DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION - shares | 3 Months Ended | |
Mar. 31, 2018 | Apr. 19, 2018 | |
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, 2018 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Entity Filer Category | Large Accelerated Filer | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 167,356,255 |
CONSOLIDATED BALANCE SHEET (una
CONSOLIDATED BALANCE SHEET (unaudited) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Investments: | ||
Fixed maturities, available for sale, at fair value (amortized cost: March 31, 2018 - $20,820.9; December 31, 2017 - $20,702.1) | $ 22,375.5 | $ 22,910.9 |
Equity securities at fair value (cost: March 31, 2018 - $504.4; December 31, 2017 - $420.0) | 498.7 | 440.6 |
Mortgage loans | 1,601.2 | 1,650.6 |
Policy loans | 116 | 116 |
Trading securities | 289.6 | 284.6 |
Investments held by variable interest entities | 1,583.9 | 1,526.9 |
Other invested assets | 951.1 | 924.5 |
Total investments | 27,416 | 27,854.1 |
Cash and cash equivalents - unrestricted | 610.8 | 578.4 |
Cash and cash equivalents held by variable interest entities | 115.6 | 178.9 |
Accrued investment income | 268.1 | 245.9 |
Present value of future profits | 350.4 | 359.6 |
Deferred acquisition costs | 1,083.6 | 1,026.8 |
Reinsurance receivables | 2,153.5 | 2,175.2 |
Income tax assets, net | 450.4 | 366.9 |
Assets held in separate accounts | 4.7 | 5 |
Other assets | 356 | 319.5 |
Total assets | 32,809.1 | 33,110.3 |
Liabilities for insurance products: | ||
Policyholder account balances | 11,254.5 | 11,220.7 |
Future policy benefits | 11,312.2 | 11,521.3 |
Liability for policy and contract claims | 509.1 | 530.3 |
Unearned and advanced premiums | 270.3 | 261.7 |
Liabilities related to separate accounts | 4.7 | 5 |
Other liabilities | 869 | 751.8 |
Investment borrowings | 1,646.5 | 1,646.7 |
Borrowings related to variable interest entities | 1,410.5 | 1,410.7 |
Notes payable – direct corporate obligations | 915.1 | 914.6 |
Total liabilities | 28,191.9 | 28,262.8 |
Commitments and Contingencies | ||
Shareholders' equity: | ||
Common stock ($0.01 par value, 8,000,000,000 shares authorized, shares issued and outstanding: March 31, 2018 – 167,354,255; December 31, 2017 – 166,857,931) | 1.6 | 1.7 |
Additional paid-in capital | 3,075.6 | 3,073.3 |
Accumulated other comprehensive income | 894.3 | 1,212.1 |
Retained earnings | 645.7 | 560.4 |
Total shareholders' equity | 4,617.2 | 4,847.5 |
Total liabilities and shareholders' equity | $ 32,809.1 | $ 33,110.3 |
CONSOLIDATED BALANCE SHEET (un3
CONSOLIDATED BALANCE SHEET (unaudited) (Parenthetical) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Investments: | ||
Fixed maturities, available for sale, amortized cost | $ 20,820.9 | $ 20,702.1 |
Equity securities cost | $ 504.4 | $ 420 |
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) | 167,354,255 | 166,857,931 |
Common stock, shares outstanding (in shares) | 167,354,255 | 166,857,931 |
CONSOLIDATED STATEMENT OF OPERA
CONSOLIDATED STATEMENT OF OPERATIONS (unaudited) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | ||
Revenues: | |||
Insurance policy income | $ 659.9 | $ 663.8 | |
Net investment income: | |||
General account assets | 329.1 | 312 | |
Policyholder and other special-purpose portfolios | 12.8 | 75.2 | |
Realized investment gains (losses): | |||
Net realized investment gains (losses), excluding impairment losses | (15.2) | 16.3 | |
Impairment losses recognized | [1] | 0 | (8.4) |
Total realized gains (losses) | (15.2) | 7.9 | |
Fee revenue and other income | 21.2 | 11.8 | |
Total revenues | 1,007.8 | 1,070.7 | |
Benefits and expenses: | |||
Insurance policy benefits | 586.6 | 669.3 | |
Interest expense | 33.6 | 30.8 | |
Amortization | 71.9 | 63.5 | |
Other operating costs and expenses | 207.6 | 210.4 | |
Total benefits and expenses | 899.7 | 974 | |
Income before income taxes | 108.1 | 96.7 | |
Income tax expense on period income | 23.8 | 34.4 | |
Net income | $ 84.3 | $ 62.3 | |
Basic: | |||
Weighted average shares outstanding (in shares) | 167,060,000 | 173,431,000 | |
Net income (in dollars per share) | $ 0.50 | $ 0.36 | |
Diluted: | |||
Weighted average shares outstanding (in shares) | 169,677,000 | 175,065,000 | |
Net income (in dollars per share) | $ 0.50 | $ 0.36 | |
[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, 2018 | Mar. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 84.3 | $ 62.3 |
Other comprehensive income, before tax: | ||
Unrealized gains (losses) for the period | (653.7) | 215.8 |
Adjustment to present value of future profits and deferred acquisition costs | 55.7 | 7.8 |
Amount related to premium deficiencies assuming the net unrealized gains (losses) had been realized | 211.6 | (52) |
Reclassification adjustments: | ||
For net realized investment gains included in net income | (0.4) | (5.1) |
Unrealized gains (losses) on investments | (386.8) | 166.5 |
Change related to deferred compensation plan | 0 | 0 |
Other comprehensive income (loss) before tax | (386.8) | 166.5 |
Income tax (expense) benefit related to items of accumulated other comprehensive income (loss) | 85.3 | (59.3) |
Other comprehensive income (loss), net of tax | (301.5) | 107.2 |
Comprehensive income (loss) | $ (217.2) | $ 169.5 |
CONSOLIDATED STATEMENT OF SHARE
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (unaudited) - USD ($) $ in Millions | Total | Common stock and additional paid-in capital | Accumulated other comprehensive income | Retained earnings |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Cumulative effect of accounting change | $ 0.3 | $ 0.9 | $ (0.6) | |
Balance, beginning of period at Dec. 31, 2016 | 4,486.9 | 3,213.8 | $ 622.4 | 650.7 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 62.3 | 62.3 | ||
Change in unrealized appreciation (depreciation) of investments (net of applicable income tax expense (benefit)) | 106.1 | 106.1 | ||
Change in noncredit component of impairment losses on fixed maturities, available for sale (net of applicable income tax expense) | 1.1 | 1.1 | ||
Cost of common stock repurchased | (43) | (43) | ||
Dividends on common stock | (14) | (14) | ||
Stock options, restricted stock and performance units | 7.1 | 7.1 | ||
Balance, end of period at Mar. 31, 2017 | 4,606.8 | 3,178.8 | 729.6 | 698.4 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Cumulative effect of accounting change | 0 | 0 | (16.3) | 16.3 |
Balance, beginning of period at Dec. 31, 2017 | 4,847.5 | 3,075 | 1,212.1 | 560.4 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 84.3 | 84.3 | ||
Change in unrealized appreciation (depreciation) of investments (net of applicable income tax expense (benefit)) | (302.1) | (302.1) | ||
Change in noncredit component of impairment losses on fixed maturities, available for sale (net of applicable income tax expense) | 0.6 | 0.6 | ||
Dividends on common stock | (15.3) | (15.3) | ||
Stock options, restricted stock and performance units | 2.2 | 2.2 | ||
Balance, end of period at Mar. 31, 2018 | $ 4,617.2 | $ 3,077.2 | $ 894.3 | $ 645.7 |
CONSOLIDATED STATEMENT OF SHAR7
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (unaudited) (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Statement of Stockholders' Equity [Abstract] | ||
Change in unrealized appreciation (depreciation) of investments, applicable income tax expense (benefit) | $ (85.5) | $ 58.7 |
Change in noncredit component of impairment losses on fixed maturities, available for sale, applicable income tax expense (benefit) | $ 0.2 | $ 0.6 |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities: | ||
Insurance policy income | $ 631.4 | $ 640.1 |
Net investment income | 298.8 | 295.3 |
Fee revenue and other income | 21.2 | 11.8 |
Insurance policy benefits | (531.4) | (511.8) |
Interest expense | (19.3) | (20.5) |
Deferrable policy acquisition costs | (60.2) | (63.2) |
Other operating costs | (246.2) | (206.8) |
Income taxes | (22.1) | (1.5) |
Net cash from operating activities | 72.2 | 143.4 |
Cash flows from investing activities: | ||
Sales of investments | 1,163.1 | 397.4 |
Maturities and redemptions of investments | 547.1 | 849.3 |
Purchases of investments | (1,798.7) | (1,166.4) |
Net sales (purchases) of trading securities | (2) | 35.6 |
Other | (7.6) | (8.9) |
Net cash provided (used) by investing activities | (98.1) | 107 |
Cash flows from financing activities: | ||
Issuance of common stock | 0 | 2.9 |
Payments to repurchase common stock | (4.6) | (39.8) |
Common stock dividends paid | (15.4) | (14) |
Amounts received for deposit products | 355.6 | 359.5 |
Withdrawals from deposit products | (339.7) | (312.9) |
Issuance of investment borrowings: | ||
Related to variable interest entities | 0 | 8.7 |
Payments on investment borrowings: | ||
Federal Home Loan Bank | (0.2) | (0.2) |
Related to variable interest entities | (0.7) | (38.1) |
Net cash used by financing activities | (5) | (33.9) |
Net increase (decrease) in cash and cash equivalents | (30.9) | 216.5 |
Cash and cash equivalents - unrestricted and held by variable interest entities, beginning of period | 757.3 | 668.2 |
Cash and cash equivalents - unrestricted and held by variable interest entities, end of period | $ 726.4 | $ 884.7 |
BUSINESS AND BASIS OF PRESENTAT
BUSINESS AND BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2018 | |
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 2017 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 2018 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, 2017, 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, 2018 | |
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 certain reinsurance agreements; and (iii) certain fixed maturity securities containing embedded derivatives for which we have elected the fair value option. The change in fair value of the income generating investments and investments supporting insurance liabilities 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, 2018 and December 31, 2017 , 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 $ 3.4 $ 2.6 Net unrealized gains on all other investments 1,551.8 2,227.3 Adjustment to present value of future profits (a) (89.7 ) (94.0 ) Adjustment to deferred acquisition costs (237.6 ) (292.6 ) Adjustment to insurance liabilities (87.8 ) (295.8 ) Deferred income tax liabilities (245.8 ) (335.4 ) Accumulated other comprehensive income $ 894.3 $ 1,212.1 ________ (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, emerged from bankruptcy. At March 31, 2018 , adjustments to the present value of future profits, deferred acquisition costs, insurance liabilities and deferred tax assets included $(80.6) million , $(134.5) million , $(87.8) million and $67.9 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, 2018 , 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, 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 $ 13,629.5 $ 1,196.1 $ (100.3 ) $ 14,725.3 $ — United States Treasury securities and obligations of United States government corporations and agencies 149.4 24.0 (.3 ) 173.1 — States and political subdivisions 1,843.7 204.2 (1.6 ) 2,046.3 — Debt securities issued by foreign governments 78.0 1.4 (1.7 ) 77.7 — Asset-backed securities 2,725.6 165.9 (7.7 ) 2,883.8 — Collateralized debt obligations 363.0 1.7 (.2 ) 364.5 — Commercial mortgage-backed securities 1,398.0 20.7 (16.8 ) 1,401.9 — Mortgage pass-through securities 1.7 .1 — 1.8 — Collateralized mortgage obligations 632.0 70.7 (1.6 ) 701.1 (.9 ) Total fixed maturities, available for sale $ 20,820.9 $ 1,684.8 $ (130.2 ) $ 22,375.5 $ (.9 ) At December 31, 2017 , 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 $ 13,286.3 $ 1,699.1 $ (27.0 ) $ 14,958.4 $ — United States Treasury securities and obligations of United States government corporations and agencies 146.4 31.5 (.2 ) 177.7 — States and political subdivisions 1,821.9 234.8 (.4 ) 2,056.3 — Debt securities issued by foreign governments 79.5 3.8 (.2 ) 83.1 — Asset-backed securities 3,085.9 172.6 (4.1 ) 3,254.4 — Collateralized debt obligations 257.1 2.3 — 259.4 — Commercial mortgage-backed securities 1,354.0 33.8 (10.3 ) 1,377.5 — Mortgage pass-through securities 1.8 .2 — 2.0 — Collateralized mortgage obligations 669.2 73.2 (.3 ) 742.1 (1.0 ) Total fixed maturities, available for sale $ 20,702.1 $ 2,251.3 $ (42.5 ) $ 22,910.9 $ (1.0 ) Equity securities $ 420.0 $ 23.6 $ (3.0 ) $ 440.6 The following table sets forth the amortized cost and estimated fair value of fixed maturities, available for sale, at March 31, 2018 , by contractual maturity. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties. Structured securities (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 $ 424.2 $ 431.3 Due after one year through five years 1,765.2 1,837.4 Due after five years through ten years 1,818.0 1,881.8 Due after ten years 11,693.2 12,871.9 Subtotal 15,700.6 17,022.4 Structured securities 5,120.3 5,353.1 Total fixed maturities, available for sale $ 20,820.9 $ 22,375.5 The following table sets forth the amortized cost and estimated fair value of fixed maturities, available for sale, at December 31, 2017 , by contractual maturity. Amortized cost Estimated fair value (Dollars in millions) Due in one year or less $ 328.1 $ 335.1 Due after one year through five years 1,947.3 2,052.3 Due after five years through ten years 1,508.7 1,601.3 Due after ten years 11,550.0 13,286.8 Subtotal 15,334.1 17,275.5 Structured securities 5,368.0 5,635.4 Total fixed maturities, available for sale $ 20,702.1 $ 22,910.9 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, 2018 2017 Fixed maturity securities, available for sale: Gross realized gains on sale $ 8.2 $ 7.0 Gross realized losses on sale (7.7 ) (2.7 ) Impairment losses recognized — (3.2 ) Net realized investment gains from fixed maturities .5 1.1 Equity securities — 1.9 Change in fair value of equity securities (a) (12.5 ) — Mortgage loans — 1.0 Impairments of other investments — (5.2 ) Other (a) (3.2 ) 9.1 Net realized investment gains (losses) $ (15.2 ) $ 7.9 _________________ (a) Changes in the estimated fair value of trading securities that we have elected the fair value option and equity securities (and are still held as of the end of the respective periods) were $(8.9) million and $3.0 million for the three months ended March 31, 2018 and 2017 , respectively. During the first three months of 2018 , we recognized net realized investment losses of $15.2 million , which were comprised of: (i) $.5 million of net gains from the sales of investments; (ii) a $12.5 million unfavorable change in the fair value of equity securities; (iii) the decrease in fair value of certain fixed maturity investments with embedded derivatives of $.5 million ; and (iv) the decrease in fair value of embedded derivatives related to a modified coinsurance agreement of $2.7 million . During the first three months of 2017 , we recognized net realized investment gains of $7.9 million , which were comprised of: (i) $12.9 million of net gains from the sales of investments; (ii) the increase in fair value of certain fixed maturity investments with embedded derivatives of $2.7 million ; (iii) the increase in fair value of embedded derivatives related to a modified coinsurance agreement of $.7 million ; and (iv) $8.4 million of writedowns of investments for other than temporary declines in fair value recognized through net income. 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 2018 , the $7.7 million of gross realized losses on sales of $444.3 million of fixed maturity securities, available for sale included: (i) $3.7 million related to various corporate securities; (ii) $2.0 million related to commercial mortgage-backed securities; and (iii) $2.0 million related to various other investments. Securities are generally sold at a loss following unforeseen issuer-specific events or conditions or shifts in perceived relative values. These reasons include but are not limited to: (i) changes in the investment environment; (ii) expectation that the market value could deteriorate; (iii) our 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. There were no impairment losses recognized in the first three months of 2018 . During the first three months of 2017 , we recognized $8.4 million of impairment losses recorded in earnings which included: (i) $3.2 million of writedowns on fixed maturities of a single issuer in the energy sector; and (ii) $5.2 million of writedowns related to a real estate investment. 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 overcollateralization, 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, 2018 , other-than-temporary impairments included in accumulated other comprehensive income totaled $.9 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, 2018 and 2017 (dollars in millions): Three months ended March 31, 2018 2017 Credit losses on fixed maturity securities, available for sale, beginning of period $ (2.8 ) $ (5.5 ) Add: credit losses on other-than-temporary impairments not previously recognized — — Less: credit losses on securities sold — .1 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 $ (2.8 ) $ (5.4 ) __________ (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 strategic asset allocation and 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, 2018 (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 $ 18.4 $ (.3 ) $ 12.6 $ — $ 31.0 $ (.3 ) States and political subdivisions 61.8 (1.2 ) 14.5 (.3 ) 76.3 (1.5 ) Debt securities issued by foreign governments 39.4 (1.6 ) 8.0 (.2 ) 47.4 (1.8 ) Corporate securities 2,594.2 (70.8 ) 299.0 (29.5 ) 2,893.2 (100.3 ) Asset-backed securities 539.5 (5.4 ) 67.9 (2.3 ) 607.4 (7.7 ) Collateralized debt obligations 74.4 (.2 ) — — 74.4 (.2 ) Commercial mortgage-backed securities 310.4 (4.4 ) 201.0 (12.4 ) 511.4 (16.8 ) Mortgage pass-through securities .1 — — — .1 — Collateralized mortgage obligations 77.0 (1.6 ) 2.4 — 79.4 (1.6 ) Total fixed maturities, available for sale $ 3,715.2 $ (85.5 ) $ 605.4 $ (44.7 ) $ 4,320.6 $ (130.2 ) 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, 2017 (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 $ 28.2 $ (.2 ) $ .7 $ — $ 28.9 $ (.2 ) States and political subdivisions 18.3 (.1 ) 14.9 (.3 ) 33.2 (.4 ) Debt securities issued by foreign governments 7.7 (.1 ) 5.4 (.1 ) 13.1 (.2 ) Corporate securities 470.5 (6.8 ) 359.7 (20.2 ) 830.2 (27.0 ) Asset-backed securities 601.4 (2.0 ) 122.2 (2.1 ) 723.6 (4.1 ) Collateralized debt obligations 3.0 — — — 3.0 — Commercial mortgage-backed securities 276.8 (1.7 ) 218.2 (8.6 ) 495.0 (10.3 ) Collateralized mortgage obligations 20.5 (.2 ) 11.5 (.1 ) 32.0 (.3 ) Total fixed maturities, available for sale $ 1,426.4 $ (11.1 ) $ 732.6 $ (31.4 ) $ 2,159.0 $ (42.5 ) Equity securities $ 58.7 $ (1.7 ) $ 21.2 $ (1.3 ) $ 79.9 $ (3.0 ) Based on management's current assessment of investments with unrealized losses at March 31, 2018 , the Company believes the issuers of the securities will continue to meet their obligations. 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, 2018 | |
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, 2018 2017 Net income for basic and diluted earnings per share $ 84.3 $ 62.3 Shares: Weighted average shares outstanding for basic earnings per share 167,060 173,431 Effect of dilutive securities on weighted average shares: Stock options, restricted stock and performance units 2,617 1,634 Weighted average shares outstanding for diluted earnings per share 169,677 175,065 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, 2018 | |
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 also have a long-term care in run-off segment which is comprised of certain long-term care business that was recaptured in 2016 due to the termination of certain reinsurance agreements. 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 related to the agent deferred compensation plan, income taxes and other non-operating items consisting primarily of earnings attributable to variable interest entities ("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 related to the agent deferred compensation plan and other non-operating items consisting primarily of 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, 2018 2017 Revenues: Bankers Life: Insurance policy income: Annuities $ 4.6 $ 6.0 Health 302.2 311.6 Life 103.9 101.5 Net investment income (a) 237.9 272.9 Fee revenue and other income (a) 19.6 10.6 Total Bankers Life revenues 668.2 702.6 Washington National: Insurance policy income: Annuities .5 .6 Health 163.8 159.8 Life 6.7 6.7 Net investment income (a) 65.4 67.4 Fee revenue and other income (a) .2 .3 Total Washington National revenues 236.6 234.8 Colonial Penn: Insurance policy income: Health .5 .6 Life 73.6 72.4 Net investment income (a) 11.0 10.9 Fee revenue and other income (a) .5 .2 Total Colonial Penn revenues 85.6 84.1 Long-term care in run-off: Insurance policy income - health 4.1 4.6 Net investment income (a) 8.4 9.7 Total Long-term care in run-off revenues 12.5 14.3 Corporate operations: Net investment income 1.2 10.4 Fee and other income 1.8 2.4 Total corporate revenues 3.0 12.8 Total revenues $ 1,005.9 $ 1,048.6 (continued on next page) (continued from previous page) Three months ended March 31, 2018 2017 Expenses: Bankers Life: Insurance policy benefits $ 411.1 $ 451.2 Amortization 47.0 46.3 Interest expense on investment borrowings 6.1 4.2 Other operating costs and expenses 114.5 111.2 Total Bankers Life expenses 578.7 612.9 Washington National: Insurance policy benefits 137.7 146.7 Amortization 14.5 14.3 Interest expense on investment borrowings 2.1 1.3 Other operating costs and expenses 48.0 49.0 Total Washington National expenses 202.3 211.3 Colonial Penn: Insurance policy benefits 56.7 52.7 Amortization 4.6 4.0 Interest expense on investment borrowings .3 .2 Other operating costs and expenses 25.5 27.5 Total Colonial Penn expenses 87.1 84.4 Long-term care in run-off: Insurance policy benefits 12.0 13.2 Other operating costs and expenses .5 .7 Total Long-term care in run-off expenses 12.5 13.9 Corporate operations: Interest expense on corporate debt 11.9 11.5 Other operating costs and expenses 18.5 21.7 Total corporate expenses 30.4 33.2 Total expenses 911.0 955.7 Pre-tax operating earnings by segment: Bankers Life 89.5 89.7 Washington National 34.3 23.5 Colonial Penn (1.5 ) (.3 ) Long-term care in run-off — .4 Corporate operations (27.4 ) (20.4 ) Pre-tax operating earnings $ 94.9 $ 92.9 ___________________ (a) It is not practicable to provide additional components of revenue by product or services. A reconciliation of segment revenues and expenses to consolidated revenues and expenses and net income (loss) is as follows (dollars in millions): Three months ended March 31, 2018 2017 Total segment revenues $ 1,005.9 $ 1,048.6 Net realized investment gains (losses) (15.2 ) 7.9 Revenues related to VIEs 17.1 14.2 Consolidated revenues 1,007.8 1,070.7 Total segment expenses 911.0 955.7 Insurance policy benefits - fair value changes in embedded derivative liabilities (30.9 ) 5.5 Amortization related to fair value changes in embedded derivative liabilities 5.8 (1.1 ) Expenses related to VIEs 13.8 13.9 Consolidated expenses 899.7 974.0 Income before tax 108.1 96.7 Income tax expense on period income 23.8 34.4 Net income $ 84.3 $ 62.3 |
ACCOUNTING FOR DERIVATIVES
ACCOUNTING FOR DERIVATIVES | 3 Months Ended |
Mar. 31, 2018 | |
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, 2017 Assets: Other invested assets: Fixed index call options $ 141.5 $ 170.2 Reinsurance receivables (4.1 ) (1.4 ) Total assets $ 137.4 $ 168.8 Liabilities: Future policy benefits: Fixed index products $ 1,315.4 $ 1,334.8 Total liabilities $ 1,315.4 $ 1,334.8 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 $3.0 billion at both March 31, 2018 and December 31, 2017 . From time to time, 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 $125 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 recognized 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, 2018 2017 Net investment income (loss) from policyholder and other special-purpose portfolios: Fixed index call options $ (5.6 ) $ 44.5 Net realized gains (losses): Embedded derivative related to modified coinsurance agreement (2.7 ) .7 Insurance policy benefits: Embedded derivative related to fixed index annuities 37.0 2.3 Total $ 28.7 $ 47.5 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, 2018 , all of our counterparties were rated "A-" or higher by S&P Global Ratings ("S&P"). We also 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, 2018 and December 31, 2017 (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, 2018: Fixed index call options $ 141.5 $ — $ 141.5 $ — $ — $ 141.5 December 31, 2017: Fixed index call options 170.2 — 170.2 — — 170.2 |
REINSURANCE
REINSURANCE | 3 Months Ended |
Mar. 31, 2018 | |
Reinsurance Disclosures [Abstract] | |
REINSURANCE | REINSURANCE The cost of reinsurance ceded totaled $24.5 million and $26.3 million in the first quarters of 2018 and 2017 , respectively. We deduct this cost from insurance policy income. Reinsurance recoveries netted against insurance policy benefits totaled $23.4 million and $24.1 million in the first quarters of 2018 and 2017 , 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 $7.2 million and $8.0 million in the first quarters of 2018 and 2017 , respectively. Insurance policy benefits related to reinsurance assumed totaled $9.3 million and $12.0 million in the first quarters of 2018 and 2017 , respectively. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2018 | |
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, 2018 2017 Current tax expense $ 5.3 $ 20.6 Deferred tax expense 18.5 13.8 Income tax expense calculated based on estimated annual effective tax rate $ 23.8 $ 34.4 On December 22, 2017, President Trump signed into law the "Tax Cuts and Jobs Act" (the "Tax Reform Act") which enacted a broad range of changes to the Internal Revenue Code (the "Code") including individual and corporate reforms and numerous changes to U.S. international tax provisions. The Tax Reform Act reduces the corporate tax rate to 21 percent from 35 percent effective January 1, 2018, and makes significant changes to the taxation of life insurance companies. Among other things, the Tax Reform Act modifies the computation of life insurance reserves, increases the capitalization rate and extends the amortization period for policy acquisition costs, imposes limitations on the deductibility of performance-based compensation to "covered employees" and interest expense, and allows for the expensing of certain capital expenditures. For net operating losses ("NOLs") arising after December 31, 2017, the Tax Reform Act limits the ability to utilize NOL carryforwards to 80% of taxable income. In addition, NOLs arising after 2017 can be carried forward indefinitely, but carryback is prohibited. As a result of the reduction in the federal corporate income tax rate, we reduced the value of our net deferred tax assets by $172.5 million (net of the reduction in the valuation allowance for deferred tax assets) which was recorded as additional income tax expense in the fourth quarter of 2017. The $172.5 million adjustment to our net deferred tax assets was a provisional amount as defined in the SEC's Staff Accounting Bulletin No. 118 ("SAB 118"), issued in December 2017 to address complexities in completing the calculations resulting from the Tax Reform Act. Although we were able to make a reasonable estimate of the impact of the Tax Reform Act based on the information available, we have not analyzed the calculations in sufficient detail to complete the accounting process, including the analysis of the calculations of life insurance tax reserves and future taxable income used to estimate the deferred tax valuation allowance. SAB 118 provides guidance on accounting for the effects of the Tax Reform Act when our accounting process is incomplete but we are able to determine a reasonable estimate. A final determination is required to be made within a measurement period not to extend beyond one year from the enactment date of the Tax Reform Act. We continue to analyze our estimate of the impact of the Tax Reform Act and expect the process to be completed in the fourth quarter of 2018. 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, 2018 2017 U.S. statutory corporate rate 21.0 % 35.0 % Non-taxable income and nondeductible benefits, net .2 (1.1 ) State taxes .8 1.7 Estimated annual effective tax rate 22.0 % 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 $ 484.2 $ 489.6 Net state operating loss carryforwards 9.8 9.3 Investments .1 4.3 Insurance liabilities 402.4 415.8 Other 44.3 48.9 Gross deferred tax assets 940.8 967.9 Deferred tax liabilities: Present value of future profits and deferred acquisition costs (160.6 ) (165.4 ) Accumulated other comprehensive income (248.1 ) (337.2 ) Gross deferred tax liabilities (408.7 ) (502.6 ) Net deferred tax assets before valuation allowance 532.1 465.3 Valuation allowance (89.1 ) (89.1 ) Net deferred tax assets 443.0 376.2 Current income taxes prepaid (accrued) 7.4 (9.3 ) Income tax assets, net $ 450.4 $ 366.9 Our income tax expense includes deferred income taxes arising from temporary differences between the financial reporting and tax bases of assets and liabilities and NOLs. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which temporary differences are expected to be recovered or paid. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in earnings in the period when the changes are enacted. A reduction of the net carrying amount of deferred tax assets by establishing a valuation allowance is required if, based on the available evidence, it is more likely than not that such assets will not be realized. In assessing the need for a valuation allowance, all available evidence, both positive and negative, shall be considered to determine whether, based on the weight of that evidence, a valuation allowance for deferred tax assets is needed. This assessment requires significant judgment and considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of carryforward periods, our experience with operating loss and tax credit carryforwards expiring unused, and tax planning strategies. We evaluate the need to establish a valuation allowance for our deferred income tax assets on an ongoing basis. The realization of our deferred tax assets depends upon generating sufficient future taxable income of the appropriate type during the periods in which our temporary differences become deductible and before our NOLs expire. Based on our assessment, it appears more likely than not that $443.0 million of our net deferred tax assets of $532.1 million will be realized through future taxable earnings. Accordingly, we have established a deferred tax valuation allowance of $89.1 million at March 31, 2018 ( $77.4 million of which relates to our net federal operating loss carryforwards and $11.7 million relates to state operating 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 the Tax Reform Act, investment strategies, the impact of the sale or reinsurance of business and the recapture of business previously ceded. Our estimates of future taxable income are based on evidence we consider to be objective and verifiable. 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 increase by 3 percent for the next five years, and level taxable income is assumed thereafter. In the projections used for our analysis, our adjusted average taxable income of approximately $345 million consisted 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 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 NOLs is required. Section 382 of the Code imposes limitations on a corporation's ability to use its NOLs when the company undergoes a 50 percent ownership change over a three year period. 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 ( 2.18 percent at March 31, 2018 ), 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, 2018 , 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, 2018 , we had $2.3 billion of federal NOLs (all of which were non-life NOLs). The following table summarizes the expiration dates of our loss carryforwards (dollars in millions): Net operating loss Year of expiration carryforwards 2023 $ 1,719.1 2025 85.2 2026 149.9 2027 10.8 2028 80.3 2029 213.2 2030 .3 2031 .2 2032 44.4 2033 .6 2034 .9 2035 .8 Total federal NOLs $ 2,305.7 We also had deferred tax assets related to NOLs for state income taxes of $9.8 million and $9.3 million at March 31, 2018 and December 31, 2017 , respectively. The related state NOLs are available to offset future state taxable income in certain states through 2025. All of the life NOLs were utilized by December 31, 2016. Accordingly, we began making estimated federal tax payments equal to the prescribed 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. Under current law, we will continue to pay tax on 65 percent of our life insurance company taxable income until all non-life NOLs are utilized or expire. The Internal Revenue Service ("IRS") is conducting an examination of 2013 through 2014. In connection with this exam, we have agreed to extend the statute of limitation for 2013 and 2014 through December 31, 2018. The Company’s various state income tax returns are generally open for tax years beginning in 2014, 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 the tax audit cannot be predicted with certainty. If the Company’s tax audit is not resolved in a manner consistent with management’s expectations, the Company may be required to adjust its provision for income taxes. |
NOTES PAYABLE - DIRECT CORPORAT
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS | 3 Months Ended |
Mar. 31, 2018 | |
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, 2018 and December 31, 2017 (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 (9.9 ) (10.4 ) Direct corporate obligations $ 915.1 $ 914.6 Revolving Credit Agreement On May 19, 2015, the Company entered into a $150.0 million four -year unsecured revolving credit agreement with KeyBank National Association, as administrative agent (the "Agent"), and the lenders from time to time party thereto. 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. On October 13, 2017, the Company entered into an amendment and restatement agreement (the "Amendment Agreement") with respect to its revolving credit agreement (as amended by the Amendment Agreement, the "Revolving Credit Agreement"). The Amendment Agreement, among other things, increased the total commitments available under the revolving credit facility from $150.0 million to $250.0 million , increased the aggregate amount of additional incremental loans the Company may incur from $50.0 million to $100.0 million and extended the maturity date of the revolving credit facility from May 19, 2019 to the earlier of October 13, 2022 and the date that is six months prior to the maturity date of the 2020 Notes, which is November 30, 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 based on the Company's unsecured debt rating), or a eurodollar rate plus an applicable margin based on the Company's unsecured debt rating. The margins under the Revolving Credit Agreement range from 1.375% to 2.125% , in the case of loans at the eurodollar rate, and 0.375% to 1.125% , in the case of loans at the base rate. At March 31, 2018 , the interest rate on the amounts outstanding under the Revolving Credit Agreement was 3.75 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 35.0 percent (such ratio was 20.1 percent at March 31, 2018 ); (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 427 percent at March 31, 2018 ); 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 $3,722.9 million at March 31, 2018 compared to the minimum requirement of $2,685.7 million ). Scheduled Repayment of our Direct Corporate Obligations The scheduled repayment of our direct corporate obligations was as follows at March 31, 2018 (dollars in millions): Year ending March 31, 2019 $ — 2020 100.0 2021 325.0 2022 — 2023 — Thereafter 500.0 $ 925.0 |
INVESTMENT BORROWINGS
INVESTMENT BORROWINGS | 3 Months Ended |
Mar. 31, 2018 | |
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. New guidance effective January 1, 2018, requiring equity investments to be measured at fair value (as described in the note entitled "Recently Issued Accounting Standards - Adopted Accounting Standards") do not apply to FHLB common stock and prohibit such investments from being classified as equity securities subject to the new guidance. Accordingly, we have classified our investment in the FHLB common stock as other invested assets at March 31, 2018. In order to conform to the current presentation, the prior period investment in the FHLB common stock has been reclassified to other invested assets. At March 31, 2018 , the carrying value of the FHLB common stock was $71.2 million . As of March 31, 2018 , collateralized borrowings from the FHLB totaled $1.6 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 $2.1 billion at March 31, 2018 , 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, 2018 $ 50.0 January 2019 Variable rate – 2.142% 50.0 February 2019 Variable rate – 1.940% 100.0 March 2019 Variable rate – 2.288% 21.8 July 2019 Variable rate – 2.331% 15.0 October 2019 Variable rate – 2.273% 50.0 May 2020 Variable rate – 2.297% 21.8 June 2020 Fixed rate – 1.960% 25.0 September 2020 Variable rate – 2.911% 100.0 September 2020 Variable rate – 2.532% 50.0 September 2020 Variable rate – 2.537% 75.0 September 2020 Variable rate – 2.422% 100.0 October 2020 Variable rate – 1.806% 50.0 December 2020 Variable rate – 2.386% 100.0 July 2021 Variable rate – 2.270% 100.0 July 2021 Variable rate – 2.240% 28.2 August 2021 Fixed rate – 2.550% 57.7 August 2021 Variable rate - 2.317% 125.0 August 2021 Variable rate – 2.352% 50.0 September 2021 Variable rate – 2.484% 22.0 May 2022 Variable rate – 2.334% 100.0 May 2022 Variable rate – 2.317% 10.0 June 2022 Variable rate – 2.671% 50.0 July 2022 Variable rate – 2.075% 50.0 July 2022 Variable rate – 2.121% 50.0 July 2022 Variable rate – 2.140% 50.0 August 2022 Variable rate – 2.183% 50.0 December 2022 Variable rate – 2.306 50.0 December 2022 Variable rate – 2.306 24.5 March 2023 Fixed rate – 2.160% 20.5 June 2025 Fixed rate – 2.940% $ 1,646.5 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, 2018 , the aggregate yield maintenance fee to prepay all fixed rate borrowings was $1.2 million . Interest expense of $8.5 million and $5.7 million in the first three months of 2018 and 2017 , respectively, was recognized related to total borrowings from the FHLB. |
CHANGES IN COMMON STOCK
CHANGES IN COMMON STOCK | 3 Months Ended |
Mar. 31, 2018 | |
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, 2017 166,858 Stock options exercised 123 (a) Restricted and performance stock vested 373 (b) Balance, March 31, 2018 167,354 ____________________ (a) Such amount was reduced by 69 thousand shares which were tendered to the Company for the payment of the exercise price and required federal and state tax withholdings. (b) Such amount was reduced by 200 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 2018 , dividends declared on common stock totaled $15.3 million ( $0.09 per common share). |
SALES INDUCEMENTS
SALES INDUCEMENTS | 3 Months Ended |
Mar. 31, 2018 | |
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 holder's balance after the policy has been outstanding for a specified period of time. These enhanced rates and persistency bonuses are considered sales inducements in accordance with GAAP. Such amounts are deferred and amortized in the same manner as deferred acquisition costs. Sales inducements deferred totaled $.5 million and $.5 million during the three months ended March 31, 2018 and 2017 , respectively. Amounts amortized totaled $2.7 million and $2.1 million during the three months ended March 31, 2018 and 2017 , respectively. The unamortized balance of deferred sales inducements was $40.3 million and $42.5 million at March 31, 2018 and December 31, 2017 , respectively. |
OUT-OF-PERIOD ADJUSTMENTS
OUT-OF-PERIOD ADJUSTMENTS | 3 Months Ended |
Mar. 31, 2018 | |
Other Liabilities Disclosure [Abstract] | |
OUT-OF-PERIOD ADJUSTMENTS | OUT-OF-PERIOD ADJUSTMENTS In the first quarter of 2018 , we recorded the net effect of out-of-period adjustments related to the calculation of certain insurance liabilities which increased insurance policy benefits by $2.5 million (of which, $1.4 million related to long-term care reserves in the Bankers Life segment and $1.1 million related to a closed block of payout annuities in the Colonial Penn segment), decreased tax expense by $.5 million and decreased our net income by $2.0 million (or 1 cent per diluted share). We evaluated these adjustments taking into account both qualitative and quantitative factors and considered the impact of these adjustments in relation to each period, as well as the periods in which they originated. The impact of recognizing these adjustments in prior years was not significant to any individual period. Management believes these adjustments are immaterial to the consolidated financial statements and all previously issued financial statements. |
RECENTLY ISSUED ACCOUNTING STAN
RECENTLY ISSUED ACCOUNTING STANDARDS | 3 Months Ended |
Mar. 31, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
RECENTLY ISSUED ACCOUNTING STANDARDS | RECENTLY ISSUED ACCOUNTING STANDARDS Pending Accounting Standards In February 2016, the Financial Accounting Standards Board (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 has not yet determined the expected impact of adoption of this guidance on its consolidated financial position, results of operations or cash flows. In June 2016, the FASB issued authoritative guidance related to the measurement of credit losses on financial instruments. The new guidance replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to form credit loss estimates. The guidance will be effective for the Company for fiscal years beginning in 2020, including interim periods within the fiscal year. Early adoption is permitted as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company has not yet determined the expected impact of adoption of this guidance on its consolidated financial position, results of operations or cash flows. In January 2017, the FASB issued authoritative guidance that removes Step 2 of the goodwill impairment test under current guidance, which requires a hypothetical purchase price allocation. The new guidance requires an impairment charge to be recognized for the amount by which the carrying amount exceeds the reported unit's fair value. Upon adoption, the guidance is to be applied prospectively. The guidance will be effective for the Company on January 1, 2020, with early adoption permitted. The adoption of this guidance is not expected to have a material impact on the Company's consolidated financial position, results of operations or cash flows. In March 2017, the FASB issued authoritative guidance related to the premium amortization on purchased callable debt securities. The guidance shortens the amortization period for certain callable debt securities held at a premium. Specifically, the new guidance requires the premium to be amortized to the earliest call date. The guidance does not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The guidance will be effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the guidance in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The guidance should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company has not yet determined the expected impact of adoption of this guidance on our consolidated financial position, results of operations or cash flows. In August 2017, the FASB issued authoritative guidance related to derivatives and hedging. The new guidance expands and refines hedge accounting for both nonfinancial and financial risk components and aligns the recognition and presentation of the effects of the hedging instruments and the hedged item in the financial statements. The new guidance also includes certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. The guidance will be effective for the Company for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company has not yet determined the expected impact of adoption of this guidance on its consolidated financial position, results of operations or cash flows. Adopted Accounting Standards In May 2014, the FASB issued authoritative guidance for recognizing revenue from contracts with customers. Certain contracts with customers are specifically excluded from this guidance, including insurance contracts. The core principle of the new guidance is that an entity should recognize revenue when it transfers promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The guidance was effective for the Company on January 1, 2018. The adoption of this new guidance impacts the timing of certain revenues and expenses between quarters of a calendar year for various distribution and marketing agreements with other insurance companies pursuant to which Bankers Life's career agents distribute third party products including prescription drug and Medicare Advantage plans. The annual fee income earned during a calendar year will not change, but the amount recognized during each quarterly period will vary based on the sales of such products in each period. Furthermore, we are recognizing distribution expenses in the same period that the associated fee revenue is earned. Periods prior to the January 1, 2018 adoption date were not restated to reflect the new guidance. The impact of adoption was as follows (dollars in millions): Three months ended March 31, 2018 Impact of Amounts prior As reported adoption to adoption Fee revenue $ 15.8 $ 7.3 $ 8.5 Distribution expense (included in other operating costs and expenses) 11.5 8.8 2.7 Impact on pre-tax income $ 4.3 $ (1.5 ) $ 5.8 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. The guidance was effective for the Company on January 1, 2018. Accordingly, the Company recorded a cumulative effect adjustment to the balance sheet as of January 1, 2018, related to certain equity investments that are measured at fair value. The impact of adoption was as follows (dollars in millions): January 1, 2018 Amounts prior to effect of adoption of authoritative guidance Effect of adoption of authoritative guidance As adjusted Accumulated other comprehensive income $ 1,212.1 $ (16.3 ) $ 1,195.8 Retained earnings 560.4 16.3 576.7 Total shareholders' equity 4,847.5 — 4,847.5 In August 2016, the FASB issued authoritative guidance related to how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The guidance addresses eight specific cash flow issues including debt prepayment or debt extinguishment costs, proceeds from the settlement of corporate-owned life insurance policies ("COLI"), distributions received from equity method investees, and others. The guidance was effective for the Company on January 1, 2018. The adoption of this guidance resulted in reclassifications to certain cash receipts and payments within our consolidated statement of cash flows, but had no impact on our consolidated financial position, results of operations or cash flows. Periods prior to the January 1, 2018 adoption date have been restated to reflect the new guidance. In November 2016, the FASB issued authoritative guidance to address the diversity in practice that currently exists regarding the classification and presentation of changes in restricted cash on the statement of cash flows. The new guidance requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Entities are also required to disclose information about the nature of their restricted cash and restricted cash equivalents. Additionally, if cash, cash equivalents, restricted cash and restricted cash equivalents are presented in more than one line item in the statement of financial position, entities will be required to present a reconciliation, either on the face of the statement of cash flows or disclosed in the notes, of the totals in the statement of cash flows to the related line item captions in the statement of financial position. The guidance was effective for the Company on January 1, 2018. The adoption of this guidance impacted the presentation of our consolidated statement of cash flows and related cash flow disclosures, but did not have an impact on our consolidated financial position, results of operations or cash flows. Periods prior to the January 1, 2018 adoption date have been restated to reflect the new guidance. The impact of adopting the cash flow guidance described above was as follows (dollars in millions): Three months ended March 31, 2017 Amounts prior to effect of adoption of authoritative guidance Restricted cash COLI death benefits Distributions received from equity method investments As adjusted Cash flows from operating activities: Net investment income $ 289.7 $ — $ — $ 5.6 $ 295.3 Other operating costs (203.6 ) — (3.2 ) — (206.8 ) Net cash flow from operating activities 141.0 — (3.2 ) 5.6 143.4 Cash flows from investing activities: Sales of investments 403.0 — — (5.6 ) 397.4 Change in cash and cash equivalents held by variable interest entities (165.2 ) 165.2 — — — Other (12.1 ) — 3.2 — (8.9 ) Net cash provided (used) by investing activities (55.8 ) 165.2 3.2 (5.6 ) 107.0 Net increase in cash and cash equivalents 51.3 165.2 — — 216.5 Cash and cash equivalents - unrestricted and held by variable interest entities, beginning of period 478.9 189.3 — — 668.2 Cash and cash equivalents - unrestricted and held by variable interest entities, end of period 530.2 354.5 — — 884.7 In May 2017, the FASB issued authoritative guidance related to which changes to the terms or conditions of a share-based award require an entity to apply modification accounting. The guidance was effective for the Company for fiscal years beginning after December 15, 2017. Early adoption was permitted, including adoption in an interim period. The guidance is to be applied prospectively to an award modified on or after the adoption date. The adoption of this guidance did not have a material impact to the Company's consolidated financial position, results of operations or cash flows. |
LITIGATION AND OTHER LEGAL PROC
LITIGATION AND OTHER LEGAL PROCEEDINGS | 3 Months Ended |
Mar. 31, 2018 | |
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. On September 29, 2016, Washington National and Bankers Conseco Life Insurance Company ("BCLIC") commenced an arbitration proceeding seeking compensatory, consequential and punitive damages against Beechwood Re Ltd. ("BRe") based upon BRe’s incurable material breaches of the long-term care reinsurance agreements, conversion, fraud, and breaches of fiduciary duties and the obligation to deal honestly and in good faith. BRe filed a counterclaim against Washington National and BCLIC in the arbitration alleging damages relating to the reinsurance agreements and their termination. In addition, on September 29, 2016, a complaint was filed by BCLIC and Washington National in the United States District Court for the Southern District of New York, Bankers Conseco Life Insurance Company and Washington National Insurance Company v. Moshe M. Feuer, Scott Taylor and David Levy, Case No. 16-cv-7646, alleging, among other claims, fraud/fraudulent concealment, and violation of the Racketeer Influenced and Corrupt Organizations Act. These allegations relate to the long-term care reinsurance agreements between BRe and Washington National and BCLIC, respectively, and emanate from the undisclosed relationships between and among the defendants (who were the principal owners and officers of BRe) and Platinum Partners, LP and its affiliates. On April 27, 2017, an amended complaint was filed adding Beechwood Capital Group, LLC as a defendant. On March 13, 2018, the District Court granted the motion that had been filed by Feuer, Taylor and Levy to compel arbitration of Washington National's and BCLIC's claims and the litigation is now stayed pending the outcome of the arbitration. Washington National and BCLIC intend to vigorously pursue their claims for damages and other remedies in the arbitration and the litigation described above. By public notice dated July 26, 2017, the Cayman Islands Monetary Authority advised that, effective July 25, 2017, two individuals (the "Controllers") had been appointed pursuant to Section 24(2)(h) of the Cayman Islands Insurance Law to assume control of the affairs of BRe. According to the public notice, effective with their appointment, the Controllers assumed immediate control of the affairs of BRe and have all the powers necessary to administer the affairs of BRe including power to terminate its insurance business. The Controllers are responsible for assessing the financial position of BRe and submitting a report to the Cayman Islands Monetary Authority by a date to be specified. We are in the process of assessing the potential impact of this action on the proceedings described in the foregoing paragraph. 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 CAS23
CONSOLIDATED STATEMENT OF CASH FLOWS | 3 Months Ended |
Mar. 31, 2018 | |
Supplemental Cash Flow Elements [Abstract] | |
CONSOLIDATED STATEMENT OF CASH FLOWS | CONSOLIDATED STATEMENT OF CASH FLOWS The following reconciles net income to net cash from operating activities (dollars in millions): Three months ended March 31, 2018 2017 Cash flows from operating activities: Net income $ 84.3 $ 62.3 Adjustments to reconcile net income to net cash from operating activities: Amortization and depreciation 78.7 70.0 Income taxes 1.7 32.9 Insurance liabilities 25.5 131.6 Accrual and amortization of investment income (43.1 ) (91.9 ) Deferral of policy acquisition costs (60.2 ) (63.2 ) Net realized investment (gains) losses 15.2 (7.9 ) Other (29.9 ) 9.6 Net cash from operating activities $ 72.2 $ 143.4 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, 2018 2017 Stock options, restricted stock and performance units $ 6.8 $ 6.3 |
INVESTMENTS IN VARIABLE INTERES
INVESTMENTS IN VARIABLE INTEREST ENTITIES | 3 Months Ended |
Mar. 31, 2018 | |
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 tables provide supplemental information about the assets and liabilities of the VIEs which have been consolidated in accordance with authoritative guidance (dollars in millions): March 31, 2018 VIEs Eliminations Net effect on consolidated balance sheet Assets: Investments held by variable interest entities $ 1,583.9 $ — $ 1,583.9 Notes receivable of VIEs held by insurance subsidiaries — (150.5 ) (150.5 ) Cash and cash equivalents held by variable interest entities 115.6 — 115.6 Accrued investment income 2.8 (.1 ) 2.7 Income tax assets, net — — — Other assets 10.3 (1.6 ) 8.7 Total assets $ 1,712.6 $ (152.2 ) $ 1,560.4 Liabilities: Other liabilities $ 154.2 $ (4.3 ) $ 149.9 Borrowings related to variable interest entities 1,410.5 — 1,410.5 Notes payable of VIEs held by insurance subsidiaries 162.6 (162.6 ) — Total liabilities $ 1,727.3 $ (166.9 ) $ 1,560.4 December 31, 2017 VIEs Eliminations Net effect on consolidated balance sheet Assets: Investments held by variable interest entities $ 1,526.9 $ — $ 1,526.9 Notes receivable of VIEs held by insurance subsidiaries — (155.5 ) (155.5 ) Cash and cash equivalents held by variable interest entities 178.9 — 178.9 Accrued investment income 2.6 (.1 ) 2.5 Income tax assets, net .7 — .7 Other assets 10.0 (1.5 ) 8.5 Total assets $ 1,719.1 $ (157.1 ) $ 1,562.0 Liabilities: Other liabilities $ 158.3 $ (4.4 ) $ 153.9 Borrowings related to variable interest entities 1,410.7 — 1,410.7 Notes payable of VIEs held by insurance subsidiaries 167.6 (167.6 ) — Total liabilities $ 1,736.6 $ (172.0 ) $ 1,564.6 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, 2018 , such loans had an amortized cost of $1,581.9 million ; gross unrealized gains of $8.8 million ; gross unrealized losses of $6.8 million ; and an estimated fair value of $1,583.9 million . The following table sets forth the amortized cost and estimated fair value of the investments held by the VIEs at March 31, 2018 , 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 $ 4.2 $ 4.2 Due after one year through five years 521.0 520.5 Due after five years through ten years 1,056.7 1,059.2 Total $ 1,581.9 $ 1,583.9 During the first three months of 2018 , the VIEs recognized net realized investment gains of nil from the sales of fixed maturities. During the first three months of 2017 , the VIEs recognized net realized investment gains of $2.1 million . At March 31, 2018 , there were no investments held by the VIEs that were in default. During the first three months of 2018 , $10.8 million of investments held by VIEs were sold which resulted in gross investment losses (before income taxes) of $.1 million . During the first three months of 2017 , $20.4 million of investments held by the VIEs were sold which resulted in gross investment losses (before income taxes) of $.1 million . At March 31, 2018 , the VIEs held: (i) investments with a fair value of $399.2 million and gross unrealized losses of $4.8 million that had been in an unrealized loss position for less than twelve months; and (ii) investments with a fair value of $41.4 million and gross unrealized losses of $2.0 million that had been in an unrealized loss position for twelve months or greater. At December 31, 2017 , the VIEs held: (i) investments with a fair value of $445.4 million and gross unrealized losses of $4.9 million that had been in an unrealized loss position for less than twelve months; and (ii) investments with a fair value of $28.4 million and gross unrealized losses of $1.7 million that had been in an unrealized loss position for twelve months or greater. 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, 2018 , we held investments in various limited partnerships and hedge funds, in which we are not the primary beneficiary, totaling $500.0 million (classified as other invested assets). At March 31, 2018 , we had unfunded commitments to these partnerships and hedge funds totaling $275.5 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, 2018 | |
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, 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, policy loans, cash and cash equivalents, 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 cash equivalents 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. 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 2018 and 2017 . 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 default rates, expected recovery rates, 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 a particular price received from a third party is 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 typically include: benchmark yields, reported trades, broker dealer quotes, issuer spreads, benchmark securities, bids, offers and other relevant 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 30 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, 2018 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 $ — $ 14,525.2 $ 200.1 $ 14,725.3 United States Treasury securities and obligations of United States government corporations and agencies — 173.1 — 173.1 States and political subdivisions — 2,046.3 — 2,046.3 Debt securities issued by foreign governments — 73.9 3.8 77.7 Asset-backed securities — 2,866.2 17.6 2,883.8 Collateralized debt obligations — 349.2 15.3 364.5 Commercial mortgage-backed securities — 1,401.9 — 1,401.9 Mortgage pass-through securities — 1.8 — 1.8 Collateralized mortgage obligations — 701.1 — 701.1 Total fixed maturities, available for sale — 22,138.7 236.8 22,375.5 Equity securities - corporate securities 335.0 142.3 21.4 498.7 Trading securities: Corporate securities — 22.2 — 22.2 United States Treasury securities and obligations of United States government corporations and agencies — .5 — .5 Asset-backed securities — 94.9 — 94.9 Collateralized debt obligations — 2.7 — 2.7 Commercial mortgage-backed securities — 100.0 — 100.0 Collateralized mortgage obligations — 67.0 — 67.0 Equity securities 2.3 — — 2.3 Total trading securities 2.3 287.3 — 289.6 Investments held by variable interest entities - corporate securities — 1,583.9 — 1,583.9 Other invested assets - derivatives — 141.5 — 141.5 Assets held in separate accounts — 4.7 — 4.7 Total assets carried at fair value by category $ 337.3 $ 24,298.4 $ 258.2 $ 24,893.9 Liabilities: Future policy benefits - embedded derivatives associated with fixed index annuity products $ — $ — $ 1,315.4 $ 1,315.4 The categorization of fair value measurements, by input level, for our financial instruments carried at fair value on a recurring basis at December 31, 2017 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 $ — $ 14,728.0 $ 230.4 $ 14,958.4 United States Treasury securities and obligations of United States government corporations and agencies — 177.7 — 177.7 States and political subdivisions — 2,056.3 — 2,056.3 Debt securities issued by foreign governments — 79.2 3.9 83.1 Asset-backed securities — 3,230.2 24.2 3,254.4 Collateralized debt obligations — 259.4 — 259.4 Commercial mortgage-backed securities — 1,377.5 — 1,377.5 Mortgage pass-through securities — 2.0 — 2.0 Collateralized mortgage obligations — 742.1 — 742.1 Total fixed maturities, available for sale — 22,652.4 258.5 22,910.9 Equity securities - corporate securities 287.8 131.6 21.2 440.6 Trading securities: Corporate securities — 21.6 — 21.6 United States Treasury securities and obligations of United States government corporations and agencies — .5 — .5 Asset-backed securities — 95.8 — 95.8 Collateralized debt obligations — 2.7 — 2.7 Commercial mortgage-backed securities — 92.5 — 92.5 Collateralized mortgage obligations — 68.7 — 68.7 Equity securities 2.8 — — 2.8 Total trading securities 2.8 281.8 — 284.6 Investments held by variable interest entities - corporate securities — 1,522.0 4.9 1,526.9 Other invested assets - derivatives — 170.2 — 170.2 Assets held in separate accounts — 5.0 — 5.0 Total assets carried at fair value by category $ 290.6 $ 24,763.0 $ 284.6 $ 25,338.2 Liabilities: Future policy benefits - embedded derivatives associated with fixed index annuity products $ — $ — $ 1,334.8 $ 1,334.8 The fair value measurements for our financial instruments disclosed at fair value on a recurring basis are as follows (dollars in millions): March 31, 2018 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 $ — $ — $ 1,611.3 $ 1,611.3 $ 1,601.2 Policy loans — — 116.0 116.0 116.0 Other invested assets: Company-owned life insurance — 181.0 — 181.0 181.0 Cash and cash equivalents: Unrestricted 610.7 .1 — 610.8 610.8 Held by variable interest entities 115.6 — — 115.6 115.6 Liabilities: Policyholder account balances — — 11,254.5 11,254.5 11,254.5 Investment borrowings — 1,647.7 — 1,647.7 1,646.5 Borrowings related to variable interest entities — 1,433.9 — 1,433.9 1,410.5 Notes payable – direct corporate obligations — 928.9 — 928.9 915.1 December 31, 2017 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 $ — $ — $ 1,677.3 $ 1,677.3 $ 1,650.6 Policy loans — — 116.0 116.0 116.0 Other invested assets: Company-owned life insurance — 182.3 — 182.3 182.3 Cash and cash equivalents: Unrestricted 578.4 — — 578.4 578.4 Held by variable interest entities 178.9 — — 178.9 178.9 Liabilities: Policyholder account balances — — 11,220.7 11,220.7 11,220.7 Investment borrowings — 1,648.8 — 1,648.8 1,646.7 Borrowings related to variable interest entities — 1,432.9 — 1,432.9 1,410.7 Notes payable – direct corporate obligations — 962.3 — 962.3 914.6 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, 2018 (dollars in millions): March 31, 2018 Beginning balance as of December 31, 2017 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, 2018 Amount of total gains (losses) for the three months ended March 31, 2018 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 $ 230.4 $ 6.2 $ 1.2 $ (2.4 ) $ — $ (35.3 ) $ 200.1 $ — Debt securities issued by foreign governments 3.9 — — (.1 ) — — 3.8 — Asset-backed securities 24.2 (6.1 ) — (.5 ) — — 17.6 — Collateralized debt obligations — 15.3 — — — — 15.3 — Commercial mortgage-backed securities — — — — — — — — Total fixed maturities, available for sale 258.5 15.4 1.2 (3.0 ) — (35.3 ) 236.8 — Equity securities - corporate securities 21.2 — .2 — — — 21.4 — Investments held by variable interest entities - corporate securities 4.9 — — — — (4.9 ) — — Liabilities: Future policy benefits - embedded derivatives associated with fixed index annuity products (1,334.8 ) (17.6 ) 37.0 — — — (1,315.4 ) 37.0 _________ (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, 2018 (dollars in millions): Purchases Sales Issuances Settlements Purchases, sales, issuances and settlements, net Assets: Fixed maturities, available for sale: Corporate securities $ 11.1 $ (4.9 ) $ — $ — $ 6.2 Asset-backed securities 5.0 (11.1 ) — — (6.1 ) Collateralized debt obligations 15.3 — — — 15.3 Total fixed maturities, available for sale 31.4 (16.0 ) — — 15.4 Liabilities: Future policy benefits - embedded derivatives associated with fixed index annuity products (39.2 ) 3.7 (2.2 ) 20.1 (17.6 ) 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, 2017 (dollars in millions): March 31, 2017 Beginning balance as of December 31, 2016 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, 2017 Amount of total gains (losses) for the three months ended March 31, 2017 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 $ 258.5 $ 4.2 $ .6 $ 8.0 $ 17.5 $ — $ 288.8 $ (3.2 ) Debt securities issued by foreign governments 3.9 — — — — — 3.9 — Asset-backed securities 60.4 9.9 — .4 — (3.5 ) 67.2 — Collateralized debt obligations 5.4 9.0 — — — (2.9 ) 11.5 — Commercial mortgage-backed securities 32.0 (.1 ) — — — (17.0 ) 14.9 — Total fixed maturities, available for sale 360.2 23.0 .6 8.4 17.5 (23.4 ) 386.3 (3.2 ) Equity securities - corporate securities 25.2 — — (.1 ) — (.8 ) 24.3 — Liabilities: Future policy benefits - embedded derivatives associated with fixed index annuity products (1,092.3 ) (69.2 ) 2.3 — — — (1,159.2 ) 2.3 ____________ (a) Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate. (b) Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts. The following summarizes such activity for the three months ended March 31, 2017 (dollars in millions): Purchases Sales Issuances Settlements Purchases, sales, issuances and settlements, net Assets: Fixed maturities, available for sale: Corporate securities $ 23.2 $ (19.0 ) $ — $ — $ 4.2 Asset-backed securities 12.0 (2.1 ) — — 9.9 Collateralized debt obligations 9.0 — — — 9.0 Commercial mortgage-backed securities — (.1 ) — — (.1 ) Total fixed maturities, available for sale 44.2 (21.2 ) — — 23.0 Liabilities: Future policy benefits - embedded derivatives associated with fixed index annuity products (43.3 ) 1.3 (43.1 ) 15.9 (69.2 ) At March 31, 2018 , 58 percent of our Level 3 fixed maturities, available for sale, were investment grade and 85 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, 2018 (dollars in millions): Fair value at March 31, 2018 Valuation techniques Unobservable inputs Range (weighted average) Assets: Corporate securities (a) $ 146.7 Discounted cash flow analysis Discount margins 1.35% - 93.32% (7.69%) Corporate securities (b) .4 Recovery method Percent of recovery expected 0% - 5% (5%) Asset-backed securities (c) 12.5 Discounted cash flow analysis Discount margins 1.97% - 2.03% (2.03%) Equity securities (d) 1.2 Market comparables EBITDA multiples 1.1X Equity securities (e) 20.2 Recovery method Percent of recovery expected 59.1% Other assets categorized as Level 3 (f) 77.2 Unadjusted third-party price source Not applicable Not applicable Total 258.2 Liabilities: Future policy benefits (g) 1,315.4 Discounted projected embedded derivatives Projected portfolio yields 5.15% - 5.61% (5.60%) Discount rates 1.13% - 2.69% (2.30%) Surrender rates 1.20% - 46.40% (12.30%) ________________________________ (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) Corporate securities - The significant unobservable input used in the fair value measurement of these corporate securities is percentage of recovery expected. Significant increases (decreases) in percentage of recovery expected in isolation would result in a significantly higher (lower) fair value measurement. (c) 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. (d) Equity securities - The significant unobservable input used in the fair value measurement of these equity securities is multiples of earnings before interest, taxes, depreciation and amortization ("EBITDA"). Generally, increases (decreases) in the EBITDA multiples would result in higher (lower) fair value measurements. (e) Equity securities - The significant unobservable input used in the fair value measurement of these equity securities is percentage of recovery expected. Significant increases (decreases) in percentage of recovery expected in isolation would result in a significantly higher (lower) fair value measurement. (f) Other assets categorized as Level 3 - For these assets, there were no adjustments to quoted market prices obtained from third-party pricing sources. (g) 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, 2017 (dollars in millions): Fair value at December 31, 2017 Valuation techniques Unobservable inputs Range (weighted average) Assets: Corporate securities (a) $ 149.2 Discounted cash flow analysis Discount margins 1.45% - 71.29% (6.96%) Corporate securities (b) 2.8 Recovery method Percent of recovery expected 0% - 21.73% (18.42%) Asset-backed securities (c) 24.2 Discounted cash flow analysis Discount margins 1.80% - 3.71% (2.67%) Equity securities (d) 1.1 Market comparables EBITDA multiples 1.1X Equity securities (e) 20.1 Recovery method Percent of recovery expected 59.1% Other assets categorized as Level 3 (f) 87.2 Unadjusted third-party price source Not applicable Not applicable Total 284.6 Liabilities: Future policy benefits (g) 1,334.8 Discounted projected embedded derivatives Projected portfolio yields 5.15% - 5.61% (5.60%) Discount rates 0.92% - 2.51% (2.00%) Surrender rates 1.20% - 46.40% (12.30%) ________________________________ (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) Corporate securities - The significant unobservable input used in the fair value measurement of these corporate securities is percentage of recovery expected. Significant increases (decreases) in percentage of recovery expected in isolation would result in a significantly higher (lower) fair value measurement. (c) 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. (d) Equity securities - The significant unobservable input used in the fair value measurement of these equity securities is EBITDA multiples. Generally, increases (decreases) in EBITDA multiples would result in higher (lower) fair value measurements. (e) Equity securities - The significant unobservable input used in the fair value measurement of these equity securities is percentage of recovery expected. Significant increases (decreases) in percentage of recovery expected in isolation would result in a significantly higher (lower) fair value measurement. (f) Other assets categorized as Level 3 - For these assets, there were no adjustments to quoted market prices obtained from third-party pricing sources. (g) 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. |
RECENTLY ISSUED ACCOUNTING ST26
RECENTLY ISSUED ACCOUNTING STANDARDS (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
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 certain reinsurance agreements; and (iii) certain fixed maturity securities containing embedded derivatives for which we have elected the fair value option. The change in fair value of the income generating investments and investments supporting insurance liabilities 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. 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 overcollateralization, 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. |
Earnings Per Share | 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). |
Segment Reporting | 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 also have a long-term care in run-off segment which is comprised of certain long-term care business that was recaptured in 2016 due to the termination of certain reinsurance agreements. 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 related to the agent deferred compensation plan, income taxes and other non-operating items consisting primarily of earnings attributable to variable interest entities ("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 related to the agent deferred compensation plan and other non-operating items consisting primarily of 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. |
Recently Issued Accounting Standards | RECENTLY ISSUED ACCOUNTING STANDARDS Pending Accounting Standards In February 2016, the Financial Accounting Standards Board (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 has not yet determined the expected impact of adoption of this guidance on its consolidated financial position, results of operations or cash flows. In June 2016, the FASB issued authoritative guidance related to the measurement of credit losses on financial instruments. The new guidance replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to form credit loss estimates. The guidance will be effective for the Company for fiscal years beginning in 2020, including interim periods within the fiscal year. Early adoption is permitted as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company has not yet determined the expected impact of adoption of this guidance on its consolidated financial position, results of operations or cash flows. In January 2017, the FASB issued authoritative guidance that removes Step 2 of the goodwill impairment test under current guidance, which requires a hypothetical purchase price allocation. The new guidance requires an impairment charge to be recognized for the amount by which the carrying amount exceeds the reported unit's fair value. Upon adoption, the guidance is to be applied prospectively. The guidance will be effective for the Company on January 1, 2020, with early adoption permitted. The adoption of this guidance is not expected to have a material impact on the Company's consolidated financial position, results of operations or cash flows. In March 2017, the FASB issued authoritative guidance related to the premium amortization on purchased callable debt securities. The guidance shortens the amortization period for certain callable debt securities held at a premium. Specifically, the new guidance requires the premium to be amortized to the earliest call date. The guidance does not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The guidance will be effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the guidance in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The guidance should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company has not yet determined the expected impact of adoption of this guidance on our consolidated financial position, results of operations or cash flows. In August 2017, the FASB issued authoritative guidance related to derivatives and hedging. The new guidance expands and refines hedge accounting for both nonfinancial and financial risk components and aligns the recognition and presentation of the effects of the hedging instruments and the hedged item in the financial statements. The new guidance also includes certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. The guidance will be effective for the Company for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company has not yet determined the expected impact of adoption of this guidance on its consolidated financial position, results of operations or cash flows. Adopted Accounting Standards In May 2014, the FASB issued authoritative guidance for recognizing revenue from contracts with customers. Certain contracts with customers are specifically excluded from this guidance, including insurance contracts. The core principle of the new guidance is that an entity should recognize revenue when it transfers promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The guidance was effective for the Company on January 1, 2018. The adoption of this new guidance impacts the timing of certain revenues and expenses between quarters of a calendar year for various distribution and marketing agreements with other insurance companies pursuant to which Bankers Life's career agents distribute third party products including prescription drug and Medicare Advantage plans. The annual fee income earned during a calendar year will not change, but the amount recognized during each quarterly period will vary based on the sales of such products in each period. Furthermore, we are recognizing distribution expenses in the same period that the associated fee revenue is earned. Periods prior to the January 1, 2018 adoption date were not restated to reflect the new guidance. The impact of adoption was as follows (dollars in millions): Three months ended March 31, 2018 Impact of Amounts prior As reported adoption to adoption Fee revenue $ 15.8 $ 7.3 $ 8.5 Distribution expense (included in other operating costs and expenses) 11.5 8.8 2.7 Impact on pre-tax income $ 4.3 $ (1.5 ) $ 5.8 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. The guidance was effective for the Company on January 1, 2018. Accordingly, the Company recorded a cumulative effect adjustment to the balance sheet as of January 1, 2018, related to certain equity investments that are measured at fair value. The impact of adoption was as follows (dollars in millions): January 1, 2018 Amounts prior to effect of adoption of authoritative guidance Effect of adoption of authoritative guidance As adjusted Accumulated other comprehensive income $ 1,212.1 $ (16.3 ) $ 1,195.8 Retained earnings 560.4 16.3 576.7 Total shareholders' equity 4,847.5 — 4,847.5 In August 2016, the FASB issued authoritative guidance related to how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The guidance addresses eight specific cash flow issues including debt prepayment or debt extinguishment costs, proceeds from the settlement of corporate-owned life insurance policies ("COLI"), distributions received from equity method investees, and others. The guidance was effective for the Company on January 1, 2018. The adoption of this guidance resulted in reclassifications to certain cash receipts and payments within our consolidated statement of cash flows, but had no impact on our consolidated financial position, results of operations or cash flows. Periods prior to the January 1, 2018 adoption date have been restated to reflect the new guidance. In November 2016, the FASB issued authoritative guidance to address the diversity in practice that currently exists regarding the classification and presentation of changes in restricted cash on the statement of cash flows. The new guidance requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Entities are also required to disclose information about the nature of their restricted cash and restricted cash equivalents. Additionally, if cash, cash equivalents, restricted cash and restricted cash equivalents are presented in more than one line item in the statement of financial position, entities will be required to present a reconciliation, either on the face of the statement of cash flows or disclosed in the notes, of the totals in the statement of cash flows to the related line item captions in the statement of financial position. The guidance was effective for the Company on January 1, 2018. The adoption of this guidance impacted the presentation of our consolidated statement of cash flows and related cash flow disclosures, but did not have an impact on our consolidated financial position, results of operations or cash flows. Periods prior to the January 1, 2018 adoption date have been restated to reflect the new guidance. The impact of adopting the cash flow guidance described above was as follows (dollars in millions): Three months ended March 31, 2017 Amounts prior to effect of adoption of authoritative guidance Restricted cash COLI death benefits Distributions received from equity method investments As adjusted Cash flows from operating activities: Net investment income $ 289.7 $ — $ — $ 5.6 $ 295.3 Other operating costs (203.6 ) — (3.2 ) — (206.8 ) Net cash flow from operating activities 141.0 — (3.2 ) 5.6 143.4 Cash flows from investing activities: Sales of investments 403.0 — — (5.6 ) 397.4 Change in cash and cash equivalents held by variable interest entities (165.2 ) 165.2 — — — Other (12.1 ) — 3.2 — (8.9 ) Net cash provided (used) by investing activities (55.8 ) 165.2 3.2 (5.6 ) 107.0 Net increase in cash and cash equivalents 51.3 165.2 — — 216.5 Cash and cash equivalents - unrestricted and held by variable interest entities, beginning of period 478.9 189.3 — — 668.2 Cash and cash equivalents - unrestricted and held by variable interest entities, end of period 530.2 354.5 — — 884.7 In May 2017, the FASB issued authoritative guidance related to which changes to the terms or conditions of a share-based award require an entity to apply modification accounting. The guidance was effective for the Company for fiscal years beginning after December 15, 2017. Early adoption was permitted, including adoption in an interim period. The guidance is to be applied prospectively to an award modified on or after the adoption date. The adoption of this guidance did not have a material impact to the Company's consolidated financial position, results of operations or cash flows. |
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, 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, policy loans, cash and cash equivalents, 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 cash equivalents 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. 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 2018 and 2017 . 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 default rates, expected recovery rates, 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 a particular price received from a third party is 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 typically include: benchmark yields, reported trades, broker dealer quotes, issuer spreads, benchmark securities, bids, offers and other relevant 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 30 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. 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. |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of accumulated other comprehensive income (loss) | These amounts, included in shareholders' equity as of March 31, 2018 and December 31, 2017 , 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 $ 3.4 $ 2.6 Net unrealized gains on all other investments 1,551.8 2,227.3 Adjustment to present value of future profits (a) (89.7 ) (94.0 ) Adjustment to deferred acquisition costs (237.6 ) (292.6 ) Adjustment to insurance liabilities (87.8 ) (295.8 ) Deferred income tax liabilities (245.8 ) (335.4 ) Accumulated other comprehensive income $ 894.3 $ 1,212.1 ________ (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, emerged from bankruptcy. |
Schedule of fixed maturities for available for sale and equity securities | At March 31, 2018 , 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, 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 $ 13,629.5 $ 1,196.1 $ (100.3 ) $ 14,725.3 $ — United States Treasury securities and obligations of United States government corporations and agencies 149.4 24.0 (.3 ) 173.1 — States and political subdivisions 1,843.7 204.2 (1.6 ) 2,046.3 — Debt securities issued by foreign governments 78.0 1.4 (1.7 ) 77.7 — Asset-backed securities 2,725.6 165.9 (7.7 ) 2,883.8 — Collateralized debt obligations 363.0 1.7 (.2 ) 364.5 — Commercial mortgage-backed securities 1,398.0 20.7 (16.8 ) 1,401.9 — Mortgage pass-through securities 1.7 .1 — 1.8 — Collateralized mortgage obligations 632.0 70.7 (1.6 ) 701.1 (.9 ) Total fixed maturities, available for sale $ 20,820.9 $ 1,684.8 $ (130.2 ) $ 22,375.5 $ (.9 ) At December 31, 2017 , 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 $ 13,286.3 $ 1,699.1 $ (27.0 ) $ 14,958.4 $ — United States Treasury securities and obligations of United States government corporations and agencies 146.4 31.5 (.2 ) 177.7 — States and political subdivisions 1,821.9 234.8 (.4 ) 2,056.3 — Debt securities issued by foreign governments 79.5 3.8 (.2 ) 83.1 — Asset-backed securities 3,085.9 172.6 (4.1 ) 3,254.4 — Collateralized debt obligations 257.1 2.3 — 259.4 — Commercial mortgage-backed securities 1,354.0 33.8 (10.3 ) 1,377.5 — Mortgage pass-through securities 1.8 .2 — 2.0 — Collateralized mortgage obligations 669.2 73.2 (.3 ) 742.1 (1.0 ) Total fixed maturities, available for sale $ 20,702.1 $ 2,251.3 $ (42.5 ) $ 22,910.9 $ (1.0 ) Equity securities $ 420.0 $ 23.6 $ (3.0 ) $ 440.6 |
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, 2018 , by contractual maturity. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties. Structured securities (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 $ 424.2 $ 431.3 Due after one year through five years 1,765.2 1,837.4 Due after five years through ten years 1,818.0 1,881.8 Due after ten years 11,693.2 12,871.9 Subtotal 15,700.6 17,022.4 Structured securities 5,120.3 5,353.1 Total fixed maturities, available for sale $ 20,820.9 $ 22,375.5 The following table sets forth the amortized cost and estimated fair value of fixed maturities, available for sale, at December 31, 2017 , by contractual maturity. Amortized cost Estimated fair value (Dollars in millions) Due in one year or less $ 328.1 $ 335.1 Due after one year through five years 1,947.3 2,052.3 Due after five years through ten years 1,508.7 1,601.3 Due after ten years 11,550.0 13,286.8 Subtotal 15,334.1 17,275.5 Structured securities 5,368.0 5,635.4 Total fixed maturities, available for sale $ 20,702.1 $ 22,910.9 |
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, 2018 2017 Fixed maturity securities, available for sale: Gross realized gains on sale $ 8.2 $ 7.0 Gross realized losses on sale (7.7 ) (2.7 ) Impairment losses recognized — (3.2 ) Net realized investment gains from fixed maturities .5 1.1 Equity securities — 1.9 Change in fair value of equity securities (a) (12.5 ) — Mortgage loans — 1.0 Impairments of other investments — (5.2 ) Other (a) (3.2 ) 9.1 Net realized investment gains (losses) $ (15.2 ) $ 7.9 _________________ (a) Changes in the estimated fair value of trading securities that we have elected the fair value option and equity securities (and are still held as of the end of the respective periods) were $(8.9) million and $3.0 million for the three months ended March 31, 2018 and 2017 , respectively. |
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, 2018 and 2017 (dollars in millions): Three months ended March 31, 2018 2017 Credit losses on fixed maturity securities, available for sale, beginning of period $ (2.8 ) $ (5.5 ) Add: credit losses on other-than-temporary impairments not previously recognized — — Less: credit losses on securities sold — .1 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 $ (2.8 ) $ (5.4 ) __________ (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, 2018 (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 $ 18.4 $ (.3 ) $ 12.6 $ — $ 31.0 $ (.3 ) States and political subdivisions 61.8 (1.2 ) 14.5 (.3 ) 76.3 (1.5 ) Debt securities issued by foreign governments 39.4 (1.6 ) 8.0 (.2 ) 47.4 (1.8 ) Corporate securities 2,594.2 (70.8 ) 299.0 (29.5 ) 2,893.2 (100.3 ) Asset-backed securities 539.5 (5.4 ) 67.9 (2.3 ) 607.4 (7.7 ) Collateralized debt obligations 74.4 (.2 ) — — 74.4 (.2 ) Commercial mortgage-backed securities 310.4 (4.4 ) 201.0 (12.4 ) 511.4 (16.8 ) Mortgage pass-through securities .1 — — — .1 — Collateralized mortgage obligations 77.0 (1.6 ) 2.4 — 79.4 (1.6 ) Total fixed maturities, available for sale $ 3,715.2 $ (85.5 ) $ 605.4 $ (44.7 ) $ 4,320.6 $ (130.2 ) 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, 2017 (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 $ 28.2 $ (.2 ) $ .7 $ — $ 28.9 $ (.2 ) States and political subdivisions 18.3 (.1 ) 14.9 (.3 ) 33.2 (.4 ) Debt securities issued by foreign governments 7.7 (.1 ) 5.4 (.1 ) 13.1 (.2 ) Corporate securities 470.5 (6.8 ) 359.7 (20.2 ) 830.2 (27.0 ) Asset-backed securities 601.4 (2.0 ) 122.2 (2.1 ) 723.6 (4.1 ) Collateralized debt obligations 3.0 — — — 3.0 — Commercial mortgage-backed securities 276.8 (1.7 ) 218.2 (8.6 ) 495.0 (10.3 ) Collateralized mortgage obligations 20.5 (.2 ) 11.5 (.1 ) 32.0 (.3 ) Total fixed maturities, available for sale $ 1,426.4 $ (11.1 ) $ 732.6 $ (31.4 ) $ 2,159.0 $ (42.5 ) Equity securities $ 58.7 $ (1.7 ) $ 21.2 $ (1.3 ) $ 79.9 $ (3.0 ) |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
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, 2018 2017 Net income for basic and diluted earnings per share $ 84.3 $ 62.3 Shares: Weighted average shares outstanding for basic earnings per share 167,060 173,431 Effect of dilutive securities on weighted average shares: Stock options, restricted stock and performance units 2,617 1,634 Weighted average shares outstanding for diluted earnings per share 169,677 175,065 |
BUSINESS SEGMENTS (Tables)
BUSINESS SEGMENTS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
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, 2018 2017 Revenues: Bankers Life: Insurance policy income: Annuities $ 4.6 $ 6.0 Health 302.2 311.6 Life 103.9 101.5 Net investment income (a) 237.9 272.9 Fee revenue and other income (a) 19.6 10.6 Total Bankers Life revenues 668.2 702.6 Washington National: Insurance policy income: Annuities .5 .6 Health 163.8 159.8 Life 6.7 6.7 Net investment income (a) 65.4 67.4 Fee revenue and other income (a) .2 .3 Total Washington National revenues 236.6 234.8 Colonial Penn: Insurance policy income: Health .5 .6 Life 73.6 72.4 Net investment income (a) 11.0 10.9 Fee revenue and other income (a) .5 .2 Total Colonial Penn revenues 85.6 84.1 Long-term care in run-off: Insurance policy income - health 4.1 4.6 Net investment income (a) 8.4 9.7 Total Long-term care in run-off revenues 12.5 14.3 Corporate operations: Net investment income 1.2 10.4 Fee and other income 1.8 2.4 Total corporate revenues 3.0 12.8 Total revenues $ 1,005.9 $ 1,048.6 (continued on next page) (continued from previous page) Three months ended March 31, 2018 2017 Expenses: Bankers Life: Insurance policy benefits $ 411.1 $ 451.2 Amortization 47.0 46.3 Interest expense on investment borrowings 6.1 4.2 Other operating costs and expenses 114.5 111.2 Total Bankers Life expenses 578.7 612.9 Washington National: Insurance policy benefits 137.7 146.7 Amortization 14.5 14.3 Interest expense on investment borrowings 2.1 1.3 Other operating costs and expenses 48.0 49.0 Total Washington National expenses 202.3 211.3 Colonial Penn: Insurance policy benefits 56.7 52.7 Amortization 4.6 4.0 Interest expense on investment borrowings .3 .2 Other operating costs and expenses 25.5 27.5 Total Colonial Penn expenses 87.1 84.4 Long-term care in run-off: Insurance policy benefits 12.0 13.2 Other operating costs and expenses .5 .7 Total Long-term care in run-off expenses 12.5 13.9 Corporate operations: Interest expense on corporate debt 11.9 11.5 Other operating costs and expenses 18.5 21.7 Total corporate expenses 30.4 33.2 Total expenses 911.0 955.7 Pre-tax operating earnings by segment: Bankers Life 89.5 89.7 Washington National 34.3 23.5 Colonial Penn (1.5 ) (.3 ) Long-term care in run-off — .4 Corporate operations (27.4 ) (20.4 ) Pre-tax operating earnings $ 94.9 $ 92.9 ___________________ (a) It is not practicable to provide additional components of revenue by product or services. |
Reconciliation of operating profit (loss) from segments to consolidated | A reconciliation of segment revenues and expenses to consolidated revenues and expenses and net income (loss) is as follows (dollars in millions): Three months ended March 31, 2018 2017 Total segment revenues $ 1,005.9 $ 1,048.6 Net realized investment gains (losses) (15.2 ) 7.9 Revenues related to VIEs 17.1 14.2 Consolidated revenues 1,007.8 1,070.7 Total segment expenses 911.0 955.7 Insurance policy benefits - fair value changes in embedded derivative liabilities (30.9 ) 5.5 Amortization related to fair value changes in embedded derivative liabilities 5.8 (1.1 ) Expenses related to VIEs 13.8 13.9 Consolidated expenses 899.7 974.0 Income before tax 108.1 96.7 Income tax expense on period income 23.8 34.4 Net income $ 84.3 $ 62.3 |
ACCOUNTING FOR DERIVATIVES (Tab
ACCOUNTING FOR DERIVATIVES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
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, 2017 Assets: Other invested assets: Fixed index call options $ 141.5 $ 170.2 Reinsurance receivables (4.1 ) (1.4 ) Total assets $ 137.4 $ 168.8 Liabilities: Future policy benefits: Fixed index products $ 1,315.4 $ 1,334.8 Total liabilities $ 1,315.4 $ 1,334.8 |
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, 2018 2017 Net investment income (loss) from policyholder and other special-purpose portfolios: Fixed index call options $ (5.6 ) $ 44.5 Net realized gains (losses): Embedded derivative related to modified coinsurance agreement (2.7 ) .7 Insurance policy benefits: Embedded derivative related to fixed index annuities 37.0 2.3 Total $ 28.7 $ 47.5 |
Derivatives with master netting arrangements | The following table summarizes information related to derivatives with master netting arrangements or collateral as of March 31, 2018 and December 31, 2017 (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, 2018: Fixed index call options $ 141.5 $ — $ 141.5 $ — $ — $ 141.5 December 31, 2017: Fixed index call options 170.2 — 170.2 — — 170.2 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
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, 2018 2017 Current tax expense $ 5.3 $ 20.6 Deferred tax expense 18.5 13.8 Income tax expense calculated based on estimated annual effective tax rate $ 23.8 $ 34.4 |
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, 2018 2017 U.S. statutory corporate rate 21.0 % 35.0 % Non-taxable income and nondeductible benefits, net .2 (1.1 ) State taxes .8 1.7 Estimated annual effective tax rate 22.0 % 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 $ 484.2 $ 489.6 Net state operating loss carryforwards 9.8 9.3 Investments .1 4.3 Insurance liabilities 402.4 415.8 Other 44.3 48.9 Gross deferred tax assets 940.8 967.9 Deferred tax liabilities: Present value of future profits and deferred acquisition costs (160.6 ) (165.4 ) Accumulated other comprehensive income (248.1 ) (337.2 ) Gross deferred tax liabilities (408.7 ) (502.6 ) Net deferred tax assets before valuation allowance 532.1 465.3 Valuation allowance (89.1 ) (89.1 ) Net deferred tax assets 443.0 376.2 Current income taxes prepaid (accrued) 7.4 (9.3 ) Income tax assets, net $ 450.4 $ 366.9 |
Summary of operating loss carryforwards | The following table summarizes the expiration dates of our loss carryforwards (dollars in millions): Net operating loss Year of expiration carryforwards 2023 $ 1,719.1 2025 85.2 2026 149.9 2027 10.8 2028 80.3 2029 213.2 2030 .3 2031 .2 2032 44.4 2033 .6 2034 .9 2035 .8 Total federal NOLs $ 2,305.7 |
NOTES PAYABLE - DIRECT CORPOR32
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt instruments | The following notes payable were direct corporate obligations of the Company as of March 31, 2018 and December 31, 2017 (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 (9.9 ) (10.4 ) Direct corporate obligations $ 915.1 $ 914.6 |
Schedule of maturities of long-term debt | The scheduled repayment of our direct corporate obligations was as follows at March 31, 2018 (dollars in millions): Year ending March 31, 2019 $ — 2020 100.0 2021 325.0 2022 — 2023 — Thereafter 500.0 $ 925.0 |
INVESTMENT BORROWINGS (Tables)
INVESTMENT BORROWINGS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
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, 2018 $ 50.0 January 2019 Variable rate – 2.142% 50.0 February 2019 Variable rate – 1.940% 100.0 March 2019 Variable rate – 2.288% 21.8 July 2019 Variable rate – 2.331% 15.0 October 2019 Variable rate – 2.273% 50.0 May 2020 Variable rate – 2.297% 21.8 June 2020 Fixed rate – 1.960% 25.0 September 2020 Variable rate – 2.911% 100.0 September 2020 Variable rate – 2.532% 50.0 September 2020 Variable rate – 2.537% 75.0 September 2020 Variable rate – 2.422% 100.0 October 2020 Variable rate – 1.806% 50.0 December 2020 Variable rate – 2.386% 100.0 July 2021 Variable rate – 2.270% 100.0 July 2021 Variable rate – 2.240% 28.2 August 2021 Fixed rate – 2.550% 57.7 August 2021 Variable rate - 2.317% 125.0 August 2021 Variable rate – 2.352% 50.0 September 2021 Variable rate – 2.484% 22.0 May 2022 Variable rate – 2.334% 100.0 May 2022 Variable rate – 2.317% 10.0 June 2022 Variable rate – 2.671% 50.0 July 2022 Variable rate – 2.075% 50.0 July 2022 Variable rate – 2.121% 50.0 July 2022 Variable rate – 2.140% 50.0 August 2022 Variable rate – 2.183% 50.0 December 2022 Variable rate – 2.306 50.0 December 2022 Variable rate – 2.306 24.5 March 2023 Fixed rate – 2.160% 20.5 June 2025 Fixed rate – 2.940% $ 1,646.5 |
CHANGES IN COMMON STOCK (Tables
CHANGES IN COMMON STOCK (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
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, 2017 166,858 Stock options exercised 123 (a) Restricted and performance stock vested 373 (b) Balance, March 31, 2018 167,354 ____________________ (a) Such amount was reduced by 69 thousand shares which were tendered to the Company for the payment of the exercise price and required federal and state tax withholdings. (b) Such amount was reduced by 200 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. |
RECENTLY ISSUED ACCOUNTING ST35
RECENTLY ISSUED ACCOUNTING STANDARDS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The impact of adoption was as follows (dollars in millions): January 1, 2018 Amounts prior to effect of adoption of authoritative guidance Effect of adoption of authoritative guidance As adjusted Accumulated other comprehensive income $ 1,212.1 $ (16.3 ) $ 1,195.8 Retained earnings 560.4 16.3 576.7 Total shareholders' equity 4,847.5 — 4,847.5 The impact of adopting the cash flow guidance described above was as follows (dollars in millions): Three months ended March 31, 2017 Amounts prior to effect of adoption of authoritative guidance Restricted cash COLI death benefits Distributions received from equity method investments As adjusted Cash flows from operating activities: Net investment income $ 289.7 $ — $ — $ 5.6 $ 295.3 Other operating costs (203.6 ) — (3.2 ) — (206.8 ) Net cash flow from operating activities 141.0 — (3.2 ) 5.6 143.4 Cash flows from investing activities: Sales of investments 403.0 — — (5.6 ) 397.4 Change in cash and cash equivalents held by variable interest entities (165.2 ) 165.2 — — — Other (12.1 ) — 3.2 — (8.9 ) Net cash provided (used) by investing activities (55.8 ) 165.2 3.2 (5.6 ) 107.0 Net increase in cash and cash equivalents 51.3 165.2 — — 216.5 Cash and cash equivalents - unrestricted and held by variable interest entities, beginning of period 478.9 189.3 — — 668.2 Cash and cash equivalents - unrestricted and held by variable interest entities, end of period 530.2 354.5 — — 884.7 The impact of adoption was as follows (dollars in millions): Three months ended March 31, 2018 Impact of Amounts prior As reported adoption to adoption Fee revenue $ 15.8 $ 7.3 $ 8.5 Distribution expense (included in other operating costs and expenses) 11.5 8.8 2.7 Impact on pre-tax income $ 4.3 $ (1.5 ) $ 5.8 |
CONSOLIDATED STATEMENT OF CAS36
CONSOLIDATED STATEMENT OF CASH FLOWS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of the reconciliation for net income provided by operating activities | The following reconciles net income to net cash from operating activities (dollars in millions): Three months ended March 31, 2018 2017 Cash flows from operating activities: Net income $ 84.3 $ 62.3 Adjustments to reconcile net income to net cash from operating activities: Amortization and depreciation 78.7 70.0 Income taxes 1.7 32.9 Insurance liabilities 25.5 131.6 Accrual and amortization of investment income (43.1 ) (91.9 ) Deferral of policy acquisition costs (60.2 ) (63.2 ) Net realized investment (gains) losses 15.2 (7.9 ) Other (29.9 ) 9.6 Net cash from operating activities $ 72.2 $ 143.4 |
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, 2018 2017 Stock options, restricted stock and performance units $ 6.8 $ 6.3 |
INVESTMENTS IN VARIABLE INTER37
INVESTMENTS IN VARIABLE INTEREST ENTITIES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Investments in Variable Interest Entities [Abstract] | |
Schedule of impact on balance sheet of consolidating variable interest entities | The following tables provide supplemental information about the assets and liabilities of the VIEs which have been consolidated in accordance with authoritative guidance (dollars in millions): March 31, 2018 VIEs Eliminations Net effect on consolidated balance sheet Assets: Investments held by variable interest entities $ 1,583.9 $ — $ 1,583.9 Notes receivable of VIEs held by insurance subsidiaries — (150.5 ) (150.5 ) Cash and cash equivalents held by variable interest entities 115.6 — 115.6 Accrued investment income 2.8 (.1 ) 2.7 Income tax assets, net — — — Other assets 10.3 (1.6 ) 8.7 Total assets $ 1,712.6 $ (152.2 ) $ 1,560.4 Liabilities: Other liabilities $ 154.2 $ (4.3 ) $ 149.9 Borrowings related to variable interest entities 1,410.5 — 1,410.5 Notes payable of VIEs held by insurance subsidiaries 162.6 (162.6 ) — Total liabilities $ 1,727.3 $ (166.9 ) $ 1,560.4 December 31, 2017 VIEs Eliminations Net effect on consolidated balance sheet Assets: Investments held by variable interest entities $ 1,526.9 $ — $ 1,526.9 Notes receivable of VIEs held by insurance subsidiaries — (155.5 ) (155.5 ) Cash and cash equivalents held by variable interest entities 178.9 — 178.9 Accrued investment income 2.6 (.1 ) 2.5 Income tax assets, net .7 — .7 Other assets 10.0 (1.5 ) 8.5 Total assets $ 1,719.1 $ (157.1 ) $ 1,562.0 Liabilities: Other liabilities $ 158.3 $ (4.4 ) $ 153.9 Borrowings related to variable interest entities 1,410.7 — 1,410.7 Notes payable of VIEs held by insurance subsidiaries 167.6 (167.6 ) — Total liabilities $ 1,736.6 $ (172.0 ) $ 1,564.6 |
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, 2018 , 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 $ 4.2 $ 4.2 Due after one year through five years 521.0 520.5 Due after five years through ten years 1,056.7 1,059.2 Total $ 1,581.9 $ 1,583.9 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
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, 2018 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 $ — $ 14,525.2 $ 200.1 $ 14,725.3 United States Treasury securities and obligations of United States government corporations and agencies — 173.1 — 173.1 States and political subdivisions — 2,046.3 — 2,046.3 Debt securities issued by foreign governments — 73.9 3.8 77.7 Asset-backed securities — 2,866.2 17.6 2,883.8 Collateralized debt obligations — 349.2 15.3 364.5 Commercial mortgage-backed securities — 1,401.9 — 1,401.9 Mortgage pass-through securities — 1.8 — 1.8 Collateralized mortgage obligations — 701.1 — 701.1 Total fixed maturities, available for sale — 22,138.7 236.8 22,375.5 Equity securities - corporate securities 335.0 142.3 21.4 498.7 Trading securities: Corporate securities — 22.2 — 22.2 United States Treasury securities and obligations of United States government corporations and agencies — .5 — .5 Asset-backed securities — 94.9 — 94.9 Collateralized debt obligations — 2.7 — 2.7 Commercial mortgage-backed securities — 100.0 — 100.0 Collateralized mortgage obligations — 67.0 — 67.0 Equity securities 2.3 — — 2.3 Total trading securities 2.3 287.3 — 289.6 Investments held by variable interest entities - corporate securities — 1,583.9 — 1,583.9 Other invested assets - derivatives — 141.5 — 141.5 Assets held in separate accounts — 4.7 — 4.7 Total assets carried at fair value by category $ 337.3 $ 24,298.4 $ 258.2 $ 24,893.9 Liabilities: Future policy benefits - embedded derivatives associated with fixed index annuity products $ — $ — $ 1,315.4 $ 1,315.4 The categorization of fair value measurements, by input level, for our financial instruments carried at fair value on a recurring basis at December 31, 2017 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 $ — $ 14,728.0 $ 230.4 $ 14,958.4 United States Treasury securities and obligations of United States government corporations and agencies — 177.7 — 177.7 States and political subdivisions — 2,056.3 — 2,056.3 Debt securities issued by foreign governments — 79.2 3.9 83.1 Asset-backed securities — 3,230.2 24.2 3,254.4 Collateralized debt obligations — 259.4 — 259.4 Commercial mortgage-backed securities — 1,377.5 — 1,377.5 Mortgage pass-through securities — 2.0 — 2.0 Collateralized mortgage obligations — 742.1 — 742.1 Total fixed maturities, available for sale — 22,652.4 258.5 22,910.9 Equity securities - corporate securities 287.8 131.6 21.2 440.6 Trading securities: Corporate securities — 21.6 — 21.6 United States Treasury securities and obligations of United States government corporations and agencies — .5 — .5 Asset-backed securities — 95.8 — 95.8 Collateralized debt obligations — 2.7 — 2.7 Commercial mortgage-backed securities — 92.5 — 92.5 Collateralized mortgage obligations — 68.7 — 68.7 Equity securities 2.8 — — 2.8 Total trading securities 2.8 281.8 — 284.6 Investments held by variable interest entities - corporate securities — 1,522.0 4.9 1,526.9 Other invested assets - derivatives — 170.2 — 170.2 Assets held in separate accounts — 5.0 — 5.0 Total assets carried at fair value by category $ 290.6 $ 24,763.0 $ 284.6 $ 25,338.2 Liabilities: Future policy benefits - embedded derivatives associated with fixed index annuity products $ — $ — $ 1,334.8 $ 1,334.8 |
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, 2018 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 $ — $ — $ 1,611.3 $ 1,611.3 $ 1,601.2 Policy loans — — 116.0 116.0 116.0 Other invested assets: Company-owned life insurance — 181.0 — 181.0 181.0 Cash and cash equivalents: Unrestricted 610.7 .1 — 610.8 610.8 Held by variable interest entities 115.6 — — 115.6 115.6 Liabilities: Policyholder account balances — — 11,254.5 11,254.5 11,254.5 Investment borrowings — 1,647.7 — 1,647.7 1,646.5 Borrowings related to variable interest entities — 1,433.9 — 1,433.9 1,410.5 Notes payable – direct corporate obligations — 928.9 — 928.9 915.1 December 31, 2017 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 $ — $ — $ 1,677.3 $ 1,677.3 $ 1,650.6 Policy loans — — 116.0 116.0 116.0 Other invested assets: Company-owned life insurance — 182.3 — 182.3 182.3 Cash and cash equivalents: Unrestricted 578.4 — — 578.4 578.4 Held by variable interest entities 178.9 — — 178.9 178.9 Liabilities: Policyholder account balances — — 11,220.7 11,220.7 11,220.7 Investment borrowings — 1,648.8 — 1,648.8 1,646.7 Borrowings related to variable interest entities — 1,432.9 — 1,432.9 1,410.7 Notes payable – direct corporate obligations — 962.3 — 962.3 914.6 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, 2018 (dollars in millions): March 31, 2018 Beginning balance as of December 31, 2017 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, 2018 Amount of total gains (losses) for the three months ended March 31, 2018 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 $ 230.4 $ 6.2 $ 1.2 $ (2.4 ) $ — $ (35.3 ) $ 200.1 $ — Debt securities issued by foreign governments 3.9 — — (.1 ) — — 3.8 — Asset-backed securities 24.2 (6.1 ) — (.5 ) — — 17.6 — Collateralized debt obligations — 15.3 — — — — 15.3 — Commercial mortgage-backed securities — — — — — — — — Total fixed maturities, available for sale 258.5 15.4 1.2 (3.0 ) — (35.3 ) 236.8 — Equity securities - corporate securities 21.2 — .2 — — — 21.4 — Investments held by variable interest entities - corporate securities 4.9 — — — — (4.9 ) — — Liabilities: Future policy benefits - embedded derivatives associated with fixed index annuity products (1,334.8 ) (17.6 ) 37.0 — — — (1,315.4 ) 37.0 _________ (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, 2018 (dollars in millions): Purchases Sales Issuances Settlements Purchases, sales, issuances and settlements, net Assets: Fixed maturities, available for sale: Corporate securities $ 11.1 $ (4.9 ) $ — $ — $ 6.2 Asset-backed securities 5.0 (11.1 ) — — (6.1 ) Collateralized debt obligations 15.3 — — — 15.3 Total fixed maturities, available for sale 31.4 (16.0 ) — — 15.4 Liabilities: Future policy benefits - embedded derivatives associated with fixed index annuity products (39.2 ) 3.7 (2.2 ) 20.1 (17.6 ) 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, 2017 (dollars in millions): March 31, 2017 Beginning balance as of December 31, 2016 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, 2017 Amount of total gains (losses) for the three months ended March 31, 2017 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 $ 258.5 $ 4.2 $ .6 $ 8.0 $ 17.5 $ — $ 288.8 $ (3.2 ) Debt securities issued by foreign governments 3.9 — — — — — 3.9 — Asset-backed securities 60.4 9.9 — .4 — (3.5 ) 67.2 — Collateralized debt obligations 5.4 9.0 — — — (2.9 ) 11.5 — Commercial mortgage-backed securities 32.0 (.1 ) — — — (17.0 ) 14.9 — Total fixed maturities, available for sale 360.2 23.0 .6 8.4 17.5 (23.4 ) 386.3 (3.2 ) Equity securities - corporate securities 25.2 — — (.1 ) — (.8 ) 24.3 — Liabilities: Future policy benefits - embedded derivatives associated with fixed index annuity products (1,092.3 ) (69.2 ) 2.3 — — — (1,159.2 ) 2.3 ____________ (a) Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate. (b) Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts. The following summarizes such activity for the three months ended March 31, 2017 (dollars in millions): Purchases Sales Issuances Settlements Purchases, sales, issuances and settlements, net Assets: Fixed maturities, available for sale: Corporate securities $ 23.2 $ (19.0 ) $ — $ — $ 4.2 Asset-backed securities 12.0 (2.1 ) — — 9.9 Collateralized debt obligations 9.0 — — — 9.0 Commercial mortgage-backed securities — (.1 ) — — (.1 ) Total fixed maturities, available for sale 44.2 (21.2 ) — — 23.0 Liabilities: Future policy benefits - embedded derivatives associated with fixed index annuity products (43.3 ) 1.3 (43.1 ) 15.9 (69.2 ) |
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, 2018 (dollars in millions): Fair value at March 31, 2018 Valuation techniques Unobservable inputs Range (weighted average) Assets: Corporate securities (a) $ 146.7 Discounted cash flow analysis Discount margins 1.35% - 93.32% (7.69%) Corporate securities (b) .4 Recovery method Percent of recovery expected 0% - 5% (5%) Asset-backed securities (c) 12.5 Discounted cash flow analysis Discount margins 1.97% - 2.03% (2.03%) Equity securities (d) 1.2 Market comparables EBITDA multiples 1.1X Equity securities (e) 20.2 Recovery method Percent of recovery expected 59.1% Other assets categorized as Level 3 (f) 77.2 Unadjusted third-party price source Not applicable Not applicable Total 258.2 Liabilities: Future policy benefits (g) 1,315.4 Discounted projected embedded derivatives Projected portfolio yields 5.15% - 5.61% (5.60%) Discount rates 1.13% - 2.69% (2.30%) Surrender rates 1.20% - 46.40% (12.30%) ________________________________ (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) Corporate securities - The significant unobservable input used in the fair value measurement of these corporate securities is percentage of recovery expected. Significant increases (decreases) in percentage of recovery expected in isolation would result in a significantly higher (lower) fair value measurement. (c) 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. (d) Equity securities - The significant unobservable input used in the fair value measurement of these equity securities is multiples of earnings before interest, taxes, depreciation and amortization ("EBITDA"). Generally, increases (decreases) in the EBITDA multiples would result in higher (lower) fair value measurements. (e) Equity securities - The significant unobservable input used in the fair value measurement of these equity securities is percentage of recovery expected. Significant increases (decreases) in percentage of recovery expected in isolation would result in a significantly higher (lower) fair value measurement. (f) Other assets categorized as Level 3 - For these assets, there were no adjustments to quoted market prices obtained from third-party pricing sources. (g) 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, 2017 (dollars in millions): Fair value at December 31, 2017 Valuation techniques Unobservable inputs Range (weighted average) Assets: Corporate securities (a) $ 149.2 Discounted cash flow analysis Discount margins 1.45% - 71.29% (6.96%) Corporate securities (b) 2.8 Recovery method Percent of recovery expected 0% - 21.73% (18.42%) Asset-backed securities (c) 24.2 Discounted cash flow analysis Discount margins 1.80% - 3.71% (2.67%) Equity securities (d) 1.1 Market comparables EBITDA multiples 1.1X Equity securities (e) 20.1 Recovery method Percent of recovery expected 59.1% Other assets categorized as Level 3 (f) 87.2 Unadjusted third-party price source Not applicable Not applicable Total 284.6 Liabilities: Future policy benefits (g) 1,334.8 Discounted projected embedded derivatives Projected portfolio yields 5.15% - 5.61% (5.60%) Discount rates 0.92% - 2.51% (2.00%) Surrender rates 1.20% - 46.40% (12.30%) ________________________________ (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) Corporate securities - The significant unobservable input used in the fair value measurement of these corporate securities is percentage of recovery expected. Significant increases (decreases) in percentage of recovery expected in isolation would result in a significantly higher (lower) fair value measurement. (c) 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. (d) Equity securities - The significant unobservable input used in the fair value measurement of these equity securities is EBITDA multiples. Generally, increases (decreases) in EBITDA multiples would result in higher (lower) fair value measurements. (e) Equity securities - The significant unobservable input used in the fair value measurement of these equity securities is percentage of recovery expected. Significant increases (decreases) in percentage of recovery expected in isolation would result in a significantly higher (lower) fair value measurement. (f) Other assets categorized as Level 3 - For these assets, there were no adjustments to quoted market prices obtained from third-party pricing sources. (g) 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 PRESENT39
BUSINESS AND BASIS OF PRESENTATION (Details) | 3 Months Ended |
Mar. 31, 2018distribution_channel | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of distribution channels | 3 |
INVESTMENTS - SCHEDULE OF UNREA
INVESTMENTS - SCHEDULE OF UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS INCLUDED IN ACCUMULATED OTHER COMPREHENSIVE INCOME (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
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 | $ 3.4 | $ 2.6 | |
Net unrealized gains on all other investments | 1,551.8 | 2,227.3 | |
Adjustment to present value of future profits | (89.7) | (94) | |
Adjustment to deferred acquisition costs | (237.6) | (292.6) | |
Adjustment to insurance liabilities | (87.8) | (295.8) | |
Deferred income tax liabilities | (245.8) | (335.4) | |
Accumulated other comprehensive income | $ 894.3 | $ 1,195.8 | $ 1,212.1 |
INVESTMENTS - NARRATIVE (Detail
INVESTMENTS - NARRATIVE (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | ||
Schedule of Available-for-sale Securities [Line Items] | ||||
Premium deficiencies adjustments to present value of future profits | $ (80.6) | |||
Reduction to deferred acquisition costs due to unrealized gains that would result in premium deficiency if unrealized gains were realized | (134.5) | |||
Adjustment to insurance liabilities | 87.8 | $ 295.8 | ||
Increase to deferred tax assets due to unrealized gains that would result in premium deficiency if unrealized gains were realized | 67.9 | |||
Net realized investment gains (losses) | (15.2) | $ 7.9 | ||
Net realized investment gains (losses), excluding impairment losses | (15.2) | 16.3 | ||
Other than temporary impairment losses, investments | 8.4 | |||
Value of available for sale securities sold | 444.3 | |||
Impairment losses recognized | [1] | 0 | (8.4) | |
Other than temporary impairment losses, losses on other investments following unforeseen events | 5.2 | |||
Other-than-temporary impairments included in accumulated other comprehensive income | 0.9 | |||
Embedded Derivative Related to Reinsurance Contract | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Embedded derivative, loss on embedded derivative | (0.5) | |||
Increase in fair value of embedded derivative | 2.7 | |||
Coinsurance | Embedded Derivative Related to Reinsurance Contract | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Embedded derivative, loss on embedded derivative | (2.7) | |||
Increase in fair value of embedded derivative | 0.7 | |||
Marketable securities | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Net realized investment gains (losses), excluding impairment losses | 0.5 | 12.9 | ||
Equity securities | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Net realized investment gains (losses) | 0 | 1.9 | ||
Change in fair value of equity securities | (12.5) | 0 | ||
Total fixed maturities, available for sale | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Net realized investment gains (losses) | 0.5 | 1.1 | ||
Gross realized losses on sale | 7.7 | 2.7 | ||
Corporate securities | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Gross realized losses on sale | 3.7 | |||
Commercial mortgage-backed securities | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Gross realized losses on sale | 2 | |||
Various other investments | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Gross realized losses on sale | $ 2 | |||
Fixed income investments | Energy Sector | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Impairment losses recognized | $ (3.2) | |||
[1] | No portion of the other-than-temporary impairments recognized in the periods was included in accumulated other comprehensive income. |
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 | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | $ 20,820.9 | $ 20,702.1 |
Other-than-temporary impairments included in accumulated other comprehensive income | (0.9) | |
Corporate securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 13,629.5 | 13,286.3 |
Gross unrealized gains | 1,196.1 | 1,699.1 |
Gross unrealized losses | (100.3) | (27) |
Estimated fair value | 14,725.3 | 14,958.4 |
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | 0 |
United States Treasury securities and obligations of United States government corporations and agencies | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 149.4 | 146.4 |
Gross unrealized gains | 24 | 31.5 |
Gross unrealized losses | (0.3) | (0.2) |
Estimated fair value | 173.1 | 177.7 |
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | 0 |
States and political subdivisions | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 1,843.7 | 1,821.9 |
Gross unrealized gains | 204.2 | 234.8 |
Gross unrealized losses | (1.6) | (0.4) |
Estimated fair value | 2,046.3 | 2,056.3 |
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | 0 |
Debt securities issued by foreign governments | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 78 | 79.5 |
Gross unrealized gains | 1.4 | 3.8 |
Gross unrealized losses | (1.7) | (0.2) |
Estimated fair value | 77.7 | 83.1 |
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | 0 |
Asset-backed securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 2,725.6 | 3,085.9 |
Gross unrealized gains | 165.9 | 172.6 |
Gross unrealized losses | (7.7) | (4.1) |
Estimated fair value | 2,883.8 | 3,254.4 |
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | 0 |
Collateralized debt obligations | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 363 | 257.1 |
Gross unrealized gains | 1.7 | 2.3 |
Gross unrealized losses | (0.2) | 0 |
Estimated fair value | 364.5 | 259.4 |
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | 0 |
Commercial mortgage-backed securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 1,398 | 1,354 |
Gross unrealized gains | 20.7 | 33.8 |
Gross unrealized losses | (16.8) | (10.3) |
Estimated fair value | 1,401.9 | 1,377.5 |
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | 0 |
Mortgage pass-through securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 1.7 | 1.8 |
Gross unrealized gains | 0.1 | 0.2 |
Gross unrealized losses | 0 | 0 |
Estimated fair value | 1.8 | 2 |
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | 0 |
Collateralized mortgage obligations | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 632 | 669.2 |
Gross unrealized gains | 70.7 | 73.2 |
Gross unrealized losses | (1.6) | (0.3) |
Estimated fair value | 701.1 | 742.1 |
Other-than-temporary impairments included in accumulated other comprehensive income | (0.9) | (1) |
Total fixed maturities, available for sale | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 20,820.9 | 20,702.1 |
Gross unrealized gains | 1,684.8 | 2,251.3 |
Gross unrealized losses | (130.2) | (42.5) |
Estimated fair value | 22,375.5 | 22,910.9 |
Other-than-temporary impairments included in accumulated other comprehensive income | $ (0.9) | (1) |
Equity securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 420 | |
Gross unrealized gains | 23.6 | |
Gross unrealized losses | (3) | |
Estimated fair value | $ 440.6 |
INVESTMENTS - SUMMARY OF INVEST
INVESTMENTS - SUMMARY OF INVESTMENTS BY CONTRACTUAL MATURITY (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Amortized cost | ||
Due in one year or less | $ 424.2 | $ 328.1 |
Due after one year through five years | 1,765.2 | 1,947.3 |
Due after five years through ten years | 1,818 | 1,508.7 |
Due after ten years | 11,693.2 | 11,550 |
Subtotal | 15,700.6 | 15,334.1 |
Structured securities | 5,120.3 | 5,368 |
Amortized cost | 20,820.9 | 20,702.1 |
Estimated fair value | ||
Due in one year or less | 431.3 | 335.1 |
Due after one year through five years | 1,837.4 | 2,052.3 |
Due after five years through ten years | 1,881.8 | 1,601.3 |
Due after ten years | 12,871.9 | 13,286.8 |
Subtotal | 17,022.4 | 17,275.5 |
Structured securities | 5,353.1 | 5,635.4 |
Total fixed maturities, available for sale | $ 22,375.5 | $ 22,910.9 |
INVESTMENTS - NET REALIZED INVE
INVESTMENTS - NET REALIZED INVESTMENT GAINS (LOSSES) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Gain (Loss) on Investments [Line Items] | ||
Total realized gains (losses) | $ (15.2) | $ 7.9 |
Investments | ||
Gain (Loss) on Investments [Line Items] | ||
Change in estimated fair value of trading securities | (8.9) | 3 |
Total fixed maturities, available for sale | ||
Gain (Loss) on Investments [Line Items] | ||
Gross realized gains on sale | 8.2 | 7 |
Gross realized losses on sale | (7.7) | (2.7) |
Impairment losses recognized | 0 | (3.2) |
Total realized gains (losses) | 0.5 | 1.1 |
Equity securities | ||
Gain (Loss) on Investments [Line Items] | ||
Total realized gains (losses) | 0 | 1.9 |
Change in fair value of equity securities | (12.5) | 0 |
Mortgage loans | ||
Gain (Loss) on Investments [Line Items] | ||
Total realized gains (losses) | 0 | 1 |
Impairments of other investments | ||
Gain (Loss) on Investments [Line Items] | ||
Total realized gains (losses) | 0 | (5.2) |
Other | ||
Gain (Loss) on Investments [Line Items] | ||
Total realized gains (losses) | $ (3.2) | $ 9.1 |
INVESTMENTS - SCHEDULE OF OTHER
INVESTMENTS - SCHEDULE OF OTHER THAN TEMPORARY IMPAIRMENT (Details) - Available-for-sale Securities - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward] | ||
Credit losses on fixed maturity securities, available for sale, beginning of period | $ (2.8) | $ (5.5) |
Add: credit losses on other-than-temporary impairments not previously recognized | 0 | 0 |
Less: credit losses on securities sold | 0 | 0.1 |
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 | $ (2.8) | $ (5.4) |
INVESTMENTS - SUMMARY OF INVE46
INVESTMENTS - SUMMARY OF INVESTMENTS WITH UNREALIZED LOSSES BY INVESTMENT CATEGORY (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Schedule of Available-for-sale Securities [Line Items] | ||
Fair value, less than 12 months | $ 3,715.2 | $ 1,426.4 |
Unrealized losses, less than 12 months | (85.5) | (11.1) |
Fair value, 12 months or greater | 605.4 | 732.6 |
Unrealized losses, 12 months or greater | (44.7) | (31.4) |
Fair value, total | 4,320.6 | 2,159 |
Unrealized losses, total | (130.2) | (42.5) |
United States Treasury securities and obligations of United States government corporations and agencies | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair value, less than 12 months | 18.4 | 28.2 |
Unrealized losses, less than 12 months | (0.3) | (0.2) |
Fair value, 12 months or greater | 12.6 | 0.7 |
Unrealized losses, 12 months or greater | 0 | 0 |
Fair value, total | 31 | 28.9 |
Unrealized losses, total | (0.3) | (0.2) |
States and political subdivisions | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair value, less than 12 months | 61.8 | 18.3 |
Unrealized losses, less than 12 months | (1.2) | (0.1) |
Fair value, 12 months or greater | 14.5 | 14.9 |
Unrealized losses, 12 months or greater | (0.3) | (0.3) |
Fair value, total | 76.3 | 33.2 |
Unrealized losses, total | (1.5) | (0.4) |
Debt securities issued by foreign governments | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair value, less than 12 months | 39.4 | 7.7 |
Unrealized losses, less than 12 months | (1.6) | (0.1) |
Fair value, 12 months or greater | 8 | 5.4 |
Unrealized losses, 12 months or greater | (0.2) | (0.1) |
Fair value, total | 47.4 | 13.1 |
Unrealized losses, total | (1.8) | (0.2) |
Corporate securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair value, less than 12 months | 2,594.2 | 470.5 |
Unrealized losses, less than 12 months | (70.8) | (6.8) |
Fair value, 12 months or greater | 299 | 359.7 |
Unrealized losses, 12 months or greater | (29.5) | (20.2) |
Fair value, total | 2,893.2 | 830.2 |
Unrealized losses, total | (100.3) | (27) |
Asset-backed securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair value, less than 12 months | 539.5 | 601.4 |
Unrealized losses, less than 12 months | (5.4) | (2) |
Fair value, 12 months or greater | 67.9 | 122.2 |
Unrealized losses, 12 months or greater | (2.3) | (2.1) |
Fair value, total | 607.4 | 723.6 |
Unrealized losses, total | (7.7) | (4.1) |
Collateralized debt obligations | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair value, less than 12 months | 74.4 | 3 |
Unrealized losses, less than 12 months | (0.2) | 0 |
Fair value, 12 months or greater | 0 | 0 |
Unrealized losses, 12 months or greater | 0 | 0 |
Fair value, total | 74.4 | 3 |
Unrealized losses, total | (0.2) | 0 |
Commercial mortgage-backed securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair value, less than 12 months | 310.4 | 276.8 |
Unrealized losses, less than 12 months | (4.4) | (1.7) |
Fair value, 12 months or greater | 201 | 218.2 |
Unrealized losses, 12 months or greater | (12.4) | (8.6) |
Fair value, total | 511.4 | 495 |
Unrealized losses, total | (16.8) | (10.3) |
Mortgage pass-through securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair value, less than 12 months | 0.1 | |
Unrealized losses, less than 12 months | 0 | |
Fair value, 12 months or greater | 0 | |
Unrealized losses, 12 months or greater | 0 | |
Fair value, total | 0.1 | |
Unrealized losses, total | 0 | |
Collateralized mortgage obligations | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair value, less than 12 months | 77 | 20.5 |
Unrealized losses, less than 12 months | (1.6) | (0.2) |
Fair value, 12 months or greater | 2.4 | 11.5 |
Unrealized losses, 12 months or greater | 0 | (0.1) |
Fair value, total | 79.4 | 32 |
Unrealized losses, total | $ (1.6) | (0.3) |
Equity securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair value, less than 12 months | 58.7 | |
Unrealized losses, less than 12 months | (1.7) | |
Fair value, 12 months or greater | 21.2 | |
Unrealized losses, 12 months or greater | (1.3) | |
Fair value, total | 79.9 | |
Unrealized losses, total | $ (3) |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Dilutive Securities, Effect on Basic Earnings Per Share [Abstract] | ||
Net income | $ 84.3 | $ 62.3 |
Shares: | ||
Weighted average shares outstanding for basic earnings per share (in shares) | 167,060,000 | 173,431,000 |
Effect of dilutive securities on weighted average shares: | ||
Stock options, restricted stock and performance units (in shares) | 2,617,000 | 1,634,000 |
Weighted average shares outstanding for diluted earnings per share (in shares) | 169,677,000 | 175,065,000 |
BUSINESS SEGMENTS (Details)
BUSINESS SEGMENTS (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Revenues: | ||
Net investment income | $ 295.3 | |
Fee revenue and other income | $ 21.2 | 11.8 |
Total revenues | 1,005.9 | 1,048.6 |
Expenses: | ||
Insurance policy benefits | 586.6 | 669.3 |
Other operating costs and expenses | 207.6 | 210.4 |
Total expenses | 911 | 955.7 |
Pre-tax operating earnings | 94.9 | 92.9 |
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract] | ||
Total segment revenues | 1,005.9 | 1,048.6 |
Net realized investment gains (losses) | (15.2) | 7.9 |
Revenues related to VIEs | 17.1 | 14.2 |
Total revenues | 1,007.8 | 1,070.7 |
Total segment expenses | 911 | 955.7 |
Insurance policy benefits - fair value changes in embedded derivative liabilities | (30.9) | 5.5 |
Amortization related to fair value changes in embedded derivative liabilities | 5.8 | (1.1) |
Expenses related to VIEs | 13.8 | 13.9 |
Total benefits and expenses | 899.7 | 974 |
Income before tax | 108.1 | 96.7 |
Income tax expense on period income | 23.8 | 34.4 |
Net income | 84.3 | 62.3 |
Operating segments | Bankers Life: | ||
Revenues: | ||
Annuities | 4.6 | 6 |
Health | 302.2 | 311.6 |
Life | 103.9 | 101.5 |
Net investment income | 237.9 | 272.9 |
Fee revenue and other income | 19.6 | 10.6 |
Total revenues | 668.2 | 702.6 |
Expenses: | ||
Insurance policy benefits | 411.1 | 451.2 |
Amortization | 47 | 46.3 |
Interest expense on investment borrowings | 6.1 | 4.2 |
Other operating costs and expenses | 114.5 | 111.2 |
Total expenses | 578.7 | 612.9 |
Pre-tax operating earnings | 89.5 | 89.7 |
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract] | ||
Total segment revenues | 668.2 | 702.6 |
Total segment expenses | 578.7 | 612.9 |
Operating segments | Washington National: | ||
Revenues: | ||
Annuities | 0.5 | 0.6 |
Health | 163.8 | 159.8 |
Life | 6.7 | 6.7 |
Net investment income | 65.4 | 67.4 |
Fee revenue and other income | 0.2 | 0.3 |
Total revenues | 236.6 | 234.8 |
Expenses: | ||
Insurance policy benefits | 137.7 | 146.7 |
Amortization | 14.5 | 14.3 |
Interest expense on investment borrowings | 2.1 | 1.3 |
Other operating costs and expenses | 48 | 49 |
Total expenses | 202.3 | 211.3 |
Pre-tax operating earnings | 34.3 | 23.5 |
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract] | ||
Total segment revenues | 236.6 | 234.8 |
Total segment expenses | 202.3 | 211.3 |
Operating segments | Colonial Penn: | ||
Revenues: | ||
Health | 0.5 | 0.6 |
Life | 73.6 | 72.4 |
Net investment income | 11 | 10.9 |
Fee revenue and other income | 0.5 | 0.2 |
Total revenues | 85.6 | 84.1 |
Expenses: | ||
Insurance policy benefits | 56.7 | 52.7 |
Amortization | 4.6 | 4 |
Interest expense on investment borrowings | 0.3 | 0.2 |
Other operating costs and expenses | 25.5 | 27.5 |
Total expenses | 87.1 | 84.4 |
Pre-tax operating earnings | (1.5) | (0.3) |
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract] | ||
Total segment revenues | 85.6 | 84.1 |
Total segment expenses | 87.1 | 84.4 |
Operating segments | Long-term care in run-off: | ||
Revenues: | ||
Health | 4.1 | 4.6 |
Net investment income | 8.4 | 9.7 |
Total revenues | 12.5 | 14.3 |
Expenses: | ||
Insurance policy benefits | 12 | 13.2 |
Other operating costs and expenses | 0.5 | 0.7 |
Total expenses | 12.5 | 13.9 |
Pre-tax operating earnings | 0 | 0.4 |
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract] | ||
Total segment revenues | 12.5 | 14.3 |
Total segment expenses | 12.5 | 13.9 |
Corporate | ||
Revenues: | ||
Net investment income | 1.2 | 10.4 |
Fee revenue and other income | 1.8 | 2.4 |
Total revenues | 3 | 12.8 |
Expenses: | ||
Interest expense on corporate debt | 11.9 | 11.5 |
Other operating costs and expenses | 18.5 | 21.7 |
Total expenses | 30.4 | 33.2 |
Pre-tax operating earnings | (27.4) | (20.4) |
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract] | ||
Total segment revenues | 3 | 12.8 |
Total segment expenses | $ 30.4 | $ 33.2 |
ACCOUNTING FOR DERIVATIVES - FA
ACCOUNTING FOR DERIVATIVES - FAIR VALUE BY BALANCE SHEET LOCATION (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Fixed index call options | ||
Derivatives, Fair Value [Line Items] | ||
Assets | $ 141.5 | $ 170.2 |
Not Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Assets | 137.4 | 168.8 |
Liabilities | 1,315.4 | 1,334.8 |
Not Designated as Hedging Instrument | Fixed index call options | Other invested assets: | ||
Derivatives, Fair Value [Line Items] | ||
Assets | 141.5 | 170.2 |
Not Designated as Hedging Instrument | Reinsurance receivables | Other invested assets: | ||
Derivatives, Fair Value [Line Items] | ||
Assets | (4.1) | (1.4) |
Not Designated as Hedging Instrument | Fixed index products | Future policy benefits: | ||
Derivatives, Fair Value [Line Items] | ||
Liabilities | $ 1,315.4 | $ 1,334.8 |
ACCOUNTING FOR DERIVATIVES (Det
ACCOUNTING FOR DERIVATIVES (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Embedded Derivative Associated With Modified Coinsurance Agreement | ||
Derivative [Line Items] | ||
Embedded derivative | $ 125 | |
Fixed index call options | ||
Derivative [Line Items] | ||
Notional amount | $ 3,000 | $ 3,000 |
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, 2018 | Mar. 31, 2017 | |
Derivative [Line Items] | ||
Gains (losses) on derivatives not designated as hedging instruments | $ 28.7 | $ 47.5 |
Investment Income | Fixed index call options | ||
Derivative [Line Items] | ||
Gains (losses) on derivatives not designated as hedging instruments | (5.6) | 44.5 |
Gain (Loss) on Investments | Embedded Derivative | Coinsurance | ||
Derivative [Line Items] | ||
Gains (losses) on derivatives not designated as hedging instruments | (2.7) | 0.7 |
Insurance Policy Benefits | Embedded Derivative | Fixed Index Annuity | ||
Derivative [Line Items] | ||
Gains (losses) on derivatives not designated as hedging instruments | $ 37 | $ 2.3 |
ACCOUNTING FOR DERIVATIVES - DE
ACCOUNTING FOR DERIVATIVES - DERIVATIVES WITH MASTER NETTING ARRANGEMENTS (Details) - Fixed index call options - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Derivative [Line Items] | ||
Gross amounts recognized | $ 141.5 | $ 170.2 |
Gross amounts offset in the balance sheet | 0 | 0 |
Net amounts of assets presented in the balance sheet | 141.5 | 170.2 |
Financial instruments | 0 | 0 |
Cash collateral received | 0 | 0 |
Net amount | $ 141.5 | $ 170.2 |
REINSURANCE (Narrative) (Detail
REINSURANCE (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Reinsurance Disclosures [Abstract] | ||
Ceded premiums written | $ 24.5 | $ 26.3 |
Ceded insurance policy benefits | 23.4 | 24.1 |
Assumed premiums written | 7.2 | 8 |
Insurance policy benefits related to reinsurance | $ 9.3 | $ 12 |
INCOME TAXES - COMPONENTS OF TA
INCOME TAXES - COMPONENTS OF TAX EXPENSE (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Current tax expense | $ 5.3 | $ 20.6 |
Deferred tax expense | 18.5 | 13.8 |
Income tax expense calculated based on estimated annual effective tax rate | $ 23.8 | $ 34.4 |
INCOME TAXES - NARRATIVE (Detai
INCOME TAXES - NARRATIVE (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2017 | |
Operating Loss Carryforwards [Line Items] | |||
Tax reform provisional income tax expense (benefit) | $ 172.5 | $ 172.5 | |
Deferred tax assets more likely than not to be realized through future taxable earnings | $ 443 | 376.2 | 376.2 |
Net deferred tax assets | 532.1 | 465.3 | 465.3 |
Valuation allowance | $ (89.1) | (89.1) | (89.1) |
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 | 2.18% | ||
Ownership change threshold restricting NOL usage | 50.00% | ||
Net operating loss carryforwards | $ 2,305.7 | ||
Net state operating loss carryforwards | $ 9.8 | $ 9.3 | $ 9.3 |
Future cash tax payments based on income of life insurance company, percent | 65.00% | ||
Federal | |||
Operating Loss Carryforwards [Line Items] | |||
Valuation allowance | $ (77.4) | ||
Net operating loss carryforwards | 2,300 | ||
State | |||
Operating Loss Carryforwards [Line Items] | |||
Valuation allowance | $ (11.7) |
INCOME TAXES - RECONCILIATION O
INCOME TAXES - RECONCILIATION OF CORPORATE TAX RATE (Details) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
U.S. statutory corporate rate | 21.00% | 35.00% |
Non-taxable income and nondeductible benefits, net | 0.20% | (1.10%) |
State taxes | 0.80% | 1.70% |
Estimated annual effective tax rate | 22.00% | 35.60% |
INCOME TAXES - DEFERRED ASSETS
INCOME TAXES - DEFERRED ASSETS AND LIABILITIES (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Deferred tax assets: | ||
Net federal operating loss carryforwards | $ 484.2 | $ 489.6 |
Net state operating loss carryforwards | 9.8 | 9.3 |
Investments | 0.1 | 4.3 |
Insurance liabilities | 402.4 | 415.8 |
Other | 44.3 | 48.9 |
Gross deferred tax assets | 940.8 | 967.9 |
Deferred tax liabilities: | ||
Present value of future profits and deferred acquisition costs | (160.6) | (165.4) |
Accumulated other comprehensive income | (248.1) | (337.2) |
Gross deferred tax liabilities | (408.7) | (502.6) |
Net deferred tax assets before valuation allowance | 532.1 | 465.3 |
Valuation allowance | (89.1) | (89.1) |
Net deferred tax assets | 443 | 376.2 |
Current income taxes prepaid (accrued) | 7.4 | (9.3) |
Income tax assets, net | $ 450.4 | $ 366.9 |
INCOME TAXES - NET OPERATING LO
INCOME TAXES - NET OPERATING LOSSES (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | $ 2,305.7 |
Carryforward Expiration 2023 | |
Operating Loss Carryforwards [Line Items] | |
Year of expiration | Dec. 31, 2023 |
Net operating loss carryforwards | $ 1,719.1 |
Carryforward Expiration 2025 | |
Operating Loss Carryforwards [Line Items] | |
Year of expiration | Dec. 31, 2025 |
Net operating loss carryforwards | $ 85.2 |
Carryforward Expiration 2026 | |
Operating Loss Carryforwards [Line Items] | |
Year of expiration | Dec. 31, 2026 |
Net operating loss carryforwards | $ 149.9 |
Carryforward Expiration 2027 | |
Operating Loss Carryforwards [Line Items] | |
Year of expiration | Dec. 31, 2027 |
Net operating loss carryforwards | $ 10.8 |
Carryforward Expiration 2028 | |
Operating Loss Carryforwards [Line Items] | |
Year of expiration | Dec. 31, 2028 |
Net operating loss carryforwards | $ 80.3 |
Carryforward Expiration 2029 | |
Operating Loss Carryforwards [Line Items] | |
Year of expiration | Dec. 31, 2029 |
Net operating loss carryforwards | $ 213.2 |
Carryforward Expiration 2030 | |
Operating Loss Carryforwards [Line Items] | |
Year of expiration | Dec. 31, 2030 |
Net operating loss carryforwards | $ 0.3 |
Carryforward Expiration 2031 | |
Operating Loss Carryforwards [Line Items] | |
Year of expiration | Dec. 31, 2031 |
Net operating loss carryforwards | $ 0.2 |
Carryforward Expiration 2032 | |
Operating Loss Carryforwards [Line Items] | |
Year of expiration | Dec. 31, 2032 |
Net operating loss carryforwards | $ 44.4 |
Carryforward Expiration 2033 | |
Operating Loss Carryforwards [Line Items] | |
Year of expiration | Dec. 31, 2033 |
Net operating loss carryforwards | $ 0.6 |
Carryforward Expiration 2034 | |
Operating Loss Carryforwards [Line Items] | |
Year of expiration | Dec. 31, 2034 |
Net operating loss carryforwards | $ 0.9 |
Carryforward Expiration 2035 | |
Operating Loss Carryforwards [Line Items] | |
Year of expiration | Dec. 31, 2035 |
Net operating loss carryforwards | $ 0.8 |
NOTES PAYABLE - DIRECT CORPOR59
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS - SCHEDULE OF LONG-TERM DEBT INSTRUMENTS (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 | May 19, 2015 |
Debt Instruments [Abstract] | |||
Direct corporate obligations | $ 915.1 | $ 914.6 | |
Unamortized debt issue costs | (9.9) | (10.4) | |
Senior notes | 4.500% Senior Notes due May 2020 | |||
Debt Instruments [Abstract] | |||
Direct corporate obligations | $ 325 | 325 | |
Interest rate | 4.50% | ||
Senior notes | 5.250% Senior Notes due May 2025 | |||
Debt Instruments [Abstract] | |||
Direct corporate obligations | $ 500 | 500 | |
Interest rate | 5.25% | ||
Line of credit | Revolving credit agreement | |||
Debt Instruments [Abstract] | |||
Direct corporate obligations | $ 100 | $ 100 | $ 100 |
NOTES PAYABLE - DIRECT CORPOR60
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS - REVOLVING CREDIT AGREEMENT (Details) - USD ($) $ in Millions | Oct. 13, 2017 | May 19, 2015 | Mar. 31, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||||
Initial drawing amount | $ 915.1 | $ 914.6 | ||
Revolving credit agreement | Line of credit | ||||
Debt Instrument [Line Items] | ||||
Line of credit maximum borrowing capacity | $ 250 | $ 150 | ||
Debt Instrument, Term | 4 years | |||
Initial drawing amount | $ 100 | $ 100 | $ 100 | |
Interest rate on amounts outstanding at period end | 3.75% | |||
Debt covenant, required minimum debt to total capitalization ratio | 35.00% | |||
Debt covenant, actual debt to total capitalization ratio at period end | 20.10% | |||
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 | 427.00% | |||
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 | $ 3,722.9 | |||
Debt covenant, required minimum consolidated net worth, amount | $ 2,685.7 | |||
Revolving credit agreement | Line of credit | Federal Funds Rate | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 0.50% | |||
Minimum | Eurodollar | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 1.375% | |||
Minimum | Base Rate | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 0.375% | |||
Minimum | Revolving credit agreement | Line of credit | ||||
Debt Instrument [Line Items] | ||||
Remaining borrowing capacity | $ 50 | |||
Maximum | Eurodollar | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 2.125% | |||
Maximum | Base Rate | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 1.125% | |||
Maximum | Revolving credit agreement | Line of credit | ||||
Debt Instrument [Line Items] | ||||
Remaining borrowing capacity | $ 100 |
NOTES PAYABLE - DIRECT CORPOR61
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS - SCHEDULED REPAYMENT (Details) $ in Millions | Mar. 31, 2018USD ($) |
Debt Disclosure [Abstract] | |
2,019 | $ 0 |
2,020 | 100 |
2,021 | 325 |
2,022 | 0 |
2,023 | 0 |
Thereafter | 500 |
Long-term Debt | $ 925 |
INVESTMENT BORROWINGS (Details)
INVESTMENT BORROWINGS (Details) $ in Millions | 3 Months Ended | ||
Mar. 31, 2018USD ($)subsidiary | Mar. 31, 2017USD ($) | Dec. 31, 2017USD ($) | |
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Number of insurance subsidiaries that are members of the FHLB | subsidiary | 3 | ||
Investment borrowings | $ 1,646.5 | $ 1,646.7 | |
Federal Home Loan Bank advances | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Federal home loan bank stock | 71.2 | ||
Investment borrowings | 1,646.5 | ||
Federal home loan bank, advances, collateral pledged | 2,100 | ||
Aggregate fee to prepay all fixed rate FHLB borrowings | 1.2 | ||
Interest expense on FHLB borrowings | 8.5 | $ 5.7 | |
Federal Home Loan Bank advances | Borrowings due January 2019 | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 50 | ||
Maturity date | Jan. 31, 2019 | ||
Interest rate | 2.142% | ||
Federal Home Loan Bank advances | Borrowings due February 2019 | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 50 | ||
Maturity date | Feb. 28, 2019 | ||
Interest rate | 1.94% | ||
Federal Home Loan Bank advances | Borrowings due March 2019 | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 100 | ||
Maturity date | Mar. 31, 2019 | ||
Interest rate | 2.288% | ||
Federal Home Loan Bank advances | Borrowings due July 2019 | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 21.8 | ||
Maturity date | Jul. 31, 2019 | ||
Interest rate | 2.331% | ||
Federal Home Loan Bank advances | Borrowings due October 2019 | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 15 | ||
Maturity date | Oct. 31, 2019 | ||
Interest rate | 2.273% | ||
Federal Home Loan Bank advances | Borrowing due May 2020 | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 50 | ||
Maturity date | May 31, 2020 | ||
Interest rate | 2.297% | ||
Federal Home Loan Bank advances | Borrowings due June 2020 | |||
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 | Borrowings due September 2020 | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 25 | ||
Maturity date | Sep. 30, 2020 | ||
Interest rate | 2.911% | ||
Federal Home Loan Bank advances | Borrowings due September 2020 rate two | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 100 | ||
Maturity date | Sep. 30, 2020 | ||
Interest rate | 2.532% | ||
Federal Home Loan Bank advances | Borrowings due September 2020 rate three | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 50 | ||
Maturity date | Sep. 30, 2020 | ||
Interest rate | 2.537% | ||
Federal Home Loan Bank advances | Borrowings due September 2020 rate four | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 75 | ||
Maturity date | Sep. 30, 2020 | ||
Interest rate | 2.422% | ||
Federal Home Loan Bank advances | Borrowings due October 2020 | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 100 | ||
Maturity date | Oct. 31, 2020 | ||
Interest rate | 1.806% | ||
Federal Home Loan Bank advances | Borrowings due December 2020 | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 50 | ||
Maturity date | Dec. 31, 2020 | ||
Interest rate | 2.386% | ||
Federal Home Loan Bank advances | Borrowings due July 2021 | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 100 | ||
Maturity date | Jul. 31, 2021 | ||
Interest rate | 2.27% | ||
Federal Home Loan Bank advances | Borrowings due July 2021 rate two | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 100 | ||
Maturity date | Jul. 31, 2021 | ||
Interest rate | 2.24% | ||
Federal Home Loan Bank advances | Borrowings due August 2021 | |||
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 | Borrowings due August 2021 rate two | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 57.7 | ||
Maturity date | Aug. 31, 2021 | ||
Interest rate | 2.317% | ||
Federal Home Loan Bank advances | Borrowings due August 2021 Rate Three | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 125 | ||
Maturity date | Aug. 31, 2021 | ||
Interest rate | 2.352% | ||
Federal Home Loan Bank advances | Borrowings due September 2021 | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 50 | ||
Maturity date | Sep. 30, 2021 | ||
Interest rate | 2.484% | ||
Federal Home Loan Bank advances | Borrowings due May 2022, Rate One | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 22 | ||
Maturity date | May 31, 2022 | ||
Interest rate | 2.334% | ||
Federal Home Loan Bank advances | Borrowings due May 2022, Rate Two | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 100 | ||
Maturity date | May 31, 2022 | ||
Interest rate | 2.317% | ||
Federal Home Loan Bank advances | Borrowings due June 2022 | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 10 | ||
Maturity date | Jun. 30, 2022 | ||
Interest rate | 2.671% | ||
Federal Home Loan Bank advances | Borrowings due July 2022 rate one | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 50 | ||
Maturity date | Jul. 31, 2022 | ||
Interest rate | 2.075% | ||
Federal Home Loan Bank advances | Borrowings due July 2022 rate two | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 50 | ||
Maturity date | Jul. 31, 2022 | ||
Interest rate | 2.121% | ||
Federal Home Loan Bank advances | Borrowings due July 2022 rate three | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 50 | ||
Maturity date | Jul. 31, 2022 | ||
Interest rate | 2.14% | ||
Federal Home Loan Bank advances | Borrowings due August 2022 | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 50 | ||
Maturity date | Aug. 31, 2022 | ||
Interest rate | 2.183% | ||
Federal Home Loan Bank advances | Borrowings Due December 2022, Variable Rate 1.795% [Member] | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 50 | ||
Maturity date | Dec. 31, 2022 | ||
Interest rate | 2.306% | ||
Federal Home Loan Bank advances | Borrowings Due December 2022, Variable Rate 1.795%, Loan 2 [Member] | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 50 | ||
Maturity date | Dec. 31, 2022 | ||
Interest rate | 2.306% | ||
Federal Home Loan Bank advances | Borrowings due March 2023 | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Investment borrowings | $ 24.5 | ||
Maturity date | Mar. 31, 2023 | ||
Interest rate | 2.16% | ||
Federal Home Loan Bank advances | Borrowings due June 2025 | |||
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, 2018 | Mar. 31, 2017 | |
Number of common shares outstanding | ||
Balance, beginning of year (in shares) | 166,857,931 | |
Balance, end of year (in shares) | 167,354,255 | |
Number of stock tendered for payment of federal and state taxes owed (in shares) | 200,000 | |
Common stock dividends declared | $ 15.3 | $ 14 |
Dividends (in dollars per share) | $ 0.09 | |
Common stock | ||
Number of common shares outstanding | ||
Balance, beginning of year (in shares) | 166,858,000 | |
Balance, end of year (in shares) | 167,354,000 | |
Common stock | Stock options | ||
Number of common shares outstanding | ||
Shares issued under employee benefit compensation plans (in shares) | 123,000 | |
Number of stock tendered for payment of federal and state taxes owed (in shares) | 69,000 | |
Common stock | Restricted and Performance Stock | ||
Number of common shares outstanding | ||
Shares issued under employee benefit compensation plans (in shares) | 373,000 |
SALES INDUCEMENTS (Details)
SALES INDUCEMENTS (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Deferred Sales Inducements [Abstract] | |||
Deferred sales inducements | $ 0.5 | $ 0.5 | |
Deferred sales inducements, amortization expense | 2.7 | $ 2.1 | |
Unamortized deferred sales inducements | $ 40.3 | $ 42.5 |
OUT-OF-PERIOD ADJUSTMENTS (Deta
OUT-OF-PERIOD ADJUSTMENTS (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Increase in insurance policy benefits | $ (586.6) | $ (669.3) |
Income tax expense on period income | 23.8 | 34.4 |
Decrease in net income | 84.3 | $ 62.3 |
Restatement Adjustment | Colonial Penn and Bankers Life | Long-term Care and Insurance Benefits and Payouts of Annuities | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Increase in insurance policy benefits | 2.5 | |
Income tax expense on period income | 0.5 | |
Decrease in net income | $ 2 | |
Adjustment to net income per diluted share (in dollars per share) | $ 0.01 | |
Restatement Adjustment | Bankers Life | Long-term Care Insurance Benefits | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Increase in insurance policy benefits | $ 1.4 | |
Restatement Adjustment | Colonial Penn | Payout Annuities | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Increase in insurance policy benefits | $ 1.1 |
RECENTLY ISSUED ACCOUNTING ST66
RECENTLY ISSUED ACCOUNTING STANDARDS (Details) - USD ($) $ in Millions | 3 Months Ended | ||||
Mar. 31, 2018 | Mar. 31, 2017 | Jan. 01, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Fee revenue | $ 15.8 | ||||
Distribution expense (included in other operating costs and expenses) | 11.5 | ||||
Impact on pre-tax income | 4.3 | ||||
Accumulated other comprehensive income | 894.3 | $ 1,195.8 | $ 1,212.1 | ||
Retained earnings | 645.7 | 576.7 | 560.4 | ||
Total shareholders' equity | 4,617.2 | $ 4,606.8 | 4,847.5 | $ 4,847.5 | $ 4,486.9 |
Net Investment Income | 295.3 | ||||
Other operating costs | (246.2) | (206.8) | |||
Net cash from operating activities | 72.2 | 143.4 | |||
Sales of investments | 397.4 | ||||
Change in cash and cash equivalents held by variable interest entities | 0 | ||||
Other | (7.6) | (8.9) | |||
Net cash provided (used) by investing activities | (98.1) | 107 | |||
Net increase in cash and cash equivalents | (30.9) | 216.5 | |||
Cash and cash equivalents - unrestricted and held by variable interest entities | 884.7 | 668.2 | |||
Accounting Standards Update 2016-01 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Accumulated other comprehensive income | (16.3) | ||||
Retained earnings | 16.3 | ||||
Total shareholders' equity | 0 | ||||
Restricted cash | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Net Investment Income | 0 | ||||
Other operating costs | 0 | ||||
Net cash from operating activities | 0 | ||||
Sales of investments | 0 | ||||
Change in cash and cash equivalents held by variable interest entities | 165.2 | ||||
Other | 0 | ||||
Net cash provided (used) by investing activities | 165.2 | ||||
Net increase in cash and cash equivalents | 165.2 | ||||
Cash and cash equivalents - unrestricted and held by variable interest entities | 354.5 | 189.3 | |||
COLI death benefits | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Net Investment Income | 0 | ||||
Other operating costs | (3.2) | ||||
Net cash from operating activities | (3.2) | ||||
Sales of investments | 0 | ||||
Change in cash and cash equivalents held by variable interest entities | 0 | ||||
Other | 3.2 | ||||
Net cash provided (used) by investing activities | 3.2 | ||||
Net increase in cash and cash equivalents | 0 | ||||
Cash and cash equivalents - unrestricted and held by variable interest entities | 0 | 0 | |||
Distributions received from equity method investments | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Net Investment Income | 5.6 | ||||
Other operating costs | 0 | ||||
Net cash from operating activities | 5.6 | ||||
Sales of investments | (5.6) | ||||
Change in cash and cash equivalents held by variable interest entities | 0 | ||||
Other | 0 | ||||
Net cash provided (used) by investing activities | (5.6) | ||||
Net increase in cash and cash equivalents | 0 | ||||
Cash and cash equivalents - unrestricted and held by variable interest entities | 0 | 0 | |||
Amounts prior to effect of adoption of authoritative guidance | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Accumulated other comprehensive income | 1,212.1 | ||||
Retained earnings | 560.4 | ||||
Total shareholders' equity | $ 4,847.5 | ||||
Net Investment Income | 289.7 | ||||
Other operating costs | (203.6) | ||||
Net cash from operating activities | 141 | ||||
Sales of investments | 403 | ||||
Change in cash and cash equivalents held by variable interest entities | (165.2) | ||||
Other | (12.1) | ||||
Net cash provided (used) by investing activities | (55.8) | ||||
Net increase in cash and cash equivalents | 51.3 | ||||
Cash and cash equivalents - unrestricted and held by variable interest entities | $ 530.2 | $ 478.9 | |||
Calculated under Revenue Guidance in Effect before Topic 606 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Fee revenue | 8.5 | ||||
Distribution expense (included in other operating costs and expenses) | 2.7 | ||||
Impact on pre-tax income | 5.8 | ||||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Fee revenue | 7.3 | ||||
Distribution expense (included in other operating costs and expenses) | 8.8 | ||||
Impact on pre-tax income | $ (1.5) |
LITIGATION AND OTHER LEGAL PR67
LITIGATION AND OTHER LEGAL PROCEEDINGS (Details) | 3 Months Ended | |
Mar. 31, 2018state | Jul. 26, 2017individual | |
Commitments and Contingencies Disclosure [Abstract] | ||
Number of individuals appointed to assume immediate control and power over affairs | individual | 2 | |
Number of states participating in examination of compliance with unclaimed property laws | state | 38 |
CONSOLIDATED STATEMENT OF CAS68
CONSOLIDATED STATEMENT OF CASH FLOWS (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities: | ||
Net income | $ 84.3 | $ 62.3 |
Adjustments to reconcile net income to net cash from operating activities: | ||
Amortization and depreciation | 78.7 | 70 |
Income taxes | 1.7 | 32.9 |
Insurance liabilities | 25.5 | 131.6 |
Accrual and amortization of investment income | (43.1) | (91.9) |
Deferral of policy acquisition costs | (60.2) | (63.2) |
Net realized investment (gains) losses | 15.2 | (7.9) |
Other | (29.9) | 9.6 |
Net cash from operating activities | 72.2 | 143.4 |
Stock options, restricted stock and performance units | $ 6.8 | $ 6.3 |
INVESTMENTS IN VARIABLE INTER69
INVESTMENTS IN VARIABLE INTEREST ENTITIES - BALANCE SHEET ITEMS (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Assets: | ||
Investments held by variable interest entities | $ 1,583.9 | $ 1,526.9 |
Cash and cash equivalents held by variable interest entities | 115.6 | 178.9 |
Liabilities: | ||
Borrowings related to variable interest entities | 1,410.5 | 1,410.7 |
VIEs | ||
Assets: | ||
Investments held by variable interest entities | 1,583.9 | 1,526.9 |
Notes receivable of VIEs held by insurance subsidiaries | 0 | 0 |
Cash and cash equivalents held by variable interest entities | 115.6 | 178.9 |
Accrued investment income | 2.8 | 2.6 |
Income tax assets, net | 0 | 0.7 |
Other assets | 10.3 | 10 |
Total assets | 1,712.6 | 1,719.1 |
Liabilities: | ||
Other liabilities | 154.2 | 158.3 |
Borrowings related to variable interest entities | 1,410.5 | 1,410.7 |
Notes payable of VIEs held by insurance subsidiaries | 162.6 | 167.6 |
Total liabilities | 1,727.3 | 1,736.6 |
Eliminations | ||
Assets: | ||
Investments held by variable interest entities | 0 | 0 |
Notes receivable of VIEs held by insurance subsidiaries | (150.5) | (155.5) |
Cash and cash equivalents held by variable interest entities | 0 | 0 |
Accrued investment income | (0.1) | (0.1) |
Income tax assets, net | 0 | 0 |
Other assets | (1.6) | (1.5) |
Total assets | (152.2) | (157.1) |
Liabilities: | ||
Other liabilities | (4.3) | (4.4) |
Borrowings related to variable interest entities | 0 | 0 |
Notes payable of VIEs held by insurance subsidiaries | (162.6) | (167.6) |
Total liabilities | (166.9) | (172) |
Net effect on consolidated balance sheet | ||
Assets: | ||
Investments held by variable interest entities | 1,583.9 | 1,526.9 |
Notes receivable of VIEs held by insurance subsidiaries | (150.5) | (155.5) |
Cash and cash equivalents held by variable interest entities | 115.6 | 178.9 |
Accrued investment income | 2.7 | 2.5 |
Income tax assets, net | 0 | 0.7 |
Other assets | 8.7 | 8.5 |
Total assets | 1,560.4 | 1,562 |
Liabilities: | ||
Other liabilities | 149.9 | 153.9 |
Borrowings related to variable interest entities | 1,410.5 | 1,410.7 |
Notes payable of VIEs held by insurance subsidiaries | 0 | 0 |
Total liabilities | $ 1,560.4 | $ 1,564.6 |
INVESTMENTS IN VARIABLE INTER70
INVESTMENTS IN VARIABLE INTEREST ENTITIES - NARRATIVE (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018USD ($)investment | Mar. 31, 2017USD ($) | Dec. 31, 2017USD ($) | |
Variable Interest Entity [Line Items] | |||
Variable interest entity amortized cost securities held | $ 1,581.9 | ||
Variable interest entity, gross unrealized gains fixed maturity securities | 8.8 | ||
Variable interest entity gross unrealized losses fixed maturity securities | 6.8 | ||
Estimated fair value of fixed maturity securities | 1,583.9 | ||
Variable interest entities net realized gain (loss) on investments | $ 0 | $ 2.1 | |
Number of investments held by VIE, in default | investment | 0 | ||
Variable interest entities, investments sold | $ 10.8 | 20.4 | |
Variable interest entity, gross investment losses from sale | 0.1 | $ 0.1 | |
Investments held in limited partnerships | 500 | ||
Unfunded commitments to limited partnerships | 275.5 | ||
Less than twelve months | |||
Variable Interest Entity [Line Items] | |||
Fair value investments held by variable interest entity that had been in an unrealized loss position | 399.2 | $ 445.4 | |
Gross unrealized losses for a period | 4.8 | 4.9 | |
Greater than twelve months | |||
Variable Interest Entity [Line Items] | |||
Fair value investments held by variable interest entity that had been in an unrealized loss position | 41.4 | 28.4 | |
Gross unrealized losses for a period | $ 2 | $ 1.7 |
INVESTMENTS IN VARIABLE INTER71
INVESTMENTS IN VARIABLE INTEREST ENTITIES - SCHEDULE OF VIEs (Details) $ in Millions | Mar. 31, 2018USD ($) |
Investment Holdings [Line Items] | |
Total amortized cost | $ 1,581.9 |
Total fair value | 1,583.9 |
Amortized cost | |
Investment Holdings [Line Items] | |
Due in one year or less | 4.2 |
Due after one year through five years | 521 |
Due after five years through ten years | 1,056.7 |
Total amortized cost | 1,581.9 |
Estimated fair value | |
Investment Holdings [Line Items] | |
Due in one year or less | 4.2 |
Due after one year through five years | 520.5 |
Due after five years through ten years | 1,059.2 |
Total fair value | $ 1,583.9 |
FAIR VALUE MEASUREMENTS - NARRA
FAIR VALUE MEASUREMENTS - NARRATIVE (Details) | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair value of level 3 fixed maturity securities valued using broker quotes, percentage | 30.00% |
Available for sale fixed maturities classified as level 3, investment grade, percent | 58.00% |
Available for sale fixed maturities classified as Level 3 and corporate securities | 85.00% |
FAIR VALUE MEASUREMENTS - MEASU
FAIR VALUE MEASUREMENTS - MEASUREMENTS BY INPUT LEVEL (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | $ 22,375.5 | $ 22,910.9 |
Trading securities | 289.6 | 284.6 |
Investments held by variable interest entities | 1,583.9 | 1,526.9 |
Assets held in separate accounts | 4.7 | 5 |
Fair Value, Measurements, Recurring | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Trading securities | 289.6 | 284.6 |
Investments held by variable interest entities | 1,583.9 | 1,526.9 |
Assets held in separate accounts | 4.7 | 5 |
Total assets carried at fair value by category | 24,893.9 | 25,338.2 |
Fair Value, Measurements, Recurring | Embedded derivatives associated with fixed index annuity products | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Future policy benefits - embedded derivatives associated with fixed index annuity products | 1,315.4 | 1,334.8 |
Fair Value, Measurements, Recurring | Derivatives | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Other invested assets - derivatives | 141.5 | 170.2 |
Fair Value, Measurements, Recurring | Corporate securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 14,725.3 | 14,958.4 |
Equity securities - corporate securities | 498.7 | 440.6 |
Trading securities | 22.2 | 21.6 |
Fair Value, Measurements, Recurring | United States Treasury securities and obligations of United States government corporations and agencies | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 173.1 | 177.7 |
Trading securities | 0.5 | 0.5 |
Fair Value, Measurements, Recurring | States and political subdivisions | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 2,046.3 | 2,056.3 |
Fair Value, Measurements, Recurring | Debt securities issued by foreign governments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 77.7 | 83.1 |
Fair Value, Measurements, Recurring | Asset-backed securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 2,883.8 | 3,254.4 |
Trading securities | 94.9 | 95.8 |
Fair Value, Measurements, Recurring | Collateralized debt obligations | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 364.5 | 259.4 |
Trading securities | 2.7 | 2.7 |
Fair Value, Measurements, Recurring | Commercial mortgage-backed securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 1,401.9 | 1,377.5 |
Trading securities | 100 | 92.5 |
Fair Value, Measurements, Recurring | Mortgage pass-through securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 1.8 | 2 |
Fair Value, Measurements, Recurring | Collateralized mortgage obligations | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 701.1 | 742.1 |
Trading securities | 67 | 68.7 |
Fair Value, Measurements, Recurring | Total fixed maturities, available for sale | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 22,375.5 | 22,910.9 |
Fair Value, Measurements, Recurring | Equity securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Trading securities | 2.3 | 2.8 |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets or liabilities (Level 1) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Trading securities | 2.3 | 2.8 |
Investments held by variable interest entities | 0 | 0 |
Assets held in separate accounts | 0 | 0 |
Total assets carried at fair value by category | 337.3 | 290.6 |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets or liabilities (Level 1) | Embedded derivatives associated with fixed index annuity products | ||
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 | Quoted prices in active markets for identical assets or liabilities (Level 1) | Derivatives | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Other invested assets - derivatives | 0 | 0 |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets or liabilities (Level 1) | Corporate securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 0 |
Equity securities - corporate securities | 335 | 287.8 |
Trading securities | 0 | 0 |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets or liabilities (Level 1) | United States Treasury securities and obligations of United States government corporations and agencies | ||
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 | Quoted prices in active markets for identical assets or liabilities (Level 1) | States and political subdivisions | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 0 |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets or liabilities (Level 1) | Debt securities issued by foreign governments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 0 |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets or liabilities (Level 1) | Asset-backed securities | ||
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 | Quoted prices in active markets for identical assets or liabilities (Level 1) | Collateralized debt obligations | ||
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 | Quoted prices in active markets for identical assets or liabilities (Level 1) | Commercial mortgage-backed securities | ||
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 | Quoted prices in active markets for identical assets or liabilities (Level 1) | Mortgage pass-through securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 0 |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets or liabilities (Level 1) | Collateralized mortgage obligations | ||
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 | Quoted prices in active markets for identical assets or liabilities (Level 1) | Total fixed maturities, available for sale | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 0 |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets or liabilities (Level 1) | Equity securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Trading securities | 2.3 | 2.8 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Trading securities | 287.3 | 281.8 |
Investments held by variable interest entities | 1,583.9 | 1,522 |
Assets held in separate accounts | 4.7 | 5 |
Total assets carried at fair value by category | 24,298.4 | 24,763 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | Embedded derivatives associated with fixed index annuity products | ||
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 | Significant other observable inputs (Level 2) | Derivatives | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Other invested assets - derivatives | 141.5 | 170.2 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | Corporate securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 14,525.2 | 14,728 |
Equity securities - corporate securities | 142.3 | 131.6 |
Trading securities | 22.2 | 21.6 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | United States Treasury securities and obligations of United States government corporations and agencies | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 173.1 | 177.7 |
Trading securities | 0.5 | 0.5 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | States and political subdivisions | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 2,046.3 | 2,056.3 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | Debt securities issued by foreign governments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 73.9 | 79.2 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | Asset-backed securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 2,866.2 | 3,230.2 |
Trading securities | 94.9 | 95.8 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | Collateralized debt obligations | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 349.2 | 259.4 |
Trading securities | 2.7 | 2.7 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | Commercial mortgage-backed securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 1,401.9 | 1,377.5 |
Trading securities | 100 | 92.5 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | Mortgage pass-through securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 1.8 | 2 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | Collateralized mortgage obligations | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 701.1 | 742.1 |
Trading securities | 67 | 68.7 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | Total fixed maturities, available for sale | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 22,138.7 | 22,652.4 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | Equity securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Trading securities | 0 | 0 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Trading securities | 0 | 0 |
Investments held by variable interest entities | 0 | 4.9 |
Assets held in separate accounts | 0 | 0 |
Total assets carried at fair value by category | 258.2 | 284.6 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Embedded derivatives associated with fixed index annuity products | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Future policy benefits - embedded derivatives associated with fixed index annuity products | 1,315.4 | 1,334.8 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Derivatives | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Other invested assets - derivatives | 0 | 0 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Corporate securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 200.1 | 230.4 |
Equity securities - corporate securities | 21.4 | 21.2 |
Trading securities | 0 | 0 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | United States Treasury securities and obligations of United States government corporations and agencies | ||
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 | Significant unobservable inputs (Level 3) | States and political subdivisions | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 0 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Debt securities issued by foreign governments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 3.8 | 3.9 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Asset-backed securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 17.6 | 24.2 |
Trading securities | 0 | 0 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Collateralized debt obligations | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 15.3 | 0 |
Trading securities | 0 | 0 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Commercial mortgage-backed securities | ||
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 | Significant unobservable inputs (Level 3) | Mortgage pass-through securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 0 | 0 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Collateralized mortgage obligations | ||
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 | Significant unobservable inputs (Level 3) | Total fixed maturities, available for sale | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fixed maturities, available for sale | 236.8 | 258.5 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Equity securities | ||
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, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2016 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Cash and cash equivalents - unrestricted | $ 726.4 | $ 757.3 | $ 884.7 | $ 668.2 |
Cash and cash equivalents held by variable interest entities | 115.6 | 178.9 | ||
Fair Value, Measurements, Recurring | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Mortgage loans | 1,601.2 | 1,650.6 | ||
Policy loans | 116 | 116 | ||
Company-owned life insurance | 181 | 182.3 | ||
Cash and cash equivalents - unrestricted | 610.8 | 578.4 | ||
Cash and cash equivalents held by variable interest entities | 115.6 | 178.9 | ||
Policyholder account balances | 11,254.5 | 11,220.7 | ||
Investment borrowings | 1,646.5 | 1,646.7 | ||
Borrowings related to variable interest entities | 1,410.5 | 1,410.7 | ||
Notes payable – direct corporate obligations | 915.1 | 914.6 | ||
Fair Value, Measurements, Recurring | Estimate of fair value measurement | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Mortgage loans | 1,611.3 | 1,677.3 | ||
Policy loans | 116 | 116 | ||
Company-owned life insurance | 181 | 182.3 | ||
Cash and cash equivalents - unrestricted | 610.8 | 578.4 | ||
Cash and cash equivalents held by variable interest entities | 115.6 | 178.9 | ||
Policyholder account balances | 11,254.5 | 11,220.7 | ||
Investment borrowings | 1,647.7 | 1,648.8 | ||
Borrowings related to variable interest entities | 1,433.9 | 1,432.9 | ||
Notes payable – direct corporate obligations | 928.9 | 962.3 | ||
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets or liabilities (Level 1) | ||||
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 | 610.7 | 578.4 | ||
Cash and cash equivalents held by variable interest entities | 115.6 | 178.9 | ||
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 | Significant other observable inputs (Level 2) | ||||
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 | 181 | 182.3 | ||
Cash and cash equivalents - unrestricted | 0.1 | 0 | ||
Cash and cash equivalents held by variable interest entities | 0 | 0 | ||
Policyholder account balances | 0 | 0 | ||
Investment borrowings | 1,647.7 | 1,648.8 | ||
Borrowings related to variable interest entities | 1,433.9 | 1,432.9 | ||
Notes payable – direct corporate obligations | 928.9 | 962.3 | ||
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Mortgage loans | 1,611.3 | 1,677.3 | ||
Policy loans | 116 | 116 | ||
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 | 11,254.5 | 11,220.7 | ||
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, 2018 | Mar. 31, 2017 | |
Interest sensitive products | ||
Liabilities: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | $ (1,334.8) | $ (1,092.3) |
Purchases, sales, issuances and settlements, net | (17.6) | (69.2) |
Total realized and unrealized gains (losses) included in net income | 37 | 2.3 |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0 | 0 |
Transfers into level 3 | 0 | 0 |
Transfers out of level 3 | 0 | 0 |
Fair value, measurement with unobservable inputs reconciliation, ending balance | (1,315.4) | (1,159.2) |
Amount of total gains (losses) for the period included in our net income relating to assets and liabilities still held as of the reporting date | 37 | 2.3 |
Corporate securities | ||
Assets: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 230.4 | 258.5 |
Purchases, sales, issuances and settlements, net | 6.2 | 4.2 |
Total realized and unrealized gains (losses) included in net income | 1.2 | 0.6 |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | (2.4) | 8 |
Transfers into level 3 | 0 | 17.5 |
Transfers out of level 3 | (35.3) | 0 |
Fair value, measurement with unobservable inputs reconciliation, ending balance | 200.1 | 288.8 |
Amount of total gains (losses) for the period included in our net income relating to assets and liabilities still held as of the reporting date | 0 | (3.2) |
Debt securities issued by foreign governments | ||
Assets: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 3.9 | 3.9 |
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) | (0.1) | 0 |
Transfers into level 3 | 0 | 0 |
Transfers out of level 3 | 0 | 0 |
Fair value, measurement with unobservable inputs reconciliation, ending balance | 3.8 | 3.9 |
Amount of total gains (losses) for the period included in our net income relating to assets and liabilities still held as of the reporting date | 0 | 0 |
Asset-backed securities | ||
Assets: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 24.2 | 60.4 |
Purchases, sales, issuances and settlements, net | (6.1) | 9.9 |
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) | (0.5) | 0.4 |
Transfers into level 3 | 0 | 0 |
Transfers out of level 3 | 0 | (3.5) |
Fair value, measurement with unobservable inputs reconciliation, ending balance | 17.6 | 67.2 |
Amount of total gains (losses) for the period included in our net income relating to assets and liabilities still held as of the reporting date | 0 | 0 |
Collateralized debt obligations | ||
Assets: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 0 | 5.4 |
Purchases, sales, issuances and settlements, net | 15.3 | 9 |
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 | (2.9) |
Fair value, measurement with unobservable inputs reconciliation, ending balance | 15.3 | 11.5 |
Amount of total gains (losses) for the period included in our net income relating to assets and liabilities still held as of the reporting date | 0 | 0 |
Commercial mortgage-backed securities | ||
Assets: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 0 | 32 |
Purchases, sales, issuances and settlements, net | 0 | (0.1) |
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 | 0 |
Transfers into level 3 | 0 | 0 |
Transfers out of level 3 | 0 | (17) |
Fair value, measurement with unobservable inputs reconciliation, ending balance | 0 | 14.9 |
Amount of total gains (losses) for the period included in our net income relating to assets and liabilities still held as of the reporting date | 0 | 0 |
Total fixed maturities, available for sale | ||
Assets: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 258.5 | 360.2 |
Purchases, sales, issuances and settlements, net | 15.4 | 23 |
Total realized and unrealized gains (losses) included in net income | 1.2 | 0.6 |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | (3) | 8.4 |
Transfers into level 3 | 0 | 17.5 |
Transfers out of level 3 | (35.3) | (23.4) |
Fair value, measurement with unobservable inputs reconciliation, ending balance | 236.8 | 386.3 |
Amount of total gains (losses) for the period included in our net income relating to assets and liabilities still held as of the reporting date | 0 | (3.2) |
Equity securities | ||
Assets: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 21.2 | 25.2 |
Purchases, sales, issuances and settlements, net | 0 | 0 |
Total realized and unrealized gains (losses) included in net income | 0.2 | 0 |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0 | (0.1) |
Transfers into level 3 | 0 | 0 |
Transfers out of level 3 | 0 | (0.8) |
Fair value, measurement with unobservable inputs reconciliation, ending balance | 21.4 | 24.3 |
Amount of total gains (losses) for the period included in our net income relating to assets and liabilities still held as of the reporting date | 0 | $ 0 |
Investments Held By Variable Interest Entities\ | Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Investments held by variable interest entities - corporate securities | ||
Assets: | ||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 4.9 | |
Purchases, sales, issuances and settlements, net | 0 | |
Total realized and unrealized gains (losses) included in net income | 0 | |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0 | |
Transfers into level 3 | 0 | |
Transfers out of level 3 | 4.9 | |
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 as of the reporting date | $ 0 |
FAIR VALUE MEASUREMENTS - FAIR
FAIR VALUE MEASUREMENTS - FAIR VALUE ACTIVITY (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Interest sensitive products | ||
Liabilities: | ||
Purchases | $ (39.2) | $ (43.3) |
Sales | 3.7 | 1.3 |
Issuances | (2.2) | (43.1) |
Settlements | 20.1 | 15.9 |
Purchases, sales, issuances and settlements, net | (17.6) | (69.2) |
Corporate securities | ||
Assets: | ||
Purchases | 11.1 | 23.2 |
Sales | (4.9) | (19) |
Issuances | 0 | 0 |
Settlements | 0 | 0 |
Purchases, sales, issuances and settlements, net | 6.2 | 4.2 |
Debt securities issued by foreign governments | ||
Assets: | ||
Purchases, sales, issuances and settlements, net | 0 | 0 |
Asset-backed securities | ||
Assets: | ||
Purchases | 5 | 12 |
Sales | (11.1) | (2.1) |
Issuances | 0 | 0 |
Settlements | 0 | 0 |
Purchases, sales, issuances and settlements, net | (6.1) | 9.9 |
Collateralized debt obligations | ||
Assets: | ||
Purchases | 15.3 | 9 |
Sales | 0 | 0 |
Issuances | 0 | 0 |
Settlements | 0 | 0 |
Purchases, sales, issuances and settlements, net | 15.3 | 9 |
Total fixed maturities, available for sale | ||
Assets: | ||
Purchases | 31.4 | 44.2 |
Sales | (16) | (21.2) |
Issuances | 0 | 0 |
Settlements | 0 | 0 |
Purchases, sales, issuances and settlements, net | 15.4 | 23 |
Equity securities | ||
Assets: | ||
Purchases, sales, issuances and settlements, net | 0 | 0 |
Commercial mortgage-backed securities | ||
Assets: | ||
Purchases | 0 | |
Sales | (0.1) | |
Issuances | 0 | |
Settlements | 0 | |
Purchases, sales, issuances and settlements, net | $ 0 | $ (0.1) |
FAIR VALUE MEASUREMENTS - FAI77
FAIR VALUE MEASUREMENTS - FAIR VALUE INPUTS (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Investments | $ 27,416 | $ 27,854.1 |
Other invested assets | 951.1 | 924.5 |
Significant unobservable inputs (Level 3) | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Investments | 258.2 | 284.6 |
Other invested assets | 77.2 | 87.2 |
Policyholder account balances | $ 1,315.4 | $ 1,334.8 |
Significant unobservable inputs (Level 3) | Minimum | Interest sensitive products | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Projected portfolio yields | 5.15% | 5.15% |
Discount rates | 1.13% | 0.92% |
Surrender rates | 1.20% | 1.20% |
Significant unobservable inputs (Level 3) | Maximum | Interest sensitive products | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Projected portfolio yields | 5.61% | 5.61% |
Discount rates | 2.69% | 2.51% |
Surrender rates | 46.40% | 46.40% |
Significant unobservable inputs (Level 3) | Weighted Average | Interest sensitive products | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Projected portfolio yields | 5.60% | 5.60% |
Discount rates | 2.30% | 2.00% |
Surrender rates | 12.30% | 12.30% |
Significant unobservable inputs (Level 3) | Corporate securities | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Investments | $ 146.7 | $ 149.2 |
Significant unobservable inputs (Level 3) | Corporate securities | Minimum | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Discount margins | 1.35% | 1.45% |
Significant unobservable inputs (Level 3) | Corporate securities | Maximum | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Discount margins | 93.32% | 71.29% |
Significant unobservable inputs (Level 3) | Corporate securities | Weighted Average | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Discount margins | 7.69% | 6.96% |
Significant unobservable inputs (Level 3) | Asset-backed securities | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Investments | $ 12.5 | $ 24.2 |
Significant unobservable inputs (Level 3) | Asset-backed securities | Minimum | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Discount margins | 1.97% | 1.80% |
Significant unobservable inputs (Level 3) | Asset-backed securities | Maximum | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Discount margins | 2.03% | 3.71% |
Significant unobservable inputs (Level 3) | Asset-backed securities | Weighted Average | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Discount margins | 2.03% | 2.67% |
Significant unobservable inputs (Level 3) | Equity securities | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Investments | $ 1.2 | $ 1.1 |
Significant unobservable inputs (Level 3) | Equity securities | Weighted Average | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
EBITDA Multiple | 110.00% | 110.00% |
Recovery method | Significant unobservable inputs (Level 3) | Corporate securities | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Investments | $ 0.4 | $ 2.8 |
Recovery method | Significant unobservable inputs (Level 3) | Corporate securities | Minimum | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Percent of recovery expected | 0.00% | 0.00% |
Recovery method | Significant unobservable inputs (Level 3) | Corporate securities | Maximum | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Percent of recovery expected | 5.00% | 21.73% |
Recovery method | Significant unobservable inputs (Level 3) | Corporate securities | Weighted Average | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Percent of recovery expected | 5.00% | 18.42% |
Recovery method | Significant unobservable inputs (Level 3) | Equity securities | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Investments | $ 20.2 | $ 20.1 |
Percent of recovery expected | 59.10% | 59.10% |