Cover Page
Cover Page - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2020 | Feb. 09, 2021 | Jun. 30, 2020 | |
Document Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2020 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Transition Report | false | ||
Entity File Number | 001-31792 | ||
Entity Registrant Name | CNO Financial Group, Inc. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 75-3108137 | ||
Entity Address, Address Line One | 11825 N. Pennsylvania Street | ||
Entity Address, City or Town | Carmel, | ||
Entity Address, State or Province | IN | ||
Entity Address, Postal Zip Code | 46032 | ||
City Area Code | (317) | ||
Local Phone Number | 817-6100 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 2.2 | ||
Entity Common Stock, Shares Outstanding | 134,644,290 | ||
Documents Incorporated by Reference | Portions of the Registrant's definitive proxy statement for the 2021 annual meeting of shareholders are incorporated by reference into Part III of this report. | ||
Entity Central Index Key | 0001224608 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Common Stock, par value $0.01 per share | |||
Document Information | |||
Title of 12(b) Security | Common Stock, par value $0.01 per share | ||
Trading Symbol | CNO | ||
Security Exchange Name | NYSE | ||
Rights to purchase Series E Junior Participating Preferred Stock | |||
Document Information | |||
Title of 12(b) Security | Rights to purchase Series E Junior Participating Preferred Stock | ||
Security Exchange Name | NYSE | ||
No Trading Symbol Flag | true | ||
5.125% Subordinated Debentures due 2060 | |||
Document Information | |||
Title of 12(b) Security | 5.125% Subordinated Debentures due 2060 | ||
Trading Symbol | CNOpA | ||
Security Exchange Name | NYSE |
CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Investments: | ||
Fixed maturities, available for sale, at fair value (net of allowance for credit losses: 2020 - $2.2; amortized cost: 2020 - $19,921.1; 2019 - $19,179.5) | $ 23,383.6 | $ 21,295.2 |
Equity securities at fair value | 151.2 | 44.1 |
Mortgage loans (net of allowance for credit losses: 2020 - $11.8) | 1,358.7 | 1,566.1 |
Policy loans | 123 | 124.5 |
Trading securities | 232 | 243.9 |
Investments held by variable interest entities (net of allowance for credit losses: 2020 - $15.1; amortized cost: 2020 - $1,211.3; 2019 - $1,206.3) | 1,189.4 | 1,188.6 |
Other invested assets | 1,146.4 | 1,118.5 |
Total investments | 27,584.3 | 25,580.9 |
Cash and cash equivalents - unrestricted | 937.8 | 580 |
Cash and cash equivalents held by variable interest entities | 54.1 | 74.7 |
Accrued investment income | 205.8 | 205.9 |
Present value of future profits | 249.4 | 275.4 |
Deferred acquisition costs | 1,027.8 | 1,215.5 |
Reinsurance receivables (net of allowance for credit losses: 2020 - $4.0) | 4,584.3 | 4,785.7 |
Income tax assets, net | 199.4 | 432.6 |
Assets held in separate accounts | 4.2 | 4.2 |
Other assets | 492.8 | 476 |
Total assets | 35,339.9 | 33,630.9 |
Liabilities for insurance products: | ||
Policyholder account liabilities | 12,540.6 | 12,132.3 |
Future policy benefits | 11,744.2 | 11,498.5 |
Liability for policy and contract claims | 561.8 | 522.3 |
Unearned and advanced premiums | 252.6 | 260.5 |
Liabilities related to separate accounts | 4.2 | 4.2 |
Other liabilities | 821.8 | 750.2 |
Investment borrowings | 1,642.5 | 1,644.3 |
Borrowings related to variable interest entities | 1,151.8 | 1,152.5 |
Notes payable – direct corporate obligations | 1,136.2 | 989.1 |
Total liabilities | 29,855.7 | 28,953.9 |
Commitments and Contingencies | ||
Shareholders' equity: | ||
Common stock ($0.01 par value, 8,000,000,000 shares authorized, shares issued and outstanding: 2020 - 135,279,119; 2019 - 148,084,178) | 1.3 | 1.5 |
Additional paid-in capital | 2,544.5 | 2,767.3 |
Accumulated other comprehensive income | 2,186.1 | 1,372.5 |
Retained earnings | 752.3 | 535.7 |
Total shareholders' equity | 5,484.2 | 4,677 |
Total liabilities and shareholders' equity | $ 35,339.9 | $ 33,630.9 |
CONSOLIDATED BALANCE SHEET (Par
CONSOLIDATED BALANCE SHEET (Parenthetical) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Investments: | ||
Fixed maturities, available for sale, allowance for credit losses | $ 2.2 | $ 2.1 |
Fixed maturities, available for sale, amortized cost | 19,921.1 | 19,179.5 |
Mortgage loans, allowance for credit losses | 11.8 | 6.7 |
Investments held by variable interest entities, allowance for credit losses | 15.1 | |
Investments held by variable interest entities, amortized cost | 1,211.3 | $ 1,206.3 |
Reinsurance receivables, allowance for credit losses | $ 4 | |
Shareholders' equity: | ||
Common stock, par value (in USD 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) | 135,279,119 | 148,084,178 |
Common stock, shares outstanding (in shares) | 135,279,119 | 148,084,178 |
CONSOLIDATED STATEMENT OF OPERA
CONSOLIDATED STATEMENT OF OPERATIONS - USD ($) shares in Thousands, $ in Millions | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | ||
Revenues: | ||||
Insurance policy income | $ 2,511.3 | $ 2,480.8 | $ 2,593.1 | |
Net investment income: | ||||
General account assets | 1,079 | 1,098 | 1,272.5 | |
Policyholder and other special-purpose portfolios | 143.5 | 264.9 | 33.7 | |
Realized investment gains (losses): | ||||
Net realized gains on the transfer of assets related to reinsurance transaction | 0 | 0 | 363.4 | |
Other net realized investment gains (losses), excluding impairment losses | (17.7) | 40.6 | (8.7) | |
Change in allowance for credit losses and other-than-temporary impairment losses | [1] | (18.5) | (12.4) | (2.6) |
Total realized gains | (36.2) | 28.2 | 352.1 | |
Fee revenue and other income | 123.5 | 143.9 | 62.1 | |
Total revenues | 3,821.1 | 4,015.8 | 4,313.5 | |
Benefits and expenses: | ||||
Insurance policy benefits | 2,157.9 | 2,417 | 2,278.6 | |
Loss related to reinsurance transaction | 0 | 0 | 1,067.6 | |
Interest expense | 108.8 | 152.3 | 149.8 | |
Amortization | 268.1 | 232.1 | 264.3 | |
Loss on extinguishment of debt | 0 | 7.3 | 0 | |
Loss on extinguishment of borrowings related to variable interest entities | 0 | 0 | 3.8 | |
Other operating costs and expenses | 942 | 932.9 | 814.2 | |
Total benefits and expenses | 3,476.8 | 3,741.6 | 4,578.3 | |
Income (loss) before income taxes | 344.3 | 274.2 | (264.8) | |
Income tax expense (benefit): | ||||
Tax expense (benefit) on period income | 76.5 | 58.5 | (57.6) | |
Valuation allowance for deferred tax assets and other tax items | (34) | (193.7) | 107.8 | |
Net income (loss) | $ 301.8 | $ 409.4 | $ (315) | |
Basic: | ||||
Weighted average shares outstanding (in shares) | 142,096 | 156,040 | 165,457 | |
Net income (loss) (in USD per share) | $ 2.12 | $ 2.62 | $ (1.90) | |
Diluted: | ||||
Weighted average shares outstanding (in shares) | 143,164 | 157,148 | 165,457 | |
Net income (loss) (in USD per share) | $ 2.11 | $ 2.61 | $ (1.90) | |
[1] | No portion of the other-than-temporary impairments recognized in 2019 and 2018 was included in accumulated other comprehensive income. |
CONSOLIDATED STATEMENT OF COMPR
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | |||
Net income (loss) | $ 301.8 | $ 409.4 | $ (315) |
Other comprehensive income, before tax: | |||
Unrealized gains (losses) for the period | 1,332.8 | 1,830.2 | (1,579.9) |
Amortization of present value of future profits and deferred acquisition costs | (116) | (165.6) | 125.5 |
Amount related to premium deficiencies assuming the net unrealized gains (losses) had been realized | (204) | (133) | 512 |
Reclassification adjustments: | |||
For net realized investment gains (losses) included in net income (loss) | 27.1 | (6.3) | (356.9) |
For amortization of the present value of future profits and deferred acquisition costs related to net realized investment gains (losses) included in net income (loss) | (2.4) | 0.6 | (0.4) |
Other comprehensive income (loss) before tax | 1,037.5 | 1,525.9 | (1,299.7) |
Income tax (expense) benefit related to items of accumulated other comprehensive income (loss) | (223.9) | (331.1) | 281.6 |
Other comprehensive income (loss), net of tax | 813.6 | 1,194.8 | (1,018.1) |
Comprehensive income (loss) | $ 1,115.4 | $ 1,604.2 | $ (1,333.1) |
CONSOLIDATED STATEMENT OF SHARE
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY - USD ($) $ in Millions | Total | Cumulative Effect, Period of Adoption, Adjustment | Cumulative Effect, Period of Adoption, Adjusted Balance | Common stock | Common stockCumulative Effect, Period of Adoption, Adjusted Balance | Additional paid-in capital | Additional paid-in capitalCumulative Effect, Period of Adoption, Adjusted Balance | Accumulated other comprehensive income | Accumulated other comprehensive incomeCumulative Effect, Period of Adoption, Adjustment | Accumulated other comprehensive incomeCumulative Effect, Period of Adoption, Adjusted Balance | Retained earnings | Retained earningsCumulative Effect, Period of Adoption, Adjustment | Retained earningsCumulative Effect, Period of Adoption, Adjusted Balance |
Balance, beginning of year (in shares) at Dec. 31, 2017 | 166,858,000 | 166,858,000 | |||||||||||
Balance, beginning of year at Dec. 31, 2017 | $ 4,847.5 | $ 0 | $ 4,847.5 | $ 1.7 | $ 1.7 | $ 3,073.3 | $ 3,073.3 | $ 1,212.1 | $ (16.3) | $ 1,195.8 | $ 560.4 | $ 16.3 | $ 576.7 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Net income (loss) | (315) | (315) | |||||||||||
Change in unrealized appreciation (depreciation) of investments (net of applicable income tax expense (benefit)) | (1,017) | (1,017) | |||||||||||
Change in noncredit component of impairment losses on fixed maturities, available for sale (net of applicable income tax benefit of less than) | $ (1.1) | (1.1) | |||||||||||
Common stock repurchased (in shares) | (5,500,000) | (5,486,000) | |||||||||||
Common stock repurchased | $ (100.9) | $ (0.1) | (100.8) | ||||||||||
Dividends on common stock | (65.1) | (65.1) | |||||||||||
Employee benefit plans, net of shares used to pay tax withholdings (in shares) | 830,000 | ||||||||||||
Employee benefits plans, net of shares used to pay tax withholdings | 22.5 | 22.5 | |||||||||||
Balance, end of year (in shares) at Dec. 31, 2018 | 162,202,000 | 162,202,000 | |||||||||||
Balance, end of year at Dec. 31, 2018 | 3,370.9 | (3.1) | 3,367.8 | $ 1.6 | $ 1.6 | 2,995 | 2,995 | 177.7 | 177.7 | 196.6 | (3.1) | 193.5 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Net income (loss) | 409.4 | 409.4 | |||||||||||
Change in unrealized appreciation (depreciation) of investments (net of applicable income tax expense (benefit)) | 1,194.9 | 1,194.9 | |||||||||||
Change in noncredit component of impairment losses on fixed maturities, available for sale (net of applicable income tax benefit of less than) | $ (0.1) | (0.1) | |||||||||||
Common stock repurchased (in shares) | (15,400,000) | (15,408,000) | |||||||||||
Common stock repurchased | $ (252.3) | $ (0.1) | (252.2) | ||||||||||
Dividends on common stock | (67.2) | (67.2) | |||||||||||
Employee benefit plans, net of shares used to pay tax withholdings (in shares) | 1,290,000 | ||||||||||||
Employee benefits plans, net of shares used to pay tax withholdings | $ 24.5 | 24.5 | |||||||||||
Balance, end of year (in shares) at Dec. 31, 2019 | 148,084,178 | 148,084,000 | 148,084,000 | ||||||||||
Balance, end of year at Dec. 31, 2019 | $ 4,677 | $ (17.8) | $ 4,659.2 | $ 1.5 | $ 1.5 | 2,767.3 | $ 2,767.3 | 1,372.5 | $ 1,372.5 | 535.7 | $ (17.8) | $ 517.9 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Net income (loss) | 301.8 | 301.8 | |||||||||||
Change in unrealized appreciation (depreciation) of investments (net of applicable income tax expense (benefit)) | $ 813.6 | 813.6 | |||||||||||
Common stock repurchased (in shares) | (14,500,000) | (14,471,000) | |||||||||||
Common stock repurchased | $ (263) | $ (0.2) | (262.8) | ||||||||||
Dividends on common stock | (67.4) | (67.4) | |||||||||||
Employee benefit plans, net of shares used to pay tax withholdings (in shares) | 1,666,000 | ||||||||||||
Employee benefits plans, net of shares used to pay tax withholdings | $ 40 | 40 | |||||||||||
Balance, end of year (in shares) at Dec. 31, 2020 | 135,279,119 | 135,279,000 | |||||||||||
Balance, end of year at Dec. 31, 2020 | $ 5,484.2 | $ 1.3 | $ 2,544.5 | $ 2,186.1 | $ 752.3 |
CONSOLIDATED STATEMENT OF SHA_2
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Parentheticals) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Statement of Stockholders' Equity [Abstract] | |||
Unrealized appreciation (depreciation) of investments (net of applicable income tax expense (benefit)) | $ 223.9 | $ 331.1 | $ (281.3) |
Noncredit component of impairment losses on fixed maturities available for sale tax benefit | $ (0.1) | $ (0.3) |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Cash flows from operating activities: | |||
Insurance policy income | $ 2,331 | $ 2,326 | $ 2,433.4 |
Net investment income | 1,097.4 | 1,122.3 | 1,321.2 |
Fee revenue and other income | 123.5 | 132.6 | 62.1 |
Insurance policy benefits | (1,582.9) | (1,630.1) | (1,910.7) |
Payment to reinsurer pursuant to long-term care business reinsured | 0 | 0 | (365) |
Interest expense | (111.2) | (151.2) | (141.1) |
Deferrable policy acquisition costs | (275.8) | (288.7) | (261.8) |
Other operating costs | (818.1) | (816.6) | (788.5) |
Income taxes | (28.4) | 2.4 | (31.8) |
Net cash from operating activities | 735.5 | 696.7 | 317.8 |
Cash flows from investing activities: | |||
Sales of investments | 1,480 | 2,899.2 | 3,210.2 |
Maturities and redemptions of investments | 2,218.3 | 2,237.7 | 2,469 |
Purchases of investments | (4,280.7) | (5,576.4) | (6,205.8) |
Net sales (purchases) of trading securities | 13.8 | (14.1) | 25.9 |
Other | (39.8) | (102) | (25) |
Net cash used by investing activities | (608.4) | (555.6) | (525.7) |
Cash flows from financing activities: | |||
Issuance of notes payable, net | 145.8 | 494.2 | 0 |
Payments on notes payable | 0 | (425) | 0 |
Expenses related to extinguishment of debt | 0 | (6.1) | 0 |
Issuance of common stock | 19 | 9.2 | 3.9 |
Payments to repurchase common stock | (268.3) | (254.5) | (108) |
Common stock dividends paid | (67) | (67.1) | (64.8) |
Amounts received for deposit products | 1,620.1 | 1,743.1 | 1,588.5 |
Withdrawals from deposit products | (1,235.6) | (1,363.9) | (1,312.3) |
Issuance of investment borrowings: | |||
Federal Home Loan Bank | 498 | 536.8 | 150 |
Related to variable interest entities | 0 | 0 | 277.6 |
Payments on investment borrowings: | |||
Federal Home Loan Bank | (499.8) | (538.2) | (150.9) |
Related to variable interest entities and other | (2.1) | (271.5) | (276.8) |
Net cash provided (used) by financing activities | 210.1 | (143) | 107.2 |
Net increase (decrease) in cash and cash equivalents | 337.2 | (1.9) | (100.7) |
Cash and cash equivalents - unrestricted and held by variable interest entities, beginning of year | 654.7 | 656.6 | 757.3 |
Cash and cash equivalents - unrestricted and held by variable interest entities, end of year | $ 991.9 | $ 654.7 | $ 656.6 |
BUSINESS AND BASIS OF PRESENTAT
BUSINESS AND BASIS OF PRESENTATION | 12 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BUSINESS AND BASIS OF PRESENTATION | BUSINESS AND BASIS OF PRESENTATION CNO Financial Group, Inc., a Delaware corporation ("CNO"), is a holding company for a group of insurance companies operating throughout the United States that develop, market and administer health insurance, annuity, individual life insurance and other insurance products. The terms "CNO Financial Group, Inc.", "CNO", the "Company", "we", "us", and "our" as used in these financial statements refer to CNO and its subsidiaries. Such terms, when used to describe insurance business and products, refer to the insurance business and products of CNO's insurance subsidiaries. We focus on serving middle-income pre-retiree and retired Americans, which we believe are attractive, underserved, high growth markets. We sell our products through exclusive agents, independent producers (some of whom sell one or more of our product lines exclusively) and direct marketing. We prepare our financial statements 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 2020 presentation. These reclassifications have no effect on net income or shareholders' equity. The accompanying financial statements include the accounts of the Company and its subsidiaries. Our consolidated financial statements exclude transactions between us and our consolidated affiliates, or among our consolidated affiliates. When we prepare financial statements in conformity with GAAP, we are required to make estimates and assumptions that significantly affect reported amounts of various assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting periods. For example, we use significant estimates and assumptions to calculate values for deferred acquisition costs, the present value of future profits, fair value measurements of certain investments (including derivatives), allowance for credit losses and other-than-temporary impairments of investments, assets and liabilities related to income taxes, liabilities for insurance products, liabilities related to litigation and guaranty fund assessment accruals. If our future experience differs from these estimates and assumptions, our financial statements would be materially affected. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Investments Fixed maturity securities include available for sale bonds and redeemable preferred stocks. We carry these investments at estimated fair value. We record any unrealized gain or loss, net of tax and related adjustments, as a component of shareholders’ equity. Equity securities include investments in common stock, exchange-traded funds and non-redeemable preferred stock. We carry these investments at estimated fair value. Effective January 1, 2018, changes in the fair value of equity securities are recognized in net income as further described below under the caption "Recently Issued Accounting Standards - Adopted Accounting Standards". Prior to January 1, 2018, changes in the fair value of equity securities were recorded in "Accumulated other comprehensive income". Mortgage loans held in our investment portfolio are carried at amortized unpaid balance, net of allowance for estimated credit losses. Interest income is accrued on the principal amount of the loan based on the loan's contractual interest rate. Payment terms specified for mortgage loans may include a prepayment penalty for unscheduled payoff of the investment. Prepayment penalties are recognized as investment income when received. The allowance for estimated credit losses is measured using a loss-rate method on an individual asset basis. Inputs used include asset-specific characteristics, current economic conditions, historical loss information and reasonable and supportable forecasts about future economic conditions. Policy loans are stated at current unpaid principal balances. Policy loans are collateralized by the cash surrender value of the life insurance policy. Interest income is recorded as earned using the contractual interest rate. Trading securities include: (i) investments purchased with the intent of selling in the near team to generate income; (ii) investments supporting certain insurance liabilities; and (iii) certain fixed maturity securities containing embedded derivatives for which we have elected the fair value option. The change in fair value of the income generating investments and investments supporting insurance liabilities and reinsurance agreements is recognized in income from policyholder and 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. Other invested assets include: (i) call options purchased in an effort to offset or hedge the effects of certain policyholder benefits related to our fixed index annuity and life insurance products; (ii) Company-owned life insurance ("COLI"); (iii) investments in the common stock of the Federal Home Loan Bank ("FHLB"); and (iv) certain non-traditional investments. We carry the call options at estimated fair value as further described in the section of this note entitled "Accounting for Derivatives". We carry COLI at its cash surrender value which approximates its net realizable value. Non-traditional investments include investments in certain limited partnerships and hedge funds which are accounted for using the equity method. In accounting for limited partnerships and hedge funds, we consistently use the most recently available financial information provided by the general partner or manager of each of these investments, which is one to three months prior to the end of our reporting period. Interest income on fixed maturity securities is recognized when earned using a constant effective yield method giving effect to amortization of premiums and accretion of discounts. Prepayment fees are recognized when earned. Dividends on equity securities are recognized when declared. When we sell a security (other than trading securities), we report the difference between the sale proceeds and amortized cost (determined based on specific identification) as a realized investment gain or loss. When an available for sale fixed maturity security's fair value is below the amortized cost, the security is considered impaired. If a portion of the decline is due to credit-related factors, we separate the credit loss component of the impairment from the amount related to all other factors. The credit loss component is recorded as an allowance and reported in net realized investment gains (losses) (limited to the difference between estimated fair value and amortized cost). The impairment related to all other factors (non-credit factors) is reported in accumulated other comprehensive income along with unrealized gains related to fixed maturity investments, available for sale, net of tax and related adjustments. The allowance is adjusted for any additional credit losses and subsequent recoveries. When recognizing an allowance associated with a credit loss, the cost basis is not adjusted. When we determine a security is uncollectable, the remaining amortized cost will be written off. In determining the credit loss component, we discount the estimated cash flows on a security by security basis. We consider the impact of macroeconomic conditions on inputs used to measure the amount of credit loss. 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 by considering asset type, rating, time to maturity, and applying an expected loss rate. If we intend to sell an impaired fixed maturity security, available for sale, or identify an impaired fixed maturity security, available for sale, for which is it more likely than not we will be required to sell before anticipated recovery, the difference between the fair value and the amortized cost is included in net realized investment gains (losses) and the fair value becomes the new amortized cost. The new cost basis is not adjusted for any subsequent recoveries in fair value. The Company reports accrued investment income separately from fixed maturities, available for sale, and has elected not to measure an allowance for credit losses for accrued investment income. Accrued investment income is written off through net investment income at the time the issuer of the bond defaults or is expected to default on payments. Cash and Cash Equivalents Cash and cash equivalents include commercial paper, invested cash and other investments purchased with original maturities of less than three months. We carry them at amortized cost, which approximates estimated fair value. It is the Company's policy to offset negative cash balances with positive balances in other accounts with the same counterparty when agreements are in place permitting legal right of offset. Deferred Acquisition Costs Deferred acquisition costs represent incremental direct costs related to the successful acquisition of new or renewal insurance contracts. For interest-sensitive life or annuity products, we amortize these costs in relation to the estimated gross profits using the interest rate credited to the underlying policies. For other products, we amortize these costs in relation to future anticipated premium revenue using the projected investment earnings rate. When we realize a gain or loss on investments backing our interest-sensitive life or annuity products, we adjust the amortization to reflect the change in estimated gross profits from the products due to the gain or loss realized and the effect on future investment yields. We also adjust deferred acquisition costs for the change in amortization that would have been recorded if our fixed maturity securities, available for sale, had been sold at their stated aggregate fair value and the proceeds reinvested at current yields. We limit the total adjustment related to the impact of unrealized losses to the total of costs capitalized plus interest related to insurance policies issued in a particular year. We include the impact of this adjustment in accumulated other comprehensive income (loss) within shareholders' equity. We regularly evaluate the recoverability of the unamortized balance of the deferred acquisition costs. We consider estimated future gross profits or future premiums, expected mortality or morbidity, interest earned and credited rates, persistency and expenses in determining whether the balance is recoverable. If we determine a portion of the unamortized balance is not recoverable, it is charged to amortization expense. In certain cases, the unamortized balance of the deferred acquisition costs may not be deficient in the aggregate, but our estimates of future earnings indicate that profits would be recognized in early periods and losses in later periods. In this case, we increase the amortization of the deferred acquisition costs over the period of profits, by an amount necessary to offset losses that are expected to be recognized in the later years. Present Value of Future Profits The present value of future profits is the value assigned to the right to receive future cash flows from policyholder insurance contracts existing at September 10, 2003 (the "Effective Date", the effective date of the bankruptcy reorganization of Conseco, Inc., an Indiana corporation (our "Predecessor")). The discount rate we used to determine the present value of future profits was 12 percent. The balance of this account is amortized and evaluated for recovery in the same manner as described above for deferred acquisition costs. We also adjust the present value of future profits for the change in amortization that would have been recorded if the fixed maturity securities, available for sale, had been sold at their stated aggregate fair value and the proceeds reinvested at current yields, similar to the manner described above for deferred acquisition costs. We limit the total adjustment related to the impact of unrealized losses to the total present value of future profits plus interest. Recognition of Insurance Policy Income and Related Benefits and Expenses on Insurance Contracts For interest-sensitive life and annuity contracts that do not involve significant mortality or morbidity risk, the amounts collected from policyholders are considered deposits and are not included in revenue. Revenues for these contracts consist of charges for policy administration, cost of insurance charges and surrender charges assessed against policyholders' account balances. Such revenues are recognized when the service or coverage is provided, or when the policy is surrendered. We establish liabilities for annuity and interest-sensitive life products equal to the accumulated policy account values, which include an accumulation of deposit payments plus credited interest, less withdrawals and the amounts assessed against the policyholder through the end of the period. In addition, policyholder account values for certain interest-sensitive life products are impacted by our assumptions related to changes of certain non-guaranteed elements that we are allowed to make under the terms of the policy, such as cost of insurance charges, expense loads, credited interest rates and policyholder bonuses. Sales inducements provided to the policyholders of these products are recognized as liabilities over the period that the contract must remain in force to qualify for the inducement. The options attributed to the policyholder related to our fixed index annuity products are accounted for as embedded derivatives as described in the section of this note entitled "Accounting for Derivatives". Premiums from individual life products (other than interest-sensitive life contracts) and health products are recognized when due. When premiums are due over a significantly shorter period than the period over which benefits are provided, any gross premium in excess of the net premium (i.e., the portion of the gross premium required to provide for all expected future benefits and expenses) is deferred and recognized into revenue in a constant relationship to insurance in force. Benefits are recorded as an expense when they are incurred. We establish liabilities for traditional life, accident and health insurance, and life contingent payment annuity products using mortality tables in general use in the United States, which are modified to reflect the Company's actual experience when appropriate. We establish liabilities for accident and health insurance products using morbidity tables based on the Company's actual or expected experience. These reserves are computed at amounts that, with additions from estimated future premiums received and with interest on such reserves at estimated future rates, are expected to be sufficient to meet our obligations under the terms of the policy. Liabilities for future policy benefits are computed on a net-level premium method based upon assumptions as to future claim costs, investment yields, mortality, morbidity, withdrawals, policy dividends and maintenance expenses determined when the policies were issued (or with respect to policies inforce at August 31, 2003, the Company's best estimate of such assumptions on the Effective Date). We make an additional provision to allow for potential adverse deviation for some of our assumptions. Once established, assumptions on these products are generally not changed unless a premium deficiency exists. In that case, a premium deficiency reserve is recognized and the future pattern of reserve changes is modified to reflect the relationship of premiums to benefits based on the current best estimate of future claim costs, investment yields, mortality, morbidity, withdrawals, policy dividends and maintenance expenses, determined without an additional provision for potential adverse deviation. We establish claim reserves based on our estimate of the loss to be incurred on reported claims plus estimates of incurred but unreported claims based on our past experience. Accounting for Long-term Care Premium Rate Increases Many of our long-term care policies have been subject to premium rate increases. In some cases, these premium rate increases were materially consistent with the assumptions we used to value the particular block of business at the Effective Date. With respect to certain premium rate increases, some of our policyholders were provided an option to cease paying their premiums and receive a non-forfeiture option in the form of a paid-up policy with limited benefits. In addition, our policyholders could choose to reduce their coverage amounts and premiums in the same proportion, when permitted by our contracts or as required by regulators. The following describes how we account for these policyholder options: • Premium rate increases - If premium rate increases reflect a change in our previous rate increase assumptions, the new assumptions are not reflected prospectively in our reserves. Instead, the additional premium revenue resulting from the rate increase is recognized as earned and original assumptions continue to be used to determine changes to liabilities for insurance products unless a premium deficiency exists. • Benefit reductions - A policyholder may choose reduced coverage with a proportionate reduction in premium, when permitted by our contracts. This option does not require additional underwriting. Benefit reductions are treated as a partial lapse of coverage, and the balance of our reserves and deferred insurance acquisition costs is reduced in proportion to the reduced coverage. • Non-forfeiture benefits offered in conjunction with a rate increase - In some cases, non-forfeiture benefits are offered to policyholders who wish to lapse their policies at the time of a significant rate increase. In these cases, exercise of this option is treated as an extinguishment of the original contract and issuance of a new contract. The balance of our reserves and deferred insurance acquisition costs are released, and a reserve for the new contract is established. Some of our policyholders may receive a non-forfeiture benefit if they cease paying their premiums pursuant to their original contract (or pursuant to changes made to their original contract as a result of a litigation settlement made prior to the Effective Date or an order issued by the Florida Office of Insurance Regulation). In these cases, exercise of this option is treated as the exercise of a policy benefit, and the reserve for premium paying benefits is reduced, and the reserve for the non-forfeiture benefit is adjusted to reflect the election of this benefit. Accounting for Certain Marketing Agreements Bankers Life and Casualty Company ("Bankers Life") has entered into various distribution and marketing agreements with other insurance companies to use Bankers Life's exclusive agents to distribute prescription drug and Medicare Advantage plans. These agreements allow Bankers Life to offer these products to current and potential future policyholders without investment in management and infrastructure. We receive fee income related to the plans sold through our distribution channels and incur distribution expenses paid to our agents who sell such products. The recognition of fee revenue and the distribution expenses paid to our agents results from approval of an application by the third-party insurance companies, which we define as our customers. We recognize revenue and distribution fees related to these sales in accordance with the new revenue recognition guidance which was effective January 1, 2018 (see "Recently Issued Accounting Standards - Adopted Accounting Standards" below). This guidance requires us to recognize the net lifetime revenue expected to be earned on these sales, but only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Prior to the fourth quarter of 2019, our revenue recognition was constrained due to the limited historical data available. In the fourth quarter of 2019, we had accumulated additional historical data with respect to some Medicare Advantage plan sales, and certain assumptions and constraints related to our revenue recognition were updated to reflect this change in estimate. To the extent we make changes to the assumptions we use to calculate revenue on these products, we will recognize the impact of the changes in the period in which the change is made. Reinsurance In the normal course of business, we seek to limit our loss exposure on any single insured or to certain groups of policies by ceding reinsurance to other insurance enterprises. We currently retain no more than $0.8 million of mortality risk on any one policy. We diversify the risk of reinsurance loss by using a number of reinsurers that have strong claims-paying ratings. In each case, the ceding CNO subsidiary is directly liable for claims reinsured in the event the assuming company is unable to pay. The cost of reinsurance ceded totaled $262.5 million, $260.6 million and $144.5 million in 2020, 2019 and 2018, respectively. We deduct this cost from insurance policy income. Reinsurance recoveries netted against insurance policy benefits totaled $403.8 million, $439.8 million and $173.5 million in 2020, 2019 and 2018, respectively. The cost of reinsurance and reinsurance recovered amounts include the impacts of the reinsurance transaction with Wilton Reassurance Company ("Wilton Re") described below. 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 $23.0 million, $25.1 million and $28.0 million in 2020, 2019 and 2018, respectively. Insurance policy benefits related to reinsurance assumed totaled $31.4 million, $36.4 million and $36.4 million in 2020, 2019 and 2018, respectively. On September 27, 2018, the Company completed a long-term care reinsurance transaction pursuant to which its wholly-owned subsidiary, Bankers Life, entered into an agreement with Wilton Re to cede all of its legacy (prior to 2003) comprehensive and nursing home long-term care policies (with statutory reserves of $2.7 billion) through 100% indemnity coinsurance. Bankers Life paid a ceding commission of $825 million to reinsure the block, funded through excess capital in the insurance subsidiaries and at the holding company. Bankers Life transferred to Wilton Re assets equal to the statutory liabilities supporting the block plus the ceding commission (subject to a customary post-closing adjustment). CNO recognized a charge related to the transaction of $661.1 million, net of taxes and gains recognized on the assets transferred to Wilton Re. The charge is primarily attributable to loss recognition on the block due to the ceding commission. In addition to the reinsurance agreement, Bankers Life and another CNO subsidiary entered into certain other agreements with Wilton Re, including a trust agreement, an administrative services agreement and a transition services agreement. Wilton Re established a trust account for the benefit of Bankers Life to secure its obligations under the coinsurance agreement. The trust account is required to hold qualified assets with book values equal to the statutory liabilities of the block plus an additional amount, initially $500 million, which declines over time. Income Taxes Our income tax expense includes deferred income taxes arising from temporary differences between the financial reporting and tax bases of assets and liabilities and net operating loss carryforwards ("NOLs"). Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which temporary differences are expected to be recovered or paid. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in earnings in the period when the changes are enacted. A reduction of the net carrying amount of deferred tax assets by establishing a valuation allowance is required if, based on the available evidence, it is more likely than not that such assets will not be realized. In assessing the need for a valuation allowance, all available evidence, both positive and negative, shall be considered to determine whether, based on the weight of that evidence, a valuation allowance for deferred tax assets is needed. This assessment requires significant judgment and considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of carryforward periods, our experience with operating loss and tax credit carryforwards expiring unused, and tax planning strategies. We evaluate the need to establish a valuation allowance for our deferred income tax assets on an ongoing basis. The realization of our deferred tax assets depends upon generating sufficient future taxable income of the appropriate type during the periods in which our temporary differences become deductible and before our NOLs expire. Investments in Variable Interest Entities We have concluded that we are the primary beneficiary with respect to certain variable interest entities ("VIEs"), which are consolidated in our financial statements. All 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. The investment portfolios held by the VIEs are primarily comprised of commercial bank loans to corporate obligors which are almost entirely rated below-investment grade. Refer to the note to the consolidated financial statements entitled "Investments in Variable Interest Entities" for additional information about VIEs. 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, agency residential mortgage-backed securities, non-agency residential mortgage-backed securities, collateralized loan obligations and commercial mortgage-backed securities. Our maximum exposure to loss on these securities is limited to our cost basis in the investment. We have determined that we are not the primary beneficiary of these structured securities due to the relative size of our investment in comparison to the total principal amount of the individual structured securities and the level of credit subordination which reduces our obligation to absorb gains or losses. At December 31, 2020, we held investments in various limited partnerships and hedge funds, in which we are not the primary beneficiary, totaling $562.7 million (classified as other invested assets). At December 31, 2020, we had unfunded commitments to these partnerships totaling $91.9 million. Our maximum exposure to loss on these investments is limited to the amount of our investment. Investment Borrowings Three of the Company's insurance subsidiaries (Bankers Life, Washington National Insurance Company ("Washington National") and Colonial Penn Life Insurance Company) are members of the 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 section of this note entitled "Recently Issued Accounting Standards - Adopted Accounting Standards") does not apply to FHLB common stock and prohibits such investments from being classified as equity securities subject to the new guidance. Accordingly, our investment in the FHLB common stock is classified as other invested assets. At December 31, 2020, the carrying value of the FHLB common stock was $71.0 million. As of December 31, 2020, 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 $2.0 billion at December 31, 2020, 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 December 31, 2020 $ 27.4 August 2021 Fixed rate – 2.550% 22.0 May 2022 Variable rate – .574% 100.0 May 2022 Variable rate – .575% 10.0 June 2022 Variable rate – .844% 50.0 July 2022 Variable rate – .591% 50.0 July 2022 Variable rate – .595% 50.0 July 2022 Variable rate – .602% 50.0 August 2022 Variable rate – .603% 50.0 December 2022 Variable rate – .525% 50.0 December 2022 Variable rate – .525% 22.4 March 2023 Fixed rate – 2.160% 50.0 July 2023 Variable rate – .543% 100.0 July 2023 Variable rate – .543% 50.0 February 2024 Variable rate – .541% 50.0 May 2024 Variable rate – .634% 21.8 May 2024 Variable rate – .632% 100.0 May 2024 Variable rate – .633% 50.0 May 2024 Variable rate – .678% 75.0 June 2024 Variable rate – .561% 100.0 July 2024 Variable rate – .544% 15.5 July 2024 Fixed rate – 1.990% 34.5 July 2024 Variable rate – .763% 15.0 July 2024 Variable rate – .663% 25.0 September 2024 Variable rate – .786% 21.7 May 2025 Variable rate – .484% 19.5 June 2025 Fixed rate – 2.940% 125.0 September 2025 Variable rate – .440% 100.0 October 2025 Variable rate – .630% 100.0 October 2025 Variable rate – .635% 57.7 October 2025 Variable rate – .610% 50.0 November 2025 Variable rate – .603% $ 1,642.5 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 December 31, 2020, the aggregate yield maintenance fee to prepay all fixed rate borrowings was $5.8 million. Interest expense of $21.2 million, $46.2 million and $41.9 million in 2020, 2019 and 2018, respectively, was recognized related to total borrowings from the FHLB. Accounting for Derivatives Our fixed index annuity products provide a guaranteed minimum rate of return and a higher potential return that is based on a percentage (the "participation rate") of the amount of increase in the value of a particular index, such as the Standard & Poor's 500 Index, over a specified period. Typically, on each policy anniversary date, a new index period begins. We are generally able to change the participation rate at the beginning of each index period during a policy year, subject to contractual minimums. The Company accounts for the options attributed to the policyholder for the estimated life of the contract as embedded derivatives. We are required to record the embedded derivatives related to our fixed index annuity products at estimated fair value. The value of the embedded derivative is based on the estimated cost to fulfill our commitment to fixed indexed annuity policyholders to purchase a series of annual forward options over the duration of the policy that back the potential return based on a percentage of the amount of increase in the value of the appropriate index. In valuing these options, we are required to make assumptions regarding: (i) future index values to determine both the future notional amounts at each anniversary date and the future prices of the forward starting options; (ii) future annual participation rates; and (iii) non-economic factors related to policy persistency. These assumptions are used to estimate the future cost to purchase the options. The value of the embedded derivatives is determined based on the present value of estimated future option costs discounted using a risk-free rate adjusted for our non-performance risk and risk margins for non-capital market inputs. The non-performance risk adjustment is determined by taking into consideration publicly available information related to spreads in the secondary market for debt with credit ratings similar to ours. These observable spreads are then adjusted to reflect the priority of these liabilities and the claim paying ability of the issuing insurance subsidiaries. Risk margins are established to capture non-capital market risks which represent the additional compensation a market participant would require to assume the risks related to the uncertainties regarding the embedded derivatives, including future policyholder behavior related to persistency. The determination of the risk margin is highly judgmental given the lack of a market to assume the risks solely related to the embedded derivatives of our fixed index annuity products. The determination of the appropriate risk-free rate and non-performance risk is sensitive to the economic and interest rate environment. Accordingly, the value of the derivative is volatile due to external market sensitivities, which may materially affect net income. Additionally, changes in the judgmental assumptions regarding the appropriate risk margin can significantly impact the value of the derivative. We typically buy call options (including call spreads) referenced to the applicable indices in an effort to offset or hedge potential increases to policyholder benefits resulting from increases in the particular index to which the policy's return is linked. We purchase certain fixed maturity securities that contain embedded derivatives that are required to be held at fair value on the consolidated balance sheet. We have elected the fair value option to carry the entire security at fair value with changes in fair value reported in net income. Sales Inducements Certain of our annuity products offer sales i |
INVESTMENTS
INVESTMENTS | 12 Months Ended |
Dec. 31, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
INVESTMENTS | INVESTMENTS At December 31, 2020, the amortized cost, gross unrealized gains, gross unrealized losses, allowance for credit losses and estimated fair value of fixed maturities, available for sale, were as follows (dollars in millions): Amortized Gross Gross Allowance for credit losses Estimated Investment grade (a): Corporate securities $ 11,243.2 $ 2,638.9 $ (3.4) $ (.2) $ 13,878.5 United States Treasury securities and obligations of United States government corporations and agencies 163.8 71.9 (.2) — 235.5 States and political subdivisions 2,284.1 358.9 (1.3) (.2) 2,641.5 Foreign governments 82.2 20.4 — — 102.6 Asset-backed securities 935.0 42.9 (4.4) — 973.5 Agency residential mortgage-backed securities 52.7 5.7 — — 58.4 Non-agency residential mortgage-backed securities 921.0 45.4 (.4) — 966.0 Collateralized loan obligations 461.9 .6 (3.6) — 458.9 Commercial mortgage-backed securities 1,783.9 114.4 (6.9) — 1,891.4 Total investment grade fixed maturities, available for sale 17,927.8 3,299.1 (20.2) (.4) 21,206.3 Below-investment grade (a) (b): Corporate securities 811.5 57.4 (6.5) (1.7) 860.7 States and political subdivisions 12.5 — — (.1) 12.4 Foreign governments .2 — — — .2 Asset-backed securities 89.4 2.2 (3.0) — 88.6 Non-agency residential mortgage-backed securities 992.5 135.8 (1.7) — 1,126.6 Commercial mortgage-backed securities 87.2 2.0 (.4) — 88.8 Total below-investment grade fixed maturities, available for sale 1,993.3 197.4 (11.6) (1.8) 2,177.3 Total fixed maturities, available for sale $ 19,921.1 $ 3,496.5 $ (31.8) $ (2.2) $ 23,383.6 _______________ (a) Investment ratings are assigned the second lowest rating by Nationally Recognized Statistical Rating Organizations ("NRSROs") (Moody's Investor Services, Inc. ("Moody's"), S&P Global Ratings ("S&P") or Fitch Ratings ("Fitch")), or if not rated by such firms, the rating assigned by the National Association of Insurance Commissioners (the "NAIC"). NAIC designations of "1" or "2" include fixed maturities generally rated investment grade (rated "Baa3" or higher by Moody's or rated "BBB-" or higher by S&P and Fitch). NAIC designations of "3" through "6" are referred to as below-investment grade (which generally are rated "Ba1" or lower by Moody's or rated "BB+" or lower by S&P and Fitch). References to investment grade or below-investment grade throughout our consolidated financial statements are determined as described above. (b) Certain structured securities rated below-investment grade by NRSROs may be assigned a NAIC 1 or NAIC 2 designation based on the cost basis of the security relative to estimated recoverable amounts as determined by the NAIC. Refer to the table below for a summary of our fixed maturity securities, available for sale, by NAIC designations. The NAIC evaluates the fixed maturity investments of insurers for regulatory and capital assessment purposes and assigns securities to one of six credit quality categories called NAIC designations, which are used by insurers when preparing their annual statements based on statutory accounting principles. The NAIC designations are generally similar to the credit quality designations of the NRSROs for marketable fixed maturity securities, except for certain structured securities. However, certain structured securities rated below investment grade by the NRSROs can be assigned NAIC 1 or NAIC 2 designations depending on the cost basis of the holding relative to estimated recoverable amounts as determined by the NAIC. The following summarizes the NAIC designations and NRSRO equivalent ratings: NAIC Designation NRSRO Equivalent Rating 1 AAA/AA/A 2 BBB 3 BB 4 B 5 CCC and lower 6 In or near default A summary of our fixed maturity securities, available for sale, by NAIC designations (or for fixed maturity securities held by non-regulated entities, based on NRSRO ratings) as of December 31, 2020 is as follows (dollars in millions): NAIC designation Amortized cost Estimated fair value Percentage of total estimated fair value 1 $ 10,512.8 $ 12,262.4 52.4 % 2 8,267.9 9,915.0 42.4 Total NAIC 1 and 2 (investment grade) 18,780.7 22,177.4 94.8 3 845.8 908.4 3.9 4 272.7 276.5 1.2 5 20.9 21.3 .1 6 1.0 — — Total NAIC 3,4,5 and 6 (below-investment grade) 1,140.4 1,206.2 5.2 $ 19,921.1 $ 23,383.6 100.0 % At December 31, 2019, the amortized cost, gross unrealized gains and losses, estimated fair value and other-than-temporary impairments in accumulated other comprehensive income of fixed maturities, available for sale, were as follows (dollars in millions): Amortized Gross Gross Estimated Other-than-temporary impairments included in accumulated other comprehensive income Investment grade: Corporate securities $ 10,802.6 $ 1,516.0 $ (8.7) $ 12,309.9 $ — United States Treasury securities and obligations of United States government corporations and agencies 161.4 43.3 (.1) 204.6 — States and political subdivisions 2,002.1 246.1 (1.5) 2,246.7 — Foreign governments 82.6 13.0 — 95.6 — Asset-backed securities 1,289.0 35.7 (1.0) 1,323.7 — Agency residential mortgage-backed securities 89.2 5.8 — 95.0 — Non-agency residential mortgage-backed securities 768.2 23.3 (.9) 790.6 (.2) Collateralized loan obligations 404.1 .1 (3.4) 400.8 — Commercial mortgage-backed securities 1,732.2 72.3 (1.0) 1,803.5 — Total investment grade fixed maturities, available for sale 17,331.4 1,955.6 (16.6) 19,270.4 (.2) Below-investment grade: Corporate securities 600.9 28.1 (3.6) 625.4 — Asset-backed securities 63.9 1.1 (.8) 64.2 — Non-agency residential mortgage-backed securities 1,102.8 149.0 (.1) 1,251.7 (0.1) Commercial mortgage-backed securities 80.5 3.0 — 83.5 — Total below-investment grade fixed maturities, available for sale 1,848.1 181.2 (4.5) 2,024.8 (.1) Total fixed maturities, available for sale $ 19,179.5 $ 2,136.8 $ (21.1) $ 21,295.2 $ (.3) Accumulated other comprehensive income is primarily comprised of the net effect of unrealized appreciation (depreciation) on our investments. These amounts, included in shareholders' equity as of December 31, 2020 and 2019, were as follows (dollars in millions): 2020 2019 Net unrealized appreciation on fixed maturity securities, available for sale, on which an other-than-temporary impairment loss has been recognized $ — $ 1.1 Net unrealized gains on all other fixed maturity securities, available for sale — 2,095.3 Net unrealized gains on investments having no allowance for credit losses 3,466.3 — Unrealized losses on investments with an allowance for credit losses (10.0) — Adjustment to present value of future profits (a) (10.2) (18.9) Adjustment to deferred acquisition costs (458.0) (227.9) Adjustment to insurance liabilities (197.5) (96.5) Deferred income tax liabilities (604.5) (380.6) Accumulated other comprehensive income $ 2,186.1 $ 1,372.5 ________ (a) The present value of future profits is the value assigned to the right to receive future cash flows from contracts existing at September 10, 2003, the date our Predecessor emerged from bankruptcy. At December 31, 2020, adjustments to the present value of future profits, deferred acquisition costs, insurance liabilities and deferred tax assets included $(8.6) million, $(133.4) million, $(197.5) million and $73.7 million, respectively, for premium deficiencies that would exist on certain blocks of business if unrealized gains on the assets backing such products had been realized and the proceeds from the sales of such assets were invested at then current yields. At December 31, 2019, adjustments to the present value of future profits, deferred acquisition costs, insurance liabilities and deferred tax assets included $(12.2) million, $(26.8) million, $(96.5) million and $29.4 million, respectively, for premium deficiencies that would exist on certain blocks of business if unrealized gains on the assets backing such products had been realized and the proceeds from the sales of such assets were invested at then current yields. Below-Investment Grade Securities At December 31, 2020, the amortized cost of the Company's below-investment grade fixed maturity securities, available for sale, was $1,993.3 million, or 10 percent of the Company's fixed maturity portfolio (or $1,140.4 million, or 6 percent, of the Company's fixed maturity portfolio measured based on credit quality ratings assigned by the NAIC). The estimated fair value of the below-investment grade portfolio was $2,177.3 million, or 109 percent of the amortized cost. Below-investment grade corporate debt securities typically have different characteristics than investment grade corporate debt securities. Based on historical performance, probability of default by the borrower is significantly greater for below-investment grade corporate debt securities and in many cases severity of loss is relatively greater as such securities are generally unsecured and often subordinated to other indebtedness of the issuer. Also, issuers of below-investment grade corporate debt securities frequently have higher levels of debt relative to investment-grade issuers, hence, all other things being equal, are generally more sensitive to adverse economic conditions. The Company attempts to reduce the overall risk related to its investment in below-investment grade securities, as in all investments, through careful credit analysis, strict investment policy guidelines, and diversification by issuer and/or guarantor and by industry. Contractual Maturity The following table sets forth the amortized cost and estimated fair value of fixed maturities, available for sale, at December 31, 2020, 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, agency residential mortgage-backed securities, non-agency residential mortgage-backed securities, collateralized loan obligations and commercial mortgage-backed securities, collectively referred to as "structured securities") frequently include provisions for periodic principal payments and permit periodic unscheduled payments. Amortized Estimated (Dollars in millions) Due in one year or less $ 388.7 $ 396.4 Due after one year through five years 987.4 1,052.9 Due after five years through ten years 1,540.4 1,715.6 Due after ten years 11,681.0 14,566.5 Subtotal 14,597.5 17,731.4 Structured securities 5,323.6 5,652.2 Total fixed maturities, available for sale $ 19,921.1 $ 23,383.6 Net Investment Income Net investment income consisted of the following (dollars in millions): 2020 2019 2018 General account assets: Fixed maturities $ 924.8 $ 952.4 $ 1,100.3 Equity securities 3.0 3.2 22.8 Mortgage loans 79.5 77.1 82.0 Policy loans 8.5 8.3 8.0 Other invested assets 84.0 65.3 72.0 Cash and cash equivalents 2.6 13.3 10.9 Policyholder and other special-purpose portfolios: Trading securities 28.1 8.9 8.5 Options related to fixed index products: Option income (loss) 35.0 (21.2) 122.3 Change in value of options 4.5 173.1 (165.3) Other special-purpose portfolios 75.9 104.1 68.2 Gross investment income 1,245.9 1,384.5 1,329.7 Less investment expenses 23.4 21.6 23.5 Net investment income $ 1,222.5 $ 1,362.9 $ 1,306.2 At December 31, 2020, the amortized cost and carrying value of fixed maturities that were non-income producing during 2020 totaled $1.0 million and nil, respectively. Net Realized Investment Gains (Losses) The following table sets forth the net realized investment gains (losses) for the periods indicated (dollars in millions): 2020 2019 2018 Fixed maturity securities, available for sale: Gross realized gains on sale $ 48.6 $ 86.5 $ 65.7 Gross realized losses on sale (53.7) (55.5) (65.8) Change in allowance for credit losses and other-than-temporary impairment losses (a) (8.2) (9.4) (.5) Net realized investment gains (losses) from fixed maturities (13.3) 21.6 (.6) Equity securities, including change in fair value (b) (5.1) 11.9 (38.2) Mortgage loans (1.9) — (1.3) Change in allowance for credit losses and impairments of other investments (c) (10.3) (3.0) (2.1) Loss on dissolution of variable interest entities — (5.1) — Other (d) (e) (5.6) 2.8 30.9 Net realized investment gains (losses) before net realized gains on the transfer of assets related to reinsurance transaction (36.2) 28.2 (11.3) Net realized gains on the transfer of assets related to reinsurance transaction — — 363.4 Net realized investment gains (losses) $ (36.2) $ 28.2 $ 352.1 _________________ (a) No portion of the other-than-temporary impairments recognized in 2019 and 2018 was included in accumulated other comprehensive income. (b) Changes in the estimated fair value of equity securities (and are still held as of the end of the respective years) were $(1.7) million, $3.7 million and $(29.7) million for the years ended December 31, 2020, 2019 and 2018, respectively. (c) The change in allowance for credit losses in 2020 includes $(5.2) million related to investments held by VIEs. (d) Changes in the estimated fair value of trading securities that we have elected the fair value option (and are still held as of the end of the respective years) were $0.4 million, $8.3 million and $(2.2) million for the years ended December 31, 2020, 2019 and 2018, respectively. (e) In April 2016, the Company announced that it had invested in a non-controlling minority interest in Tennenbaum Capital Partners, LLC ("TCP"), a Los Angeles-based investment management firm. In August 2018, Blackrock, Inc. announced the completion of its acquisition of TCP. The sale of our interest in TCP resulted in a significant portion of the net realized gains in 2018. During 2020, we recognized net realized investment losses of $36.2 million, which were comprised of: (i) $15.1 million of net losses from the sales of investments; (ii) $5.1 million of losses related to equity securities, including the change in fair value; (iii) the decrease in fair value of certain fixed maturity investments with embedded derivatives of $0.1 million; (iv) the increase in fair value of embedded derivatives related to a modified coinsurance agreement of $2.6 million; and (v) an increase in the allowance for credit losses and other-than-temporary impairment losses of $18.5 million. During 2019, we recognized net realized investment gains of $28.2 million, which were comprised of: (i) $20.2 million of net gains from the sales of investments; (ii) $5.1 million of losses on the dissolution of a VIE; (iii) $11.9 million of gains related to equity securities, including the change in fair value; (iv) the increase in fair value of certain fixed maturity investments with embedded derivatives of $8.3 million; (v) the increase in fair value of embedded derivatives related to a modified coinsurance agreement of $5.3 million; and (vi) $12.4 million of writedowns of investments for other than temporary declines in fair value recognized through net income. During 2019, a VIE that was required to be consolidated was dissolved. We recognized a loss of $5.1 million in 2019 representing the difference between the borrowings of such VIE and the contractual distributions required following the liquidation of the underlying assets. During 2018, we recognized net realized investment gains of $352.1 million, which were comprised of: (i) $40.1 million of net gains from the sales of investments; (ii) $363.4 million of gains on the transfer of assets (substantially all of which were fixed maturities) related to a reinsurance transaction; (iii) $38.2 million of losses related to equity securities, including the change in fair value; (iv) the decrease in fair value of certain fixed maturity investments with embedded derivatives of $5.5 million; (v) the decrease in fair value of embedded derivatives related to a modified coinsurance agreement of $5.1 million; and (vi) $2.6 million of writedowns of investments for other than temporary declines in fair value recognized through net income. At December 31, 2020, there were no fixed maturity investments in default. During 2020, the $53.7 million of realized losses on sales of $507.1 million of fixed maturity securities, available for sale, included: (i) $16.2 million related to various corporate securities; (ii) $26.1 million related to commercial mortgage-backed securities; (iii) $9.6 million related to asset-backed securities; and (iv) $1.8 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. During 2019, the $55.5 million of realized losses on sales of $971.2 million of fixed maturity securities, available for sale included: (i) $48.1 million related to various corporate securities; (ii) $5.4 million related to collateralized loan obligations; and (iii) $2.0 million related to various other investments. During 2019, we recognized $12.4 million of impairment losses recorded in earnings which included: (i) $9.4 million related to corporate securities due to issuer specific events; and (ii) $3.0 million related to commercial bank loans held by the VIEs. During 2018, the $65.8 million of realized losses on sales of $1,295.8 million of fixed maturity securities, available for sale, included: (i) $54.0 million related to various corporate securities; (ii) $4.1 million related to commercial mortgage-backed securities; (iii) $4.1 million related to asset-backed securities; and (iv) $3.6 million related to various other investments. During 2018, we recognized $2.6 million of impairment losses recorded in earnings which included: (i) $2.1 million related to a mortgage loan due to issuer specific events; and (ii) $0.5 million related to a corporate security. Our fixed maturity investments are generally purchased in the context of various long-term strategies, including funding insurance liabilities, so we do not generally seek to generate short-term realized gains through the purchase and sale of such securities. In certain circumstances, including those in which securities are selling at prices which exceed our view of their underlying economic value, or when it is possible to reinvest the proceeds to better meet our long-term asset-liability objectives, we may sell certain securities. The following summarizes the investments sold at a loss during 2020 which had been continuously in an unrealized loss position exceeding 20 percent of the amortized cost basis prior to the sale for the period indicated (dollars in millions): At date of sale Number Amortized cost Fair value Less than 6 months prior to sale 18 $ 51.6 $ 36.6 Greater than or equal to 6 months and less than 12 months prior to sale 1 3.1 1.9 Greater than 12 months prior to sale 1 1.1 — 20 $ 55.8 $ 38.5 Prior to January 1, 2020, we regularly evaluated all of our investments with unrealized losses for possible impairment. Our assessment of whether unrealized losses were "other than temporary" required significant judgment. Factors considered included: (i) the extent to which fair value is less than the cost basis; (ii) the length of time that the fair value had been less than cost; (iii) whether the unrealized loss was 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 was investment-grade and/or has been downgraded since its purchase; (vi) whether the issuer was current on all payments in accordance with the contractual terms of the investment and was expected to meet all of its obligations under the terms of the investment; (vii) whether we intended to sell the investment or it was more likely than not that circumstances would 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 would 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. The manner in which impairment losses on fixed maturity securities, available for sale, were recognized in the financial statements was dependent on the facts and circumstances related to the specific security. If we intended to sell a security or it was more likely than not that we would be required to sell a security before the recovery of its amortized cost, the security was other-than-temporarily impaired and the full amount of the impairment was recognized as a loss through earnings. If we did not expect to recover the amortized cost basis, we did not plan to sell the security, and if it was 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 was bifurcated. We recognized the credit loss portion in net income and the noncredit loss portion in accumulated other comprehensive income. We estimated 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 was 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 varied depending on the type of security. For most structured securities, cash flow estimates were based on bond-specific facts and circumstances that included 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 were 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 became the security's new cost basis. We accreted the new cost basis to the estimated future cash flows over the expected remaining life of the security, except when the security was in default or considered nonperforming. The remaining noncredit impairment, which was recorded in accumulated other comprehensive income, was 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 represented changes in the market interest rates, current market liquidity and risk premiums. 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. Mortgage loans were impaired when it was probable that we would not collect the contractual principal and interest on the loan. We measured impairment based upon the difference between the carrying value of the loan and the estimated fair value of the collateral securing the loan less cost to sell. The following table summarizes the amount of credit losses recognized in earnings on fixed maturity securities, available for sale, held at the beginning of the period, for which a portion of the other-than-temporary impairment was also recognized in accumulated other comprehensive income (dollars in millions): Year ended December 31, 2019 2018 Credit losses on fixed maturity securities, available for sale, beginning of period $ (.2) $ (2.8) Add: credit losses on other-than-temporary impairments not previously recognized — — Less: credit losses on securities sold — 2.6 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) $ (.2) __________ (a) Represents securities for which the amount previously recognized in accumulated other comprehensive income was recognized in earnings because we intend to sell the security or we more likely than not will be required to sell the security before recovery of its amortized cost basis. Investments with Unrealized Losses The following table sets forth the amortized cost and estimated fair value of those fixed maturities, available for sale, with unrealized losses at December 31, 2020, by contractual maturity. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties. Structured securities frequently include provisions for periodic principal payments and permit periodic unscheduled payments. Amortized Estimated (Dollars in millions) Due in one year or less $ 8.0 $ 8.0 Due after one year through five years 51.7 50.4 Due after five years through ten years 86.4 84.8 Due after ten years 181.3 170.6 Subtotal 327.4 313.8 Structured securities 1,088.3 1,067.9 Total $ 1,415.7 $ 1,381.7 The following summarizes the investments in our portfolio rated below-investment grade which have been continuously in an unrealized loss position exceeding 20 percent of the cost basis for the period indicated as of December 31, 2020 (dollars in millions): Number Cost Unrealized Estimated Less than 6 months 1 $ 14.1 $ (2.9) $ 11.2 The following table summarizes the gross unrealized losses and fair values of our investments with unrealized losses for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time that such securities have been in a continuous unrealized loss position, at December 31, 2020 (dollars in millions): Less than 12 months 12 months or greater Total Description of securities Fair Unrealized Fair Unrealized Fair Unrealized Corporate securities $ 110.0 $ (2.6) $ 5.6 $ (.2) $ 115.6 $ (2.8) United States Treasury securities and obligations of United States government corporations and agencies 17.9 (.2) — — 17.9 (.2) States and political subdivisions 8.6 (.1) — — 8.6 (.1) Asset-backed securities 146.9 (4.1) 26.0 (3.3) 172.9 (7.4) Non-agency residential mortgage-backed securities 173.2 (1.5) 42.2 (.6) 215.4 (2.1) Collateralized loan obligations 151.4 (1.5) 178.7 (2.1) 330.1 (3.6) Commercial mortgage-backed securities 277.0 (6.3) 72.3 (1.0) 349.3 (7.3) Total fixed maturities, available for sale $ 885.0 $ (16.3) $ 324.8 $ (7.2) $ 1,209.8 $ (23.5) 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, 2019 (dollars in millions): Less than 12 months 12 months or greater Total Description of securities Fair Unrealized Fair Unrealized Fair Unrealized Corporate securities $ 305.5 $ (6.6) $ 96.8 $ (5.7) $ 402.3 $ (12.3) United States Treasury securities and obligations of United States government corporations and agencies 7.0 (.1) 3.5 — 10.5 (.1) States and political subdivisions 110.1 (1.5) — — 110.1 (1.5) Foreign governments 3.4 — — — 3.4 — Asset-backed securities 75.7 (.4) 45.5 (1.4) 121.2 (1.8) Agency residential mortgage-backed securities 8.8 — — — 8.8 — Non-agency residential mortgage-backed securities 137.4 (.7) 67.2 (.3) 204.6 (1.0) Collateralized loan obligations 220.7 (1.1) 115.4 (2.3) 336.1 (3.4) Commercial mortgage-backed securities 394.2 (1.0) 12.8 — 407.0 (1.0) Total fixed maturities, available for sale $ 1,262.8 $ (11.4) $ 341.2 $ (9.7) $ 1,604.0 $ (21.1) Based on management's current assessment of investments with unrealized losses at December 31, 2020, 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. The following table summarizes changes in the allowance for credit losses related to fixed maturities, available for sale, for the year ended December 31, 2020 (dollars in millions): Corporate securities States and political subdivisions Foreign governments Non-agency residential mortgage-backed securities Asset-backed securities Total Allowance at January 1, 2020 $ 2.1 $ — $ — $ — $ — $ 2.1 Additions for securities for which credit losses were not previously recorded 23.6 .7 .1 1.0 .3 25.7 Additions for purchased securities with deteriorated credit — — — — — — Additions (reductions) for securities where an allowance was previously recorded (22.3) (.4) (.1) (1.0) (.3) (24.1) Reduction for securities sold during the period (1.5) — — — — (1.5) Reduction for securities for which the Company made the decision to sell where an allowance was previously recorded — — — — — — Write-offs — — — — — — Recoveries of previously written-off amount — — — — — — Allowance at December 31, 2020 $ 1.9 $ .3 $ — $ — $ — $ 2.2 Structured Securities At December 31, 2020, fixed maturity investments included structured securities with an estimated fair value of $5.7 billion (or 24.2 percent of all fixed maturity securities). The yield characteristics of structured securities generally differ in some respects from those of traditional corporate fixed-income securities or government securities. For example, interest and principal payments on structured securities may occur more frequently, often monthly. In many instances, we are subject to variability in the amount and timing of principal and interest payments. For example, in many cases, partial prepayments may occur at the option of the issuer and prepayment rates are influenced by a number of factors that cannot be predicted with certainty, including: the relative sensitivity of prepayments on the underlying assets backing the security to changes in interest rates and asset values; the availability of alternative financing; a variety of economic, geographic and other factors; the timing, pace and proceeds of liquidations of defaulted collateral; and various security-specific structural considerations (for example, the repayment priority of a given security in a securitization structure). In addition, the total amount of payments for non-agency structured securities may be affected by changes to cumulative default rates or loss severities of the related collateral. Historically, the rate of prepayments on structured securities has tended to increase when prevailing interest rates have declined significantly in absolute terms and also relative to the interest rates on the underlying collateral. The yields recognized on structured securities purchased at a discount to par will generally increase (relative to the stated rate) when the underlying collateral prepays faster than expected. The yields recognized on structured securities purchased at a premium will decrease (relative to the stated rate) when the underlying collateral prepays faster than expected. When interest rates decline, the proceeds from prepayments may be reinvested at lower rates than we were earning on the prepaid securities. When interest rates increase, prepayments may decrease below expected levels. When this occurs, the average maturity and duration of structured securities increases, decreasing the yield on structured securities purchased at discounts and increasing t |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2020 | |
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 COLI, 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; and 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, 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. The vast majority of our fixed maturity and equity securities, including those held in trading portfolios and those held by consolidated VIEs 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. Foreign governments are generally priced using the market approach. Inputs generally consist of trades of identical or similar securities, quoted prices in inactive markets, new issuances, benchmark yields, credit spreads and issuer rating. Asset-backed securities, agency and non-agency residential mortgage-backed securities, collateralized loan obligations and commercial mortgage-backed securities 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 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 85 percent of our Level 3 fixed maturity securities and trading 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. The categorization of fair value measurements, by input level, for our financial instruments carried at fair value on a recurring basis at December 31, 2020 is as follows (dollars in millions): Quoted prices in active markets Significant other observable inputs Significant unobservable inputs Total Assets: Fixed maturities, available for sale: Corporate securities $ — $ 14,592.3 $ 146.9 $ 14,739.2 United States Treasury securities and obligations of United States government corporations and agencies — 235.5 — 235.5 States and political subdivisions — 2,653.9 — 2,653.9 Foreign governments — 102.8 — 102.8 Asset-backed securities — 1,047.8 14.3 1,062.1 Agency residential mortgage-backed securities — 58.4 — 58.4 Non-agency residential mortgage-backed securities — 2,091.0 1.6 2,092.6 Collateralized loan obligations — 458.9 — 458.9 Commercial mortgage-backed securities — 1,980.2 — 1,980.2 Total fixed maturities, available for sale — 23,220.8 162.8 23,383.6 Equity securities - corporate securities 104.6 19.8 26.8 151.2 Trading securities: Asset-backed securities — 10.4 — 10.4 Agency residential mortgage-backed securities — .4 — .4 Non-agency residential mortgage-backed securities — 92.0 5.9 97.9 Commercial mortgage-backed securities — 106.3 17.0 123.3 Total trading securities — 209.1 22.9 232.0 Investments held by variable interest entities - corporate securities — 1,189.4 — 1,189.4 Other invested assets - derivatives — 216.7 — 216.7 Assets held in separate accounts — 4.2 — 4.2 Total assets carried at fair value by category $ 104.6 $ 24,860.0 $ 212.5 $ 25,177.1 Liabilities: Embedded derivatives associated with fixed index annuity products (classified as policyholder account liabilities) $ — $ — $ 1,644.5 $ 1,644.5 The categorization of fair value measurements, by input level, for our financial instruments carried at fair value on a recurring basis at December 31, 2019 is as follows (dollars in millions): Quoted prices in active markets Significant other observable inputs Significant unobservable inputs Total Assets: Fixed maturities, available for sale: Corporate securities $ — $ 12,756.5 $ 178.8 $ 12,935.3 United States Treasury securities and obligations of United States government corporations and agencies — 204.6 — 204.6 States and political subdivisions — 2,246.7 — 2,246.7 Foreign governments — 94.5 1.1 95.6 Asset-backed securities — 1,375.3 12.6 1,387.9 Agency residential mortgage-backed securities — 95.0 — 95.0 Non-agency residential mortgage-backed securities — 2,042.3 — 2,042.3 Collateralized loan obligations — 400.8 — 400.8 Commercial mortgage-backed securities — 1,887.0 — 1,887.0 Total fixed maturities, available for sale — 21,102.7 192.5 21,295.2 Equity securities - corporate securities 31.3 4.5 8.3 44.1 Trading securities: Asset-backed securities — 12.1 — 12.1 Agency residential mortgage-backed securities — .4 — .4 Non-agency residential mortgage-backed securities — 113.4 — 113.4 Commercial mortgage-backed securities — 105.5 12.5 118.0 Total trading securities — 231.4 12.5 243.9 Investments held by variable interest entities - corporate securities — 1,188.6 — 1,188.6 Other invested assets - derivatives — 203.8 — 203.8 Assets held in separate accounts — 4.2 — 4.2 Total assets carried at fair value by category $ 31.3 $ 22,735.2 $ 213.3 $ 22,979.8 Liabilities: Embedded derivatives associated with fixed index annuity products (classified as policyholder account liabilities) $ — $ — $ 1,565.4 $ 1,565.4 The fair value of our financial instruments disclosed at fair value on a recurring basis are as follows (dollars in millions): December 31, 2020 Quoted prices in active markets for identical assets or liabilities Significant other observable inputs Significant unobservable inputs Total estimated fair value Total carrying amount Assets: Mortgage loans $ — $ — $ 1,424.8 $ 1,424.8 $ 1,358.7 Policy loans — — 123.0 123.0 123.0 Other invested assets: Company-owned life insurance — 209.7 — 209.7 209.7 Cash and cash equivalents: Unrestricted 937.8 — — 937.8 937.8 Held by variable interest entities 54.1 — — 54.1 54.1 Liabilities: Policyholder account liabilities — — 12,540.6 12,540.6 12,540.6 Investment borrowings — 1,648.3 — 1,648.3 1,642.5 Borrowings related to variable interest entities — 1,141.7 — 1,141.7 1,151.8 Notes payable – direct corporate obligations — 1,326.8 — 1,326.8 1,136.2 December 31, 2019 Quoted prices in active markets for identical assets or liabilities Significant other observable inputs Significant unobservable inputs Total estimated fair value Total carrying amount Assets: Mortgage loans $ — $ — $ 1,651.4 $ 1,651.4 $ 1,566.1 Policy loans — — 124.5 124.5 124.5 Other invested assets: Company-owned life insurance — 194.0 — 194.0 194.0 Cash and cash equivalents: Unrestricted 579.9 .1 — 580.0 580.0 Held by variable interest entities 74.7 — — 74.7 74.7 Liabilities: Policyholder account liabilities — — 12,132.3 12,132.3 12,132.3 Investment borrowings — 1,647.9 — 1,647.9 1,644.3 Borrowings related to variable interest entities — 1,142.1 — 1,142.1 1,152.5 Notes payable – direct corporate obligations — 1,117.2 — 1,117.2 989.1 The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the year ended December 31, 2020 (dollars in millions): December 31, 2020 Beginning balance as of December 31, 2019 Purchases, sales, issuances and settlements, net (b) Total realized and unrealized gains (losses) included in net income Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) Transfers into Level 3 (a) Transfers out of Level 3 (a) Ending balance as of December 31, 2020 Amount of total gains (losses) for the year ended December 31, 2020 included in our net income relating to assets and liabilities still held as of the reporting date Amount of total gains (losses) for the year ended December 31, 2020 included in accumulated other comprehensive income (loss) relating to assets and liabilities still held as of the reporting date Assets: Fixed maturities, available for sale: Corporate securities $ 178.8 $ 17.8 $ (.9) $ 10.2 $ 90.6 $ (149.6) $ 146.9 $ (1.0) $ 7.2 Foreign governments 1.1 — — — — (1.1) — — — Asset-backed securities 12.6 1.5 — .2 — — 14.3 — .2 Non-agency residential mortgage-backed securities — 1.6 — — — — 1.6 — — Total fixed maturities, available for sale 192.5 20.9 (.9) 10.4 90.6 (150.7) 162.8 (1.0) 7.4 Equity securities - corporate securities 8.3 14.0 .3 — 4.2 — 26.8 — — Trading securities: Non-agency residential mortgage-backed securities — (2.0) (.1) .4 7.6 — 5.9 (.1) — Commercial mortgage-backed securities 12.5 4.3 (.4) .6 — — 17.0 (.4) — Total trading securities 12.5 2.3 (.5) 1.0 7.6 — 22.9 (.5) — Liabilities: Embedded derivatives associated with fixed index annuity products (classified as policyholder account liabilities) (1,565.4) (157.0) 77.9 — — — (1,644.5) 77.9 — _________ (a) Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate. (b) Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts. The following summarizes such activity for the year ended December 31, 2020 (dollars in millions): Purchases Sales Issuances Settlements Purchases, sales, issuances and settlements, net Assets: Fixed maturities, available for sale: Corporate securities $ 20.5 $ (2.7) $ — $ — $ 17.8 Asset-backed securities 2.0 (.5) — — 1.5 Non-agency residential mortgage-backed securities 1.6 — — — 1.6 Total fixed maturities, available for sale 24.1 (3.2) — — 20.9 Equity securities - corporate securities 14.3 (.3) — — 14.0 Trading securities: Non-agency residential mortgage-backed securities — (2.0) — — (2.0) Commercial mortgage-backed securities 4.3 — — — 4.3 Total trading securities 4.3 (2.0) — — 2.3 Liabilities: Embedded derivatives associated with fixed index annuity products (classified as policyholder account liabilities) (183.7) 119.3 (180.1) 87.5 (157.0) The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the year ended December 31, 2019 (dollars in millions): December 31, 2019 Beginning balance as of December 31, 2018 Purchases, sales, issuances and settlements, net (b) Total realized and unrealized gains (losses) included in net income Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) Transfers into Level 3 (a) Transfers out of Level 3 (a) Ending balance as of December 31, 2019 Amount of total gains (losses) for the year ended December 31, 2019 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 $ 158.6 $ (34.3) $ (4.6) $ 12.9 $ 46.2 $ — $ 178.8 $ (4.0) Foreign governments 1.0 — — .1 — — 1.1 — Asset-backed securities 12.0 (.6) — 1.2 — — 12.6 — Total fixed maturities, available for sale 171.6 (34.9) (4.6) 14.2 46.2 — 192.5 (4.0) Equity securities - corporate securities 9.5 — (1.2) — — — 8.3 (1.2) Trading securities - commercial mortgage-backed securities — — 1.6 .6 10.3 — 12.5 1.6 Liabilities: Embedded derivatives associated with fixed index annuity products (classified as policyholder account liabilities) (1,289.0) (193.5) (82.9) — — — (1,565.4) (82.9) ____________ (a) Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate. (b) Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts. The following summarizes such activity for the year ended December 31, 2019 (dollars in millions): Purchases Sales Issuances Settlements Purchases, sales, issuances and settlements, net Assets: Fixed maturities, available for sale: Corporate securities $ 20.1 $ (54.4) $ — $ — $ (34.3) Asset-backed securities — (.6) — — (.6) Total fixed maturities, available for sale 20.1 (55.0) — — (34.9) Liabilities: Embedded derivatives associated with fixed index annuity products (classified as policyholder account liabilities) (154.9) 7.2 (138.0) 92.2 (193.5) 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 income 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 amount presented for gains (losses) included in accumulated other comprehensive income (loss) for assets and liabilities still held as of the reporting date primarily represents changes in the fair value of fixed maturities, available for sale, that are held as of the reporting date. At December 31, 2020, 92 percent of our Level 3 fixed maturities, available for sale, were investment grade and 90 percent of our Level 3 fixed maturities, available for sale, consisted of corporate securities. 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, 2020 (dollars in millions): Fair value at December 31, 2020 Valuation techniques Unobservable inputs Range (weighted average) (a) Assets: Corporate securities (b) $ 13.4 Discounted cash flow analysis Discount margins 1.90% - 5.59% (3.24%) Asset-backed securities (c) 12.3 Discounted cash flow analysis Discount margins 2.46% Equity securities (d) 8.3 Recovery method Percent of recovery expected 59.27% - 100.00% (59.52%) Equity securities (e) 18.6 Unadjusted purchase price Not applicable Not applicable Other assets categorized as Level 3 (f) 159.9 Unadjusted third-party price source Not applicable Not applicable Total 212.5 Liabilities: Embedded derivatives related to fixed index annuity products (classified as policyholder account liabilities) (g) 1,644.5 Discounted projected embedded derivatives Projected portfolio yields 4.12% - 4.38% (4.13%) Discount rates 0.00% - 2.64% (1.03%) Surrender rates 1.60% - 25.60% (9.40%) ________________________________ (a) The weighted average is based on the relative fair value of the related assets or liabilities. (b) 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 have resulted in a significantly lower (higher) 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 have resulted 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 percentage of recovery expected. Significant increases (decreases) in percentage of recovery expected in isolation would have resulted in a significantly higher (lower) fair value measurement. (e) Equity securities – For these assets, there were no adjustments to the purchase price. (f) Other assets categorized as Level 3 - For these assets, there were no adjustments to non-binding quoted market prices obtained from third-party pricing sources. (g) Embedded derivatives related to fixed index annuity products (classified as policyholder account liabilities) - 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 have led to a higher (lower) fair value measurement. The discount rate is based on risk free rates (U.S. Treasury rates for similar durations) adjusted for our non-performance risk and risk margins for non-capital market inputs. Increases (decreases) in the discount rates would have led 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, 2019 (dollars in millions): Fair value at December 31, 2019 Valuation techniques Unobservable inputs Range (weighted average) Assets: Corporate securities (a) $ 134.2 Discounted cash flow analysis Discount margins 1.07% - 8.42% (1.91%) Corporate securities (b) 1.0 Recovery method Percent of recovery expected 12.77% Asset-backed securities (c) 12.6 Discounted cash flow analysis Discount margins 1.66% Equity securities (d) 8.3 Recovery method Percent of recovery expected 59.27% - 100.00% (59.52%) Other assets categorized as Level 3 (e) 57.2 Unadjusted third-party price source Not applicable Not applicable Total 213.3 Liabilities: Embedded derivatives related to fixed index annuity products (classified as policyholder account liabilities) (f) 1,565.4 Discounted projected embedded derivatives Projected portfolio yields 4.71% - 4.98% (4.72%) Discount rates 1.24% - 3.07% (1.88%) Surrender rates 1.60% - 31.90% (10.90%) ________________________________ (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 percentage of recovery expected. Significant increases (decreases) in percentage of recovery expected in isolation would result in a significantly higher (lower) fair value measurement. (e) Other assets categorized as Level 3 - For these assets, there were no adjustments to non-binding quoted market prices obtained from third-party pricing sources. (f) Embedded derivatives related to fixed index annuity products (classified as policyholder account liabilities) - 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 risk free rates (U.S. Treasury rates for similar durations) adjusted for our non-performance risk and risk margins for non-capital market inputs. Increases (decreases) in the discount rates would lead to a lower (higher) fair value measurement. Assumed surrender rates are used to project how long the contracts remain in force. Generally, the longer the contracts are assumed to be in force the higher the fair value of the embedded derivative. |
LIABILITIES FOR INSURANCE PRODU
LIABILITIES FOR INSURANCE PRODUCTS | 12 Months Ended |
Dec. 31, 2020 | |
Insurance [Abstract] | |
LIABILITIES FOR INSURANCE PRODUCTS | LIABILITIES FOR INSURANCE PRODUCTS Our future policy benefits are summarized as follows (dollars in millions): Withdrawal assumption Morbidity assumption Mortality assumption Average interest rate assumption 2020 2019 Long-term care Company experience Company experience Company experience 6% $ 5,455.8 $ 5,414.1 Traditional life insurance contracts Company experience Not applicable (a) 5% 2,556.3 2,505.2 Accident and health contracts Company experience Company experience Company experience 5% 3,214.9 3,079.4 Interest-sensitive life insurance contracts Company experience Company experience Company experience 5% 73.9 62.1 Annuities and supplemental contracts with life contingencies Company experience Not applicable (b) 3% 443.3 437.7 Total $ 11,744.2 $ 11,498.5 ____________________ (a) Principally, modifications of: (i) the 1965 ‑ 70 and 1975 - 80 Basic Tables; and (ii) the 1941, 1958 and 1980 Commissioners' Standard Ordinary Tables; as well as Company experience. (b) Principally, modifications of: (i) the 1971 Individual Annuity Mortality Table; (ii) the 1983 Table "A"; and (iii) the Annuity 2000 Mortality Table; as well as Company experience. Our policyholder account liabilities are summarized as follows (dollars in millions): 2020 2019 Fixed index annuities $ 8,111.4 $ 7,503.1 Other annuities 3,209.0 3,452.2 Interest-sensitive life insurance contracts 1,220.2 1,177.0 Total $ 12,540.6 $ 12,132.3 The Company establishes reserves for insurance policy benefits based on assumptions as to investment yields, mortality, morbidity, withdrawals, lapses and maintenance expenses. These reserves include amounts for estimated future payment of claims based on actuarial assumptions. The balance includes provision for the Company's best estimate of the future policyholder benefits to be incurred on this business, given recent and expected future changes in experience. Changes in the unpaid claims reserve (included in claims payable) and disabled life reserves related to accident and health insurance (included in the liability for future policy benefits) were as follows (dollars in millions): 2020 2019 2018 Balance, beginning of year $ 1,921.2 $ 1,868.0 $ 1,828.2 Less reinsurance (receivables) payables (993.2) (951.1) 15.1 Net balance, beginning of year 928.0 916.9 1,843.3 Incurred claims related to: Current year 1,177.8 1,233.9 1,480.0 Prior years (a) (75.2) (40.3) (41.5) Total incurred 1,102.6 1,193.6 1,438.5 Interest on claim reserves 36.8 36.2 71.8 Paid claims related to: Current year (766.1) (843.8) (849.4) Prior years (357.8) (374.9) (630.6) Total paid (1,123.9) (1,218.7) (1,480.0) Reserves ceded pursuant to reinsurance transaction — — (956.7) Net balance, end of year 943.5 928.0 916.9 Add reinsurance receivables (payables) 881.5 993.2 951.1 Balance, end of year $ 1,825.0 $ 1,921.2 $ 1,868.0 ___________ (a) The reserves and liabilities we establish are necessarily based on estimates, assumptions and prior years' statistics. Such amounts will fluctuate based upon the estimation procedures used to determine the amount of unpaid losses. It is possible that actual claims will exceed our reserves and have a material adverse effect on our results of operations and financial condition. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The components of income tax expense (benefit) were as follows (dollars in millions): 2020 2019 2018 Current tax expense (benefit) $ (24.0) $ 19.2 $ (2.8) Deferred tax expense 100.5 39.3 93.1 Valuation allowance applicable to current year income — — 8.9 Income tax expense calculated based on annual effective tax rate 76.5 58.5 99.2 Tax benefit on long-term care reinsurance transaction — — (147.9) Income tax expense on discrete items: Carryback of net operating losses to years with a higher statutory corporate rate pursuant to provisions of the CARES Act (as defined below) (34.0) — — Change in valuation allowance — (193.7) 95.7 Other items — — 3.2 Total income tax expense (benefit) $ 42.5 $ (135.2) $ 50.2 The Coronavirus Aid, Relief, and Economic Security ("CARES") Act, a tax-and-spending package intended to provide economic relief to address the impact of the novel coronavirus ("COVID-19") pandemic, was signed into law in March 2020. Provisions in the CARES Act permit NOLs arising in a taxable year beginning after December 31, 2017, and before January 1, 2021 to be allowed as a carryback to each of the five taxable years preceding the taxable year of such loss. Accordingly, we are able to carryback the NOL created in 2018 related to the long-term care reinsurance transaction to 2017 and 2016 resulting in a $34.0 million tax benefit from the difference in tax rates between the current enacted rate of 21% and the enacted rate in 2016 and 2017 of 35%. This provision also accelerated the utilization of approximately $375 million of life NOLs and restored approximately $130 million of non-life NOLs. Further, the CARES Act temporarily repeals the 80 percent limitation for taxable years beginning before January 1, 2021 (as required under the Tax Cuts and Job Act (the "Tax Reform Act")). This provision resulted in the acceleration of approximately $105 million of life NOLs and restored approximately $35 million of non-life NOLs. Our current income tax asset at December 31, 2020, includes a receivable of $99.2 million related to refunds resulting from the NOL utilization provisions of the CARES Act. A reconciliation of the U.S. statutory corporate tax rate to the effective rate reflected in the consolidated statement of operations is as follows: 2020 2019 2018 U.S. statutory corporate rate 21.0 % 21.0 % 21.0 % Valuation allowance — (70.6) (39.5) Non-taxable income and nondeductible benefits, net (.4) (1.0) .6 State taxes 1.6 1.3 (1.1) Carryback of net operating losses to years with a higher statutory corporate rate pursuant to provisions of the CARES Act (9.9) — — Effective tax rate 12.3 % (49.3) % (19.0) % The components of the Company's income tax assets and liabilities are summarized below (dollars in millions): 2020 2019 Deferred tax assets: Net federal operating loss carryforwards $ 339.2 $ 532.3 Net state operating loss carryforwards 2.7 10.3 Insurance liabilities 386.4 351.3 Indirect costs allocable to self-constructed real estate assets 105.7 50.3 Other 43.0 40.4 Gross deferred tax assets 877.0 984.6 Deferred tax liabilities: Investments (29.5) (24.4) Present value of future profits and deferred acquisition costs (133.8) (150.1) Accumulated other comprehensive income (604.3) (381.2) Gross deferred tax liabilities (767.6) (555.7) Net deferred tax assets 109.4 428.9 Current income taxes prepaid 90.0 3.7 Income tax assets, net $ 199.4 $ 432.6 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 using a deferred tax valuation model. 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, the recapture of business previously ceded, tax planning strategies and the COVID-19 pandemic. Our estimates of future taxable income are based on evidence we consider to be objectively verifiable. At December 31, 2020, our projection of future taxable income for purposes of determining the valuation allowance was based on our estimates of such future taxable income through the date our NOLs expire. Such estimates are subject to the risks and uncertainties associated with the COVID-19 pandemic and the extent to which actual impacts differ from the assumptions used in our deferred tax valuation model. Based on our assessment, we have concluded that it is more likely than not that all our deferred tax assets of $109.4 million will be realized through future taxable earnings. 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. In the fourth quarter of 2019, the Company implemented a tax planning strategy whereby, pursuant to the Internal Revenue Code (the "Code"), the Company reflected a change in its method of accounting for indirect costs allocable to self-constructed real estate assets in its 2019 federal income tax return filing. Such tax planning strategy is expected to increase taxable income for the tax years 2019 through 2023. Changes in our valuation allowance are summarized as follows (dollars in millions): Balance, December 31, 2017 $ 89.1 Increase in 2018 104.6 (a) Balance, December 31, 2018 193.7 Decrease in 2019 (193.7) (b) Balance, December 31, 2019 $ — ___________________ (a) The 2018 increase to the deferred tax valuation allowance includes: (i) an increase of $104.8 million due to the life NOLs generated by the tax loss on the long-term care reinsurance transaction; and (ii) other changes netting to $(.2) million. The increase in life company NOLs generated by the tax loss on the reinsurance transaction was expected to impact our ability to utilize non-life NOLs in the future. (b) The 2019 decrease to the deferred tax valuation allowance is related to the tax planning strategy discussed above. 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). 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 (.99 percent at December 31, 2020), and the annual restriction could limit our ability to use a substantial portion of our NOLs to offset future taxable income. We regularly monitor ownership change (as calculated for purposes of Section 382) and, as of December 31, 2020, we were below the 50 percent ownership change level that could limit our ability to utilize our NOLs. In 2009, the Company's Board of Directors adopted a Section 382 Rights Agreement designed to protect shareholder value by preserving the value of our tax assets primarily associated with tax NOLs under Section 382. The Section 382 Rights Agreement was adopted to reduce the likelihood of an ownership change occurring by deterring the acquisition of stock that would create "5 percent shareholders" as defined in Section 382. The Section 382 Rights Agreement has been amended four times, most recently effective November 13, 2020 (the "Fourth Amended and Restated Section 382 Rights Agreement"). The Fourth Amended and Restated Section 382 Rights Agreement extended the expiration date of the Section 382 Rights Agreement to November 13, 2023, updated the purchase price of the rights described below and provided for a new series of preferred stock relating to the rights that is substantially identical to the prior series of preferred stock. The Company expects to submit the Fourth Amended and Restated Section 382 Rights Agreement to the Company’s stockholders for approval at the Company’s 2021 annual meeting. Under the Section 382 Rights Agreement, one right was distributed for each share of our common stock outstanding as of the close of business on January 30, 2009 and for each share issued after that date. Pursuant to the Fourth Amended and Restated Section 382 Rights Agreement, if any person or group (subject to certain exemptions) becomes an owner of more than 4.99 percent of the Company's outstanding common stock (or any other interest in the Company that would be treated as "stock" under applicable Section 382 regulations) without the approval of the Board of Directors, there would be a triggering event causing significant dilution in the voting power and economic ownership of that person or group. Shareholders who held more than 4.99 percent of the Company's outstanding common stock as of December 6, 2011 will trigger a dilutive event only if they acquire additional shares exceeding one percent of our outstanding shares without prior approval from the Board of Directors. In 2010, our shareholders approved an amendment to CNO's certificate of incorporation designed to prevent certain transfers of common stock which could otherwise adversely affect our ability to use our NOLs (the "Original Section 382 Charter Amendment"). Subject to the provisions set forth in the Original Section 382 Charter Amendment, transfers of our common stock would be void and of no effect if the effect of the purported transfer would be to: (i) increase the direct or indirect ownership of our common stock by any person or public group (as such term is defined in the regulations under Section 382) from less than 5% to 5% or more of our common stock; (ii) increase the percentage of our common stock owned directly or indirectly by a person or public group owning or deemed to own 5% or more of our common stock; or (iii) create a new public group. The Original Section 382 Charter Amendment was amended and extended in 2013, 2016 and 2019 (the "2019 Section 382 Charter Amendment"). The expiration date for the 2019 Section 382 Charter Amendment is July 31, 2022. We have $1.6 billion of federal NOLs as of December 31, 2020, as summarized below (dollars in millions): Net operating loss Year of expiration carryforwards 2023 $ 1,028.7 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 non-life NOLs $ 1,615.3 Our life NOLs have been fully utilized in 2020. Our non-life NOLs can be used to offset 35 percent of life insurance company taxable income and 100 percent of non-life company taxable income until all non-life NOLs are utilized or expire. We also had deferred tax assets related to NOLs for state income taxes of $2.7 million and $10.3 million at December 31, 2020 and 2019, respectively. The related state NOLs are available to offset future state taxable income in certain states and are expected to be fully utilized prior to expiration. There were no unrecognized tax benefits in either 2020 or 2019. |
NOTES PAYABLE - DIRECT CORPORAT
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS | NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS The following notes payable were direct corporate obligations of the Company as of December 31, 2020 and 2019 (dollars in millions): 2020 2019 5.250% Senior Notes due May 2025 $ 500.0 $ 500.0 5.250% Senior Notes due May 2029 500.0 500.0 5.125% Subordinated Debentures due 2060 150.0 — Revolving Credit Agreement (as defined below) — — Unamortized debt issuance costs (13.8) (10.9) Direct corporate obligations $ 1,136.2 $ 989.1 Subordinated Debentures due 2060 In November 2020, the Company issued $150.0 million of 5.125% Subordinated Debentures due 2060 (the "Debentures"). The terms of the Debentures are set forth in the Indenture, dated as of June 12, 2019 (the "2019 Base Indenture") as supplemented by the Second Supplemental Indenture, dated as of November 25, 2020 (the "2020 Supplemental Indenture" and, together with the 2019 Base Indenture, the "2020 Indenture"), each between the Company and U.S. Bank National Association, as trustee (the "Trustee"). The Debentures bear interest at an annual rate of 5.125%, payable quarterly in arrears on February 25, May 25, August 25 and November 25 commencing on February 25, 2021. The Debentures mature on November 25, 2060. The Company used the net proceeds from the issuance of the Debentures for general corporate purposes. The Debentures are unsecured and rank junior to all existing and future senior indebtedness (including the 2025 Notes and 2029 Notes, each as defined below). In addition, the Debentures are structurally subordinated to all existing and future indebtedness and other liabilities of the Company's subsidiaries. The Company may redeem the Debentures: (i) in whole at any time or in part from time to time on or after November 25, 2025, at a redemption price equal to their principal amount plus accrued and unpaid interest to, but excluding, the date of redemption; provided that if the Debentures are not redeemed in whole, at least $25 million aggregate principal amount of the Debentures must remain outstanding after giving effect to such redemption; (ii) in whole, but not in part, at any time prior to November 25, 2025, within 90 days of the occurrence of a "tax event" or a "regulatory capital event" (as such terms are defined in the 2020 Indenture) at a redemption price equal to their principal amount plus accrued and unpaid interest to, but excluding, the date of redemption; or (iii) in whole, but not in part, at any time prior to November 25, 2025, within 90 days of the occurrence of a "rating agency event" (as such term is defined in the 2020 Indenture) at a redemption price equal to 102% of their principal amount plus any accrued and unpaid interest to, but excluding, the date of redemption. The 2020 Indenture contains covenants that will limit the ability of the Company and certain of its subsidiaries to consolidate, merge or sell, lease, transfer or otherwise dispose of its properties and assets substantially as an entirety. An event of default with respect to the Debentures will occur only upon certain events of our bankruptcy, insolvency or receivership (as specified in the 2020 Indenture). 2029 Notes On June 12, 2019, the Company executed the 2019 Base Indenture and the First Supplemental Indenture, dated as of June 12, 2019 (the "2019 Supplemental Indenture" and, together with the 2019 Base Indenture, the "2019 Indenture"), between the Company and the Trustee pursuant to which the Company issued $500.0 million aggregate principal amount of 5.250% Senior Notes due 2029 (the "2029 Notes"). The Company used the net proceeds from the offering of the 2029 Notes to: (i) repay all amounts outstanding under its existing Revolving Credit Agreement (as defined below); (ii) redeem and satisfy and discharge all of its outstanding 4.500% Senior Notes due May 2020 (the "2020 Notes"); and (iii) pay fees and expenses related to the foregoing. The remaining proceeds were used for general corporate purposes. The 2029 Notes mature on May 30, 2029 and interest on the 2029 Notes is payable at 5.250% per annum. Interest on the 2029 Notes is payable semi-annually in cash in arrears on May 30 and November 30 of each year, commencing on November 30, 2019. The 2029 Notes are senior unsecured obligations and rank equally with the Company’s other senior unsecured and unsubordinated debt from time to time outstanding. The 2029 Notes are effectively subordinated to all of the Company’s existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness. The 2029 Notes are structurally subordinated to all existing and future indebtedness and other liabilities of the Company’s subsidiaries. Prior to February 28, 2029, the Company may redeem some or all of the 2029 Notes at any time or from time to time at a "make-whole" redemption price plus accrued and unpaid interest to, but not including, the redemption date. On and after February 28, 2029, the Company may redeem some or all of the 2029 Notes at any time or from time to time at a redemption price equal to 100% of the principal amount thereof plus accrued and unpaid interest to, but not including, the redemption date. Upon the occurrence of a Change of Control Repurchase Event (as defined in the 2019 Indenture), the Company will be required to make an offer to repurchase the 2029 Notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the date of repurchase. In the event that the 2029 Notes receive investment grade credit ratings, this covenant will cease to apply. The 2019 Indenture contains covenants that restrict the Company’s ability, with certain exceptions, to: • create liens; • issue, sell, transfer or otherwise dispose of any shares of capital stock of any Insurance Subsidiary (as defined in the 2019 Indenture); and • consolidate or merge with or into other companies or transfer all or substantially all of the Company’s assets. The 2019 Indenture provides for customary events of default (subject in certain cases to customary grace and cure periods), which include nonpayment, breach of covenants in the 2019 Indenture, failure to pay at maturity or acceleration of other indebtedness, a failure to pay certain judgments and certain events of bankruptcy and insolvency. Generally, if an event of default occurs, the Trustee or holders of at least 50% in principal amount of the then outstanding 2029 Notes may declare the principal of and accrued but unpaid interest, including any additional interest, on all of the 2029 Notes to be due and payable. 2025 Notes On May 19, 2015, the Company executed the Indenture, dated as of May 19, 2015 (the "2015 Base Indenture") and the First Supplemental Indenture, dated as of May 19, 2015 (the "2015 Supplemental Indenture" and, together with the 2015 Base Indenture, the "2015 Indenture"), between the Company and the Trustee pursuant to which the Company issued $325.0 million aggregate principal amount of the 2020 Notes and $500.0 million aggregate principal amount of 5.250% Senior Notes due 2025 (the "2025 Notes"). As described above, the 2020 Notes were redeemed on June 12, 2019. The 2025 Notes mature on May 30, 2025. Interest on the 2025 Notes is payable at 5.250% per annum. Interest on the 2025 Notes is payable semi-annually in cash in arrears on May 30 and November 30 of each year, commencing on November 30, 2015. The 2025 Notes are senior unsecured obligations and rank equally with the Company's other senior unsecured and unsubordinated debt from time to time outstanding, including obligations under the Revolving Credit Agreement (as defined below). The 2025 Notes are effectively subordinated to all of the Company's existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness. The 2025 Notes are structurally subordinated to all existing and future indebtedness and other liabilities of the Company's subsidiaries. Prior to February 28, 2025, the Company may redeem some or all of the 2025 Notes at any time or from time to time at a "make-whole" redemption price plus accrued and unpaid interest to, but not including, the redemption date. On and after February 28, 2025, the Company may redeem some or all of the 2025 Notes at any time or from time to time at a redemption price equal to 100% of the principal amount thereof plus accrued and unpaid interest to, but not including, the redemption date. Upon the occurrence of a Change of Control Repurchase Event (as defined in the 2015 Indenture), the Company will be required to make an offer to repurchase the 2025 Notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the date of repurchase. The 2015 Indenture contains covenants that restrict the Company’s ability, with certain exceptions, to: • incur certain subsidiary indebtedness without also guaranteeing the 2025 Notes; • create liens; • enter into sale and leaseback transactions; • issue, sell, transfer or otherwise dispose of any shares of capital stock of any Insurance Subsidiary (as defined in the 2015 Indenture); and • consolidate or merge with or into other companies or transfer all or substantially all of the Company’s assets. The 2015 Indenture provides for customary events of default (subject in certain cases to customary grace and cure periods), which include nonpayment, breach of covenants in the 2015 Indenture, failure to pay at maturity or acceleration of other indebtedness, a failure to pay certain judgments and certain events of bankruptcy and insolvency. Generally, if an event of default occurs, the Trustee or holders of at least 25% in principal amount of the then outstanding 2025 Notes may declare the principal of and accrued but unpaid interest, including any additional interest, on all of the 2025 Notes to be due and payable. 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. 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 October 13, 2022. As described above, all amounts outstanding under the Revolving Credit Agreement were repaid in connection with the issuance of the 2029 Notes. There were no amounts outstanding under the Revolving Credit Agreement at December 31, 2020. The Revolving Credit Agreement includes an uncommitted subfacility for swingline loans of up to $5.0 million, and up to $5.0 million of the Revolving Credit Agreement is available for the issuance of letters of credit. The Company may incur additional incremental loans under the Revolving Credit Agreement in an aggregate principal amount of up to $100.0 million provided that there are no events of default and subject to certain other terms and conditions including the delivery of certain documentation. 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 percent to 2.125 percent, in the case of loans at the eurodollar rate, and 0.375 percent to 1.125 percent, in the case of loans at the base rate. 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 contains certain financial, affirmative and negative covenants. The negative covenants in the Revolving Credit Agreement include restrictions that relate to, among other things and subject to customary baskets, exceptions and limitations for facilities of this type: • subsidiary debt; • liens; • restrictive agreements; • restricted payments during the continuance of an event of default; • disposition of assets and sale and leaseback transactions; • transactions with affiliates; • change in business; • fundamental changes; • modification of certain agreements; and • changes to fiscal year. 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 26.4 percent at December 31, 2020); (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 411 percent at December 31, 2020); 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 $3,298.1 million at December 31, 2020 compared to the minimum requirement of $2,700.5 million). The Revolving Credit Agreement provides for customary events of default (subject in certain cases to customary grace and cure periods), which include, without limitation, the following: • non-payment; • breach of representations, warranties or covenants; • cross-default and cross-acceleration; • bankruptcy and insolvency events; • judgment defaults; • actual or asserted invalidity of documentation with respect to the Revolving Credit Agreement; • change of control; and • customary ERISA defaults. If an event of default under the Revolving Credit Agreement occurs and is continuing, the Agent may accelerate the amounts and terminate all commitments outstanding under the Revolving Credit Agreement. Loss on Extinguishment of Debt In 2019, we recognized a loss on the extinguishment of debt totaling $7.3 million which consisted of: (i) a premium of $6.1 million related to the redemption of the 2020 Notes; and (ii) the write-off of $1.2 million of unamortized issuance costs associated with the redemption of the 2020 Notes. Scheduled Repayment of our Direct Corporate Obligations The scheduled repayment of our direct corporate obligations was as follows at December 31, 2020 (dollars in millions): Year ending December 31, 2021 $ — 2022 — 2023 — 2024 — 2025 500.0 Thereafter 650.0 $ 1,150.0 |
LITIGATION AND OTHER LEGAL PROC
LITIGATION AND OTHER LEGAL PROCEEDINGS | 12 Months Ended |
Dec. 31, 2020 | |
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 April 9, 2019, Bankers Conseco Life Insurance Company ("BCLIC") and Washington National commenced an action entitled Bankers Conseco Life Insurance Company and Washington National Insurance Company v. Wilmington Trust, National Association , in the Supreme Court of the State of New York, County of New York, Commercial Division (the "Wilmington Action"). BCLIC and Washington National seek an unspecified amount of damages, costs, attorney's fees, and other relief as the court deems appropriate. In the Wilmington Action, BCLIC and Washington National assert claims against Wilmington Trust, National Association ("Wilmington") for breaching its express contractual obligations under four trust agreements pursuant to which Wilmington was the trustee in regard to trust assets ceded as part of reinsurance agreements with Beechwood Re Ltd. ("BRe"), as well as for breaching its fiduciary duties to BCLIC and Washington National. The Court granted Wilmington’s motion to dismiss this litigation. BCLIC and Washington National appealed the Court’s decision, which appeal is awaiting oral argument before the New York Appellate Division of the Supreme Court, First Judicial Department. On June 7, 2019, the Joint Official Liquidators of Platinum Partners Value Arbitrage Fund L.P. (in Official Liquidation) and Principal Growth Strategies, LLC, commenced suit against, among others, CNO Financial Group, Inc., BCLIC, Washington National and 40|86 Advisors, Inc. (collectively, the "CNO Parties") in Delaware Chancery Court. Plaintiffs seek an unspecified amount of damages, costs, attorney's fees, and other relief as the court deems appropriate. Plaintiffs allege that the CNO Parties were unjustly enriched when they terminated BCLIC and Washington National's reinsurance agreements with BRe and recaptured assets from reinsurance trusts, in particular, Agera securities. Plaintiffs contend that the Agera securities were fraudulently transferred to the reinsurance trusts by other Platinum-related entities and they are seeking to claw back those Agera securities, or the value of those assets, from the CNO Parties. The CNO Parties are vigorously contesting the plaintiff's claims. The CNO Parties had removed the case to the United States District Court for the District of Delaware but on April 6, 2020, the District Court granted the plaintiff's motion to remand the case back to the Delaware Chancery Court. Plaintiffs have filed an Amended Complaint and the CNO Parties have moved to dismiss the Amended Complaint. On June 28, 2019, BCLIC and Washington National commenced an action entitled Bankers Conseco Life Insurance Company and Washington National Insurance Company v. KPMG LLP , in the Supreme Court of the State of New York, County of New York, Commercial Division (the "KPMG Action"). BCLIC and Washington National seek an unspecified amount of damages, costs, attorney's fees, and other relief as the court deems appropriate. In the KPMG Action, BCLIC and Washington National assert claims against KPMG LLP ("KPMG") for aiding and abetting fraud, constructive fraud and negligent misrepresentation arising from KPMG's alleged role in the Platinum Partners' scheme to defraud BCLIC and Washington National into reinsuring its long-term care business with BRe. The Court granted KPMG’s motion to dismiss this litigation. BCLIC and Washington National appealed the Court's decision. On December 1, 2020, the New York Appellate Division of the Supreme Court, First Judicial Department unanimously reversed the Trial Court and reinstated the aiding and abetting claim against KPMG. The KPMG Action is currently pending in the Supreme Court of the State of New York, County of New York, Commercial Division. 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 ("SSADMF") 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 41 states and the District of Columbia participated in this examination. In November 2018, we entered into a Global Resolution Agreement for compliance with laws and regulations concerning the identification, reporting and escheatment of unclaimed contract benefits or abandoned funds. Under the terms of the Global Resolution Agreement, a third-party auditor acting on behalf of the signatory jurisdictions is comparing expanded matching criteria to the SSADMF to identify deceased insureds and contract holders where a valid claim has not been made. Guaranty Fund Assessments The balance sheet at December 31, 2020, included: (i) accruals of $7.6 million, representing our estimate of all known assessments that will be levied against the Company's insurance subsidiaries by various state guaranty associations based on premiums written through December 31, 2020; and (ii) receivables of $14.8 million that we estimate will be recovered through a reduction in future premium taxes as a result of such assessments. At December 31, 2019, such guaranty fund assessment accruals were $8.9 million and such receivables were $16.8 million. These estimates are subject to change when the associations determine more precisely the losses that have occurred and how such losses will be allocated among the insurance companies. We recognized expense for such assessments of $2.9 million, $2.1 million and $2.3 million in 2020, 2019 and 2018, respectively. Guarantees In accordance with the terms of the employment agreements of two of the Company's former chief executive officers, certain wholly-owned subsidiaries of the Company are the guarantors of the former executives' nonqualified supplemental retirement benefits. The liability for such benefits was $22.0 million and $22.7 million at December 31, 2020 and 2019, respectively, and is included in the caption "Other liabilities" in the consolidated balance sheet. Leases and Certain Other Long-Term Commitments The Company rents office space, equipment and computer software under contractual commitments or noncancellable operating lease agreements. In addition, the Company has entered into certain sponsorship agreements which require future payments. Total expense pursuant to these agreements was $74.9 million, $67.0 million and $67.0 million in 2020, 2019 and 2018, respectively. The Company rents office space for certain administrative operations under an agreement that expires in 2023. We lease sales offices in various states which are generally short-term in length with remaining lease terms expiring between 2021 and 2027. Many leases include an option to extend or renew the lease term. The exercise of the renewal option is at the Company's discretion. The operating lease liability includes lease payments related to options to extend or renew the lease term only if the Company is reasonably certain of exercising those options. In determining the present value of lease payments, the Company uses its incremental borrowing rate for borrowings secured by collateral commensurate with the terms of the underlying lease. Information related to our right of use assets are as follows (dollars in millions): 2020 2019 Operating lease expense $ 25.0 $ 25.0 Cash paid for operating lease liability 25.7 24.3 Right of use assets obtained in exchange for lease liabilities (non-cash transactions) 11.5 22.7 Total right of use assets 54.7 66.5 Maturities of our operating lease liabilities as of December 31, 2020 are as follows (dollars in millions): 2021 $ 22.8 2022 18.0 2023 13.3 2024 5.5 2025 1.9 Thereafter .7 Total undiscounted lease payments 62.2 Less interest (2.2) Present value of lease liabilities $ 60.0 Weighted average remaining lease term (in years) 3.2 Weighted average discount rate 2.36 % |
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 April 9, 2019, Bankers Conseco Life Insurance Company ("BCLIC") and Washington National commenced an action entitled Bankers Conseco Life Insurance Company and Washington National Insurance Company v. Wilmington Trust, National Association , in the Supreme Court of the State of New York, County of New York, Commercial Division (the "Wilmington Action"). BCLIC and Washington National seek an unspecified amount of damages, costs, attorney's fees, and other relief as the court deems appropriate. In the Wilmington Action, BCLIC and Washington National assert claims against Wilmington Trust, National Association ("Wilmington") for breaching its express contractual obligations under four trust agreements pursuant to which Wilmington was the trustee in regard to trust assets ceded as part of reinsurance agreements with Beechwood Re Ltd. ("BRe"), as well as for breaching its fiduciary duties to BCLIC and Washington National. The Court granted Wilmington’s motion to dismiss this litigation. BCLIC and Washington National appealed the Court’s decision, which appeal is awaiting oral argument before the New York Appellate Division of the Supreme Court, First Judicial Department. On June 7, 2019, the Joint Official Liquidators of Platinum Partners Value Arbitrage Fund L.P. (in Official Liquidation) and Principal Growth Strategies, LLC, commenced suit against, among others, CNO Financial Group, Inc., BCLIC, Washington National and 40|86 Advisors, Inc. (collectively, the "CNO Parties") in Delaware Chancery Court. Plaintiffs seek an unspecified amount of damages, costs, attorney's fees, and other relief as the court deems appropriate. Plaintiffs allege that the CNO Parties were unjustly enriched when they terminated BCLIC and Washington National's reinsurance agreements with BRe and recaptured assets from reinsurance trusts, in particular, Agera securities. Plaintiffs contend that the Agera securities were fraudulently transferred to the reinsurance trusts by other Platinum-related entities and they are seeking to claw back those Agera securities, or the value of those assets, from the CNO Parties. The CNO Parties are vigorously contesting the plaintiff's claims. The CNO Parties had removed the case to the United States District Court for the District of Delaware but on April 6, 2020, the District Court granted the plaintiff's motion to remand the case back to the Delaware Chancery Court. Plaintiffs have filed an Amended Complaint and the CNO Parties have moved to dismiss the Amended Complaint. On June 28, 2019, BCLIC and Washington National commenced an action entitled Bankers Conseco Life Insurance Company and Washington National Insurance Company v. KPMG LLP , in the Supreme Court of the State of New York, County of New York, Commercial Division (the "KPMG Action"). BCLIC and Washington National seek an unspecified amount of damages, costs, attorney's fees, and other relief as the court deems appropriate. In the KPMG Action, BCLIC and Washington National assert claims against KPMG LLP ("KPMG") for aiding and abetting fraud, constructive fraud and negligent misrepresentation arising from KPMG's alleged role in the Platinum Partners' scheme to defraud BCLIC and Washington National into reinsuring its long-term care business with BRe. The Court granted KPMG’s motion to dismiss this litigation. BCLIC and Washington National appealed the Court's decision. On December 1, 2020, the New York Appellate Division of the Supreme Court, First Judicial Department unanimously reversed the Trial Court and reinstated the aiding and abetting claim against KPMG. The KPMG Action is currently pending in the Supreme Court of the State of New York, County of New York, Commercial Division. 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 ("SSADMF") 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 41 states and the District of Columbia participated in this examination. In November 2018, we entered into a Global Resolution Agreement for compliance with laws and regulations concerning the identification, reporting and escheatment of unclaimed contract benefits or abandoned funds. Under the terms of the Global Resolution Agreement, a third-party auditor acting on behalf of the signatory jurisdictions is comparing expanded matching criteria to the SSADMF to identify deceased insureds and contract holders where a valid claim has not been made. Guaranty Fund Assessments The balance sheet at December 31, 2020, included: (i) accruals of $7.6 million, representing our estimate of all known assessments that will be levied against the Company's insurance subsidiaries by various state guaranty associations based on premiums written through December 31, 2020; and (ii) receivables of $14.8 million that we estimate will be recovered through a reduction in future premium taxes as a result of such assessments. At December 31, 2019, such guaranty fund assessment accruals were $8.9 million and such receivables were $16.8 million. These estimates are subject to change when the associations determine more precisely the losses that have occurred and how such losses will be allocated among the insurance companies. We recognized expense for such assessments of $2.9 million, $2.1 million and $2.3 million in 2020, 2019 and 2018, respectively. Guarantees In accordance with the terms of the employment agreements of two of the Company's former chief executive officers, certain wholly-owned subsidiaries of the Company are the guarantors of the former executives' nonqualified supplemental retirement benefits. The liability for such benefits was $22.0 million and $22.7 million at December 31, 2020 and 2019, respectively, and is included in the caption "Other liabilities" in the consolidated balance sheet. Leases and Certain Other Long-Term Commitments The Company rents office space, equipment and computer software under contractual commitments or noncancellable operating lease agreements. In addition, the Company has entered into certain sponsorship agreements which require future payments. Total expense pursuant to these agreements was $74.9 million, $67.0 million and $67.0 million in 2020, 2019 and 2018, respectively. The Company rents office space for certain administrative operations under an agreement that expires in 2023. We lease sales offices in various states which are generally short-term in length with remaining lease terms expiring between 2021 and 2027. Many leases include an option to extend or renew the lease term. The exercise of the renewal option is at the Company's discretion. The operating lease liability includes lease payments related to options to extend or renew the lease term only if the Company is reasonably certain of exercising those options. In determining the present value of lease payments, the Company uses its incremental borrowing rate for borrowings secured by collateral commensurate with the terms of the underlying lease. Information related to our right of use assets are as follows (dollars in millions): 2020 2019 Operating lease expense $ 25.0 $ 25.0 Cash paid for operating lease liability 25.7 24.3 Right of use assets obtained in exchange for lease liabilities (non-cash transactions) 11.5 22.7 Total right of use assets 54.7 66.5 Maturities of our operating lease liabilities as of December 31, 2020 are as follows (dollars in millions): 2021 $ 22.8 2022 18.0 2023 13.3 2024 5.5 2025 1.9 Thereafter .7 Total undiscounted lease payments 62.2 Less interest (2.2) Present value of lease liabilities $ 60.0 Weighted average remaining lease term (in years) 3.2 Weighted average discount rate 2.36 % |
AGENT DEFERRED COMPENSATION PLA
AGENT DEFERRED COMPENSATION PLAN | 12 Months Ended |
Dec. 31, 2020 | |
Retirement Benefits [Abstract] | |
AGENT DEFERRED COMPENSATION PLAN | AGENT DEFERRED COMPENSATION PLAN For our agent deferred compensation plan, it is our policy to immediately recognize changes in the actuarial benefit obligation resulting from either actual experience being different than expected or from changes in actuarial assumptions. One of our insurance subsidiaries has a noncontributory, unfunded deferred compensation plan for qualifying members of its exclusive agency force. Benefits were based on years of service and career earnings. In 2016, the agent deferred compensation plan was amended to: (i) freeze participation in the plan; (ii) freeze benefits accrued under the plan; and (iii) add a limited cashout feature. The actuarial measurement date of this deferred compensation plan is December 31. The liability recognized in the consolidated balance sheet for the agent deferred compensation plan was $190.7 million and $175.2 million at December 31, 2020 and 2019, respectively. Expenses incurred on this plan were $22.8 million, $27.0 million and $(5.2) million during 2020, 2019 and 2018, respectively (including the recognition of gains (losses) of $(16.3) million, $(20.4) million and $11.9 million in 2020, 2019 and 2018, respectively, primarily resulting from: (i) changes in the discount rate assumption used to determine the deferred compensation plan liability to reflect current investment yields; and (ii) changes in mortality table assumptions. We purchased COLI as an investment vehicle to fund the agent deferred compensation plan. The COLI assets are not assets of the agent deferred compensation plan, and as a result, are accounted for outside the plan and are recorded in the consolidated balance sheet as other invested assets. The carrying value of the COLI assets was $209.7 million and $194.0 million at December 31, 2020 and 2019, respectively. Death benefits related to the COLI and changes in the cash surrender value (which approximates net realizable value) of the COLI assets are recorded as net investment income (loss) on special-purpose portfolios and totaled $15.7 million, $22.3 million and $(10.6) million in 2020, 2019 and 2018, respectively. We used the following assumptions for the deferred compensation plan to calculate: 2020 2019 Benefit obligations: Discount rate 2.50 % 3.25 % Net periodic cost: Discount rate 3.25 % 4.25 % The discount rate is based on the yield of a hypothetical portfolio of high quality debt instruments which could effectively settle plan benefits on a present value basis as of the measurement date. The benefits expected to be paid pursuant to our agent deferred compensation plan as of December 31, 2020 were as follows (dollars in millions): 2021 $ 7.8 2022 8.1 2023 8.5 2024 8.7 2025 8.8 2026 - 2030 46.2 One of our insurance subsidiaries has another unfunded nonqualified deferred compensation program for qualifying members of its exclusive agency force. Such agents may defer a certain percentage of their net commissions into the program. In addition, annual Company contributions are made based on the agent's production and vest over a period of five |
DERIVATIVES
DERIVATIVES | 12 Months Ended |
Dec. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVES | 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 2020 2019 Assets: Other invested assets: Fixed index call options $ 216.7 $ 203.8 Reinsurance receivables 1.4 (1.2) Total assets $ 218.1 $ 202.6 Liabilities: Policyholder account liabilities: Fixed index products $ 1,644.5 $ 1,565.4 Total liabilities $ 1,644.5 $ 1,565.4 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 $112 million in underlying investments held by the ceding reinsurer at December 31, 2020. The activity associated with freestanding derivative instruments is measured as either the notional or the number of contracts. The activity associated with the fixed index annuity embedded derivatives are shown by the number of policies. The following table represents activity associated with derivative instruments as of the dates indicated: Measurement December 31, 2019 Additions Maturities/terminations December 31, 2020 Fixed index annuities - embedded derivative Policies 113,652 11,553 (8,291) 116,914 Fixed index call options Notional (a) $ 3,166.3 $ 2,540.1 $ (3,268.3) $ 2,438.1 _________________ (a) Dollars in millions. The following table provides the pre-tax gains (losses) recognized in net income for derivative instruments, which are not designated as hedges for the periods indicated (dollars in millions): 2020 2019 2018 Net investment income from policyholder and other special-purpose portfolios: Fixed index call options $ 39.5 $ 151.9 $ (43.0) Net realized gains (losses): Embedded derivative related to modified coinsurance agreement 2.6 5.3 (5.1) Insurance policy benefits: Embedded derivative related to fixed index annuities 77.9 (82.9) 107.8 Total $ 120.0 $ 74.3 $ 59.7 Derivative Counterparty Risk If the counterparties to the call options fail to meet their obligations, we may recognize a loss. We limit our exposure to such a loss by diversifying among several counterparties believed to be strong and creditworthy. At December 31, 2020, all of our counterparties were rated "A" or higher by S&P. The Company and its subsidiaries are parties to master netting arrangements with its counterparties related to entering into various derivative contracts. The following table summarizes information related to derivatives with master netting arrangements or collateral as of December 31, 2020 and 2019 (dollars in millions): Gross amounts not offset in the balance sheet Gross amounts recognized Gross amounts offset in the balance sheet Net amounts of assets presented in the balance sheet Financial instruments Cash collateral received Net amount December 31, 2020: Fixed index call options $ 216.7 $ — $ 216.7 $ — $ — $ 216.7 December 31, 2019: Fixed index call options 203.8 — 203.8 — — 203.8 |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2020 | |
Equity [Abstract] | |
SHAREHOLDERS' EQUITY | SHAREHOLDERS' EQUITY In May 2011, the Company announced a securities repurchase program. In 2020, 2019 and 2018, we repurchased 14.5 million, 15.4 million and 5.5 million shares, respectively, for $263.0 million, $252.3 million (including $1.8 million of repurchases settled in the first quarter of 2020), and $100.9 million, respectively, under the securities repurchase program. The Company had remaining repurchase authority of $269.3 million as of December 31, 2020. In 2020, 2019 and 2018, dividends declared on common stock totaled $67.4 million ($0.47 per common share), $67.2 million ($0.43 per common share) and $65.1 million ($0.39 per common share), respectively. In May 2020, the Company increased its quarterly common stock dividend to $0.12 per share from $0.11 per share. In May 2019, the Company increased its quarterly common stock dividend to $0.11 per share from $0.10 per share. In May 2018, the Company increased its quarterly common stock dividend to $0.10 per share from $0.09 per share. The Company has a long-term incentive plan which permits the grant of CNO incentive or non-qualified stock options, restricted stock awards, restricted stock units, stock appreciation rights, performance shares or units and certain other equity-based awards to certain directors, officers and employees of the Company and certain other individuals who perform services for the Company. As of December 31, 2020, 8.8 million shares remained available for issuance under the plan. Our stock option awards are generally granted with an exercise price equal to the market price of the Company's stock on the date of grant and a maximum term of ten years. Our stock options granted in 2010 through 2014 generally vest on a graded basis over a three year service term and expire seven years from the date of grant. Our stock options granted in 2015 through 2019 generally vest on a graded basis over a three year service term and expire ten years from the date of grant. In 2018, one grant of 1.6 million of stock options vests on a graded basis over a five year service term and expires ten years from the date of grant. The vesting periods for our awards of restricted stock and restricted stock units (collectively "restricted stock") range from immediate vesting to a period of three years. A summary of the Company's stock option activity and related information for 2020 is presented below (shares in thousands; dollars in millions, except per share amounts): Shares Weighted average exercise price Weighted average remaining life (in years) Aggregate intrinsic value Outstanding at the beginning of the year 6,015 $ 18.59 Options granted — — Exercised (1,104) (16.59) $ 9.0 Forfeited or terminated (367) (19.40) Outstanding at the end of the year 4,544 19.01 5.6 $ 27.5 Options exercisable at the end of the year 2,946 4.5 $ 19.9 Available for future grant 8,789 A summary of the Company's stock option activity and related information for 2019 is presented below (shares in thousands; dollars in millions, except per share amounts): Shares Weighted average exercise price Weighted average remaining life (in years) Aggregate intrinsic value Outstanding at the beginning of the year 6,539 $ 17.77 Options granted 801 17.25 Exercised (787) (9.95) $ 5.5 Forfeited or terminated (538) (19.32) Outstanding at the end of the year 6,015 18.59 5.8 $ 38.7 Options exercisable at the end of the year 3,517 4.1 $ 25.8 Available for future grant 4,670 A summary of the Company's stock option activity and related information for 2018 is presented below (shares in thousands; dollars in millions, except per share amounts): Shares Weighted average exercise price Weighted average remaining life (in years) Aggregate intrinsic value Outstanding at the beginning of the year 5,121 $ 15.95 Options granted 2,112 21.03 Exercised (447) (10.94) $ 3.1 Forfeited or terminated (247) (20.29) Outstanding at the end of the year 6,539 17.77 5.8 $ 44.4 Options exercisable at the end of the year 3,247 3.5 $ 26.7 Available for future grant 5,296 We recognized compensation expense related to stock options totaling $2.6 million ($2.1 million after income taxes) in 2020, $3.8 million ($3.0 million after income taxes) in 2019 and $5.6 million ($4.5 million after income taxes) in 2018. Compensation expense related to stock options reduced both basic and diluted earnings per share by one cent in 2020, two cents in 2019 and three cents in 2018. At December 31, 2020, the unrecognized compensation expense for non-vested stock options totaled $3.3 million which is expected to be recognized over a weighted average period of 2.0 years. Cash received by the Company from the exercise of stock options was $16.5 million, $6.9 million and $3.9 million during 2020, 2019 and 2018, respectively. The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option valuation model with the following weighted average assumptions (there were no stock option grants in 2020): 2019 2018 Grants Grants Weighted average risk-free interest rates 2.4 % 2.9 % Weighted average dividend yields 2.4 % 1.9 % Volatility factors 26 % 27 % Weighted average expected life (in years) 6.3 6.4 Weighted average fair value per share $ 3.90 $ 5.49 The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The dividend yield is based on the Company's history and expectation of dividend payouts. Volatility factors are based on the weekly historical volatility of the Company's common stock equal to the expected life of the option. The expected life is based on the average of the graded vesting period and the contractual terms of the option. The exercise price was equal to the market price of our stock on the date of grant for all options granted in 2019 and 2018. The following table summarizes information about stock options outstanding at December 31, 2020 (shares in thousands): Options outstanding Options exercisable Range of exercise prices Number outstanding Remaining life (in years) Average exercise price Number exercisable Average exercise price 15.08 - $21.57 4,177 5.5 18.63 2,763 $ 18.53 $23.33 367 6.8 23.33 183 23.33 4,544 2,946 During 2020, 2019 and 2018, the Company granted restricted stock of 0.5 million, 0.5 million and 0.4 million, respectively, to certain directors, officers and employees of the Company at a weighted average fair value of $18.28 per share, $17.07 per share and $22.36 per share, respectively. The fair value of such grants totaled $9.5 million, $8.1 million and $9.7 million in 2020, 2019 and 2018, respectively. Such amounts are recognized as compensation expense over the vesting period of the restricted stock. A summary of the Company's non-vested restricted stock activity for 2020 is presented below (shares in thousands): Shares Weighted average grant date fair value Non-vested shares, beginning of year 828 $ 19.49 Granted 520 18.28 Vested (349) 19.59 Forfeited (31) 19.34 Non-vested shares, end of year 968 18.80 At December 31, 2020, the unrecognized compensation expense for non-vested restricted stock totaled $7.8 million which is expected to be recognized over a weighted average period of 1.8 years. At December 31, 2019, the unrecognized compensation expense for non-vested restricted stock totaled $7.6 million. We recognized compensation expense related to restricted stock awards totaling $8.7 million, $7.2 million and $7.1 million in 2020, 2019 and 2018, respectively. The fair value of restricted stock that vested during 2020, 2019 and 2018 was $6.8 million, $6.5 million and $4.2 million, respectively. In 2020, 2019 and 2018, the Company granted performance units totaling 493,630, 485,830 and 319,920, respectively, pursuant to its long-term incentive plan to certain officers of the Company. The criteria for payment for such awards are based on certain company-wide performance levels that must be achieved within a specified performance time (generally one A summary of the Company's performance units is presented below (shares in thousands): Total shareholder return awards Operating return on equity awards Operating earnings per share awards Awards outstanding at December 31, 2017 629 629 Granted in 2018 160 160 Additional shares issued pursuant to achieving certain performance criteria (a) — 123 Shares vested in 2018 (160) (318) Forfeited (61) (26) Awards outstanding at December 31, 2018 568 568 Granted in 2019 243 243 Additional shares issued pursuant to achieving certain performance criteria (a) — 113 Shares vested in 2019 — (297) Forfeited (260) (76) Awards outstanding at December 31, 2019 551 551 — Granted in 2020 — 247 247 Additional shares issued pursuant to achieving certain performance criteria (a) — 138 — Shares vested in 2020 — (281) — Forfeited (212) (74) (8) Awards outstanding at December 31, 2020 339 581 239 _________________________ (a) The performance units that vested in 2018, 2019 and 2020 provided for a payout of up to 200 percent of the award if certain performance levels were achieved. The grant date fair value of the performance units awarded was $10.1 million and $9.4 million in 2020 and 2019, respectively. We recognized compensation expense of $12.5 million, $7.8 million and $12.0 million in 2020, 2019 and 2018, respectively, related to the performance units. As further discussed in the footnote to the consolidated financial statements entitled "Income Taxes", the Company's Board of Directors adopted the Section 382 Rights Agreement in 2009 and has amended and extended the Section 382 Rights Agreement on four occasions. The Section 382 Rights Agreement, as amended, is designed to protect shareholder value by preserving the value of our tax assets primarily associated with NOLs. At the time the Section 382 Rights Agreement was adopted, the Company declared a dividend of one preferred share purchase right (a "Right") for each outstanding share of common stock. The dividend was payable on January 30, 2009, to the shareholders of record as of the close of business on that date and a Right is also attached to each share of CNO common stock issued after that date. Pursuant to the Section 382 Rights Agreement, as amended, each Right entitles the shareholder to purchase from the Company one one-thousandth of a share of Series E Junior Participating Preferred Stock, par value $.01 per share (the "Junior Preferred Stock") of the Company at a price of $95.00 per one one-thousandth of a share of Junior Preferred Stock. The description and terms of the Rights are set forth in the Section 382 Rights Agreement, as amended. The Rights would become exercisable in the event any person or group (subject to certain exemptions) becomes an owner of more than 4.99 percent of the outstanding stock of CNO (a "Threshold Holder") without the approval of the Board of Directors or an existing shareholder who is currently a Threshold Holder acquires additional shares exceeding one percent of our outstanding shares without prior approval from the Board of Directors. A reconciliation of net income and shares used to calculate basic and diluted earnings per share is as follows (dollars in millions and shares in thousands): 2020 2019 2018 Net income (loss) for diluted earnings per share $ 301.8 $ 409.4 $ (315.0) Shares: Weighted average shares outstanding for basic earnings per share 142,096 156,040 165,457 Effect of dilutive securities on weighted average shares: Amounts related to employee benefit plans 1,068 1,108 — Weighted average shares outstanding for diluted earnings per share 143,164 157,148 165,457 In 2018, equivalent common shares of 2,104,000 (related to stock options, restricted stock and performance units) were not included in the diluted weighted average shares outstanding, because their inclusion would have been antidilutive due to the net loss recognized by the Company in such period. 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). |
OTHER OPERATING STATEMENT DATA
OTHER OPERATING STATEMENT DATA | 12 Months Ended |
Dec. 31, 2020 | |
Insurance [Abstract] | |
OTHER OPERATING STATEMENT DATA | OTHER OPERATING STATEMENT DATA Insurance policy income consisted of the following (dollars in millions): 2020 2019 2018 Direct premiums collected $ 4,176.0 $ 4,311.9 $ 4,150.3 Reinsurance assumed 23.0 25.1 27.8 Reinsurance ceded (247.8) (267.9) (156.2) Premiums collected, net of reinsurance 3,951.2 4,069.1 4,021.9 Change in unearned premiums 9.2 (7.5) 6.5 Less premiums on interest-sensitive life and products without mortality and morbidity risk which are recorded as additions to insurance liabilities (1,620.1) (1,743.1) (1,588.5) Premiums on traditional products with mortality or morbidity risk 2,340.3 2,318.5 2,439.9 Fees and surrender charges on interest-sensitive products 171.0 162.3 153.2 Insurance policy income $ 2,511.3 $ 2,480.8 $ 2,593.1 The three states with the largest shares of 2020 collected premiums were Florida (11 percent), Pennsylvania (6 percent) and Texas (5 percent). No other state accounted for more than five percent of total collected premiums. Other operating costs and expenses were as follows (dollars in millions): 2020 2019 2018 Commission expense $ 111.8 $ 133.6 $ 122.8 Salaries and wages 252.6 238.2 233.2 Other 577.6 561.1 458.2 Total other operating costs and expenses $ 942.0 $ 932.9 $ 814.2 Changes in deferred acquisition costs were as follows (dollars in millions): 2020 2019 2018 Balance, beginning of year $ 1,215.5 $ 1,322.5 $ 1,026.8 Additions 275.8 288.7 261.8 Amortization (233.4) (195.4) (219.2) Effect of reinsurance transaction — — (1.2) Amounts related to changes in unrealized investment gains (losses) on fixed maturities, available for sale (230.1) (189.6) 254.3 Other adjustments (a) — (10.7) — Balance, end of year $ 1,027.8 $ 1,215.5 $ 1,322.5 Changes in the present value of future profits were as follows (dollars in millions): 2020 2019 2018 Balance, beginning of year $ 275.4 $ 343.6 $ 359.6 Amortization (34.7) (36.7) (45.1) Effect of reinsurance transaction — — (60.4) Amounts related to changes in unrealized investment gains (losses) on fixed maturities, available for sale 8.7 (14.4) 89.5 Other adjustments (a) — (17.1) — Balance, end of year $ 249.4 $ 275.4 $ 343.6 ___________________ (a) These adjustments were recognized in conjunction with the conversion to a new valuation software system for certain non-interest sensitive life insurance business. The adjustments had no impact on net income since comparable reductions in insurance policy liabilities were also recognized in conjunction with the conversion. Based on current conditions and assumptions as to future events on all policies inforce, the Company expects to amortize approximately 10 percent of the December 31, 2020 balance of the present value of future profits in 2021, 9 percent in 2022, 8 percent in 2023, 7 percent in 2024 and 6 percent in 2025. The discount rate used to determine the amortization of the present value of future profits averaged approximately 5 percent in the years ended December 31, 2020, 2019 and 2018. In accordance with authoritative guidance, we are required to amortize the present value of future profits in relation to estimated gross profits for interest-sensitive life products and annuity products. Such guidance also requires that estimates of expected gross profits used as a basis for amortization be evaluated regularly, and that the total amortization recorded to date be adjusted by a charge or credit to the statement of operations, if actual experience or other evidence suggests that earlier estimates should be revised. |
CONSOLIDATED STATEMENT OF CAS_2
CONSOLIDATED STATEMENT OF CASH FLOWS | 12 Months Ended |
Dec. 31, 2020 | |
Supplemental Cash Flow Elements [Abstract] | |
CONSOLIDATED STATEMENT OF CASH FLOWS | CONSOLIDATED STATEMENT OF CASH FLOWS The following disclosures supplement our consolidated statement of cash flows. The following reconciles net income (loss) to net cash provided by operating activities (dollars in millions): 2020 2019 2018 Cash flows from operating activities: Net income (loss) $ 301.8 $ 409.4 $ (315.0) Adjustments to reconcile net income (loss) to net cash from operating activities: Amortization and depreciation 303.9 267.9 292.2 Income taxes 14.1 (132.8) 18.4 Insurance liabilities 397.6 632.4 207.8 Accrual and amortization of investment income (125.2) (240.7) 14.9 Deferral of policy acquisition costs (275.8) (288.7) (261.7) Net realized investment (gains) losses 36.2 (28.2) 11.3 Net realized gains on the transfer of assets related to reinsurance transaction — — (363.4) Loss related to reinsurance transaction — — 1,067.6 Payment to reinsurer pursuant to long-term care business reinsured — — (365.0) Loss on extinguishment of borrowings related to variable interest entities — — 3.8 Loss on extinguishment of debt — 7.3 — Other 82.9 70.1 6.9 Net cash from operating activities $ 735.5 $ 696.7 $ 317.8 The following summarizes the impact of the reinsurance transaction completed on September 27, 2018 (dollars in millions): Investments transferred $ (3,582.1) (a) Cash paid to reinsurer (365.0) Accrued interest on investments transferred (51.6) Present value of future profits and deferred acquisition costs written-off (61.6) Reinsurance receivables 2,818.0 Transaction expenses and other (14.6) Release of future loss reserve 189.3 Subtotal (1,067.6) Realized gains on investments transferred 363.4 Pre-tax loss related to reinsurance transaction $ (704.2) ______________ (a) Such non-cash amounts are not included in the consolidated statement of cash flows. Other non-cash items not reflected in the investing and financing activities sections of the consolidated statement of cash flows (dollars in millions): 2020 2019 2018 Stock options, restricted stock and performance units $ 24.5 $ 19.3 $ 24.7 |
STATUTORY INFORMATION (BASED ON
STATUTORY INFORMATION (BASED ON NON-GAAP MEASURES) | 12 Months Ended |
Dec. 31, 2020 | |
Insurance [Abstract] | |
STATUTORY INFORMATION (BASED ON NON-GAAP MEASURES) | STATUTORY INFORMATION (BASED ON NON-GAAP MEASURES) Statutory accounting practices prescribed or permitted by regulatory authorities for the Company's insurance subsidiaries differ from GAAP. The Company's insurance subsidiaries reported the following amounts to regulatory agencies, after appropriate elimination of intercompany accounts among such subsidiaries (dollars in millions): 2020 2019 Statutory capital and surplus $ 1,805.5 $ 1,696.6 Asset valuation reserve 304.0 295.9 Interest maintenance reserve 406.6 420.1 Total $ 2,516.1 $ 2,412.6 Statutory capital and surplus included investments in upstream affiliates of $42.6 million at both December 31, 2020 and 2019, which were eliminated in the consolidated financial statements prepared in accordance with GAAP. Statutory earnings build the capital required by ratings agencies and regulators. Statutory earnings, fees and interest paid by the insurance companies to the parent company create the "cash flow capacity" the parent company needs to meet its obligations, including debt service. The consolidated statutory net income (loss) (a non-GAAP measure) of our insurance subsidiaries was $409.6 million, $291.4 million and $(293.3) million (including approximately $541 million loss related to a reinsurance transaction) in 2020, 2019 and 2018, respectively. In 2020, statutory net operating income and capital and surplus were favorably impacted by $99 million and $53 million, respectively, related to certain provisions in the CARES Act. The favorable impact resulted from provisions that permitted the carryback of net operating losses that were created after 2017 and the temporary repeal of the 80% limitation on the utilization of NOLs created after 2017. Net income in 2019 includes a $46.0 million tax benefit to be received from CNO (resulting from the implementation of a tax planning strategy). Such amount is offset by an accrued dividend of $46.0 million payable to the non-life parent of the insurance subsidiaries. Accordingly, there was no impact on capital and surplus in 2019 related to these transactions. Also included in net income were net realized capital gains (losses), net of income taxes, of $(11.9) million, $(16.6) million and $43.8 million in 2020, 2019 and 2018, respectively. In addition, such net income included pre-tax amounts for fees and interest paid to CNO or its non-life subsidiaries totaling $163.8 million, $166.3 million and $159.2 million in 2020, 2019 and 2018, respectively. Insurance regulators may prohibit the payment of dividends or other payments by our insurance subsidiaries to parent companies if they determine that such payment could be adverse to our policyholders or contract holders. Otherwise, the ability of our insurance subsidiaries to pay dividends is subject to state insurance department regulations. Insurance regulations generally permit dividends to be paid from statutory earned surplus of the insurance company without regulatory approval for any 12-month period in amounts equal to the greater of (or in some states, the lesser of): (i) statutory net gain from operations or statutory net income for the prior year; or (ii) 10 percent of statutory capital and surplus as of the end of the preceding year. However, as each of the immediate insurance subsidiaries of CDOC, Inc. ("CDOC", our wholly owned subsidiary and the immediate parent of Washington National and Conseco Life Insurance Company of Texas) has negative earned surplus, any dividend payments from the insurance subsidiaries to CNO requires the prior approval of the director or commissioner of the applicable state insurance department. During 2020, our insurance subsidiaries paid dividends of $294.1 million to CDOC. The payment of interest on surplus debentures requires either prior written notice or approval of the director or commissioner of the applicable state insurance department. Dividends and other payments from our non-insurance subsidiaries to CNO or CDOC do not require approval by any regulatory authority or other third party. In accordance with an order from the Florida Office of Insurance Regulation, Washington National may not distribute funds to any affiliate or shareholder, except pursuant to agreements that have been approved, without prior notice to the Florida Office of Insurance Regulation. In addition, the risk-based capital ("RBC") and other capital requirements described below can also limit, in certain circumstances, the ability of our insurance subsidiaries to pay dividends. RBC requirements provide a tool for insurance regulators to determine the levels of statutory capital and surplus an insurer must maintain in relation to its insurance and investment risks and the need for possible regulatory attention. The RBC requirements provide four levels of regulatory attention, varying with the ratio of the insurance company's total adjusted capital (defined as the total of its statutory capital and surplus, asset valuation reserve and certain other adjustments) to its RBC (as measured on December 31 of each year) as follows: (i) if a company's total adjusted capital is less than 100 percent but greater than or equal to 75 percent of its RBC, the company must submit a comprehensive plan to the regulatory authority proposing corrective actions aimed at improving its capital position (the "Company Action Level"); (ii) if a company's total adjusted capital is less than 75 percent but greater than or equal to 50 percent of its RBC, the regulatory authority will perform a special examination of the company and issue an order specifying the corrective actions that must be taken; (iii) if a company's total adjusted capital is less than 50 percent but greater than or equal to 35 percent of its RBC, the regulatory authority may take any action it deems necessary, including placing the company under regulatory control; and (iv) if a company's total adjusted capital is less than 35 percent of its RBC, the regulatory authority must place the company under its control. In addition, the RBC requirements provide for a trend test if a company's total adjusted capital is between 100 percent and 150 percent of its RBC at the end of the year. The trend test calculates the greater of the decrease in the margin of total adjusted capital over RBC: (i) between the current year and the prior year; and (ii) for the average of the last 3 years. It assumes that such decrease could occur again in the coming year. Any company whose trended total adjusted capital is less than 95 percent of its RBC would trigger a requirement to submit a comprehensive plan as described above for the Company Action Level. The 2020 statutory annual statements of each of our insurance subsidiaries reflect total adjusted capital in excess of the levels that would subject our subsidiaries to any regulatory action. In addition, although we are under no obligation to do so, we may elect to contribute additional capital or retain greater amounts of capital to strengthen the surplus of certain insurance subsidiaries. Any election to contribute or retain additional capital could impact the amounts our insurance subsidiaries pay as dividends to the holding company. The ability of our insurance subsidiaries to pay dividends is also impacted by various criteria established by rating agencies to maintain or receive higher ratings and by the capital levels that we target for our insurance subsidiaries. At December 31, 2020, the consolidated RBC ratio of our insurance subsidiaries exceeded the minimum RBC requirement included in our Revolving Credit Agreement. See the note to the consolidated financial statements entitled "Notes Payable - Direct Corporate Obligations" for further discussion of various financial ratios and balances we are required to maintain. We calculate the consolidated RBC ratio by assuming all of the assets, liabilities, capital and surplus and other aspects of the business of our insurance subsidiaries are combined together in one insurance subsidiary, with appropriate intercompany eliminations. |
BUSINESS SEGMENTS
BUSINESS SEGMENTS | 12 Months Ended |
Dec. 31, 2020 | |
Segment Reporting [Abstract] | |
BUSINESS SEGMENTS | BUSINESS SEGMENTS Prior to 2020, the Company managed its business through the following operating segments: Bankers Life, Washington National and Colonial Penn, which were defined on the basis of product distribution; long-term care in run-off; and corporate operations, comprised of holding company activities and certain noninsurance company businesses. In January 2020, we announced a new operating model that changes how we view our operating segments. Instead of the operating business segments described above, we view our operations as three insurance product lines (annuity, health and life) and the investment and fee revenue segments. The new structure creates a leaner, more integrated, customer-centric organization that better positions us for long-term success and shareholder value creation. Our new segments are aligned based on their common characteristics, comparability of profit margins and the way management makes operating decisions and assesses the performance of the business. We began reporting under the new segment structure in the first quarter of 2020. Prior period results have been reclassified to conform to the new reporting structure. Our insurance product line segments (including annuity, health and life) include marketing, underwriting and administration of the policies our insurance subsidiaries sell. Under our new operating model, the business written in each of the three product categories through all of our insurance subsidiaries is aggregated allowing management and investors to assess the performance of each product category. When analyzing profitability of these segments, we use insurance product margin as the measure of profitability, which is: (i) insurance policy income; and (ii) net investment income allocated to the insurance product lines; less (i) insurance policy benefits and interest credited to policyholders; and (ii) amortization, non-deferred commissions and advertising expense. Net investment income is allocated to the product lines using the book yield of investments backing the block of business, which is applied to the average insurance liabilities, net of insurance intangibles, for the block in each period. Income from insurance products is the sum of the insurance margins of the annuity, health and life product lines, less expenses allocated to the insurance lines. It excludes the income from our fee income business, investment income not allocated to product lines, net expenses not allocated to product lines (primarily holding company expenses) and income taxes. Management believes insurance product margin and income from insurance products help provide a better understanding of the business and a more meaningful analysis of the results of our insurance product lines. Under our new structure, we market our insurance products through the Consumer and Worksite Divisions that reflect the customers served by the Company. The Consumer Division serves individual consumers, engaging with them on the phone, online, face-to-face with agents, or through a combination of sales channels. This structure unifies consumer capabilities into a single division and integrates the strength of our agent sales forces and industry-leading direct-to-consumer business with proven experience in advertising, web/digital and call center support. The Worksite Division focuses on worksite and group sales for businesses, associations, and other membership groups, interacting with customers at their place of employment. By creating a dedicated Worksite Division, we are bringing a sharper focus to this high-growth business while further capitalizing on the strength of our recent acquisition of Web Benefits Design Corporation ("WBD"). Sales in the Worksite Division have been particularly adversely impacted by the COVID-19 pandemic given the challenges of interacting with customers at their place of employment. The Consumer and Worksite Divisions are primarily focused on marketing insurance products, several types of which are sold in both divisions and underwritten in the same manner. Sales of group underwritten policies are currently not significant, but are expected to increase within the Worksite Division. We also centralized certain functional areas previously housed in the three business segments, including marketing, business unit finance, sales training and support, and agent recruiting, among others. All policy, contract, and certificate terms, conditions, and benefits remain unchanged. The investment segment involves the management of our capital resources, including investments and the management of corporate debt and liquidity. Our measure of profitability of this segment is the total net investment income not allocated to the insurance products. Investment income not allocated to product lines represents net investment income less: (i) equity returns credited to policyholder account balances; (ii) the investment income allocated to our product lines; (iii) interest expense on notes payable and investment borrowings; and (iv) certain expenses related to benefit plans that are offset by special-purpose investment income. Investment income not allocated to product lines includes investment income on investments in excess of average insurance liabilities, investments held by our holding companies, the spread we earn from the FHLB investment borrowing program and variable components of investment income (including call and prepayment income, adjustments to returns on structured securities due to cash flow changes, income (loss) from COLI and alternative investment income not allocated to product lines), net of interest expense on corporate debt. Our fee and other revenue segment includes the earnings generated from sales of third-party insurance products, services provided by WBD (our wholly owned on-line benefit administration firm) and the operations of our broker-dealer and registered investment advisor. Expenses not allocated to product lines include the expenses of our corporate operations, excluding interest expense on debt. We measure segment performance by excluding loss related to reinsurance agreement, 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, loss on extinguishment of debt, income taxes and other non-operating items consisting primarily of earnings attributable to VIEs ("pre-tax operating earnings") because we believe that this performance measure is a better indicator of the ongoing business and trends in our business. Our primary investment focus is on investment income to support our liabilities for insurance products as opposed to the generation of net realized investment gains (losses), and a long-term focus is necessary to maintain profitability over the life of the business. The net realized investment gains (losses), fair value changes in embedded derivative liabilities (net of related amortization), fair value changes related to the agent deferred compensation plan, loss on extinguishment of debt 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): 2020 2019 2018 Revenues: Annuity: Insurance policy income $ 18.8 $ 21.1 $ 19.9 Net investment income 465.1 464.4 456.4 Total annuity revenues 483.9 485.5 476.3 Health: Insurance policy income 1,699.5 1,701.6 1,699.6 Net investment income 282.3 279.9 271.8 Total health revenues 1,981.8 1,981.5 1,971.4 Life: Insurance policy income 793.0 758.1 740.9 Net investment income 139.6 138.3 135.4 Total life revenues 932.6 896.4 876.3 Revenues related to the reinsured long-term care block prior to being ceded in the third quarter of 2018: Insurance policy income — — 132.7 Net investment income — — 138.5 Change in market values of the underlying options supporting the fixed index annuity and life products (offset by market value changes credited to policyholder balances) 37.8 153.7 (45.5) Investment income not allocated to product lines 258.5 265.0 277.7 Fee revenue and other income: Fee income 106.0 88.7 52.0 Amounts netted in expenses not allocated to product lines 6.9 39.7 9.4 Total segment revenues $ 3,807.5 $ 3,910.5 $ 3,888.8 (continued on next page) (continued from previous page) 2020 2019 2018 Expenses: Annuity: Insurance policy benefits $ (93.7) $ 12.8 $ 37.1 Interest credited 170.6 166.9 156.5 Amortization and non-deferred commissions 110.3 75.7 69.1 Total annuity expenses 187.2 255.4 262.7 Health: Insurance policy benefits 1,329.7 1,424.9 1,434.6 Amortization and non-deferred commissions 192.3 193.7 185.7 Total health expenses 1,522.0 1,618.6 1,620.3 Life: Insurance policy benefits 570.0 513.6 497.2 Interest credited 44.5 41.9 40.5 Amortization, non-deferred commissions and advertising expense 153.1 144.8 134.2 Total life expenses 767.6 700.3 671.9 Expenses related to the reinsured long-term care block prior to being ceded in the third quarter of 2018: Insurance policy benefits — — 226.5 Amortization — — 7.0 Other operating costs and expenses — — 18.2 Allocated expenses 557.7 543.0 521.2 Expenses not allocated to product lines 90.7 93.1 89.7 Market value changes of options credited to fixed index annuity and life policyholders 37.8 153.7 (45.5) Amounts netted in investment income not allocated to product lines: Interest expense 76.4 98.6 89.9 Other expenses 15.0 14.3 4.1 Expenses netted in fee revenue: Distribution and commission expenses 89.3 65.2 41.6 Total segment expenses 3,343.7 3,542.2 3,507.6 Pre-tax measure of profitability: Annuity margin 296.7 230.1 213.6 Health margin 459.8 362.9 351.1 Life margin 165.0 196.1 204.4 Total insurance product margin 921.5 789.1 769.1 Allocated expenses (557.7) (543.0) (521.2) Income from insurance products 363.8 246.1 247.9 Ceded long-term care block — — 19.5 Fee income 16.7 23.5 10.4 Investment income not allocated to product lines 167.1 152.1 183.7 Expenses not allocated to product lines (83.8) (53.4) (80.3) Operating earnings before taxes 463.8 368.3 381.2 Income tax expense on operating income 101.5 78.3 78.1 Net operating income $ 362.3 $ 290.0 $ 303.1 A reconciliation of segment revenues and expenses to consolidated revenues and expenses and net income is as follows (dollars in millions): 2020 2019 2018 Total segment revenues $ 3,807.5 $ 3,910.5 $ 3,888.8 Net realized investment gains (losses) (36.2) 28.2 (11.3) Net realized gains on the transfer of assets related to reinsurance transaction — — 363.4 Revenues related to earnings attributable to VIEs 35.5 57.4 67.4 Fee revenue related to transition services agreement 14.3 19.7 5.2 Consolidated revenues 3,821.1 4,015.8 4,313.5 Total segment expenses 3,343.7 3,542.2 3,507.6 Insurance policy benefits - fair value changes in embedded derivative liabilities 99.0 103.3 (68.3) Amortization related to fair value changes in embedded derivative liabilities (19.9) (21.9) 12.8 Amortization related to net realized investment gains (losses) (2.4) .6 (.4) Expenses attributable to VIEs 33.8 55.3 65.8 Fair value changes related to agent deferred compensation plan 16.3 20.4 (11.9) Loss on extinguishment of debt — 7.3 — Loss related to reinsurance transaction — — 1,067.6 Expenses related to transition services agreement 8.8 18.5 5.1 Other expenses (2.5) 15.9 — Consolidated expenses 3,476.8 3,741.6 4,578.3 Income (loss) before tax 344.3 274.2 (264.8) Income tax expense (benefit): Tax expense (benefit) on period income (loss) 76.5 58.5 (57.6) Valuation allowance for deferred tax assets and other tax items (34.0) (193.7) 107.8 Net income (loss) $ 301.8 $ 409.4 $ (315.0) Segment balance sheet information was as follows (dollars in millions): 2020 2019 Assets: Annuity $ 13,074.2 $ 12,141.0 Health 10,931.2 10,403.8 Life 4,421.6 4,221.3 Investments not allocated to product lines 6,425.5 6,360.9 Assets of our non-life companies included in the fee income segment 370.7 358.6 Assets of our other non-life companies 116.7 145.3 Total assets $ 35,339.9 $ 33,630.9 Liabilities: Annuity $ 11,764.0 $ 11,398.1 Health 9,949.0 9,557.6 Life 3,972.6 3,997.1 Liabilities associated with investments not allocated to product lines (a) 3,930.6 3,786.0 Liabilities of our non-life companies included in the fee income segment 224.6 196.0 Liabilities of our other non-life companies 14.9 19.1 Total liabilities $ 29,855.7 $ 28,953.9 ____________ (a) Includes investment borrowings, borrowings related to VIEs and notes payable - direct corporate obligations. The following table presents selected financial information of our segments (dollars in millions): Segment Present value of future profits Deferred acquisition costs Insurance liabilities 2020 Annuity $ — $ 90.0 $ 11,428.6 Health 230.0 508.5 9,828.8 Life 19.4 429.3 3,846.0 Total $ 249.4 $ 1,027.8 $ 25,103.4 2019 Annuity $ .3 $ 166.2 $ 11,085.4 Health 254.6 613.1 9,444.7 Life 20.5 436.2 3,887.7 Total $ 275.4 $ 1,215.5 $ 24,417.8 |
QUARTERLY FINANCIAL DATA (UNAUD
QUARTERLY FINANCIAL DATA (UNAUDITED) | 12 Months Ended |
Dec. 31, 2020 | |
Quarterly Financial Data [Abstract] | |
QUARTERLY FINANCIAL DATA (UNAUDITED) | QUARTERLY FINANCIAL DATA (UNAUDITED) We compute earnings per common share for each quarter independently of earnings per share for the year. The sum of the quarterly earnings per share may not equal the earnings per share for the year because of: (i) transactions affecting the weighted average number of shares outstanding in each quarter; and (ii) the uneven distribution of earnings during the year. Quarterly financial data (unaudited) were as follows (dollars in millions, except per share data): 2020 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. Revenues $ 717.2 $ 1,014.2 $ 1,013.5 $ 1,076.2 Income (loss) before income taxes $ (71.0) $ 105.4 $ 166.4 $ 143.5 Income tax expense (benefit) (49.8) 23.4 37.2 31.7 Net income (loss) $ (21.2) $ 82.0 $ 129.2 $ 111.8 Earnings per common share: Basic: Net income (loss) $ (.15) $ .57 $ .92 $ .81 Diluted: Net income (loss) $ (.15) $ .57 $ .91 $ .80 2019 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. Revenues $ 1,023.0 $ 979.8 $ 944.0 $ 1,069.0 Income before income taxes $ 65.6 $ 47.7 $ 53.5 $ 107.4 Income tax expense (benefit) 13.8 10.1 11.5 (170.6) Net income $ 51.8 $ 37.6 $ 42.0 $ 278.0 Earnings per common share: Basic: Net income $ .32 $ .24 $ .27 $ 1.85 Diluted: Net income $ .32 $ .24 $ .27 $ 1.84 |
INVESTMENTS IN VARIABLE INTERES
INVESTMENTS IN VARIABLE INTEREST ENTITIES | 12 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [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. During 2019, a VIE that was required to be consolidated was dissolved. We recognized a loss of $5.1 million in 2019 representing the difference between the borrowings of such VIE and the contractual distributions required following the liquidation of the underlying assets. The scheduled repayment of the remaining principal balance of the borrowings related to the VIEs are as follows: $27.6 million in 2021; $99.7 million in 2022; $340.5 million in 2023; $314.1 million in 2024; $183.3 million in 2025; $120.1 million in 2026; $63.4 million in 2027; $0.8 million in 2028; and $7.0 million in 2030. The Company has no financial obligation to the VIEs beyond its investment in each VIE. Certain of our subsidiaries are noteholders of the VIEs. Another subsidiary of the Company is the investment manager for the VIEs. As such, it has the power to direct the most significant activities of the VIEs which materially impacts the economic performance of the VIEs. The following table provides supplemental information about the assets and liabilities of the VIEs which have been consolidated (dollars in millions): December 31, 2020 VIEs Eliminations Net effect on Assets: Investments held by variable interest entities $ 1,189.4 $ — $ 1,189.4 Notes receivable of VIEs held by subsidiaries — (113.8) (113.8) Cash and cash equivalents held by variable interest entities 54.1 — 54.1 Accrued investment income 1.7 — 1.7 Income tax assets, net 10.4 — 10.4 Other assets 3.3 (.9) 2.4 Total assets $ 1,258.9 $ (114.7) $ 1,144.2 Liabilities: Other liabilities $ 36.3 $ (4.8) $ 31.5 Borrowings related to variable interest entities 1,151.8 — 1,151.8 Notes payable of VIEs held by subsidiaries 126.1 (126.1) — Total liabilities $ 1,314.2 $ (130.9) $ 1,183.3 December 31, 2019 VIEs Eliminations Net effect on Assets: Investments held by variable interest entities $ 1,188.6 $ — $ 1,188.6 Notes receivable of VIEs held by subsidiaries — (113.8) (113.8) Cash and cash equivalents held by variable interest entities 74.7 — 74.7 Accrued investment income 1.7 — 1.7 Income tax assets, net 8.0 — 8.0 Other assets 2.8 (1.4) 1.4 Total assets $ 1,275.8 $ (115.2) $ 1,160.6 Liabilities: Other liabilities $ 42.8 $ (4.4) $ 38.4 Borrowings related to variable interest entities 1,152.5 — 1,152.5 Notes payable of VIEs held by subsidiaries 126.1 (126.1) — Total liabilities $ 1,321.4 $ (130.5) $ 1,190.9 The following table provides supplemental information about the revenues and expenses of the VIEs which have been consolidated in accordance with authoritative guidance, after giving effect to the elimination of our investment in the VIEs and investment management fees earned by a subsidiary of the Company (dollars in millions): 2020 2019 2018 Revenues: Net investment income – policyholder and other special-purpose portfolios $ 52.7 $ 74.3 $ 81.5 Fee revenue and other income 5.1 5.8 7.6 Total revenues 57.8 80.1 89.1 Expenses: Interest expense 32.4 53.7 59.9 Other operating expenses 1.4 1.6 2.1 Total expenses 33.8 55.3 62.0 Income before net realized investment gains (losses) and income taxes 24.0 24.8 27.1 Net realized investment gains (losses) (13.8) (20.5) (3.6) Loss on extinguishment of borrowings — — (3.8) Income before income taxes $ 10.2 $ 4.3 $ 19.7 The investment portfolios held by the VIEs are primarily comprised of commercial bank loans to corporate obligors. At December 31, 2020, the amortized cost of the below-investment grade investments held by the VIEs was $1,181.2 million, or 98 percent of the VIEs investment portfolio. The estimated fair value of the below-investment grade portfolio was $1,159.2 million, or 98 percent of the amortized cost. At December 31, 2020, such loans had an amortized cost of $1,211.3 million; gross unrealized gains of $3.7 million; gross unrealized losses of $10.5 million; allowance for credit losses of $15.1 million; and an estimated fair value of $1,189.4 million. The following table summarizes changes in the allowance for credit losses related to investments held by VIEs for the year ended December 31, 2020 (dollars in millions): Corporate securities Allowance at January 1, 2020 $ 9.9 Additions for securities for which credit losses were not previously recorded 26.6 Additions for purchased securities with deteriorated credit — Additions (reductions) for securities where an allowance was previously recorded (15.7) Reduction for securities sold during the period (5.7) Reduction for securities for which the Company made the decision to sell where an allowance was previously recorded — Write-offs — Recoveries of previously written-off amount — Allowance at December 31, 2020 $ 15.1 The following table sets forth the amortized cost and estimated fair value of the investments held by the VIEs at December 31, 2020, by contractual maturity. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties. Amortized Estimated (Dollars in millions) Due in one year or less $ 6.6 $ 5.4 Due after one year through five years 762.7 744.0 Due after five years through ten years 442.0 440.0 Total $ 1,211.3 $ 1,189.4 The following table sets forth the amortized cost and estimated fair value of those investments held by the VIEs with unrealized losses at December 31, 2020, by contractual maturity. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties. Amortized Estimated (Dollars in millions) Due in one year or less $ 6.6 $ 5.4 Due after one year through five years 660.9 640.7 Due after five years through ten years 258.9 254.7 Total $ 926.4 $ 900.8 The following summarizes the investments sold at a loss during 2020 which had been continuously in an unrealized loss position exceeding 20 percent of the amortized cost basis prior to the sale for the period indicated (dollars in millions): At date of sale Number Amortized cost Fair value Less than 6 months prior to sale 7 $ 10.3 $ 7.4 Greater than or equal to 6 months and less than 12 months prior to sale 5 7.0 4.2 12 $ 17.3 $ 11.6 There were no investments in our portfolio rated below-investment grade which had been continuously in an unrealized loss position exceeding 20 percent of the cost basis. During 2020, the VIEs recognized net realized investment losses of $13.8 million which were comprised of: (i) $8.6 million of net losses from the sales of fixed maturities; and (ii) a $5.2 million increase in the allowance for credit losses. Such net realized losses included gross realized losses of $8.7 million from the sale of $57.4 million of investments. During 2019, the VIEs recognized net realized investment losses of $20.5 million which were comprised of: (i) $12.4 million of net losses from the sales of fixed maturities; (ii) $5.1 million of losses on the dissolution of a VIE; and (iii) $3.0 million of writedowns of investments for other than temporary declines in fair value recognized through net income. Such net realized losses included gross realized losses of $12.6 million from the sale of $280.6 million of investments. During 2018, the VIEs recognized net realized investment losses of $3.6 million from the sales of fixed maturities. Such net realized losses included gross realized losses of $3.8 million from the sale of $57.2 million of investments. At December 31, 2020, there were three fixed maturity investments held by the VIEs in default with an amortized cost of $5.2 million, a carrying value of $1.6 million and an allowance for credit losses of $3.5 million. At December 31, 2020, the VIEs held: (i) investments (for which an allowance for credit losses has not been recorded) with a fair value of $461.9 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 (for which an allowance for credit losses has not been recorded) with a fair value of $238.3 million and gross unrealized losses of $3.9 million that had been in an unrealized loss position for greater than twelve months. At December 31, 2019, the VIEs held: (i) investments with a fair value of $153.0 million and gross unrealized losses of $3.1 million that had been in an unrealized loss position for less than twelve months; and (ii) investments with a fair value of $430.1 million and gross unrealized losses of $18.5 million that had been in an unrealized loss position for greater than twelve months. The investments held by the VIEs are evaluated for impairment in a manner that is consistent with the Company's fixed maturities, available for sale. Similarly, prior to January 1, 2020, the investments held by the VIEs were evaluated for other-than-temporary declines in fair value in a manner that was consistent with the Company's fixed maturities, available for sale. |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 12 Months Ended |
Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENT | SUBSEQUENT EVENT In February 2021, we acquired DirectPath, LLC ("DirectPath"), a leading national provider of year-round, technology-driven employee benefits management services to employers and employees. DirectPath provides personalized benefits education, advocacy and transparency, and communications compliance services that help employers reduce healthcare costs and assist employees with making informed benefits decisions. The purchase price was approximately $50 million with an additional earn‐out if certain financial targets are achieved. The transaction was funded from holding company cash. DirectPath's education services engage and enroll employees in worksite benefits plans through face-to-face, virtual and telephonic enrollment. The Company’s advocacy and transparency services help employees select cost-effective medical providers and resolve claims issues, while enabling employers to reduce administrative and healthcare costs. Its communications compliance services manage governance and regulatory communications for corporate benefits plans. DirectPath operates direct nationwide and serves 400 employers and represents a covered employee base of more than 2.5 million people. DirectPath's clients range in size from small- and medium-sized businesses to Fortune 100 companies. |
SCHEDULE II - Condensed Financi
SCHEDULE II - Condensed Financial Information of Registrant (Parent Company) | 12 Months Ended |
Dec. 31, 2020 | |
Condensed Financial Information Disclosure [Abstract] | |
SCHEDULE II - Condensed Financial Information of Registrant (Parent Company) | SCHEDULE II Condensed Financial Information of Registrant (Parent Company) Balance Sheet as of December 31, 2020 and 2019 (Dollars in millions) ASSETS 2020 2019 Cash and cash equivalents - unrestricted $ 391.3 $ 181.9 Investment in wholly-owned subsidiaries (eliminated in consolidation) 6,202.7 5,501.5 Income tax assets, net 160.3 140.9 Receivable from subsidiaries (eliminated in consolidation) 89.6 38.4 Other assets 34.3 .8 Total assets $ 6,878.2 $ 5,863.5 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Notes payable $ 1,136.2 $ 989.1 Payable to subsidiaries (eliminated in consolidation) 136.7 126.8 Other liabilities 121.1 70.6 Total liabilities 1,394.0 1,186.5 Commitments and Contingencies Shareholders' equity: Common stock and additional paid-in capital ($0.01 par value, 8,000,000,000 shares authorized, shares issued and outstanding: 2020 - 135,279,119; 2019 - 148,084,178) 2,545.8 2,768.8 Accumulated other comprehensive income 2,186.1 1,372.5 Retained earnings 752.3 535.7 Total shareholders' equity 5,484.2 4,677.0 Total liabilities and shareholders' equity $ 6,878.2 $ 5,863.5 The accompanying notes are an integral part of the condensed financial statements. CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES SCHEDULE II Condensed Financial Information of Registrant (Parent Company) Statement of Operations for the years ended December 31, 2020, 2019 and 2018 (Dollars in millions) 2020 2019 2018 Revenues: Net investment income $ 28.7 $ 13.0 $ 14.3 Net investment income - affiliated .8 .8 — Net realized investment gains (losses) .2 .1 (4.3) Total revenues 29.7 13.9 10.0 Expenses: Interest expense 55.2 52.4 48.0 Intercompany expenses (eliminated in consolidation) 1.1 3.2 2.9 Operating costs and expenses 65.9 52.6 40.0 Loss on extinguishment of debt — 7.3 — Total expenses 122.2 115.5 90.9 Loss before income taxes and equity in undistributed earnings of subsidiaries (92.5) (101.6) (80.9) Income tax benefit (28.2) (32.4) (20.8) Loss before equity in undistributed earnings of subsidiaries (64.3) (69.2) (60.1) Equity in undistributed earnings (losses) of subsidiaries (eliminated in consolidation) 366.1 478.6 (254.9) Net income (loss) $ 301.8 $ 409.4 $ (315.0) The accompanying notes are an integral part of the condensed financial statements. CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES SCHEDULE II Condensed Financial Information of Registrant (Parent Company) Statement of Cash Flows for the years ended December 31, 2020, 2019 and 2018 (Dollars in millions) 2020 2019 2018 Cash flows from operating activities $ (136.3) $ (77.9) $ (107.2) Cash flows from investing activities: Sales of investments 18.4 20.2 250.1 Purchases of investments (18.2) — (30.9) Net sales of trading securities 26.8 8.8 8.3 Dividends received from consolidated subsidiary, net of capital contributions of nil in 2020; nil in 2019; and $265.0 in 2018* 324.7 194.3 (40.1) Net cash provided by investing activities 351.7 223.3 187.4 Cash flows from financing activities: Issuance of notes payable, net 145.8 494.2 — Payments on notes payable — (425.0) — Expenses related to extinguishment of debt — (6.1) — Issuance of common stock 19.0 9.2 3.9 Payments to repurchase common stock (268.3) (254.5) (108.0) Common stock dividends paid (67.0) (67.1) (64.8) Issuance of notes payable to affiliates* 308.1 254.9 227.7 Payments on notes payable to affiliates* (143.6) (175.0) (94.2) Net cash used by financing activities (6.0) (169.4) (35.4) Net increase (decrease) in cash and cash equivalents 209.4 (24.0) 44.8 Cash and cash equivalents, beginning of the year 181.9 205.9 161.1 Cash and cash equivalents, end of the year $ 391.3 $ 181.9 $ 205.9 * Eliminated in consolidation The accompanying notes are an integral part of the condensed financial statements. CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES SCHEDULE II Notes to Condensed Financial Information 1. Basis of Presentation The condensed financial information should be read in conjunction with the consolidated financial statements of CNO Financial Group, Inc. The condensed financial information includes the accounts and activity of the parent company. |
SCHEDULE IV - REINSURANCE
SCHEDULE IV - REINSURANCE | 12 Months Ended |
Dec. 31, 2020 | |
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Abstract] | |
Schedule IV - Reinsurance | SCHEDULE IV Reinsurance for the years ended December 31, 2020, 2019 and 2018 (Dollars in millions) 2020 2019 2018 Life insurance inforce: Direct $ 29,109.8 $ 28,282.8 $ 27,662.8 Assumed 99.5 107.1 114.4 Ceded (3,042.4) (3,204.1) (3,321.3) Net insurance inforce $ 26,166.9 $ 25,185.8 $ 24,455.9 Percentage of assumed to net .4 % .4 % .5 % 2020 2019 2018 Insurance policy income: Direct $ 2,565.4 $ 2,537.7 $ 2,540.2 Assumed 23.0 25.1 28.0 Ceded (248.1) (244.3) (128.3) Net premiums $ 2,340.3 $ 2,318.5 $ 2,439.9 Percentage of assumed to net 1.0 % 1.1 % 1.1 % |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Accounting | We prepare our financial statements 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 2020 presentation. These reclassifications have no effect on net income or shareholders' equity. |
Consolidation | 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. |
Use of Estimates | 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), allowance for credit losses and other-than-temporary impairments of investments, assets and liabilities related to income taxes, liabilities for insurance products, liabilities related to litigation and guaranty fund assessment accruals. If our future experience differs from these estimates and assumptions, our financial statements would be materially affected. |
Investments | Fixed maturity securities include available for sale bonds and redeemable preferred stocks. We carry these investments at estimated fair value. We record any unrealized gain or loss, net of tax and related adjustments, as a component of shareholders’ equity. Equity securities include investments in common stock, exchange-traded funds and non-redeemable preferred stock. We carry these investments at estimated fair value. Effective January 1, 2018, changes in the fair value of equity securities are recognized in net income as further described below under the caption "Recently Issued Accounting Standards - Adopted Accounting Standards". Prior to January 1, 2018, changes in the fair value of equity securities were recorded in "Accumulated other comprehensive income". Mortgage loans held in our investment portfolio are carried at amortized unpaid balance, net of allowance for estimated credit losses. Interest income is accrued on the principal amount of the loan based on the loan's contractual interest rate. Payment terms specified for mortgage loans may include a prepayment penalty for unscheduled payoff of the investment. Prepayment penalties are recognized as investment income when received. The allowance for estimated credit losses is measured using a loss-rate method on an individual asset basis. Inputs used include asset-specific characteristics, current economic conditions, historical loss information and reasonable and supportable forecasts about future economic conditions. Policy loans are stated at current unpaid principal balances. Policy loans are collateralized by the cash surrender value of the life insurance policy. Interest income is recorded as earned using the contractual interest rate. Trading securities include: (i) investments purchased with the intent of selling in the near team to generate income; (ii) investments supporting certain insurance liabilities; and (iii) certain fixed maturity securities containing embedded derivatives for which we have elected the fair value option. The change in fair value of the income generating investments and investments supporting insurance liabilities and reinsurance agreements is recognized in income from policyholder and 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. Other invested assets include: (i) call options purchased in an effort to offset or hedge the effects of certain policyholder benefits related to our fixed index annuity and life insurance products; (ii) Company-owned life insurance ("COLI"); (iii) investments in the common stock of the Federal Home Loan Bank ("FHLB"); and (iv) certain non-traditional investments. We carry the call options at estimated fair value as further described in the section of this note entitled "Accounting for Derivatives". We carry COLI at its cash surrender value which approximates its net realizable value. Non-traditional investments include investments in certain limited partnerships and hedge funds which are accounted for using the equity method. In accounting for limited partnerships and hedge funds, we consistently use the most recently available financial information provided by the general partner or manager of each of these investments, which is one to three months prior to the end of our reporting period. Interest income on fixed maturity securities is recognized when earned using a constant effective yield method giving effect to amortization of premiums and accretion of discounts. Prepayment fees are recognized when earned. Dividends on equity securities are recognized when declared. When we sell a security (other than trading securities), we report the difference between the sale proceeds and amortized cost (determined based on specific identification) as a realized investment gain or loss. When an available for sale fixed maturity security's fair value is below the amortized cost, the security is considered impaired. If a portion of the decline is due to credit-related factors, we separate the credit loss component of the impairment from the amount related to all other factors. The credit loss component is recorded as an allowance and reported in net realized investment gains (losses) (limited to the difference between estimated fair value and amortized cost). The impairment related to all other factors (non-credit factors) is reported in accumulated other comprehensive income along with unrealized gains related to fixed maturity investments, available for sale, net of tax and related adjustments. The allowance is adjusted for any additional credit losses and subsequent recoveries. When recognizing an allowance associated with a credit loss, the cost basis is not adjusted. When we determine a security is uncollectable, the remaining amortized cost will be written off. In determining the credit loss component, we discount the estimated cash flows on a security by security basis. We consider the impact of macroeconomic conditions on inputs used to measure the amount of credit loss. 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 by considering asset type, rating, time to maturity, and applying an expected loss rate. If we intend to sell an impaired fixed maturity security, available for sale, or identify an impaired fixed maturity security, available for sale, for which is it more likely than not we will be required to sell before anticipated recovery, the difference between the fair value and the amortized cost is included in net realized investment gains (losses) and the fair value becomes the new amortized cost. The new cost basis is not adjusted for any subsequent recoveries in fair value. The Company reports accrued investment income separately from fixed maturities, available for sale, and has elected not to measure an allowance for credit losses for accrued investment income. Accrued investment income is written off through net investment income at the time the issuer of the bond defaults or is expected to default on payments. |
Cash and Cash Equivalents | Cash and cash equivalents include commercial paper, invested cash and other investments purchased with original maturities of less than three months. We carry them at amortized cost, which approximates estimated fair value. It is the Company's policy to offset negative cash balances with positive balances in other accounts with the same counterparty when agreements are in place permitting legal right of offset. |
Deferred Acquisition Costs | Deferred acquisition costs represent incremental direct costs related to the successful acquisition of new or renewal insurance contracts. For interest-sensitive life or annuity products, we amortize these costs in relation to the estimated gross profits using the interest rate credited to the underlying policies. For other products, we amortize these costs in relation to future anticipated premium revenue using the projected investment earnings rate. When we realize a gain or loss on investments backing our interest-sensitive life or annuity products, we adjust the amortization to reflect the change in estimated gross profits from the products due to the gain or loss realized and the effect on future investment yields. We also adjust deferred acquisition costs for the change in amortization that would have been recorded if our fixed maturity securities, available for sale, had been sold at their stated aggregate fair value and the proceeds reinvested at current yields. We limit the total adjustment related to the impact of unrealized losses to the total of costs capitalized plus interest related to insurance policies issued in a particular year. We include the impact of this adjustment in accumulated other comprehensive income (loss) within shareholders' equity. We regularly evaluate the recoverability of the unamortized balance of the deferred acquisition costs. We consider estimated future gross profits or future premiums, expected mortality or morbidity, interest earned and credited rates, persistency and expenses in determining whether the balance is recoverable. If we determine a portion of the unamortized balance is not recoverable, it is charged to amortization expense. In certain cases, the unamortized balance of the deferred acquisition costs may not be deficient in the aggregate, but our estimates of future earnings indicate that profits would be recognized in early periods and losses in later periods. In this case, we increase the amortization of the deferred acquisition costs over the period of profits, by an amount necessary to offset losses that are expected to be recognized in the later years. |
Present Value of Future Profits | The present value of future profits is the value assigned to the right to receive future cash flows from policyholder insurance contracts existing at September 10, 2003 (the "Effective Date", the effective date of the bankruptcy reorganization of Conseco, Inc., an Indiana corporation (our "Predecessor")). The discount rate we used to determine the present value of future profits was 12 percent. The balance of this account is amortized and evaluated for recovery in the same manner as described above for deferred acquisition costs. We also adjust the present value of future profits for the change in amortization that would have been recorded if the fixed maturity securities, available for sale, had been sold at their stated aggregate fair value and the proceeds reinvested at current yields, similar to the manner described above for deferred acquisition costs. We limit the total adjustment related to the impact of unrealized losses to the total present value of future profits plus interest. |
Recognition of Insurance Policy Income and Related Benefits and Expenses on Insurance Contracts | For interest-sensitive life and annuity contracts that do not involve significant mortality or morbidity risk, the amounts collected from policyholders are considered deposits and are not included in revenue. Revenues for these contracts consist of charges for policy administration, cost of insurance charges and surrender charges assessed against policyholders' account balances. Such revenues are recognized when the service or coverage is provided, or when the policy is surrendered. We establish liabilities for annuity and interest-sensitive life products equal to the accumulated policy account values, which include an accumulation of deposit payments plus credited interest, less withdrawals and the amounts assessed against the policyholder through the end of the period. In addition, policyholder account values for certain interest-sensitive life products are impacted by our assumptions related to changes of certain non-guaranteed elements that we are allowed to make under the terms of the policy, such as cost of insurance charges, expense loads, credited interest rates and policyholder bonuses. Sales inducements provided to the policyholders of these products are recognized as liabilities over the period that the contract must remain in force to qualify for the inducement. The options attributed to the policyholder related to our fixed index annuity products are accounted for as embedded derivatives as described in the section of this note entitled "Accounting for Derivatives". Premiums from individual life products (other than interest-sensitive life contracts) and health products are recognized when due. When premiums are due over a significantly shorter period than the period over which benefits are provided, any gross premium in excess of the net premium (i.e., the portion of the gross premium required to provide for all expected future benefits and expenses) is deferred and recognized into revenue in a constant relationship to insurance in force. Benefits are recorded as an expense when they are incurred. We establish liabilities for traditional life, accident and health insurance, and life contingent payment annuity products using mortality tables in general use in the United States, which are modified to reflect the Company's actual experience when appropriate. We establish liabilities for accident and health insurance products using morbidity tables based on the Company's actual or expected experience. These reserves are computed at amounts that, with additions from estimated future premiums received and with interest on such reserves at estimated future rates, are expected to be sufficient to meet our obligations under the terms of the policy. Liabilities for future policy benefits are computed on a net-level premium method based upon assumptions as to future claim costs, investment yields, mortality, morbidity, withdrawals, policy dividends and maintenance expenses determined when the policies were issued (or with respect to policies inforce at August 31, 2003, the Company's best estimate of such assumptions on the Effective Date). We make an additional provision to allow for potential adverse deviation for some of our assumptions. Once established, assumptions on these products are generally not changed unless a premium deficiency exists. In that case, a premium deficiency reserve is recognized and the future pattern of reserve changes is modified to reflect the relationship of premiums to benefits based on the current best estimate of future claim costs, investment yields, mortality, morbidity, withdrawals, policy dividends and maintenance expenses, determined without an additional provision for potential adverse deviation. We establish claim reserves based on our estimate of the loss to be incurred on reported claims plus estimates of incurred but unreported claims based on our past experience. |
Accounting for Long-term Care Premium Rate Increases | Many of our long-term care policies have been subject to premium rate increases. In some cases, these premium rate increases were materially consistent with the assumptions we used to value the particular block of business at the Effective Date. With respect to certain premium rate increases, some of our policyholders were provided an option to cease paying their premiums and receive a non-forfeiture option in the form of a paid-up policy with limited benefits. In addition, our policyholders could choose to reduce their coverage amounts and premiums in the same proportion, when permitted by our contracts or as required by regulators. The following describes how we account for these policyholder options: • Premium rate increases - If premium rate increases reflect a change in our previous rate increase assumptions, the new assumptions are not reflected prospectively in our reserves. Instead, the additional premium revenue resulting from the rate increase is recognized as earned and original assumptions continue to be used to determine changes to liabilities for insurance products unless a premium deficiency exists. • Benefit reductions - A policyholder may choose reduced coverage with a proportionate reduction in premium, when permitted by our contracts. This option does not require additional underwriting. Benefit reductions are treated as a partial lapse of coverage, and the balance of our reserves and deferred insurance acquisition costs is reduced in proportion to the reduced coverage. • Non-forfeiture benefits offered in conjunction with a rate increase - In some cases, non-forfeiture benefits are offered to policyholders who wish to lapse their policies at the time of a significant rate increase. In these cases, exercise of this option is treated as an extinguishment of the original contract and issuance of a new contract. The balance of our reserves and deferred insurance acquisition costs are released, and a reserve for the new contract is established. Some of our policyholders may receive a non-forfeiture benefit if they cease paying their premiums pursuant to their original contract (or pursuant to changes made to their original contract as a result of a litigation settlement made prior to the Effective Date or an order issued by the Florida Office of Insurance Regulation). In these cases, exercise of this option is treated as the exercise of a policy benefit, and the reserve for premium paying benefits is reduced, and the reserve for the non-forfeiture benefit is adjusted to reflect the election of this benefit. |
Accounting for Certain Marketing Agreements | Bankers Life and Casualty Company ("Bankers Life") has entered into various distribution and marketing agreements with other insurance companies to use Bankers Life's exclusive agents to distribute prescription drug and Medicare Advantage plans. These agreements allow Bankers Life to offer these products to current and potential future policyholders without investment in management and infrastructure. We receive fee income related to the plans sold through our distribution channels and incur distribution expenses paid to our agents who sell such products. The recognition of fee revenue and the distribution expenses paid to our agents results from approval of an application by the third-party insurance companies, which we define as our customers. We recognize revenue and distribution fees related to these sales in accordance with the new revenue recognition guidance which was effective January 1, 2018 (see "Recently Issued Accounting Standards - Adopted Accounting Standards" below). This guidance requires us to recognize the net lifetime revenue expected to be earned on these sales, but only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Prior to the fourth quarter of 2019, our revenue recognition was constrained due to the limited historical data available. In the fourth quarter of 2019, we had accumulated additional historical data with respect to some Medicare Advantage plan sales, and certain assumptions and constraints related to our revenue recognition were updated to reflect this change in estimate. To the extent we make changes to the assumptions we use to calculate revenue on these products, we will recognize the impact of the changes in the period in which the change is made. |
Income Taxes | Our income tax expense includes deferred income taxes arising from temporary differences between the financial reporting and tax bases of assets and liabilities and net operating loss carryforwards ("NOLs"). Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which temporary differences are expected to be recovered or paid. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in earnings in the period when the changes are enacted. A reduction of the net carrying amount of deferred tax assets by establishing a valuation allowance is required if, based on the available evidence, it is more likely than not that such assets will not be realized. In assessing the need for a valuation allowance, all available evidence, both positive and negative, shall be considered to determine whether, based on the weight of that evidence, a valuation allowance for deferred tax assets is needed. This assessment requires significant judgment and considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of carryforward periods, our experience with operating loss and tax credit carryforwards expiring unused, and tax planning strategies. We evaluate the need to establish a valuation allowance for our deferred income tax assets on an ongoing basis. The realization of our deferred tax assets depends upon generating sufficient future taxable income of the appropriate type during the periods in which our temporary differences become deductible and before our NOLs expire. |
Investments in Variable Interest Entities | We have concluded that we are the primary beneficiary with respect to certain variable interest entities ("VIEs"), which are consolidated in our financial statements. All 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. The investment portfolios held by the VIEs are primarily comprised of commercial bank loans to corporate obligors which are almost entirely rated below-investment grade. Refer to the note to the consolidated financial statements entitled "Investments in Variable Interest Entities" for additional information about VIEs. 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, agency residential mortgage-backed securities, non-agency residential mortgage-backed securities, collateralized loan obligations and commercial mortgage-backed securities. 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. |
Investment borrowings | Substantially all of such investments are classified as fixed maturities, available for sale, in our consolidated balance sheet. |
Accounting for Derivatives | Our fixed index annuity products provide a guaranteed minimum rate of return and a higher potential return that is based on a percentage (the "participation rate") of the amount of increase in the value of a particular index, such as the Standard & Poor's 500 Index, over a specified period. Typically, on each policy anniversary date, a new index period begins. We are generally able to change the participation rate at the beginning of each index period during a policy year, subject to contractual minimums. The Company accounts for the options attributed to the policyholder for the estimated life of the contract as embedded derivatives. We are required to record the embedded derivatives related to our fixed index annuity products at estimated fair value. The value of the embedded derivative is based on the estimated cost to fulfill our commitment to fixed indexed annuity policyholders to purchase a series of annual forward options over the duration of the policy that back the potential return based on a percentage of the amount of increase in the value of the appropriate index. In valuing these options, we are required to make assumptions regarding: (i) future index values to determine both the future notional amounts at each anniversary date and the future prices of the forward starting options; (ii) future annual participation rates; and (iii) non-economic factors related to policy persistency. These assumptions are used to estimate the future cost to purchase the options. The value of the embedded derivatives is determined based on the present value of estimated future option costs discounted using a risk-free rate adjusted for our non-performance risk and risk margins for non-capital market inputs. The non-performance risk adjustment is determined by taking into consideration publicly available information related to spreads in the secondary market for debt with credit ratings similar to ours. These observable spreads are then adjusted to reflect the priority of these liabilities and the claim paying ability of the issuing insurance subsidiaries. Risk margins are established to capture non-capital market risks which represent the additional compensation a market participant would require to assume the risks related to the uncertainties regarding the embedded derivatives, including future policyholder behavior related to persistency. The determination of the risk margin is highly judgmental given the lack of a market to assume the risks solely related to the embedded derivatives of our fixed index annuity products. The determination of the appropriate risk-free rate and non-performance risk is sensitive to the economic and interest rate environment. Accordingly, the value of the derivative is volatile due to external market sensitivities, which may materially affect net income. Additionally, changes in the judgmental assumptions regarding the appropriate risk margin can significantly impact the value of the derivative. We typically buy call options (including call spreads) referenced to the applicable indices in an effort to offset or hedge potential increases to policyholder benefits resulting from increases in the particular index to which the policy's return is linked. We purchase certain fixed maturity securities that contain embedded derivatives that are required to be held at fair value on the consolidated balance sheet. We have elected the fair value option to carry the entire security at fair value with changes in fair value reported in net income. |
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. |
Out-of-Period Adjustments | In 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 and $1.1 million related to a closed block of payout annuities), decreased tax expense by $0.5 million and increased our net loss 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 Standards | Pending Accounting Standards In August 2018, the Financial Accounting Standards Board (the "FASB") issued authoritative guidance that makes targeted improvements to the accounting for long-duration contracts. The new guidance: (i) improves the timeliness of recognizing changes in the liability for future benefits and modifies the rate used to discount future cash flows; (ii) simplifies and improves the accounting for certain market-based options or guarantees associated with deposit (or account balance) contracts; (iii) simplifies the amortization of deferred acquisition costs; and (iv) requires enhanced disclosures, including disaggregated rollforwards of the liability for future policy benefits, policyholder account liabilities, market risk benefits and deferred acquisition costs. Additionally, qualitative and quantitative information about expected cash flows, estimates and assumptions will be required. The new measurement guidance for traditional and limited-payment contract liabilities and the new guidance for the amortization of deferred acquisition costs are required to be adopted on a modified retrospective transition approach, with an option to elect a full retrospective transition if certain criteria are met. The transition approach for deferred acquisition costs is required to be consistent with the transition applied to the liability for future policyholder benefits. Under the modified retrospective approach, for contracts in-force at the transition date, an entity would continue to use the existing locked-in investment yield interest rate assumption to calculate the net premium ratio, rather than the upper-medium grade fixed-income corporate instrument yield. However, for balance sheet remeasurement purposes, the current upper-medium grade fixed-income corporate instrument yield would be used at transition through accumulated other comprehensive income and subsequently through other comprehensive income. For market risk benefits, retrospective application is required, with the ability to use hindsight to measure fair value components to the extent assumptions in a prior period are unobservable or otherwise unavailable. In November 2020, the FASB issued authoritative guidance which delayed the effective date of this guidance for the Company by one year (until January 1, 2023). 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 February 2016, the FASB issued authoritative guidance related to accounting for leases, requiring lessees to report most leases on their balance sheets, regardless of whether the lease is classified as a finance lease or an operating lease. For lessees, the initial lease liability is equal to the present value of future lease payments, and a corresponding asset, adjusted for certain items, is also recorded. Expense recognition for lessees will remain similar to current accounting requirements for capital and operating leases. The accounting applied by a lessor is largely unchanged from that applied under previous GAAP. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The guidance was effective for the Company on January 1, 2019. Based on lease contracts in effect at January 1, 2019, the impact of implementation of the new leasing guidance was the recognition of a "right to use" asset (included in other assets) and a "lease liability" (included in other liabilities) of $72.0 million and there was no cumulative effect adjustment to retained earnings as of January 1, 2019. The Company elected to apply practical expedients related to the adoption of the new guidance including: not reassessing whether a contract includes an embedded lease at adoption; not reassessing the previously determined classification of a lease as operating or capital; not reassessing our previously recorded initial direct costs; election of an accounting policy that permits inclusion of both the lease and non-lease components as a single component and account for it as a lease; and election of an accounting policy to exclude lease accounting requirements for leases that have terms of less than twelve months. Refer to the note to the consolidated financial statements entitled "Litigation and Other Legal Proceedings - Leases and Certain Other Long-Term Commitments" for additional disclosures. 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 requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset to present the net carrying value at the amount expected to be collected on the financial asset. Credit losses on available for sale debt securities are measured in a manner similar to current GAAP. However, the guidance requires that credit losses be presented as an allowance rather than as a writedown. The guidance was effective for the Company on January 1, 2020. The impact of adoption, using the modified retrospective approach, was as follows (dollars in millions): January 1, 2020 Amounts prior to effect of adoption of authoritative guidance Effect of adoption of authoritative guidance As adjusted Fixed maturities, available for sale $ 21,295.2 $ (2.1) $ 21,293.1 Mortgage loans 1,566.1 (6.7) 1,559.4 Investments held by variable interest entities 1,188.6 (9.9) 1,178.7 Income tax assets, net 432.6 4.9 437.5 Reinsurance receivables 4,785.7 (4.0) 4,781.7 Total assets 33,630.9 (17.8) 33,613.1 Retained earnings 535.7 (17.8) 517.9 Total shareholders' equity 4,677.0 (17.8) 4,659.2 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 was effective for the Company on January 1, 2019. The guidance was applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of January 1, 2019. The impact of adoption was as follows (dollars in millions): January 1, 2019 Amounts prior to effect of adoption of authoritative guidance Effect of adoption of authoritative guidance As adjusted Fixed maturities, available for sale $ 18,447.7 $ (4.0) $ 18,443.7 Income tax assets, net 630.0 .9 630.9 Total assets 31,439.8 (3.1) 31,436.7 Retained earnings 196.6 (3.1) 193.5 Total shareholders' equity 3,370.9 (3.1) 3,367.8 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 was effective for the Company on January 1, 2020. The adoption of this guidance did not have a material impact on the Company's 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 was effective for the Company on January 1, 2019. Based on the Company's current use of derivatives and hedging activities, the adoption of this guidance had no impact on the Company's consolidated financial position, results of operations or cash flows. In August 2018, the FASB issued authoritative guidance related to changes to the disclosure requirements for fair value measurement. The new guidance removes, modifies and adds certain disclosure requirements. The guidance was effective for the Company on January 1, 2020. The adoption of such guidance impacted certain fair value disclosures, but did not impact our consolidated financial position, results of operations or cash flows. 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 impacted 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 exclusive agents distribute third party products including prescription drug and Medicare Advantage plans. See "Accounting for Certain Marketing Agreements" above, for a description of our accounting under this standard. Furthermore, we recognized distribution expenses in the same period that the associated fee revenue was earned. 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, 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. 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. 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. 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 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 COLI, 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; and 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, 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. The vast majority of our fixed maturity and equity securities, including those held in trading portfolios and those held by consolidated VIEs 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. Foreign governments are generally priced using the market approach. Inputs generally consist of trades of identical or similar securities, quoted prices in inactive markets, new issuances, benchmark yields, credit spreads and issuer rating. Asset-backed securities, agency and non-agency residential mortgage-backed securities, collateralized loan obligations and commercial mortgage-backed securities 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 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 85 percent of our Level 3 fixed maturity securities and trading 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. 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 income 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 amount presented for gains (losses) included in accumulated other comprehensive income (loss) for assets and liabilities still held as of the reporting date primarily represents changes in the fair value of fixed maturities, available for sale, that are held as of the reporting date. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [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 December 31, 2020 $ 27.4 August 2021 Fixed rate – 2.550% 22.0 May 2022 Variable rate – .574% 100.0 May 2022 Variable rate – .575% 10.0 June 2022 Variable rate – .844% 50.0 July 2022 Variable rate – .591% 50.0 July 2022 Variable rate – .595% 50.0 July 2022 Variable rate – .602% 50.0 August 2022 Variable rate – .603% 50.0 December 2022 Variable rate – .525% 50.0 December 2022 Variable rate – .525% 22.4 March 2023 Fixed rate – 2.160% 50.0 July 2023 Variable rate – .543% 100.0 July 2023 Variable rate – .543% 50.0 February 2024 Variable rate – .541% 50.0 May 2024 Variable rate – .634% 21.8 May 2024 Variable rate – .632% 100.0 May 2024 Variable rate – .633% 50.0 May 2024 Variable rate – .678% 75.0 June 2024 Variable rate – .561% 100.0 July 2024 Variable rate – .544% 15.5 July 2024 Fixed rate – 1.990% 34.5 July 2024 Variable rate – .763% 15.0 July 2024 Variable rate – .663% 25.0 September 2024 Variable rate – .786% 21.7 May 2025 Variable rate – .484% 19.5 June 2025 Fixed rate – 2.940% 125.0 September 2025 Variable rate – .440% 100.0 October 2025 Variable rate – .630% 100.0 October 2025 Variable rate – .635% 57.7 October 2025 Variable rate – .610% 50.0 November 2025 Variable rate – .603% $ 1,642.5 |
Schedule of new accounting pronouncements and changes in accounting principles | The impact of adoption, using the modified retrospective approach, was as follows (dollars in millions): January 1, 2020 Amounts prior to effect of adoption of authoritative guidance Effect of adoption of authoritative guidance As adjusted Fixed maturities, available for sale $ 21,295.2 $ (2.1) $ 21,293.1 Mortgage loans 1,566.1 (6.7) 1,559.4 Investments held by variable interest entities 1,188.6 (9.9) 1,178.7 Income tax assets, net 432.6 4.9 437.5 Reinsurance receivables 4,785.7 (4.0) 4,781.7 Total assets 33,630.9 (17.8) 33,613.1 Retained earnings 535.7 (17.8) 517.9 Total shareholders' equity 4,677.0 (17.8) 4,659.2 January 1, 2019 Amounts prior to effect of adoption of authoritative guidance Effect of adoption of authoritative guidance As adjusted Fixed maturities, available for sale $ 18,447.7 $ (4.0) $ 18,443.7 Income tax assets, net 630.0 .9 630.9 Total assets 31,439.8 (3.1) 31,436.7 Retained earnings 196.6 (3.1) 193.5 Total shareholders' equity 3,370.9 (3.1) 3,367.8 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 |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of fixed maturities for available for sale and equity securities | At December 31, 2020, the amortized cost, gross unrealized gains, gross unrealized losses, allowance for credit losses and estimated fair value of fixed maturities, available for sale, were as follows (dollars in millions): Amortized Gross Gross Allowance for credit losses Estimated Investment grade (a): Corporate securities $ 11,243.2 $ 2,638.9 $ (3.4) $ (.2) $ 13,878.5 United States Treasury securities and obligations of United States government corporations and agencies 163.8 71.9 (.2) — 235.5 States and political subdivisions 2,284.1 358.9 (1.3) (.2) 2,641.5 Foreign governments 82.2 20.4 — — 102.6 Asset-backed securities 935.0 42.9 (4.4) — 973.5 Agency residential mortgage-backed securities 52.7 5.7 — — 58.4 Non-agency residential mortgage-backed securities 921.0 45.4 (.4) — 966.0 Collateralized loan obligations 461.9 .6 (3.6) — 458.9 Commercial mortgage-backed securities 1,783.9 114.4 (6.9) — 1,891.4 Total investment grade fixed maturities, available for sale 17,927.8 3,299.1 (20.2) (.4) 21,206.3 Below-investment grade (a) (b): Corporate securities 811.5 57.4 (6.5) (1.7) 860.7 States and political subdivisions 12.5 — — (.1) 12.4 Foreign governments .2 — — — .2 Asset-backed securities 89.4 2.2 (3.0) — 88.6 Non-agency residential mortgage-backed securities 992.5 135.8 (1.7) — 1,126.6 Commercial mortgage-backed securities 87.2 2.0 (.4) — 88.8 Total below-investment grade fixed maturities, available for sale 1,993.3 197.4 (11.6) (1.8) 2,177.3 Total fixed maturities, available for sale $ 19,921.1 $ 3,496.5 $ (31.8) $ (2.2) $ 23,383.6 _______________ (a) Investment ratings are assigned the second lowest rating by Nationally Recognized Statistical Rating Organizations ("NRSROs") (Moody's Investor Services, Inc. ("Moody's"), S&P Global Ratings ("S&P") or Fitch Ratings ("Fitch")), or if not rated by such firms, the rating assigned by the National Association of Insurance Commissioners (the "NAIC"). NAIC designations of "1" or "2" include fixed maturities generally rated investment grade (rated "Baa3" or higher by Moody's or rated "BBB-" or higher by S&P and Fitch). NAIC designations of "3" through "6" are referred to as below-investment grade (which generally are rated "Ba1" or lower by Moody's or rated "BB+" or lower by S&P and Fitch). References to investment grade or below-investment grade throughout our consolidated financial statements are determined as described above. (b) Certain structured securities rated below-investment grade by NRSROs may be assigned a NAIC 1 or NAIC 2 designation based on the cost basis of the security relative to estimated recoverable amounts as determined by the NAIC. Refer to the table below for a summary of our fixed maturity securities, available for sale, by NAIC designations. At December 31, 2019, the amortized cost, gross unrealized gains and losses, estimated fair value and other-than-temporary impairments in accumulated other comprehensive income of fixed maturities, available for sale, were as follows (dollars in millions): Amortized Gross Gross Estimated Other-than-temporary impairments included in accumulated other comprehensive income Investment grade: Corporate securities $ 10,802.6 $ 1,516.0 $ (8.7) $ 12,309.9 $ — United States Treasury securities and obligations of United States government corporations and agencies 161.4 43.3 (.1) 204.6 — States and political subdivisions 2,002.1 246.1 (1.5) 2,246.7 — Foreign governments 82.6 13.0 — 95.6 — Asset-backed securities 1,289.0 35.7 (1.0) 1,323.7 — Agency residential mortgage-backed securities 89.2 5.8 — 95.0 — Non-agency residential mortgage-backed securities 768.2 23.3 (.9) 790.6 (.2) Collateralized loan obligations 404.1 .1 (3.4) 400.8 — Commercial mortgage-backed securities 1,732.2 72.3 (1.0) 1,803.5 — Total investment grade fixed maturities, available for sale 17,331.4 1,955.6 (16.6) 19,270.4 (.2) Below-investment grade: Corporate securities 600.9 28.1 (3.6) 625.4 — Asset-backed securities 63.9 1.1 (.8) 64.2 — Non-agency residential mortgage-backed securities 1,102.8 149.0 (.1) 1,251.7 (0.1) Commercial mortgage-backed securities 80.5 3.0 — 83.5 — Total below-investment grade fixed maturities, available for sale 1,848.1 181.2 (4.5) 2,024.8 (.1) Total fixed maturities, available for sale $ 19,179.5 $ 2,136.8 $ (21.1) $ 21,295.2 $ (.3) |
Schedule of NAIC designations and NRSRO equivalent ratings | The following summarizes the NAIC designations and NRSRO equivalent ratings: NAIC Designation NRSRO Equivalent Rating 1 AAA/AA/A 2 BBB 3 BB 4 B 5 CCC and lower 6 In or near default |
Summary of fixed maturity securities available for sale | A summary of our fixed maturity securities, available for sale, by NAIC designations (or for fixed maturity securities held by non-regulated entities, based on NRSRO ratings) as of December 31, 2020 is as follows (dollars in millions): NAIC designation Amortized cost Estimated fair value Percentage of total estimated fair value 1 $ 10,512.8 $ 12,262.4 52.4 % 2 8,267.9 9,915.0 42.4 Total NAIC 1 and 2 (investment grade) 18,780.7 22,177.4 94.8 3 845.8 908.4 3.9 4 272.7 276.5 1.2 5 20.9 21.3 .1 6 1.0 — — Total NAIC 3,4,5 and 6 (below-investment grade) 1,140.4 1,206.2 5.2 $ 19,921.1 $ 23,383.6 100.0 % |
Schedule of accumulated other comprehensive income (loss) | Accumulated other comprehensive income is primarily comprised of the net effect of unrealized appreciation (depreciation) on our investments. These amounts, included in shareholders' equity as of December 31, 2020 and 2019, were as follows (dollars in millions): 2020 2019 Net unrealized appreciation on fixed maturity securities, available for sale, on which an other-than-temporary impairment loss has been recognized $ — $ 1.1 Net unrealized gains on all other fixed maturity securities, available for sale — 2,095.3 Net unrealized gains on investments having no allowance for credit losses 3,466.3 — Unrealized losses on investments with an allowance for credit losses (10.0) — Adjustment to present value of future profits (a) (10.2) (18.9) Adjustment to deferred acquisition costs (458.0) (227.9) Adjustment to insurance liabilities (197.5) (96.5) Deferred income tax liabilities (604.5) (380.6) Accumulated other comprehensive income $ 2,186.1 $ 1,372.5 ________ (a) The present value of future profits is the value assigned to the right to receive future cash flows from contracts existing at September 10, 2003, the date our Predecessor emerged from bankruptcy. |
Schedule of investments classified by contractual maturity date | The following table sets forth the amortized cost and estimated fair value of fixed maturities, available for sale, at December 31, 2020, 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, agency residential mortgage-backed securities, non-agency residential mortgage-backed securities, collateralized loan obligations and commercial mortgage-backed securities, collectively referred to as "structured securities") frequently include provisions for periodic principal payments and permit periodic unscheduled payments. Amortized Estimated (Dollars in millions) Due in one year or less $ 388.7 $ 396.4 Due after one year through five years 987.4 1,052.9 Due after five years through ten years 1,540.4 1,715.6 Due after ten years 11,681.0 14,566.5 Subtotal 14,597.5 17,731.4 Structured securities 5,323.6 5,652.2 Total fixed maturities, available for sale $ 19,921.1 $ 23,383.6 |
Schedule of investment income | Net investment income consisted of the following (dollars in millions): 2020 2019 2018 General account assets: Fixed maturities $ 924.8 $ 952.4 $ 1,100.3 Equity securities 3.0 3.2 22.8 Mortgage loans 79.5 77.1 82.0 Policy loans 8.5 8.3 8.0 Other invested assets 84.0 65.3 72.0 Cash and cash equivalents 2.6 13.3 10.9 Policyholder and other special-purpose portfolios: Trading securities 28.1 8.9 8.5 Options related to fixed index products: Option income (loss) 35.0 (21.2) 122.3 Change in value of options 4.5 173.1 (165.3) Other special-purpose portfolios 75.9 104.1 68.2 Gross investment income 1,245.9 1,384.5 1,329.7 Less investment expenses 23.4 21.6 23.5 Net investment income $ 1,222.5 $ 1,362.9 $ 1,306.2 |
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): 2020 2019 2018 Fixed maturity securities, available for sale: Gross realized gains on sale $ 48.6 $ 86.5 $ 65.7 Gross realized losses on sale (53.7) (55.5) (65.8) Change in allowance for credit losses and other-than-temporary impairment losses (a) (8.2) (9.4) (.5) Net realized investment gains (losses) from fixed maturities (13.3) 21.6 (.6) Equity securities, including change in fair value (b) (5.1) 11.9 (38.2) Mortgage loans (1.9) — (1.3) Change in allowance for credit losses and impairments of other investments (c) (10.3) (3.0) (2.1) Loss on dissolution of variable interest entities — (5.1) — Other (d) (e) (5.6) 2.8 30.9 Net realized investment gains (losses) before net realized gains on the transfer of assets related to reinsurance transaction (36.2) 28.2 (11.3) Net realized gains on the transfer of assets related to reinsurance transaction — — 363.4 Net realized investment gains (losses) $ (36.2) $ 28.2 $ 352.1 _________________ (a) No portion of the other-than-temporary impairments recognized in 2019 and 2018 was included in accumulated other comprehensive income. (b) Changes in the estimated fair value of equity securities (and are still held as of the end of the respective years) were $(1.7) million, $3.7 million and $(29.7) million for the years ended December 31, 2020, 2019 and 2018, respectively. (c) The change in allowance for credit losses in 2020 includes $(5.2) million related to investments held by VIEs. (d) Changes in the estimated fair value of trading securities that we have elected the fair value option (and are still held as of the end of the respective years) were $0.4 million, $8.3 million and $(2.2) million for the years ended December 31, 2020, 2019 and 2018, respectively. (e) In April 2016, the Company announced that it had invested in a non-controlling minority interest in Tennenbaum Capital Partners, LLC ("TCP"), a Los Angeles-based investment management firm. In August 2018, Blackrock, Inc. announced the completion of its acquisition of TCP. The sale of our interest in TCP resulted in a significant portion of the net realized gains in 2018. |
Debt securities, available-for-sale, unrealized loss position, fair value | The following summarizes the investments sold at a loss during 2020 which had been continuously in an unrealized loss position exceeding 20 percent of the amortized cost basis prior to the sale for the period indicated (dollars in millions): At date of sale Number Amortized cost Fair value Less than 6 months prior to sale 18 $ 51.6 $ 36.6 Greater than or equal to 6 months and less than 12 months prior to sale 1 3.1 1.9 Greater than 12 months prior to sale 1 1.1 — 20 $ 55.8 $ 38.5 The following summarizes the investments in our portfolio rated below-investment grade which have been continuously in an unrealized loss position exceeding 20 percent of the cost basis for the period indicated as of December 31, 2020 (dollars in millions): Number Cost Unrealized Estimated Less than 6 months 1 $ 14.1 $ (2.9) $ 11.2 The following summarizes the investments sold at a loss during 2020 which had been continuously in an unrealized loss position exceeding 20 percent of the amortized cost basis prior to the sale for the period indicated (dollars in millions): At date of sale Number Amortized cost Fair value Less than 6 months prior to sale 7 $ 10.3 $ 7.4 Greater than or equal to 6 months and less than 12 months prior to sale 5 7.0 4.2 12 $ 17.3 $ 11.6 |
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 (dollars in millions): Year ended December 31, 2019 2018 Credit losses on fixed maturity securities, available for sale, beginning of period $ (.2) $ (2.8) Add: credit losses on other-than-temporary impairments not previously recognized — — Less: credit losses on securities sold — 2.6 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) $ (.2) __________ (a) Represents securities for which the amount previously recognized in accumulated other comprehensive income was recognized in earnings because we intend to sell the security or we more likely than not will be required to sell the security before recovery of its amortized cost basis. |
Schedule of investments with unrealized losses classified by contractual maturity date | The following table sets forth the amortized cost and estimated fair value of those fixed maturities, available for sale, with unrealized losses at December 31, 2020, by contractual maturity. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties. Structured securities frequently include provisions for periodic principal payments and permit periodic unscheduled payments. Amortized Estimated (Dollars in millions) Due in one year or less $ 8.0 $ 8.0 Due after one year through five years 51.7 50.4 Due after five years through ten years 86.4 84.8 Due after ten years 181.3 170.6 Subtotal 327.4 313.8 Structured securities 1,088.3 1,067.9 Total $ 1,415.7 $ 1,381.7 |
Schedule of unrealized loss on investments | The following table summarizes the gross unrealized losses and fair values of our investments with unrealized losses for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time that such securities have been in a continuous unrealized loss position, at December 31, 2020 (dollars in millions): Less than 12 months 12 months or greater Total Description of securities Fair Unrealized Fair Unrealized Fair Unrealized Corporate securities $ 110.0 $ (2.6) $ 5.6 $ (.2) $ 115.6 $ (2.8) United States Treasury securities and obligations of United States government corporations and agencies 17.9 (.2) — — 17.9 (.2) States and political subdivisions 8.6 (.1) — — 8.6 (.1) Asset-backed securities 146.9 (4.1) 26.0 (3.3) 172.9 (7.4) Non-agency residential mortgage-backed securities 173.2 (1.5) 42.2 (.6) 215.4 (2.1) Collateralized loan obligations 151.4 (1.5) 178.7 (2.1) 330.1 (3.6) Commercial mortgage-backed securities 277.0 (6.3) 72.3 (1.0) 349.3 (7.3) Total fixed maturities, available for sale $ 885.0 $ (16.3) $ 324.8 $ (7.2) $ 1,209.8 $ (23.5) 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, 2019 (dollars in millions): Less than 12 months 12 months or greater Total Description of securities Fair Unrealized Fair Unrealized Fair Unrealized Corporate securities $ 305.5 $ (6.6) $ 96.8 $ (5.7) $ 402.3 $ (12.3) United States Treasury securities and obligations of United States government corporations and agencies 7.0 (.1) 3.5 — 10.5 (.1) States and political subdivisions 110.1 (1.5) — — 110.1 (1.5) Foreign governments 3.4 — — — 3.4 — Asset-backed securities 75.7 (.4) 45.5 (1.4) 121.2 (1.8) Agency residential mortgage-backed securities 8.8 — — — 8.8 — Non-agency residential mortgage-backed securities 137.4 (.7) 67.2 (.3) 204.6 (1.0) Collateralized loan obligations 220.7 (1.1) 115.4 (2.3) 336.1 (3.4) Commercial mortgage-backed securities 394.2 (1.0) 12.8 — 407.0 (1.0) Total fixed maturities, available for sale $ 1,262.8 $ (11.4) $ 341.2 $ (9.7) $ 1,604.0 $ (21.1) |
Summary of changes in the allowance for current expected credit losses related to investments held by VIEs | The following table summarizes changes in the allowance for credit losses related to fixed maturities, available for sale, for the year ended December 31, 2020 (dollars in millions): Corporate securities States and political subdivisions Foreign governments Non-agency residential mortgage-backed securities Asset-backed securities Total Allowance at January 1, 2020 $ 2.1 $ — $ — $ — $ — $ 2.1 Additions for securities for which credit losses were not previously recorded 23.6 .7 .1 1.0 .3 25.7 Additions for purchased securities with deteriorated credit — — — — — — Additions (reductions) for securities where an allowance was previously recorded (22.3) (.4) (.1) (1.0) (.3) (24.1) Reduction for securities sold during the period (1.5) — — — — (1.5) Reduction for securities for which the Company made the decision to sell where an allowance was previously recorded — — — — — — Write-offs — — — — — — Recoveries of previously written-off amount — — — — — — Allowance at December 31, 2020 $ 1.9 $ .3 $ — $ — $ — $ 2.2 The following table summarizes changes in the allowance for credit losses related to investments held by VIEs for the year ended December 31, 2020 (dollars in millions): Corporate securities Allowance at January 1, 2020 $ 9.9 Additions for securities for which credit losses were not previously recorded 26.6 Additions for purchased securities with deteriorated credit — Additions (reductions) for securities where an allowance was previously recorded (15.7) Reduction for securities sold during the period (5.7) Reduction for securities for which the Company made the decision to sell where an allowance was previously recorded — Write-offs — Recoveries of previously written-off amount — Allowance at December 31, 2020 $ 15.1 |
Schedule of structured securities | The amortized cost and estimated fair value of structured securities at December 31, 2020, summarized by type of security, were as follows (dollars in millions): Estimated fair value Type Amortized Amount Percent Asset-backed securities $ 1,024.4 $ 1,062.1 4.5 % Agency residential mortgage-backed securities 52.7 58.4 .3 Non-agency residential mortgage-backed securities 1,913.5 2,092.6 8.9 Collateralized loan obligations 461.9 458.9 2.0 Commercial mortgage-backed securities 1,871.1 1,980.2 8.5 Total structured securities $ 5,323.6 $ 5,652.2 24.2 % |
Summary of weighted average loan-to-value ratio for outstanding mortgage loans | The following table provides the amortized cost by year of origination and estimated fair value of our outstanding commercial mortgage loans and the underlying collateral as of December 31, 2020 (dollars in millions): Estimated fair Loan-to-value ratio (a) 2020 2019 2018 2017 2016 Prior Total amortized cost Mortgage loans Collateral Less than 60% $ 29.0 $ 81.5 $ 139.7 $ 84.1 $ 76.7 $ 608.0 $ 1,019.0 $ 1,074.4 $ 2,899.3 60% to less than 70% — 7.3 8.6 10.8 19.4 72.7 118.8 121.7 182.0 70% to less than 80% 18.8 12.2 — — — 43.1 74.1 73.8 101.0 80% to less than 90% — — — — — 63.8 63.8 61.2 76.5 90% or greater — — — — 10.0 — 10.0 8.8 10.7 Total $ 47.8 $ 101.0 $ 148.3 $ 94.9 $ 106.1 $ 787.6 $ 1,285.7 $ 1,339.9 $ 3,269.5 ________________ (a) Loan-to-value ratios are calculated as the ratio of: (i) the amortized cost of the commercial mortgage loans; to (ii) the estimated fair value of the underlying collateral. |
Schedule of allowance for credit losses | The following table summarizes changes in the allowance for credit losses related to mortgage loans for the year ended December 31, 2020 (dollars in millions): Mortgage loans Allowance for credit losses at January 1, 2020 $ 6.7 Current period provision for expected credit losses 5.1 Initial allowance recognized for purchased financial assets with credit deterioration — Write-offs charged against the allowance — Recoveries of amounts previously written off — Allowance for credit losses at December 31, 2020 $ 11.8 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair value measurements of financial instruments measured on a recurring basis | The categorization of fair value measurements, by input level, for our financial instruments carried at fair value on a recurring basis at December 31, 2020 is as follows (dollars in millions): Quoted prices in active markets Significant other observable inputs Significant unobservable inputs Total Assets: Fixed maturities, available for sale: Corporate securities $ — $ 14,592.3 $ 146.9 $ 14,739.2 United States Treasury securities and obligations of United States government corporations and agencies — 235.5 — 235.5 States and political subdivisions — 2,653.9 — 2,653.9 Foreign governments — 102.8 — 102.8 Asset-backed securities — 1,047.8 14.3 1,062.1 Agency residential mortgage-backed securities — 58.4 — 58.4 Non-agency residential mortgage-backed securities — 2,091.0 1.6 2,092.6 Collateralized loan obligations — 458.9 — 458.9 Commercial mortgage-backed securities — 1,980.2 — 1,980.2 Total fixed maturities, available for sale — 23,220.8 162.8 23,383.6 Equity securities - corporate securities 104.6 19.8 26.8 151.2 Trading securities: Asset-backed securities — 10.4 — 10.4 Agency residential mortgage-backed securities — .4 — .4 Non-agency residential mortgage-backed securities — 92.0 5.9 97.9 Commercial mortgage-backed securities — 106.3 17.0 123.3 Total trading securities — 209.1 22.9 232.0 Investments held by variable interest entities - corporate securities — 1,189.4 — 1,189.4 Other invested assets - derivatives — 216.7 — 216.7 Assets held in separate accounts — 4.2 — 4.2 Total assets carried at fair value by category $ 104.6 $ 24,860.0 $ 212.5 $ 25,177.1 Liabilities: Embedded derivatives associated with fixed index annuity products (classified as policyholder account liabilities) $ — $ — $ 1,644.5 $ 1,644.5 The categorization of fair value measurements, by input level, for our financial instruments carried at fair value on a recurring basis at December 31, 2019 is as follows (dollars in millions): Quoted prices in active markets Significant other observable inputs Significant unobservable inputs Total Assets: Fixed maturities, available for sale: Corporate securities $ — $ 12,756.5 $ 178.8 $ 12,935.3 United States Treasury securities and obligations of United States government corporations and agencies — 204.6 — 204.6 States and political subdivisions — 2,246.7 — 2,246.7 Foreign governments — 94.5 1.1 95.6 Asset-backed securities — 1,375.3 12.6 1,387.9 Agency residential mortgage-backed securities — 95.0 — 95.0 Non-agency residential mortgage-backed securities — 2,042.3 — 2,042.3 Collateralized loan obligations — 400.8 — 400.8 Commercial mortgage-backed securities — 1,887.0 — 1,887.0 Total fixed maturities, available for sale — 21,102.7 192.5 21,295.2 Equity securities - corporate securities 31.3 4.5 8.3 44.1 Trading securities: Asset-backed securities — 12.1 — 12.1 Agency residential mortgage-backed securities — .4 — .4 Non-agency residential mortgage-backed securities — 113.4 — 113.4 Commercial mortgage-backed securities — 105.5 12.5 118.0 Total trading securities — 231.4 12.5 243.9 Investments held by variable interest entities - corporate securities — 1,188.6 — 1,188.6 Other invested assets - derivatives — 203.8 — 203.8 Assets held in separate accounts — 4.2 — 4.2 Total assets carried at fair value by category $ 31.3 $ 22,735.2 $ 213.3 $ 22,979.8 Liabilities: Embedded derivatives associated with fixed index annuity products (classified as policyholder account liabilities) $ — $ — $ 1,565.4 $ 1,565.4 The fair value of our financial instruments disclosed at fair value on a recurring basis are as follows (dollars in millions): December 31, 2020 Quoted prices in active markets for identical assets or liabilities Significant other observable inputs Significant unobservable inputs Total estimated fair value Total carrying amount Assets: Mortgage loans $ — $ — $ 1,424.8 $ 1,424.8 $ 1,358.7 Policy loans — — 123.0 123.0 123.0 Other invested assets: Company-owned life insurance — 209.7 — 209.7 209.7 Cash and cash equivalents: Unrestricted 937.8 — — 937.8 937.8 Held by variable interest entities 54.1 — — 54.1 54.1 Liabilities: Policyholder account liabilities — — 12,540.6 12,540.6 12,540.6 Investment borrowings — 1,648.3 — 1,648.3 1,642.5 Borrowings related to variable interest entities — 1,141.7 — 1,141.7 1,151.8 Notes payable – direct corporate obligations — 1,326.8 — 1,326.8 1,136.2 December 31, 2019 Quoted prices in active markets for identical assets or liabilities Significant other observable inputs Significant unobservable inputs Total estimated fair value Total carrying amount Assets: Mortgage loans $ — $ — $ 1,651.4 $ 1,651.4 $ 1,566.1 Policy loans — — 124.5 124.5 124.5 Other invested assets: Company-owned life insurance — 194.0 — 194.0 194.0 Cash and cash equivalents: Unrestricted 579.9 .1 — 580.0 580.0 Held by variable interest entities 74.7 — — 74.7 74.7 Liabilities: Policyholder account liabilities — — 12,132.3 12,132.3 12,132.3 Investment borrowings — 1,647.9 — 1,647.9 1,644.3 Borrowings related to variable interest entities — 1,142.1 — 1,142.1 1,152.5 Notes payable – direct corporate obligations — 1,117.2 — 1,117.2 989.1 |
Fair value, assets measured on recurring basis, unobservable input reconciliation | The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the year ended December 31, 2020 (dollars in millions): December 31, 2020 Beginning balance as of December 31, 2019 Purchases, sales, issuances and settlements, net (b) Total realized and unrealized gains (losses) included in net income Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) Transfers into Level 3 (a) Transfers out of Level 3 (a) Ending balance as of December 31, 2020 Amount of total gains (losses) for the year ended December 31, 2020 included in our net income relating to assets and liabilities still held as of the reporting date Amount of total gains (losses) for the year ended December 31, 2020 included in accumulated other comprehensive income (loss) relating to assets and liabilities still held as of the reporting date Assets: Fixed maturities, available for sale: Corporate securities $ 178.8 $ 17.8 $ (.9) $ 10.2 $ 90.6 $ (149.6) $ 146.9 $ (1.0) $ 7.2 Foreign governments 1.1 — — — — (1.1) — — — Asset-backed securities 12.6 1.5 — .2 — — 14.3 — .2 Non-agency residential mortgage-backed securities — 1.6 — — — — 1.6 — — Total fixed maturities, available for sale 192.5 20.9 (.9) 10.4 90.6 (150.7) 162.8 (1.0) 7.4 Equity securities - corporate securities 8.3 14.0 .3 — 4.2 — 26.8 — — Trading securities: Non-agency residential mortgage-backed securities — (2.0) (.1) .4 7.6 — 5.9 (.1) — Commercial mortgage-backed securities 12.5 4.3 (.4) .6 — — 17.0 (.4) — Total trading securities 12.5 2.3 (.5) 1.0 7.6 — 22.9 (.5) — Liabilities: Embedded derivatives associated with fixed index annuity products (classified as policyholder account liabilities) (1,565.4) (157.0) 77.9 — — — (1,644.5) 77.9 — _________ (a) Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate. (b) Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts. The following summarizes such activity for the year ended December 31, 2020 (dollars in millions): Purchases Sales Issuances Settlements Purchases, sales, issuances and settlements, net Assets: Fixed maturities, available for sale: Corporate securities $ 20.5 $ (2.7) $ — $ — $ 17.8 Asset-backed securities 2.0 (.5) — — 1.5 Non-agency residential mortgage-backed securities 1.6 — — — 1.6 Total fixed maturities, available for sale 24.1 (3.2) — — 20.9 Equity securities - corporate securities 14.3 (.3) — — 14.0 Trading securities: Non-agency residential mortgage-backed securities — (2.0) — — (2.0) Commercial mortgage-backed securities 4.3 — — — 4.3 Total trading securities 4.3 (2.0) — — 2.3 Liabilities: Embedded derivatives associated with fixed index annuity products (classified as policyholder account liabilities) (183.7) 119.3 (180.1) 87.5 (157.0) The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the year ended December 31, 2019 (dollars in millions): December 31, 2019 Beginning balance as of December 31, 2018 Purchases, sales, issuances and settlements, net (b) Total realized and unrealized gains (losses) included in net income Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) Transfers into Level 3 (a) Transfers out of Level 3 (a) Ending balance as of December 31, 2019 Amount of total gains (losses) for the year ended December 31, 2019 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 $ 158.6 $ (34.3) $ (4.6) $ 12.9 $ 46.2 $ — $ 178.8 $ (4.0) Foreign governments 1.0 — — .1 — — 1.1 — Asset-backed securities 12.0 (.6) — 1.2 — — 12.6 — Total fixed maturities, available for sale 171.6 (34.9) (4.6) 14.2 46.2 — 192.5 (4.0) Equity securities - corporate securities 9.5 — (1.2) — — — 8.3 (1.2) Trading securities - commercial mortgage-backed securities — — 1.6 .6 10.3 — 12.5 1.6 Liabilities: Embedded derivatives associated with fixed index annuity products (classified as policyholder account liabilities) (1,289.0) (193.5) (82.9) — — — (1,565.4) (82.9) ____________ (a) Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate. (b) Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts. The following summarizes such activity for the year ended December 31, 2019 (dollars in millions): Purchases Sales Issuances Settlements Purchases, sales, issuances and settlements, net Assets: Fixed maturities, available for sale: Corporate securities $ 20.1 $ (54.4) $ — $ — $ (34.3) Asset-backed securities — (.6) — — (.6) Total fixed maturities, available for sale 20.1 (55.0) — — (34.9) Liabilities: Embedded derivatives associated with fixed index annuity products (classified as policyholder account liabilities) (154.9) 7.2 (138.0) 92.2 (193.5) |
Fair value, liabilities measured on recurring basis, unobservable input reconciliation | The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the year ended December 31, 2020 (dollars in millions): December 31, 2020 Beginning balance as of December 31, 2019 Purchases, sales, issuances and settlements, net (b) Total realized and unrealized gains (losses) included in net income Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) Transfers into Level 3 (a) Transfers out of Level 3 (a) Ending balance as of December 31, 2020 Amount of total gains (losses) for the year ended December 31, 2020 included in our net income relating to assets and liabilities still held as of the reporting date Amount of total gains (losses) for the year ended December 31, 2020 included in accumulated other comprehensive income (loss) relating to assets and liabilities still held as of the reporting date Assets: Fixed maturities, available for sale: Corporate securities $ 178.8 $ 17.8 $ (.9) $ 10.2 $ 90.6 $ (149.6) $ 146.9 $ (1.0) $ 7.2 Foreign governments 1.1 — — — — (1.1) — — — Asset-backed securities 12.6 1.5 — .2 — — 14.3 — .2 Non-agency residential mortgage-backed securities — 1.6 — — — — 1.6 — — Total fixed maturities, available for sale 192.5 20.9 (.9) 10.4 90.6 (150.7) 162.8 (1.0) 7.4 Equity securities - corporate securities 8.3 14.0 .3 — 4.2 — 26.8 — — Trading securities: Non-agency residential mortgage-backed securities — (2.0) (.1) .4 7.6 — 5.9 (.1) — Commercial mortgage-backed securities 12.5 4.3 (.4) .6 — — 17.0 (.4) — Total trading securities 12.5 2.3 (.5) 1.0 7.6 — 22.9 (.5) — Liabilities: Embedded derivatives associated with fixed index annuity products (classified as policyholder account liabilities) (1,565.4) (157.0) 77.9 — — — (1,644.5) 77.9 — _________ (a) Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate. (b) Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts. The following summarizes such activity for the year ended December 31, 2020 (dollars in millions): Purchases Sales Issuances Settlements Purchases, sales, issuances and settlements, net Assets: Fixed maturities, available for sale: Corporate securities $ 20.5 $ (2.7) $ — $ — $ 17.8 Asset-backed securities 2.0 (.5) — — 1.5 Non-agency residential mortgage-backed securities 1.6 — — — 1.6 Total fixed maturities, available for sale 24.1 (3.2) — — 20.9 Equity securities - corporate securities 14.3 (.3) — — 14.0 Trading securities: Non-agency residential mortgage-backed securities — (2.0) — — (2.0) Commercial mortgage-backed securities 4.3 — — — 4.3 Total trading securities 4.3 (2.0) — — 2.3 Liabilities: Embedded derivatives associated with fixed index annuity products (classified as policyholder account liabilities) (183.7) 119.3 (180.1) 87.5 (157.0) The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the year ended December 31, 2019 (dollars in millions): December 31, 2019 Beginning balance as of December 31, 2018 Purchases, sales, issuances and settlements, net (b) Total realized and unrealized gains (losses) included in net income Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) Transfers into Level 3 (a) Transfers out of Level 3 (a) Ending balance as of December 31, 2019 Amount of total gains (losses) for the year ended December 31, 2019 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 $ 158.6 $ (34.3) $ (4.6) $ 12.9 $ 46.2 $ — $ 178.8 $ (4.0) Foreign governments 1.0 — — .1 — — 1.1 — Asset-backed securities 12.0 (.6) — 1.2 — — 12.6 — Total fixed maturities, available for sale 171.6 (34.9) (4.6) 14.2 46.2 — 192.5 (4.0) Equity securities - corporate securities 9.5 — (1.2) — — — 8.3 (1.2) Trading securities - commercial mortgage-backed securities — — 1.6 .6 10.3 — 12.5 1.6 Liabilities: Embedded derivatives associated with fixed index annuity products (classified as policyholder account liabilities) (1,289.0) (193.5) (82.9) — — — (1,565.4) (82.9) ____________ (a) Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate. (b) Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts. The following summarizes such activity for the year ended December 31, 2019 (dollars in millions): Purchases Sales Issuances Settlements Purchases, sales, issuances and settlements, net Assets: Fixed maturities, available for sale: Corporate securities $ 20.1 $ (54.4) $ — $ — $ (34.3) Asset-backed securities — (.6) — — (.6) Total fixed maturities, available for sale 20.1 (55.0) — — (34.9) Liabilities: Embedded derivatives associated with fixed index annuity products (classified as policyholder account liabilities) (154.9) 7.2 (138.0) 92.2 (193.5) |
Fair value inputs | The following table provides additional information about the significant unobservable (Level 3) inputs developed internally by the Company to determine fair value for certain assets and liabilities carried at fair value at December 31, 2020 (dollars in millions): Fair value at December 31, 2020 Valuation techniques Unobservable inputs Range (weighted average) (a) Assets: Corporate securities (b) $ 13.4 Discounted cash flow analysis Discount margins 1.90% - 5.59% (3.24%) Asset-backed securities (c) 12.3 Discounted cash flow analysis Discount margins 2.46% Equity securities (d) 8.3 Recovery method Percent of recovery expected 59.27% - 100.00% (59.52%) Equity securities (e) 18.6 Unadjusted purchase price Not applicable Not applicable Other assets categorized as Level 3 (f) 159.9 Unadjusted third-party price source Not applicable Not applicable Total 212.5 Liabilities: Embedded derivatives related to fixed index annuity products (classified as policyholder account liabilities) (g) 1,644.5 Discounted projected embedded derivatives Projected portfolio yields 4.12% - 4.38% (4.13%) Discount rates 0.00% - 2.64% (1.03%) Surrender rates 1.60% - 25.60% (9.40%) ________________________________ (a) The weighted average is based on the relative fair value of the related assets or liabilities. (b) 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 have resulted in a significantly lower (higher) 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 have resulted 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 percentage of recovery expected. Significant increases (decreases) in percentage of recovery expected in isolation would have resulted in a significantly higher (lower) fair value measurement. (e) Equity securities – For these assets, there were no adjustments to the purchase price. (f) Other assets categorized as Level 3 - For these assets, there were no adjustments to non-binding quoted market prices obtained from third-party pricing sources. (g) Embedded derivatives related to fixed index annuity products (classified as policyholder account liabilities) - 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 have led to a higher (lower) fair value measurement. The discount rate is based on risk free rates (U.S. Treasury rates for similar durations) adjusted for our non-performance risk and risk margins for non-capital market inputs. Increases (decreases) in the discount rates would have led 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, 2019 (dollars in millions): Fair value at December 31, 2019 Valuation techniques Unobservable inputs Range (weighted average) Assets: Corporate securities (a) $ 134.2 Discounted cash flow analysis Discount margins 1.07% - 8.42% (1.91%) Corporate securities (b) 1.0 Recovery method Percent of recovery expected 12.77% Asset-backed securities (c) 12.6 Discounted cash flow analysis Discount margins 1.66% Equity securities (d) 8.3 Recovery method Percent of recovery expected 59.27% - 100.00% (59.52%) Other assets categorized as Level 3 (e) 57.2 Unadjusted third-party price source Not applicable Not applicable Total 213.3 Liabilities: Embedded derivatives related to fixed index annuity products (classified as policyholder account liabilities) (f) 1,565.4 Discounted projected embedded derivatives Projected portfolio yields 4.71% - 4.98% (4.72%) Discount rates 1.24% - 3.07% (1.88%) Surrender rates 1.60% - 31.90% (10.90%) ________________________________ (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 percentage of recovery expected. Significant increases (decreases) in percentage of recovery expected in isolation would result in a significantly higher (lower) fair value measurement. (e) Other assets categorized as Level 3 - For these assets, there were no adjustments to non-binding quoted market prices obtained from third-party pricing sources. (f) Embedded derivatives related to fixed index annuity products (classified as policyholder account liabilities) - 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 risk free rates (U.S. Treasury rates for similar durations) adjusted for our non-performance risk and risk margins for non-capital market inputs. Increases (decreases) in the discount rates would lead to a lower (higher) fair value measurement. Assumed surrender rates are used to project how long the contracts remain in force. Generally, the longer the contracts are assumed to be in force the higher the fair value of the embedded derivative. |
LIABILITIES FOR INSURANCE PRO_2
LIABILITIES FOR INSURANCE PRODUCTS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Insurance [Abstract] | |
Schedule of insurance liabilities by product segment | Our future policy benefits are summarized as follows (dollars in millions): Withdrawal assumption Morbidity assumption Mortality assumption Average interest rate assumption 2020 2019 Long-term care Company experience Company experience Company experience 6% $ 5,455.8 $ 5,414.1 Traditional life insurance contracts Company experience Not applicable (a) 5% 2,556.3 2,505.2 Accident and health contracts Company experience Company experience Company experience 5% 3,214.9 3,079.4 Interest-sensitive life insurance contracts Company experience Company experience Company experience 5% 73.9 62.1 Annuities and supplemental contracts with life contingencies Company experience Not applicable (b) 3% 443.3 437.7 Total $ 11,744.2 $ 11,498.5 ____________________ (a) Principally, modifications of: (i) the 1965 ‑ 70 and 1975 - 80 Basic Tables; and (ii) the 1941, 1958 and 1980 Commissioners' Standard Ordinary Tables; as well as Company experience. (b) Principally, modifications of: (i) the 1971 Individual Annuity Mortality Table; (ii) the 1983 Table "A"; and (iii) the Annuity 2000 Mortality Table; as well as Company experience. Our policyholder account liabilities are summarized as follows (dollars in millions): 2020 2019 Fixed index annuities $ 8,111.4 $ 7,503.1 Other annuities 3,209.0 3,452.2 Interest-sensitive life insurance contracts 1,220.2 1,177.0 Total $ 12,540.6 $ 12,132.3 |
Summary of liabilities for unpaid claims adjustment expense | Changes in the unpaid claims reserve (included in claims payable) and disabled life reserves related to accident and health insurance (included in the liability for future policy benefits) were as follows (dollars in millions): 2020 2019 2018 Balance, beginning of year $ 1,921.2 $ 1,868.0 $ 1,828.2 Less reinsurance (receivables) payables (993.2) (951.1) 15.1 Net balance, beginning of year 928.0 916.9 1,843.3 Incurred claims related to: Current year 1,177.8 1,233.9 1,480.0 Prior years (a) (75.2) (40.3) (41.5) Total incurred 1,102.6 1,193.6 1,438.5 Interest on claim reserves 36.8 36.2 71.8 Paid claims related to: Current year (766.1) (843.8) (849.4) Prior years (357.8) (374.9) (630.6) Total paid (1,123.9) (1,218.7) (1,480.0) Reserves ceded pursuant to reinsurance transaction — — (956.7) Net balance, end of year 943.5 928.0 916.9 Add reinsurance receivables (payables) 881.5 993.2 951.1 Balance, end of year $ 1,825.0 $ 1,921.2 $ 1,868.0 ___________ (a) The reserves and liabilities we establish are necessarily based on estimates, assumptions and prior years' statistics. Such amounts will fluctuate based upon the estimation procedures used to determine the amount of unpaid losses. It is possible that actual claims will exceed our reserves and have a material adverse effect on our results of operations and financial condition. |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of components of income tax expense | The components of income tax expense (benefit) were as follows (dollars in millions): 2020 2019 2018 Current tax expense (benefit) $ (24.0) $ 19.2 $ (2.8) Deferred tax expense 100.5 39.3 93.1 Valuation allowance applicable to current year income — — 8.9 Income tax expense calculated based on annual effective tax rate 76.5 58.5 99.2 Tax benefit on long-term care reinsurance transaction — — (147.9) Income tax expense on discrete items: Carryback of net operating losses to years with a higher statutory corporate rate pursuant to provisions of the CARES Act (as defined below) (34.0) — — Change in valuation allowance — (193.7) 95.7 Other items — — 3.2 Total income tax expense (benefit) $ 42.5 $ (135.2) $ 50.2 |
Schedule of effective income tax rate reconciliation | A reconciliation of the U.S. statutory corporate tax rate to the effective rate reflected in the consolidated statement of operations is as follows: 2020 2019 2018 U.S. statutory corporate rate 21.0 % 21.0 % 21.0 % Valuation allowance — (70.6) (39.5) Non-taxable income and nondeductible benefits, net (.4) (1.0) .6 State taxes 1.6 1.3 (1.1) Carryback of net operating losses to years with a higher statutory corporate rate pursuant to provisions of the CARES Act (9.9) — — Effective tax rate 12.3 % (49.3) % (19.0) % |
Schedule of deferred tax assets and liabilities | The components of the Company's income tax assets and liabilities are summarized below (dollars in millions): 2020 2019 Deferred tax assets: Net federal operating loss carryforwards $ 339.2 $ 532.3 Net state operating loss carryforwards 2.7 10.3 Insurance liabilities 386.4 351.3 Indirect costs allocable to self-constructed real estate assets 105.7 50.3 Other 43.0 40.4 Gross deferred tax assets 877.0 984.6 Deferred tax liabilities: Investments (29.5) (24.4) Present value of future profits and deferred acquisition costs (133.8) (150.1) Accumulated other comprehensive income (604.3) (381.2) Gross deferred tax liabilities (767.6) (555.7) Net deferred tax assets 109.4 428.9 Current income taxes prepaid 90.0 3.7 Income tax assets, net $ 199.4 $ 432.6 |
Summary of valuation allowance | Changes in our valuation allowance are summarized as follows (dollars in millions): Balance, December 31, 2017 $ 89.1 Increase in 2018 104.6 (a) Balance, December 31, 2018 193.7 Decrease in 2019 (193.7) (b) Balance, December 31, 2019 $ — ___________________ (a) The 2018 increase to the deferred tax valuation allowance includes: (i) an increase of $104.8 million due to the life NOLs generated by the tax loss on the long-term care reinsurance transaction; and (ii) other changes netting to $(.2) million. The increase in life company NOLs generated by the tax loss on the reinsurance transaction was expected to impact our ability to utilize non-life NOLs in the future. (b) The 2019 decrease to the deferred tax valuation allowance is related to the tax planning strategy discussed above. |
Summary of operating loss carryforwards | We have $1.6 billion of federal NOLs as of December 31, 2020, as summarized below (dollars in millions): Net operating loss Year of expiration carryforwards 2023 $ 1,028.7 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 non-life NOLs $ 1,615.3 |
NOTES PAYABLE - DIRECT CORPOR_2
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt instruments | The following notes payable were direct corporate obligations of the Company as of December 31, 2020 and 2019 (dollars in millions): 2020 2019 5.250% Senior Notes due May 2025 $ 500.0 $ 500.0 5.250% Senior Notes due May 2029 500.0 500.0 5.125% Subordinated Debentures due 2060 150.0 — Revolving Credit Agreement (as defined below) — — Unamortized debt issuance costs (13.8) (10.9) Direct corporate obligations $ 1,136.2 $ 989.1 |
Schedule of maturities of long-term debt | The scheduled repayment of our direct corporate obligations was as follows at December 31, 2020 (dollars in millions): Year ending December 31, 2021 $ — 2022 — 2023 — 2024 — 2025 500.0 Thereafter 650.0 $ 1,150.0 |
LITIGATION AND OTHER LEGAL PR_2
LITIGATION AND OTHER LEGAL PROCEEDINGS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Information related to right to use assets and weighted average information | Information related to our right of use assets are as follows (dollars in millions): 2020 2019 Operating lease expense $ 25.0 $ 25.0 Cash paid for operating lease liability 25.7 24.3 Right of use assets obtained in exchange for lease liabilities (non-cash transactions) 11.5 22.7 Total right of use assets 54.7 66.5 Weighted average remaining lease term (in years) 3.2 Weighted average discount rate 2.36 % |
Maturities of Operating Lease Liabilities | Maturities of our operating lease liabilities as of December 31, 2020 are as follows (dollars in millions): 2021 $ 22.8 2022 18.0 2023 13.3 2024 5.5 2025 1.9 Thereafter .7 Total undiscounted lease payments 62.2 Less interest (2.2) Present value of lease liabilities $ 60.0 |
AGENT DEFERRED COMPENSATION P_2
AGENT DEFERRED COMPENSATION PLAN (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Retirement Benefits [Abstract] | |
Schedule of assumptions used | We used the following assumptions for the deferred compensation plan to calculate: 2020 2019 Benefit obligations: Discount rate 2.50 % 3.25 % Net periodic cost: Discount rate 3.25 % 4.25 % |
Schedule of expected benefit payments | The benefits expected to be paid pursuant to our agent deferred compensation plan as of December 31, 2020 were as follows (dollars in millions): 2021 $ 7.8 2022 8.1 2023 8.5 2024 8.7 2025 8.8 2026 - 2030 46.2 |
DERIVATIVES (Tables)
DERIVATIVES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
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 2020 2019 Assets: Other invested assets: Fixed index call options $ 216.7 $ 203.8 Reinsurance receivables 1.4 (1.2) Total assets $ 218.1 $ 202.6 Liabilities: Policyholder account liabilities: Fixed index products $ 1,644.5 $ 1,565.4 Total liabilities $ 1,644.5 $ 1,565.4 |
Schedule of derivative instruments | The following table represents activity associated with derivative instruments as of the dates indicated: Measurement December 31, 2019 Additions Maturities/terminations December 31, 2020 Fixed index annuities - embedded derivative Policies 113,652 11,553 (8,291) 116,914 Fixed index call options Notional (a) $ 3,166.3 $ 2,540.1 $ (3,268.3) $ 2,438.1 _________________ (a) Dollars in millions. |
Schedule pre-tax gains (losses) recognized in net income for derivative instruments | The following table provides the pre-tax gains (losses) recognized in net income for derivative instruments, which are not designated as hedges for the periods indicated (dollars in millions): 2020 2019 2018 Net investment income from policyholder and other special-purpose portfolios: Fixed index call options $ 39.5 $ 151.9 $ (43.0) Net realized gains (losses): Embedded derivative related to modified coinsurance agreement 2.6 5.3 (5.1) Insurance policy benefits: Embedded derivative related to fixed index annuities 77.9 (82.9) 107.8 Total $ 120.0 $ 74.3 $ 59.7 |
Derivatives with master netting arrangements | The following table summarizes information related to derivatives with master netting arrangements or collateral as of December 31, 2020 and 2019 (dollars in millions): Gross amounts not offset in the balance sheet Gross amounts recognized Gross amounts offset in the balance sheet Net amounts of assets presented in the balance sheet Financial instruments Cash collateral received Net amount December 31, 2020: Fixed index call options $ 216.7 $ — $ 216.7 $ — $ — $ 216.7 December 31, 2019: Fixed index call options 203.8 — 203.8 — — 203.8 |
SHAREHOLDERS' EQUITY (Tables)
SHAREHOLDERS' EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Equity [Abstract] | |
Schedule of share-based compensation | A summary of the Company's stock option activity and related information for 2020 is presented below (shares in thousands; dollars in millions, except per share amounts): Shares Weighted average exercise price Weighted average remaining life (in years) Aggregate intrinsic value Outstanding at the beginning of the year 6,015 $ 18.59 Options granted — — Exercised (1,104) (16.59) $ 9.0 Forfeited or terminated (367) (19.40) Outstanding at the end of the year 4,544 19.01 5.6 $ 27.5 Options exercisable at the end of the year 2,946 4.5 $ 19.9 Available for future grant 8,789 A summary of the Company's stock option activity and related information for 2019 is presented below (shares in thousands; dollars in millions, except per share amounts): Shares Weighted average exercise price Weighted average remaining life (in years) Aggregate intrinsic value Outstanding at the beginning of the year 6,539 $ 17.77 Options granted 801 17.25 Exercised (787) (9.95) $ 5.5 Forfeited or terminated (538) (19.32) Outstanding at the end of the year 6,015 18.59 5.8 $ 38.7 Options exercisable at the end of the year 3,517 4.1 $ 25.8 Available for future grant 4,670 A summary of the Company's stock option activity and related information for 2018 is presented below (shares in thousands; dollars in millions, except per share amounts): Shares Weighted average exercise price Weighted average remaining life (in years) Aggregate intrinsic value Outstanding at the beginning of the year 5,121 $ 15.95 Options granted 2,112 21.03 Exercised (447) (10.94) $ 3.1 Forfeited or terminated (247) (20.29) Outstanding at the end of the year 6,539 17.77 5.8 $ 44.4 Options exercisable at the end of the year 3,247 3.5 $ 26.7 Available for future grant 5,296 |
Schedule of valuation assumptions on payment awards | The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option valuation model with the following weighted average assumptions (there were no stock option grants in 2020): 2019 2018 Grants Grants Weighted average risk-free interest rates 2.4 % 2.9 % Weighted average dividend yields 2.4 % 1.9 % Volatility factors 26 % 27 % Weighted average expected life (in years) 6.3 6.4 Weighted average fair value per share $ 3.90 $ 5.49 |
Schedule of share-based compensation by exercise price range | The following table summarizes information about stock options outstanding at December 31, 2020 (shares in thousands): Options outstanding Options exercisable Range of exercise prices Number outstanding Remaining life (in years) Average exercise price Number exercisable Average exercise price 15.08 - $21.57 4,177 5.5 18.63 2,763 $ 18.53 $23.33 367 6.8 23.33 183 23.33 4,544 2,946 |
Schedule of nonvested share activity | A summary of the Company's non-vested restricted stock activity for 2020 is presented below (shares in thousands): Shares Weighted average grant date fair value Non-vested shares, beginning of year 828 $ 19.49 Granted 520 18.28 Vested (349) 19.59 Forfeited (31) 19.34 Non-vested shares, end of year 968 18.80 |
Schedule of performance share-based compensation | A summary of the Company's performance units is presented below (shares in thousands): Total shareholder return awards Operating return on equity awards Operating earnings per share awards Awards outstanding at December 31, 2017 629 629 Granted in 2018 160 160 Additional shares issued pursuant to achieving certain performance criteria (a) — 123 Shares vested in 2018 (160) (318) Forfeited (61) (26) Awards outstanding at December 31, 2018 568 568 Granted in 2019 243 243 Additional shares issued pursuant to achieving certain performance criteria (a) — 113 Shares vested in 2019 — (297) Forfeited (260) (76) Awards outstanding at December 31, 2019 551 551 — Granted in 2020 — 247 247 Additional shares issued pursuant to achieving certain performance criteria (a) — 138 — Shares vested in 2020 — (281) — Forfeited (212) (74) (8) Awards outstanding at December 31, 2020 339 581 239 _________________________ (a) The performance units that vested in 2018, 2019 and 2020 provided for a payout of up to 200 percent of the award if certain performance levels were achieved. |
Schedule of earnings per share reconciliation | A reconciliation of net income and shares used to calculate basic and diluted earnings per share is as follows (dollars in millions and shares in thousands): 2020 2019 2018 Net income (loss) for diluted earnings per share $ 301.8 $ 409.4 $ (315.0) Shares: Weighted average shares outstanding for basic earnings per share 142,096 156,040 165,457 Effect of dilutive securities on weighted average shares: Amounts related to employee benefit plans 1,068 1,108 — Weighted average shares outstanding for diluted earnings per share 143,164 157,148 165,457 |
OTHER OPERATING STATEMENT DATA
OTHER OPERATING STATEMENT DATA (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Insurance [Abstract] | |
Schedule of insurance policy income | Insurance policy income consisted of the following (dollars in millions): 2020 2019 2018 Direct premiums collected $ 4,176.0 $ 4,311.9 $ 4,150.3 Reinsurance assumed 23.0 25.1 27.8 Reinsurance ceded (247.8) (267.9) (156.2) Premiums collected, net of reinsurance 3,951.2 4,069.1 4,021.9 Change in unearned premiums 9.2 (7.5) 6.5 Less premiums on interest-sensitive life and products without mortality and morbidity risk which are recorded as additions to insurance liabilities (1,620.1) (1,743.1) (1,588.5) Premiums on traditional products with mortality or morbidity risk 2,340.3 2,318.5 2,439.9 Fees and surrender charges on interest-sensitive products 171.0 162.3 153.2 Insurance policy income $ 2,511.3 $ 2,480.8 $ 2,593.1 |
Schedule of other operating cost and expense | Other operating costs and expenses were as follows (dollars in millions): 2020 2019 2018 Commission expense $ 111.8 $ 133.6 $ 122.8 Salaries and wages 252.6 238.2 233.2 Other 577.6 561.1 458.2 Total other operating costs and expenses $ 942.0 $ 932.9 $ 814.2 |
Schedule of changes in deferred acquisition costs | Changes in deferred acquisition costs were as follows (dollars in millions): 2020 2019 2018 Balance, beginning of year $ 1,215.5 $ 1,322.5 $ 1,026.8 Additions 275.8 288.7 261.8 Amortization (233.4) (195.4) (219.2) Effect of reinsurance transaction — — (1.2) Amounts related to changes in unrealized investment gains (losses) on fixed maturities, available for sale (230.1) (189.6) 254.3 Other adjustments (a) — (10.7) — Balance, end of year $ 1,027.8 $ 1,215.5 $ 1,322.5 |
Schedule of changes in present value of future insurance profits | Changes in the present value of future profits were as follows (dollars in millions): 2020 2019 2018 Balance, beginning of year $ 275.4 $ 343.6 $ 359.6 Amortization (34.7) (36.7) (45.1) Effect of reinsurance transaction — — (60.4) Amounts related to changes in unrealized investment gains (losses) on fixed maturities, available for sale 8.7 (14.4) 89.5 Other adjustments (a) — (17.1) — Balance, end of year $ 249.4 $ 275.4 $ 343.6 ___________________ (a) These adjustments were recognized in conjunction with the conversion to a new valuation software system for certain non-interest sensitive life insurance business. The adjustments had no impact on net income since comparable reductions in insurance policy liabilities were also recognized in conjunction with the conversion. |
CONSOLIDATED STATEMENT OF CAS_3
CONSOLIDATED STATEMENT OF CASH FLOWS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of the reconciliation for net income provided by operating activities | The following reconciles net income (loss) to net cash provided by operating activities (dollars in millions): 2020 2019 2018 Cash flows from operating activities: Net income (loss) $ 301.8 $ 409.4 $ (315.0) Adjustments to reconcile net income (loss) to net cash from operating activities: Amortization and depreciation 303.9 267.9 292.2 Income taxes 14.1 (132.8) 18.4 Insurance liabilities 397.6 632.4 207.8 Accrual and amortization of investment income (125.2) (240.7) 14.9 Deferral of policy acquisition costs (275.8) (288.7) (261.7) Net realized investment (gains) losses 36.2 (28.2) 11.3 Net realized gains on the transfer of assets related to reinsurance transaction — — (363.4) Loss related to reinsurance transaction — — 1,067.6 Payment to reinsurer pursuant to long-term care business reinsured — — (365.0) Loss on extinguishment of borrowings related to variable interest entities — — 3.8 Loss on extinguishment of debt — 7.3 — Other 82.9 70.1 6.9 Net cash from operating activities $ 735.5 $ 696.7 $ 317.8 |
Effects of reinsurance | The following summarizes the impact of the reinsurance transaction completed on September 27, 2018 (dollars in millions): Investments transferred $ (3,582.1) (a) Cash paid to reinsurer (365.0) Accrued interest on investments transferred (51.6) Present value of future profits and deferred acquisition costs written-off (61.6) Reinsurance receivables 2,818.0 Transaction expenses and other (14.6) Release of future loss reserve 189.3 Subtotal (1,067.6) Realized gains on investments transferred 363.4 Pre-tax loss related to reinsurance transaction $ (704.2) ______________ (a) Such non-cash amounts are not included in the consolidated statement of cash flows. |
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): 2020 2019 2018 Stock options, restricted stock and performance units $ 24.5 $ 19.3 $ 24.7 |
STATUTORY INFORMATION (BASED _2
STATUTORY INFORMATION (BASED ON NON-GAAP MEASURES) (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Insurance [Abstract] | |
Schedule of statutory accounting practices | The Company's insurance subsidiaries reported the following amounts to regulatory agencies, after appropriate elimination of intercompany accounts among such subsidiaries (dollars in millions): 2020 2019 Statutory capital and surplus $ 1,805.5 $ 1,696.6 Asset valuation reserve 304.0 295.9 Interest maintenance reserve 406.6 420.1 Total $ 2,516.1 $ 2,412.6 |
BUSINESS SEGMENTS (Tables)
BUSINESS SEGMENTS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Segment Reporting [Abstract] | |
Schedule of segment reporting information by segment | Operating information by segment was as follows (dollars in millions): 2020 2019 2018 Revenues: Annuity: Insurance policy income $ 18.8 $ 21.1 $ 19.9 Net investment income 465.1 464.4 456.4 Total annuity revenues 483.9 485.5 476.3 Health: Insurance policy income 1,699.5 1,701.6 1,699.6 Net investment income 282.3 279.9 271.8 Total health revenues 1,981.8 1,981.5 1,971.4 Life: Insurance policy income 793.0 758.1 740.9 Net investment income 139.6 138.3 135.4 Total life revenues 932.6 896.4 876.3 Revenues related to the reinsured long-term care block prior to being ceded in the third quarter of 2018: Insurance policy income — — 132.7 Net investment income — — 138.5 Change in market values of the underlying options supporting the fixed index annuity and life products (offset by market value changes credited to policyholder balances) 37.8 153.7 (45.5) Investment income not allocated to product lines 258.5 265.0 277.7 Fee revenue and other income: Fee income 106.0 88.7 52.0 Amounts netted in expenses not allocated to product lines 6.9 39.7 9.4 Total segment revenues $ 3,807.5 $ 3,910.5 $ 3,888.8 (continued on next page) (continued from previous page) 2020 2019 2018 Expenses: Annuity: Insurance policy benefits $ (93.7) $ 12.8 $ 37.1 Interest credited 170.6 166.9 156.5 Amortization and non-deferred commissions 110.3 75.7 69.1 Total annuity expenses 187.2 255.4 262.7 Health: Insurance policy benefits 1,329.7 1,424.9 1,434.6 Amortization and non-deferred commissions 192.3 193.7 185.7 Total health expenses 1,522.0 1,618.6 1,620.3 Life: Insurance policy benefits 570.0 513.6 497.2 Interest credited 44.5 41.9 40.5 Amortization, non-deferred commissions and advertising expense 153.1 144.8 134.2 Total life expenses 767.6 700.3 671.9 Expenses related to the reinsured long-term care block prior to being ceded in the third quarter of 2018: Insurance policy benefits — — 226.5 Amortization — — 7.0 Other operating costs and expenses — — 18.2 Allocated expenses 557.7 543.0 521.2 Expenses not allocated to product lines 90.7 93.1 89.7 Market value changes of options credited to fixed index annuity and life policyholders 37.8 153.7 (45.5) Amounts netted in investment income not allocated to product lines: Interest expense 76.4 98.6 89.9 Other expenses 15.0 14.3 4.1 Expenses netted in fee revenue: Distribution and commission expenses 89.3 65.2 41.6 Total segment expenses 3,343.7 3,542.2 3,507.6 Pre-tax measure of profitability: Annuity margin 296.7 230.1 213.6 Health margin 459.8 362.9 351.1 Life margin 165.0 196.1 204.4 Total insurance product margin 921.5 789.1 769.1 Allocated expenses (557.7) (543.0) (521.2) Income from insurance products 363.8 246.1 247.9 Ceded long-term care block — — 19.5 Fee income 16.7 23.5 10.4 Investment income not allocated to product lines 167.1 152.1 183.7 Expenses not allocated to product lines (83.8) (53.4) (80.3) Operating earnings before taxes 463.8 368.3 381.2 Income tax expense on operating income 101.5 78.3 78.1 Net operating income $ 362.3 $ 290.0 $ 303.1 |
Reconciliation of operating profit (loss) from segments to consolidated | A reconciliation of segment revenues and expenses to consolidated revenues and expenses and net income is as follows (dollars in millions): 2020 2019 2018 Total segment revenues $ 3,807.5 $ 3,910.5 $ 3,888.8 Net realized investment gains (losses) (36.2) 28.2 (11.3) Net realized gains on the transfer of assets related to reinsurance transaction — — 363.4 Revenues related to earnings attributable to VIEs 35.5 57.4 67.4 Fee revenue related to transition services agreement 14.3 19.7 5.2 Consolidated revenues 3,821.1 4,015.8 4,313.5 Total segment expenses 3,343.7 3,542.2 3,507.6 Insurance policy benefits - fair value changes in embedded derivative liabilities 99.0 103.3 (68.3) Amortization related to fair value changes in embedded derivative liabilities (19.9) (21.9) 12.8 Amortization related to net realized investment gains (losses) (2.4) .6 (.4) Expenses attributable to VIEs 33.8 55.3 65.8 Fair value changes related to agent deferred compensation plan 16.3 20.4 (11.9) Loss on extinguishment of debt — 7.3 — Loss related to reinsurance transaction — — 1,067.6 Expenses related to transition services agreement 8.8 18.5 5.1 Other expenses (2.5) 15.9 — Consolidated expenses 3,476.8 3,741.6 4,578.3 Income (loss) before tax 344.3 274.2 (264.8) Income tax expense (benefit): Tax expense (benefit) on period income (loss) 76.5 58.5 (57.6) Valuation allowance for deferred tax assets and other tax items (34.0) (193.7) 107.8 Net income (loss) $ 301.8 $ 409.4 $ (315.0) |
Schedule of balance sheet information, by segment | Segment balance sheet information was as follows (dollars in millions): 2020 2019 Assets: Annuity $ 13,074.2 $ 12,141.0 Health 10,931.2 10,403.8 Life 4,421.6 4,221.3 Investments not allocated to product lines 6,425.5 6,360.9 Assets of our non-life companies included in the fee income segment 370.7 358.6 Assets of our other non-life companies 116.7 145.3 Total assets $ 35,339.9 $ 33,630.9 Liabilities: Annuity $ 11,764.0 $ 11,398.1 Health 9,949.0 9,557.6 Life 3,972.6 3,997.1 Liabilities associated with investments not allocated to product lines (a) 3,930.6 3,786.0 Liabilities of our non-life companies included in the fee income segment 224.6 196.0 Liabilities of our other non-life companies 14.9 19.1 Total liabilities $ 29,855.7 $ 28,953.9 ____________ (a) Includes investment borrowings, borrowings related to VIEs and notes payable - direct corporate obligations. |
Schedule of selected financial information, by segment | The following table presents selected financial information of our segments (dollars in millions): Segment Present value of future profits Deferred acquisition costs Insurance liabilities 2020 Annuity $ — $ 90.0 $ 11,428.6 Health 230.0 508.5 9,828.8 Life 19.4 429.3 3,846.0 Total $ 249.4 $ 1,027.8 $ 25,103.4 2019 Annuity $ .3 $ 166.2 $ 11,085.4 Health 254.6 613.1 9,444.7 Life 20.5 436.2 3,887.7 Total $ 275.4 $ 1,215.5 $ 24,417.8 |
QUARTERLY FINANCIAL DATA (UNA_2
QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Quarterly Financial Data [Abstract] | |
Schedule of quarterly financial information | Quarterly financial data (unaudited) were as follows (dollars in millions, except per share data): 2020 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. Revenues $ 717.2 $ 1,014.2 $ 1,013.5 $ 1,076.2 Income (loss) before income taxes $ (71.0) $ 105.4 $ 166.4 $ 143.5 Income tax expense (benefit) (49.8) 23.4 37.2 31.7 Net income (loss) $ (21.2) $ 82.0 $ 129.2 $ 111.8 Earnings per common share: Basic: Net income (loss) $ (.15) $ .57 $ .92 $ .81 Diluted: Net income (loss) $ (.15) $ .57 $ .91 $ .80 2019 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. Revenues $ 1,023.0 $ 979.8 $ 944.0 $ 1,069.0 Income before income taxes $ 65.6 $ 47.7 $ 53.5 $ 107.4 Income tax expense (benefit) 13.8 10.1 11.5 (170.6) Net income $ 51.8 $ 37.6 $ 42.0 $ 278.0 Earnings per common share: Basic: Net income $ .32 $ .24 $ .27 $ 1.85 Diluted: Net income $ .32 $ .24 $ .27 $ 1.84 |
INVESTMENTS IN VARIABLE INTER_2
INVESTMENTS IN VARIABLE INTEREST ENTITIES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of impact on balance sheet of consolidating variable interest entities | The following table provides supplemental information about the assets and liabilities of the VIEs which have been consolidated (dollars in millions): December 31, 2020 VIEs Eliminations Net effect on Assets: Investments held by variable interest entities $ 1,189.4 $ — $ 1,189.4 Notes receivable of VIEs held by subsidiaries — (113.8) (113.8) Cash and cash equivalents held by variable interest entities 54.1 — 54.1 Accrued investment income 1.7 — 1.7 Income tax assets, net 10.4 — 10.4 Other assets 3.3 (.9) 2.4 Total assets $ 1,258.9 $ (114.7) $ 1,144.2 Liabilities: Other liabilities $ 36.3 $ (4.8) $ 31.5 Borrowings related to variable interest entities 1,151.8 — 1,151.8 Notes payable of VIEs held by subsidiaries 126.1 (126.1) — Total liabilities $ 1,314.2 $ (130.9) $ 1,183.3 December 31, 2019 VIEs Eliminations Net effect on Assets: Investments held by variable interest entities $ 1,188.6 $ — $ 1,188.6 Notes receivable of VIEs held by subsidiaries — (113.8) (113.8) Cash and cash equivalents held by variable interest entities 74.7 — 74.7 Accrued investment income 1.7 — 1.7 Income tax assets, net 8.0 — 8.0 Other assets 2.8 (1.4) 1.4 Total assets $ 1,275.8 $ (115.2) $ 1,160.6 Liabilities: Other liabilities $ 42.8 $ (4.4) $ 38.4 Borrowings related to variable interest entities 1,152.5 — 1,152.5 Notes payable of VIEs held by subsidiaries 126.1 (126.1) — Total liabilities $ 1,321.4 $ (130.5) $ 1,190.9 |
Supplemental information, revenues and expenses of variable interest entities | The following table provides supplemental information about the revenues and expenses of the VIEs which have been consolidated in accordance with authoritative guidance, after giving effect to the elimination of our investment in the VIEs and investment management fees earned by a subsidiary of the Company (dollars in millions): 2020 2019 2018 Revenues: Net investment income – policyholder and other special-purpose portfolios $ 52.7 $ 74.3 $ 81.5 Fee revenue and other income 5.1 5.8 7.6 Total revenues 57.8 80.1 89.1 Expenses: Interest expense 32.4 53.7 59.9 Other operating expenses 1.4 1.6 2.1 Total expenses 33.8 55.3 62.0 Income before net realized investment gains (losses) and income taxes 24.0 24.8 27.1 Net realized investment gains (losses) (13.8) (20.5) (3.6) Loss on extinguishment of borrowings — — (3.8) Income before income taxes $ 10.2 $ 4.3 $ 19.7 |
Summary of changes in the allowance for current expected credit losses related to investments held by VIEs | The following table summarizes changes in the allowance for credit losses related to fixed maturities, available for sale, for the year ended December 31, 2020 (dollars in millions): Corporate securities States and political subdivisions Foreign governments Non-agency residential mortgage-backed securities Asset-backed securities Total Allowance at January 1, 2020 $ 2.1 $ — $ — $ — $ — $ 2.1 Additions for securities for which credit losses were not previously recorded 23.6 .7 .1 1.0 .3 25.7 Additions for purchased securities with deteriorated credit — — — — — — Additions (reductions) for securities where an allowance was previously recorded (22.3) (.4) (.1) (1.0) (.3) (24.1) Reduction for securities sold during the period (1.5) — — — — (1.5) Reduction for securities for which the Company made the decision to sell where an allowance was previously recorded — — — — — — Write-offs — — — — — — Recoveries of previously written-off amount — — — — — — Allowance at December 31, 2020 $ 1.9 $ .3 $ — $ — $ — $ 2.2 The following table summarizes changes in the allowance for credit losses related to investments held by VIEs for the year ended December 31, 2020 (dollars in millions): Corporate securities Allowance at January 1, 2020 $ 9.9 Additions for securities for which credit losses were not previously recorded 26.6 Additions for purchased securities with deteriorated credit — Additions (reductions) for securities where an allowance was previously recorded (15.7) Reduction for securities sold during the period (5.7) Reduction for securities for which the Company made the decision to sell where an allowance was previously recorded — Write-offs — Recoveries of previously written-off amount — Allowance at December 31, 2020 $ 15.1 |
Summary of variable interest entities by contractual maturity | The following table sets forth the amortized cost and estimated fair value of the investments held by the VIEs at December 31, 2020, by contractual maturity. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties. Amortized Estimated (Dollars in millions) Due in one year or less $ 6.6 $ 5.4 Due after one year through five years 762.7 744.0 Due after five years through ten years 442.0 440.0 Total $ 1,211.3 $ 1,189.4 The following table sets forth the amortized cost and estimated fair value of those investments held by the VIEs with unrealized losses at December 31, 2020, by contractual maturity. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties. Amortized Estimated (Dollars in millions) Due in one year or less $ 6.6 $ 5.4 Due after one year through five years 660.9 640.7 Due after five years through ten years 258.9 254.7 Total $ 926.4 $ 900.8 |
Debt securities, available-for-sale, unrealized loss position, fair value | The following summarizes the investments sold at a loss during 2020 which had been continuously in an unrealized loss position exceeding 20 percent of the amortized cost basis prior to the sale for the period indicated (dollars in millions): At date of sale Number Amortized cost Fair value Less than 6 months prior to sale 18 $ 51.6 $ 36.6 Greater than or equal to 6 months and less than 12 months prior to sale 1 3.1 1.9 Greater than 12 months prior to sale 1 1.1 — 20 $ 55.8 $ 38.5 The following summarizes the investments in our portfolio rated below-investment grade which have been continuously in an unrealized loss position exceeding 20 percent of the cost basis for the period indicated as of December 31, 2020 (dollars in millions): Number Cost Unrealized Estimated Less than 6 months 1 $ 14.1 $ (2.9) $ 11.2 The following summarizes the investments sold at a loss during 2020 which had been continuously in an unrealized loss position exceeding 20 percent of the amortized cost basis prior to the sale for the period indicated (dollars in millions): At date of sale Number Amortized cost Fair value Less than 6 months prior to sale 7 $ 10.3 $ 7.4 Greater than or equal to 6 months and less than 12 months prior to sale 5 7.0 4.2 12 $ 17.3 $ 11.6 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - PRESENT VALUE OF FUTURE PROFITS (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Discount rate used to determine present value of future profits | 12.00% |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - REINSURANCE (Details) - USD ($) $ in Millions | Sep. 27, 2018 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Accounting Policies [Abstract] | ||||
Company retains no more than this amount of mortality risk | $ 0.8 | |||
Ceded premiums written | 262.5 | $ 260.6 | $ 144.5 | |
Reinsurance recoveries netted against insurance policy benefits | 403.8 | 439.8 | 173.5 | |
Assumed premiums written | 23 | 25.1 | 28 | |
Insurance policy benefits related to reinsurance assumed | $ 31.4 | $ 36.4 | $ 36.4 | |
Statutory liabilities transferred, reinsurance transaction | $ 2,700 | |||
Negative ceding commission | 825 | |||
Reinsurance transaction, after tax charge | 661.1 | |||
Trust account assets, amount of over collateralization | $ 500 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - INVESTMENTS IN VARIABLE INTEREST ENTITIES (Details) $ in Millions | Dec. 31, 2020USD ($) |
Accounting Policies [Abstract] | |
Investments held in limited partnerships | $ 562.7 |
Unfunded commitments to limited partnerships | $ 91.9 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - INVESTMENT BORROWINGS (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020USD ($)subsidiary | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Number of insurance subsidiaries | subsidiary | 3 | ||
Investment borrowings | $ 1,642.5 | $ 1,644.3 | |
Interest expense on FHLB borrowings | 21.2 | $ 46.2 | $ 41.9 |
Federal Home Loan Bank Advances | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Federal home loan bank stock | 71 | ||
Investment borrowings | 1,642.5 | ||
Fair value of collateral for borrowings | 2,000 | ||
Aggregate fee to prepay all fixed rate FHLB borrowings | 5.8 | ||
Federal Home Loan Bank Advances | Borrowings Due August 2021 | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $ 27.4 | ||
Interest rate | 2.55% | ||
Federal Home Loan Bank Advances | Borrowings Due May 2022, Rate One | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $ 22 | ||
Interest rate | 0.574% | ||
Federal Home Loan Bank Advances | Borrowings Due May 2022, Rate Two | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $ 100 | ||
Interest rate | 0.575% | ||
Federal Home Loan Bank Advances | Borrowings Due June 2022 | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $ 10 | ||
Interest rate | 0.844% | ||
Federal Home Loan Bank Advances | Borrowings Due July 2022, Rate One | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $ 50 | ||
Interest rate | 0.591% | ||
Federal Home Loan Bank Advances | Borrowings Due July 2022, Rate Two | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $ 50 | ||
Interest rate | 0.595% | ||
Federal Home Loan Bank Advances | Borrowings Due July 2022, Rate Three | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $ 50 | ||
Interest rate | 0.602% | ||
Federal Home Loan Bank Advances | Borrowings Due August 2022 | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $ 50 | ||
Interest rate | 0.603% | ||
Federal Home Loan Bank Advances | Borrowings Due December 2022, Rate One | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $ 50 | ||
Interest rate | 0.525% | ||
Federal Home Loan Bank Advances | Borrowings Due December 2022, Rate Two | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $ 50 | ||
Interest rate | 0.525% | ||
Federal Home Loan Bank Advances | Borrowings Due March 2023 | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $ 22.4 | ||
Interest rate | 2.16% | ||
Federal Home Loan Bank Advances | Borrowings Due July 2023, Rate One | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $ 50 | ||
Interest rate | 0.543% | ||
Federal Home Loan Bank Advances | Borrowings Due July 2023, Rate Two | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $ 100 | ||
Interest rate | 0.543% | ||
Federal Home Loan Bank Advances | Borrowings Due February 2024 | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $ 50 | ||
Interest rate | 0.541% | ||
Federal Home Loan Bank Advances | Borrowings Due May 2024, Rate One | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $ 50 | ||
Interest rate | 0.634% | ||
Federal Home Loan Bank Advances | Borrowings Due May 2024, Rate Two | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $ 21.8 | ||
Interest rate | 0.632% | ||
Federal Home Loan Bank Advances | Borrowings Due May 2024, Rate Three | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $ 100 | ||
Interest rate | 0.633% | ||
Federal Home Loan Bank Advances | Borrowings Due May 2024, Rate Four | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $ 50 | ||
Interest rate | 0.678% | ||
Federal Home Loan Bank Advances | Borrowings Due June 2024 | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $ 75 | ||
Interest rate | 0.561% | ||
Federal Home Loan Bank Advances | Borrowings Due July 2024, Rate One | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $ 100 | ||
Interest rate | 0.544% | ||
Federal Home Loan Bank Advances | Borrowings Due July 2024, Rate Two | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $ 15.5 | ||
Interest rate | 1.99% | ||
Federal Home Loan Bank Advances | Borrowings Due July 2024, Rate Three | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $ 34.5 | ||
Interest rate | 0.763% | ||
Federal Home Loan Bank Advances | Borrowings Due July 2024, Rate Four | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $ 15 | ||
Interest rate | 0.663% | ||
Federal Home Loan Bank Advances | Borrowings Due September 2024 | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $ 25 | ||
Interest rate | 0.786% | ||
Federal Home Loan Bank Advances | Borrowings Due May 2025 | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $ 21.7 | ||
Interest rate | 0.484% | ||
Federal Home Loan Bank Advances | Borrowings Due June 2025 | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $ 19.5 | ||
Interest rate | 2.94% | ||
Federal Home Loan Bank Advances | Borrowings Due September 2025 | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $ 125 | ||
Interest rate | 0.44% | ||
Federal Home Loan Bank Advances | Borrowings Due October 2025 Rate One | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $ 100 | ||
Interest rate | 0.63% | ||
Federal Home Loan Bank Advances | Borrowings Due October 2025 Rate Two | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $ 100 | ||
Interest rate | 0.635% | ||
Federal Home Loan Bank Advances | Borrowings Due October 2025 Rate Three | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $ 57.7 | ||
Interest rate | 0.61% | ||
Federal Home Loan Bank Advances | Borrowings Due November 2025 | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $ 50 | ||
Interest rate | 0.603% |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - SALES INDUCEMENTS (NARRATIVE) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | |||
Deferred sales inducements | $ 14.1 | $ 24.9 | $ 11.6 |
Deferred sales inducements, amortization expense | 15.4 | 7.7 | $ 10.6 |
Unamortized deferred sales inducements | $ 59.4 | $ 60.7 |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - OUT OF PERIOD ADJUSTMENTS (NARRATIVE) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||||||||
Insurance policy benefits | $ 2,157.9 | $ 2,417 | $ 2,278.6 | ||||||||
Income tax expense | $ 31.7 | $ 37.2 | $ 23.4 | $ (49.8) | $ (170.6) | $ 11.5 | $ 10.1 | $ 13.8 | 42.5 | (135.2) | 50.2 |
Net loss | $ 111.8 | $ 129.2 | $ 82 | $ (21.2) | $ 278 | $ 42 | $ 37.6 | $ 51.8 | $ 301.8 | $ 409.4 | $ (315) |
Adjustment to earnings per diluted share (in USD per share) | $ 0.80 | $ 0.91 | $ 0.57 | $ (0.15) | $ 1.84 | $ 0.27 | $ 0.24 | $ 0.32 | $ 2.11 | $ 2.61 | $ (1.90) |
Restatement Adjustment | |||||||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||||||||
Insurance policy benefits | $ 2.5 | ||||||||||
Income tax expense | (0.5) | ||||||||||
Net loss | $ (2) | ||||||||||
Adjustment to earnings per diluted share (in USD per share) | $ (0.01) | ||||||||||
Restatement Adjustment | Long-term Care Insurance Benefits | Bankers Life | |||||||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||||||||
Insurance policy benefits | $ 1.4 | ||||||||||
Restatement Adjustment | Payout of Annuities | Colonial Penn | |||||||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||||||||
Insurance policy benefits | $ 1.1 |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (NARRATIVE) (Details) - USD ($) | Dec. 31, 2020 | Jan. 01, 2020 | Dec. 31, 2019 | Jan. 01, 2019 | Jan. 01, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Total right of use assets | $ 54,700,000 | $ 66,500,000 | |||
Lease liabilities | 60,000,000 | ||||
Retained earnings | $ 752,300,000 | $ 517,900,000 | $ 535,700,000 | $ 193,500,000 | $ 576,700,000 |
Accounting Standards Update 2016-02 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Total right of use assets | 72,000,000 | ||||
Lease liabilities | 72,000,000 | ||||
Retained earnings | $ 0 |
RECENTLY ISSUED ACCOUNTING STAN
RECENTLY ISSUED ACCOUNTING STANDARDS - IMPACT OF ADOPTION (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Jan. 01, 2020 | Dec. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Fixed maturities, available for sale | $ 23,383.6 | $ 21,293.1 | $ 21,295.2 | $ 18,443.7 | |||
Mortgage loans | 1,559.4 | ||||||
Investments held by variable interest entities | 1,189.4 | 1,178.7 | 1,188.6 | ||||
Income tax assets, net | 199.4 | 437.5 | 432.6 | 630.9 | |||
Reinsurance receivables | 4,584.3 | 4,781.7 | 4,785.7 | ||||
Total assets | 35,339.9 | 33,613.1 | 33,630.9 | 31,436.7 | |||
Accumulated other comprehensive income | 2,186.1 | 1,372.5 | $ 1,195.8 | ||||
Retained earnings | 752.3 | 517.9 | 535.7 | 193.5 | 576.7 | ||
Total shareholders' equity | $ 5,484.2 | 4,659.2 | 4,677 | $ 3,367.8 | $ 3,370.9 | 4,847.5 | $ 4,847.5 |
ASU 2016-13 Credit Losses | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Fixed maturities, available for sale | (2.1) | ||||||
Mortgage loans | (6.7) | ||||||
Investments held by variable interest entities | (9.9) | ||||||
Income tax assets, net | 4.9 | ||||||
Reinsurance receivables | (4) | ||||||
Total assets | (17.8) | ||||||
Retained earnings | (17.8) | ||||||
Total shareholders' equity | $ (17.8) | ||||||
Amounts prior to effect of adoption of authoritative guidance | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Fixed maturities, available for sale | 21,295.2 | 18,447.7 | |||||
Mortgage loans | 1,566.1 | ||||||
Investments held by variable interest entities | 1,188.6 | ||||||
Income tax assets, net | 432.6 | 630 | |||||
Reinsurance receivables | 4,785.7 | ||||||
Total assets | 33,630.9 | 31,439.8 | |||||
Accumulated other comprehensive income | 1,212.1 | ||||||
Retained earnings | 535.7 | 196.6 | 560.4 | ||||
Total shareholders' equity | $ 4,677 | $ 3,370.9 | $ 4,847.5 | ||||
Restatement Adjustment | 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 |
SUMMARY OF SIGNIFICANT ACCOU_11
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - IMPACT OF ADOPTION (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Jan. 01, 2020 | Dec. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Fixed maturities, available for sale | $ 23,383.6 | $ 21,293.1 | $ 21,295.2 | $ 18,443.7 | |||
Income tax assets, net | 199.4 | 437.5 | 432.6 | 630.9 | |||
Total assets | 35,339.9 | 33,613.1 | 33,630.9 | 31,436.7 | |||
Retained earnings | 752.3 | 517.9 | 535.7 | 193.5 | $ 576.7 | ||
Total shareholders' equity | $ 5,484.2 | $ 4,659.2 | 4,677 | 3,367.8 | $ 3,370.9 | $ 4,847.5 | $ 4,847.5 |
Accounting Standards Update 2017-08 | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Fixed maturities, available for sale | (4) | ||||||
Income tax assets, net | 0.9 | ||||||
Total assets | (3.1) | ||||||
Retained earnings | (3.1) | ||||||
Total shareholders' equity | $ (3.1) | ||||||
Amounts prior to effect of adoption of authoritative guidance | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Fixed maturities, available for sale | 21,295.2 | 18,447.7 | |||||
Income tax assets, net | 432.6 | 630 | |||||
Total assets | 33,630.9 | 31,439.8 | |||||
Retained earnings | 535.7 | 196.6 | 560.4 | ||||
Total shareholders' equity | $ 4,677 | $ 3,370.9 | $ 4,847.5 |
INVESTMENTS - SCHEDULE OF FIXED
INVESTMENTS - SCHEDULE OF FIXED MATURITIES FOR AVAILABLE FOR SALE (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Jan. 01, 2020 | Dec. 31, 2019 | Jan. 01, 2019 |
Debt Securities, Available-for-sale [Line Items] | ||||
Amortized cost | $ 19,921.1 | $ 19,179.5 | ||
Allowance for credit losses | (2.2) | (2.1) | ||
Estimated fair value | 23,383.6 | $ 21,293.1 | 21,295.2 | $ 18,443.7 |
Below-investment Grade | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Amortized cost | 1,993.3 | |||
Estimated fair value | $ 2,177.3 | |||
Percentage of available-for-sale debt securities | 10.00% | |||
Corporate securities | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Allowance for credit losses | $ (1.9) | (2.1) | ||
Corporate securities | Investment Grade | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Amortized cost | 11,243.2 | 10,802.6 | ||
Gross unrealized gains | 2,638.9 | 1,516 | ||
Gross unrealized losses | (3.4) | (8.7) | ||
Allowance for credit losses | (0.2) | |||
Estimated fair value | 13,878.5 | 12,309.9 | ||
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | |||
Corporate securities | Below-investment Grade | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Amortized cost | 811.5 | 600.9 | ||
Gross unrealized gains | 57.4 | 28.1 | ||
Gross unrealized losses | (6.5) | (3.6) | ||
Allowance for credit losses | (1.7) | |||
Estimated fair value | 860.7 | 625.4 | ||
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | |||
United States Treasury securities and obligations of United States government corporations and agencies | Investment Grade | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Amortized cost | 163.8 | 161.4 | ||
Gross unrealized gains | 71.9 | 43.3 | ||
Gross unrealized losses | (0.2) | (0.1) | ||
Allowance for credit losses | 0 | |||
Estimated fair value | 235.5 | 204.6 | ||
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | |||
States and political subdivisions | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Allowance for credit losses | (0.3) | 0 | ||
States and political subdivisions | Investment Grade | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Amortized cost | 2,284.1 | 2,002.1 | ||
Gross unrealized gains | 358.9 | 246.1 | ||
Gross unrealized losses | (1.3) | (1.5) | ||
Allowance for credit losses | (0.2) | |||
Estimated fair value | 2,641.5 | 2,246.7 | ||
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | |||
States and political subdivisions | Below-investment Grade | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Amortized cost | 12.5 | |||
Gross unrealized gains | 0 | |||
Gross unrealized losses | 0 | |||
Allowance for credit losses | (0.1) | |||
Estimated fair value | 12.4 | |||
Foreign governments | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Allowance for credit losses | 0 | 0 | ||
Foreign governments | Investment Grade | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Amortized cost | 82.2 | 82.6 | ||
Gross unrealized gains | 20.4 | 13 | ||
Gross unrealized losses | 0 | 0 | ||
Allowance for credit losses | 0 | |||
Estimated fair value | 102.6 | 95.6 | ||
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | |||
Foreign governments | Below-investment Grade | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Amortized cost | 0.2 | |||
Gross unrealized gains | 0 | |||
Gross unrealized losses | 0 | |||
Allowance for credit losses | 0 | |||
Estimated fair value | 0.2 | |||
Asset-backed securities | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Allowance for credit losses | 0 | 0 | ||
Asset-backed securities | Investment Grade | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Amortized cost | 935 | 1,289 | ||
Gross unrealized gains | 42.9 | 35.7 | ||
Gross unrealized losses | (4.4) | (1) | ||
Allowance for credit losses | 0 | |||
Estimated fair value | 973.5 | 1,323.7 | ||
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | |||
Asset-backed securities | Below-investment Grade | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Amortized cost | 89.4 | 63.9 | ||
Gross unrealized gains | 2.2 | 1.1 | ||
Gross unrealized losses | (3) | (0.8) | ||
Allowance for credit losses | 0 | |||
Estimated fair value | 88.6 | 64.2 | ||
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | |||
Agency residential mortgage-backed securities | Investment Grade | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Amortized cost | 52.7 | 89.2 | ||
Gross unrealized gains | 5.7 | 5.8 | ||
Gross unrealized losses | 0 | 0 | ||
Allowance for credit losses | 0 | |||
Estimated fair value | 58.4 | 95 | ||
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | |||
Non-agency residential mortgage-backed securities | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Allowance for credit losses | 0 | 0 | ||
Non-agency residential mortgage-backed securities | Investment Grade | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Amortized cost | 921 | 768.2 | ||
Gross unrealized gains | 45.4 | 23.3 | ||
Gross unrealized losses | (0.4) | (0.9) | ||
Allowance for credit losses | 0 | |||
Estimated fair value | 966 | 790.6 | ||
Other-than-temporary impairments included in accumulated other comprehensive income | (0.2) | |||
Non-agency residential mortgage-backed securities | Below-investment Grade | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Amortized cost | 992.5 | 1,102.8 | ||
Gross unrealized gains | 135.8 | 149 | ||
Gross unrealized losses | (1.7) | (0.1) | ||
Allowance for credit losses | 0 | |||
Estimated fair value | 1,126.6 | 1,251.7 | ||
Other-than-temporary impairments included in accumulated other comprehensive income | (0.1) | |||
Collateralized loan obligations | Investment Grade | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Amortized cost | 461.9 | 404.1 | ||
Gross unrealized gains | 0.6 | 0.1 | ||
Gross unrealized losses | (3.6) | (3.4) | ||
Allowance for credit losses | 0 | |||
Estimated fair value | 458.9 | 400.8 | ||
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | |||
Commercial mortgage-backed securities | Investment Grade | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Amortized cost | 1,783.9 | 1,732.2 | ||
Gross unrealized gains | 114.4 | 72.3 | ||
Gross unrealized losses | (6.9) | (1) | ||
Allowance for credit losses | 0 | |||
Estimated fair value | 1,891.4 | 1,803.5 | ||
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | |||
Commercial mortgage-backed securities | Below-investment Grade | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Amortized cost | 87.2 | 80.5 | ||
Gross unrealized gains | 2 | 3 | ||
Gross unrealized losses | (0.4) | 0 | ||
Allowance for credit losses | 0 | |||
Estimated fair value | 88.8 | 83.5 | ||
Other-than-temporary impairments included in accumulated other comprehensive income | 0 | |||
Fixed Maturities | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Amortized cost | 19,921.1 | 19,179.5 | ||
Gross unrealized gains | 3,496.5 | 2,136.8 | ||
Gross unrealized losses | (31.8) | (21.1) | ||
Allowance for credit losses | (2.2) | |||
Estimated fair value | 23,383.6 | 21,295.2 | ||
Other-than-temporary impairments included in accumulated other comprehensive income | (0.3) | |||
Fixed Maturities | Investment Grade | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Amortized cost | 17,927.8 | 17,331.4 | ||
Gross unrealized gains | 3,299.1 | 1,955.6 | ||
Gross unrealized losses | (20.2) | (16.6) | ||
Allowance for credit losses | (0.4) | |||
Estimated fair value | 21,206.3 | 19,270.4 | ||
Other-than-temporary impairments included in accumulated other comprehensive income | (0.2) | |||
Fixed Maturities | Below-investment Grade | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Amortized cost | 1,993.3 | 1,848.1 | ||
Gross unrealized gains | 197.4 | 181.2 | ||
Gross unrealized losses | (11.6) | (4.5) | ||
Allowance for credit losses | (1.8) | |||
Estimated fair value | $ 2,177.3 | 2,024.8 | ||
Other-than-temporary impairments included in accumulated other comprehensive income | $ (0.1) |
INVESTMENTS - SUMMARY OF FIXED
INVESTMENTS - SUMMARY OF FIXED MATURITY SECURITIES AVAILABLE FOR SALE (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Jan. 01, 2020 | Dec. 31, 2019 | Jan. 01, 2019 |
Debt Securities, Available-for-sale [Line Items] | ||||
Amortized cost | $ 19,921.1 | $ 19,179.5 | ||
Estimated fair value | $ 23,383.6 | $ 21,293.1 | $ 21,295.2 | $ 18,443.7 |
Percentage of total estimated fair value | 100.00% | |||
NAIC designation 1 | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Amortized cost | $ 10,512.8 | |||
Estimated fair value | $ 12,262.4 | |||
Percentage of total estimated fair value | 52.40% | |||
NAIC designation 2 | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Amortized cost | $ 8,267.9 | |||
Estimated fair value | $ 9,915 | |||
Percentage of total estimated fair value | 42.40% | |||
Total NAIC 1 and 2 (investment grade) | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Amortized cost | $ 18,780.7 | |||
Estimated fair value | $ 22,177.4 | |||
Percentage of total estimated fair value | 94.80% | |||
NAIC designation 3 | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Amortized cost | $ 845.8 | |||
Estimated fair value | $ 908.4 | |||
Percentage of total estimated fair value | 3.90% | |||
NAIC designation 4 | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Amortized cost | $ 272.7 | |||
Estimated fair value | $ 276.5 | |||
Percentage of total estimated fair value | 1.20% | |||
NAIC designation 5 | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Amortized cost | $ 20.9 | |||
Estimated fair value | $ 21.3 | |||
Percentage of total estimated fair value | 0.10% | |||
NAIC designation 6 | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Amortized cost | $ 1 | |||
Estimated fair value | $ 0 | |||
Percentage of total estimated fair value | 0.00% | |||
Total NAIC 3,4,5 and 6 (below-investment grade) | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Amortized cost | $ 1,140.4 | |||
Estimated fair value | $ 1,206.2 | |||
Percentage of total estimated fair value | 5.20% |
INVESTMENTS - SCHEDULE OF ACCUM
INVESTMENTS - SCHEDULE OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 | Jan. 01, 2018 |
Investments, Debt and Equity Securities [Abstract] | |||
Net unrealized appreciation on fixed maturity securities, available for sale, on which an other-than-temporary impairment loss has been recognized | $ 0 | $ 1.1 | |
Net unrealized gains on all other fixed maturity securities, available for sale | 0 | 2,095.3 | |
Net unrealized gains on investments having no allowance for credit losses | 3,466.3 | 0 | |
Unrealized losses on investments with an allowance for credit losses | (10) | 0 | |
Adjustment to present value of future profits | (10.2) | (18.9) | |
Adjustment to deferred acquisition costs | (458) | (227.9) | |
Adjustment to insurance liabilities | (197.5) | (96.5) | |
Deferred income tax liabilities | (604.5) | (380.6) | |
Accumulated other comprehensive income | $ 2,186.1 | $ 1,372.5 | $ 1,195.8 |
INVESTMENTS - NARRATIVE (Detail
INVESTMENTS - NARRATIVE (Details) | Sep. 27, 2018USD ($) | Dec. 31, 2020USD ($)stateloanmortgage_loaninvestment | Dec. 31, 2019USD ($)investment | Dec. 31, 2018USD ($) | Jan. 01, 2020USD ($) | Jan. 01, 2019USD ($) | |
Debt Securities, Available-for-sale [Line Items] | |||||||
Premium deficiencies adjustments to present value of future profits | $ (8,600,000) | $ (12,200,000) | |||||
Reduction to deferred acquisition costs due to unrealized gains that would result in premium deficiency if unrealized gains were realized | (133,400,000) | (26,800,000) | |||||
Adjustment to insurance liabilities | (197,500,000) | (96,500,000) | |||||
Increase to deferred tax assets due to unrealized gains that would result in premium deficiency if unrealized gains were realized | 73,700,000 | 29,400,000 | |||||
Amortized cost | 19,921,100,000 | 19,179,500,000 | |||||
Estimated fair value | 23,383,600,000 | 21,295,200,000 | $ 21,293,100,000 | $ 18,443,700,000 | |||
Amortized cost of fixed maturity investments not accruing investment income | 1,000,000 | ||||||
Carrying value of fixed maturity investments not accruing investment income | 0 | ||||||
Net realized investment gains (losses) | (36,200,000) | 28,200,000 | $ 352,100,000 | ||||
Change in allowance for credit losses and other-than-temporary impairment losses | [1] | 18,500,000 | 12,400,000 | 2,600,000 | |||
Loss on dissolution of variable interest entity | 0 | 5,100,000 | 0 | ||||
Net impairment losses recognized | 12,400,000 | ||||||
Net realized gains on the transfer of assets related to reinsurance transaction | $ 363,400,000 | $ 0 | $ 0 | 363,400,000 | |||
Number of investments in default or considered nonperforming | investment | 0 | 0 | |||||
Value of available for sale securities sold | $ 507,100,000 | $ 971,200,000 | 1,295,800,000 | ||||
Estimated fair value | $ 5,652,200,000 | ||||||
Percent of fixed maturities | 24.20% | ||||||
Number of additional states greater than specified percentage of mortgage loan balance | state | 0 | ||||||
Number of mortgage loans | mortgage_loan | 0 | ||||||
Mortgage loans | $ 1,358,700,000 | 1,566,100,000 | |||||
Assets held by insurance regulators | $ 40,100,000 | 39,600,000 | |||||
Residential Portfolio Segment | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Number of mortgage loans noncurrent | loan | 19 | ||||||
Loans noncurrent | $ 6,100,000 | ||||||
Residential Portfolio Segment | Forbearance | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Number of mortgage loans noncurrent | loan | 15 | ||||||
Loans noncurrent | $ 5,100,000 | ||||||
Residential Portfolio Segment | Foreclosure | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Number of mortgage loans noncurrent | loan | 3 | ||||||
Loans noncurrent | $ 500,000 | ||||||
Minimum | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Percentage of mortgage loan balance | 6.00% | ||||||
California | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Percentage of mortgage loan balance | 14.00% | ||||||
Texas | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Percentage of mortgage loan balance | 10.00% | ||||||
Maryland | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Percentage of mortgage loan balance | 8.00% | ||||||
WISCONSIN | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Percentage of mortgage loan balance | 7.00% | ||||||
Fixed index annuities - embedded derivative | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Increase (decreases) in fair value of certain fixed maturity investments with embedded derivatives | $ (100,000) | 8,300,000 | (5,500,000) | ||||
Reinsurance Contract | Embedded derivative related to modified coinsurance agreement | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Increase (decreases) in fair value of certain fixed maturity investments with embedded derivatives | 2,600,000 | 5,300,000 | (5,100,000) | ||||
Non Investment Grade | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Amortized cost | $ 1,993,300,000 | ||||||
Percentage of available-for-sale debt securities | 10.00% | ||||||
Estimated fair value | $ 2,177,300,000 | ||||||
Available-for-sale securities, percentage of amortized cost | 109.00% | ||||||
Continuous unrealized loss position | 20.00% | ||||||
Fixed Maturities | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Amortized cost | $ 19,921,100,000 | 19,179,500,000 | |||||
Estimated fair value | $ 23,383,600,000 | 21,295,200,000 | |||||
Continuous unrealized loss position | 20.00% | ||||||
Fixed Maturities | Non Investment Grade | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Amortized cost | $ 1,993,300,000 | 1,848,100,000 | |||||
Estimated fair value | 2,177,300,000 | 2,024,800,000 | |||||
Commercial mortgage-backed securities | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Gross realized losses on sale | 26,100,000 | ||||||
Estimated fair value | $ 1,980,200,000 | ||||||
Percent of fixed maturities | 8.50% | ||||||
Commercial mortgage-backed securities | Non Investment Grade | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Amortized cost | $ 87,200,000 | 80,500,000 | |||||
Estimated fair value | 88,800,000 | 83,500,000 | |||||
Asset-backed securities | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Gross realized losses on sale | 9,600,000 | ||||||
Estimated fair value | $ 1,062,100,000 | ||||||
Percent of fixed maturities | 4.50% | ||||||
Asset-backed securities | Non Investment Grade | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Amortized cost | $ 89,400,000 | 63,900,000 | |||||
Estimated fair value | 88,600,000 | 64,200,000 | |||||
Equity Securities | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Net realized investment gains (losses) | (5,100,000) | 11,900,000 | (38,200,000) | ||||
Total fixed maturities, available for sale | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Net realized investment gains (losses) | (13,300,000) | 21,600,000 | (600,000) | ||||
Change in allowance for credit losses and other-than-temporary impairment losses | 18,500,000 | ||||||
Gross realized losses on sale | 53,700,000 | 55,500,000 | 65,800,000 | ||||
Corporate securities | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Change in allowance for credit losses and other-than-temporary impairment losses | 9,400,000 | ||||||
Marketable Securities | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Net realized investment gains (losses) | (15,100,000) | 20,200,000 | 40,100,000 | ||||
Corporate securities | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Change in allowance for credit losses and other-than-temporary impairment losses | 500,000 | ||||||
Gross realized losses on sale | 16,200,000 | 48,100,000 | 54,000,000 | ||||
Collateralized loan obligations | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Gross realized losses on sale | 5,400,000 | ||||||
Other Investments | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Gross realized losses on sale | 1,800,000 | 2,000,000 | 3,600,000 | ||||
Mortgage loans | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Change in allowance for credit losses and other-than-temporary impairment losses | 2,100,000 | ||||||
Commercial mortgage-backed securities | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Gross realized losses on sale | 4,100,000 | ||||||
Asset-backed securities | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Gross realized losses on sale | $ 4,100,000 | ||||||
Residential Mortgage | Total amortized cost | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Mortgage loans | 84,800,000 | ||||||
Residential Mortgage | Estimated fair value | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Mortgage loans | 84,900,000 | ||||||
Commercial Bank Loans Held By Variable Interest Entities | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Net impairment losses recognized | $ 3,000,000 | ||||||
NAIC | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Amortized cost | $ 1,140,400,000 | ||||||
Percentage of available-for-sale debt securities | 6.00% | ||||||
Estimated fair value | $ 1,206,200,000 | ||||||
[1] | No portion of the other-than-temporary impairments recognized in 2019 and 2018 was included in accumulated other comprehensive income. |
INVESTMENTS - SCHEDULE OF INVES
INVESTMENTS - SCHEDULE OF INVESTMENTS CLASSIFIED BY CONTRACTUAL MATURITY DATE (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Jan. 01, 2020 | Dec. 31, 2019 | Jan. 01, 2019 |
Amortized cost | ||||
Due in one year or less | $ 388.7 | |||
Due after one year through five years | 987.4 | |||
Due after five years through ten years | 1,540.4 | |||
Due after ten years | 11,681 | |||
Subtotal | 14,597.5 | |||
Structured securities | 5,323.6 | |||
Amortized cost | 19,921.1 | $ 19,179.5 | ||
Estimated fair value | ||||
Due in one year or less | 396.4 | |||
Due after one year through five years | 1,052.9 | |||
Due after five years through ten years | 1,715.6 | |||
Due after ten years | 14,566.5 | |||
Subtotal | 17,731.4 | |||
Structured securities | 5,652.2 | |||
Estimated fair value | $ 23,383.6 | $ 21,293.1 | $ 21,295.2 | $ 18,443.7 |
INVESTMENTS - SCHEDULE OF INV_2
INVESTMENTS - SCHEDULE OF INVESTMENT INCOME (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |||
Fixed maturities | $ 924.8 | $ 952.4 | $ 1,100.3 |
Equity securities | 3 | 3.2 | 22.8 |
Mortgage loans | 79.5 | 77.1 | 82 |
Policy loans | 8.5 | 8.3 | 8 |
Other invested assets | 84 | 65.3 | 72 |
Cash and cash equivalents | 2.6 | 13.3 | 10.9 |
Trading securities | 28.1 | 8.9 | 8.5 |
Option income (loss) | 35 | (21.2) | 122.3 |
Change in value of options | 4.5 | 173.1 | (165.3) |
Other special-purpose portfolios | 75.9 | 104.1 | 68.2 |
Gross investment income | 1,245.9 | 1,384.5 | 1,329.7 |
Less investment expenses | 23.4 | 21.6 | 23.5 |
Net investment income | $ 1,222.5 | $ 1,362.9 | $ 1,306.2 |
INVESTMENTS - SCHEDULE OF REALI
INVESTMENTS - SCHEDULE OF REALIZED GAIN (LOSS) ON INVESTMENTS (Details) - USD ($) $ in Millions | Sep. 27, 2018 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Gain (Loss) on Securities [Line Items] | ||||
Total realized gains | $ (36.2) | $ 28.2 | $ 352.1 | |
Loss on dissolution of variable interest entities | 0 | (5.1) | 0 | |
Net realized gains on the transfer of assets related to reinsurance transaction | $ 363.4 | 0 | 0 | 363.4 |
Change in estimated fair value of equity securities | (1.7) | 3.7 | (29.7) | |
Variable interest entities change in allowance for current expected credit losses | (5.2) | |||
Investments | ||||
Gain (Loss) on Securities [Line Items] | ||||
Change in estimated fair value of trading securities | 0.4 | 8.3 | (2.2) | |
Net realized investment gains (losses) before net realized gains on the transfer of assets related to reinsurance transaction | ||||
Gain (Loss) on Securities [Line Items] | ||||
Total realized gains | (36.2) | 28.2 | (11.3) | |
Total fixed maturities, available for sale | ||||
Gain (Loss) on Securities [Line Items] | ||||
Gross realized gains on sale | 48.6 | 86.5 | 65.7 | |
Gross realized losses on sale | (53.7) | (55.5) | (65.8) | |
Change in allowance for credit losses and other-than-temporary impairment losses | (8.2) | (9.4) | (0.5) | |
Total realized gains | (13.3) | 21.6 | (0.6) | |
Equity Securities | ||||
Gain (Loss) on Securities [Line Items] | ||||
Total realized gains | (5.1) | 11.9 | (38.2) | |
Mortgage loans | ||||
Gain (Loss) on Securities [Line Items] | ||||
Total realized gains | (1.9) | 0 | (1.3) | |
Change in allowance for credit losses and impairments of other investments | ||||
Gain (Loss) on Securities [Line Items] | ||||
Change in allowance for credit losses and impairments of other investments | (10.3) | (3) | (2.1) | |
Variable interest entities change in allowance for current expected credit losses | (5.2) | |||
Other Securities | ||||
Gain (Loss) on Securities [Line Items] | ||||
Total realized gains | $ (5.6) | $ 2.8 | $ 30.9 |
INVESTMENTS - SCHEDULE OF INV_3
INVESTMENTS - SCHEDULE OF INVESTMENTS IN OUR PORTFOLIO WHICH HAVE BEEN CONTINUOUSLY IN AN UNREALIZED LOSS POSITION EXCEEDING 20% OF AMORTIZED COST PRIOR TO SALE (Details) - Fixed Maturities $ in Millions | Dec. 31, 2020USD ($)issuer |
Debt Securities, Available-for-sale [Line Items] | |
Less than 6 months prior to sale, Number of issuers | issuer | 18 |
Greater than or equal to 6 months and less than 12 months prior to sale, Number of issuers | issuer | 1 |
Greater than or equal to 12 months prior to sale, Number of issuers | issuer | 1 |
Number of issuers, Total | issuer | 20 |
Less than 6 months prior to sale, Amortized cost | $ 51.6 |
Greater than or equal to 6 months and less than 12 months prior to sale, Amortized cost | 3.1 |
Greater than or equal to 12 months prior to sale, Amortized cost | 1.1 |
Amortized cost, Total | 55.8 |
Less than 6 months prior to sale, Fair value | 36.6 |
Greater than or equal to 6 months and less than 12 months prior to sale, Fair value | 1.9 |
Greater than or equal to 12 months prior to sale, Fair Value | 0 |
Fair value, Total | $ 38.5 |
INVESTMENTS - SCHEDULE OF CREDI
INVESTMENTS - SCHEDULE OF CREDIT LOSSES RECOGNIZED IN EARNINGS (Details) - Available-for-sale Securities - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward] | ||
Credit losses on fixed maturity securities, available for sale, beginning of period | $ (0.2) | $ (2.8) |
Add: credit losses on other-than-temporary impairments not previously recognized | 0 | 0 |
Less: credit losses on securities sold | 0 | 2.6 |
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 | $ (0.2) | $ (0.2) |
INVESTMENTS - SCHEDULE OF INV_4
INVESTMENTS - SCHEDULE OF INVESTMENTS WITH UNREALIZED LOSSES CLASSIFIED BY CONTRACTUAL MATURITY DATE (Details) $ in Millions | Dec. 31, 2020USD ($) |
Amortized cost | |
Due in one year or less | $ 8 |
Due after one year through five years | 51.7 |
Due after five years through ten years | 86.4 |
Due after ten years | 181.3 |
Subtotal | 327.4 |
Structured securities | 1,088.3 |
Total | 1,415.7 |
Estimated fair value | |
Due in one year or less | 8 |
Due after one year through five years | 50.4 |
Due after five years through ten years | 84.8 |
Due after ten years | 170.6 |
Subtotal | 313.8 |
Structured securities | 1,067.9 |
Total | $ 1,381.7 |
INVESTMENTS - SCHEDULE OF INV_5
INVESTMENTS - SCHEDULE OF INVESTMENTS IN OUR PORTFOLIO RATED BELOW-INVESTMENT GRADE WHICH HAVE BEEN CONTINUOUSLY IN AN UNREALIZED LOSS POSITION EXCEEDING 20% OF THE COST BASIS (Details) - Non Investment Grade $ in Millions | Dec. 31, 2020USD ($)issuer |
Debt Securities, Available-for-sale [Line Items] | |
Less than 6 months, Number of issuers | issuer | 1 |
Less than 6 months, Cost basis | $ 14.1 |
Less than 6 months, Unrealized loss | (2.9) |
Less than 6 months, Estimated fair value | $ 11.2 |
INVESTMENTS - SCHEDULE OF UNREA
INVESTMENTS - SCHEDULE OF UNREALIZED LOSS ON INVESTMENTS (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Fair value | ||
Less than 12 months | $ 885 | $ 1,262.8 |
12 months or greater | 324.8 | 341.2 |
Total | 1,209.8 | 1,604 |
Unrealized losses | ||
Less than 12 months | (16.3) | (11.4) |
12 months or greater | (7.2) | (9.7) |
Total | (23.5) | (21.1) |
Corporate securities | ||
Fair value | ||
Less than 12 months | 110 | 305.5 |
12 months or greater | 5.6 | 96.8 |
Total | 115.6 | 402.3 |
Unrealized losses | ||
Less than 12 months | (2.6) | (6.6) |
12 months or greater | (0.2) | (5.7) |
Total | (2.8) | (12.3) |
United States Treasury securities and obligations of United States government corporations and agencies | ||
Fair value | ||
Less than 12 months | 17.9 | 7 |
12 months or greater | 0 | 3.5 |
Total | 17.9 | 10.5 |
Unrealized losses | ||
Less than 12 months | (0.2) | (0.1) |
12 months or greater | 0 | 0 |
Total | (0.2) | (0.1) |
States and political subdivisions | ||
Fair value | ||
Less than 12 months | 8.6 | 110.1 |
12 months or greater | 0 | 0 |
Total | 8.6 | 110.1 |
Unrealized losses | ||
Less than 12 months | (0.1) | (1.5) |
12 months or greater | 0 | 0 |
Total | (0.1) | (1.5) |
Foreign governments | ||
Fair value | ||
Less than 12 months | 3.4 | |
12 months or greater | 0 | |
Total | 3.4 | |
Unrealized losses | ||
Less than 12 months | 0 | |
12 months or greater | 0 | |
Total | 0 | |
Asset-backed securities | ||
Fair value | ||
Less than 12 months | 146.9 | 75.7 |
12 months or greater | 26 | 45.5 |
Total | 172.9 | 121.2 |
Unrealized losses | ||
Less than 12 months | (4.1) | (0.4) |
12 months or greater | (3.3) | (1.4) |
Total | (7.4) | (1.8) |
Non-agency residential mortgage-backed securities | ||
Fair value | ||
Less than 12 months | 173.2 | 137.4 |
12 months or greater | 42.2 | 67.2 |
Total | 215.4 | 204.6 |
Unrealized losses | ||
Less than 12 months | (1.5) | (0.7) |
12 months or greater | (0.6) | (0.3) |
Total | (2.1) | (1) |
Agency residential mortgage-backed securities | ||
Fair value | ||
Less than 12 months | 8.8 | |
12 months or greater | 0 | |
Total | 8.8 | |
Unrealized losses | ||
Less than 12 months | 0 | |
12 months or greater | 0 | |
Total | 0 | |
Collateralized loan obligations | ||
Fair value | ||
Less than 12 months | 151.4 | 220.7 |
12 months or greater | 178.7 | 115.4 |
Total | 330.1 | 336.1 |
Unrealized losses | ||
Less than 12 months | (1.5) | (1.1) |
12 months or greater | (2.1) | (2.3) |
Total | (3.6) | (3.4) |
Commercial mortgage-backed securities | ||
Fair value | ||
Less than 12 months | 277 | 394.2 |
12 months or greater | 72.3 | 12.8 |
Total | 349.3 | 407 |
Unrealized losses | ||
Less than 12 months | (6.3) | (1) |
12 months or greater | (1) | 0 |
Total | $ (7.3) | $ (1) |
INVESTMENTS - SUMMARY OF CHANGE
INVESTMENTS - SUMMARY OF CHANGES IN THE ALLOWANCE FOR CURRENT EXPECTED CREDIT LOSSES (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Debt Securities, Available-for-sale, Allowance for Credit Loss [Roll Forward] | |
Allowance at January 1, 2020 | $ 2.1 |
Additions for securities for which credit losses were not previously recorded | 25.7 |
Additions for purchased securities with deteriorated credit | 0 |
Additions (reductions) for securities where an allowance was previously recorded | (24.1) |
Reduction for securities sold during the period | (1.5) |
Reduction for securities for which the Company made the decision to sell where an allowance was previously recorded | 0 |
Write-offs | 0 |
Recoveries of previously written-off amount | 0 |
Allowance at December 31, 2020 | 2.2 |
Corporate securities | |
Debt Securities, Available-for-sale, Allowance for Credit Loss [Roll Forward] | |
Allowance at January 1, 2020 | 2.1 |
Additions for securities for which credit losses were not previously recorded | 23.6 |
Additions for purchased securities with deteriorated credit | 0 |
Additions (reductions) for securities where an allowance was previously recorded | (22.3) |
Reduction for securities sold during the period | (1.5) |
Reduction for securities for which the Company made the decision to sell where an allowance was previously recorded | 0 |
Write-offs | 0 |
Recoveries of previously written-off amount | 0 |
Allowance at December 31, 2020 | 1.9 |
States and political subdivisions | |
Debt Securities, Available-for-sale, Allowance for Credit Loss [Roll Forward] | |
Allowance at January 1, 2020 | 0 |
Additions for securities for which credit losses were not previously recorded | 0.7 |
Additions for purchased securities with deteriorated credit | 0 |
Additions (reductions) for securities where an allowance was previously recorded | (0.4) |
Reduction for securities sold during the period | 0 |
Reduction for securities for which the Company made the decision to sell where an allowance was previously recorded | 0 |
Write-offs | 0 |
Recoveries of previously written-off amount | 0 |
Allowance at December 31, 2020 | 0.3 |
Foreign governments | |
Debt Securities, Available-for-sale, Allowance for Credit Loss [Roll Forward] | |
Allowance at January 1, 2020 | 0 |
Additions for securities for which credit losses were not previously recorded | 0.1 |
Additions for purchased securities with deteriorated credit | 0 |
Additions (reductions) for securities where an allowance was previously recorded | (0.1) |
Reduction for securities sold during the period | 0 |
Reduction for securities for which the Company made the decision to sell where an allowance was previously recorded | 0 |
Write-offs | 0 |
Recoveries of previously written-off amount | 0 |
Allowance at December 31, 2020 | 0 |
Non-agency residential mortgage-backed securities | |
Debt Securities, Available-for-sale, Allowance for Credit Loss [Roll Forward] | |
Allowance at January 1, 2020 | 0 |
Additions for securities for which credit losses were not previously recorded | 1 |
Additions for purchased securities with deteriorated credit | 0 |
Additions (reductions) for securities where an allowance was previously recorded | (1) |
Reduction for securities sold during the period | 0 |
Reduction for securities for which the Company made the decision to sell where an allowance was previously recorded | 0 |
Write-offs | 0 |
Recoveries of previously written-off amount | 0 |
Allowance at December 31, 2020 | 0 |
Asset-backed securities | |
Debt Securities, Available-for-sale, Allowance for Credit Loss [Roll Forward] | |
Allowance at January 1, 2020 | 0 |
Additions for securities for which credit losses were not previously recorded | 0.3 |
Additions for purchased securities with deteriorated credit | 0 |
Additions (reductions) for securities where an allowance was previously recorded | (0.3) |
Reduction for securities sold during the period | 0 |
Reduction for securities for which the Company made the decision to sell where an allowance was previously recorded | 0 |
Write-offs | 0 |
Recoveries of previously written-off amount | 0 |
Allowance at December 31, 2020 | $ 0 |
INVESTMENTS - SCHEDULE OF STRUC
INVESTMENTS - SCHEDULE OF STRUCTURED SECURITIES (Details) $ in Millions | Dec. 31, 2020USD ($) |
Structured Securities [Line Items] | |
Amortized cost | $ 5,323.6 |
Estimated fair value, Amount | $ 5,652.2 |
Estimated fair value, Percent of fixed maturities | 24.20% |
Asset-backed securities | |
Structured Securities [Line Items] | |
Amortized cost | $ 1,024.4 |
Estimated fair value, Amount | $ 1,062.1 |
Estimated fair value, Percent of fixed maturities | 4.50% |
Agency residential mortgage-backed securities | |
Structured Securities [Line Items] | |
Amortized cost | $ 52.7 |
Estimated fair value, Amount | $ 58.4 |
Estimated fair value, Percent of fixed maturities | 0.30% |
Non-agency residential mortgage-backed securities | |
Structured Securities [Line Items] | |
Amortized cost | $ 1,913.5 |
Estimated fair value, Amount | $ 2,092.6 |
Estimated fair value, Percent of fixed maturities | 8.90% |
Collateralized loan obligations | |
Structured Securities [Line Items] | |
Amortized cost | $ 461.9 |
Estimated fair value, Amount | $ 458.9 |
Estimated fair value, Percent of fixed maturities | 2.00% |
Commercial mortgage-backed securities | |
Structured Securities [Line Items] | |
Amortized cost | $ 1,871.1 |
Estimated fair value, Amount | $ 1,980.2 |
Estimated fair value, Percent of fixed maturities | 8.50% |
INVESTMENTS - SUMMARY OF WEIGHT
INVESTMENTS - SUMMARY OF WEIGHTED AVERAGE LOAN-TO-VALUE RATIO FOR OUTSTANDING MORTGAGE LOANS (Details) $ in Millions | Dec. 31, 2020USD ($) |
Commercial Portfolio Segment | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
2020 | $ 47.8 |
2019 | 101 |
2018 | 148.3 |
2017 | 94.9 |
2016 | 106.1 |
Prior | 787.6 |
Total amortized cost | 1,285.7 |
Estimated fair value | 1,339.9 |
Collateral | 3,269.5 |
Less than 60% | Commercial Portfolio Segment | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
2020 | 29 |
2019 | 81.5 |
2018 | 139.7 |
2017 | 84.1 |
2016 | 76.7 |
Prior | 608 |
Total amortized cost | 1,019 |
Estimated fair value | 1,074.4 |
Collateral | $ 2,899.3 |
Less than 60% | Maximum | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
Loan-to-value ratio | 60.00% |
60% to less than 70% | Commercial Portfolio Segment | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
2020 | $ 0 |
2019 | 7.3 |
2018 | 8.6 |
2017 | 10.8 |
2016 | 19.4 |
Prior | 72.7 |
Total amortized cost | 118.8 |
Estimated fair value | 121.7 |
Collateral | $ 182 |
60% to less than 70% | Minimum | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
Loan-to-value ratio | 60.00% |
60% to less than 70% | Maximum | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
Loan-to-value ratio | 70.00% |
70% to less than 80% | Commercial Portfolio Segment | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
2020 | $ 18.8 |
2019 | 12.2 |
2018 | 0 |
2017 | 0 |
2016 | 0 |
Prior | 43.1 |
Total amortized cost | 74.1 |
Estimated fair value | 73.8 |
Collateral | $ 101 |
70% to less than 80% | Minimum | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
Loan-to-value ratio | 70.00% |
70% to less than 80% | Maximum | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
Loan-to-value ratio | 80.00% |
80% to less than 90% | Commercial Portfolio Segment | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
2020 | $ 0 |
2019 | 0 |
2018 | 0 |
2017 | 0 |
2016 | 0 |
Prior | 63.8 |
Total amortized cost | 63.8 |
Estimated fair value | 61.2 |
Collateral | $ 76.5 |
80% to less than 90% | Minimum | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
Loan-to-value ratio | 80.00% |
80% to less than 90% | Maximum | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
Loan-to-value ratio | 90.00% |
90% or greater | Commercial Portfolio Segment | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
2020 | $ 0 |
2019 | 0 |
2018 | 0 |
2017 | 0 |
2016 | 10 |
Prior | 0 |
Total amortized cost | 10 |
Estimated fair value | 8.8 |
Collateral | $ 10.7 |
90% or greater | Minimum | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
Loan-to-value ratio | 90.00% |
INVESTMENTS - SUMMARY OF CHAN_2
INVESTMENTS - SUMMARY OF CHANGES IN THE ALLOWANCE FOR CURRENT EXPECTED CREDIT LOSSES RELATED TO MORTGAGE LOANS (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Mortgage loans | |
Allowance for credit losses at January 1, 2020 | $ 6.7 |
Current period provision for expected credit losses | 5.1 |
Initial allowance recognized for purchased financial assets with credit deterioration | 0 |
Write-offs charged against the allowance | 0 |
Recoveries of amounts previously written off | 0 |
Allowance for credit losses at December 31, 2020 | $ 11.8 |
FAIR VALUE MEASUREMENTS - NARRA
FAIR VALUE MEASUREMENTS - NARRATIVE (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair value of level 3 fixed maturity securities valued using broker quotes, percentage | 85.00% |
Available for sale fixed maturities classified as level 3, investment grade, percent | 92.00% |
Available for sale fixed maturities classified as level 3, corporate securities, percent | 90.00% |
FAIR VALUE MEASUREMENTS - FAIR
FAIR VALUE MEASUREMENTS - FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS MEASURED ON A RECURRING BASIS - SECURITIES (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Jan. 01, 2020 | Dec. 31, 2019 | Jan. 01, 2019 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Estimated fair value | $ 23,383.6 | $ 21,293.1 | $ 21,295.2 | $ 18,443.7 |
Equity securities - corporate securities | 151.2 | 44.1 | ||
Trading securities | 232 | 243.9 | ||
Investments held by variable interest entities | 1,189.4 | $ 1,178.7 | 1,188.6 | |
Assets held in separate accounts | 4.2 | 4.2 | ||
Significant unobservable inputs (Level 3) | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Total assets carried at fair value by category | 212.5 | 213.3 | ||
Fair value, Measurements, Recurring | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Trading securities | 232 | 243.9 | ||
Investments held by variable interest entities | 1,189.4 | 1,188.6 | ||
Assets held in separate accounts | 4.2 | 4.2 | ||
Total assets carried at fair value by category | 25,177.1 | 22,979.8 | ||
Fair value, Measurements, Recurring | Embedded Derivatives Associated with Fixed Index Annuity Products | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Embedded derivatives associated with fixed index annuity products (classified as policyholder account liabilities) | 1,644.5 | 1,565.4 | ||
Fair value, Measurements, Recurring | Other Invested Assets - Derivatives | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Other invested assets - derivatives | 216.7 | 203.8 | ||
Fair value, Measurements, Recurring | Corporate securities | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Estimated fair value | 14,739.2 | 12,935.3 | ||
Equity securities - corporate securities | 151.2 | 44.1 | ||
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] | ||||
Estimated fair value | 235.5 | 204.6 | ||
Fair value, Measurements, Recurring | States and political subdivisions | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Estimated fair value | 2,653.9 | 2,246.7 | ||
Fair value, Measurements, Recurring | Foreign governments | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Estimated fair value | 102.8 | 95.6 | ||
Fair value, Measurements, Recurring | Asset-backed securities | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Estimated fair value | 1,062.1 | 1,387.9 | ||
Trading securities | 10.4 | 12.1 | ||
Fair value, Measurements, Recurring | Agency residential mortgage-backed securities | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Estimated fair value | 58.4 | 95 | ||
Trading securities | 0.4 | 0.4 | ||
Fair value, Measurements, Recurring | Non-agency residential mortgage-backed securities | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Estimated fair value | 2,092.6 | 2,042.3 | ||
Trading securities | 97.9 | 113.4 | ||
Fair value, Measurements, Recurring | Collateralized loan obligations | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Estimated fair value | 458.9 | 400.8 | ||
Fair value, Measurements, Recurring | Commercial mortgage-backed securities | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Estimated fair value | 1,980.2 | 1,887 | ||
Trading securities | 123.3 | 118 | ||
Fair value, Measurements, Recurring | Total fixed maturities, available for sale | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Estimated fair value | 23,383.6 | 21,295.2 | ||
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 | 0 | 0 | ||
Investments held by variable interest entities | 0 | 0 | ||
Assets held in separate accounts | 0 | 0 | ||
Total assets carried at fair value by category | 104.6 | 31.3 | ||
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] | ||||
Embedded derivatives associated with fixed index annuity products (classified as policyholder account liabilities) | 0 | 0 | ||
Fair value, Measurements, Recurring | Quoted prices in active markets for identical assets or liabilities (Level 1) | Other Invested Assets - 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] | ||||
Estimated fair value | 0 | 0 | ||
Equity securities - corporate securities | 104.6 | 31.3 | ||
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] | ||||
Estimated fair value | 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] | ||||
Estimated fair value | 0 | 0 | ||
Fair value, Measurements, Recurring | Quoted prices in active markets for identical assets or liabilities (Level 1) | Foreign governments | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Estimated fair value | 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] | ||||
Estimated fair value | 0 | 0 | ||
Trading securities | 0 | 0 | ||
Fair value, Measurements, Recurring | Quoted prices in active markets for identical assets or liabilities (Level 1) | Agency residential mortgage-backed securities | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Estimated fair value | 0 | 0 | ||
Trading securities | 0 | 0 | ||
Fair value, Measurements, Recurring | Quoted prices in active markets for identical assets or liabilities (Level 1) | Non-agency residential mortgage-backed securities | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Estimated fair value | 0 | 0 | ||
Trading securities | 0 | 0 | ||
Fair value, Measurements, Recurring | Quoted prices in active markets for identical assets or liabilities (Level 1) | Collateralized loan obligations | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Estimated fair value | 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] | ||||
Estimated fair value | 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] | ||||
Estimated fair value | 0 | 0 | ||
Fair value, Measurements, Recurring | Significant other observable inputs (Level 2) | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Trading securities | 209.1 | 231.4 | ||
Investments held by variable interest entities | 1,189.4 | 1,188.6 | ||
Assets held in separate accounts | 4.2 | 4.2 | ||
Total assets carried at fair value by category | 24,860 | 22,735.2 | ||
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] | ||||
Embedded derivatives associated with fixed index annuity products (classified as policyholder account liabilities) | 0 | 0 | ||
Fair value, Measurements, Recurring | Significant other observable inputs (Level 2) | Other Invested Assets - Derivatives | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Other invested assets - derivatives | 216.7 | 203.8 | ||
Fair value, Measurements, Recurring | Significant other observable inputs (Level 2) | Corporate securities | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Estimated fair value | 14,592.3 | 12,756.5 | ||
Equity securities - corporate securities | 19.8 | 4.5 | ||
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] | ||||
Estimated fair value | 235.5 | 204.6 | ||
Fair value, Measurements, Recurring | Significant other observable inputs (Level 2) | States and political subdivisions | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Estimated fair value | 2,653.9 | 2,246.7 | ||
Fair value, Measurements, Recurring | Significant other observable inputs (Level 2) | Foreign governments | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Estimated fair value | 102.8 | 94.5 | ||
Fair value, Measurements, Recurring | Significant other observable inputs (Level 2) | Asset-backed securities | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Estimated fair value | 1,047.8 | 1,375.3 | ||
Trading securities | 10.4 | 12.1 | ||
Fair value, Measurements, Recurring | Significant other observable inputs (Level 2) | Agency residential mortgage-backed securities | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Estimated fair value | 58.4 | 95 | ||
Trading securities | 0.4 | 0.4 | ||
Fair value, Measurements, Recurring | Significant other observable inputs (Level 2) | Non-agency residential mortgage-backed securities | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Estimated fair value | 2,091 | 2,042.3 | ||
Trading securities | 92 | 113.4 | ||
Fair value, Measurements, Recurring | Significant other observable inputs (Level 2) | Collateralized loan obligations | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Estimated fair value | 458.9 | 400.8 | ||
Fair value, Measurements, Recurring | Significant other observable inputs (Level 2) | Commercial mortgage-backed securities | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Estimated fair value | 1,980.2 | 1,887 | ||
Trading securities | 106.3 | 105.5 | ||
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] | ||||
Estimated fair value | 23,220.8 | 21,102.7 | ||
Fair value, Measurements, Recurring | Significant unobservable inputs (Level 3) | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Trading securities | 22.9 | 12.5 | ||
Investments held by variable interest entities | 0 | 0 | ||
Assets held in separate accounts | 0 | 0 | ||
Total assets carried at fair value by category | 212.5 | 213.3 | ||
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] | ||||
Embedded derivatives associated with fixed index annuity products (classified as policyholder account liabilities) | 1,644.5 | 1,565.4 | ||
Fair value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Other Invested Assets - 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] | ||||
Estimated fair value | 146.9 | 178.8 | ||
Equity securities - corporate securities | 26.8 | 8.3 | ||
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] | ||||
Estimated fair value | 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] | ||||
Estimated fair value | 0 | 0 | ||
Fair value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Foreign governments | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Estimated fair value | 0 | 1.1 | ||
Fair value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Asset-backed securities | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Estimated fair value | 14.3 | 12.6 | ||
Trading securities | 0 | 0 | ||
Fair value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Agency residential mortgage-backed securities | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Estimated fair value | 0 | 0 | ||
Trading securities | 0 | 0 | ||
Fair value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Non-agency residential mortgage-backed securities | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Estimated fair value | 1.6 | 0 | ||
Trading securities | 5.9 | 0 | ||
Fair value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Collateralized loan obligations | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Estimated fair value | 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] | ||||
Estimated fair value | 0 | 0 | ||
Trading securities | 17 | 12.5 | ||
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] | ||||
Estimated fair value | $ 162.8 | $ 192.5 |
FAIR VALUE MEASUREMENTS - FAI_2
FAIR VALUE MEASUREMENTS - FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS MEASURED ON A RECURRING BASIS - FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Cash and cash equivalents: | ||
Held by variable interest entities | $ 54.1 | $ 74.7 |
Fair value, Measurements, Recurring | Estimated fair value | ||
Assets: | ||
Mortgage loans | 1,424.8 | 1,651.4 |
Policy loans | 123 | 124.5 |
Other invested assets: | ||
Company-owned life insurance | 209.7 | 194 |
Cash and cash equivalents: | ||
Unrestricted | 937.8 | 580 |
Held by variable interest entities | 54.1 | 74.7 |
Liabilities: | ||
Policyholder account liabilities | 12,540.6 | 12,132.3 |
Investment borrowings | 1,648.3 | 1,647.9 |
Borrowings related to variable interest entities | 1,141.7 | 1,142.1 |
Notes payable – direct corporate obligations | 1,326.8 | 1,117.2 |
Fair value, Measurements, Recurring | Total amortized cost | ||
Assets: | ||
Mortgage loans | 1,358.7 | 1,566.1 |
Policy loans | 123 | 124.5 |
Other invested assets: | ||
Company-owned life insurance | 209.7 | 194 |
Cash and cash equivalents: | ||
Unrestricted | 937.8 | 580 |
Held by variable interest entities | 54.1 | 74.7 |
Liabilities: | ||
Policyholder account liabilities | 12,540.6 | 12,132.3 |
Investment borrowings | 1,642.5 | 1,644.3 |
Borrowings related to variable interest entities | 1,151.8 | 1,152.5 |
Notes payable – direct corporate obligations | 1,136.2 | 989.1 |
Fair value, Measurements, Recurring | Quoted prices in active markets for identical assets or liabilities (Level 1) | ||
Assets: | ||
Mortgage loans | 0 | 0 |
Policy loans | 0 | 0 |
Other invested assets: | ||
Company-owned life insurance | 0 | 0 |
Cash and cash equivalents: | ||
Unrestricted | 937.8 | 579.9 |
Held by variable interest entities | 54.1 | 74.7 |
Liabilities: | ||
Policyholder account liabilities | 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) | ||
Assets: | ||
Mortgage loans | 0 | 0 |
Policy loans | 0 | 0 |
Other invested assets: | ||
Company-owned life insurance | 209.7 | 194 |
Cash and cash equivalents: | ||
Unrestricted | 0 | 0.1 |
Held by variable interest entities | 0 | 0 |
Liabilities: | ||
Policyholder account liabilities | 0 | 0 |
Investment borrowings | 1,648.3 | 1,647.9 |
Borrowings related to variable interest entities | 1,141.7 | 1,142.1 |
Notes payable – direct corporate obligations | 1,326.8 | 1,117.2 |
Fair value, Measurements, Recurring | Significant unobservable inputs (Level 3) | ||
Assets: | ||
Mortgage loans | 1,424.8 | 1,651.4 |
Policy loans | 123 | 124.5 |
Other invested assets: | ||
Company-owned life insurance | 0 | 0 |
Cash and cash equivalents: | ||
Unrestricted | 0 | 0 |
Held by variable interest entities | 0 | 0 |
Liabilities: | ||
Policyholder account liabilities | 12,540.6 | 12,132.3 |
Investment borrowings | 0 | 0 |
Borrowings related to variable interest entities | 0 | 0 |
Notes payable – direct corporate obligations | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS - FAI_3
FAIR VALUE MEASUREMENTS - FAIR VALUE ASSETS AND LIABILITIES MEASURED ON A RECURRING BASIS, UNOBSERVABLE INPUT RECONCILIATION (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Embedded derivatives associated with fixed index annuity products (classified as policyholder account liabilities) | ||
Liabilities: | ||
Purchases, sales, issuances and settlements, net | $ (157) | $ (193.5) |
Corporate securities | Fixed Income Securities | ||
Assets: | ||
Purchases, sales, issuances and settlements, net | 17.8 | (34.3) |
Asset-backed securities | Fixed Income Securities | ||
Assets: | ||
Purchases, sales, issuances and settlements, net | 1.5 | (0.6) |
Non-agency residential mortgage-backed securities | ||
Assets: | ||
Purchases, sales, issuances and settlements, net | (2) | |
Non-agency residential mortgage-backed securities | Fixed Income Securities | ||
Assets: | ||
Purchases, sales, issuances and settlements, net | 1.6 | |
Total fixed maturities, available for sale | Fixed Income Securities | ||
Assets: | ||
Purchases, sales, issuances and settlements, net | 20.9 | (34.9) |
Equity securities - corporate securities | ||
Assets: | ||
Purchases, sales, issuances and settlements, net | 14 | |
Commercial mortgage-backed securities | ||
Assets: | ||
Purchases, sales, issuances and settlements, net | 4.3 | |
Trading securities | ||
Assets: | ||
Purchases, sales, issuances and settlements, net | 2.3 | |
Fair Value, Inputs, Level 3 | Fair value, Measurements, Recurring | Embedded derivatives associated with fixed index annuity products (classified as policyholder account liabilities) | ||
Liabilities: | ||
Beginning balance | (1,565.4) | (1,289) |
Purchases, sales, issuances and settlements, net | (157) | (193.5) |
Total realized and unrealized gains (losses) included in net income | 77.9 | (82.9) |
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 |
Ending balance | (1,644.5) | (1,565.4) |
Amount of total gains (losses) for the year included in our net income related to liabilities still held as of the reporting date | 77.9 | (82.9) |
Amount of total gains (losses) included in accumulated other comprehensive income (loss) relating to assets and liabilities still held as of the reporting date | 0 | |
Fair Value, Inputs, Level 3 | Fair value, Measurements, Recurring | Corporate securities | Fixed Income Securities | ||
Assets: | ||
Beginning balance | 178.8 | 158.6 |
Purchases, sales, issuances and settlements, net | 17.8 | (34.3) |
Total realized and unrealized gains (losses) included in net income | (0.9) | (4.6) |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 10.2 | 12.9 |
Transfers into level 3 | 90.6 | 46.2 |
Transfers out of level 3 | (149.6) | 0 |
Ending balance | 146.9 | 178.8 |
Amount of total gains (losses) for the year included in our net income relating to assets still held as of the reporting date | (1) | (4) |
Amount of total gains (losses) included in accumulated other comprehensive income (loss) relating to assets and liabilities still held as of the reporting date | 7.2 | |
Fair Value, Inputs, Level 3 | Fair value, Measurements, Recurring | Foreign governments | Fixed Income Securities | ||
Assets: | ||
Beginning balance | 1.1 | 1 |
Purchases, sales, issuances and settlements, net | 0 | 0 |
Total realized and unrealized gains (losses) included in net income | 0 | 0 |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0 | 0.1 |
Transfers into level 3 | 0 | 0 |
Transfers out of level 3 | (1.1) | 0 |
Ending balance | 0 | 1.1 |
Amount of total gains (losses) for the year included in our net income relating to assets still held as of the reporting date | 0 | 0 |
Amount of total gains (losses) included in accumulated other comprehensive income (loss) relating to assets and liabilities still held as of the reporting date | 0 | |
Fair Value, Inputs, Level 3 | Fair value, Measurements, Recurring | Asset-backed securities | Fixed Income Securities | ||
Assets: | ||
Beginning balance | 12.6 | 12 |
Purchases, sales, issuances and settlements, net | 1.5 | (0.6) |
Total realized and unrealized gains (losses) included in net income | 0 | 0 |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0.2 | 1.2 |
Transfers into level 3 | 0 | 0 |
Transfers out of level 3 | 0 | 0 |
Ending balance | 14.3 | 12.6 |
Amount of total gains (losses) for the year included in our net income relating to assets still held as of the reporting date | 0 | 0 |
Amount of total gains (losses) included in accumulated other comprehensive income (loss) relating to assets and liabilities still held as of the reporting date | 0.2 | |
Fair Value, Inputs, Level 3 | Fair value, Measurements, Recurring | Non-agency residential mortgage-backed securities | ||
Assets: | ||
Beginning balance | 0 | |
Purchases, sales, issuances and settlements, net | (2) | |
Total realized and unrealized gains (losses) included in net income | (0.1) | |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0.4 | |
Transfers into level 3 | 7.6 | |
Transfers out of level 3 | 0 | |
Ending balance | 5.9 | 0 |
Amount of total gains (losses) for the year included in our net income relating to assets still held as of the reporting date | (0.1) | |
Amount of total gains (losses) included in accumulated other comprehensive income (loss) relating to assets and liabilities still held as of the reporting date | 0 | |
Fair Value, Inputs, Level 3 | Fair value, Measurements, Recurring | Non-agency residential mortgage-backed securities | Fixed Income Securities | ||
Assets: | ||
Beginning balance | 0 | |
Purchases, sales, issuances and settlements, net | 1.6 | |
Total realized and unrealized gains (losses) included in net income | 0 | |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0 | |
Transfers into level 3 | 0 | |
Transfers out of level 3 | 0 | |
Ending balance | 1.6 | 0 |
Amount of total gains (losses) for the year included in our net income relating to assets still held as of the reporting date | 0 | |
Amount of total gains (losses) included in accumulated other comprehensive income (loss) relating to assets and liabilities still held as of the reporting date | 0 | |
Fair Value, Inputs, Level 3 | Fair value, Measurements, Recurring | Total fixed maturities, available for sale | Fixed Income Securities | ||
Assets: | ||
Beginning balance | 192.5 | 171.6 |
Purchases, sales, issuances and settlements, net | 20.9 | (34.9) |
Total realized and unrealized gains (losses) included in net income | (0.9) | (4.6) |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 10.4 | 14.2 |
Transfers into level 3 | 90.6 | 46.2 |
Transfers out of level 3 | (150.7) | 0 |
Ending balance | 162.8 | 192.5 |
Amount of total gains (losses) for the year included in our net income relating to assets still held as of the reporting date | (1) | (4) |
Amount of total gains (losses) included in accumulated other comprehensive income (loss) relating to assets and liabilities still held as of the reporting date | 7.4 | |
Fair Value, Inputs, Level 3 | Fair value, Measurements, Recurring | Equity securities - corporate securities | ||
Assets: | ||
Beginning balance | 8.3 | 9.5 |
Purchases, sales, issuances and settlements, net | 14 | 0 |
Total realized and unrealized gains (losses) included in net income | 0.3 | (1.2) |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0 | 0 |
Transfers into level 3 | 4.2 | 0 |
Transfers out of level 3 | 0 | 0 |
Ending balance | 26.8 | 8.3 |
Amount of total gains (losses) for the year included in our net income relating to assets still held as of the reporting date | 0 | (1.2) |
Amount of total gains (losses) included in accumulated other comprehensive income (loss) relating to assets and liabilities still held as of the reporting date | 0 | |
Fair Value, Inputs, Level 3 | Fair value, Measurements, Recurring | Commercial mortgage-backed securities | ||
Assets: | ||
Beginning balance | 12.5 | 0 |
Purchases, sales, issuances and settlements, net | 4.3 | 0 |
Total realized and unrealized gains (losses) included in net income | (0.4) | 1.6 |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0.6 | 0.6 |
Transfers into level 3 | 0 | 10.3 |
Transfers out of level 3 | 0 | 0 |
Ending balance | 17 | 12.5 |
Amount of total gains (losses) for the year included in our net income relating to assets still held as of the reporting date | (0.4) | 1.6 |
Amount of total gains (losses) included in accumulated other comprehensive income (loss) relating to assets and liabilities still held as of the reporting date | 0 | |
Fair Value, Inputs, Level 3 | Fair value, Measurements, Recurring | Trading securities | ||
Assets: | ||
Beginning balance | 12.5 | |
Purchases, sales, issuances and settlements, net | 2.3 | |
Total realized and unrealized gains (losses) included in net income | (0.5) | |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 1 | |
Transfers into level 3 | 7.6 | |
Transfers out of level 3 | 0 | |
Ending balance | 22.9 | $ 12.5 |
Amount of total gains (losses) for the year included in our net income relating to assets still held as of the reporting date | (0.5) | |
Amount of total gains (losses) included in accumulated other comprehensive income (loss) relating to assets and liabilities still held as of the reporting date | $ 0 |
FAIR VALUE MEASUREMENTS - FAI_4
FAIR VALUE MEASUREMENTS - FAIR VALUE ASSETS AND LIABILITIES MEASURED ON A RECURRING BASIS, UNOBSERVABLE INPUT RECONCILIATION - ACTIVITY (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Non-agency residential mortgage-backed securities | ||
Assets: | ||
Purchases | $ 0 | |
Sales | (2) | |
Issuances | 0 | |
Settlements | 0 | |
Purchases, sales, issuances and settlements, net | (2) | |
Equity securities - corporate securities | ||
Assets: | ||
Purchases | 14.3 | |
Sales | (0.3) | |
Issuances | 0 | |
Settlements | 0 | |
Purchases, sales, issuances and settlements, net | 14 | |
Commercial mortgage-backed securities | ||
Assets: | ||
Purchases | 4.3 | |
Sales | 0 | |
Issuances | 0 | |
Settlements | 0 | |
Purchases, sales, issuances and settlements, net | 4.3 | |
Trading securities | ||
Assets: | ||
Purchases | 4.3 | |
Sales | (2) | |
Issuances | 0 | |
Settlements | 0 | |
Purchases, sales, issuances and settlements, net | 2.3 | |
Embedded derivatives associated with fixed index annuity products (classified as policyholder account liabilities) | ||
Liabilities: | ||
Purchases | (183.7) | $ (154.9) |
Sales | 119.3 | 7.2 |
Issuances | (180.1) | (138) |
Settlements | 87.5 | 92.2 |
Purchases, sales, issuances and settlements, net | (157) | (193.5) |
Fixed Income Securities | Corporate securities | ||
Assets: | ||
Purchases | 20.5 | 20.1 |
Sales | (2.7) | (54.4) |
Issuances | 0 | 0 |
Settlements | 0 | 0 |
Purchases, sales, issuances and settlements, net | 17.8 | (34.3) |
Fixed Income Securities | Asset-backed securities | ||
Assets: | ||
Purchases | 2 | 0 |
Sales | (0.5) | (0.6) |
Issuances | 0 | 0 |
Settlements | 0 | 0 |
Purchases, sales, issuances and settlements, net | 1.5 | (0.6) |
Fixed Income Securities | Non-agency residential mortgage-backed securities | ||
Assets: | ||
Purchases | 1.6 | |
Sales | 0 | |
Issuances | 0 | |
Settlements | 0 | |
Purchases, sales, issuances and settlements, net | 1.6 | |
Fixed Income Securities | Total fixed maturities, available for sale | ||
Assets: | ||
Purchases | 24.1 | 20.1 |
Sales | (3.2) | (55) |
Issuances | 0 | 0 |
Settlements | 0 | 0 |
Purchases, sales, issuances and settlements, net | $ 20.9 | $ (34.9) |
FAIR VALUE MEASUREMENTS - FAI_5
FAIR VALUE MEASUREMENTS - FAIR VALUE INPUTS (Details) $ in Millions | Dec. 31, 2020USD ($) | Jan. 01, 2020USD ($) | Dec. 31, 2019USD ($) | Jan. 01, 2019USD ($) |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Fixed maturities, available for sale | $ 23,383.6 | $ 21,293.1 | $ 21,295.2 | $ 18,443.7 |
Equity securities - corporate securities | 151.2 | 44.1 | ||
Significant unobservable inputs (Level 3) | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Total assets carried at fair value by category | 212.5 | 213.3 | ||
Significant unobservable inputs (Level 3) | Recovery method | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Equity securities - corporate securities | 8.3 | |||
Significant unobservable inputs (Level 3) | Unadjusted third-party price source | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Other assets | 159.9 | 57.2 | ||
Significant unobservable inputs (Level 3) | Discounted projected embedded derivatives | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Embedded derivatives related to fixed index annuity products | $ 1,644.5 | $ 1,565.4 | ||
Significant unobservable inputs (Level 3) | Discount margins/rate | Discounted projected embedded derivatives | Minimum | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Unobservable inputs, liabilities | 0 | 0.0124 | ||
Significant unobservable inputs (Level 3) | Discount margins/rate | Discounted projected embedded derivatives | Maximum | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Unobservable inputs, liabilities | 0.0264 | 0.0307 | ||
Significant unobservable inputs (Level 3) | Discount margins/rate | Discounted projected embedded derivatives | Weighted Average | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Unobservable inputs, liabilities | 0.0103 | 0.0188 | ||
Significant unobservable inputs (Level 3) | Percent of recovery expected | Recovery method | Minimum | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Unobservable inputs, assets | 0.5927 | 0.5927 | ||
Significant unobservable inputs (Level 3) | Percent of recovery expected | Recovery method | Maximum | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Unobservable inputs, assets | 1 | 1 | ||
Significant unobservable inputs (Level 3) | Percent of recovery expected | Recovery method | Weighted Average | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Unobservable inputs, assets | 0.5952 | 0.5952 | ||
Significant unobservable inputs (Level 3) | Projected portfolio yields | Discounted projected embedded derivatives | Minimum | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Unobservable inputs, liabilities | 0.0412 | 0.0471 | ||
Significant unobservable inputs (Level 3) | Projected portfolio yields | Discounted projected embedded derivatives | Maximum | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Unobservable inputs, liabilities | 0.0438 | 0.0498 | ||
Significant unobservable inputs (Level 3) | Projected portfolio yields | Discounted projected embedded derivatives | Weighted Average | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Unobservable inputs, liabilities | 0.0413 | 0.0472 | ||
Significant unobservable inputs (Level 3) | Surrender rates | Discounted projected embedded derivatives | Minimum | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Unobservable inputs, liabilities | 0.0160 | 0.0160 | ||
Significant unobservable inputs (Level 3) | Surrender rates | Discounted projected embedded derivatives | Maximum | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Unobservable inputs, liabilities | 0.2560 | 0.3190 | ||
Significant unobservable inputs (Level 3) | Surrender rates | Discounted projected embedded derivatives | Weighted Average | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Unobservable inputs, liabilities | 0.0940 | 0.1090 | ||
Significant unobservable inputs (Level 3) | Corporate securities | Discounted cash flow analysis | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Fixed maturities, available for sale | $ 13.4 | $ 134.2 | ||
Significant unobservable inputs (Level 3) | Corporate securities | Recovery method | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Fixed maturities, available for sale | $ 1 | |||
Significant unobservable inputs (Level 3) | Corporate securities | Discount margins/rate | Discounted cash flow analysis | Minimum | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Unobservable inputs, assets | 0.0190 | 0.0107 | ||
Significant unobservable inputs (Level 3) | Corporate securities | Discount margins/rate | Discounted cash flow analysis | Maximum | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Unobservable inputs, assets | 0.0559 | 0.0842 | ||
Significant unobservable inputs (Level 3) | Corporate securities | Discount margins/rate | Discounted cash flow analysis | Weighted Average | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Unobservable inputs, assets | 0.0324 | 0.0191 | ||
Significant unobservable inputs (Level 3) | Corporate securities | Percent of recovery expected | Recovery method | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Unobservable inputs, assets | 0.1277 | |||
Significant unobservable inputs (Level 3) | Asset-backed securities | Discounted cash flow analysis | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Fixed maturities, available for sale | $ 12.3 | $ 12.6 | ||
Significant unobservable inputs (Level 3) | Asset-backed securities | Discount margins/rate | Discounted cash flow analysis | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Unobservable inputs, assets | 0.0246 | 0.0166 | ||
Significant unobservable inputs (Level 3) | Equity Securities | Recovery method | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Equity securities - corporate securities | $ 8.3 | |||
Significant unobservable inputs (Level 3) | Equity Securities | Unadjusted purchase price | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Equity securities - corporate securities | $ 18.6 |
LIABILITIES FOR INSURANCE PRO_3
LIABILITIES FOR INSURANCE PRODUCTS - SCHEDULE OF INSURANCE LIABILITIES BY PRODUCT SEGMENT (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Liability for Future Policy Benefit, by Product Segment [Line Items] | ||
Future policy benefits | $ 11,744.2 | $ 11,498.5 |
Policyholder account balance | $ 12,540.6 | 12,132.3 |
Long-term care | ||
Liability for Future Policy Benefit, by Product Segment [Line Items] | ||
Average interest rate assumption | 6.00% | |
Future policy benefits | $ 5,455.8 | 5,414.1 |
Traditional life insurance contracts | ||
Liability for Future Policy Benefit, by Product Segment [Line Items] | ||
Average interest rate assumption | 5.00% | |
Future policy benefits | $ 2,556.3 | 2,505.2 |
Accident and health contracts | ||
Liability for Future Policy Benefit, by Product Segment [Line Items] | ||
Average interest rate assumption | 5.00% | |
Future policy benefits | $ 3,214.9 | 3,079.4 |
Interest-sensitive life insurance contracts | ||
Liability for Future Policy Benefit, by Product Segment [Line Items] | ||
Average interest rate assumption | 5.00% | |
Future policy benefits | $ 73.9 | 62.1 |
Policyholder account balance | $ 1,220.2 | 1,177 |
Annuities and supplemental contracts with life contingencies | ||
Liability for Future Policy Benefit, by Product Segment [Line Items] | ||
Average interest rate assumption | 3.00% | |
Future policy benefits | $ 443.3 | 437.7 |
Fixed index annuities | ||
Liability for Future Policy Benefit, by Product Segment [Line Items] | ||
Policyholder account balance | 8,111.4 | 7,503.1 |
Other annuities | ||
Liability for Future Policy Benefit, by Product Segment [Line Items] | ||
Policyholder account balance | $ 3,209 | $ 3,452.2 |
LIABILITIES FOR INSURANCE PRO_4
LIABILITIES FOR INSURANCE PRODUCTS - SUMMARY OF LIABILITIES FOR UNPAID CLAIMS ADJUSTMENT EXPENSE (Details) - Accident and Health Insurance Product Line - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||||
Balance, beginning of year | $ 1,921.2 | $ 1,868 | $ 1,828.2 | |
Less reinsurance (receivables) payables | (881.5) | (993.2) | (951.1) | $ 15.1 |
Net balance, beginning of year | 928 | 916.9 | 1,843.3 | |
Incurred claims related to: | ||||
Current year | 1,177.8 | 1,233.9 | 1,480 | |
Prior years | (75.2) | (40.3) | (41.5) | |
Total incurred | 1,102.6 | 1,193.6 | 1,438.5 | |
Interest on claim reserves | 36.8 | 36.2 | 71.8 | |
Paid claims related to: | ||||
Current year | (766.1) | (843.8) | (849.4) | |
Prior years | (357.8) | (374.9) | (630.6) | |
Total paid | (1,123.9) | (1,218.7) | (1,480) | |
Reserves ceded pursuant to reinsurance transaction | 0 | 0 | (956.7) | |
Net balance, end of year | 943.5 | 928 | 916.9 | |
Add reinsurance receivables (payables) | 881.5 | 993.2 | 951.1 | $ (15.1) |
Balance, end of year | $ 1,825 | $ 1,921.2 | $ 1,868 |
INCOME TAXES - SCHEDULE OF COMP
INCOME TAXES - SCHEDULE OF COMPONENTS OF INCOME TAX EXPENSE (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |||||||||||
Current tax expense (benefit) | $ (24) | $ 19.2 | $ (2.8) | ||||||||
Deferred tax expense | 100.5 | 39.3 | 93.1 | ||||||||
Valuation allowance applicable to current year income | 0 | 0 | 8.9 | ||||||||
Income tax expense calculated based on annual effective tax rate | 76.5 | 58.5 | 99.2 | ||||||||
Tax benefit on long-term care reinsurance transaction | 0 | 0 | (147.9) | ||||||||
Income tax expense on discrete items: | |||||||||||
Carryback of net operating losses to years with a higher statutory corporate rate pursuant to provisions of the CARES Act (as defined below) | (34) | 0 | 0 | ||||||||
Change in valuation allowance | 0 | (193.7) | 95.7 | ||||||||
Other items | 0 | 0 | 3.2 | ||||||||
Total income tax expense (benefit) | $ 31.7 | $ 37.2 | $ 23.4 | $ (49.8) | $ (170.6) | $ 11.5 | $ 10.1 | $ 13.8 | $ 42.5 | $ (135.2) | $ 50.2 |
INCOME TAXES - NARRATIVE (Detai
INCOME TAXES - NARRATIVE (Details) | 12 Months Ended | |||||
Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2010 | Dec. 31, 2009 | Jan. 30, 2009right | |
Operating Loss Carryforwards [Line Items] | ||||||
Carryback of net operating losses to years with a higher statutory corporate rate pursuant to provision of the CARES Act | $ 34,000,000 | $ 0 | $ 0 | |||
Receivable related to refunds from NOL utilization provisions from the CARES Act | 99,200,000 | |||||
Net deferred tax assets | $ 109,400,000 | 428,900,000 | ||||
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 | 0.99% | |||||
Ownership change threshold restricting NOL usage | 50.00% | |||||
Ownership percentage threshold relating to company 382 provision, ownership percentage at which transfers of common stock become void (less than) | 5.00% | 5.00% | ||||
Number of rights for each share | right | 1 | |||||
Ownership percentage threshold relating to company 382 securities | 4.99% | |||||
Net operating loss carryforwards | $ 1,615,300,000 | |||||
Net state operating loss carryforwards | 2,700,000 | 10,300,000 | ||||
Unrecognized tax benefits | 0 | $ 0 | ||||
Internal Revenue Service (IRS) | ||||||
Operating Loss Carryforwards [Line Items] | ||||||
Net operating loss carryforwards | 1,600,000,000 | |||||
Tax Year 2018 And Later | ||||||
Operating Loss Carryforwards [Line Items] | ||||||
Acceleration of the utilization of life NOLs | 375,000,000 | |||||
Restoration of non-life NOLs | 130,000,000 | |||||
Tax Years Before 2021 | ||||||
Operating Loss Carryforwards [Line Items] | ||||||
Acceleration of the utilization of life NOLs | 105,000,000 | |||||
Restoration of non-life NOLs | $ 35,000,000 |
INCOME TAXES - SCHEDULE OF EFFE
INCOME TAXES - SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILLIATION (Details) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |||
U.S. statutory corporate rate | 21.00% | 21.00% | 21.00% |
Valuation allowance | 0.00% | (70.60%) | (39.50%) |
Non-taxable income and nondeductible benefits, net | (0.40%) | (1.00%) | 0.60% |
State taxes | 1.60% | 1.30% | (1.10%) |
Carryback of net operating losses to years with a higher statutory corporate rate pursuant to provisions of the CARES Act | (9.90%) | 0.00% | 0.00% |
Effective tax rate | 12.30% | (49.30%) | (19.00%) |
INCOME TAXES - SCHEDULE OF DEFE
INCOME TAXES - SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Jan. 01, 2020 | Dec. 31, 2019 | Jan. 01, 2019 |
Deferred tax assets: | ||||
Net federal operating loss carryforwards | $ 339.2 | $ 532.3 | ||
Net state operating loss carryforwards | 2.7 | 10.3 | ||
Insurance liabilities | 386.4 | 351.3 | ||
Indirect costs allocable to self-constructed real estate assets | 105.7 | 50.3 | ||
Other | 43 | 40.4 | ||
Gross deferred tax assets | 877 | 984.6 | ||
Deferred tax liabilities: | ||||
Investments | (29.5) | (24.4) | ||
Present value of future profits and deferred acquisition costs | (133.8) | (150.1) | ||
Accumulated other comprehensive income | (604.3) | (381.2) | ||
Gross deferred tax liabilities | (767.6) | (555.7) | ||
Net deferred tax assets | 109.4 | 428.9 | ||
Current income taxes prepaid | 90 | 3.7 | ||
Income tax assets, net | $ 199.4 | $ 437.5 | $ 432.6 | $ 630.9 |
INCOME TAXES - SUMMARY OF VALUA
INCOME TAXES - SUMMARY OF VALUATION ALLOWANCE (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Increase (Decrease) in Valuation Allowance [Roll Forward] | ||
Beginning valuation allowance | $ 193.7 | $ 89.1 |
Change in valuation allowance | (193.7) | 104.6 |
Ending valuation allowance | $ 0 | 193.7 |
Long-term Care Reinsurance | ||
Increase (Decrease) in Valuation Allowance [Roll Forward] | ||
Change in valuation allowance | 104.8 | |
Other Changes | ||
Increase (Decrease) in Valuation Allowance [Roll Forward] | ||
Change in valuation allowance | $ (0.2) |
INCOME TAXES - SUMMARY OF OPERA
INCOME TAXES - SUMMARY OF OPERATING LOSS CARRYFORWARDS (Details) $ in Millions | Dec. 31, 2020USD ($) |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | $ 1,615.3 |
2023 | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 1,028.7 |
2025 | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 85.2 |
2026 | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 149.9 |
2027 | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 10.8 |
2028 | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 80.3 |
2029 | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 213.2 |
2030 | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 0.3 |
2031 | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 0.2 |
2032 | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 44.4 |
2033 | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 0.6 |
2034 | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 0.9 |
2035 | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | $ 0.8 |
NOTES PAYABLE - DIRECT CORPOR_3
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS - SCHEDULE OF LONG-TERM DEBT INSTRUMENTS (Details) - USD ($) | Dec. 31, 2020 | Nov. 30, 2020 | Dec. 31, 2019 | Jun. 12, 2019 | May 19, 2015 |
Debt Instrument [Line Items] | |||||
Notes payable – direct corporate obligations | $ 1,136,200,000 | $ 989,100,000 | |||
Unamortized debt issuance costs | $ (13,800,000) | (10,900,000) | |||
Senior Notes | 5.250% Senior Notes due May 2025 | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 5.25% | 5.25% | |||
Notes payable – direct corporate obligations | $ 500,000,000 | 500,000,000 | |||
Senior Notes | 5.250% Senior Notes due May 2029 | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 5.25% | 5.25% | |||
Notes payable – direct corporate obligations | $ 500,000,000 | 500,000,000 | |||
Subordinated Debt | 5.125% Subordinated Debentures due 2060 | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 5.125% | 5.125% | |||
Notes payable – direct corporate obligations | $ 150,000,000 | 0 | |||
Line of Credit | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Notes payable – direct corporate obligations | $ 0 | $ 0 |
NOTES PAYABLE - DIRECT CORPOR_4
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS - Narrative (Details) - USD ($) | Jun. 12, 2019 | May 19, 2015 | Nov. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | ||||||
Loss on extinguishment of debt | $ 0 | $ 7,300,000 | $ 0 | |||
Payment of redemption premium | 6,100,000 | |||||
Write off of deferred debt issuance cost | $ 1,200,000 | |||||
Subordinated Debt | 5.125% Subordinated Debentures due 2060 | ||||||
Debt Instrument [Line Items] | ||||||
Amount issued | $ 150,000,000 | |||||
Interest rate | 5.125% | 5.125% | ||||
Aggregate principal amount | $ 150,000,000 | |||||
Subordinated Debt | 5.125% Subordinated Debentures due 2060 | On or After November 25, 2025 | ||||||
Debt Instrument [Line Items] | ||||||
Amount issued | 25,000,000 | |||||
Aggregate principal amount | $ 25,000,000 | |||||
Redemption price, percent | 102.00% | |||||
Senior Notes | 5.250% Senior Notes due May 2029 | ||||||
Debt Instrument [Line Items] | ||||||
Amount issued | $ 500,000,000 | |||||
Interest rate | 5.25% | 5.25% | ||||
Aggregate principal amount | $ 500,000,000 | |||||
Debt default, percentage of principal amount outstanding | 50.00% | |||||
Senior Notes | 5.250% Senior Notes due May 2029 | On and After February 28, 2029 | ||||||
Debt Instrument [Line Items] | ||||||
Redemption price, percent | 100.00% | |||||
Senior Notes | 5.250% Senior Notes due May 2029 | Change of Control Repurchase Event | ||||||
Debt Instrument [Line Items] | ||||||
Redemption price, percent | 101.00% | |||||
Senior Notes | 4.500% Senior Notes due May 2020 | ||||||
Debt Instrument [Line Items] | ||||||
Amount issued | $ 325,000,000 | |||||
Interest rate | 4.50% | |||||
Aggregate principal amount | 325,000,000 | |||||
Senior Notes | 5.250% Senior Notes due May 2025 | ||||||
Debt Instrument [Line Items] | ||||||
Amount issued | $ 500,000,000 | |||||
Interest rate | 5.25% | 5.25% | ||||
Aggregate principal amount | $ 500,000,000 | |||||
Event of default ownership percentage threshold to declare payment | 25.00% | |||||
Senior Notes | 5.250% Senior Notes due May 2025 | Change of Control Repurchase Event | ||||||
Debt Instrument [Line Items] | ||||||
Redemption price, percent | 101.00% | |||||
Senior Notes | 5.250% Senior Notes due May 2025 | On and After February 28, 2025 | ||||||
Debt Instrument [Line Items] | ||||||
Redemption price, percent | 100.00% |
NOTES PAYABLE - DIRECT CORPOR_5
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS - REVOLVING CREDIT AGREEMENT (Details) - USD ($) | Oct. 13, 2017 | May 19, 2015 | Dec. 31, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||||
Notes payable – direct corporate obligations | $ 1,136,200,000 | $ 989,100,000 | ||
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% | |||
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% | |||
Line of Credit | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 250,000,000 | $ 150,000,000 | ||
Debt Instrument, term | 4 years | |||
Initial drawing amount | $ 100,000,000 | |||
Notes payable – direct corporate obligations | $ 0 | $ 0 | ||
Potential additional borrowing capacity | $ 100,000,000 | |||
Debt covenant, required minimum debt to total capitalization ratio | 35.00% | |||
Debt covenant, actual debt to total capitalization ratio at period end | 26.40% | |||
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 | 411.00% | |||
Debt covenant, minimum required consolidated net worth, component one, amount | $ 2,674,000,000 | |||
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 | $ 3,298,100,000 | |||
Debt covenant, required minimum consolidated net worth, amount | $ 2,700,500,000 | |||
Line of Credit | Revolving Credit Facility | Federal Funds Rate | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 0.50% | |||
Line of Credit | Revolving Credit Facility | Minimum | ||||
Debt Instrument [Line Items] | ||||
Remaining borrowing capacity | $ 50,000,000 | |||
Line of Credit | Revolving Credit Facility | Maximum | ||||
Debt Instrument [Line Items] | ||||
Remaining borrowing capacity | $ 100,000,000 | |||
Line of Credit | Bridge Loan | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | 5,000,000 | |||
Line of Credit | Letter of Credit | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 5,000,000 |
NOTES PAYABLE - DIRECT CORPOR_6
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS - SCHEDULE OF MATURITIES OF LONG-TERM DEBT (Details) $ in Millions | Dec. 31, 2020USD ($) |
Debt Disclosure [Abstract] | |
2021 | $ 0 |
2022 | 0 |
2023 | 0 |
2024 | 0 |
2025 | 500 |
Thereafter | 650 |
Direct corporate obligations | $ 1,150 |
LITIGATION AND OTHER LEGAL PR_3
LITIGATION AND OTHER LEGAL PROCEEDINGS - NARRATIVE (Details) $ in Millions | 1 Months Ended | 12 Months Ended | ||
Aug. 31, 2011state | Dec. 31, 2020USD ($)individual | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||||
Number of states participating in examination of compliance with unclaimed property laws | state | 41 | |||
Amount of insurance-related assessment liability | $ 7.6 | $ 8.9 | ||
Premium tax offset for loss contingency accruals | 14.8 | 16.8 | ||
Insurance-related assessment, expense recognized | 2.9 | 2.1 | $ 2.3 | |
Operating leases and sponsorship agreements, expense | $ 74.9 | 67 | $ 67 | |
Former Chief Executive Officers | ||||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||||
Number of Company's former chief executive officers' retirement benefits guaranteed by subsidiaries | individual | 2 | |||
Deferred compensation arrangement with individual, recorded liability | $ 22 | $ 22.7 |
LITIGATION AND OTHER LEGAL PR_4
LITIGATION AND OTHER LEGAL PROCEEDINGS - INFORMATION RELATED TO RIGHT TO USE ASSETS (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Leases [Abstract] | ||
Operating lease expense | $ 25 | $ 25 |
Cash paid for operating lease liability | 25.7 | 24.3 |
Right of use assets obtained in exchange for lease liabilities (non-cash transactions) | 11.5 | 22.7 |
Total right of use assets | $ 54.7 | $ 66.5 |
LITIGATION AND OTHER LEGAL PR_5
LITIGATION AND OTHER LEGAL PROCEEDINGS - SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING LEASES (Details) $ in Millions | Dec. 31, 2020USD ($) |
Leases [Abstract] | |
2021 | $ 22.8 |
2022 | 18 |
2023 | 13.3 |
2024 | 5.5 |
2025 | 1.9 |
Thereafter | 0.7 |
Total undiscounted lease payments | 62.2 |
Less interest | (2.2) |
Present value of lease liabilities | $ 60 |
LITIGATION AND OTHER LEGAL PR_6
LITIGATION AND OTHER LEGAL PROCEEDINGS - WEIGHTED AVERAGE INFORMATION (Details) | Dec. 31, 2020 |
Leases [Abstract] | |
Weighted average remaining lease term (in years) | 3 years 2 months 12 days |
Weighted average discount rate | 2.36% |
AGENT DEFERRED COMPENSATION P_3
AGENT DEFERRED COMPENSATION PLAN - NARRATIVE (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items] | |||
Cost recognized for defined contribution plan | $ 6 | $ 6.1 | $ 5.8 |
Nonqualified Plan | |||
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items] | |||
Deferred compensation arrangement with individual, recorded liability | 53.3 | 41.5 | |
Company-owned life insurance | 47.8 | 36.2 | |
Deferred compensation arrangement contributions by employer | $ 4.9 | 5 | 5.5 |
Minimum | Nonqualified Plan | |||
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items] | |||
Deferred compensation arrangement vesting period | 5 years | ||
Maximum | Nonqualified Plan | |||
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items] | |||
Deferred compensation arrangement vesting period | 10 years | ||
Unfunded Plan | |||
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items] | |||
Deferred compensation arrangement with individual, recorded liability | $ 190.7 | 175.2 | |
Net periodic benefit cost | 22.8 | 27 | (5.2) |
Deferred compensation arrangement with individual, gain (loss) recognized | (16.3) | (20.4) | 11.9 |
Company-owned life insurance | 209.7 | 194 | |
Change in value of corporate or bank owned life insurance | $ 15.7 | $ 22.3 | $ (10.6) |
AGENT DEFERRED COMPENSATION P_4
AGENT DEFERRED COMPENSATION PLAN - SCHEDULE OF ASSUMPTIONS USED (Details) - Unfunded Plan | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Benefit obligations: | ||
Discount rate | 2.50% | 3.25% |
Net periodic cost: | ||
Discount rate | 3.25% | 4.25% |
AGENT DEFERRED COMPENSATION P_5
AGENT DEFERRED COMPENSATION PLAN - SCHEDULE OF EXPECTED BENEFIT PAYMENTS (Details) - Unfunded Plan $ in Millions | Dec. 31, 2020USD ($) |
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items] | |
2021 | $ 7.8 |
2022 | 8.1 |
2023 | 8.5 |
2024 | 8.7 |
2025 | 8.8 |
2026 - 2030 | $ 46.2 |
DERIVATIVES - FAIR VALUE BY BAL
DERIVATIVES - FAIR VALUE BY BALANCE SHEET LOCATION (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Embedded Derivative Associated With Modified Coinsurance Agreement | ||
Derivatives, Fair Value [Line Items] | ||
Mark to market adjustment on embedded derivative | $ 112 | |
Fixed index call options | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts recognized | 216.7 | $ 203.8 |
Not Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts recognized | 218.1 | 202.6 |
Gross derivative liability | 1,644.5 | 1,565.4 |
Not Designated as Hedging Instrument | Fixed index call options | Other invested assets | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts recognized | 216.7 | 203.8 |
Not Designated as Hedging Instrument | Reinsurance receivables | Other invested assets | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts recognized | 1.4 | (1.2) |
Not Designated as Hedging Instrument | Fixed index products | Fixed index products | ||
Derivatives, Fair Value [Line Items] | ||
Gross derivative liability | $ 1,644.5 | $ 1,565.4 |
DERIVATIVES - SCHEDULE OF DERIV
DERIVATIVES - SCHEDULE OF DERIVATIVE INSTRUMENTS (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2020USD ($)policy | |
Fixed index annuities - embedded derivative | |
Derivative Instrument [Roll Forward] | |
Derivative beginning balance | policy | 113,652 |
Additions | policy | 11,553 |
Maturities/terminations | policy | (8,291) |
Derivative ending balance | policy | 116,914 |
Fixed index call options | |
Derivative, Notional Amount [Roll Forward] | |
Derivative notional amount beginning balance | $ | $ 3,166.3 |
Additions | $ | 2,540.1 |
Maturities/terminations | $ | (3,268.3) |
Derivative notional amount ending balance | $ | $ 2,438.1 |
DERIVATIVES - SCHEDULE PRE-TAX
DERIVATIVES - SCHEDULE PRE-TAX GAINS (LOSSES) RECOGNIZED IN NET INCOME FOR DERIVATIVE INSTRUMENTS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Derivative [Line Items] | |||
Gains (losses) on derivative instruments not designated as hedging instruments | $ 120 | $ 74.3 | $ 59.7 |
Investment Income | Fixed index call options | |||
Derivative [Line Items] | |||
Gains (losses) on derivative instruments not designated as hedging instruments | 39.5 | 151.9 | (43) |
Gain (Loss) on Investments | Fixed index annuities - embedded derivative | Embedded derivative related to modified coinsurance agreement | |||
Derivative [Line Items] | |||
Gains (losses) on derivative instruments not designated as hedging instruments | 2.6 | 5.3 | (5.1) |
Insurance Policy Benefits | Fixed index annuities - embedded derivative | |||
Derivative [Line Items] | |||
Gains (losses) on derivative instruments not designated as hedging instruments | $ 77.9 | $ (82.9) | $ 107.8 |
DERIVATIVES - DERIVATIVES WITH
DERIVATIVES - DERIVATIVES WITH MASTER NETTING ARRANGEMENTS (Details) - Fixed index call options - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Derivative [Line Items] | ||
Gross amounts recognized | $ 216.7 | $ 203.8 |
Gross amounts offset in the balance sheet | 0 | 0 |
Net amounts of assets presented in the balance sheet | 216.7 | 203.8 |
Financial instruments | 0 | 0 |
Cash collateral received | 0 | 0 |
Net amount | $ 216.7 | $ 203.8 |
SHAREHOLDERS' EQUITY - NARRATIV
SHAREHOLDERS' EQUITY - NARRATIVE (Details) $ / shares in Units, $ in Millions | 3 Months Ended | 4 Months Ended | 8 Months Ended | 12 Months Ended | 60 Months Ended | 72 Months Ended | |||||||
Mar. 31, 2020USD ($) | Apr. 30, 2020$ / shares | Apr. 30, 2019$ / shares | Apr. 30, 2018$ / shares | Dec. 31, 2020USD ($)$ / sharesshares | Dec. 31, 2019USD ($)$ / sharesshares | Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2020USD ($)$ / sharesshares | Dec. 31, 2019USD ($)$ / sharesshares | Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2014 | Dec. 31, 2020USD ($)$ / sharesshares | Jan. 30, 2009rightshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Treasury stock purchased and retired (in shares) | shares | 14,500,000 | 15,400,000 | 5,500,000 | ||||||||||
Repurchased and retired during period, value | $ 263 | $ 252.3 | $ 100.9 | ||||||||||
Repurchase stock settled during period | $ 1.8 | ||||||||||||
Stock repurchase program, remaining repurchase authorized amount | $ 269.3 | 269.3 | $ 269.3 | ||||||||||
Dividends, common stock, cash | $ 67.4 | $ 67.2 | $ 65.1 | $ 67.4 | $ 67.2 | $ 65.1 | $ 67.4 | ||||||
Dividends (in USD per share) | $ / shares | $ 0.11 | $ 0.10 | $ 0.09 | $ 0.12 | $ 0.11 | $ 0.10 | $ 0.47 | $ 0.43 | $ 0.39 | ||||
Available for future grant (in shares) | shares | 8,789,000 | 4,670,000 | 5,296,000 | 8,789,000 | 4,670,000 | 5,296,000 | 8,789,000 | ||||||
Options granted (in shares) | shares | 0 | 801,000 | 2,112,000 | ||||||||||
Proceeds from stock options exercised | $ 16.5 | $ 6.9 | $ 3.9 | ||||||||||
Number of rights for each share | right | 1 | ||||||||||||
Number of shares purchased by each right | shares | 0.001 | ||||||||||||
Price of junior preferred stock (per 1/1000 of a share) | $ / shares | $ 95 | $ 95 | $ 95 | ||||||||||
Junior preferred stock right becomes exercisable when a person or group becomes owner of stated percentage (more than) | 4.99% | ||||||||||||
Common stock, shares, excluded from diluted weighted average shares outstanding (in shares) | shares | 2,104,000 | ||||||||||||
Series E Preferred Stock | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Series E junior participating preferred stock par value (in USD per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | ||||||||||
Five Year Vesting | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Options granted (in shares) | shares | 1,600,000 | ||||||||||||
Employee Stock Option | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Expiration period | 10 years | ||||||||||||
Allocated share-based compensation expense | $ 2.6 | 3.8 | $ 5.6 | ||||||||||
Allocated share-based compensation expense, net of tax | $ 2.1 | $ 3 | $ 4.5 | ||||||||||
Effect of compensation expense related to stock options on basic and diluted earnings per share (in USD per share) | $ / shares | $ 0.01 | $ 0.02 | $ 0.03 | ||||||||||
Unrecognized compensation expense | $ 3.3 | $ 3.3 | $ 3.3 | ||||||||||
Weighted average recognition period | 2 years | ||||||||||||
Employee Stock Option | Years 2010 through 2014 | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Expiration period | 7 years | ||||||||||||
Vesting period | 3 years | ||||||||||||
Employee Stock Option | Years 2015 through 2019 | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Expiration period | 10 years | ||||||||||||
Vesting period | 3 years | ||||||||||||
Employee Stock Option | Year 2018 | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Expiration period | 10 years | ||||||||||||
Vesting period | 5 years | ||||||||||||
Restricted Stock | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Vesting period | 3 years | ||||||||||||
Allocated share-based compensation expense | $ 8.7 | $ 7.2 | $ 7.1 | ||||||||||
Unrecognized compensation expense | 7.8 | $ 7.6 | $ 7.8 | $ 7.6 | $ 7.8 | ||||||||
Weighted average recognition period | 1 year 9 months 18 days | ||||||||||||
Granted (in shares) | shares | 520,000 | ||||||||||||
Granted (in USD per share) | $ / shares | $ 18.28 | $ 17.07 | $ 22.36 | ||||||||||
Grant date fair value of performance shares awarded | 9.5 | 8.1 | $ 9.7 | $ 9.5 | $ 8.1 | $ 9.7 | 9.5 | ||||||
Fair value of vested shares | $ 6.8 | $ 6.5 | $ 4.2 | ||||||||||
Restricted Stock | Directors, Officers, and Employees | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Granted (in shares) | shares | 500,000 | 500,000 | 400,000 | ||||||||||
Performance Shares | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Allocated share-based compensation expense | $ 12.5 | $ 7.8 | $ 12 | ||||||||||
Granted (in shares) | shares | 493,630 | 485,830 | 319,920 | ||||||||||
Grant date fair value of performance shares awarded | $ 10.1 | $ 9.4 | $ 10.1 | $ 9.4 | $ 10.1 | ||||||||
Performance unit payout | 200.00% | 200.00% | 200.00% | ||||||||||
Performance Shares | Maximum | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Performance period | 3 years | ||||||||||||
Performance Shares | Minimum | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Performance period | 1 year |
SHAREHOLDERS' EQUITY - SCHEDULE
SHAREHOLDERS' EQUITY - SCHEDULE OF SHARE-BASED COMPENSATION (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Outstanding at the beginning of the year (in shares) | 6,015,000 | 6,539,000 | 5,121,000 |
Options granted (in shares) | 0 | 801,000 | 2,112,000 |
Exercised (in shares) | (1,104,000) | (787,000) | (447,000) |
Forfeited or terminated (in shares) | (367,000) | (538,000) | (247,000) |
Outstanding at the end of the year (in shares) | 4,544,000 | 6,015,000 | 6,539,000 |
Options exercisable at the end of the year (in shares) | 2,946,000 | 3,517,000 | 3,247,000 |
Available for future grant (in shares) | 8,789,000 | 4,670,000 | 5,296,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | |||
Outstanding at the beginning of the year (in USD per share) | $ 18.59 | $ 17.77 | $ 15.95 |
Options granted (in USD per share) | 0 | 17.25 | 21.03 |
Exercised (in USD per share) | (16.59) | (9.95) | (10.94) |
Forfeited or terminated (in USD per share) | (19.40) | (19.32) | (20.29) |
Outstanding at the end of the year (in USD per share) | $ 19.01 | $ 18.59 | $ 17.77 |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | |||
Outstanding, weighted average remaining life | 5 years 7 months 6 days | 5 years 9 months 18 days | 5 years 9 months 18 days |
Options exercisable at the end of the year, weighted average remaining life | 4 years 6 months | 4 years 1 month 6 days | 3 years 6 months |
Exercised, aggregate intrinsic value | $ 9 | $ 5.5 | $ 3.1 |
Options outstanding, aggregate intrinsic value | 27.5 | 38.7 | 44.4 |
Options exercisable at the end of the year, aggregate intrinsic value | $ 19.9 | $ 25.8 | $ 26.7 |
SHAREHOLDERS' EQUITY - SCHEDU_2
SHAREHOLDERS' EQUITY - SCHEDULE OF VALUATION ASSUMPTIONS ON PAYMENT AWARDS (Details) - Employee Stock Option - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Weighted average risk-free interest rates | 2.40% | 2.90% |
Weighted average dividend yields | 2.40% | 1.90% |
Volatility factors | 26.00% | 27.00% |
Weighted average expected life (in years) | 6 years 3 months 18 days | 6 years 4 months 24 days |
Weighted average fair value per share (in USD per share) | $ 3.90 | $ 5.49 |
SHAREHOLDERS' EQUITY - SCHEDU_3
SHAREHOLDERS' EQUITY - SCHEDULE OF SHARE-BASED COMPENSATION BY EXERCISE PRICE RANGE (Details) shares in Thousands | 12 Months Ended |
Dec. 31, 2020$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number outstanding (in shares) | shares | 4,544 |
Options exercisable, Number exercisable (in shares) | shares | 2,946 |
15.08 - $21.57 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Range of exercise prices, lower range limit (in USD per share) | $ 15.08 |
Range of exercise prices, upper range limit (in USD per share) | $ 21.57 |
Number outstanding (in shares) | shares | 4,177 |
Options outstanding, Remaining life (in years) | 5 years 6 months |
Options outstanding, Average exercise price (in USD per share) | $ 18.63 |
Options exercisable, Number exercisable (in shares) | shares | 2,763 |
Options exercisable, Average exercise price (in USD per share) | $ 18.53 |
$23.33 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Range of exercise prices, upper range limit (in USD per share) | $ 23.33 |
Number outstanding (in shares) | shares | 367 |
Options outstanding, Remaining life (in years) | 6 years 9 months 18 days |
Options outstanding, Average exercise price (in USD per share) | $ 23.33 |
Options exercisable, Number exercisable (in shares) | shares | 183 |
Options exercisable, Average exercise price (in USD per share) | $ 23.33 |
SHAREHOLDERS' EQUITY - SCHEDU_4
SHAREHOLDERS' EQUITY - SCHEDULE OF NONVESTED SHARE ACTIVITY (Details) - Restricted Stock - $ / shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |||
Non-vested shares, beginning of year (in shares) | 828 | ||
Granted (in shares) | 520 | ||
Vested (in shares) | (349) | ||
Forfeited (in shares) | (31) | ||
Non-vested shares, end of year (in shares) | 968 | 828 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other Than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |||
Non-vested shares, beginning of year (in USD per share) | $ 19.49 | ||
Granted (in USD per share) | 18.28 | $ 17.07 | $ 22.36 |
Vested (in USD per share) | 19.59 | ||
Forfeited (in USD per share) | 19.34 | ||
Non-vested shares, end of year (in USD per share) | $ 18.80 | $ 19.49 |
SHAREHOLDERS' EQUITY - SCHEDU_5
SHAREHOLDERS' EQUITY - SCHEDULE OF PERFORMANCE SHARE-BASED COMPENSATION (Details) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Total shareholder return awards | |||
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward] | |||
Awards outstanding, beginning of period (in shares) | 551 | 568 | 629 |
Granted (in shares) | 0 | 243 | 160 |
Additional shares issued pursuant to achieving certain performance criteria (in shares) | 0 | 0 | 0 |
Shares vested (in shares) | 0 | 0 | (160) |
Forfeited (in shares) | (212) | (260) | (61) |
Awards outstanding, end of period (in shares) | 339 | 551 | 568 |
Performance unit payout | 200.00% | 200.00% | 200.00% |
Operating return on equity awards | |||
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward] | |||
Awards outstanding, beginning of period (in shares) | 551 | 568 | 629 |
Granted (in shares) | 247 | 243 | 160 |
Additional shares issued pursuant to achieving certain performance criteria (in shares) | 138 | 113 | 123 |
Shares vested (in shares) | (281) | (297) | (318) |
Forfeited (in shares) | (74) | (76) | (26) |
Awards outstanding, end of period (in shares) | 581 | 551 | 568 |
Operating earnings per share awards | |||
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward] | |||
Awards outstanding, beginning of period (in shares) | 0 | ||
Granted (in shares) | 247 | ||
Additional shares issued pursuant to achieving certain performance criteria (in shares) | 0 | ||
Shares vested (in shares) | 0 | ||
Forfeited (in shares) | (8) | ||
Awards outstanding, end of period (in shares) | 239 | 0 |
SHAREHOLDERS' EQUITY - SCHEDU_6
SHAREHOLDERS' EQUITY - SCHEDULE OF EARNINGS PER SHARE RECONCILIATION (Details) - USD ($) shares in Thousands, $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Equity [Abstract] | |||
Net income (loss) for diluted earnings per share | $ 301.8 | $ 409.4 | $ (315) |
Shares: | |||
Weighted average shares outstanding for basic earnings per share (in shares) | 142,096 | 156,040 | 165,457 |
Effect of dilutive securities on weighted average shares: | |||
Amounts related to employee benefit plans (in shares) | 1,068 | 1,108 | 0 |
Weighted average shares outstanding for diluted earnings per share (in shares) | 143,164 | 157,148 | 165,457 |
OTHER OPERATING STATEMENT DAT_2
OTHER OPERATING STATEMENT DATA - SCHEDULE OF INSURANCE POLICY INCOME (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Insurance [Abstract] | |||
Direct premiums collected | $ 4,176 | $ 4,311.9 | $ 4,150.3 |
Reinsurance assumed | 23 | 25.1 | 27.8 |
Reinsurance ceded | (247.8) | (267.9) | (156.2) |
Premiums collected, net of reinsurance | 3,951.2 | 4,069.1 | 4,021.9 |
Change in unearned premiums | 9.2 | (7.5) | 6.5 |
Less premiums on interest-sensitive life and products without mortality and morbidity risk which are recorded as additions to insurance liabilities | (1,620.1) | (1,743.1) | (1,588.5) |
Premiums on traditional products with mortality or morbidity risk | 2,340.3 | 2,318.5 | 2,439.9 |
Fees and surrender charges on interest-sensitive products | 171 | 162.3 | 153.2 |
Insurance policy income | $ 2,511.3 | $ 2,480.8 | $ 2,593.1 |
OTHER OPERATING STATEMENT DAT_3
OTHER OPERATING STATEMENT DATA - NARRATIVE (Details) - state | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
SEC Schedule, 12-16, Insurance Companies, Supplementary Insurance Information [Line Items] | |||
Number of states | 3 | ||
Percentage of total collected premiums (more than 5%) | 5.00% | ||
Present Value of Future Insurance Profits, Percentage of Amortization Expense, Next Five Years [Abstract] | |||
2021 | 10.00% | ||
2022 | 9.00% | ||
2023 | 8.00% | ||
2024 | 7.00% | ||
2025 | 6.00% | ||
Average interest accrual rate associated with amortization method of present value of future insurance profits | 5.00% | 5.00% | 5.00% |
Florida | |||
SEC Schedule, 12-16, Insurance Companies, Supplementary Insurance Information [Line Items] | |||
Percentage of total collected premiums (more than 5%) | 11.00% | ||
Pennsylvania | |||
SEC Schedule, 12-16, Insurance Companies, Supplementary Insurance Information [Line Items] | |||
Percentage of total collected premiums (more than 5%) | 6.00% | ||
Texas | |||
SEC Schedule, 12-16, Insurance Companies, Supplementary Insurance Information [Line Items] | |||
Percentage of total collected premiums (more than 5%) | 5.00% |
OTHER OPERATING STATEMENT DAT_4
OTHER OPERATING STATEMENT DATA - SCHEDULE OF OTHER OPERATING COST AND EXPENSE (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Expenses: | |||
Commission expense | $ 111.8 | $ 133.6 | $ 122.8 |
Salaries and wages | 252.6 | 238.2 | 233.2 |
Other | 577.6 | 561.1 | 458.2 |
Total other operating costs and expenses | $ 942 | $ 932.9 | $ 814.2 |
OTHER OPERATING STATEMENT DAT_5
OTHER OPERATING STATEMENT DATA - SCHEDULE OF CHANGES IN DEFERRED ACQUISITION COSTS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Movement Analysis of Deferred Policy Acquisition Costs [Roll Forward] | |||
Balance, beginning of year | $ 1,215.5 | $ 1,322.5 | $ 1,026.8 |
Additions | 275.8 | 288.7 | 261.8 |
Amortization | (233.4) | (195.4) | (219.2) |
Effect of reinsurance transaction | 0 | 0 | (1.2) |
Amounts related to changes in unrealized investment gains (losses) on fixed maturities, available for sale | (230.1) | (189.6) | 254.3 |
Other adjustments | 0 | (10.7) | 0 |
Balance, end of year | $ 1,027.8 | $ 1,215.5 | $ 1,322.5 |
OTHER OPERATING STATEMENT DAT_6
OTHER OPERATING STATEMENT DATA - SCHEDULE OF CHANGES IN PRESENT VALUE OF FUTURE INSURANCE PROFITS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Movement in Present Value of Future Insurance Profits [Roll Forward] | |||
Balance, beginning of year | $ 275.4 | $ 343.6 | $ 359.6 |
Amortization | (34.7) | (36.7) | (45.1) |
Effect of reinsurance transaction | 0 | 0 | (60.4) |
Amounts related to changes in unrealized investment gains (losses) on fixed maturities, available for sale | 8.7 | (14.4) | 89.5 |
Other adjustments | 0 | (17.1) | 0 |
Balance, end of year | $ 249.4 | $ 275.4 | $ 343.6 |
CONSOLIDATED STATEMENT OF CAS_4
CONSOLIDATED STATEMENT OF CASH FLOWS - SCHEDULE OF THE RECONCILIATION FOR NET INCOME PROVIDED BY OPERATING ACTIVITIES (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Cash flows from operating activities: | |||||||||||
Net income (loss) | $ 111.8 | $ 129.2 | $ 82 | $ (21.2) | $ 278 | $ 42 | $ 37.6 | $ 51.8 | $ 301.8 | $ 409.4 | $ (315) |
Adjustments to reconcile net income (loss) to net cash from operating activities: | |||||||||||
Amortization and depreciation | 303.9 | 267.9 | 292.2 | ||||||||
Income taxes | 14.1 | (132.8) | 18.4 | ||||||||
Insurance liabilities | 397.6 | 632.4 | 207.8 | ||||||||
Accrual and amortization of investment income | (125.2) | (240.7) | 14.9 | ||||||||
Deferral of policy acquisition costs | (275.8) | (288.7) | (261.7) | ||||||||
Net realized investment (gains) losses | 36.2 | (28.2) | 11.3 | ||||||||
Net realized gains on the transfer of assets related to reinsurance transaction | 0 | 0 | (363.4) | ||||||||
Loss related to reinsurance transaction | 0 | 0 | 1,067.6 | ||||||||
Payment to reinsurer pursuant to long-term care business reinsured | 0 | 0 | (365) | ||||||||
Loss on extinguishment of borrowings related to variable interest entities | 0 | 0 | 3.8 | ||||||||
Loss on extinguishment of debt | 0 | 7.3 | 0 | ||||||||
Other | 82.9 | 70.1 | 6.9 | ||||||||
Net cash from operating activities | $ 735.5 | $ 696.7 | $ 317.8 |
CONSOLIDATED STATEMENT OF CAS_5
CONSOLIDATED STATEMENT OF CASH FLOWS - SCHEDULE OF OTHER SIGNIFICANT NONCASH TRANSACTIONS (Details) - USD ($) $ in Millions | Sep. 27, 2018 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Supplemental Cash Flow Elements [Abstract] | ||||
Investments transferred | $ (3,582.1) | |||
Cash paid to reinsurer | (365) | |||
Accrued interest on investments transferred | (51.6) | |||
Present value of future profits and deferred acquisition costs written-off | (61.6) | |||
Reinsurance receivables | 2,818 | |||
Transaction expenses and other | (14.6) | |||
Release of future loss reserve | 189.3 | |||
Subtotal | (1,067.6) | |||
Realized gains on investments transferred | 363.4 | $ 0 | $ 0 | $ 363.4 |
Pre-tax loss related to reinsurance transaction | $ (704.2) | |||
Stock options, restricted stock and performance units | $ 24.5 | $ 19.3 | $ 24.7 |
STATUTORY INFORMATION (BASED _3
STATUTORY INFORMATION (BASED ON NON-GAAP MEASURES) - SCHEDULE OF STATUTORY ACCOUNTING PRACTICES (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Insurance [Abstract] | ||
Statutory capital and surplus | $ 1,805.5 | $ 1,696.6 |
Asset valuation reserve | 304 | 295.9 |
Interest maintenance reserve | 406.6 | 420.1 |
Total | $ 2,516.1 | $ 2,412.6 |
STATUTORY INFORMATION (BASED _4
STATUTORY INFORMATION (BASED ON NON-GAAP MEASURES) - NARRATIVE (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Statutory Accounting Practices [Line Items] | |||
Statutory capital and surplus included investments in upstream affiliates | $ 42.6 | $ 42.6 | |
Statutory accounting practices, statutory net income, amount | 409.6 | 291.4 | $ (293.3) |
Statutory accounting practices, loss related to reinsurance transaction | 541 | ||
Favorable impact to net operating income due to CARES Act | 99 | ||
Favorable impact to capital and surplus due to CARES Act | 53 | ||
Statutory accounting practices tax benefit | 46 | ||
Dividends payable, accrued | 46 | ||
Statutory accounting practices, net realized capital gain (loss), net of income taxes | (11.9) | (16.6) | 43.8 |
Statutory accounting practices, pre-tax amounts for fees and interest paid | $ 163.8 | $ 166.3 | $ 159.2 |
Percentage of statutory capital and surplus, available for dividend distribution without prior approval from regulatory agency | 10.00% | ||
Amount of dividends paid by insurance subsidiaries | $ 294.1 | ||
Trended adjusted capital to risk-based capital ratio threshold (less than) | 95.00% | ||
Company Plan for Improving Capital Position | Maximum | |||
Statutory Accounting Practices [Line Items] | |||
Adjusted capital to risk-based capital ratio | 100.00% | ||
Company Plan for Improving Capital Position | Minimum | |||
Statutory Accounting Practices [Line Items] | |||
Adjusted capital to risk-based capital ratio | 75.00% | ||
Regulatory Authority Special Examination | Maximum | |||
Statutory Accounting Practices [Line Items] | |||
Adjusted capital to risk-based capital ratio | 75.00% | ||
Regulatory Authority Special Examination | Minimum | |||
Statutory Accounting Practices [Line Items] | |||
Adjusted capital to risk-based capital ratio | 50.00% | ||
Regulatory Authority, Any Action Deemed Necessary | Maximum | |||
Statutory Accounting Practices [Line Items] | |||
Adjusted capital to risk-based capital ratio | 50.00% | ||
Regulatory Authority, Any Action Deemed Necessary | Minimum | |||
Statutory Accounting Practices [Line Items] | |||
Adjusted capital to risk-based capital ratio | 35.00% | ||
Regulatory Authority Control | Maximum | |||
Statutory Accounting Practices [Line Items] | |||
Adjusted capital to risk-based capital ratio | 35.00% | ||
Trend Test | Maximum | |||
Statutory Accounting Practices [Line Items] | |||
Adjusted capital to risk-based capital ratio | 150.00% | ||
Trend Test | Minimum | |||
Statutory Accounting Practices [Line Items] | |||
Adjusted capital to risk-based capital ratio | 100.00% |
BUSINESS SEGMENTS BUSINESS SEGM
BUSINESS SEGMENTS BUSINESS SEGMENTS - NARRATIVE (Details) | 12 Months Ended |
Dec. 31, 2020segmentproduct_line | |
Segment Reporting [Abstract] | |
Number of product lines | product_line | 3 |
Number of business segments | segment | 3 |
BUSINESS SEGMENTS - SCHEDULE OF
BUSINESS SEGMENTS - SCHEDULE OF SEGMENT REPORTING INFORMATION BY SEGMENT (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Revenues: | |||
Insurance policy income | $ 2,511.3 | $ 2,480.8 | $ 2,593.1 |
Net investment income | 1,222.5 | 1,362.9 | 1,306.2 |
Fee revenue and other income | 123.5 | 143.9 | 62.1 |
Total segment revenues | 3,807.5 | 3,910.5 | 3,888.8 |
Benefits and expenses: | |||
Insurance policy benefits | 2,157.9 | 2,417 | 2,278.6 |
Other operating costs and expenses | 942 | 932.9 | 814.2 |
Interest expense | 108.8 | 152.3 | 149.8 |
Total segment expenses | 3,343.7 | 3,542.2 | 3,507.6 |
Operating earnings before taxes | 463.8 | 368.3 | 381.2 |
Income tax expense on operating income | 101.5 | 78.3 | 78.1 |
Operating Income (Loss), Net Of Tax | 362.3 | 290 | 303.1 |
Insurance Product Lines | |||
Benefits and expenses: | |||
Allocated expenses | (557.7) | (543) | (521.2) |
Gross Profit | 921.5 | 789.1 | 769.1 |
Operating earnings before taxes | 363.8 | 246.1 | 247.9 |
Expenses not allocated to product lines | |||
Revenues: | |||
Fee revenue and other income | 6.9 | 39.7 | 9.4 |
Benefits and expenses: | |||
Expenses not allocated to product lines | 90.7 | 93.1 | 89.7 |
Gross Profit | (83.8) | (53.4) | (80.3) |
Investments not allocated to product lines | |||
Revenues: | |||
Change in market values of the underlying options supporting the fixed index annuity and life products (offset by market value changes credited to policyholder balances) | 37.8 | 153.7 | (45.5) |
Investment income not allocated to product lines | 258.5 | 265 | 277.7 |
Benefits and expenses: | |||
Other operating costs and expenses | 15 | 14.3 | 4.1 |
Market value changes of options credited to fixed index annuity and life policyholders | 37.8 | 153.7 | (45.5) |
Interest expense | 76.4 | 98.6 | 89.9 |
Gross Profit | 167.1 | 152.1 | 183.7 |
Assets of our other non-life companies | |||
Revenues: | |||
Fee revenue and other income | 106 | 88.7 | 52 |
Benefits and expenses: | |||
Distribution and commission expenses | 89.3 | 65.2 | 41.6 |
Gross Profit | 16.7 | 23.5 | 10.4 |
Annuity | Insurance Product Lines | |||
Revenues: | |||
Insurance policy income | 18.8 | 21.1 | 19.9 |
Net investment income | 465.1 | 464.4 | 456.4 |
Total insurance product line revenue | 483.9 | 485.5 | 476.3 |
Benefits and expenses: | |||
Insurance policy benefits | (93.7) | 12.8 | 37.1 |
Interest credited | 170.6 | 166.9 | 156.5 |
Amortization, non-deferred commissions and advertising expense | 110.3 | 75.7 | 69.1 |
Total expenses | 187.2 | 255.4 | 262.7 |
Gross Profit | 296.7 | 230.1 | 213.6 |
Health | Insurance Product Lines | |||
Revenues: | |||
Insurance policy income | 1,699.5 | 1,701.6 | 1,699.6 |
Net investment income | 282.3 | 279.9 | 271.8 |
Total insurance product line revenue | 1,981.8 | 1,981.5 | 1,971.4 |
Benefits and expenses: | |||
Insurance policy benefits | 1,329.7 | 1,424.9 | 1,434.6 |
Amortization, non-deferred commissions and advertising expense | 192.3 | 193.7 | 185.7 |
Total expenses | 1,522 | 1,618.6 | 1,620.3 |
Gross Profit | 459.8 | 362.9 | 351.1 |
Life | Insurance Product Lines | |||
Revenues: | |||
Insurance policy income | 793 | 758.1 | 740.9 |
Net investment income | 139.6 | 138.3 | 135.4 |
Total insurance product line revenue | 932.6 | 896.4 | 876.3 |
Benefits and expenses: | |||
Insurance policy benefits | 570 | 513.6 | 497.2 |
Interest credited | 44.5 | 41.9 | 40.5 |
Amortization, non-deferred commissions and advertising expense | 153.1 | 144.8 | 134.2 |
Total expenses | 767.6 | 700.3 | 671.9 |
Gross Profit | 165 | 196.1 | 204.4 |
Reinsured Long-Term Care Block Prior To Being Ceded | Insurance Product Lines | |||
Revenues: | |||
Insurance policy income | 0 | 0 | 132.7 |
Net investment income | 0 | 0 | 138.5 |
Benefits and expenses: | |||
Insurance policy benefits | 0 | 0 | 226.5 |
Amortization | 0 | 0 | 7 |
Other operating costs and expenses | 0 | 0 | 18.2 |
Ceded long-term care block | $ 0 | $ 0 | $ 19.5 |
BUSINESS SEGMENTS - RECONCILIAT
BUSINESS SEGMENTS - RECONCILIATION OF OPERATING PROFIT (LOSS) FROM SEGMENTS TO CONSOLIDATED (Details) - USD ($) $ in Millions | Sep. 27, 2018 | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Segment Reporting Information [Line Items] | ||||||||||||
Net realized gains on the transfer of assets related to reinsurance transaction | $ 363.4 | $ 0 | $ 0 | $ 363.4 | ||||||||
Total revenues | $ 1,076.2 | $ 1,013.5 | $ 1,014.2 | $ 717.2 | $ 1,069 | $ 944 | $ 979.8 | $ 1,023 | 3,821.1 | 4,015.8 | 4,313.5 | |
Loss on extinguishment of debt | 0 | 7.3 | 0 | |||||||||
Loss related to reinsurance transaction | 0 | 0 | 1,067.6 | |||||||||
Total benefits and expenses | 3,476.8 | 3,741.6 | 4,578.3 | |||||||||
Income (loss) before income taxes | 143.5 | 166.4 | 105.4 | (71) | 107.4 | 53.5 | 47.7 | 65.6 | 344.3 | 274.2 | (264.8) | |
Income tax expense (benefit): | ||||||||||||
Tax expense (benefit) on period income (loss) | 76.5 | 58.5 | (57.6) | |||||||||
Valuation allowance for deferred tax assets and other tax items | (34) | (193.7) | 107.8 | |||||||||
Net income (loss) | $ 111.8 | $ 129.2 | $ 82 | $ (21.2) | $ 278 | $ 42 | $ 37.6 | $ 51.8 | 301.8 | 409.4 | (315) | |
Operating segments | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Total segment revenues | 3,807.5 | 3,910.5 | 3,888.8 | |||||||||
Total segment expenses | 3,343.7 | 3,542.2 | 3,507.6 | |||||||||
Segment reconciling items | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Net realized investment gains (losses) | (36.2) | 28.2 | (11.3) | |||||||||
Net realized gains on the transfer of assets related to reinsurance transaction | 0 | 0 | 363.4 | |||||||||
Revenues related to earnings attributable to VIEs | 35.5 | 57.4 | 67.4 | |||||||||
Fee revenue related to transition services agreement | 14.3 | 19.7 | 5.2 | |||||||||
Insurance policy benefits - fair value changes in embedded derivative liabilities | 99 | 103.3 | (68.3) | |||||||||
Amortization related to fair value changes in embedded derivative liabilities | (19.9) | (21.9) | 12.8 | |||||||||
Amortization related to net realized investment gains (losses) | (2.4) | 0.6 | (0.4) | |||||||||
Expenses attributable to VIEs | 33.8 | 55.3 | 65.8 | |||||||||
Fair value changes related to agent deferred compensation plan | 16.3 | 20.4 | (11.9) | |||||||||
Loss on extinguishment of debt | 0 | 7.3 | 0 | |||||||||
Loss related to reinsurance transaction | 0 | 0 | 1,067.6 | |||||||||
Expenses related to transition services agreement | 8.8 | 18.5 | 5.1 | |||||||||
Other expenses | $ (2.5) | $ 15.9 | $ 0 |
BUSINESS SEGMENTS - SCHEDULE _2
BUSINESS SEGMENTS - SCHEDULE OF BALANCE SHEET INFORMATION, BY SEGMENT (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Jan. 01, 2020 | Dec. 31, 2019 | Jan. 01, 2019 |
Segment Reporting Information [Line Items] | ||||
Total assets | $ 35,339.9 | $ 33,613.1 | $ 33,630.9 | $ 31,436.7 |
Total liabilities | 29,855.7 | 28,953.9 | ||
Investments not allocated to product lines | ||||
Segment Reporting Information [Line Items] | ||||
Total assets | 6,425.5 | 6,360.9 | ||
Total liabilities | 3,930.6 | 3,786 | ||
Non-life companies included in the fee income segment | ||||
Segment Reporting Information [Line Items] | ||||
Total assets | 370.7 | 358.6 | ||
Total liabilities | 224.6 | 196 | ||
Other non-life companies | ||||
Segment Reporting Information [Line Items] | ||||
Total assets | 116.7 | 145.3 | ||
Total liabilities | 14.9 | 19.1 | ||
Annuity | Insurance Product Lines | ||||
Segment Reporting Information [Line Items] | ||||
Total assets | 13,074.2 | 12,141 | ||
Total liabilities | 11,764 | 11,398.1 | ||
Health | Insurance Product Lines | ||||
Segment Reporting Information [Line Items] | ||||
Total assets | 10,931.2 | 10,403.8 | ||
Total liabilities | 9,949 | 9,557.6 | ||
Life insurance inforce: | Insurance Product Lines | ||||
Segment Reporting Information [Line Items] | ||||
Total assets | 4,421.6 | 4,221.3 | ||
Total liabilities | $ 3,972.6 | $ 3,997.1 |
BUSINESS SEGMENTS - SCHEDULE _3
BUSINESS SEGMENTS - SCHEDULE OF SELECTED FINANCIAL INFORMATION, BY SEGMENT (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Segment Reporting Information [Line Items] | ||||
Present value of future profits | $ 249.4 | $ 275.4 | $ 343.6 | $ 359.6 |
Insurance Product Lines | ||||
Segment Reporting Information [Line Items] | ||||
Present value of future profits | 249.4 | 275.4 | ||
Deferred acquisition costs | 1,027.8 | 1,215.5 | ||
Insurance liabilities | 25,103.4 | 24,417.8 | ||
Annuity | Insurance Product Lines | ||||
Segment Reporting Information [Line Items] | ||||
Present value of future profits | 0 | 0.3 | ||
Deferred acquisition costs | 90 | 166.2 | ||
Insurance liabilities | 11,428.6 | 11,085.4 | ||
Health | Insurance Product Lines | ||||
Segment Reporting Information [Line Items] | ||||
Present value of future profits | 230 | 254.6 | ||
Deferred acquisition costs | 508.5 | 613.1 | ||
Insurance liabilities | 9,828.8 | 9,444.7 | ||
Life | Insurance Product Lines | ||||
Segment Reporting Information [Line Items] | ||||
Present value of future profits | 19.4 | 20.5 | ||
Deferred acquisition costs | 429.3 | 436.2 | ||
Insurance liabilities | $ 3,846 | $ 3,887.7 |
QUARTERLY FINANCIAL DATA (UNA_3
QUARTERLY FINANCIAL DATA (UNAUDITED) - SCHEDULE OF QUARTERLY FINANCIAL INFORMATION (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Quarterly Financial Data [Abstract] | |||||||||||
Revenues | $ 1,076.2 | $ 1,013.5 | $ 1,014.2 | $ 717.2 | $ 1,069 | $ 944 | $ 979.8 | $ 1,023 | $ 3,821.1 | $ 4,015.8 | $ 4,313.5 |
Income (loss) before income taxes | 143.5 | 166.4 | 105.4 | (71) | 107.4 | 53.5 | 47.7 | 65.6 | 344.3 | 274.2 | (264.8) |
Income tax expense (benefit) | 31.7 | 37.2 | 23.4 | (49.8) | (170.6) | 11.5 | 10.1 | 13.8 | 42.5 | (135.2) | 50.2 |
Net income (loss) | $ 111.8 | $ 129.2 | $ 82 | $ (21.2) | $ 278 | $ 42 | $ 37.6 | $ 51.8 | $ 301.8 | $ 409.4 | $ (315) |
Basic: | |||||||||||
Net income (loss) (in USD per share) | $ 0.81 | $ 0.92 | $ 0.57 | $ (0.15) | $ 1.85 | $ 0.27 | $ 0.24 | $ 0.32 | $ 2.12 | $ 2.62 | $ (1.90) |
Diluted: | |||||||||||
Net income (loss) (in USD per share) | $ 0.80 | $ 0.91 | $ 0.57 | $ (0.15) | $ 1.84 | $ 0.27 | $ 0.24 | $ 0.32 | $ 2.11 | $ 2.61 | $ (1.90) |
INVESTMENTS IN VARIABLE INTER_3
INVESTMENTS IN VARIABLE INTEREST ENTITIES - NARRATIVE (Details) $ in Millions | 12 Months Ended | ||||
Dec. 31, 2020USD ($)entity | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Jan. 01, 2020USD ($) | Jan. 01, 2019USD ($) | |
Variable Interest Entity [Line Items] | |||||
Loss on dissolution of variable interest entity | $ 0 | $ 5.1 | $ 0 | ||
Repayments of investment borrowings related to variable interest entities, amounts due in 2021 | 27.6 | ||||
Repayments of investment borrowings related to variable interest entities, amounts due in 2022 | 99.7 | ||||
Repayments of investment borrowings related to variable interest entities, amounts due in 2023 | 340.5 | ||||
Repayments of investment borrowings related to variable interest entities, amounts due in 2024 | 314.1 | ||||
Repayments of investment borrowings related to variable interest entities, amounts due in 2025 | 183.3 | ||||
Repayments of investment borrowings related to variable interest entities, amounts due in 2026 | 120.1 | ||||
Repayments of investment borrowings related to variable interest entities, amounts due in 2027 | 63.4 | ||||
Repayments of investment borrowings related to variable interest entities, amounts due in 2028 | 0.8 | ||||
Repayments of investment borrowings related to variable interest entities, amounts due in 2030 | 7 | ||||
Amortized cost | 19,921.1 | 19,179.5 | |||
Fixed maturities, available for sale | 23,383.6 | 21,295.2 | $ 21,293.1 | $ 18,443.7 | |
Variable interest entity amortized cost securities held | 1,211.3 | ||||
Variable interest entity, gross unrealized gains fixed maturity securities | 3.7 | ||||
Variable interest entity gross unrealized losses fixed maturity securities | 10.5 | ||||
Variable interest entity fixed maturity securities allowance for credit loss | 15.1 | ||||
Variable interest entity, estimated fair value of securities held | 1,189.4 | ||||
Variable interest entities net realized loss on investments | 13.8 | 20.5 | 3.6 | ||
Variable interest entities net loss from sale of fixed maturity investments | (8.6) | (12.4) | |||
Variable interest entities change in allowance for current expected credit losses | (5.2) | ||||
Variable interest entity, gross investment losses from sale | 8.7 | 12.6 | 3.8 | ||
Investments held by VIEs and sold | $ 57.4 | 280.6 | $ 57.2 | ||
Writedowns of investments for other than temporary declines in fair value recognized through net income | 3 | ||||
Number of VIEs in default | entity | 3 | ||||
Fair value of investments in unrealized loss position for less than 12 months | $ 885 | 1,262.8 | |||
Gross unrealized losses of investments in unrealized loss position for less than 12 months | 16.3 | 11.4 | |||
Fair value of investments in unrealized loss position for more than 12 months | 324.8 | 341.2 | |||
Gross unrealized losses of investments in unrealized loss position for more than 12 months | 7.2 | 9.7 | |||
Non Investment Grade | |||||
Variable Interest Entity [Line Items] | |||||
Amortized cost | $ 1,993.3 | ||||
Percentage of available-for-sale debt securities | 10.00% | ||||
Fixed maturities, available for sale | $ 2,177.3 | ||||
Available-for-sale securities, percentage of amortized cost | 109.00% | ||||
Continuous unrealized loss position | 20.00% | ||||
Variable Interest Entity | |||||
Variable Interest Entity [Line Items] | |||||
Amortized cost | $ 1,211.3 | ||||
Fixed maturities, available for sale | 1,189.4 | ||||
Variable interest entity amortized cost securities held | 5.2 | ||||
Variable interest entity fixed maturity securities allowance for credit loss | 3.5 | ||||
Variable interest entity fixed maturity securities carrying value | 1.6 | ||||
Fair value of investments in unrealized loss position for less than 12 months | 461.9 | 153 | |||
Gross unrealized losses of investments in unrealized loss position for less than 12 months | 4.9 | 3.1 | |||
Fair value of investments in unrealized loss position for more than 12 months | 238.3 | 430.1 | |||
Gross unrealized losses of investments in unrealized loss position for more than 12 months | 3.9 | $ 18.5 | |||
Variable Interest Entity | Non Investment Grade | |||||
Variable Interest Entity [Line Items] | |||||
Amortized cost | $ 1,181.2 | ||||
Percentage of available-for-sale debt securities | 98.00% | ||||
Fixed maturities, available for sale | $ 1,159.2 | ||||
Available-for-sale securities, percentage of amortized cost | 98.00% |
INVESTMENTS IN VARIABLE INTER_4
INVESTMENTS IN VARIABLE INTEREST ENTITIES - SCHEDULE OF IMPACT ON BALANCE SHEET OF CONSOLIDATING VARIABLE INTEREST ENTITIES (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Jan. 01, 2020 | Dec. 31, 2019 | Jan. 01, 2019 |
Assets: | ||||
Investments held by variable interest entities | $ 1,189.4 | $ 1,178.7 | $ 1,188.6 | |
Cash and cash equivalents held by variable interest entities | 54.1 | 74.7 | ||
Accrued investment income | 205.8 | 205.9 | ||
Income tax assets, net | 199.4 | 437.5 | 432.6 | $ 630.9 |
Other assets | 492.8 | 476 | ||
Total assets | 35,339.9 | $ 33,613.1 | 33,630.9 | $ 31,436.7 |
Liabilities: | ||||
Other liabilities | 821.8 | 750.2 | ||
Borrowings related to variable interest entities | 1,151.8 | 1,152.5 | ||
Total liabilities | 29,855.7 | 28,953.9 | ||
Variable Interest Entity | ||||
Assets: | ||||
Investments held by variable interest entities | 1,189.4 | 1,188.6 | ||
Notes receivable of VIEs held by subsidiaries | (113.8) | (113.8) | ||
Cash and cash equivalents held by variable interest entities | 54.1 | 74.7 | ||
Accrued investment income | 1.7 | 1.7 | ||
Income tax assets, net | 10.4 | 8 | ||
Other assets | 2.4 | 1.4 | ||
Total assets | 1,144.2 | 1,160.6 | ||
Liabilities: | ||||
Other liabilities | 31.5 | 38.4 | ||
Borrowings related to variable interest entities | 1,151.8 | 1,152.5 | ||
Notes payable of VIEs held by subsidiaries | 0 | 0 | ||
Total liabilities | 1,183.3 | 1,190.9 | ||
Variable Interest Entity | VIEs | ||||
Assets: | ||||
Investments held by variable interest entities | 1,189.4 | 1,188.6 | ||
Notes receivable of VIEs held by subsidiaries | 0 | 0 | ||
Cash and cash equivalents held by variable interest entities | 54.1 | 74.7 | ||
Accrued investment income | 1.7 | 1.7 | ||
Income tax assets, net | 10.4 | 8 | ||
Other assets | 3.3 | 2.8 | ||
Total assets | 1,258.9 | 1,275.8 | ||
Liabilities: | ||||
Other liabilities | 36.3 | 42.8 | ||
Borrowings related to variable interest entities | 1,151.8 | 1,152.5 | ||
Notes payable of VIEs held by subsidiaries | 126.1 | 126.1 | ||
Total liabilities | 1,314.2 | 1,321.4 | ||
Variable Interest Entity | Eliminations | ||||
Assets: | ||||
Investments held by variable interest entities | 0 | 0 | ||
Notes receivable of VIEs held by subsidiaries | (113.8) | (113.8) | ||
Cash and cash equivalents held by variable interest entities | 0 | 0 | ||
Accrued investment income | 0 | 0 | ||
Income tax assets, net | 0 | 0 | ||
Other assets | (0.9) | (1.4) | ||
Total assets | (114.7) | (115.2) | ||
Liabilities: | ||||
Other liabilities | (4.8) | (4.4) | ||
Borrowings related to variable interest entities | 0 | 0 | ||
Notes payable of VIEs held by subsidiaries | (126.1) | (126.1) | ||
Total liabilities | $ (130.9) | $ (130.5) |
INVESTMENTS IN VARIABLE INTER_5
INVESTMENTS IN VARIABLE INTEREST ENTITIES - SUPPLEMENTAL INFORMATION, REVENUES AND EXPENSES OF VARIABLE INTEREST ENTITIES (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Revenues: | |||||||||||
Net investment income – policyholder and other special-purpose portfolios | $ 143.5 | $ 264.9 | $ 33.7 | ||||||||
Fee revenue and other income | 123.5 | 143.9 | 62.1 | ||||||||
Total revenues | $ 1,076.2 | $ 1,013.5 | $ 1,014.2 | $ 717.2 | $ 1,069 | $ 944 | $ 979.8 | $ 1,023 | 3,821.1 | 4,015.8 | 4,313.5 |
Expenses: | |||||||||||
Interest expense | 108.8 | 152.3 | 149.8 | ||||||||
Other operating expenses | 942 | 932.9 | 814.2 | ||||||||
Total benefits and expenses | 3,476.8 | 3,741.6 | 4,578.3 | ||||||||
Loss on extinguishment of borrowings | 0 | 0 | (3.8) | ||||||||
Income (loss) before income taxes | $ 143.5 | $ 166.4 | $ 105.4 | $ (71) | $ 107.4 | $ 53.5 | $ 47.7 | $ 65.6 | 344.3 | 274.2 | (264.8) |
Variable Interest Entity | |||||||||||
Revenues: | |||||||||||
Net investment income – policyholder and other special-purpose portfolios | 52.7 | 74.3 | 81.5 | ||||||||
Total revenues | 57.8 | 80.1 | 89.1 | ||||||||
Expenses: | |||||||||||
Interest expense | 32.4 | 53.7 | 59.9 | ||||||||
Other operating expenses | 1.4 | 1.6 | 2.1 | ||||||||
Total benefits and expenses | 33.8 | 55.3 | 62 | ||||||||
Income before net realized investment gains (losses) and income taxes | 24 | 24.8 | 27.1 | ||||||||
Net realized investment gains (losses) | (13.8) | (20.5) | (3.6) | ||||||||
Loss on extinguishment of borrowings | 0 | 0 | (3.8) | ||||||||
Income (loss) before income taxes | 10.2 | 4.3 | 19.7 | ||||||||
Variable Interest Entity | Financial Service | |||||||||||
Revenues: | |||||||||||
Fee revenue and other income | $ 5.1 | $ 5.8 | $ 7.6 |
INVESTMENTS IN VARIABLE INTER_6
INVESTMENTS IN VARIABLE INTEREST ENTITIES - ALLOWANCE FOR CREDIT LOSSES (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Debt Securities, Available-for-sale, Allowance for Credit Loss [Roll Forward] | |
Allowance at January 1, 2020 | $ 2.1 |
Additions for securities for which credit losses were not previously recorded | 25.7 |
Additions for purchased securities with deteriorated credit | 0 |
Additions (reductions) for securities where an allowance was previously recorded | (24.1) |
Reduction for securities sold during the period | (1.5) |
Reduction for securities for which the Company made the decision to sell where an allowance was previously recorded | 0 |
Write-offs | 0 |
Recoveries of previously written-off amount | 0 |
Allowance at December 31, 2020 | 2.2 |
Corporate securities | |
Debt Securities, Available-for-sale, Allowance for Credit Loss [Roll Forward] | |
Allowance at January 1, 2020 | 2.1 |
Additions for securities for which credit losses were not previously recorded | 23.6 |
Additions for purchased securities with deteriorated credit | 0 |
Additions (reductions) for securities where an allowance was previously recorded | (22.3) |
Reduction for securities sold during the period | (1.5) |
Reduction for securities for which the Company made the decision to sell where an allowance was previously recorded | 0 |
Write-offs | 0 |
Recoveries of previously written-off amount | 0 |
Allowance at December 31, 2020 | 1.9 |
Variable Interest Entity | Corporate securities | |
Debt Securities, Available-for-sale, Allowance for Credit Loss [Roll Forward] | |
Allowance at January 1, 2020 | 9.9 |
Additions for securities for which credit losses were not previously recorded | 26.6 |
Additions for purchased securities with deteriorated credit | 0 |
Additions (reductions) for securities where an allowance was previously recorded | (15.7) |
Reduction for securities sold during the period | (5.7) |
Reduction for securities for which the Company made the decision to sell where an allowance was previously recorded | 0 |
Write-offs | 0 |
Recoveries of previously written-off amount | 0 |
Allowance at December 31, 2020 | $ 15.1 |
INVESTMENTS IN VARIABLE INTER_7
INVESTMENTS IN VARIABLE INTEREST ENTITIES - SUMMARY OF VARIABLE INTEREST ENTITIES BY CONTRACTUAL MATURITY (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Jan. 01, 2020 | Dec. 31, 2019 | Jan. 01, 2019 |
Amortized cost | ||||
Due in one year or less | $ 388.7 | |||
Due after one year through five years | 987.4 | |||
Due after five years through ten years | 1,540.4 | |||
Amortized cost | 19,921.1 | $ 19,179.5 | ||
Due after one year through five years | 51.7 | |||
Due after five years through ten years | 86.4 | |||
Total | 1,415.7 | |||
Estimated fair value | ||||
Due in one year or less | 396.4 | |||
Due after one year through five years | 1,052.9 | |||
Due after five years through ten years | 1,715.6 | |||
Estimated fair value | 23,383.6 | $ 21,293.1 | $ 21,295.2 | $ 18,443.7 |
Due after one year through five years | 50.4 | |||
Due after five years through ten years | 84.8 | |||
Total | 1,381.7 | |||
Variable Interest Entity | ||||
Amortized cost | ||||
Due in one year or less | 6.6 | |||
Due after one year through five years | 762.7 | |||
Due after five years through ten years | 442 | |||
Amortized cost | 1,211.3 | |||
Due in one year or less | 6.6 | |||
Due after one year through five years | 660.9 | |||
Due after five years through ten years | 258.9 | |||
Total | 926.4 | |||
Estimated fair value | ||||
Due in one year or less | 5.4 | |||
Due after one year through five years | 744 | |||
Due after five years through ten years | 440 | |||
Estimated fair value | 1,189.4 | |||
Due in one year or less | 5.4 | |||
Due after one year through five years | 640.7 | |||
Due after five years through ten years | 254.7 | |||
Total | $ 900.8 |
INVESTMENTS IN VARIABLE INTER_8
INVESTMENTS IN VARIABLE INTEREST ENTITIES - SCHEDULE OF INVESTMENTS IN OUR PORTFOLIO WHICH HAVE BEEN CONTINUOUSLY IN AN UNREALIZED LOSS POSITION EXCEEDING 20% OF AMORTIZED COST PRIOR TO SALE (Details) - Variable Interest Entity $ in Millions | Dec. 31, 2020USD ($)product_distribution_channel |
Debt Securities, Available-for-sale [Line Items] | |
Less than 6 months prior to sale, Number of issuers | product_distribution_channel | 7 |
Greater than or equal to 6 months and less than 12 months prior to sale, Number of issuers | product_distribution_channel | 5 |
Number of issuers, Total | product_distribution_channel | 12 |
Less than 6 months prior to sale, Amortized cost | $ 10.3 |
Greater than or equal to 6 months and less than 12 months prior to sale, Amortized cost | 7 |
Amortized cost, Total | 17.3 |
Less than 6 months prior to sale, Fair value | 7.4 |
Greater than or equal to 6 months and less than 12 months prior to sale, Fair value | 4.2 |
Fair value, Total | $ 11.6 |
SUBSEQUENT EVENT (Details)
SUBSEQUENT EVENT (Details) - Subsequent Event people in Millions, $ in Millions | Feb. 09, 2021USD ($)peopleemployer |
DirectPath | |
Subsequent Event [Line Items] | |
Number of employers served | employer | 400 |
Number of employees (more than) | people | 2.5 |
DirectPath | |
Subsequent Event [Line Items] | |
Purchase price | $ | $ 50 |
SCHEDULE II - Condensed Finan_2
SCHEDULE II - Condensed Financial Information of Registrant (Parent Company) - Balance Sheet (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Jan. 01, 2020 | Dec. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Assets: | |||||||
Income tax assets, net | $ 199.4 | $ 432.6 | |||||
Other assets | 492.8 | 476 | |||||
Total assets | 35,339.9 | $ 33,613.1 | 33,630.9 | $ 31,436.7 | |||
Liabilities: | |||||||
Notes payable | 1,136.2 | 989.1 | |||||
Other liabilities | 821.8 | 750.2 | |||||
Total liabilities | 29,855.7 | 28,953.9 | |||||
Commitments and Contingencies | |||||||
Shareholders' equity: | |||||||
Accumulated other comprehensive income | 2,186.1 | 1,372.5 | $ 1,195.8 | ||||
Retained earnings | 752.3 | 517.9 | 535.7 | 193.5 | 576.7 | ||
Total shareholders' equity | 5,484.2 | $ 4,659.2 | 4,677 | $ 3,367.8 | $ 3,370.9 | $ 4,847.5 | $ 4,847.5 |
Total liabilities and shareholders' equity | 35,339.9 | 33,630.9 | |||||
Parent Company | |||||||
Assets: | |||||||
Cash and cash equivalents - unrestricted | 391.3 | 181.9 | |||||
Investment in wholly-owned subsidiaries (eliminated in consolidation) | 6,202.7 | 5,501.5 | |||||
Income tax assets, net | 160.3 | 140.9 | |||||
Receivable from subsidiaries (eliminated in consolidation) | 89.6 | 38.4 | |||||
Other assets | 34.3 | 0.8 | |||||
Total assets | 6,878.2 | 5,863.5 | |||||
Liabilities: | |||||||
Notes payable | 1,136.2 | 989.1 | |||||
Payable to subsidiaries (eliminated in consolidation) | 136.7 | 126.8 | |||||
Other liabilities | 121.1 | 70.6 | |||||
Total liabilities | 1,394 | 1,186.5 | |||||
Commitments and Contingencies | |||||||
Shareholders' equity: | |||||||
Common stock and additional paid-in capital ($0.01 par value, 8,000,000,000 shares authorized, shares issued and outstanding: 2020 - 135,279,119; 2019 - 148,084,178) | 2,545.8 | 2,768.8 | |||||
Accumulated other comprehensive income | 2,186.1 | 1,372.5 | |||||
Retained earnings | 752.3 | 535.7 | |||||
Total shareholders' equity | 5,484.2 | 4,677 | |||||
Total liabilities and shareholders' equity | $ 6,878.2 | $ 5,863.5 |
SCHEDULE II - Condensed Finan_3
SCHEDULE II - Condensed Financial Information of Registrant (Parent Company) - Balance Sheet (Parenthetical) (Details) - $ / shares | Dec. 31, 2020 | Dec. 31, 2019 |
Condensed Financial Statements, Captions [Line Items] | ||
Common stock, par value (in USD 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) | 135,279,119 | 148,084,178 |
Common stock, shares outstanding (in shares) | 135,279,119 | 148,084,178 |
Parent Company | ||
Condensed Financial Statements, Captions [Line Items] | ||
Common stock, par value (in USD 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) | 135,279,119 | 148,084,178 |
Common stock, shares outstanding (in shares) | 135,279,119 | 148,084,178 |
SCHEDULE II - Condensed Finan_4
SCHEDULE II - Condensed Financial Information of Registrant (Parent Company) - Statement of Operations (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Revenues: | |||||||||||
Net investment income | $ 1,222.5 | $ 1,362.9 | $ 1,306.2 | ||||||||
Total revenues | $ 1,076.2 | $ 1,013.5 | $ 1,014.2 | $ 717.2 | $ 1,069 | $ 944 | $ 979.8 | $ 1,023 | 3,821.1 | 4,015.8 | 4,313.5 |
Expenses: | |||||||||||
Interest expense | 108.8 | 152.3 | 149.8 | ||||||||
Loss on extinguishment of debt | 0 | 7.3 | 0 | ||||||||
Income (loss) before income taxes | 143.5 | 166.4 | 105.4 | (71) | 107.4 | 53.5 | 47.7 | 65.6 | 344.3 | 274.2 | (264.8) |
Income tax benefit | 31.7 | 37.2 | 23.4 | (49.8) | (170.6) | 11.5 | 10.1 | 13.8 | 42.5 | (135.2) | 50.2 |
Net income (loss) | $ 111.8 | $ 129.2 | $ 82 | $ (21.2) | $ 278 | $ 42 | $ 37.6 | $ 51.8 | 301.8 | 409.4 | (315) |
Parent Company | |||||||||||
Revenues: | |||||||||||
Net investment income | 28.7 | 13 | 14.3 | ||||||||
Net investment income - affiliated | 0.8 | 0.8 | 0 | ||||||||
Net realized investment gains (losses) | 0.2 | 0.1 | (4.3) | ||||||||
Total revenues | 29.7 | 13.9 | 10 | ||||||||
Expenses: | |||||||||||
Interest expense | 55.2 | 52.4 | 48 | ||||||||
Intercompany expenses (eliminated in consolidation) | 1.1 | 3.2 | 2.9 | ||||||||
Operating costs and expenses | 65.9 | 52.6 | 40 | ||||||||
Loss on extinguishment of debt | 0 | 7.3 | 0 | ||||||||
Total expenses | 122.2 | 115.5 | 90.9 | ||||||||
Income (loss) before income taxes | (92.5) | (101.6) | (80.9) | ||||||||
Income tax benefit | (28.2) | (32.4) | (20.8) | ||||||||
Loss before equity in undistributed earnings of subsidiaries | (64.3) | (69.2) | (60.1) | ||||||||
Equity in undistributed earnings (losses) of subsidiaries (eliminated in consolidation) | 366.1 | 478.6 | (254.9) | ||||||||
Net income (loss) | $ 301.8 | $ 409.4 | $ (315) |
SCHEDULE II - Condensed Finan_5
SCHEDULE II - Condensed Financial Information of Registrant (Parent Company) - Statement of Cash Flows (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | ||
Condensed Financial Statements, Captions [Line Items] | ||||
Cash flows from operating activities | $ 735.5 | $ 696.7 | $ 317.8 | |
Cash flows from investing activities: | ||||
Sales of investments | 1,480 | 2,899.2 | 3,210.2 | |
Purchases of investments | (4,280.7) | (5,576.4) | (6,205.8) | |
Net sales of trading securities | 13.8 | (14.1) | 25.9 | |
Net cash used by investing activities | (608.4) | (555.6) | (525.7) | |
Cash flows from financing activities: | ||||
Issuance of notes payable, net | 145.8 | 494.2 | 0 | |
Payments on notes payable | 0 | (425) | 0 | |
Expenses related to extinguishment of debt | 0 | (6.1) | 0 | |
Issuance of common stock | 16.5 | 6.9 | 3.9 | |
Payments to repurchase common stock | (268.3) | (254.5) | (108) | |
Net cash provided (used) by financing activities | 210.1 | (143) | 107.2 | |
Net increase (decrease) in cash and cash equivalents | 337.2 | (1.9) | (100.7) | |
Cash and cash equivalents - unrestricted and held by variable interest entities, beginning of year | 654.7 | 656.6 | 757.3 | |
Cash and cash equivalents - unrestricted and held by variable interest entities, end of year | 991.9 | 654.7 | 656.6 | |
Parent Company | ||||
Condensed Financial Statements, Captions [Line Items] | ||||
Cash flows from operating activities | (136.3) | (77.9) | (107.2) | |
Cash flows from investing activities: | ||||
Sales of investments | 18.4 | 20.2 | 250.1 | |
Purchases of investments | (18.2) | 0 | (30.9) | |
Net sales of trading securities | 26.8 | 8.8 | 8.3 | |
Dividends received from consolidated subsidiary, net of capital contributions of nil in 2020; nil in 2019; and $265.0 in 2018 | [1] | 324.7 | 194.3 | (40.1) |
Net cash used by investing activities | 351.7 | 223.3 | 187.4 | |
Cash flows from financing activities: | ||||
Issuance of notes payable, net | 145.8 | 494.2 | 0 | |
Payments on notes payable | 0 | (425) | 0 | |
Expenses related to extinguishment of debt | 0 | (6.1) | 0 | |
Issuance of common stock | 19 | 9.2 | 3.9 | |
Payments to repurchase common stock | (268.3) | (254.5) | (108) | |
Common stock dividends paid | (67) | (67.1) | (64.8) | |
Issuance of notes payable to affiliates | [1] | 308.1 | 254.9 | 227.7 |
Payments on notes payable to affiliates | [1] | (143.6) | (175) | (94.2) |
Net cash provided (used) by financing activities | (6) | (169.4) | (35.4) | |
Net increase (decrease) in cash and cash equivalents | 209.4 | (24) | 44.8 | |
Cash and cash equivalents - unrestricted and held by variable interest entities, beginning of year | 181.9 | 205.9 | 161.1 | |
Cash and cash equivalents - unrestricted and held by variable interest entities, end of year | $ 391.3 | $ 181.9 | $ 205.9 | |
[1] | Eliminated in consolidation |
SCHEDULE II - Condensed Finan_6
SCHEDULE II - Condensed Financial Information of Registrant (Parent Company) - Statement of Cash Flows (Parenthetical) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Parent Company | |||
Condensed Financial Statements, Captions [Line Items] | |||
Capital contributions | $ 0 | $ 0 | $ 265 |
SCHEDULE IV - REINSURANCE (Deta
SCHEDULE IV - REINSURANCE (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Line Items] | |||
Assumed premiums earned | $ 23 | $ 25.1 | $ 27.8 |
Reinsurance ceded | (247.8) | (267.9) | (156.2) |
Insurance policy income | 2,511.3 | 2,480.8 | 2,593.1 |
Life insurance inforce: | |||
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Line Items] | |||
Direct | 29,109.8 | 28,282.8 | 27,662.8 |
Assumed | 99.5 | 107.1 | 114.4 |
Ceded | (3,042.4) | (3,204.1) | (3,321.3) |
Net insurance inforce | $ 26,166.9 | $ 25,185.8 | $ 24,455.9 |
Percentage of assumed to net | 0.40% | 0.40% | 0.50% |
Insurance policy income: | |||
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Line Items] | |||
Direct premiums earned | $ 2,565.4 | $ 2,537.7 | $ 2,540.2 |
Assumed premiums earned | 23 | 25.1 | 28 |
Reinsurance ceded | (248.1) | (244.3) | (128.3) |
Insurance policy income | $ 2,340.3 | $ 2,318.5 | $ 2,439.9 |
Percentage of assumed to net | 1.00% | 1.10% | 1.10% |