | 3,856.20 | $ | 3,966.00 | $ | 3,883.10 | ||||||
Reinsurance assumed | 34.5 | 38 | 70.4 | |||||||||
Reinsurance ceded | (187.9 | ) | (240.5 | ) | (237.1 | ) | ||||||
Premiums collected, net of reinsurance | 3,702.80 | 3,763.50 | 3,716.40 | |||||||||
Change in unearned premiums | 9.1 | (16.6 | ) | 20.8 | ||||||||
Less premiums on interest-sensitive life and products without mortality and morbidity risk which are recorded as additions to insurance liabilities | (1,295.4 | ) | (1,298.1 | ) | (1,296.7 | ) | ||||||
Premiums on traditional products with mortality or morbidity risk | 2,416.50 | 2,448.80 | 2,440.50 | |||||||||
Fees and surrender charges on interest-sensitive products | 213.2 | 295.9 | 314.9 | |||||||||
Insurance policy income | $ | 2,629.70 | $ | 2,744.70 | $ | 2,755.40 | ||||||
The four states with the largest shares of 2014 collected premiums were Florida (8.3 percent), Pennsylvania (6.7 percent), California (5.4 percent) and Texas (5.3 percent) . No other state accounted for more than five percent of total collected premiums. | ||||||||||||
Other operating costs and expenses were as follows (dollars in millions): | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Commission expense | $ | 99.4 | $ | 103.8 | $ | 115.8 | ||||||
Salaries and wages | 242.4 | 234 | 226.6 | |||||||||
Other | 461 | 428.4 | 476.9 | |||||||||
Total other operating costs and expenses | $ | 802.8 | $ | 766.2 | $ | 819.3 | ||||||
Changes in the present value of future profits were as follows (dollars in millions): | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Balance, beginning of year | $ | 679.3 | $ | 626 | $ | 697.7 | ||||||
Amortization | (76.2 | ) | (92.0 | ) | (93.5 | ) | ||||||
Effect of reinsurance transaction | 5 | — | — | |||||||||
Amounts related to CLIC prior to being sold | (15.5 | ) | — | — | ||||||||
Amounts related to fair value adjustment of fixed maturities, available for sale | (103.2 | ) | 145.3 | 21.8 | ||||||||
Balance, end of year | $ | 489.4 | $ | 679.3 | $ | 626 | ||||||
Based on current conditions and assumptions as to future events on all policies inforce, the Company expects to amortize approximately 11 percent of the December 31, 2014 balance of the present value of future profits in 2015, 10 percent in 2016, 9 percent in 2017, 8 percent in 2018 and 7 percent in 2019. The discount rate used to determine the amortization of the present value of future profits averaged approximately 5 percent in the years ended December 31, 2014, 2013 and 2012. | ||||||||||||
In accordance with authoritative guidance, we are required to amortize the present value of future profits in relation to estimated gross profits for interest-sensitive life products and annuity products. Such guidance also requires that estimates of expected gross profits used as a basis for amortization be evaluated regularly, and that the total amortization recorded to date be adjusted by a charge or credit to the statement of operations, if actual experience or other evidence suggests that earlier estimates should be revised. | ||||||||||||
Changes in deferred acquisition costs were as follows (dollars in millions): | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Balance, beginning of year | $ | 968.1 | $ | 629.7 | $ | 797.1 | ||||||
Additions | 242.8 | 222.8 | 191.7 | |||||||||
Amortization | (171.2 | ) | (204.3 | ) | (195.5 | ) | ||||||
Effect of reinsurance transaction | 24 | — | — | |||||||||
Amounts related to CLIC prior to being sold | (37.6 | ) | — | — | ||||||||
Amounts related to fair value adjustment of fixed maturities, available for sale | (255.5 | ) | 315.9 | (163.6 | ) | |||||||
Other | — | 4 | — | |||||||||
Balance, end of year | $ | 770.6 | $ | 968.1 | $ | 629.7 | ||||||
CONSOLIDATED_STATEMENT_CASH_FL
CONSOLIDATED STATEMENT CASH FLOWS | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Supplemental Cash Flow Elements [Abstract] | ||||||||||||
CONSOLIDATED STATEMENT OF CASH FLOWS | CONSOLIDATED STATEMENT OF CASH FLOWS | |||||||||||
The following disclosures supplement our consolidated statement of cash flows. | ||||||||||||
The following reconciles net income to net cash provided by operating activities (dollars in millions): | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Net income | $ | 51.4 | $ | 478 | $ | 221 | ||||||
Adjustments to reconcile net income to net cash from operating activities: | ||||||||||||
Amortization and depreciation | 274.2 | 324.6 | 315 | |||||||||
Income taxes | 119.7 | (181.2 | ) | (71.8 | ) | |||||||
Insurance liabilities | 398.2 | 465.8 | 330 | |||||||||
Accrual and amortization of investment income | (148.3 | ) | (276.3 | ) | (100.7 | ) | ||||||
Deferral of policy acquisition costs | (242.8 | ) | (222.8 | ) | (191.7 | ) | ||||||
Net realized investment gains | (36.7 | ) | (33.6 | ) | (81.1 | ) | ||||||
Payment to reinsurer pursuant to long-term care business reinsured | (590.3 | ) | — | — | ||||||||
Net loss on sale of subsidiary and (gain) loss on reinsurance transactions | 239.8 | 98.4 | — | |||||||||
Loss on extinguishment or modification of debt | 0.6 | 65.4 | 200.2 | |||||||||
Other | 56 | 2.1 | 14 | |||||||||
Net cash from operating activities | $ | 121.8 | (a) | $ | 720.4 | $ | 634.9 | |||||
______________________ | ||||||||||||
(a) | Cash flows from operating activities reflect outflows in the 2014 period due to the payment to reinsurer to transfer certain long-term care business. | |||||||||||
On July 1, 2014, Bankers Life recaptured the life business written by Bankers Life that was reinsured by Wilton Re in 2009. The following summarizes the impact of the recapture (dollars in millions): | ||||||||||||
Investments | $ | 139.4 | (a) (b) | |||||||||
Cash | 7.7 | |||||||||||
Present value of future profits and deferred acquisition costs | 29 | (b) | ||||||||||
Reinsurance receivables | (155.9 | ) | (b) | |||||||||
Other liabilities | 5.9 | (b) | ||||||||||
Gain on reinsurance transaction (classified as "Net loss on sale of subsidiary and (gain) loss on reinsurance transactions") | 26.1 | |||||||||||
Income tax expense | 9.2 | |||||||||||
Gain on reinsurance transaction (net of income taxes) | $ | 16.9 | ||||||||||
___________________ | ||||||||||||
(a) Such amount has been reduced by a $28.0 million recapture fee. | ||||||||||||
(b) Such non-cash amounts have been excluded from the consolidated statement of cash flows. | ||||||||||||
Other non-cash items not reflected in the financing activities section of the consolidated statement of cash flows (dollars in millions): | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Stock options, restricted stock and performance units | $ | 15.6 | $ | 15.1 | $ | 13.7 | ||||||
STATUTORY_INFORMATION_BASED_ON
STATUTORY INFORMATION (BASED ON NON-GAAP MEASURES) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Insurance [Abstract] | ||||||||
STATUTORY INFORMATION (BASED ON NON-GAAP MEASURES) | STATUTORY INFORMATION (BASED ON NON-GAAP MEASURES) | |||||||
Statutory accounting practices prescribed or permitted by regulatory authorities for the Company's insurance subsidiaries differ from GAAP. The Company's insurance subsidiaries reported the following amounts to regulatory agencies, after appropriate elimination of intercompany accounts among such subsidiaries (dollars in millions): | ||||||||
2014 | 2013 | |||||||
Statutory capital and surplus | $ | 1,664.40 | $ | 1,711.90 | ||||
Asset valuation reserve | 203.1 | 233.9 | ||||||
Interest maintenance reserve | 504.1 | 582.4 | ||||||
Total | $ | 2,371.60 | $ | 2,528.20 | ||||
Statutory capital and surplus included investments in upstream affiliates of $42.6 million and $52.4 million at December 31, 2014 and 2013, respectively, which were eliminated in the consolidated financial statements prepared in accordance with GAAP. | ||||||||
Statutory earnings build the capital required by ratings agencies and regulators. Statutory earnings, fees and interest paid by the insurance companies to the parent company create the "cash flow capacity" the parent company needs to meet its obligations, including debt service. The consolidated statutory net income (a non-GAAP measure) of our insurance subsidiaries was $374.3 million, $386.5 million and $350.4 million in 2014, 2013 and 2012, respectively. Included in such net income were net realized capital gains (losses), net of income taxes, of $(18.2) million, $19.0 million and $13.0 million in 2014, 2013 and 2012, respectively. In addition, such net income included pre-tax amounts for fees and interest paid to CNO or its non-life subsidiaries totaling $157.5 million, $159.7 million and $155.3 million in 2014, 2013 and 2012, respectively. | ||||||||
Insurance regulators may prohibit the payment of dividends or other payments by our insurance subsidiaries to parent companies if they determine that such payment could be adverse to our policyholders or contract holders. Otherwise, the ability of our insurance subsidiaries to pay dividends is subject to state insurance department regulations. Insurance regulations generally permit dividends to be paid from statutory earned surplus of the insurance company without regulatory approval for any 12-month period in amounts equal to the greater of (or in a few states, the lesser of): (i) statutory net gain from operations or statutory net income for the prior year; or (ii) 10 percent of statutory capital and surplus as of the end of the preceding year. This type of dividend is referred to as an "ordinary dividend". Any dividend in excess of these levels requires the approval of the director or commissioner of the applicable state insurance department and is referred to as an "extraordinary dividend". During 2014, our insurance subsidiaries paid extraordinary dividends of $227.0 million to CDOC, Inc. ("CDOC") (our wholly owned subsidiary and the immediate parent of Washington National and Conseco Life Insurance Company of Texas). The holding companies made capital contributions to insurance subsidiaries totaling $53.0 million in 2014. | ||||||||
Each of the immediate insurance subsidiaries of CDOC had negative earned surplus at December 31, 2014. Accordingly, any dividend payments from these subsidiaries require the approval of the director or commissioner of the applicable state insurance department. The payment of interest on surplus debentures requires either prior written notice or approval of the director or commissioner of the applicable state insurance department. Dividends and other payments from our non-insurance subsidiaries to CNO or CDOC do not require approval by any regulatory authority or other third party. | ||||||||
In accordance with an order from the Florida Office of Insurance Regulation, Washington National may not distribute funds to any affiliate or shareholder, except pursuant to agreements that have been approved, without prior notice to the Florida Office of Insurance Regulation. In addition, the risk-based capital ("RBC") and other capital requirements described below can also limit, in certain circumstances, the ability of our insurance subsidiaries to pay dividends. | ||||||||
RBC requirements provide a tool for insurance regulators to determine the levels of statutory capital and surplus an insurer must maintain in relation to its insurance and investment risks and the need for possible regulatory attention. The RBC requirements provide four levels of regulatory attention, varying with the ratio of the insurance company's total adjusted capital (defined as the total of its statutory capital and surplus, asset valuation reserve and certain other adjustments) to its RBC (as measured on December 31 of each year) as follows: (i) if a company's total adjusted capital is less than 100 percent but greater than or equal to 75 percent of its RBC, the company must submit a comprehensive plan to the regulatory authority proposing corrective actions aimed at improving its capital position (the "Company Action Level"); (ii) if a company's total adjusted capital is less than 75 percent but greater than or equal to 50 percent of its RBC, the regulatory authority will perform a special examination of the company and issue an order specifying the corrective actions that must be taken; (iii) if a company's total adjusted capital is less than 50 percent but greater than or equal to 35 percent of its RBC, the regulatory authority may take any action it deems necessary, including placing the company under regulatory control; and (iv) if a company's total adjusted capital is less than 35 percent of its RBC, the regulatory authority must place the company under its control. In addition, the RBC requirements provide for a trend test if a company's total adjusted capital is between 100 percent and 150 percent of its RBC at the end of the year. The trend test calculates the greater of the decrease in the margin of total adjusted capital over RBC: (i) between the current year and the prior year; and (ii) for the average of the last 3 years. It assumes that such decrease could occur again in the coming year. Any company whose trended total adjusted capital is less than 95 percent of its RBC would trigger a requirement to submit a comprehensive plan as described above for the Company Action Level. The 2014 statutory annual statements of each of our insurance subsidiaries reflect total adjusted capital in excess of the levels subjecting the subsidiaries to any regulatory action. | ||||||||
In addition, although we are under no obligation to do so, we may elect to contribute additional capital or retain greater amounts of capital to strengthen the surplus of certain insurance subsidiaries. Any election to contribute or retain additional capital could impact the amounts our insurance subsidiaries pay as dividends to the holding company. The ability of our insurance subsidiaries to pay dividends is also impacted by various criteria established by rating agencies to maintain or receive higher ratings and by the capital levels that we target for our insurance subsidiaries. | ||||||||
At December 31, 2014, the consolidated RBC ratio of our insurance subsidiaries exceeded the minimum RBC requirement included in our Senior Secured Credit Agreement. See the note to the consolidated financial statements entitled "Notes Payable - Direct Corporate Obligations" for further discussion of various financial ratios and balances we are required to maintain. We calculate the consolidated RBC ratio by assuming all of the assets, liabilities, capital and surplus and other aspects of the business of our insurance subsidiaries are combined together in one insurance subsidiary, with appropriate intercompany eliminations. |
SALE_OF_SUBSIDIARY
SALE OF SUBSIDIARY | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Discontinued Operations and Disposal Groups [Abstract] | |||||
SALE OF SUBSIDIARY | SALE OF SUBSIDIARY | ||||
On March 2, 2014, CNO entered into a Stock Purchase Agreement (the "Stock Purchase Agreement") with Wilton Re, pursuant to which CNO agreed to sell to Wilton Re all of the issued and outstanding shares of CLIC. The transaction closed on July 1, 2014, after the receipt of insurance regulatory approvals and satisfaction of other customary closing conditions. After adjustments for transaction costs and post-closing adjustments, the transaction resulted in net cash proceeds of $224.9 million, including the impact of intercompany transactions completed in connection with the closing. In the first quarter of 2014, we recognized an estimated loss on the sale of CLIC of $298 million, net of income taxes. In the third and fourth quarters of 2014, we recognized a reduction to the loss on the sale of CLIC of $6 million and $2.9 million, respectively, to reflect the determination of the final sales price and net proceeds. | |||||
The loss on the sale of CLIC in 2014, is summarized below (dollars in millions): | |||||
Net cash proceeds | $ | 224.9 | |||
Net assets being sold: | |||||
Investments | 3,863.80 | ||||
Cash and cash equivalents | 164.7 | ||||
Accrued investment income | 42.7 | ||||
Present value of future profits | 15.5 | ||||
Deferred acquisition costs | 37.6 | ||||
Reinsurance receivables | 307.4 | ||||
Income tax assets, net | 84.4 | ||||
Other assets | 2.8 | ||||
Liabilities for insurance products | (3,201.3 | ) | |||
Other liabilities | (199.1 | ) | |||
Investment borrowings | (383.4 | ) | |||
Accumulated other comprehensive income | (240.5 | ) | |||
Net assets being sold | 494.6 | ||||
Loss before taxes | (269.7 | ) | |||
Tax expense related to the sale | 14.2 | ||||
Valuation allowance release related to the tax on the sale | (14.2 | ) | |||
Valuation allowance increase related to the decrease in projected future taxable income | 19.4 | ||||
Net loss | $ | (289.1 | ) | ||
Because the tax basis of CLIC is lower than the net cash proceeds, the transaction generated a taxable gain and estimated tax expense of $14.2 million. Fully offsetting the tax is $14.2 million of a valuation allowance release pertaining to NOLs which may now be utilized. However, the disposition of CLIC is expected to result in a net reduction to CNO's taxable income in future periods which also required us to establish a valuation allowance of $19.4 million. | |||||
In connection with the closing of the transaction, CNO Services, LLC ("CNO Services"), an indirect wholly owned subsidiary of CNO, entered into a transition services agreement and a special support services agreement with Wilton Re, pursuant to which CNO Services will make available to Wilton Re and its affiliates, for a limited period of time, certain services required for the operation of CLIC's business following the closing. Under such agreements, we will receive $30 million in the year ending June 30, 2015 and $20 million in the year ending June 30, 2016. In addition, certain services will continue to be provided in the three years ending June 30, 2019 for an annual fee of $.2 million. The costs of the services provided to Wilton Re are expected to approximate the fees received under the agreements. | |||||
The Stock Purchase Agreement also provided that, at the closing, Bankers Life, an indirect wholly owned subsidiary of CNO, recapture the life insurance business written by Bankers Life that was reinsured by Wilton Re. The recapture agreement was conditioned on the concurrent consummation of the closing. On July 1, 2014, Bankers Life paid $28.0 million to recapture the life insurance business from Wilton Re and recognized a gain (net of income taxes) of $16.9 million in the third quarter of 2014 as a result of the recapture. Refer to the note to the consolidated financial statements entitled "Consolidated Statement of Cash Flows" for additional information. |
BUSINESS_SEGMENTS
BUSINESS SEGMENTS | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Segment Reporting [Abstract] | ||||||||||||
BUSINESS SEGMENTS | BUSINESS SEGMENTS | |||||||||||
Prior to 2014, the Company managed its business through the following operating segments: Bankers Life, Washington National and Colonial Penn, which are defined on the basis of product distribution; Other CNO Business, comprised primarily of products we no longer sell actively; and corporate operations, comprised of holding company activities and certain noninsurance company businesses. As a result of the sale of CLIC which was completed on July 1, 2014 and the coinsurance agreements to cede certain long-term care business effective December 31, 2013 (as further described in the note to the consolidated financial statements entitled "Summary of Significant Accounting Policies - Reinsurance"), management has changed the manner in which it disaggregates the Company's operations for making operating decisions and assessing performance. In periods prior to 2014: (i) the results in the Washington National segment have been adjusted to include the results from the business in the Other CNO Business segment that are being retained; (ii) the Other CNO Business segment included only the long-term care business that was ceded effective December 31, 2013 and the overhead expense of CLIC that is expected to continue after the completion of the sale; and (iii) the CLIC business being sold is excluded from our analysis of business segment results. Beginning on January 1, 2014: (i) the overhead expense of CLIC that is expected to continue after the completion of the sale has been reallocated primarily to the Bankers Life and Washington National segments; (ii) there is no longer an Other CNO Business segment; and (iii) the CLIC business being sold continues to be excluded from our analysis of business segment results. After the completion of the sale of CLIC: (i) the Bankers Life segment includes the results of certain life insurance business that was recaptured from Wilton Re; and (ii) the revenues and expenses associated with a transition services agreement and a special support services agreement with Wilton Re are included in our non-operating earnings. Our prior period segment disclosures have been revised to reflect management's current view of the Company's operating segments. | ||||||||||||
We measure segment performance by excluding the net loss on the sale of CLIC and gain on reinsurance transactions, the earnings of CLIC prior to being sold, net realized investment gains (losses), fair value changes in embedded derivative liabilities (net of related amortization), equity in earnings of certain non-strategic investments and earnings attributable to VIEs, net revenue pursuant to transition and support services agreements, loss on extinguishment or modification of debt and income taxes ("pre-tax operating earnings") because we believe that this performance measure is a better indicator of the ongoing business and trends in our business. Our primary investment focus is on investment income to support our liabilities for insurance products as opposed to the generation of net realized investment gains (losses), and a long-term focus is necessary to maintain profitability over the life of the business. | ||||||||||||
The net loss on the sale of CLIC and gain on related reinsurance transaction, the earnings of CLIC prior to being sold, net realized investment gains (losses), fair value changes in embedded derivative liabilities (net of related amortization), equity in earnings of certain non-strategic investments and earnings attributable to VIEs, net revenue pursuant to transition and support services agreements and loss on extinguishment or modification of debt depend on market conditions or represent unusual items that do not necessarily relate to the underlying business of our segments. Net realized investment gains (losses) and fair value changes in embedded derivative liabilities (net of related amortization) may affect future earnings levels since our underlying business is long-term in nature and changes in our investment portfolio may impact our ability to earn the assumed interest rates needed to maintain the profitability of our business. | ||||||||||||
Operating information by segment was as follows (dollars in millions): | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Revenues: | ||||||||||||
Bankers Life: | ||||||||||||
Insurance policy income: | ||||||||||||
Annuities | $ | 26 | $ | 28.9 | $ | 28.4 | ||||||
Health | 1,287.10 | 1,311.20 | 1,342.70 | |||||||||
Life | 338.6 | 308.6 | 286.3 | |||||||||
Net investment income (a) | 957.3 | 1,005.70 | 838.9 | |||||||||
Fee revenue and other income (a) | 29.3 | 19 | 15.2 | |||||||||
Total Bankers Life revenues | 2,638.30 | 2,673.40 | 2,511.50 | |||||||||
Washington National: | ||||||||||||
Insurance policy income: | ||||||||||||
Annuities | 4 | 11.4 | 9.6 | |||||||||
Health | 597.6 | 587.1 | 575.9 | |||||||||
Life | 24.4 | 23 | 23.4 | |||||||||
Net investment income (a) | 276.1 | 296.9 | 289.2 | |||||||||
Fee revenue and other income (a) | 1.1 | 0.9 | 1.1 | |||||||||
Total Washington National revenues | 903.2 | 919.3 | 899.2 | |||||||||
Colonial Penn: | ||||||||||||
Insurance policy income: | ||||||||||||
Health | 3.6 | 4.3 | 5.2 | |||||||||
Life | 242.4 | 227.8 | 212.6 | |||||||||
Net investment income (a) | 41.7 | 40 | 40.4 | |||||||||
Fee revenue and other income (a) | 1 | 0.8 | 0.7 | |||||||||
Total Colonial Penn revenues | 288.7 | 272.9 | 258.9 | |||||||||
Other CNO Business: | ||||||||||||
Insurance policy income - health | — | 24.1 | 25.6 | |||||||||
Net investment income (a) | — | 33.3 | 32.9 | |||||||||
Total Other CNO Business revenues | — | 57.4 | 58.5 | |||||||||
Corporate operations: | ||||||||||||
Net investment income | 14.9 | 39.8 | 62.4 | |||||||||
Fee and other income | 6.7 | 6.2 | 2.8 | |||||||||
Total corporate revenues | 21.6 | 46 | 65.2 | |||||||||
Total revenues | 3,851.80 | 3,969.00 | 3,793.30 | |||||||||
(continued on next page) | ||||||||||||
(continued from previous page) | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Expenses: | ||||||||||||
Bankers Life: | ||||||||||||
Insurance policy benefits | $ | 1,667.60 | $ | 1,788.70 | $ | 1,642.90 | ||||||
Amortization | 174.7 | 187.5 | 187.6 | |||||||||
Interest expense on investment borrowings | 7.9 | 6.7 | 5.3 | |||||||||
Other operating costs and expenses | 401.2 | 380 | 374.8 | |||||||||
Total Bankers Life expenses | 2,251.40 | 2,362.90 | 2,210.60 | |||||||||
Washington National: | ||||||||||||
Insurance policy benefits | 536.2 | 541.4 | 500.6 | |||||||||
Amortization | 64.6 | 64.9 | 64.9 | |||||||||
Interest expense on investment borrowings | 1.7 | 1.9 | 2.8 | |||||||||
Other operating costs and expenses | 189.5 | 170.5 | 182.1 | |||||||||
Total Washington National expenses | 792 | 778.7 | 750.4 | |||||||||
Colonial Penn: | ||||||||||||
Insurance policy benefits | 173.2 | 165.7 | 161.1 | |||||||||
Amortization | 15.3 | 14.5 | 15 | |||||||||
Other operating costs and expenses | 99.4 | 105.2 | 91.4 | |||||||||
Total Colonial Penn expenses | 287.9 | 285.4 | 267.5 | |||||||||
Other CNO Business: | ||||||||||||
Insurance policy benefits | — | 59.2 | 63.2 | |||||||||
Other operating costs and expenses | — | 25.8 | 25 | |||||||||
Total Other CNO Business expenses | — | 85 | 88.2 | |||||||||
Corporate operations: | ||||||||||||
Interest expense on corporate debt | 43.9 | 51.3 | 66.2 | |||||||||
Interest expense on borrowings of variable interest entities | — | 0.1 | 20 | |||||||||
Interest expense on investment borrowings | 0.1 | — | 0.4 | |||||||||
Other operating costs and expenses | 75.9 | 27.3 | 65.1 | |||||||||
Total corporate expenses | 119.9 | 78.7 | 151.7 | |||||||||
Total expenses | 3,451.20 | 3,590.70 | 3,468.40 | |||||||||
Pre-tax operating earnings by segment: | ||||||||||||
Bankers Life | 386.9 | 310.5 | 300.9 | |||||||||
Washington National | 111.2 | 140.6 | 148.8 | |||||||||
Colonial Penn | 0.8 | (12.5 | ) | (8.6 | ) | |||||||
Other CNO Business | — | (27.6 | ) | (29.7 | ) | |||||||
Corporate operations | (98.3 | ) | (32.7 | ) | (86.5 | ) | ||||||
Pre-tax operating earnings | $ | 400.6 | $ | 378.3 | $ | 324.9 | ||||||
___________________ | ||||||||||||
(a) | It is not practicable to provide additional components of revenue by product or services. | |||||||||||
A reconciliation of segment revenues and expenses to consolidated revenues and expenses and net income is as follows (dollars in millions): | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Total segment revenues | $ | 3,851.80 | $ | 3,969.00 | $ | 3,793.30 | ||||||
Net realized investment gains | 33.9 | 33.4 | 81.1 | |||||||||
Revenues related to certain non-strategic investments and earnings attributable to VIEs | 33.2 | 32.2 | — | |||||||||
Fee revenue related to transition and support services agreements | 15 | — | — | |||||||||
Revenues of CLIC prior to being sold | 210.8 | 441.5 | 468.3 | |||||||||
Consolidated revenues | 4,144.70 | 4,476.10 | 4,342.70 | |||||||||
Total segment expenses | 3,451.20 | 3,590.70 | 3,468.40 | |||||||||
Insurance policy benefits - fair value changes in embedded derivative liabilities | 48.5 | (54.4 | ) | 4.4 | ||||||||
Amortization related to fair value changes in embedded derivative liabilities | (12.5 | ) | 19 | (1.6 | ) | |||||||
Amortization related to net realized investment gains | 1 | 1.6 | 6.5 | |||||||||
Expenses related to certain non-strategic investments and earnings attributable to VIEs | 41.2 | 42.4 | — | |||||||||
Loss on extinguishment or modification of debt | 0.6 | 65.4 | 200.2 | |||||||||
Net loss on sale of subsidiary and (gain) loss on reinsurance transactions | 239.8 | 98.4 | — | |||||||||
Expenses related to transition and support services agreements | 12.4 | — | — | |||||||||
Expenses of CLIC prior to being sold | 187.4 | 408.2 | 509.1 | |||||||||
Consolidated expenses | 3,969.60 | 4,171.30 | 4,187.00 | |||||||||
Income before tax | 175.1 | 304.8 | 155.7 | |||||||||
Income tax expense: | ||||||||||||
Tax expense on period income | 159.2 | 128.3 | 106.2 | |||||||||
Valuation allowance for deferred tax assets and other tax items | (35.5 | ) | (301.5 | ) | (171.5 | ) | ||||||
Net income | $ | 51.4 | $ | 478 | $ | 221 | ||||||
Segment balance sheet information was as follows (dollars in millions): | ||||||||||||
2014 | 2013 | |||||||||||
Assets: | ||||||||||||
Bankers Life | $ | 19,303.00 | $ | 18,230.20 | ||||||||
Washington National | 8,207.90 | 8,204.80 | ||||||||||
Colonial Penn | 945.3 | 891.1 | ||||||||||
Other CNO Business | — | 607.4 | ||||||||||
Business of CLIC being sold | — | 4,326.80 | ||||||||||
Corporate operations | 2,728.00 | 2,520.30 | ||||||||||
Total assets | $ | 31,184.20 | $ | 34,780.60 | ||||||||
Liabilities: | ||||||||||||
Bankers Life | $ | 16,697.50 | $ | 15,866.40 | ||||||||
Washington National | 6,778.80 | 6,834.30 | ||||||||||
Colonial Penn | 802.2 | 766.6 | ||||||||||
Other CNO Business | — | 597.6 | ||||||||||
Business of CLIC being sold | — | 3,764.50 | ||||||||||
Corporate operations | 2,217.50 | 1,996.00 | ||||||||||
Total liabilities | $ | 26,496.00 | $ | 29,825.40 | ||||||||
The following table presents selected financial information of our segments (dollars in millions): | ||||||||||||
Segment | Present value of future profits | Deferred acquisition costs | Insurance liabilities | |||||||||
2014 | ||||||||||||
Bankers Life | $ | 128.4 | $ | 456.6 | $ | 15,308.90 | ||||||
Washington National | 314.2 | 240.2 | 6,228.80 | |||||||||
Colonial Penn | 46.8 | 73.8 | 771 | |||||||||
Total | $ | 489.4 | $ | 770.6 | $ | 22,308.70 | ||||||
2013 | ||||||||||||
Bankers Life | $ | 263.2 | $ | 627.8 | $ | 14,575.00 | ||||||
Washington National | 344.3 | 232.2 | 5,664.10 | |||||||||
Colonial Penn | 55.7 | 67.4 | 766.2 | |||||||||
Other CNO Business | — | — | 597.5 | |||||||||
Business of CLIC prior to being sold | 16.1 | 40.7 | 3,273.00 | |||||||||
Total | $ | 679.3 | $ | 968.1 | $ | 24,875.80 | ||||||
QUARTERLY_FINANCIAL_DATA_UNAUD
QUARTERLY FINANCIAL DATA (UNAUDITED) | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Quarterly Financial Data [Abstract] | ||||||||||||||||
QUARTERLY FINANCIAL DATA (UNAUDITED) | QUARTERLY FINANCIAL DATA (UNAUDITED) | |||||||||||||||
We compute earnings per common share for each quarter independently of earnings per share for the year. The sum of the quarterly earnings per share may not equal the earnings per share for the year because of: (i) transactions affecting the weighted average number of shares outstanding in each quarter; and (ii) the uneven distribution of earnings during the year. Quarterly financial data (unaudited) were as follows (dollars in millions, except per share data): | ||||||||||||||||
2014 | 1st Qtr. | 2nd Qtr. | 3rd Qtr. | 4th Qtr. | ||||||||||||
Revenues | $ | 1,084.70 | $ | 1,093.00 | $ | 967 | $ | 1,000.00 | ||||||||
Income (loss) before income taxes | $ | (169.6 | ) | $ | 114.4 | $ | 154.4 | $ | 75.9 | |||||||
Income tax expense (benefit) | 58.4 | 36.3 | 37 | (8.0 | ) | |||||||||||
Net income (loss) | $ | (228.0 | ) | $ | 78.1 | $ | 117.4 | $ | 83.9 | |||||||
Earnings per common share: | ||||||||||||||||
Basic: | ||||||||||||||||
Net income (loss) | $ | (1.03 | ) | $ | 0.36 | $ | 0.56 | $ | 0.41 | |||||||
Diluted: | ||||||||||||||||
Net income (loss) | $ | (1.03 | ) | $ | 0.35 | $ | 0.54 | $ | 0.41 | |||||||
2013 | 1st Qtr. | 2nd Qtr. | 3rd Qtr. | 4th Qtr. | ||||||||||||
Revenues | $ | 1,142.60 | $ | 1,081.50 | $ | 1,093.80 | $ | 1,158.20 | ||||||||
Income before income taxes | $ | 34.6 | $ | 114.7 | $ | 114.4 | $ | 41.1 | ||||||||
Income tax expense (benefit) | 22.7 | 37.6 | (168.6 | ) | (64.9 | ) | ||||||||||
Net income | $ | 11.9 | $ | 77.1 | $ | 283 | $ | 106 | ||||||||
Earnings per common share: | ||||||||||||||||
Basic: | ||||||||||||||||
Net income | $ | 0.05 | $ | 0.35 | $ | 1.27 | $ | 0.48 | ||||||||
Diluted: | ||||||||||||||||
Net income | $ | 0.05 | $ | 0.34 | $ | 1.23 | $ | 0.47 | ||||||||
INVESTMENTS_IN_VARIABLE_INTERE
INVESTMENTS IN VARIABLE INTEREST ENTITIES | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Investments in Variable Interest Entities [Abstract] | ||||||||||||
INVESTMENTS IN VARIABLE INTEREST ENTITIES | INVESTMENTS IN VARIABLE INTEREST ENTITIES | |||||||||||
We have concluded that we are the primary beneficiary with respect to certain VIEs, which are consolidated in our financial statements. In consolidating the VIEs, we consistently use the financial information most recently distributed to investors in the VIE, which in one case, is less than two months prior to the end of our reporting period. | ||||||||||||
All of the VIEs are collateralized loan trusts that were established to issue securities to finance the purchase of corporate loans and other permitted investments (including two new VIEs which were consolidated in 2014, one new VIE which was consolidated in 2013 and one new VIE which was consolidated in 2012). The assets held by the trusts are legally isolated and not available to the Company. The liabilities of the VIEs are expected to be satisfied from the cash flows generated by the underlying loans held by the trusts, not from the assets of the Company. The scheduled repayment of the remaining principal balance of the borrowings related to the VIEs are as follows: $35.4 million in 2015; $64.5 million in 2018; $492.0 million in 2022; $381.8 million in 2024; and $326.9 million in 2026. The Company has no further commitments to the VIEs. | ||||||||||||
Certain of our insurance subsidiaries are noteholders of the VIEs. Another subsidiary of the Company is the investment manager for the VIEs. As such, it has the power to direct the most significant activities of the VIEs which materially impacts the economic performance of the VIEs. | ||||||||||||
The following table provides supplemental information about the assets and liabilities of the VIEs which have been consolidated (dollars in millions): | ||||||||||||
December 31, 2014 | ||||||||||||
VIEs | Eliminations | Net effect on | ||||||||||
consolidated | ||||||||||||
balance sheet | ||||||||||||
Assets: | ||||||||||||
Investments held by variable interest entities | $ | 1,367.10 | $ | — | $ | 1,367.10 | ||||||
Notes receivable of VIEs held by insurance subsidiaries | — | (153.3 | ) | (153.3 | ) | |||||||
Cash and cash equivalents held by variable interest entities | 68.3 | — | 68.3 | |||||||||
Accrued investment income | 3.2 | — | 3.2 | |||||||||
Income tax assets, net | 18.1 | (2.9 | ) | 15.2 | ||||||||
Other assets | 14.2 | (1.7 | ) | 12.5 | ||||||||
Total assets | $ | 1,470.90 | $ | (157.9 | ) | $ | 1,313.00 | |||||
Liabilities: | ||||||||||||
Other liabilities | $ | 61.2 | $ | (6.1 | ) | $ | 55.1 | |||||
Borrowings related to variable interest entities | 1,286.10 | — | 1,286.10 | |||||||||
Notes payable of VIEs held by insurance subsidiaries | 157.3 | (157.3 | ) | — | ||||||||
Total liabilities | $ | 1,504.60 | $ | (163.4 | ) | $ | 1,341.20 | |||||
December 31, 2013 | ||||||||||||
VIEs | Eliminations | Net effect on | ||||||||||
consolidated | ||||||||||||
balance sheet | ||||||||||||
Assets: | ||||||||||||
Investments held by variable interest entities | $ | 1,046.70 | $ | — | $ | 1,046.70 | ||||||
Notes receivable of VIEs held by insurance subsidiaries | — | (108.5 | ) | (108.5 | ) | |||||||
Cash and cash equivalents held by variable interest entities | 104.3 | — | 104.3 | |||||||||
Accrued investment income | 1.9 | — | 1.9 | |||||||||
Income tax assets, net | 5.4 | (2.5 | ) | 2.9 | ||||||||
Other assets | 22.6 | (.9 | ) | 21.7 | ||||||||
Total assets | $ | 1,180.90 | $ | (111.9 | ) | $ | 1,069.00 | |||||
Liabilities: | ||||||||||||
Other liabilities | $ | 66 | $ | (4.0 | ) | $ | 62 | |||||
Borrowings related to variable interest entities | 1,012.30 | — | 1,012.30 | |||||||||
Notes payable of VIEs held by insurance subsidiaries | 112.5 | (112.5 | ) | — | ||||||||
Total liabilities | $ | 1,190.80 | $ | (116.5 | ) | $ | 1,074.30 | |||||
The following table provides supplemental information about the revenues and expenses of the VIEs which have been consolidated in accordance with authoritative guidance, after giving effect to the elimination of our investment in the VIEs and investment management fees earned by a subsidiary of the Company (dollars in millions): | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Revenues: | ||||||||||||
Net investment income – policyholder and reinsurer accounts and other special-purpose portfolios | $ | 47.2 | $ | 42.3 | $ | 31.3 | ||||||
Fee revenue and other income | 1.1 | 1.8 | 1.6 | |||||||||
Total revenues | 48.3 | 44.1 | 32.9 | |||||||||
Expenses: | ||||||||||||
Interest expense | 30.1 | 26 | 20 | |||||||||
Other operating expenses | 1.2 | 1.4 | 0.6 | |||||||||
Total expenses | 31.3 | 27.4 | 20.6 | |||||||||
Income before net realized investment losses and income taxes | 17 | 16.7 | 12.3 | |||||||||
Net realized investment losses | (2.2 | ) | (1.6 | ) | (.4 | ) | ||||||
Income before income taxes | $ | 14.8 | $ | 15.1 | $ | 11.9 | ||||||
The investment portfolios held by the VIEs are primarily comprised of commercial bank loans to corporate obligors which are almost entirely rated below-investment grade. At December 31, 2014, such loans had an amortized cost of $1,398.1 million; gross unrealized gains of $.5 million; gross unrealized losses of $31.5 million; and an estimated fair value of $1,367.1 million. | ||||||||||||
The following table sets forth the amortized cost and estimated fair value of the investments held by the VIEs at December 31, 2014, by contractual maturity. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties. | ||||||||||||
Amortized | Estimated | |||||||||||
cost | fair | |||||||||||
value | ||||||||||||
(Dollars in millions) | ||||||||||||
Due after one year through five years | $ | 417.2 | $ | 411.3 | ||||||||
Due after five years through ten years | 980.9 | 955.8 | ||||||||||
Total | $ | 1,398.10 | $ | 1,367.10 | ||||||||
The following table sets forth the amortized cost and estimated fair value of those investments held by the VIEs with unrealized losses at December 31, 2014, by contractual maturity. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties. | ||||||||||||
Amortized | Estimated | |||||||||||
cost | fair | |||||||||||
value | ||||||||||||
(Dollars in millions) | ||||||||||||
Due after one year through five years | $ | 382.3 | $ | 376.3 | ||||||||
Due after five years through ten years | 869.8 | 844.3 | ||||||||||
Total | $ | 1,252.10 | $ | 1,220.60 | ||||||||
During 2014, the VIEs recognized net realized investment losses of $2.2 million from the sales of fixed maturities. During 2013, the VIEs recognized net realized investment losses of $1.6 million, which were comprised of $.5 million of net losses from the sales of fixed maturities, and $1.1 million of writedowns of investments for other than temporary declines in fair value recognized through net income. During 2012, the VIEs recognized net realized investment losses of $.4 million, which were comprised of $.4 million of net gains from the sales of fixed maturities, and $.8 million of writedowns of investments for other than temporary declines in fair value recognized through net income. | ||||||||||||
At December 31, 2014, there were no investments held by the VIEs that were in default. | ||||||||||||
During 2014, $38.7 million of investments held by the VIEs were sold which resulted in gross investment losses (before income taxes) of $2.4 million. During 2013, $11.1 million of investments held by the VIEs were sold which resulted in gross investment losses (before income taxes) of $.9 million. During 2012, $34.9 million of investments held by the VIEs were sold which resulted in gross investment losses (before income taxes) of $.3 million. | ||||||||||||
At December 31, 2014, the VIEs held: (i) investments with a fair value of $1,053.2 million and gross unrealized losses of $27.3 million that had been in an unrealized loss position for less than twelve months; and (ii) investments with a fair value of $167.4 million and gross unrealized losses of $4.2 million that had been in an unrealized loss position for greater than twelve months. | ||||||||||||
At December 31, 2013, the VIEs held: (i) investments with a fair value of $355.5 million and gross unrealized losses of $3.1 million that had been in an unrealized loss position for less than twelve months; and (ii) investments with a fair value of $7.9 million and gross unrealized losses of less than $.1 million that had been in an unrealized loss position for greater than twelve months. | ||||||||||||
The investments held by the VIEs are evaluated for other-than-temporary declines in fair value in a manner that is consistent with the Company's fixed maturities, available for sale. | ||||||||||||
In addition, the Company, in the normal course of business, makes passive investments in structured securities issued by VIEs for which the Company is not the investment manager. These structured securities include asset-backed securities, collateralized debt obligations, commercial mortgage-backed securities, residential mortgage-backed securities and collateralized mortgage obligations. Our maximum exposure to loss on these securities is limited to our cost basis in the investment. We have determined that we are not the primary beneficiary of these structured securities due to the relative size of our investment in comparison to the total principal amount of the individual structured securities and the level of credit subordination which reduces our obligation to absorb gains or losses. | ||||||||||||
At December 31, 2014, we held investments in various limited partnerships, in which we are not the primary beneficiary, totaling $36.3 million (classified as other invested assets). At December 31, 2014, we had unfunded commitments to these partnerships of $81.8 million. Our maximum exposure to loss on these investments is limited to the amount of our investment. |
SUBSEQUENT_EVENT
SUBSEQUENT EVENT | 12 Months Ended |
Dec. 31, 2014 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENT | SUBSEQUENT EVENT |
On February 10, 2015, we announced that we have entered into a comprehensive agreement with Cognizant forming a strategic partnership for technology delivery that is expected to accelerate our core IT process improvements and enable more rapid innovation. Under the agreement, Cognizant will, after the transition period, assume CNO’s application development, maintenance, and testing functions as well as select IT infrastructure operations. Cognizant will also take over all CNO operations located in Hyderabad, India. The partnership will result in the movement of approximately 640 IT positions from CNO to Cognizant, roughly 240 of which are U.S.-based. |
SCHEDULE_II
SCHEDULE II | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | ||||||||||||
Condensed Financial Information of Registrant (Parent Company) | SCHEDULE II | |||||||||||
Condensed Financial Information of Registrant (Parent Company) | ||||||||||||
Balance Sheet | ||||||||||||
as of December 31, 2014 and 2013 | ||||||||||||
(Dollars in millions) | ||||||||||||
ASSETS | ||||||||||||
2014 | 2013 | |||||||||||
Fixed maturities, available for sale, at fair value (amortized cost: 2014 - $35.0; 2013 - $51.8) | $ | 34.9 | $ | 51.7 | ||||||||
Cash and cash equivalents - unrestricted | 86.6 | 131.1 | ||||||||||
Equity securities at fair value (cost: 2014 - $202.7; 2013 - $65.3) | 216.9 | 79.6 | ||||||||||
Trading securities | 2.1 | 2.1 | ||||||||||
Other invested assets | — | 22.2 | ||||||||||
Investment in wholly-owned subsidiaries (eliminated in consolidation) | 5,263.30 | 5,550.90 | ||||||||||
Income tax assets, net | 47.9 | 107.6 | ||||||||||
Other invested assets - affiliated (eliminated in consolidation) | 27 | 19.9 | ||||||||||
Receivable from subsidiaries (eliminated in consolidation) | 10.8 | 1.7 | ||||||||||
Other assets | 17.2 | 22.1 | ||||||||||
Total assets | $ | 5,706.70 | $ | 5,988.90 | ||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||
Liabilities: | ||||||||||||
Notes payable | $ | 794.4 | $ | 856.4 | ||||||||
Payable to subsidiaries (eliminated in consolidation) | 114.3 | 108.7 | ||||||||||
Other liabilities | 109.8 | 68.6 | ||||||||||
Total liabilities | 1,018.50 | 1,033.70 | ||||||||||
Commitments and Contingencies | ||||||||||||
Shareholders' equity: | ||||||||||||
Common stock and additional paid-in capital ($0.01 par value, 8,000,000,000 shares authorized, shares issued and outstanding: 2014 – 203,324,458; 2013 – 220,323,823) | 3,734.40 | 4,095.00 | ||||||||||
Accumulated other comprehensive income | 825.3 | 731.8 | ||||||||||
Retained earnings | 128.5 | 128.4 | ||||||||||
Total shareholders' equity | 4,688.20 | 4,955.20 | ||||||||||
Total liabilities and shareholders' equity | $ | 5,706.70 | $ | 5,988.90 | ||||||||
The accompanying notes are an integral part | ||||||||||||
of the condensed financial statements. | ||||||||||||
CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES | ||||||||||||
SCHEDULE II | ||||||||||||
Condensed Financial Information of Registrant (Parent Company) | ||||||||||||
Statement of Operations | ||||||||||||
for the years ended December 31, 2014, 2013 and 2012 | ||||||||||||
(Dollars in millions) | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Revenues: | ||||||||||||
Net investment income | $ | 12.7 | $ | 21.1 | $ | 22.3 | ||||||
Net realized investment gains | 11.1 | 0.4 | 1.9 | |||||||||
Intercompany revenues (losses) (eliminated in consolidation) | (1.0 | ) | 1.6 | — | ||||||||
Total revenues | 22.8 | 23.1 | 24.2 | |||||||||
Expenses: | ||||||||||||
Interest expense | 44 | 51.4 | 66.6 | |||||||||
Intercompany expenses (eliminated in consolidation) | 0.3 | 0.3 | 0.4 | |||||||||
Operating costs and expenses | 66.6 | 26.1 | 50.9 | |||||||||
Loss on extinguishment of debt | 0.6 | 65.4 | 200.2 | |||||||||
Total expenses | 111.5 | 143.2 | 318.1 | |||||||||
Loss before income taxes and equity in undistributed earnings of subsidiaries | (88.7 | ) | (120.1 | ) | (293.9 | ) | ||||||
Income tax benefit on period income | (34.1 | ) | (8.8 | ) | (59.8 | ) | ||||||
Loss before equity in undistributed earnings of subsidiaries | (54.6 | ) | (111.3 | ) | (234.1 | ) | ||||||
Equity in undistributed earnings of subsidiaries (eliminated in consolidation) | 106 | 589.3 | 455.1 | |||||||||
Net income | $ | 51.4 | $ | 478 | $ | 221 | ||||||
The accompanying notes are an integral part | ||||||||||||
of the condensed financial statements. | ||||||||||||
CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES | ||||||||||||
SCHEDULE II | ||||||||||||
Condensed Financial Information of Registrant (Parent Company) | ||||||||||||
Statement of Cash Flows | ||||||||||||
for the years ended December 31, 2014, 2013 and 2012 | ||||||||||||
(Dollars in millions) | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Cash flows from operating activities | $ | (66.7 | ) | $ | (65.9 | ) | $ | (95.3 | ) | |||
Cash flows from investing activities: | ||||||||||||
Sales of investments | 229.8 | 95.8 | 159.7 | |||||||||
Sales of investments - affiliated* | 18.3 | — | — | |||||||||
Purchases of investments | (320.1 | ) | (119.3 | ) | (145.0 | ) | ||||||
Purchases of investments - affiliated* | (30.7 | ) | (10.0 | ) | — | |||||||
Net sales of trading securities | 9.9 | 12.6 | 37.4 | |||||||||
Dividends received from consolidated subsidiary, net of capital contributions of $18.8 in 2014, nil in 2013 and $26 in 2012* | 423.5 | 242.8 | 245 | |||||||||
Change in restricted cash | — | — | 26 | |||||||||
Net cash provided by investing activities | 330.7 | 221.9 | 323.1 | |||||||||
Cash flows from financing activities: | ||||||||||||
Issuance of notes payable, net | — | — | 944.5 | |||||||||
Payments on notes payable | (62.9 | ) | (126.9 | ) | (810.6 | ) | ||||||
Issuance of common stock | 5 | 15.1 | 3.1 | |||||||||
Payments to repurchase common stock and warrants | (376.5 | ) | (118.4 | ) | (180.2 | ) | ||||||
Common stock dividends paid | (51.0 | ) | (24.4 | ) | (13.9 | ) | ||||||
Expenses related to extinguishment or modification of debt | (.6 | ) | (61.6 | ) | (183.0 | ) | ||||||
Amount paid to extinguish the beneficial conversion feature associated with repurchase of convertible debentures | — | (12.6 | ) | (24.0 | ) | |||||||
Investment borrowings - repurchase agreements, net | 20.4 | — | (24.8 | ) | ||||||||
Issuance of notes payable to affiliates* | 257.8 | 222.1 | 208.6 | |||||||||
Payments on notes payable to affiliates* | (100.7 | ) | (83.9 | ) | (52.0 | ) | ||||||
Net cash used by financing activities | (308.5 | ) | (190.6 | ) | (132.3 | ) | ||||||
Net increase (decrease) in cash and cash equivalents | (44.5 | ) | (34.6 | ) | 95.5 | |||||||
Cash and cash equivalents, beginning of the year | 131.1 | 165.7 | 70.2 | |||||||||
Cash and cash equivalents, end of the year | $ | 86.6 | $ | 131.1 | $ | 165.7 | ||||||
* Eliminated in consolidation | ||||||||||||
The accompanying notes are an integral part | ||||||||||||
of the condensed financial statements. | ||||||||||||
CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES | ||||||||||||
SCHEDULE II | ||||||||||||
Notes to Condensed Financial Information | ||||||||||||
1. Basis of Presentation | ||||||||||||
The condensed financial information should be read in conjunction with the consolidated financial statements of CNO Financial Group, Inc. The condensed financial information includes the accounts and activity of the parent company. |
SCHEDULE_IV
SCHEDULE IV | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Supplemental Schedule of Reinsurance Premiums for Insurance Companies [Abstract] | ||||||||||||
Reinsurance | SCHEDULE IV | |||||||||||
Reinsurance | ||||||||||||
for the years ended December 31, 2014, 2013 and 2012 | ||||||||||||
(Dollars in millions) | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Life insurance inforce: | ||||||||||||
Direct | $ | 25,029.00 | $ | 53,304.90 | $ | 53,750.80 | ||||||
Assumed | 147.1 | 305.7 | 325.7 | |||||||||
Ceded | (3,660.1 | ) | (11,477.6 | ) | (12,392.4 | ) | ||||||
Net insurance inforce | $ | 21,516.00 | $ | 42,133.00 | $ | 41,684.10 | ||||||
Percentage of assumed to net | 0.7 | % | 0.7 | % | 0.8 | % | ||||||
2014 | 2013 | 2012 | ||||||||||
Insurance policy income: | ||||||||||||
Direct | $ | 2,558.20 | $ | 2,623.50 | $ | 2,591.10 | ||||||
Assumed | 35 | 37.4 | 69.4 | |||||||||
Ceded | (176.7 | ) | (212.1 | ) | (220.0 | ) | ||||||
Net premiums | $ | 2,416.50 | $ | 2,448.80 | $ | 2,440.50 | ||||||
Percentage of assumed to net | 1.4 | % | 1.5 | % | 2.8 | % | ||||||
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (POLICIES) | 12 Months Ended | |
Dec. 31, 2014 | ||
Accounting Policies [Abstract] | ||
Segments | Prior to 2014, the Company managed its business through the following operating segments: Bankers Life, Washington National and Colonial Penn, which are defined on the basis of product distribution; Other CNO Business, comprised primarily of products we no longer sell actively; and corporate operations, comprised of holding company activities and certain noninsurance company businesses. As a result of the sale of Conseco Life Insurance Company ("CLIC") which was completed on July 1, 2014 (as further described in the note to the consolidated financial statements entitled "Sale of Subsidiary") and the coinsurance agreements to cede certain long-term care business effective December 31, 2013, management has changed the manner in which it disaggregates the Company's operations for making operating decisions and assessing performance. In periods prior to 2014: (i) the results in the Washington National segment have been adjusted to include the results from the business in the Other CNO Business segment that are being retained; (ii) the Other CNO Business segment included only the long-term care business that was ceded effective December 31, 2013 and the overhead expense of CLIC that is expected to continue after the completion of the sale; and (iii) the CLIC business being sold is excluded from our analysis of business segment results. Beginning on January 1, 2014: (i) the overhead expense of CLIC that is expected to continue after the completion of the sale has been reallocated primarily to the Bankers Life and Washington National segments; (ii) there is no longer an Other CNO Business segment; and (iii) the CLIC business being sold continues to be excluded from our analysis of business segment results. After the completion of the sale of CLIC: (i) the Bankers Life segment includes the results of certain life insurance business that was recaptured from Wilton Reassurance Company ("Wilton Re"); and (ii) the revenues and expenses associated with a transition services agreement and a special support services agreement with Wilton Re are included in our non-operating earnings. Under such agreements, we will receive $30 million in the year ending June 30, 2015 and $20 million in the year ending June 30, 2016. In addition, certain services will continue to be provided in the three years ending June 30, 2019 for an annual fee of $.2 million. The income we receive from these services agreements will offset certain of our overhead costs. If we are not successful in reducing our overhead costs to the same extent as the reduction in fees to be received from Wilton Re over the period of the agreements, our results of operations will be adversely affected. Our prior period segment disclosures have been revised to reflect management's current view of the Company's operating segments. The Company’s insurance segments are described below: | |
• | Bankers Life, which markets and distributes Medicare supplement insurance, interest-sensitive life insurance, traditional life insurance, fixed annuities and long-term care insurance products to the middle-income senior market through a dedicated field force of career agents and sales managers supported by a network of community-based sales offices. The Bankers Life segment includes primarily the business of Bankers Life and Casualty Company ("Bankers Life"). Bankers Life also markets and distributes Medicare Advantage plans primarily through distribution arrangements with Humana, Inc. and United HealthCare and Medicare Part D prescription drug plans ("PDP") primarily through a distribution arrangement with Coventry Health Care ("Coventry"). | |
• | Washington National, which markets and distributes supplemental health (including specified disease, accident and hospital indemnity insurance products) and life insurance to middle-income consumers at home and at the worksite. These products are marketed through Performance Matters Associates of Texas, Inc. (a wholly owned subsidiary) and through independent marketing organizations and insurance agencies including worksite marketing. The products being marketed are underwritten by Washington National Insurance Company ("Washington National"). This segment's business also includes certain closed blocks of annuities and Medicare supplement policies which are no longer being actively marketed by this segment and were primarily issued or acquired by Washington National. | |
• | Colonial Penn, which markets primarily graded benefit and simplified issue life insurance directly to customers in the senior middle-income market through television advertising, direct mail, the internet and telemarketing. The Colonial Penn segment includes primarily the business of Colonial Penn Life Insurance Company ("Colonial Penn"). | |
Basis of Accounting | We prepare our financial statements in accordance with accounting principles generally accepted in the United States of America ("GAAP"). | |
The accompanying financial statements include the accounts of the Company and its subsidiaries. Our consolidated financial statements exclude transactions between us and our consolidated affiliates, or among our consolidated affiliates. | ||
When we prepare financial statements in conformity with GAAP, we are required to make estimates and assumptions that significantly affect reported amounts of various assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting periods. For example, we use significant estimates and assumptions to calculate values for deferred acquisition costs, the present value of future profits, fair value measurements of certain investments (including derivatives), other-than-temporary impairments of investments, assets and liabilities related to income taxes, liabilities for insurance products, liabilities related to litigation and guaranty fund assessment accruals. If our future experience differs from these estimates and assumptions, our financial statements would be materially affected. | ||
Investments | Investments | |
Fixed maturity securities include available for sale bonds and redeemable preferred stocks. We carry these investments at estimated fair value. We record any unrealized gain or loss, net of tax and related adjustments, as a component of shareholders’ equity. | ||
Equity securities include available for sale investments in common stock and non-redeemable preferred stock. We carry these investments at estimated fair value. We record any unrealized gain or loss, net of tax and related adjustments, as a component of shareholders' equity. | ||
Mortgage loans held in our investment portfolio are carried at amortized unpaid balances, net of provisions for estimated losses. Interest income is accrued on the principal amount of the loan based on the loan's contractual interest rate. Payment terms specified for mortgage loans may include a prepayment penalty for unscheduled payoff of the investment. Prepayment penalties are recognized as investment income when received. | ||
Policy loans are stated at current unpaid principal balances. Policy loans are collateralized by the cash surrender value of the life insurance policy. Interest income is recorded as earned using the contractual interest rate. | ||
Trading securities include: (i) investments purchased with the intent of selling in the near team to generate income; (ii) investments supporting certain insurance liabilities (including investments backing the market strategies of our multibucket annuity products) and certain reinsurance agreements; and (iii) certain fixed maturity securities containing embedded derivatives for which we have elected the fair value option. The change in fair value of the income generating investments and investments supporting insurance liabilities and reinsurance agreements is recognized in income from policyholder and reinsurer accounts and other special-purpose portfolios (a component of net investment income). The change in fair value of securities with embedded derivatives is recognized in realized investment gains (losses). Investment income related to investments supporting certain insurance liabilities and certain reinsurance agreements is substantially offset by the change in insurance policy benefits related to certain products and agreements. | ||
Other invested assets include: (i) call options purchased in an effort to offset or hedge the effects of certain policyholder benefits related to our fixed index annuity and life insurance products; (ii) Company-owned life insurance ("COLI"); and (iii) certain non-traditional investments. We carry the call options at estimated fair value as further described in the section of this note entitled "Accounting for Derivatives". We carry COLI at its cash surrender value which approximates its net realizable value. Non-traditional investments include investments in certain limited partnerships and hedge funds which are accounted for using the equity method; and promissory notes, which are accounted for using the cost method. In accounting for limited partnerships and hedge funds, we consistently use the most recently available financial information provided by the general partner or manager of each of these investments, which is one to three months prior to the end of our reporting period. | ||
Interest income on fixed maturity securities is recognized when earned using a constant effective yield method giving effect to amortization of premiums and accretion of discounts. Prepayment fees are recognized when earned. Dividends on equity securities are recognized when declared. | ||
When we sell a security (other than trading securities), we report the difference between the sale proceeds and amortized cost (determined based on specific identification) as a realized investment gain or loss. | ||
We regularly evaluate our investments for possible impairment as further described in the note to the consolidated financial statements entitled "Investments". | ||
When a security defaults (including mortgage loans) or securities are other-than-temporarily impaired, our policy is to discontinue the accrual of interest and eliminate all previous interest accruals, if we determine that such amounts will not be ultimately realized in full. | ||
Cash and Cash Equivalents | Cash and Cash Equivalents | |
Cash and cash equivalents include commercial paper, invested cash and other investments purchased with original maturities of less than three months. We carry them at amortized cost, which approximates estimated fair value. | ||
Deferred Acquisition Costs | Deferred Acquisition Costs | |
Deferred acquisition costs represent incremental direct costs related to the successful acquisition of new or renewal insurance contracts. For interest-sensitive life or annuity products, we amortize these costs in relation to the estimated gross profits using the interest rate credited to the underlying policies. For other products, we amortize these costs in relation to future anticipated premium revenue using the projected investment earnings rate. | ||
When we realize a gain or loss on investments backing our interest-sensitive life or annuity products, we adjust the amortization to reflect the change in estimated gross profits from the products due to the gain or loss realized and the effect on future investment yields. We also adjust deferred acquisition costs for the change in amortization that would have been recorded if our fixed maturity securities, available for sale, had been sold at their stated aggregate fair value and the proceeds reinvested at current yields. We limit the total adjustment related to the impact of unrealized losses to the total of costs capitalized plus interest related to insurance policies issued in a particular year. We include the impact of this adjustment in accumulated other comprehensive income (loss) within shareholders' equity. | ||
We regularly evaluate the recoverability of the unamortized balance of the deferred acquisition costs. We consider estimated future gross profits or future premiums, expected mortality or morbidity, interest earned and credited rates, persistency and expenses in determining whether the balance is recoverable. If we determine a portion of the unamortized balance is not recoverable, it is charged to amortization expense. In certain cases, the unamortized balance of the deferred acquisition costs may not be deficient in the aggregate, but our estimates of future earnings indicate that profits would be recognized in early periods and losses in later periods. In this case, we increase the amortization of the deferred acquisition costs over the period of profits, by an amount necessary to offset losses that are expected to be recognized in the later years. | ||
Present Value of Future Profits | Present Value of Future Profits | |
The present value of future profits is the value assigned to the right to receive future cash flows from policyholder insurance contracts existing at September 10, 2003 (the "Effective Date", the effective date of the bankruptcy reorganization of Conseco, Inc., an Indiana corporation (our "Predecessor")). The discount rate we used to determine the present value of future profits was 12 percent. The balance of this account is amortized and evaluated for recovery in the same manner as described above for deferred acquisition costs. We also adjust the present value of future profits for the change in amortization that would have been recorded if the fixed maturity securities, available for sale, had been sold at their stated aggregate fair value and the proceeds reinvested at current yields, similar to the manner described above for deferred acquisition costs. We limit the total adjustment related to the impact of unrealized losses to the total present value of future profits plus interest. | ||
Assets Held in Separate Accounts | Assets Held in Separate Accounts | |
Separate accounts are funds on which investment income and gains or losses accrue directly to certain policyholders. The assets of these accounts are legally segregated. They are not subject to the claims that may arise out of any other business of CNO. We report separate account assets at fair value; the underlying investment risks are assumed by the contractholders. We record the related liabilities at amounts equal to the separate account assets. We record the fees earned for administrative and contractholder services performed for the separate accounts in insurance policy income. | ||
Recognition of Insurance Policy Income and Related Benefits and Expenses on Insurance Contracts | Recognition of Insurance Policy Income and Related Benefits and Expenses on Insurance Contracts | |
For interest-sensitive life and annuity contracts that do not involve significant mortality or morbidity risk, the amounts collected from policyholders are considered deposits and are not included in revenue. Revenues for these contracts consist of charges for policy administration, cost of insurance charges and surrender charges assessed against policyholders' account balances. Such revenues are recognized when the service or coverage is provided, or when the policy is surrendered. | ||
We establish liabilities for annuity and interest-sensitive life products equal to the accumulated policy account values, which include an accumulation of deposit payments plus credited interest, less withdrawals and the amounts assessed against the policyholder through the end of the period. In addition, policyholder account values for certain interest-sensitive life products are impacted by our assumptions related to changes of certain non-guaranteed elements that we are allowed to make under the terms of the policy, such as cost of insurance charges, expense loads, credited interest rates and policyholder bonuses. Sales inducements provided to the policyholders of these products are recognized as liabilities over the period that the contract must remain in force to qualify for the inducement. The options attributed to the policyholder related to our fixed index annuity products are accounted for as embedded derivatives as described in the section of this note entitled "Accounting for Derivatives". | ||
Premiums from individual life products (other than interest-sensitive life contracts) and health products are recognized when due. When premiums are due over a significantly shorter period than the period over which benefits are provided, any gross premium in excess of the net premium (i.e., the portion of the gross premium required to provide for all expected future benefits and expenses) is deferred and recognized into revenue in a constant relationship to insurance in force. Benefits are recorded as an expense when they are incurred. | ||
We establish liabilities for traditional life, accident and health insurance, and life contingent payment annuity products using mortality tables in general use in the United States, which are modified to reflect the Company's actual experience when appropriate. We establish liabilities for accident and health insurance products using morbidity tables based on the Company's actual or expected experience. These reserves are computed at amounts that, with additions from estimated future premiums received and with interest on such reserves at estimated future rates, are expected to be sufficient to meet our obligations under the terms of the policy. Liabilities for future policy benefits are computed on a net-level premium method based upon assumptions as to future claim costs, investment yields, mortality, morbidity, withdrawals, policy dividends and maintenance expenses determined when the policies were issued (or with respect to policies inforce at August 31, 2003, the Company's best estimate of such assumptions on the Effective Date). We make an additional provision to allow for potential adverse deviation for some of our assumptions. Once established, assumptions on these products are generally not changed unless a premium deficiency exists. In that case, a premium deficiency reserve is recognized and the future pattern of reserve changes is modified to reflect the relationship of premiums to benefits based on the current best estimate of future claim costs, investment yields, mortality, morbidity, withdrawals, policy dividends and maintenance expenses, determined without an additional provision for potential adverse deviation. | ||
We establish claim reserves based on our estimate of the loss to be incurred on reported claims plus estimates of incurred but unreported claims based on our past experience. | ||
Accounting for Long-term Care Premium Rate Increases | Accounting for Long-term Care Premium Rate Increases | |
Many of our long-term care policies have been subject to premium rate increases. In some cases, these premium rate increases were materially consistent with the assumptions we used to value the particular block of business at the Effective Date. With respect to certain premium rate increases, some of our policyholders were provided an option to cease paying their premiums and receive a non-forfeiture option in the form of a paid-up policy with limited benefits. In addition, our policyholders could choose to reduce their coverage amounts and premiums in the same proportion, when permitted by our contracts or as required by regulators. The following describes how we account for these policyholder options: | ||
• | Premium rate increases - If premium rate increases reflect a change in our previous rate increase assumptions, the new assumptions are not reflected prospectively in our reserves. Instead, the additional premium revenue resulting from the rate increase is recognized as earned and original assumptions continue to be used to determine changes to liabilities for insurance products unless a premium deficiency exists. | |
• | Benefit reductions - A policyholder may choose reduced coverage with a proportionate reduction in premium, when permitted by our contracts. This option does not require additional underwriting. Benefit reductions are treated as a partial lapse of coverage, and the balance of our reserves and deferred insurance acquisition costs is reduced in proportion to the reduced coverage. | |
• | Non-forfeiture benefits offered in conjunction with a rate increase - In some cases, non-forfeiture benefits are offered to policyholders who wish to lapse their policies at the time of a significant rate increase. In these cases, exercise of this option is treated as an extinguishment of the original contract and issuance of a new contract. The balance of our reserves and deferred insurance acquisition costs are released, and a reserve for the new contract is established. | |
Some of our policyholders may receive a non-forfeiture benefit if they cease paying their premiums pursuant to their original contract (or pursuant to changes made to their original contract as a result of a litigation settlement made prior to the Effective Date or an order issued by the Florida Office of Insurance Regulation). In these cases, exercise of this option is treated as the exercise of a policy benefit, and the reserve for premium paying benefits is reduced, and the reserve for the non-forfeiture benefit is adjusted to reflect the election of this benefit. | ||
Accounting for Certain Marketing and Reinsurance Agreements | Accounting for Certain Marketing and Reinsurance Agreements | |
Bankers Life has entered into various distribution and marketing agreements with other insurance companies to use Bankers Life's career agents to distribute prescription drug and Medicare Advantage plans. These agreements allow Bankers Life to offer these products to current and potential future policyholders without investment in management and infrastructure. We receive fee income related to the plans sold through our distribution channels. We account for these distribution agreements as follows: | ||
• | We recognize distribution income based on either: (i) a fixed fee per contract sold; or (ii) a percentage of premiums collected. This fee income is recognized over the calendar year term of the contract. | |
• | We also pay commissions to our agents who sell the plans. These payments are deferred and amortized over the term of the contract. | |
Prior to its termination in August 2013, we had a quota-share reinsurance agreement with Coventry that provided Bankers Life with 50 percent of the net premiums and related policy benefits of certain PDP business sold through Bankers Life's career agency force. We accounted for the quota-share agreement as follows: | ||
• | We recognized premium revenue evenly over the period of the underlying Medicare Part D contracts. | |
• | We recognized policyholder benefits and assumed commission expense as incurred. | |
• | We recognized risk-share premium adjustments consistent with Coventry's risk-share agreement with the Centers for Medicare and Medicaid Services. | |
Reinsurance | ||
In the normal course of business, we seek to limit our loss exposure on any single insured or to certain groups of policies by ceding reinsurance to other insurance enterprises. We currently retain no more than $.8 million of mortality risk on any one policy. We diversify the risk of reinsurance loss by using a number of reinsurers that have strong claims-paying ratings. In each case, the ceding CNO subsidiary is directly liable for claims reinsured in the event the assuming company is unable to pay. | ||
The cost of reinsurance ceded totaled $176.7 million, $212.1 million and $220.0 million in 2014, 2013 and 2012, respectively. We deduct this cost from insurance policy income. Reinsurance recoveries netted against insurance policy benefits totaled $195.3 million, $196.2 million and $210.2 million in 2014, 2013 and 2012, respectively. | ||
From time-to-time, we assume insurance from other companies. Any costs associated with the assumption of insurance are amortized consistent with the method used to amortize deferred acquisition costs. Reinsurance premiums assumed totaled $35.0 million, $37.4 million and $69.4 million in 2014, 2013 and 2012, respectively. Reinsurance premiums included amounts assumed pursuant to marketing and quota-share agreements with Coventry of $6.8 million, $19.7 million and $49.9 million, in 2014, 2013 and 2012 respectively. As further described above, we received a notice of Coventry's intent to terminate the PDP quota-share reinsurance agreement in August 2013. The premiums collected from Coventry in 2014 represented adjustments to premiums on such business related to periods prior to the termination of the agreement. | ||
In December 2013, two of our insurance subsidiaries with long-term care business in the former Other CNO Business segment entered into 100% coinsurance agreements ceding $495 million of long-term care reserves to Beechwood Re Ltd. ("BRe"). Pursuant to the agreements, the insurance subsidiaries paid an additional premium of $96.9 million to BRe and an amount equal to the related net liabilities. The insurance subsidiaries' ceded reserve credits are secured by assets in market-value trusts subject to a 7% over-collateralization, investment guidelines and periodic true-up provisions. Future payments into the trusts to maintain collateral requirements are the responsibility of BRe. We recognized a pre-tax loss of $98.4 million in 2013 to reflect: (i) the known loss (or premium deficiency) on the business, as we will not be recognizing additional income in future periods to recover the unamortized additional premium which will be paid to BRe; and (ii) other transaction costs. | ||
In the second quarter of 2014, we recaptured a block of interest-sensitive life business that was previously ceded under a modified coinsurance agreement. The recapture of this block resulted in a gain related to reinsurance transaction of $3.8 million. | ||
As further described in the note to the financial statements entitled "Sale of Subsidiary", we recaptured a block of life insurance business in 2014 that was previously ceded under a coinsurance agreement. | ||
Income Taxes | Income Taxes | |
Our income tax expense includes deferred income taxes arising from temporary differences between the financial reporting and tax bases of assets and liabilities, capital loss carryforwards and net operating loss carryforwards ("NOLs"). Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which temporary differences are expected to be recovered or paid. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in earnings in the period when the changes are enacted. | ||
A reduction of the net carrying amount of deferred tax assets by establishing a valuation allowance is required if, based on the available evidence, it is more likely than not that such assets will not be realized. In assessing the need for a valuation allowance, all available evidence, both positive and negative, shall be considered to determine whether, based on the weight of that evidence, a valuation allowance for deferred tax assets is needed. This assessment requires significant judgment and considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of carryforward periods, our experience with operating loss and tax credit carryforwards expiring unused, and tax planning strategies. We evaluate the need to establish a valuation allowance for our deferred income tax assets on an ongoing basis. The realization of our deferred tax assets depends upon generating sufficient future taxable income of the appropriate type during the periods in which our temporary differences become deductible and before our capital loss carryforwards and life and non-life NOLs expire. | ||
At December 31, 2014, our valuation allowance for our net deferred tax assets was $246.0 million, as we have determined that it is more likely than not that a portion of our deferred tax assets will not be realized. This determination was made by evaluating each component of the deferred tax assets and assessing the effects of limitations and/or interpretations on the value of such component to be fully recognized in the future. | ||
Investments in Variable Interest Entities | Investments in Variable Interest Entities | |
We have concluded that we are the primary beneficiary with respect to certain variable interest entities ("VIEs"), which are consolidated in our financial statements. | ||
All such VIEs are collateralized loan trusts that were established to issue securities to finance the purchase of corporate loans and other permitted investments (including two new VIEs which were consolidated in 2014, one new VIE which was consolidated in 2013 and one new VIE which was consolidated in 2012). The assets held by the trusts are legally isolated and not available to the Company. The liabilities of the VIEs are expected to be satisfied from the cash flows generated by the underlying loans held by the trusts, not from the assets of the Company. The Company has no financial obligation to the VIEs beyond its investment in each VIE. | ||
The investment portfolios held by the VIEs are primarily comprised of commercial bank loans to corporate obligors which are almost entirely rated below-investment grade. Refer to the note to the consolidated financial statements entitled "Investments in Variable Interest Entities" for additional information about VIEs. | ||
Investment borrowings | Investment borrowings | |
Two of the Company's insurance subsidiaries (Washington National and Bankers Life) are members of the Federal Home Loan Bank ("FHLB"). As members of the FHLB, Washington National and Bankers Life have the ability to borrow on a collateralized basis from the FHLB. Washington National and Bankers Life are required to hold certain minimum amounts of FHLB common stock as a condition of membership in the FHLB, and additional amounts based on the amount of the borrowings. At December 31, 2014, the carrying value of the FHLB common stock was $73.5 million. As of December 31, 2014, collateralized borrowings from the FHLB totaled $1.5 billion and the proceeds were used to purchase fixed maturity securities. The borrowings are classified as investment borrowings in the accompanying consolidated balance sheet. The borrowings are collateralized by investments with an estimated fair value of $1.8 billion at December 31, 2014, which are maintained in a custodial account for the benefit of the FHLB. Substantially all of such investments are classified as fixed maturities, available for sale, in our consolidated balance sheet. | ||
Accounting for Derivatives | Accounting for Derivatives | |
Our fixed index annuity products provide a guaranteed minimum rate of return and a higher potential return that is based on a percentage (the "participation rate") of the amount of increase in the value of a particular index, such as the Standard & Poor's 500 Index, over a specified period. Typically, on each policy anniversary date, a new index period begins. We are generally able to change the participation rate at the beginning of each index period during a policy year, subject to contractual minimums. The Company accounts for the options attributed to the policyholder for the estimated life of the annuity contract as embedded derivatives. These accounting requirements often create volatility in the earnings from these products. We typically buy call options (including call spreads) referenced to the applicable indices in an effort to offset or hedge potential increases to policyholder benefits resulting from increases in the particular index to which the policy's return is linked. | ||
We utilize United States Treasury interest rate futures primarily to hedge interest rate risk related to anticipated mortgage loan transactions. | ||
In periods prior to the second quarter of 2014, we were required to establish an embedded derivative related to a modified coinsurance agreement which ceded the risks of a block of interest sensitive life business. We recaptured this block in the second quarter of 2014 resulting in a gain of $3.8 million. Prior to the recapture of this block, we maintained the investments related to the modified coinsurance agreement in our trading securities account, which we carried at estimated fair value with changes in such value recognized as investment income. Such trading securities were sold in the second quarter of 2014 in conjunction with the reinsurance recapture. | ||
We purchase certain fixed maturity securities that contain embedded derivatives that are required to be bifurcated from the instrument and held at fair value on the consolidated balance sheet. We have elected the fair value option to carry the entire security at fair value with changes in fair value reported in net income for operational ease. | ||
Multibucket Annuity Products | Multibucket Annuity Products | |
The Company's multibucket annuity is an annuity product that credits interest based on the experience of a particular market strategy. Policyholders allocate their annuity premium payments to several different market strategies based on different asset classes within the Company's investment portfolio. Interest is credited to this product based on the market return of the given strategy, less management fees, and funds may be moved between different strategies. The Company guarantees a minimum return of premium plus approximately 3 percent per annum over the life of the contract. The investments backing the market strategies of these products are designated by the Company as trading securities. The change in the fair value of these securities is recognized as investment income (classified as income from policyholder and reinsurer accounts and other special-purpose portfolios), which is substantially offset by the change in insurance policy benefits for these products. | ||
Sales Inducements | Sales Inducements | |
Certain of our annuity products offer sales inducements to contract holders in the form of enhanced crediting rates or bonus payments in the initial period of the contract. Certain of our life insurance products offer persistency bonuses credited to the contract holders balance after the policy has been outstanding for a specified period of time. These enhanced rates and persistency bonuses are considered sales inducements in accordance with GAAP. Such amounts are deferred and amortized in the same manner as deferred acquisition costs. | ||
Out-of-Period Adjustments | Out-of-Period Adjustments | |
In 2014, we recorded the net effect of an out-of-period adjustment related to the calculation of incentive compensation accruals which increased other operating costs and expenses by $2.4 million, decreased tax expense by $.8 million and decreased our net income by $1.6 million (or 1 cent per diluted share). In 2013 we recorded the net effect of out-of-period adjustment which increased our insurance policy benefits by $4.7 million, increased amortization expense by $2.1 million, increased other operating costs and expenses by $1.5 million, decreased tax expense by $.7 million and decreased our net income by $7.6 million (or 3 cents per diluted share). We evaluated these adjustments taking into account both qualitative and quantitative factors and considered the impact of these adjustments in relation to each period, as well as the periods in which they originated. The impact of recognizing these adjustments in prior years was not significant to any individual period. Management believes these adjustments are immaterial to the consolidated financial statements and all previously issued financial statements. | ||
Recently Issued Accounting Standards | Recently Issued Accounting Standards | |
Pending Accounting Standards | ||
In April 2014, the Financial Accounting Standards Board (the "FASB") issued authoritative guidance changing the criteria for reporting discontinued operations. Under the revised guidance, only disposals of a component or a group of components, including those classified as held for sale, which represent a strategic shift that has or will have a major effect on a company's operations and financial results will be reported as discontinued operations. The guidance is effective prospectively for new disposals occurring after January 1, 2015. | ||
In May 2014, the FASB issued authoritative guidance for recognizing revenue from contracts with customers. Certain contracts with customers are specifically excluded from this guidance, including insurance contracts. The core principle of the new guidance is that an entity should recognize revenue when it transfers promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The guidance will be effective for the Company on January 1, 2017 and permits two methods of transition upon adoption; full retrospective and modified retrospective. Under the full retrospective method, prior periods would be restated under the new revenue standard, providing for comparability in all periods presented. Under the modified retrospective method, prior periods would not be restated. Instead, revenues and other disclosures for pre-2017 periods would be provided in the notes to the financial statements as previously reported under the current revenue standard. The Company is currently assessing the impact the guidance will have upon adoption. | ||
In June 2014, the FASB issued authoritative guidance on the accounting and disclosure of repurchase-to-maturity transactions and repurchase financings. Under this new accounting guidance, repurchase-to-maturity transactions will be accounted for as secured borrowings rather than sales of an asset, and transfers of financial assets with a contemporaneous repurchase financing arrangement will no longer be evaluated to determine whether they should be accounted for on a combined basis as forward contracts. The new guidance also prescribes additional disclosures particularly on the nature of collateral pledged in the repurchase agreement accounted for as a secured borrowing. The new guidance is effective beginning on January 1, 2015. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements. | ||
In August 2014, the FASB issued authoritative guidance related to measuring the financial assets and the financial liabilities of a consolidated collateralized financing entity which provides a measurement alternative for an entity that consolidates collateralized financing entities. A collateralized financing entity is a variable interest entity with no more than nominal equity that holds financial assets and issues beneficial interests in those financial assets; the beneficial interests have contractual recourse only to the related assets of the collateralized financing entity and are classified as financial liabilities. If elected, the alternative method results in the reporting entity measuring both the financial assets and the financial liabilities of the collateralized financing entity using the more observable of the two fair value measurements, which effectively removes measurement differences between the financial assets and the financial liabilities of the collateralized financing entity previously recorded as net income (loss) attributable to non-controlling and other beneficial interests and as an adjustment to appropriated retained earnings. The reporting entity continues to measure its own beneficial interests in the collateralized financing entity (other than those that represent compensation for services) at fair value. The guidance is effective for interim and annual periods beginning after December 15, 2015. A reporting entity may apply the guidance using a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the annual period of adoption. A reporting entity may also apply the guidance retrospectively to all relevant prior periods. Early adoption is permitted. The Company is currently assessing the impact the guidance will have upon adoption. | ||
Adopted Accounting Standards | ||
In July 2013, the FASB issued authoritative guidance regarding the financial statement presentation of an unrecognized tax benefit when a NOL carryforward, a similar tax loss or a tax credit carryforward exists. Such guidance requires an unrecognized tax benefit, or a portion of an unrecognized tax benefit, to be presented in the financial statements as a reduction to a deferred tax asset for a NOL carryforward, a similar tax loss, or a tax credit carryforward, except under certain circumstances as further described in the guidance. Such guidance does not require new recurring disclosures. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of this guidance did not have a material impact on our consolidated financial statements. | ||
Fair Value Measurements | Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and, therefore, represents an exit price, not an entry price. We carry certain assets and liabilities at fair value on a recurring basis, including fixed maturities, equity securities, trading securities, investments held by VIEs, derivatives, cash and cash equivalents, separate account assets and embedded derivatives. We carry our COLI policy, which is invested in a series of mutual funds, at its cash surrender value and our hedge fund investments at their net asset values; in both cases, we believe these values approximate their fair values. In addition, we disclose fair value for certain financial instruments, including mortgage loans and policy loans, policyholder account balances, investment borrowings, notes payable and borrowings related to VIEs. | |
The degree of judgment utilized in measuring the fair value of financial instruments is largely dependent on the level to which pricing is based on observable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our view of market assumptions in the absence of observable market data. Financial instruments with readily available active quoted prices would be considered to have fair values based on the highest level of observable inputs, and little judgment would be utilized in measuring fair value. Financial instruments that rarely trade would often have fair value based on a lower level of observable inputs, and more judgment would be utilized in measuring fair value. | ||
Valuation Hierarchy | ||
There is a three-level hierarchy for valuing assets or liabilities at fair value based on whether inputs are observable or unobservable. | ||
• | Level 1 – includes assets and liabilities valued using inputs that are unadjusted quoted prices in active markets for identical assets or liabilities. Our Level 1 assets primarily include cash and exchange traded securities. | |
• | Level 2 – includes assets and liabilities valued using inputs that are quoted prices for similar assets in an active market, quoted prices for identical or similar assets in a market that is not active, observable inputs, or observable inputs that can be corroborated by market data. Level 2 assets and liabilities include those financial instruments that are valued by independent pricing services using models or other valuation methodologies. These models consider various inputs such as credit rating, maturity, corporate credit spreads, reported trades and other inputs that are observable or derived from observable information in the marketplace or are supported by transactions executed in the marketplace. Financial assets in this category primarily include: certain publicly registered and privately placed corporate fixed maturity securities; certain government or agency securities; certain mortgage and asset-backed securities; certain equity securities; most investments held by our consolidated VIEs; certain mutual fund and hedge fund investments; most short-term investments; and non-exchange-traded derivatives such as call options. Financial liabilities in this category include investment borrowings, notes payable and borrowings related to VIEs. | |
• | Level 3 – includes assets and liabilities valued using unobservable inputs that are used in model-based valuations that contain management assumptions. Level 3 assets and liabilities include those financial instruments whose fair value is estimated based on broker/dealer quotes, pricing services or internally developed models or methodologies utilizing significant inputs not based on, or corroborated by, readily available market information. Financial assets in this category include certain corporate securities (primarily certain below-investment grade privately placed securities), certain structured securities, mortgage loans, and other less liquid securities. Financial liabilities in this category include our insurance liabilities for interest-sensitive products, which includes embedded derivatives (including embedded derivatives related to our fixed index annuity products and to a modified coinsurance arrangement) since their values include significant unobservable inputs including actuarial assumptions. | |
At each reporting date, we classify assets and liabilities into the three input levels based on the lowest level of input that is significant to the measurement of fair value for each asset and liability reported at fair value. This classification is impacted by a number of factors, including the type of financial instrument, whether the financial instrument is new to the market and not yet established, the characteristics specific to the transaction and overall market conditions. Our assessment of the significance of a particular input to the fair value measurement and the ultimate classification of each asset and liability requires judgment and is subject to change from period to period based on the observability of the valuation inputs. Any transfers between levels are reported as having occurred at the beginning of the period. There were no transfers between Level 1 and Level 2 in 2014 and 2013. | ||
The vast majority of our fixed maturity and equity securities, including those held in trading portfolios and those held by consolidated VIEs, short-term and separate account assets use Level 2 inputs for the determination of fair value. These fair values are obtained primarily from independent pricing services, which use Level 2 inputs for the determination of fair value. Substantially all of our Level 2 fixed maturity securities and separate account assets were valued from independent pricing services. Third party pricing services normally derive security prices through recently reported trades for identical or similar securities making adjustments through the reporting date based upon available market observable information. If there are no recently reported trades, the third party pricing services may use matrix or model processes to develop a security price where future cash flow expectations are discounted at an estimated risk-adjusted market rate. The number of prices obtained for a given security is dependent on the Company's analysis of such prices as further described below. | ||
For securities that are not priced by pricing services and may not be reliably priced using pricing models, we obtain broker quotes. These broker quotes are non-binding and represent an exit price, but assumptions used to establish the fair value may not be observable and therefore represent Level 3 inputs. Approximately 26 percent of our Level 3 fixed maturity securities were valued using unadjusted broker quotes or broker-provided valuation inputs. The remaining Level 3 fixed maturity investments do not have readily determinable market prices and/or observable inputs. For these securities, we use internally developed valuations. Key assumptions used to determine fair value for these securities may include risk premiums, projected performance of underlying collateral and other factors involving significant assumptions which may not be reflective of an active market. For certain investments, we use a matrix or model process to develop a security price where future cash flow expectations are discounted at an estimated market rate. The pricing matrix incorporates term interest rates as well as a spread level based on the issuer's credit rating, other factors relating to the issuer, and the security's maturity. In some instances issuer-specific spread adjustments, which can be positive or negative, are made based upon internal analysis of security specifics such as liquidity, deal size, and time to maturity. | ||
As the Company is responsible for the determination of fair value, we have control processes designed to ensure that the fair values received from third-party pricing sources are reasonable and the valuation techniques and assumptions used appear reasonable and consistent with prevailing market conditions. Additionally, when inputs are provided by third-party pricing sources, we have controls in place to review those inputs for reasonableness. As part of these controls, we perform monthly quantitative and qualitative analysis on the prices received from third parties to determine whether the prices are reasonable estimates of fair value. The Company's analysis includes: (i) a review of the methodology used by third party pricing services; (ii) where available, a comparison of multiple pricing services' valuations for the same security; (iii) a review of month to month price fluctuations; (iv) a review to ensure valuations are not unreasonably dated; and (v) back testing to compare actual purchase and sale transactions with valuations received from third parties. As a result of such procedures, the Company may conclude the prices received from third parties are not reflective of current market conditions. In those instances, we may request additional pricing quotes or apply internally developed valuations. However, the number of instances is insignificant and the aggregate change in value of such investments is not materially different from the original prices received. | ||
The categorization of the fair value measurements of our investments priced by independent pricing services was based upon the Company's judgment of the inputs or methodologies used by the independent pricing services to value different asset classes. Such inputs typically include: benchmark yields, reported trades, broker dealer quotes, issuer spreads, benchmark securities, bids, offers and reference data. The Company categorizes such fair value measurements based upon asset classes and the underlying observable or unobservable inputs used to value such investments. | ||
The fair value measurements for derivative instruments, including embedded derivatives requiring bifurcation, are determined based on the consideration of several inputs including closing exchange or over-the-counter market price quotations; time value and volatility factors underlying options; market interest rates; and non-performance risk. For certain embedded derivatives, we use actuarial assumptions in the determination of fair value. | ||
Realized and unrealized gains (losses) on Level 3 assets are primarily reported in either net investment income for policyholder and reinsurer accounts and other special-purpose portfolios, net realized investment gains (losses) or insurance policy benefits within the consolidated statement of operations or accumulated other comprehensive income within shareholders' equity based on the stated accounting policy for the instrument. | ||
The amount presented for gains (losses) included in our net loss for assets and liabilities still held as of the reporting date primarily represents impairments for fixed maturities, available for sale, changes in fair value of trading securities and certain derivatives and changes in fair value of embedded derivative instruments included in liabilities for insurance products that exist as of the reporting date. | ||
For those financial instruments disclosed at fair value, we use the following methods and assumptions to determine the estimated fair values: | ||
Mortgage loans and policy loans. We discount future expected cash flows based on interest rates currently being offered for similar loans with similar risk characteristics. We aggregate loans with similar characteristics in our calculations. The fair value of policy loans approximates their carrying value. | ||
Company-owned life insurance is backed by a series of mutual funds and is carried at cash surrender value which approximates estimated fair value. | ||
Alternative investment funds are carried at their net asset values which approximates estimated fair value. | ||
Cash and cash equivalents include commercial paper, invested cash and other investments purchased with original maturities of less than three months. We carry them at amortized cost, which approximates estimated fair value. | ||
Liabilities for policyholder account balances. We discount future expected cash flows based on interest rates currently being offered for similar contracts with similar maturities. | ||
Investment borrowings, notes payable and borrowings related to variable interest entities. For publicly traded debt, we use current fair values. For other notes, we use discounted cash flow analyses based on our current incremental borrowing rates for similar types of borrowing arrangements. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (TABLES) | 12 Months Ended | ||||||
Dec. 31, 2014 | |||||||
Accounting Policies [Abstract] | |||||||
Schedule of terms of federal home loan bank borrowing | The following summarizes the terms of the borrowings from the FHLB by Washington National and Bankers Life (dollars in millions): | ||||||
Amount | Maturity | Interest rate at | |||||
borrowed | date | December 31, 2014 | |||||
$ | 50 | Oct-15 | Variable rate – 0.511% | ||||
100 | Jun-16 | Variable rate – 0.610% | |||||
75 | Jun-16 | Variable rate – 0.417% | |||||
100 | Oct-16 | Variable rate – 0.413% | |||||
50 | Nov-16 | Variable rate – 0.505% | |||||
50 | Nov-16 | Variable rate – 0.640% | |||||
57.7 | Jun-17 | Variable rate – 0.587% | |||||
50 | Aug-17 | Variable rate – 0.432% | |||||
75 | Aug-17 | Variable rate – 0.383% | |||||
100 | Oct-17 | Variable rate – 0.661% | |||||
50 | Nov-17 | Variable rate – 0.744% | |||||
50 | Jan-18 | Variable rate – 0.579% | |||||
50 | Jan-18 | Variable rate – 0.571% | |||||
50 | Feb-18 | Variable rate – 0.542% | |||||
50 | Feb-18 | Variable rate – 0.322% | |||||
22 | Feb-18 | Variable rate – 0.566% | |||||
100 | May-18 | Variable rate – 0.620% | |||||
50 | Jul-18 | Variable rate – 0.703% | |||||
50 | Aug-18 | Variable rate – 0.352% | |||||
50 | Jan-19 | Variable rate – 0.649% | |||||
50 | Feb-19 | Variable rate – 0.322% | |||||
100 | Mar-19 | Variable rate – 0.642% | |||||
21.8 | Jul-19 | Variable rate – 0.655% | |||||
21.8 | Jun-20 | Fixed rate – 1.960% | |||||
28.2 | Aug-21 | Fixed rate – 2.550% | |||||
26.8 | Mar-23 | Fixed rate – 2.160% | |||||
20.5 | Jun-25 | Fixed rate – 2.940% | |||||
$ | 1,498.80 | ||||||
INVESTMENTS_TABLES
INVESTMENTS (TABLES) | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||
Schedule of fixed maturities for available for sale and equity securities | At December 31, 2014, the amortized cost, gross unrealized gains and losses, estimated fair value and other-than-temporary impairments in accumulated other comprehensive income of fixed maturities, available for sale, and equity securities were as follows (dollars in millions): | ||||||||||||||||||||||||
Amortized | Gross | Gross | Estimated | Other-than-temporary impairments included in accumulated other comprehensive income | |||||||||||||||||||||
cost | unrealized | unrealized | fair | ||||||||||||||||||||||
gains | losses | value | |||||||||||||||||||||||
Investment grade (a): | |||||||||||||||||||||||||
Corporate securities | $ | 11,177.10 | $ | 1,710.50 | $ | (42.1 | ) | $ | 12,845.50 | $ | — | ||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | 138.8 | 30.2 | (.1 | ) | 168.9 | — | |||||||||||||||||||
States and political subdivisions | 1,960.60 | 299.3 | (.7 | ) | 2,259.20 | — | |||||||||||||||||||
Debt securities issued by foreign governments | 1.8 | 0.1 | — | 1.9 | — | ||||||||||||||||||||
Asset-backed securities | 720.7 | 52 | (1.6 | ) | 771.1 | — | |||||||||||||||||||
Collateralized debt obligations | 314.9 | 2.4 | (3.4 | ) | 313.9 | — | |||||||||||||||||||
Commercial mortgage-backed securities | 1,179.70 | 80.9 | (.5 | ) | 1,260.10 | — | |||||||||||||||||||
Mortgage pass-through securities | 4.2 | 0.4 | — | 4.6 | — | ||||||||||||||||||||
Collateralized mortgage obligations | 571.1 | 23.1 | (.6 | ) | 593.6 | — | |||||||||||||||||||
Total investment grade fixed maturities, available for sale | 16,068.90 | 2,198.90 | (49.0 | ) | 18,218.80 | — | |||||||||||||||||||
Below-investment grade (a): | |||||||||||||||||||||||||
Corporate securities | 1,139.30 | 29.2 | (43.0 | ) | 1,125.50 | — | |||||||||||||||||||
States and political subdivisions | 20.6 | 0.2 | (2.3 | ) | 18.5 | — | |||||||||||||||||||
Asset-backed securities | 465.9 | 33.8 | (1.8 | ) | 497.9 | — | |||||||||||||||||||
Collateralized debt obligations | 10.4 | 0.2 | — | 10.6 | — | ||||||||||||||||||||
Commercial mortgage-backed securities | 15.3 | 0.9 | — | 16.2 | — | ||||||||||||||||||||
Collateralized mortgage obligations | 687.7 | 60.4 | (.7 | ) | 747.4 | (3.2 | ) | ||||||||||||||||||
Total below-investment grade fixed maturities, available for sale | 2,339.20 | 124.7 | (47.8 | ) | 2,416.10 | (3.2 | ) | ||||||||||||||||||
Total fixed maturities, available for sale | $ | 18,408.10 | $ | 2,323.60 | $ | (96.8 | ) | $ | 20,634.90 | $ | (3.2 | ) | |||||||||||||
Equity securities | $ | 400.5 | $ | 19.1 | $ | (.6 | ) | $ | 419 | ||||||||||||||||
_______________ | |||||||||||||||||||||||||
(a) | Investment ratings – Investment ratings are assigned the second lowest rating by Nationally Recognized Statistical Rating Organizations ("NRSROs") (Moody's Investor Services, Inc. ("Moody's"), Standard & Poor's Corporation ("S&P") or Fitch Ratings ("Fitch")), or if not rated by such firms, the rating assigned by the National Association of Insurance Commissioners (the "NAIC"). NAIC designations of "1" or "2" include fixed maturities generally rated investment grade (rated "Baa3" or higher by Moody's or rated "BBB-" or higher by S&P and Fitch). NAIC designations of "3" through "6" are referred to as below-investment grade (which generally are rated "Ba1" or lower by Moody's or rated "BB+" or lower by S&P and Fitch). References to investment grade or below-investment grade throughout our consolidated financial statements are determined as described above. | ||||||||||||||||||||||||
Schedule of NAIC designations and NRSRO equivalent ratings | The following summarizes the NAIC designations and NRSRO equivalent ratings: | ||||||||||||||||||||||||
NAIC Designation | NRSRO Equivalent Rating | ||||||||||||||||||||||||
1 | AAA/AA/A | ||||||||||||||||||||||||
2 | BBB | ||||||||||||||||||||||||
3 | BB | ||||||||||||||||||||||||
4 | B | ||||||||||||||||||||||||
5 | CCC and lower | ||||||||||||||||||||||||
6 | In or near default | ||||||||||||||||||||||||
Summary of fixed maturity securities available for sale | A summary of our fixed maturity securities, available for sale, by NAIC designations (or for fixed maturity securities held by non-insurance entities, based on NRSRO ratings) as of December 31, 2014 is as follows (dollars in millions): | ||||||||||||||||||||||||
NAIC designation | Amortized cost | Estimated fair value | Percentage of total estimated fair value | ||||||||||||||||||||||
1 | $ | 8,930.80 | $ | 10,158.60 | 49.2 | % | |||||||||||||||||||
2 | 8,294.00 | 9,310.10 | 45.1 | ||||||||||||||||||||||
3 | 800.6 | 800.6 | 3.9 | ||||||||||||||||||||||
4 | 350.2 | 334.5 | 1.6 | ||||||||||||||||||||||
5 | 32.5 | 31.1 | 0.2 | ||||||||||||||||||||||
6 | — | — | — | ||||||||||||||||||||||
$ | 18,408.10 | $ | 20,634.90 | 100 | % | ||||||||||||||||||||
Schedule of accumulated other comprehensive income (loss) | At December 31, 2013, the amortized cost, gross unrealized gains and losses, estimated fair value and other-than-temporary impairments in accumulated other comprehensive income of fixed maturities, available for sale, and equity securities were as follows (dollars in millions): | ||||||||||||||||||||||||
Amortized | Gross | Gross | Estimated | Other-than-temporary impairments included in accumulated other comprehensive income | |||||||||||||||||||||
cost | unrealized | unrealized | fair | ||||||||||||||||||||||
gains | losses | value | |||||||||||||||||||||||
Investment grade (a): | |||||||||||||||||||||||||
Corporate securities | $ | 13,404.10 | $ | 1,086.20 | $ | (125.8 | ) | $ | 14,364.50 | $ | — | ||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | 71.1 | 2.6 | (.6 | ) | 73.1 | — | |||||||||||||||||||
States and political subdivisions | 2,130.20 | 106.8 | (38.5 | ) | 2,198.50 | — | |||||||||||||||||||
Asset-backed securities | 869.9 | 41.6 | (3.9 | ) | 907.6 | — | |||||||||||||||||||
Collateralized debt obligations | 259.4 | 7.4 | (.1 | ) | 266.7 | — | |||||||||||||||||||
Commercial mortgage-backed securities | 1,517.10 | 97.7 | (5.8 | ) | 1,609.00 | — | |||||||||||||||||||
Mortgage pass-through securities | 12.7 | 0.7 | — | 13.4 | — | ||||||||||||||||||||
Collateralized mortgage obligations | 936.2 | 34.3 | (1.3 | ) | 969.2 | — | |||||||||||||||||||
Total investment grade fixed maturities, available for sale | 19,200.70 | 1,377.30 | (176.0 | ) | 20,402.00 | — | |||||||||||||||||||
Below-investment grade (a): | |||||||||||||||||||||||||
Corporate securities | 1,314.50 | 53.4 | (32.7 | ) | 1,335.20 | — | |||||||||||||||||||
States and political subdivisions | 6.4 | — | (.5 | ) | 5.9 | — | |||||||||||||||||||
Asset-backed securities | 523.5 | 34.3 | (3.3 | ) | 554.5 | — | |||||||||||||||||||
Collateralized debt obligations | 27.6 | 0.1 | (.4 | ) | 27.3 | — | |||||||||||||||||||
Collateralized mortgage obligations | 819.1 | 60.9 | (.3 | ) | 879.7 | (4.3 | ) | ||||||||||||||||||
Total below-investment grade fixed maturities, available for sale | 2,691.10 | 148.7 | (37.2 | ) | 2,802.60 | (4.3 | ) | ||||||||||||||||||
Total fixed maturities, available for sale | $ | 21,891.80 | $ | 1,526.00 | $ | (213.2 | ) | $ | 23,204.60 | $ | (4.3 | ) | |||||||||||||
Equity securities | $ | 206.7 | $ | 16.3 | $ | — | $ | 223 | |||||||||||||||||
Accumulated other comprehensive income is primarily comprised of the net effect of unrealized appreciation (depreciation) on our investments. These amounts, included in shareholders' equity as of December 31, 2014 and 2013, were as follows (dollars in millions): | |||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
Net unrealized appreciation (depreciation) on fixed maturity securities, available for sale, on which an other-than-temporary impairment loss has been recognized | $ | 5.3 | $ | 6.5 | |||||||||||||||||||||
Net unrealized gains on all other investments | 2,207.70 | 1,322.60 | |||||||||||||||||||||||
Adjustment to present value of future profits (a) | (149.9 | ) | (47.7 | ) | |||||||||||||||||||||
Adjustment to deferred acquisition costs | (390.5 | ) | (137.0 | ) | |||||||||||||||||||||
Adjustment to insurance liabilities | (381.4 | ) | — | ||||||||||||||||||||||
Unrecognized net loss related to deferred compensation plan | (8.5 | ) | (7.1 | ) | |||||||||||||||||||||
Deferred income tax liabilities | (457.4 | ) | (405.5 | ) | |||||||||||||||||||||
Accumulated other comprehensive income | $ | 825.3 | $ | 731.8 | |||||||||||||||||||||
________ | |||||||||||||||||||||||||
(a) | The present value of future profits is the value assigned to the right to receive future cash flows from contracts existing at September 10, 2003, the date our Predecessor emerged from bankruptcy. | ||||||||||||||||||||||||
Schedule of investments classified by contractual maturity date | The following table sets forth the amortized cost and estimated fair value of fixed maturities, available for sale, at December 31, 2014, by contractual maturity. Actual maturities will differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without penalties. In addition, structured securities (such as asset-backed securities, collateralized debt obligations, commercial mortgage-backed securities, mortgage pass-through securities and collateralized mortgage obligations, collectively referred to as "structured securities") frequently include provisions for periodic principal payments and permit periodic unscheduled payments. | ||||||||||||||||||||||||
Amortized | Estimated | ||||||||||||||||||||||||
cost | fair | ||||||||||||||||||||||||
value | |||||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||
Due in one year or less | $ | 216.5 | $ | 220 | |||||||||||||||||||||
Due after one year through five years | 1,966.50 | 2,152.30 | |||||||||||||||||||||||
Due after five years through ten years | 2,689.50 | 2,879.60 | |||||||||||||||||||||||
Due after ten years | 9,565.70 | 11,167.60 | |||||||||||||||||||||||
Subtotal | 14,438.20 | 16,419.50 | |||||||||||||||||||||||
Structured securities | 3,969.90 | 4,215.40 | |||||||||||||||||||||||
Total fixed maturities, available for sale | $ | 18,408.10 | $ | 20,634.90 | |||||||||||||||||||||
Schedule of investment income | Net investment income consisted of the following (dollars in millions): | ||||||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||||||
General account assets: | |||||||||||||||||||||||||
Fixed maturities | $ | 1,175.80 | $ | 1,290.30 | $ | 1,281.10 | |||||||||||||||||||
Equity securities | 13.9 | 7 | 4.2 | ||||||||||||||||||||||
Mortgage loans | 104.2 | 96.3 | 99.8 | ||||||||||||||||||||||
Policy loans | 11 | 17.3 | 17.1 | ||||||||||||||||||||||
Other invested assets | 17.1 | 14.4 | 14.4 | ||||||||||||||||||||||
Cash and cash equivalents | 0.6 | 0.5 | 0.6 | ||||||||||||||||||||||
Policyholder and reinsurer accounts and other special-purpose portfolios: | |||||||||||||||||||||||||
Trading securities (a) | 14.8 | 12.8 | 26.3 | ||||||||||||||||||||||
Options related to fixed index products: | |||||||||||||||||||||||||
Option income | 118.9 | 77.4 | 0.4 | ||||||||||||||||||||||
Change in value of options | (49.4 | ) | 100.1 | 25.1 | |||||||||||||||||||||
Other special-purpose portfolios | 42.1 | 67.9 | 36.1 | ||||||||||||||||||||||
Gross investment income | 1,449.00 | 1,684.00 | 1,505.10 | ||||||||||||||||||||||
Less investment expenses | 21.6 | 20 | 18.7 | ||||||||||||||||||||||
Net investment income | $ | 1,427.40 | $ | 1,664.00 | $ | 1,486.40 | |||||||||||||||||||
_________________ | |||||||||||||||||||||||||
(a) | Changes in the estimated fair value for trading securities still held as of the end of the respective years and included in net investment income were $3.4 million, $.4 million and $4.9 million for the years ended December 31, 2014, 2013 and 2012, respectively. | ||||||||||||||||||||||||
Schedule of realized gain (loss) on investments | The following table sets forth the net realized investment gains (losses) for the periods indicated (dollars in millions): | ||||||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||||||
Fixed maturity securities, available for sale: | |||||||||||||||||||||||||
Gross realized gains on sale | $ | 64.4 | $ | 57.7 | $ | 115.4 | |||||||||||||||||||
Gross realized losses on sale | (13.0 | ) | (11.4 | ) | (15.4 | ) | |||||||||||||||||||
Impairments: | |||||||||||||||||||||||||
Total other-than-temporary impairment losses | — | (7.1 | ) | (1.0 | ) | ||||||||||||||||||||
Other-than-temporary impairment losses recognized in accumulated other comprehensive income | — | — | — | ||||||||||||||||||||||
Net impairment losses recognized | — | (7.1 | ) | (1.0 | ) | ||||||||||||||||||||
Net realized investment gains from fixed maturities | 51.4 | 39.2 | 99 | ||||||||||||||||||||||
Equity securities | 10.1 | 4.8 | 0.1 | ||||||||||||||||||||||
Commercial mortgage loans | (.1 | ) | (1.1 | ) | (3.7 | ) | |||||||||||||||||||
Impairments of mortgage loans and other investments | (27.3 | ) | (4.5 | ) | (36.8 | ) | |||||||||||||||||||
Other (a) | 2.6 | (5.0 | ) | 22.5 | |||||||||||||||||||||
Net realized investment gains (losses) | $ | 36.7 | $ | 33.4 | $ | 81.1 | |||||||||||||||||||
_________________ | |||||||||||||||||||||||||
(a) | Changes in the estimated fair value for trading securities for we have elected the fair value option still held as of the end of the respective years and included in net realized investment gains (losses) were $7.8 million, $(3.0) million and $20.1 million for the years ended December 31, 2014, 2013 and 2012, respectively. | ||||||||||||||||||||||||
Schedule of investments in our portfolio rated below-investment grade which have been continuously in an unrealized loss position | The following summarizes the investments sold at a loss during 2014 which had been continuously in an unrealized loss position exceeding 20 percent of the amortized cost basis prior to the sale for the period indicated (dollars in millions): | ||||||||||||||||||||||||
At date of sale | |||||||||||||||||||||||||
Number | Amortized cost | Fair value | |||||||||||||||||||||||
of issuers | |||||||||||||||||||||||||
Less than 6 months prior to sale | 1 | $ | 0.5 | $ | 0.4 | ||||||||||||||||||||
Greater than or equal to 6 months and less than 12 months prior to sale | 1 | 0.2 | 0.2 | ||||||||||||||||||||||
Greater than 12 months prior to sale | 2 | 5.2 | 3.9 | ||||||||||||||||||||||
4 | $ | 5.9 | $ | 4.5 | |||||||||||||||||||||
The following summarizes the investments in our portfolio rated below-investment grade which have been continuously in an unrealized loss position exceeding 20 percent of the cost basis for the period indicated as of December 31, 2014 (dollars in millions): | |||||||||||||||||||||||||
Number | Cost | Unrealized | Estimated | ||||||||||||||||||||||
of issuers | basis | loss | fair value | ||||||||||||||||||||||
Less than 6 months | 6 | $ | 40.9 | $ | (10.3 | ) | $ | 30.6 | |||||||||||||||||
Greater than 12 months (a) | 1 | 14.1 | (4.5 | ) | 9.6 | ||||||||||||||||||||
7 | $ | 55 | $ | (14.8 | ) | $ | 40.2 | ||||||||||||||||||
________________ | |||||||||||||||||||||||||
(a) | With respect to the security which has been in an unrealized position for greater than 12 months, we have analyzed the issuer's financial performance and determined we expect to recover the entire amortized cost. | ||||||||||||||||||||||||
Schedule of credit losses recognized in earnings | The following table summarizes the amount of credit losses recognized in earnings on fixed maturity securities, available for sale, held at the beginning of the period, for which a portion of the other-than-temporary impairment was also recognized in accumulated other comprehensive income for years ended December 31, 2014, 2013 and 2012 (dollars in millions): | ||||||||||||||||||||||||
Year ended | |||||||||||||||||||||||||
December 31, | |||||||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||||||
Credit losses on fixed maturity securities, available for sale, beginning of period | $ | (1.3 | ) | $ | (1.6 | ) | $ | (2.0 | ) | ||||||||||||||||
Add: credit losses on other-than-temporary impairments not previously recognized | — | — | — | ||||||||||||||||||||||
Less: credit losses on securities sold | 0.3 | 0.3 | 0.4 | ||||||||||||||||||||||
Less: credit losses on securities impaired due to intent to sell (a) | — | — | — | ||||||||||||||||||||||
Add: credit losses on previously impaired securities | — | — | — | ||||||||||||||||||||||
Less: increases in cash flows expected on previously impaired securities | — | — | — | ||||||||||||||||||||||
Credit losses on fixed maturity securities, available for sale, end of period | $ | (1.0 | ) | $ | (1.3 | ) | $ | (1.6 | ) | ||||||||||||||||
__________ | |||||||||||||||||||||||||
(a) | Represents securities for which the amount previously recognized in accumulated other comprehensive income was recognized in earnings because we intend to sell the security or we more likely than not will be required to sell the security before recovery of its amortized cost basis. | ||||||||||||||||||||||||
Schedule of investments with unrealized losses classified by contractual maturity date | The following table sets forth the amortized cost and estimated fair value of those fixed maturities, available for sale, with unrealized losses at December 31, 2014, by contractual maturity. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties. Structured securities frequently include provisions for periodic principal payments and permit periodic unscheduled payments. | ||||||||||||||||||||||||
Amortized | Estimated | ||||||||||||||||||||||||
cost | fair | ||||||||||||||||||||||||
value | |||||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||
Due in one year or less | $ | 7.8 | $ | 7.8 | |||||||||||||||||||||
Due after one year through five years | 170.7 | 165.3 | |||||||||||||||||||||||
Due after five years through ten years | 508.4 | 474.4 | |||||||||||||||||||||||
Due after ten years | 758.2 | 709.4 | |||||||||||||||||||||||
Subtotal | 1,445.10 | 1,356.90 | |||||||||||||||||||||||
Structured securities | 502.8 | 494.2 | |||||||||||||||||||||||
Total | $ | 1,947.90 | $ | 1,851.10 | |||||||||||||||||||||
Schedule of unrealized loss on investments | The following table summarizes the gross unrealized losses and fair values of our investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that such securities have been in a continuous unrealized loss position, at December 31, 2014 (dollars in millions): | ||||||||||||||||||||||||
Less than 12 months | 12 months or greater | Total | |||||||||||||||||||||||
Description of securities | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
value | losses | value | losses | value | losses | ||||||||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | $ | 12.1 | $ | (.1 | ) | $ | 4.6 | $ | — | $ | 16.7 | $ | (.1 | ) | |||||||||||
States and political subdivisions | 13.2 | (.3 | ) | 44.5 | (2.7 | ) | 57.7 | (3.0 | ) | ||||||||||||||||
Corporate securities | 985 | (65.9 | ) | 297.5 | (19.2 | ) | 1,282.50 | (85.1 | ) | ||||||||||||||||
Asset-backed securities | 91.2 | (1.3 | ) | 60.5 | (2.1 | ) | 151.7 | (3.4 | ) | ||||||||||||||||
Collateralized debt obligations | 184.2 | (3.4 | ) | — | — | 184.2 | (3.4 | ) | |||||||||||||||||
Commercial mortgage-backed securities | 46.7 | (.5 | ) | — | — | 46.7 | (.5 | ) | |||||||||||||||||
Mortgage pass-through securities | 0.5 | — | 0.1 | — | 0.6 | — | |||||||||||||||||||
Collateralized mortgage obligations | 79 | (.8 | ) | 32 | (.5 | ) | 111 | (1.3 | ) | ||||||||||||||||
Total fixed maturities, available for sale | $ | 1,411.90 | $ | (72.3 | ) | $ | 439.2 | $ | (24.5 | ) | $ | 1,851.10 | $ | (96.8 | ) | ||||||||||
Equity securities | $ | 13.2 | $ | (.6 | ) | $ | 0.5 | $ | — | $ | 13.7 | $ | (.6 | ) | |||||||||||
The following table summarizes the gross unrealized losses and fair values of our investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that such securities have been in a continuous unrealized loss position, at December 31, 2013 (dollars in millions): | |||||||||||||||||||||||||
Less than 12 months | 12 months or greater | Total | |||||||||||||||||||||||
Description of securities | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
value | losses | value | losses | value | losses | ||||||||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | $ | 23.8 | $ | (.6 | ) | $ | — | $ | — | $ | 23.8 | $ | (.6 | ) | |||||||||||
States and political subdivisions | 473.6 | (30.3 | ) | 79.2 | (8.7 | ) | 552.8 | (39.0 | ) | ||||||||||||||||
Corporate securities | 2,432.40 | (137.7 | ) | 170.3 | (20.8 | ) | 2,602.70 | (158.5 | ) | ||||||||||||||||
Asset-backed securities | 308.4 | (6.5 | ) | 32.5 | (.7 | ) | 340.9 | (7.2 | ) | ||||||||||||||||
Collateralized debt obligations | 46.7 | (.5 | ) | — | — | 46.7 | (.5 | ) | |||||||||||||||||
Commercial mortgage-backed securities | 161.8 | (5.8 | ) | — | — | 161.8 | (5.8 | ) | |||||||||||||||||
Mortgage pass-through securities | 1.6 | — | 1.6 | — | 3.2 | — | |||||||||||||||||||
Collateralized mortgage obligations | 121.8 | (1.6 | ) | 2.2 | — | 124 | (1.6 | ) | |||||||||||||||||
Total fixed maturities, available for sale | $ | 3,570.10 | $ | (183.0 | ) | $ | 285.8 | $ | (30.2 | ) | $ | 3,855.90 | $ | (213.2 | ) | ||||||||||
Equity securities | $ | 0.5 | $ | — | $ | — | $ | — | $ | 0.5 | $ | — | |||||||||||||
Schedule of structured securities | The following table sets forth the par value, amortized cost and estimated fair value of structured securities, summarized by interest rates on the underlying collateral, at December 31, 2014 (dollars in millions): | ||||||||||||||||||||||||
Par | Amortized | Estimated | |||||||||||||||||||||||
value | cost | fair value | |||||||||||||||||||||||
Below 4 percent | $ | 1,160.70 | $ | 887.8 | $ | 908 | |||||||||||||||||||
4 percent – 5 percent | 759.5 | 717.6 | 757.7 | ||||||||||||||||||||||
5 percent – 6 percent | 1,880.00 | 1,760.10 | 1,882.20 | ||||||||||||||||||||||
6 percent – 7 percent | 533.6 | 496.5 | 544.7 | ||||||||||||||||||||||
7 percent – 8 percent | 85.3 | 87 | 101.3 | ||||||||||||||||||||||
8 percent and above | 20 | 20.9 | 21.5 | ||||||||||||||||||||||
Total structured securities | $ | 4,439.10 | $ | 3,969.90 | $ | 4,215.40 | |||||||||||||||||||
The amortized cost and estimated fair value of structured securities at December 31, 2014, summarized by type of security, were as follows (dollars in millions): | |||||||||||||||||||||||||
Estimated fair value | |||||||||||||||||||||||||
Type | Amortized | Amount | Percent | ||||||||||||||||||||||
cost | of fixed | ||||||||||||||||||||||||
maturities | |||||||||||||||||||||||||
Pass-throughs, sequential and equivalent securities | $ | 969.4 | $ | 1,033.40 | 5 | % | |||||||||||||||||||
Planned amortization classes, target amortization classes and accretion-directed bonds | 243.3 | 262 | 1.3 | ||||||||||||||||||||||
Commercial mortgage-backed securities | 1,195.00 | 1,276.30 | 6.2 | ||||||||||||||||||||||
Asset-backed securities | 1,186.60 | 1,269.00 | 6.1 | ||||||||||||||||||||||
Collateralized debt obligations | 325.3 | 324.5 | 1.6 | ||||||||||||||||||||||
Other | 50.3 | 50.2 | 0.2 | ||||||||||||||||||||||
Total structured securities | $ | 3,969.90 | $ | 4,215.40 | 20.4 | % | |||||||||||||||||||
Summary of weighted average loan-to-value ratio for outstanding mortgage loans | The following table provides the carrying value and estimated fair value of our outstanding mortgage loans and the underlying collateral as of December 31, 2014 (dollars in millions): | ||||||||||||||||||||||||
Estimated fair | |||||||||||||||||||||||||
value | |||||||||||||||||||||||||
Loan-to-value ratio (a) | Carrying value | Mortgage loans | Collateral | ||||||||||||||||||||||
Less than 60% | $ | 745.8 | $ | 787.4 | $ | 1,694.10 | |||||||||||||||||||
60% to 70% | 376.9 | 387.1 | 587 | ||||||||||||||||||||||
Greater than 70% to 80% | 425.3 | 441.6 | 574.8 | ||||||||||||||||||||||
Greater than 80% to 90% | 139.6 | 147.8 | 165.2 | ||||||||||||||||||||||
Greater than 90% | 4.3 | 5 | 4.7 | ||||||||||||||||||||||
Total | $ | 1,691.90 | $ | 1,768.90 | $ | 3,025.80 | |||||||||||||||||||
________________ | |||||||||||||||||||||||||
(a) | Loan-to-value ratios are calculated as the ratio of: (i) the carrying value of the commercial mortgage loans; to (ii) the estimated fair value of the underlying collateral. |
FAIR_VALUE_MEASUREMENTS_TABLES
FAIR VALUE MEASUREMENTS (TABLES) | 12 Months Ended | ||||||||||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||
Fair value measurements of financial instruments measured on a recurring basis | The fair value measurements for our financial instruments disclosed at fair value on a recurring basis are as follows (dollars in millions): | ||||||||||||||||||||||||||||||||||||
December 31, 2014 | |||||||||||||||||||||||||||||||||||||
Quoted prices in active markets for identical assets or liabilities | Significant other observable inputs | Significant unobservable inputs | Total estimated fair value | Total carrying amount | |||||||||||||||||||||||||||||||||
(Level 1) | (Level 2) | (Level 3) | |||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||
Mortgage loans | $ | — | $ | — | $ | 1,768.90 | $ | 1,768.90 | $ | 1,691.90 | |||||||||||||||||||||||||||
Policy loans | — | — | 106.9 | 106.9 | 106.9 | ||||||||||||||||||||||||||||||||
Other invested assets: | |||||||||||||||||||||||||||||||||||||
Company-owned life insurance | — | 157.6 | — | 157.6 | 157.6 | ||||||||||||||||||||||||||||||||
Alternative investment funds | — | 102.8 | — | 102.8 | 102.8 | ||||||||||||||||||||||||||||||||
Cash and cash equivalents: | |||||||||||||||||||||||||||||||||||||
Unrestricted | 549.6 | 62 | — | 611.6 | 611.6 | ||||||||||||||||||||||||||||||||
Held by variable interest entities | 68.3 | — | — | 68.3 | 68.3 | ||||||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||
Policyholder account balances (a) | — | — | 10,707.20 | 10,707.20 | 10,707.20 | ||||||||||||||||||||||||||||||||
Investment borrowings | — | 1,520.40 | — | 1,520.40 | 1,519.20 | ||||||||||||||||||||||||||||||||
Borrowings related to variable interest entities | — | 1,229.20 | — | 1,229.20 | 1,286.10 | ||||||||||||||||||||||||||||||||
Notes payable – direct corporate obligations | — | 807.4 | — | 807.4 | 794.4 | ||||||||||||||||||||||||||||||||
31-Dec-13 | |||||||||||||||||||||||||||||||||||||
Quoted prices in active markets for identical assets or liabilities | Significant other observable inputs | Significant unobservable inputs | Total estimated fair value | Total carrying amount | |||||||||||||||||||||||||||||||||
(Level 1) | (Level 2) | (Level 3) | |||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||
Mortgage loans | $ | — | $ | — | $ | 1,749.50 | $ | 1,749.50 | $ | 1,729.50 | |||||||||||||||||||||||||||
Policy loans | — | — | 277 | 277 | 277 | ||||||||||||||||||||||||||||||||
Other invested assets: | |||||||||||||||||||||||||||||||||||||
Company-owned life insurance | — | 144.8 | — | 144.8 | 144.8 | ||||||||||||||||||||||||||||||||
Alternative investment funds | — | 67.6 | — | 67.6 | 67.6 | ||||||||||||||||||||||||||||||||
Cash and cash equivalents: | |||||||||||||||||||||||||||||||||||||
Unrestricted | 457.8 | 241.2 | — | 699 | 699 | ||||||||||||||||||||||||||||||||
Held by variable interest entities | 104.3 | — | — | 104.3 | 104.3 | ||||||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||
Policyholder account balances (a) | — | — | 12,776.40 | 12,776.40 | 12,776.40 | ||||||||||||||||||||||||||||||||
Investment borrowings | — | 1,948.50 | — | 1,948.50 | 1,900.00 | ||||||||||||||||||||||||||||||||
Borrowings related to variable interest entities | — | 993.7 | — | 993.7 | 1,012.30 | ||||||||||||||||||||||||||||||||
Notes payable – direct corporate obligations | — | 872.5 | — | 872.5 | 856.4 | ||||||||||||||||||||||||||||||||
____________________ | |||||||||||||||||||||||||||||||||||||
(a) | The estimated fair value of insurance liabilities for policyholder account balances was approximately equal to its carrying value at December 31, 2014 and 2013. This was because interest rates credited on the vast majority of account balances approximate current rates paid on similar products and because these rates are not generally guaranteed beyond one year. | ||||||||||||||||||||||||||||||||||||
The categorization of fair value measurements, by input level, for our financial instruments carried at fair value on a recurring basis at December 31, 2014 is as follows (dollars in millions): | |||||||||||||||||||||||||||||||||||||
Quoted prices in active markets | Significant other observable inputs | Significant unobservable inputs | Total | ||||||||||||||||||||||||||||||||||
for identical assets or liabilities | (Level 2) | (Level 3) | |||||||||||||||||||||||||||||||||||
(Level 1) | |||||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||
Fixed maturities, available for sale: | |||||||||||||||||||||||||||||||||||||
Corporate securities | $ | — | $ | 13,605.10 | $ | 365.9 | $ | 13,971.00 | |||||||||||||||||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | — | 168.9 | — | 168.9 | |||||||||||||||||||||||||||||||||
States and political subdivisions | — | 2,242.20 | 35.5 | 2,277.70 | |||||||||||||||||||||||||||||||||
Debt securities issued by foreign governments | — | 1.9 | — | 1.9 | |||||||||||||||||||||||||||||||||
Asset-backed securities | — | 1,209.80 | 59.2 | 1,269.00 | |||||||||||||||||||||||||||||||||
Collateralized debt obligations | — | 324.5 | — | 324.5 | |||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | — | 1,275.10 | 1.2 | 1,276.30 | |||||||||||||||||||||||||||||||||
Mortgage pass-through securities | — | 4.2 | 0.4 | 4.6 | |||||||||||||||||||||||||||||||||
Collateralized mortgage obligations | — | 1,341.00 | — | 1,341.00 | |||||||||||||||||||||||||||||||||
Total fixed maturities, available for sale | — | 20,172.70 | 462.2 | 20,634.90 | |||||||||||||||||||||||||||||||||
Equity securities - corporate securities | 216.9 | 174.1 | 28 | 419 | |||||||||||||||||||||||||||||||||
Trading securities: | |||||||||||||||||||||||||||||||||||||
Corporate securities | — | 24.3 | — | 24.3 | |||||||||||||||||||||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | — | 3.7 | — | 3.7 | |||||||||||||||||||||||||||||||||
Asset-backed securities | — | 24 | — | 24 | |||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | — | 131 | 28.6 | 159.6 | |||||||||||||||||||||||||||||||||
Mortgage pass-through securities | — | 0.1 | — | 0.1 | |||||||||||||||||||||||||||||||||
Collateralized mortgage obligations | — | 29.7 | — | 29.7 | |||||||||||||||||||||||||||||||||
Equity securities | 3.5 | — | — | 3.5 | |||||||||||||||||||||||||||||||||
Total trading securities | 3.5 | 212.8 | 28.6 | 244.9 | |||||||||||||||||||||||||||||||||
Investments held by variable interest entities - corporate securities | — | 1,367.10 | — | 1,367.10 | |||||||||||||||||||||||||||||||||
Other invested assets - derivatives | 1.4 | 107.2 | — | 108.6 | |||||||||||||||||||||||||||||||||
Assets held in separate accounts | — | 5.6 | — | 5.6 | |||||||||||||||||||||||||||||||||
Total assets carried at fair value by category | $ | 221.8 | $ | 22,039.50 | $ | 518.8 | $ | 22,780.10 | |||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||
Future policy benefits - embedded derivatives associated with fixed index annuity products | $ | — | $ | — | $ | 1,081.50 | $ | 1,081.50 | |||||||||||||||||||||||||||||
The categorization of fair value measurements, by input level, for our financial instruments carried at fair value on a recurring basis at December 31, 2013 is as follows (dollars in millions): | |||||||||||||||||||||||||||||||||||||
Quoted prices in active markets | Significant other observable inputs | Significant unobservable inputs | Total | ||||||||||||||||||||||||||||||||||
for identical assets or liabilities | (Level 2) | (Level 3) | |||||||||||||||||||||||||||||||||||
(Level 1) | |||||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||
Fixed maturities, available for sale: | |||||||||||||||||||||||||||||||||||||
Corporate securities | $ | — | $ | 15,340.10 | $ | 359.6 | $ | 15,699.70 | |||||||||||||||||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | — | 73.1 | — | 73.1 | |||||||||||||||||||||||||||||||||
States and political subdivisions | — | 2,204.40 | — | 2,204.40 | |||||||||||||||||||||||||||||||||
Asset-backed securities | — | 1,419.90 | 42.2 | 1,462.10 | |||||||||||||||||||||||||||||||||
Collateralized debt obligations | — | 47.3 | 246.7 | 294 | |||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | — | 1,609.00 | — | 1,609.00 | |||||||||||||||||||||||||||||||||
Mortgage pass-through securities | — | 11.8 | 1.6 | 13.4 | |||||||||||||||||||||||||||||||||
Collateralized mortgage obligations | — | 1,848.90 | — | 1,848.90 | |||||||||||||||||||||||||||||||||
Total fixed maturities, available for sale | — | 22,554.50 | 650.1 | 23,204.60 | |||||||||||||||||||||||||||||||||
Equity securities - corporate securities | 79.6 | 118.9 | 24.5 | 223 | |||||||||||||||||||||||||||||||||
Trading securities: | |||||||||||||||||||||||||||||||||||||
Corporate securities | — | 45.2 | — | 45.2 | |||||||||||||||||||||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | — | 4.6 | — | 4.6 | |||||||||||||||||||||||||||||||||
States and political subdivisions | — | 14.1 | — | 14.1 | |||||||||||||||||||||||||||||||||
Asset-backed securities | — | 24.3 | — | 24.3 | |||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | — | 125.8 | — | 125.8 | |||||||||||||||||||||||||||||||||
Mortgage pass-through securities | — | 0.1 | — | 0.1 | |||||||||||||||||||||||||||||||||
Collateralized mortgage obligations | — | 31.1 | — | 31.1 | |||||||||||||||||||||||||||||||||
Equity securities | 2.4 | — | — | 2.4 | |||||||||||||||||||||||||||||||||
Total trading securities | 2.4 | 245.2 | — | 247.6 | |||||||||||||||||||||||||||||||||
Investments held by variable interest entities - corporate securities | — | 1,046.70 | — | 1,046.70 | |||||||||||||||||||||||||||||||||
Other invested assets - derivatives | 0.6 | 156.2 | — | 156.8 | |||||||||||||||||||||||||||||||||
Assets held in separate accounts | — | 10.3 | — | 10.3 | |||||||||||||||||||||||||||||||||
Total assets carried at fair value by category | $ | 82.6 | $ | 24,131.80 | $ | 674.6 | $ | 24,889.00 | |||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||
Future policy benefits - embedded derivatives associated with fixed index annuity products | $ | — | $ | — | $ | 903.7 | $ | 903.7 | |||||||||||||||||||||||||||||
Other liabilities - embedded derivatives associated with modified coinsurance agreement | — | — | 1.8 | 1.8 | |||||||||||||||||||||||||||||||||
Total liabilities carried at fair value by category | $ | — | $ | — | $ | 905.5 | $ | 905.5 | |||||||||||||||||||||||||||||
Fair value assets and liabilities measured on a recurring basis, unobservable input reconciliation | The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the year ended December 31, 2014 (dollars in millions): | ||||||||||||||||||||||||||||||||||||
December 31, 2014 | |||||||||||||||||||||||||||||||||||||
Beginning balance as of December 31, 2013 | Purchases, sales, issuances and settlements, net (b) | Total realized and unrealized gains (losses) included in net income | Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | Transfers into Level 3 (a) | Transfers out of Level 3 (a) | Assets of CLIC sold | Ending balance as of December 31, 2014 | Amount of total gains (losses) for the year ended December 31, 2014 included in our net income relating to assets and liabilities still held as of the reporting date | |||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||
Fixed maturities, available for sale: | |||||||||||||||||||||||||||||||||||||
Corporate securities | $ | 359.6 | $ | 70 | $ | — | $ | 20.1 | $ | 36.8 | $ | (69.4 | ) | $ | (51.2 | ) | $ | 365.9 | $ | — | |||||||||||||||||
States and political subdivisions | — | (1.8 | ) | — | 3 | 36.5 | — | (2.2 | ) | 35.5 | — | ||||||||||||||||||||||||||
Asset-backed securities | 42.2 | 7.6 | — | 5.1 | 14 | — | (9.7 | ) | 59.2 | — | |||||||||||||||||||||||||||
Collateralized debt obligations | 246.7 | — | — | — | — | (246.7 | ) | — | — | — | |||||||||||||||||||||||||||
Commercial mortgage-backed securities | — | 1.1 | — | 0.1 | — | — | — | 1.2 | — | ||||||||||||||||||||||||||||
Mortgage pass-through securities | 1.6 | (1.2 | ) | — | — | — | — | — | 0.4 | — | |||||||||||||||||||||||||||
Total fixed maturities, available for sale | 650.1 | 75.7 | — | 28.3 | 87.3 | (316.1 | ) | (63.1 | ) | 462.2 | — | ||||||||||||||||||||||||||
Equity securities - corporate securities | 24.5 | 3.5 | — | — | — | — | — | 28 | — | ||||||||||||||||||||||||||||
Trading securities - commercial mortgage-backed securities | — | 29 | — | (.4 | ) | — | — | — | 28.6 | (.4 | ) | ||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||
Future policy benefits - embedded derivatives associated with fixed index annuity products | (903.7 | ) | (104.3 | ) | (73.5 | ) | — | — | — | — | (1,081.5 | ) | (73.5 | ) | |||||||||||||||||||||||
Other liabilities - embedded derivatives associated with modified coinsurance agreement | (1.8 | ) | 1.8 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Total liabilities | (905.5 | ) | (102.5 | ) | (73.5 | ) | — | — | — | — | (1,081.5 | ) | (73.5 | ) | |||||||||||||||||||||||
_________ | |||||||||||||||||||||||||||||||||||||
(a) | Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate. | ||||||||||||||||||||||||||||||||||||
(b) | Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts. The following summarizes such activity for the year ended December 31, 2014 (dollars in millions): | ||||||||||||||||||||||||||||||||||||
Purchases | Sales | Issuances | Settlements | Purchases, sales, issuances and settlements, net | |||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||
Fixed maturities, available for sale: | |||||||||||||||||||||||||||||||||||||
Corporate securities | $ | 71.7 | $ | (1.7 | ) | $ | — | $ | — | $ | 70 | ||||||||||||||||||||||||||
States and political subdivisions | — | (1.8 | ) | — | — | (1.8 | ) | ||||||||||||||||||||||||||||||
Asset-backed securities | 9.9 | (2.3 | ) | — | — | 7.6 | |||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | 1.1 | — | — | — | 1.1 | ||||||||||||||||||||||||||||||||
Mortgage pass-through securities | 1.1 | (2.3 | ) | — | — | (1.2 | ) | ||||||||||||||||||||||||||||||
Total fixed maturities, available for sale | 83.8 | (8.1 | ) | — | — | 75.7 | |||||||||||||||||||||||||||||||
Equity securities - corporate securities | 3.5 | — | — | — | 3.5 | ||||||||||||||||||||||||||||||||
Trading securities - commercial mortgage-backed securities | 29 | — | — | — | 29 | ||||||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||
Future policy benefits - embedded derivatives associated with fixed index annuity products | (121.9 | ) | 7.5 | (45.9 | ) | 56 | (104.3 | ) | |||||||||||||||||||||||||||||
Other liabilities - embedded derivatives associated with modified coinsurance agreement | — | 3.4 | (1.6 | ) | — | 1.8 | |||||||||||||||||||||||||||||||
Total liabilities | (121.9 | ) | 10.9 | (47.5 | ) | 56 | (102.5 | ) | |||||||||||||||||||||||||||||
The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the year ended December 31, 2013 (dollars in millions): | |||||||||||||||||||||||||||||||||||||
December 31, 2013 | |||||||||||||||||||||||||||||||||||||
Beginning balance as of December 31, 2012 | Purchases, sales, issuances and settlements, net (b) | Total realized and unrealized gains (losses) included in net income | Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | Transfers into Level 3 (a) | Transfers out of Level 3 (a) | Ending balance as of December 31, 2013 | Amount of total gains (losses) for the year ended December 31, 2013 included in our net income relating to assets and liabilities still held as of the reporting date | ||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||
Fixed maturities, available for sale: | |||||||||||||||||||||||||||||||||||||
Corporate securities | $ | 355.5 | $ | 34 | $ | (.3 | ) | $ | (9.8 | ) | $ | 13.2 | $ | (33.0 | ) | $ | 359.6 | $ | — | ||||||||||||||||||
States and political subdivisions | 13.1 | — | — | — | — | (13.1 | ) | — | — | ||||||||||||||||||||||||||||
Asset-backed securities | 44 | 1.6 | 0.1 | (3.6 | ) | 0.1 | — | 42.2 | — | ||||||||||||||||||||||||||||
Collateralized debt obligations | 324 | (85.4 | ) | 0.2 | 7.9 | — | — | 246.7 | — | ||||||||||||||||||||||||||||
Commercial mortgage-backed securities | 6.2 | — | — | — | — | (6.2 | ) | — | — | ||||||||||||||||||||||||||||
Mortgage pass-through securities | 1.9 | (.3 | ) | — | — | — | — | 1.6 | — | ||||||||||||||||||||||||||||
Collateralized mortgage obligations | 16.9 | — | — | — | — | (16.9 | ) | — | — | ||||||||||||||||||||||||||||
Total fixed maturities, available for sale | 761.6 | (50.1 | ) | — | (5.5 | ) | 13.3 | (69.2 | ) | 650.1 | — | ||||||||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||||||||||||||
Corporate securities | 0.1 | 24.5 | — | (.1 | ) | — | — | 24.5 | — | ||||||||||||||||||||||||||||
Venture capital investments | 2.8 | — | (2.5 | ) | (.3 | ) | — | — | — | — | |||||||||||||||||||||||||||
Total equity securities | 2.9 | 24.5 | (2.5 | ) | (.4 | ) | — | — | 24.5 | — | |||||||||||||||||||||||||||
Trading securities: | |||||||||||||||||||||||||||||||||||||
States and political subdivisions | 0.6 | — | — | — | — | (.6 | ) | — | — | ||||||||||||||||||||||||||||
Collateralized debt obligations | 7.3 | (7.7 | ) | 0.6 | (.2 | ) | — | — | — | (.2 | ) | ||||||||||||||||||||||||||
Collateralized mortgage obligations | 5.8 | — | — | — | — | (5.8 | ) | — | — | ||||||||||||||||||||||||||||
Total trading securities | 13.7 | (7.7 | ) | 0.6 | (.2 | ) | — | (6.4 | ) | — | (.2 | ) | |||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||
Future policy benefits - embedded derivatives associated with fixed index annuity products | (734.0 | ) | (219.0 | ) | 49.3 | — | — | — | (903.7 | ) | 49.3 | ||||||||||||||||||||||||||
Other liabilities - embedded derivatives associated with modified coinsurance agreement | (5.5 | ) | 3.7 | — | — | — | — | (1.8 | ) | — | |||||||||||||||||||||||||||
Total liabilities | (739.5 | ) | (215.3 | ) | 49.3 | — | — | — | (905.5 | ) | 49.3 | ||||||||||||||||||||||||||
____________ | |||||||||||||||||||||||||||||||||||||
(a) | Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate. | ||||||||||||||||||||||||||||||||||||
(b) | Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts. The following summarizes such activity for the year ended December 31, 2013 (dollars in millions): | ||||||||||||||||||||||||||||||||||||
Purchases | Sales | Issuances | Settlements | Purchases, sales, issuances and settlements, net | |||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||
Fixed maturities, available for sale: | |||||||||||||||||||||||||||||||||||||
Corporate securities | $ | 44 | $ | (10.0 | ) | $ | — | $ | — | $ | 34 | ||||||||||||||||||||||||||
Asset-backed securities | 22 | (20.4 | ) | — | — | 1.6 | |||||||||||||||||||||||||||||||
Collateralized debt obligations | 6 | (91.4 | ) | — | — | (85.4 | ) | ||||||||||||||||||||||||||||||
Mortgage pass-through securities | — | (.3 | ) | — | — | (.3 | ) | ||||||||||||||||||||||||||||||
Total fixed maturities, available for sale | 72 | (122.1 | ) | — | — | (50.1 | ) | ||||||||||||||||||||||||||||||
Equity securities - corporate securities | 24.5 | — | — | — | 24.5 | ||||||||||||||||||||||||||||||||
Trading securities - collateralized debt obligations | — | (7.7 | ) | — | — | (7.7 | ) | ||||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||
Future policy benefits - embedded derivatives associated with fixed index annuity products | (105.6 | ) | 1.4 | (156.3 | ) | 41.5 | (219.0 | ) | |||||||||||||||||||||||||||||
Other liabilities - embedded derivatives associated with modified coinsurance agreement | — | 3.7 | — | — | 3.7 | ||||||||||||||||||||||||||||||||
Total liabilities | (105.6 | ) | 5.1 | (156.3 | ) | 41.5 | (215.3 | ) | |||||||||||||||||||||||||||||
Fair value inputs | The following table provides additional information about the significant unobservable (Level 3) inputs developed internally by the Company to determine fair value for certain assets and liabilities carried at fair value at December 31, 2014 (dollars in millions): | ||||||||||||||||||||||||||||||||||||
Fair value at December 31, 2014 | Valuation technique(s) | Unobservable inputs | Range (weighted average) | ||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||
Corporate securities (a) | $ | 312.1 | Discounted cash flow analysis | Discount margins | 1.48% - 5.83% (2.58%) | ||||||||||||||||||||||||||||||||
Asset-backed securities (b) | 30.6 | Discounted cash flow analysis | Discount margins | 1.99% - 4.15% (2.95%) | |||||||||||||||||||||||||||||||||
Equity security (c) | 28 | Market approach | Projected cash flows | Not applicable | |||||||||||||||||||||||||||||||||
Other assets categorized as Level 3 (d) | 148.1 | Unadjusted third-party price source | Not applicable | Not applicable | |||||||||||||||||||||||||||||||||
Total | 518.8 | ||||||||||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||
Future policy benefits (e) | 1,081.50 | Discounted projected embedded derivatives | Projected portfolio yields | 5.15% - 5.61% (5.42%) | |||||||||||||||||||||||||||||||||
Discount rates | 0.00 - 2.74% (1.78%) | ||||||||||||||||||||||||||||||||||||
Surrender rates | 1.98% - 47.88% (14.16%) | ||||||||||||||||||||||||||||||||||||
________________________________ | |||||||||||||||||||||||||||||||||||||
(a) | Corporate securities - The significant unobservable input used in the fair value measurement of our corporate securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement. | ||||||||||||||||||||||||||||||||||||
(b) | Asset-backed securities - The significant unobservable input used in the fair value measurement of these asset-backed securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement. | ||||||||||||||||||||||||||||||||||||
(c) | Equity security - This equity security represents an investment in a company that is constructing a manufacturing facility. The significant unobservable input is the cash flows that will be generated upon completion of the manufacturing facility. Given the nature of this investment, the best current indicator of value is the cost basis of the investment, which we believe approximates market value. | ||||||||||||||||||||||||||||||||||||
(d) | Other assets categorized as Level 3 - For these assets, there were no adjustments to quoted market prices obtained from third-party pricing sources. | ||||||||||||||||||||||||||||||||||||
(e) | Future policy benefits - The significant unobservable inputs used in the fair value measurement of our embedded derivatives associated with fixed index annuity products are projected portfolio yields, discount rates and surrender rates. Increases (decreases) in projected portfolio yields in isolation would lead to a higher (lower) fair value measurement. The discount rate is based on the Treasury rate adjusted by a margin. Increases (decreases) in the discount rates would lead to a lower (higher) fair value measurement. Assumed surrender rates are used to project how long the contracts remain in force. Generally, the longer the contracts are assumed to be in force the higher the fair value of the embedded derivative. | ||||||||||||||||||||||||||||||||||||
The following table provides additional information about the significant unobservable (Level 3) inputs developed internally by the Company to determine fair value for certain assets and liabilities carried at fair value at December 31, 2013 (dollars in millions): | |||||||||||||||||||||||||||||||||||||
Fair value at December 31, 2013 | Valuation technique(s) | Unobservable inputs | Range (weighted average) | ||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||
Corporate securities (a) | $ | 260.3 | Discounted cash flow analysis | Discount margins | 1.65% - 2.90% (2.36%) | ||||||||||||||||||||||||||||||||
Asset-backed securities (b) | 35.1 | Discounted cash flow analysis | Discount margins | 2.03% - 4.20% (3.09%) | |||||||||||||||||||||||||||||||||
Collateralized debt obligations (c) | 240.7 | Discounted cash flow analysis | Recoveries | 64% - 67% (65.8%) | |||||||||||||||||||||||||||||||||
Constant prepayment rate | 20% | ||||||||||||||||||||||||||||||||||||
Discount margins | .95% - 2.00% (1.32%) | ||||||||||||||||||||||||||||||||||||
Annual default rate | 1.14% - 5.57% (3.05%) | ||||||||||||||||||||||||||||||||||||
Portfolio CCC % | 1.52% - 21.79% (12.57%) | ||||||||||||||||||||||||||||||||||||
Equity security (d) | 24.5 | Market approach | Projected cash flows | Not applicable | |||||||||||||||||||||||||||||||||
Other assets categorized as Level 3 (e) | 114 | Unadjusted third-party price source | Not applicable | Not applicable | |||||||||||||||||||||||||||||||||
Total | 674.6 | ||||||||||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||
Future policy benefits (f) | 905.5 | Discounted projected embedded derivatives | Projected portfolio yields | 5.35% - 6.63% (5.60%) | |||||||||||||||||||||||||||||||||
Discount rates | 0.00 - 4.64% (2.47%) | ||||||||||||||||||||||||||||||||||||
Surrender rates | 2.80% - 54.60% (14.39%) | ||||||||||||||||||||||||||||||||||||
________________________________ | |||||||||||||||||||||||||||||||||||||
(a) | Corporate securities - The significant unobservable input used in the fair value measurement of our corporate securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement. | ||||||||||||||||||||||||||||||||||||
(b) | Asset-backed securities - The significant unobservable input used in the fair value measurement of these asset-backed securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement. | ||||||||||||||||||||||||||||||||||||
(c) | Collateralized debt obligations - The significant unobservable inputs used in the fair value measurement of our collateralized debt obligations relate to collateral performance, including default rate, recoveries and constant prepayment rate, as well as discount margins of the underlying collateral. Significant increases (decreases) in default rate in isolation would result in a significantly lower (higher) fair value measurement. Generally, a significant increase (decrease) in the constant prepayment rate and recoveries in isolation would result in a significantly higher (lower) fair value measurement. Generally a significant increase (decrease) in discount margin in isolation would result in a significantly lower (higher) fair value measurement. Generally, a change in the assumption used for the annual default rate is accompanied by a directionally similar change in the assumption used for discount margins and portfolio CCC % and a directionally opposite change in the assumption used for constant prepayment rate and recoveries. A tranche's payment priority and investment cost basis could alter generalized fair value outcomes. | ||||||||||||||||||||||||||||||||||||
(d) | Equity security - This equity security represents an investment in a company that is constructing a manufacturing facility. The significant unobservable input is the cash flows that will be generated upon completion of the manufacturing facility. Given the nature of this investment, the best current indicator of value is the cost basis of the investment, which we believe approximates market value. | ||||||||||||||||||||||||||||||||||||
(e) | Other assets categorized as Level 3 - For these assets, there were no adjustments to quoted market prices obtained from third-party pricing sources. | ||||||||||||||||||||||||||||||||||||
(f) | Future policy benefits - The significant unobservable inputs used in the fair value measurement of our embedded derivatives associated with fixed index annuity products are projected portfolio yields, discount rates and surrender rates. Increases (decreases) in projected portfolio yields in isolation would lead to a higher (lower) fair value measurement. The discount rate is based on the Treasury rate adjusted by a margin. Increases (decreases) in the discount rates would lead to a lower (higher) fair value measurement. Assumed surrender rates are used to project how long the contracts remain in force. Generally, the longer the contracts are assumed to be in force the higher the fair value of the embedded derivative. |
LIABILITIES_FOR_INSURANCE_PROD1
LIABILITIES FOR INSURANCE PRODUCTS (TABLES) | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Insurance [Abstract] | ||||||||||||||||
Schedule of insurance liabilities by product segment | Our future policy benefits are summarized as follows (dollars in millions): | |||||||||||||||
Withdrawal assumption | Morbidity assumption | Mortality assumption | Interest rate assumption | 2014 | 2013 | |||||||||||
Long-term care | Company experience | Company experience | Company experience | 6% | $ | 5,385.20 | $ | 4,999.70 | ||||||||
Traditional life insurance contracts | Company experience | Company experience | (a) | 5% | 2,175.80 | 2,517.50 | ||||||||||
Accident and health contracts | Company experience | Company experience | Company experience | 5% | 2,519.10 | 2,466.80 | ||||||||||
Interest-sensitive life insurance contracts | Company experience | Company experience | Company experience | 5% | 47.6 | 526.5 | ||||||||||
Annuities and supplemental contracts with life contingencies | Company experience | Company experience | (b) | 4% | 707.7 | 712 | ||||||||||
Total | $ | 10,835.40 | $ | 11,222.50 | ||||||||||||
____________________ | ||||||||||||||||
(a) | Principally, modifications of: (i) the 1965 ‑ 70 and 1975 - 80 Basic Tables; and (ii) the 1941, 1958 and 1980 Commissioners' Standard Ordinary Tables; as well as Company experience. | |||||||||||||||
(b) | Principally, modifications of: (i) the 1971 Individual Annuity Mortality Table; (ii) the 1983 Table "A"; and (iii) the Annuity 2000 Mortality Table; as well as Company experience. | |||||||||||||||
Our policyholder account balances are summarized as follows (dollars in millions): | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Fixed index annuities | $ | 4,496.90 | $ | 4,093.90 | ||||||||||||
Other annuities | 5,280.80 | 6,013.00 | ||||||||||||||
Interest-sensitive life insurance contracts | 929.5 | 2,669.50 | ||||||||||||||
Total | $ | 10,707.20 | $ | 12,776.40 | ||||||||||||
Summary of liabilities for unpaid claims adjustment expense | Changes in the unpaid claims reserve (included in claims payable) and disabled life reserves related to accident and health insurance (included in the liability for future policy benefits) were as follows (dollars in millions): | |||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||
Balance, beginning of year | $ | 1,710.10 | $ | 1,679.30 | $ | 1,637.30 | ||||||||||
Less reinsurance receivables | (164.1 | ) | (27.4 | ) | (21.7 | ) | ||||||||||
Net balance, beginning of year | 1,546.00 | 1,651.90 | 1,615.60 | |||||||||||||
Incurred claims related to: | ||||||||||||||||
Current year | 1,468.10 | 1,511.10 | 1,570.10 | |||||||||||||
Prior years (a) | (39.9 | ) | (162.3 | ) | (56.4 | ) | ||||||||||
Total incurred | 1,428.20 | 1,348.80 | 1,513.70 | |||||||||||||
Interest on claim reserves | 70.5 | 75.2 | 77.8 | |||||||||||||
Paid claims related to: | ||||||||||||||||
Current year | 848.7 | 870 | 891.3 | |||||||||||||
Prior years | 641.5 | 659.9 | 663.9 | |||||||||||||
Total paid | 1,490.20 | 1,529.90 | 1,555.20 | |||||||||||||
Net balance, end of year | 1,554.50 | 1,546.00 | 1,651.90 | |||||||||||||
Add reinsurance receivables | 125 | 164.1 | 27.4 | |||||||||||||
Balance, end of year | $ | 1,679.50 | $ | 1,710.10 | $ | 1,679.30 | ||||||||||
___________ | ||||||||||||||||
(a) | The reserves and liabilities we establish are necessarily based on estimates, assumptions and prior years' statistics. Such amounts will fluctuate based upon the estimation procedures used to determine the amount of unpaid losses. It is possible that actual claims will exceed our reserves and have a material adverse effect on our results of operations and financial condition. |
INCOME_TAXES_TABLES
INCOME TAXES (TABLES) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||
Schedule of components of income tax expense | The components of income tax expense (benefit) were as follows (dollars in millions): | ||||||||||||
2014 | 2013 | 2012 | |||||||||||
Current tax expense | $ | 15.6 | $ | 8.2 | $ | 12.5 | |||||||
Deferred tax expense | 143.6 | 120.1 | 93.7 | ||||||||||
Tax expense on period income | 159.2 | 128.3 | 106.2 | ||||||||||
Tax expense related to the sale of CLIC | 14.2 | — | — | ||||||||||
Deferred taxes on expired capital loss carryforwards | — | 159.4 | — | ||||||||||
Change in valuation allowance | (48.8 | ) | (472.1 | ) | (171.5 | ) | |||||||
Other items | (.9 | ) | 11.2 | — | |||||||||
Total income tax expense (benefit) | $ | 123.7 | $ | (173.2 | ) | $ | (65.3 | ) | |||||
Schedule of effective income tax rate reconciliation | A reconciliation of the U.S. statutory corporate tax rate to the estimated annual effective rate reflected in the consolidated statement of operations is as follows: | ||||||||||||
2014 | 2013 | 2012 | |||||||||||
U.S. statutory corporate rate | 35 | % | 35 | % | 35 | % | |||||||
Valuation allowance | (27.9 | ) | (154.9 | ) | (110.1 | ) | |||||||
Expired capital loss carryforwards (which were fully offset by a corresponding reduction in the valuation allowance) | — | 52.3 | — | ||||||||||
Non-taxable income and nondeductible benefits, net | (.9 | ) | 5 | 32.3 | |||||||||
State taxes | 1.5 | 1.9 | 1.4 | ||||||||||
Impact of the sale of CLIC | 66.3 | — | — | ||||||||||
Other items | (3.4 | ) | 3.9 | (.5 | ) | ||||||||
Effective tax rate | 70.6 | % | (56.8 | )% | (41.9 | )% | |||||||
Schedule of deferred tax assets and liabilities | The components of the Company's income tax assets and liabilities are summarized below (dollars in millions): | ||||||||||||
2014 | 2013 | ||||||||||||
Deferred tax assets: | |||||||||||||
Net federal operating loss carryforwards | $ | 1,048.40 | $ | 1,240.20 | |||||||||
Net state operating loss carryforwards | 15.2 | 20 | |||||||||||
Tax credits | 47.2 | 43.9 | |||||||||||
Capital loss carryforwards | — | 13.4 | |||||||||||
Investments | 59.7 | 74.3 | |||||||||||
Insurance liabilities | 585.9 | 723.8 | |||||||||||
Other | 67.3 | 64.7 | |||||||||||
Gross deferred tax assets | 1,823.70 | 2,180.30 | |||||||||||
Deferred tax liabilities: | |||||||||||||
Present value of future profits and deferred acquisition costs | (320.5 | ) | (306.8 | ) | |||||||||
Accumulated other comprehensive income | (457.4 | ) | (405.5 | ) | |||||||||
Gross deferred tax liabilities | (777.9 | ) | (712.3 | ) | |||||||||
Net deferred tax assets before valuation allowance | 1,045.80 | 1,468.00 | |||||||||||
Valuation allowance | (246.0 | ) | (294.8 | ) | |||||||||
Net deferred tax assets | 799.8 | 1,173.20 | |||||||||||
Current income taxes accrued | (41.1 | ) | (26.0 | ) | |||||||||
Income tax assets, net | $ | 758.7 | $ | 1,147.20 | |||||||||
Summary of valuation allowance | Changes in our valuation allowance are summarized as follows (dollars in millions): | ||||||||||||
Balance, December 31, 2011 | $ | 938.4 | |||||||||||
Decrease in 2012 | (171.5 | ) | (a) | ||||||||||
Balance, December 31, 2012 | 766.9 | ||||||||||||
Decrease in 2013 | (472.1 | ) | (b) | ||||||||||
Balance, December 31, 2013 | 294.8 | ||||||||||||
Decrease in 2014 | (48.8 | ) | (c) | ||||||||||
Balance, December 31, 2014 | $ | 246 | |||||||||||
___________________ | |||||||||||||
(a) | The 2012 reduction to the deferred tax valuation allowance primarily resulted from the impact of recent higher levels of income when projecting future taxable income. | ||||||||||||
(b) | The 2013 reduction to the deferred tax valuation allowance primarily resulted from the impact of higher levels of income on projected future taxable income, the expiration of capital loss carryforwards, a settlement with the Internal Revenue Service (the "IRS") related to the classification of a portion of the cancellation of indebtedness income and the execution of certain investment trading strategies. | ||||||||||||
(c) | The 2014 reduction to the deferred tax valuation allowance primarily resulted from tax examination adjustments and the tax gain on the sale of CLIC. | ||||||||||||
Summary of operating loss carryforwards | As of December 31, 2014, we had $3.0 billion of federal NOLs. The following table summarizes the expiration dates of our loss carryforwards assuming the IRS ultimately agrees with the position we have taken with respect to the loss on our investment in Conseco Senior Health Insurance Company ("CSHI") (dollars in millions): | ||||||||||||
Year of expiration | Net operating loss carryforwards | Total loss | |||||||||||
Life | Non-life | carryforwards | |||||||||||
2022 | $ | 112.1 | $ | — | $ | 112.1 | |||||||
2023 | 742.6 | 1,983.00 | 2,725.60 | ||||||||||
2025 | — | 91.5 | 91.5 | ||||||||||
2026 | — | 207.4 | 207.4 | ||||||||||
2027 | — | 4.9 | 4.9 | ||||||||||
2028 | — | 203.7 | 203.7 | ||||||||||
2029 | — | 146.6 | 146.6 | ||||||||||
2032 | — | 44 | 44 | ||||||||||
Subtotal | 854.7 | 2,681.10 | 3,535.80 | ||||||||||
Less: | |||||||||||||
Unrecognized tax benefits | (342.9 | ) | (197.4 | ) | (540.3 | ) | |||||||
Total | $ | 511.8 | $ | 2,483.70 | $ | 2,995.50 | |||||||
Reconciliation of unrecognized tax benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2014 and 2013 is as follows (dollars in millions): | ||||||||||||
Years ended December 31, | |||||||||||||
2014 | 2013 | ||||||||||||
Balance at beginning of year | $ | 226.7 | $ | 310.5 | |||||||||
Increase based on tax positions taken in prior years | 10.9 | 35.6 | |||||||||||
Decrease based on tax positions taken in prior years | — | (27.0 | ) | ||||||||||
Increase based on tax positions taken in the current year | — | 47.6 | |||||||||||
Decrease in unrecognized tax benefits related to settlements with taxing authorities | (8.9 | ) | (140.0 | ) | |||||||||
Balance at end of year | $ | 228.7 | $ | 226.7 | |||||||||
NOTES_PAYABLE_DIRECT_CORPORATE1
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS (TABLES) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Debt Disclosure [Abstract] | ||||||||
Schedule of long-term debt instruments | The following notes payable were direct corporate obligations of the Company as of December 31, 2014 and 2013 (dollars in millions): | |||||||
2014 | 2013 | |||||||
Senior Secured Credit Agreement (as defined below) | $ | 522.1 | $ | 581.5 | ||||
6.375% Senior Secured Notes due October 2020 (the "6.375% Notes") | 275 | 275 | ||||||
7.0% Debentures | — | 3.5 | ||||||
Unamortized discount on Senior Secured Credit Agreement | (2.7 | ) | (3.6 | ) | ||||
Direct corporate obligations | $ | 794.4 | $ | 856.4 | ||||
Sources and uses of recapitalization transactions | The following table sets forth the sources and uses of cash from the recapitalization transactions (dollars in millions): | |||||||
Sources: | ||||||||
Senior Secured Credit Agreement | $ | 669.5 | ||||||
Issuance of 6.375% Notes | 275 | |||||||
Total sources | $ | 944.5 | ||||||
Uses: | ||||||||
Cash on hand for general corporate purposes | $ | 13.7 | ||||||
Repurchase of $200 million principal amount of 7.0% Debentures pursuant to Debenture Repurchase Agreement | 355.1 | |||||||
Repayment of a previous senior secured credit agreement | 223.8 | |||||||
Repayment of $275.0 million principal amount of 9.0% Notes, including redemption premium | 322.7 | |||||||
Debt issuance costs | 23.1 | |||||||
Accrued interest | 6.1 | |||||||
Total uses | $ | 944.5 | ||||||
Schedule of maturities of long-term debt | The scheduled repayment of our direct corporate obligations was as follows at December 31, 2014 (dollars in millions): | |||||||
Year ending December 31, | ||||||||
2015 | $ | 79.2 | ||||||
2016 | 60.5 | |||||||
2017 | 4.3 | |||||||
2018 | 378.1 | |||||||
2019 | — | |||||||
Thereafter | 275 | |||||||
$ | 797.1 | |||||||
LITIGATION_AND_OTHER_LEGAL_PRO1
LITIGATION AND OTHER LEGAL PROCEEDINGS (Tables) | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Commitments and Contingencies Disclosure [Abstract] | ||||
Schedule of future minimum rental payments for operating leases | Future required minimum payments as of December 31, 2014, were as follows (dollars in millions): | |||
2015 | $ | 47.3 | ||
2016 | 34.8 | |||
2017 | 21.2 | |||
2018 | 17.6 | |||
2019 | 6.9 | |||
Thereafter | 11.1 | |||
Total | $ | 138.9 | ||
AGENT_DEFERRED_COMPENSATION_PL1
AGENT DEFERRED COMPENSATION PLAN (TABLES) | 12 Months Ended | |||||
Dec. 31, 2014 | ||||||
Compensation and Retirement Disclosure [Abstract] | ||||||
Schedule of assumptions used | We used the following assumptions for the deferred compensation plan to calculate: | |||||
2014 | 2013 | |||||
Benefit obligations: | ||||||
Discount rate | 4.15 | % | 4.75 | % | ||
Net periodic cost: | ||||||
Discount rate | 4.75 | % | 4 | % | ||
Schedule of expected benefit payments | The benefits expected to be paid pursuant to our agent deferred compensation plan as of December 31, 2014 were as follows (dollars in millions): | |||||
2015 | $ | 6.5 | ||||
2016 | 6.8 | |||||
2017 | 7.1 | |||||
2018 | 7.7 | |||||
2019 | 8 | |||||
2020 - 2024 | 47.4 | |||||
DERIVATIVES_Tables
DERIVATIVES (Tables) | 12 Months Ended | |||||||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||
Fair Value by Balance Sheet Location | Our freestanding and embedded derivatives, which are not designated as hedging instruments, are summarized as follows (dollars in millions): | |||||||||||||||||||||||||
Fair value | ||||||||||||||||||||||||||
Balance sheet classification | 2014 | 2013 | ||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||
Fixed index call options | Other invested assets | $ | 107.2 | $ | 156.2 | |||||||||||||||||||||
Interest futures | Other invested assets | — | 0.2 | |||||||||||||||||||||||
Total assets | $ | 107.2 | $ | 156.4 | ||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||
Interest futures | Other invested assets | $ | 0.2 | $ | — | |||||||||||||||||||||
Fixed index annuities - embedded derivative | Future policy benefits | 1,081.50 | 903.7 | |||||||||||||||||||||||
Reinsurance payable - embedded derivative | Future policy benefits | — | 1.8 | |||||||||||||||||||||||
Total liabilities | $ | 1,081.70 | $ | 905.5 | ||||||||||||||||||||||
Schedule of Derivative Instruments | The following table represents activity associated with derivative instruments as of the dates indicated: | |||||||||||||||||||||||||
Measurement | December 31, 2013 | Additions | Maturities/terminations | December 31, 2014 | ||||||||||||||||||||||
Interest futures | Contracts | 186 | 4,847 | (4,631 | ) | 402 | ||||||||||||||||||||
Fixed index annuities - embedded derivative | Policies | 90,408 | 9,830 | (7,053 | ) | 93,185 | ||||||||||||||||||||
Fixed index call options | Notional (a) | $ | 2,284.80 | $ | 2,430.20 | $ | (2,311.1 | ) | $ | 2,403.90 | ||||||||||||||||
_________________ | ||||||||||||||||||||||||||
(a) Dollars in millions. | ||||||||||||||||||||||||||
Schedule pre-tax gains (losses) recognized in net income for derivative instruments | The following table provides the pre-tax gains (losses) recognized in net income for derivative instruments, which are not designated as hedges for the periods indicated (dollars in millions): | |||||||||||||||||||||||||
Income statement classification | 2014 | 2013 | 2012 | |||||||||||||||||||||||
Fixed index call options | Net investment income from policyholder and reinsurer accounts and other special-purpose portfolios | $ | 69.5 | $ | 177.5 | $ | 25.5 | |||||||||||||||||||
Interest futures | Net realized investments gains (losses) | (7.0 | ) | (.4 | ) | (.2 | ) | |||||||||||||||||||
Fixed index annuities - embedded derivative | Insurance policy benefits | (73.5 | ) | 49.3 | (15.2 | ) | ||||||||||||||||||||
Reinsurance payable - embedded derivative | Net investment income from policyholder and reinsurer accounts and other special-purpose portfolios | (1.4 | ) | 3.7 | (2.4 | ) | ||||||||||||||||||||
Total | $ | (12.4 | ) | $ | 230.1 | $ | 7.7 | |||||||||||||||||||
Derivatives with master netting arrangements | The following table summarizes information related to derivatives with master netting arrangements or collateral as of December 31, 2014 and 2013 (dollars in millions): | |||||||||||||||||||||||||
Gross amounts not offset in the balance sheet | ||||||||||||||||||||||||||
Gross amounts recognized | Gross amounts offset in the balance sheet | Net amounts of assets presented in the balance sheet | Financial instruments | Cash collateral received | Net amount | |||||||||||||||||||||
December 31, 2014: | ||||||||||||||||||||||||||
Fixed index call options | $ | 107.2 | $ | — | $ | 107.2 | $ | — | $ | — | $ | 107.2 | ||||||||||||||
Interest futures | (.2 | ) | 1.5 | 1.3 | — | — | 1.3 | |||||||||||||||||||
December 31, 2013: | ||||||||||||||||||||||||||
Fixed index call options | 156.2 | — | 156.2 | — | — | 156.2 | ||||||||||||||||||||
Interest futures | 0.2 | 0.4 | 0.6 | — | — | 0.6 | ||||||||||||||||||||
Schedule of repurchase agreements | The following table summarizes information related to repurchase agreements as of December 31, 2014 (dollars in millions): | |||||||||||||||||||||||||
Gross amounts not offset in the balance sheet | ||||||||||||||||||||||||||
Gross amounts of recognized liabilities | Gross amounts offset in the balance sheet | Net amounts of liabilities presented in the balance sheet | Financial instruments | Cash collateral pledged | Net amount | |||||||||||||||||||||
December 31, 2014: | ||||||||||||||||||||||||||
Repurchase agreements (a) | $ | 20.4 | $ | — | $ | 20.4 | $ | 20.4 | $ | — | $ | — | ||||||||||||||
_________________ | ||||||||||||||||||||||||||
(a) | As of December 31, 2014, these agreements were collateralized by investment securities with a fair value of $25.3 million. There were no repurchase agreements outstanding at December 31, 2013. |
SHAREHOLDERS_EQUITY_Tables
SHAREHOLDERS' EQUITY (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||
Schedule of common stock outstanding | Changes in the number of shares of common stock outstanding were as follows (shares in thousands): | ||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Balance, beginning of year | 220,324 | 221,502 | 241,305 | ||||||||||||||
Treasury stock purchased and retired | (18,489 | ) | (8,949 | ) | (21,533 | ) | |||||||||||
Conversion of 7.0% Debentures | — | 4,739 | — | ||||||||||||||
Stock options exercised | 916 | 2,087 | 1,191 | ||||||||||||||
Restricted and performance stock vested (a) | 573 | 945 | 539 | ||||||||||||||
Balance, end of year | 203,324 | 220,324 | 221,502 | ||||||||||||||
____________________ | |||||||||||||||||
(a) | In 2014, 2013 and 2012, such amount was reduced by 257 thousand, 472 thousand and 237 thousand shares, respectively, which were tendered to the Company for the payment of required federal and state tax withholdings owed on the vesting of restricted and performance stock. | ||||||||||||||||
Schedule of share-based compensation | A summary of the Company's stock option activity and related information for 2014 is presented below (shares in thousands; dollars in millions, except per share amounts): | ||||||||||||||||
Shares | Weighted average exercise price | Weighted average remaining life (in years) | Aggregate intrinsic value | ||||||||||||||
Outstanding at the beginning of the year | 5,579 | $ | 10.64 | ||||||||||||||
Options granted | 1,014 | 19.1 | |||||||||||||||
Exercised | (917 | ) | 5.47 | $ | 3.8 | ||||||||||||
Forfeited or terminated | (665 | ) | 20.07 | ||||||||||||||
Outstanding at the end of the year | 5,011 | 12.04 | 4.3 | $ | 32.1 | ||||||||||||
Options exercisable at the end of the year | 2,030 | 2.7 | $ | 12.1 | |||||||||||||
Available for future grant | 8,571 | ||||||||||||||||
A summary of the Company's stock option activity and related information for 2013 is presented below (shares in thousands; dollars in millions, except per share amounts): | |||||||||||||||||
Shares | Weighted average exercise price | Weighted average remaining life (in years) | Aggregate intrinsic value | ||||||||||||||
Outstanding at the beginning of the year | 6,655 | $ | 9.72 | ||||||||||||||
Options granted | 1,447 | 11.01 | |||||||||||||||
Exercised | (2,087 | ) | 7.27 | $ | 6 | ||||||||||||
Forfeited or terminated | (436 | ) | 13.95 | ||||||||||||||
Outstanding at the end of the year | 5,579 | 10.64 | 4 | $ | 32.5 | ||||||||||||
Options exercisable at the end of the year | 2,529 | 2.1 | $ | 13.9 | |||||||||||||
Available for future grant | 9,099 | ||||||||||||||||
A summary of the Company's stock option activity and related information for 2012 is presented below (shares in thousands; dollars in millions, except per share amounts): | |||||||||||||||||
Shares | Weighted average exercise price | Weighted average remaining life (in years) | Aggregate intrinsic value | ||||||||||||||
Outstanding at the beginning of the year | 7,712 | $ | 10.13 | ||||||||||||||
Options granted | 1,389 | 7.55 | |||||||||||||||
Exercised | (1,191 | ) | 3.14 | $ | 2.7 | ||||||||||||
Forfeited or terminated | (1,255 | ) | 16.13 | ||||||||||||||
Outstanding at the end of the year | 6,655 | 9.72 | 3.4 | $ | 30.2 | ||||||||||||
Options exercisable at the end of the year | 3,715 | 1.7 | $ | 15.5 | |||||||||||||
Available for future grant | 9,713 | ||||||||||||||||
Schedule of valuation assumptions on payment awards | The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option valuation model with the following weighted average assumptions: | ||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Grants | Grants | Grants | |||||||||||||||
Weighted average risk-free interest rates | 1.6 | % | 0.8 | % | 0.9 | % | |||||||||||
Weighted average dividend yields | 1.3 | % | 0.7 | % | — | % | |||||||||||
Volatility factors | 51 | % | 107 | % | 108 | % | |||||||||||
Weighted average expected life (in years) | 4.8 | 4.8 | 4.7 | ||||||||||||||
Weighted average fair value per share | $ | 7.65 | $ | 8.02 | $ | 5.76 | |||||||||||
Schedule of share-based compensation by exercise price range | The following table summarizes information about stock options outstanding at December 31, 2014 (shares in thousands): | ||||||||||||||||
Options outstanding | Options exercisable | ||||||||||||||||
Range of exercise prices | Number outstanding | Remaining life (in years) | Average exercise price | Number exercisable | Average exercise price | ||||||||||||
$6.45 - $6.77 | 521 | 2.2 | $ | 6.45 | 520 | $ | 6.45 | ||||||||||
$7.38 - $7.74 | 1,580 | 3.8 | 7.47 | 1,027 | 7.44 | ||||||||||||
$8.29 - $12.34 | 1,396 | 5.1 | 10.78 | 31 | 8.29 | ||||||||||||
$12.74 - $18.27 | 83 | 5.9 | 15.4 | — | — | ||||||||||||
$19.15 - $25.45 | 1,431 | 4.6 | 20.18 | 452 | 22.41 | ||||||||||||
5,011 | 2,030 | ||||||||||||||||
Schedule of nonvested share activity | A summary of the Company's non-vested restricted stock activity for 2014 is presented below (shares in thousands): | ||||||||||||||||
Shares | Weighted average grant date fair value | ||||||||||||||||
Non-vested shares, beginning of year | 521 | $ | 8.29 | ||||||||||||||
Granted | 113 | 17.15 | |||||||||||||||
Vested | (396 | ) | 9.22 | ||||||||||||||
Forfeited | (2 | ) | 10.19 | ||||||||||||||
Non-vested shares, end of year | 236 | 10.95 | |||||||||||||||
Schedule of performance share-based compensation | A summary of the Company's performance units is presented below (shares in thousands): | ||||||||||||||||
Total shareholder return awards | Operating return on equity awards | Pre-tax operating income awards | |||||||||||||||
Awards outstanding at December 31, 2011 | — | — | 836 | ||||||||||||||
Granted in 2012 | 203 | — | 203 | ||||||||||||||
Forfeited | (10 | ) | — | (62 | ) | ||||||||||||
Awards outstanding at December 31, 2012 | 193 | — | 977 | ||||||||||||||
Granted in 2013 | 212 | 212 | — | ||||||||||||||
Additional shares issued pursuant to achieving certain performance criteria (a) | — | — | 223 | ||||||||||||||
Shares vested in 2013 | — | — | (668 | ) | |||||||||||||
Forfeited | (23 | ) | (8 | ) | (62 | ) | |||||||||||
Awards outstanding at December 31, 2013 | 382 | 204 | 470 | ||||||||||||||
Granted in 2014 | 142 | 142 | — | ||||||||||||||
Additional shares issued pursuant to achieving certain performance criteria (a) | — | — | 142 | ||||||||||||||
Shares vested in 2014 | — | — | (434 | ) | |||||||||||||
Forfeited | (5 | ) | (3 | ) | (2 | ) | |||||||||||
Awards outstanding at December 31, 2014 | 519 | 343 | 176 | ||||||||||||||
_________________________ | |||||||||||||||||
(a) The performance units provide for a payout of up to 150 percent of the award if certain performance levels are achieved. | |||||||||||||||||
Schedule of earnings per share reconciliation | A reconciliation of net income and shares used to calculate basic and diluted earnings per share is as follows (dollars in millions and shares in thousands): | ||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Net income (loss) for basic earnings per share | $ | 51.4 | $ | 478 | $ | 221 | |||||||||||
Add: interest expense on 7.0% Debentures, net of income taxes | — | 1.6 | 12.2 | ||||||||||||||
Net income (loss) for diluted earnings per share | $ | 51.4 | $ | 479.6 | $ | 233.2 | |||||||||||
Shares: | |||||||||||||||||
Weighted average shares outstanding for basic earnings per share | 212,917 | 221,628 | 233,685 | ||||||||||||||
Effect of dilutive securities on weighted average shares: | |||||||||||||||||
7.0% Debentures | — | 5,780 | 44,037 | ||||||||||||||
Stock options, restricted stock and performance units | 2,505 | 2,776 | 2,762 | ||||||||||||||
Warrants (a) | 2,233 | 2,518 | 943 | ||||||||||||||
Dilutive potential common shares | 4,738 | 11,074 | 47,742 | ||||||||||||||
Weighted average shares outstanding for diluted earnings per share | 217,655 | 232,702 | 281,427 | ||||||||||||||
________ | |||||||||||||||||
(a) | All outstanding warrants were repurchased in September 2014 as further discussed above. Accordingly, the warrants will have no dilutive effect in periods beginning after September 30, 2014. |
OTHER_OPERATING_STATEMENT_DATA1
OTHER OPERATING STATEMENT DATA (Tables) | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Insurance [Abstract] | ||||||||||||
Schedule of insurance policy income | Insurance policy income consisted of the following (dollars in millions): | |||||||||||
2014 | 2013 | 2012 | ||||||||||
Direct premiums collected | $ | 3,856.20 | $ | 3,966.00 | $ | 3,883.10 | ||||||
Reinsurance assumed | 34.5 | 38 | 70.4 | |||||||||
Reinsurance ceded | (187.9 | ) | (240.5 | ) | (237.1 | ) | ||||||
Premiums collected, net of reinsurance | 3,702.80 | 3,763.50 | 3,716.40 | |||||||||
Change in unearned premiums | 9.1 | (16.6 | ) | 20.8 | ||||||||
Less premiums on interest-sensitive life and products without mortality and morbidity risk which are recorded as additions to insurance liabilities | (1,295.4 | ) | (1,298.1 | ) | (1,296.7 | ) | ||||||
Premiums on traditional products with mortality or morbidity risk | 2,416.50 | 2,448.80 | 2,440.50 | |||||||||
Fees and surrender charges on interest-sensitive products | 213.2 | 295.9 | 314.9 | |||||||||
Insurance policy income | $ | 2,629.70 | $ | 2,744.70 | $ | 2,755.40 | ||||||
Schedule of other operating cost and expense | Other operating costs and expenses were as follows (dollars in millions): | |||||||||||
2014 | 2013 | 2012 | ||||||||||
Commission expense | $ | 99.4 | $ | 103.8 | $ | 115.8 | ||||||
Salaries and wages | 242.4 | 234 | 226.6 | |||||||||
Other | 461 | 428.4 | 476.9 | |||||||||
Total other operating costs and expenses | $ | 802.8 | $ | 766.2 | $ | 819.3 | ||||||
Schedule of changes in present value of future insurance profits | Changes in the present value of future profits were as follows (dollars in millions): | |||||||||||
2014 | 2013 | 2012 | ||||||||||
Balance, beginning of year | $ | 679.3 | $ | 626 | $ | 697.7 | ||||||
Amortization | (76.2 | ) | (92.0 | ) | (93.5 | ) | ||||||
Effect of reinsurance transaction | 5 | — | — | |||||||||
Amounts related to CLIC prior to being sold | (15.5 | ) | — | — | ||||||||
Amounts related to fair value adjustment of fixed maturities, available for sale | (103.2 | ) | 145.3 | 21.8 | ||||||||
Balance, end of year | $ | 489.4 | $ | 679.3 | $ | 626 | ||||||
Schedule of changes in deferred acquisition costs | Changes in deferred acquisition costs were as follows (dollars in millions): | |||||||||||
2014 | 2013 | 2012 | ||||||||||
Balance, beginning of year | $ | 968.1 | $ | 629.7 | $ | 797.1 | ||||||
Additions | 242.8 | 222.8 | 191.7 | |||||||||
Amortization | (171.2 | ) | (204.3 | ) | (195.5 | ) | ||||||
Effect of reinsurance transaction | 24 | — | — | |||||||||
Amounts related to CLIC prior to being sold | (37.6 | ) | — | — | ||||||||
Amounts related to fair value adjustment of fixed maturities, available for sale | (255.5 | ) | 315.9 | (163.6 | ) | |||||||
Other | — | 4 | — | |||||||||
Balance, end of year | $ | 770.6 | $ | 968.1 | $ | 629.7 | ||||||
CONSOLIDATED_STATEMENT_CASH_FL1
CONSOLIDATED STATEMENT CASH FLOWS (Tables) | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Supplemental Cash Flow Elements [Abstract] | ||||||||||||
Schedule of the reconciliation for net income provided by operating activities | The following reconciles net income to net cash provided by operating activities (dollars in millions): | |||||||||||
2014 | 2013 | 2012 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Net income | $ | 51.4 | $ | 478 | $ | 221 | ||||||
Adjustments to reconcile net income to net cash from operating activities: | ||||||||||||
Amortization and depreciation | 274.2 | 324.6 | 315 | |||||||||
Income taxes | 119.7 | (181.2 | ) | (71.8 | ) | |||||||
Insurance liabilities | 398.2 | 465.8 | 330 | |||||||||
Accrual and amortization of investment income | (148.3 | ) | (276.3 | ) | (100.7 | ) | ||||||
Deferral of policy acquisition costs | (242.8 | ) | (222.8 | ) | (191.7 | ) | ||||||
Net realized investment gains | (36.7 | ) | (33.6 | ) | (81.1 | ) | ||||||
Payment to reinsurer pursuant to long-term care business reinsured | (590.3 | ) | — | — | ||||||||
Net loss on sale of subsidiary and (gain) loss on reinsurance transactions | 239.8 | 98.4 | — | |||||||||
Loss on extinguishment or modification of debt | 0.6 | 65.4 | 200.2 | |||||||||
Other | 56 | 2.1 | 14 | |||||||||
Net cash from operating activities | $ | 121.8 | (a) | $ | 720.4 | $ | 634.9 | |||||
______________________ | ||||||||||||
(a) | Cash flows from operating activities reflect outflows in the 2014 period due to the payment to reinsurer to transfer certain long-term care business. | |||||||||||
Effects of reinsurance | On July 1, 2014, Bankers Life recaptured the life business written by Bankers Life that was reinsured by Wilton Re in 2009. The following summarizes the impact of the recapture (dollars in millions): | |||||||||||
Investments | $ | 139.4 | (a) (b) | |||||||||
Cash | 7.7 | |||||||||||
Present value of future profits and deferred acquisition costs | 29 | (b) | ||||||||||
Reinsurance receivables | (155.9 | ) | (b) | |||||||||
Other liabilities | 5.9 | (b) | ||||||||||
Gain on reinsurance transaction (classified as "Net loss on sale of subsidiary and (gain) loss on reinsurance transactions") | 26.1 | |||||||||||
Income tax expense | 9.2 | |||||||||||
Gain on reinsurance transaction (net of income taxes) | $ | 16.9 | ||||||||||
___________________ | ||||||||||||
(a) Such amount has been reduced by a $28.0 million recapture fee. | ||||||||||||
(b) Such non-cash amounts have been excluded from the consolidated statement of cash flows. | ||||||||||||
Schedule of other significant noncash transactions | Other non-cash items not reflected in the financing activities section of the consolidated statement of cash flows (dollars in millions): | |||||||||||
2014 | 2013 | 2012 | ||||||||||
Stock options, restricted stock and performance units | $ | 15.6 | $ | 15.1 | $ | 13.7 | ||||||
STATUTORY_INFORMATION_BASED_ON1
STATUTORY INFORMATION (BASED ON NON-GAAP MEASURES) (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Insurance [Abstract] | ||||||||
Schedule of statutory accounting practices | The Company's insurance subsidiaries reported the following amounts to regulatory agencies, after appropriate elimination of intercompany accounts among such subsidiaries (dollars in millions): | |||||||
2014 | 2013 | |||||||
Statutory capital and surplus | $ | 1,664.40 | $ | 1,711.90 | ||||
Asset valuation reserve | 203.1 | 233.9 | ||||||
Interest maintenance reserve | 504.1 | 582.4 | ||||||
Total | $ | 2,371.60 | $ | 2,528.20 | ||||
SALE_OF_SUBSIDIARY_Tables
SALE OF SUBSIDIARY (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Discontinued Operations and Disposal Groups [Abstract] | |||||
Schedule of Carrying Amount of CLIC Business Being Sold | The loss on the sale of CLIC in 2014, is summarized below (dollars in millions): | ||||
Net cash proceeds | $ | 224.9 | |||
Net assets being sold: | |||||
Investments | 3,863.80 | ||||
Cash and cash equivalents | 164.7 | ||||
Accrued investment income | 42.7 | ||||
Present value of future profits | 15.5 | ||||
Deferred acquisition costs | 37.6 | ||||
Reinsurance receivables | 307.4 | ||||
Income tax assets, net | 84.4 | ||||
Other assets | 2.8 | ||||
Liabilities for insurance products | (3,201.3 | ) | |||
Other liabilities | (199.1 | ) | |||
Investment borrowings | (383.4 | ) | |||
Accumulated other comprehensive income | (240.5 | ) | |||
Net assets being sold | 494.6 | ||||
Loss before taxes | (269.7 | ) | |||
Tax expense related to the sale | 14.2 | ||||
Valuation allowance release related to the tax on the sale | (14.2 | ) | |||
Valuation allowance increase related to the decrease in projected future taxable income | 19.4 | ||||
Net loss | $ | (289.1 | ) |
BUSINESS_SEGMENTS_Tables
BUSINESS SEGMENTS (Tables) | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Segment Reporting [Abstract] | ||||||||||||
Schedule of segment reporting information by segment | Operating information by segment was as follows (dollars in millions): | |||||||||||
2014 | 2013 | 2012 | ||||||||||
Revenues: | ||||||||||||
Bankers Life: | ||||||||||||
Insurance policy income: | ||||||||||||
Annuities | $ | 26 | $ | 28.9 | $ | 28.4 | ||||||
Health | 1,287.10 | 1,311.20 | 1,342.70 | |||||||||
Life | 338.6 | 308.6 | 286.3 | |||||||||
Net investment income (a) | 957.3 | 1,005.70 | 838.9 | |||||||||
Fee revenue and other income (a) | 29.3 | 19 | 15.2 | |||||||||
Total Bankers Life revenues | 2,638.30 | 2,673.40 | 2,511.50 | |||||||||
Washington National: | ||||||||||||
Insurance policy income: | ||||||||||||
Annuities | 4 | 11.4 | 9.6 | |||||||||
Health | 597.6 | 587.1 | 575.9 | |||||||||
Life | 24.4 | 23 | 23.4 | |||||||||
Net investment income (a) | 276.1 | 296.9 | 289.2 | |||||||||
Fee revenue and other income (a) | 1.1 | 0.9 | 1.1 | |||||||||
Total Washington National revenues | 903.2 | 919.3 | 899.2 | |||||||||
Colonial Penn: | ||||||||||||
Insurance policy income: | ||||||||||||
Health | 3.6 | 4.3 | 5.2 | |||||||||
Life | 242.4 | 227.8 | 212.6 | |||||||||
Net investment income (a) | 41.7 | 40 | 40.4 | |||||||||
Fee revenue and other income (a) | 1 | 0.8 | 0.7 | |||||||||
Total Colonial Penn revenues | 288.7 | 272.9 | 258.9 | |||||||||
Other CNO Business: | ||||||||||||
Insurance policy income - health | — | 24.1 | 25.6 | |||||||||
Net investment income (a) | — | 33.3 | 32.9 | |||||||||
Total Other CNO Business revenues | — | 57.4 | 58.5 | |||||||||
Corporate operations: | ||||||||||||
Net investment income | 14.9 | 39.8 | 62.4 | |||||||||
Fee and other income | 6.7 | 6.2 | 2.8 | |||||||||
Total corporate revenues | 21.6 | 46 | 65.2 | |||||||||
Total revenues | 3,851.80 | 3,969.00 | 3,793.30 | |||||||||
(continued on next page) | ||||||||||||
(continued from previous page) | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Expenses: | ||||||||||||
Bankers Life: | ||||||||||||
Insurance policy benefits | $ | 1,667.60 | $ | 1,788.70 | $ | 1,642.90 | ||||||
Amortization | 174.7 | 187.5 | 187.6 | |||||||||
Interest expense on investment borrowings | 7.9 | 6.7 | 5.3 | |||||||||
Other operating costs and expenses | 401.2 | 380 | 374.8 | |||||||||
Total Bankers Life expenses | 2,251.40 | 2,362.90 | 2,210.60 | |||||||||
Washington National: | ||||||||||||
Insurance policy benefits | 536.2 | 541.4 | 500.6 | |||||||||
Amortization | 64.6 | 64.9 | 64.9 | |||||||||
Interest expense on investment borrowings | 1.7 | 1.9 | 2.8 | |||||||||
Other operating costs and expenses | 189.5 | 170.5 | 182.1 | |||||||||
Total Washington National expenses | 792 | 778.7 | 750.4 | |||||||||
Colonial Penn: | ||||||||||||
Insurance policy benefits | 173.2 | 165.7 | 161.1 | |||||||||
Amortization | 15.3 | 14.5 | 15 | |||||||||
Other operating costs and expenses | 99.4 | 105.2 | 91.4 | |||||||||
Total Colonial Penn expenses | 287.9 | 285.4 | 267.5 | |||||||||
Other CNO Business: | ||||||||||||
Insurance policy benefits | — | 59.2 | 63.2 | |||||||||
Other operating costs and expenses | — | 25.8 | 25 | |||||||||
Total Other CNO Business expenses | — | 85 | 88.2 | |||||||||
Corporate operations: | ||||||||||||
Interest expense on corporate debt | 43.9 | 51.3 | 66.2 | |||||||||
Interest expense on borrowings of variable interest entities | — | 0.1 | 20 | |||||||||
Interest expense on investment borrowings | 0.1 | — | 0.4 | |||||||||
Other operating costs and expenses | 75.9 | 27.3 | 65.1 | |||||||||
Total corporate expenses | 119.9 | 78.7 | 151.7 | |||||||||
Total expenses | 3,451.20 | 3,590.70 | 3,468.40 | |||||||||
Pre-tax operating earnings by segment: | ||||||||||||
Bankers Life | 386.9 | 310.5 | 300.9 | |||||||||
Washington National | 111.2 | 140.6 | 148.8 | |||||||||
Colonial Penn | 0.8 | (12.5 | ) | (8.6 | ) | |||||||
Other CNO Business | — | (27.6 | ) | (29.7 | ) | |||||||
Corporate operations | (98.3 | ) | (32.7 | ) | (86.5 | ) | ||||||
Pre-tax operating earnings | $ | 400.6 | $ | 378.3 | $ | 324.9 | ||||||
___________________ | ||||||||||||
(a) | It is not practicable to provide additional components of revenue by product or services. | |||||||||||
Reconciliation of operating profit (loss) from segments to consolidated | A reconciliation of segment revenues and expenses to consolidated revenues and expenses and net income is as follows (dollars in millions): | |||||||||||
2014 | 2013 | 2012 | ||||||||||
Total segment revenues | $ | 3,851.80 | $ | 3,969.00 | $ | 3,793.30 | ||||||
Net realized investment gains | 33.9 | 33.4 | 81.1 | |||||||||
Revenues related to certain non-strategic investments and earnings attributable to VIEs | 33.2 | 32.2 | — | |||||||||
Fee revenue related to transition and support services agreements | 15 | — | — | |||||||||
Revenues of CLIC prior to being sold | 210.8 | 441.5 | 468.3 | |||||||||
Consolidated revenues | 4,144.70 | 4,476.10 | 4,342.70 | |||||||||
Total segment expenses | 3,451.20 | 3,590.70 | 3,468.40 | |||||||||
Insurance policy benefits - fair value changes in embedded derivative liabilities | 48.5 | (54.4 | ) | 4.4 | ||||||||
Amortization related to fair value changes in embedded derivative liabilities | (12.5 | ) | 19 | (1.6 | ) | |||||||
Amortization related to net realized investment gains | 1 | 1.6 | 6.5 | |||||||||
Expenses related to certain non-strategic investments and earnings attributable to VIEs | 41.2 | 42.4 | — | |||||||||
Loss on extinguishment or modification of debt | 0.6 | 65.4 | 200.2 | |||||||||
Net loss on sale of subsidiary and (gain) loss on reinsurance transactions | 239.8 | 98.4 | — | |||||||||
Expenses related to transition and support services agreements | 12.4 | — | — | |||||||||
Expenses of CLIC prior to being sold | 187.4 | 408.2 | 509.1 | |||||||||
Consolidated expenses | 3,969.60 | 4,171.30 | 4,187.00 | |||||||||
Income before tax | 175.1 | 304.8 | 155.7 | |||||||||
Income tax expense: | ||||||||||||
Tax expense on period income | 159.2 | 128.3 | 106.2 | |||||||||
Valuation allowance for deferred tax assets and other tax items | (35.5 | ) | (301.5 | ) | (171.5 | ) | ||||||
Net income | $ | 51.4 | $ | 478 | $ | 221 | ||||||
Schedule of balance sheet information, by segment | Segment balance sheet information was as follows (dollars in millions): | |||||||||||
2014 | 2013 | |||||||||||
Assets: | ||||||||||||
Bankers Life | $ | 19,303.00 | $ | 18,230.20 | ||||||||
Washington National | 8,207.90 | 8,204.80 | ||||||||||
Colonial Penn | 945.3 | 891.1 | ||||||||||
Other CNO Business | — | 607.4 | ||||||||||
Business of CLIC being sold | — | 4,326.80 | ||||||||||
Corporate operations | 2,728.00 | 2,520.30 | ||||||||||
Total assets | $ | 31,184.20 | $ | 34,780.60 | ||||||||
Liabilities: | ||||||||||||
Bankers Life | $ | 16,697.50 | $ | 15,866.40 | ||||||||
Washington National | 6,778.80 | 6,834.30 | ||||||||||
Colonial Penn | 802.2 | 766.6 | ||||||||||
Other CNO Business | — | 597.6 | ||||||||||
Business of CLIC being sold | — | 3,764.50 | ||||||||||
Corporate operations | 2,217.50 | 1,996.00 | ||||||||||
Total liabilities | $ | 26,496.00 | $ | 29,825.40 | ||||||||
Schedule of selected financial information, by segment | The following table presents selected financial information of our segments (dollars in millions): | |||||||||||
Segment | Present value of future profits | Deferred acquisition costs | Insurance liabilities | |||||||||
2014 | ||||||||||||
Bankers Life | $ | 128.4 | $ | 456.6 | $ | 15,308.90 | ||||||
Washington National | 314.2 | 240.2 | 6,228.80 | |||||||||
Colonial Penn | 46.8 | 73.8 | 771 | |||||||||
Total | $ | 489.4 | $ | 770.6 | $ | 22,308.70 | ||||||
2013 | ||||||||||||
Bankers Life | $ | 263.2 | $ | 627.8 | $ | 14,575.00 | ||||||
Washington National | 344.3 | 232.2 | 5,664.10 | |||||||||
Colonial Penn | 55.7 | 67.4 | 766.2 | |||||||||
Other CNO Business | — | — | 597.5 | |||||||||
Business of CLIC prior to being sold | 16.1 | 40.7 | 3,273.00 | |||||||||
Total | $ | 679.3 | $ | 968.1 | $ | 24,875.80 | ||||||
QUARTERLY_FINANCIAL_DATA_UNAUD1
QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables) | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Quarterly Financial Data [Abstract] | ||||||||||||||||
Schedule of quarterly financial information | Quarterly financial data (unaudited) were as follows (dollars in millions, except per share data): | |||||||||||||||
2014 | 1st Qtr. | 2nd Qtr. | 3rd Qtr. | 4th Qtr. | ||||||||||||
Revenues | $ | 1,084.70 | $ | 1,093.00 | $ | 967 | $ | 1,000.00 | ||||||||
Income (loss) before income taxes | $ | (169.6 | ) | $ | 114.4 | $ | 154.4 | $ | 75.9 | |||||||
Income tax expense (benefit) | 58.4 | 36.3 | 37 | (8.0 | ) | |||||||||||
Net income (loss) | $ | (228.0 | ) | $ | 78.1 | $ | 117.4 | $ | 83.9 | |||||||
Earnings per common share: | ||||||||||||||||
Basic: | ||||||||||||||||
Net income (loss) | $ | (1.03 | ) | $ | 0.36 | $ | 0.56 | $ | 0.41 | |||||||
Diluted: | ||||||||||||||||
Net income (loss) | $ | (1.03 | ) | $ | 0.35 | $ | 0.54 | $ | 0.41 | |||||||
2013 | 1st Qtr. | 2nd Qtr. | 3rd Qtr. | 4th Qtr. | ||||||||||||
Revenues | $ | 1,142.60 | $ | 1,081.50 | $ | 1,093.80 | $ | 1,158.20 | ||||||||
Income before income taxes | $ | 34.6 | $ | 114.7 | $ | 114.4 | $ | 41.1 | ||||||||
Income tax expense (benefit) | 22.7 | 37.6 | (168.6 | ) | (64.9 | ) | ||||||||||
Net income | $ | 11.9 | $ | 77.1 | $ | 283 | $ | 106 | ||||||||
Earnings per common share: | ||||||||||||||||
Basic: | ||||||||||||||||
Net income | $ | 0.05 | $ | 0.35 | $ | 1.27 | $ | 0.48 | ||||||||
Diluted: | ||||||||||||||||
Net income | $ | 0.05 | $ | 0.34 | $ | 1.23 | $ | 0.47 | ||||||||
INVESTMENTS_IN_VARIABLE_INTERE1
INVESTMENTS IN VARIABLE INTEREST ENTITIES (TABLES) | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Investments in Variable Interest Entities [Abstract] | ||||||||||||
Schedule of impact on balance sheet of consolidating variable interest entities | The following table provides supplemental information about the assets and liabilities of the VIEs which have been consolidated (dollars in millions): | |||||||||||
December 31, 2014 | ||||||||||||
VIEs | Eliminations | Net effect on | ||||||||||
consolidated | ||||||||||||
balance sheet | ||||||||||||
Assets: | ||||||||||||
Investments held by variable interest entities | $ | 1,367.10 | $ | — | $ | 1,367.10 | ||||||
Notes receivable of VIEs held by insurance subsidiaries | — | (153.3 | ) | (153.3 | ) | |||||||
Cash and cash equivalents held by variable interest entities | 68.3 | — | 68.3 | |||||||||
Accrued investment income | 3.2 | — | 3.2 | |||||||||
Income tax assets, net | 18.1 | (2.9 | ) | 15.2 | ||||||||
Other assets | 14.2 | (1.7 | ) | 12.5 | ||||||||
Total assets | $ | 1,470.90 | $ | (157.9 | ) | $ | 1,313.00 | |||||
Liabilities: | ||||||||||||
Other liabilities | $ | 61.2 | $ | (6.1 | ) | $ | 55.1 | |||||
Borrowings related to variable interest entities | 1,286.10 | — | 1,286.10 | |||||||||
Notes payable of VIEs held by insurance subsidiaries | 157.3 | (157.3 | ) | — | ||||||||
Total liabilities | $ | 1,504.60 | $ | (163.4 | ) | $ | 1,341.20 | |||||
December 31, 2013 | ||||||||||||
VIEs | Eliminations | Net effect on | ||||||||||
consolidated | ||||||||||||
balance sheet | ||||||||||||
Assets: | ||||||||||||
Investments held by variable interest entities | $ | 1,046.70 | $ | — | $ | 1,046.70 | ||||||
Notes receivable of VIEs held by insurance subsidiaries | — | (108.5 | ) | (108.5 | ) | |||||||
Cash and cash equivalents held by variable interest entities | 104.3 | — | 104.3 | |||||||||
Accrued investment income | 1.9 | — | 1.9 | |||||||||
Income tax assets, net | 5.4 | (2.5 | ) | 2.9 | ||||||||
Other assets | 22.6 | (.9 | ) | 21.7 | ||||||||
Total assets | $ | 1,180.90 | $ | (111.9 | ) | $ | 1,069.00 | |||||
Liabilities: | ||||||||||||
Other liabilities | $ | 66 | $ | (4.0 | ) | $ | 62 | |||||
Borrowings related to variable interest entities | 1,012.30 | — | 1,012.30 | |||||||||
Notes payable of VIEs held by insurance subsidiaries | 112.5 | (112.5 | ) | — | ||||||||
Total liabilities | $ | 1,190.80 | $ | (116.5 | ) | $ | 1,074.30 | |||||
Supplemental information, revenues and expenses of variable interest entities | The following table provides supplemental information about the revenues and expenses of the VIEs which have been consolidated in accordance with authoritative guidance, after giving effect to the elimination of our investment in the VIEs and investment management fees earned by a subsidiary of the Company (dollars in millions): | |||||||||||
2014 | 2013 | 2012 | ||||||||||
Revenues: | ||||||||||||
Net investment income – policyholder and reinsurer accounts and other special-purpose portfolios | $ | 47.2 | $ | 42.3 | $ | 31.3 | ||||||
Fee revenue and other income | 1.1 | 1.8 | 1.6 | |||||||||
Total revenues | 48.3 | 44.1 | 32.9 | |||||||||
Expenses: | ||||||||||||
Interest expense | 30.1 | 26 | 20 | |||||||||
Other operating expenses | 1.2 | 1.4 | 0.6 | |||||||||
Total expenses | 31.3 | 27.4 | 20.6 | |||||||||
Income before net realized investment losses and income taxes | 17 | 16.7 | 12.3 | |||||||||
Net realized investment losses | (2.2 | ) | (1.6 | ) | (.4 | ) | ||||||
Income before income taxes | $ | 14.8 | $ | 15.1 | $ | 11.9 | ||||||
Summary of variable interest entities by contractual maturity | The following table sets forth the amortized cost and estimated fair value of the investments held by the VIEs at December 31, 2014, by contractual maturity. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties. | |||||||||||
Amortized | Estimated | |||||||||||
cost | fair | |||||||||||
value | ||||||||||||
(Dollars in millions) | ||||||||||||
Due after one year through five years | $ | 417.2 | $ | 411.3 | ||||||||
Due after five years through ten years | 980.9 | 955.8 | ||||||||||
Total | $ | 1,398.10 | $ | 1,367.10 | ||||||||
The following table sets forth the amortized cost and estimated fair value of those investments held by the VIEs with unrealized losses at December 31, 2014, by contractual maturity. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties. | ||||||||||||
Amortized | Estimated | |||||||||||
cost | fair | |||||||||||
value | ||||||||||||
(Dollars in millions) | ||||||||||||
Due after one year through five years | $ | 382.3 | $ | 376.3 | ||||||||
Due after five years through ten years | 869.8 | 844.3 | ||||||||||
Total | $ | 1,252.10 | $ | 1,220.60 | ||||||||
BUSINESS_AND_BASIS_OF_PRESENTA1
BUSINESS AND BASIS OF PRESENTATION Narrative (Details) (Conseco Life Insurance Company [Member], Wilton Reassurance Company [Member], USD $) | 0 Months Ended |
In Millions, unless otherwise specified | Jul. 01, 2014 |
Transition Services for the Year Ended June 30, 2015 [Member] | |
Significant Acquisitions and Disposals [Line Items] | |
Fees from transition and special Support Services Agreements | $30 |
Transition Services for the Year Ended June 30, 2016 [Member] | |
Significant Acquisitions and Disposals [Line Items] | |
Fees from transition and special Support Services Agreements | 20 |
Transition Services for the the Three Years Ended June 30, 2019 [Member] | |
Significant Acquisitions and Disposals [Line Items] | |
Fees from transition and special Support Services Agreements | $0.20 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (INVESTMENTS) (NARRATIVE) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Accounting Policies [Abstract] | ||
Trading securities | $244.90 | $247.60 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (PRESENT VALUE OF FUTURE PROFITS) (Details) | 12 Months Ended |
Dec. 31, 2014 | |
Accounting Policies [Abstract] | |
Discount Rate Used To Determine Present Value of Future Insurance Profits | 12.00% |
SUMMARY_OF_SIGNIFICANT_ACCOUNT5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (REINSURANCE) (NARRATIVE) (Details) (USD $) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Jun. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
subsidiary | |||||
Significant Accounting Policies [Line Items] | |||||
Company retains no more than this amount of mortality risk | $0.80 | ||||
Ceded premiums written | 176.7 | 212.1 | 220 | ||
Policyholder Benefits and Claims Incurred, Ceded | 195.3 | 196.2 | 210.2 | ||
Assumed premiums written | 35 | 37.4 | 69.4 | ||
Insurance Subsidiaries | 2 | ||||
Reinsurance Retention Policy, Reinsured Risk, Percentage | 100.00% | ||||
Ceded long-term reserves | 495 | ||||
Additional premiums paid by subsidiaries to enter into coinsurance agreement | 96.9 | ||||
Over-collateralization rate of market-value trusts | 7.00% | ||||
Net loss on sale of subsidiary and (gain) loss on reinsurance transactions | 239.8 | 98.4 | 0 | ||
Gain related to other reinsurance transactions | 3.8 | ||||
Coventry health care marketing and quota share agreements [Member] | |||||
Significant Accounting Policies [Line Items] | |||||
Assumed premiums written | $6.80 | $19.70 | $49.90 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (INCOME TAXES) (NARRATIVE) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
In Millions, unless otherwise specified | ||||
Accounting Policies [Abstract] | ||||
Valuation allowance | $246 | $294.80 | $766.90 | $938.40 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (INVESTMENT BORROWINGS) (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $1,519,200,000 | $1,900,000,000 | |
Secured Debt, Repurchase Agreements | 20,400,000 | 0 | |
Federal Home Loan Bank advances [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Federal home loan bank stock | 73,500,000 | ||
Investment borrowings | 1,498,800,000 | ||
Federal Home Loan Bank, Advances, General Debt Obligations, Disclosures, Collateral Pledged | 1,800,000,000 | ||
Aggregate fee to prepay all fixed rate FHLB borrowings | 1,200,000 | ||
Interest expense on FHLB borrowings | 18,700,000 | 27,900,000 | 28,000,000 |
Borrowings due October 2015 [Member] | Federal Home Loan Bank advances [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 50,000,000 | ||
Maturity date | 31-Oct-15 | ||
Interest rate | 0.51% | ||
Borrowings due June 2016 [Member] | Federal Home Loan Bank advances [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 100,000,000 | ||
Maturity date | 30-Jun-16 | ||
Interest rate | 0.61% | ||
Borrowings due June 2016 rate two [Member] | Federal Home Loan Bank advances [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 75,000,000 | ||
Maturity date | 30-Jun-16 | ||
Interest rate | 0.42% | ||
Borrowings due October 2016 [Member] | Federal Home Loan Bank advances [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 100,000,000 | ||
Maturity date | 31-Oct-16 | ||
Interest rate | 0.41% | ||
Borrowings due November 2016 [Member] | Federal Home Loan Bank advances [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 50,000,000 | ||
Maturity date | 30-Nov-16 | ||
Interest rate | 0.51% | ||
Borrowings due November 2016 rate two [Member] | Federal Home Loan Bank advances [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 50,000,000 | ||
Maturity date | 30-Nov-16 | ||
Interest rate | 0.64% | ||
Borrowings due June 2017 [Member] | Federal Home Loan Bank advances [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 57,700,000 | ||
Maturity date | 30-Jun-17 | ||
Interest rate | 0.59% | ||
Borrowings due August 2017 [Member] | Federal Home Loan Bank advances [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 50,000,000 | ||
Maturity date | 31-Aug-17 | ||
Interest rate | 0.43% | ||
Borrowings due August 2017 rate two [Member] | Federal Home Loan Bank advances [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 75,000,000 | ||
Maturity date | 31-Aug-17 | ||
Interest rate | 0.38% | ||
Borrowings due October 2017 [Member] | Federal Home Loan Bank advances [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 100,000,000 | ||
Maturity date | 31-Oct-17 | ||
Interest rate | 0.66% | ||
Borrowings due November 2017 [Member] | Federal Home Loan Bank advances [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 50,000,000 | ||
Maturity date | 30-Nov-17 | ||
Interest rate | 0.74% | ||
Borrowings due January 2018 [Member] | Federal Home Loan Bank advances [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 50,000,000 | ||
Maturity date | 31-Jan-18 | ||
Interest rate | 0.58% | ||
Borrowings due January 2018 rate two [Member] | Federal Home Loan Bank advances [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 50,000,000 | ||
Maturity date | 31-Jan-18 | ||
Interest rate | 0.57% | ||
Borrowings due February 2018 [Member] | Federal Home Loan Bank advances [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 50,000,000 | ||
Maturity date | 28-Feb-18 | ||
Interest rate | 0.54% | ||
Borrowings due February 2018 rate two [Member] | Federal Home Loan Bank advances [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 50,000,000 | ||
Maturity date | 28-Feb-18 | ||
Interest rate | 0.32% | ||
Borrowings due February 2018 rate three [Member] | Federal Home Loan Bank advances [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 22,000,000 | ||
Maturity date | 28-Feb-18 | ||
Interest rate | 0.57% | ||
Borrowings due May 2018 [Member] | Federal Home Loan Bank advances [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 100,000,000 | ||
Maturity date | 30-May-18 | ||
Interest rate | 0.62% | ||
Borrowings due July 2018 [Member] | Federal Home Loan Bank advances [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 50,000,000 | ||
Maturity date | 31-Jul-18 | ||
Interest rate | 0.70% | ||
Borrowings due August 2018 [Member] | Federal Home Loan Bank advances [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 50,000,000 | ||
Maturity date | 31-Aug-18 | ||
Interest rate | 0.35% | ||
Borrowings due January 2019 [Member] | Federal Home Loan Bank advances [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 50,000,000 | ||
Maturity date | 31-Jan-19 | ||
Interest rate | 0.65% | ||
Borrowings due February 2019 [Member] | Federal Home Loan Bank advances [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 50,000,000 | ||
Maturity date | 28-Feb-19 | ||
Interest rate | 0.32% | ||
Borrowings due March 2019 [Member] | Federal Home Loan Bank advances [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 100,000,000 | ||
Maturity date | 31-Mar-19 | ||
Interest rate | 0.64% | ||
Borrowings due July 2019 [Member] | Federal Home Loan Bank advances [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 21,800,000 | ||
Maturity date | 31-Jul-19 | ||
Interest rate | 0.66% | ||
Borrowings due June 2020 [Member] | Federal Home Loan Bank advances [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 21,800,000 | ||
Maturity date | 30-Jun-20 | ||
Interest rate | 1.96% | ||
Borrowings due August 2021 [Member] | Federal Home Loan Bank advances [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 28,200,000 | ||
Maturity date | 31-Aug-21 | ||
Interest rate | 2.55% | ||
Borrowings due March 2023 [Member] | Federal Home Loan Bank advances [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 26,800,000 | ||
Maturity date | 31-Mar-23 | ||
Interest rate | 2.16% | ||
Borrowings due June 2025 [Member] | Federal Home Loan Bank advances [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $20,500,000 | ||
Maturity date | 30-Jun-25 | ||
Interest rate | 2.94% |
SUMMARY_OF_SIGNIFICANT_ACCOUNT8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (ACCOUNTING FOR DERIVATIVES) (NARRATIVE) (Details) (USD $) | 3 Months Ended |
In Millions, unless otherwise specified | Jun. 30, 2014 |
Accounting Policies [Abstract] | |
Gain related to other reinsurance transactions | $3.80 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (MULTIBUCKET ANNUITY PRODUCTS) (NARRATIVE) (Details) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Accounting Policies [Abstract] | ||
Return of premium annual percentage, multibucket annuity | 3.00% | |
Insurance liabilities held, related to multibucket annuity products | $43.40 | $45.80 |
Recovered_Sheet1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (SALE OF INDUCEMENTS) (NARRATIVE) (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Accounting Policies [Abstract] | |||
Deferred sales inducements | $5.10 | $5 | $4.40 |
Deferred sales inducements, amortization expense | 12.4 | 22.9 | 27.1 |
Unamortized deferred sales inducements | 67.4 | 108.6 | |
Insurance liabilities for persistency bonus benefits | $1.50 | $28.90 |
Recovered_Sheet2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (OUT-OF-PERIOD ADJUSTMENTS) (NARRATIVE) (Details) (Out of Period Adjustment [Member], USD $) | 12 Months Ended | |
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Out of Period Adjustment [Member] | ||
Significant Accounting Policies [Line Items] | ||
Out of period adjustment, increase in other operating costs and expenses | $2.40 | $1.50 |
Out of period adjustment, decrease (increase) in tax expense | 0.8 | 0.7 |
Out of period adjustment, effect on net income (loss) | -1.6 | -7.6 |
Adjustment to earnings (losses) per diluted share (in dollars per share) | ($0.01) | ($0.03) |
Out of period adjustment, increase in insurance policy benefits | 4.7 | |
Out of period adjustment, increase in amortization expense | $2.10 |
INVESTMENTS_NARRATIVE_Details
INVESTMENTS (NARRATIVE) (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
states | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Premium deficiencies adjustments to present value of future profits | $128,800,000 | $27,800,000 | |
Reduction to deferred acquisition costs due to unrealized gains that would result in premium deficiency if unrealized gains were realized | 142,200,000 | ||
Adjustment to insurance liabilities | -381,400,000 | 0 | |
Increase to deferred tax assets due to unrealized gains that would result in premium deficiency if unrealized gains were realized | 232,100,000 | 9,900,000 | |
Fixed maturities, available for sale, amortized cost | 18,408,100,000 | 21,891,800,000 | |
Estimated fair value | 20,634,900,000 | 23,204,600,000 | |
Fair value of fixed maturity investments and mortgage loans not accruing investment income | 0 | 500,000 | |
Net realized investment gains (losses) | 36,700,000 | 33,400,000 | 81,100,000 |
Net realized investment gains, excluding impairment losses | 64,000,000 | 45,000,000 | 118,900,000 |
Sales of investments | 2,090,000,000 | 2,315,800,000 | 2,057,600,000 |
Other than temporary impairments recorded | 27,300,000 | 11,600,000 | 37,800,000 |
Fixed maturities in default | 0 | ||
Value Of available for sale securities sold | 233,700,000 | 477,500,000 | 402,500,000 |
Impairment losses related to writedown of mortgage loans which losses major tenants | 6,800,000 | 5,400,000 | |
Impairment losses related to private company investments did not meet expectations of previous valuations | 19,100,000 | ||
Other than temporary impairment losses, losses on other investments following unforeseen events | 1,400,000 | 2,500,000 | |
Other-than-temporary impairments included in accumulated other comprehensive income | 3,200,000 | 4,300,000 | |
Estimated fair value | 4,215,400,000 | ||
Percent of fixed maturities | 20.40% | ||
Number of additional states greater than specified percentage of mortgage loan balance | 0 | ||
Assets held by insurance regulators | 42,300,000 | 65,600,000 | |
Minimum [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Percentage of mortgage loan balance | 5.00% | ||
Maximum [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Percentage of commercial loan balance that is noncurrent | 0.00% | ||
Non Investment Grade [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Fixed maturities, available for sale, amortized cost | 2,339,200,000 | 2,691,100,000 | |
Percentage of available-for-sale debt securities | 13.00% | ||
Estimated fair value | 2,416,100,000 | 2,802,600,000 | |
Available-for-sale securities, percentage of amortized cost | 103.00% | ||
Other-than-temporary impairments included in accumulated other comprehensive income | 3,200,000 | 4,300,000 | |
Marketable Securities [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Net realized investment gains, excluding impairment losses | 54,400,000 | 51,800,000 | 98,800,000 |
Embedded Derivative Financial Instruments [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Embedded Derivative, Gain on Embedded Derivative | 7,600,000 | 20,100,000 | |
Embedded Derivative, Loss on Embedded Derivative | -6,800,000 | ||
Total fixed maturities, available for sale [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Net realized investment gains (losses) | 51,400,000 | 39,200,000 | 99,000,000 |
Available-for-sale Securities, Gross Realized Losses | 13,000,000 | 11,400,000 | 15,400,000 |
Mortgage-backed and Asset-backed Securities [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Realized losses on sale | 2,500,000 | 5,200,000 | |
US States and Political Subdivisions Debt Securities [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Available-for-sale Securities, Gross Realized Losses | 700,000 | ||
Corporate debt securities [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Available-for-sale Securities, Gross Realized Losses | 12,300,000 | ||
Realized losses on sale | 8,900,000 | 10,200,000 | |
Mortgage Loan [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Net realized investment gains (losses) | -100,000 | -1,100,000 | -3,700,000 |
Individual Corporate Security [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Other than temporary impairments recorded | 5,000,000 | ||
Equity Securities [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Net realized investment gains (losses) | 10,100,000 | 4,800,000 | 100,000 |
Other than temporary impairments recorded | 2,500,000 | 29,900,000 | |
Other Securities [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Net realized investment gains (losses) | 2,600,000 | -5,000,000 | 22,500,000 |
Other than temporary impairments recorded | 4,100,000 | ||
California [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Percentage of mortgage loan balance | 13.00% | ||
Texas [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Percentage of mortgage loan balance | 10.00% | ||
Maryland [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Percentage of mortgage loan balance | 7.00% | ||
Coinsurance [Member] | Embedded Derivative Financial Instruments [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Embedded Derivative, Gain on Embedded Derivative | $2,000,000 |
INVESTMENTS_SCHEDULE_OF_FIXED_
INVESTMENTS (SCHEDULE OF FIXED MATURITIES FOR AVAILABLE FOR SALE AND EQUITY SECURITIES) (Details) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | $18,408.10 | $21,891.80 |
Gross unrealized gains | 2,323.60 | 1,526 |
Gross unrealized losses | -96.8 | -213.2 |
Estimated fair value | 20,634.90 | 23,204.60 |
Other-than-temporary impairments included in accumulated other comprehensive income | -3.2 | -4.3 |
Equity Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 400.5 | 206.7 |
Gross unrealized gains | 19.1 | 16.3 |
Gross unrealized losses | -0.6 | 0 |
Estimated fair value | 419 | 223 |
Investment Grade [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 16,068.90 | 19,200.70 |
Gross unrealized gains | 2,198.90 | 1,377.30 |
Gross unrealized losses | -49 | -176 |
Estimated fair value | 18,218.80 | 20,402 |
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | 0 |
Investment Grade [Member] | Corporate securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 11,177.10 | 13,404.10 |
Gross unrealized gains | 1,710.50 | 1,086.20 |
Gross unrealized losses | -42.1 | -125.8 |
Estimated fair value | 12,845.50 | 14,364.50 |
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | 0 |
Investment Grade [Member] | US treasury and government [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 138.8 | 71.1 |
Gross unrealized gains | 30.2 | 2.6 |
Gross unrealized losses | -0.1 | -0.6 |
Estimated fair value | 168.9 | 73.1 |
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | 0 |
Investment Grade [Member] | US States and Political Subdivisions Debt Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 1,960.60 | 2,130.20 |
Gross unrealized gains | 299.3 | 106.8 |
Gross unrealized losses | -0.7 | -38.5 |
Estimated fair value | 2,259.20 | 2,198.50 |
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | 0 |
Investment Grade [Member] | Debt securities issued by foreign governments [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 1.8 | |
Gross unrealized gains | 0.1 | |
Gross unrealized losses | 0 | |
Estimated fair value | 1.9 | |
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | |
Investment Grade [Member] | Asset-backed securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 720.7 | 869.9 |
Gross unrealized gains | 52 | 41.6 |
Gross unrealized losses | -1.6 | -3.9 |
Estimated fair value | 771.1 | 907.6 |
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | 0 |
Investment Grade [Member] | Collateralized debt obligations [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 314.9 | 259.4 |
Gross unrealized gains | 2.4 | 7.4 |
Gross unrealized losses | -3.4 | -0.1 |
Estimated fair value | 313.9 | 266.7 |
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | 0 |
Investment Grade [Member] | Commercial Mortgage Backed Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 1,179.70 | 1,517.10 |
Gross unrealized gains | 80.9 | 97.7 |
Gross unrealized losses | -0.5 | -5.8 |
Estimated fair value | 1,260.10 | 1,609 |
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | 0 |
Investment Grade [Member] | Mortgage pass-through securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 4.2 | 12.7 |
Gross unrealized gains | 0.4 | 0.7 |
Gross unrealized losses | 0 | 0 |
Estimated fair value | 4.6 | 13.4 |
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | 0 |
Investment Grade [Member] | Collateralized mortgage obligations [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 571.1 | 936.2 |
Gross unrealized gains | 23.1 | 34.3 |
Gross unrealized losses | -0.6 | -1.3 |
Estimated fair value | 593.6 | 969.2 |
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | 0 |
Non Investment Grade [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 2,339.20 | 2,691.10 |
Gross unrealized gains | 124.7 | 148.7 |
Gross unrealized losses | -47.8 | -37.2 |
Estimated fair value | 2,416.10 | 2,802.60 |
Other-than-temporary impairments included in accumulated other comprehensive income | -3.2 | -4.3 |
Non Investment Grade [Member] | Corporate securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 1,139.30 | 1,314.50 |
Gross unrealized gains | 29.2 | 53.4 |
Gross unrealized losses | -43 | -32.7 |
Estimated fair value | 1,125.50 | 1,335.20 |
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | 0 |
Non Investment Grade [Member] | US States and Political Subdivisions Debt Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 20.6 | 6.4 |
Gross unrealized gains | 0.2 | 0 |
Gross unrealized losses | -2.3 | -0.5 |
Estimated fair value | 18.5 | 5.9 |
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | 0 |
Non Investment Grade [Member] | Asset-backed securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 465.9 | 523.5 |
Gross unrealized gains | 33.8 | 34.3 |
Gross unrealized losses | -1.8 | -3.3 |
Estimated fair value | 497.9 | 554.5 |
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | 0 |
Non Investment Grade [Member] | Collateralized debt obligations [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 10.4 | 27.6 |
Gross unrealized gains | 0.2 | 0.1 |
Gross unrealized losses | 0 | -0.4 |
Estimated fair value | 10.6 | 27.3 |
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | 0 |
Non Investment Grade [Member] | Commercial Mortgage Backed Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 15.3 | |
Gross unrealized gains | 0.9 | |
Gross unrealized losses | 0 | |
Estimated fair value | 16.2 | |
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | |
Non Investment Grade [Member] | Collateralized mortgage obligations [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 687.7 | 819.1 |
Gross unrealized gains | 60.4 | 60.9 |
Gross unrealized losses | -0.7 | -0.3 |
Estimated fair value | 747.4 | 879.7 |
Other-than-temporary impairments included in accumulated other comprehensive income | ($3.20) | ($4.30) |
INVESTMENTS_SUMMARY_OF_FIXED_M
INVESTMENTS (SUMMARY OF FIXED MATURITY SECURITIES AVAILABLE FOR SALE) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fixed maturities, available for sale, amortized cost | $18,408.10 | $21,891.80 |
Estimated fair value | 20,634.90 | 23,204.60 |
Percentage of total estimated fair value | 100.00% | |
NAIC designation 1 [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fixed maturities, available for sale, amortized cost | 8,930.80 | |
Estimated fair value | 10,158.60 | |
Percentage of total estimated fair value | 49.20% | |
NAIC designation 2 [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fixed maturities, available for sale, amortized cost | 8,294 | |
Estimated fair value | 9,310.10 | |
Percentage of total estimated fair value | 45.10% | |
NAIC designation 3 [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fixed maturities, available for sale, amortized cost | 800.6 | |
Estimated fair value | 800.6 | |
Percentage of total estimated fair value | 3.90% | |
NAIC designation 4 [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fixed maturities, available for sale, amortized cost | 350.2 | |
Estimated fair value | 334.5 | |
Percentage of total estimated fair value | 1.60% | |
NAIC designation 5 [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fixed maturities, available for sale, amortized cost | 32.5 | |
Estimated fair value | 31.1 | |
Percentage of total estimated fair value | 0.20% | |
NAIC designation 6 [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fixed maturities, available for sale, amortized cost | 0 | |
Estimated fair value | $0 | |
Percentage of total estimated fair value | 0.00% |
INVESTMENTS_SCHEDULE_OF_ACCUMU
INVESTMENTS (SCHEDULE OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Investments, Debt and Equity Securities [Abstract] | ||
Net unrealized appreciation (depreciation) on fixed maturity securities, available for sale, on which an other-than-temporary impairment loss has been recognized | $5.30 | $6.50 |
Net unrealized gains on all other investments | 2,207.70 | 1,322.60 |
Adjustment to present value of future profits | -149.9 | -47.7 |
Adjustment to deferred acquisition costs | -390.5 | -137 |
Adjustment to insurance liabilities | -381.4 | 0 |
Unrecognized net loss related to deferred compensation plan | -8.5 | -7.1 |
Deferred income tax liabilities | -457.4 | -405.5 |
Accumulated other comprehensive income | $825.30 | $731.80 |
INVESTMENTS_SCHEDULE_OF_INVEST
INVESTMENTS (SCHEDULE OF INVESTMENTS CLASSIFIED BY CONTRACTUAL MATURITY DATE) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Available-for-sale Securities, Debt Maturities, Single Maturity Date, Amortized Cost Basis [Abstract] | ||
Due in one year or less | $216.50 | |
Due after one year through five years | 1,966.50 | |
Due after five years through ten years | 2,689.50 | |
Due after ten years | 9,565.70 | |
Subtotal | 14,438.20 | |
Structured securities | 3,969.90 | |
Amortized cost | 18,408.10 | 21,891.80 |
Available-for-sale Securities, Debt Maturities, Single Maturity Date [Abstract] | ||
Due in one year or less | 220 | |
Due after one year through five years | 2,152.30 | |
Due after five years through ten years | 2,879.60 | |
Due after ten years | 11,167.60 | |
Subtotal | 16,419.50 | |
Structured securities | 4,215.40 | |
Estimated fair value | $20,634.90 | $23,204.60 |
INVESTMENTS_SCHEDULE_OF_INVEST1
INVESTMENTS (SCHEDULE OF INVESTMENT INCOME) (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Fixed maturities | $1,175.80 | $1,290.30 | $1,281.10 |
Equity securities | 13.9 | 7 | 4.2 |
Mortgage loans | 104.2 | 96.3 | 99.8 |
Policy loans | 11 | 17.3 | 17.1 |
Other invested assets | 17.1 | 14.4 | 14.4 |
Cash and cash equivalents | 0.6 | 0.5 | 0.6 |
Trading securities (a) | 14.8 | 12.8 | 26.3 |
Option income | 118.9 | 77.4 | 0.4 |
Change in value of options | -49.4 | 100.1 | 25.1 |
Other special-purpose portfolios | 42.1 | 67.9 | 36.1 |
Gross investment income | 1,449 | 1,684 | 1,505.10 |
Less investment expenses | 21.6 | 20 | 18.7 |
Net investment income | 1,427.40 | 1,664 | 1,486.40 |
Investment Income [Member] | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Increase (decrease) in trading securities | $3.40 | $0.40 | $4.90 |
INVESTMENTS_SCHEDULE_OF_REALIZ
INVESTMENTS (SCHEDULE OF REALIZED GAIN (LOSS) ON INVESTMENTS) (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Investment [Line Items] | |||
Other than Temporary Impairment Losses, Investments | ($27.30) | ($11.60) | ($37.80) |
Other than Temporary Impairment Losses, Investments, Portion in Other Comprehensive Loss, before Tax, Including Portion Attributable to Noncontrolling Interest, Available-for-sale Securities | 0 | 0 | 0 |
Other than Temporary Impairment Losses, Investments, Portion Recognized in Earnings, Net, Available-for-sale Securities | -27.3 | -11.6 | -37.8 |
Gain (Loss) on Investments | 36.7 | 33.4 | 81.1 |
Total fixed maturities, available for sale [Member] | |||
Investment [Line Items] | |||
Available-for-sale Securities, Gross Realized Gains | 64.4 | 57.7 | 115.4 |
Available-for-sale Securities, Gross Realized Losses | -13 | -11.4 | -15.4 |
Other than Temporary Impairment Losses, Investments | 0 | -7.1 | -1 |
Other than Temporary Impairment Losses, Investments, Portion in Other Comprehensive Loss, before Tax, Including Portion Attributable to Noncontrolling Interest, Available-for-sale Securities | 0 | 0 | 0 |
Other than Temporary Impairment Losses, Investments, Portion Recognized in Earnings, Net, Available-for-sale Securities | 0 | -7.1 | -1 |
Gain (Loss) on Investments | 51.4 | 39.2 | 99 |
Equity Securities [Member] | |||
Investment [Line Items] | |||
Gain (Loss) on Investments | 10.1 | 4.8 | 0.1 |
Mortgage Loan [Member] | |||
Investment [Line Items] | |||
Gain (Loss) on Investments | -0.1 | -1.1 | -3.7 |
Impairments of Mortgage Loans And Other Investments [Member] | |||
Investment [Line Items] | |||
Gain (Loss) on Investments | -27.3 | -4.5 | -36.8 |
Other Securities [Member] | |||
Investment [Line Items] | |||
Gain (Loss) on Investments | 2.6 | -5 | 22.5 |
Investments [Member] | |||
Investment [Line Items] | |||
Increase (decrease) in trading securities | $7.80 | ($3) | $20.10 |
INVESTMENTS_SCHEDULE_OF_INVEST2
INVESTMENTS (SCHEDULE OF INVESTMENTS IN OUR PORTFOLIO RATED BELOW-INVESTMENT GRADE WHICH HAVE BEEN CONTINUOUSLY IN AN UNREALIZED LOSS POSITION 1) (Details) (Fixed Maturities [Member], USD $) | Dec. 31, 2014 |
In Millions, unless otherwise specified | issuers |
Fixed Maturities [Member] | |
Schedule of Available-for-sale Securities [Line Items] | |
Less than 6 months prior to sale, Number of issuers | 1 |
Greater than or equal to 6 months and less than 12 months prior to sale, Number of issuers | 1 |
Greater than 12 months prior to sale, Number of issuers | 2 |
Number of issuers, Total | 4 |
Less than 6 months prior to sale, Amortized cost | $0.50 |
Greater than or equal to 6 months and less than 12 months prior to sale, Amortized cost | 0.2 |
Greater than 12 months prior to sale, Amortized cost | 5.2 |
Amortized cost, Total | 5.9 |
Less than 6 months prior to sale, Fair value | 0.4 |
Greater than or equal to 6 months and less than 12 months prior to sale, Fair value | 0.2 |
Greater than 12 months prior to sale, Fair value | 3.9 |
Fair value, Total | $4.50 |
INVESTMENTS_SCHEDULE_OF_CREDIT
INVESTMENTS (SCHEDULE OF CREDIT LOSSES RECOGNIZED IN EARNINGS) (Details) (Available-for-sale securities [Member], USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Available-for-sale securities [Member] | |||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward] | |||
Credit losses on fixed maturity securities, available for sale, beginning of period | ($1.30) | ($1.60) | ($2) |
Add: credit losses on other-than-temporary impairments not previously recognized | 0 | 0 | 0 |
Less: credit losses on securities sold | 0.3 | 0.3 | 0.4 |
Less: credit losses on securities impaired due to intent to sell | 0 | 0 | 0 |
Add: credit losses on previously impaired securities | 0 | 0 | 0 |
Less: increases in cash flows expected on previously impaired securities | 0 | 0 | 0 |
Credit losses on fixed maturity securities, available for sale, end of period | ($1) | ($1.30) | ($1.60) |
INVESTMENTS_SCHEDULE_OF_INVEST3
INVESTMENTS (SCHEDULE OF INVESTMENTS WITH UNREALIZED LOSSES CLASSIFIED BY CONTRACTUAL MATURITY DATE) (Details) (USD $) | Dec. 31, 2014 |
In Millions, unless otherwise specified | |
Amortized cost | |
Due in one year or less | $7.80 |
Due after one year through five years | 170.7 |
Due after five years through ten years | 508.4 |
Due after ten years | 758.2 |
Subtotal | 1,445.10 |
Structured securities | 502.8 |
Total | 1,947.90 |
Estimated fair value | |
Due in one year or less | 7.8 |
Due after one year through five years | 165.3 |
Due after five years through ten years | 474.4 |
Due after ten years | 709.4 |
Subtotal | 1,356.90 |
Structured securities | 494.2 |
Total | $1,851.10 |
INVESTMENTS_SCHEDULE_OF_INVEST4
INVESTMENTS (SCHEDULE OF INVESTMENTS IN OUR PORTFOLIO RATED BELOW-INVESTMENT GRADE WHICH HAVE BEEN CONTINUOUSLY IN AN UNREALIZED LOSS POSITION 2) (Details) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
issuers | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Greater than 12 months, Unrealized losses | ($24.50) | ($30.20) |
Unrealized losses, total | -96.8 | -213.2 |
Greater than 12 months, Estimated fair value | 439.2 | 285.8 |
Fair value, total | 1,851.10 | 3,855.90 |
Non Investment Grade [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Continuous unrealized loss position exceeding cost basis, percent | 20.00% | |
Less than 6 months, Number of issuers | 6 | |
Greater than 12 months, Number of issuers | 1 | |
Number of issuers, Total | 7 | |
Less than 6 months, Cost basis | 40.9 | |
Greater than 12 months, Cost basis | 14.1 | |
Amortized cost, Total | 55 | |
Less than 6 months, Unrealized loss | -10.3 | |
Greater than 12 months, Unrealized losses | -4.5 | |
Unrealized losses, total | -14.8 | |
Less than 6 months, Estimated fair value | 30.6 | |
Greater than 12 months, Estimated fair value | 9.6 | |
Fair value, total | $40.20 |
INVESTMENTS_SCHEDULE_OF_UNREAL
INVESTMENTS (SCHEDULE OF UNREALIZED LOSS ON INVESTMENTS) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair value, less than twelve months | $1,411.90 | $3,570.10 |
Unrealized losses, less than 12 months | -72.3 | -183 |
Fair value, twelve months or longer, Fair value | 439.2 | 285.8 |
Unrealized losses, 12 months or longer | -24.5 | -30.2 |
Fair value, total | 1,851.10 | 3,855.90 |
Unrealized losses, total | -96.8 | -213.2 |
US treasury and government [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair value, less than twelve months | 12.1 | 23.8 |
Unrealized losses, less than 12 months | -0.1 | -0.6 |
Fair value, twelve months or longer, Fair value | 4.6 | 0 |
Unrealized losses, 12 months or longer | 0 | 0 |
Fair value, total | 16.7 | 23.8 |
Unrealized losses, total | -0.1 | -0.6 |
US States and Political Subdivisions Debt Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair value, less than twelve months | 13.2 | 473.6 |
Unrealized losses, less than 12 months | -0.3 | -30.3 |
Fair value, twelve months or longer, Fair value | 44.5 | 79.2 |
Unrealized losses, 12 months or longer | -2.7 | -8.7 |
Fair value, total | 57.7 | 552.8 |
Unrealized losses, total | -3 | -39 |
Corporate debt securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair value, less than twelve months | 985 | 2,432.40 |
Unrealized losses, less than 12 months | -65.9 | -137.7 |
Fair value, twelve months or longer, Fair value | 297.5 | 170.3 |
Unrealized losses, 12 months or longer | -19.2 | -20.8 |
Fair value, total | 1,282.50 | 2,602.70 |
Unrealized losses, total | -85.1 | -158.5 |
Asset-backed securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair value, less than twelve months | 91.2 | 308.4 |
Unrealized losses, less than 12 months | -1.3 | -6.5 |
Fair value, twelve months or longer, Fair value | 60.5 | 32.5 |
Unrealized losses, 12 months or longer | -2.1 | -0.7 |
Fair value, total | 151.7 | 340.9 |
Unrealized losses, total | -3.4 | -7.2 |
Collateralized debt obligations [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair value, less than twelve months | 184.2 | 46.7 |
Unrealized losses, less than 12 months | -3.4 | -0.5 |
Fair value, twelve months or longer, Fair value | 0 | 0 |
Unrealized losses, 12 months or longer | 0 | 0 |
Fair value, total | 184.2 | 46.7 |
Unrealized losses, total | -3.4 | -0.5 |
Commercial Mortgage Backed Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair value, less than twelve months | 46.7 | 161.8 |
Unrealized losses, less than 12 months | -0.5 | -5.8 |
Fair value, twelve months or longer, Fair value | 0 | 0 |
Unrealized losses, 12 months or longer | 0 | 0 |
Fair value, total | 46.7 | 161.8 |
Unrealized losses, total | -0.5 | -5.8 |
Mortgage pass-through securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair value, less than twelve months | 0.5 | 1.6 |
Unrealized losses, less than 12 months | 0 | 0 |
Fair value, twelve months or longer, Fair value | 0.1 | 1.6 |
Unrealized losses, 12 months or longer | 0 | 0 |
Fair value, total | 0.6 | 3.2 |
Unrealized losses, total | 0 | 0 |
Collateralized Mortgage Backed Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair value, less than twelve months | 79 | 121.8 |
Unrealized losses, less than 12 months | -0.8 | -1.6 |
Fair value, twelve months or longer, Fair value | 32 | 2.2 |
Unrealized losses, 12 months or longer | -0.5 | 0 |
Fair value, total | 111 | 124 |
Unrealized losses, total | -1.3 | -1.6 |
Equity Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair value, less than twelve months | 13.2 | 0.5 |
Unrealized losses, less than 12 months | -0.6 | 0 |
Fair value, twelve months or longer, Fair value | 0.5 | 0 |
Unrealized losses, 12 months or longer | 0 | 0 |
Fair value, total | 13.7 | 0.5 |
Unrealized losses, total | ($0.60) | $0 |
INVESTMENTS_SCHEDULE_OF_STRUCT
INVESTMENTS (SCHEDULE OF STRUCTURED SECURITIES) (Details) (USD $) | 3 Months Ended |
In Millions, unless otherwise specified | Dec. 31, 2014 |
Financial Instruments Owned and Pledged as Collateral [Line Items] | |
Par value | $4,439.10 |
Amortized cost | 3,969.90 |
Estimated fair value | 4,215.40 |
Percent of fixed maturities | 20.40% |
Pass Throughs, Sequential and Equivalent Securities [Member] | |
Financial Instruments Owned and Pledged as Collateral [Line Items] | |
Amortized cost | 969.4 |
Estimated fair value | 1,033.40 |
Percent of fixed maturities | 5.00% |
Planned Amortization Classes, Target Amortization Classes and Accretion Directed Bonds [Member] | |
Financial Instruments Owned and Pledged as Collateral [Line Items] | |
Amortized cost | 243.3 |
Estimated fair value | 262 |
Percent of fixed maturities | 1.30% |
Commercial Mortgage Backed Securities [Member] | |
Financial Instruments Owned and Pledged as Collateral [Line Items] | |
Amortized cost | 1,195 |
Estimated fair value | 1,276.30 |
Percent of fixed maturities | 6.20% |
Asset-backed securities [Member] | |
Financial Instruments Owned and Pledged as Collateral [Line Items] | |
Amortized cost | 1,186.60 |
Estimated fair value | 1,269 |
Percent of fixed maturities | 6.10% |
Collateralized debt obligations [Member] | |
Financial Instruments Owned and Pledged as Collateral [Line Items] | |
Amortized cost | 325.3 |
Estimated fair value | 324.5 |
Percent of fixed maturities | 1.60% |
Other Type of Security [Member] | |
Financial Instruments Owned and Pledged as Collateral [Line Items] | |
Amortized cost | 50.3 |
Estimated fair value | 50.2 |
Percent of fixed maturities | 0.20% |
Below 4 Percent [Member] | |
Financial Instruments Owned and Pledged as Collateral [Line Items] | |
Par value | 1,160.70 |
Amortized cost | 887.8 |
Estimated fair value | 908 |
Structured settlement, interest rate, low end | 0.00% |
Structured settlement, interest rate, high end | 4.00% |
4 Percent - 5 Percent [Member] | |
Financial Instruments Owned and Pledged as Collateral [Line Items] | |
Par value | 759.5 |
Amortized cost | 717.6 |
Estimated fair value | 757.7 |
Structured settlement, interest rate, low end | 4.00% |
Structured settlement, interest rate, high end | 5.00% |
5 Percent - 6 Percent [Member] | |
Financial Instruments Owned and Pledged as Collateral [Line Items] | |
Par value | 1,880 |
Amortized cost | 1,760.10 |
Estimated fair value | 1,882.20 |
Structured settlement, interest rate, low end | 5.00% |
Structured settlement, interest rate, high end | 6.00% |
6 Percent - 7 Percent [Member] | |
Financial Instruments Owned and Pledged as Collateral [Line Items] | |
Par value | 533.6 |
Amortized cost | 496.5 |
Estimated fair value | 544.7 |
Structured settlement, interest rate, low end | 6.00% |
Structured settlement, interest rate, high end | 7.00% |
7 Percent - 8 Percent [Member] | |
Financial Instruments Owned and Pledged as Collateral [Line Items] | |
Par value | 85.3 |
Amortized cost | 87 |
Estimated fair value | 101.3 |
Structured settlement, interest rate, low end | 7.00% |
Structured settlement, interest rate, high end | 8.00% |
8 Percent and Above [Member] | |
Financial Instruments Owned and Pledged as Collateral [Line Items] | |
Par value | 20 |
Amortized cost | 20.9 |
Estimated fair value | $21.50 |
Structured settlement, interest rate, low end | 8.00% |
Structured settlement, interest rate, high end | 13.00% |
INVESTMENTS_SUMMARY_OF_WEIGHTE
INVESTMENTS (SUMMARY OF WEIGHTED AVERAGE LOAN-TO-VALUE RATIO FOR OUTSTANDING MORTGAGE LOANS) (DETAILS) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Mortgage loans | $1,691.90 | $1,729.50 |
Estimate of fair value measurement [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Mortgage loans | 1,768.90 | |
Collateral | 3,025.80 | |
Estimate of fair value measurement [Member] | Less than 60% [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Mortgage loans | 787.4 | |
Collateral | 1,694.10 | |
Estimate of fair value measurement [Member] | 60% to 70% [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Mortgage loans | 387.1 | |
Collateral | 587 | |
Estimate of fair value measurement [Member] | Greater than 70% to 80% [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Mortgage loans | 441.6 | |
Collateral | 574.8 | |
Estimate of fair value measurement [Member] | Greater than 80% to 90% [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Mortgage loans | 147.8 | |
Collateral | 165.2 | |
Estimate of fair value measurement [Member] | Greater than 90% [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Mortgage loans | 5 | |
Collateral | 4.7 | |
Carrying value [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Mortgage loans | 1,691.90 | |
Carrying value [Member] | Less than 60% [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Mortgage loans | 745.8 | |
Carrying value [Member] | 60% to 70% [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Mortgage loans | 376.9 | |
Carrying value [Member] | Greater than 70% to 80% [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Mortgage loans | 425.3 | |
Carrying value [Member] | Greater than 80% to 90% [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Mortgage loans | 139.6 | |
Carrying value [Member] | Greater than 90% [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Mortgage loans | $4.30 | |
Minimum [Member] | 60% to 70% [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Outstanding Mortgage Loans, Loan to Value Ratio | 0.6 | |
Minimum [Member] | Greater than 70% to 80% [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Outstanding Mortgage Loans, Loan to Value Ratio | 0.7 | |
Minimum [Member] | Greater than 80% to 90% [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Outstanding Mortgage Loans, Loan to Value Ratio | 0.8 | |
Minimum [Member] | Greater than 90% [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Outstanding Mortgage Loans, Loan to Value Ratio | 0.9 | |
Maximum [Member] | Less than 60% [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Outstanding Mortgage Loans, Loan to Value Ratio | 0.6 | |
Maximum [Member] | 60% to 70% [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Outstanding Mortgage Loans, Loan to Value Ratio | 0.7 | |
Maximum [Member] | Greater than 70% to 80% [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Outstanding Mortgage Loans, Loan to Value Ratio | 0.8 | |
Maximum [Member] | Greater than 80% to 90% [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Outstanding Mortgage Loans, Loan to Value Ratio | 0.9 |
FAIR_VALUE_MEASUREMENTS_FAIR_V
FAIR VALUE MEASUREMENTS (FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS MEASURED ON A RECURRING BASIS - SECURITIES) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | $20,634.90 | $23,204.60 |
Trading securities | 244.9 | 247.6 |
Investments held by variable interest entities - corporate securities | 1,367.10 | 1,046.70 |
Assets held in separate accounts | 5.6 | 10.3 |
Level 1 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Trading securities | 3.5 | 2.4 |
Investments held by variable interest entities - corporate securities | 0 | 0 |
Assets held in separate accounts | 0 | 0 |
Total assets carried at fair value by category | 221.8 | 82.6 |
Total liabilities carried at fair value by category | 0 | |
Level 2 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Trading securities | 212.8 | 245.2 |
Investments held by variable interest entities - corporate securities | 1,367.10 | 1,046.70 |
Assets held in separate accounts | 5.6 | 10.3 |
Total assets carried at fair value by category | 22,039.50 | 24,131.80 |
Total liabilities carried at fair value by category | 0 | |
Level 3 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Trading securities | 28.6 | 0 |
Investments held by variable interest entities - corporate securities | 0 | 0 |
Assets held in separate accounts | 0 | 0 |
Total assets carried at fair value by category | 518.8 | 674.6 |
Total liabilities carried at fair value by category | 905.5 | |
Corporate debt securities [Member] | Level 1 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 0 |
Equity securities - corporate securities | 216.9 | 79.6 |
Trading securities | 0 | 0 |
Corporate debt securities [Member] | Level 2 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 13,605.10 | 15,340.10 |
Equity securities - corporate securities | 174.1 | 118.9 |
Trading securities | 24.3 | 45.2 |
Corporate debt securities [Member] | Level 3 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 365.9 | 359.6 |
Equity securities - corporate securities | 28 | 24.5 |
Trading securities | 0 | 0 |
US treasury and government [Member] | Level 1 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 0 |
Trading securities | 0 | 0 |
US treasury and government [Member] | Level 2 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 168.9 | 73.1 |
Trading securities | 3.7 | 4.6 |
US treasury and government [Member] | Level 3 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 0 |
Trading securities | 0 | 0 |
US States and Political Subdivisions Debt Securities [Member] | Level 1 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 0 |
Trading securities | 0 | |
US States and Political Subdivisions Debt Securities [Member] | Level 2 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 2,242.20 | 2,204.40 |
Trading securities | 14.1 | |
US States and Political Subdivisions Debt Securities [Member] | Level 3 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 35.5 | 0 |
Trading securities | 0 | |
Foreign Government Debt Securities [Member] | Level 1 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | |
Foreign Government Debt Securities [Member] | Level 2 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 1.9 | |
Foreign Government Debt Securities [Member] | Level 3 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | |
Asset-backed securities [Member] | Level 1 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 0 |
Trading securities | 0 | 0 |
Asset-backed securities [Member] | Level 2 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 1,209.80 | 1,419.90 |
Trading securities | 24 | 24.3 |
Asset-backed securities [Member] | Level 3 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 59.2 | 42.2 |
Trading securities | 0 | 0 |
Collateralized debt obligations [Member] | Level 1 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 0 |
Collateralized debt obligations [Member] | Level 2 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 324.5 | 47.3 |
Collateralized debt obligations [Member] | Level 3 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 246.7 |
Commercial Mortgage Backed Securities [Member] | Level 1 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 0 |
Trading securities | 0 | 0 |
Commercial Mortgage Backed Securities [Member] | Level 2 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 1,275.10 | 1,609 |
Trading securities | 131 | 125.8 |
Commercial Mortgage Backed Securities [Member] | Level 3 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 1.2 | 0 |
Trading securities | 28.6 | 0 |
Mortgage pass-through securities [Member] | Level 1 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 0 |
Trading securities | 0 | 0 |
Mortgage pass-through securities [Member] | Level 2 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 4.2 | 11.8 |
Trading securities | 0.1 | 0.1 |
Mortgage pass-through securities [Member] | Level 3 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0.4 | 1.6 |
Trading securities | 0 | 0 |
Collateralized mortgage obligations [Member] | Level 1 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 0 |
Trading securities | 0 | 0 |
Collateralized mortgage obligations [Member] | Level 2 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 1,341 | 1,848.90 |
Trading securities | 29.7 | 31.1 |
Collateralized mortgage obligations [Member] | Level 3 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 0 |
Trading securities | 0 | 0 |
Total fixed maturities, available for sale [Member] | Level 1 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 0 |
Total fixed maturities, available for sale [Member] | Level 2 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 20,172.70 | 22,554.50 |
Total fixed maturities, available for sale [Member] | Level 3 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 462.2 | 650.1 |
Equity Securities [Member] | Level 1 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Trading securities | 3.5 | 2.4 |
Equity Securities [Member] | Level 2 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Trading securities | 0 | 0 |
Equity Securities [Member] | Level 3 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Trading securities | 0 | 0 |
Derivatives [Member] | Level 1 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Other invested assets - derivatives | 1.4 | 0.6 |
Derivatives [Member] | Level 2 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Other invested assets - derivatives | 107.2 | 156.2 |
Derivatives [Member] | Level 3 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Other invested assets - derivatives | 0 | 0 |
Embedded derivatives associated with fixed index annuity products [Member] | Level 1 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total liabilities for insurance products | 0 | 0 |
Embedded derivatives associated with fixed index annuity products [Member] | Level 2 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total liabilities for insurance products | 0 | 0 |
Embedded derivatives associated with fixed index annuity products [Member] | Level 3 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total liabilities for insurance products | 1,081.50 | 903.7 |
Embedded derivative associated with modified coinsurance agreement [Member] | Level 1 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total liabilities for insurance products | 0 | |
Embedded derivative associated with modified coinsurance agreement [Member] | Level 2 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total liabilities for insurance products | 0 | |
Embedded derivative associated with modified coinsurance agreement [Member] | Level 3 [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total liabilities for insurance products | 1.8 | |
Estimate of fair value measurement [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Trading securities | 244.9 | 247.6 |
Investments held by variable interest entities - corporate securities | 1,367.10 | 1,046.70 |
Assets held in separate accounts | 5.6 | 10.3 |
Total assets carried at fair value by category | 22,780.10 | 24,889 |
Total liabilities carried at fair value by category | 905.5 | |
Estimate of fair value measurement [Member] | Corporate debt securities [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 13,971 | 15,699.70 |
Equity securities - corporate securities | 419 | 223 |
Trading securities | 24.3 | 45.2 |
Estimate of fair value measurement [Member] | US treasury and government [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 168.9 | 73.1 |
Trading securities | 3.7 | 4.6 |
Estimate of fair value measurement [Member] | US States and Political Subdivisions Debt Securities [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 2,277.70 | 2,204.40 |
Trading securities | 14.1 | |
Estimate of fair value measurement [Member] | Foreign Government Debt Securities [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 1.9 | |
Estimate of fair value measurement [Member] | Asset-backed securities [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 1,269 | 1,462.10 |
Trading securities | 24 | 24.3 |
Estimate of fair value measurement [Member] | Collateralized debt obligations [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 324.5 | 294 |
Estimate of fair value measurement [Member] | Commercial Mortgage Backed Securities [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 1,276.30 | 1,609 |
Trading securities | 159.6 | 125.8 |
Estimate of fair value measurement [Member] | Mortgage pass-through securities [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 4.6 | 13.4 |
Trading securities | 0.1 | 0.1 |
Estimate of fair value measurement [Member] | Collateralized mortgage obligations [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 1,341 | 1,848.90 |
Trading securities | 29.7 | 31.1 |
Estimate of fair value measurement [Member] | Total fixed maturities, available for sale [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 20,634.90 | 23,204.60 |
Estimate of fair value measurement [Member] | Equity Securities [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Trading securities | 3.5 | 2.4 |
Estimate of fair value measurement [Member] | Derivatives [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Other invested assets - derivatives | 108.6 | 156.8 |
Estimate of fair value measurement [Member] | Embedded derivatives associated with fixed index annuity products [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total liabilities for insurance products | 1,081.50 | 903.7 |
Estimate of fair value measurement [Member] | Embedded derivative associated with modified coinsurance agreement [Member] | Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total liabilities for insurance products | $1.80 |
FAIR_VALUE_MEASUREMENTS_FAIR_V1
FAIR VALUE MEASUREMENTS (FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS MEASURED ON A RECURRING BASIS - FINANCIAL INSTRUMENTS) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
In Millions, unless otherwise specified | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Cash and cash equivalents - unrestricted | $611.60 | $699 | $582.50 | $436 |
Cash and cash equivalents held by variable interest entities | 68.3 | 104.3 | ||
Fair value, measurements, recurring [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Mortgage loans | 1,691.90 | 1,729.50 | ||
Policy loans | 106.9 | 277 | ||
Company-owned life insurance | 157.6 | 144.8 | ||
Alternative investment funds | 102.8 | 67.6 | ||
Cash and cash equivalents - unrestricted | 611.6 | 699 | ||
Cash and cash equivalents held by variable interest entities | 68.3 | 104.3 | ||
Policyholder account balances | 10,707.20 | 12,776.40 | ||
Investment borrowings | 1,519.20 | 1,900 | ||
Borrowings related to variable interest entities | 1,286.10 | 1,012.30 | ||
Notes payable – direct corporate obligations | 794.4 | 856.4 | ||
Fair value, measurements, recurring [Member] | Level 1 [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Mortgage loans | 0 | 0 | ||
Policy loans | 0 | 0 | ||
Company-owned life insurance | 0 | 0 | ||
Alternative investment funds | 0 | 0 | ||
Cash and cash equivalents - unrestricted | 549.6 | 457.8 | ||
Cash and cash equivalents held by variable interest entities | 68.3 | 104.3 | ||
Policyholder account balances | 0 | 0 | ||
Investment borrowings | 0 | 0 | ||
Borrowings related to variable interest entities | 0 | 0 | ||
Notes payable – direct corporate obligations | 0 | 0 | ||
Fair value, measurements, recurring [Member] | Level 2 [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Mortgage loans | 0 | 0 | ||
Policy loans | 0 | 0 | ||
Company-owned life insurance | 157.6 | 144.8 | ||
Alternative investment funds | 102.8 | 67.6 | ||
Cash and cash equivalents - unrestricted | 62 | 241.2 | ||
Cash and cash equivalents held by variable interest entities | 0 | 0 | ||
Policyholder account balances | 0 | 0 | ||
Investment borrowings | 1,520.40 | 1,948.50 | ||
Borrowings related to variable interest entities | 1,229.20 | 993.7 | ||
Notes payable – direct corporate obligations | 807.4 | 872.5 | ||
Fair value, measurements, recurring [Member] | Level 3 [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Mortgage loans | 1,768.90 | 1,749.50 | ||
Policy loans | 106.9 | 277 | ||
Company-owned life insurance | 0 | 0 | ||
Alternative investment funds | 0 | 0 | ||
Cash and cash equivalents - unrestricted | 0 | 0 | ||
Cash and cash equivalents held by variable interest entities | 0 | 0 | ||
Policyholder account balances | 10,707.20 | 12,776.40 | ||
Investment borrowings | 0 | 0 | ||
Borrowings related to variable interest entities | 0 | 0 | ||
Notes payable – direct corporate obligations | 0 | 0 | ||
Estimate of fair value measurement [Member] | Fair value, measurements, recurring [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Mortgage loans | 1,768.90 | 1,749.50 | ||
Policy loans | 106.9 | 277 | ||
Company-owned life insurance | 157.6 | 144.8 | ||
Alternative investment funds | 102.8 | 67.6 | ||
Cash and cash equivalents - unrestricted | 611.6 | 699 | ||
Cash and cash equivalents held by variable interest entities | 68.3 | 104.3 | ||
Policyholder account balances | 10,707.20 | 12,776.40 | ||
Investment borrowings | 1,520.40 | 1,948.50 | ||
Borrowings related to variable interest entities | 1,229.20 | 993.7 | ||
Notes payable – direct corporate obligations | $807.40 | $872.50 |
FAIR_VALUE_MEASUREMENTS_FAIR_V2
FAIR VALUE MEASUREMENTS (FAIR VALUE ASSETS AND LIABILITIES MEASURED ON A RECURRING BASIS, UNOBSERVABLE INPUT RECONCILIATION) (Details) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Liabilities: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | ($905.50) | ($739.50) |
Purchases, sales, issuances and settlements, net | -102.5 | -215.3 |
Total realized and unrealized gains (losses) included in net income | -73.5 | 49.3 |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0 | 0 |
Transfers into level 3 | 0 | 0 |
Transfers out of level 3 | 0 | 0 |
Assets of CLIC sold | 0 | |
Fair value, measurement with unobservable inputs reconciliation, ending balance | -1,081.50 | -905.5 |
Amount of total gains (losses) included in our net income relating to assets and liabilities still held as of the reporting date | -73.5 | 49.3 |
Available-for-sale securities [Member] | Corporate debt securities [Member] | ||
Assets: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 359.6 | 355.5 |
Purchases, sales, issuances and settlements, net | 70 | 34 |
Total realized and unrealized gains (losses) included in net income | 0 | -0.3 |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 20.1 | -9.8 |
Transfers into level 3 | 36.8 | 13.2 |
Transfers out of level 3 | -69.4 | -33 |
Assets of CLIC sold | -51.2 | |
Fair value, measurement with unobservable inputs reconciliation, ending balance | 365.9 | 359.6 |
Liabilities: | ||
Amount of total gains (losses) included in our net income relating to assets and liabilities still held as of the reporting date | 0 | 0 |
Available-for-sale securities [Member] | US States and Political Subdivisions Debt Securities [Member] | ||
Assets: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 0 | 13.1 |
Purchases, sales, issuances and settlements, net | -1.8 | 0 |
Total realized and unrealized gains (losses) included in net income | 0 | 0 |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 3 | 0 |
Transfers into level 3 | 36.5 | 0 |
Transfers out of level 3 | 0 | -13.1 |
Assets of CLIC sold | -2.2 | |
Fair value, measurement with unobservable inputs reconciliation, ending balance | 35.5 | 0 |
Liabilities: | ||
Amount of total gains (losses) included in our net income relating to assets and liabilities still held as of the reporting date | 0 | 0 |
Available-for-sale securities [Member] | Asset-backed Securities [Member] | ||
Assets: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 42.2 | 44 |
Purchases, sales, issuances and settlements, net | 7.6 | 1.6 |
Total realized and unrealized gains (losses) included in net income | 0 | 0.1 |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 5.1 | -3.6 |
Transfers into level 3 | 14 | 0.1 |
Transfers out of level 3 | 0 | 0 |
Assets of CLIC sold | -9.7 | |
Fair value, measurement with unobservable inputs reconciliation, ending balance | 59.2 | 42.2 |
Liabilities: | ||
Amount of total gains (losses) included in our net income relating to assets and liabilities still held as of the reporting date | 0 | 0 |
Available-for-sale securities [Member] | Collateralized debt obligations [Member] | ||
Assets: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 246.7 | 324 |
Purchases, sales, issuances and settlements, net | 0 | -85.4 |
Total realized and unrealized gains (losses) included in net income | 0 | 0.2 |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0 | 7.9 |
Transfers into level 3 | 0 | 0 |
Transfers out of level 3 | -246.7 | 0 |
Assets of CLIC sold | 0 | |
Fair value, measurement with unobservable inputs reconciliation, ending balance | 0 | 246.7 |
Liabilities: | ||
Amount of total gains (losses) included in our net income relating to assets and liabilities still held as of the reporting date | 0 | 0 |
Available-for-sale securities [Member] | Commercial Mortgage Backed Securities [Member] | ||
Assets: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 0 | 6.2 |
Purchases, sales, issuances and settlements, net | 1.1 | 0 |
Total realized and unrealized gains (losses) included in net income | 0 | 0 |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0.1 | 0 |
Transfers into level 3 | 0 | 0 |
Transfers out of level 3 | 0 | -6.2 |
Assets of CLIC sold | 0 | |
Fair value, measurement with unobservable inputs reconciliation, ending balance | 1.2 | 0 |
Liabilities: | ||
Amount of total gains (losses) included in our net income relating to assets and liabilities still held as of the reporting date | 0 | 0 |
Available-for-sale securities [Member] | Mortgage pass-through securities [Member] | ||
Assets: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 1.6 | 1.9 |
Purchases, sales, issuances and settlements, net | -1.2 | -0.3 |
Total realized and unrealized gains (losses) included in net income | 0 | 0 |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0 | 0 |
Transfers into level 3 | 0 | 0 |
Transfers out of level 3 | 0 | 0 |
Assets of CLIC sold | 0 | |
Fair value, measurement with unobservable inputs reconciliation, ending balance | 0.4 | 1.6 |
Liabilities: | ||
Amount of total gains (losses) included in our net income relating to assets and liabilities still held as of the reporting date | 0 | 0 |
Available-for-sale securities [Member] | Collateralized mortgage obligations [Member] | ||
Assets: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 16.9 | |
Purchases, sales, issuances and settlements, net | 0 | |
Total realized and unrealized gains (losses) included in net income | 0 | |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0 | |
Transfers into level 3 | 0 | |
Transfers out of level 3 | -16.9 | |
Fair value, measurement with unobservable inputs reconciliation, ending balance | 0 | |
Liabilities: | ||
Amount of total gains (losses) included in our net income relating to assets and liabilities still held as of the reporting date | 0 | |
Available-for-sale securities [Member] | Total fixed maturities, available for sale [Member] | ||
Assets: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 650.1 | 761.6 |
Purchases, sales, issuances and settlements, net | 75.7 | -50.1 |
Total realized and unrealized gains (losses) included in net income | 0 | 0 |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 28.3 | -5.5 |
Transfers into level 3 | 87.3 | 13.3 |
Transfers out of level 3 | -316.1 | -69.2 |
Assets of CLIC sold | -63.1 | |
Fair value, measurement with unobservable inputs reconciliation, ending balance | 462.2 | 650.1 |
Liabilities: | ||
Amount of total gains (losses) included in our net income relating to assets and liabilities still held as of the reporting date | 0 | 0 |
Equity securities classification [Member] | Corporate debt securities [Member] | ||
Assets: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 24.5 | 0.1 |
Purchases, sales, issuances and settlements, net | 3.5 | 24.5 |
Total realized and unrealized gains (losses) included in net income | 0 | 0 |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0 | -0.1 |
Transfers into level 3 | 0 | 0 |
Transfers out of level 3 | 0 | 0 |
Assets of CLIC sold | 0 | |
Fair value, measurement with unobservable inputs reconciliation, ending balance | 28 | 24.5 |
Liabilities: | ||
Amount of total gains (losses) included in our net income relating to assets and liabilities still held as of the reporting date | 0 | 0 |
Equity securities classification [Member] | Venture Capital Funds [Member] | ||
Assets: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 2.8 | |
Purchases, sales, issuances and settlements, net | 0 | |
Total realized and unrealized gains (losses) included in net income | -2.5 | |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | -0.3 | |
Transfers into level 3 | 0 | |
Transfers out of level 3 | 0 | |
Fair value, measurement with unobservable inputs reconciliation, ending balance | 0 | |
Liabilities: | ||
Amount of total gains (losses) included in our net income relating to assets and liabilities still held as of the reporting date | 0 | |
Equity securities classification [Member] | Equity Securities [Member] | ||
Assets: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 2.9 | |
Purchases, sales, issuances and settlements, net | 24.5 | |
Total realized and unrealized gains (losses) included in net income | -2.5 | |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | -0.4 | |
Transfers into level 3 | 0 | |
Transfers out of level 3 | 0 | |
Fair value, measurement with unobservable inputs reconciliation, ending balance | 24.5 | |
Liabilities: | ||
Amount of total gains (losses) included in our net income relating to assets and liabilities still held as of the reporting date | 0 | |
Trading Securities [Member] | ||
Assets: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 13.7 | |
Purchases, sales, issuances and settlements, net | -7.7 | |
Total realized and unrealized gains (losses) included in net income | 0.6 | |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | -0.2 | |
Transfers into level 3 | 0 | |
Transfers out of level 3 | -6.4 | |
Fair value, measurement with unobservable inputs reconciliation, ending balance | 0 | |
Liabilities: | ||
Amount of total gains (losses) included in our net income relating to assets and liabilities still held as of the reporting date | -0.2 | |
Trading Securities [Member] | Collateralized debt obligations [Member] | ||
Assets: | ||
Purchases, sales, issuances and settlements, net | -7.7 | |
Trading Securities [Member] | Commercial Mortgage Backed Securities [Member] | ||
Assets: | ||
Purchases, sales, issuances and settlements, net | 29 | |
Collateralized mortgage obligations [Member] | Trading Securities [Member] | ||
Assets: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 5.8 | |
Purchases, sales, issuances and settlements, net | 0 | |
Total realized and unrealized gains (losses) included in net income | 0 | |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0 | |
Transfers into level 3 | 0 | |
Transfers out of level 3 | -5.8 | |
Fair value, measurement with unobservable inputs reconciliation, ending balance | 0 | |
Liabilities: | ||
Amount of total gains (losses) included in our net income relating to assets and liabilities still held as of the reporting date | 0 | |
Commercial Mortgage Backed Securities [Member] | Trading Securities [Member] | ||
Assets: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 0 | |
Purchases, sales, issuances and settlements, net | 29 | |
Total realized and unrealized gains (losses) included in net income | 0 | |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | -0.4 | |
Transfers into level 3 | 0 | |
Transfers out of level 3 | 0 | |
Assets of CLIC sold | 0 | |
Fair value, measurement with unobservable inputs reconciliation, ending balance | 28.6 | |
Liabilities: | ||
Amount of total gains (losses) included in our net income relating to assets and liabilities still held as of the reporting date | -0.4 | |
Collateralized debt obligations [Member] | Trading Securities [Member] | ||
Assets: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 7.3 | |
Purchases, sales, issuances and settlements, net | -7.7 | |
Total realized and unrealized gains (losses) included in net income | 0.6 | |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | -0.2 | |
Transfers into level 3 | 0 | |
Transfers out of level 3 | 0 | |
Fair value, measurement with unobservable inputs reconciliation, ending balance | 0 | |
Liabilities: | ||
Amount of total gains (losses) included in our net income relating to assets and liabilities still held as of the reporting date | -0.2 | |
US States and Political Subdivisions Debt Securities [Member] | Trading Securities [Member] | ||
Assets: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 0.6 | |
Purchases, sales, issuances and settlements, net | 0 | |
Total realized and unrealized gains (losses) included in net income | 0 | |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0 | |
Transfers into level 3 | 0 | |
Transfers out of level 3 | -0.6 | |
Fair value, measurement with unobservable inputs reconciliation, ending balance | 0 | |
Liabilities: | ||
Amount of total gains (losses) included in our net income relating to assets and liabilities still held as of the reporting date | 0 | |
Interest sensitive products [Member] | ||
Liabilities: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | -903.7 | -734 |
Purchases, sales, issuances and settlements, net | -104.3 | -219 |
Total realized and unrealized gains (losses) included in net income | -73.5 | 49.3 |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0 | 0 |
Transfers into level 3 | 0 | 0 |
Transfers out of level 3 | 0 | 0 |
Assets of CLIC sold | 0 | |
Fair value, measurement with unobservable inputs reconciliation, ending balance | -1,081.50 | -903.7 |
Amount of total gains (losses) included in our net income relating to assets and liabilities still held as of the reporting date | -73.5 | 49.3 |
Interest Sensitive Products Modified Coinsurance Agreement [Member] | ||
Liabilities: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | -1.8 | -5.5 |
Purchases, sales, issuances and settlements, net | 1.8 | 3.7 |
Total realized and unrealized gains (losses) included in net income | 0 | 0 |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0 | 0 |
Transfers into level 3 | 0 | 0 |
Transfers out of level 3 | 0 | 0 |
Assets of CLIC sold | 0 | |
Fair value, measurement with unobservable inputs reconciliation, ending balance | 0 | -1.8 |
Amount of total gains (losses) included in our net income relating to assets and liabilities still held as of the reporting date | $0 | $0 |
FAIR_VALUE_MEASUREMENTS_FAIR_V3
FAIR VALUE MEASUREMENTS (FAIR VALUE ASSETS AND LIABILITIES MEASURED ON A RECURRING BASIS, UNOBSERVABLE INPUT RECONCILIATION - ACTIVITY) (Details) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Liabilities: | ||
Purchases | ($121.90) | ($105.60) |
Sales | 10.9 | 5.1 |
Issuances | -47.5 | -156.3 |
Settlements | 56 | 41.5 |
Purchases, sales, issuances and settlements, net | -102.5 | -215.3 |
Trading Securities [Member] | ||
Assets: | ||
Purchases, sales, issuances and settlements, net | -7.7 | |
Corporate debt securities [Member] | Available-for-sale securities [Member] | ||
Assets: | ||
Purchases | 71.7 | 44 |
Sales | -1.7 | -10 |
Issuances | 0 | 0 |
Settlements | 0 | 0 |
Purchases, sales, issuances and settlements, net | 70 | 34 |
Corporate debt securities [Member] | Equity securities classification [Member] | ||
Assets: | ||
Purchases | 3.5 | 24.5 |
Sales | 0 | 0 |
Issuances | 0 | 0 |
Settlements | 0 | 0 |
Purchases, sales, issuances and settlements, net | 3.5 | 24.5 |
US States and Political Subdivisions Debt Securities [Member] | Available-for-sale securities [Member] | ||
Assets: | ||
Purchases | 0 | |
Sales | -1.8 | |
Issuances | 0 | |
Settlements | 0 | |
Purchases, sales, issuances and settlements, net | -1.8 | 0 |
Asset-backed Securities [Member] | Available-for-sale securities [Member] | ||
Assets: | ||
Purchases | 9.9 | 22 |
Sales | -2.3 | -20.4 |
Issuances | 0 | 0 |
Settlements | 0 | 0 |
Purchases, sales, issuances and settlements, net | 7.6 | 1.6 |
Collateralized debt obligations [Member] | Available-for-sale securities [Member] | ||
Assets: | ||
Purchases | 6 | |
Sales | -91.4 | |
Issuances | 0 | |
Settlements | 0 | |
Purchases, sales, issuances and settlements, net | 0 | -85.4 |
Collateralized debt obligations [Member] | Trading Securities [Member] | ||
Assets: | ||
Purchases | 0 | |
Sales | -7.7 | |
Issuances | 0 | |
Settlements | 0 | |
Purchases, sales, issuances and settlements, net | -7.7 | |
Commercial Mortgage Backed Securities [Member] | Available-for-sale securities [Member] | ||
Assets: | ||
Purchases | 1.1 | |
Sales | 0 | |
Issuances | 0 | |
Settlements | 0 | |
Purchases, sales, issuances and settlements, net | 1.1 | 0 |
Commercial Mortgage Backed Securities [Member] | Trading Securities [Member] | ||
Assets: | ||
Purchases | 29 | |
Sales | 0 | |
Issuances | 0 | |
Settlements | 0 | |
Purchases, sales, issuances and settlements, net | 29 | |
Mortgage pass-through securities [Member] | Available-for-sale securities [Member] | ||
Assets: | ||
Purchases | 1.1 | 0 |
Sales | -2.3 | -0.3 |
Issuances | 0 | 0 |
Settlements | 0 | 0 |
Purchases, sales, issuances and settlements, net | -1.2 | -0.3 |
Total fixed maturities, available for sale [Member] | Available-for-sale securities [Member] | ||
Assets: | ||
Purchases | 83.8 | 72 |
Sales | -8.1 | -122.1 |
Issuances | 0 | 0 |
Settlements | 0 | 0 |
Purchases, sales, issuances and settlements, net | 75.7 | -50.1 |
Interest sensitive products [Member] | ||
Liabilities: | ||
Purchases | -121.9 | -105.6 |
Sales | 7.5 | 1.4 |
Issuances | -45.9 | -156.3 |
Settlements | 56 | 41.5 |
Purchases, sales, issuances and settlements, net | -104.3 | -219 |
Interest Sensitive Products Modified Coinsurance Agreement [Member] | ||
Liabilities: | ||
Purchases | 0 | 0 |
Sales | 3.4 | 3.7 |
Issuances | -1.6 | 0 |
Settlements | 0 | 0 |
Purchases, sales, issuances and settlements, net | 1.8 | 3.7 |
Collateralized debt obligations [Member] | Trading Securities [Member] | ||
Assets: | ||
Purchases, sales, issuances and settlements, net | ($7.70) |
FAIR_VALUE_MEASUREMENTS_FAIR_V4
FAIR VALUE MEASUREMENTS (FAIR VALUE INPUTS) (Details) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Investments | 24,908.30 | 27,151.70 |
Other invested assets | 443.6 | 423.3 |
Policyholder account balances | 10,707.20 | 12,776.40 |
Level 3 [Member] | Interest sensitive products [Member] | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Weighted average projected portfolio yields | 5.42% | 5.60% |
Weighted average discount rates | 1.78% | 2.47% |
Weighted average surrender rates | 14.16% | 14.39% |
Level 3 [Member] | Corporate debt securities [Member] | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Weighted average discount rate | 2.58% | 2.36% |
Level 3 [Member] | Asset-backed securities [Member] | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Weighted average discount rate | 2.95% | 3.09% |
Level 3 [Member] | Collateralized debt obligations [Member] | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Weighted average discount rate | 1.32% | |
Weighted average recoveries | 65.80% | |
Weighted average constant prepayment rate | 20.00% | |
Weighted average annual default rate | 3.05% | |
Weighted average portfolio CCC percent | 12.57% | |
Minimum [Member] | Level 3 [Member] | Interest sensitive products [Member] | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Projected Portfolio Yields | 5.15% | 5.35% |
Discount rates | 0.00% | 0.00% |
Surrender rates | 1.98% | 2.80% |
Minimum [Member] | Level 3 [Member] | Corporate debt securities [Member] | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Discount rate | 1.48% | 1.65% |
Minimum [Member] | Level 3 [Member] | Asset-backed securities [Member] | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Discount rate | 1.99% | 2.03% |
Minimum [Member] | Level 3 [Member] | Collateralized debt obligations [Member] | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Discount rate | 0.95% | |
Debt obligation, recovery rate | 64.00% | |
Annual default rate | 1.14% | |
Portfolio CCC Percent | 1.52% | |
Maximum [Member] | Level 3 [Member] | Interest sensitive products [Member] | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Projected Portfolio Yields | 5.61% | 6.63% |
Discount rates | 2.74% | 4.64% |
Surrender rates | 47.88% | 54.60% |
Maximum [Member] | Level 3 [Member] | Corporate debt securities [Member] | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Discount rate | 5.83% | 2.90% |
Maximum [Member] | Level 3 [Member] | Asset-backed securities [Member] | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Discount rate | 4.15% | 4.20% |
Maximum [Member] | Level 3 [Member] | Collateralized debt obligations [Member] | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Discount rate | 2.00% | |
Debt obligation, recovery rate | 67.00% | |
Annual default rate | 5.57% | |
Portfolio CCC Percent | 21.79% | |
Estimate of fair value measurement [Member] | Level 3 [Member] | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Investments | 518.8 | 674.6 |
Other invested assets | 148.1 | 114 |
Policyholder account balances | 1,081.50 | 905.5 |
Estimate of fair value measurement [Member] | Level 3 [Member] | Corporate debt securities [Member] | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Investments | 312.1 | 260.3 |
Estimate of fair value measurement [Member] | Level 3 [Member] | Asset-backed securities [Member] | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Investments | 30.6 | 35.1 |
Estimate of fair value measurement [Member] | Level 3 [Member] | Collateralized debt obligations [Member] | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Investments | 240.7 | |
Estimate of fair value measurement [Member] | Level 3 [Member] | Equity Securities [Member] | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Investments | 28 | 24.5 |
FAIR_VALUE_MEASUREMENTS_NARRAT
FAIR VALUE MEASUREMENTS (NARRATIVE) (Details) | 12 Months Ended |
Dec. 31, 2014 | |
Fair Value Disclosures [Abstract] | |
Fair value of level 3 fixed maturity securities valued using broker quotes, percentage | 26.00% |
Available for sale fixed maturities classified as level 3, investment grade, percent | 85.00% |
Available for Sale Maturities with Significant Unobservable Inputs, Corporate Securities, Percent | 79.00% |
LIABILITIES_FOR_INSURANCE_PROD2
LIABILITIES FOR INSURANCE PRODUCTS (SCHEDULE OF INSURANCE LIABILITIES BY PRODUCT SEGMENT) (Details) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Liability for Future Policy Benefit, by Product Segment [Line Items] | ||
Future policy benefits | $10,835.40 | $11,222.50 |
Policyholder account balance | 10,707.20 | 12,776.40 |
Long-term Care [Member] | ||
Liability for Future Policy Benefit, by Product Segment [Line Items] | ||
Interest rate assumption | 6.00% | |
Future policy benefits | 5,385.20 | 4,999.70 |
Traditional Life Insurance Contracts [Member] | ||
Liability for Future Policy Benefit, by Product Segment [Line Items] | ||
Interest rate assumption | 5.00% | |
Future policy benefits | 2,175.80 | 2,517.50 |
Individual and Group Accident and Health [Member] | ||
Liability for Future Policy Benefit, by Product Segment [Line Items] | ||
Interest rate assumption | 5.00% | |
Future policy benefits | 2,519.10 | 2,466.80 |
Interest-sensitive Life Insurance Contract [Member] | ||
Liability for Future Policy Benefit, by Product Segment [Line Items] | ||
Interest rate assumption | 5.00% | |
Future policy benefits | 47.6 | 526.5 |
Policyholder account balance | 929.5 | 2,669.50 |
Annuities and Supplemental Contract with Life Contingencies [Member] | ||
Liability for Future Policy Benefit, by Product Segment [Line Items] | ||
Interest rate assumption | 4.00% | |
Future policy benefits | 707.7 | 712 |
Fixed Index Annuity [Member] | ||
Liability for Future Policy Benefit, by Product Segment [Line Items] | ||
Policyholder account balance | 4,496.90 | 4,093.90 |
Other Annuity [Member] | ||
Liability for Future Policy Benefit, by Product Segment [Line Items] | ||
Policyholder account balance | $5,280.80 | $6,013 |
LIABILITIES_FOR_INSURANCE_PROD3
LIABILITIES FOR INSURANCE PRODUCTS (SUMMARY OF LIABILITIES FOR UNPAID CLAIMS ADJUSTMENT EXPENSE) (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Paid claims related to: | |||
Add reinsurance receivables | $2,991.10 | $3,392.10 | |
Accident and Health Insurance Product Line [Member] | |||
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | |||
Balance, beginning of year | 1,710.10 | 1,679.30 | 1,637.30 |
Less reinsurance receivables | -164.1 | -27.4 | -21.7 |
Net balance, beginning of year | 1,546 | 1,651.90 | 1,615.60 |
Incurred claims related to: | |||
Current year | 1,468.10 | 1,511.10 | 1,570.10 |
Prior years | -39.9 | -162.3 | -56.4 |
Total incurred | 1,428.20 | 1,348.80 | 1,513.70 |
Interest on claim reserves | 70.5 | 75.2 | 77.8 |
Paid claims related to: | |||
Current year | 848.7 | 870 | 891.3 |
Prior years | 641.5 | 659.9 | 663.9 |
Total paid | 1,490.20 | 1,529.90 | 1,555.20 |
Balance, end of year | 1,554.50 | 1,546 | 1,651.90 |
Add reinsurance receivables | 125 | 164.1 | 27.4 |
Net balance, end of year | $1,679.50 | $1,710.10 | $1,679.30 |
INCOME_TAXES_NARRATIVE_Details
INCOME TAXES (NARRATIVE) (Details) (USD $) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Jun. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2008 | 8-May-13 | Dec. 31, 2011 | 11-May-10 | Jan. 20, 2009 |
Operating Loss Carryforwards [Line Items] | ||||||||||
Deferred tax assets more likely than not to be realized through future taxable earnings | $799.80 | $799.80 | $1,173.20 | |||||||
Increase (decrease) in valuation allowance | 48.8 | 472.1 | 171.5 | |||||||
Valuation Allowance, Deferred Tax Asset, Valuation Model, Average Annual Historical Income Used in Model, Period | 3 years | |||||||||
Core Growth Rate for the Next Five Years, Included in Deferred Tax Valuation Analysis | 3.00% | |||||||||
Assumed Growth Rate For the Next Five Years, Included in Deferred Tax Valuation Analysis, Period Increase | 1.00% | |||||||||
Aggregate Growth Rate for the Next Five Years, Included in Deferred Tax Valuation Analysis | 4.00% | 4.00% | ||||||||
Valuation Allowance, Deferred Tax Asset, Valuation Model, Forecast Period of Model | 5 years | |||||||||
Estimated Normalized Annual Taxable Income For Current Year | 315 | 320 | ||||||||
Estimated Normalized Annual Taxable Income For Current Year, Non-life Taxable Income | 50 | |||||||||
Estimated Normalized Annual Taxable Income For Current Year, Life Income | 270 | |||||||||
Loss limitation based on income of life insurance company, percent | 35.00% | 35.00% | ||||||||
Loss limitation based on loss of non-life entities, percent | 35.00% | 35.00% | ||||||||
Federal long-term tax exempt rate | 2.80% | 2.80% | ||||||||
Ownership change threshold restricting NOL usage | 50.00% | 50.00% | ||||||||
Ownership percentage threshold relating to company 382 securities | 4.99% | |||||||||
Ownership percentage threshold relating to company 382 provision, ownership percentage at which transfers of common stock become void (less than) | 4.99% | 5.00% | ||||||||
Net state operating loss carryforwards | 15.2 | 15.2 | 20 | |||||||
Loss on investment in senior health | 878 | |||||||||
Income Tax Examination, Expired Capital Loss Carryforwards if IRS position is correct | 473 | |||||||||
Unrecognized tax benefit related to loss on investment in Senior Health | 166 | |||||||||
Increase in valuation allowance if unrecognized tax benefit is recognized | 34 | 34 | ||||||||
Unrecognized Tax Benefits that Would Impact Effective Tax Rate | 155.4 | 155.4 | 156 | |||||||
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued | 2.4 | 2.4 | 1.8 | |||||||
Operating Loss Carryforwards, Related to Deductions for Stock Options and Restricted Stock | 30.9 | 30.9 | ||||||||
Deferred Tax Assets Before Valuation Allowance | 1,045.80 | 1,045.80 | 1,468 | |||||||
Valuation allowance | 246 | 246 | 294.8 | 766.9 | 938.4 | |||||
Internal Revenue Service (IRS) [Member] | ||||||||||
Operating Loss Carryforwards [Line Items] | ||||||||||
Net operating loss carryforwards | 3,000 | 3,000 | ||||||||
Life [Member] | ||||||||||
Operating Loss Carryforwards [Line Items] | ||||||||||
Net operating loss carryforwards | 854.7 | 854.7 | ||||||||
Loss on investment in senior health | 742 | |||||||||
Non-life [Member] | ||||||||||
Operating Loss Carryforwards [Line Items] | ||||||||||
Net operating loss carryforwards | 2,681.10 | 2,681.10 | ||||||||
Loss on investment in senior health | 136 | |||||||||
Taxable Operating Income Exceeds Deferred Tax Valuation [Member] | ||||||||||
Operating Loss Carryforwards [Line Items] | ||||||||||
Increase (decrease) in valuation allowance | ($48.80) |
INCOME_TAXES_SCHEDULE_OF_COMPO
INCOME TAXES (SCHEDULE OF COMPONENTS OF INCOME TAX EXPENSE) (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Income Tax Disclosure [Abstract] | |||||||||||
Current tax expense | $15.60 | $8.20 | $12.50 | ||||||||
Deferred tax expense | 143.6 | 120.1 | 93.7 | ||||||||
Tax expense on period income | 159.2 | 128.3 | 106.2 | ||||||||
Tax expense related to the sale | 14.2 | 0 | 0 | ||||||||
Deferred taxes on expired capital loss carryforwards | 0 | 159.4 | 0 | ||||||||
Increase (decrease) in valuation allowance | -48.8 | -472.1 | -171.5 | ||||||||
Other items | -0.9 | 11.2 | 0 | ||||||||
Total income tax expense (benefit) | ($8) | $37 | $36.30 | $58.40 | ($64.90) | ($168.60) | $37.60 | $22.70 | $123.70 | ($173.20) | ($65.30) |
INCOME_TAXES_SCHEDULE_OF_EFFEC
INCOME TAXES (SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILLIATION) (Details) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Income Tax Disclosure [Abstract] | |||
U.S. statutory corporate rate | 35.00% | 35.00% | 35.00% |
Valuation allowance | -27.90% | -154.90% | -110.10% |
Expired capital loss carryforwards (which were fully offset by a corresponding reduction in the valuation allowance) | 0.00% | 52.30% | 0.00% |
Non-taxable income and nondeductible benefits, net | -0.90% | 5.00% | 32.30% |
State taxes | 1.50% | 1.90% | 1.40% |
Impact of the sale of CLIC | 66.30% | 0.00% | 0.00% |
Other items | -3.40% | 3.90% | -0.50% |
Effective tax rate | 70.60% | -56.80% | -41.90% |
INCOME_TAXES_SCHEDULE_OF_DEFER
INCOME TAXES (SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
In Millions, unless otherwise specified | ||||
Deferred tax assets: | ||||
Net federal operating loss carryforwards | $1,048.40 | $1,240.20 | ||
Net state operating loss carryforwards | 15.2 | 20 | ||
Tax credits | 47.2 | 43.9 | ||
Capital loss carryforwards | 0 | 13.4 | ||
Investments | 59.7 | 74.3 | ||
Insurance liabilities | 585.9 | 723.8 | ||
Other | 67.3 | 64.7 | ||
Gross deferred tax assets | 1,823.70 | 2,180.30 | ||
Deferred tax liabilities: | ||||
Present value of future profits and deferred acquisition costs | -320.5 | -306.8 | ||
Accumulated other comprehensive income | -457.4 | -405.5 | ||
Gross deferred tax liabilities | -777.9 | -712.3 | ||
Net deferred tax assets before valuation allowance | 1,045.80 | 1,468 | ||
Valuation allowance | -246 | -294.8 | -766.9 | -938.4 |
Net deferred tax assets | 799.8 | 1,173.20 | ||
Current income taxes accrued | -41.1 | -26 | ||
Income tax assets, net | $758.70 | $1,147.20 |
INCOME_TAXES_SUMMARY_OF_VALUAT
INCOME TAXES (SUMMARY OF VALUATION ALLOWANCE) (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Increase (Decrease) in Valuation Allowance [Roll Forward] | |||
Beginning valuation allowance | $294.80 | $766.90 | $938.40 |
Increase (decrease) in valuation allowance | -48.8 | -472.1 | -171.5 |
Ending valuation allowance | $246 | $294.80 | $766.90 |
INCOME_TAXES_SUMMARY_OF_OPERAT
INCOME TAXES (SUMMARY OF OPERATING LOSS CARRYFORWARDS) (Details) (USD $) | 12 Months Ended |
In Millions, unless otherwise specified | Dec. 31, 2014 |
Operating Loss Carryforwards [Line Items] | |
Total loss carryforwards | $3,535.80 |
Total loss carryforwards, unrecognized tax benefit | -540.3 |
Total loss carryforwards, net of unrecognized tax benefits | 2,995.50 |
Life [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 854.7 |
Net operating loss carryforward, unrecognized tax benefit | -342.9 |
Net operating loss carryforwards, net of unrecognized tax benefits | 511.8 |
Non-life [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 2,681.10 |
Net operating loss carryforward, unrecognized tax benefit | -197.4 |
Net operating loss carryforwards, net of unrecognized tax benefits | 2,483.70 |
2022 [Member] | |
Operating Loss Carryforwards [Line Items] | |
Year of expiration | 31-Dec-22 |
Total loss carryforwards | 112.1 |
2022 [Member] | Life [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 112.1 |
2022 [Member] | Non-life [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 0 |
2023 [Member] | |
Operating Loss Carryforwards [Line Items] | |
Year of expiration | 31-Dec-23 |
Total loss carryforwards | 2,725.60 |
2023 [Member] | Life [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 742.6 |
2023 [Member] | Non-life [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 1,983 |
2025 [Member] | |
Operating Loss Carryforwards [Line Items] | |
Year of expiration | 31-Dec-25 |
Total loss carryforwards | 91.5 |
2025 [Member] | Life [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 0 |
2025 [Member] | Non-life [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 91.5 |
2026 [Member] | |
Operating Loss Carryforwards [Line Items] | |
Year of expiration | 31-Dec-26 |
Total loss carryforwards | 207.4 |
2026 [Member] | Life [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 0 |
2026 [Member] | Non-life [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 207.4 |
2027 [Member] | |
Operating Loss Carryforwards [Line Items] | |
Year of expiration | 31-Dec-27 |
Total loss carryforwards | 4.9 |
2027 [Member] | Life [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 0 |
2027 [Member] | Non-life [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 4.9 |
2028 [Member] | |
Operating Loss Carryforwards [Line Items] | |
Year of expiration | 31-Dec-28 |
Total loss carryforwards | 203.7 |
2028 [Member] | Life [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 0 |
2028 [Member] | Non-life [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 203.7 |
2029 [Member] | |
Operating Loss Carryforwards [Line Items] | |
Year of expiration | 31-Dec-29 |
Total loss carryforwards | 146.6 |
2029 [Member] | Life [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 0 |
2029 [Member] | Non-life [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 146.6 |
2032 [Member] | |
Operating Loss Carryforwards [Line Items] | |
Year of expiration | 31-Dec-32 |
Total loss carryforwards | 44 |
2032 [Member] | Life [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 0 |
2032 [Member] | Non-life [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | $44 |
INCOME_TAXES_RECONCILIATION_OF
INCOME TAXES (RECONCILIATION OF UNRECOGNIZED TAX BENEFITS) (Details) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Balance at beginning of year | $226.70 | $310.50 |
Increase based on tax positions taken in prior years | 10.9 | 35.6 |
Decrease based on tax positions taken in prior years | 0 | -27 |
Increase based on tax positions taken in the current year | 0 | 47.6 |
Decrease in unrecognized tax benefits related to settlements with taxing authorities | -8.9 | -140 |
Balance at end of year | $228.70 | $226.70 |
NOTES_PAYABLE_DIRECT_CORPORATE2
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS (SCHEDULE OF LONG-TERM DEBT INSTRUMENTS) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Sep. 28, 2012 |
Debt Instrument [Line Items] | |||
Notes payable – direct corporate obligations | $794,400,000 | $856,400,000 | |
Senior Secured Credit Agreement [Member] | |||
Debt Instrument [Line Items] | |||
Notes payable – direct corporate obligations | 522,100,000 | 581,500,000 | |
Unamortized discount on Senior Secured Credit Agreement | -2,700,000 | -3,600,000 | |
Debentures [Member] | |||
Debt Instrument [Line Items] | |||
Notes payable – direct corporate obligations | 0 | 3,500,000 | |
Senior Notes [Member] | Senior Secured Note 6.375 Percent [Member] | |||
Debt Instrument [Line Items] | |||
Notes payable – direct corporate obligations | $275,000,000 | $275,000,000 | $275,000,000 |
NOTES_PAYABLE_DIRECT_CORPORATE3
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS (SOURCES AND USES OF RECAPITALIZATION TRANSACTIONS) (Details) (USD $) | 3 Months Ended | 12 Months Ended | 1 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 |
Debt Instrument [Line Items] | |||||
Issuance of notes payable, net | $944.50 | $0 | $0 | $944.50 | |
Repayments of Notes Payable | 62.9 | 126.9 | 810.6 | ||
Accrued interest | 81.7 | 95.9 | 109 | ||
Total uses | 944.5 | ||||
Senior Secured Credit Agreement [Member] | |||||
Debt Instrument [Line Items] | |||||
Issuance of notes payable, net | 669.5 | ||||
New Senior Secured Credit Agreement And Senior Secured Note 6.375 Percent [Member] | |||||
Debt Instrument [Line Items] | |||||
Cash on hand for general corporate purposes | 13.7 | ||||
Convertible Subordinated Debt [Member] | |||||
Debt Instrument [Line Items] | |||||
Repayments of Notes Payable | 355.1 | ||||
Senior Debt Obligations [Member] | |||||
Debt Instrument [Line Items] | |||||
Repayments of Notes Payable | 223.8 | 223.8 | |||
Senior Secured Notes 9 Percent [Member] | |||||
Debt Instrument [Line Items] | |||||
Repayments of Notes Payable | 322.7 | ||||
Convertible Subordinated And Senior And Senior Secured Notes 9 Percent [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt issuance costs | 23.1 | ||||
Accrued interest | 6.1 | ||||
Senior Notes [Member] | Senior Secured Note 6.375 Percent [Member] | |||||
Debt Instrument [Line Items] | |||||
Issuance of notes payable, net | $275 |
NOTES_PAYABLE_DIRECT_CORPORATE4
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS (SENIOR SECURED CREDIT AGREEMENT) (NARRATIVE) (Details) (USD $) | 6 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | 12 Months Ended | 0 Months Ended | ||||
Jun. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 28, 2012 | 31-May-13 | Dec. 31, 2014 | Sep. 28, 2014 | 30-May-14 | Jul. 01, 2014 | Sep. 30, 2012 | |
Debt Instrument [Line Items] | ||||||||||
Notes payable – direct corporate obligations | $856,400,000 | $794,400,000 | ||||||||
Long-term Debt | 797,100,000 | |||||||||
Senior Secured Credit Agreement [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Notes payable – direct corporate obligations | 581,500,000 | 522,100,000 | ||||||||
Senior Secured Note 6.375 Percent [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate | 6.38% | |||||||||
Notes Payable to Banks [Member] | Senior Secured Credit Agreement [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Terms, Mandatory Prepayments, Percentage of Restricted Payments | 100.00% | |||||||||
Additional Debt Repayment | 42,700,000 | 2,000,000 | ||||||||
Mandatory Debt Repayment | 20,400,000 | 28,400,000 | ||||||||
Debt instrument, terms, mandatory prepayments, percentage of share repurchases and common stock dividend payments | 33.33% | |||||||||
Senior Notes [Member] | Senior Secured Note 6.375 Percent [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Notes payable – direct corporate obligations | 275,000,000 | 275,000,000 | 275,000,000 | |||||||
Interest rate | 6.38% | 6.38% | ||||||||
Secured Debt [Member] | Line of Credit [Member] | Term Loan Facility, Six-Year [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Notes payable – direct corporate obligations | 425,000,000 | |||||||||
Debt Instrument, Term | 6 years | 6 years | ||||||||
Long-term Debt | 390,900,000 | |||||||||
Debt Instrument, Annual Amortization Percentage of Loan in First and Second Year | 1.00% | |||||||||
Secured Debt [Member] | Line of Credit [Member] | Term Loan Facility, Four-Year [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Notes payable – direct corporate obligations | 250,000,000 | |||||||||
Debt Instrument, Term | 4 years | 4 years | ||||||||
Long-term Debt | 131,200,000 | |||||||||
Debt Instrument, Annual Amortization Percentage of Loan in First and Second Year | 20.00% | |||||||||
Debt Instrument, Annual Amortization Percentage of Loan in Third and Fourth Year | 30.00% | |||||||||
Secured Debt [Member] | Line of Credit [Member] | Senior Secured Credit Agreement [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Terms, Mandatory Prepayments, Percentage of Restricted Payments | 100.00% | |||||||||
Debt Instrument, Terms, Mandatory Prepayments, Reduced Percentage | 33.33% | |||||||||
Debt to Capitalization Ratio, Maximum Threshold for Repayment Requirement (less than) | 0.2 | |||||||||
Debt Instrument, Terms, Mandatory Prepayments, Percentage of Net Cash Proceeds from Asset Sales and Casualty Events | 100.00% | |||||||||
Debt Instrument, Terms, Mandatory Prepayments, Percentage of Net Cash Proceeds Received for Restricted Subsidiaries from Debt Issuances | 100.00% | |||||||||
Additional Debt Repayment | 59,400,000 | |||||||||
Debt to Capitalization Ratio at Period End | 0.172 | |||||||||
Lesser Of Interest Coverage Ratio Required | 15.75 | |||||||||
Aggregate Adjusted Capital to Company Action Level Risk Based Capital Ratio at Period End | 4.34 | |||||||||
Minimum Combined Statutory Capital and Surplus | 1,300,000,000 | |||||||||
Combined Statutory Capital and Surplus at Period End | 1,868,000,000 | |||||||||
Swingline Loan [Member] | Line of Credit [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Line of Credit Facility, Maximum Borrowing Capacity | 5,000,000 | |||||||||
Revolving Credit Facility [Member] | Line of Credit [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Line of Credit Facility, Maximum Borrowing Capacity | 5,000,000 | |||||||||
Revolving Credit Facility [Member] | Line of Credit [Member] | Revolving Credit Facility, Three Year [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Term | 3 years | |||||||||
Line of Credit Facility, Maximum Borrowing Capacity | 50,000,000 | |||||||||
Maximum [Member] | Notes Payable to Banks [Member] | Senior Secured Credit Agreement [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt to Capitalization Ratio, Threshold Requiring Equal Debt Repayment | 0.225 | |||||||||
Maximum [Member] | Senior Notes [Member] | Senior Secured Note 6.375 Percent [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt to Capitalization Ratio, Threshold Requiring Equal Debt Repayment | 0.175 | |||||||||
Maximum [Member] | Secured Debt [Member] | Line of Credit [Member] | Senior Secured Credit Agreement [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Proceeds from Issuance of Debt | 250,000,000 | |||||||||
Debt to Capitalization Ratio, Threshold Requiring Equal Debt Repayment | 0.25 | |||||||||
Debt Instrument, Debt to Capitalization Ratio, Percentage Required No Mandatory Prepayment (less than) | 0.2 | |||||||||
Debt to Capitalization Ratio is required (not more than) | 0.275 | |||||||||
Minimum [Member] | Notes Payable to Banks [Member] | Senior Secured Credit Agreement [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt to Capitalization Ratio, Threshold Requiring Equal Debt Repayment | 0.175 | |||||||||
Minimum [Member] | Secured Debt [Member] | Line of Credit [Member] | Senior Secured Credit Agreement [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt to Capitalization Ratio, Threshold Requiring Equal Debt Repayment | 0.2 | |||||||||
Interest Coverage Ratio Required (not less than) | 2.5 | |||||||||
Aggregate Adjusted Capital to Company Action Level Risk-Based Capital Ratio, After Stated Date (less than) | 2.5 | |||||||||
Conseco Life Insurance Company [Member] | Secured Debt [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Disposal Group, Including Discontinued Operations, Proceeds Exceeding Defined Amount Require A Mandatory Prepayment, Pursuant To Senior Secured Credit Agreement | 125,000,000 | |||||||||
Wilton Reassurance Company [Member] | Bankers Life [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Reinsurance recapture fee paid | $28,000,000 | |||||||||
Base Rate Floor [Member] | Term Loan Facility, Four-Year [Member] | Notes Payable to Banks [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Variable Interest Rate, Floor | 2.00% | |||||||||
Base Rate Floor [Member] | Term Loan Facility, Six-Year [Member] | Notes Payable to Banks [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Variable Interest Rate, Floor | 2.25% | |||||||||
Eurodollar Floor [Member] | Term Loan Facility, Four-Year [Member] | Notes Payable to Banks [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Variable Interest Rate, Floor | 1.00% | |||||||||
Eurodollar Floor [Member] | Term Loan Facility, Six-Year [Member] | Notes Payable to Banks [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Variable Interest Rate, Floor | 1.25% | |||||||||
Eurodollar Floor [Member] | Revolving Credit Facility [Member] | Notes Payable to Banks [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Basis Spread on Variable Rate | 3.50% | |||||||||
Eurodollar Rate [Member] | Term Loan Facility, Four-Year [Member] | Notes Payable to Banks [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Basis Spread on Variable Rate | 3.25% | |||||||||
Eurodollar Rate [Member] | Term Loan Facility, Six-Year [Member] | Notes Payable to Banks [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Basis Spread on Variable Rate | 3.75% | |||||||||
Eurodollar [Member] | Secured Debt [Member] | Line of Credit [Member] | Term Loan Facility, Six-Year [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Basis Spread on Variable Rate | 2.75% | |||||||||
Line of Credit Facility, Interest Rate at Period End | 3.75% | |||||||||
Eurodollar [Member] | Secured Debt [Member] | Line of Credit [Member] | Term Loan Facility, Four-Year [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Basis Spread on Variable Rate | 2.25% | |||||||||
Line of Credit Facility, Interest Rate at Period End | 3.00% | |||||||||
Eurodollar [Member] | Revolving Credit Facility [Member] | Line of Credit [Member] | Term Loan Facility, Four-Year [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Basis Spread on Variable Rate | 3.00% | |||||||||
Eurodollar [Member] | Minimum [Member] | Secured Debt [Member] | Line of Credit [Member] | Term Loan Facility, Six-Year [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Basis Spread on Variable Rate | 1.00% | |||||||||
Eurodollar [Member] | Minimum [Member] | Secured Debt [Member] | Line of Credit [Member] | Term Loan Facility, Four-Year [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Basis Spread on Variable Rate | 0.75% | |||||||||
Base Rate [Member] | Secured Debt [Member] | Line of Credit [Member] | Term Loan Facility, Six-Year [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Basis Spread on Variable Rate | 1.75% | |||||||||
Base Rate [Member] | Secured Debt [Member] | Line of Credit [Member] | Term Loan Facility, Four-Year [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Basis Spread on Variable Rate | 1.25% | |||||||||
Base Rate [Member] | Term Loan Facility, Four-Year [Member] | Notes Payable to Banks [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Basis Spread on Variable Rate | 2.25% | |||||||||
Base Rate [Member] | Term Loan Facility, Six-Year [Member] | Notes Payable to Banks [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Basis Spread on Variable Rate | 2.75% | |||||||||
Base Rate [Member] | Revolving Credit Facility [Member] | Line of Credit [Member] | Term Loan Facility, Four-Year [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Basis Spread on Variable Rate | 2.00% | |||||||||
Base Rate [Member] | Revolving Credit Facility [Member] | Notes Payable to Banks [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Basis Spread on Variable Rate | 2.50% | |||||||||
Base Rate [Member] | Minimum [Member] | Secured Debt [Member] | Line of Credit [Member] | Term Loan Facility, Six-Year [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Basis Spread on Variable Rate | 2.25% | |||||||||
Base Rate [Member] | Minimum [Member] | Secured Debt [Member] | Line of Credit [Member] | Term Loan Facility, Four-Year [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Basis Spread on Variable Rate | 2.00% |
NOTES_PAYABLE_DIRECT_CORPORATE5
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS (6.375% NOTES) (NARRATIVE) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2012 | Sep. 28, 2012 |
Debt Instrument [Line Items] | ||||
Notes payable – direct corporate obligations | $794,400,000 | $856,400,000 | ||
Senior Secured Note 6.375 Percent [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 6.38% | |||
Senior Notes [Member] | Senior Secured Note 6.375 Percent [Member] | ||||
Debt Instrument [Line Items] | ||||
Notes payable – direct corporate obligations | 275,000,000 | 275,000,000 | 275,000,000 | |
Interest rate | 6.38% | 6.38% | ||
Debt Instrument, Redemption Percentage of Aggregate Principal Amount | 100.00% | |||
Debt Instrument, Price Percentage of Aggregate Principal Amount | 106.38% | |||
Debt Instrument, Terms, Mandatory Accelerated Repurchase, Percentage of Aggregate Principal Amount | 101.00% | |||
Debt Instrument, Terms, Percentage of Trustees or Holders | 25.00% | |||
Debt Instrument, Terms, Minimum Pro Forma Risk-Based Capital Ratio for Restricted Payments | 2.25 | |||
Debt Instrument, Terms, Restricted Payments Based on a Percentage of Net Excess Cash Flow, Percentage | 50.00% | |||
Limit of restricted payments permitted, amount | 175,000,000 | |||
Limit of restricted payments permitted, amount of allowed additional payments | 75,000,000 | |||
Secured Debt [Member] | Line of Credit [Member] | Term Loan Facility, Four-Year [Member] | ||||
Debt Instrument [Line Items] | ||||
Notes payable – direct corporate obligations | 250,000,000 | |||
Maximum [Member] | Senior Notes [Member] | Senior Secured Note 6.375 Percent [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Redemption Percentage of Aggregate Principal Amount with Cash from Equity Offerings | 35.00% | |||
Debt to Capitalization Ratio, Threshold Requiring Equal Debt Repayment (less than) | 0.175 | |||
Minimum [Member] | Senior Notes [Member] | Senior Secured Note 6.375 Percent [Member] | ||||
Debt Instrument [Line Items] | ||||
Limit of restricted payments permitted, cash dividends to common stock | $30,000,000 |
NOTES_PAYABLE_DIRECT_CORPORATE6
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS (PARI PASSU INTERCREDITOR AGREEMENT) (NARRATIVE) (Details) (Senior Secured Note 6.375 Percent [Member], USD $) | Dec. 31, 2014 | Sep. 30, 2012 | Sep. 28, 2012 |
In Millions, unless otherwise specified | |||
Debt Instrument [Line Items] | |||
Interest rate | 6.38% | ||
Senior Notes [Member] | |||
Debt Instrument [Line Items] | |||
Interest rate | 6.38% | 6.38% | |
Debt instrument, minimum outstanding principle amount before triggering discard (less than) | $25 |
NOTES_PAYABLE_DIRECT_CORPORATE7
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS (9.0% NOTES) (NARRATIVE) (Details) (USD $) | 0 Months Ended | |||||
Dec. 21, 2010 | Oct. 29, 2012 | Sep. 28, 2012 | Sep. 28, 2012 | Dec. 31, 2014 | Sep. 30, 2012 | |
Senior Secured Note 6.375 Percent [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Interest rate | 6.38% | |||||
Senior Secured Notes 9 Percent [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt Instrument, Face Amount | $275,000,000 | |||||
Proceeds from Issuance of Secured Debt | 267,000,000 | |||||
Interest rate | 9.00% | |||||
Senior Notes [Member] | Senior Secured Note 6.375 Percent [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Interest rate | 6.38% | 6.38% | 6.38% | |||
Senior Notes [Member] | Senior Secured Notes 9 Percent [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt Instrument, Cash Tender Offer to Repay Long-term Debt | 273,800,000 | |||||
Repayments of Long-term Debt | 1,200,000 | 326,300,000 | ||||
Repayments of Long-term Debt, Portion Related to Tender Offer | 313,100,000 | |||||
Repayments of Long-term Debt, Portion Related to Consent Payments | 8,200,000 | |||||
Repayments of Long-term Debt, Portion Related to Accrued and Unpaid Interest | $5,000,000 |
NOTES_PAYABLE_DIRECT_CORPORATE8
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS (7.0% DEBENTURES) (NARRATIVE) (Details) (USD $) | 0 Months Ended | 12 Months Ended | 0 Months Ended | |||||||
Share data in Thousands, except Per Share data, unless otherwise specified | Jul. 02, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 04, 2012 | 30-May-14 | Jul. 01, 2013 | 31-May-13 | Mar. 28, 2013 | 31-May-10 |
Rate | Rate | |||||||||
Debt Instrument [Line Items] | ||||||||||
Notes payable – direct corporate obligations | 794,400,000 | 856,400,000 | ||||||||
Convertible Subordinated Debt [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Face Amount | 293,000,000 | |||||||||
Interest rate | 7.00% | 7.00% | 7.00% | |||||||
Principle amount of debt repurchased | 3,500,000 | 4,500,000 | ||||||||
Debt Instrument, Repurchase Amount | 3,700,000 | 9,400,000 | ||||||||
Par Value of Each Convertible Senior Debenture | 1,000 | 1,000 | ||||||||
Convertible Debt Repurchase Tender Offer, Average Volume Weighted Average, Amount Per Share (in dollars per share) | $11.24 | |||||||||
Conversion Rate for Convertible Senior Debentures | 184.3127 | 183.5145 | ||||||||
Convertible Debt Repurchase Tender Offer Addition to Multiplier, Amount Per Share (in dollars per share) | $61.25 | |||||||||
Final Purchase Price Per Principal Amount of Each Convertible Senior Debenture | 2,123.82 | |||||||||
Convertible Debentures Submitted for Conversion, Face Amount | 25,700,000 | |||||||||
Conversion of 7.0% debentures (in shares) | 4,700 | 0 | 4,739 | 0 | ||||||
Notes Payable, Other Payables [Member] | Convertible Subordinated Debt [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Repayments of Long-term Debt | 355,100,000 | |||||||||
Discount Rate on Estimated Fair Market Value of Convertible Debentures | 2.80% | |||||||||
Principle amount of debt repurchased | 63,800,000 | 59,300,000 | ||||||||
Debt Instrument, Repurchase Amount | 124,800,000 | |||||||||
Paulson & Co. Inc. [Member] | Notes Payable, Other Payables [Member] | Convertible Subordinated Debt [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Notes payable – direct corporate obligations | 200,000,000 | $200,000,000 |
NOTES_PAYABLE_DIRECT_CORPORATE9
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS (PREVIOUS SENIOR SECURED CREDIT AGREEMENT AND SENIOR HEALTH NOTE) (NARRATIVE) (Details) (USD $) | 12 Months Ended | 3 Months Ended | 1 Months Ended | 9 Months Ended | 0 Months Ended | 12 Months Ended | 1 Months Ended | ||||||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Sep. 30, 2012 | Sep. 30, 2012 | Nov. 12, 2009 | Dec. 31, 2011 | Dec. 31, 2010 | Dec. 31, 2009 | Mar. 31, 2012 | 30-May-14 | 31-May-10 | Nov. 12, 2013 | Sep. 28, 2012 |
Debt Instrument [Line Items] | |||||||||||||||
Repayments of Notes Payable | $62.90 | $126.90 | $810.60 | ||||||||||||
Convertible Subordinated Debt [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Interest rate | 7.00% | 7.00% | 7.00% | ||||||||||||
Repayments of Notes Payable | 355.1 | ||||||||||||||
Senior Debt Obligations [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Mandatory Debt Repayment | 31.4 | ||||||||||||||
Repayments of Notes Payable | 223.8 | 223.8 | |||||||||||||
Senior Secured Note 6.375 Percent [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Interest rate | 6.38% | ||||||||||||||
Other Notes Payable [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Interest rate | 6.00% | ||||||||||||||
Repayments of Notes Payable | 25 | 25 | 25 | ||||||||||||
Debt Instrument, Periodic Payment, Principal | 25 | ||||||||||||||
Senior Notes [Member] | Senior Secured Note 6.375 Percent [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Interest rate | 6.38% | 6.38% | 6.38% | 6.38% | |||||||||||
Senior Notes [Member] | Other Notes Payable [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Repayments of Notes Payable | $50 |
Recovered_Sheet3
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS (LOSS ON EXTINGUISHMENT OF DEBT) (NARRATIVE) (Details) (USD $) | 12 Months Ended | ||||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | 30-May-14 | 31-May-10 | Dec. 21, 2010 | Sep. 04, 2012 | |
Debt Instrument [Line Items] | |||||||
Gains (Losses) on Extinguishment of Debt | ($600,000) | ($65,400,000) | ($200,200,000) | ||||
Notes payable – direct corporate obligations | 794,400,000 | 856,400,000 | |||||
Extinguishment of Beneficial Conversion Feature Related to Repurchase of Convertible Debentures | 12,600,000 | 24,000,000 | |||||
Senior Secured Credit Agreement [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Gains (Losses) on Extinguishment of Debt | -2,900,000 | -400,000 | |||||
Notes payable – direct corporate obligations | 522,100,000 | 581,500,000 | |||||
Convertible Subordinated Debt [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Gains (Losses) on Extinguishment of Debt | -200,000 | -62,500,000 | -136,500,000 | ||||
Interest rate | 7.00% | 7.00% | 7.00% | ||||
Senior Secured Notes 9 Percent [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Gains (Losses) on Extinguishment of Debt | -58,200,000 | ||||||
Interest rate | 9.00% | ||||||
Senior Debt Obligations [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Gains (Losses) on Extinguishment of Debt | -5,100,000 | ||||||
Secured Debt [Member] | Senior Secured Credit Agreement [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Gains (Losses) on Extinguishment of Debt | -400,000 | ||||||
Common Stock Including Additional Paid in Capital [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Extinguishment of Beneficial Conversion Feature Related to Repurchase of Convertible Debentures | 12,600,000 | 24,000,000 | |||||
Paulson & Co. Inc. [Member] | Notes Payable, Other Payables [Member] | Convertible Subordinated Debt [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Notes payable – direct corporate obligations | $200,000,000 | $200,000,000 |
Recovered_Sheet4
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS (SCHEDULE OF MATURITIES OF LONG-TERM DEBT) (DETAILS) (USD $) | Dec. 31, 2014 |
In Millions, unless otherwise specified | |
Debt Disclosure [Abstract] | |
2015 | $79.20 |
2016 | 60.5 |
2017 | 4.3 |
2018 | 378.1 |
2019 | 0 |
Thereafter | 275 |
Long-term Debt | $797.10 |
LITIGATION_AND_OTHER_LEGAL_PRO2
LITIGATION AND OTHER LEGAL PROCEEDINGS (NARRATIVE) (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
states | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Number of states participating in examination of compliance with unclaimed property laws | 38 | ||
Amount of insurance-related assessment liability | $23.70 | $24 | |
Premium tax offset for loss contingency accruals | 23.6 | 24.9 | |
Insurance-related assessment, expense recognized | 1.1 | 2.7 | 4.3 |
Operating leases and sponsorship agreements, expense | 50.4 | 44.3 | 47.5 |
Former Chief Executive Officers [Member] | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Deferred compensation arrangement with individual, recorded liability | $27.20 | $25.90 |
LITIGATION_AND_OTHER_LEGAL_PRO3
LITIGATION AND OTHER LEGAL PROCEEDINGS (SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING LEASES) (Details) (USD $) | Dec. 31, 2014 |
In Millions, unless otherwise specified | |
Commitments and Contingencies Disclosure [Abstract] | |
2015 | $47.30 |
2016 | 34.8 |
2017 | 21.2 |
2018 | 17.6 |
2019 | 6.9 |
Thereafter | 11.1 |
Total | $138.90 |
AGENT_DEFERRED_COMPENSATION_PL2
AGENT DEFERRED COMPENSATION PLAN (SCHEDULE OF ASSUMPTIONS USED) (Details) (Agent Deferred Compensation Plan [Member]) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Agent Deferred Compensation Plan [Member] | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Discount rate - Benefit Obligations | 4.15% | 4.75% |
Discount rate - Net Period Costs | 4.75% | 4.00% |
AGENT_DEFERRED_COMPENSATION_PL3
AGENT DEFERRED COMPENSATION PLAN (SCHEDULE OF EXPECTED BENEFIT PAYMENTS) (Details) (USD $) | Dec. 31, 2014 |
In Millions, unless otherwise specified | |
Compensation and Retirement Disclosure [Abstract] | |
2015 | $6.50 |
2016 | 6.8 |
2017 | 7.1 |
2018 | 7.7 |
2019 | 8 |
2020 - 2024 | $47.40 |
AGENT_DEFERRED_COMPENSATION_PL4
AGENT DEFERRED COMPENSATION PLAN (NARRATIVE) (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Cost recognized for defined contribution plan | $5.10 | $4.60 | $4.50 |
Agent Deferred Compensation Plan [Member] | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Pension and other postretirement defined benefit plans, liabilities | 175.1 | 142.7 | |
Net periodic benefit cost | 36.3 | -2.9 | 20.5 |
Actuarial net gains (losses) | -24.3 | 17.2 | -7.5 |
Company-owned life insurance | 157.6 | 144.8 | |
Change in value of corporate or bank owned life insurance | $5.70 | $19.70 | $9 |
Rate of compensation increase | 4.00% |
DERIVATIVES_FAIR_VALUE_BY_BALA
DERIVATIVES (FAIR VALUE BY BALANCE SHEET LOCATION) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Interest Rate Contract [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts recognized | ($0.20) | $0.20 |
Not Designated as Hedging Instrument [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts recognized | 107.2 | 156.4 |
Liabilities | 1,081.70 | 905.5 |
Not Designated as Hedging Instrument [Member] | Equity Contract [Member] | Other Invested Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts recognized | 107.2 | 156.2 |
Not Designated as Hedging Instrument [Member] | Interest Rate Contract [Member] | Other Invested Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts recognized | 0 | 0.2 |
Liabilities | 0.2 | 0 |
Not Designated as Hedging Instrument [Member] | Equity Index Annuities - Embedded Derivative [Member] | Future Policy Benefits [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Liabilities | 1,081.50 | 903.7 |
Not Designated as Hedging Instrument [Member] | Reinsurance Payable - Embedded Derivative [Member] | Future Policy Benefits [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Liabilities | $0 | $1.80 |
DERIVATIVES_SCHEDULE_OF_DERIVA
DERIVATIVES (SCHEDULE OF DERIVATIVE INSTRUMENTS) (Details) (USD $) | 12 Months Ended |
In Millions, unless otherwise specified | Dec. 31, 2014 |
Contract | |
Interest Rate Contract [Member] | |
Derivative Instrument [Roll Forward] | |
31-Dec-13 | 186 |
Additions | 4,847 |
Maturities/terminations | -4,631 |
31-Dec-14 | 402 |
Embedded Derivative Financial Instruments [Member] | |
Derivative Instrument [Roll Forward] | |
31-Dec-13 | 90,408 |
Additions | 9,830 |
Maturities/terminations | -7,053 |
31-Dec-14 | 93,185 |
Equity Contract [Member] | |
Derivative, Notional Amount [Roll Forward] | |
31-Dec-13 | 2,284.80 |
Additions | 2,430.20 |
Maturities/terminations | -2,311.10 |
31-Dec-14 | 2,403.90 |
DERIVATIVES_SCHEDULE_PRETAX_GA
DERIVATIVES (SCHEDULE PRE-TAX GAINS (LOSSES) RECOGNIZED IN NET INCOME FOR DERIVATIVE INSTRUMENTS) (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Derivative [Line Items] | |||
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net | ($12.40) | $230.10 | $7.70 |
Investment Income [Member] | Equity Swap [Member] | |||
Derivative [Line Items] | |||
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net | 69.5 | 177.5 | 25.5 |
Investment Income [Member] | Embedded Derivative Financial Instruments [Member] | |||
Derivative [Line Items] | |||
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net | -1.4 | 3.7 | -2.4 |
Gain (Loss) on Investments [Member] | Interest Rate Contract [Member] | |||
Derivative [Line Items] | |||
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net | -7 | -0.4 | -0.2 |
Insurance Policy Benefits [Member] | Embedded Derivative Financial Instruments [Member] | |||
Derivative [Line Items] | |||
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net | ($73.50) | $49.30 | ($15.20) |
DERIVATIVES_DERIVATIVES_WITH_M
DERIVATIVES (DERIVATIVES WITH MASTER NETTING ARRANGEMENTS) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Equity Contract [Member] | ||
Derivative [Line Items] | ||
Gross amounts offset in the balance sheet | $0 | $0 |
Net amounts of assets presented in the balance sheet | 107.2 | 156.2 |
Financial instruments | 0 | 0 |
Cash collateral received | 0 | 0 |
Net amount | 107.2 | 156.2 |
Interest Rate Contract [Member] | ||
Derivative [Line Items] | ||
Gross amounts recognized | -0.2 | 0.2 |
Gross amounts offset in the balance sheet | 1.5 | 0.4 |
Net amounts of assets presented in the balance sheet | 1.3 | 0.6 |
Financial instruments | 0 | 0 |
Cash collateral received | 0 | 0 |
Net amount | 1.3 | 0.6 |
Not Designated as Hedging Instrument [Member] | ||
Derivative [Line Items] | ||
Gross amounts recognized | $107.20 | $156.40 |
DERIVATIVES_SCHEDULE_OF_REPURC
DERIVATIVES (SCHEDULE OF REPURCHASE AGREEMENTS) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Gross amounts of recognized liabilities | $20,400,000 | |
Gross amounts offset in the balance sheet | 0 | |
Net amounts of liabilities presented in the balance sheet | 20,400,000 | |
Financial instruments | 20,400,000 | |
Cash collateral pledged | 0 | |
Net amount | 0 | |
Fair value of collateralized investment securities | $25,300,000 | $0 |
SHAREHOLDERS_EQUITY_NARRATIVE_
SHAREHOLDERS' EQUITY (NARRATIVE) (Details) (USD $) | 1 Months Ended | 3 Months Ended | 12 Months Ended | 34 Months Ended | 12 Months Ended | 36 Months Ended | 60 Months Ended | ||||||||
Sep. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Nov. 30, 2014 | Dec. 31, 2006 | Dec. 31, 2009 | Dec. 31, 2014 | 30-May-14 | 31-May-13 | 31-May-10 | Mar. 28, 2013 | 31-May-11 | |
Rate | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Stock repurchase program, increase in authorized amount | $1,200,000,000 | ||||||||||||||
Payments for Repurchase of Common Stock | 319,100,000 | 118,400,000 | 180,200,000 | ||||||||||||
Payments for Repurchase of Warrants | 57,400,000 | ||||||||||||||
Stock repurchase program, remaining repurchase authorized amount | 420,900,000 | 420,900,000 | |||||||||||||
Common stock dividends paid | 51,000,000 | 24,400,000 | 13,900,000 | ||||||||||||
Dividends (in dollars per share) | $0.06 | $0.03 | $0.24 | $0.11 | $0.06 | ||||||||||
Available for future grant (in shares) | 9,099,000 | 8,571,000 | 9,099,000 | 9,713,000 | 8,571,000 | ||||||||||
Proceeds from stock options exercised | 5,000,000 | 15,100,000 | 3,100,000 | ||||||||||||
Price of junior preferred stock (per 1/1000 of a share) | $25 | 25 | |||||||||||||
Junior preferred stock right becomes exercisable when a person or group becomes owner of stated percentage (more than) | 4.99% | ||||||||||||||
Conversion rate per $1000 principal amount of 7.0% convertible debentures, shares (in shares) | 182.1494 | 182.1494 | |||||||||||||
Par value of each 7.0% convertible debenture | 1,000 | 1,000 | |||||||||||||
Conversion price (in dollars per share) | $5.49 | 5.49 | |||||||||||||
Series B Preferred Stock [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Series B junior participating preferred stock par value (in dollars per share) | $0.01 | 0.01 | |||||||||||||
Junior preferred stock, purchase right to purchase fractional share (in shares) | 0.001 | ||||||||||||||
Employee Stock Option [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Allocated share-based compensation expense | 7,900,000 | 7,200,000 | 6,700,000 | ||||||||||||
Allocated Share-based Compensation Expense, Net of Tax | 5,100,000 | 4,700,000 | 4,400,000 | ||||||||||||
Compensation expense related to stock options reduced both basic and diluted earnings per share (in dollars per share) | ($0.02) | ||||||||||||||
Unrecognized compensation expense | 8,700,000 | 8,700,000 | |||||||||||||
Weighted average recognition period | 1 year 8 months 24 days | ||||||||||||||
Restricted Stock [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Vesting period | 3 years | ||||||||||||||
Allocated share-based compensation expense | 3,000,000 | 4,500,000 | 4,500,000 | ||||||||||||
Unrecognized compensation expense | 2,500,000 | 1,400,000 | 2,500,000 | 1,400,000 | |||||||||||
Weighted average recognition period | 1 year 7 months 24 days | ||||||||||||||
Granted (in dollars per share) | $17.15 | $12 | $7.35 | ||||||||||||
Grant date fair value of performance shares awarded | 2,100,000 | 1,900,000 | 2,100,000 | 5,000,000 | 1,900,000 | ||||||||||
Fair value of vested shares | 3,700,000 | 5,600,000 | 4,400,000 | ||||||||||||
Performance Shares [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Allocated share-based compensation expense | 4,700,000 | 3,400,000 | 3,800,000 | ||||||||||||
Granted (in shares) | 283,630 | 424,400 | 406,500 | ||||||||||||
Grant date fair value of performance shares awarded | 4,400,000 | 5,200,000 | 4,400,000 | 5,200,000 | |||||||||||
2006 and Prior Years [Member] | Employee Stock Option [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Vesting period | 4 years | ||||||||||||||
Expiration period | 10 years | ||||||||||||||
Years 2007 Through 2009 [Member] | Employee Stock Option [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Vesting period | 3 years | ||||||||||||||
Expiration period | 5 years | ||||||||||||||
Years 2010 and Thereafter [Member] | Employee Stock Option [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Vesting period | 3 years | ||||||||||||||
Expiration period | 7 years | ||||||||||||||
Convertible Subordinated Debt [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Principle amount of debt repurchased | 3,500,000 | 4,500,000 | |||||||||||||
Interest rate | 7.00% | 7.00% | 7.00% | 7.00% | |||||||||||
Convertible Subordinated Debt [Member] | Notes Payable, Other Payables [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Principle amount of debt repurchased | 63,800,000 | 63,800,000 | 59,300,000 | ||||||||||||
Common Stock [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
stock purchased and retired (in shares) | 18,489,000 | 8,949,000 | 21,533,000 | ||||||||||||
Common Share Repurchase Program [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Stock repurchase program, authorized amount | $100,000,000 | ||||||||||||||
Directors, Officers, and Employees [Member] | Restricted Stock [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Granted (in shares) | 113,000 | 200,000 | 700,000 |
SHAREHOLDERS_EQUITY_SCHEDULE_O
SHAREHOLDERS' EQUITY (SCHEDULE OF COMMON STOCK OUTSTANDING) (Details) | 0 Months Ended | 12 Months Ended | ||
Jul. 02, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Common Stock Outstanding [Roll Forward] | ||||
Balance, beginning of year (in shares) | 220,323,823 | |||
Balance, end of year (in shares) | 203,324,458 | 220,323,823 | ||
Number of stock tendered for payment of federal and state taxes owed | 257,000 | 472,000 | 237,000 | |
Common Stock [Member] | ||||
Common Stock Outstanding [Roll Forward] | ||||
Balance, beginning of year (in shares) | 220,324,000 | 221,502,000 | 241,305,000 | |
Treasury stock purchased and retired (in shares) | -18,489,000 | -8,949,000 | -21,533,000 | |
Balance, end of year (in shares) | 203,324,000 | 220,324,000 | 221,502,000 | |
Convertible Subordinated Debt [Member] | ||||
Common Stock Outstanding [Roll Forward] | ||||
Conversion of 7.0% debentures (in shares) | 4,700,000 | 0 | 4,739,000 | 0 |
Employee Stock Option [Member] | Common Stock [Member] | ||||
Common Stock Outstanding [Roll Forward] | ||||
Shares issued under employee benefit compensation plans (in shares) | 916,000 | 2,087,000 | 1,191,000 | |
Restricted and Performance Stock [Member] | Common Stock [Member] | ||||
Common Stock Outstanding [Roll Forward] | ||||
Shares issued under employee benefit compensation plans (in shares) | 573,000 | 945,000 | 539,000 |
SHAREHOLDERS_EQUITY_SCHEDULE_O1
SHAREHOLDERS' EQUITY (SCHEDULE OF SHARE-BASED COMPENSATION) (Details) (USD $) | 12 Months Ended | ||
In Millions, except Share data in Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Outstanding at the beginning of the year (in shares) | 5,579 | 6,655 | 7,712 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 1,014 | 1,447 | 1,389 |
Exercised (in shares) | -917 | -2,087 | -1,191 |
Forfeited or terminated (in shares) | -665 | -436 | -1,255 |
Outstanding at the end of the year (in shares) | 5,011 | 5,579 | 6,655 |
Options exercisable at the end of the year (in shares) | 2,030 | 2,529 | 3,715 |
Available for future grant (in shares) | 8,571 | 9,099 | 9,713 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | |||
Outstanding at the beginning of the year (in dollars per share) | $10.64 | $9.72 | $10.13 |
Options granted (in dollars per share) | $19.10 | $11.01 | $7.55 |
Exercised (in dollars per share) | $5.47 | $7.27 | $3.14 |
Forfeited or terminated (in dollars per share) | $20.07 | $13.95 | $16.13 |
Outstanding at the end of the year (in dollars per share) | $12.04 | $10.64 | $9.72 |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | |||
Options outstanding, weighted average remaining life | 4 years 3 months 24 days | 4 years | 3 years 4 months 24 days |
Options exercisable at the end of the year, weighted average remaining life | 2 years 8 months 24 days | 2 years 1 month 24 days | 1 year 8 months 24 days |
Options exercised, aggregate intrinsic value | $3.80 | $6 | $2.70 |
Options outstanding, aggregate intrinsic value | 32.1 | 32.5 | 30.2 |
Options exercisable at the end of the year, aggregate intrinsic value | $12.10 | $13.90 | $15.50 |
SHAREHOLDERS_EQUITY_SCHEDULE_O2
SHAREHOLDERS' EQUITY (SCHEDULE OF VALUATION ASSUMPTIONS ON PAYMENT AWARDS) (Details) (Employee Stock Option [Member], USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Employee Stock Option [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted average risk-free interest rates | 1.60% | 0.80% | 0.90% |
Weighted average dividend yields | 1.30% | 0.70% | 0.00% |
Volatility factors | 51.00% | 107.00% | 108.00% |
Weighted average expected life (in years) | 4 years 9 months 24 days | 4 years 9 months 24 days | 4 years 8 months 24 days |
Weighted average fair value per share (in dollars per share) | $7.65 | $8.02 | $5.76 |
SHAREHOLDERS_EQUITY_SCHEDULE_O3
SHAREHOLDERS' EQUITY (SCHEDULE OF SHARE-BASED COMPENSATION BY EXERCISE PRICE RANGE) (Details) (USD $) | 12 Months Ended |
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number outstanding (in shares) | 5,011 |
Number exercisable (in shares) | 2,030 |
Range of exercise prices: $6.45 - $6.77 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Exercise price range, lower range limit (in dollars per share) | $6.45 |
Exercise price range, upper range limit (in dollars per share) | $6.77 |
Number outstanding (in shares) | 521 |
Remaining life (in years) | 2 years 2 months 24 days |
Average exercise price (in dollars per share) | $6.45 |
Number exercisable (in shares) | 520 |
Average exercise price (in dollars per share) | $6.45 |
Range of exercise prices: $7.38 - $7.74 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Exercise price range, lower range limit (in dollars per share) | $7.38 |
Exercise price range, upper range limit (in dollars per share) | $7.74 |
Number outstanding (in shares) | 1,580 |
Remaining life (in years) | 3 years 9 months 24 days |
Average exercise price (in dollars per share) | $7.47 |
Number exercisable (in shares) | 1,027 |
Average exercise price (in dollars per share) | $7.44 |
Range of exercise prices: $8.29 - $12.34 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Exercise price range, lower range limit (in dollars per share) | $8.29 |
Exercise price range, upper range limit (in dollars per share) | $12.34 |
Number outstanding (in shares) | 1,396 |
Remaining life (in years) | 5 years 1 month 24 days |
Average exercise price (in dollars per share) | $10.78 |
Number exercisable (in shares) | 31 |
Average exercise price (in dollars per share) | $8.29 |
Range of exercise prices: $12.74 - $18.27 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Exercise price range, lower range limit (in dollars per share) | $12.74 |
Exercise price range, upper range limit (in dollars per share) | $18.27 |
Number outstanding (in shares) | 83 |
Remaining life (in years) | 5 years 10 months 24 days |
Average exercise price (in dollars per share) | $15.40 |
Number exercisable (in shares) | 0 |
Average exercise price (in dollars per share) | $0 |
Range of exercise prices: $19.15 - $25.45 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Exercise price range, lower range limit (in dollars per share) | $19.15 |
Exercise price range, upper range limit (in dollars per share) | $25.45 |
Number outstanding (in shares) | 1,431 |
Remaining life (in years) | 4 years 7 months 24 days |
Average exercise price (in dollars per share) | $20.18 |
Number exercisable (in shares) | 452 |
Average exercise price (in dollars per share) | $22.41 |
SHAREHOLDERS_EQUITY_SCHEDULE_O4
SHAREHOLDERS' EQUITY (SCHEDULE OF NONVESTED SHARE ACTIVITY) (Details) (Restricted Stock [Member], USD $) | 12 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Restricted Stock [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |||
Non-vested shares, beginning of year (in shares) | 521 | ||
Vested (in shares) | -396 | ||
Forfeited (in shares) | -2 | ||
Non-vested shares, end of year (in shares) | 236 | 521 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |||
Non-vested shares, beginning of year (in dollars per share) | $8.29 | ||
Granted (in dollars per share) | $17.15 | $12 | $7.35 |
Vested (in dollars per share) | $9.22 | ||
Forfeited (in dollars per share) | $10.19 | ||
Non-vested shares, end of year (in dollars per share) | $10.95 | $8.29 |
SHAREHOLDERS_EQUITY_SCHEDULE_O5
SHAREHOLDERS' EQUITY (SCHEDULE OF PERFORMANCE SHARE-BASED COMPENSATION) (Details) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Shareholder Return Awards [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward] | |||
Awards outstanding, beginning of period (in units) | 382 | 193 | 0 |
Granted (in units) | 142 | 212 | 203 |
Additional shares issued pursuant to achieving certain performance criteria (in units) | 0 | 0 | |
Vested (in units) | 0 | 0 | |
Forfeited (in units) | -5 | -23 | -10 |
Awards outstanding, end of period (in units) | 519 | 382 | 193 |
Performance unit payout | 150.00% | ||
Operating Return on Equity Awards [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward] | |||
Awards outstanding, beginning of period (in units) | 204 | 0 | 0 |
Granted (in units) | 142 | 212 | 0 |
Additional shares issued pursuant to achieving certain performance criteria (in units) | 0 | 0 | |
Vested (in units) | 0 | 0 | |
Forfeited (in units) | -3 | -8 | 0 |
Awards outstanding, end of period (in units) | 343 | 204 | 0 |
Pre-Tax Operating Income Awards [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward] | |||
Awards outstanding, beginning of period (in units) | 470 | 977 | 836 |
Granted (in units) | 0 | 0 | 203 |
Additional shares issued pursuant to achieving certain performance criteria (in units) | 142 | 223 | |
Vested (in units) | -434 | -668 | |
Forfeited (in units) | -2 | -62 | -62 |
Awards outstanding, end of period (in units) | 176 | 470 | 977 |
SHAREHOLDERS_EQUITY_SCHEDULE_O6
SHAREHOLDERS' EQUITY (SCHEDULE OF EARNINGS PER SHARE RECONCILIATION) (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Millions, except Share data in Thousands, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||
Net income (loss) for basic earnings per share | $83.90 | $117.40 | $78.10 | ($228) | $106 | $283 | $77.10 | $11.90 | $51.40 | $478 | $221 |
Add: interest expense on 7.0% Debentures, net of income taxes | 0 | 1.6 | 12.2 | ||||||||
Net income (loss) for diluted earnings per share | $51.40 | $479.60 | $233.20 | ||||||||
Shares: | |||||||||||
Weighted Average Number of Shares Outstanding, Basic (in shares) | 212,917 | 221,628 | 233,685 | ||||||||
Effect of dilutive securities on weighted average shares: | |||||||||||
7.0% Debentures (in shares) | 0 | 5,780 | 44,037 | ||||||||
Stock options, restricted stock and performance units (in shares) | 2,505 | 2,776 | 2,762 | ||||||||
Warrants (in shares) | 2,233 | 2,518 | 943 | ||||||||
Dilutive potential common shares (in shares) | 4,738 | 11,074 | 47,742 | ||||||||
Weighted average shares outstanding for diluted earnings per share (in shares) | 217,655 | 232,702 | 281,427 |
OTHER_OPERATING_STATEMENT_DATA2
OTHER OPERATING STATEMENT DATA (SCHEDULE OF INSURANCE POLICY INCOME) (DETAILS) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Insurance [Abstract] | |||
Direct premiums collected | $3,856.20 | $3,966 | $3,883.10 |
Reinsurance assumed | 34.5 | 38 | 70.4 |
Reinsurance ceded | -187.9 | -240.5 | -237.1 |
Premiums collected, net of reinsurance | 3,702.80 | 3,763.50 | 3,716.40 |
Change in unearned premiums | 9.1 | -16.6 | 20.8 |
Less premiums on interest-sensitive life and products without mortality and morbidity risk which are recorded as additions to insurance liabilities | -1,295.40 | -1,298.10 | -1,296.70 |
Premiums on traditional products with mortality or morbidity risk | 2,416.50 | 2,448.80 | 2,440.50 |
Fees and surrender charges on interest-sensitive products | 213.2 | 295.9 | 314.9 |
Insurance policy income | $2,629.70 | $2,744.70 | $2,755.40 |
OTHER_OPERATING_STATEMENT_DATA3
OTHER OPERATING STATEMENT DATA (SCHEDULE OF OTHER OPERATING COST AND EXPENSE) (DETAILS) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Expenses: | |||
Commission expense | $99.40 | $103.80 | $115.80 |
Salaries and wages | 242.4 | 234 | 226.6 |
Other | 461 | 428.4 | 476.9 |
Total other operating costs and expenses | $802.80 | $766.20 | $819.30 |
OTHER_OPERATING_STATEMENT_DATA4
OTHER OPERATING STATEMENT DATA (SCHEDULE OF CHANGES IN PRESENT VALUE OF FUTURE INSURANCE PROFITS) (DETAILS) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Movement in Present Value of Future Insurance Profits [Roll Forward] | |||
Balance, beginning of year | $679.30 | $626 | $697.70 |
Amortization | -76.2 | -92 | -93.5 |
Effect of reinsurance transaction | 5 | 0 | 0 |
Amounts related to CLIC prior to being sold | -15.5 | 0 | 0 |
Amounts related to fair value adjustment of fixed maturities, available for sale | -103.2 | 145.3 | 21.8 |
Balance, end of year | $489.40 | $679.30 | $626 |
OTHER_OPERATING_STATEMENT_DATA5
OTHER OPERATING STATEMENT DATA (SCHEDULE OF CHANGES IN DEFERRED ACQUISITION COSTS) (DETAILS) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Movement Analysis of Deferred Policy Acquisition Costs [Roll Forward] | |||
Balance, beginning of year | $968.10 | $629.70 | $797.10 |
Additions | 242.8 | 222.8 | 191.7 |
Amortization | -171.2 | -204.3 | -195.5 |
Effect of reinsurance transaction | 24 | 0 | 0 |
Amounts related to CLIC prior to being sold | -37.6 | 0 | 0 |
Amounts related to fair value adjustment of fixed maturities, available for sale | -255.5 | 315.9 | -163.6 |
Other | 0 | 4 | 0 |
Balance, end of year | $770.60 | $968.10 | $629.70 |
OTHER_OPERATING_STATEMENT_DATA6
OTHER OPERATING STATEMENT DATA (NARRATIVE) (Details) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
states | |||
Supplementary Insurance Information, by Segment [Line Items] | |||
Number of states with largest share of collected premiums | 4 | ||
Percentage of total collected premiums (more than for 5%) | 5.00% | ||
Number of additional states greater than specified percentage of total collected premiums | 0 | ||
Percentage of Amount Amortized During Next Five Years [Abstract] | |||
2015 | 11.00% | ||
2016 | 10.00% | ||
2017 | 9.00% | ||
2018 | 8.00% | ||
2019 | 7.00% | ||
Average interest accrual rate associated with amortization method of present value of future insurance profits | 5.00% | 5.00% | 5.00% |
Florida [Member] | |||
Supplementary Insurance Information, by Segment [Line Items] | |||
Percentage of total collected premiums (more than for 5%) | 8.30% | ||
Pennsylvania [Member] | |||
Supplementary Insurance Information, by Segment [Line Items] | |||
Percentage of total collected premiums (more than for 5%) | 6.70% | ||
California [Member] | |||
Supplementary Insurance Information, by Segment [Line Items] | |||
Percentage of total collected premiums (more than for 5%) | 5.40% | ||
Texas [Member] | |||
Supplementary Insurance Information, by Segment [Line Items] | |||
Percentage of total collected premiums (more than for 5%) | 5.30% |
CONSOLIDATED_STATEMENT_CASH_FL2
CONSOLIDATED STATEMENT CASH FLOWS (SCHEDULE OF THE RECONCILIATION FOR NET INCOME PROVIDED BY OPERATING ACTIVITIES) (Details) (USD $) | 12 Months Ended | |||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Additional Cash Flow Elements, Operating Activities [Abstract] | ||||
Net income | $51.40 | $478 | $221 | |
Adjustments to reconcile net income to net cash from operating activities: | ||||
Amortization and depreciation | 274.2 | 324.6 | 315 | |
Income taxes | 119.7 | -181.2 | -71.8 | |
Insurance liabilities | 398.2 | 465.8 | 330 | |
Accrual and amortization of investment income | -148.3 | -276.3 | -100.7 | |
Deferral of policy acquisition costs | -242.8 | -222.8 | -191.7 | |
Net realized investment gains | -36.7 | -33.6 | -81.1 | |
Payment to reinsurer pursuant to long-term care business reinsured | -590.3 | 0 | 0 | |
Net loss on sale of subsidiary and (gain) loss on reinsurance transactions | 239.8 | 98.4 | 0 | |
Loss on extinguishment or modification of debt | 0.6 | 65.4 | 200.2 | |
Other | 56 | 2.1 | 14 | |
Net cash from operating activities | $121.80 | [1] | $720.40 | $634.90 |
[1] | Cash flows from operating activities reflect outflows in 2014 due to the payment to reinsurer to transfer certain long-term care business. |
CONSOLIDATED_STATEMENT_CASH_FL3
CONSOLIDATED STATEMENT CASH FLOWS (EFFECTS OF REINSURANCE) (Details) (USD $) | 0 Months Ended |
In Millions, unless otherwise specified | Jul. 01, 2014 |
Ceded Credit Risk [Line Items] | |
Gain on reinsurance transaction (net of income taxes) | $16.90 |
Bankers Life [Member] | Wilton Reassurance Company [Member] | |
Ceded Credit Risk [Line Items] | |
Gain on reinsurance transaction (classified as Net loss on sale of subsidiary and (gain) loss on reinsurance transactions) | 26.1 |
Income tax expense | 9.2 |
Gain on reinsurance transaction (net of income taxes) | 16.9 |
Reinsurance recapture fee paid | 28 |
Bankers Life [Member] | Wilton Reassurance Company [Member] | Investments [Member] | |
Ceded Credit Risk [Line Items] | |
Reinsurance Recapture, Gross | 139.4 |
Bankers Life [Member] | Wilton Reassurance Company [Member] | Cash [Member] | |
Ceded Credit Risk [Line Items] | |
Reinsurance Recapture, Gross | 7.7 |
Bankers Life [Member] | Wilton Reassurance Company [Member] | Present value of future profits and deferred acquisition costs [Member] | |
Ceded Credit Risk [Line Items] | |
Reinsurance Recapture, Gross | 29 |
Bankers Life [Member] | Wilton Reassurance Company [Member] | Reinsurance Receivables [Member] | |
Ceded Credit Risk [Line Items] | |
Reinsurance Recapture, Gross | -155.9 |
Bankers Life [Member] | Wilton Reassurance Company [Member] | Other liabilities [Member] | |
Ceded Credit Risk [Line Items] | |
Reinsurance Recapture, Gross | $5.90 |
CONSOLIDATED_STATEMENT_CASH_FL4
CONSOLIDATED STATEMENT CASH FLOWS (SCHEDULE OF OTHER SIGNIFICANT NONCASH TRANSACTIONS) (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Supplemental Cash Flow Elements [Abstract] | |||
Stock options, restricted stock and performance units | $15.60 | $15.10 | $13.70 |
STATUTORY_INFORMATION_BASED_ON2
STATUTORY INFORMATION (BASED ON NON-GAAP MEASURES) (SCHEDULE OF STATUTORY ACCOUNTING PRACTICES) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Insurance [Abstract] | ||
Statutory capital and surplus | $1,664.40 | $1,711.90 |
Asset valuation reserve | 203.1 | 233.9 |
Interest maintenance reserve | 504.1 | 582.4 |
Total | $2,371.60 | $2,528.20 |
STATUTORY_INFORMATION_BASED_ON3
STATUTORY INFORMATION (BASED ON NON-GAAP MEASURES) (NARRATIVE) (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Statutory Accounting Practices [Line Items] | |||
Statutory capital and surplus included investments in upstream affiliates | $42.60 | $52.40 | |
Statutory accounting practices, statutory net income, amount | 374.3 | 386.5 | 350.4 |
Statutory accounting practices, net realized capital gain (loss), net of income taxes | -18.2 | 19 | 13 |
Statutory accounting practices, pre-tax amounts for fees and interest paid | 157.5 | 159.7 | 155.3 |
Percentage of statutory capital and surplus, available for dividend distribution without prior approval from regulatory agency | 10.00% | ||
Amount of extraordinary dividends paid by insurance subsidiaries | 227 | ||
Capital contributions to insurance subsidiaries from parent | $53 | ||
Adjusted Capital to Risk-based Capital Ratio (less than) | 0.95 | ||
Minimum [Member] | Company Plan for Improving Capital Position [Member] | |||
Statutory Accounting Practices [Line Items] | |||
Adjusted Capital to Risk-based Capital Ratio (less than) | 0.75 | ||
Minimum [Member] | Regulatory Authority Special Examination [Member] | |||
Statutory Accounting Practices [Line Items] | |||
Adjusted Capital to Risk-based Capital Ratio (less than) | 0.5 | ||
Minimum [Member] | Regulatory Authority, Any Action Deemed Necessary [Member] | |||
Statutory Accounting Practices [Line Items] | |||
Adjusted Capital to Risk-based Capital Ratio (less than) | 0.35 | ||
Minimum [Member] | Trend Test [Member] | |||
Statutory Accounting Practices [Line Items] | |||
Adjusted Capital to Risk-based Capital Ratio (less than) | 1 | ||
Maximum [Member] | Company Plan for Improving Capital Position [Member] | |||
Statutory Accounting Practices [Line Items] | |||
Adjusted Capital to Risk-based Capital Ratio (less than) | 1 | ||
Maximum [Member] | Regulatory Authority Special Examination [Member] | |||
Statutory Accounting Practices [Line Items] | |||
Adjusted Capital to Risk-based Capital Ratio (less than) | 0.75 | ||
Maximum [Member] | Regulatory Authority, Any Action Deemed Necessary [Member] | |||
Statutory Accounting Practices [Line Items] | |||
Adjusted Capital to Risk-based Capital Ratio (less than) | 0.5 | ||
Maximum [Member] | Regulatory Authority Control [Member] | |||
Statutory Accounting Practices [Line Items] | |||
Adjusted Capital to Risk-based Capital Ratio (less than) | 0.35 | ||
Maximum [Member] | Trend Test [Member] | |||
Statutory Accounting Practices [Line Items] | |||
Adjusted Capital to Risk-based Capital Ratio (less than) | 1.5 |
SALE_OF_SUBSIDIARY_NARRATIVE_D
SALE OF SUBSIDIARY (NARRATIVE) (Details) (USD $) | 0 Months Ended | 12 Months Ended | 3 Months Ended | ||||
In Millions, unless otherwise specified | Jul. 01, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Sep. 30, 2014 | Mar. 31, 2014 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Tax (expense) benefit related to tax gain on sale | ($14.20) | $0 | $0 | ||||
Gain related to other reinsurance transaction | 16.9 | ||||||
Conseco Life Insurance Company [Member] | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Discontinued Operation, Gain (Loss) on Disposal of Discontinued Operation, Net of Tax | 2.9 | 6 | -298 | ||||
Bankers Life [Member] | Wilton Reassurance Company [Member] | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Reinsurance recapture fee paid | 28 | ||||||
Gain related to other reinsurance transaction | 16.9 | ||||||
Conseco Life Insurance Company [Member] | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Net cash proceeds | 224.9 | ||||||
Tax (expense) benefit related to tax gain on sale | -14.2 | ||||||
Valuation allowance release related to the gain | 14.2 | ||||||
Valuation allowance increase related to the decrease in projected future taxable income | -19.4 | ||||||
Conseco Life Insurance Company [Member] | Transition Services for the Year Ended June 30, 2015 [Member] | Wilton Reassurance Company [Member] | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Fees from transition and special Support Services Agreements | 30 | ||||||
Conseco Life Insurance Company [Member] | Transition Services for the Year Ended June 30, 2016 [Member] | Wilton Reassurance Company [Member] | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Fees from transition and special Support Services Agreements | 20 | ||||||
Conseco Life Insurance Company [Member] | Transition Services for the the Three Years Ended June 30, 2019 [Member] | Wilton Reassurance Company [Member] | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Fees from transition and special Support Services Agreements | $0.20 |
SALE_OF_SUBSIDIARY_SCHEDULE_OF
SALE OF SUBSIDIARY (SCHEDULE OF CARRYING AMOUNT OF CLIC BUSINESS BEING SOLD) (Details) (USD $) | 12 Months Ended | 0 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Jul. 01, 2014 |
Net assets being sold: | ||||
Loss before taxes | ($239.80) | ($98.40) | $0 | |
Tax expense related to the sale | 14.2 | 0 | 0 | |
Conseco Life Insurance Company [Member] | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Net cash proceeds | 224.9 | |||
Net assets being sold: | ||||
Investments | 3,863.80 | |||
Cash and cash equivalents | 164.7 | |||
Accrued investment income | 42.7 | |||
Present value of future profits | 15.5 | |||
Deferred acquisition costs | 37.6 | |||
Reinsurance receivables | 307.4 | |||
Income tax assets, net | 84.4 | |||
Other assets | 2.8 | |||
Liabilities for insurance products | -3,201.30 | |||
Other liabilities | -199.1 | |||
Investment borrowings | -383.4 | |||
Accumulated other comprehensive income | -240.5 | |||
Net assets being sold | 494.6 | |||
Loss before taxes | -269.7 | |||
Tax expense related to the sale | 14.2 | |||
Valuation allowance release related to the tax on the sale | -14.2 | |||
Valuation allowance increase related to the decrease in projected future taxable income | 19.4 | |||
Net loss | ($289.10) |
BUSINESS_SEGMENTS_SCHEDULE_OF_
BUSINESS SEGMENTS (SCHEDULE OF SEGMENT REPORTING INFORMATION BY SEGMENT) (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Revenues: | |||
Net investment income | $1,427.40 | $1,664 | $1,486.40 |
Fee revenue and other income | 50.9 | 34 | 19.8 |
Total | 3,851.80 | 3,969 | 3,793.30 |
Benefits and expenses: | |||
Insurance policy benefits | 2,586.20 | 2,839.70 | 2,763.90 |
Other operating costs and expenses | 802.8 | 766.2 | 819.3 |
Total expenses | 3,451.20 | 3,590.70 | 3,468.40 |
Pre-tax operating earnings by segment | 400.6 | 378.3 | 324.9 |
Bankers Life [Member] | |||
Revenues: | |||
Insurance policy income, Annuities | 26 | 28.9 | 28.4 |
Insurance policy income, Health | 1,287.10 | 1,311.20 | 1,342.70 |
Insurance policy income, Life | 338.6 | 308.6 | 286.3 |
Net investment income | 957.3 | 1,005.70 | 838.9 |
Fee revenue and other income | 29.3 | 19 | 15.2 |
Total | 2,638.30 | 2,673.40 | 2,511.50 |
Benefits and expenses: | |||
Insurance policy benefits | 1,667.60 | 1,788.70 | 1,642.90 |
Amortization | 174.7 | 187.5 | 187.6 |
Interest expense on investment borrowings | 7.9 | 6.7 | 5.3 |
Other operating costs and expenses | 401.2 | 380 | 374.8 |
Total expenses | 2,251.40 | 2,362.90 | 2,210.60 |
Pre-tax operating earnings by segment | 386.9 | 310.5 | 300.9 |
Washington National [Member] | |||
Revenues: | |||
Insurance policy income, Annuities | 4 | 11.4 | 9.6 |
Insurance policy income, Health | 597.6 | 587.1 | 575.9 |
Insurance policy income, Life | 24.4 | 23 | 23.4 |
Net investment income | 276.1 | 296.9 | 289.2 |
Fee revenue and other income | 1.1 | 0.9 | 1.1 |
Total | 903.2 | 919.3 | 899.2 |
Benefits and expenses: | |||
Insurance policy benefits | 536.2 | 541.4 | 500.6 |
Amortization | 64.6 | 64.9 | 64.9 |
Interest expense on investment borrowings | 1.7 | 1.9 | 2.8 |
Other operating costs and expenses | 189.5 | 170.5 | 182.1 |
Total expenses | 792 | 778.7 | 750.4 |
Pre-tax operating earnings by segment | 111.2 | 140.6 | 148.8 |
Colonial Penn [Member] | |||
Revenues: | |||
Insurance policy income, Health | 3.6 | 4.3 | 5.2 |
Insurance policy income, Life | 242.4 | 227.8 | 212.6 |
Net investment income | 41.7 | 40 | 40.4 |
Fee revenue and other income | 1 | 0.8 | 0.7 |
Total | 288.7 | 272.9 | 258.9 |
Benefits and expenses: | |||
Insurance policy benefits | 173.2 | 165.7 | 161.1 |
Amortization | 15.3 | 14.5 | 15 |
Other operating costs and expenses | 99.4 | 105.2 | 91.4 |
Total expenses | 287.9 | 285.4 | 267.5 |
Pre-tax operating earnings by segment | 0.8 | -12.5 | -8.6 |
Other CNO Business [Member] | |||
Revenues: | |||
Insurance policy income, Health | 0 | 24.1 | 25.6 |
Net investment income | 0 | 33.3 | 32.9 |
Total | 0 | 57.4 | 58.5 |
Benefits and expenses: | |||
Insurance policy benefits | 0 | 59.2 | 63.2 |
Other operating costs and expenses | 0 | 25.8 | 25 |
Total expenses | 0 | 85 | 88.2 |
Pre-tax operating earnings by segment | 0 | -27.6 | -29.7 |
Corporate operations [Member] | |||
Revenues: | |||
Net investment income | 14.9 | 39.8 | 62.4 |
Fee revenue and other income | 6.7 | 6.2 | 2.8 |
Total | 21.6 | 46 | 65.2 |
Benefits and expenses: | |||
Interest expense on investment borrowings | 0.1 | 0 | 0.4 |
Other operating costs and expenses | 75.9 | 27.3 | 65.1 |
Interest expense on corporate debt | 43.9 | 51.3 | 66.2 |
Interest expense on borrowings of variable interest entities | 0 | 0.1 | 20 |
Total expenses | 119.9 | 78.7 | 151.7 |
Pre-tax operating earnings by segment | ($98.30) | ($32.70) | ($86.50) |
BUSINESS_SEGMENTS_RECONCILIATI
BUSINESS SEGMENTS (RECONCILIATION OF OPERATING PROFIT (LOSS) FROM SEGMENTS TO CONSOLIDATED) (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Segment Reporting [Abstract] | |||||||||||
Total segment revenues | $3,851.80 | $3,969 | $3,793.30 | ||||||||
Net realized investment gains | 33.9 | 33.4 | 81.1 | ||||||||
Revenues related to certain non-strategic investments and earnings attributable to VIEs | 33.2 | 32.2 | 0 | ||||||||
Fee revenue related to transition and support services agreements | 15 | 0 | 0 | ||||||||
Revenues of CLIC prior to being sold | 210.8 | 441.5 | 468.3 | ||||||||
Total revenues | 1,000 | 967 | 1,093 | 1,084.70 | 1,158.20 | 1,093.80 | 1,081.50 | 1,142.60 | 4,144.70 | 4,476.10 | 4,342.70 |
Total segment expenses | 3,451.20 | 3,590.70 | 3,468.40 | ||||||||
Loss related to other reinsurance transactions | -3.8 | ||||||||||
Insurance policy benefits - fair value changes in embedded derivative liabilities | 48.5 | -54.4 | 4.4 | ||||||||
Amortization related to fair value changes in embedded derivative liabilities | -12.5 | 19 | -1.6 | ||||||||
Amortization related to net realized investment gains | 1 | 1.6 | 6.5 | ||||||||
Expenses related to certain non-strategic investments and earnings attributable to VIEs | 41.2 | 42.4 | 0 | ||||||||
Loss on extinguishment or modification of debt | 0.6 | 65.4 | 200.2 | ||||||||
Net loss on sale of subsidiary and (gain) loss on reinsurance transactions | 239.8 | 98.4 | 0 | ||||||||
Expenses related to transition and support services agreements | 12.4 | 0 | 0 | ||||||||
Expenses of CLIC prior to being sold | 187.4 | 408.2 | 509.1 | ||||||||
Total benefits and expenses | 3,969.60 | 4,171.30 | 4,187 | ||||||||
Income before income taxes | 75.9 | 154.4 | 114.4 | -169.6 | 41.1 | 114.4 | 114.7 | 34.6 | 175.1 | 304.8 | 155.7 |
Tax expense on period income | 159.2 | 128.3 | 106.2 | ||||||||
Valuation allowance for deferred tax assets and other tax items | -35.5 | -301.5 | -171.5 | ||||||||
Net income | $83.90 | $117.40 | $78.10 | ($228) | $106 | $283 | $77.10 | $11.90 | $51.40 | $478 | $221 |
BUSINESS_SEGMENTS_SCHEDULE_OF_1
BUSINESS SEGMENTS (SCHEDULE OF BALANCE SHEET INFORMATION, BY SEGMENT) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Segment Reporting Information [Line Items] | ||
Assets | $31,184.20 | $34,780.60 |
Liabilities | 26,496 | 29,825.40 |
Bankers Life [Member] | ||
Segment Reporting Information [Line Items] | ||
Assets | 19,303 | 18,230.20 |
Liabilities | 16,697.50 | 15,866.40 |
Washington National [Member] | ||
Segment Reporting Information [Line Items] | ||
Assets | 8,207.90 | 8,204.80 |
Liabilities | 6,778.80 | 6,834.30 |
Colonial Penn [Member] | ||
Segment Reporting Information [Line Items] | ||
Assets | 945.3 | 891.1 |
Liabilities | 802.2 | 766.6 |
Other CNO Business [Member] | ||
Segment Reporting Information [Line Items] | ||
Assets | 0 | 607.4 |
Liabilities | 0 | 597.6 |
Business of CLIC being Sold [Member] | ||
Segment Reporting Information [Line Items] | ||
Assets | 0 | 4,326.80 |
Liabilities | 0 | 3,764.50 |
Corporate operations [Member] | ||
Segment Reporting Information [Line Items] | ||
Assets | 2,728 | 2,520.30 |
Liabilities | $2,217.50 | $1,996 |
BUSINESS_SEGMENTS_SCHEDULE_OF_2
BUSINESS SEGMENTS (SCHEDULE OF SELECTED FINANCIAL INFORMATION, BY SEGMENT) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
In Millions, unless otherwise specified | ||||
Segment Reporting Information [Line Items] | ||||
Present value of future profits | $489.40 | $679.30 | $626 | $697.70 |
Deferred acquisition costs | 770.6 | 968.1 | ||
Insurance liabilities | 22,308.70 | 24,875.80 | ||
Bankers Life [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Present value of future profits | 128.4 | 263.2 | ||
Deferred acquisition costs | 456.6 | 627.8 | ||
Insurance liabilities | 15,308.90 | 14,575 | ||
Washington National [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Present value of future profits | 314.2 | 344.3 | ||
Deferred acquisition costs | 240.2 | 232.2 | ||
Insurance liabilities | 6,228.80 | 5,664.10 | ||
Colonial Penn [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Present value of future profits | 46.8 | 55.7 | ||
Deferred acquisition costs | 73.8 | 67.4 | ||
Insurance liabilities | 771 | 766.2 | ||
Other CNO Business [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Present value of future profits | 0 | |||
Deferred acquisition costs | 0 | |||
Insurance liabilities | 597.5 | |||
Business of CLIC being Sold [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Present value of future profits | 16.1 | |||
Deferred acquisition costs | 40.7 | |||
Insurance liabilities | $3,273 |
QUARTERLY_FINANCIAL_DATA_UNAUD2
QUARTERLY FINANCIAL DATA (UNAUDITED) (SCHEDULE OF QUARTERLY FINANCIAL INFORMATION) (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Quarterly Financial Data [Abstract] | |||||||||||
Revenues | $1,000 | $967 | $1,093 | $1,084.70 | $1,158.20 | $1,093.80 | $1,081.50 | $1,142.60 | $4,144.70 | $4,476.10 | $4,342.70 |
Income (loss) before income taxes | 75.9 | 154.4 | 114.4 | -169.6 | 41.1 | 114.4 | 114.7 | 34.6 | 175.1 | 304.8 | 155.7 |
Income tax expense (benefit) | -8 | 37 | 36.3 | 58.4 | -64.9 | -168.6 | 37.6 | 22.7 | 123.7 | -173.2 | -65.3 |
Net income (loss) | $83.90 | $117.40 | $78.10 | ($228) | $106 | $283 | $77.10 | $11.90 | $51.40 | $478 | $221 |
Basic: | |||||||||||
Net income (loss) (in dollars per share) | $0.41 | $0.56 | $0.36 | ($1.03) | $0.48 | $1.27 | $0.35 | $0.05 | $0.24 | $2.16 | $0.95 |
Diluted: | |||||||||||
Net income (loss) (in dollars per share) | $0.41 | $0.54 | $0.35 | ($1.03) | $0.47 | $1.23 | $0.34 | $0.05 | $0.24 | $2.06 | $0.83 |
INVESTMENTS_IN_VARIABLE_INTERE2
INVESTMENTS IN VARIABLE INTEREST ENTITIES (NARRATIVE) (DETAILS) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
entity | |||
Variable Interest Entity [Line Items] | |||
Repayments of investment borrowings related to variable interest entities, amounts due in 2015 | $35.40 | ||
Repayments of investment borrowings related to variable interest entities, amounts due in 2018 | 64.5 | ||
Repayments of investment borrowings related to variable interest entities, amounts due in 2022 | 492 | ||
Repayments of investment borrowings related to variable interest entities, amounts due in 2024 | 381.8 | ||
Repayments of investment borrowings related to variable interest entities, amounts due in 2026 | 326.9 | ||
Variable interest entity amortized cost securities held | 1,398.10 | ||
Variable interest entity, gross unrealized gains fixed maturity securities | 0.5 | ||
Variable interest entity gross unrealized losses fixed maturity securities | 31.5 | ||
Variable Interest Entity, Fixed Maturity Securities Fair Value | 1,367.10 | ||
Variable interest entities net realized gain (loss) on investments | -2.2 | -1.6 | -0.4 |
Variable Interest Entities Net Gain (Loss) From Sale Of Fixed Maturity Investments | -0.5 | ||
Total Other Than Temporary Impairment Losses on Investments Held by Variable Interest Entities | 1.1 | 0.8 | |
Variable Interest Entities Net Gains (Losses) From Sale Of Fixed Maturity Investments | 0.4 | ||
Number of Variable Interest Entities in Default | 0 | ||
Variable Interest Entities, Investments Sold | 38.7 | 11.1 | 34.9 |
Variable interest entity, gross investment losses from sale | 2.4 | 0.9 | 0.3 |
Investments held in limited partnerships | 36.3 | ||
Unfunded commitments to limited partnerships | 81.8 | ||
Less than twelve months [Member] | |||
Variable Interest Entity [Line Items] | |||
Fair value investments held by variable interest entity that had been in an unrealized loss position | 1,053.20 | 355.5 | |
Gross unrealized gain (loss) on investments held by VIEs | -27.3 | -3.1 | |
Greater than twelve months [Member] | |||
Variable Interest Entity [Line Items] | |||
Fair value investments held by variable interest entity that had been in an unrealized loss position | 167.4 | 7.9 | |
Gross unrealized gain (loss) on investments held by VIEs | ($4.20) | ($0.10) |
INVESTMENTS_IN_VARIABLE_INTERE3
INVESTMENTS IN VARIABLE INTEREST ENTITIES (SCHEDULE OF IMPACT ON BALANCE SHEET OF CONSOLIDATING VARIABLE INTEREST ENTITIES) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Assets [Abstract] | ||
Investments held by variable interest entities | $1,367.10 | $1,046.70 |
Cash and cash equivalents held by variable interest entities | 68.3 | 104.3 |
Liabilities: | ||
Borrowings related to variable interest entities | 1,286.10 | 1,012.30 |
VIEs [Member] | ||
Assets [Abstract] | ||
Investments held by variable interest entities | 1,367.10 | 1,046.70 |
Notes receivable of VIEs held by insurance subsidiaries | 0 | 0 |
Cash and cash equivalents held by variable interest entities | 68.3 | 104.3 |
Accrued investment income | 3.2 | 1.9 |
Income tax assets, net | 18.1 | 5.4 |
Other assets | 14.2 | 22.6 |
Total assets | 1,470.90 | 1,180.90 |
Liabilities: | ||
Other liabilities | 61.2 | 66 |
Borrowings related to variable interest entities | 1,286.10 | 1,012.30 |
Notes payable of VIEs held by insurance subsidiaries | 157.3 | 112.5 |
Total liabilities | 1,504.60 | 1,190.80 |
Eliminations [Member] | ||
Assets [Abstract] | ||
Investments held by variable interest entities | 0 | 0 |
Notes receivable of VIEs held by insurance subsidiaries | -153.3 | -108.5 |
Cash and cash equivalents held by variable interest entities | 0 | 0 |
Accrued investment income | 0 | 0 |
Income tax assets, net | -2.9 | -2.5 |
Other assets | -1.7 | -0.9 |
Total assets | -157.9 | -111.9 |
Liabilities: | ||
Other liabilities | -6.1 | -4 |
Borrowings related to variable interest entities | 0 | 0 |
Notes payable of VIEs held by insurance subsidiaries | -157.3 | -112.5 |
Total liabilities | -163.4 | -116.5 |
Variable Interest Entity, Primary Beneficiary [Member] | ||
Assets [Abstract] | ||
Investments held by variable interest entities | 1,367.10 | 1,046.70 |
Notes receivable of VIEs held by insurance subsidiaries | -153.3 | -108.5 |
Cash and cash equivalents held by variable interest entities | 68.3 | 104.3 |
Accrued investment income | 3.2 | 1.9 |
Income tax assets, net | 15.2 | 2.9 |
Other assets | 12.5 | 21.7 |
Total assets | 1,313 | 1,069 |
Liabilities: | ||
Other liabilities | 55.1 | 62 |
Borrowings related to variable interest entities | 1,286.10 | 1,012.30 |
Notes payable of VIEs held by insurance subsidiaries | 0 | 0 |
Total liabilities | $1,341.20 | $1,074.30 |
INVESTMENTS_IN_VARIABLE_INTERE4
INVESTMENTS IN VARIABLE INTEREST ENTITIES (SUPPLEMENTAL INFORMATION, REVENUES AND EXPENSES OF VARIABLE INTEREST ENTITIES) (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Revenues: | |||||||||||
Policyholder and reinsurer accounts and other special-purpose portfolios | $126.40 | $258.20 | $87.90 | ||||||||
Fee revenue and other income | 50.9 | 34 | 19.8 | ||||||||
Total revenues | 1,000 | 967 | 1,093 | 1,084.70 | 1,158.20 | 1,093.80 | 1,081.50 | 1,142.60 | 4,144.70 | 4,476.10 | 4,342.70 |
Expenses: | |||||||||||
Interest expense | 92.8 | 105.3 | 114.6 | ||||||||
Other operating costs and expenses | 802.8 | 766.2 | 819.3 | ||||||||
Total benefits and expenses | 3,969.60 | 4,171.30 | 4,187 | ||||||||
Net realized investment losses | 33.9 | 33.4 | 81.1 | ||||||||
Income before income taxes | 75.9 | 154.4 | 114.4 | -169.6 | 41.1 | 114.4 | 114.7 | 34.6 | 175.1 | 304.8 | 155.7 |
Variable Interest Entity, Primary Beneficiary [Member] | |||||||||||
Revenues: | |||||||||||
Policyholder and reinsurer accounts and other special-purpose portfolios | 47.2 | 42.3 | 31.3 | ||||||||
Fee revenue and other income | 1.1 | 1.8 | 1.6 | ||||||||
Total revenues | 48.3 | 44.1 | 32.9 | ||||||||
Expenses: | |||||||||||
Interest expense | 30.1 | 26 | 20 | ||||||||
Other operating costs and expenses | 1.2 | 1.4 | 0.6 | ||||||||
Total benefits and expenses | 31.3 | 27.4 | 20.6 | ||||||||
Income before net realized investment losses and income taxes | 17 | 16.7 | 12.3 | ||||||||
Net realized investment losses | -2.2 | -1.6 | -0.4 | ||||||||
Income before income taxes | $14.80 | $15.10 | $11.90 |
INVESTMENTS_IN_VARIABLE_INTERE5
INVESTMENTS IN VARIABLE INTEREST ENTITIES (SUMMARY OF VARIABLE INTEREST ENTITIES BY CONTRACTUAL MATURITY) (Details) (USD $) | Dec. 31, 2014 |
In Millions, unless otherwise specified | |
Variable Interest Entity [Line Items] | |
Total, Amortized Cost | $1,398.10 |
Total, Estimated Fair Value | 1,367.10 |
Amortized Cost [Member] | |
Variable Interest Entity [Line Items] | |
Due after one year through five years | 417.2 |
Due after five years through ten years | 980.9 |
Total, Amortized Cost | 1,398.10 |
Due after one year through five years | 382.3 |
Due after five years through ten years | 869.8 |
Total, Amortized Cost of Securities Held with Unrealized Losses | 1,252.10 |
Estimated Fair Value [Member] | |
Variable Interest Entity [Line Items] | |
Due after one year through five years | 411.3 |
Due after five years through ten years | 955.8 |
Total, Estimated Fair Value | 1,367.10 |
Due after one year through five years | 376.3 |
Due after five years through ten years | 844.3 |
Total, Estimated Fair Value of Securities Held with Unrealized Losses | $1,220.60 |
SUBSEQUENT_EVENT_NARRATIVE_DET
SUBSEQUENT EVENT (NARRATIVE) (DETAILS) (Subsequent Event [Member], Employee Relocation [Member]) | 0 Months Ended |
Feb. 10, 2015 | |
position | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring and Related Cost, Number of Positions Transitioned | 640 |
United States [Member] | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring and Related Cost, Number of Positions Transitioned | 240 |
SCHEDULE_II_BALANCE_SHEET_Deta
SCHEDULE II - BALANCE SHEET (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Assets [Abstract] | ||||
Fixed maturities, available for sale, at fair value (amortized cost: 2014 - $35.0; 2013 - $51.8) | $20,634,900,000 | $23,204,600,000 | ||
Cash and cash equivalents - unrestricted | 611,600,000 | 699,000,000 | 582,500,000 | 436,000,000 |
Equity securities at fair value (cost: 2014 - $202.7; 2013 - $65.3) | 419,000,000 | 223,000,000 | ||
Trading securities | 244,900,000 | 247,600,000 | ||
Other invested assets | 443,600,000 | 423,300,000 | ||
Income tax assets, net | 758,700,000 | 1,147,200,000 | ||
Other assets | 337,700,000 | 341,700,000 | ||
Total assets | 31,184,200,000 | 34,780,600,000 | ||
Liabilities: | ||||
Notes payable | 794,400,000 | 856,400,000 | ||
Other liabilities | 587,600,000 | 590,600,000 | ||
Total liabilities | 26,496,000,000 | 29,825,400,000 | ||
Commitments and Contingencies | ||||
Shareholders' equity: | ||||
Accumulated other comprehensive income | 825,300,000 | 731,800,000 | ||
Retained earnings | 128,500,000 | 128,400,000 | ||
Total shareholders' equity | 4,688,200,000 | 4,955,200,000 | 5,049,300,000 | 4,613,800,000 |
Total liabilities and shareholders' equity | 31,184,200,000 | 34,780,600,000 | ||
Parent Company [Member] | ||||
Assets [Abstract] | ||||
Fixed maturities, available for sale, at fair value (amortized cost: 2014 - $35.0; 2013 - $51.8) | 34,900,000 | 51,700,000 | ||
Cash and cash equivalents - unrestricted | 86,600,000 | 131,100,000 | 165,700,000 | 70,200,000 |
Equity securities at fair value (cost: 2014 - $202.7; 2013 - $65.3) | 216,900,000 | 79,600,000 | ||
Trading securities | 2,100,000 | 2,100,000 | ||
Other invested assets | 0 | 22,200,000 | ||
Investment in wholly-owned subsidiaries (eliminated in consolidation) | 5,263,300,000 | 5,550,900,000 | ||
Income tax assets, net | 47,900,000 | 107,600,000 | ||
Other invested assets - affiliated (eliminated in consolidation) | 27,000,000 | 19,900,000 | ||
Receivable from subsidiaries (eliminated in consolidation) | 10,800,000 | 1,700,000 | ||
Other assets | 17,200,000 | 22,100,000 | ||
Total assets | 5,706,700,000 | 5,988,900,000 | ||
Liabilities: | ||||
Notes payable | 794,400,000 | 856,400,000 | ||
Payable to subsidiaries (eliminated in consolidation) | 114,300,000 | 108,700,000 | ||
Other liabilities | 109,800,000 | 68,600,000 | ||
Total liabilities | 1,018,500,000 | 1,033,700,000 | ||
Commitments and Contingencies | ||||
Shareholders' equity: | ||||
Common stock and additional paid-in capital ($0.01 par value, 8,000,000,000 shares authorized, shares issued and outstanding: 2014 – 203,324,458; 2013 – 220,323,823) | 3,734,400,000 | 4,095,000,000 | ||
Accumulated other comprehensive income | 825,300,000 | 731,800,000 | ||
Retained earnings | 128,500,000 | 128,400,000 | ||
Total shareholders' equity | 4,688,200,000 | 4,955,200,000 | ||
Total liabilities and shareholders' equity | $5,706,700,000 | $5,988,900,000 |
SCHEDULE_II_SCHEDULE_II_BALANC
SCHEDULE II SCHEDULE II - BALANCE SHEET Parenthetical (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, except Share data, unless otherwise specified | ||
Condensed Financial Statements, Captions [Line Items] | ||
Fixed maturities, available for sale, amortized cost | $18,408.10 | $21,891.80 |
Equity securities cost | 400.5 | 206.7 |
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized (in shares) | 8,000,000,000 | 8,000,000,000 |
Common stock, shares issued (in shares) | 203,324,458 | 220,323,823 |
Common stock, shares outstanding (in shares) | 203,324,458 | 220,323,823 |
Parent Company [Member] | ||
Condensed Financial Statements, Captions [Line Items] | ||
Fixed maturities, available for sale, amortized cost | 35 | 51.8 |
Equity securities cost | $202.70 | $65.30 |
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized (in shares) | 8,000,000,000 | 8,000,000,000 |
Common stock, shares issued (in shares) | 203,324,458 | 220,323,823 |
Common stock, shares outstanding (in shares) | 203,324,458 | 220,323,823 |
SCHEDULE_II_STATEMENT_OF_OPERA
SCHEDULE II - STATEMENT OF OPERATIONS (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Revenues: | |||||||||||
Net investment income | $1,427.40 | $1,664 | $1,486.40 | ||||||||
Net realized investment gains | 33.9 | 33.4 | 81.1 | ||||||||
Total revenues | 1,000 | 967 | 1,093 | 1,084.70 | 1,158.20 | 1,093.80 | 1,081.50 | 1,142.60 | 4,144.70 | 4,476.10 | 4,342.70 |
Expenses: | |||||||||||
Interest expense | 92.8 | 105.3 | 114.6 | ||||||||
Loss on extinguishment or modification of debt | 0.6 | 65.4 | 200.2 | ||||||||
Income before income taxes | 75.9 | 154.4 | 114.4 | -169.6 | 41.1 | 114.4 | 114.7 | 34.6 | 175.1 | 304.8 | 155.7 |
Income tax expense (benefit) | -8 | 37 | 36.3 | 58.4 | -64.9 | -168.6 | 37.6 | 22.7 | 123.7 | -173.2 | -65.3 |
Net income | 83.9 | 117.4 | 78.1 | -228 | 106 | 283 | 77.1 | 11.9 | 51.4 | 478 | 221 |
Parent Company [Member] | |||||||||||
Revenues: | |||||||||||
Net investment income | 12.7 | 21.1 | 22.3 | ||||||||
Net realized investment gains | 11.1 | 0.4 | 1.9 | ||||||||
Intercompany revenues (losses) (eliminated in consolidation) | -1 | 1.6 | 0 | ||||||||
Total revenues | 22.8 | 23.1 | 24.2 | ||||||||
Expenses: | |||||||||||
Interest expense | 44 | 51.4 | 66.6 | ||||||||
Intercompany expenses (eliminated in consolidation) | 0.3 | 0.3 | 0.4 | ||||||||
Operating costs and expenses | 66.6 | 26.1 | 50.9 | ||||||||
Loss on extinguishment or modification of debt | 0.6 | 65.4 | 200.2 | ||||||||
Total expenses | 111.5 | 143.2 | 318.1 | ||||||||
Income before income taxes | -88.7 | -120.1 | -293.9 | ||||||||
Income tax expense (benefit) | -34.1 | -8.8 | -59.8 | ||||||||
Loss before equity in undistributed earnings of subsidiaries | -54.6 | -111.3 | -234.1 | ||||||||
Equity in undistributed earnings of subsidiaries (eliminated in consolidation) | 106 | 589.3 | 455.1 | ||||||||
Net income | $51.40 | $478 | $221 |
SCHEDULE_II_STATEMENT_OF_CASH_
SCHEDULE II - STATEMENT OF CASH FLOWS (Details) (USD $) | 12 Months Ended | |||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Condensed Financial Statements, Captions [Line Items] | ||||
Cash flows from operating activities | $121.80 | [1] | $720.40 | $634.90 |
Cash flows from investing activities: | ||||
Sales of investments | 2,090 | 2,315.80 | 2,057.60 | |
Purchases of investments | -3,731.60 | -5,367.10 | -4,271.10 | |
Net sales of trading securities | 4.9 | 30 | 60.4 | |
Net cash provided (used) by investing activities | 56.3 | -602.5 | -197.1 | |
Cash flows from financing activities: | ||||
Issuance of notes payable, net | 0 | 0 | 944.5 | |
Payments on notes payable | -62.9 | -126.9 | -810.6 | |
Issuance of common stock | 5 | 15.1 | 3.1 | |
Payments to repurchase common stock and warrants | -319.1 | -118.4 | -180.2 | |
Expenses related to extinguishment or modification of debt | -0.6 | -61.6 | -183 | |
Amount paid to extinguish the beneficial conversion feature associated with repurchase of convertible debentures | 0 | -12.6 | -24 | |
Net cash used by financing activities | -265.5 | -1.4 | -291.3 | |
Net increase (decrease) in cash and cash equivalents | -87.4 | 116.5 | 146.5 | |
Cash and cash equivalents, beginning of year | 699 | 582.5 | 436 | |
Cash and cash equivalents, end of year | 611.6 | 699 | 582.5 | |
Parent Company [Member] | ||||
Condensed Financial Statements, Captions [Line Items] | ||||
Cash flows from operating activities | -66.7 | -65.9 | -95.3 | |
Cash flows from investing activities: | ||||
Sales of investments | 229.8 | 95.8 | 159.7 | |
Sales of investments - affiliated | 18.3 | 0 | 0 | |
Purchases of investments | -320.1 | -119.3 | -145 | |
Purchases of investments - affiliated | -30.7 | -10 | 0 | |
Net sales of trading securities | 9.9 | 12.6 | 37.4 | |
Dividends received from consolidated subsidiary, net of capital contributions of $18.8 in 2014, nil in 2013 and $26 in 2012 | 423.5 | 242.8 | 245 | |
Change in restricted cash | 0 | 0 | 26 | |
Net cash provided (used) by investing activities | 330.7 | 221.9 | 323.1 | |
Cash flows from financing activities: | ||||
Issuance of notes payable, net | 0 | 0 | 944.5 | |
Payments on notes payable | -62.9 | -126.9 | -810.6 | |
Issuance of common stock | 5 | 15.1 | 3.1 | |
Payments to repurchase common stock and warrants | -376.5 | -118.4 | -180.2 | |
Common stock dividends paid | -51 | -24.4 | -13.9 | |
Expenses related to extinguishment or modification of debt | -0.6 | -61.6 | -183 | |
Amount paid to extinguish the beneficial conversion feature associated with repurchase of convertible debentures | 0 | -12.6 | -24 | |
Investment borrowings - repurchase agreements, net | 20.4 | 0 | -24.8 | |
Issuance of notes payable to affiliates | 257.8 | 222.1 | 208.6 | |
Payments on notes payable to affiliates | -100.7 | -83.9 | -52 | |
Net cash used by financing activities | -308.5 | -190.6 | -132.3 | |
Net increase (decrease) in cash and cash equivalents | -44.5 | -34.6 | 95.5 | |
Cash and cash equivalents, beginning of year | 131.1 | 165.7 | 70.2 | |
Cash and cash equivalents, end of year | $86.60 | $131.10 | $165.70 | |
[1] | Cash flows from operating activities reflect outflows in 2014 due to the payment to reinsurer to transfer certain long-term care business. |
SCHEDULE_IV_DETAILS
SCHEDULE IV (DETAILS) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items] | |||
Assumed premiums earned | $34.50 | $38 | $70.40 |
Reinsurance ceded | -187.9 | -240.5 | -237.1 |
Insurance policy income | 2,629.70 | 2,744.70 | 2,755.40 |
Life insurance inforce | |||
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items] | |||
Direct | 25,029 | 53,304.90 | 53,750.80 |
Assumed | 147.1 | 305.7 | 325.7 |
Ceded | -3,660.10 | -11,477.60 | -12,392.40 |
Net insurance inforce | 21,516 | 42,133 | 41,684.10 |
Percentage of assumed to net | 0.70% | 0.70% | 0.80% |
Insurance policy income | |||
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items] | |||
Direct premiums earned | 2,558.20 | 2,623.50 | 2,591.10 |
Assumed premiums earned | 35 | 37.4 | 69.4 |
Reinsurance ceded | -176.7 | -212.1 | -220 |
Insurance policy income | $2,416.50 | $2,448.80 | $2,440.50 |
Premiums, percentage assumed | 1.40% | 1.50% | 2.80% |