Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2022 | Oct. 24, 2022 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2022 | |
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 Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 114,403,320 | |
Entity Central Index Key | 0001224608 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Common Stock, par value $0.01 per share | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | CNO | |
Security Exchange Name | NYSE | |
Rights to purchase Series E Junior Participating Preferred Stock | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Rights to purchase Series E Junior Participating Preferred Stock | |
Security Exchange Name | NYSE | |
No Trading Symbol Flag | true | |
5.125% Subordinated Debentures due 2060 | ||
Document Information [Line Items] | ||
Title of 12(b) Security | 5.125% Subordinated Debentures due 2060 | |
Trading Symbol | CNOpA | |
Security Exchange Name | NYSE |
CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Investments: | ||
Fixed maturities, available for sale, at fair value (net of allowance for credit losses: September 30, 2022 - $52.0 and December 31, 2021 - $7.6; amortized cost: September 30, 2022 - $23,442.5 and December 31, 2021 - $21,867.6) | $ 20,301.1 | $ 24,805.4 |
Equity securities at fair value | 135.8 | 131.1 |
Mortgage loans (net of allowance for credit losses: September 30, 2022 - $5.3 and December 31, 2021 - $5.6) | 1,227.3 | 1,218.6 |
Policy loans | 120.2 | 120.2 |
Trading securities | 223.3 | 227.2 |
Investments held by variable interest entities (net of allowance for credit losses: September 30, 2022 - $6.5 and December 31, 2021 - $3.7; amortized cost: September 30, 2022 - $1,166.7 and December 31, 2021 - $1,206.8) | 1,099.2 | 1,199.6 |
Other invested assets | 1,028.6 | 1,224 |
Total investments | 24,135.5 | 28,926.1 |
Cash and cash equivalents - unrestricted | 498 | 632.1 |
Cash and cash equivalents held by variable interest entities | 55.5 | 99.6 |
Accrued investment income | 236 | 216.4 |
Present value of future profits | 218.9 | 222.6 |
Deferred acquisition costs | 1,886.4 | 1,112 |
Reinsurance receivables (net of allowance for credit losses: September 30, 2022 - $2.0 and December 31, 2021 - $3.0) | 4,271.9 | 4,354.3 |
Income tax assets, net | 1,180.2 | 118.3 |
Assets held in separate accounts | 2.7 | 3.9 |
Other assets | 552.2 | 519.1 |
Total assets | 33,037.3 | 36,204.4 |
Liabilities for insurance products: | ||
Policyholder account liabilities | 14,653.7 | 13,689.7 |
Future policy benefits | 11,747.5 | 11,670.7 |
Liability for policy and contract claims | 454.3 | 501.8 |
Unearned and advanced premiums | 238.2 | 246.7 |
Liabilities related to separate accounts | 2.7 | 3.9 |
Other liabilities | 749.4 | 830.9 |
Investment borrowings | 1,639.9 | 1,715.8 |
Borrowings related to variable interest entities | 1,115.3 | 1,147.9 |
Notes payable – direct corporate obligations | 1,138.4 | 1,137.3 |
Total liabilities | 31,739.4 | 30,944.7 |
Commitments and Contingencies | ||
Shareholders' equity: | ||
Common stock ($0.01 par value, 8,000,000,000 shares authorized, shares issued and outstanding: September 30, 2022 – 114,367,345; December 31, 2021 – 120,377,152) | 1.1 | 1.2 |
Additional paid-in capital | 2,030.6 | 2,184.2 |
Accumulated other comprehensive income (loss) | (2,165.7) | 1,947.1 |
Retained earnings | 1,431.9 | 1,127.2 |
Total shareholders' equity | 1,297.9 | 5,259.7 |
Total liabilities and shareholders' equity | $ 33,037.3 | $ 36,204.4 |
CONSOLIDATED BALANCE SHEET (Par
CONSOLIDATED BALANCE SHEET (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Investments: | ||
Fixed maturities, available for sale, allowance for credit losses | $ 52 | $ 7.6 |
Fixed maturities, available for sale, amortized cost | 23,442.5 | 21,867.6 |
Mortgage loans, allowance for credit losses | 5.3 | 5.6 |
Investments held by variable interest entities, allowance for credit losses | 6.5 | 3.7 |
Investments held by variable interest entities, amortized cost | 1,166.7 | 1,206.8 |
Reinsurance receivables, allowance for current expected credit losses | $ 2 | $ 3 |
Shareholders' equity: | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 8,000,000,000 | 8,000,000,000 |
Common stock, shares issued (in shares) | 114,367,345 | 120,377,152 |
Common stock, shares outstanding (in shares) | 114,367,345 | 120,377,152 |
CONSOLIDATED STATEMENT OF OPERA
CONSOLIDATED STATEMENT OF OPERATIONS - USD ($) shares in Thousands, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenues: | ||||
Insurance policy income | $ 623.2 | $ 630.6 | $ 1,873.8 | $ 1,893.5 |
Net investment income: | ||||
General account assets | 289 | 289.5 | 884.2 | 854.3 |
Policyholder and other special-purpose portfolios | (20.9) | 18.7 | (184) | 171.3 |
Investment gains (losses): | ||||
Realized investment gains (losses) | (8.2) | 3.7 | 3.6 | 14.8 |
Other investment gains (losses) | (9.5) | (6) | (102.8) | 11.4 |
Total investment gains (losses) | (17.7) | (2.3) | (99.2) | 26.2 |
Fee revenue and other income | 31.7 | 31.8 | 128.4 | 102.1 |
Total revenues | 905.3 | 968.3 | 2,603.2 | 3,047.4 |
Benefits and expenses: | ||||
Insurance policy benefits | 412.2 | 524.8 | 1,099.1 | 1,641.3 |
Interest expense | 37.6 | 23.7 | 89.2 | 71.8 |
Amortization | 87.5 | 57.9 | 279.5 | 200.2 |
Other operating costs and expenses | 230.8 | 233.9 | 673.5 | 714.5 |
Total benefits and expenses | 768.1 | 840.3 | 2,141.3 | 2,627.8 |
Income before income taxes | 137.2 | 128 | 461.9 | 419.6 |
Income tax expense on period income | 32.2 | 28.2 | 108.5 | 94.4 |
Net income | $ 105 | $ 99.8 | $ 353.4 | $ 325.2 |
Basic: | ||||
Weighted average shares outstanding (in shares) | 114,354 | 126,429 | 116,170 | 130,528 |
Net income (in dollars per share) | $ 0.92 | $ 0.79 | $ 3.04 | $ 2.49 |
Diluted: | ||||
Weighted average shares outstanding (in shares) | 115,928 | 129,018 | 118,072 | 133,162 |
Net income (in dollars per share) | $ 0.91 | $ 0.77 | $ 2.99 | $ 2.44 |
CONSOLIDATED STATEMENT OF COMPR
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 105 | $ 99.8 | $ 353.4 | $ 325.2 |
Other comprehensive loss, before tax: | ||||
Unrealized losses on investments | (1,407.2) | (112.9) | (6,128.2) | (436.6) |
Adjustment to present value of future profits and deferred acquisition costs | 126.2 | 13.4 | 666.5 | 21.6 |
Amount related to premium deficiencies assuming the net unrealized gains had been realized | 0 | 16.5 | 165 | 114 |
Reclassification adjustments: | ||||
For net realized investment (gains) losses included in net income | 1 | (0.9) | 36 | (26.4) |
For amortization of the present value of future profits and deferred acquisition costs related to net realized investment (gains) losses included in net income | (0.6) | 0.1 | (1.7) | 1.4 |
Other comprehensive loss before tax | (1,280.6) | (83.8) | (5,262.4) | (326) |
Income tax benefit related to items of accumulated other comprehensive loss | 279.9 | 18 | 1,149.6 | 69.6 |
Other comprehensive loss, net of tax | (1,000.7) | (65.8) | (4,112.8) | (256.4) |
Comprehensive income (loss) | $ (895.7) | $ 34 | $ (3,759.4) | $ 68.8 |
CONSOLIDATED STATEMENT OF SHARE
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY - USD ($) $ in Millions | Total | Common stock | Additional paid-in capital | Accumulated other comprehensive income (loss) | Retained earnings |
Balance, beginning of period (in shares) at Dec. 31, 2020 | 135,279,000 | ||||
Balance, beginning of period at Dec. 31, 2020 | $ 5,484.2 | $ 1.3 | $ 2,544.5 | $ 2,186.1 | $ 752.3 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 325.2 | 325.2 | |||
Change in unrealized appreciation (depreciation) of investments (net of applicable income tax benefit) | (256.4) | (256.4) | |||
Common stock repurchased (in shares) | (12,511,000) | ||||
Common stock repurchased | (302.4) | $ (0.1) | (302.3) | ||
Dividends on common stock | (50.1) | (50.1) | |||
Employee benefit plans, net of shares used to pay tax withholdings (in shares) | 1,502,000 | ||||
Employee benefit plans, net of shares used to pay tax withholdings | 32.4 | 32.4 | |||
Balance, end of period (in shares) at Sep. 30, 2021 | 124,270,000 | ||||
Balance, end of period at Sep. 30, 2021 | 5,232.9 | $ 1.2 | 2,274.6 | 1,929.7 | 1,027.4 |
Balance, beginning of period (in shares) at Jun. 30, 2021 | 129,105,000 | ||||
Balance, beginning of period at Jun. 30, 2021 | 5,324 | $ 1.3 | 2,383 | 1,995.5 | 944.2 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 99.8 | 99.8 | |||
Change in unrealized appreciation (depreciation) of investments (net of applicable income tax benefit) | (65.8) | (65.8) | |||
Common stock repurchased (in shares) | (4,911,000) | ||||
Common stock repurchased | (115) | $ (0.1) | (114.9) | ||
Dividends on common stock | (16.6) | (16.6) | |||
Employee benefit plans, net of shares used to pay tax withholdings (in shares) | 76,000 | ||||
Employee benefit plans, net of shares used to pay tax withholdings | 6.5 | 6.5 | |||
Balance, end of period (in shares) at Sep. 30, 2021 | 124,270,000 | ||||
Balance, end of period at Sep. 30, 2021 | $ 5,232.9 | $ 1.2 | 2,274.6 | 1,929.7 | 1,027.4 |
Balance, beginning of period (in shares) at Dec. 31, 2021 | 120,377,152 | 120,377,000 | |||
Balance, beginning of period at Dec. 31, 2021 | $ 5,259.7 | $ 1.2 | 2,184.2 | 1,947.1 | 1,127.2 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 353.4 | 353.4 | |||
Change in unrealized appreciation (depreciation) of investments (net of applicable income tax benefit) | (4,112.8) | (4,112.8) | |||
Common stock repurchased (in shares) | (7,168,000) | ||||
Common stock repurchased | (170) | $ (0.1) | (169.9) | ||
Dividends on common stock | (48.7) | (48.7) | |||
Employee benefit plans, net of shares used to pay tax withholdings (in shares) | 1,158,000 | ||||
Employee benefit plans, net of shares used to pay tax withholdings | $ 16.3 | 16.3 | |||
Balance, end of period (in shares) at Sep. 30, 2022 | 114,367,345 | 114,367,000 | |||
Balance, end of period at Sep. 30, 2022 | $ 1,297.9 | $ 1.1 | 2,030.6 | (2,165.7) | 1,431.9 |
Balance, beginning of period (in shares) at Jun. 30, 2022 | 114,795,000 | ||||
Balance, beginning of period at Jun. 30, 2022 | 2,212 | $ 1.1 | 2,032.7 | (1,165) | 1,343.2 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 105 | 105 | |||
Change in unrealized appreciation (depreciation) of investments (net of applicable income tax benefit) | (1,000.7) | (1,000.7) | |||
Common stock repurchased (in shares) | (561,000) | ||||
Common stock repurchased | (10) | $ 0 | (10) | ||
Dividends on common stock | (16.3) | (16.3) | |||
Employee benefit plans, net of shares used to pay tax withholdings (in shares) | 133,000 | ||||
Employee benefit plans, net of shares used to pay tax withholdings | $ 7.9 | 7.9 | |||
Balance, end of period (in shares) at Sep. 30, 2022 | 114,367,345 | 114,367,000 | |||
Balance, end of period at Sep. 30, 2022 | $ 1,297.9 | $ 1.1 | $ 2,030.6 | $ (2,165.7) | $ 1,431.9 |
CONSOLIDATED STATEMENT OF SHA_2
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Statement of Stockholders' Equity [Abstract] | ||||
Change in unrealized appreciation (depreciation) of investments, applicable income tax benefit | $ (279.9) | $ (18) | $ (1,149.6) | $ (69.6) |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash flows from operating activities: | ||
Insurance policy income | $ 1,724.9 | $ 1,756.4 |
Net investment income | 832.2 | 793.1 |
Fee revenue and other income | 110.4 | 104.3 |
Insurance policy benefits | (1,243.4) | (1,247.3) |
Interest expense | (65.8) | (57.4) |
Deferrable policy acquisition costs | (245.7) | (213.3) |
Other operating costs | (757.4) | (685.7) |
Income taxes | (20.7) | 28.9 |
Net cash from operating activities | 334.5 | 479 |
Cash flows from investing activities: | ||
Sales of investments | 2,764.9 | 1,419.7 |
Maturities and redemptions of investments | 1,265.1 | 2,237.8 |
Purchases of investments | (5,521.1) | (4,363.8) |
Net purchases of trading securities | (37.4) | (21.1) |
Other | (39.4) | (68) |
Net cash used by investing activities | (1,567.9) | (795.4) |
Cash flows from financing activities: | ||
Issuance of common stock | 6.6 | 18.6 |
Payments to repurchase common stock | (180.2) | (307.8) |
Common stock dividends paid | (48.7) | (49.9) |
Amounts received for deposit products | 2,457.8 | 1,379.3 |
Withdrawals from deposit products | (1,071) | (999.3) |
Issuance of investment borrowings: | ||
Federal Home Loan Bank | 210 | 720.8 |
Payments on investment borrowings: | ||
Federal Home Loan Bank | (285.9) | (622.1) |
Related to variable interest entities | (33.4) | (1.6) |
Debt issuance costs | 0 | (0.9) |
Net cash provided by financing activities | 1,055.2 | 137.1 |
Net decrease in cash and cash equivalents | (178.2) | (179.3) |
Cash and cash equivalents - unrestricted and held by variable interest entities, beginning of period | 731.7 | 991.9 |
Cash and cash equivalents - unrestricted and held by variable interest entities, end of period | $ 553.5 | $ 812.6 |
BUSINESS AND BASIS OF PRESENTAT
BUSINESS AND BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BUSINESS AND BASIS OF PRESENTATION | BUSINESS AND BASIS OF PRESENTATION The following notes should be read together with the notes to the consolidated financial statements included in our 2021 Annual Report on Form 10-K. CNO Financial Group, Inc., a Delaware corporation ("CNO"), is a holding company for a group of insurance companies operating throughout the United States that develop, market and administer health insurance, annuity, individual life insurance and other insurance products. The terms "CNO Financial Group, Inc.", "CNO", the "Company", "we", "us", and "our" as used in these financial statements refer to CNO and its subsidiaries. Such terms, when used to describe insurance business and products, refer to the insurance business and products of CNO's insurance subsidiaries. We focus on serving middle-income pre-retiree and retired Americans, which we believe are attractive, underserved, high growth markets. We sell our products through exclusive agents, independent producers (some of whom sell one or more of our product lines exclusively) and direct marketing. Our unaudited consolidated financial statements reflect normal recurring adjustments that, in the opinion of management, are necessary for a fair statement of our financial position, results of operations and cash flows for the periods presented. As permitted by rules and regulations of the Securities and Exchange Commission (the "SEC") applicable to quarterly reports on Form 10-Q, we have condensed or omitted certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). We have reclassified certain amounts from the prior periods to conform to the 2022 presentation. These reclassifications have no effect on net income or shareholders' equity. Results for interim periods are not necessarily indicative of the results that may be expected for a full year. The balance sheet at December 31, 2021, presented herein, has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. When we prepare financial statements in conformity with GAAP, we are required to make estimates and assumptions that significantly affect reported amounts of various assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting periods. For example, we use significant estimates and assumptions to calculate values for deferred acquisition costs, the present value of future profits, fair value measurements of certain investments (including derivatives), 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 could be materially affected. The accompanying financial statements include the accounts of the Company and its subsidiaries. Our consolidated financial statements exclude transactions between us and our consolidated affiliates, or among our consolidated affiliates. |
INVESTMENTS
INVESTMENTS | 9 Months Ended |
Sep. 30, 2022 | |
Investments, Debt and Equity Securities [Abstract] | |
INVESTMENTS | INVESTMENTS We classify our fixed maturity securities into one of two categories: (i) "available for sale" (which we carry at estimated fair value with any unrealized gain or loss, net of tax and related adjustments, recorded as a component of shareholders' equity); or (ii) "trading" (which we carry at estimated fair value with changes in such value recognized as either net investment income (classified as investment income from policyholder and other special-purpose portfolios) or investment gains (losses)). Trading securities include: (i) investments purchased with the intent of selling in the near term to generate income; and (ii) 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 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 other investment gains (losses). We review our available for sale fixed maturity securities with unrealized losses to determine whether such impairments are the result of credit losses. We analyze various factors to make such determinations including, but not limited to: (i) actions taken by rating agencies; (ii) default by the issuer; (iii) the significance of the decline; (iv) an assessment of our intent to sell the security before recovering the security's amortized cost; (v) an economic analysis of the issuer's industry; and (vi) the financial strength, liquidity, and recoverability of the issuer. We perform a security by security review each quarter to evaluate whether a credit loss has occurred. 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 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 other 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 (loss) along with unrealized gains (losses) 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. 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 it is 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 other 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. Accumulated other comprehensive income (loss) is primarily comprised of the net effect of unrealized appreciation (depreciation) on our investments. These amounts, included in shareholders' equity as of September 30, 2022 and December 31, 2021, were as follows (dollars in millions): September 30, December 31, Net unrealized gains (losses) on investments having no allowance for credit losses $ (1,222.1) $ 2,963.3 Unrealized losses on investments with an allowance for credit losses (1,929.9) (23.1) Adjustment to present value of future profits (a) 8.7 (8.3) Adjustment to deferred acquisition costs 367.1 (420.2) Adjustment to insurance liabilities — (25.5) Deferred income tax assets (liabilities) 610.5 (539.1) Accumulated other comprehensive income (loss) $ (2,165.7) $ 1,947.1 ________ (a) The present value of future profits is the value assigned to the right to receive future cash flows from contracts existing at September 10, 2003, the date Conseco, Inc., an Indiana corporation, emerged from bankruptcy. At December 31, 2021, adjustments to the present value of future profits, deferred acquisition costs, insurance liabilities and deferred tax assets included $(7.3) million, $(132.2) million, $(25.5) million and $35.8 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. There were no such adjustments at September 30, 2022. At September 30, 2022, 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 cost Gross unrealized gains Gross unrealized losses Allowance for credit losses Estimated fair value Corporate securities $ 13,942.2 $ 22.2 $ (2,136.6) $ (49.2) $ 11,778.6 United States Treasury securities and obligations of United States government corporations and agencies 169.5 — (11.7) — 157.8 States and political subdivisions 2,818.8 20.9 (437.8) (1.7) 2,400.2 Foreign governments 84.5 — (14.4) (.8) 69.3 Asset-backed securities 1,402.0 .2 (131.8) (.3) 1,270.1 Agency residential mortgage-backed securities 39.0 — (.5) — 38.5 Non-agency residential mortgage-backed securities 1,755.5 50.7 (167.3) — 1,638.9 Collateralized loan obligations 778.3 — (45.1) — 733.2 Commercial mortgage-backed securities 2,452.7 — (238.2) — 2,214.5 Total fixed maturities, available for sale $ 23,442.5 $ 94.0 $ (3,183.4) $ (52.0) $ 20,301.1 At December 31, 2021, 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 cost Gross unrealized gains Gross unrealized losses Allowance for credit losses Estimated fair value Corporate securities $ 13,195.4 $ 2,284.5 $ (21.7) $ (7.4) $ 15,450.8 United States Treasury securities and obligations of United States government corporations and agencies 166.2 54.3 (.9) — 219.6 States and political subdivisions 2,649.0 356.7 (1.5) — 3,004.2 Foreign governments 85.4 13.6 (.3) (.2) 98.5 Asset-backed securities 1,129.0 37.0 (3.1) — 1,162.9 Agency residential mortgage-backed securities 36.7 3.7 — — 40.4 Non-agency residential mortgage-backed securities 1,870.4 156.5 (3.1) — 2,023.8 Collateralized loan obligations 587.3 2.3 (1.3) — 588.3 Commercial mortgage-backed securities 2,148.2 77.9 (9.2) — 2,216.9 Total fixed maturities, available for sale $ 21,867.6 $ 2,986.5 $ (41.1) $ (7.6) $ 24,805.4 The following table sets forth the amortized cost and estimated fair value of fixed maturities, available for sale, at September 30, 2022, 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 $ 123.4 $ 122.6 Due after one year through five years 1,935.7 1,805.1 Due after five years through ten years 2,125.3 1,894.4 Due after ten years 12,830.6 10,583.8 Subtotal 17,015.0 14,405.9 Structured securities 6,427.5 5,895.2 Total fixed maturities, available for sale $ 23,442.5 $ 20,301.1 The following table sets forth the amortized cost and estimated fair value of fixed maturities, available for sale, at December 31, 2021, by contractual maturity. Amortized Estimated (Dollars in millions) Due in one year or less $ 80.3 $ 80.5 Due after one year through five years 1,147.4 1,205.6 Due after five years through ten years 1,458.4 1,573.7 Due after ten years 13,409.9 15,913.3 Subtotal 16,096.0 18,773.1 Structured securities 5,771.6 6,032.3 Total fixed maturities, available for sale $ 21,867.6 $ 24,805.4 Gross Unrealized Investment Losses Our investment strategy is to maximize, over a sustained period and within acceptable parameters of quality and risk, investment income and total investment return through active strategic asset allocation and investment management. Accordingly, we may sell securities at a gain or a loss to enhance the projected total return of the portfolio as market opportunities change, to reflect changing perceptions of risk, or to better match certain characteristics of our investment portfolio with the corresponding characteristics of our insurance liabilities. The following table summarizes the gross unrealized losses and fair values of our investments with unrealized losses 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 September 30, 2022 (dollars in millions): Less than 12 months 12 months or greater Total Description of securities Fair Unrealized Fair Unrealized Fair Unrealized Corporate securities $ 3,134.3 $ (495.7) $ 31.4 $ (11.4) $ 3,165.7 $ (507.1) United States Treasury securities and obligations of United States government corporations and agencies 134.8 (8.0) 21.7 (3.6) 156.5 (11.6) States and political subdivisions 827.3 (176.7) 4.2 (1.8) 831.5 (178.5) Foreign governments 10.8 (.4) — — 10.8 (.4) Asset-backed securities 1,122.5 (115.4) 82.5 (11.6) 1,205.0 (127.0) Agency residential mortgage-backed securities 33.1 (.5) — — 33.1 (.5) Non-agency residential mortgage-backed securities 1,053.8 (140.0) 93.4 (27.4) 1,147.2 (167.4) Collateralized loan obligations 595.6 (36.6) 120.4 (8.5) 716.0 (45.1) Commercial mortgage-backed securities 1,812.6 (181.4) 394.0 (56.7) 2,206.6 (238.1) Total fixed maturities, available for sale $ 8,724.8 $ (1,154.7) $ 747.6 $ (121.0) $ 9,472.4 $ (1,275.7) 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, 2021 (dollars in millions): Less than 12 months 12 months or greater Total Description of securities Fair Unrealized Fair Unrealized Fair Unrealized Corporate securities $ 87.8 $ (.4) $ 9.2 $ (.1) $ 97.0 $ (.5) United States Treasury securities and obligations of United States government corporations and agencies 5.7 — 18.7 (.9) 24.4 (.9) States and political subdivisions 47.3 (.4) — — 47.3 (.4) Asset-backed securities 210.8 (2.4) 17.8 (.7) 228.6 (3.1) Non-agency residential mortgage-backed securities 380.8 (3.1) 2.3 — 383.1 (3.1) Collateralized loan obligations 271.5 (1.2) 32.8 (.1) 304.3 (1.3) Commercial mortgage-backed securities 694.7 (7.6) 41.4 (1.6) 736.1 (9.2) Total fixed maturities, available for sale $ 1,698.6 $ (15.1) $ 122.2 $ (3.4) $ 1,820.8 $ (18.5) Based on management's current assessment of investments with unrealized losses at September 30, 2022, 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 three months ended September 30, 2022 (dollars in millions): Corporate securities States and political subdivisions Foreign governments Asset-backed securities Total Allowance at June 30, 2022 $ 52.2 $ 1.1 $ .7 $ .2 $ 54.2 Additions for securities for which credit losses were not previously recorded 7.2 .2 .1 .1 7.6 Additions for purchased securities with deteriorated credit — — — — — Additions (reductions) for securities where an allowance was previously recorded (6.9) .5 — — (6.4) Reduction for securities sold during the period (3.3) (.1) — — (3.4) 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 September 30, 2022 $ 49.2 $ 1.7 $ .8 $ .3 $ 52.0 The following table summarizes changes in the allowance for credit losses related to fixed maturities, available for sale, for the nine months ended September 30, 2022 (dollars in millions): Corporate securities States and political subdivisions Foreign governments Asset-backed securities Total Allowance at December 31, 2021 $ 7.4 $ — $ .2 $ — $ 7.6 Additions for securities for which credit losses were not previously recorded 39.8 .7 .5 .2 41.2 Additions for purchased securities with deteriorated credit — — — — — Additions (reductions) for securities where an allowance was previously recorded 11.8 1.1 .1 .1 13.1 Reduction for securities sold during the period (9.8) (.1) — — (9.9) 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 September 30, 2022 $ 49.2 $ 1.7 $ .8 $ .3 $ 52.0 The following table summarizes changes in the allowance for credit losses related to fixed maturities, available for sale, for the three months ended September 30, 2021 (dollars in millions): Corporate securities Foreign governments Total Allowance at June 30, 2021 $ 2.3 $ — $ 2.3 Additions for securities for which credit losses were not previously recorded 2.4 .1 2.5 Additions for purchased securities with deteriorated credit — — — Additions (reductions) for securities where an allowance was previously recorded .7 — .7 Reduction for securities sold during the period (.1) — (.1) 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 September 30, 2021 $ 5.3 $ .1 $ 5.4 The following table summarizes changes in the allowance for credit losses related to fixed maturities, available for sale, for the nine months ended September 30, 2021 (dollars in millions): Corporate securities States and political subdivisions Foreign governments Total Allowance at December 31, 2020 $ 1.9 $ .3 $ — $ 2.2 Additions for securities for which credit losses were not previously recorded 4.3 .1 .1 4.5 Additions for purchased securities with deteriorated credit — — — — Additions (reductions) for securities where an allowance was previously recorded (.3) (.4) — (.7) Reduction for securities sold during the period (.6) — — (.6) 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 September 30, 2021 $ 5.3 $ — $ .1 $ 5.4 Mortgage Loans Mortgage loans 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. At September 30, 2022, the mortgage loan balance was primarily comprised of commercial mortgage loans and there were no commercial mortgage loans in process of foreclosure. At September 30, 2022, we held residential mortgage loan investments with an amortized cost and fair value of $63.6 million and $61.6 million, respectively. At September 30, 2022, there were two mortgage loans with a carrying value of $0.5 million that were in foreclosure. There were no other mortgage loans that were noncurrent at September 30, 2022. 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 September 30, 2022 (dollars in millions): Estimated fair Loan-to-value ratio (a) 2022 2021 2020 2019 2018 Prior Total amortized cost Mortgage loans Collateral Less than 60% $ 149.3 $ 127.6 $ 43.9 $ 75.8 $ 67.1 $ 470.2 $ 933.9 $ 824.5 $ 3,790.3 60% to less than 70% 47.3 12.9 — — 8.2 43.4 111.8 103.3 170.6 70% to less than 80% 33.0 22.4 — — — 15.1 70.5 60.8 93.7 80% to less than 90% — — — — — 42.8 42.8 34.9 52.0 90% or greater — — — — — 10.0 10.0 6.9 10.7 Total $ 229.6 $ 162.9 $ 43.9 $ 75.8 $ 75.3 $ 581.5 $ 1,169.0 $ 1,030.4 $ 4,117.3 ________________ (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. The following table summarizes changes in the allowance for credit losses related to mortgage loans for the three months ended September 30, 2022 and 2021 (dollars in millions): Three months ended September 30, 2022 2021 Allowance at the beginning of the period $ 4.9 $ 8.3 Current period provision for expected credit losses .4 (1.0) Initial allowance recognized for purchased financial assets with credit deterioration — — Write-offs charged against the allowance — — Recoveries of amounts previously written off — — Allowance at the end of the period $ 5.3 $ 7.3 The following table summarizes changes in the allowance for credit losses related to mortgage loans for the nine months ended September 30, 2022 and 2021 (dollars in millions): Nine months ended September 30, 2022 2021 Allowance at the beginning of the period $ 5.6 $ 11.8 Current period provision for expected credit losses (.3) (4.5) Initial allowance recognized for purchased financial assets with credit deterioration — — Write-offs charged against the allowance — — Recoveries of amounts previously written off — — Allowance at the end of the period $ 5.3 $ 7.3 Total Investment Gains (Losses) The following table sets forth the total investment gains (losses) for the periods indicated (dollars in millions): Three months ended Nine months ended September 30, September 30, 2022 2021 2022 2021 Realized investment gains (losses): Gross realized gains on sales of fixed maturities, available for sale $ 18.1 $ 4.1 $ 96.4 $ 42.8 Gross realized losses on sales of fixed maturities, available for sale (24.4) (.2) (81.3) (18.4) Equity securities, net — — (8.3) (2.8) Other, net (1.9) (.2) (3.2) (6.8) Total realized investment gains (losses) (8.2) 3.7 3.6 14.8 Change in allowance for credit losses (a) 7.5 (1.4) (46.9) 13.9 Change in fair value of equity securities (b) (.7) (3.0) (2.4) (.4) Other changes in fair value (c) (16.3) (1.6) (53.5) (2.1) Other investment gains (losses) (9.5) (6.0) (102.8) 11.4 Total investment gains (losses) $ (17.7) $ (2.3) $ (99.2) $ 26.2 _________________ (a) Changes in the allowance for credit losses includes $5.7 million and $(2.8) million in the three and nine months ended September 30, 2022, respectively, and $0.7 million and $12.6 million in the three and nine months ended September 30, 2021, respectively, related to investments held by variable interest entities ("VIEs"). (b) Changes in the estimated fair value of equity securities (that are still held as of the end of the respective periods) were $(6.9) million and $(2.6) million for the nine months ended September 30, 2022 and 2021, respectively. (c) Changes in the estimated fair value of trading securities that we have elected the fair value option (that are still held as of the end of the respective periods) were $(36.6) million and $(0.2) million in the nine months ended September 30, 2022 and 2021, respectively. During the first nine months of 2022, we recognized net investment losses of $99.2 million, which were comprised of: (i) $11.9 million of net gains from the sales of investments; (ii) $10.7 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 $37.4 million; (iv) the decrease in fair value of embedded derivatives related to a modified coinsurance agreement of $16.1 million; and (v) an increase in the allowance for credit losses of $46.9 million. During the first nine months of 2021, we recognized net investment gains of $26.2 million, which were comprised of: (i) $17.6 million of net gains from the sales of investments; (ii) $3.2 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 $0.2 million; (iv) the decrease in fair value of embedded derivatives related to a modified coinsurance agreement of $1.9 million; and (v) a decrease in the allowance for credit losses of $13.9 million. 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. At September 30, 2022, there were no fixed maturity investments in default. During the first nine months of 2022, the $81.3 million of gross realized losses on sales of $1,321.7 million of fixed maturity securities, available for sale, included: (i) $54.3 million related to various corporate securities; (ii) $14.0 million related to non-agency residential mortgage-backed securities; (iii) $7.3 million related to states and political subdivisions; and (iv) $5.7 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 the first nine months of 2021, the $18.4 million of gross realized losses on sales of $350.3 million of fixed maturity securities, available for sale, primarily related to various corporate securities. 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. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE A reconciliation of net income and shares used to calculate basic and diluted earnings per share is as follows (dollars in millions and shares in thousands): Three months ended Nine months ended September 30, September 30, 2022 2021 2022 2021 Net income for basic and diluted earnings per share $ 105.0 $ 99.8 $ 353.4 $ 325.2 Shares: Weighted average shares outstanding for basic earnings per share 114,354 126,429 116,170 130,528 Effect of dilutive securities on weighted average shares: Amounts related to employee benefit plans 1,574 2,589 1,902 2,634 Weighted average shares outstanding for diluted earnings per share 115,928 129,018 118,072 133,162 |
BUSINESS SEGMENTS
BUSINESS SEGMENTS | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
BUSINESS SEGMENTS | BUSINESS SEGMENTS We view our operations as three insurance product lines (annuity, health and life) and the investment and fee revenue segments. Our 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. Our insurance product line segments (annuity, health and life) include marketing, underwriting and administration of the policies our insurance subsidiaries sell. 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. 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, virtually, 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 with one of the largest direct-to-consumer insurance businesses 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 and virtually. With a separate Worksite Division, we are bringing a sharper focus to this high-growth business while further capitalizing on the strength of our acquisitions of Web Benefits Design Corporation ("WBD") in April 2019 and DirectPath, LLC ("DirectPath", now known as Optavise, LLC ("Optavise") subsequent to its name change in April 2022) in February 2021. Sales in the Worksite Division have been particularly adversely impacted by the novel coronavirus ("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. 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; (iv) expenses related to the funding agreement-backed note ("FABN") program; and (v) 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 our Federal Home Loan Bank ("FHLB") investment borrowing and FABN programs 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 company-owned life insurance ("COLI") and alternative investments income not allocated to product lines), net of interest expense on corporate debt. The spread earned from our FHLB investment borrowing and FABN programs includes the investment income on the matched assets less: (i) interest on investment borrowings related to the FHLB investment borrowing program; (ii) interest credited on funding agreements; and (iii) amortization of deferred acquisition costs related to the FABN program. Our fee income segment includes the earnings generated from sales of third-party insurance products, services provided by WBD (our on-line benefit administration firm), Optavise (a national provider of year-round technology-driven employee benefits management services) 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 total investment gains (losses), fair value changes in embedded derivative liabilities (net of related amortization), fair value changes related to the agent deferred compensation plan, income taxes and other non-operating items consisting primarily of earnings attributable to 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 investment gains (losses), and a long-term focus is necessary to maintain profitability over the life of the business. Investment gains (losses), fair value changes in embedded derivative liabilities (net of related amortization), fair value changes related to the agent deferred compensation plan and other non-operating items consisting primarily of earnings attributable to VIEs depend on market conditions or represent unusual items that do not necessarily relate to the underlying business of our segments. 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 is as follows (dollars in millions): Three months ended Nine months ended September 30, September 30, 2022 2021 2022 2021 Revenues: Annuity: Insurance policy income $ 6.3 $ 5.8 $ 17.1 $ 15.5 Net investment income 117.3 115.5 347.2 346.1 Total annuity revenues 123.6 121.3 364.3 361.6 Health: Insurance policy income 403.5 414.4 1,213.7 1,246.3 Net investment income 71.9 72.2 215.3 215.3 Total health revenues 475.4 486.6 1,429.0 1,461.6 Life: Insurance policy income 213.4 210.4 643.0 631.7 Net investment income 36.6 36.4 109.1 108.3 Total life revenues 250.0 246.8 752.1 740.0 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) (34.9) 7.2 (199.2) 125.8 Investment income not allocated to product lines 63.6 69.8 197.9 207.2 Fee revenue and other income: Fee income 30.6 28.0 102.0 91.4 Amounts netted in expenses not allocated to product lines 1.8 4.7 28.9 13.3 Total segment revenues $ 910.1 $ 964.4 $ 2,675.0 $ 3,000.9 (continued on next page) (continued from previous page) Three months ended Nine months ended September 30, September 30, 2022 2021 2022 2021 Expenses: Annuity: Insurance policy benefits $ 23.7 $ 16.2 $ 69.1 $ 23.7 Interest credited 46.3 38.1 129.9 113.7 Amortization and non-deferred commissions 13.8 14.5 43.8 47.8 Total annuity expenses 83.8 68.8 242.8 185.2 Health: Insurance policy benefits 307.8 325.4 924.8 955.3 Amortization and non-deferred commissions 43.5 43.3 141.9 142.8 Total health expenses 351.3 368.7 1,066.7 1,098.1 Life: Insurance policy benefits 142.6 141.3 444.6 454.4 Interest credited 12.2 11.1 35.1 32.7 Amortization, non-deferred commissions and advertising expense 51.8 41.2 152.4 132.9 Total life expenses 206.6 193.6 632.1 620.0 Allocated expenses 150.5 140.5 447.5 423.2 Expenses not allocated to product lines 17.9 22.0 56.9 76.4 Market value changes of options credited to fixed index annuity and life policyholders (34.9) 7.2 (199.2) 125.8 Amounts netted in investment income not allocated to product lines: Interest expense 25.9 17.9 64.3 54.2 Interest credited 7.2 — 21.3 — Amortization .3 — 1.1 — Other expenses (2.0) 1.0 (18.0) 11.3 Expenses netted in fee revenue: Commissions and other operating expenses 29.2 25.4 87.5 74.9 Total segment expenses 835.8 845.1 2,403.0 2,669.1 Pre-tax measure of profitability: Annuity margin 39.8 52.5 121.5 176.4 Health margin 124.1 117.9 362.3 363.5 Life margin 43.4 53.2 120.0 120.0 Total insurance product margin 207.3 223.6 603.8 659.9 Allocated expenses (150.5) (140.5) (447.5) (423.2) Income from insurance products 56.8 83.1 156.3 236.7 Fee income 1.4 2.6 14.5 16.5 Investment income not allocated to product lines 32.2 50.9 129.2 141.7 Expenses not allocated to product lines (16.1) (17.3) (28.0) (63.1) Operating earnings before taxes 74.3 119.3 272.0 331.8 Income tax expense on operating income 17.4 26.5 63.9 74.7 Net operating income $ 56.9 $ 92.8 $ 208.1 $ 257.1 A reconciliation of segment revenues and expenses to consolidated revenues and expenses and net income is as follows (dollars in millions): Three months ended Nine months ended September 30, September 30, 2022 2021 2022 2021 Total segment revenues $ 910.1 $ 964.4 $ 2,675.0 $ 3,000.9 Total investment gains (losses) (17.7) (2.3) (99.2) 26.2 Revenues related to earnings attributable to VIEs 12.9 6.2 27.4 20.3 Consolidated revenues 905.3 968.3 2,603.2 3,047.4 Total segment expenses 835.8 845.1 2,403.0 2,669.1 Insurance policy benefits - fair value changes in embedded derivative liabilities (92.7) (14.5) (326.5) (64.3) Amortization related to fair value changes in embedded derivative liabilities 26.7 3.6 90.0 16.2 Amortization related to investment gains (losses) (.6) .1 (1.7) 1.4 Expenses attributable to VIEs 11.9 6.0 26.2 18.6 Fair value changes related to agent deferred compensation plan (12.0) — (48.7) (13.2) Other expenses (1.0) — (1.0) — Consolidated expenses 768.1 840.3 2,141.3 2,627.8 Income before tax 137.2 128.0 461.9 419.6 Income tax expense on period income 32.2 28.2 108.5 94.4 Net income $ 105.0 $ 99.8 $ 353.4 $ 325.2 |
ACCOUNTING FOR DERIVATIVES
ACCOUNTING FOR DERIVATIVES | 9 Months Ended |
Sep. 30, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
ACCOUNTING FOR DERIVATIVES | ACCOUNTING FOR DERIVATIVES Our freestanding and embedded derivatives, which are not designated as hedging instruments, are held at fair value and are summarized as follows (dollars in millions): Fair value September 30, December 31, 2021 Assets: Other invested assets: Fixed index call options $ 24.0 $ 225.0 Other — 2.5 Reinsurance receivables (17.8) (1.7) Total assets $ 6.2 $ 225.8 Liabilities: Future policy benefits: Fixed index products $ 1,253.9 $ 1,724.1 Total liabilities $ 1,253.9 $ 1,724.1 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 $93 million in underlying investments held by the ceding reinsurer at September 30, 2022. 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. We are generally able to change the participation rate at the beginning of each index period (typically on each policy anniversary date), subject to contractual minimums. The Company accounts for the options attributed to the policyholder for the estimated life of the contract as embedded derivatives. These accounting requirements often create volatility in the earnings from these products. We typically buy call options (including call spreads) referenced to the applicable indices in an effort to offset or hedge potential increases to policyholder benefits resulting from increases in the particular index to which the policy's return is linked. The notional amount of these options was $3.0 billion at both September 30, 2022 and December 31, 2021. We purchase certain fixed maturity securities that contain embedded derivatives that are required to be held at fair value on the consolidated balance sheet. We have elected the fair value option to carry the entire security at fair value with changes in fair value recognized in net income. The following table provides the pre-tax gains (losses) recognized in revenues for derivative instruments, which are not designated as hedges for the periods indicated (dollars in millions): Three months ended Nine months ended September 30, September 30, 2022 2021 2022 2021 Net investment income (loss) from policyholder and other special-purpose portfolios: Fixed index call options $ (34.7) $ 7.4 $ (200.4) $ 127.0 Total investment losses: Embedded derivative related to modified coinsurance agreement (4.4) (.7) (16.1) (1.9) Total revenues from derivative instruments, not designated as hedges $ (39.1) $ 6.7 $ (216.5) $ 125.1 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 September 30, 2022, all of our counterparties were rated "A" or higher by S&P Global Ratings ("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 September 30, 2022 and December 31, 2021 (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 September 30, 2022: Fixed index call options $ 24.0 $ — $ 24.0 $ — $ — $ 24.0 December 31, 2021: Fixed index call options 225.0 — 225.0 — — 225.0 |
REINSURANCE
REINSURANCE | 9 Months Ended |
Sep. 30, 2022 | |
Insurance [Abstract] | |
REINSURANCE | REINSURANCE The cost of reinsurance ceded totaled $51.9 million and $54.3 million in the third quarters of 2022 and 2021, respectively, and $153.0 million and $163.3 million in the first nine months of 2022 and 2021, respectively. We deduct this cost from insurance policy income. Reinsurance recoveries netted against insurance policy benefits totaled $56.2 million and $76.5 million in the third quarters of 2022 and 2021, respectively, and $230.6 million and $232.9 million in the first nine months of 2022 and 2021, respectively. From time to time, we assume insurance from other companies. Any costs associated with the assumption of insurance are amortized consistent with the method used to amortize deferred acquisition costs. Reinsurance premiums assumed totaled $4.7 million and $5.1 million in the third quarters of 2022 and 2021, respectively, and $14.2 million and $15.4 million in the first nine months of 2022 and 2021, respectively. Insurance policy benefits related to reinsurance assumed totaled $6.4 million and $6.4 million in the third quarters of 2022 and 2021, respectively, and $19.5 million and $21.7 million in the first nine months of 2022 and 2021, respectively. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company's interim tax expense is based upon the estimated annual effective tax rate for the respective period. Under authoritative guidance, certain items are required to be excluded from the estimated annual effective tax rate calculation. Such items include changes in judgment about the realizability of deferred tax assets resulting from changes in projections of income expected to be available in future years, and items deemed to be unusual, infrequent, or that cannot be reliably estimated. In these cases, the actual tax expense or benefit applicable to that item is treated discretely and is reported in the same period as the related item. The components of income tax expense are as follows (dollars in millions): Three months ended Nine months ended September 30, September 30, 2022 2021 2022 2021 Current tax expense $ 14.9 $ 14.1 $ 19.9 $ 50.9 Deferred tax expense 17.3 14.1 88.6 43.5 Total income tax expense $ 32.2 $ 28.2 $ 108.5 $ 94.4 A reconciliation of the U.S. statutory corporate tax rate to the estimated annual effective rate, reflected in the consolidated statement of operations is as follows: Nine months ended September 30, 2022 2021 U.S. statutory corporate rate 21.0 % 21.0 % Non-taxable income and nondeductible benefits, net — (.1) State taxes 2.5 1.6 Effective tax rate 23.5 % 22.5 % The increase in our effective tax rate in the first nine months of 2022 was driven by a new Illinois income tax regulation that will limit our use of Illinois net operating loss carryforwards ("NOLs") in 2022 and 2023, triggering retaliatory taxes in other states. The components of the Company's income tax assets and liabilities are summarized below (dollars in millions): September 30, December 31, Deferred tax assets: Net federal operating loss carryforwards $ 188.4 $ 241.4 Net state operating loss carryforwards 2.5 2.3 Insurance liabilities 302.3 390.7 Indirect costs allocable to self-constructed real estate assets 199.3 158.3 Accumulated other comprehensive loss 606.3 — Other 9.4 27.5 Gross deferred tax assets 1,308.2 820.2 Deferred tax liabilities: Investments (35.6) (48.2) Present value of future profits and deferred acquisition costs (99.3) (119.4) Accumulated other comprehensive income — (540.4) Gross deferred tax liabilities (134.9) (708.0) Net deferred tax assets 1,173.3 112.2 Current income taxes prepaid 6.9 6.1 Income tax assets, net $ 1,180.2 $ 118.3 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, are 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 Cuts and Jobs 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 September 30, 2022, our projection of future taxable income for purposes of determining the valuation allowance is 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 $1,173.3 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. The Internal Revenue Code (the "Code") limits the extent to which losses realized by a non-life entity (or entities) may offset income from a life insurance company (or companies) to the lesser of: (i) 35 percent of the income of the life insurance company; or (ii) 35 percent of the total loss of the non-life entities (including NOLs of the non-life entities). There is no similar limitation on the extent to which losses realized by a life insurance entity (or entities) may offset income from a non-life entity (or entities). Section 382 of the Code imposes limitations on a corporation's ability to use its NOLs when the company undergoes a 50 percent ownership change over a three-year period. Future transactions and the timing of such transactions could cause an ownership change for Section 382 income tax purposes. Such transactions may include, but are not limited to, additional repurchases under our securities repurchase program, issuances of common stock and acquisitions or sales of shares of CNO stock by certain holders of our shares, including persons who have held, currently hold or may accumulate in the future five percent or more of our outstanding common stock for their own account. Many of these transactions are beyond our control. If an additional ownership change were to occur for purposes of Section 382, we would be required to calculate an annual restriction on the use of our NOLs to offset future taxable income. The annual restriction would be calculated based upon the value of CNO's equity at the time of such ownership change, multiplied by a federal long-term tax exempt rate (2.54 percent at September 30, 2022), 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 September 30, 2022, we were below the 50 percent ownership change level that could limit our ability to utilize our NOLs. We have $0.9 billion of federal NOLs as of September 30, 2022, as summarized below (dollars in millions): Net operating loss Year of expiration carryforwards 2023 $ 310.8 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 $ 897.4 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 $2.5 million and $2.3 million at September 30, 2022 and December 31, 2021, 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. |
NOTES PAYABLE - DIRECT CORPORAT
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS | 9 Months Ended |
Sep. 30, 2022 | |
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 September 30, 2022 and December 31, 2021 (dollars in millions): September 30, December 31, 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 November 2060 150.0 150.0 Revolving Credit Agreement (as defined below) — — Unamortized debt issue costs (11.6) (12.7) Direct corporate obligations $ 1,138.4 $ 1,137.3 Revolving Credit Agreement On July 16, 2021, the Company amended and restated its $250.0 million revolving credit agreement (as so amended and restated, the "Revolving Credit Agreement"). The Revolving Credit Agreement, among other things, (i) requires the Company to maintain (each as calculated in accordance with the Revolving Credit Agreement): (i) a debt to total capitalization ratio (excluding hybrid securities, except to the extent that the aggregate amount outstanding of all such hybrid securities exceeds an amount equal to 15 percent of total capitalization) of not more than 35.0 percent (such ratio was 22.0 percent at September 30, 2022); and (ii) a minimum consolidated net worth of not less than the sum of (x) $2,674 million plus (y) 25.0 percent 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 $3,463.6 million at September 30, 2022 compared to the minimum requirement of $2,692.7 million). The maturity date of the Revolving Credit Agreement is July 16, 2026. The Revolving Credit Agreement contains certain other restrictive covenants with which the Company must comply. The interest rate applicable to loans under the Revolving Credit Agreement is calculated as the eurodollar rate or the base rate, at the Company’s option, plus a 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. The commitment fee under the Revolving Credit Agreement is based on the Company's unsecured debt rating and the Revolving Credit Agreement includes updated LIBOR fallback provisions. There were no amounts outstanding under the Revolving Credit Agreement during the nine months ended September 30, 2022. |
INVESTMENT BORROWINGS
INVESTMENT BORROWINGS | 9 Months Ended |
Sep. 30, 2022 | |
Investment Borrowings [Abstract] | |
INVESTMENT BORROWINGS | INVESTMENT BORROWINGS Three of the Company's insurance subsidiaries (Bankers Life and Casualty Company ("Bankers Life"), Washington National Insurance Company ("Washington National") and Colonial Penn Life Insurance Company ("Colonial Penn")) 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. At September 30, 2022, the carrying value of the FHLB common stock was $75.2 million. As of September 30, 2022, collateralized borrowings from the FHLB totaled $1.6 billion and the proceeds were used to purchase matched variable rate fixed maturity securities. The borrowings are classified as investment borrowings in the accompanying consolidated balance sheet. The borrowings are collateralized by investments with an estimated fair value of $2.1 billion at September 30, 2022, 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 September 30, 2022 $ 21.0 March 2023 Fixed rate – 2.160% 50.0 July 2023 Variable rate – 3.170% 100.0 July 2023 Variable rate – 3.170% 50.0 July 2023 Variable rate – 3.170% 100.0 April 2024 Variable rate – 3.080% 50.0 May 2024 Variable rate – 3.643% 22.0 May 2024 Variable rate – 3.319% 75.0 June 2024 Variable rate – 3.951% 100.0 July 2024 Variable rate – 2.595% 15.5 July 2024 Fixed rate – 1.990% 34.5 July 2024 Variable rate – 3.266% 15.0 July 2024 Variable rate – 3.256% 27.0 August 2024 Fixed rate – .640% 25.0 September 2024 Variable rate – 3.726% 21.7 May 2025 Variable rate – 3.389% 18.7 June 2025 Fixed rate – 2.940% 125.0 September 2025 Variable rate – 3.310% 100.0 October 2025 Variable rate – 3.234% 100.0 October 2025 Variable rate – 3.330% 57.7 October 2025 Variable rate – 3.068% 50.0 November 2025 Variable rate – 3.394% 50.0 January 2026 Variable rate – 3.013% 50.0 January 2026 Variable rate – 2.935% 100.0 January 2026 Variable rate – 3.029% 21.8 May 2026 Variable rate – 2.919% 50.0 May 2026 Variable rate – 3.230% 50.0 April 2027 Variable rate – 3.261% 50.0 May 2027 Variable rate – 3.271% 100.0 June 2027 Variable rate – 3.330% 10.0 June 2027 Variable rate – 3.553% $ 1,639.9 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 September 30, 2022, the aggregate yield maintenance fee to prepay all fixed rate borrowings was $1.0 million. Interest expense of $17.4 million and $7.5 million in the first nine months of 2022 and 2021, respectively, was recognized related to total borrowings from the FHLB. |
CHANGES IN COMMON STOCK
CHANGES IN COMMON STOCK | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
CHANGES IN COMMON STOCK | CHANGES IN COMMON STOCK In the first nine months of 2022, we repurchased 7.2 million shares of common stock for $170.0 million under our securities repurchase program. The Company had remaining repurchase authority of $196.9 million as of September 30, 2022. In the first nine months of 2022, dividends declared on common stock totaled $48.7 million ($0.41 per common share). In May 2022, the Company increased its quarterly common stock dividend to $0.14 per share from $0.13 per share. |
SALES INDUCEMENTS
SALES INDUCEMENTS | 9 Months Ended |
Sep. 30, 2022 | |
Insurance [Abstract] | |
SALES INDUCEMENTS | SALES INDUCEMENTS Certain of our annuity products offer sales inducements to contract holders in the form of enhanced crediting rates or bonus payments in the initial period of the contract. Certain of our life insurance products offer persistency bonuses credited to the contract holder's balance after the policy has been outstanding for a specified period of time. These enhanced rates and persistency bonuses are considered sales inducements in accordance with GAAP. Such amounts are deferred and amortized in the same manner as deferred acquisition costs. Sales inducements deferred totaled $15.8 million and $12.2 million during the nine months ended September 30, 2022 and 2021, respectively. Amounts amortized totaled $20.0 million and $10.2 million during the nine months ended September 30, 2022 and 2021, respectively. The unamortized balance of deferred sales inducements was $57.0 million and $61.2 million at September 30, 2022 and December 31, 2021, respectively. |
RECENTLY ISSUED ACCOUNTING STAN
RECENTLY ISSUED ACCOUNTING STANDARDS | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Changes and Error Corrections [Abstract] | |
RECENTLY ISSUED ACCOUNTING STANDARDS | RECENTLY ISSUED ACCOUNTING STANDARDS Pending Accounting Standards In August 2018, the Financial Accounting Standards Board issued authoritative guidance revising the accounting for long-duration insurance 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 (loss) 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. We have selected the modified retrospective transition method, except for market risk benefits where we are required to use the full retrospective approach. We have made progress in determining certain accounting decisions related to the standard including, but not limited to, conclusions related to: (i) the method to determine discount rates; (ii) a process to group policies into cohorts for the measurement of future policy benefits; (iii) a process to develop experience studies at a cohort level to substantiate mortality, morbidity, terminations and other actuarial assumptions; and (iv) a method to estimate the fair value of certain annuity product features which guarantee a defined stream of income to the policyholder for life (which is considered a market risk benefit). With respect to the method to determine interest rates, we have made certain conclusions, but we continue to refine our methodology. The process involves the determination of discount rate curves for discounting cash flows to calculate the liability for future policy benefits at a cohort level. Each discount rate curve is developed to reflect the duration characteristics of the underlying insurance liabilities using discount rates comparable to upper-medium grade (low credit risk) fixed income yields. Discount rates will be updated quarterly. Our long duration insurance contracts will be grouped into annual calendar-year cohorts primarily based on the contractual issue date, marketing distribution channel, legal entity and product type. Single premium contracts will be grouped into separate cohorts from other traditional products. Riders will generally be combined with the base policy. Insurance contracts which were issued prior to September 10, 2003 (the effective date of the bankruptcy reorganization of Conseco, Inc. (our Predecessor)) will be grouped by marketing distribution channel, legal entity and product type in a single issue year cohort. Using the cash flow assumptions underlying our insurance contracts, we have completed preliminary testing of the potential loss recognition on the January 1, 2021 transition date (the "Transition Date"). Under the new guidance, this testing is performed at the Transition Date at a cohort level, rather than the current requirements to aggregate all vintages within a block. Although we do not have variable annuity business with guaranteed features considered "market risk benefits," we do issue certain fixed index annuities with lifetime income riders. These riders are currently accounted for using traditional insurance accounting, but must be carried at fair value under the new standard. We have made preliminary determinations of the Transition Date impact of this change. We continue to evaluate the impact of adoption and expect that the adoption will have a significant impact on our financial position, results of operations, and disclosures. We anticipate that the requirement to update assumptions for the liability for future policy benefits will have a significant impact on our results of operations, systems, processes and controls and that the requirement to update discount rates will have a significant impact on shareholders’ equity. Based upon the modified retrospective transition method, we currently estimate that the new discount rate impact from adoption on the Transition Date is likely to result in a decrease to the accumulated other comprehensive income (loss) balance in the range of approximately $1,800 million to $2,200 million, resulting in a balance approximating zero at the Transition Date. This is primarily due to updating the liability for future policy benefits discount rate assumptions from the rates locked in for reserves held as of the Transition Date to rates determined by reference to the Transition Date market level yields for upper-medium-grade (low credit risk) fixed income instruments as of December 31, 2020. The impacts on accumulated other comprehensive income (loss) in periods following the Transition Date will be based on market yields in effect on the date of the financial statements, and such impact may differ significantly from the estimated range disclosed above. In addition, we currently estimate that the Transition Date impact on retained earnings will be a decrease in the range of approximately $100 million to $200 million primarily due to certain "cohorts" of older long-term care policies having negative margins. The overall margin on our long-term care block continues to be positive. In addition, our estimate of the Transition Date impact on retained earnings includes the impact of carrying the lifetime income riders on certain fixed index annuities at fair value. The estimated impact on retained earnings is based on numerous assumptions and preliminary methodologies including: (i) our methodology of defining cohorts; (ii) the assumptions used to estimate the market value of features which guarantee a defined stream of income to the policyholder for life; and (iii) numerous assumptions regarding future policy benefits. Under the new standard, we estimate that recast GAAP earnings from the Transition Date into 2021 and 2022 will be modestly higher and less volatile. We base this estimate on a number of factors: First, there is less quarter-to-quarter volatility in most products as temporary deviations from experience (including the impacts of COVID-19) are offset by reserve changes. This is different than current GAAP accounting for health and traditional life products where no such change to reserves is made for temporary deviations from experience. Second, the gradual release of provisions for adverse deviations or PADs, embedded in our transition balance sheet reserves are expected to positively impact earnings. This will affect our health and traditional life inforce blocks of business and will be spread over the remaining life of those blocks. Third, we expect positive impacts from lower amortization of deferred acquisition costs and other similar intangible assets. Fourth, the transition impacts to retained earnings, primarily from reserve changes on certain cohorts of older long-term care policies, will increase earnings in 2021 and 2022 due to favorable experience during these periods. This positive impact is not expected to persist materially past year-end 2022. We are testing our reporting and disclosure capabilities under the new guidance for post-Transition Date accounting periods. We are also enhancing certain modeling, data management, experience study and analytical capabilities and increasing |
LITIGATION AND OTHER LEGAL PROC
LITIGATION AND OTHER LEGAL PROCEEDINGS | 9 Months Ended |
Sep. 30, 2022 | |
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. On April 20, 2021, the New York Appellate Division of the Supreme Court, First Judicial Department unanimously reversed the trial court and reinstated breach of contract and breach of fiduciary duty claims against Wilmington. The Wilmington Action is currently pending in the Supreme Court of the State of New York, County of New York, Commercial Division. 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. The Delaware Chancery Court denied the CNO Parties’ motions to dismiss the Amended Complaint on the basis of forum non conveniens, but granted the CNO Parties’ motion to stay the case pending the conclusion of a related matter. After the stay is lifted, the court will address the CNO Parties’ and other defendants’ motions to dismiss the Amended Complaint on numerous other grounds. 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. On October 5, 2012, plaintiffs William Jeffrey Burnett and Joe H. Camp commenced an action entitled Burnett v. Conseco Life Ins. Co. against, among others, CNO Financial Group, Inc. and CNO Services, LLC (collectively, the "CNO Entities") in the United States District Court for the Central District of California on behalf of a putative class of former interest-sensitive whole life insurance policyholders who surrendered their policies or let them lapse. Plaintiffs' First Amended Complaint alleges that the CNO Entities are liable under an alter ego theory for Conseco Life Insurance Company's purported breach of the Optional Premium Payment Provision of plaintiffs' insurance policies. In January 2018, the case was transferred to the Southern District of Indiana. On August 17, 2020, the Court denied the CNO Entities' motions to dismiss. On January 13, 2021, the Court granted final approval of a class action settlement between plaintiffs and co-defendant Conseco Life Insurance Company (n/k/a Wilco Life Insurance Company). The case remains pending against the CNO Entities. On March 25, 2022, the Court certified a Rule 23(b)(3) class of under 2,000 policyholders who invoked the policy's Optional Premium Payment prior to October 2008 and who surrendered between October 7, 2008 and September 1, 2011. The Court's certification order acknowledged the existence of individualized issues of causation and damages, which the court stated could be addressed in individualized proceedings following a class trial on the alter ego allegations and the meaning of the subject insurance policy language. The CNO Entities continue to vigorously defend the case. 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. |
CONSOLIDATED STATEMENT OF CAS_2
CONSOLIDATED STATEMENT OF CASH FLOWS | 9 Months Ended |
Sep. 30, 2022 | |
Supplemental Cash Flow Elements [Abstract] | |
CONSOLIDATED STATEMENT OF CASH FLOWS | CONSOLIDATED STATEMENT OF CASH FLOWS The following reconciles net income to net cash from operating activities (dollars in millions): Nine months ended September 30, 2022 2021 Cash flows from operating activities: Net income $ 353.4 $ 325.2 Adjustments to reconcile net income to net cash from operating activities: Amortization and depreciation 305.6 227.3 Income taxes 87.8 123.3 Insurance liabilities (292.3) 255.2 Accrual, amortization and fair value changes included in investment income 132.0 (232.5) Deferral of policy acquisition costs (245.7) (213.3) Net investment (gains) losses 99.2 (26.2) Other (a) (105.5) 20.0 Net cash from operating activities $ 334.5 $ 479.0 _____________ (a) Primarily relates to: (i) changes in other assets and liabilities related to the timing of payments and receipts; and (ii) the change in fair value of the deferred compensation plan liability. Other non-cash items not reflected in the investing and financing activities sections of the consolidated statement of cash flows (dollars in millions): Nine months ended September 30, 2022 2021 Amounts related to employee benefit plans $ 19.8 $ 19.2 |
INVESTMENTS IN VARIABLE INTERES
INVESTMENTS IN VARIABLE INTEREST ENTITIES | 9 Months Ended |
Sep. 30, 2022 | |
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. 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 tables provide supplemental information about the assets and liabilities of the VIEs which have been consolidated in accordance with authoritative guidance (dollars in millions): September 30, 2022 VIEs Eliminations Net effect on Assets: Investments held by variable interest entities $ 1,099.2 $ — $ 1,099.2 Notes receivable of VIEs held by subsidiaries — (113.8) (113.8) Cash and cash equivalents held by variable interest entities 55.5 — 55.5 Accrued investment income 3.0 — 3.0 Income tax assets, net 21.6 — 21.6 Other assets 13.2 (.8) 12.4 Total assets $ 1,192.5 $ (114.6) $ 1,077.9 Liabilities: Other liabilities $ 46.0 $ (2.1) $ 43.9 Borrowings related to variable interest entities 1,115.3 — 1,115.3 Notes payable of VIEs held by subsidiaries 126.1 (126.1) — Total liabilities $ 1,287.4 $ (128.2) $ 1,159.2 December 31, 2021 VIEs Eliminations Net effect on Assets: Investments held by variable interest entities $ 1,199.6 $ — $ 1,199.6 Notes receivable of VIEs held by subsidiaries — (113.8) (113.8) Cash and cash equivalents held by variable interest entities 99.6 — 99.6 Accrued investment income 1.6 — 1.6 Income tax assets, net 8.4 — 8.4 Other assets 7.1 (.9) 6.2 Total assets $ 1,316.3 $ (114.7) $ 1,201.6 Liabilities: Other liabilities $ 89.5 $ (4.3) $ 85.2 Borrowings related to variable interest entities 1,147.9 — 1,147.9 Notes payable of VIEs held by subsidiaries 126.1 (126.1) — Total liabilities $ 1,363.5 $ (130.4) $ 1,233.1 The investment portfolios held by the VIEs are primarily comprised of commercial bank loans to corporate obligors which are almost entirely rated below-investment grade. At September 30, 2022, such loans had an amortized cost of $1,166.7 million; gross unrealized gains of $0.3 million; gross unrealized losses of $61.3 million; allowance for credit losses of $6.5 million; and an estimated fair value of $1,099.2 million. The following table summarizes changes in the allowance for credit losses related to corporate securities held by VIEs for the three months ended September 30, 2022 and 2021 (dollars in millions): Three months ended September 30, 2022 2021 Allowance at the beginning of the period $ 12.2 $ 3.2 Additions for securities for which credit losses were not previously recorded .9 .1 Additions for purchased securities with deteriorated credit — — Additions (reductions) for securities where an allowance was previously recorded (5.7) (.2) Reduction for securities sold during the period (.9) (.6) 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 the end of the period $ 6.5 $ 2.5 The following table summarizes changes in the allowance for credit losses related to corporate securities held by VIEs for the nine months ended September 30, 2022 and 2021 (dollars in millions): Nine months ended September 30, 2022 2021 Allowance at the beginning of the period $ 3.7 $ 15.1 Additions for securities for which credit losses were not previously recorded 7.2 .7 Additions for purchased securities with deteriorated credit — — Additions (reductions) for securities where an allowance was previously recorded (2.5) (3.7) Reduction for securities sold during the period (1.9) (9.6) 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 the end of the period $ 6.5 $ 2.5 The following table sets forth the amortized cost and estimated fair value of the investments held by the VIEs at September 30, 2022, 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 $ 4.5 $ 4.3 Due after one year through five years 687.5 652.9 Due after five years through ten years 474.7 442.0 Total $ 1,166.7 $ 1,099.2 During the first nine months of 2022, the VIEs recognized investment losses of $6.7 million which were comprised of: (i) $3.9 million of net losses from the sales of fixed maturities; and (ii) an increase in the allowance for credit losses of $2.8 million. Such net realized losses included gross realized losses of $3.9 million from the sale of $55.9 million of investments. During the first nine months of 2021, the VIEs recognized net investment gains of $5.1 million which were comprised of: (i) $7.5 million of net losses from the sales of fixed maturities; and (ii) a decrease in the allowance for credit losses of $12.6 million. Such net realized losses included gross realized losses of $7.7 million from the sale of $56.1 million of investments. At September 30, 2022, there were no fixed maturity investments held by the VIEs in default. At September 30, 2022, the VIEs held: (i) investments (for which an allowance for credit losses has not been recorded) with a fair value of $477.4 million and gross unrealized losses not deemed to have credit losses of $19.7 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 $395.4 million and gross unrealized losses not deemed to have credit losses of $19.5 million that had been in an unrealized loss position for twelve months or greater. At December 31, 2021, the VIEs held: (i) investments (for which an allowance for credit losses has not been recorded) with a fair value of $417.7 million and gross unrealized losses of $2.2 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 $279.7 million and gross unrealized losses of $3.1 million that had been in an unrealized loss position for twelve months or greater. 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. In addition, the Company, in the normal course of business, makes passive investments in structured securities issued by VIEs for which the Company is not the investment manager. These structured securities include asset-backed securities, collateralized loan obligations, commercial mortgage-backed securities, agency residential mortgage-backed securities and non-agency residential 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 September 30, 2022, we held investments in various limited partnerships and hedge funds, in which we are not the primary beneficiary, totaling $620.2 million (classified as other invested assets). At September 30, 2022, we had unfunded commitments to these partnerships totaling $358.1 million. Our maximum exposure to loss on these investments is limited to the amount of our investment. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2022 | |
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 and funding agreements, 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), and funding agreements 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 assets carried at fair value 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 using independent pricing services. 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 using independent pricing services. 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 using independent pricing services. 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 using independent pricing services. 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 87 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 September 30, 2022 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 $ — $ 11,656.5 $ 122.1 $ 11,778.6 United States Treasury securities and obligations of United States government corporations and agencies — 157.8 — 157.8 States and political subdivisions — 2,400.2 — 2,400.2 Foreign governments — 69.3 — 69.3 Asset-backed securities — 1,221.2 48.9 1,270.1 Agency residential mortgage-backed securities — 38.5 — 38.5 Non-agency residential mortgage-backed securities — 1,609.8 29.1 1,638.9 Collateralized loan obligations — 719.8 13.4 733.2 Commercial mortgage-backed securities — 2,176.9 37.6 2,214.5 Total fixed maturities, available for sale — 20,050.0 251.1 20,301.1 Equity securities - corporate securities 61.0 — 74.8 135.8 Trading securities: Asset-backed securities — 13.0 — 13.0 Agency residential mortgage-backed securities — .3 — .3 Non-agency residential mortgage-backed securities — 63.4 — 63.4 Commercial mortgage-backed securities — 146.6 — 146.6 Total trading securities — 223.3 — 223.3 Investments held by variable interest entities - corporate securities — 1,099.2 — 1,099.2 Other invested assets: Derivatives — 24.0 — 24.0 Residual tranches — 15.1 4.0 19.1 Total other invested assets — 39.1 4.0 43.1 Assets held in separate accounts — 2.7 — 2.7 Total assets carried at fair value by category $ 61.0 $ 21,414.3 $ 329.9 $ 21,805.2 Liabilities: Embedded derivatives associated with fixed index annuity products (classified as policyholder account liabilities) $ — $ — $ 1,253.9 $ 1,253.9 The categorization of fair value measurements, by input level, for our financial instruments carried at fair value on a recurring basis at December 31, 2021 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 $ — $ 15,361.1 $ 89.7 $ 15,450.8 United States Treasury securities and obligations of United States government corporations and agencies — 219.6 — 219.6 States and political subdivisions — 3,004.2 — 3,004.2 Foreign governments — 98.5 — 98.5 Asset-backed securities — 1,136.3 26.6 1,162.9 Agency residential mortgage-backed securities — 40.4 — 40.4 Non-agency residential mortgage-backed securities — 2,023.8 — 2,023.8 Collateralized loan obligations — 583.3 5.0 588.3 Commercial mortgage-backed securities — 2,197.9 19.0 2,216.9 Total fixed maturities, available for sale — 24,665.1 140.3 24,805.4 Equity securities - corporate securities 100.8 18.8 11.5 131.1 Trading securities: Asset-backed securities — 5.8 — 5.8 Agency residential mortgage-backed securities — .4 — .4 Non-agency residential mortgage-backed securities — 77.5 3.5 81.0 Commercial mortgage-backed securities — 127.1 12.9 140.0 Total trading securities — 210.8 16.4 227.2 Investments held by variable interest entities - corporate securities — 1,197.4 2.2 1,199.6 Other invested assets - derivatives — 227.5 — 227.5 Assets held in separate accounts — 3.9 — 3.9 Total assets carried at fair value by category $ 100.8 $ 26,323.5 $ 170.4 $ 26,594.7 Liabilities: Embedded derivatives associated with fixed index annuity products (classified as policyholder account liabilities) $ — $ — $ 1,724.1 $ 1,724.1 The fair value of our financial instruments disclosed at fair value on a recurring basis are as follows (dollars in millions): September 30, 2022 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 $ — $ — $ 1,092.0 $ 1,092.0 $ 1,227.3 Policy loans — — 120.2 120.2 120.2 Other invested assets: Company-owned life insurance — 197.6 — 197.6 197.6 Cash and cash equivalents: Unrestricted 498.0 — — 498.0 498.0 Held by variable interest entities 55.5 — — 55.5 55.5 Liabilities: Policyholder account liabilities — — 14,653.7 14,653.7 14,653.7 Investment borrowings — 1,640.9 — 1,640.9 1,639.9 Borrowings related to variable interest entities — 1,068.7 — 1,068.7 1,115.3 Notes payable – direct corporate obligations — 1,073.8 — 1,073.8 1,138.4 December 31, 2021 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 $ — $ — $ 1,297.5 $ 1,297.5 $ 1,218.6 Policy loans — — 120.2 120.2 120.2 Other invested assets: Company-owned life insurance — 207.0 — 207.0 207.0 Cash and cash equivalents: Unrestricted 632.1 — — 632.1 632.1 Held by variable interest entities 99.6 — — 99.6 99.6 Liabilities: Policyholder account liabilities — — 13,689.7 13,689.7 13,689.7 Investment borrowings — 1,719.6 — 1,719.6 1,715.8 Borrowings related to variable interest entities — 1,144.8 — 1,144.8 1,147.9 Notes payable – direct corporate obligations — 1,283.4 — 1,283.4 1,137.3 The following table presents additional information about assets measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the three months ended September 30, 2022 (dollars in millions): September 30, 2022 Beginning balance as of June 30, 2022 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 Ending balance as of September 30, 2022 Amount of total gains (losses) for the three months ended September 30, 2022 included in our net income relating to assets still held as of the reporting date Amount of total gains (losses) for the three months ended September 30, 2022 included in accumulated other comprehensive income (loss) relating to assets still held as of the reporting date Assets: Fixed maturities, available for sale: Corporate securities $ 124.0 $ 2.7 $ (.9) $ (13.4) $ 9.7 $ — $ 122.1 $ (.9) $ (14.2) Asset-backed securities 29.7 18.3 — (3.2) 4.1 — 48.9 — (3.2) Non-agency residential mortgage-backed securities 40.5 (.1) — (2.5) 13.6 (22.4) 29.1 — (2.5) Collateralized loan obligations 4.4 — — — 13.4 (4.4) 13.4 — — Commercial mortgage-backed securities 16.5 — — (1.1) 22.2 — 37.6 — (1.1) Total fixed maturities, available for sale 215.1 20.9 (.9) (20.2) 63.0 (26.8) 251.1 (.9) (21.0) Equity securities - corporate securities 8.2 — (.5) — 67.1 — 74.8 (.5) — Trading securities: Non-agency residential mortgage-backed securities 3.4 — — — — (3.4) — — — Commercial mortgage-backed securities 6.0 — — — — (6.0) — — — Total trading securities 9.4 — — — — (9.4) — — — Other invested assets - residual tranches 2.6 1.6 (.5) — .3 — 4.0 (.5) — _________ (a) Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate. (b) Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset 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. The following summarizes such activity for the three months ended September 30, 2022 (dollars in millions): Purchases Sales Issuances Settlements Purchases, sales, issuances and settlements, net Assets: Fixed maturities, available for sale: Corporate securities $ 9.3 $ (6.6) $ — $ — $ 2.7 Asset-backed securities 19.0 (.7) — — 18.3 Non-agency residential mortgage-backed securities — (.1) — — (.1) Total fixed maturities, available for sale 28.3 (7.4) — — 20.9 Other invested assets - residual tranches 1.6 — — — 1.6 The following table presents additional information about assets 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 nine months ended September 30, 2022 (dollars in millions): September 30, 2022 Beginning balance as of December 31, 2021 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 Ending balance as of September 30, 2022 Amount of total gains (losses) for the nine months ended September 30, 2022 included in our net income relating to assets still held as of the reporting date Amount of total gains (losses) for the nine months ended September 30, 2022 included in accumulated other comprehensive income (loss) relating to assets still held as of the reporting date Assets: Fixed maturities, available for sale: Corporate securities $ 89.7 $ 13.0 $ (.1) $ (41.7) $ 68.6 $ (7.4) $ 122.1 $ .4 $ (43.1) Asset-backed securities 26.6 26.0 — (6.4) 2.7 — 48.9 — (6.4) Non-agency residential mortgage-backed securities — 6.0 — (10.3) 33.4 — 29.1 — (10.3) Collateralized loan obligations 5.0 — — (.4) 13.8 (5.0) 13.4 — (.4) Commercial mortgage-backed securities 19.0 28.0 — (9.4) — — 37.6 — (9.5) Total fixed maturities, available for sale 140.3 73.0 (.1) (68.2) 118.5 (12.4) 251.1 .4 (69.7) Equity securities - corporate securities 11.5 63.9 (.6) — — — 74.8 (.5) — Trading securities: Non-agency residential mortgage-backed securities 3.5 — — — — (3.5) — — — Commercial mortgage-backed securities 12.9 — — — — (12.9) — — — Total trading securities 16.4 — — — — (16.4) — — — Investments held by variable interest entities - corporate securities 2.2 (2.1) (.1) — — — — — — Other invested assets - residual tranches — 2.8 — (.6) 1.8 — 4.0 — (.6) _________ (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 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. The following summarizes such activity for the nine months ended September 30, 2022 (dollars in millions): Purchases Sales Issuances Settlements Purchases, sales, issuances and settlements, net Assets: Fixed maturities, available for sale: Corporate securities $ 24.2 $ (11.2) $ — $ — $ 13.0 Asset-backed securities 26.9 (.9) — — 26.0 Non-agency residential mortgage-backed securities 6.5 (.5) — — 6.0 Commercial mortgage-backed securities 28.0 — — — 28.0 Total fixed maturities, available for sale 85.6 (12.6) — — 73.0 Equity securities - corporate securities 67.0 (3.1) — — 63.9 Investments held by variable interest entities - corporate securities — (2.1) — — (2.1) Other invested assets - residual tranches 2.8 — — — 2.8 The following table presents additional information about assets measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the three months ended September 30, 2021 (dollars in millions): September 30, 2021 Beginning balance as of June 30, 2021 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 September 30, 2021 Amount of total gains (losses) for the three months ended September 30, 2021 included in our net income relating to assets still held as of the reporting date Amount of total gains (losses) for the three months ended September 30, 2021 included in accumulated other comprehensive income (loss) relating to assets still held as of the reporting date Assets: Fixed maturities, available for sale: Corporate securities $ 82.5 $ 18.5 $ (1.2) $ 1.1 $ — $ (5.1) $ 95.8 $ (1.2) $ .6 Asset-backed securities 12.0 8.0 — .1 — — 20.1 — $ .1 Commercial mortgage-backed securities — 6.4 — .4 12.6 — 19.4 — $ .4 Total fixed maturities, available for sale 94.5 32.9 (1.2) 1.6 12.6 (5.1) 135.3 (1.2) 1.1 Equity securities - corporate securities 27.0 — (1.8) — — — 25.2 (1.8) — Trading securities: Non-agency residential mortgage-backed securities 4.8 (.7) (.2) .2 — — 4.1 (.2) — Commercial mortgage-backed securities 12.6 — — .2 — — 12.8 — — Total trading securities 17.4 (.7) (.2) .4 — — 16.9 (.2) — ____________ (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 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. The following summarizes such activity for the three months ended September 30, 2021 (dollars in millions): Purchases Sales Issuances Settlements Purchases, sales, issuances and settlements, net Assets: Fixed maturities, available for sale: Corporate securities $ 18.5 $ — $ — $ — $ 18.5 Asset-backed securities 8.2 (.2) — — 8.0 Commercial mortgage-backed securities 6.4 — — — 6.4 Total fixed maturities, available for sale 33.1 (.2) — — 32.9 Trading securities - non-agency residential mortgage-backed securities — (.7) — — (.7) The following table presents additional information about assets 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 nine months ended September 30, 2021 (dollars in millions): September 30, 2021 Beginning balance as of December 31, 2020 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 September 30, 2021 Amount of total gains (losses) for the nine months ended September 30, 2021 included in our net income relating to assets still held as of the reporting date Amount of total gains (losses) for the nine months ended September 30, 2021 included in accumulated other comprehensive income (loss) relating to assets still held as of the reporting date Assets: Fixed maturities, available for sale: Corporate securities $ 146.9 $ 18.4 $ (.3) $ .8 $ 6.1 $ (76.1) $ 95.8 $ (.3) $ (.6) Asset-backed securities 14.3 7.7 — .1 — (2.0) 20.1 — .1 Non-agency residential mortgage-backed securities 1.6 — — — — (1.6) — — — Commercial mortgage-backed securities — 6.4 — (.2) 13.2 — 19.4 — (.4) Total fixed maturities, available for sale 162.8 32.5 (.3) .7 19.3 (79.7) 135.3 (.3) (.9) Equity securities - corporate securities 26.8 .2 (1.8) — — — 25.2 (1.8) — Trading securities: Non-agency residential mortgage-backed securities 5.9 (1.8) (.4) .4 — — 4.1 (.4) — Commercial mortgage-backed securities 17.0 — — .5 — (4.7) 12.8 — — Total trading securities 22.9 (1.8) (.4) .9 — (4.7) 16.9 (.4) — ____________ (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 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. The following summarizes such activity for the nine months ended September 30, 2021 (dollars in millions): Purchases Sales Issuances Settlements Purchases, sales, issuances and settlements, net Assets: Fixed maturities, available for sale: Corporate securities $ 18.5 $ (.1) $ — $ — $ 18.4 Asset-backed securities 8.2 (.5) — — 7.7 Commercial mortgage-backed securities 6.4 — — — 6.4 Total fixed maturities, available for sale 33.1 (.6) — — 32.5 Equity securities - corporate securities .2 — — — .2 Trading securities - non-agency residential mortgage-backed securities — (1.8) — — (1.8) 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 or investment gains (losses) within the consolidated statement of operations or accumulated other comprehensive income (loss) 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 still held as of the reporting date primarily represents change in allowance for credit losses for fixed maturities, available for sale, changes in fair value of equity securities and trading securities that exist as of the reporting date. The amount presented for gains (losses) included in accumulated other comprehensive income (loss) for assets 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 September 30, 2022, 84 percent of our Level 3 fixed maturities, available for sale, were investment grade and 49 percent of our Level 3 fixed maturities, available for sale, consisted of corporate securities. The following table summarizes changes in the value of our embedded derivatives associated with fixed index annuity products (classified as policyholder account liabilities) which are measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value (dollars in millions): Three months ended Nine months ended September 30, September 30, 2022 2021 2022 2021 Balance at beginning of the period $ 1,371.0 $ 1,695.0 $ 1,724.1 $ 1,644.5 Premiums less benefits 12.0 27.9 55.3 71.3 Change in fair value, net (129.1) (18.7) (525.5) (11.6) Balance at end of the period $ 1,253.9 $ 1,704.2 $ 1,253.9 $ 1,704.2 The change in fair value, net for each period in our embedded derivatives is included in the consolidated statement of operations. 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 September 30, 2022 (dollars in millions): Fair value at September 30, 2022 Valuation techniques Unobservable inputs Range (weighted average) (a) Assets: Corporate securities (b) $ 2.9 Discounted cash flow analysis Discount margins 2.53% - 4.01% (2.56%) Corporate securities (c) 10.5 Unadjusted purchase price Not applicable Not applicable Asset-backed securities (d) 18.8 Discounted cash flow analysis Discount margins 2.08% - 3.58% (2.80%) Equity securities (e) 63.0 Market comparables EBITDA multiples 8X Equity securities (f) .1 Recovery method Percent of recovery expected 0.00% - 100.00% (100.00%) Equity securities (g) 11.7 Unadjusted purchase price Not applicable Not applicable Other assets categorized as Level 3 (h) 222.9 Unadjusted third-party price source Not applicable Not applicable Total 329. |
BUSINESS AND BASIS OF PRESENT_2
BUSINESS AND BASIS OF PRESENTATION (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Accounting | 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 could be materially affected. |
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. |
Investments | We classify our fixed maturity securities into one of two categories: (i) "available for sale" (which we carry at estimated fair value with any unrealized gain or loss, net of tax and related adjustments, recorded as a component of shareholders' equity); or (ii) "trading" (which we carry at estimated fair value with changes in such value recognized as either net investment income (classified as investment income from policyholder and other special-purpose portfolios) or investment gains (losses)). |
Earnings Per Share | Basic earnings per common share is computed by dividing net income by the weighted average number of common shares outstanding for the period. Restricted shares (including our performance units) are not included in basic earnings per share until vested. Diluted earnings per share reflect the potential dilution that could occur if outstanding stock options were exercised and restricted stock was vested. The dilution from options and restricted shares is calculated using the treasury stock method. Under this method, we assume the proceeds from the exercise of the options (or the unrecognized compensation expense with respect to restricted stock and performance units) will be used to purchase shares of our common stock at the average market price during the period, reducing the dilutive effect of the exercise of the options (or the vesting of the restricted stock and performance units). |
Business Segments | We view our operations as three insurance product lines (annuity, health and life) and the investment and fee revenue segments. Our 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. Our insurance product line segments (annuity, health and life) include marketing, underwriting and administration of the policies our insurance subsidiaries sell. 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. 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, virtually, 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 with one of the largest direct-to-consumer insurance businesses 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 and virtually. With a separate Worksite Division, we are bringing a sharper focus to this high-growth business while further capitalizing on the strength of our acquisitions of Web Benefits Design Corporation ("WBD") in April 2019 and DirectPath, LLC ("DirectPath", now known as Optavise, LLC ("Optavise") subsequent to its name change in April 2022) in February 2021. Sales in the Worksite Division have been particularly adversely impacted by the novel coronavirus ("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. 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; (iv) expenses related to the funding agreement-backed note ("FABN") program; and (v) 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 our Federal Home Loan Bank ("FHLB") investment borrowing and FABN programs 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 company-owned life insurance ("COLI") and alternative investments income not allocated to product lines), net of interest expense on corporate debt. The spread earned from our FHLB investment borrowing and FABN programs includes the investment income on the matched assets less: (i) interest on investment borrowings related to the FHLB investment borrowing program; (ii) interest credited on funding agreements; and (iii) amortization of deferred acquisition costs related to the FABN program. Our fee income segment includes the earnings generated from sales of third-party insurance products, services provided by WBD (our on-line benefit administration firm), Optavise (a national provider of year-round technology-driven employee benefits management services) 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 total investment gains (losses), fair value changes in embedded derivative liabilities (net of related amortization), fair value changes related to the agent deferred compensation plan, income taxes and other non-operating items consisting primarily of earnings attributable to 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 investment gains (losses), and a long-term focus is necessary to maintain profitability over the life of the business. Investment gains (losses), fair value changes in embedded derivative liabilities (net of related amortization), fair value changes related to the agent deferred compensation plan and other non-operating items consisting primarily of earnings attributable to VIEs depend on market conditions or represent unusual items that do not necessarily relate to the underlying business of our segments. Investment gains (losses) and fair value changes in embedded derivative liabilities (net of related amortization) may affect future earnings levels since our underlying business is long-term in nature and changes in our investment portfolio may impact our ability to earn the assumed interest rates needed to maintain the profitability of our business. |
Recently Issued Accounting Standards and Pending Accounting Standards | Pending Accounting Standards In August 2018, the Financial Accounting Standards Board issued authoritative guidance revising the accounting for long-duration insurance 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 (loss) 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. We have selected the modified retrospective transition method, except for market risk benefits where we are required to use the full retrospective approach. We have made progress in determining certain accounting decisions related to the standard including, but not limited to, conclusions related to: (i) the method to determine discount rates; (ii) a process to group policies into cohorts for the measurement of future policy benefits; (iii) a process to develop experience studies at a cohort level to substantiate mortality, morbidity, terminations and other actuarial assumptions; and (iv) a method to estimate the fair value of certain annuity product features which guarantee a defined stream of income to the policyholder for life (which is considered a market risk benefit). With respect to the method to determine interest rates, we have made certain conclusions, but we continue to refine our methodology. The process involves the determination of discount rate curves for discounting cash flows to calculate the liability for future policy benefits at a cohort level. Each discount rate curve is developed to reflect the duration characteristics of the underlying insurance liabilities using discount rates comparable to upper-medium grade (low credit risk) fixed income yields. Discount rates will be updated quarterly. Our long duration insurance contracts will be grouped into annual calendar-year cohorts primarily based on the contractual issue date, marketing distribution channel, legal entity and product type. Single premium contracts will be grouped into separate cohorts from other traditional products. Riders will generally be combined with the base policy. Insurance contracts which were issued prior to September 10, 2003 (the effective date of the bankruptcy reorganization of Conseco, Inc. (our Predecessor)) will be grouped by marketing distribution channel, legal entity and product type in a single issue year cohort. Using the cash flow assumptions underlying our insurance contracts, we have completed preliminary testing of the potential loss recognition on the January 1, 2021 transition date (the "Transition Date"). Under the new guidance, this testing is performed at the Transition Date at a cohort level, rather than the current requirements to aggregate all vintages within a block. Although we do not have variable annuity business with guaranteed features considered "market risk benefits," we do issue certain fixed index annuities with lifetime income riders. These riders are currently accounted for using traditional insurance accounting, but must be carried at fair value under the new standard. We have made preliminary determinations of the Transition Date impact of this change. We continue to evaluate the impact of adoption and expect that the adoption will have a significant impact on our financial position, results of operations, and disclosures. We anticipate that the requirement to update assumptions for the liability for future policy benefits will have a significant impact on our results of operations, systems, processes and controls and that the requirement to update discount rates will have a significant impact on shareholders’ equity. Based upon the modified retrospective transition method, we currently estimate that the new discount rate impact from adoption on the Transition Date is likely to result in a decrease to the accumulated other comprehensive income (loss) balance in the range of approximately $1,800 million to $2,200 million, resulting in a balance approximating zero at the Transition Date. This is primarily due to updating the liability for future policy benefits discount rate assumptions from the rates locked in for reserves held as of the Transition Date to rates determined by reference to the Transition Date market level yields for upper-medium-grade (low credit risk) fixed income instruments as of December 31, 2020. The impacts on accumulated other comprehensive income (loss) in periods following the Transition Date will be based on market yields in effect on the date of the financial statements, and such impact may differ significantly from the estimated range disclosed above. In addition, we currently estimate that the Transition Date impact on retained earnings will be a decrease in the range of approximately $100 million to $200 million primarily due to certain "cohorts" of older long-term care policies having negative margins. The overall margin on our long-term care block continues to be positive. In addition, our estimate of the Transition Date impact on retained earnings includes the impact of carrying the lifetime income riders on certain fixed index annuities at fair value. The estimated impact on retained earnings is based on numerous assumptions and preliminary methodologies including: (i) our methodology of defining cohorts; (ii) the assumptions used to estimate the market value of features which guarantee a defined stream of income to the policyholder for life; and (iii) numerous assumptions regarding future policy benefits. Under the new standard, we estimate that recast GAAP earnings from the Transition Date into 2021 and 2022 will be modestly higher and less volatile. We base this estimate on a number of factors: First, there is less quarter-to-quarter volatility in most products as temporary deviations from experience (including the impacts of COVID-19) are offset by reserve changes. This is different than current GAAP accounting for health and traditional life products where no such change to reserves is made for temporary deviations from experience. Second, the gradual release of provisions for adverse deviations or PADs, embedded in our transition balance sheet reserves are expected to positively impact earnings. This will affect our health and traditional life inforce blocks of business and will be spread over the remaining life of those blocks. Third, we expect positive impacts from lower amortization of deferred acquisition costs and other similar intangible assets. Fourth, the transition impacts to retained earnings, primarily from reserve changes on certain cohorts of older long-term care policies, will increase earnings in 2021 and 2022 due to favorable experience during these periods. This positive impact is not expected to persist materially past year-end 2022. We are testing our reporting and disclosure capabilities under the new guidance for post-Transition Date accounting periods. We are also enhancing certain modeling, data management, experience study and analytical capabilities and increasing |
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 and funding agreements, 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), and funding agreements 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 assets carried at fair value 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 using independent pricing services. 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 using independent pricing services. 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 using independent pricing services. 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 using independent pricing services. 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 87 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. |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | These amounts, included in shareholders' equity as of September 30, 2022 and December 31, 2021, were as follows (dollars in millions): September 30, December 31, Net unrealized gains (losses) on investments having no allowance for credit losses $ (1,222.1) $ 2,963.3 Unrealized losses on investments with an allowance for credit losses (1,929.9) (23.1) Adjustment to present value of future profits (a) 8.7 (8.3) Adjustment to deferred acquisition costs 367.1 (420.2) Adjustment to insurance liabilities — (25.5) Deferred income tax assets (liabilities) 610.5 (539.1) Accumulated other comprehensive income (loss) $ (2,165.7) $ 1,947.1 ________ (a) The present value of future profits is the value assigned to the right to receive future cash flows from contracts existing at September 10, 2003, the date Conseco, Inc., an Indiana corporation, emerged from bankruptcy. |
Schedule of Fixed Maturities for Available for Sale Securities | At September 30, 2022, 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 cost Gross unrealized gains Gross unrealized losses Allowance for credit losses Estimated fair value Corporate securities $ 13,942.2 $ 22.2 $ (2,136.6) $ (49.2) $ 11,778.6 United States Treasury securities and obligations of United States government corporations and agencies 169.5 — (11.7) — 157.8 States and political subdivisions 2,818.8 20.9 (437.8) (1.7) 2,400.2 Foreign governments 84.5 — (14.4) (.8) 69.3 Asset-backed securities 1,402.0 .2 (131.8) (.3) 1,270.1 Agency residential mortgage-backed securities 39.0 — (.5) — 38.5 Non-agency residential mortgage-backed securities 1,755.5 50.7 (167.3) — 1,638.9 Collateralized loan obligations 778.3 — (45.1) — 733.2 Commercial mortgage-backed securities 2,452.7 — (238.2) — 2,214.5 Total fixed maturities, available for sale $ 23,442.5 $ 94.0 $ (3,183.4) $ (52.0) $ 20,301.1 At December 31, 2021, 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 cost Gross unrealized gains Gross unrealized losses Allowance for credit losses Estimated fair value Corporate securities $ 13,195.4 $ 2,284.5 $ (21.7) $ (7.4) $ 15,450.8 United States Treasury securities and obligations of United States government corporations and agencies 166.2 54.3 (.9) — 219.6 States and political subdivisions 2,649.0 356.7 (1.5) — 3,004.2 Foreign governments 85.4 13.6 (.3) (.2) 98.5 Asset-backed securities 1,129.0 37.0 (3.1) — 1,162.9 Agency residential mortgage-backed securities 36.7 3.7 — — 40.4 Non-agency residential mortgage-backed securities 1,870.4 156.5 (3.1) — 2,023.8 Collateralized loan obligations 587.3 2.3 (1.3) — 588.3 Commercial mortgage-backed securities 2,148.2 77.9 (9.2) — 2,216.9 Total fixed maturities, available for sale $ 21,867.6 $ 2,986.5 $ (41.1) $ (7.6) $ 24,805.4 |
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 September 30, 2022, 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 $ 123.4 $ 122.6 Due after one year through five years 1,935.7 1,805.1 Due after five years through ten years 2,125.3 1,894.4 Due after ten years 12,830.6 10,583.8 Subtotal 17,015.0 14,405.9 Structured securities 6,427.5 5,895.2 Total fixed maturities, available for sale $ 23,442.5 $ 20,301.1 The following table sets forth the amortized cost and estimated fair value of fixed maturities, available for sale, at December 31, 2021, by contractual maturity. Amortized Estimated (Dollars in millions) Due in one year or less $ 80.3 $ 80.5 Due after one year through five years 1,147.4 1,205.6 Due after five years through ten years 1,458.4 1,573.7 Due after ten years 13,409.9 15,913.3 Subtotal 16,096.0 18,773.1 Structured securities 5,771.6 6,032.3 Total fixed maturities, available for sale $ 21,867.6 $ 24,805.4 |
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 September 30, 2022 (dollars in millions): Less than 12 months 12 months or greater Total Description of securities Fair Unrealized Fair Unrealized Fair Unrealized Corporate securities $ 3,134.3 $ (495.7) $ 31.4 $ (11.4) $ 3,165.7 $ (507.1) United States Treasury securities and obligations of United States government corporations and agencies 134.8 (8.0) 21.7 (3.6) 156.5 (11.6) States and political subdivisions 827.3 (176.7) 4.2 (1.8) 831.5 (178.5) Foreign governments 10.8 (.4) — — 10.8 (.4) Asset-backed securities 1,122.5 (115.4) 82.5 (11.6) 1,205.0 (127.0) Agency residential mortgage-backed securities 33.1 (.5) — — 33.1 (.5) Non-agency residential mortgage-backed securities 1,053.8 (140.0) 93.4 (27.4) 1,147.2 (167.4) Collateralized loan obligations 595.6 (36.6) 120.4 (8.5) 716.0 (45.1) Commercial mortgage-backed securities 1,812.6 (181.4) 394.0 (56.7) 2,206.6 (238.1) Total fixed maturities, available for sale $ 8,724.8 $ (1,154.7) $ 747.6 $ (121.0) $ 9,472.4 $ (1,275.7) 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, 2021 (dollars in millions): Less than 12 months 12 months or greater Total Description of securities Fair Unrealized Fair Unrealized Fair Unrealized Corporate securities $ 87.8 $ (.4) $ 9.2 $ (.1) $ 97.0 $ (.5) United States Treasury securities and obligations of United States government corporations and agencies 5.7 — 18.7 (.9) 24.4 (.9) States and political subdivisions 47.3 (.4) — — 47.3 (.4) Asset-backed securities 210.8 (2.4) 17.8 (.7) 228.6 (3.1) Non-agency residential mortgage-backed securities 380.8 (3.1) 2.3 — 383.1 (3.1) Collateralized loan obligations 271.5 (1.2) 32.8 (.1) 304.3 (1.3) Commercial mortgage-backed securities 694.7 (7.6) 41.4 (1.6) 736.1 (9.2) Total fixed maturities, available for sale $ 1,698.6 $ (15.1) $ 122.2 $ (3.4) $ 1,820.8 $ (18.5) |
Summary of Changes in the Allowance for Current Expected Credit Losses | The following table summarizes changes in the allowance for credit losses related to fixed maturities, available for sale, for the three months ended September 30, 2022 (dollars in millions): Corporate securities States and political subdivisions Foreign governments Asset-backed securities Total Allowance at June 30, 2022 $ 52.2 $ 1.1 $ .7 $ .2 $ 54.2 Additions for securities for which credit losses were not previously recorded 7.2 .2 .1 .1 7.6 Additions for purchased securities with deteriorated credit — — — — — Additions (reductions) for securities where an allowance was previously recorded (6.9) .5 — — (6.4) Reduction for securities sold during the period (3.3) (.1) — — (3.4) 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 September 30, 2022 $ 49.2 $ 1.7 $ .8 $ .3 $ 52.0 The following table summarizes changes in the allowance for credit losses related to fixed maturities, available for sale, for the nine months ended September 30, 2022 (dollars in millions): Corporate securities States and political subdivisions Foreign governments Asset-backed securities Total Allowance at December 31, 2021 $ 7.4 $ — $ .2 $ — $ 7.6 Additions for securities for which credit losses were not previously recorded 39.8 .7 .5 .2 41.2 Additions for purchased securities with deteriorated credit — — — — — Additions (reductions) for securities where an allowance was previously recorded 11.8 1.1 .1 .1 13.1 Reduction for securities sold during the period (9.8) (.1) — — (9.9) 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 September 30, 2022 $ 49.2 $ 1.7 $ .8 $ .3 $ 52.0 The following table summarizes changes in the allowance for credit losses related to fixed maturities, available for sale, for the three months ended September 30, 2021 (dollars in millions): Corporate securities Foreign governments Total Allowance at June 30, 2021 $ 2.3 $ — $ 2.3 Additions for securities for which credit losses were not previously recorded 2.4 .1 2.5 Additions for purchased securities with deteriorated credit — — — Additions (reductions) for securities where an allowance was previously recorded .7 — .7 Reduction for securities sold during the period (.1) — (.1) 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 September 30, 2021 $ 5.3 $ .1 $ 5.4 The following table summarizes changes in the allowance for credit losses related to fixed maturities, available for sale, for the nine months ended September 30, 2021 (dollars in millions): Corporate securities States and political subdivisions Foreign governments Total Allowance at December 31, 2020 $ 1.9 $ .3 $ — $ 2.2 Additions for securities for which credit losses were not previously recorded 4.3 .1 .1 4.5 Additions for purchased securities with deteriorated credit — — — — Additions (reductions) for securities where an allowance was previously recorded (.3) (.4) — (.7) Reduction for securities sold during the period (.6) — — (.6) 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 September 30, 2021 $ 5.3 $ — $ .1 $ 5.4 The following table summarizes changes in the allowance for credit losses related to corporate securities held by VIEs for the three months ended September 30, 2022 and 2021 (dollars in millions): Three months ended September 30, 2022 2021 Allowance at the beginning of the period $ 12.2 $ 3.2 Additions for securities for which credit losses were not previously recorded .9 .1 Additions for purchased securities with deteriorated credit — — Additions (reductions) for securities where an allowance was previously recorded (5.7) (.2) Reduction for securities sold during the period (.9) (.6) 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 the end of the period $ 6.5 $ 2.5 The following table summarizes changes in the allowance for credit losses related to corporate securities held by VIEs for the nine months ended September 30, 2022 and 2021 (dollars in millions): Nine months ended September 30, 2022 2021 Allowance at the beginning of the period $ 3.7 $ 15.1 Additions for securities for which credit losses were not previously recorded 7.2 .7 Additions for purchased securities with deteriorated credit — — Additions (reductions) for securities where an allowance was previously recorded (2.5) (3.7) Reduction for securities sold during the period (1.9) (9.6) 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 the end of the period $ 6.5 $ 2.5 |
Summary of Carrying Value and Estimated Fair Value of Outstanding Commercial Mortgage Loans and Underlying Collateral | 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 September 30, 2022 (dollars in millions): Estimated fair Loan-to-value ratio (a) 2022 2021 2020 2019 2018 Prior Total amortized cost Mortgage loans Collateral Less than 60% $ 149.3 $ 127.6 $ 43.9 $ 75.8 $ 67.1 $ 470.2 $ 933.9 $ 824.5 $ 3,790.3 60% to less than 70% 47.3 12.9 — — 8.2 43.4 111.8 103.3 170.6 70% to less than 80% 33.0 22.4 — — — 15.1 70.5 60.8 93.7 80% to less than 90% — — — — — 42.8 42.8 34.9 52.0 90% or greater — — — — — 10.0 10.0 6.9 10.7 Total $ 229.6 $ 162.9 $ 43.9 $ 75.8 $ 75.3 $ 581.5 $ 1,169.0 $ 1,030.4 $ 4,117.3 ________________ |
Summary of Changes in the Allowance for Current Expected Credit Losses Related to Mortgage Loans | The following table summarizes changes in the allowance for credit losses related to mortgage loans for the three months ended September 30, 2022 and 2021 (dollars in millions): Three months ended September 30, 2022 2021 Allowance at the beginning of the period $ 4.9 $ 8.3 Current period provision for expected credit losses .4 (1.0) Initial allowance recognized for purchased financial assets with credit deterioration — — Write-offs charged against the allowance — — Recoveries of amounts previously written off — — Allowance at the end of the period $ 5.3 $ 7.3 The following table summarizes changes in the allowance for credit losses related to mortgage loans for the nine months ended September 30, 2022 and 2021 (dollars in millions): Nine months ended September 30, 2022 2021 Allowance at the beginning of the period $ 5.6 $ 11.8 Current period provision for expected credit losses (.3) (4.5) Initial allowance recognized for purchased financial assets with credit deterioration — — Write-offs charged against the allowance — — Recoveries of amounts previously written off — — Allowance at the end of the period $ 5.3 $ 7.3 |
Schedule of Realized Gain (Loss) on Investments | The following table sets forth the total investment gains (losses) for the periods indicated (dollars in millions): Three months ended Nine months ended September 30, September 30, 2022 2021 2022 2021 Realized investment gains (losses): Gross realized gains on sales of fixed maturities, available for sale $ 18.1 $ 4.1 $ 96.4 $ 42.8 Gross realized losses on sales of fixed maturities, available for sale (24.4) (.2) (81.3) (18.4) Equity securities, net — — (8.3) (2.8) Other, net (1.9) (.2) (3.2) (6.8) Total realized investment gains (losses) (8.2) 3.7 3.6 14.8 Change in allowance for credit losses (a) 7.5 (1.4) (46.9) 13.9 Change in fair value of equity securities (b) (.7) (3.0) (2.4) (.4) Other changes in fair value (c) (16.3) (1.6) (53.5) (2.1) Other investment gains (losses) (9.5) (6.0) (102.8) 11.4 Total investment gains (losses) $ (17.7) $ (2.3) $ (99.2) $ 26.2 _________________ (a) Changes in the allowance for credit losses includes $5.7 million and $(2.8) million in the three and nine months ended September 30, 2022, respectively, and $0.7 million and $12.6 million in the three and nine months ended September 30, 2021, respectively, related to investments held by variable interest entities ("VIEs"). (b) Changes in the estimated fair value of equity securities (that are still held as of the end of the respective periods) were $(6.9) million and $(2.6) million for the nine months ended September 30, 2022 and 2021, respectively. |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share Reconciliation | A reconciliation of net income and shares used to calculate basic and diluted earnings per share is as follows (dollars in millions and shares in thousands): Three months ended Nine months ended September 30, September 30, 2022 2021 2022 2021 Net income for basic and diluted earnings per share $ 105.0 $ 99.8 $ 353.4 $ 325.2 Shares: Weighted average shares outstanding for basic earnings per share 114,354 126,429 116,170 130,528 Effect of dilutive securities on weighted average shares: Amounts related to employee benefit plans 1,574 2,589 1,902 2,634 Weighted average shares outstanding for diluted earnings per share 115,928 129,018 118,072 133,162 |
BUSINESS SEGMENTS (Tables)
BUSINESS SEGMENTS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Schedule of Operating Information by Segment | Operating information by segment is as follows (dollars in millions): Three months ended Nine months ended September 30, September 30, 2022 2021 2022 2021 Revenues: Annuity: Insurance policy income $ 6.3 $ 5.8 $ 17.1 $ 15.5 Net investment income 117.3 115.5 347.2 346.1 Total annuity revenues 123.6 121.3 364.3 361.6 Health: Insurance policy income 403.5 414.4 1,213.7 1,246.3 Net investment income 71.9 72.2 215.3 215.3 Total health revenues 475.4 486.6 1,429.0 1,461.6 Life: Insurance policy income 213.4 210.4 643.0 631.7 Net investment income 36.6 36.4 109.1 108.3 Total life revenues 250.0 246.8 752.1 740.0 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) (34.9) 7.2 (199.2) 125.8 Investment income not allocated to product lines 63.6 69.8 197.9 207.2 Fee revenue and other income: Fee income 30.6 28.0 102.0 91.4 Amounts netted in expenses not allocated to product lines 1.8 4.7 28.9 13.3 Total segment revenues $ 910.1 $ 964.4 $ 2,675.0 $ 3,000.9 (continued on next page) (continued from previous page) Three months ended Nine months ended September 30, September 30, 2022 2021 2022 2021 Expenses: Annuity: Insurance policy benefits $ 23.7 $ 16.2 $ 69.1 $ 23.7 Interest credited 46.3 38.1 129.9 113.7 Amortization and non-deferred commissions 13.8 14.5 43.8 47.8 Total annuity expenses 83.8 68.8 242.8 185.2 Health: Insurance policy benefits 307.8 325.4 924.8 955.3 Amortization and non-deferred commissions 43.5 43.3 141.9 142.8 Total health expenses 351.3 368.7 1,066.7 1,098.1 Life: Insurance policy benefits 142.6 141.3 444.6 454.4 Interest credited 12.2 11.1 35.1 32.7 Amortization, non-deferred commissions and advertising expense 51.8 41.2 152.4 132.9 Total life expenses 206.6 193.6 632.1 620.0 Allocated expenses 150.5 140.5 447.5 423.2 Expenses not allocated to product lines 17.9 22.0 56.9 76.4 Market value changes of options credited to fixed index annuity and life policyholders (34.9) 7.2 (199.2) 125.8 Amounts netted in investment income not allocated to product lines: Interest expense 25.9 17.9 64.3 54.2 Interest credited 7.2 — 21.3 — Amortization .3 — 1.1 — Other expenses (2.0) 1.0 (18.0) 11.3 Expenses netted in fee revenue: Commissions and other operating expenses 29.2 25.4 87.5 74.9 Total segment expenses 835.8 845.1 2,403.0 2,669.1 Pre-tax measure of profitability: Annuity margin 39.8 52.5 121.5 176.4 Health margin 124.1 117.9 362.3 363.5 Life margin 43.4 53.2 120.0 120.0 Total insurance product margin 207.3 223.6 603.8 659.9 Allocated expenses (150.5) (140.5) (447.5) (423.2) Income from insurance products 56.8 83.1 156.3 236.7 Fee income 1.4 2.6 14.5 16.5 Investment income not allocated to product lines 32.2 50.9 129.2 141.7 Expenses not allocated to product lines (16.1) (17.3) (28.0) (63.1) Operating earnings before taxes 74.3 119.3 272.0 331.8 Income tax expense on operating income 17.4 26.5 63.9 74.7 Net operating income $ 56.9 $ 92.8 $ 208.1 $ 257.1 |
Schedule of Reconciliation of Segment Revenues and Expenses to Consolidated Revenues and Expenses and Net Income | A reconciliation of segment revenues and expenses to consolidated revenues and expenses and net income is as follows (dollars in millions): Three months ended Nine months ended September 30, September 30, 2022 2021 2022 2021 Total segment revenues $ 910.1 $ 964.4 $ 2,675.0 $ 3,000.9 Total investment gains (losses) (17.7) (2.3) (99.2) 26.2 Revenues related to earnings attributable to VIEs 12.9 6.2 27.4 20.3 Consolidated revenues 905.3 968.3 2,603.2 3,047.4 Total segment expenses 835.8 845.1 2,403.0 2,669.1 Insurance policy benefits - fair value changes in embedded derivative liabilities (92.7) (14.5) (326.5) (64.3) Amortization related to fair value changes in embedded derivative liabilities 26.7 3.6 90.0 16.2 Amortization related to investment gains (losses) (.6) .1 (1.7) 1.4 Expenses attributable to VIEs 11.9 6.0 26.2 18.6 Fair value changes related to agent deferred compensation plan (12.0) — (48.7) (13.2) Other expenses (1.0) — (1.0) — Consolidated expenses 768.1 840.3 2,141.3 2,627.8 Income before tax 137.2 128.0 461.9 419.6 Income tax expense on period income 32.2 28.2 108.5 94.4 Net income $ 105.0 $ 99.8 $ 353.4 $ 325.2 |
ACCOUNTING FOR DERIVATIVES (Tab
ACCOUNTING FOR DERIVATIVES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
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 September 30, December 31, 2021 Assets: Other invested assets: Fixed index call options $ 24.0 $ 225.0 Other — 2.5 Reinsurance receivables (17.8) (1.7) Total assets $ 6.2 $ 225.8 Liabilities: Future policy benefits: Fixed index products $ 1,253.9 $ 1,724.1 Total liabilities $ 1,253.9 $ 1,724.1 |
Schedule Pre-Tax Gains (Losses) Recognized in Net Income for Derivative Instruments | The following table provides the pre-tax gains (losses) recognized in revenues for derivative instruments, which are not designated as hedges for the periods indicated (dollars in millions): Three months ended Nine months ended September 30, September 30, 2022 2021 2022 2021 Net investment income (loss) from policyholder and other special-purpose portfolios: Fixed index call options $ (34.7) $ 7.4 $ (200.4) $ 127.0 Total investment losses: Embedded derivative related to modified coinsurance agreement (4.4) (.7) (16.1) (1.9) Total revenues from derivative instruments, not designated as hedges $ (39.1) $ 6.7 $ (216.5) $ 125.1 |
Derivatives with Master Netting Arrangements | The following table summarizes information related to derivatives with master netting arrangements or collateral as of September 30, 2022 and December 31, 2021 (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 September 30, 2022: Fixed index call options $ 24.0 $ — $ 24.0 $ — $ — $ 24.0 December 31, 2021: Fixed index call options 225.0 — 225.0 — — 225.0 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) | The components of income tax expense are as follows (dollars in millions): Three months ended Nine months ended September 30, September 30, 2022 2021 2022 2021 Current tax expense $ 14.9 $ 14.1 $ 19.9 $ 50.9 Deferred tax expense 17.3 14.1 88.6 43.5 Total income tax expense $ 32.2 $ 28.2 $ 108.5 $ 94.4 |
Schedule of Effective Income Tax Rate Reconciliation | A reconciliation of the U.S. statutory corporate tax rate to the estimated annual effective rate, reflected in the consolidated statement of operations is as follows: Nine months ended September 30, 2022 2021 U.S. statutory corporate rate 21.0 % 21.0 % Non-taxable income and nondeductible benefits, net — (.1) State taxes 2.5 1.6 Effective tax rate 23.5 % 22.5 % |
Schedule of Deferred Tax Assets and Liabilities | The components of the Company's income tax assets and liabilities are summarized below (dollars in millions): September 30, December 31, Deferred tax assets: Net federal operating loss carryforwards $ 188.4 $ 241.4 Net state operating loss carryforwards 2.5 2.3 Insurance liabilities 302.3 390.7 Indirect costs allocable to self-constructed real estate assets 199.3 158.3 Accumulated other comprehensive loss 606.3 — Other 9.4 27.5 Gross deferred tax assets 1,308.2 820.2 Deferred tax liabilities: Investments (35.6) (48.2) Present value of future profits and deferred acquisition costs (99.3) (119.4) Accumulated other comprehensive income — (540.4) Gross deferred tax liabilities (134.9) (708.0) Net deferred tax assets 1,173.3 112.2 Current income taxes prepaid 6.9 6.1 Income tax assets, net $ 1,180.2 $ 118.3 |
Summary of Operating Loss Carryforwards | We have $0.9 billion of federal NOLs as of September 30, 2022, as summarized below (dollars in millions): Net operating loss Year of expiration carryforwards 2023 $ 310.8 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 $ 897.4 |
NOTES PAYABLE - DIRECT CORPOR_2
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt Instruments | The following notes payable were direct corporate obligations of the Company as of September 30, 2022 and December 31, 2021 (dollars in millions): September 30, December 31, 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 November 2060 150.0 150.0 Revolving Credit Agreement (as defined below) — — Unamortized debt issue costs (11.6) (12.7) Direct corporate obligations $ 1,138.4 $ 1,137.3 |
INVESTMENT BORROWINGS (Tables)
INVESTMENT BORROWINGS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Investment Borrowings [Abstract] | |
Schedule of Terms of Federal Home Loan Bank Borrowing | The following summarizes the terms of the borrowings from the FHLB by our insurance subsidiaries (dollars in millions): Amount Maturity Interest rate at borrowed date September 30, 2022 $ 21.0 March 2023 Fixed rate – 2.160% 50.0 July 2023 Variable rate – 3.170% 100.0 July 2023 Variable rate – 3.170% 50.0 July 2023 Variable rate – 3.170% 100.0 April 2024 Variable rate – 3.080% 50.0 May 2024 Variable rate – 3.643% 22.0 May 2024 Variable rate – 3.319% 75.0 June 2024 Variable rate – 3.951% 100.0 July 2024 Variable rate – 2.595% 15.5 July 2024 Fixed rate – 1.990% 34.5 July 2024 Variable rate – 3.266% 15.0 July 2024 Variable rate – 3.256% 27.0 August 2024 Fixed rate – .640% 25.0 September 2024 Variable rate – 3.726% 21.7 May 2025 Variable rate – 3.389% 18.7 June 2025 Fixed rate – 2.940% 125.0 September 2025 Variable rate – 3.310% 100.0 October 2025 Variable rate – 3.234% 100.0 October 2025 Variable rate – 3.330% 57.7 October 2025 Variable rate – 3.068% 50.0 November 2025 Variable rate – 3.394% 50.0 January 2026 Variable rate – 3.013% 50.0 January 2026 Variable rate – 2.935% 100.0 January 2026 Variable rate – 3.029% 21.8 May 2026 Variable rate – 2.919% 50.0 May 2026 Variable rate – 3.230% 50.0 April 2027 Variable rate – 3.261% 50.0 May 2027 Variable rate – 3.271% 100.0 June 2027 Variable rate – 3.330% 10.0 June 2027 Variable rate – 3.553% $ 1,639.9 |
CONSOLIDATED STATEMENT OF CAS_3
CONSOLIDATED STATEMENT OF CASH FLOWS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of the Reconciliation for Net Income Provided by Operating Activities | The following reconciles net income to net cash from operating activities (dollars in millions): Nine months ended September 30, 2022 2021 Cash flows from operating activities: Net income $ 353.4 $ 325.2 Adjustments to reconcile net income to net cash from operating activities: Amortization and depreciation 305.6 227.3 Income taxes 87.8 123.3 Insurance liabilities (292.3) 255.2 Accrual, amortization and fair value changes included in investment income 132.0 (232.5) Deferral of policy acquisition costs (245.7) (213.3) Net investment (gains) losses 99.2 (26.2) Other (a) (105.5) 20.0 Net cash from operating activities $ 334.5 $ 479.0 _____________ (a) Primarily relates to: (i) changes in other assets and liabilities related to the timing of payments and receipts; and (ii) the change in fair value of the deferred compensation plan liability. |
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): Nine months ended September 30, 2022 2021 Amounts related to employee benefit plans $ 19.8 $ 19.2 |
INVESTMENTS IN VARIABLE INTER_2
INVESTMENTS IN VARIABLE INTEREST ENTITIES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Impact on Balance Sheet of Consolidating Variable Interest Entities | The following tables provide supplemental information about the assets and liabilities of the VIEs which have been consolidated in accordance with authoritative guidance (dollars in millions): September 30, 2022 VIEs Eliminations Net effect on Assets: Investments held by variable interest entities $ 1,099.2 $ — $ 1,099.2 Notes receivable of VIEs held by subsidiaries — (113.8) (113.8) Cash and cash equivalents held by variable interest entities 55.5 — 55.5 Accrued investment income 3.0 — 3.0 Income tax assets, net 21.6 — 21.6 Other assets 13.2 (.8) 12.4 Total assets $ 1,192.5 $ (114.6) $ 1,077.9 Liabilities: Other liabilities $ 46.0 $ (2.1) $ 43.9 Borrowings related to variable interest entities 1,115.3 — 1,115.3 Notes payable of VIEs held by subsidiaries 126.1 (126.1) — Total liabilities $ 1,287.4 $ (128.2) $ 1,159.2 December 31, 2021 VIEs Eliminations Net effect on Assets: Investments held by variable interest entities $ 1,199.6 $ — $ 1,199.6 Notes receivable of VIEs held by subsidiaries — (113.8) (113.8) Cash and cash equivalents held by variable interest entities 99.6 — 99.6 Accrued investment income 1.6 — 1.6 Income tax assets, net 8.4 — 8.4 Other assets 7.1 (.9) 6.2 Total assets $ 1,316.3 $ (114.7) $ 1,201.6 Liabilities: Other liabilities $ 89.5 $ (4.3) $ 85.2 Borrowings related to variable interest entities 1,147.9 — 1,147.9 Notes payable of VIEs held by subsidiaries 126.1 (126.1) — Total liabilities $ 1,363.5 $ (130.4) $ 1,233.1 |
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 three months ended September 30, 2022 (dollars in millions): Corporate securities States and political subdivisions Foreign governments Asset-backed securities Total Allowance at June 30, 2022 $ 52.2 $ 1.1 $ .7 $ .2 $ 54.2 Additions for securities for which credit losses were not previously recorded 7.2 .2 .1 .1 7.6 Additions for purchased securities with deteriorated credit — — — — — Additions (reductions) for securities where an allowance was previously recorded (6.9) .5 — — (6.4) Reduction for securities sold during the period (3.3) (.1) — — (3.4) 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 September 30, 2022 $ 49.2 $ 1.7 $ .8 $ .3 $ 52.0 The following table summarizes changes in the allowance for credit losses related to fixed maturities, available for sale, for the nine months ended September 30, 2022 (dollars in millions): Corporate securities States and political subdivisions Foreign governments Asset-backed securities Total Allowance at December 31, 2021 $ 7.4 $ — $ .2 $ — $ 7.6 Additions for securities for which credit losses were not previously recorded 39.8 .7 .5 .2 41.2 Additions for purchased securities with deteriorated credit — — — — — Additions (reductions) for securities where an allowance was previously recorded 11.8 1.1 .1 .1 13.1 Reduction for securities sold during the period (9.8) (.1) — — (9.9) 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 September 30, 2022 $ 49.2 $ 1.7 $ .8 $ .3 $ 52.0 The following table summarizes changes in the allowance for credit losses related to fixed maturities, available for sale, for the three months ended September 30, 2021 (dollars in millions): Corporate securities Foreign governments Total Allowance at June 30, 2021 $ 2.3 $ — $ 2.3 Additions for securities for which credit losses were not previously recorded 2.4 .1 2.5 Additions for purchased securities with deteriorated credit — — — Additions (reductions) for securities where an allowance was previously recorded .7 — .7 Reduction for securities sold during the period (.1) — (.1) 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 September 30, 2021 $ 5.3 $ .1 $ 5.4 The following table summarizes changes in the allowance for credit losses related to fixed maturities, available for sale, for the nine months ended September 30, 2021 (dollars in millions): Corporate securities States and political subdivisions Foreign governments Total Allowance at December 31, 2020 $ 1.9 $ .3 $ — $ 2.2 Additions for securities for which credit losses were not previously recorded 4.3 .1 .1 4.5 Additions for purchased securities with deteriorated credit — — — — Additions (reductions) for securities where an allowance was previously recorded (.3) (.4) — (.7) Reduction for securities sold during the period (.6) — — (.6) 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 September 30, 2021 $ 5.3 $ — $ .1 $ 5.4 The following table summarizes changes in the allowance for credit losses related to corporate securities held by VIEs for the three months ended September 30, 2022 and 2021 (dollars in millions): Three months ended September 30, 2022 2021 Allowance at the beginning of the period $ 12.2 $ 3.2 Additions for securities for which credit losses were not previously recorded .9 .1 Additions for purchased securities with deteriorated credit — — Additions (reductions) for securities where an allowance was previously recorded (5.7) (.2) Reduction for securities sold during the period (.9) (.6) 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 the end of the period $ 6.5 $ 2.5 The following table summarizes changes in the allowance for credit losses related to corporate securities held by VIEs for the nine months ended September 30, 2022 and 2021 (dollars in millions): Nine months ended September 30, 2022 2021 Allowance at the beginning of the period $ 3.7 $ 15.1 Additions for securities for which credit losses were not previously recorded 7.2 .7 Additions for purchased securities with deteriorated credit — — Additions (reductions) for securities where an allowance was previously recorded (2.5) (3.7) Reduction for securities sold during the period (1.9) (9.6) 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 the end of the period $ 6.5 $ 2.5 |
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 September 30, 2022, 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 $ 4.5 $ 4.3 Due after one year through five years 687.5 652.9 Due after five years through ten years 474.7 442.0 Total $ 1,166.7 $ 1,099.2 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of Financial Instruments Carried at Fair Value Categorized by Input Level | The categorization of fair value measurements, by input level, for our financial instruments carried at fair value on a recurring basis at September 30, 2022 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 $ — $ 11,656.5 $ 122.1 $ 11,778.6 United States Treasury securities and obligations of United States government corporations and agencies — 157.8 — 157.8 States and political subdivisions — 2,400.2 — 2,400.2 Foreign governments — 69.3 — 69.3 Asset-backed securities — 1,221.2 48.9 1,270.1 Agency residential mortgage-backed securities — 38.5 — 38.5 Non-agency residential mortgage-backed securities — 1,609.8 29.1 1,638.9 Collateralized loan obligations — 719.8 13.4 733.2 Commercial mortgage-backed securities — 2,176.9 37.6 2,214.5 Total fixed maturities, available for sale — 20,050.0 251.1 20,301.1 Equity securities - corporate securities 61.0 — 74.8 135.8 Trading securities: Asset-backed securities — 13.0 — 13.0 Agency residential mortgage-backed securities — .3 — .3 Non-agency residential mortgage-backed securities — 63.4 — 63.4 Commercial mortgage-backed securities — 146.6 — 146.6 Total trading securities — 223.3 — 223.3 Investments held by variable interest entities - corporate securities — 1,099.2 — 1,099.2 Other invested assets: Derivatives — 24.0 — 24.0 Residual tranches — 15.1 4.0 19.1 Total other invested assets — 39.1 4.0 43.1 Assets held in separate accounts — 2.7 — 2.7 Total assets carried at fair value by category $ 61.0 $ 21,414.3 $ 329.9 $ 21,805.2 Liabilities: Embedded derivatives associated with fixed index annuity products (classified as policyholder account liabilities) $ — $ — $ 1,253.9 $ 1,253.9 The categorization of fair value measurements, by input level, for our financial instruments carried at fair value on a recurring basis at December 31, 2021 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 $ — $ 15,361.1 $ 89.7 $ 15,450.8 United States Treasury securities and obligations of United States government corporations and agencies — 219.6 — 219.6 States and political subdivisions — 3,004.2 — 3,004.2 Foreign governments — 98.5 — 98.5 Asset-backed securities — 1,136.3 26.6 1,162.9 Agency residential mortgage-backed securities — 40.4 — 40.4 Non-agency residential mortgage-backed securities — 2,023.8 — 2,023.8 Collateralized loan obligations — 583.3 5.0 588.3 Commercial mortgage-backed securities — 2,197.9 19.0 2,216.9 Total fixed maturities, available for sale — 24,665.1 140.3 24,805.4 Equity securities - corporate securities 100.8 18.8 11.5 131.1 Trading securities: Asset-backed securities — 5.8 — 5.8 Agency residential mortgage-backed securities — .4 — .4 Non-agency residential mortgage-backed securities — 77.5 3.5 81.0 Commercial mortgage-backed securities — 127.1 12.9 140.0 Total trading securities — 210.8 16.4 227.2 Investments held by variable interest entities - corporate securities — 1,197.4 2.2 1,199.6 Other invested assets - derivatives — 227.5 — 227.5 Assets held in separate accounts — 3.9 — 3.9 Total assets carried at fair value by category $ 100.8 $ 26,323.5 $ 170.4 $ 26,594.7 Liabilities: Embedded derivatives associated with fixed index annuity products (classified as policyholder account liabilities) $ — $ — $ 1,724.1 $ 1,724.1 The fair value of our financial instruments disclosed at fair value on a recurring basis are as follows (dollars in millions): September 30, 2022 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 $ — $ — $ 1,092.0 $ 1,092.0 $ 1,227.3 Policy loans — — 120.2 120.2 120.2 Other invested assets: Company-owned life insurance — 197.6 — 197.6 197.6 Cash and cash equivalents: Unrestricted 498.0 — — 498.0 498.0 Held by variable interest entities 55.5 — — 55.5 55.5 Liabilities: Policyholder account liabilities — — 14,653.7 14,653.7 14,653.7 Investment borrowings — 1,640.9 — 1,640.9 1,639.9 Borrowings related to variable interest entities — 1,068.7 — 1,068.7 1,115.3 Notes payable – direct corporate obligations — 1,073.8 — 1,073.8 1,138.4 December 31, 2021 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 $ — $ — $ 1,297.5 $ 1,297.5 $ 1,218.6 Policy loans — — 120.2 120.2 120.2 Other invested assets: Company-owned life insurance — 207.0 — 207.0 207.0 Cash and cash equivalents: Unrestricted 632.1 — — 632.1 632.1 Held by variable interest entities 99.6 — — 99.6 99.6 Liabilities: Policyholder account liabilities — — 13,689.7 13,689.7 13,689.7 Investment borrowings — 1,719.6 — 1,719.6 1,715.8 Borrowings related to variable interest entities — 1,144.8 — 1,144.8 1,147.9 Notes payable – direct corporate obligations — 1,283.4 — 1,283.4 1,137.3 The following table presents additional information about assets measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the three months ended September 30, 2022 (dollars in millions): September 30, 2022 Beginning balance as of June 30, 2022 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 Ending balance as of September 30, 2022 Amount of total gains (losses) for the three months ended September 30, 2022 included in our net income relating to assets still held as of the reporting date Amount of total gains (losses) for the three months ended September 30, 2022 included in accumulated other comprehensive income (loss) relating to assets still held as of the reporting date Assets: Fixed maturities, available for sale: Corporate securities $ 124.0 $ 2.7 $ (.9) $ (13.4) $ 9.7 $ — $ 122.1 $ (.9) $ (14.2) Asset-backed securities 29.7 18.3 — (3.2) 4.1 — 48.9 — (3.2) Non-agency residential mortgage-backed securities 40.5 (.1) — (2.5) 13.6 (22.4) 29.1 — (2.5) Collateralized loan obligations 4.4 — — — 13.4 (4.4) 13.4 — — Commercial mortgage-backed securities 16.5 — — (1.1) 22.2 — 37.6 — (1.1) Total fixed maturities, available for sale 215.1 20.9 (.9) (20.2) 63.0 (26.8) 251.1 (.9) (21.0) Equity securities - corporate securities 8.2 — (.5) — 67.1 — 74.8 (.5) — Trading securities: Non-agency residential mortgage-backed securities 3.4 — — — — (3.4) — — — Commercial mortgage-backed securities 6.0 — — — — (6.0) — — — Total trading securities 9.4 — — — — (9.4) — — — Other invested assets - residual tranches 2.6 1.6 (.5) — .3 — 4.0 (.5) — _________ (a) Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate. (b) Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset 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. The following summarizes such activity for the three months ended September 30, 2022 (dollars in millions): Purchases Sales Issuances Settlements Purchases, sales, issuances and settlements, net Assets: Fixed maturities, available for sale: Corporate securities $ 9.3 $ (6.6) $ — $ — $ 2.7 Asset-backed securities 19.0 (.7) — — 18.3 Non-agency residential mortgage-backed securities — (.1) — — (.1) Total fixed maturities, available for sale 28.3 (7.4) — — 20.9 Other invested assets - residual tranches 1.6 — — — 1.6 The following table presents additional information about assets 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 nine months ended September 30, 2022 (dollars in millions): September 30, 2022 Beginning balance as of December 31, 2021 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 Ending balance as of September 30, 2022 Amount of total gains (losses) for the nine months ended September 30, 2022 included in our net income relating to assets still held as of the reporting date Amount of total gains (losses) for the nine months ended September 30, 2022 included in accumulated other comprehensive income (loss) relating to assets still held as of the reporting date Assets: Fixed maturities, available for sale: Corporate securities $ 89.7 $ 13.0 $ (.1) $ (41.7) $ 68.6 $ (7.4) $ 122.1 $ .4 $ (43.1) Asset-backed securities 26.6 26.0 — (6.4) 2.7 — 48.9 — (6.4) Non-agency residential mortgage-backed securities — 6.0 — (10.3) 33.4 — 29.1 — (10.3) Collateralized loan obligations 5.0 — — (.4) 13.8 (5.0) 13.4 — (.4) Commercial mortgage-backed securities 19.0 28.0 — (9.4) — — 37.6 — (9.5) Total fixed maturities, available for sale 140.3 73.0 (.1) (68.2) 118.5 (12.4) 251.1 .4 (69.7) Equity securities - corporate securities 11.5 63.9 (.6) — — — 74.8 (.5) — Trading securities: Non-agency residential mortgage-backed securities 3.5 — — — — (3.5) — — — Commercial mortgage-backed securities 12.9 — — — — (12.9) — — — Total trading securities 16.4 — — — — (16.4) — — — Investments held by variable interest entities - corporate securities 2.2 (2.1) (.1) — — — — — — Other invested assets - residual tranches — 2.8 — (.6) 1.8 — 4.0 — (.6) _________ (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 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. The following summarizes such activity for the nine months ended September 30, 2022 (dollars in millions): Purchases Sales Issuances Settlements Purchases, sales, issuances and settlements, net Assets: Fixed maturities, available for sale: Corporate securities $ 24.2 $ (11.2) $ — $ — $ 13.0 Asset-backed securities 26.9 (.9) — — 26.0 Non-agency residential mortgage-backed securities 6.5 (.5) — — 6.0 Commercial mortgage-backed securities 28.0 — — — 28.0 Total fixed maturities, available for sale 85.6 (12.6) — — 73.0 Equity securities - corporate securities 67.0 (3.1) — — 63.9 Investments held by variable interest entities - corporate securities — (2.1) — — (2.1) Other invested assets - residual tranches 2.8 — — — 2.8 The following table presents additional information about assets measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the three months ended September 30, 2021 (dollars in millions): September 30, 2021 Beginning balance as of June 30, 2021 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 September 30, 2021 Amount of total gains (losses) for the three months ended September 30, 2021 included in our net income relating to assets still held as of the reporting date Amount of total gains (losses) for the three months ended September 30, 2021 included in accumulated other comprehensive income (loss) relating to assets still held as of the reporting date Assets: Fixed maturities, available for sale: Corporate securities $ 82.5 $ 18.5 $ (1.2) $ 1.1 $ — $ (5.1) $ 95.8 $ (1.2) $ .6 Asset-backed securities 12.0 8.0 — .1 — — 20.1 — $ .1 Commercial mortgage-backed securities — 6.4 — .4 12.6 — 19.4 — $ .4 Total fixed maturities, available for sale 94.5 32.9 (1.2) 1.6 12.6 (5.1) 135.3 (1.2) 1.1 Equity securities - corporate securities 27.0 — (1.8) — — — 25.2 (1.8) — Trading securities: Non-agency residential mortgage-backed securities 4.8 (.7) (.2) .2 — — 4.1 (.2) — Commercial mortgage-backed securities 12.6 — — .2 — — 12.8 — — Total trading securities 17.4 (.7) (.2) .4 — — 16.9 (.2) — ____________ (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 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. The following summarizes such activity for the three months ended September 30, 2021 (dollars in millions): Purchases Sales Issuances Settlements Purchases, sales, issuances and settlements, net Assets: Fixed maturities, available for sale: Corporate securities $ 18.5 $ — $ — $ — $ 18.5 Asset-backed securities 8.2 (.2) — — 8.0 Commercial mortgage-backed securities 6.4 — — — 6.4 Total fixed maturities, available for sale 33.1 (.2) — — 32.9 Trading securities - non-agency residential mortgage-backed securities — (.7) — — (.7) The following table presents additional information about assets 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 nine months ended September 30, 2021 (dollars in millions): September 30, 2021 Beginning balance as of December 31, 2020 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 September 30, 2021 Amount of total gains (losses) for the nine months ended September 30, 2021 included in our net income relating to assets still held as of the reporting date Amount of total gains (losses) for the nine months ended September 30, 2021 included in accumulated other comprehensive income (loss) relating to assets still held as of the reporting date Assets: Fixed maturities, available for sale: Corporate securities $ 146.9 $ 18.4 $ (.3) $ .8 $ 6.1 $ (76.1) $ 95.8 $ (.3) $ (.6) Asset-backed securities 14.3 7.7 — .1 — (2.0) 20.1 — .1 Non-agency residential mortgage-backed securities 1.6 — — — — (1.6) — — — Commercial mortgage-backed securities — 6.4 — (.2) 13.2 — 19.4 — (.4) Total fixed maturities, available for sale 162.8 32.5 (.3) .7 19.3 (79.7) 135.3 (.3) (.9) Equity securities - corporate securities 26.8 .2 (1.8) — — — 25.2 (1.8) — Trading securities: Non-agency residential mortgage-backed securities 5.9 (1.8) (.4) .4 — — 4.1 (.4) — Commercial mortgage-backed securities 17.0 — — .5 — (4.7) 12.8 — — Total trading securities 22.9 (1.8) (.4) .9 — (4.7) 16.9 (.4) — ____________ (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 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. The following summarizes such activity for the nine months ended September 30, 2021 (dollars in millions): Purchases Sales Issuances Settlements Purchases, sales, issuances and settlements, net Assets: Fixed maturities, available for sale: Corporate securities $ 18.5 $ (.1) $ — $ — $ 18.4 Asset-backed securities 8.2 (.5) — — 7.7 Commercial mortgage-backed securities 6.4 — — — 6.4 Total fixed maturities, available for sale 33.1 (.6) — — 32.5 Equity securities - corporate securities .2 — — — .2 Trading securities - non-agency residential mortgage-backed securities — (1.8) — — (1.8) The following table summarizes changes in the value of our embedded derivatives associated with fixed index annuity products (classified as policyholder account liabilities) which are measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value (dollars in millions): Three months ended Nine months ended September 30, September 30, 2022 2021 2022 2021 Balance at beginning of the period $ 1,371.0 $ 1,695.0 $ 1,724.1 $ 1,644.5 Premiums less benefits 12.0 27.9 55.3 71.3 Change in fair value, net (129.1) (18.7) (525.5) (11.6) Balance at end of the period $ 1,253.9 $ 1,704.2 $ 1,253.9 $ 1,704.2 |
Schedule of Fair Value Measurement Inputs | The following table provides additional information about the significant unobservable (Level 3) inputs developed internally by the Company to determine fair value for certain assets and liabilities carried at fair value at September 30, 2022 (dollars in millions): Fair value at September 30, 2022 Valuation techniques Unobservable inputs Range (weighted average) (a) Assets: Corporate securities (b) $ 2.9 Discounted cash flow analysis Discount margins 2.53% - 4.01% (2.56%) Corporate securities (c) 10.5 Unadjusted purchase price Not applicable Not applicable Asset-backed securities (d) 18.8 Discounted cash flow analysis Discount margins 2.08% - 3.58% (2.80%) Equity securities (e) 63.0 Market comparables EBITDA multiples 8X Equity securities (f) .1 Recovery method Percent of recovery expected 0.00% - 100.00% (100.00%) Equity securities (g) 11.7 Unadjusted purchase price Not applicable Not applicable Other assets categorized as Level 3 (h) 222.9 Unadjusted third-party price source Not applicable Not applicable Total 329.9 Liabilities: Embedded derivatives related to fixed index annuity products (classified as policyholder account liabilities) (i) 1,253.9 Discounted projected embedded derivatives Projected portfolio yields 3.98% - 4.37% (3.99%) Discount rates 3.23% - 5.55% (4.43%) Surrender rates 1.50% - 26.40% (9.00%) ________________________________ (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) Corporate securities - For these assets, there were no adjustments to the purchase price. (d) 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. (e) Equity securities - The significant unobservable input used in the fair value measurement of these equity securities is multiples of earnings before interest, taxes, depreciation and amortization ("EBITDA"). Generally, increases (decreases) in the EBITDA multiples would result in higher (lower) fair value measurements. (f) 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. (g) Equity securities - For these assets, there were no adjustments to the purchase price. (h) 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. (i) 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 resulted in 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 resulted in 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, 2021 (dollars in millions): Fair value at December 31, 2021 Valuation techniques Unobservable inputs Range (weighted average) (a) Assets: Corporate securities (b) $ .1 Discounted cash flow analysis Discount margins 4.49% Corporate securities (c) 2.3 Recovery method Percent of recovery expected 0.00% - 100.00% (100.00%) Corporate securities (d) 12.5 Unadjusted purchase price Not applicable Not applicable Asset-backed securities (e) 11.6 Discounted cash flow analysis Discount margins 1.50% Equity securities (f) 3.3 Recovery method Percent of recovery expected 0.00% - 100.00% (100.00%) Equity securities (g) 8.2 Unadjusted purchase price Not applicable Not applicable Other assets categorized as Level 3 (h) 132.4 Unadjusted third-party price source Not applicable Not applicable Total 170.4 Liabilities: Embedded derivatives related to fixed index annuity products (classified as policyholder account liabilities) (i) 1,724.1 Discounted projected embedded derivatives Projected portfolio yields 3.98% - 4.37% (3.99%) Discount rates 0.31% - 3.18% (1.89%) Surrender rates 1.50% - 26.40% (9.00%) ________________________________ (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) 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 have resulted in a significantly higher (lower) fair value measurement. (d) Corporate securities - For these assets, there were no adjustments to the purchase price. (e) 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. (f) 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. (g) Equity securities - For these assets, there were no adjustments to the purchase price. (h) 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. (i) 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 resulted in 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 resulted in 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. |
INVESTMENTS - SCHEDULE OF UNREA
INVESTMENTS - SCHEDULE OF UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS INCLUDED IN ACCUMULATED OTHER COMPREHENSIVE INCOME (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Investments, Debt and Equity Securities [Abstract] | ||
Net unrealized gains (losses) on investments having no allowance for credit losses | $ (1,222.1) | $ 2,963.3 |
Unrealized losses on investments with an allowance for credit losses | (1,929.9) | (23.1) |
Adjustment to present value of future profits | 8.7 | (8.3) |
Adjustment to deferred acquisition costs | 367.1 | (420.2) |
Adjustment to insurance liabilities | 0 | (25.5) |
Deferred income tax assets (liabilities) | 610.5 | (539.1) |
Accumulated other comprehensive income (loss) | $ (2,165.7) | $ 1,947.1 |
INVESTMENTS - NARRATIVE (Detail
INVESTMENTS - NARRATIVE (Details) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 USD ($) investment | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) investment mortgage_loan | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | |
Debt Securities, Available-for-sale [Line Items] | |||||
Premium deficiencies adjustments to present value of future profits | $ (7.3) | ||||
Reduction to deferred acquisition costs due to unrealized gains that would result in premium deficiency if unrealized gains were realized | (132.2) | ||||
Adjustment to insurance liabilities | $ 0 | $ 0 | (25.5) | ||
Increase to deferred tax assets due to unrealized gains that would result in premium deficiency if unrealized gains were realized | $ 35.8 | ||||
Net realized investment gains (losses) | (17.7) | $ (2.3) | (99.2) | $ 26.2 | |
Change in allowance for credit losses | $ (7.5) | 1.4 | $ 46.9 | (13.9) | |
Number of investments in default or considered nonperforming | investment | 0 | 0 | |||
Value of available for sale securities sold | $ 1,321.7 | 350.3 | |||
Total fixed maturities, available for sale | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Gross realized losses on sale | $ 24.4 | $ 0.2 | 81.3 | 18.4 | |
Embedded Derivative Related to Fixed Maturity Securities | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Change in fair value of certain investments with embedded derivatives | (37.4) | (0.2) | |||
Reinsurance Contract | Coinsurance | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Change in fair value of certain investments with embedded derivatives | (16.1) | (1.9) | |||
Marketable Securities | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Net realized investment gains (losses) | 11.9 | 17.6 | |||
Equity Securities - Corporate Securities | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Net realized investment gains (losses) | (10.7) | $ (3.2) | |||
Corporate Securities | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Gross realized losses on sale | 54.3 | ||||
Non-agency residential mortgage-backed securities | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Gross realized losses on sale | 14 | ||||
States and political subdivisions | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Gross realized losses on sale | 7.3 | ||||
Various Other Investments | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Gross realized losses on sale | 5.7 | ||||
Carrying Value | Residential Mortgage | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Mortgage loans | 63.6 | 63.6 | |||
Fair Value | Residential Mortgage | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Mortgage loans | 61.6 | $ 61.6 | |||
Commercial Portfolio Segment | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Number of mortgage loans in process of foreclosure | mortgage_loan | 0 | ||||
Carrying value of loans | 1,169 | $ 1,169 | |||
Residential Portfolio Segment | Foreclosure | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Number of mortgage loans noncurrent | mortgage_loan | 2 | ||||
Carrying value of loans | $ 0.5 | $ 0.5 |
INVESTMENTS - SCHEDULE OF AMORT
INVESTMENTS - SCHEDULE OF AMORTIZED COST, GROSS UNREALIZED GAINS AND LOSSES, ESTIMATED FAIR VALUE, AND ALLOWANCE FOR CREDIT LOSSES (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Jun. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Dec. 31, 2020 |
Debt Securities, Available-for-sale [Line Items] | ||||||
Amortized cost | $ 23,442.5 | $ 21,867.6 | ||||
Allowance for credit losses | (52) | $ (54.2) | (7.6) | $ (5.4) | $ (2.3) | $ (2.2) |
Estimated fair value | 20,301.1 | 24,805.4 | ||||
Corporate securities | ||||||
Debt Securities, Available-for-sale [Line Items] | ||||||
Amortized cost | 13,942.2 | 13,195.4 | ||||
Gross unrealized gains | 22.2 | 2,284.5 | ||||
Gross unrealized losses | (2,136.6) | (21.7) | ||||
Allowance for credit losses | (49.2) | (52.2) | (7.4) | (5.3) | (2.3) | (1.9) |
Estimated fair value | 11,778.6 | 15,450.8 | ||||
United States Treasury securities and obligations of United States government corporations and agencies | ||||||
Debt Securities, Available-for-sale [Line Items] | ||||||
Amortized cost | 169.5 | 166.2 | ||||
Gross unrealized gains | 0 | 54.3 | ||||
Gross unrealized losses | (11.7) | (0.9) | ||||
Allowance for credit losses | 0 | 0 | ||||
Estimated fair value | 157.8 | 219.6 | ||||
States and political subdivisions | ||||||
Debt Securities, Available-for-sale [Line Items] | ||||||
Amortized cost | 2,818.8 | 2,649 | ||||
Gross unrealized gains | 20.9 | 356.7 | ||||
Gross unrealized losses | (437.8) | (1.5) | ||||
Allowance for credit losses | (1.7) | (1.1) | 0 | 0 | (0.3) | |
Estimated fair value | 2,400.2 | 3,004.2 | ||||
Foreign governments | ||||||
Debt Securities, Available-for-sale [Line Items] | ||||||
Amortized cost | 84.5 | 85.4 | ||||
Gross unrealized gains | 0 | 13.6 | ||||
Gross unrealized losses | (14.4) | (0.3) | ||||
Allowance for credit losses | (0.8) | (0.7) | (0.2) | $ (0.1) | $ 0 | $ 0 |
Estimated fair value | 69.3 | 98.5 | ||||
Asset-backed securities | ||||||
Debt Securities, Available-for-sale [Line Items] | ||||||
Amortized cost | 1,402 | 1,129 | ||||
Gross unrealized gains | 0.2 | 37 | ||||
Gross unrealized losses | (131.8) | (3.1) | ||||
Allowance for credit losses | (0.3) | $ (0.2) | 0 | |||
Estimated fair value | 1,270.1 | 1,162.9 | ||||
Agency residential mortgage-backed securities | ||||||
Debt Securities, Available-for-sale [Line Items] | ||||||
Amortized cost | 39 | 36.7 | ||||
Gross unrealized gains | 0 | 3.7 | ||||
Gross unrealized losses | (0.5) | 0 | ||||
Allowance for credit losses | 0 | 0 | ||||
Estimated fair value | 38.5 | 40.4 | ||||
Non-agency residential mortgage-backed securities | ||||||
Debt Securities, Available-for-sale [Line Items] | ||||||
Amortized cost | 1,755.5 | 1,870.4 | ||||
Gross unrealized gains | 50.7 | 156.5 | ||||
Gross unrealized losses | (167.3) | (3.1) | ||||
Allowance for credit losses | 0 | 0 | ||||
Estimated fair value | 1,638.9 | 2,023.8 | ||||
Collateralized loan obligations | ||||||
Debt Securities, Available-for-sale [Line Items] | ||||||
Amortized cost | 778.3 | 587.3 | ||||
Gross unrealized gains | 0 | 2.3 | ||||
Gross unrealized losses | (45.1) | (1.3) | ||||
Allowance for credit losses | 0 | 0 | ||||
Estimated fair value | 733.2 | 588.3 | ||||
Commercial mortgage-backed securities | ||||||
Debt Securities, Available-for-sale [Line Items] | ||||||
Amortized cost | 2,452.7 | 2,148.2 | ||||
Gross unrealized gains | 0 | 77.9 | ||||
Gross unrealized losses | (238.2) | (9.2) | ||||
Allowance for credit losses | 0 | 0 | ||||
Estimated fair value | 2,214.5 | 2,216.9 | ||||
Total fixed maturities, available for sale | ||||||
Debt Securities, Available-for-sale [Line Items] | ||||||
Amortized cost | 23,442.5 | 21,867.6 | ||||
Gross unrealized gains | 94 | 2,986.5 | ||||
Gross unrealized losses | (3,183.4) | (41.1) | ||||
Allowance for credit losses | (52) | (7.6) | ||||
Estimated fair value | $ 20,301.1 | $ 24,805.4 |
INVESTMENTS - SUMMARY OF INVEST
INVESTMENTS - SUMMARY OF INVESTMENTS BY CONTRACTUAL MATURITY (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Amortized cost | ||
Due in one year or less | $ 123.4 | $ 80.3 |
Due after one year through five years | 1,935.7 | 1,147.4 |
Due after five years through ten years | 2,125.3 | 1,458.4 |
Due after ten years | 12,830.6 | 13,409.9 |
Subtotal | 17,015 | 16,096 |
Structured securities | 6,427.5 | 5,771.6 |
Amortized cost | 23,442.5 | 21,867.6 |
Estimated fair value | ||
Due in one year or less | 122.6 | 80.5 |
Due after one year through five years | 1,805.1 | 1,205.6 |
Due after five years through ten years | 1,894.4 | 1,573.7 |
Due after ten years | 10,583.8 | 15,913.3 |
Subtotal | 14,405.9 | 18,773.1 |
Structured securities | 5,895.2 | 6,032.3 |
Estimated fair value | $ 20,301.1 | $ 24,805.4 |
INVESTMENTS - SUMMARY OF INVE_2
INVESTMENTS - SUMMARY OF INVESTMENTS WITH UNREALIZED LOSSES BY INVESTMENT CATEGORY (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Fair value | ||
Less than 12 months | $ 8,724.8 | $ 1,698.6 |
12 months or greater | 747.6 | 122.2 |
Total | 9,472.4 | 1,820.8 |
Unrealized losses | ||
Less than 12 months | (1,154.7) | (15.1) |
12 months or greater | (121) | (3.4) |
Total | (1,275.7) | (18.5) |
Corporate securities | ||
Fair value | ||
Less than 12 months | 3,134.3 | 87.8 |
12 months or greater | 31.4 | 9.2 |
Total | 3,165.7 | 97 |
Unrealized losses | ||
Less than 12 months | (495.7) | (0.4) |
12 months or greater | (11.4) | (0.1) |
Total | (507.1) | (0.5) |
United States Treasury securities and obligations of United States government corporations and agencies | ||
Fair value | ||
Less than 12 months | 134.8 | 5.7 |
12 months or greater | 21.7 | 18.7 |
Total | 156.5 | 24.4 |
Unrealized losses | ||
Less than 12 months | (8) | 0 |
12 months or greater | (3.6) | (0.9) |
Total | (11.6) | (0.9) |
States and political subdivisions | ||
Fair value | ||
Less than 12 months | 827.3 | 47.3 |
12 months or greater | 4.2 | 0 |
Total | 831.5 | 47.3 |
Unrealized losses | ||
Less than 12 months | (176.7) | (0.4) |
12 months or greater | (1.8) | 0 |
Total | (178.5) | (0.4) |
Foreign governments | ||
Fair value | ||
Less than 12 months | 10.8 | |
12 months or greater | 0 | |
Total | 10.8 | |
Unrealized losses | ||
Less than 12 months | (0.4) | |
12 months or greater | 0 | |
Total | (0.4) | |
Asset-backed securities | ||
Fair value | ||
Less than 12 months | 1,122.5 | 210.8 |
12 months or greater | 82.5 | 17.8 |
Total | 1,205 | 228.6 |
Unrealized losses | ||
Less than 12 months | (115.4) | (2.4) |
12 months or greater | (11.6) | (0.7) |
Total | (127) | (3.1) |
Agency residential mortgage-backed securities | ||
Fair value | ||
Less than 12 months | 33.1 | |
12 months or greater | 0 | |
Total | 33.1 | |
Unrealized losses | ||
Less than 12 months | (0.5) | |
12 months or greater | 0 | |
Total | (0.5) | |
Non-agency residential mortgage-backed securities | ||
Fair value | ||
Less than 12 months | 1,053.8 | 380.8 |
12 months or greater | 93.4 | 2.3 |
Total | 1,147.2 | 383.1 |
Unrealized losses | ||
Less than 12 months | (140) | (3.1) |
12 months or greater | (27.4) | 0 |
Total | (167.4) | (3.1) |
Collateralized loan obligations | ||
Fair value | ||
Less than 12 months | 595.6 | 271.5 |
12 months or greater | 120.4 | 32.8 |
Total | 716 | 304.3 |
Unrealized losses | ||
Less than 12 months | (36.6) | (1.2) |
12 months or greater | (8.5) | (0.1) |
Total | (45.1) | (1.3) |
Commercial mortgage-backed securities | ||
Fair value | ||
Less than 12 months | 1,812.6 | 694.7 |
12 months or greater | 394 | 41.4 |
Total | 2,206.6 | 736.1 |
Unrealized losses | ||
Less than 12 months | (181.4) | (7.6) |
12 months or greater | (56.7) | (1.6) |
Total | $ (238.1) | $ (9.2) |
INVESTMENTS - SUMMARY OF CHANGE
INVESTMENTS - SUMMARY OF CHANGES IN THE ALLOWANCE FOR CURRENT EXPECTED CREDIT LOSSES (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Debt Securities, Available-for-sale, Allowance for Credit Loss [Roll Forward] | ||||
Allowance at the beginning of the period | $ 54.2 | $ 2.3 | $ 7.6 | $ 2.2 |
Additions for securities for which credit losses were not previously recorded | 7.6 | 2.5 | 41.2 | 4.5 |
Additions for purchased securities with deteriorated credit | 0 | 0 | 0 | 0 |
Additions (reductions) for securities where an allowance was previously recorded | (6.4) | 0.7 | 13.1 | (0.7) |
Reduction for securities sold during the period | (3.4) | (0.1) | (9.9) | (0.6) |
Reduction for securities for which the Company made the decision to sell where an allowance was previously recorded | 0 | 0 | 0 | 0 |
Write-offs | 0 | 0 | 0 | 0 |
Recoveries of previously written-off amount | 0 | 0 | 0 | 0 |
Allowance at the end of the period | 52 | 5.4 | 52 | 5.4 |
Corporate securities | ||||
Debt Securities, Available-for-sale, Allowance for Credit Loss [Roll Forward] | ||||
Allowance at the beginning of the period | 52.2 | 2.3 | 7.4 | 1.9 |
Additions for securities for which credit losses were not previously recorded | 7.2 | 2.4 | 39.8 | 4.3 |
Additions for purchased securities with deteriorated credit | 0 | 0 | 0 | 0 |
Additions (reductions) for securities where an allowance was previously recorded | (6.9) | 0.7 | 11.8 | (0.3) |
Reduction for securities sold during the period | (3.3) | (0.1) | (9.8) | (0.6) |
Reduction for securities for which the Company made the decision to sell where an allowance was previously recorded | 0 | 0 | 0 | 0 |
Write-offs | 0 | 0 | 0 | 0 |
Recoveries of previously written-off amount | 0 | 0 | 0 | 0 |
Allowance at the end of the period | 49.2 | 5.3 | 49.2 | 5.3 |
States and political subdivisions | ||||
Debt Securities, Available-for-sale, Allowance for Credit Loss [Roll Forward] | ||||
Allowance at the beginning of the period | 1.1 | 0 | 0.3 | |
Additions for securities for which credit losses were not previously recorded | 0.2 | 0.7 | 0.1 | |
Additions for purchased securities with deteriorated credit | 0 | 0 | 0 | |
Additions (reductions) for securities where an allowance was previously recorded | 0.5 | 1.1 | (0.4) | |
Reduction for securities sold during the period | (0.1) | (0.1) | 0 | |
Reduction for securities for which the Company made the decision to sell where an allowance was previously recorded | 0 | 0 | 0 | |
Write-offs | 0 | 0 | 0 | |
Recoveries of previously written-off amount | 0 | 0 | 0 | |
Allowance at the end of the period | 1.7 | 0 | 1.7 | 0 |
Foreign governments | ||||
Debt Securities, Available-for-sale, Allowance for Credit Loss [Roll Forward] | ||||
Allowance at the beginning of the period | 0.7 | 0 | 0.2 | 0 |
Additions for securities for which credit losses were not previously recorded | 0.1 | 0.1 | 0.5 | 0.1 |
Additions for purchased securities with deteriorated credit | 0 | 0 | 0 | 0 |
Additions (reductions) for securities where an allowance was previously recorded | 0 | 0 | 0.1 | 0 |
Reduction for securities sold during the period | 0 | 0 | 0 | 0 |
Reduction for securities for which the Company made the decision to sell where an allowance was previously recorded | 0 | 0 | 0 | 0 |
Write-offs | 0 | 0 | 0 | 0 |
Recoveries of previously written-off amount | 0 | 0 | 0 | 0 |
Allowance at the end of the period | 0.8 | $ 0.1 | 0.8 | $ 0.1 |
Asset-backed securities | ||||
Debt Securities, Available-for-sale, Allowance for Credit Loss [Roll Forward] | ||||
Allowance at the beginning of the period | 0.2 | 0 | ||
Additions for securities for which credit losses were not previously recorded | 0.1 | 0.2 | ||
Additions for purchased securities with deteriorated credit | 0 | 0 | ||
Additions (reductions) for securities where an allowance was previously recorded | 0 | 0.1 | ||
Reduction for securities sold during the period | 0 | 0 | ||
Reduction for securities for which the Company made the decision to sell where an allowance was previously recorded | 0 | 0 | ||
Write-offs | 0 | 0 | ||
Recoveries of previously written-off amount | 0 | 0 | ||
Allowance at the end of the period | $ 0.3 | $ 0.3 |
INVESTMENTS - SUMMARY OF CARRYI
INVESTMENTS - SUMMARY OF CARRYING VALUE AND ESTIMATED FAIR VALUE OF OUTSTANDING COMMERCIAL MORTGAGE LOANS AND UNDERLYING COLLATERAL (Details) - Commercial Portfolio Segment $ in Millions | Sep. 30, 2022 USD ($) |
Financing Receivable, Credit Quality Indicator [Line Items] | |
2022 | $ 229.6 |
2021 | 162.9 |
2020 | 43.9 |
2019 | 75.8 |
2018 | 75.3 |
Prior | 581.5 |
Total amortized cost | 1,169 |
Mortgage loans | 1,030.4 |
Collateral | 4,117.3 |
Less than 60% | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
2022 | 149.3 |
2021 | 127.6 |
2020 | 43.9 |
2019 | 75.8 |
2018 | 67.1 |
Prior | 470.2 |
Total amortized cost | 933.9 |
Mortgage loans | 824.5 |
Collateral | 3,790.3 |
60% to less than 70% | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
2022 | 47.3 |
2021 | 12.9 |
2020 | 0 |
2019 | 0 |
2018 | 8.2 |
Prior | 43.4 |
Total amortized cost | 111.8 |
Mortgage loans | 103.3 |
Collateral | 170.6 |
70% to less than 80% | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
2022 | 33 |
2021 | 22.4 |
2020 | 0 |
2019 | 0 |
2018 | 0 |
Prior | 15.1 |
Total amortized cost | 70.5 |
Mortgage loans | 60.8 |
Collateral | 93.7 |
80% to less than 90% | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
2022 | 0 |
2021 | 0 |
2020 | 0 |
2019 | 0 |
2018 | 0 |
Prior | 42.8 |
Total amortized cost | 42.8 |
Mortgage loans | 34.9 |
Collateral | 52 |
90% or greater | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
2022 | 0 |
2021 | 0 |
2020 | 0 |
2019 | 0 |
2018 | 0 |
Prior | 10 |
Total amortized cost | 10 |
Mortgage loans | 6.9 |
Collateral | $ 10.7 |
INVESTMENTS - SUMMARY OF CHAN_2
INVESTMENTS - SUMMARY OF CHANGES IN THE ALLOWANCE FOR CURRENT EXPECTED CREDIT LOSSES RELATED TO MORTGAGE LOANS (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||||
Allowance for credit losses at beginning of period | $ 4.9 | $ 8.3 | $ 5.6 | $ 11.8 |
Current period provision for expected credit losses | 0.4 | (1) | (0.3) | (4.5) |
Initial allowance recognized for purchased financial assets with credit deterioration | 0 | 0 | 0 | 0 |
Write-offs charged against the allowance | 0 | 0 | 0 | 0 |
Recoveries of amounts previously written off | 0 | 0 | 0 | 0 |
Allowance for credit losses at end of period | $ 5.3 | $ 7.3 | $ 5.3 | $ 7.3 |
INVESTMENTS - TOTAL INVESTMENT
INVESTMENTS - TOTAL INVESTMENT GAINS (LOSSES) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Realized investment gains (losses): | ||||
Total realized investment gains (losses) | $ (8.2) | $ 3.7 | $ 3.6 | $ 14.8 |
Change in allowance for credit losses | 7.5 | (1.4) | (46.9) | 13.9 |
Change in fair value of equity securities | (0.7) | (3) | (2.4) | (0.4) |
Other changes in fair value | (16.3) | (1.6) | (53.5) | (2.1) |
Other investment gains (losses) | (9.5) | (6) | (102.8) | 11.4 |
Net realized investment gains (losses) | (17.7) | (2.3) | (99.2) | 26.2 |
Variable interest entities, change in allowance for current expected credit losses | 5.7 | 0.7 | (2.8) | 12.6 |
Increase (decrease) in equity securities, FV-NI, held at end of period | (6.9) | (2.6) | ||
Change in estimated fair value of trading securities | (36.6) | (0.2) | ||
Total fixed maturities, available for sale | ||||
Realized investment gains (losses): | ||||
Gross realized gains on sales of fixed maturities, available for sale | 18.1 | 4.1 | 96.4 | 42.8 |
Gross realized losses on sales of fixed maturities, available for sale | (24.4) | (0.2) | (81.3) | (18.4) |
Equity securities, net | 0 | 0 | (8.3) | (2.8) |
Other, net | $ (1.9) | $ (0.2) | $ (3.2) | $ (6.8) |
EARNINGS PER SHARE - BASIC AND
EARNINGS PER SHARE - BASIC AND DILUTED EARNINGS PER SHARE (Details) - USD ($) shares in Thousands, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Earnings Per Share [Abstract] | ||||
Net income for basic earnings per share | $ 105 | $ 99.8 | $ 353.4 | $ 325.2 |
Net income for diluted earnings per share | $ 105 | $ 99.8 | $ 353.4 | $ 325.2 |
Shares: | ||||
Weighted average shares outstanding for basic earnings per share (in shares) | 114,354 | 126,429 | 116,170 | 130,528 |
Effect of dilutive securities on weighted average shares: | ||||
Amounts related to employee benefit plans (in shares) | 1,574 | 2,589 | 1,902 | 2,634 |
Weighted average shares outstanding for diluted earnings per share (in shares) | 115,928 | 129,018 | 118,072 | 133,162 |
BUSINESS SEGMENTS (Details)
BUSINESS SEGMENTS (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) product_line | Sep. 30, 2021 USD ($) | |
Segment Reporting [Abstract] | ||||
Number of product lines | product_line | 3 | |||
Revenues: | ||||
Insurance policy income | $ 623.2 | $ 630.6 | $ 1,873.8 | $ 1,893.5 |
Fee revenue and other income: | 31.7 | 31.8 | 128.4 | 102.1 |
Total segment revenues | 910.1 | 964.4 | 2,675 | 3,000.9 |
Expenses: | ||||
Insurance policy benefits | 412.2 | 524.8 | 1,099.1 | 1,641.3 |
Interest expense | 37.6 | 23.7 | 89.2 | 71.8 |
Other expenses | 230.8 | 233.9 | 673.5 | 714.5 |
Total segment expenses | 835.8 | 845.1 | 2,403 | 2,669.1 |
Operating earnings before taxes | 74.3 | 119.3 | 272 | 331.8 |
Income tax expense on operating income | 17.4 | 26.5 | 63.9 | 74.7 |
Net operating income | 56.9 | 92.8 | 208.1 | 257.1 |
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract] | ||||
Total segment revenues | 910.1 | 964.4 | 2,675 | 3,000.9 |
Total investment gains (losses) | (8.2) | 3.7 | 3.6 | 14.8 |
Total revenues | 905.3 | 968.3 | 2,603.2 | 3,047.4 |
Total segment expenses | 835.8 | 845.1 | 2,403 | 2,669.1 |
Other expenses | 230.8 | 233.9 | 673.5 | 714.5 |
Total benefits and expenses | 768.1 | 840.3 | 2,141.3 | 2,627.8 |
Income before income taxes | 137.2 | 128 | 461.9 | 419.6 |
Income tax expense (benefit): | ||||
Income tax expense on period income | 32.2 | 28.2 | 108.5 | 94.4 |
Net income | 105 | 99.8 | 353.4 | 325.2 |
Operating Segments | ||||
Revenues: | ||||
Total segment revenues | 910.1 | 964.4 | 2,675 | 3,000.9 |
Expenses: | ||||
Total segment expenses | 835.8 | 845.1 | 2,403 | 2,669.1 |
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract] | ||||
Total segment revenues | 910.1 | 964.4 | 2,675 | 3,000.9 |
Total segment expenses | 835.8 | 845.1 | 2,403 | 2,669.1 |
Segment Reconciling Items | ||||
Expenses: | ||||
Other expenses | (1) | 0 | (1) | 0 |
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract] | ||||
Total investment gains (losses) | (17.7) | (2.3) | (99.2) | 26.2 |
Revenues related to earnings attributable to VIEs | 12.9 | 6.2 | 27.4 | 20.3 |
Insurance policy benefits - fair value changes in embedded derivative liabilities | (92.7) | (14.5) | (326.5) | (64.3) |
Amortization related to fair value changes in embedded derivative liabilities | 26.7 | 3.6 | 90 | 16.2 |
Amortization related to investment gains (losses) | (0.6) | 0.1 | (1.7) | 1.4 |
Expenses attributable to VIEs | 11.9 | 6 | 26.2 | 18.6 |
Fair value changes related to agent deferred compensation plan | (12) | 0 | (48.7) | (13.2) |
Other expenses | (1) | 0 | (1) | 0 |
Insurance Product Lines | ||||
Expenses: | ||||
Allocated expenses | 150.5 | 140.5 | 447.5 | 423.2 |
Total insurance product margin | 207.3 | 223.6 | 603.8 | 659.9 |
Operating earnings before taxes | 56.8 | 83.1 | 156.3 | 236.7 |
Insurance Product Lines | Annuity: | ||||
Revenues: | ||||
Insurance policy income | 6.3 | 5.8 | 17.1 | 15.5 |
Net investment income | 117.3 | 115.5 | 347.2 | 346.1 |
Total insurance product line revenue | 123.6 | 121.3 | 364.3 | 361.6 |
Expenses: | ||||
Insurance policy benefits | 23.7 | 16.2 | 69.1 | 23.7 |
Interest credited | 46.3 | 38.1 | 129.9 | 113.7 |
Amortization and non-deferred commissions | 13.8 | 14.5 | 43.8 | 47.8 |
Total expenses | 83.8 | 68.8 | 242.8 | 185.2 |
Total insurance product margin | 39.8 | 52.5 | 121.5 | 176.4 |
Insurance Product Lines | Health: | ||||
Revenues: | ||||
Insurance policy income | 403.5 | 414.4 | 1,213.7 | 1,246.3 |
Net investment income | 71.9 | 72.2 | 215.3 | 215.3 |
Total insurance product line revenue | 475.4 | 486.6 | 1,429 | 1,461.6 |
Expenses: | ||||
Insurance policy benefits | 307.8 | 325.4 | 924.8 | 955.3 |
Amortization and non-deferred commissions | 43.5 | 43.3 | 141.9 | 142.8 |
Total expenses | 351.3 | 368.7 | 1,066.7 | 1,098.1 |
Total insurance product margin | 124.1 | 117.9 | 362.3 | 363.5 |
Insurance Product Lines | Life: | ||||
Revenues: | ||||
Insurance policy income | 213.4 | 210.4 | 643 | 631.7 |
Net investment income | 36.6 | 36.4 | 109.1 | 108.3 |
Total insurance product line revenue | 250 | 246.8 | 752.1 | 740 |
Expenses: | ||||
Insurance policy benefits | 142.6 | 141.3 | 444.6 | 454.4 |
Interest credited | 12.2 | 11.1 | 35.1 | 32.7 |
Amortization and non-deferred commissions | 51.8 | 41.2 | 152.4 | 132.9 |
Total expenses | 206.6 | 193.6 | 632.1 | 620 |
Total insurance product margin | 43.4 | 53.2 | 120 | 120 |
Insurance Product Lines | Allocated expenses | ||||
Expenses: | ||||
Total insurance product margin | (150.5) | (140.5) | (447.5) | (423.2) |
Investment income 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) | (34.9) | 7.2 | (199.2) | 125.8 |
Investment income not allocated to product lines | 63.6 | 69.8 | 197.9 | 207.2 |
Expenses: | ||||
Interest credited | 7.2 | 0 | 21.3 | 0 |
Market value changes of options credited to fixed index annuity and life policyholders | (34.9) | 7.2 | (199.2) | 125.8 |
Interest expense | 25.9 | 17.9 | 64.3 | 54.2 |
Amortization | 0.3 | 0 | 1.1 | 0 |
Other expenses | (2) | 1 | (18) | 11.3 |
Total insurance product margin | 32.2 | 50.9 | 129.2 | 141.7 |
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract] | ||||
Other expenses | (2) | 1 | (18) | 11.3 |
Fee income | ||||
Revenues: | ||||
Fee revenue and other income: | 30.6 | 28 | 102 | 91.4 |
Expenses: | ||||
Commissions and other operating expenses | 29.2 | 25.4 | 87.5 | 74.9 |
Total insurance product margin | 1.4 | 2.6 | 14.5 | 16.5 |
Amounts netted in expenses not allocated to product lines | ||||
Revenues: | ||||
Fee revenue and other income: | 1.8 | 4.7 | 28.9 | 13.3 |
Expenses: | ||||
Expenses not allocated to product lines | 17.9 | 22 | 56.9 | 76.4 |
Total insurance product margin | $ (16.1) | $ (17.3) | $ (28) | $ (63.1) |
ACCOUNTING FOR DERIVATIVES - FA
ACCOUNTING FOR DERIVATIVES - FAIR VALUE BY BALANCE SHEET LOCATION (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Fixed index call options | ||
Derivatives, Fair Value [Line Items] | ||
Assets: | $ 24 | $ 225 |
Not Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Assets: | 6.2 | 225.8 |
Liabilities: | 1,253.9 | 1,724.1 |
Not Designated as Hedging Instrument | Fixed index call options | Other invested assets: | ||
Derivatives, Fair Value [Line Items] | ||
Assets: | 24 | 225 |
Not Designated as Hedging Instrument | Other | Other invested assets: | ||
Derivatives, Fair Value [Line Items] | ||
Assets: | 0 | 2.5 |
Not Designated as Hedging Instrument | Reinsurance receivables | Reinsurance receivables | ||
Derivatives, Fair Value [Line Items] | ||
Assets: | (17.8) | (1.7) |
Not Designated as Hedging Instrument | Fixed index products | Future policy benefits: | ||
Derivatives, Fair Value [Line Items] | ||
Liabilities: | $ 1,253.9 | $ 1,724.1 |
ACCOUNTING FOR DERIVATIVES - NA
ACCOUNTING FOR DERIVATIVES - NARRATIVE (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Derivative [Line Items] | ||
Embedded derivative | $ 93 | |
Fixed Index Call Options | ||
Derivative [Line Items] | ||
Notional amount | $ 3,000 | $ 3,000 |
ACCOUNTING FOR DERIVATIVES - SC
ACCOUNTING FOR DERIVATIVES - SCHEDULE PRE-TAX GAINS (LOSSES) RECOGNIZED IN NET INCOME FOR DERIVATIVE INSTRUMENTS (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Derivative [Line Items] | ||||
Gains (losses) on derivatives not designated as hedging instruments | $ (39.1) | $ 6.7 | $ (216.5) | $ 125.1 |
Net investment income (loss) from policyholder and other special-purpose portfolios | Fixed index call options | ||||
Derivative [Line Items] | ||||
Gains (losses) on derivatives not designated as hedging instruments | (34.7) | 7.4 | (200.4) | 127 |
Net realized gains (losses) | Embedded derivative related to modified coinsurance agreement | Coinsurance agreements | ||||
Derivative [Line Items] | ||||
Gains (losses) on derivatives not designated as hedging instruments | $ (4.4) | $ (0.7) | $ (16.1) | $ (1.9) |
ACCOUNTING FOR DERIVATIVES - DE
ACCOUNTING FOR DERIVATIVES - DERIVATIVES WITH MASTER NETTING ARRANGEMENTS (Details) - Fixed index call options - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Derivative [Line Items] | ||
Gross amounts recognized | $ 24 | $ 225 |
Gross amounts offset in the balance sheet | 0 | 0 |
Net amounts of assets presented in the balance sheet | 24 | 225 |
Financial instruments | 0 | 0 |
Cash collateral received | 0 | 0 |
Net amount | $ 24 | $ 225 |
REINSURANCE (Details)
REINSURANCE (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Insurance [Abstract] | ||||
Ceded premiums written | $ 51.9 | $ 54.3 | $ 153 | $ 163.3 |
Reinsurance recoveries benefits | 56.2 | 76.5 | 230.6 | 232.9 |
Assumed premiums written | 4.7 | 5.1 | 14.2 | 15.4 |
Insurance policy benefits related to reinsurance assumed | $ 6.4 | $ 6.4 | $ 19.5 | $ 21.7 |
INCOME TAXES - COMPONENTS OF TA
INCOME TAXES - COMPONENTS OF TAX EXPENSE (BENEFIT) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | ||||
Current tax expense | $ 14.9 | $ 14.1 | $ 19.9 | $ 50.9 |
Deferred tax expense | 17.3 | 14.1 | 88.6 | 43.5 |
Total income tax expense | $ 32.2 | $ 28.2 | $ 108.5 | $ 94.4 |
INCOME TAXES - RECONCILIATION O
INCOME TAXES - RECONCILIATION OF CORPORATE TAX RATE (Details) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | ||
U.S. statutory corporate rate | 21% | 21% |
Non-taxable income and nondeductible benefits, net | 0% | (0.10%) |
State taxes | 2.50% | 1.60% |
Effective tax rate | 23.50% | 22.50% |
INCOME TAXES - DEFERRED ASSETS
INCOME TAXES - DEFERRED ASSETS AND LIABILITIES (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Deferred tax assets: | ||
Net federal operating loss carryforwards | $ 188.4 | $ 241.4 |
Net state operating loss carryforwards | 2.5 | 2.3 |
Insurance liabilities | 302.3 | 390.7 |
Indirect costs allocable to self-constructed real estate assets | 199.3 | 158.3 |
Accumulated other comprehensive loss | 606.3 | 0 |
Other | 9.4 | 27.5 |
Gross deferred tax assets | 1,308.2 | 820.2 |
Deferred tax liabilities: | ||
Investments | (35.6) | (48.2) |
Present value of future profits and deferred acquisition costs | (99.3) | (119.4) |
Accumulated other comprehensive income | 0 | (540.4) |
Gross deferred tax liabilities | (134.9) | (708) |
Net deferred tax assets | 1,173.3 | 112.2 |
Current income taxes prepaid | 6.9 | 6.1 |
Income tax assets, net | $ 1,180.2 | $ 118.3 |
INCOME TAXES - NARRATIVE (Detai
INCOME TAXES - NARRATIVE (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Operating Loss Carryforwards [Line Items] | ||
Deferred tax assets more likely than not to be realized through future taxable earnings | $ 1,173.3 | $ 112.2 |
Loss limitation based on income of life insurance company, percent | 35% | |
Loss limitation based on loss of non-life entities, percent | 35% | |
Federal long-term tax exempt rate | 2.54% | |
Ownership change threshold restricting NOL usage | 50% | |
Net state operating loss carryforwards | $ 2.5 | $ 2.3 |
Federal | ||
Operating Loss Carryforwards [Line Items] | ||
Net federal operating loss carryforwards | $ 900 |
INCOME TAXES - NET OPERATING LO
INCOME TAXES - NET OPERATING LOSSES (Details) $ in Millions | Sep. 30, 2022 USD ($) |
Operating Loss Carryforwards [Line Items] | |
Non-life net operating loss carryforwards | $ 897.4 |
2023 | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 310.8 |
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 ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Debt Instrument [Line Items] | ||
Notes payable – direct corporate obligations | $ 1,138.4 | $ 1,137.3 |
Unamortized debt issue costs | $ (11.6) | (12.7) |
Senior Notes | 5.250% Senior Notes due May 2025 | ||
Debt Instrument [Line Items] | ||
Interest rate | 5.25% | |
Notes payable – direct corporate obligations | $ 500 | 500 |
Senior Notes | 5.250% Senior Notes due May 2029 | ||
Debt Instrument [Line Items] | ||
Interest rate | 5.25% | |
Notes payable – direct corporate obligations | $ 500 | 500 |
Subordinated Debt | 5.125% Subordinated Debentures due November 2060 | ||
Debt Instrument [Line Items] | ||
Interest rate | 5.125% | |
Notes payable – direct corporate obligations | $ 150 | 150 |
Revolving Credit Agreement | 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 ($) | Jul. 16, 2021 | Sep. 30, 2022 | Dec. 31, 2021 |
Debt Instrument [Line Items] | |||
Outstanding amount | $ 1,138,400,000 | $ 1,137,300,000 | |
Line of Credit | Revolving Credit Agreement | |||
Debt Instrument [Line Items] | |||
Line of credit maximum borrowing capacity | $ 250,000,000 | ||
Total capitalization percentage | 15% | ||
Debt covenant, required minimum debt to total capitalization ratio | 35% | ||
Debt covenant, actual debt to total capitalization ratio at period end | 22% | ||
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 | 25% | ||
Debt covenant, actual consolidated net worth at period end | $ 3,463,600,000 | ||
Debt covenant, required minimum consolidated net worth, amount | 2,692,700,000 | ||
Outstanding amount | $ 0 | $ 0 | |
Line of Credit | Revolving Credit Agreement | Eurodollar | Minimum | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 1.375% | ||
Line of Credit | Revolving Credit Agreement | Eurodollar | Maximum | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 2.125% | ||
Line of Credit | Revolving Credit Agreement | Base Rate | Minimum | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 0.375% | ||
Line of Credit | Revolving Credit Agreement | Base Rate | Maximum | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 1.125% |
INVESTMENT BORROWINGS - NARRATI
INVESTMENT BORROWINGS - NARRATIVE (Details) $ in Millions | 9 Months Ended | ||
Sep. 30, 2022 USD ($) subsidiary | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | |
Debt Instrument [Line Items] | |||
Number of insurance subsidiaries that are members of the FHLB | subsidiary | 3 | ||
Investment borrowings | $ 1,639.9 | $ 1,715.8 | |
Federal Home Loan Bank Advances | |||
Debt Instrument [Line Items] | |||
Federal home loan bank stock | 75.2 | ||
Investment borrowings | 1,639.9 | ||
Federal home loan bank advances, collateral pledged | 2,100 | ||
Aggregate fee to prepay all fixed rate FHLB borrowings | 1 | ||
Interest expense on FHLB borrowings | $ 17.4 | $ 7.5 |
INVESTMENT BORROWINGS - TERMS O
INVESTMENT BORROWINGS - TERMS OF THE BORROWINGS FROM THE FHLB (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Debt and Equity Securities, FV-NI [Line Items] | ||
Investment borrowings | $ 1,639.9 | $ 1,715.8 |
Federal Home Loan Bank Advances | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Investment borrowings | 1,639.9 | |
Borrowings due March 2023 at 2.160% | Federal Home Loan Bank Advances | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Investment borrowings | $ 21 | |
Interest rate | 2.16% | |
Borrowings due July 2023 at 3.170% | Federal Home Loan Bank Advances | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Investment borrowings | $ 50 | |
Interest rate | 3.17% | |
Borrowings Due July 2023 at 3.170% | Federal Home Loan Bank Advances | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Investment borrowings | $ 100 | |
Interest rate | 3.17% | |
Borrowings due April 2024 at 3.080% | Federal Home Loan Bank Advances | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Investment borrowings | $ 100 | |
Interest rate | 3.08% | |
Borrowings due May 2024 at 3.643% | Federal Home Loan Bank Advances | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Investment borrowings | $ 50 | |
Interest rate | 3.643% | |
Borrowings due May 2024 at 3.319% | Federal Home Loan Bank Advances | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Investment borrowings | $ 22 | |
Interest rate | 3.319% | |
Borrowings due June 2024 at 3.951% | Federal Home Loan Bank Advances | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Investment borrowings | $ 75 | |
Interest rate | 3.951% | |
Borrowings due July 2024 at 2.595% | Federal Home Loan Bank Advances | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Investment borrowings | $ 100 | |
Interest rate | 2.595% | |
Borrowings due July 2024 at 1.990% | Federal Home Loan Bank Advances | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Investment borrowings | $ 15.5 | |
Interest rate | 1.99% | |
Borrowings due July 2024 at 3.266% | Federal Home Loan Bank Advances | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Investment borrowings | $ 34.5 | |
Interest rate | 3.266% | |
Borrowings due July 2024 at 3.256% | Federal Home Loan Bank Advances | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Investment borrowings | $ 15 | |
Interest rate | 3.256% | |
Borrowings Due August 2024 at 0.640% | Federal Home Loan Bank Advances | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Investment borrowings | $ 27 | |
Interest rate | 0.64% | |
Borrowings due September 2024 at 3.726% | Federal Home Loan Bank Advances | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Investment borrowings | $ 25 | |
Interest rate | 3.726% | |
Borrowings due May 2025 at 3.389% | Federal Home Loan Bank Advances | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Investment borrowings | $ 21.7 | |
Interest rate | 3.389% | |
Borrowings due June 2025 at 2.940% | Federal Home Loan Bank Advances | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Investment borrowings | $ 18.7 | |
Interest rate | 2.94% | |
Borrowings due September 2025 at 3.310% | Federal Home Loan Bank Advances | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Investment borrowings | $ 125 | |
Interest rate | 3.31% | |
Borrowings due October 2025 at 3.234% | Federal Home Loan Bank Advances | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Investment borrowings | $ 100 | |
Interest rate | 3.234% | |
Borrowings due October 2025 at 3.330% | Federal Home Loan Bank Advances | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Investment borrowings | $ 100 | |
Interest rate | 3.33% | |
Borrowings due October 2025 at 3.068% | Federal Home Loan Bank Advances | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Investment borrowings | $ 57.7 | |
Interest rate | 3.068% | |
Borrowings due November 2025 at 3.394% | Federal Home Loan Bank Advances | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Investment borrowings | $ 50 | |
Interest rate | 3.394% | |
Borrowings due January 2026 at 3.013% | Federal Home Loan Bank Advances | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Investment borrowings | $ 50 | |
Interest rate | 3.013% | |
Borrowings due January 2026 at 2.935% | Federal Home Loan Bank Advances | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Investment borrowings | $ 50 | |
Interest rate | 2.935% | |
Borrowings due January 2026 at 3.029% | Federal Home Loan Bank Advances | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Investment borrowings | $ 100 | |
Interest rate | 3.029% | |
Borrowings due May 2026 at 2.919% | Federal Home Loan Bank Advances | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Investment borrowings | $ 21.8 | |
Interest rate | 2.919% | |
Borrowings due May 2026 at 3.230% | Federal Home Loan Bank Advances | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Investment borrowings | $ 50 | |
Interest rate | 3.23% | |
Borrowings due April 2027 at 3.261% | Federal Home Loan Bank Advances | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Investment borrowings | $ 50 | |
Interest rate | 3.261% | |
Borrowings due May 2027 at 3.271% | Federal Home Loan Bank Advances | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Investment borrowings | $ 50 | |
Interest rate | 3.271% | |
Borrowings due June 2027 at 3.330% | Federal Home Loan Bank Advances | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Investment borrowings | $ 100 | |
Interest rate | 3.33% | |
Borrowings due June 2027 at 3.553% | Federal Home Loan Bank Advances | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Investment borrowings | $ 10 | |
Interest rate | 3.553% | |
Borrowings due July 2023 Rate three | Federal Home Loan Bank Advances | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Investment borrowings | $ 50 | |
Interest rate | 3.17% |
CHANGES IN COMMON STOCK (Detail
CHANGES IN COMMON STOCK (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 1 Months Ended | 3 Months Ended | 4 Months Ended | 9 Months Ended | ||
May 31, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Apr. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | |
Equity, Class of Treasury Stock [Line Items] | ||||||
Common stock repurchased | $ 10 | $ 115 | $ 170 | $ 302.4 | ||
Stock repurchase program, remaining repurchase authorized amount | 196.9 | 196.9 | ||||
Common stock dividends declared | $ 16.3 | $ 16.6 | $ 48.7 | $ 50.1 | ||
Dividends (in dollars per share) | $ 0.14 | $ 0.13 | $ 0.41 | |||
Common stock | ||||||
Equity, Class of Treasury Stock [Line Items] | ||||||
Stock repurchased and retired during period (in shares) | 561 | 4,911 | 7,168 | 12,511 | ||
Common stock repurchased | $ 0 | $ 0.1 | $ 0.1 | $ 0.1 |
SALES INDUCEMENTS (Details)
SALES INDUCEMENTS (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Insurance [Abstract] | |||
Deferred sales inducements | $ 15.8 | $ 12.2 | |
Deferred sales inducements, amortization expense | 20 | $ 10.2 | |
Unamortized deferred sales inducements | $ 57 | $ 61.2 |
RECENTLY ISSUED ACCOUNTING ST_2
RECENTLY ISSUED ACCOUNTING STANDARDS - NARRATIVE (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 | Jan. 01, 2021 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Accumulated other comprehensive income (loss) | $ (2,165.7) | $ 1,947.1 | |
Retained earnings | $ 1,431.9 | $ 1,127.2 | |
Minimum | Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2018-12 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Accumulated other comprehensive income (loss) | $ (1,800) | ||
Retained earnings | (100) | ||
Maximum | Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2018-12 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Accumulated other comprehensive income (loss) | (2,200) | ||
Retained earnings | $ (200) |
LITIGATION AND OTHER LEGAL PR_2
LITIGATION AND OTHER LEGAL PROCEEDINGS (Details) | 5 Months Ended | ||
Mar. 25, 2022 policyholder | Apr. 09, 2019 trust_agreement | May 31, 2022 state | |
Commitments and Contingencies Disclosure [Abstract] | |||
Number of trust agreements | trust_agreement | 4 | ||
Number of Policyholders | policyholder | 2,000 | ||
Number of states participating in examination of compliance with unclaimed property laws | state | 42 |
CONSOLIDATED STATEMENT OF CAS_4
CONSOLIDATED STATEMENT OF CASH FLOWS (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Cash flows from operating activities: | ||||
Net income | $ 105 | $ 99.8 | $ 353.4 | $ 325.2 |
Adjustments to reconcile net income to net cash from operating activities: | ||||
Amortization and depreciation | 305.6 | 227.3 | ||
Income taxes | 87.8 | 123.3 | ||
Insurance liabilities | (292.3) | 255.2 | ||
Accrual, amortization and fair value changes included in investment income | 132 | (232.5) | ||
Deferral of policy acquisition costs | (245.7) | (213.3) | ||
Net investment (gains) losses | 99.2 | (26.2) | ||
Other | (105.5) | 20 | ||
Net cash from operating activities | 334.5 | 479 | ||
Amounts related to employee benefit plans | $ 19.8 | $ 19.2 |
INVESTMENTS IN VARIABLE INTER_3
INVESTMENTS IN VARIABLE INTEREST ENTITIES - BALANCE SHEET ITEMS (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Assets: | ||
Investments held by variable interest entities | $ 1,099.2 | $ 1,199.6 |
Cash and cash equivalents held by variable interest entities | 55.5 | 99.6 |
Accrued investment income | 236 | 216.4 |
Income tax assets, net | 1,180.2 | 118.3 |
Other assets | 552.2 | 519.1 |
Total assets | 33,037.3 | 36,204.4 |
Liabilities: | ||
Other liabilities | 749.4 | 830.9 |
Borrowings related to variable interest entities | 1,115.3 | 1,147.9 |
Total liabilities | 31,739.4 | 30,944.7 |
Investments held by variable interest entities - corporate securities | ||
Assets: | ||
Investments held by variable interest entities | 1,099.2 | 1,199.6 |
Notes receivable of VIEs held by subsidiaries | (113.8) | (113.8) |
Cash and cash equivalents held by variable interest entities | 55.5 | 99.6 |
Accrued investment income | 3 | 1.6 |
Income tax assets, net | 21.6 | 8.4 |
Other assets | 12.4 | 6.2 |
Total assets | 1,077.9 | 1,201.6 |
Liabilities: | ||
Other liabilities | 43.9 | 85.2 |
Borrowings related to variable interest entities | 1,115.3 | 1,147.9 |
Notes payable of VIEs held by subsidiaries | 0 | 0 |
Total liabilities | 1,159.2 | 1,233.1 |
Investments held by variable interest entities - corporate securities | VIEs | ||
Assets: | ||
Investments held by variable interest entities | 1,099.2 | 1,199.6 |
Notes receivable of VIEs held by subsidiaries | 0 | 0 |
Cash and cash equivalents held by variable interest entities | 55.5 | 99.6 |
Accrued investment income | 3 | 1.6 |
Income tax assets, net | 21.6 | 8.4 |
Other assets | 13.2 | 7.1 |
Total assets | 1,192.5 | 1,316.3 |
Liabilities: | ||
Other liabilities | 46 | 89.5 |
Borrowings related to variable interest entities | 1,115.3 | 1,147.9 |
Notes payable of VIEs held by subsidiaries | 126.1 | 126.1 |
Total liabilities | 1,287.4 | 1,363.5 |
Investments held by variable interest entities - corporate securities | 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 | (0.8) | (0.9) |
Total assets | (114.6) | (114.7) |
Liabilities: | ||
Other liabilities | (2.1) | (4.3) |
Borrowings related to variable interest entities | 0 | 0 |
Notes payable of VIEs held by subsidiaries | (126.1) | (126.1) |
Total liabilities | $ (128.2) | $ (130.4) |
INVESTMENTS IN VARIABLE INTER_4
INVESTMENTS IN VARIABLE INTEREST ENTITIES - NARRATIVE (Details) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 USD ($) investment | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) investment | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | |
Variable Interest Entity [Line Items] | |||||
Total amortized cost | $ 1,166.7 | $ 1,166.7 | |||
Variable interest entity, gross unrealized gains fixed maturity securities | 0.3 | 0.3 | |||
Variable interest entity gross unrealized losses fixed maturity securities | 61.3 | 61.3 | |||
Variable interest entity, allowance for credit losses fixed maturity securities | 6.5 | 6.5 | |||
Estimated fair value of fixed maturity securities | 1,099.2 | 1,099.2 | |||
Variable interest entities net realized gain (losses) on investments | (6.7) | $ 5.1 | |||
Variable interest entities net loss from sale of fixed maturity investments | (3.9) | (7.5) | |||
Variable interest entities, change in allowance for credit losses | $ 5.7 | $ 0.7 | (2.8) | 12.6 | |
Variable interest entity, gross investment losses from sale | 3.9 | 7.7 | |||
Variable interest entities, investments sold | $ 55.9 | $ 56.1 | |||
Number of investments held by VIE, in default | investment | 0 | 0 | |||
Fair value, less than 12 months | $ 8,724.8 | $ 8,724.8 | $ 1,698.6 | ||
Gross unrealized losses, less than 12 months | 1,154.7 | 1,154.7 | 15.1 | ||
Fair value, 12 months or greater | 747.6 | 747.6 | 122.2 | ||
Gross unrealized losses, 12 months or greater | 121 | 121 | 3.4 | ||
Investments held in limited partnerships | 620.2 | 620.2 | |||
Unfunded commitments to limited partnerships | 358.1 | 358.1 | |||
Investments held by variable interest entities - corporate securities | |||||
Variable Interest Entity [Line Items] | |||||
Fair value, less than 12 months | 477.4 | 477.4 | 417.7 | ||
Gross unrealized losses, less than 12 months | 19.7 | 19.7 | 2.2 | ||
Fair value, 12 months or greater | 395.4 | 395.4 | 279.7 | ||
Gross unrealized losses, 12 months or greater | $ 19.5 | $ 19.5 | $ 3.1 |
INVESTMENTS IN VARIABLE INTER_5
INVESTMENTS IN VARIABLE INTEREST ENTITIES - CHANGES IN ALLOWANCE (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Debt Securities, Available-for-sale, Allowance for Credit Loss [Roll Forward] | ||||
Allowance at the beginning of the period | $ 54.2 | $ 2.3 | $ 7.6 | $ 2.2 |
Additions for securities for which credit losses were not previously recorded | 7.6 | 2.5 | 41.2 | 4.5 |
Additions for purchased securities with deteriorated credit | 0 | 0 | 0 | 0 |
Additions (reductions) for securities where an allowance was previously recorded | (6.4) | 0.7 | 13.1 | (0.7) |
Reduction for securities sold during the period | (3.4) | (0.1) | (9.9) | (0.6) |
Reduction for securities for which the Company made the decision to sell where an allowance was previously recorded | 0 | 0 | 0 | 0 |
Write-offs | 0 | 0 | 0 | 0 |
Recoveries of previously written-off amount | 0 | 0 | 0 | 0 |
Allowance at the end of the period | 52 | 5.4 | 52 | 5.4 |
Corporate securities | ||||
Debt Securities, Available-for-sale, Allowance for Credit Loss [Roll Forward] | ||||
Allowance at the beginning of the period | 52.2 | 2.3 | 7.4 | 1.9 |
Additions for securities for which credit losses were not previously recorded | 7.2 | 2.4 | 39.8 | 4.3 |
Additions for purchased securities with deteriorated credit | 0 | 0 | 0 | 0 |
Additions (reductions) for securities where an allowance was previously recorded | (6.9) | 0.7 | 11.8 | (0.3) |
Reduction for securities sold during the period | (3.3) | (0.1) | (9.8) | (0.6) |
Reduction for securities for which the Company made the decision to sell where an allowance was previously recorded | 0 | 0 | 0 | 0 |
Write-offs | 0 | 0 | 0 | 0 |
Recoveries of previously written-off amount | 0 | 0 | 0 | 0 |
Allowance at the end of the period | 49.2 | 5.3 | 49.2 | 5.3 |
Investments held by variable interest entities - corporate securities | Corporate securities | ||||
Debt Securities, Available-for-sale, Allowance for Credit Loss [Roll Forward] | ||||
Allowance at the beginning of the period | 12.2 | 3.2 | 3.7 | 15.1 |
Additions for securities for which credit losses were not previously recorded | 0.9 | 0.1 | 7.2 | 0.7 |
Additions for purchased securities with deteriorated credit | 0 | 0 | 0 | 0 |
Additions (reductions) for securities where an allowance was previously recorded | (5.7) | (0.2) | (2.5) | (3.7) |
Reduction for securities sold during the period | (0.9) | (0.6) | (1.9) | (9.6) |
Reduction for securities for which the Company made the decision to sell where an allowance was previously recorded | 0 | 0 | 0 | 0 |
Write-offs | 0 | 0 | 0 | 0 |
Recoveries of previously written-off amount | 0 | 0 | 0 | 0 |
Allowance at the end of the period | $ 6.5 | $ 2.5 | $ 6.5 | $ 2.5 |
INVESTMENTS IN VARIABLE INTER_6
INVESTMENTS IN VARIABLE INTEREST ENTITIES - SCHEDULE OF VIEs (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Amortized cost | ||
Due in one year or less | $ 123.4 | $ 80.3 |
Due after one year through five years | 1,935.7 | 1,147.4 |
Due after five years through ten years | 2,125.3 | 1,458.4 |
Amortized cost | 23,442.5 | 21,867.6 |
Estimated fair value | ||
Due in one year or less | 122.6 | 80.5 |
Due after one year through five years | 1,805.1 | 1,205.6 |
Due after five years through ten years | 1,894.4 | 1,573.7 |
Estimated fair value | 20,301.1 | $ 24,805.4 |
Investments held by variable interest entities - corporate securities | ||
Amortized cost | ||
Due in one year or less | 4.5 | |
Due after one year through five years | 687.5 | |
Due after five years through ten years | 474.7 | |
Amortized cost | 1,166.7 | |
Estimated fair value | ||
Due in one year or less | 4.3 | |
Due after one year through five years | 652.9 | |
Due after five years through ten years | 442 | |
Estimated fair value | $ 1,099.2 |
FAIR VALUE MEASUREMENTS - NARRA
FAIR VALUE MEASUREMENTS - NARRATIVE (Details) | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair value of level 3 fixed maturity securities and trading securities valued using broker quotes, percentage | 87% |
Available for sale fixed maturities classified as level 3, investment grade, percent | 84% |
Available for sale fixed maturities classified as Level 3 and corporate securities | 49% |
FAIR VALUE MEASUREMENTS - MEASU
FAIR VALUE MEASUREMENTS - MEASUREMENTS BY INPUT LEVEL (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Assets: | ||
Estimated fair value | $ 20,301.1 | $ 24,805.4 |
Equity securities - corporate securities | 135.8 | 131.1 |
Total trading securities | 223.3 | 227.2 |
Investments held by variable interest entities - corporate securities | 1,099.2 | 1,199.6 |
Total other invested assets | 1,028.6 | 1,224 |
Assets held in separate accounts | 2.7 | 3.9 |
Corporate securities | ||
Assets: | ||
Estimated fair value | 11,778.6 | 15,450.8 |
United States Treasury securities and obligations of United States government corporations and agencies | ||
Assets: | ||
Estimated fair value | 157.8 | 219.6 |
States and political subdivisions | ||
Assets: | ||
Estimated fair value | 2,400.2 | 3,004.2 |
Foreign governments | ||
Assets: | ||
Estimated fair value | 69.3 | 98.5 |
Asset-backed securities | ||
Assets: | ||
Estimated fair value | 1,270.1 | 1,162.9 |
Agency residential mortgage-backed securities | ||
Assets: | ||
Estimated fair value | 38.5 | 40.4 |
Non-agency residential mortgage-backed securities | ||
Assets: | ||
Estimated fair value | 1,638.9 | 2,023.8 |
Collateralized loan obligations | ||
Assets: | ||
Estimated fair value | 733.2 | 588.3 |
Commercial mortgage-backed securities | ||
Assets: | ||
Estimated fair value | 2,214.5 | 2,216.9 |
Significant unobservable inputs (Level 3) | ||
Assets: | ||
Total assets carried at fair value by category | 329.9 | 170.4 |
Fair Value, Measurements, Recurring | ||
Assets: | ||
Estimated fair value | 20,301.1 | 24,805.4 |
Total trading securities | 223.3 | 227.2 |
Investments held by variable interest entities - corporate securities | 1,099.2 | 1,199.6 |
Derivatives | 24 | 227.5 |
Residual tranches | 19.1 | |
Total other invested assets | 43.1 | |
Assets held in separate accounts | 2.7 | 3.9 |
Total assets carried at fair value by category | 21,805.2 | 26,594.7 |
Liabilities: | ||
Embedded derivatives associated with fixed index annuity products (classified as policyholder account liabilities) | 1,253.9 | 1,724.1 |
Fair Value, Measurements, Recurring | Corporate securities | ||
Assets: | ||
Estimated fair value | 11,778.6 | 15,450.8 |
Equity securities - corporate securities | 135.8 | 131.1 |
Fair Value, Measurements, Recurring | United States Treasury securities and obligations of United States government corporations and agencies | ||
Assets: | ||
Estimated fair value | 157.8 | 219.6 |
Fair Value, Measurements, Recurring | States and political subdivisions | ||
Assets: | ||
Estimated fair value | 2,400.2 | 3,004.2 |
Fair Value, Measurements, Recurring | Foreign governments | ||
Assets: | ||
Estimated fair value | 69.3 | 98.5 |
Fair Value, Measurements, Recurring | Asset-backed securities | ||
Assets: | ||
Estimated fair value | 1,270.1 | 1,162.9 |
Total trading securities | 13 | 5.8 |
Fair Value, Measurements, Recurring | Agency residential mortgage-backed securities | ||
Assets: | ||
Estimated fair value | 38.5 | 40.4 |
Total trading securities | 0.3 | 0.4 |
Fair Value, Measurements, Recurring | Non-agency residential mortgage-backed securities | ||
Assets: | ||
Estimated fair value | 1,638.9 | 2,023.8 |
Total trading securities | 63.4 | 81 |
Fair Value, Measurements, Recurring | Collateralized loan obligations | ||
Assets: | ||
Estimated fair value | 733.2 | 588.3 |
Fair Value, Measurements, Recurring | Commercial mortgage-backed securities | ||
Assets: | ||
Estimated fair value | 2,214.5 | 2,216.9 |
Total trading securities | 146.6 | 140 |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets or liabilities (Level 1) | ||
Assets: | ||
Estimated fair value | 0 | 0 |
Total trading securities | 0 | 0 |
Investments held by variable interest entities - corporate securities | 0 | 0 |
Derivatives | 0 | 0 |
Residual tranches | 0 | |
Total other invested assets | 0 | |
Assets held in separate accounts | 0 | 0 |
Total assets carried at fair value by category | 61 | 100.8 |
Liabilities: | ||
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) | Corporate securities | ||
Assets: | ||
Estimated fair value | 0 | 0 |
Equity securities - corporate securities | 61 | 100.8 |
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 | ||
Assets: | ||
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 | ||
Assets: | ||
Estimated fair value | 0 | 0 |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets or liabilities (Level 1) | Foreign governments | ||
Assets: | ||
Estimated fair value | 0 | 0 |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets or liabilities (Level 1) | Asset-backed securities | ||
Assets: | ||
Estimated fair value | 0 | 0 |
Total 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 | ||
Assets: | ||
Estimated fair value | 0 | 0 |
Total 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 | ||
Assets: | ||
Estimated fair value | 0 | 0 |
Total trading securities | 0 | 0 |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets or liabilities (Level 1) | Collateralized loan obligations | ||
Assets: | ||
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 | ||
Assets: | ||
Estimated fair value | 0 | 0 |
Total trading securities | 0 | 0 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | ||
Assets: | ||
Estimated fair value | 20,050 | 24,665.1 |
Total trading securities | 223.3 | 210.8 |
Investments held by variable interest entities - corporate securities | 1,099.2 | 1,197.4 |
Derivatives | 24 | 227.5 |
Residual tranches | 15.1 | |
Total other invested assets | 39.1 | |
Assets held in separate accounts | 2.7 | 3.9 |
Total assets carried at fair value by category | 21,414.3 | 26,323.5 |
Liabilities: | ||
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) | Corporate securities | ||
Assets: | ||
Estimated fair value | 11,656.5 | 15,361.1 |
Equity securities - corporate securities | 0 | 18.8 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | United States Treasury securities and obligations of United States government corporations and agencies | ||
Assets: | ||
Estimated fair value | 157.8 | 219.6 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | States and political subdivisions | ||
Assets: | ||
Estimated fair value | 2,400.2 | 3,004.2 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | Foreign governments | ||
Assets: | ||
Estimated fair value | 69.3 | 98.5 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | Asset-backed securities | ||
Assets: | ||
Estimated fair value | 1,221.2 | 1,136.3 |
Total trading securities | 13 | 5.8 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | Agency residential mortgage-backed securities | ||
Assets: | ||
Estimated fair value | 38.5 | 40.4 |
Total trading securities | 0.3 | 0.4 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | Non-agency residential mortgage-backed securities | ||
Assets: | ||
Estimated fair value | 1,609.8 | 2,023.8 |
Total trading securities | 63.4 | 77.5 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | Collateralized loan obligations | ||
Assets: | ||
Estimated fair value | 719.8 | 583.3 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | Commercial mortgage-backed securities | ||
Assets: | ||
Estimated fair value | 2,176.9 | 2,197.9 |
Total trading securities | 146.6 | 127.1 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | ||
Assets: | ||
Estimated fair value | 251.1 | 140.3 |
Total trading securities | 0 | 16.4 |
Investments held by variable interest entities - corporate securities | 0 | 2.2 |
Derivatives | 0 | 0 |
Residual tranches | 4 | |
Total other invested assets | 4 | |
Assets held in separate accounts | 0 | 0 |
Total assets carried at fair value by category | 329.9 | 170.4 |
Liabilities: | ||
Embedded derivatives associated with fixed index annuity products (classified as policyholder account liabilities) | 1,253.9 | 1,724.1 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Corporate securities | ||
Assets: | ||
Estimated fair value | 122.1 | 89.7 |
Equity securities - corporate securities | 74.8 | 11.5 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | United States Treasury securities and obligations of United States government corporations and agencies | ||
Assets: | ||
Estimated fair value | 0 | 0 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | States and political subdivisions | ||
Assets: | ||
Estimated fair value | 0 | 0 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Foreign governments | ||
Assets: | ||
Estimated fair value | 0 | 0 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Asset-backed securities | ||
Assets: | ||
Estimated fair value | 48.9 | 26.6 |
Total trading securities | 0 | 0 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Agency residential mortgage-backed securities | ||
Assets: | ||
Estimated fair value | 0 | 0 |
Total trading securities | 0 | 0 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Non-agency residential mortgage-backed securities | ||
Assets: | ||
Estimated fair value | 29.1 | 0 |
Total trading securities | 0 | 3.5 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Collateralized loan obligations | ||
Assets: | ||
Estimated fair value | 13.4 | 5 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Commercial mortgage-backed securities | ||
Assets: | ||
Estimated fair value | 37.6 | 19 |
Total trading securities | $ 0 | $ 12.9 |
FAIR VALUE MEASUREMENTS - RECUR
FAIR VALUE MEASUREMENTS - RECURRING BASIS (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Cash and cash equivalents: | ||
Held by variable interest entities | $ 55.5 | $ 99.6 |
Fair Value, Measurements, Recurring | Total estimated fair value | ||
Assets: | ||
Mortgage loans | 1,092 | 1,297.5 |
Policy loans | 120.2 | 120.2 |
Other invested assets: | ||
Company-owned life insurance | 197.6 | 207 |
Cash and cash equivalents: | ||
Unrestricted | 498 | 632.1 |
Held by variable interest entities | 55.5 | 99.6 |
Liabilities: | ||
Policyholder account liabilities | 14,653.7 | 13,689.7 |
Investment borrowings | 1,640.9 | 1,719.6 |
Borrowings related to variable interest entities | 1,068.7 | 1,144.8 |
Notes payable – direct corporate obligations | 1,073.8 | 1,283.4 |
Fair Value, Measurements, Recurring | Total carrying amount | ||
Assets: | ||
Mortgage loans | 1,227.3 | 1,218.6 |
Policy loans | 120.2 | 120.2 |
Other invested assets: | ||
Company-owned life insurance | 197.6 | 207 |
Cash and cash equivalents: | ||
Unrestricted | 498 | 632.1 |
Held by variable interest entities | 55.5 | 99.6 |
Liabilities: | ||
Policyholder account liabilities | 14,653.7 | 13,689.7 |
Investment borrowings | 1,639.9 | 1,715.8 |
Borrowings related to variable interest entities | 1,115.3 | 1,147.9 |
Notes payable – direct corporate obligations | 1,138.4 | 1,137.3 |
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 | 498 | 632.1 |
Held by variable interest entities | 55.5 | 99.6 |
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 | 197.6 | 207 |
Cash and cash equivalents: | ||
Unrestricted | 0 | 0 |
Held by variable interest entities | 0 | 0 |
Liabilities: | ||
Policyholder account liabilities | 0 | 0 |
Investment borrowings | 1,640.9 | 1,719.6 |
Borrowings related to variable interest entities | 1,068.7 | 1,144.8 |
Notes payable – direct corporate obligations | 1,073.8 | 1,283.4 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | ||
Assets: | ||
Mortgage loans | 1,092 | 1,297.5 |
Policy loans | 120.2 | 120.2 |
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 | 14,653.7 | 13,689.7 |
Investment borrowings | 0 | 0 |
Borrowings related to variable interest entities | 0 | 0 |
Notes payable – direct corporate obligations | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS - BALAN
FAIR VALUE MEASUREMENTS - BALANCE SHEET RECURRING (Details) - Significant unobservable inputs (Level 3) - Fair Value, Measurements, Recurring - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Corporate securities | ||||
Assets: | ||||
Beginning balance | $ 124 | $ 82.5 | $ 89.7 | $ 146.9 |
Purchases, sales, issuances and settlements, net | 2.7 | 18.5 | 13 | 18.4 |
Total realized and unrealized gains (losses) included in net income | (0.9) | (1.2) | (0.1) | (0.3) |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | (13.4) | 1.1 | (41.7) | 0.8 |
Transfers into level 3 | 9.7 | 0 | 68.6 | 6.1 |
Transfers out of level 3 | 0 | (5.1) | (7.4) | (76.1) |
Ending balance | 122.1 | 95.8 | 122.1 | 95.8 |
Amount of total gains (losses) included in our net income relating to assets still held as of the reporting date | (0.9) | (1.2) | 0.4 | (0.3) |
Amount of total gains (losses) included in accumulated other comprehensive income (loss) relating to assets still held as of the reporting date | (14.2) | 0.6 | (43.1) | (0.6) |
Corporate securities | Investments held by variable interest entities - corporate securities | ||||
Assets: | ||||
Beginning balance | 2.2 | |||
Purchases, sales, issuances and settlements, net | (2.1) | |||
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 | |||
Transfers into level 3 | 0 | |||
Transfers out of level 3 | 0 | |||
Ending balance | 0 | 0 | ||
Amount of total gains (losses) 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 still held as of the reporting date | 0 | |||
Asset-backed securities | ||||
Assets: | ||||
Beginning balance | 29.7 | 12 | 26.6 | 14.3 |
Purchases, sales, issuances and settlements, net | 18.3 | 8 | 26 | 7.7 |
Total realized and unrealized gains (losses) included in net income | 0 | 0 | 0 | 0 |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | (3.2) | 0.1 | (6.4) | 0.1 |
Transfers into level 3 | 4.1 | 0 | 2.7 | 0 |
Transfers out of level 3 | 0 | 0 | 0 | (2) |
Ending balance | 48.9 | 20.1 | 48.9 | 20.1 |
Amount of total gains (losses) included in our net income relating to assets still held as of the reporting date | 0 | 0 | 0 | 0 |
Amount of total gains (losses) included in accumulated other comprehensive income (loss) relating to assets still held as of the reporting date | (3.2) | 0.1 | (6.4) | 0.1 |
Non-agency residential mortgage-backed securities | ||||
Assets: | ||||
Beginning balance | 40.5 | 0 | 1.6 | |
Purchases, sales, issuances and settlements, net | (0.1) | 6 | 0 | |
Total realized and unrealized gains (losses) included in net income | 0 | 0 | 0 | |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | (2.5) | (10.3) | 0 | |
Transfers into level 3 | 13.6 | 33.4 | 0 | |
Transfers out of level 3 | (22.4) | 0 | (1.6) | |
Ending balance | 29.1 | 0 | 29.1 | 0 |
Amount of total gains (losses) included in our net income relating to assets still held as of the reporting date | 0 | 0 | 0 | |
Amount of total gains (losses) included in accumulated other comprehensive income (loss) relating to assets still held as of the reporting date | (2.5) | (10.3) | 0 | |
Collateralized loan obligations | ||||
Assets: | ||||
Beginning balance | 4.4 | 5 | ||
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 | (0.4) | ||
Transfers into level 3 | 13.4 | 13.8 | ||
Transfers out of level 3 | (4.4) | (5) | ||
Ending balance | 13.4 | 13.4 | ||
Amount of total gains (losses) 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 still held as of the reporting date | 0 | (0.4) | ||
Commercial mortgage-backed securities | ||||
Assets: | ||||
Beginning balance | 16.5 | 0 | 19 | 0 |
Purchases, sales, issuances and settlements, net | 0 | 6.4 | 28 | 6.4 |
Total realized and unrealized gains (losses) included in net income | 0 | 0 | 0 | 0 |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | (1.1) | 0.4 | (9.4) | (0.2) |
Transfers into level 3 | 22.2 | 12.6 | 0 | 13.2 |
Transfers out of level 3 | 0 | 0 | 0 | 0 |
Ending balance | 37.6 | 19.4 | 37.6 | 19.4 |
Amount of total gains (losses) included in our net income relating to assets still held as of the reporting date | 0 | 0 | 0 | 0 |
Amount of total gains (losses) included in accumulated other comprehensive income (loss) relating to assets still held as of the reporting date | (1.1) | 0.4 | (9.5) | (0.4) |
Total fixed maturities, available for sale | ||||
Assets: | ||||
Beginning balance | 215.1 | 94.5 | 140.3 | 162.8 |
Purchases, sales, issuances and settlements, net | 20.9 | 32.9 | 73 | 32.5 |
Total realized and unrealized gains (losses) included in net income | (0.9) | (1.2) | (0.1) | (0.3) |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | (20.2) | 1.6 | (68.2) | 0.7 |
Transfers into level 3 | 63 | 12.6 | 118.5 | 19.3 |
Transfers out of level 3 | (26.8) | (5.1) | (12.4) | (79.7) |
Ending balance | 251.1 | 135.3 | 251.1 | 135.3 |
Amount of total gains (losses) included in our net income relating to assets still held as of the reporting date | (0.9) | (1.2) | 0.4 | (0.3) |
Amount of total gains (losses) included in accumulated other comprehensive income (loss) relating to assets still held as of the reporting date | (21) | 1.1 | (69.7) | (0.9) |
Equity securities - corporate securities | ||||
Assets: | ||||
Beginning balance | 8.2 | 27 | 11.5 | 26.8 |
Purchases, sales, issuances and settlements, net | 0 | 0 | 63.9 | 0.2 |
Total realized and unrealized gains (losses) included in net income | (0.5) | (1.8) | (0.6) | (1.8) |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0 | 0 | 0 | 0 |
Transfers into level 3 | 67.1 | 0 | 0 | 0 |
Transfers out of level 3 | 0 | 0 | 0 | 0 |
Ending balance | 74.8 | 25.2 | 74.8 | 25.2 |
Amount of total gains (losses) included in our net income relating to assets still held as of the reporting date | (0.5) | (1.8) | (0.5) | (1.8) |
Amount of total gains (losses) included in accumulated other comprehensive income (loss) relating to assets still held as of the reporting date | 0 | 0 | 0 | 0 |
Trading securities - non-agency residential mortgage-backed securities | ||||
Assets: | ||||
Beginning balance | 3.4 | 4.8 | 3.5 | 5.9 |
Purchases, sales, issuances and settlements, net | 0 | (0.7) | 0 | (1.8) |
Total realized and unrealized gains (losses) included in net income | 0 | (0.2) | 0 | (0.4) |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0 | 0.2 | 0 | 0.4 |
Transfers into level 3 | 0 | 0 | 0 | 0 |
Transfers out of level 3 | (3.4) | 0 | (3.5) | 0 |
Ending balance | 0 | 4.1 | 0 | 4.1 |
Amount of total gains (losses) included in our net income relating to assets still held as of the reporting date | 0 | (0.2) | 0 | (0.4) |
Amount of total gains (losses) included in accumulated other comprehensive income (loss) relating to assets still held as of the reporting date | 0 | 0 | 0 | 0 |
Trading Securities - Commercial mortgage-backed securities | ||||
Assets: | ||||
Beginning balance | 6 | 12.6 | 12.9 | 17 |
Purchases, sales, issuances and settlements, net | 0 | 0 | 0 | 0 |
Total realized and unrealized gains (losses) included in net income | 0 | 0 | 0 | 0 |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0 | 0.2 | 0 | 0.5 |
Transfers into level 3 | 0 | 0 | 0 | 0 |
Transfers out of level 3 | (6) | 0 | (12.9) | (4.7) |
Ending balance | 0 | 12.8 | 0 | 12.8 |
Amount of total gains (losses) included in our net income relating to assets still held as of the reporting date | 0 | 0 | 0 | 0 |
Amount of total gains (losses) included in accumulated other comprehensive income (loss) relating to assets still held as of the reporting date | 0 | 0 | 0 | 0 |
Total trading securities | ||||
Assets: | ||||
Beginning balance | 9.4 | 17.4 | 16.4 | 22.9 |
Purchases, sales, issuances and settlements, net | 0 | (0.7) | 0 | (1.8) |
Total realized and unrealized gains (losses) included in net income | 0 | (0.2) | 0 | (0.4) |
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0 | 0.4 | 0 | 0.9 |
Transfers into level 3 | 0 | 0 | 0 | 0 |
Transfers out of level 3 | (9.4) | 0 | (16.4) | (4.7) |
Ending balance | 0 | 16.9 | 0 | 16.9 |
Amount of total gains (losses) included in our net income relating to assets still held as of the reporting date | 0 | (0.2) | 0 | (0.4) |
Amount of total gains (losses) included in accumulated other comprehensive income (loss) relating to assets still held as of the reporting date | 0 | $ 0 | 0 | $ 0 |
Other invested assets - residual tranches | ||||
Assets: | ||||
Beginning balance | 2.6 | 0 | ||
Purchases, sales, issuances and settlements, net | 1.6 | 2.8 | ||
Total realized and unrealized gains (losses) included in net income | (0.5) | 0 | ||
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0 | (0.6) | ||
Transfers into level 3 | 0.3 | 1.8 | ||
Transfers out of level 3 | 0 | 0 | ||
Ending balance | 4 | 4 | ||
Amount of total gains (losses) included in our net income relating to assets still held as of the reporting date | (0.5) | 0 | ||
Amount of total gains (losses) included in accumulated other comprehensive income (loss) relating to assets still held as of the reporting date | $ 0 | $ (0.6) |
FAIR VALUE MEASUREMENTS - FAIR
FAIR VALUE MEASUREMENTS - FAIR VALUE ACTIVITY (Details) - Significant unobservable inputs (Level 3) - Fair Value, Measurements, Recurring - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Corporate securities | ||||
Assets: | ||||
Purchases | $ 9.3 | $ 18.5 | $ 24.2 | $ 18.5 |
Sales | (6.6) | 0 | (11.2) | (0.1) |
Issuances | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Purchases, sales, issuances and settlements, net | 2.7 | 18.5 | 13 | 18.4 |
Corporate securities | Variable Interest Entities | ||||
Assets: | ||||
Purchases | 0 | |||
Sales | (2.1) | |||
Issuances | 0 | |||
Settlements | 0 | |||
Purchases, sales, issuances and settlements, net | (2.1) | |||
Asset-backed securities | ||||
Assets: | ||||
Purchases | 19 | 8.2 | 26.9 | 8.2 |
Sales | (0.7) | (0.2) | (0.9) | (0.5) |
Issuances | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Purchases, sales, issuances and settlements, net | 18.3 | 8 | 26 | 7.7 |
Non-agency residential mortgage-backed securities | ||||
Assets: | ||||
Purchases | 0 | 6.5 | ||
Sales | (0.1) | (0.5) | ||
Issuances | 0 | 0 | ||
Settlements | 0 | 0 | ||
Purchases, sales, issuances and settlements, net | (0.1) | 6 | ||
Commercial mortgage-backed securities | ||||
Assets: | ||||
Purchases | 6.4 | 28 | 6.4 | |
Sales | 0 | 0 | 0 | |
Issuances | 0 | 0 | 0 | |
Settlements | 0 | 0 | 0 | |
Purchases, sales, issuances and settlements, net | 0 | 6.4 | 28 | 6.4 |
Total fixed maturities, available for sale | ||||
Assets: | ||||
Purchases | 28.3 | 33.1 | 85.6 | 33.1 |
Sales | (7.4) | (0.2) | (12.6) | (0.6) |
Issuances | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Purchases, sales, issuances and settlements, net | 20.9 | 32.9 | 73 | 32.5 |
Equity securities - corporate securities | ||||
Assets: | ||||
Purchases | 67 | 0.2 | ||
Sales | (3.1) | 0 | ||
Issuances | 0 | 0 | ||
Settlements | 0 | 0 | ||
Purchases, sales, issuances and settlements, net | 0 | 0 | 63.9 | 0.2 |
Trading securities - non-agency residential mortgage-backed securities | ||||
Assets: | ||||
Purchases | 0 | 0 | ||
Sales | (0.7) | (1.8) | ||
Issuances | 0 | 0 | ||
Settlements | 0 | 0 | ||
Purchases, sales, issuances and settlements, net | 0 | $ (0.7) | 0 | $ (1.8) |
Other invested assets - residual tranches | ||||
Assets: | ||||
Purchases | 1.6 | 2.8 | ||
Sales | 0 | 0 | ||
Issuances | 0 | 0 | ||
Settlements | 0 | 0 | ||
Purchases, sales, issuances and settlements, net | $ 1.6 | $ 2.8 |
FAIR VALUE MEASUREMENTS-CHANGES
FAIR VALUE MEASUREMENTS-CHANGES IN VALUE OF EMBEDDED DERIVATIVES (Details) - Fair Value, Inputs, Level 3 - Fixed Index Annuity Products - Fair Value, Measurements, Recurring - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Liabilities: | ||||
Balance at beginning of the period | $ 1,371 | $ 1,695 | $ 1,724.1 | $ 1,644.5 |
Premiums less benefits | 12 | 27.9 | 55.3 | 71.3 |
Change in fair value, net | (129.1) | (18.7) | (525.5) | (11.6) |
Balance at end of the period | $ 1,253.9 | $ 1,704.2 | $ 1,253.9 | $ 1,704.2 |
FAIR VALUE MEASUREMENTS - FAI_2
FAIR VALUE MEASUREMENTS - FAIR VALUE INPUTS (Details) $ in Millions | Sep. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) |
Fair Value, Assets on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Equity securities - corporate securities | $ 135.8 | $ 131.1 |
Significant unobservable inputs (Level 3) | ||
Fair Value, Assets on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total assets carried at fair value by category | $ 329.9 | $ 170.4 |
Significant unobservable inputs (Level 3) | Market comparables | EBITDA multiples | Weighted Average | ||
Fair Value, Assets on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Unobservable inputs, equity securities | 8 | |
Significant unobservable inputs (Level 3) | Recovery method | Percent of recovery expected | Minimum | ||
Fair Value, Assets on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Unobservable inputs, fixed maturities | 0 | |
Unobservable inputs, equity securities | 0 | 0 |
Significant unobservable inputs (Level 3) | Recovery method | Percent of recovery expected | Maximum | ||
Fair Value, Assets on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Unobservable inputs, fixed maturities | 1 | |
Unobservable inputs, equity securities | 1 | 1 |
Significant unobservable inputs (Level 3) | Recovery method | Percent of recovery expected | Weighted Average | ||
Fair Value, Assets on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Unobservable inputs, fixed maturities | 1 | |
Unobservable inputs, equity securities | 1 | 1 |
Significant unobservable inputs (Level 3) | Unadjusted third-party price source | ||
Fair Value, Assets on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Other assets | $ 222.9 | $ 132.4 |
Significant unobservable inputs (Level 3) | Discounted projected embedded derivatives | ||
Fair Value, Assets on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Embedded derivatives related to fixed index annuity products | $ 1,253.9 | $ 1,724.1 |
Significant unobservable inputs (Level 3) | Discounted projected embedded derivatives | Discount margins/rates | Minimum | ||
Fair Value, Assets on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Unobservable inputs, liabilities | 0.0323 | 0.0031 |
Significant unobservable inputs (Level 3) | Discounted projected embedded derivatives | Discount margins/rates | Maximum | ||
Fair Value, Assets on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Unobservable inputs, liabilities | 0.0555 | 0.0318 |
Significant unobservable inputs (Level 3) | Discounted projected embedded derivatives | Discount margins/rates | Weighted Average | ||
Fair Value, Assets on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Unobservable inputs, liabilities | 0.0443 | 0.0189 |
Significant unobservable inputs (Level 3) | Discounted projected embedded derivatives | Projected portfolio yields | Minimum | ||
Fair Value, Assets on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Unobservable inputs, liabilities | 0.0398 | 0.0398 |
Significant unobservable inputs (Level 3) | Discounted projected embedded derivatives | Projected portfolio yields | Maximum | ||
Fair Value, Assets on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Unobservable inputs, liabilities | 0.0437 | 0.0437 |
Significant unobservable inputs (Level 3) | Discounted projected embedded derivatives | Projected portfolio yields | Weighted Average | ||
Fair Value, Assets on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Unobservable inputs, liabilities | 0.0399 | 0.0399 |
Significant unobservable inputs (Level 3) | Discounted projected embedded derivatives | Surrender rates | Minimum | ||
Fair Value, Assets on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Unobservable inputs, liabilities | 0.0150 | 0.0150 |
Significant unobservable inputs (Level 3) | Discounted projected embedded derivatives | Surrender rates | Maximum | ||
Fair Value, Assets on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Unobservable inputs, liabilities | 0.2640 | 0.2640 |
Significant unobservable inputs (Level 3) | Discounted projected embedded derivatives | Surrender rates | Weighted Average | ||
Fair Value, Assets on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Unobservable inputs, liabilities | 0.0900 | 0.0900 |
Significant unobservable inputs (Level 3) | Corporate securities | Discounted cash flow analysis | ||
Fair Value, Assets on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Fixed maturities, available for sale | $ 2.9 | $ 0.1 |
Significant unobservable inputs (Level 3) | Corporate securities | Discounted cash flow analysis | Discount margins/rates | Minimum | ||
Fair Value, Assets on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Unobservable inputs, fixed maturities | 0.0253 | |
Significant unobservable inputs (Level 3) | Corporate securities | Discounted cash flow analysis | Discount margins/rates | Maximum | ||
Fair Value, Assets on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Unobservable inputs, fixed maturities | 0.0401 | |
Significant unobservable inputs (Level 3) | Corporate securities | Discounted cash flow analysis | Discount margins/rates | Weighted Average | ||
Fair Value, Assets on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Unobservable inputs, fixed maturities | 0.0256 | 0.0449 |
Significant unobservable inputs (Level 3) | Corporate securities | Unadjusted purchase price | ||
Fair Value, Assets on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Fixed maturities, available for sale | $ 10.5 | $ 12.5 |
Significant unobservable inputs (Level 3) | Corporate securities | Recovery method | ||
Fair Value, Assets on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Fixed maturities, available for sale | 2.3 | |
Significant unobservable inputs (Level 3) | Asset-backed securities | Discounted cash flow analysis | ||
Fair Value, Assets on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Fixed maturities, available for sale | $ 18.8 | $ 11.6 |
Significant unobservable inputs (Level 3) | Asset-backed securities | Discounted cash flow analysis | Discount margins/rates | ||
Fair Value, Assets on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Unobservable inputs, fixed maturities | 0.0150 | |
Significant unobservable inputs (Level 3) | Asset-backed securities | Discounted cash flow analysis | Discount margins/rates | Minimum | ||
Fair Value, Assets on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Unobservable inputs, fixed maturities | 0.0208 | |
Significant unobservable inputs (Level 3) | Asset-backed securities | Discounted cash flow analysis | Discount margins/rates | Maximum | ||
Fair Value, Assets on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Unobservable inputs, fixed maturities | 0.0358 | |
Significant unobservable inputs (Level 3) | Asset-backed securities | Discounted cash flow analysis | Discount margins/rates | Weighted Average | ||
Fair Value, Assets on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Unobservable inputs, fixed maturities | 0.0280 | |
Significant unobservable inputs (Level 3) | Equity Securities | Unadjusted purchase price | ||
Fair Value, Assets on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Equity securities - corporate securities | $ 11.7 | $ 8.2 |
Significant unobservable inputs (Level 3) | Equity Securities | Market comparables | ||
Fair Value, Assets on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Equity securities - corporate securities | 63 | |
Significant unobservable inputs (Level 3) | Equity Securities | Recovery method | ||
Fair Value, Assets on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Equity securities - corporate securities | $ 0.1 | $ 3.3 |