DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION - shares | 3 Months Ended | |
Mar. 31, 2016 | Apr. 21, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | CNO Financial Group, Inc. | |
Entity Central Index Key | 1,224,608 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2016 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
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 Common Stock, Shares Outstanding | 179,098,447 |
CONSOLIDATED BALANCE SHEET (una
CONSOLIDATED BALANCE SHEET (unaudited) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Investments: | ||
Fixed maturities, available for sale, at fair value (amortized cost: March 31, 2016 - $18,765.4; December 31, 2015 - $18,947.0) | $ 20,105.1 | $ 19,882.9 |
Equity securities at fair value (cost: March 31, 2016 - $586.0; December 31, 2015 - $447.4) | 610.7 | 463 |
Mortgage loans | 1,700.8 | 1,721 |
Policy loans | 110.1 | 109.4 |
Trading securities | 285.2 | 262.1 |
Investments held by variable interest entities | 1,691 | 1,633.6 |
Other invested assets | 433.4 | 415.1 |
Total investments | 24,936.3 | 24,487.1 |
Cash and cash equivalents - unrestricted | 635.7 | 432.3 |
Cash and cash equivalents held by variable interest entities | 190.1 | 364.4 |
Accrued investment income | 247.7 | 237 |
Present value of future profits | 432.2 | 449 |
Deferred acquisition costs | 954.8 | 1,083.3 |
Reinsurance receivables | 2,839.4 | 2,859.3 |
Income tax assets, net | 828.8 | 898.8 |
Assets held in separate accounts | 4.6 | 4.7 |
Other assets | 388.4 | 309.2 |
Total assets | 31,458 | 31,125.1 |
Liabilities for insurance products: | ||
Policyholder account balances | 10,772.4 | 10,762.3 |
Future policy benefits | 10,768.7 | 10,602.1 |
Liability for policy and contract claims | 488.7 | 487.8 |
Unearned and advanced premiums | 292 | 286.3 |
Liabilities related to separate accounts | 4.6 | 4.7 |
Other liabilities | 788.9 | 707.8 |
Investment borrowings | 1,548 | 1,548.1 |
Borrowings related to variable interest entities | 1,656.6 | 1,676.4 |
Notes payable – direct corporate obligations | 911.5 | 911.1 |
Total liabilities | $ 27,231.4 | $ 26,986.6 |
Commitments and Contingencies | ||
Shareholders' equity: | ||
Common stock ($0.01 par value, 8,000,000,000 shares authorized, shares issued and outstanding: March 31, 2016 – 179,098,447; December 31, 2015 – 184,028,511) | $ 1.8 | $ 1.8 |
Additional paid-in capital | 3,304.3 | 3,386.8 |
Accumulated other comprehensive income | 540.5 | 402.8 |
Retained earnings | 380 | 347.1 |
Total shareholders' equity | 4,226.6 | 4,138.5 |
Total liabilities and shareholders' equity | $ 31,458 | $ 31,125.1 |
CONSOLIDATED BALANCE SHEET (un3
CONSOLIDATED BALANCE SHEET (unaudited) (Parenthetical) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Investments: | ||
Fixed maturities, available for sale, amortized cost | $ 18,765.4 | $ 18,947 |
Equity securities cost | $ 586 | $ 447.4 |
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) | 179,098,447 | 184,028,511 |
Common stock, shares outstanding (in shares) | 179,098,447 | 184,028,511 |
CONSOLIDATED STATEMENT OF OPERA
CONSOLIDATED STATEMENT OF OPERATIONS (unaudited) - USD ($) shares in Thousands, $ in Millions | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | ||
Revenues: | |||
Insurance policy income | $ 644.4 | $ 636.5 | |
Net investment income (loss): | |||
General account assets | 291 | 300.1 | |
Policyholder and other special-purpose portfolios | 11.7 | 16.6 | |
Realized investment gains (losses): | |||
Net realized investment gains (losses), excluding impairment losses | 9.1 | (1.1) | |
Impairment losses recognized | [1] | (10) | (1.3) |
Gain on dissolution of a variable interest entity | 0 | 11.3 | |
Total realized gains (losses) | (0.9) | 8.9 | |
Fee revenue and other income | 14.2 | 16.2 | |
Total revenues | 960.4 | 978.3 | |
Benefits and expenses: | |||
Insurance policy benefits | 619 | 606 | |
Transition expenses | 0 | 4.5 | |
Interest expense | 27.7 | 21.5 | |
Amortization | 62.1 | 66.1 | |
Other operating costs and expenses | 211.1 | 197.9 | |
Total benefits and expenses | 919.9 | 896 | |
Income before income taxes | 40.5 | 82.3 | |
Income tax expense: | |||
Tax expense on period income | 15 | 29.5 | |
Valuation allowance for deferred tax assets | (20) | 0 | |
Net income | $ 45.5 | $ 52.8 | |
Basic: | |||
Weighted average shares outstanding (in shares) | 180,350 | 200,491 | |
Net income (loss) (in dollars per share) | $ 0.25 | $ 0.26 | |
Diluted: | |||
Weighted average shares outstanding (in shares) | 182,128 | 202,275 | |
Net income (loss) (in dollars per share) | $ 0.25 | $ 0.26 | |
[1] | No portion of the other-than-temporary impairments recognized in the periods was included in accumulated other comprehensive income. |
CONSOLIDATED STATEMENT OF COMPR
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 45.5 | $ 52.8 |
Other comprehensive income, before tax: | ||
Unrealized gains (losses) for the period | 431.1 | 269 |
Adjustment to present value of future profits and deferred acquisition costs | (45.2) | (9.2) |
Amount related to premium deficiencies assuming the net unrealized gains (losses) had been realized | (168) | (92.1) |
Reclassification adjustments: | ||
For net realized investment (gains) losses included in net income | (4.9) | 0.4 |
For amortization of the present value of future profits and deferred acquisition costs related to net realized investment gains (losses) included in net income | 0.1 | (0.2) |
Unrealized gains on investments | 213.1 | 167.9 |
Change related to deferred compensation plan | 0.6 | 1.3 |
Other comprehensive income before tax | 213.7 | 169.2 |
Income tax expense related to items of accumulated other comprehensive income | (76) | (60.3) |
Other comprehensive income, net of tax | 137.7 | 108.9 |
Comprehensive income | $ 183.2 | $ 161.7 |
CONSOLIDATED STATEMENT OF SHARE
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (unaudited) - USD ($) $ in Millions | Total | Common stock and additional paid-in capital [Member] | Accumulated other comprehensive income [Member] | Retained earnings [Member] |
Balance, beginning of period at Dec. 31, 2014 | $ 4,688.2 | $ 3,734.4 | $ 825.3 | $ 128.5 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 52.8 | 52.8 | ||
Change in unrealized appreciation (depreciation) of investments (net of applicable income tax expense) | 108.2 | 108.2 | ||
Change in noncredit component of impairment losses on fixed maturities, available for sale (net of applicable income tax expense) | 0.7 | 0.7 | ||
Cost of common stock repurchased | (86) | (86) | ||
Dividends on common stock | (12) | (12) | ||
Stock options, restricted stock and performance units | 1.7 | 1.7 | ||
Balance, end of period at Mar. 31, 2015 | 4,753.6 | 3,650.1 | 934.2 | 169.3 |
Balance, beginning of period at Dec. 31, 2015 | 4,138.5 | 3,388.6 | 402.8 | 347.1 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 45.5 | 45.5 | ||
Change in unrealized appreciation (depreciation) of investments (net of applicable income tax expense) | 137.7 | 137.7 | ||
Cost of common stock repurchased | (90) | (90) | ||
Dividends on common stock | (12.6) | (12.6) | ||
Stock options, restricted stock and performance units | 7.5 | 7.5 | ||
Balance, end of period at Mar. 31, 2016 | $ 4,226.6 | $ 3,306.1 | $ 540.5 | $ 380 |
CONSOLIDATED STATEMENT OF SHAR7
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (unaudited) (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Statement of Stockholders' Equity [Abstract] | ||
Change in unrealized appreciation (depreciation) of investments, applicable income tax expense (benefit) | $ 76 | $ 59.9 |
Change in noncredit component of impairment losses on fixed maturities, available for sale, applicable income tax expense (benefit) | $ 0 | $ 0.4 |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cash flows from operating activities: | ||
Insurance policy income | $ 617.3 | $ 592.9 |
Net investment income | 285.8 | 281 |
Fee revenue and other income | 14.2 | 16.2 |
Insurance policy benefits | (487.4) | (474.9) |
Interest expense | (13.3) | (17.2) |
Deferrable policy acquisition costs | (62.2) | (58.2) |
Other operating costs | (212.9) | (216.6) |
Income taxes | (1.1) | (0.7) |
Net cash from operating activities | 140.4 | 122.5 |
Cash flows from investing activities: | ||
Sales of investments | 1,181.5 | 452.5 |
Maturities and redemptions of investments | 349.6 | 320.1 |
Purchases of investments | (1,524.9) | (1,019.9) |
Net purchases of trading securities | (21.7) | (3.7) |
Change in cash and cash equivalents held by variable interest entities | 174.3 | (90.2) |
Other | (3.8) | (5.2) |
Net cash provided (used) by investing activities | 155 | (346.4) |
Cash flows from financing activities: | ||
Payments on notes payable | 0 | (19.8) |
Issuance of common stock | 0.4 | 1 |
Payments to repurchase common stock | (93.7) | (81.5) |
Common stock dividends paid | (12.7) | (12.1) |
Amounts received for deposit products | 340.1 | 286.1 |
Withdrawals from deposit products | (305.3) | (322.6) |
Issuance of investment borrowings: | ||
Related to variable interest entities | 2.9 | 239.3 |
Payments on investment borrowings: | ||
Federal Home Loan Bank | (0.2) | (0.2) |
Related to variable interest entities and other | (23.5) | (50.9) |
Investment borrowings - repurchase agreements, net | 0 | (0.1) |
Net cash provided (used) by financing activities | (92) | 39.2 |
Net increase (decrease) in cash and cash equivalents | 203.4 | (184.7) |
Cash and cash equivalents, beginning of period | 432.3 | 611.6 |
Cash and cash equivalents, end of period | $ 635.7 | $ 426.9 |
BUSINESS AND BASIS OF PRESENTAT
BUSINESS AND BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BUSINESS AND BASIS OF PRESENTATION | BUSINESS AND BASIS OF PRESENTATION The following notes should be read together with the notes to the consolidated financial statements included in our 2015 Annual Report on Form 10-K. 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. Our unaudited consolidated financial statements reflect normal recurring adjustments that, in the opinion of management, are necessary for a fair statement of our financial position, results of operations and cash flows for the periods presented. As permitted by rules and regulations of the Securities and Exchange Commission (the "SEC") applicable to quarterly reports on Form 10-Q, we have condensed or omitted certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). We have reclassified certain amounts from the prior periods to conform to the 2016 presentation. These reclassifications have no effect on net income or shareholders' equity. Results for interim periods are not necessarily indicative of the results that may be expected for a full year. The balance sheet at December 31, 2015, presented herein, has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. 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. 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. |
INVESTMENTS
INVESTMENTS | 3 Months Ended |
Mar. 31, 2016 | |
Investments, Debt and Equity Securities [Abstract] | |
INVESTMENTS | INVESTMENTS We classify our fixed maturity securities into one of two categories: (i) "available for sale" (which we carry at estimated fair value with any unrealized gain or loss, net of tax and related adjustments, recorded as a component of shareholders' equity); or (ii) "trading" (which we carry at estimated fair value with changes in such value recognized as net investment income (classified as investment income from policyholder and other special-purpose portfolios)). Our trading securities include: (i) investments purchased with the intent of selling in the near term to generate income; (ii) investments supporting certain insurance liabilities (including investments backing the market strategies of our multibucket annuity products); 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 is recognized in income from policyholder 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 is substantially offset by the change in insurance policy benefits related to certain products. 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 March 31, 2016 and December 31, 2015 , were as follows (dollars in millions): March 31, December 31, Net unrealized appreciation (depreciation) on fixed maturity securities, available for sale, on which an other-than-temporary impairment loss has been recognized $ 1.6 $ 1.6 Net unrealized gains on all other investments 1,329.6 903.4 Adjustment to present value of future profits (a) (120.3 ) (121.2 ) Adjustment to deferred acquisition costs (279.6 ) (133.3 ) Adjustment to insurance liabilities (82.3 ) (14.6 ) Unrecognized net loss related to deferred compensation plan (8.0 ) (8.6 ) Deferred income tax liabilities (300.5 ) (224.5 ) Accumulated other comprehensive income $ 540.5 $ 402.8 ________ (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 Conseco, Inc., an Indiana corporation (our "Predecessor"), emerged from bankruptcy. At March 31, 2016 , adjustments to the present value of future profits, deferred acquisition costs, insurance liabilities and deferred tax assets included $(104.8) million , $(138.0) million , $(82.3) million and $115.5 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 March 31, 2016 , the amortized cost, gross unrealized gains and losses, estimated fair value, 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 cost Gross unrealized gains Gross unrealized losses Estimated fair value Other-than-temporary impairments included in accumulated other comprehensive income Corporate securities $ 11,946.1 $ 1,188.0 $ (226.3 ) $ 12,907.8 $ — United States Treasury securities and obligations of United States government corporations and agencies 160.4 36.7 — 197.1 — States and political subdivisions 1,814.3 249.2 (3.7 ) 2,059.8 (3.0 ) Debt securities issued by foreign governments 33.5 .5 — 34.0 — Asset-backed securities 2,173.2 50.8 (29.7 ) 2,194.3 — Collateralized debt obligations 148.4 .1 (4.8 ) 143.7 — Commercial mortgage-backed securities 1,494.7 46.0 (23.1 ) 1,517.6 — Mortgage pass-through securities 2.8 .3 — 3.1 — Collateralized mortgage obligations 992.0 60.0 (4.3 ) 1,047.7 (1.8 ) Total fixed maturities, available for sale $ 18,765.4 $ 1,631.6 $ (291.9 ) $ 20,105.1 $ (4.8 ) Equity securities $ 586.0 $ 26.3 $ (1.6 ) $ 610.7 The following table sets forth the amortized cost and estimated fair value of fixed maturities, available for sale, at March 31, 2016 , 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 cost Estimated fair value (Dollars in millions) Due in one year or less $ 306.7 $ 311.2 Due after one year through five years 2,222.7 2,385.4 Due after five years through ten years 1,574.3 1,670.2 Due after ten years 9,850.6 10,831.9 Subtotal 13,954.3 15,198.7 Structured securities 4,811.1 4,906.4 Total fixed maturities, available for sale $ 18,765.4 $ 20,105.1 Net Realized Investment Gains (Losses) The following table sets forth the net realized investment gains (losses) for the periods indicated (dollars in millions): Three months ended March 31, 2016 2015 Fixed maturity securities, available for sale: Gross realized gains on sale $ 98.5 $ 14.7 Gross realized losses on sale (81.0 ) (15.4 ) Impairments: Total other-than-temporary impairment losses (6.3 ) (1.3 ) Other-than-temporary impairment losses recognized in accumulated other comprehensive income — — Net impairment losses recognized (6.3 ) (1.3 ) Net realized investment gains (losses) from fixed maturities 11.2 (2.0 ) Equity securities .1 2.5 Commercial mortgage loans — (2.3 ) Impairments of other investments (3.7 ) — Gain on dissolution of a variable interest entity — 11.3 Other (a) (8.5 ) (.6 ) Net realized investment gains (losses) $ (.9 ) $ 8.9 _________________ (a) Changes in the estimated fair value of trading securities that we have elected the fair value option (and are still held as of the end of the respective periods) were $(3.4) million for the three months ended March 31, 2016 . Such amount was insignificant in the 2015 period. During the first three months of 2016 , we recognized net realized investment losses of $.9 million , which were comprised of: (i) $10.9 million of net gains from the sales of investments; (ii) the decrease in fair value of certain fixed maturity investments with embedded derivatives of $3.6 million ; (iii) the increase in fair value of embedded derivatives related to a modified coinsurance agreement of $1.8 million ; and (iv) $10.0 million of writedowns of investments for other than temporary declines in fair value recognized through net income. During the first three months of 2015 , we recognized net realized investment gains of $8.9 million , which were comprised of: (i) $2.5 million of net losses from the sales of investments; (ii) an $11.3 million gain on the dissolution of a variable interest entity ("VIE"); (iii) the increase in fair value of embedded derivatives related to a modified coinsurance agreement of $1.4 million ; and (iv) $1.3 million of writedowns of investments for other than temporary declines in fair value recognized through net income. During the first three months of 2015 , a VIE that was required to be consolidated was dissolved. A gain of $11.3 million was recognized representing the difference between the borrowings of such VIE and the contractual distributions required following the liquidation of the underlying assets. 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. During the first three months of 2016 , the $81.0 million of gross realized losses on sales of $388.0 million of fixed maturity securities, available for sale included: (i) $74.5 million related to various corporate securities (including $62.7 million related to sales of investments in the energy sector); (ii) $5.3 million related to commercial mortgage-backed securities; and (iii) $1.2 million related to various other investments. 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 portfolio cash flows. During the first three months of 2016 , we recognized $10.0 million of impairment losses recorded in earnings which included: (i) $6.3 million of writedowns on fixed maturities of a single issuer in the energy sector; and (ii) $3.7 million of writedowns on a direct loan due to borrower specific events. Factors considered in determining the writedowns of investments in the first three months of 2016 included the subordination status of each investment, the impact of recent downgrades and issuer specific events, including the impact of the current low oil prices on issuers in the energy sector. During the first three months of 2015 , we recognized $1.3 million of impairment losses recorded in earnings on a fixed maturity due to issuer specific events. 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 March 31, 2016 , other-than-temporary impairments included in accumulated other comprehensive income totaled $4.8 million (before taxes and related amortization). 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 the three months ended March 31, 2016 and 2015 (dollars in millions): Three months ended March 31, 2016 2015 Credit losses on fixed maturity securities, available for sale, beginning of period $ (2.6 ) $ (1.0 ) Add: credit losses on other-than-temporary impairments not previously recognized — — Less: credit losses on securities sold — — 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 $ (2.6 ) $ (1.0 ) __________ (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. Gross Unrealized Investment Losses Our investment strategy is to maximize, over a sustained period and within acceptable parameters of quality and risk, investment income and total investment return through active investment management. Accordingly, we may sell securities at a gain or a loss to enhance the projected total return of the portfolio as market opportunities change, to reflect changing perceptions of risk, or to better match certain characteristics of our investment portfolio with the corresponding characteristics of our insurance liabilities. 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 March 31, 2016 (dollars in millions): Less than 12 months 12 months or greater Total Description of securities Fair value Unrealized losses Fair value Unrealized losses Fair value Unrealized losses United States Treasury securities and obligations of United States government corporations and agencies $ .6 $ — $ — $ — $ .6 $ — States and political subdivisions 14.4 (.2 ) 23.1 (3.5 ) 37.5 (3.7 ) Debt securities issued by foreign governments 4.2 — — — 4.2 — Corporate securities 1,862.3 (142.7 ) 548.5 (83.6 ) 2,410.8 (226.3 ) Asset-backed securities 1,118.9 (24.8 ) 162.4 (4.9 ) 1,281.3 (29.7 ) Collateralized debt obligations 113.4 (4.0 ) 27.6 (.8 ) 141.0 (4.8 ) Commercial mortgage-backed securities 493.5 (19.8 ) 48.5 (3.3 ) 542.0 (23.1 ) Collateralized mortgage obligations 281.9 (3.3 ) 28.4 (1.0 ) 310.3 (4.3 ) Total fixed maturities, available for sale $ 3,889.2 $ (194.8 ) $ 838.5 $ (97.1 ) $ 4,727.7 $ (291.9 ) Equity securities $ 51.4 $ (1.1 ) $ 14.0 $ (.5 ) $ 65.4 $ (1.6 ) 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, 2015 (dollars in millions): Less than 12 months 12 months or greater Total Description of securities Fair value Unrealized losses Fair value Unrealized losses Fair value Unrealized losses United States Treasury securities and obligations of United States government corporations and agencies $ 43.6 $ (.3 ) $ — $ — $ 43.6 $ (.3 ) States and political subdivisions 156.8 (4.1 ) 14.8 (3.5 ) 171.6 (7.6 ) Debt securities issued by foreign governments 20.7 (.6 ) — — 20.7 (.6 ) Corporate securities 2,913.6 (255.7 ) 278.9 (89.5 ) 3,192.5 (345.2 ) Asset-backed securities 930.3 (11.7 ) 98.4 (1.7 ) 1,028.7 (13.4 ) Collateralized debt obligations 96.2 (1.8 ) 36.3 (.4 ) 132.5 (2.2 ) Commercial mortgage-backed securities 556.0 (16.1 ) 25.7 (1.5 ) 581.7 (17.6 ) Mortgage pass-through securities — — .1 — .1 — Collateralized mortgage obligations 97.8 (1.0 ) 40.8 (.6 ) 138.6 (1.6 ) Total fixed maturities, available for sale $ 4,815.0 $ (291.3 ) $ 495.0 $ (97.2 ) $ 5,310.0 $ (388.5 ) Equity securities $ 140.1 $ (2.4 ) $ 2.4 $ (.4 ) $ 142.5 $ (2.8 ) Based on management's current assessment of investments with unrealized losses at March 31, 2016 , 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. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE 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): Three months ended March 31, 2016 2015 Net income for basic and diluted earnings per share $ 45.5 $ 52.8 Shares: Weighted average shares outstanding for basic earnings per share 180,350 200,491 Effect of dilutive securities on weighted average shares: Stock options, restricted stock and performance units 1,778 1,784 Weighted average shares outstanding for diluted earnings per share 182,128 202,275 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 were exercised and restricted stock was vested. The dilution from options and restricted shares is calculated using the treasury stock method. Under this method, we assume the proceeds from the exercise of the options (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 (or the vesting of the restricted stock and performance units). |
BUSINESS SEGMENTS
BUSINESS SEGMENTS | 3 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
BUSINESS SEGMENTS | BUSINESS SEGMENTS The Company manages its business through the following operating segments: Bankers Life, Washington National and Colonial Penn, which are defined on the basis of product distribution; and corporate operations, comprised of holding company activities and certain noninsurance company businesses. We measure segment performance by excluding net realized investment gains (losses), fair value changes in embedded derivative liabilities (net of related amortization), fair value changes in the agent deferred compensation plan, loss on extinguishment of debt, income taxes and other non-operating items consisting primarily of equity in earnings of certain non-strategic investments and earnings attributable to VIEs ("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 realized investment gains (losses), fair value changes in embedded derivative liabilities (net of related amortization), fair value changes in the agent deferred compensation plan, loss on extinguishment of debt and other non-operating items consisting primarily of equity in earnings of certain non-strategic investments and earnings attributable to VIEs 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): Three months ended March 31, 2016 2015 Revenues: Bankers Life: Insurance policy income: Annuities $ 4.8 $ 5.7 Health 311.1 315.8 Life 97.3 91.2 Net investment income (a) 214.2 226.5 Fee revenue and other income (a) 6.6 6.3 Total Bankers Life revenues 634.0 645.5 Washington National: Insurance policy income: Annuities .5 .9 Health 155.5 152.2 Life 6.1 6.4 Net investment income (a) 60.6 65.6 Fee revenue and other income (a) .3 .4 Total Washington National revenues 223.0 225.5 Colonial Penn: Insurance policy income: Health .7 .8 Life 68.4 63.5 Net investment income (a) 11.0 10.7 Fee revenue and other income (a) .4 .3 Total Colonial Penn revenues 80.5 75.3 Corporate operations: Net investment income 4.0 6.7 Fee and other income 2.5 1.9 Total corporate revenues 6.5 8.6 Total revenues 944.0 954.9 (continued on next page) (continued from previous page) Three months ended March 31, 2016 2015 Expenses: Bankers Life: Insurance policy benefits $ 397.0 $ 405.3 Amortization 51.5 51.6 Interest expense on investment borrowings 2.9 2.1 Other operating costs and expenses 105.0 104.3 Total Bankers Life expenses 556.4 563.3 Washington National: Insurance policy benefits 133.5 135.2 Amortization 15.1 15.3 Interest expense on investment borrowings .8 .4 Other operating costs and expenses 47.3 46.1 Total Washington National expenses 196.7 197.0 Colonial Penn: Insurance policy benefits 50.5 48.6 Amortization 3.9 3.6 Interest expense on investment borrowings .1 — Other operating costs and expenses 32.8 29.0 Total Colonial Penn expenses 87.3 81.2 Corporate operations: Interest expense on corporate debt 11.4 10.5 Other operating costs and expenses 14.6 9.9 Total corporate expenses 26.0 20.4 Total expenses 866.4 861.9 Pre-tax operating earnings by segment: Bankers Life 77.6 82.2 Washington National 26.3 28.5 Colonial Penn (6.8 ) (5.9 ) Corporate operations (19.5 ) (11.8 ) Pre-tax operating earnings $ 77.6 $ 93.0 ___________________ (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 (loss) is as follows (dollars in millions): Three months ended March 31, 2016 2015 Total segment revenues $ 944.0 $ 954.9 Net realized investment gains (losses) (.9 ) (2.4 ) Revenues related to certain non-strategic investments and earnings attributable to VIEs 12.3 18.3 Fee revenue related to transition and support services agreements 5.0 7.5 Consolidated revenues 960.4 978.3 Total segment expenses 866.4 861.9 Insurance policy benefits - fair value changes in embedded derivative liabilities 38.0 16.9 Amortization related to fair value changes in embedded derivative liabilities (8.5 ) (4.2 ) Amortization related to net realized investment gains .1 (.2 ) Expenses related to certain non-strategic investments and expenses attributable to VIEs 12.9 10.5 Fair value changes related to agent deferred compensation plan 6.0 — Transition expenses — 4.5 Expenses related to transition and support services agreements 5.0 6.6 Consolidated expenses 919.9 896.0 Income before tax 40.5 82.3 Income tax expense: Tax expense on period income 15.0 29.5 Valuation allowance for deferred tax assets (20.0 ) — Net income $ 45.5 $ 52.8 |
ACCOUNTING FOR DERIVATIVES
ACCOUNTING FOR DERIVATIVES | 3 Months Ended |
Mar. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
ACCOUNTING FOR DERIVATIVES | ACCOUNTING FOR DERIVATIVES Our freestanding and embedded derivatives, which are not designated as hedging instruments, are held at fair value and are summarized as follows (dollars in millions): Fair value March 31, December 31, 2015 Assets: Other invested assets: Fixed index call options $ 47.0 $ 41.0 Interest rate futures (.3 ) .1 Reinsurance receivables (3.2 ) (5.0 ) Total assets $ 43.5 $ 36.1 Liabilities: Future policy benefits: Fixed index products $ 1,096.0 $ 1,057.1 Total liabilities $ 1,096.0 $ 1,057.1 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 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. The notional amount of these options was $2.3 billion at March 31, 2016 . Such amount did not fluctuate significantly during the first three months of 2016 and 2015. We utilize United States Treasury interest rate futures primarily to hedge interest rate risk related to anticipated mortgage loan transactions. We are required to establish an embedded derivative related to a modified coinsurance agreement pursuant to which we assume the risks of a block of health insurance business. The embedded derivative represents the mark-to-market adjustment for approximately $140 million in underlying investments held by the ceding reinsurer. We purchase certain fixed maturity securities that contain embedded derivatives that are required to be 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. 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): Three months ended March 31, 2016 2015 Net investment income from policyholder and other special-purpose portfolios: Fixed index call options $ (9.0 ) $ (2.1 ) Embedded derivative related to reinsurance contract — — Total (9.0 ) (2.1 ) Net realized gains (losses): Interest rate futures (1.0 ) (1.7 ) Embedded derivative related to modified coinsurance agreement 1.8 — Total .8 (1.7 ) Insurance policy benefits: Embedded derivative related to fixed index annuities (34.9 ) (17.8 ) Total $ (43.1 ) $ (21.6 ) 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 March 31, 2016 , all of our counterparties were rated "A-" or higher by Standard & Poor's Corporation ("S&P"). We enter into exchange-traded interest rate future contracts. The contracts 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 March 31, 2016 and December 31, 2015 (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 March 31, 2016: Fixed index call options $ 47.0 $ — $ 47.0 $ — $ — $ 47.0 Interest rate futures (.3 ) .7 .4 — — .4 December 31, 2015: Fixed index call options 41.0 — 41.0 — — 41.0 Interest rate futures .1 1.5 1.6 — — 1.6 |
REINSURANCE
REINSURANCE | 3 Months Ended |
Mar. 31, 2016 | |
Reinsurance Disclosures [Abstract] | |
REINSURANCE | REINSURANCE The cost of reinsurance ceded totaled $33.6 million and $33.9 million in the first quarters of 2016 and 2015 , respectively. We deduct this cost from insurance policy income. Reinsurance recoveries netted against insurance policy benefits totaled $40.4 million and $39.4 million in the first quarters of 2016 and 2015 , 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 $8.8 million and $9.9 million in the first quarters of 2016 and 2015 , respectively. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company's interim tax expense is based upon the estimated annual effective tax rate for the respective period. Under authoritative guidance, certain items are required to be excluded from the estimated annual effective tax rate calculation. Such items include changes in judgment about the realizability of deferred tax assets resulting from changes in projections of income expected to be available in future years, and items deemed to be unusual, infrequent, or that can not be reliably estimated. In these cases, the actual tax expense or benefit applicable to that item is treated discretely and is reported in the same period as the related item. The components of income tax expense are as follows (dollars in millions): Three months ended March 31, 2016 2015 Current tax expense $ 4.1 $ 2.9 Deferred tax expense 10.9 26.4 Income tax expense calculated based on estimated annual effective tax rate 15.0 29.3 Income tax expense on discrete items: Change in valuation allowance (20.0 ) — Other items — .2 Total income tax expense $ (5.0 ) $ 29.5 A reconciliation of the U.S. statutory corporate tax rate to the estimated annual effective rate, before discrete items, reflected in the consolidated statement of operations is as follows: Three months ended March 31, 2016 2015 U.S. statutory corporate rate 35.0 % 35.0 % Non-taxable income and nondeductible benefits, net .8 (.8 ) State taxes 1.2 1.4 Estimated annual effective tax rate 37.0 % 35.6 % The components of the Company's income tax assets and liabilities are summarized below (dollars in millions): March 31, December 31, Deferred tax assets: Net federal operating loss carryforwards $ 883.4 $ 916.3 Net state operating loss carryforwards 13.9 14.1 Tax credits 57.2 55.3 Capital loss carryforwards 12.2 13.8 Investments 19.7 26.5 Insurance liabilities 624.8 600.3 Other 63.9 63.0 Gross deferred tax assets 1,675.1 1,689.3 Deferred tax liabilities: Present value of future profits and deferred acquisition costs (303.4 ) (305.4 ) Accumulated other comprehensive income (298.6 ) (223.8 ) Gross deferred tax liabilities (602.0 ) (529.2 ) Net deferred tax assets before valuation allowance 1,073.1 1,160.1 Valuation allowance (193.5 ) (213.5 ) Net deferred tax assets 879.6 946.6 Current income taxes accrued (50.8 ) (47.8 ) Income tax assets, net $ 828.8 $ 898.8 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. Based on our assessment, it appears more likely than not that $879.6 million of our net deferred tax assets of $1,073.1 million will be realized through future taxable earnings. Accordingly, we have established a deferred tax valuation allowance of $193.5 million at March 31, 2016 ( $176.5 million of which relates to our net federal operating loss carryforwards; $10 million relates to state operating loss carryforwards; and $7 million relates to capital loss carryforwards). 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 strategies, reinsurance transactions and the impact of the sale of Conseco Life Insurance Company ("CLIC", a wholly owned subsidiary prior to its sale in July 2014). Our estimates of future taxable income are based on evidence we consider to be objective and verifiable. In the first three months of 2016, we reduced the valuation allowance for deferred tax assets by $20.0 million primarily related to higher expected non-life income from: (i) our recently announced investment in Tennenbaum Capital Partners, LLC ("TCP"); and (ii) approximately $250 million of additional investments to be made over time in various TCP managed funds and strategies. The investment in TCP is further discussed in the note to the consolidated financial statements entitled "Subsequent Event". Our projection of future taxable income for purposes of determining the valuation allowance is based on our adjusted average annual taxable income which is assumed to remain flat for two years and then increase by 3 percent for the next five years, and level taxable income is assumed thereafter. Our deferred tax valuation model was adjusted to reflect our investment in TCP. In the projections used for our analysis, our adjusted average taxable income (based on the level of recent normalized taxable income) of approximately $345 million has not changed, however, the amount characterized as non-life taxable income increased by approximately $10 million and the amount characterized as life taxable income decreased by $10 million . Accordingly, our adjusted average taxable income is comprised of $85 million of non-life taxable income and $260 million of life taxable income. 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 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 ( 2.65 percent at March 31, 2016 ), 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 March 31, 2016 , we were below the 50 percent ownership change level that would trigger further impairment of our ability to utilize our NOLs. As of March 31, 2016 , we had $2.5 billion of federal NOLs. The following table summarizes the expiration dates of our loss carryforwards assuming the Internal Revenue Service ("IRS") ultimately agrees with the position we have taken with respect to the loss on our investment in Conseco Senior Health Insurance Company ("CSHI") and other uncertain tax positions(dollars in millions): Year of expiration Net operating loss carryforwards Total loss Life Non-life carryforwards 2023 $ 449.4 $ 1,916.8 $ 2,366.2 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 — 44.0 44.0 Subtotal 449.4 2,614.9 3,064.3 Less: Unrecognized tax benefits (342.9 ) (197.4 ) (540.3 ) Total $ 106.5 $ 2,417.5 $ 2,524.0 In addition, at March 31, 2016 , we had $34.9 million of capital loss carryforwards that expire in 2020. We had deferred tax assets related to NOLs for state income taxes of $13.9 million and $14.1 million at March 31, 2016 and December 31, 2015 , 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 has disagreed with our ordinary loss treatment and believes that it should be treated as a capital loss, subject to a five year carryover. 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 a tax benefit of $166.0 million . However, if this unrecognized tax benefit would have been recognized, we would also have established a valuation allowance of $34.0 million at March 31, 2016 . The IRS has completed the examination for 2004 and 2008 through 2010 and has proposed two adjustments to which we disagree, including the adjustment to classify the loss on our investment in CSHI as a capital loss as described above. The Company is contesting these adjustments through the IRS Appeals Office. Although the resolution of the Appeals could occur in the next 12 months, there is no reasonable basis to estimate the changes in unrecognized tax benefits that may occur. The IRS has also begun an examination of 2011 and 2012. In connection with this exam, we have agreed to extend the statute of limitations to September 10, 2017. The Company’s various state income tax returns are generally open for tax years beginning in 2012, based on individual state statutes of limitation. Generally, for tax years which generate NOLs, capital losses or tax credit carryforwards, the statute remains open until the expiration of the statute of limitations for the tax year in which such carryforwards are utilized. The outcome of tax audits cannot be predicted with certainty. If the Company’s tax audits are not resolved in a manner consistent with management’s expectations, the Company may be required to adjust its provision for income taxes. We currently expect to utilize all of our remaining life NOLs in the second quarter of 2016, absent a favorable outcome on the classification of the loss on our investment in CSHI. After all of the life NOLs are utilized, we will begin making cash tax payments equal to the effective federal tax rate applied to 65 percent of our life insurance company taxable income due to the limitations on the extent to which we can use non-life NOLs to offset life insurance company taxable income. We will continue to pay tax on only 65 percent of our life insurance company taxable income until all non-life NOLs are utilized or expire. |
NOTES PAYABLE - DIRECT CORPORAT
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS | 3 Months Ended |
Mar. 31, 2016 | |
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 March 31, 2016 and December 31, 2015 (dollars in millions): March 31, December 31, 4.500% Senior Notes due May 2020 $ 325.0 $ 325.0 5.250% Senior Notes due May 2025 500.0 500.0 Revolving Credit Agreement (as defined below) 100.0 100.0 Unamortized debt issue costs (13.5 ) (13.9 ) Direct corporate obligations $ 911.5 $ 911.1 Revolving Credit Agreement On May 19, 2015, the Company entered into a revolving credit agreement, with KeyBank National Association, as administrative agent (the "Agent"), and the lenders from time to time party thereto (the "Revolving Credit Agreement"). On May 19, 2015, the Company made an initial drawing of $100.0 million under the Revolving Credit Agreement, resulting in $50.0 million available for additional borrowings. The Revolving Credit Agreement matures on May 19, 2019. The interest rates with respect to loans under the Revolving Credit Agreement are based on, at the Company's option, a floating base rate (defined as a per annum rate equal to the highest of: (i) the federal funds rate plus 0.50% ; (ii) the "prime rate" of the Agent; and (iii) the eurodollar rate for a one-month interest period plus an applicable margin of initially 1.00% per annum), or a eurodollar rate plus an applicable margin of initially 2.00% per annum. At March 31, 2016 , the interest rate on the amounts outstanding under the Revolving Credit Agreement was 2.43 percent . In addition, the daily average undrawn portion of the Revolving Credit Agreement accrues a commitment fee payable quarterly in arrears. The applicable margin for, and the commitment fee applicable to, the Revolving Credit Agreement, will be adjusted from time-to-time pursuant to a ratings based pricing grid. The Revolving Credit Agreement requires the Company to maintain (each as calculated in accordance with the Revolving Credit Agreement): (i) a debt to total capitalization ratio of not more than 30.0 percent (such ratio was 20.3 percent at March 31, 2016 ); (ii) 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 estimated to be 441 percent at March 31, 2016 ); and (iii) a minimum consolidated net worth of not less than the sum of (x) $2,674 million plus (y) 50.0% of the net equity proceeds received by the Company from the issuance and sale of equity interests in the Company (the Company's consolidated net worth was $3,686.1 million at March 31, 2016 compared to the minimum requirement of $2,677 million ). Scheduled Repayment of our Direct Corporate Obligations The scheduled repayment of our direct corporate obligations was as follows at March 31, 2016 (dollars in millions): Year ending March 31, 2017 $ — 2018 — 2019 — 2020 100.0 2021 325.0 Thereafter 500.0 $ 925.0 |
INVESTMENT BORROWINGS
INVESTMENT BORROWINGS | 3 Months Ended |
Mar. 31, 2016 | |
Investment Borrowings [Abstract] | |
INVESTMENT BORROWINGS | INVESTMENT BORROWINGS Three of the Company's insurance subsidiaries (Washington National Insurance Company ("Washington National"), Bankers Life and Casualty Company ("Bankers Life") and Colonial Penn Life Insurance Company ("Colonial Penn")) are members of the Federal Home Loan Bank ("FHLB"). As members of the FHLB, our insurance subsidiaries have the ability to borrow on a collateralized basis from the FHLB. We 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 March 31, 2016 , the carrying value of the FHLB common stock was $74.2 million . As of March 31, 2016 , 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 March 31, 2016 , 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 our insurance subsidiaries (dollars in millions): Amount Maturity Interest rate at borrowed date March 31, 2016 $ 57.7 June 2017 Variable rate – 0.871% 50.0 August 2017 Variable rate – 0.817% 75.0 August 2017 Variable rate – 0.779% 100.0 October 2017 Variable rate – 1.052% 50.0 November 2017 Variable rate – 1.145% 50.0 January 2018 Variable rate – 0.967% 50.0 January 2018 Variable rate – 0.959% 50.0 February 2018 Variable rate – 0.930% 50.0 February 2018 Variable rate – 0.707% 22.0 February 2018 Variable rate – 0.966% 100.0 May 2018 Variable rate – 0.883% 50.0 July 2018 Variable rate – 1.091% 50.0 August 2018 Variable rate – 0.737% 10.0 December 2018 Variable rate – 0.951% 50.0 January 2019 Variable rate – 1.040% 50.0 February 2019 Variable rate – 0.707% 100.0 March 2019 Variable rate – 0.921% 21.8 July 2019 Variable rate – 0.922% 15.0 October 2019 Variable rate – 1.134% 50.0 May 2020 Variable rate – 0.956% 21.8 June 2020 Fixed rate – 1.960% 25.0 September 2020 Variable rate – 1.253% 100.0 September 2020 Variable rate – 1.093% 50.0 September 2020 Variable rate – 1.093% 75.0 September 2020 Variable rate – 0.749% 100.0 October 2020 Variable rate – 0.723% 50.0 December 2020 Variable rate – 1.138% 28.2 August 2021 Fixed rate – 2.550% 26.0 March 2023 Fixed rate – 2.160% 20.5 June 2025 Fixed rate – 2.940% $ 1,548.0 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 March 31, 2016 , the aggregate yield maintenance fee to prepay all fixed rate borrowings was $4.5 million . Interest expense of $3.8 million and $2.5 million in the first three months of 2016 and 2015 , respectively, was recognized related to total borrowings from the FHLB. |
CHANGES IN COMMON STOCK
CHANGES IN COMMON STOCK | 3 Months Ended |
Mar. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
CHANGES IN COMMON STOCK | CHANGES IN COMMON STOCK Changes in the number of shares of common stock outstanding were as follows (shares in thousands): Balance, December 31, 2015 184,029 Treasury stock purchased and retired (5,331 ) Stock options exercised 51 Restricted and performance stock vested 349 (a) Balance, March 31, 2016 179,098 ____________________ (a) Such amount was reduced by 182 thousand shares 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 the first three months of 2016 , we repurchased 5.3 million shares of common stock for $90.0 million under our securities repurchase program. The Company had remaining repurchase authority of $365.7 million as of March 31, 2016 . In the first three months of 2016 , dividends declared on common stock totaled $12.6 million ( $0.07 per common share). |
SALES INDUCEMENTS
SALES INDUCEMENTS | 3 Months Ended |
Mar. 31, 2016 | |
Deferred Sales Inducements [Abstract] | |
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. Sales inducements deferred totaled $1.0 million and $.8 million during the three months ended March 31, 2016 and 2015 , respectively. Amounts amortized totaled $1.7 million and $2.8 million during the three months ended March 31, 2016 and 2015 , respectively. The unamortized balance of deferred sales inducements was $56.7 million and $57.4 million at March 31, 2016 and December 31, 2015 , respectively. The balance of insurance liabilities for persistency bonus benefits was $.8 million and $.9 million at March 31, 2016 and December 31, 2015 , respectively. |
RECENTLY ISSUED ACCOUNTING STAN
RECENTLY ISSUED ACCOUNTING STANDARDS | 3 Months Ended |
Mar. 31, 2016 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
RECENTLY ISSUED ACCOUNTING STANDARDS | RECENTLY ISSUED ACCOUNTING STANDARDS Pending Accounting Standards In May 2014, the Financial Accounting Standards Board (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. In March 2016, the FASB issued amendments that clarify the implementation guidance on principal versus agent considerations. In July 2015, the guidance was updated and will now be effective for the Company on January 1, 2018 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 May 2015, the FASB issued authoritative guidance which requires additional disclosures related to short-duration contracts. The guidance will require insurance entities to disclose for annual reporting periods information about the liability for unpaid claims and claim adjustment expenses. The guidance also requires insurance entities to disclose information about significant changes in methodologies and assumptions used to calculate the liability for unpaid claims and claim adjustment expenses, including reasons for the change and the effects on the financial statements. Additionally, the guidance requires insurance entities to disclose for annual and interim reporting periods a rollforward of the liability for unpaid claims and claim adjustment expenses. For health insurance claims, the guidance requires the disclosure of the total of incurred-but-not-reported liabilities plus expected development on reported claims included in the liability for unpaid claims and claim adjustment expenses. The guidance will be effective for the Company for annual periods beginning after December 15, 2015, and the interim periods within annual periods beginning after December 15, 2016. The Company is currently assessing the impact the guidance will have on its disclosures upon adoption. The adoption of this guidance will have no effect on our financial position or results of operations. In January 2016, the FASB issued authoritative guidance related to the recognition and measurement of financial assets and financial liabilities which made targeted improvements to GAAP as follows: (i) Require equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. (ii) Simplify the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. When a qualitative assessment indicates that impairment exists, an entity is required to measure the investment at fair value. (iii) Eliminate the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet. (iv) Require public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. (v) Require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. (vi) Require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements. (vii) Clarify that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. An entity should apply this guidance by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values (including disclosure requirements) should be applied prospectively to equity investments that exist as of the date of adoption of the guidance. The guidance will be effective for the Company for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption of the guidance is not permitted; except that item (v) above is permitted to be adopted early as of the beginning of the fiscal year of adoption. The Company is currently assessing the impact the guidance will have upon adoption. In February 2016, the FASB issued authoritative guidance related to accounting for leases, requiring lessees to report most leases on their balance sheets, regardless of whether the lease is classified as a finance lease or an operating lease. For lessees, the initial lease liability is equal to the present value of future lease payments, and a corresponding asset, adjusted for certain items, is also recorded. Expense recognition for lessees will remain similar to current accounting requirements for capital and operating leases. The accounting applied by a lessor is largely unchanged from that applied under previous GAAP. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The guidance will be effective for the Company for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the impact the guidance will have upon adoption. In March 2016, the FASB issued authoritative guidance that clarifies the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. An entity performing the assessment under this guidance is required to assess the embedded call (put) options solely in accordance with a four-step decision sequence. The guidance will be effective for the Company for fiscal years beginning after December 15, 2017, and interim periods within fiscal years beginning after December 15, 2018. The Company is currently assessing the impact the guidance will have upon adoption. In March 2016, the FASB issued authoritative guidance related to several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The new guidance requires all income tax effects of stock-based compensation awards to be recognized in the income statement when the awards vest or are settled. The new guidance also allows an employer to withhold shares upon settlement of an award to satisfy the employer's tax withholding requirements up to the highest marginal tax rate applicable to employees, without resulting in liability classification of the award. Current guidance strictly limits the withholding to the employer's minimum statutory tax withholding requirement. The guidance will be effective for the Company for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Transition guidance varies between retrospective, modified retrospective and prospective depending on the specific change required. Early adoption is permitted. The Company is currently assessing the impact the guidance will have upon adoption. Adopted Accounting Standards 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 VIE 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 was effective for the Company for interim and annual periods beginning in 2016. 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. The adoption of this guidance had no impact on our consolidated financial statements. In February 2015, the FASB issued authoritative guidance which updates the analysis that a reporting entity must perform to determine whether it should consolidate certain legal entities. Such guidance: (i) modifies the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities; (ii) eliminates the presumption that a general partner should consolidate a limited partnership; (iii) affects the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships; and (iv) provides a scope exception from consolidation guidance for certain investment funds. The guidance was effective for the Company for interim and annual periods beginning in 2016. 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. The adoption of this guidance did not have a material impact on our consolidated financial statements. |
LITIGATION AND OTHER LEGAL PROC
LITIGATION AND OTHER LEGAL PROCEEDINGS | 3 Months Ended |
Mar. 31, 2016 | |
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. |
CONSOLIDATED STATEMENT OF CAS22
CONSOLIDATED STATEMENT OF CASH FLOWS | 3 Months Ended |
Mar. 31, 2016 | |
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 (loss) to net cash from operating activities (dollars in millions): Three months ended March 31, 2016 2015 Cash flows from operating activities: Net income $ 45.5 $ 52.8 Adjustments to reconcile net income to net cash from operating activities: Amortization and depreciation 68.2 71.0 Income taxes (6.1 ) 28.9 Insurance liabilities 103.7 88.2 Accrual and amortization of investment income (16.9 ) (35.7 ) Deferral of policy acquisition costs (62.2 ) (58.2 ) Net realized investment (gains) losses .9 (8.9 ) Transition expenses — 4.5 Other 7.3 (20.1 ) Net cash from operating activities $ 140.4 $ 122.5 Other non-cash items not reflected in the investing and financing activities sections of the consolidated statement of cash flows (dollars in millions): Three months ended March 31, 2016 2015 Stock options, restricted stock and performance units $ 10.2 $ 4.3 |
INVESTMENTS IN VARIABLE INTERES
INVESTMENTS IN VARIABLE INTEREST ENTITIES | 3 Months Ended |
Mar. 31, 2016 | |
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. 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. 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. 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 in accordance with authoritative guidance (dollars in millions): March 31, 2016 VIEs Eliminations Net effect on consolidated balance sheet Assets: Investments held by variable interest entities $ 1,691.0 $ — $ 1,691.0 Notes receivable of VIEs held by insurance subsidiaries — (203.4 ) (203.4 ) Cash and cash equivalents held by variable interest entities 190.1 — 190.1 Accrued investment income 3.7 (.1 ) 3.6 Income tax assets, net 24.6 (1.8 ) 22.8 Other assets 6.5 (1.9 ) 4.6 Total assets $ 1,915.9 $ (207.2 ) $ 1,708.7 Liabilities: Other liabilities $ 101.6 $ (7.3 ) $ 94.3 Borrowings related to variable interest entities 1,656.6 — 1,656.6 Notes payable of VIEs held by insurance subsidiaries 203.1 (203.1 ) — Total liabilities $ 1,961.3 $ (210.4 ) $ 1,750.9 December 31, 2015 VIEs Eliminations Net effect on consolidated balance sheet Assets: Investments held by variable interest entities $ 1,633.6 $ — $ 1,633.6 Notes receivable of VIEs held by insurance subsidiaries — (204.3 ) (204.3 ) Cash and cash equivalents held by variable interest entities 364.4 — 364.4 Accrued investment income 3.3 — 3.3 Income tax assets, net 26.0 (1.9 ) 24.1 Other assets 1.4 (1.5 ) (.1 ) Total assets $ 2,028.7 $ (207.7 ) $ 1,821.0 Liabilities: Other liabilities $ 196.6 $ (7.2 ) $ 189.4 Borrowings related to variable interest entities 1,676.4 — 1,676.4 Notes payable of VIEs held by insurance subsidiaries 204.0 (204.0 ) — Total liabilities $ 2,077.0 $ (211.2 ) $ 1,865.8 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 March 31, 2016 , such loans had an amortized cost of $1,725.8 million ; gross unrealized gains of $2.6 million ; gross unrealized losses of $37.4 million ; and an estimated fair value of $1,691.0 million . The following table sets forth the amortized cost and estimated fair value of the investments held by the VIEs at March 31, 2016 , 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 cost Estimated fair value (Dollars in millions) Due in one year or less $ 4.8 $ 4.8 Due after one year through five years 898.4 878.0 Due after five years through ten years 822.6 808.2 Total $ 1,725.8 $ 1,691.0 During the first three months of 2016 , the VIEs recognized net realized investment losses of $6.4 million . During the first three months of 2015 , the VIEs recognized net realized investment losses of $.9 million . At March 31, 2016 , there was one investment held by the VIEs in default or considered nonperforming with an amortized cost and carrying value of $2.3 million and $1.3 million , respectively. During the first three months of 2016 , $26.2 million of investments held by the VIEs were sold which resulted in gross investment losses (before income taxes) of $6.5 million . During the first three months of 2015 , $28.3 million of investments held by the VIEs were sold which resulted in gross investment losses (before income taxes) of $1.0 million . At March 31, 2016 , the VIEs held: (i) investments with a fair value of $958.4 million and gross unrealized losses of $19.0 million that had been in an unrealized loss position for less than twelve months; and (ii) investments with a fair value of $288.7 million and gross unrealized losses of $18.4 million that had been in an unrealized loss position for greater than twelve months. At December 31, 2015 , the VIEs held: (i) investments with a fair value of $1,178.7 million and gross unrealized losses of $23.9 million that had been in an unrealized loss position for less than twelve months; and (ii) investments with a fair value of $294.3 million and gross unrealized losses of $22.3 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 March 31, 2016 , we held investments in various limited partnerships, in which we are not the primary beneficiary, totaling $108.8 million (classified as other invested assets). At March 31, 2016 , we had unfunded commitments to these partnerships of $66.7 million . Our maximum exposure to loss on these investments is limited to the amount of our investment. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2016 | |
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 company-owned life insurance policy, which is invested in a series of mutual funds, at its cash surrender value which approximates fair value. In addition, we disclose fair value for certain financial instruments, including mortgage loans and policy loans, insurance liabilities for interest-sensitive products, 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 information. 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 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. Certain investments classified as other invested assets with a carrying value of $77.9 million and $92.7 million as of March 31, 2016 and December 31, 2015 , respectively, have not been classified in the fair value hierarchy as the fair value of these investments is measured using the net asset value per share practical expedient. 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 both the first three months of 2016 and 2015 . 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. Our Level 2 assets are valued as follows: • Fixed maturities available for sale, equity securities and trading securities Corporate securities are generally priced using market and income approaches. Inputs generally consist of trades of identical or similar securities, quoted prices in inactive markets, issuer rating, benchmark yields, maturity, and credit spreads. U.S. Treasuries and obligations of U.S. Government corporations and agencies are generally priced using the market approach. Inputs generally consist of trades of identical or similar securities, quoted prices in inactive markets and maturity. States and political subdivisions are generally priced using the market approach. Inputs generally consist of trades of identical or similar securities, quoted prices in inactive markets, new issuances and credit spreads. Asset-backed securities, collateralized debt obligations, commercial mortgage-backed securities, mortgage pass-through securities and collateralized mortgage obligations are generally priced using market and income approaches. Inputs generally consist of quoted prices in inactive markets, spreads on actively traded securities, expected prepayments, expected credit default rates, delinquencies, and issue specific information including, but not limited to, collateral type, seniority and vintage. Equity securities (primarily comprised of non-redeemable preferred stock) are generally priced using the market approach. Inputs generally consist of trades of identical or similar securities, quoted prices in inactive markets, issuer rating, benchmark yields, maturity, and credit spreads. • Investments held by VIEs Corporate securities are generally priced using market and income approaches using pricing vendors. Inputs generally consist of issuer rating, benchmark yields, maturity, and credit spreads. • Other invested assets - derivatives 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 quotes; time value and volatility factors underlying options; market interest rates; and non-performance risk. 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. 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 such 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 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. 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 47 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. For certain embedded derivatives, we use actuarial assumptions in the determination of fair value which we consider to be Level 3 inputs. The categorization of fair value measurements, by input level, for our financial instruments carried at fair value on a recurring basis at March 31, 2016 is as follows (dollars in millions): Quoted prices in active markets Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Total Assets: Fixed maturities, available for sale: Corporate securities $ — $ 12,734.5 $ 173.3 $ 12,907.8 United States Treasury securities and obligations of United States government corporations and agencies — 197.1 — 197.1 States and political subdivisions — 2,059.8 — 2,059.8 Debt securities issued by foreign governments — 34.0 — 34.0 Asset-backed securities — 2,150.5 43.8 2,194.3 Collateralized debt obligations — 143.7 — 143.7 Commercial mortgage-backed securities — 1,516.5 1.1 1,517.6 Mortgage pass-through securities — 3.1 — 3.1 Collateralized mortgage obligations — 1,047.7 — 1,047.7 Total fixed maturities, available for sale — 19,886.9 218.2 20,105.1 Equity securities - corporate securities 401.7 176.6 32.4 610.7 Trading securities: Corporate securities — 20.2 — 20.2 United States Treasury securities and obligations of United States government corporations and agencies — 1.6 — 1.6 Asset-backed securities — 43.1 — 43.1 Collateralized debt obligations — 1.9 — 1.9 Commercial mortgage-backed securities — 111.9 39.0 150.9 Collateralized mortgage obligations — 62.4 — 62.4 Equity securities 5.1 — — 5.1 Total trading securities 5.1 241.1 39.0 285.2 Investments held by variable interest entities - corporate securities — 1,691.0 — 1,691.0 Other invested assets - derivatives .4 47.0 — 47.4 Assets held in separate accounts — 4.6 — 4.6 Total assets carried at fair value by category $ 407.2 $ 22,047.2 $ 289.6 $ 22,744.0 Liabilities: Future policy benefits - embedded derivatives associated with fixed index annuity products $ — $ — $ 1,096.0 $ 1,096.0 The categorization of fair value measurements, by input level, for our financial instruments carried at fair value on a recurring basis at December 31, 2015 is as follows (dollars in millions): Quoted prices in active markets for identical assets or liabilities (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Total Assets: Fixed maturities, available for sale: Corporate securities $ — $ 12,698.1 $ 170.4 $ 12,868.5 United States Treasury securities and obligations of United States government corporations and agencies — 194.5 — 194.5 States and political subdivisions — 2,104.2 — 2,104.2 Debt securities issued by foreign governments — 20.7 — 20.7 Asset-backed securities — 1,816.3 35.9 1,852.2 Collateralized debt obligations — 186.7 — 186.7 Commercial mortgage-backed securities — 1,604.2 1.1 1,605.3 Mortgage pass-through securities — 3.3 .1 3.4 Collateralized mortgage obligations — 1,047.4 — 1,047.4 Total fixed maturities, available for sale — 19,675.4 207.5 19,882.9 Equity securities - corporate securities 254.9 176.1 32.0 463.0 Trading securities: Corporate securities — 21.5 — 21.5 United States Treasury securities and obligations of United States government corporations and agencies — 1.9 — 1.9 Asset-backed securities — 35.5 — 35.5 Collateralized debt obligations — 2.1 — 2.1 Commercial mortgage-backed securities — 118.1 39.9 158.0 Collateralized mortgage obligations — 38.2 — 38.2 Equity securities 4.9 — — 4.9 Total trading securities 4.9 217.3 39.9 262.1 Investments held by variable interest entities - corporate securities — 1,633.6 — 1,633.6 Other invested assets - derivatives 1.6 41.0 — 42.6 Assets held in separate accounts — 4.7 — 4.7 Total assets carried at fair value by category $ 261.4 $ 21,748.1 $ 279.4 $ 22,288.9 Liabilities: Future policy benefits - embedded derivatives associated with fixed index annuity products $ — $ — $ 1,057.1 $ 1,057.1 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. 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. The estimated fair value of insurance liabilities for policyholder account balances was approximately equal to its carrying value as 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. 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): March 31, 2016 Quoted prices in active markets for identical assets or liabilities (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Total estimated fair value Total carrying amount Assets: Mortgage loans $ — $ — $ 1,803.4 $ 1,803.4 $ 1,700.8 Policy loans — — 110.1 110.1 110.1 Other invested assets: Company-owned life insurance — 159.0 — 159.0 159.0 Cash and cash equivalents: Unrestricted 544.7 91.0 — 635.7 635.7 Held by variable interest entities 190.1 — — 190.1 190.1 Liabilities: Policyholder account balances — — 10,772.4 10,772.4 10,772.4 Investment borrowings — 1,552.5 — 1,552.5 1,548.0 Borrowings related to variable interest entities — 1,625.7 — 1,625.7 1,656.6 Notes payable – direct corporate obligations — 941.5 — 941.5 911.5 December 31, 2015 Quoted prices in active markets for identical assets or liabilities (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Total estimated fair value Total carrying amount Assets: Mortgage loans $ — $ — $ 1,772.4 $ 1,772.4 $ 1,721.0 Policy loans — — 109.4 109.4 109.4 Other invested assets: Company-owned life insurance — 158.1 — 158.1 158.1 Cash and cash equivalents: Unrestricted 432.3 — — 432.3 432.3 Held by variable interest entities 364.4 — — 364.4 364.4 Liabilities: Policyholder account balances — — 10,762.3 10,762.3 10,762.3 Investment borrowings — 1,549.8 — 1,549.8 1,548.1 Borrowings related to variable interest entities — 1,673.6 — 1,673.6 1,676.4 Notes payable – direct corporate obligations — 937.8 — 937.8 911.1 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 three months ended March 31, 2016 (dollars in millions): March 31, 2016 Beginning balance as of December 31, 2015 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 March 31, 2016 Amount of total gains (losses) for the three months ended March 31, 2016 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 $ 170.4 $ (15.4 ) $ (11.1 ) $ 9.1 $ 20.3 $ — $ 173.3 $ (6.3 ) Asset-backed securities 35.9 20.9 — .7 — (13.7 ) 43.8 — Commercial mortgage-backed securities 1.1 — — — — — 1.1 — Mortgage pass-through securities .1 (.1 ) — — — — — — Total fixed maturities, available for sale 207.5 5.4 (11.1 ) 9.8 20.3 (13.7 ) 218.2 (6.3 ) Equity securities - corporate securities 32.0 1.1 — (.7 ) — — 32.4 — Trading securities - commercial mortgage-backed securities 39.9 (1.1 ) — .2 — — 39.0 .2 Liabilities: Future policy benefits - embedded derivatives associated with fixed index annuity products (1,057.1 ) (4.0 ) (34.9 ) — — — (1,096.0 ) (34.9 ) _________ (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 three months ended March 31, 2016 (dollars in millions): Purchases Sales Issuances Settlements Purchases, sales, issuances and settlements, net Assets: Fixed maturities, available for sale: Corporate securities $ — $ (15.4 ) $ — $ — $ (15.4 ) Asset-backed securities 21.0 (.1 ) — — 20.9 Mortgage pass-through securities — (.1 ) — — (.1 ) Total fixed maturities, available for sale 21.0 (15.6 ) — — 5.4 Equity securities - corporate securities 1.1 — — — 1.1 Trading securities - commercial mortgage-backed securities — (1.1 ) — — (1.1 ) Liabilities: Future policy benefits - embedded derivatives associated with fixed index annuity products (34.0 ) 14.2 (.2 ) 16.0 (4.0 ) 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 three months ended March 31, 2015 (dollars in millions): March 31, 2015 Beginning balance as of December 31, 2014 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 March 31, 2015 Amount of total gains (losses) for the three months ended March 31, 2015 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 $ 365.9 $ (20.1 ) $ (1.3 ) $ (.8 ) $ 9.1 $ (216.8 ) $ 136.0 $ — States and political subdivisions 35.5 — — — — (35.5 ) — — Asset-backed securities 59.2 (.8 ) — 1.4 10.0 (4.0 ) 65.8 — Commercial mortgage-backed securities 1.2 — — (.5 ) 1.4 — 2.1 — Mortgage pass-through securities .4 (.2 ) — — — — .2 — Total fixed maturities, available for sale 462.2 (21.1 ) (1.3 ) .1 20.5 (256.3 ) 204.1 — Equity securities - corporate securities 28.0 1.0 — — — — 29.0 — Trading securities - commercial mortgage-backed securities 28.6 — — — — (28.6 ) — — Liabilities: Future policy benefits - embedded derivatives associated with fixed index annuity products (1,081.5 ) (2.8 ) (17.8 ) — — — (1,102.1 ) (17.8 ) ____________ (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 three months ended March 31, 2015 (dollars in millions): Purchases Sales Issuances Settlements Purchases, sales, issuances and settlements, net Assets: Fixed maturities, available for sale: Corporate securities $ .1 $ (20.2 ) $ — $ — $ (20.1 ) Asset-backed securities 9.9 (10.7 ) — — (.8 ) Mortgage pass-through securities — (.2 ) — — (.2 ) Total fixed maturities, available for sale 10.0 (31.1 ) — — (21.1 ) Equity securities - corporate securities 1.0 — — — 1.0 Liabilities: Future policy benefits - embedded derivatives associated with fixed index annuity products (30.4 ) 11.4 (1.6 ) 17.8 (2.8 ) At March 31, 2016 , 48 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 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 appropriate accounting treatment 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 March 31, 2016 (dollars in millions): Fair value at March 31, 2016 Valuation techniques Unobservable inputs Range (weighted average) Assets: Corporate securities (a) $ 78.8 Discounted cash flow analysis Discount margins 1.80% - 11.29% (5.55%) Asset-backed securities (b) 22.8 Discounted cash flow analysis Discount margins 2.89% - 4.25% (3.47%) Equity security (c) 32.4 Market approach Projected cash flows Not applicable Other assets categorized as Level 3 (d) 155.6 Unadjusted third-party price source Not applicable Not applicable Total 289.6 Liabilities: Future policy benefits (e) 1,096.0 Discounted projected embedded derivatives Projected portfolio yields 5.15% - 5.61% (5.42%) Discount rates 0.00% - 2.80% (1.44%) Surrender rates 1.67% - 46.56% (14.09%) ________________________________ (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, 2015 (dollars in millions): Fair value at December 31, 2015 Valuation techniques Unobservable inputs Range (weighted average) Assets: Corporate securities (a) $ 76.9 Discounted cash flow analysis Discount margins 1.65% - 9.74% (5.35%) Asset-backed securities (b) 22.2 Discounted cash flow analysis Discount margins 2.83% - 4.45% (3.50%) Equity security (c) 32.0 Market approach Projected cash flows Not applicable Other assets categorized as Level 3 (d) 148.3 Unadjusted third-party price source Not applicable Not applicable Total 279.4 Liabilities: Future policy benefits (e) 1,057.1 Discounted projected embedded derivatives Projected portfolio yields 5.15% - 5.61% (5.42%) Discount rates 0.00 - 3.18% (1.94%) Surrender rates 1.67% - 46.56% (14.09%) ________________________________ (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 th |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 3 Months Ended |
Mar. 31, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENT | SUBSEQUENT EVENT In April 2016, the Company announced that it has invested in a non-controlling minority interest in TCP, a Los Angeles-based investment management firm with over $6 billion in assets under management. In addition, the Company has agreed to make general account investments over a period of time of approximately $250 million in TCP’s managed funds and strategies. |
RECENTLY ISSUED ACCOUNTING ST26
RECENTLY ISSUED ACCOUNTING STANDARDS (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recently Issued Accounting Standards | RECENTLY ISSUED ACCOUNTING STANDARDS Pending Accounting Standards In May 2014, the Financial Accounting Standards Board (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. In March 2016, the FASB issued amendments that clarify the implementation guidance on principal versus agent considerations. In July 2015, the guidance was updated and will now be effective for the Company on January 1, 2018 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 May 2015, the FASB issued authoritative guidance which requires additional disclosures related to short-duration contracts. The guidance will require insurance entities to disclose for annual reporting periods information about the liability for unpaid claims and claim adjustment expenses. The guidance also requires insurance entities to disclose information about significant changes in methodologies and assumptions used to calculate the liability for unpaid claims and claim adjustment expenses, including reasons for the change and the effects on the financial statements. Additionally, the guidance requires insurance entities to disclose for annual and interim reporting periods a rollforward of the liability for unpaid claims and claim adjustment expenses. For health insurance claims, the guidance requires the disclosure of the total of incurred-but-not-reported liabilities plus expected development on reported claims included in the liability for unpaid claims and claim adjustment expenses. The guidance will be effective for the Company for annual periods beginning after December 15, 2015, and the interim periods within annual periods beginning after December 15, 2016. The Company is currently assessing the impact the guidance will have on its disclosures upon adoption. The adoption of this guidance will have no effect on our financial position or results of operations. In January 2016, the FASB issued authoritative guidance related to the recognition and measurement of financial assets and financial liabilities which made targeted improvements to GAAP as follows: (i) Require equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. (ii) Simplify the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. When a qualitative assessment indicates that impairment exists, an entity is required to measure the investment at fair value. (iii) Eliminate the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet. (iv) Require public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. (v) Require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. (vi) Require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements. (vii) Clarify that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. An entity should apply this guidance by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values (including disclosure requirements) should be applied prospectively to equity investments that exist as of the date of adoption of the guidance. The guidance will be effective for the Company for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption of the guidance is not permitted; except that item (v) above is permitted to be adopted early as of the beginning of the fiscal year of adoption. The Company is currently assessing the impact the guidance will have upon adoption. In February 2016, the FASB issued authoritative guidance related to accounting for leases, requiring lessees to report most leases on their balance sheets, regardless of whether the lease is classified as a finance lease or an operating lease. For lessees, the initial lease liability is equal to the present value of future lease payments, and a corresponding asset, adjusted for certain items, is also recorded. Expense recognition for lessees will remain similar to current accounting requirements for capital and operating leases. The accounting applied by a lessor is largely unchanged from that applied under previous GAAP. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The guidance will be effective for the Company for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the impact the guidance will have upon adoption. In March 2016, the FASB issued authoritative guidance that clarifies the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. An entity performing the assessment under this guidance is required to assess the embedded call (put) options solely in accordance with a four-step decision sequence. The guidance will be effective for the Company for fiscal years beginning after December 15, 2017, and interim periods within fiscal years beginning after December 15, 2018. The Company is currently assessing the impact the guidance will have upon adoption. In March 2016, the FASB issued authoritative guidance related to several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The new guidance requires all income tax effects of stock-based compensation awards to be recognized in the income statement when the awards vest or are settled. The new guidance also allows an employer to withhold shares upon settlement of an award to satisfy the employer's tax withholding requirements up to the highest marginal tax rate applicable to employees, without resulting in liability classification of the award. Current guidance strictly limits the withholding to the employer's minimum statutory tax withholding requirement. The guidance will be effective for the Company for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Transition guidance varies between retrospective, modified retrospective and prospective depending on the specific change required. Early adoption is permitted. The Company is currently assessing the impact the guidance will have upon adoption. Adopted Accounting Standards 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 VIE 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 was effective for the Company for interim and annual periods beginning in 2016. 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. The adoption of this guidance had no impact on our consolidated financial statements. In February 2015, the FASB issued authoritative guidance which updates the analysis that a reporting entity must perform to determine whether it should consolidate certain legal entities. Such guidance: (i) modifies the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities; (ii) eliminates the presumption that a general partner should consolidate a limited partnership; (iii) affects the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships; and (iv) provides a scope exception from consolidation guidance for certain investment funds. The guidance was effective for the Company for interim and annual periods beginning in 2016. 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. The adoption of this guidance did not have a material impact on our consolidated financial statements. |
Fair Value Measurements | 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 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 appropriate accounting treatment 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. 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. The estimated fair value of insurance liabilities for policyholder account balances was approximately equal to its carrying value as 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. 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. 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 company-owned life insurance policy, which is invested in a series of mutual funds, at its cash surrender value which approximates fair value. In addition, we disclose fair value for certain financial instruments, including mortgage loans and policy loans, insurance liabilities for interest-sensitive products, 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 information. 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 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. Certain investments classified as other invested assets with a carrying value of $77.9 million and $92.7 million as of March 31, 2016 and December 31, 2015 , respectively, have not been classified in the fair value hierarchy as the fair value of these investments is measured using the net asset value per share practical expedient. 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 both the first three months of 2016 and 2015 . 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. Our Level 2 assets are valued as follows: • Fixed maturities available for sale, equity securities and trading securities Corporate securities are generally priced using market and income approaches. Inputs generally consist of trades of identical or similar securities, quoted prices in inactive markets, issuer rating, benchmark yields, maturity, and credit spreads. U.S. Treasuries and obligations of U.S. Government corporations and agencies are generally priced using the market approach. Inputs generally consist of trades of identical or similar securities, quoted prices in inactive markets and maturity. States and political subdivisions are generally priced using the market approach. Inputs generally consist of trades of identical or similar securities, quoted prices in inactive markets, new issuances and credit spreads. Asset-backed securities, collateralized debt obligations, commercial mortgage-backed securities, mortgage pass-through securities and collateralized mortgage obligations are generally priced using market and income approaches. Inputs generally consist of quoted prices in inactive markets, spreads on actively traded securities, expected prepayments, expected credit default rates, delinquencies, and issue specific information including, but not limited to, collateral type, seniority and vintage. Equity securities (primarily comprised of non-redeemable preferred stock) are generally priced using the market approach. Inputs generally consist of trades of identical or similar securities, quoted prices in inactive markets, issuer rating, benchmark yields, maturity, and credit spreads. • Investments held by VIEs Corporate securities are generally priced using market and income approaches using pricing vendors. Inputs generally consist of issuer rating, benchmark yields, maturity, and credit spreads. • Other invested assets - derivatives 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 quotes; time value and volatility factors underlying options; market interest rates; and non-performance risk. 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. 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 such 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 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. 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 47 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. For certain embedded derivatives, we use actuarial assumptions in the determination of fair value which we consider to be Level 3 inputs. |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of accumulated other comprehensive income (loss) | 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 March 31, 2016 and December 31, 2015 , were as follows (dollars in millions): March 31, December 31, Net unrealized appreciation (depreciation) on fixed maturity securities, available for sale, on which an other-than-temporary impairment loss has been recognized $ 1.6 $ 1.6 Net unrealized gains on all other investments 1,329.6 903.4 Adjustment to present value of future profits (a) (120.3 ) (121.2 ) Adjustment to deferred acquisition costs (279.6 ) (133.3 ) Adjustment to insurance liabilities (82.3 ) (14.6 ) Unrecognized net loss related to deferred compensation plan (8.0 ) (8.6 ) Deferred income tax liabilities (300.5 ) (224.5 ) Accumulated other comprehensive income $ 540.5 $ 402.8 ________ (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 Conseco, Inc., an Indiana corporation (our "Predecessor"), emerged from bankruptcy. |
Schedule of fixed maturities for available for sale and equity securities | At March 31, 2016 , the amortized cost, gross unrealized gains and losses, estimated fair value, 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 cost Gross unrealized gains Gross unrealized losses Estimated fair value Other-than-temporary impairments included in accumulated other comprehensive income Corporate securities $ 11,946.1 $ 1,188.0 $ (226.3 ) $ 12,907.8 $ — United States Treasury securities and obligations of United States government corporations and agencies 160.4 36.7 — 197.1 — States and political subdivisions 1,814.3 249.2 (3.7 ) 2,059.8 (3.0 ) Debt securities issued by foreign governments 33.5 .5 — 34.0 — Asset-backed securities 2,173.2 50.8 (29.7 ) 2,194.3 — Collateralized debt obligations 148.4 .1 (4.8 ) 143.7 — Commercial mortgage-backed securities 1,494.7 46.0 (23.1 ) 1,517.6 — Mortgage pass-through securities 2.8 .3 — 3.1 — Collateralized mortgage obligations 992.0 60.0 (4.3 ) 1,047.7 (1.8 ) Total fixed maturities, available for sale $ 18,765.4 $ 1,631.6 $ (291.9 ) $ 20,105.1 $ (4.8 ) Equity securities $ 586.0 $ 26.3 $ (1.6 ) $ 610.7 |
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 March 31, 2016 , 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 cost Estimated fair value (Dollars in millions) Due in one year or less $ 306.7 $ 311.2 Due after one year through five years 2,222.7 2,385.4 Due after five years through ten years 1,574.3 1,670.2 Due after ten years 9,850.6 10,831.9 Subtotal 13,954.3 15,198.7 Structured securities 4,811.1 4,906.4 Total fixed maturities, available for sale $ 18,765.4 $ 20,105.1 |
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): Three months ended March 31, 2016 2015 Fixed maturity securities, available for sale: Gross realized gains on sale $ 98.5 $ 14.7 Gross realized losses on sale (81.0 ) (15.4 ) Impairments: Total other-than-temporary impairment losses (6.3 ) (1.3 ) Other-than-temporary impairment losses recognized in accumulated other comprehensive income — — Net impairment losses recognized (6.3 ) (1.3 ) Net realized investment gains (losses) from fixed maturities 11.2 (2.0 ) Equity securities .1 2.5 Commercial mortgage loans — (2.3 ) Impairments of other investments (3.7 ) — Gain on dissolution of a variable interest entity — 11.3 Other (a) (8.5 ) (.6 ) Net realized investment gains (losses) $ (.9 ) $ 8.9 _________________ (a) Changes in the estimated fair value of trading securities that we have elected the fair value option (and are still held as of the end of the respective periods) were $(3.4) million for the three months ended March 31, 2016 . Such amount was insignificant in the 2015 period. |
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 the three months ended March 31, 2016 and 2015 (dollars in millions): Three months ended March 31, 2016 2015 Credit losses on fixed maturity securities, available for sale, beginning of period $ (2.6 ) $ (1.0 ) Add: credit losses on other-than-temporary impairments not previously recognized — — Less: credit losses on securities sold — — 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 $ (2.6 ) $ (1.0 ) __________ (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 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 March 31, 2016 (dollars in millions): Less than 12 months 12 months or greater Total Description of securities Fair value Unrealized losses Fair value Unrealized losses Fair value Unrealized losses United States Treasury securities and obligations of United States government corporations and agencies $ .6 $ — $ — $ — $ .6 $ — States and political subdivisions 14.4 (.2 ) 23.1 (3.5 ) 37.5 (3.7 ) Debt securities issued by foreign governments 4.2 — — — 4.2 — Corporate securities 1,862.3 (142.7 ) 548.5 (83.6 ) 2,410.8 (226.3 ) Asset-backed securities 1,118.9 (24.8 ) 162.4 (4.9 ) 1,281.3 (29.7 ) Collateralized debt obligations 113.4 (4.0 ) 27.6 (.8 ) 141.0 (4.8 ) Commercial mortgage-backed securities 493.5 (19.8 ) 48.5 (3.3 ) 542.0 (23.1 ) Collateralized mortgage obligations 281.9 (3.3 ) 28.4 (1.0 ) 310.3 (4.3 ) Total fixed maturities, available for sale $ 3,889.2 $ (194.8 ) $ 838.5 $ (97.1 ) $ 4,727.7 $ (291.9 ) Equity securities $ 51.4 $ (1.1 ) $ 14.0 $ (.5 ) $ 65.4 $ (1.6 ) 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, 2015 (dollars in millions): Less than 12 months 12 months or greater Total Description of securities Fair value Unrealized losses Fair value Unrealized losses Fair value Unrealized losses United States Treasury securities and obligations of United States government corporations and agencies $ 43.6 $ (.3 ) $ — $ — $ 43.6 $ (.3 ) States and political subdivisions 156.8 (4.1 ) 14.8 (3.5 ) 171.6 (7.6 ) Debt securities issued by foreign governments 20.7 (.6 ) — — 20.7 (.6 ) Corporate securities 2,913.6 (255.7 ) 278.9 (89.5 ) 3,192.5 (345.2 ) Asset-backed securities 930.3 (11.7 ) 98.4 (1.7 ) 1,028.7 (13.4 ) Collateralized debt obligations 96.2 (1.8 ) 36.3 (.4 ) 132.5 (2.2 ) Commercial mortgage-backed securities 556.0 (16.1 ) 25.7 (1.5 ) 581.7 (17.6 ) Mortgage pass-through securities — — .1 — .1 — Collateralized mortgage obligations 97.8 (1.0 ) 40.8 (.6 ) 138.6 (1.6 ) Total fixed maturities, available for sale $ 4,815.0 $ (291.3 ) $ 495.0 $ (97.2 ) $ 5,310.0 $ (388.5 ) Equity securities $ 140.1 $ (2.4 ) $ 2.4 $ (.4 ) $ 142.5 $ (2.8 ) |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
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): Three months ended March 31, 2016 2015 Net income for basic and diluted earnings per share $ 45.5 $ 52.8 Shares: Weighted average shares outstanding for basic earnings per share 180,350 200,491 Effect of dilutive securities on weighted average shares: Stock options, restricted stock and performance units 1,778 1,784 Weighted average shares outstanding for diluted earnings per share 182,128 202,275 |
BUSINESS SEGMENTS (Tables)
BUSINESS SEGMENTS (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
Schedule of segment reporting information by segment | Operating information by segment was as follows (dollars in millions): Three months ended March 31, 2016 2015 Revenues: Bankers Life: Insurance policy income: Annuities $ 4.8 $ 5.7 Health 311.1 315.8 Life 97.3 91.2 Net investment income (a) 214.2 226.5 Fee revenue and other income (a) 6.6 6.3 Total Bankers Life revenues 634.0 645.5 Washington National: Insurance policy income: Annuities .5 .9 Health 155.5 152.2 Life 6.1 6.4 Net investment income (a) 60.6 65.6 Fee revenue and other income (a) .3 .4 Total Washington National revenues 223.0 225.5 Colonial Penn: Insurance policy income: Health .7 .8 Life 68.4 63.5 Net investment income (a) 11.0 10.7 Fee revenue and other income (a) .4 .3 Total Colonial Penn revenues 80.5 75.3 Corporate operations: Net investment income 4.0 6.7 Fee and other income 2.5 1.9 Total corporate revenues 6.5 8.6 Total revenues 944.0 954.9 (continued on next page) (continued from previous page) Three months ended March 31, 2016 2015 Expenses: Bankers Life: Insurance policy benefits $ 397.0 $ 405.3 Amortization 51.5 51.6 Interest expense on investment borrowings 2.9 2.1 Other operating costs and expenses 105.0 104.3 Total Bankers Life expenses 556.4 563.3 Washington National: Insurance policy benefits 133.5 135.2 Amortization 15.1 15.3 Interest expense on investment borrowings .8 .4 Other operating costs and expenses 47.3 46.1 Total Washington National expenses 196.7 197.0 Colonial Penn: Insurance policy benefits 50.5 48.6 Amortization 3.9 3.6 Interest expense on investment borrowings .1 — Other operating costs and expenses 32.8 29.0 Total Colonial Penn expenses 87.3 81.2 Corporate operations: Interest expense on corporate debt 11.4 10.5 Other operating costs and expenses 14.6 9.9 Total corporate expenses 26.0 20.4 Total expenses 866.4 861.9 Pre-tax operating earnings by segment: Bankers Life 77.6 82.2 Washington National 26.3 28.5 Colonial Penn (6.8 ) (5.9 ) Corporate operations (19.5 ) (11.8 ) Pre-tax operating earnings $ 77.6 $ 93.0 ___________________ (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 (loss) is as follows (dollars in millions): Three months ended March 31, 2016 2015 Total segment revenues $ 944.0 $ 954.9 Net realized investment gains (losses) (.9 ) (2.4 ) Revenues related to certain non-strategic investments and earnings attributable to VIEs 12.3 18.3 Fee revenue related to transition and support services agreements 5.0 7.5 Consolidated revenues 960.4 978.3 Total segment expenses 866.4 861.9 Insurance policy benefits - fair value changes in embedded derivative liabilities 38.0 16.9 Amortization related to fair value changes in embedded derivative liabilities (8.5 ) (4.2 ) Amortization related to net realized investment gains .1 (.2 ) Expenses related to certain non-strategic investments and expenses attributable to VIEs 12.9 10.5 Fair value changes related to agent deferred compensation plan 6.0 — Transition expenses — 4.5 Expenses related to transition and support services agreements 5.0 6.6 Consolidated expenses 919.9 896.0 Income before tax 40.5 82.3 Income tax expense: Tax expense on period income 15.0 29.5 Valuation allowance for deferred tax assets (20.0 ) — Net income $ 45.5 $ 52.8 |
ACCOUNTING FOR DERIVATIVES (Tab
ACCOUNTING FOR DERIVATIVES (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
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 held at fair value and are summarized as follows (dollars in millions): Fair value March 31, December 31, 2015 Assets: Other invested assets: Fixed index call options $ 47.0 $ 41.0 Interest rate futures (.3 ) .1 Reinsurance receivables (3.2 ) (5.0 ) Total assets $ 43.5 $ 36.1 Liabilities: Future policy benefits: Fixed index products $ 1,096.0 $ 1,057.1 Total liabilities $ 1,096.0 $ 1,057.1 |
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): Three months ended March 31, 2016 2015 Net investment income from policyholder and other special-purpose portfolios: Fixed index call options $ (9.0 ) $ (2.1 ) Embedded derivative related to reinsurance contract — — Total (9.0 ) (2.1 ) Net realized gains (losses): Interest rate futures (1.0 ) (1.7 ) Embedded derivative related to modified coinsurance agreement 1.8 — Total .8 (1.7 ) Insurance policy benefits: Embedded derivative related to fixed index annuities (34.9 ) (17.8 ) Total $ (43.1 ) $ (21.6 ) |
Derivatives with master netting arrangements | The following table summarizes information related to derivatives with master netting arrangements or collateral as of March 31, 2016 and December 31, 2015 (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 March 31, 2016: Fixed index call options $ 47.0 $ — $ 47.0 $ — $ — $ 47.0 Interest rate futures (.3 ) .7 .4 — — .4 December 31, 2015: Fixed index call options 41.0 — 41.0 — — 41.0 Interest rate futures .1 1.5 1.6 — — 1.6 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of components of income tax expense | The components of income tax expense are as follows (dollars in millions): Three months ended March 31, 2016 2015 Current tax expense $ 4.1 $ 2.9 Deferred tax expense 10.9 26.4 Income tax expense calculated based on estimated annual effective tax rate 15.0 29.3 Income tax expense on discrete items: Change in valuation allowance (20.0 ) — Other items — .2 Total income tax expense $ (5.0 ) $ 29.5 |
Schedule of effective income tax rate reconciliation | A reconciliation of the U.S. statutory corporate tax rate to the estimated annual effective rate, before discrete items, reflected in the consolidated statement of operations is as follows: Three months ended March 31, 2016 2015 U.S. statutory corporate rate 35.0 % 35.0 % Non-taxable income and nondeductible benefits, net .8 (.8 ) State taxes 1.2 1.4 Estimated annual effective tax rate 37.0 % 35.6 % |
Schedule of deferred tax assets and liabilities | The components of the Company's income tax assets and liabilities are summarized below (dollars in millions): March 31, December 31, Deferred tax assets: Net federal operating loss carryforwards $ 883.4 $ 916.3 Net state operating loss carryforwards 13.9 14.1 Tax credits 57.2 55.3 Capital loss carryforwards 12.2 13.8 Investments 19.7 26.5 Insurance liabilities 624.8 600.3 Other 63.9 63.0 Gross deferred tax assets 1,675.1 1,689.3 Deferred tax liabilities: Present value of future profits and deferred acquisition costs (303.4 ) (305.4 ) Accumulated other comprehensive income (298.6 ) (223.8 ) Gross deferred tax liabilities (602.0 ) (529.2 ) Net deferred tax assets before valuation allowance 1,073.1 1,160.1 Valuation allowance (193.5 ) (213.5 ) Net deferred tax assets 879.6 946.6 Current income taxes accrued (50.8 ) (47.8 ) Income tax assets, net $ 828.8 $ 898.8 |
Summary of operating loss carryforwards | The following table summarizes the expiration dates of our loss carryforwards assuming the Internal Revenue Service ("IRS") ultimately agrees with the position we have taken with respect to the loss on our investment in Conseco Senior Health Insurance Company ("CSHI") and other uncertain tax positions(dollars in millions): Year of expiration Net operating loss carryforwards Total loss Life Non-life carryforwards 2023 $ 449.4 $ 1,916.8 $ 2,366.2 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 — 44.0 44.0 Subtotal 449.4 2,614.9 3,064.3 Less: Unrecognized tax benefits (342.9 ) (197.4 ) (540.3 ) Total $ 106.5 $ 2,417.5 $ 2,524.0 |
NOTES PAYABLE - DIRECT CORPOR32
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt instruments | The following notes payable were direct corporate obligations of the Company as of March 31, 2016 and December 31, 2015 (dollars in millions): March 31, December 31, 4.500% Senior Notes due May 2020 $ 325.0 $ 325.0 5.250% Senior Notes due May 2025 500.0 500.0 Revolving Credit Agreement (as defined below) 100.0 100.0 Unamortized debt issue costs (13.5 ) (13.9 ) Direct corporate obligations $ 911.5 $ 911.1 |
Schedule of maturities of long-term debt | The scheduled repayment of our direct corporate obligations was as follows at March 31, 2016 (dollars in millions): Year ending March 31, 2017 $ — 2018 — 2019 — 2020 100.0 2021 325.0 Thereafter 500.0 $ 925.0 |
INVESTMENT BORROWINGS (Tables)
INVESTMENT BORROWINGS (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Investment Borrowings [Abstract] | |
Schedule of terms of federal home loan bank borrowing | The following summarizes the terms of the borrowings from the FHLB by our insurance subsidiaries (dollars in millions): Amount Maturity Interest rate at borrowed date March 31, 2016 $ 57.7 June 2017 Variable rate – 0.871% 50.0 August 2017 Variable rate – 0.817% 75.0 August 2017 Variable rate – 0.779% 100.0 October 2017 Variable rate – 1.052% 50.0 November 2017 Variable rate – 1.145% 50.0 January 2018 Variable rate – 0.967% 50.0 January 2018 Variable rate – 0.959% 50.0 February 2018 Variable rate – 0.930% 50.0 February 2018 Variable rate – 0.707% 22.0 February 2018 Variable rate – 0.966% 100.0 May 2018 Variable rate – 0.883% 50.0 July 2018 Variable rate – 1.091% 50.0 August 2018 Variable rate – 0.737% 10.0 December 2018 Variable rate – 0.951% 50.0 January 2019 Variable rate – 1.040% 50.0 February 2019 Variable rate – 0.707% 100.0 March 2019 Variable rate – 0.921% 21.8 July 2019 Variable rate – 0.922% 15.0 October 2019 Variable rate – 1.134% 50.0 May 2020 Variable rate – 0.956% 21.8 June 2020 Fixed rate – 1.960% 25.0 September 2020 Variable rate – 1.253% 100.0 September 2020 Variable rate – 1.093% 50.0 September 2020 Variable rate – 1.093% 75.0 September 2020 Variable rate – 0.749% 100.0 October 2020 Variable rate – 0.723% 50.0 December 2020 Variable rate – 1.138% 28.2 August 2021 Fixed rate – 2.550% 26.0 March 2023 Fixed rate – 2.160% 20.5 June 2025 Fixed rate – 2.940% $ 1,548.0 |
CHANGES IN COMMON STOCK (Tables
CHANGES IN COMMON STOCK (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
Schedule of options activity | Changes in the number of shares of common stock outstanding were as follows (shares in thousands): Balance, December 31, 2015 184,029 Treasury stock purchased and retired (5,331 ) Stock options exercised 51 Restricted and performance stock vested 349 (a) Balance, March 31, 2016 179,098 ____________________ (a) Such amount was reduced by 182 thousand shares 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. |
CONSOLIDATED STATEMENT OF CAS35
CONSOLIDATED STATEMENT OF CASH FLOWS (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of the reconciliation for net income provided by operating activities | The following reconciles net income (loss) to net cash from operating activities (dollars in millions): Three months ended March 31, 2016 2015 Cash flows from operating activities: Net income $ 45.5 $ 52.8 Adjustments to reconcile net income to net cash from operating activities: Amortization and depreciation 68.2 71.0 Income taxes (6.1 ) 28.9 Insurance liabilities 103.7 88.2 Accrual and amortization of investment income (16.9 ) (35.7 ) Deferral of policy acquisition costs (62.2 ) (58.2 ) Net realized investment (gains) losses .9 (8.9 ) Transition expenses — 4.5 Other 7.3 (20.1 ) Net cash from operating activities $ 140.4 $ 122.5 |
Schedule of other significant noncash transactions | Other non-cash items not reflected in the investing and financing activities sections of the consolidated statement of cash flows (dollars in millions): Three months ended March 31, 2016 2015 Stock options, restricted stock and performance units $ 10.2 $ 4.3 |
INVESTMENTS IN VARIABLE INTER36
INVESTMENTS IN VARIABLE INTEREST ENTITIES (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
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 in accordance with authoritative guidance (dollars in millions): March 31, 2016 VIEs Eliminations Net effect on consolidated balance sheet Assets: Investments held by variable interest entities $ 1,691.0 $ — $ 1,691.0 Notes receivable of VIEs held by insurance subsidiaries — (203.4 ) (203.4 ) Cash and cash equivalents held by variable interest entities 190.1 — 190.1 Accrued investment income 3.7 (.1 ) 3.6 Income tax assets, net 24.6 (1.8 ) 22.8 Other assets 6.5 (1.9 ) 4.6 Total assets $ 1,915.9 $ (207.2 ) $ 1,708.7 Liabilities: Other liabilities $ 101.6 $ (7.3 ) $ 94.3 Borrowings related to variable interest entities 1,656.6 — 1,656.6 Notes payable of VIEs held by insurance subsidiaries 203.1 (203.1 ) — Total liabilities $ 1,961.3 $ (210.4 ) $ 1,750.9 December 31, 2015 VIEs Eliminations Net effect on consolidated balance sheet Assets: Investments held by variable interest entities $ 1,633.6 $ — $ 1,633.6 Notes receivable of VIEs held by insurance subsidiaries — (204.3 ) (204.3 ) Cash and cash equivalents held by variable interest entities 364.4 — 364.4 Accrued investment income 3.3 — 3.3 Income tax assets, net 26.0 (1.9 ) 24.1 Other assets 1.4 (1.5 ) (.1 ) Total assets $ 2,028.7 $ (207.7 ) $ 1,821.0 Liabilities: Other liabilities $ 196.6 $ (7.2 ) $ 189.4 Borrowings related to variable interest entities 1,676.4 — 1,676.4 Notes payable of VIEs held by insurance subsidiaries 204.0 (204.0 ) — Total liabilities $ 2,077.0 $ (211.2 ) $ 1,865.8 |
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 March 31, 2016 , 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 cost Estimated fair value (Dollars in millions) Due in one year or less $ 4.8 $ 4.8 Due after one year through five years 898.4 878.0 Due after five years through ten years 822.6 808.2 Total $ 1,725.8 $ 1,691.0 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Schedule of financial instruments carried at fair value categorized by input level | The categorization of fair value measurements, by input level, for our financial instruments carried at fair value on a recurring basis at March 31, 2016 is as follows (dollars in millions): Quoted prices in active markets Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Total Assets: Fixed maturities, available for sale: Corporate securities $ — $ 12,734.5 $ 173.3 $ 12,907.8 United States Treasury securities and obligations of United States government corporations and agencies — 197.1 — 197.1 States and political subdivisions — 2,059.8 — 2,059.8 Debt securities issued by foreign governments — 34.0 — 34.0 Asset-backed securities — 2,150.5 43.8 2,194.3 Collateralized debt obligations — 143.7 — 143.7 Commercial mortgage-backed securities — 1,516.5 1.1 1,517.6 Mortgage pass-through securities — 3.1 — 3.1 Collateralized mortgage obligations — 1,047.7 — 1,047.7 Total fixed maturities, available for sale — 19,886.9 218.2 20,105.1 Equity securities - corporate securities 401.7 176.6 32.4 610.7 Trading securities: Corporate securities — 20.2 — 20.2 United States Treasury securities and obligations of United States government corporations and agencies — 1.6 — 1.6 Asset-backed securities — 43.1 — 43.1 Collateralized debt obligations — 1.9 — 1.9 Commercial mortgage-backed securities — 111.9 39.0 150.9 Collateralized mortgage obligations — 62.4 — 62.4 Equity securities 5.1 — — 5.1 Total trading securities 5.1 241.1 39.0 285.2 Investments held by variable interest entities - corporate securities — 1,691.0 — 1,691.0 Other invested assets - derivatives .4 47.0 — 47.4 Assets held in separate accounts — 4.6 — 4.6 Total assets carried at fair value by category $ 407.2 $ 22,047.2 $ 289.6 $ 22,744.0 Liabilities: Future policy benefits - embedded derivatives associated with fixed index annuity products $ — $ — $ 1,096.0 $ 1,096.0 The categorization of fair value measurements, by input level, for our financial instruments carried at fair value on a recurring basis at December 31, 2015 is as follows (dollars in millions): Quoted prices in active markets for identical assets or liabilities (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Total Assets: Fixed maturities, available for sale: Corporate securities $ — $ 12,698.1 $ 170.4 $ 12,868.5 United States Treasury securities and obligations of United States government corporations and agencies — 194.5 — 194.5 States and political subdivisions — 2,104.2 — 2,104.2 Debt securities issued by foreign governments — 20.7 — 20.7 Asset-backed securities — 1,816.3 35.9 1,852.2 Collateralized debt obligations — 186.7 — 186.7 Commercial mortgage-backed securities — 1,604.2 1.1 1,605.3 Mortgage pass-through securities — 3.3 .1 3.4 Collateralized mortgage obligations — 1,047.4 — 1,047.4 Total fixed maturities, available for sale — 19,675.4 207.5 19,882.9 Equity securities - corporate securities 254.9 176.1 32.0 463.0 Trading securities: Corporate securities — 21.5 — 21.5 United States Treasury securities and obligations of United States government corporations and agencies — 1.9 — 1.9 Asset-backed securities — 35.5 — 35.5 Collateralized debt obligations — 2.1 — 2.1 Commercial mortgage-backed securities — 118.1 39.9 158.0 Collateralized mortgage obligations — 38.2 — 38.2 Equity securities 4.9 — — 4.9 Total trading securities 4.9 217.3 39.9 262.1 Investments held by variable interest entities - corporate securities — 1,633.6 — 1,633.6 Other invested assets - derivatives 1.6 41.0 — 42.6 Assets held in separate accounts — 4.7 — 4.7 Total assets carried at fair value by category $ 261.4 $ 21,748.1 $ 279.4 $ 22,288.9 Liabilities: Future policy benefits - embedded derivatives associated with fixed index annuity products $ — $ — $ 1,057.1 $ 1,057.1 |
Schedule of assets and liabilities measured on a recurring fair value basis | The fair value measurements for our financial instruments disclosed at fair value on a recurring basis are as follows (dollars in millions): March 31, 2016 Quoted prices in active markets for identical assets or liabilities (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Total estimated fair value Total carrying amount Assets: Mortgage loans $ — $ — $ 1,803.4 $ 1,803.4 $ 1,700.8 Policy loans — — 110.1 110.1 110.1 Other invested assets: Company-owned life insurance — 159.0 — 159.0 159.0 Cash and cash equivalents: Unrestricted 544.7 91.0 — 635.7 635.7 Held by variable interest entities 190.1 — — 190.1 190.1 Liabilities: Policyholder account balances — — 10,772.4 10,772.4 10,772.4 Investment borrowings — 1,552.5 — 1,552.5 1,548.0 Borrowings related to variable interest entities — 1,625.7 — 1,625.7 1,656.6 Notes payable – direct corporate obligations — 941.5 — 941.5 911.5 December 31, 2015 Quoted prices in active markets for identical assets or liabilities (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Total estimated fair value Total carrying amount Assets: Mortgage loans $ — $ — $ 1,772.4 $ 1,772.4 $ 1,721.0 Policy loans — — 109.4 109.4 109.4 Other invested assets: Company-owned life insurance — 158.1 — 158.1 158.1 Cash and cash equivalents: Unrestricted 432.3 — — 432.3 432.3 Held by variable interest entities 364.4 — — 364.4 364.4 Liabilities: Policyholder account balances — — 10,762.3 10,762.3 10,762.3 Investment borrowings — 1,549.8 — 1,549.8 1,548.1 Borrowings related to variable interest entities — 1,673.6 — 1,673.6 1,676.4 Notes payable – direct corporate obligations — 937.8 — 937.8 911.1 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 three months ended March 31, 2016 (dollars in millions): March 31, 2016 Beginning balance as of December 31, 2015 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 March 31, 2016 Amount of total gains (losses) for the three months ended March 31, 2016 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 $ 170.4 $ (15.4 ) $ (11.1 ) $ 9.1 $ 20.3 $ — $ 173.3 $ (6.3 ) Asset-backed securities 35.9 20.9 — .7 — (13.7 ) 43.8 — Commercial mortgage-backed securities 1.1 — — — — — 1.1 — Mortgage pass-through securities .1 (.1 ) — — — — — — Total fixed maturities, available for sale 207.5 5.4 (11.1 ) 9.8 20.3 (13.7 ) 218.2 (6.3 ) Equity securities - corporate securities 32.0 1.1 — (.7 ) — — 32.4 — Trading securities - commercial mortgage-backed securities 39.9 (1.1 ) — .2 — — 39.0 .2 Liabilities: Future policy benefits - embedded derivatives associated with fixed index annuity products (1,057.1 ) (4.0 ) (34.9 ) — — — (1,096.0 ) (34.9 ) _________ (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 three months ended March 31, 2016 (dollars in millions): Purchases Sales Issuances Settlements Purchases, sales, issuances and settlements, net Assets: Fixed maturities, available for sale: Corporate securities $ — $ (15.4 ) $ — $ — $ (15.4 ) Asset-backed securities 21.0 (.1 ) — — 20.9 Mortgage pass-through securities — (.1 ) — — (.1 ) Total fixed maturities, available for sale 21.0 (15.6 ) — — 5.4 Equity securities - corporate securities 1.1 — — — 1.1 Trading securities - commercial mortgage-backed securities — (1.1 ) — — (1.1 ) Liabilities: Future policy benefits - embedded derivatives associated with fixed index annuity products (34.0 ) 14.2 (.2 ) 16.0 (4.0 ) 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 three months ended March 31, 2015 (dollars in millions): March 31, 2015 Beginning balance as of December 31, 2014 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 March 31, 2015 Amount of total gains (losses) for the three months ended March 31, 2015 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 $ 365.9 $ (20.1 ) $ (1.3 ) $ (.8 ) $ 9.1 $ (216.8 ) $ 136.0 $ — States and political subdivisions 35.5 — — — — (35.5 ) — — Asset-backed securities 59.2 (.8 ) — 1.4 10.0 (4.0 ) 65.8 — Commercial mortgage-backed securities 1.2 — — (.5 ) 1.4 — 2.1 — Mortgage pass-through securities .4 (.2 ) — — — — .2 — Total fixed maturities, available for sale 462.2 (21.1 ) (1.3 ) .1 20.5 (256.3 ) 204.1 — Equity securities - corporate securities 28.0 1.0 — — — — 29.0 — Trading securities - commercial mortgage-backed securities 28.6 — — — — (28.6 ) — — Liabilities: Future policy benefits - embedded derivatives associated with fixed index annuity products (1,081.5 ) (2.8 ) (17.8 ) — — — (1,102.1 ) (17.8 ) ____________ (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 three months ended March 31, 2015 (dollars in millions): Purchases Sales Issuances Settlements Purchases, sales, issuances and settlements, net Assets: Fixed maturities, available for sale: Corporate securities $ .1 $ (20.2 ) $ — $ — $ (20.1 ) Asset-backed securities 9.9 (10.7 ) — — (.8 ) Mortgage pass-through securities — (.2 ) — — (.2 ) Total fixed maturities, available for sale 10.0 (31.1 ) — — (21.1 ) Equity securities - corporate securities 1.0 — — — 1.0 Liabilities: Future policy benefits - embedded derivatives associated with fixed index annuity products (30.4 ) 11.4 (1.6 ) 17.8 (2.8 ) |
Schedule of fair value measurement 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 March 31, 2016 (dollars in millions): Fair value at March 31, 2016 Valuation techniques Unobservable inputs Range (weighted average) Assets: Corporate securities (a) $ 78.8 Discounted cash flow analysis Discount margins 1.80% - 11.29% (5.55%) Asset-backed securities (b) 22.8 Discounted cash flow analysis Discount margins 2.89% - 4.25% (3.47%) Equity security (c) 32.4 Market approach Projected cash flows Not applicable Other assets categorized as Level 3 (d) 155.6 Unadjusted third-party price source Not applicable Not applicable Total 289.6 Liabilities: Future policy benefits (e) 1,096.0 Discounted projected embedded derivatives Projected portfolio yields 5.15% - 5.61% (5.42%) Discount rates 0.00% - 2.80% (1.44%) Surrender rates 1.67% - 46.56% (14.09%) ________________________________ (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, 2015 (dollars in millions): Fair value at December 31, 2015 Valuation techniques Unobservable inputs Range (weighted average) Assets: Corporate securities (a) $ 76.9 Discounted cash flow analysis Discount margins 1.65% - 9.74% (5.35%) Asset-backed securities (b) 22.2 Discounted cash flow analysis Discount margins 2.83% - 4.45% (3.50%) Equity security (c) 32.0 Market approach Projected cash flows Not applicable Other assets categorized as Level 3 (d) 148.3 Unadjusted third-party price source Not applicable Not applicable Total 279.4 Liabilities: Future policy benefits (e) 1,057.1 Discounted projected embedded derivatives Projected portfolio yields 5.15% - 5.61% (5.42%) Discount rates 0.00 - 3.18% (1.94%) Surrender rates 1.67% - 46.56% (14.09%) ________________________________ (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. |
BUSINESS AND BASIS OF PRESENT38
BUSINESS AND BASIS OF PRESENTATION (Details) | 3 Months Ended |
Mar. 31, 2016distribution_channel | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of distribution channels | 3 |
INVESTMENTS - NARRATIVE (Detail
INVESTMENTS - NARRATIVE (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | ||
Schedule of Available-for-sale Securities [Line Items] | ||||
Premium deficiencies adjustments to present value of future profits | $ (104.8) | |||
Reduction to deferred acquisition costs due to unrealized gains that would result in premium deficiency if unrealized gains were realized | (138) | |||
Adjustment to insurance liabilities | (82.3) | $ (14.6) | ||
Increase to deferred tax assets due to unrealized gains that would result in premium deficiency if unrealized gains were realized | 115.5 | |||
Net realized investment gains (losses) | (0.9) | $ 8.9 | ||
Net realized investment gains (losses), excluding impairment losses | 9.1 | (1.1) | ||
Gain on dissolution of a variable interest entity | 0 | 11.3 | ||
Total other-than-temporary impairment losses | [1] | (10) | (1.3) | |
Value of available for sale securities sold | 388 | |||
Other-than-temporary impairments included in accumulated other comprehensive income | 4.8 | |||
Embedded Derivative Related to Reinsurance Contract [Member] | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Decrease in fair value of embedded derivatives | (3.6) | |||
Coinsurance [Member] | Embedded Derivative Related to Reinsurance Contract [Member] | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Increase in fair value of embedded derivative | 1.8 | 1.4 | ||
Marketable securities [Member] | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Net realized investment gains (losses), excluding impairment losses | 10.9 | (2.5) | ||
Total fixed maturities, available for sale [Member] | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Net realized investment gains (losses) | 11.2 | (2) | ||
Total other-than-temporary impairment losses | (6.3) | (1.3) | ||
Gross realized losses on sale | (81) | (15.4) | ||
Corporate securities [Member] | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Gross realized losses on sale | (74.5) | |||
Fixed income investments [Member] | Energy Sector [Member] | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Gross realized losses on sale | (62.7) | |||
Total other-than-temporary impairment losses | (6.3) | |||
Commercial mortgage-backed securities [Member] | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Gross realized losses on sale | (5.3) | |||
Various other investments [Member] | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Gross realized losses on sale | (1.2) | |||
Direct loan [Member] | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Total other-than-temporary impairment losses | (3.7) | |||
Impairment of other investments [Member] | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Net realized investment gains (losses) | $ (3.7) | 0 | ||
Total other-than-temporary impairment losses | $ (1.3) | |||
[1] | No portion of the other-than-temporary impairments recognized in the periods was included in accumulated other comprehensive income. |
INVESTMENTS - SCHEDULE OF UNREA
INVESTMENTS - SCHEDULE OF UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS INCLUDED IN ACCUMULATED OTHER COMPREHENSIVE INCOME (Details) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
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 | $ 1.6 | $ 1.6 |
Net unrealized gains on all other investments | 1,329.6 | 903.4 |
Adjustment to present value of future profits | (120.3) | (121.2) |
Adjustment to deferred acquisition costs | (279.6) | (133.3) |
Adjustment to insurance liabilities | (82.3) | (14.6) |
Unrecognized net loss related to deferred compensation plan | (8) | (8.6) |
Deferred income tax liabilities | (300.5) | (224.5) |
Accumulated other comprehensive income | $ 540.5 | $ 402.8 |
INVESTMENTS - SCHEDULE OF AMORT
INVESTMENTS - SCHEDULE OF AMORTIZED COST, GROSS UNREALIZED GAINS AND LOSSES, ESTIMATED FAIR VALUE, AND OTHER-THAN-TEMPORARY IMPAIRMENTS (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | $ 18,765.4 | $ 18,947 |
Other-than-temporary impairments included in accumulated other comprehensive income | (4.8) | |
Corporate securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 11,946.1 | |
Gross unrealized gains | 1,188 | |
Gross unrealized losses | (226.3) | |
Estimated fair value | 12,907.8 | |
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | |
United States Treasury securities and obligations of United States government corporations and agencies [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 160.4 | |
Gross unrealized gains | 36.7 | |
Gross unrealized losses | 0 | |
Estimated fair value | 197.1 | |
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | |
States and political subdivisions [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 1,814.3 | |
Gross unrealized gains | 249.2 | |
Gross unrealized losses | (3.7) | |
Estimated fair value | 2,059.8 | |
Other-than-temporary impairments included in accumulated other comprehensive income | (3) | |
Debt securities issued by foreign governments [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 33.5 | |
Gross unrealized gains | 0.5 | |
Gross unrealized losses | 0 | |
Estimated fair value | 34 | |
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | |
Asset-backed securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 2,173.2 | |
Gross unrealized gains | 50.8 | |
Gross unrealized losses | (29.7) | |
Estimated fair value | 2,194.3 | |
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | |
Collateralized debt obligations [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 148.4 | |
Gross unrealized gains | 0.1 | |
Gross unrealized losses | (4.8) | |
Estimated fair value | 143.7 | |
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | |
Commercial mortgage-backed securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 1,494.7 | |
Gross unrealized gains | 46 | |
Gross unrealized losses | (23.1) | |
Estimated fair value | 1,517.6 | |
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | |
Mortgage pass-through securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 2.8 | |
Gross unrealized gains | 0.3 | |
Gross unrealized losses | 0 | |
Estimated fair value | 3.1 | |
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | |
Collateralized mortgage obligations [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 992 | |
Gross unrealized gains | 60 | |
Gross unrealized losses | (4.3) | |
Estimated fair value | 1,047.7 | |
Other-than-temporary impairments included in accumulated other comprehensive income | (1.8) | |
Total fixed maturities, available for sale [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 18,765.4 | |
Gross unrealized gains | 1,631.6 | |
Gross unrealized losses | (291.9) | |
Estimated fair value | 20,105.1 | |
Other-than-temporary impairments included in accumulated other comprehensive income | (4.8) | |
Equity securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 586 | |
Gross unrealized gains | 26.3 | |
Gross unrealized losses | (1.6) | |
Estimated fair value | $ 610.7 |
INVESTMENTS - SUMMARY OF INVEST
INVESTMENTS - SUMMARY OF INVESTMENTS BY CONTRACTUAL MATURITY (Details) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Amortized cost | ||
Due in one year or less | $ 306.7 | |
Due after one year through five years | 2,222.7 | |
Due after five years through ten years | 1,574.3 | |
Due after ten years | 9,850.6 | |
Subtotal | 13,954.3 | |
Structured securities | 4,811.1 | |
Amortized cost | 18,765.4 | $ 18,947 |
Estimated fair value | ||
Due in one year or less | 311.2 | |
Due after one year through five years | 2,385.4 | |
Due after five years through ten years | 1,670.2 | |
Due after ten years | 10,831.9 | |
Subtotal | 15,198.7 | |
Structured securities | 4,906.4 | |
Total fixed maturities, available for sale | $ 20,105.1 | $ 19,882.9 |
INVESTMENTS - NET REALIZED INVE
INVESTMENTS - NET REALIZED INVESTMENT GAINS (LOSSES) (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | ||
Gain (Loss) on Investments [Line Items] | |||
Total other-than-temporary impairment losses | [1] | $ (10) | $ (1.3) |
Total realized gains (losses) | (0.9) | 8.9 | |
Gain on dissolution of a variable interest entity | 0 | 11.3 | |
Investments [Member] | |||
Gain (Loss) on Investments [Line Items] | |||
Change in estimated fair value of trading securities | (3.4) | ||
Total fixed maturities, available for sale [Member] | |||
Gain (Loss) on Investments [Line Items] | |||
Gross realized gains on sale | 98.5 | 14.7 | |
Gross realized losses on sale | (81) | (15.4) | |
Total other-than-temporary impairment losses | (6.3) | (1.3) | |
Other-than-temporary impairment losses recognized in accumulated other comprehensive income | 0 | 0 | |
Net impairment losses recognized | (6.3) | (1.3) | |
Total realized gains (losses) | 11.2 | (2) | |
Equity securities [Member] | |||
Gain (Loss) on Investments [Line Items] | |||
Total realized gains (losses) | 0.1 | 2.5 | |
Commercial mortgage loans [Member] | |||
Gain (Loss) on Investments [Line Items] | |||
Total realized gains (losses) | 0 | (2.3) | |
Impairment of other investments [Member] | |||
Gain (Loss) on Investments [Line Items] | |||
Total realized gains (losses) | (3.7) | 0 | |
Other Member] | |||
Gain (Loss) on Investments [Line Items] | |||
Total realized gains (losses) | $ (8.5) | $ (0.6) | |
[1] | No portion of the other-than-temporary impairments recognized in the periods was included in accumulated other comprehensive income. |
INVESTMENTS - SCHEDULE OF OTHER
INVESTMENTS - SCHEDULE OF OTHER THAN TEMPORARY IMPAIRMENT (Details) - Available-for-sale securities [Member] - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward] | ||
Credit losses on fixed maturity securities, available for sale, beginning of period | $ (2.6) | $ (1) |
Add: credit losses on other-than-temporary impairments not previously recognized | 0 | 0 |
Less: credit losses on securities sold | 0 | 0 |
Less: credit losses on securities impaired due to intent to sell | 0 | 0 |
Add: credit losses on previously impaired securities | 0 | 0 |
Less: increases in cash flows expected on previously impaired securities | 0 | 0 |
Credit losses on fixed maturity securities, available for sale, end of period | $ (2.6) | $ (1) |
INVESTMENTS - SUMMARY OF INVE45
INVESTMENTS - SUMMARY OF INVESTMENTS WITH UNREALIZED LOSSES BY INVESTMENT CATEGORY (Details) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Schedule of Available-for-sale Securities [Line Items] | ||
Fair value, less than 12 months | $ 3,889.2 | $ 4,815 |
Unrealized losses, less than 12 months | (194.8) | (291.3) |
Fair value, 12 months or longer | 838.5 | 495 |
Unrealized losses, 12 months or longer | (97.1) | (97.2) |
Fair value, total | 4,727.7 | 5,310 |
Unrealized losses, total | (291.9) | (388.5) |
United States Treasury securities and obligations of United States government corporations and agencies [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair value, less than 12 months | 0.6 | 43.6 |
Unrealized losses, less than 12 months | 0 | (0.3) |
Fair value, 12 months or longer | 0 | 0 |
Unrealized losses, 12 months or longer | 0 | 0 |
Fair value, total | 0.6 | 43.6 |
Unrealized losses, total | 0 | (0.3) |
States and political subdivisions [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair value, less than 12 months | 14.4 | 156.8 |
Unrealized losses, less than 12 months | (0.2) | (4.1) |
Fair value, 12 months or longer | 23.1 | 14.8 |
Unrealized losses, 12 months or longer | (3.5) | (3.5) |
Fair value, total | 37.5 | 171.6 |
Unrealized losses, total | (3.7) | (7.6) |
Debt securities issued by foreign governments [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair value, less than 12 months | 4.2 | 20.7 |
Unrealized losses, less than 12 months | 0 | (0.6) |
Fair value, 12 months or longer | 0 | 0 |
Unrealized losses, 12 months or longer | 0 | 0 |
Fair value, total | 4.2 | 20.7 |
Unrealized losses, total | 0 | (0.6) |
Corporate securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair value, less than 12 months | 1,862.3 | 2,913.6 |
Unrealized losses, less than 12 months | (142.7) | (255.7) |
Fair value, 12 months or longer | 548.5 | 278.9 |
Unrealized losses, 12 months or longer | (83.6) | (89.5) |
Fair value, total | 2,410.8 | 3,192.5 |
Unrealized losses, total | (226.3) | (345.2) |
Asset-backed securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair value, less than 12 months | 1,118.9 | 930.3 |
Unrealized losses, less than 12 months | (24.8) | (11.7) |
Fair value, 12 months or longer | 162.4 | 98.4 |
Unrealized losses, 12 months or longer | (4.9) | (1.7) |
Fair value, total | 1,281.3 | 1,028.7 |
Unrealized losses, total | (29.7) | (13.4) |
Collateralized debt obligations [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair value, less than 12 months | 113.4 | 96.2 |
Unrealized losses, less than 12 months | (4) | (1.8) |
Fair value, 12 months or longer | 27.6 | 36.3 |
Unrealized losses, 12 months or longer | (0.8) | (0.4) |
Fair value, total | 141 | 132.5 |
Unrealized losses, total | (4.8) | (2.2) |
Commercial mortgage-backed securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair value, less than 12 months | 493.5 | 556 |
Unrealized losses, less than 12 months | (19.8) | (16.1) |
Fair value, 12 months or longer | 48.5 | 25.7 |
Unrealized losses, 12 months or longer | (3.3) | (1.5) |
Fair value, total | 542 | 581.7 |
Unrealized losses, total | (23.1) | (17.6) |
Mortgage pass-through securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair value, less than 12 months | 0 | |
Unrealized losses, less than 12 months | 0 | |
Fair value, 12 months or longer | 0.1 | |
Unrealized losses, 12 months or longer | 0 | |
Fair value, total | 0.1 | |
Unrealized losses, total | 0 | |
Collateralized mortgage obligations [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair value, less than 12 months | 281.9 | 97.8 |
Unrealized losses, less than 12 months | (3.3) | (1) |
Fair value, 12 months or longer | 28.4 | 40.8 |
Unrealized losses, 12 months or longer | (1) | (0.6) |
Fair value, total | 310.3 | 138.6 |
Unrealized losses, total | (4.3) | (1.6) |
Equity securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair value, less than 12 months | 51.4 | 140.1 |
Unrealized losses, less than 12 months | (1.1) | (2.4) |
Fair value, 12 months or longer | 14 | 2.4 |
Unrealized losses, 12 months or longer | (0.5) | (0.4) |
Fair value, total | 65.4 | 142.5 |
Unrealized losses, total | $ (1.6) | $ (2.8) |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) shares in Thousands, $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Dilutive Securities, Effect on Basic Earnings Per Share [Abstract] | ||
Net income for basic and diluted earnings per share | $ 45.5 | $ 52.8 |
Shares: | ||
Weighted average shares outstanding for basic earnings per share (in shares) | 180,350 | 200,491 |
Effect of dilutive securities on weighted average shares: | ||
Stock options, restricted stock and performance units (in shares) | 1,778 | 1,784 |
Weighted average shares outstanding for diluted earnings per share (in shares) | 182,128 | 202,275 |
BUSINESS SEGMENTS (Details)
BUSINESS SEGMENTS (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Revenues: | ||
Fee revenue and other income | $ 14.2 | $ 16.2 |
Total revenues | 944 | 954.9 |
Expenses: | ||
Insurance policy benefits | 619 | 606 |
Other operating costs and expenses | 211.1 | 197.9 |
Total expenses | 866.4 | 861.9 |
Pre-tax operating earnings | 77.6 | 93 |
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract] | ||
Total segment revenues | 944 | 954.9 |
Net realized investment gains (losses) | (0.9) | (2.4) |
Revenues related to certain non-strategic investments and earnings attributable to VIEs | 12.3 | 18.3 |
Fee revenue related to transition and support services agreements | 5 | 7.5 |
Total revenues | 960.4 | 978.3 |
Total segment expenses | 866.4 | 861.9 |
Insurance policy benefits - fair value changes in embedded derivative liabilities | 38 | 16.9 |
Amortization related to fair value changes in embedded derivative liabilities | (8.5) | (4.2) |
Amortization related to net realized investment gains | 0.1 | (0.2) |
Expenses related to certain non-strategic investments and expenses attributable to VIEs | 12.9 | 10.5 |
Fair value changes related to agent deferred compensation plan | 6 | 0 |
Transition expenses | 0 | 4.5 |
Expenses related to transition and support services agreements | 5 | 6.6 |
Total benefits and expenses | 919.9 | 896 |
Income before income taxes | 40.5 | 82.3 |
Tax expense on period income | 15 | 29.5 |
Valuation allowance for deferred tax assets | (20) | 0 |
Net income | 45.5 | 52.8 |
Bankers Life [Member] | ||
Revenues: | ||
Annuities | 4.8 | 5.7 |
Health | 311.1 | 315.8 |
Life | 97.3 | 91.2 |
Net investment income | 214.2 | 226.5 |
Fee revenue and other income | 6.6 | 6.3 |
Total revenues | 634 | 645.5 |
Expenses: | ||
Insurance policy benefits | 397 | 405.3 |
Amortization | 51.5 | 51.6 |
Interest expense on investment borrowings | 2.9 | 2.1 |
Other operating costs and expenses | 105 | 104.3 |
Total expenses | 556.4 | 563.3 |
Pre-tax operating earnings | 77.6 | 82.2 |
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract] | ||
Total segment revenues | 634 | 645.5 |
Total segment expenses | 556.4 | 563.3 |
Washington National [Member] | ||
Revenues: | ||
Annuities | 0.5 | 0.9 |
Health | 155.5 | 152.2 |
Life | 6.1 | 6.4 |
Net investment income | 60.6 | 65.6 |
Fee revenue and other income | 0.3 | 0.4 |
Total revenues | 223 | 225.5 |
Expenses: | ||
Insurance policy benefits | 133.5 | 135.2 |
Amortization | 15.1 | 15.3 |
Interest expense on investment borrowings | 0.8 | 0.4 |
Other operating costs and expenses | 47.3 | 46.1 |
Total expenses | 196.7 | 197 |
Pre-tax operating earnings | 26.3 | 28.5 |
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract] | ||
Total segment revenues | 223 | 225.5 |
Total segment expenses | 196.7 | 197 |
Colonial Penn [Member] | ||
Revenues: | ||
Health | 0.7 | 0.8 |
Life | 68.4 | 63.5 |
Net investment income | 11 | 10.7 |
Fee revenue and other income | 0.4 | 0.3 |
Total revenues | 80.5 | 75.3 |
Expenses: | ||
Insurance policy benefits | 50.5 | 48.6 |
Amortization | 3.9 | 3.6 |
Interest expense on investment borrowings | 0.1 | 0 |
Other operating costs and expenses | 32.8 | 29 |
Total expenses | 87.3 | 81.2 |
Pre-tax operating earnings | (6.8) | (5.9) |
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract] | ||
Total segment revenues | 80.5 | 75.3 |
Total segment expenses | 87.3 | 81.2 |
Corporate operations [Member] | ||
Revenues: | ||
Net investment income | 4 | 6.7 |
Fee revenue and other income | 2.5 | 1.9 |
Total revenues | 6.5 | 8.6 |
Expenses: | ||
Interest expense on corporate debt | 11.4 | 10.5 |
Other operating costs and expenses | 14.6 | 9.9 |
Total expenses | 26 | 20.4 |
Pre-tax operating earnings | (19.5) | (11.8) |
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract] | ||
Total segment revenues | 6.5 | 8.6 |
Total segment expenses | $ 26 | $ 20.4 |
ACCOUNTING FOR DERIVATIVES - FA
ACCOUNTING FOR DERIVATIVES - FAIR VALUE BY BALANCE SHEET LOCATION (Details) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Fixed Index Call Options [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Assets | $ 47 | $ 41 |
Interest Rate Futures [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Assets | (0.3) | 0.1 |
Not Designated as Hedging Instrument [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Assets | 43.5 | 36.1 |
Liabilities | 1,096 | 1,057.1 |
Not Designated as Hedging Instrument [Member] | Fixed Index Call Options [Member] | Other Invested Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Assets | 47 | 41 |
Not Designated as Hedging Instrument [Member] | Interest Rate Futures [Member] | Other Invested Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Assets | (0.3) | 0.1 |
Not Designated as Hedging Instrument [Member] | Reinsurance Receivables - Embedded Derivative [Member] | Other Invested Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Assets | (3.2) | (5) |
Not Designated as Hedging Instrument [Member] | Equity Index Annuities - Embedded Derivative [Member] | Future Policy Benefits [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Liabilities | $ 1,096 | $ 1,057.1 |
ACCOUNTING FOR DERIVATIVES - SC
ACCOUNTING FOR DERIVATIVES - SCHEDULE PRE-TAX GAINS (LOSSES) RECOGNIZED IN NET INCOME FOR DERIVATIVE INSTRUMENTS (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Derivative [Line Items] | ||
Net investment income from policyholder and other special-purpose portfolios | $ (43.1) | $ (21.6) |
Investment Income [Member] | ||
Derivative [Line Items] | ||
Net investment income from policyholder and other special-purpose portfolios | (9) | (2.1) |
Investment Income [Member] | Fixed Index Call Options [Member] | ||
Derivative [Line Items] | ||
Net investment income from policyholder and other special-purpose portfolios | (9) | (2.1) |
Investment Income [Member] | Embedded Derivative Related to Reinsurance Contract [Member] | ||
Derivative [Line Items] | ||
Net investment income from policyholder and other special-purpose portfolios | 0 | 0 |
Gain (Loss) on Investments [Member] | ||
Derivative [Line Items] | ||
Net investment income from policyholder and other special-purpose portfolios | 0.8 | (1.7) |
Gain (Loss) on Investments [Member] | Interest Rate Futures [Member] | ||
Derivative [Line Items] | ||
Net investment income from policyholder and other special-purpose portfolios | (1) | (1.7) |
Insurance Policy Benefits [Member] | Embedded Derivative Related to Reinsurance Contract [Member] | ||
Derivative [Line Items] | ||
Net investment income from policyholder and other special-purpose portfolios | (34.9) | (17.8) |
Coinsurance [Member] | Gain (Loss) on Investments [Member] | Embedded Derivative Related to Reinsurance Contract [Member] | ||
Derivative [Line Items] | ||
Net investment income from policyholder and other special-purpose portfolios | $ 1.8 | $ 0 |
ACCOUNTING FOR DERIVATIVES - DE
ACCOUNTING FOR DERIVATIVES - DERIVATIVES WITH MASTER NETTING ARRANGEMENTS (Details) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Fixed Index Call Options [Member] | ||
Derivative [Line Items] | ||
Gross amounts recognized | $ 47 | $ 41 |
Gross amounts offset in the balance sheet | 0 | 0 |
Net amounts of assets presented in the balance sheet | 47 | 41 |
Financial instruments | 0 | 0 |
Cash collateral received | 0 | 0 |
Net amount | 47 | 41 |
Interest Rate Futures [Member] | ||
Derivative [Line Items] | ||
Gross amounts recognized | (0.3) | 0.1 |
Gross amounts offset in the balance sheet | 0.7 | 1.5 |
Net amounts of assets presented in the balance sheet | 0.4 | 1.6 |
Financial instruments | 0 | 0 |
Cash collateral received | 0 | 0 |
Net amount | $ 0.4 | $ 1.6 |
ACCOUNTING FOR DERIVATIVES (Det
ACCOUNTING FOR DERIVATIVES (Details) $ in Millions | Mar. 31, 2016USD ($) |
Embedded Derivative Associated With Modified Coinsurance Agreement [Member] | |
Derivative [Line Items] | |
Embedded derivative | $ 140 |
Fixed Index Call Options [Member] | |
Derivative [Line Items] | |
Notional amount | $ 2,300 |
REINSURANCE (Details)
REINSURANCE (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Reinsurance Disclosures [Abstract] | ||
Ceded premiums written | $ 33.6 | $ 33.9 |
Ceded insurance policy benefits | 40.4 | 39.4 |
Assumed premiums written | $ 8.8 | $ 9.9 |
INCOME TAXES - COMPONENTS OF TA
INCOME TAXES - COMPONENTS OF TAX EXPENSE (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
Current tax expense | $ 4.1 | $ 2.9 |
Deferred tax expense | 10.9 | 26.4 |
Income tax expense calculated based on estimated annual effective tax rate | 15 | 29.3 |
Change in valuation allowance | (20) | 0 |
Other items | 0 | 0.2 |
Total income tax expense | $ (5) | $ 29.5 |
INCOME TAXES - RECONCILIATION O
INCOME TAXES - RECONCILIATION OF CORPORATE TAX RATE (Details) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
U.S. statutory corporate rate | 35.00% | 35.00% |
Non-taxable income and nondeductible benefits, net | 0.80% | (0.80%) |
State taxes | 1.20% | 1.40% |
Estimated annual effective tax rate | 37.00% | 35.60% |
INCOME TAXES - DEFERRED ASSETS
INCOME TAXES - DEFERRED ASSETS AND LIABILITIES (Details) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Deferred tax assets: | ||
Net federal operating loss carryforwards | $ 883.4 | $ 916.3 |
Net state operating loss carryforwards | 13.9 | 14.1 |
Tax credits | 57.2 | 55.3 |
Capital loss carryforwards | 12.2 | 13.8 |
Investments | 19.7 | 26.5 |
Insurance liabilities | 624.8 | 600.3 |
Other | 63.9 | 63 |
Gross deferred tax assets | 1,675.1 | 1,689.3 |
Deferred tax liabilities: | ||
Present value of future profits and deferred acquisition costs | (303.4) | (305.4) |
Accumulated other comprehensive income | (298.6) | (223.8) |
Gross deferred tax liabilities | (602) | (529.2) |
Net deferred tax assets before valuation allowance | 1,073.1 | 1,160.1 |
Valuation allowance | (193.5) | (213.5) |
Net deferred tax assets | 879.6 | 946.6 |
Current income taxes accrued | (50.8) | (47.8) |
Income tax assets, net | $ 828.8 | $ 898.8 |
INCOME TAXES - NET OPERATING LO
INCOME TAXES - NET OPERATING LOSSES (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Operating Loss Carryforwards [Line Items] | |
Total loss carryforwards | $ 3,064.3 |
Total loss carryforwards, unrecognized tax benefit | (540.3) |
Total loss carryforwards, net of unrecognized tax benefits | 2,524 |
Life insurance companies [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 449.4 |
Net operating loss carryforward, unrecognized tax benefit | (342.9) |
Net operating loss carryforwards, net of unrecognized tax benefits | 106.5 |
Non life insurance companies [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 2,614.9 |
Net operating loss carryforward, unrecognized tax benefit | (197.4) |
Net operating loss carryforwards, net of unrecognized tax benefits | $ 2,417.5 |
Carryforward Expiration 2023 [Member] | |
Operating Loss Carryforwards [Line Items] | |
Year of expiration | Dec. 31, 2023 |
Total loss carryforwards | $ 2,366.2 |
Carryforward Expiration 2023 [Member] | Life insurance companies [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 449.4 |
Carryforward Expiration 2023 [Member] | Non life insurance companies [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | $ 1,916.8 |
Carryforward Expiration 2025 [Member] | |
Operating Loss Carryforwards [Line Items] | |
Year of expiration | Dec. 31, 2025 |
Total loss carryforwards | $ 91.5 |
Carryforward Expiration 2025 [Member] | Life insurance companies [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 0 |
Carryforward Expiration 2025 [Member] | Non life insurance companies [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | $ 91.5 |
Carryforward Expiration 2026 [Member] | |
Operating Loss Carryforwards [Line Items] | |
Year of expiration | Dec. 31, 2026 |
Total loss carryforwards | $ 207.4 |
Carryforward Expiration 2026 [Member] | Life insurance companies [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 0 |
Carryforward Expiration 2026 [Member] | Non life insurance companies [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | $ 207.4 |
Carryforward Expiration 2027 [Member] | |
Operating Loss Carryforwards [Line Items] | |
Year of expiration | Dec. 31, 2027 |
Total loss carryforwards | $ 4.9 |
Carryforward Expiration 2027 [Member] | Life insurance companies [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 0 |
Carryforward Expiration 2027 [Member] | Non life insurance companies [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | $ 4.9 |
Carryforward Expiration 2028 [Member] | |
Operating Loss Carryforwards [Line Items] | |
Year of expiration | Dec. 31, 2028 |
Total loss carryforwards | $ 203.7 |
Carryforward Expiration 2028 [Member] | Life insurance companies [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 0 |
Carryforward Expiration 2028 [Member] | Non life insurance companies [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | $ 203.7 |
Carryforward Expiration 2029 [Member] | |
Operating Loss Carryforwards [Line Items] | |
Year of expiration | Dec. 31, 2029 |
Total loss carryforwards | $ 146.6 |
Carryforward Expiration 2029 [Member] | Life insurance companies [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 0 |
Carryforward Expiration 2029 [Member] | Non life insurance companies [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | $ 146.6 |
Carryforward Expiration 2032 [Member] | |
Operating Loss Carryforwards [Line Items] | |
Year of expiration | Dec. 31, 2032 |
Total loss carryforwards | $ 44 |
Carryforward Expiration 2032 [Member] | Life insurance companies [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 0 |
Carryforward Expiration 2032 [Member] | Non life insurance companies [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | $ 44 |
INCOME TAXES - NARRATIVE (Detai
INCOME TAXES - NARRATIVE (Details) $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Apr. 30, 2016USD ($) | Mar. 31, 2016USD ($)adjustment | Mar. 31, 2015USD ($) | Dec. 31, 2008USD ($) | Dec. 31, 2015USD ($) | |
Operating Loss Carryforwards [Line Items] | |||||
Deferred tax assets more likely than not to be realized through future taxable earnings | $ 879.6 | $ 946.6 | |||
Net deferred tax assets | 1,073.1 | 1,160.1 | |||
Valuation allowance | 193.5 | 213.5 | |||
Change in valuation allowance | $ 20 | $ 0 | |||
Assumed period adjusted annual taxable income will remain flat | 2 years | ||||
Deferred tax valuation analysis, growth rate for the next five years | 3.00% | ||||
Valuation allowance model, forecast period of Model | 5 years | ||||
Estimated normalized annual taxable income for the current year | $ 345 | ||||
Adjusted average non-life taxable income | 85 | ||||
Adjusted average life taxable income | $ 260 | ||||
Loss limitation based on income of life insurance company, percent | 35.00% | ||||
Loss limitation based on loss of non-life entities, percent | 35.00% | ||||
Federal long-term tax exempt rate | 2.65% | ||||
Ownership change threshold restricting NOL usage | 50.00% | ||||
Capital loss carryforwards | $ 34.9 | ||||
Net state operating loss carryforwards | 13.9 | $ 14.1 | |||
Loss on investment in senior health | $ 878 | ||||
Capital loss carryforwards that would have expired if IRS position is determined to be 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 | ||||
Number Of Adjustments Proposed As A Result Of Internal Revenue Service Examination | adjustment | 2 | ||||
Future cash tax payments based on income of life insurance company, percent | 65.00% | ||||
TCP [Member] | Subsequent Event [Member] | |||||
Operating Loss Carryforwards [Line Items] | |||||
Additional investments to be made over time | $ 250 | ||||
Capital Loss Carryforward [Member] | |||||
Operating Loss Carryforwards [Line Items] | |||||
Valuation allowance | $ 7 | ||||
Federal [Member] | |||||
Operating Loss Carryforwards [Line Items] | |||||
Valuation allowance | 176.5 | ||||
Net operating loss carryforwards | 2,500 | ||||
State [Member] | |||||
Operating Loss Carryforwards [Line Items] | |||||
Valuation allowance | 10 | ||||
Life insurance companies [Member] | |||||
Operating Loss Carryforwards [Line Items] | |||||
Increase (decrease) in estimated normalized annual taxable income | (10) | ||||
Net operating loss carryforwards | 449.4 | ||||
Loss on investment in senior health | 742 | ||||
Non life insurance companies [Member] | |||||
Operating Loss Carryforwards [Line Items] | |||||
Increase (decrease) in estimated normalized annual taxable income | 10 | ||||
Net operating loss carryforwards | $ 2,614.9 | ||||
Loss on investment in senior health | $ 136 |
NOTES PAYABLE - SCHEDULE OF LON
NOTES PAYABLE - SCHEDULE OF LONG-TERM DEBT INSTRUMENTS (Details) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 | May. 19, 2015 |
Debt Instruments [Abstract] | |||
Direct corporate obligations | $ 911.5 | $ 911.1 | |
Unamortized debt issue costs | (13.5) | (13.9) | |
Senior notes [Member] | 4.500% Senior Notes due May 2020 [Member] | |||
Debt Instruments [Abstract] | |||
Direct corporate obligations | 325 | 325 | |
Interest rate | 4.50% | ||
Senior notes [Member] | 5.250% Senior Notes due May 2025 [Member] | |||
Debt Instruments [Abstract] | |||
Direct corporate obligations | 500 | 500 | |
Interest rate | 5.25% | ||
Line of credit [Member] | Revolving Credit Agreement [Member] | |||
Debt Instruments [Abstract] | |||
Direct corporate obligations | $ 100 | $ 100 |
NOTES PAYABLE - REVOLVING CREDI
NOTES PAYABLE - REVOLVING CREDIT AGREEMENT (Details) - Revolving Credit Agreement [Member] - Line of credit [Member] - USD ($) $ in Millions | May. 19, 2015 | Mar. 31, 2016 |
Debt Instrument [Line Items] | ||
Initial drawing amount | $ 100 | |
Remaining borrowing capacity | $ 50 | |
Interest rate on amounts outstanding at period end | 2.43% | |
Debt covenant, required minimum debt to total capitalization ratio | 30.00% | |
Debt covenant, actual debt to total capitalization ratio at period end | 20.30% | |
Debt covenant, minimum required aggregate total adjusted capital to company action level risk-based capital ratio | 250.00% | |
Debt covenant, actual aggregate total adjusted capital to company action level risk-based capital ratio at period end | 441.00% | |
Debt covenant, minimum required consolidated net worth, component one, amount | $ 2,674 | |
Debt covenant, minimum required consolidated net worth, component two, as a percent of net equity proceeds received from issuance and sale of equity interests | 50.00% | |
Debt covenant, actual consolidated net worth at period end | $ 3,686.1 | |
Debt covenant, required minimum consolidated net worth, amount | $ 2,677 | |
Federal Funds Rate [Member] | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 0.50% | |
One-Month Eurodollar [Member] | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 1.00% | |
Eurodollar [Member] | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 2.00% |
NOTES PAYABLE - DIRECT CORPOR60
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS NOTES PAYABLE - SCHEDULED REPAYMENT (Details) $ in Millions | Mar. 31, 2016USD ($) |
Debt Disclosure [Abstract] | |
2,017 | $ 0 |
2,018 | 0 |
2,019 | 0 |
2,020 | 100 |
2,021 | 325 |
Thereafter | 500 |
Long-term Debt | $ 925 |
INVESTMENT BORROWINGS (Details)
INVESTMENT BORROWINGS (Details) $ in Millions | 3 Months Ended | ||
Mar. 31, 2016USD ($)subsidiary | Mar. 31, 2015USD ($) | Dec. 31, 2015USD ($) | |
Investment Borrowings [Abstract] | |||
Number of insurance subsidiaries that are members of the FHLB | subsidiary | 3 | ||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 1,548 | $ 1,548.1 | |
Federal Home Loan Bank advances [Member] | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Federal Home Loan Bank stock | 74.2 | ||
Investment borrowings | 1,548 | ||
Federal Home Loan Bank, Advances, collateral pledged | 1,800 | ||
Aggregate Fee to Prepay All Fixed Rate FHLB Borrowings | 4.5 | ||
Interest Expense on FHLB Borrowings | 3.8 | $ 2.5 | |
Federal Home Loan Bank advances [Member] | Borrowings due June 2017 [Member] | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 57.7 | ||
Maturity date | Jun. 30, 2017 | ||
Interest rate | 0.871% | ||
Federal Home Loan Bank advances [Member] | Borrowings due August 2017 [Member] | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 50 | ||
Maturity date | Aug. 31, 2017 | ||
Interest rate | 0.817% | ||
Federal Home Loan Bank advances [Member] | Borrowings due August 2017 rate two [Member] | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 75 | ||
Maturity date | Aug. 31, 2017 | ||
Interest rate | 0.779% | ||
Federal Home Loan Bank advances [Member] | Borrowings due October 2017 [Member] | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 100 | ||
Maturity date | Oct. 31, 2017 | ||
Interest rate | 1.052% | ||
Federal Home Loan Bank advances [Member] | Borrowings due November 2017 [Member] | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 50 | ||
Maturity date | Nov. 30, 2017 | ||
Interest rate | 1.145% | ||
Federal Home Loan Bank advances [Member] | Borrowings due January 2018 [Member] | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 50 | ||
Maturity date | Jan. 31, 2018 | ||
Interest rate | 0.967% | ||
Federal Home Loan Bank advances [Member] | Borrowings due January 2018 rate two [Member] | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 50 | ||
Maturity date | Jan. 31, 2018 | ||
Interest rate | 0.959% | ||
Federal Home Loan Bank advances [Member] | Borrowings due February 2018 [Member] | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 50 | ||
Maturity date | Feb. 28, 2018 | ||
Interest rate | 0.93% | ||
Federal Home Loan Bank advances [Member] | Borrowings due February 2018 rate two [Member] | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 50 | ||
Maturity date | Feb. 28, 2018 | ||
Interest rate | 0.707% | ||
Federal Home Loan Bank advances [Member] | Borrowings due February 2018 rate three [Member] | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 22 | ||
Maturity date | Feb. 28, 2018 | ||
Interest rate | 0.966% | ||
Federal Home Loan Bank advances [Member] | Borrowings due May 2018 [Member] | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 100 | ||
Maturity date | May 31, 2018 | ||
Interest rate | 0.883% | ||
Federal Home Loan Bank advances [Member] | Borrowings due July 2018 [Member] | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 50 | ||
Maturity date | Jul. 31, 2018 | ||
Interest rate | 1.091% | ||
Federal Home Loan Bank advances [Member] | Borrowings due August 2018 [Member] | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 50 | ||
Maturity date | Aug. 31, 2018 | ||
Interest rate | 0.737% | ||
Federal Home Loan Bank advances [Member] | Borrowings Due December 2018 [Member] | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 10 | ||
Maturity date | Dec. 31, 2018 | ||
Interest rate | 0.951% | ||
Federal Home Loan Bank advances [Member] | Borrowings due January 2019 [Member] | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 50 | ||
Maturity date | Jan. 31, 2019 | ||
Interest rate | 1.04% | ||
Federal Home Loan Bank advances [Member] | Borrowings due February 2019 [Member] | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 50 | ||
Maturity date | Feb. 28, 2019 | ||
Interest rate | 0.707% | ||
Federal Home Loan Bank advances [Member] | Borrowings due March 2019 [Member] | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 100 | ||
Maturity date | Mar. 31, 2019 | ||
Interest rate | 0.921% | ||
Federal Home Loan Bank advances [Member] | Borrowings due July 2019 [Member] | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 21.8 | ||
Maturity date | Jul. 31, 2019 | ||
Interest rate | 0.922% | ||
Federal Home Loan Bank advances [Member] | Borrowings Due October 2019 [Member] | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 15 | ||
Maturity date | Oct. 31, 2019 | ||
Interest rate | 1.134% | ||
Federal Home Loan Bank advances [Member] | Borrowing Due May 2020 [Member] | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 50 | ||
Maturity date | May 31, 2020 | ||
Interest rate | 0.956% | ||
Federal Home Loan Bank advances [Member] | Borrowings due June 2020 [Member] | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 21.8 | ||
Maturity date | Jun. 30, 2020 | ||
Interest rate | 1.96% | ||
Federal Home Loan Bank advances [Member] | Borrowings due September 2020 [Member] | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 25 | ||
Maturity date | Sep. 30, 2020 | ||
Interest rate | 1.253% | ||
Federal Home Loan Bank advances [Member] | Borrowings due September 2020 rate two [Member] | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 100 | ||
Maturity date | Sep. 30, 2020 | ||
Interest rate | 1.093% | ||
Federal Home Loan Bank advances [Member] | Borrowings due September 2020 rate three [Member] | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 50 | ||
Maturity date | Sep. 30, 2020 | ||
Interest rate | 1.093% | ||
Federal Home Loan Bank advances [Member] | Borrowings due September 2020 rate four [Member] | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 75 | ||
Maturity date | Sep. 30, 2020 | ||
Interest rate | 0.749% | ||
Federal Home Loan Bank advances [Member] | Borrowings Due October 2020 [Member] | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 100 | ||
Maturity date | Oct. 31, 2020 | ||
Interest rate | 0.723% | ||
Federal Home Loan Bank advances [Member] | Borrowings Due December 2020 [Member] | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 50 | ||
Maturity date | Dec. 31, 2020 | ||
Interest rate | 1.138% | ||
Federal Home Loan Bank advances [Member] | Borrowings Due August 2021 [Member] | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 28.2 | ||
Maturity date | Aug. 31, 2021 | ||
Interest rate | 2.55% | ||
Federal Home Loan Bank advances [Member] | Borrowings due March 2023 [Member] | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 26 | ||
Maturity date | Mar. 31, 2023 | ||
Interest rate | 2.16% | ||
Federal Home Loan Bank advances [Member] | Borrowings due June 2025 [Member] | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 20.5 | ||
Maturity date | Jun. 30, 2025 | ||
Interest rate | 2.94% |
CHANGES IN COMMON STOCK (Detail
CHANGES IN COMMON STOCK (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Number of common shares outstanding | ||
Balance, beginning of year (in shares) | 184,028,511 | |
Balance, end of year (in shares) | 179,098,447 | |
Number of stock tendered for payment of federal and state taxes owed (in shares) | 182,000 | |
Repurchase of common stock, amount | $ 90 | |
Stock repurchase program, remaining repurchase authorized amount | 365.7 | |
Common stock dividends declared | $ 12.6 | $ 12 |
Dividends (in dollars per share) | $ 0.07 | |
Common stock [Member] | ||
Number of common shares outstanding | ||
Balance, beginning of year (in shares) | 184,029,000 | |
Treasury stock purchased and retired (in shares) | (5,331,000) | |
Balance, end of year (in shares) | 179,098,000 | |
Common stock [Member] | Stock options [Member] | ||
Number of common shares outstanding | ||
Shares issued under employee benefit compensation plans (in shares) | 51,000 | |
Common stock [Member] | Restricted and Performance Stock [Member] | ||
Number of common shares outstanding | ||
Shares issued under employee benefit compensation plans (in shares) | 349,000 |
SALES INDUCEMENTS (Details)
SALES INDUCEMENTS (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Deferred Sales Inducements [Abstract] | |||
Deferred sales inducements | $ 1 | $ 0.8 | |
Deferred sales inducements, amortization expense | 1.7 | $ 2.8 | |
Unamortized deferred sales inducements | 56.7 | $ 57.4 | |
Insurance liabilities for persistency bonus benefits | $ 0.8 | $ 0.9 |
LITIGATION AND OTHER LEGAL PR64
LITIGATION AND OTHER LEGAL PROCEEDINGS (Details) | 3 Months Ended |
Mar. 31, 2016state | |
Commitments and Contingencies Disclosure [Abstract] | |
Number of states participating in examination of compliance with unclaimed property laws | 38 |
CONSOLIDATED STATEMENT OF CAS65
CONSOLIDATED STATEMENT OF CASH FLOWS (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cash flows from operating activities: | ||
Net income | $ 45.5 | $ 52.8 |
Adjustments to reconcile net income to net cash from operating activities: | ||
Amortization and depreciation | 68.2 | 71 |
Income taxes | (6.1) | 28.9 |
Insurance liabilities | 103.7 | 88.2 |
Accrual and amortization of investment income | (16.9) | (35.7) |
Deferral of policy acquisition costs | (62.2) | (58.2) |
Net realized investment (gains) losses | 0.9 | (8.9) |
Transition expenses | 0 | 4.5 |
Other | 7.3 | (20.1) |
Net cash from operating activities | 140.4 | 122.5 |
Stock options, restricted stock and performance units | $ 10.2 | $ 4.3 |
INVESTMENTS IN VARIABLE INTER66
INVESTMENTS IN VARIABLE INTEREST ENTITIES - NARRATIVE (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2016USD ($)investment | Mar. 31, 2015USD ($) | Dec. 31, 2015USD ($) | |
Variable Interest Entity [Line Items] | |||
Variable interest entity amortized cost securities held | $ 1,725.8 | ||
Variable interest entity, gross unrealized gains fixed maturity securities | 2.6 | ||
Variable interest entity gross unrealized losses fixed maturity securities | 37.4 | ||
Estimated fair value of fixed maturity securities | 1,691 | ||
Variable interest entities net realized gain (loss) on investments | $ (6.4) | $ (0.9) | |
Number of investments held by VIE, in default | investment | 1 | ||
Investment held by VIE, in default, amortized cost | $ 2.3 | ||
Investment held by VIE, in default, carrying value | 1.3 | ||
Variable interest entities, investments sold | 26.2 | 28.3 | |
Variable interest entity, gross investment losses from sale | 6.5 | $ 1 | |
Investments held in limited partnerships | 108.8 | ||
Unfunded commitments to limited partnerships | 66.7 | ||
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 | 958.4 | $ 1,178.7 | |
Gross unrealized losses in an unrealized loss position for a period | (19) | (23.9) | |
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 | 288.7 | 294.3 | |
Gross unrealized losses in an unrealized loss position for a period | $ (18.4) | $ (22.3) |
INVESTMENTS IN VARIABLE INTER67
INVESTMENTS IN VARIABLE INTEREST ENTITIES - BALANCE SHEET ITEMS (Details) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Variable Interest Entity [Line Items] | ||
Investments held by variable interest entities | $ 1,691 | $ 1,633.6 |
Cash and cash equivalents held by variable interest entities | 190.1 | 364.4 |
Borrowings related to variable interest entities | 1,656.6 | 1,676.4 |
VIEs [Member] | ||
Variable Interest Entity [Line Items] | ||
Investments held by variable interest entities | 1,691 | 1,633.6 |
Notes receivable of VIEs held by insurance subsidiaries | 0 | 0 |
Cash and cash equivalents held by variable interest entities | 190.1 | 364.4 |
Accrued investment income | 3.7 | 3.3 |
Income tax assets, net | 24.6 | 26 |
Other assets | 6.5 | 1.4 |
Total assets | 1,915.9 | 2,028.7 |
Other liabilities | 101.6 | 196.6 |
Borrowings related to variable interest entities | 1,656.6 | 1,676.4 |
Notes payable of VIEs held by insurance subsidiaries | 203.1 | 204 |
Total liabilities | 1,961.3 | 2,077 |
Eliminations [Member] | ||
Variable Interest Entity [Line Items] | ||
Investments held by variable interest entities | 0 | 0 |
Notes receivable of VIEs held by insurance subsidiaries | (203.4) | (204.3) |
Cash and cash equivalents held by variable interest entities | 0 | 0 |
Accrued investment income | (0.1) | 0 |
Income tax assets, net | (1.8) | (1.9) |
Other assets | (1.9) | (1.5) |
Total assets | (207.2) | (207.7) |
Other liabilities | (7.3) | (7.2) |
Borrowings related to variable interest entities | 0 | 0 |
Notes payable of VIEs held by insurance subsidiaries | (203.1) | (204) |
Total liabilities | (210.4) | (211.2) |
Variable Interest Entity, Primary Beneficiary [Member] | ||
Variable Interest Entity [Line Items] | ||
Investments held by variable interest entities | 1,691 | 1,633.6 |
Notes receivable of VIEs held by insurance subsidiaries | (203.4) | (204.3) |
Cash and cash equivalents held by variable interest entities | 190.1 | 364.4 |
Accrued investment income | 3.6 | 3.3 |
Income tax assets, net | 22.8 | 24.1 |
Other assets | 4.6 | (0.1) |
Total assets | 1,708.7 | 1,821 |
Other liabilities | 94.3 | 189.4 |
Borrowings related to variable interest entities | 1,656.6 | 1,676.4 |
Notes payable of VIEs held by insurance subsidiaries | 0 | 0 |
Total liabilities | $ 1,750.9 | $ 1,865.8 |
INVESTMENTS IN VARIABLE INTER68
INVESTMENTS IN VARIABLE INTEREST ENTITIES - SCHEDULE OF VIEs (Details) $ in Millions | Mar. 31, 2016USD ($) |
Investment Holdings [Line Items] | |
Total amortized cost | $ 1,725.8 |
Total fair value | 1,691 |
Amortized cost [Member] | |
Investment Holdings [Line Items] | |
Due in one year or less | 4.8 |
Due after one year through five years | 898.4 |
Due after five years through ten years | 822.6 |
Total amortized cost | 1,725.8 |
Estimated fair value [Member] | |
Investment Holdings [Line Items] | |
Due in one year or less | 4.8 |
Due after one year through five years | 878 |
Due after five years through ten years | 808.2 |
Total fair value | $ 1,691 |
FAIR VALUE MEASUREMENTS - MEASU
FAIR VALUE MEASUREMENTS - MEASUREMENTS BY INPUT LEVEL (Details) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | $ 20,105.1 | $ 19,882.9 |
Trading securities | 285.2 | 262.1 |
Investments held by variable interest entities | 1,691 | 1,633.6 |
Assets held in separate accounts | 4.6 | 4.7 |
Fair value, measurements, recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Trading securities | 285.2 | 262.1 |
Investments held by variable interest entities | 1,691 | 1,633.6 |
Assets held in separate accounts | 4.6 | 4.7 |
Total assets carried at fair value by category | 22,744 | 22,288.9 |
Fair value, measurements, recurring [Member] | Embedded derivatives associated with fixed index annuity products [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Future policy benefits - embedded derivatives associated with fixed index annuity products | 1,096 | 1,057.1 |
Fair value, measurements, recurring [Member] | Derivatives [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Other invested assets - derivatives | 47.4 | 42.6 |
Fair value, measurements, recurring [Member] | Corporate securities [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 12,907.8 | 12,868.5 |
Equity securities - corporate securities | 610.7 | 463 |
Trading securities | 20.2 | 21.5 |
Fair value, measurements, recurring [Member] | United States Treasury securities and obligations of United States government corporations and agencies [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 197.1 | 194.5 |
Trading securities | 1.6 | 1.9 |
Fair value, measurements, recurring [Member] | States and political subdivisions [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 2,059.8 | 2,104.2 |
Fair value, measurements, recurring [Member] | Debt securities issued by foreign governments [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 34 | 20.7 |
Fair value, measurements, recurring [Member] | Asset-backed securities [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 2,194.3 | 1,852.2 |
Trading securities | 43.1 | 35.5 |
Fair value, measurements, recurring [Member] | Collateralized debt obligations [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 143.7 | 186.7 |
Trading securities | 1.9 | 2.1 |
Fair value, measurements, recurring [Member] | Commercial mortgage-backed securities [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 1,517.6 | 1,605.3 |
Trading securities | 150.9 | 158 |
Fair value, measurements, recurring [Member] | Mortgage pass-through securities [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 3.1 | 3.4 |
Fair value, measurements, recurring [Member] | Collateralized mortgage obligations [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 1,047.7 | 1,047.4 |
Trading securities | 62.4 | 38.2 |
Fair value, measurements, recurring [Member] | Total fixed maturities, available for sale [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 20,105.1 | 19,882.9 |
Fair value, measurements, recurring [Member] | Equity securities [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Trading securities | 5.1 | 4.9 |
Fair value, measurements, recurring [Member] | Level 1 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Trading securities | 5.1 | 4.9 |
Investments held by variable interest entities | 0 | 0 |
Assets held in separate accounts | 0 | 0 |
Total assets carried at fair value by category | 407.2 | 261.4 |
Fair value, measurements, recurring [Member] | Level 1 [Member] | Embedded derivatives associated with fixed index annuity products [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Future policy benefits - embedded derivatives associated with fixed index annuity products | 0 | 0 |
Fair value, measurements, recurring [Member] | Level 1 [Member] | Derivatives [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Other invested assets - derivatives | 0.4 | 1.6 |
Fair value, measurements, recurring [Member] | Level 1 [Member] | Corporate securities [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 0 |
Equity securities - corporate securities | 401.7 | 254.9 |
Trading securities | 0 | 0 |
Fair value, measurements, recurring [Member] | Level 1 [Member] | United States Treasury securities and obligations of United States government corporations and agencies [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 0 |
Trading securities | 0 | 0 |
Fair value, measurements, recurring [Member] | Level 1 [Member] | States and political subdivisions [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 0 |
Fair value, measurements, recurring [Member] | Level 1 [Member] | Debt securities issued by foreign governments [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 0 |
Fair value, measurements, recurring [Member] | Level 1 [Member] | Asset-backed securities [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 0 |
Trading securities | 0 | 0 |
Fair value, measurements, recurring [Member] | Level 1 [Member] | Collateralized debt obligations [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 0 |
Trading securities | 0 | 0 |
Fair value, measurements, recurring [Member] | Level 1 [Member] | Commercial mortgage-backed securities [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 0 |
Trading securities | 0 | 0 |
Fair value, measurements, recurring [Member] | Level 1 [Member] | Mortgage pass-through securities [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 0 |
Fair value, measurements, recurring [Member] | Level 1 [Member] | Collateralized mortgage obligations [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 0 |
Trading securities | 0 | 0 |
Fair value, measurements, recurring [Member] | Level 1 [Member] | Total fixed maturities, available for sale [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 0 |
Fair value, measurements, recurring [Member] | Level 1 [Member] | Equity securities [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Trading securities | 5.1 | 4.9 |
Fair value, measurements, recurring [Member] | Level 2 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Trading securities | 241.1 | 217.3 |
Investments held by variable interest entities | 1,691 | 1,633.6 |
Assets held in separate accounts | 4.6 | 4.7 |
Total assets carried at fair value by category | 22,047.2 | 21,748.1 |
Fair value, measurements, recurring [Member] | Level 2 [Member] | Embedded derivatives associated with fixed index annuity products [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Future policy benefits - embedded derivatives associated with fixed index annuity products | 0 | 0 |
Fair value, measurements, recurring [Member] | Level 2 [Member] | Derivatives [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Other invested assets - derivatives | 47 | 41 |
Fair value, measurements, recurring [Member] | Level 2 [Member] | Corporate securities [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 12,734.5 | 12,698.1 |
Equity securities - corporate securities | 176.6 | 176.1 |
Trading securities | 20.2 | 21.5 |
Fair value, measurements, recurring [Member] | Level 2 [Member] | United States Treasury securities and obligations of United States government corporations and agencies [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 197.1 | 194.5 |
Trading securities | 1.6 | 1.9 |
Fair value, measurements, recurring [Member] | Level 2 [Member] | States and political subdivisions [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 2,059.8 | 2,104.2 |
Fair value, measurements, recurring [Member] | Level 2 [Member] | Debt securities issued by foreign governments [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 34 | 20.7 |
Fair value, measurements, recurring [Member] | Level 2 [Member] | Asset-backed securities [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 2,150.5 | 1,816.3 |
Trading securities | 43.1 | 35.5 |
Fair value, measurements, recurring [Member] | Level 2 [Member] | Collateralized debt obligations [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 143.7 | 186.7 |
Trading securities | 1.9 | 2.1 |
Fair value, measurements, recurring [Member] | Level 2 [Member] | Commercial mortgage-backed securities [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 1,516.5 | 1,604.2 |
Trading securities | 111.9 | 118.1 |
Fair value, measurements, recurring [Member] | Level 2 [Member] | Mortgage pass-through securities [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 3.1 | 3.3 |
Fair value, measurements, recurring [Member] | Level 2 [Member] | Collateralized mortgage obligations [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 1,047.7 | 1,047.4 |
Trading securities | 62.4 | 38.2 |
Fair value, measurements, recurring [Member] | Level 2 [Member] | Total fixed maturities, available for sale [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 19,886.9 | 19,675.4 |
Fair value, measurements, recurring [Member] | Level 2 [Member] | Equity securities [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Trading securities | 0 | 0 |
Fair value, measurements, recurring [Member] | Level 3 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Trading securities | 39 | 39.9 |
Investments held by variable interest entities | 0 | 0 |
Assets held in separate accounts | 0 | 0 |
Total assets carried at fair value by category | 289.6 | 279.4 |
Fair value, measurements, recurring [Member] | Level 3 [Member] | Embedded derivatives associated with fixed index annuity products [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Future policy benefits - embedded derivatives associated with fixed index annuity products | 1,096 | 1,057.1 |
Fair value, measurements, recurring [Member] | Level 3 [Member] | Derivatives [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Other invested assets - derivatives | 0 | 0 |
Fair value, measurements, recurring [Member] | Level 3 [Member] | Corporate securities [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 173.3 | 170.4 |
Equity securities - corporate securities | 32.4 | 32 |
Trading securities | 0 | 0 |
Fair value, measurements, recurring [Member] | Level 3 [Member] | United States Treasury securities and obligations of United States government corporations and agencies [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 0 |
Trading securities | 0 | 0 |
Fair value, measurements, recurring [Member] | Level 3 [Member] | States and political subdivisions [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 0 |
Fair value, measurements, recurring [Member] | Level 3 [Member] | Debt securities issued by foreign governments [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 0 |
Fair value, measurements, recurring [Member] | Level 3 [Member] | Asset-backed securities [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 43.8 | 35.9 |
Trading securities | 0 | 0 |
Fair value, measurements, recurring [Member] | Level 3 [Member] | Collateralized debt obligations [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 0 |
Trading securities | 0 | 0 |
Fair value, measurements, recurring [Member] | Level 3 [Member] | Commercial mortgage-backed securities [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 1.1 | 1.1 |
Trading securities | 39 | 39.9 |
Fair value, measurements, recurring [Member] | Level 3 [Member] | Mortgage pass-through securities [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 0.1 |
Fair value, measurements, recurring [Member] | Level 3 [Member] | Collateralized mortgage obligations [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 0 |
Trading securities | 0 | 0 |
Fair value, measurements, recurring [Member] | Level 3 [Member] | Total fixed maturities, available for sale [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 218.2 | 207.5 |
Fair value, measurements, recurring [Member] | Level 3 [Member] | Equity securities [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Trading securities | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS - RECUR
FAIR VALUE MEASUREMENTS - RECURRING BASIS (Details) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 | Mar. 31, 2015 | Dec. 31, 2014 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Cash and cash equivalents - unrestricted | $ 635.7 | $ 432.3 | $ 426.9 | $ 611.6 |
Cash and cash equivalents held by variable interest entities | 190.1 | 364.4 | ||
Fair value, measurements, recurring [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Mortgage loans | 1,700.8 | 1,721 | ||
Policy loans | 110.1 | 109.4 | ||
Company-owned life insurance | 159 | 158.1 | ||
Cash and cash equivalents - unrestricted | 635.7 | 432.3 | ||
Cash and cash equivalents held by variable interest entities | 190.1 | 364.4 | ||
Policyholder account balances | 10,772.4 | 10,762.3 | ||
Investment borrowings | 1,548 | 1,548.1 | ||
Borrowings related to variable interest entities | 1,656.6 | 1,676.4 | ||
Notes payable – direct corporate obligations | 911.5 | 911.1 | ||
Fair value, measurements, recurring [Member] | Estimate of fair value measurement [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Mortgage loans | 1,803.4 | 1,772.4 | ||
Policy loans | 110.1 | 109.4 | ||
Company-owned life insurance | 159 | 158.1 | ||
Cash and cash equivalents - unrestricted | 635.7 | 432.3 | ||
Cash and cash equivalents held by variable interest entities | 190.1 | 364.4 | ||
Policyholder account balances | 10,772.4 | 10,762.3 | ||
Investment borrowings | 1,552.5 | 1,549.8 | ||
Borrowings related to variable interest entities | 1,625.7 | 1,673.6 | ||
Notes payable – direct corporate obligations | 941.5 | 937.8 | ||
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 | ||
Cash and cash equivalents - unrestricted | 544.7 | 432.3 | ||
Cash and cash equivalents held by variable interest entities | 190.1 | 364.4 | ||
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 | 159 | 158.1 | ||
Cash and cash equivalents - unrestricted | 91 | 0 | ||
Cash and cash equivalents held by variable interest entities | 0 | 0 | ||
Policyholder account balances | 0 | 0 | ||
Investment borrowings | 1,552.5 | 1,549.8 | ||
Borrowings related to variable interest entities | 1,625.7 | 1,673.6 | ||
Notes payable – direct corporate obligations | 941.5 | 937.8 | ||
Fair value, measurements, recurring [Member] | Level 3 [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Mortgage loans | 1,803.4 | 1,772.4 | ||
Policy loans | 110.1 | 109.4 | ||
Company-owned life insurance | 0 | 0 | ||
Cash and cash equivalents - unrestricted | 0 | 0 | ||
Cash and cash equivalents held by variable interest entities | 0 | 0 | ||
Policyholder account balances | 10,772.4 | 10,762.3 | ||
Investment borrowings | 0 | 0 | ||
Borrowings related to variable interest entities | 0 | 0 | ||
Notes payable – direct corporate obligations | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS - BALAN
FAIR VALUE MEASUREMENTS - BALANCE SHEET RECURRING (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Interest sensitive products [Member] | ||
Liabilities: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | $ (1,057.1) | $ (1,081.5) |
Purchases, sales, issuances and settlements, net | (4) | (2.8) |
Total realized and unrealized gains (losses) included in net income | (34.9) | (17.8) |
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 |
Fair value, measurement with unobservable inputs reconciliation, ending balance | (1,096) | (1,102.1) |
Amount of total gains (losses) for the period included in our net income relating to assets and liabilities still held s of the reporting date | (34.9) | (17.8) |
Corporate securities [Member] | ||
Assets: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 170.4 | 365.9 |
Purchases, sales, issuances and settlements, net | (15.4) | (20.1) |
Total realized and unrealized gains (losses) included in net income | (11.1) | (1.3) |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 9.1 | (0.8) |
Transfers into level 3 | 20.3 | 9.1 |
Transfers out of level 3 | 0 | (216.8) |
Fair value, measurement with unobservable inputs reconciliation, ending balance | 173.3 | 136 |
Amount of total gains (losses) for the period included in our net income relating to assets and liabilities still held s of the reporting date | (6.3) | 0 |
States and political subdivisions [Member] | ||
Assets: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 35.5 | |
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 | (35.5) | |
Fair value, measurement with unobservable inputs reconciliation, ending balance | 0 | |
Amount of total gains (losses) for the period included in our net income relating to assets and liabilities still held s of the reporting date | 0 | |
Asset-backed Securities [Member] | ||
Assets: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 35.9 | 59.2 |
Purchases, sales, issuances and settlements, net | 20.9 | (0.8) |
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) | 0.7 | 1.4 |
Transfers into level 3 | 0 | 10 |
Transfers out of level 3 | (13.7) | (4) |
Fair value, measurement with unobservable inputs reconciliation, ending balance | 43.8 | 65.8 |
Amount of total gains (losses) for the period included in our net income relating to assets and liabilities still held s of the reporting date | 0 | 0 |
Commercial mortgage-backed securities [Member] | ||
Assets: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 1.1 | 1.2 |
Purchases, sales, issuances and settlements, net | 0 | 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 | (0.5) |
Transfers into level 3 | 0 | 1.4 |
Transfers out of level 3 | 0 | 0 |
Fair value, measurement with unobservable inputs reconciliation, ending balance | 1.1 | 2.1 |
Amount of total gains (losses) for the period included in our net income relating to assets and liabilities still held s of the reporting date | 0 | 0 |
Mortgage pass-through securities [Member] | ||
Assets: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 0.1 | 0.4 |
Purchases, sales, issuances and settlements, net | (0.1) | (0.2) |
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 |
Fair value, measurement with unobservable inputs reconciliation, ending balance | 0 | 0.2 |
Amount of total gains (losses) for the period included in our net income relating to assets and liabilities still held s of the reporting date | 0 | 0 |
Total fixed maturities, available for sale [Member] | ||
Assets: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 207.5 | 462.2 |
Purchases, sales, issuances and settlements, net | 5.4 | (21.1) |
Total realized and unrealized gains (losses) included in net income | (11.1) | (1.3) |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 9.8 | 0.1 |
Transfers into level 3 | 20.3 | 20.5 |
Transfers out of level 3 | (13.7) | (256.3) |
Fair value, measurement with unobservable inputs reconciliation, ending balance | 218.2 | 204.1 |
Amount of total gains (losses) for the period included in our net income relating to assets and liabilities still held s of the reporting date | (6.3) | 0 |
Equity securities [Member] | ||
Assets: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 32 | 28 |
Purchases, sales, issuances and settlements, net | 1.1 | 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) | (0.7) | 0 |
Transfers into level 3 | 0 | 0 |
Transfers out of level 3 | 0 | 0 |
Fair value, measurement with unobservable inputs reconciliation, ending balance | 32.4 | 29 |
Amount of total gains (losses) for the period included in our net income relating to assets and liabilities still held s of the reporting date | 0 | 0 |
Trading securities [Member] | ||
Assets: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 39.9 | 28.6 |
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) | 0.2 | 0 |
Transfers into level 3 | 0 | 0 |
Transfers out of level 3 | 0 | (28.6) |
Fair value, measurement with unobservable inputs reconciliation, ending balance | 39 | 0 |
Amount of total gains (losses) for the period included in our net income relating to assets and liabilities still held s of the reporting date | $ 0.2 | $ 0 |
FAIR VALUE MEASUREMENTS - FAIR
FAIR VALUE MEASUREMENTS - FAIR VALUE ACTIVITY (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Interest sensitive products [Member] | ||
Liabilities: | ||
Purchases | $ (34) | $ (30.4) |
Sales | 14.2 | 11.4 |
Issuances | (0.2) | (1.6) |
Settlements | 16 | 17.8 |
Purchases, sales, issuances and settlements, net | (4) | (2.8) |
Corporate securities [Member] | ||
Assets: | ||
Purchases | 0 | 0.1 |
Sales | (15.4) | (20.2) |
Issuances | 0 | 0 |
Settlements | 0 | 0 |
Purchases, sales, issuances and settlements, net | (15.4) | (20.1) |
Asset-backed securities [Member] | ||
Assets: | ||
Purchases | 21 | 9.9 |
Sales | (0.1) | (10.7) |
Issuances | 0 | 0 |
Settlements | 0 | 0 |
Purchases, sales, issuances and settlements, net | 20.9 | (0.8) |
Mortgage pass-through securities [Member] | ||
Assets: | ||
Purchases | 0 | 0 |
Sales | (0.1) | (0.2) |
Issuances | 0 | 0 |
Settlements | 0 | 0 |
Purchases, sales, issuances and settlements, net | (0.1) | (0.2) |
Total fixed maturities, available for sale [Member] | ||
Assets: | ||
Purchases | 21 | 10 |
Sales | (15.6) | (31.1) |
Issuances | 0 | 0 |
Settlements | 0 | 0 |
Purchases, sales, issuances and settlements, net | 5.4 | (21.1) |
Equity securities [Member] | ||
Assets: | ||
Purchases | 1.1 | 1 |
Sales | 0 | 0 |
Issuances | 0 | 0 |
Settlements | 0 | 0 |
Purchases, sales, issuances and settlements, net | 1.1 | 1 |
Trading securities [Member] | ||
Assets: | ||
Purchases | 0 | |
Sales | (1.1) | |
Issuances | 0 | |
Settlements | 0 | |
Purchases, sales, issuances and settlements, net | $ (1.1) | $ 0 |
FAIR VALUE MEASUREMENTS - FAI73
FAIR VALUE MEASUREMENTS - FAIR VALUE INPUTS (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2016 | Dec. 31, 2015 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Investments | $ 24,936.3 | $ 24,487.1 |
Other invested assets | 433.4 | 415.1 |
Level 3 [Member] | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Investments | 289.6 | 279.4 |
Other invested assets | 155.6 | 148.3 |
Policyholder account balances | $ 1,096 | $ 1,057.1 |
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% | 5.42% |
Weighted average discount rates | 1.44% | 1.94% |
Weighted average surrender rates | 14.09% | 14.09% |
Level 3 [Member] | Minimum [Member] | Interest sensitive products [Member] | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Projected portfolio yields | 5.15% | 5.15% |
Discount rates | 0.00% | 0.00% |
Surrender rates | 1.67% | 1.67% |
Level 3 [Member] | Maximum [Member] | Interest sensitive products [Member] | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Projected portfolio yields | 5.61% | 5.61% |
Discount rates | 2.80% | 3.18% |
Surrender rates | 46.56% | 46.56% |
Level 3 [Member] | Corporate securities [Member] | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Investments | $ 78.8 | $ 76.9 |
Weighted average discount rate | 5.55% | 5.35% |
Level 3 [Member] | Corporate securities [Member] | Minimum [Member] | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Discount rate | 1.80% | 1.65% |
Level 3 [Member] | Corporate securities [Member] | Maximum [Member] | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Discount rate | 11.29% | 9.74% |
Level 3 [Member] | Asset-backed securities [Member] | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Investments | $ 22.8 | $ 22.2 |
Weighted average discount rate | 3.47% | 3.50% |
Level 3 [Member] | Asset-backed securities [Member] | Minimum [Member] | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Discount rate | 2.89% | 2.83% |
Level 3 [Member] | Asset-backed securities [Member] | Maximum [Member] | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Discount rate | 4.25% | 4.45% |
Level 3 [Member] | Equity securities [Member] | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Investments | $ 32.4 | $ 32 |
FAIR VALUE MEASUREMENTS - NARRA
FAIR VALUE MEASUREMENTS - NARRATIVE (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of level 3 fixed maturity securities valued using broker quotes, percentage | 47.00% | |
Available for sale fixed maturities classified as level 3, investment grade, percent | 48.00% | |
Available for sale fixed maturities classified as Level 3 and corporate securities | 79.00% | |
Fair value, measurements, recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Hedge fund | $ 77.9 | $ 92.7 |
SUBSEQUENT EVENT (Details)
SUBSEQUENT EVENT (Details) - Subsequent Event [Member] $ in Millions | 1 Months Ended |
Apr. 30, 2016USD ($) | |
TCP [Member] | |
Subsequent Event [Line Items] | |
Investments to be made over time | $ 250 |
TCP [Member] | |
Subsequent Event [Line Items] | |
Assets under management (over) | $ 6,000 |