Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2019 | |
Cover [Abstract] | |
Entity Registrant Name | MEMBERS Life Insurance Co |
Entity Central Index Key | 0001562577 |
Document Type | S-1 |
Document Period End Date | Dec. 31, 2019 |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | false |
Emerging Growth Company | false |
Amendment Flag | false |
Balance Sheets
Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Investments | ||
Debt securities, available for sale, at fair value (amortized cost 2019- $34,434; 2018 - $29,856) | $ 35,744 | $ 29,569 |
Total investments | 35,744 | 29,569 |
Cash and cash equivalents | 29,037 | 24,912 |
Accrued investment income | 358 | 304 |
Reinsurance recoverable from affiliate | 23,927 | 24,034 |
Assets on deposit | 4,274,964 | 3,138,096 |
Premiums receivable, net | 11 | 13 |
Net deferred tax asset | 6 | 375 |
Receivable from affiliate | 484 | 5,027 |
Other assets and receivables | 1,294 | 819 |
Federal income taxes recoverable from affiliate | 3,493 | 2,889 |
Separate account assets | 169,654 | 103,205 |
Total assets | 4,538,972 | 3,329,243 |
Liabilities | ||
Claim and policy benefit reserves - life and health | 22,551 | 26,836 |
Policyholder account balances | 4,281,679 | 3,142,077 |
Payables to affiliates | 3,533 | 3,006 |
Accounts payable and other liabilities | 19,023 | 14,199 |
Separate account liabilities | 169,654 | 103,205 |
Total liabilities | 4,496,440 | 3,289,323 |
Commitments and contingencies (Note 11) | ||
Stockholder's equity | ||
Common stock, $5 par value, authorized 1,000 shares; issued and outstanding 1,000 shares | 5,000 | 5,000 |
Additional paid in capital | 31,153 | 31,153 |
Accumulated other comprehensive income (loss), net of tax expense (benefit) (2019 - $275; 2018 - ($61)) | 1,035 | (226) |
Retained earnings | 5,344 | 3,993 |
Total stockholder's equity | 42,532 | 39,920 |
Total liabilities and stockholder's equity | $ 4,538,972 | $ 3,329,243 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Available-for-sale debt securities, amortized cost basis | $ 34,434 | $ 29,856 |
Common stock, par value (in dollars per shares) | $ 5 | $ 5 |
Common stock, authorized | 1,000 | 1,000 |
Common stock, issued | 1,000 | 1,000 |
Common stock, outstanding | 1,000 | 1,000 |
Tax expense (benefit) in accumulated other comprehensive income | $ 275 | $ (61) |
Statements of Operations and Co
Statements of Operations and Comprehensive Income (Loss) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | |||
Net investment income | $ 1,677 | $ 762 | $ 517 |
Net realized investment gains (losses) | 17 | (17) | |
Other income | 38 | 18 | 3,996 |
Total revenues | 1,732 | 763 | 4,513 |
Benefits and expenses | |||
Life and health insurance claims and benefits, net | 2 | ||
Interest credited to policyholder account balances, net | 40 | (15) | |
Operating and other expenses | 343 | 151 | 1,709 |
Total benefits and expenses | 383 | 136 | 1,711 |
Income before income taxes | 1,349 | 627 | 2,802 |
Income tax expense (benefit) | (2) | (182) | 723 |
Net income | 1,351 | 809 | 2,079 |
Change in unrealized gains (losses), net of tax expense (benefit) (2019 - $339; 2018 - ($50); 2017 - $181) | 1,268 | (188) | 334 |
Reclassification adjustment for (gains) included in net income, net of tax (benefit) (2019 - ($3); 2018 - ($14)) | (7) | (52) | |
Other comprehensive income (loss) | 1,261 | (240) | 334 |
Total comprehensive income | $ 2,612 | $ 569 | $ 2,413 |
Statements of Operations and _2
Statements of Operations and Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | |||
Tax expense (benefit) portion of change in unrealized gains (losses) | $ 339 | $ (50) | $ 181 |
Tax Expense (Benefit), Portion of reclassification adjustment for (gains) | $ (3) | $ (14) |
Statements of Stockholder's Equ
Statements of Stockholder's Equity - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Retained Earnings [Member] | Total |
Balance, Beginning at Dec. 31, 2016 | $ 5,000 | $ 10,500 | $ (323) | $ 8,108 | $ 23,285 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 2,079 | 2,079 | |||
Other comprehensive income (loss) | 334 | 334 | |||
Dividend to parent | (7,000) | (7,000) | |||
Balance, End at Dec. 31, 2017 | 5,000 | 10,500 | 11 | 3,187 | 18,698 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 809 | 809 | |||
Other comprehensive income (loss) | (240) | (240) | |||
Capital contribution | 20,653 | 20,653 | |||
Cumulative effect of reclassification for stranded tax effects | 3 | (3) | |||
Balance, End at Dec. 31, 2018 | 5,000 | 31,153 | (226) | 3,993 | 39,920 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 1,351 | 1,351 | |||
Other comprehensive income (loss) | 1,261 | 1,261 | |||
Balance, End at Dec. 31, 2019 | $ 5,000 | $ 31,153 | $ 1,035 | $ 5,344 | $ 42,532 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities: | |||
Net income | $ 1,351 | $ 809 | $ 2,079 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Net realized investment (gains) losses | (17) | 17 | |
Interest credited to policyholder account balances | 40 | (15) | |
Deferred income taxes | 34 | (262) | 241 |
Amortization of bond premium and discount | 5 | 15 | 19 |
Amortization and write off of deferred charges | 15 | 16 | 20 |
Changes in other assets and liabilities | |||
Accrued investment income | (55) | (20) | 3 |
Reinsurance recoverable from affiliate | (167) | (333) | (590) |
Premiums receivable | 2 | (1) | 3 |
Receivable from affiliate and other assets | (2,013) | 2,767 | 3,228 |
Federal income taxes recoverable from affiliate | (604) | (418) | (835) |
Claim and policy benefit reserves - life and health | 1,782 | 3,784 | 1,546 |
Payables to affiliates and other liabilities | 5,348 | (1,821) | 59 |
Net cash provided by operating activities | 5,721 | 4,538 | 5,773 |
Cash flows from investing activities: | |||
Purchases of debt securities, available for sale | (4,994) | ||
Proceeds on sale or maturity of debt securities | 430 | 1,268 | 367 |
Net cash provided by investing activities | (4,564) | 1,268 | 367 |
Cash flows from financing activities: | |||
Dividend to parent | (7,000) | ||
Policyholder account deposits | 943,662 | 781,815 | 719,883 |
Policyholder account withdrawals | (146,919) | (88,266) | (50,481) |
Assets on deposit - deposits | (939,940) | (780,777) | (718,797) |
Assets on deposit - withdrawals | 146,165 | 87,895 | 49,964 |
Change in bank overdrafts | (1) | (1) | |
Net cash provided by (used in) financing activities | 2,968 | 666 | (6,432) |
Change in cash and cash equivalents | 4,125 | 6,472 | (292) |
Cash and cash equivalents at beginning of year | 24,912 | 18,440 | 18,732 |
Cash and cash equivalents at end of year | 29,037 | 24,912 | 18,440 |
Supplemental disclosure of cash information: | |||
Net cash paid to affiliate for income taxes | 568 | 498 | 1,316 |
Non-cash receipt of securities as capital contribution from parent | $ 20,653 |
Nature of Business
Nature of Business | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business | Note 1: Nature of Business MEMBERS Life Insurance Company (“MLIC” or the “Company”) is a life and health insurance stock company organized under the laws of Iowa and a wholly-owned subsidiary of CUNA Mutual Investment Corporation (“CMIC”). CMIC is organized under the laws of Wisconsin and is a wholly-owned subsidiary of CMFG Life Insurance Company (“CMFG Life”), an Iowa life insurance company. CMFG Life and its affiliated companies primarily sell insurance and other products to credit unions and their members. The Company’s ultimate parent is CUNA Mutual Holding Company (“CMHC”), a mutual insurance holding company organized under the laws of Iowa. MLIC began selling a single premium deferred modified guaranteed index annuity in 2019, flexible premium deferred variable and index linked annuity contracts in 2016 and single premium deferred index annuity contracts in 2013. All products are sold to consumers, including credit union members, through the face-to-face distribution channel. Prior to 2013, MLIC did not actively market new business; it primarily serviced existing blocks of individual and group life policies. See Note 7, Reinsurance, for information on the Company’s reinsurance agreements. MLIC is authorized to sell life, health and annuity policies in all states in the U.S. and the District of Columbia, except New York. The following table identifies states with premiums greater than 5% of total direct premium and states with deposits on annuity contracts greater than 5% of total deposits: Deposits on Direct Life and Health Premium Annuity Contracts 2019 2018 2017 2019 2018 2017 Michigan 60 % 62 % 62 % 6 % 7 % 9 % Texas 25 24 24 5 * 5 California 5 5 5 * * 6 Pennsylvania * * * 7 8 8 Iowa * * * 5 6 7 Florida * * * 5 6 * Indiana * * * * 5 6 Wisconsin * * * 6 5 6 *Less than 5% No other state represents more than 5% of the Company’s premiums or deposits for any year in the three years ended December 31, 2019. As discussed in Note 6, CMFG Life provides significant services required in the conduct of the Company’s operations. Management believes allocations of expenses are reasonable, but the results of the Company’s operations may have materially differed from the results reflected in the accompanying financial statements if the Company did not have this relationship. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2: Summary of Significant Accounting Policies Basis of Presentation The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and in some cases the difference could be material. Investment valuations, embedded derivatives, deferred tax asset valuation reserves, and claim and policy benefit reserves are most affected by the use of estimates and assumptions. Segment Reporting The Company is currently managed as two reportable business segments, (1) life and health and (2) annuities. The Company’s life and health segment includes individual and group life policies that the Company no longer actively markets. The annuities segment includes its single premium deferred index annuity contracts, single premium deferred modified guaranteed index annuity contracts and flexible premium deferred variable and index linked annuity contracts. See Note 7, Reinsurance, for information on the Company’s reinsurance agreements, which impact the financial statement presentation of these segments. Investments Debt securities: Unrealized gains and losses on investments in debt securities, net of deferred federal income taxes, are included in accumulated other comprehensive income (loss) as a separate component of stockholder’s equity. Policy loans: Net investment income: Net realized gains and losses: Assets on Deposit Assets on deposit represent the amount of policyholder account balances related to reinsurance of the single premium deferred index annuity and single premium deferred modified guaranteed index annuity and risk control accounts of the flexible premium deferred variable and index linked annuity contracts (investment-type contracts) that are ceded to CMFG Life. Assets on deposit are accounted for on a basis consistent with accounting for the underlying investment-type contracts; therefore, the Company accounts for the reinsurance of these contracts using the deposit method of accounting consistent with the terms of the reinsurance agreement with CMFG Life. The related contract charges and interest credited to policyholder account balances in the statements of operations and comprehensive income (loss) are reported net of the amounts ceded under the agreement. See Note 7 for a further discussion of the ceding and reinsurance agreements. Derivative Financial Instruments The Company issues single premium deferred index annuity, single premium deferred modified guaranteed index annuity and flexible premium deferred variable and index linked annuity contracts that contain embedded derivatives. Derivatives embedded within non-derivative host contracts are separated from the host instrument when the embedded derivative is not clearly and closely related to the host instrument. Such embedded derivatives are recorded at fair value, and they are reported as part of assets on deposit and policyholder account balances in the balance sheets, with the change in the value being recorded in net realized investment gains. See Note 3, Investments-Embedded Derivatives for additional information. Changes in the embedded derivatives are included with policyholder account balances and assets on deposits withdrawal and deposits in the financing section of the statements of cash flows. Changes in the fair value of the embedded derivative in assets on deposit offset changes in the fair value of the embedded derivative in policyholder account balances; both of these changes are included in net realized investment gains and are ceded as part of the ceding and reinsurance agreements. Accretion of the interest on assets on deposit offsets accretion of the interest on the host contract; both of these amounts are included in interest credited on policyholder account balances and are ceded pursuant to the ceding and reinsurance agreements. Cash and Cash Equivalents Cash and cash equivalents include unrestricted deposits in financial institutions with maturities of 90 days or less. Cash and cash equivalents are stated at amortized cost, which approximates fair value. The Company recognizes a liability in accounts payable and other liabilities for the amount of checks issued in excess of its current cash balance. The change in this overdraft amount is recognized as a financing activity in the Company’s statement of cash flows. Variable Interest Entities A variable interest entity (“VIE”) is a legal entity that does not have sufficient equity at risk to finance its activities without additional subordinated financial support or is structured such that equity investors lack the ability to make significant decisions relating to the entity’s operations through voting rights or do not substantively participate in the gains and losses of the entity. Consolidation of a VIE by its primary beneficiary is not based on majority voting interest, but is based on a review of the VIE’s capital structure, contractual relationships and terms, nature of the VIE’s operations and purpose, nature of the VIE’s interests issued and the Company’s involvement with the entity. When assessing the need to consolidate a VIE, the Company evaluates the design of the VIE as well as the related exposure to the variable interest holders. The primary beneficiary is the entity that has both the power to direct the activities of the VIE that most significantly affect the entity’s economic performance and the obligation to absorb losses or the right to receive benefits that could be potentially significant to the VIE. While also considering these factors, the consolidation conclusion depends on the breadth of the Company’s decision-making ability and the Company’s ability to influence activities that significantly affect the economic performance of the VIE. Unconsolidated VIEs: Recognition of Insurance Revenue and Related Benefits Term-life and whole-life insurance premiums are recognized as premium income when due. Policy benefits for these products are recognized in relation to the premiums so as to result in the recognition of profits over the expected lives of the policies and contracts. Policies not subject to significant mortality or longevity risk, such as the Company’s single premium deferred index annuity, single premium deferred modified guaranteed index annuity and flexible premium deferred variable and index linked annuity contracts, are considered investment-type contracts. Amounts collected on these products, with the exception of the variable annuity component of the flexible premium deferred variable and index linked annuity, are recorded as increases in policyholder account balances. The variable annuity component of the flexible premium deferred variable and index linked annuity is recorded in separate account assets and liabilities. Revenues from investment-type contracts principally consist of net investment income and contract charges such as expense and surrender charges. Expenses for investment-type contracts consist of interest credited to contracts, benefits incurred in excess of related policyholder account balances and policy maintenance costs. Because the Company has entered into an agreement with CMFG Life to cede 100% of this business, these revenues and expenses are ceded and do not impact the statement of operations and comprehensive income (loss). See Note 7, Reinsurance for additional information on this agreement. Other Income / Operating and Other Expenses Other income in 2019 and 2018 represents advisory fees based on a percentage of assets under management. Other income in 2017 includes legal settlements received on structured security investments that had previously been sold. There were no legal settlements in 2019 and 2018. Operating and other expenses in 2017 include legal expenses related to settlements received. Deferred Policy Acquisition Costs The costs of acquiring insurance business that are directly related to the successful acquisition of new and renewal business are deferred to the extent that such costs are expected to be recoverable from future profits. Such costs principally include commissions and sales costs, premium taxes, and certain policy issuance and underwriting costs. Costs deferred on term-life and whole-life insurance products, deferred policy acquisition costs (“DAC”), are amortized in proportion to the ratio of the annual premium to the total anticipated premiums generated. Due to the age of the life insurance policies, all DAC has been fully amortized as of December 31, 2019 and 2018 and there was no amortization expense in 2019, 2018 or 2017. Acquisition costs on the Company’s single premium deferred index annuity, single premium deferred modified guaranteed index annuity contracts and flexible premium deferred variable and index linked annuity contracts are reimbursed through a ceding commission by CMFG Life, which assumes all deferrable costs as part of its agreement to assume 100% of this business from the Company. See Note 7, Reinsurance for additional information on these agreements. Accordingly, there is no DAC asset associated with annuities. Claim and Policy Benefits Reserves – Life and Health Life and health claim and policy benefit reserves consist principally of future policy benefit reserves and reserves for estimates of future payments on incurred claims reported but not yet paid and unreported incurred claims. Estimates for future payments on incurred claims are developed using actuarial principles and assumptions based on past experience adjusted for current trends. Any change in the probable ultimate liabilities is reflected in net income in the period in which the change is determined. When actual experience indicates that existing contract liabilities, together with the present value of future gross premiums will not be sufficient to recover the present value of future benefits or recover unamortized deferred acquisition costs, a premium deficiency will be recognized by either a reduction in unamortized acquisition costs or an increase in the liability for future benefits. The liability for premium deficiency is insignificant as of December 31, 2019 and 2018. Additionally, the liability for future policy benefits may not be deficient in the aggregate to trigger a premium deficiency, but the pattern of earnings may be such that profits are expected to be recognized in early years followed by losses in later years. In those situations, the liability for future benefits will be increased to offset losses that would be recognized in later years. The Company recorded a liability of $153 as of December 31, 2019 and $138 as of December 31, 2018 for the profits that are expected to be followed by losses in the future. There was no liability recorded as of December 31, 2017. Policyholder Account Balances The single premium deferred index annuities, single premium deferred modified guaranteed index annuities and risk control accounts the flexible premium variable and index linked deferred annuities are included in policyholder account balances. These products have two risk control accounts, referred to as the Secure and Growth Accounts; the Secure Account has a yearly credited interest rate floor of 0% and the yearly Growth Account floor is -10%. The Secure and Growth Accounts both have credited interest rate caps that vary based on the issuance date of the contract. Interest is credited at the end of each contract year during the selected index term based on the allocation between risk control accounts and the performance of an external index (reference index) during that contract year. For the single premium deferred index annuity, the Company offers one reference index, which is the S&P 500 Index. For the single premium deferred modified guaranteed index annuity, the Company offers three reference indices, which are the S&P 500 Index, the MSCI EAFE Index and the Russell 2000 Price Return Index. For the flexible premium deferred variable and index linked annuity, the Company offers two reference indices, which are the S&P 500 Index and the MSCI EAFE Index. Policyholders are able to allocate funds in both the Secure and Growth Accounts for the available indices. At the end of the initial index term, only the Secure Account is available as an option to the policyholder. The average annualized credited rate for the single premium deferred index annuity was 1.14%, 1.50% and 1.44% in 2019, 2018 and 2017, respectively. The average annualized credited rate for the single premium deferred modified guaranteed index annuity was 1.83% in 2019. The average annualized credited rate for the risk control accounts of the flexible premium variable and index linked deferred annuity was 2.51%, 1.20% and 1.59% in 2019, 2018 and 2017, respectively. Interest credited does not represent the actual return to a policyholder. The Company recognizes a liability at the stated account value for policyholder deposits that are not subject to significant policyholder mortality or longevity risk and for universal life-type policies. The account value equals the sum of the original deposit and accumulated interest, less any withdrawals and expense charges. The average credited rate was 4.5% in 2019, 2018 and 2017. The future minimum guaranteed interest rate during the life of the contracts is 4.5%. Accounts Payable and Other Liabilities The Company issues the single premium deferred index annuity contracts, single premium deferred modified guaranteed index annuity contracts and flexible premium deferred variable and index linked annuity contracts on the 10th and 25th of each month. The Company recognizes a liability on contracts for which it has received cash, but has not issued a contract. Reinsurance Reinsurance premiums, claims and benefits, commission expense reimbursements, and reserves related to reinsured business ceded are accounted for on a basis consistent with the accounting for the underlying direct policies that have been ceded and the terms of the reinsurance contracts. Premiums and insurance claims and benefits in the statements of operations and comprehensive income (loss) are reported net of the amounts ceded to other companies under such reinsurance contracts. Ceded insurance reserves and ceded benefits paid are included in reinsurance recoverables along with certain ceded policyholder account balances, which include mortality risk. A prepaid reinsurance asset is also recorded for the portion of unearned premiums related to ceded policies. Separate Accounts Separate accounts represent customer accounts related to the variable annuity component of the single premium deferred modified guaranteed index annuity and flexible premium deferred variable and index linked annuity contracts issued by the Company, where investment income and investment gains and losses accrue directly to the contract holders who bear the investment risk. Contract holders are able to invest in investment funds managed for their benefit. All of the separate account assets are invested in unit investment trusts that are registered with the Securities and Exchange Commission (“SEC”) as of December 31, 2019. Separate account assets are legally segregated and may only be used to settle separate account liabilities. Separate account assets are carried at fair value, which is based on daily quoted net asset values at which the Company could transact on behalf of the contract holder. Separate account liabilities are equal to the separate account assets and represent contract holders’ claims to the related assets. Contract holder deposits to and withdrawals from the separate accounts are recorded directly to the separate account assets and liabilities and are not included in the Company’s statements of operations and comprehensive income (loss). Charges made by the Company to the contract holders’ balances include fees for maintenance, administration, cost of insurance, and surrenders of contracts prior to the contractually specified dates. Because the Company has entered into an agreement with CMFG Life to cede 100% of this business, these revenues are ceded and do not impact the statement of operations and comprehensive income (loss). See Note 7, Reinsurance for additional information on this agreement. Income Tax The Company recognizes taxes payable or refundable and deferred taxes for the tax consequences of differences between the financial reporting and tax basis of assets and liabilities. Deferred tax assets and liabilities are measured by applying the enacted tax rates to the difference between the financial statement and tax basis of assets and liabilities. The Company records current tax benefits and deferred tax assets utilizing a benefits-for-loss approach. Under this approach, current benefits are realized and deferred tax assets are considered realizable by the Company when realized or realizable by the consolidated group of which the Company is a member even if the benefits would not be realized on a stand-alone basis. The Company records a valuation allowance for deferred tax assets if it determines it is more likely than not that the asset will not be realized by the consolidated group. Deferred income tax assets can be realized through future earnings, including, but not limited to, the generation of future income, reversal of existing temporary differences and available tax planning strategies. The Company is subject to tax-related audits. These audits may result in additional tax assets or liabilities. In establishing tax liabilities, the Company determines whether a tax position is more likely than not to be sustained under examination by the appropriate taxing authority. Tax positions that do not meet the more likely than not standard are not recognized. Tax positions that meet this standard are recognized in the financial statements within net deferred tax assets or liabilities or federal income taxes recoverable or payable. Accounting Standards Updates Pending Adoption In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Measurement of Credit Losses of Financial Instruments (“ASU 2016-13”) with an effective date in 2020 for public business entities and 2023 for others. The guidance for credit losses was further amended by ASU No. 2019-04 and 2019-05. The new standard replaces the existing incurred loss recognition model with an expected credit loss recognition model. The objective of the expected credit loss model is for the Company to recognize its estimate of expected credit losses for affected financial assets in a valuation allowance deducted from the amortized cost basis of the related financial assets that results in presenting the net carrying value of the financial assets at the amount expected to be collected. The Company must consider all available relevant information when estimating expected credit losses, including details about past events, current conditions, and reasonable and supportable forecasts over the contractual life of an asset. Financial assets may be evaluated individually or on a pooled basis when they share similar risk characteristics. The measurement of credit losses for available-for-sale debt securities measured at fair value is not affected, except that credit losses recognized are limited to the amount by which fair value is below amortized cost and the carrying value adjustment is recognized through an allowance and not as a direct write-down. The impact of ASU 2016-13 will not be material. In August 2018, the FASB adopted ASU No. 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts ● Under current guidance, the liability for future policy benefits for long-duration products is established based on assumptions set at issue which are not changed unless there is a premium deficiency. Under ASU 2018-12, these assumptions, which include mortality, morbidity, persistency, expenses, and the discount rate, must be reviewed for changes at least annually. The existing guidance is retained for participating policies. When assumptions other than the discount rate are changed, the liability is recomputed and a cumulative catch-up adjustment is recorded in the current year income statement. The discount rate, which is based on the yield of an upper-medium-grade fixed income instrument, must be updated each reporting period; changes in the liability resulting from the discount rate are recorded in other comprehensive income (loss). ● The liability for future policy benefits can no longer include a provision for adverse deviation except for participating policies. ● Because liability assumptions are updated periodically, the test for premium deficiency is no longer required for nonparticipating traditional and limited payment contracts. ● ASU 2018-12 introduces the concept of market risk benefits for product features that protect the contract holder from capital market risk, which must be accounted for at fair value. ● Deferred acquisition costs will generally be amortized to expense on a constant level basis, either individually or grouped consistent with reserve cohorts, over the expected term of the contracts inforce. Amortization based on estimated gross profits or gross margins will be eliminated. The deferred policy acquisition costs asset does not need to be tested for impairment, no interest is accreted, and shadow adjustments are no longer required. ● Insurers must provide disclosures that allow financial statement users to understand the amount, timing, and uncertainty of future cash flows arising from the insurance liabilities. The Company is currently evaluating the impact of ASU 2018-12 on its financial statements. The future impact may be material. |
Investments
Investments | 12 Months Ended |
Dec. 31, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Note 3: Investments Debt Securities The amortized cost, gross unrealized gains and losses, and estimated fair values, as reported on the balance sheet, of debt securities at December 31, 2019 are as follows: Amortized Gross Unrealized Estimated Cost Gains Losses Fair Value U.S. government and agencies $ 8,739 $ 454 $ — $ 9,193 Domestic corporate securities 16,478 757 — 17,235 Residential mortgage-backed securities 3,217 17 — 3,234 Other structured securities 2,001 — — 2,001 Foreign corporate securities 3,999 82 — 4,081 Total debt securities $ 34,434 $ 1,310 $ — $ 35,744 The amortized cost, gross unrealized gains and losses, and estimated fair values, as reported on the balance sheet, of debt securities at December 31, 2018 are as follows: Amortized Gross Unrealized Estimated Cost Gains Losses Fair Value U.S. government and agencies $ 8,744 $ — $ (521 ) $ 8,223 Domestic corporate securities 16,476 188 (9 ) 16,655 Residential mortgage-backed securities 639 14 — 653 Foreign corporate securities 3,997 44 (3 ) 4,038 Total debt securities $ 29,856 $ 246 $ (533 ) $ 29,569 No investments were non-income producing during the years ended December 31, 2019 or 2018. The amortized cost and estimated fair values of investments in debt securities at December 31, 2019, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Because of the potential for prepayment on residential mortgage-backed securities, such securities have not been displayed in the table below by contractual maturity. Amortized Estimated Cost Fair Value Due in one year or less $ 6,495 $ 6,554 Due after one year through five years 10,990 11,511 Due after five years through ten years 2,993 3,250 Due after ten years 8,738 9,194 Residential mortgage-backed securities 3,217 3,234 Other structured securities 2,001 2,001 Total debt securities $ 34,434 $ 35,744 Net Investment Income Sources of investment income for the years ended December 31 are summarized as follows: 2019 2018 2017 Gross investment income: Debt securities $ 1,022 $ 368 $ 321 Cash and cash equivalents 709 452 217 Total gross investment income 1,731 820 538 Investment expenses (54 ) (58 ) (21 ) Net investment income $ 1,677 $ 762 $ 517 Net Realized Investment Gains Proceeds from the sale of debt securities were $338 and $651 in 2019 and 2018, respectively. There were no sales or transfers of debt securities in 2017 that resulted in a realized investment gain or loss. Other-Than-Temporary Investment Impairments Investment securities are reviewed for OTTI on an ongoing basis. The Company creates a watchlist of securities based largely on the fair value of an investment security relative to its cost basis. When the fair value drops below the Company’s cost, the Company monitors the security for OTTI. The determination of OTTI requires significant judgment on the part of the Company and depends on several factors, including, but not limited to: ● The existence of any plans to sell the investment security. ● The extent to which fair value is less than book value. ● The underlying reason for the decline in fair value (credit concerns, interest rates, etc.). ● The financial condition and near term prospects of the issuer/borrower, including the ability to meet contractual obligations, relevant industry trends and conditions. ● The Company’s intent and ability to retain the investment for a period of time sufficient to allow for an anticipated recovery in fair value. ● The Company’s ability to recover all amounts due according to the contractual terms of the agreements. ● The Company’s collateral position in the case of bankruptcy or restructuring. A debt security is considered other-than-temporarily impaired when the fair value is less than the amortized cost basis and its value is not expected to recover through the Company's anticipated holding period of the security. If a credit loss exists, but the Company does not intend to sell the impaired debt security and is not more likely than not to be required to sell before recovery, it is required to bifurcate the impairment into the loss that is attributable to credit and non-credit related risk. The credit portion of the OTTI is the difference between the present value of the expected future cash flows and amortized cost. Only the estimated credit loss amount is recognized in earnings, with the remainder of the loss amount recognized in other comprehensive income (loss). If the Company intends to sell, at the time this determination is made, the Company records a realized loss equal to the difference between the amortized cost and fair value. The fair value of the other-than-temporarily impaired security becomes its new cost basis. In determining whether an unrealized loss is expected to be other than temporary, the Company considers, among other factors, any plans to sell the security, the severity of impairment, financial position of the issuer, recent events affecting the issuer’s business and industry sector, credit ratings, and the ability of the Company to hold the investment until the fair value has recovered at least its cost basis. For securitized debt securities, the Company considers factors including residential property changes in value that vary by property type and location and average cumulative collateral loss rates that vary by vintage year. These assumptions require the use of significant management judgment and include the probability of issuer default and estimates regarding timing and amount of expected recoveries. In addition, projections of expected future debt security cash flows may change based upon new information regarding the performance of the issuer and/or underlying collateral. For certain securitized financial assets with contractual cash flows, the Company is required to periodically update its best estimate of cash flows over the life of the security. If the fair value of a securitized financial asset is less than its cost or amortized cost and there has been a decrease in the present value of the estimated cash flows since the last revised estimate, considering both timing and amount, an OTTI charge is recognized. The Company also considers its intent and ability to retain a temporarily impaired security until recovery. Estimating future cash flows involves judgment and includes both quantitative and qualitative factors. Such determinations incorporate various information and assessments regarding the future performance of the underlying collateral. In addition, projections of expected future cash flows may change based upon new information regarding the performance of the underlying collateral. Management has completed a review for other-than-temporarily impaired securities at December 31, 2019, 2018 and 2017 and recorded no OTTI. As a result of the subjective nature of these estimates, however, provisions may subsequently be determined to be necessary as new facts emerge and a greater understanding of economic trends develops. Consistent with the Company’s practices, OTTI will be recorded as appropriate and as determined by the Company’s regular monitoring procedures of additional facts. Net Unrealized Investment Gains (Losses) The components of net unrealized investment gains (losses) included in accumulated other comprehensive income (loss) at December 31 were as follows: 2019 2018 2017 Debt securities $ 1,310 $ (287 ) $ 17 Deferred income taxes (275 ) 61 (6 ) Net unrealized investment gains (losses) $ 1,035 $ (226 ) $ 11 At December 31, 2019, the Company owned no securities in an unrealized investment loss position under or over 12 months. At December 31, 2018, the Company owned three debt securities with a fair value of $10,209 in an unrealized investment loss position. Of these, one with a fair value of $8,223 had been in an unrealized loss position for twelve or more months. There was $521 in an unrealized loss position for debt securities with a loss period 12 months or greater, which represents a 6.0% price impairment. The remaining two securities had a fair value of $1,986 and had been in an unrealized loss for under 12 months. There was $12 in an unrealized loss for debt securities with a loss period less than 12 months, which represents a 0.6% price impairment. The total fair value of debt securities, which reflect an unrealized loss at December 31, 2018 and which are rated investment grade, is $10,209 or 100.0% of the total fair value of all debt securities which reflect an unrealized loss at December 31, 2018. For these purposes investment grade is defined by the Company to be securities rated BBB or greater. Embedded Derivatives The Company issues single premium deferred index annuity, single premium deferred modified guaranteed index annuity and flexible premium variable and index linked deferred annuity contracts that contain embedded derivatives. Such embedded derivatives are separated from their host contracts and recorded at fair value. The following table presents the fair value of embedded derivatives, which are reported as part of policyholder account balances in the consolidated balance sheets, as of December 31: 2019 2018 Single premium deferred index annuities $ 799,912 $ 456,088 Flexible premium variable and index linked deferred annuities 147,328 68,090 Single premium deferred modified guaranteed index annuities 4,762 — Total embedded derivatives $ 952,002 $ 524,178 The increase (decrease) in fair value related to embedded derivatives from the date of deposit was $295,733, ($45,101) and $136,078 for the years ended December 31, 2019, 2018 and 2017, respectively. Because the Company has entered into an agreement with CMFG Life to cede 100% of this business, these amounts are ceded and do not impact the statement of operations and comprehensive income (loss). Assets Designated/Securities on Deposit Iowa law requires that assets equal to a life insurer’s “legal reserve” must be designated for the Iowa Department of Commerce, Insurance Division. The legal reserve is equal to the net present value of all outstanding policies and contracts involving life contingencies. At December 31, 2019 and 2018, debt securities and cash with a carrying value of $33,566 and $27,621, respectively, were accordingly designated for Iowa. Other regulatory jurisdictions require cash and securities to be deposited for the benefit of policyholders. Pursuant to these requirements, securities with a fair value of $2,227 and $1,998 were on deposit with other regulatory jurisdictions as of December 31, 2019 and 2018, respectively. |
Fair Value
Fair Value | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value | Note 4: Fair Value The Company uses fair value measurements to record fair value of certain assets and liabilities and to estimate fair value of financial instruments not recorded at fair value but required to be disclosed at fair value. Certain financial instruments, such as insurance policy liabilities (other than investment-type contracts), are excluded from the fair value disclosure requirements. Valuation Hierarchy Fair value is defined as 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. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value of assets and liabilities into three broad levels. The Company has categorized its financial instruments, based on the degree of subjectivity inherent in the valuation technique, as follows: ● Level 1: Inputs are directly observable and represent quoted prices for identical assets or liabilities in active markets the Company has the ability to access at the measurement date. ● Level 2: All significant inputs are observable, either directly or indirectly, other than quoted prices included in Level 1, for the asset or liability. This includes: (i) quoted prices for similar instruments in active markets, (ii) quoted prices for identical or similar instruments in markets that are not active, (iii) inputs other than quoted prices that are observable for the instruments and (iv) inputs that are derived principally from or corroborated by observable market data by correlation or other means. ● Level 3: One or more significant inputs are unobservable and reflect the Company’s estimates of the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. For purposes of determining the fair value of the Company’s assets and liabilities, observable inputs are those inputs used by market participants in valuing financial instruments, which are developed based on market data obtained from independent sources. The Company uses prices and inputs that are current as of the measurement date. In some instances, valuation inputs used to measure fair value fall into different levels of the fair value hierarchy. The category level in the fair value hierarchy is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The hierarchy requires the use of market observable information when available for assessing fair value. The availability of observable inputs varies by investment. The Company has no Level 3 investments with unrealized gains or losses included in other comprehensive income (loss). Valuation Process The Company is responsible for the determination of fair value and the supporting assumptions and methodologies. The Company gains assurance on the overall reasonableness and consistent application of valuation methodologies and inputs and compliance with accounting standards through the execution of various processes and controls designed to provide assurance that the Company’s assets and liabilities are appropriately valued. The Company has policies and guidelines that require the establishment of valuation methodologies and consistent application of such methodologies. These policies and guidelines govern the use of inputs and price source hierarchies and provide controls around the valuation processes. These controls include appropriate review and analysis of prices against market activity or indicators of reasonableness, approval of price source changes, price overrides, methodology changes and classification of fair value hierarchy levels. The valuation policies and guidelines are reviewed and updated as appropriate. Transfers Between Levels There were no transfers between levels during the years ended December 31, 2019 and 2018. Fair Value Measurement – Recurring Basis The following table summarizes the Company’s assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2019. Assets, at Fair Value Level 1 Level 2 Level 3 Total Cash equivalents 1 $ 28,122 $ — $ — $ 28,122 Debt securities: U.S. government and agencies — 9,193 — 9,193 Domestic corporate securities — 17,235 — 17,235 Residential mortgage-backed securities — 3,234 — 3,234 Other structured securities — 2,001 — 2,001 Foreign corporate securities — 4,081 — 4,081 Total debt securities — 35,744 — 35,744 Derivatives embedded in assets on deposit — — 952,002 952,002 Separate account assets — 169,654 — 169,654 Total assets $ 28,122 $ 205,398 $ 952,002 $ 1,185,522 Liabilities, at Fair Value Level 1 Level 2 Level 3 Total Derivatives embedded in annuity contracts $ — $ — $ 952,002 $ 952,002 Total liabilities $ — $ — $ 952,002 $ 952,002 1 The following table summarizes the Company’s assets that are measured at fair value on a recurring basis as of December 31, 2018. Assets, at Fair Value Level 1 Level 2 Level 3 Total Cash equivalents 1 $ 21,630 $ — $ — $ 21,630 Debt securities: U.S. government and agencies — 8,223 — 8,223 Domestic corporate securities — 16,655 — 16,655 Residential mortgage-backed securities — 653 — 653 Foreign corporate securities — 4,038 — 4,038 Total debt securities — 29,569 — 29,569 Derivatives embedded in assets on deposit — — 524,178 524,178 Separate account assets — 103,205 — 103,205 Total assets $ 21,630 $ 132,774 $ 524,178 $ 678,582 Liabilities, at Fair Value Level 1 Level 2 Level 3 Total Derivatives embedded in annuity contracts $ — $ — $ 524,178 $ 524,178 Total liabilities $ — $ — $ 524,178 $ 524,178 1 The Company had no assets or liabilities that required a fair value adjustment on a non-recurring basis as of December 31, 2019 or December 31, 2018. Determination of Fair Values The Company determines the estimated fair value of its investments using primarily the market approach and the income approach. The use of quoted prices and matrix pricing or similar techniques are examples of market approaches, while the use of discounted cash flow methodologies is an example of the income approach. A summary of valuation techniques for classes of financial assets and liabilities by fair value hierarchy level are as follows: Level 1 Measurements Cash equivalents: Level 2 Measurements For assets classified as Level 2 investments, the Company values the assets using third-party pricing sources, which generally rely on quoted prices for similar assets in markets that are active and observable market data. U.S. government and agencies: Domestic corporate securities: Residential mortgage-backed securities: Other structured securities: Foreign corporate securities: Separate account assets: Level 3 Measurements Derivatives embedded in assets on deposit and annuity contracts: In estimating the fair value of the embedded derivative, the Company attributes a present value to the embedded derivative equal to the discounted sum of the excess cash flows of the index related fund value over the minimum fund value. The current year portion of the embedded derivative is adjusted for known market conditions. The discount factor at which the embedded derivative is valued contains an adjustment for the Company’s own credit and risk margins for unobservable non-capital market inputs. The Company’s own credit adjustment is determined taking into consideration publicly available information relating to the Company’s debt as well as its claims paying ability. These derivatives may be more costly than expected in volatile or declining equity markets. Changes in market conditions include, but are not limited to, changes in interest rates, equity indices, default rates, lapse rates and market volatility. Changes in fair value may be impacted by changes in the Company’s own credit standing. Lastly, changes in actuarial assumptions regarding policyholder behavior (such as full or partial withdrawals varying from expectations) and risk margins related to non-capital market inputs may result in significant fluctuations in the fair value of the derivatives. See Embedded Derivatives within Note 3, Investments for the impact to net income. The following table presents information about significant unobservable inputs used in Level 3 embedded derivative liabilities and related assets on deposit measured at fair value developed by internal models as of December 31, 2019 and 2018: Predominant Significant Range of Values - Unobservable Input Valuation Method Unobservable Input 2019 2018 Single premium deferred index annuity Discounted cash flow Lapse rates 1% to 4% with an excess lapse rate at the end of the index period of 50% or 75%. Weighted average is 4.9% 2% to 4% with an excess lapse rate at the end of the index period of 50% or 95%. Weighted average is 3.7% Company's own credit and risk margin 71 - 102 basis points added on to discount rate. Weighted average is 90 basis points 51 - 113 basis points added on to discount rate. Weighted average is 80 basis points Flexible premium variable and index linked deferred annuity Discounted cash flow Lapse rates 2% to 10% with an excess lapse rate at the end of the index period of 5% to 20%. Weighted average is 2.6% 2% to 10% with an excess lapse rate at the end of the index period of 5% to 20%. Weighted average Company's own credit and risk margin 71 - 102 basis points added on to discount rate. Weighted average is 90 basis points 51 - 113 basis points added on to discount rate. Weighted average is 80 basis points Single premium deferred modified guaranteed index annuity Discounted cash flow Lapse rates 1% to 13% with an excess lapse rate at the end of the index period of 1% to 2%. Weighted average is 1.0% N/A Company's own credit and risk margin 71 - 102 basis points added on to discount rate. Weighted average is 90 basis points N/A Changes in Level 3 Fair Value Measurement The following table sets forth the values of assets and liabilities classified as Level 3 within the fair value hierarchy at December 31, 2019. Total Realized/Unrealized Balance Balance January 1, December 31, 2019 Purchases Maturities Earnings 1 2019 Derivatives embedded in assets on deposit $ 524,178 $ 152,501 $ (20,410 ) $ 295,733 $ 952,002 Total assets $ 524,178 $ 152,501 $ (20,410 ) $ 295,733 $ 952,002 Derivatives embedded in annuity contracts $ 524,178 $ 152,501 $ (20,410 ) $ 295,733 $ 952,002 Total liabilities $ 524,178 $ 152,501 $ (20,410 ) $ 295,733 $ 952,002 1 The following table sets forth the values of assets and liabilities classified as Level 3 within the fair value hierarchy at December 31, 2018. Total Realized/Unrealized Balance Balance January 1, December 31, 2018 Purchases Maturities Earnings 1 2018 Derivatives embedded in assets on deposit $ 471,192 $ 109,477 $ (11,390 ) $ (45,101 ) $ 524,178 Total assets $ 471,192 $ 109,477 $ (11,390 ) $ (45,101 ) $ 524,178 Derivatives embedded in annuity contracts $ 471,192 $ 109,477 $ (11,390 ) $ (45,101 ) $ 524,178 Total liabilities $ 471,192 $ 109,477 $ (11,390 ) $ (45,101 ) $ 524,178 1 Fair Value Measurements for Financial Instruments Not Reported at Fair Value Accounting standards require disclosure of fair value information about certain on- and off-balance sheet financial instruments which are not recorded at fair value on a recurring basis for which it is practicable to estimate that value. The following methods and assumptions were used by the Company in estimating the fair value disclosures for significant financial instruments: Level 1 Measurements Cash Level 2 Measurements Assets on deposit and Investment-type contracts Separate account liabilities The carrying amounts and estimated fair values of the Company’s financial instruments which are not measured at fair value on a recurring basis at December 31, 2019 and 2018 are as follows: 2019 2018 Carrying Estimated Carrying Estimated Amount Fair Value Level Amount Fair Value Level Financial instruments recorded as assets: Cash $ 915 $ 915 1 $ 3,282 $ 3,282 1 Assets on deposit 3,322,962 3,251,078 2 2,613,918 2,303,358 2 Financial instruments recorded as liabilities: Investment-type contracts 3,322,962 3,251,078 2 2,613,918 2,303,358 2 Separate account liabilities 169,654 169,654 2 103,205 103,205 2 |
Income Tax
Income Tax | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Tax | Note 5: Income Tax The Company is included in the consolidated federal income tax return filed by CMHC, the Company’s ultimate parent. The Company has entered into a tax sharing agreement with CMHC and its subsidiaries. The agreement provides for the allocation of tax expense based on each subsidiary’s contribution to the consolidated federal income tax liability. Pursuant to the agreement, subsidiaries that have incurred losses are reimbursed regardless of the utilization of the loss in the current year. Federal income taxes recoverable from affiliate reported on the balance sheet are due from CMFG Life. Income Tax Expense Income tax expense for the years ended December 31 is as follows: 2019 2018 2017 Current tax expense (benefit) $ (36 ) $ 80 $ 481 Deferred tax expense (benefit) 34 (262 ) 193 Adjustment of deferred tax assets and liabilities for enacted rate change — — 49 Total income tax expense (benefit) $ (2 ) $ (182 ) $ 723 Reconciliation to U.S. Tax Rate Income tax expense differs from the amount computed by applying the U.S. federal corporate income tax rate of 21% for 2019 and 2018 and 35% in 2017 to income before income taxes due to the items listed in the following reconciliation: 2019 2018 2017 Amount Rate Amount Rate Amount Rate Tax expense computed at federal corporate tax rate $ 283 21.0 % $ 132 21.0 % $ 981 35.0 % Income tax expense (benefit) related to prior years (159 ) (11.8 ) (240 ) (38.2 ) (221 ) (7.8 ) Dividends-received deduction (87 ) (6.5 ) (59 ) (9.4 ) (83 ) (3.0 ) Foreign tax credit (40 ) (3.0 ) (14 ) (2.2 ) — — Adjustment of deferred tax assets and liabilities for enacted rate change — — — — 49 1.7 Other 1 0.1 (1 ) (0.2 ) (3 ) (0.1 ) Total income tax expense (benefit) $ (2 ) -0.2 % $ (182 ) -29.0 % $ 723 25.8 % Deferred Income Taxes Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities at December 31, 2019 and 2018 are as follows: 2019 2018 Deferred tax assets Tax reserves method change $ 7 $ 11 Unrealized investment losses — 61 Accrued expenses 140 293 Deferred policy acquisition costs 479 380 Other 12 — Gross deferred tax assets 638 745 Deferred tax liabilities Investments 344 354 Deferred reinsurance expense 13 16 Unrealized investment gains 275 — Gross deferred tax liabilities 632 370 Net deferred tax asset $ 6 $ 375 Valuation Allowance The Company considered the need for a valuation allowance with respect to its gross deferred tax assets as of December 31, 2019 and 2018, and based on that evaluation, the Company has determined it is more likely than not all deferred tax assets as of December 31, 2019 and 2018 will be realized. Therefore, a valuation allowance was not established. Unrecognized Tax Benefits There are no unrecognized tax benefits as of December 31, 2019 and 2018. Management does not anticipate a material change to the Company’s uncertain tax positions during 2020. The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense in the statements of operations and comprehensive income (loss). For the years ended December 31, 2019 and 2018, the Company did not recognize any addition or reduction in interest and penalties. For the year ended December 31, 2017, the Company recognized a reduction in interest and penalties of $5. The Company had accrued $2 and $2 for the payment of interest and penalties at December 31, 2019 and 2018, respectively. The Company is included in a consolidated U.S. federal income tax return filed by CMHC. The Company also files income tax returns in various states. For the major jurisdictions where it operates, the Company is generally no longer subject to income tax examination by tax authorities for years ended before 2013. Amended refund claims filed for tax years 2010 and 2012 are currently under examination as part of the Joint Committee on Taxation approval process. Other Tax Items As of December 31, 2019 and 2018, the Company did not have any capital loss, operating loss or credit carryforwards. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 6: Related Party Transactions In the normal course of business, there are various transactions between the Company and other related entities. In certain circumstances, expenses such as those related to sales and marketing, administrative, operations, other support and infrastructure costs are shared between the companies. Expenses incurred that are specifically identifiable with a particular company are borne by that company; other expenses are allocated among the companies on the basis of time and usage studies. Amounts due from transactions with affiliates are generally settled monthly. The Company reimbursed CMFG Life $38,579, $30,131 and $20,808 for these expenses in 2019, 2018 and 2017, respectively; which are included in operating and other expenses. Amounts receivable/payable from/to affiliates are shown in the following table: 2019 2018 Receivable from: CMFG Life $ 476 $ 5,001 Other 8 26 Total $ 484 $ 5,027 Payable to: CUNA Brokerage Services, Inc. $ 3,383 $ 2,948 Other 150 58 Total $ 3,533 $ 3,006 Amounts receivable from CMFG Life at December 31, 2018 are primarily for a policyholder’s purchase of an MLIC annuity when a CMFG Life policyholder has surrendered their policy for the purchase of a single premium deferred index annuity, single premium deferred modified guaranteed index annuity or flexible premium variable and index linked deferred annuity and for the cession of death claims related to the Company’s single premium deferred index annuity, single premium deferred modified guaranteed index annuity or flexible premium variable index linked deferred annuity. The Company hires MEMBERS Capital Advisors, Inc. (“MCA”) for investment advisory services. MCA, which is 100% owned by CMIC, manages substantially all of the Company’s invested assets in accordance with policies, directives and guidelines established by the Company. The Company recorded MCA investment management fees totaling $54, $58 and $21 for the years ended December 31, 2019, 2018 and 2017, respectively, which are included as a reduction to net investment income. The Company utilizes CUNA Brokerage Services, Inc., which is 100% owned by CMIC, to distribute its single premium deferred index annuity, single premium deferred modified guaranteed index annuity and flexible premium variable and index linked deferred annuity and recorded commission expense for this service of $34,180, $29,996 and $29,114 in 2019, 2018 and 2017, respectively, which is included in operating and other expenses. This expense is entirely offset by commission income the Company receives from CMFG Life as part of the 2013, 2015 and 2019 reinsurance agreements. The Company received additional paid in capital of $20,653 of debt securities from CMIC in 2018, net of deferred tax liability of $24. The Company received no additional paid in capital in 2019 and 2017. The Company paid a $7,000 cash dividend to its parent in 2017. The Company paid no dividends in 2019 and 2018. See Note 7 regarding reinsurance and other agreements entered into by the Company and CMFG Life. |
Reinsurance
Reinsurance | 12 Months Ended |
Dec. 31, 2019 | |
Reinsurance Recoverables, Including Reinsurance Premium Paid [Abstract] | |
Reinsurance | Note 7: Reinsurance The Company entered into a reinsurance agreement with its affiliate, CMFG Life, on a coinsurance and modified coinsurance basis to cede 100% of its investment-type contracts for its flexible premium variable and index linked deferred annuity, which are accounted for using the deposit method of accounting. On October 15, 2018, the Company amended its reinsurance agreement with CMFG Life to include a new flexible premium variable and index linked deferred annuity offering by the Company and will continue to cede 100% of its investment-type contracts for its flexible premium variable and index linked deferred annuities. The Company had $565,370 and $337,755 of assets on deposit for these contracts as of December 31, 2019 and 2018, respectively. The Company had related liabilities of $565,370 and $337,755 as of December 31, 2019 and 2018, respectively, which are included in policyholder account balances in the balance sheets. The Company had separate account assets and liabilities for these contracts of $169,654 and $169,654 and $103,205 and $103,205, respectively, as of December 31, 2019 and 2018. The Company receives a commission equal to 100% of its actual expenses incurred for this business, which was $26,384, $17,738 and $11,019 for the years ended December 31, 2019, 2018 and 2017, respectively. The Company entered into a second agreement with its affiliate, CMFG Life, to cede 100% of its investment-type contracts for its single premium deferred index annuity, which are accounted for using the deposit method of accounting. The Company had $3,665,129 and $2,800,341 of assets on deposit for these contracts as of December 31, 2019 and 2018, respectively. The Company had related liabilities of $3,665,129 and $2,800,341, respectively which are included in policyholder account balances in the balance sheets. The Company receives a commission equal to 100% of its actual expenses incurred for this business, which was $56,991, $52,652 and $44,773 for the years ended December 31, 2019, 2018 and 2017, respectively. The Company entered into a third agreement with its affiliate, CMFG Life, on a coinsurance basis to cede 100% of its investment-type contracts for its single premium deferred modified guaranteed index annuity, which are accounted for using the deposit method of accounting. The Company had $44,465 of assets on deposit for these contracts as of December 31, 2019. The Company had related liabilities of $44,465 as of December 31, 2019, which are included in policyholder account balances in the balance sheets. The Company receives a commission equal to 100% of its actual expenses incurred for this business, which was $3,752 for the year ended December 31, 2019. In December 2019, the Company filed a replacement reinsurance agreement, which consolidates and replaces the three separate agreements related to its annuity contracts (the 2013, 2015 and 2019 agreements), with its state of domicile. This replacement agreement was approved by the regulator in January 2020 and effective for 2019. On October 31, 2012, the Company ceded 95% of its insurance policies in force pursuant to a reinsurance agreement with CMFG Life and the Company was reimbursed for 95% of expenses incurred in the provision of policyholder and benefit payment services, and insurance taxes and charges on a go forward basis under this contract. On September 30, 2015, the Company amended its reinsurance agreement with CMFG Life and now cedes 100% of its insurance policies in force to CMFG Life and is reimbursed 100% for expenses incurred in the provision of policyholder and benefit payments services, and insurance taxes and charges going forward. The Company receives a commission equal to 100% of its actual expenses incurred for this business, which was $767 and $839 for the years ended December 31, 2018 and 2017, respectively. For the year ended December 31, 2019, the Company paid a refund of $668 due to the change in the amount due to the guaranty fund. MLIC did not have any other reinsurance agreements at December 31, 2019 or 2018 and the entire reinsurance recoverable balance of $23,927 and $24,034, respectively, was due from CMFG Life. The recoverable balances are not collateralized and the Company retains the risk of loss in the event CMFG Life is unable to meet its obligations assumed under the reinsurance agreements. MLIC believes the risk of non-collection is remote due to CMFG Life’s stable financial strength ratings of A from A.M. Best Company and S&P Global Ratings and A2 rating from Moody’s Investors Service. The effects of reinsurance on contract charges, interest credited to policyholder accounts, premiums and on claims, benefits, and losses incurred for the years ended December 31 are as follows: 2019 2018 2017 Face amount of policies in force $ 72,193 $ 80,872 $ 86,587 Premiums: Direct - written $ 4,094 $ 2,812 $ 3,145 Direct - change in unearned — — 5 Direct - earned 4,094 2,812 3,150 Ceded to affiliate - written (4,094 ) (2,812 ) (3,145 ) Ceded to affiliate - change in unearned — — (5 ) Ceded to affiliate - earned (4,094 ) (2,812 ) (3,150 ) Premiums - written, net — — 5 Premiums - change in unearned, net — — (5 ) Premiums, net $ — $ — $ — Contract charges: Direct $ 10,935 $ 7,535 $ 3,498 Ceded to affiliate (10,935 ) (7,535 ) (3,498 ) Contract charges, net $ — $ — $ — Claims, benefits and losses incurred: Direct $ 4,317 $ 2,507 $ 2,779 Ceded to affiliate (4,317 ) (2,507 ) (2,777 ) Claims, benefits and losses, net $ — $ — $ 2 Interest credited to policyholder account balances: Direct $ 34,571 $ 41,175 $ 30,469 Ceded to affiliate (34,531 ) (41,190 ) (30,469 ) Interest credited to policyholder account balances, net $ 40 $ (15 ) $ — |
Statutory Financial Data and Di
Statutory Financial Data and Dividend Restrictions | 12 Months Ended |
Dec. 31, 2019 | |
Statutory Financial Data And Dividend Restrictions | |
Statutory Financial Data and Dividend Restrictions | Note 8: Statutory Financial Data and Dividend Restrictions The Company is a life and health insurer and is domiciled in Iowa. The Company files statutory-basis financial statements with insurance regulatory authorities. The Company did not use any permitted practices in 2019, 2018 or 2017. Certain statutory basis financial information for MLIC is presented in the table below as of and for the years ended December 31. Statutory Basis Statutory Basis Capital and Surplus Net Income 2019 2018 2019 2018 2017 MLIC $ 39,989 $ 39,447 $ 1,249 $ 419 $ 1,914 The Company is subject to statutory regulations as to maintenance of equity and the payment of dividends. Generally, ordinary dividends from an insurance subsidiary to its parent company must meet notice requirements promulgated by the regulator of the subsidiary’s state of domicile (“Insurance Department”). Extraordinary dividends, as defined by state statutes, must be approved by the Insurance Department. Based on Iowa statutory regulations, the Company could pay dividends up to $3,836 during 2020, without prior approval of the Insurance Department. Risk-based capital (“RBC”) requirements promulgated by the National Association of Insurance Commissioners (NAIC) require U.S. insurers to maintain minimum capitalization levels that are determined based on formulas incorporating credit risk, insurance risk, interest rate risk, and general business risk. The adequacy of the Company’s actual capital is evaluated by a comparison to the RBC results, as determined by the formula. At December 31, 2019 and 2018, the Company’s adjusted capital exceeded the RBC minimum requirements as required by the NAIC. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 12 Months Ended |
Dec. 31, 2019 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Note 9: Accumulated Other Comprehensive Income (Loss) The components of accumulated other comprehensive income (loss), net of tax, are as follows: Accumulated Unrealized Other Investment Comprehensive Gains (Loss) Income (Loss) Balance, January 1, 2017 $ (323 ) $ (323 ) Change in unrealized holding gains (losses), net of tax - $181 334 334 Balance, December 31, 2017 11 11 Effect of change for Cumulative effect of reclassification for the stranded tax effects 3 3 Change in unrealized holding gains (losses), net of tax - ($64) (240 ) (240 ) Balance, December 31, 2018 (226 ) (226 ) Change in unrealized holding gains (losses), net of tax - $336 1,261 1,261 Balance, December 31, 2019 $ 1,035 $ 1,035 Reclassification Adjustments Accumulated other comprehensive income (loss) includes amounts related to unrealized investment gains (losses) which were reclassified to net income. Reclassifications from accumulated other comprehensive income (loss) for the years ended December 31, 2019 and 2018 were $7 and $52, respectively, net of deferred taxes of $3 and $14. |
Business Segment Information
Business Segment Information | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Business Segment Information | Note 10: Business Segment Information The following table sets forth financial information regarding the Company’s two reportable business segments for the year ended December 31, 2019. Life and Year ended or as of December 31, 2019 Health Annuities Total Revenues Net investment income $ 1,677 $ — $ 1,677 Net realized investment (losses) 17 — 17 Other income 38 — 38 Total revenues 1,732 — 1,732 Benefits and expenses Life and health insurance claims and benefits, net — — — Interest credited to policyholder account balances, net — 40 40 Operating and other expenses 343 — 343 Total benefits and expenses 343 40 383 Income (loss) before income taxes 1,389 (40 ) 1,349 Income tax expense (benefit) (2 ) — (2 ) Net income (loss) 1,391 (40 ) 1,351 Change in unrealized gains (losses), net of tax expense (benefit) 1,268 — 1,268 Reclassification adjustment for (gains) included in net income, net of tax (benefit) (7 ) — (7 ) Other comprehensive income (loss) 1,261 — 1,261 Total comprehensive income (loss) $ 2,652 $ (40 ) $ 2,612 Reinsurance recoverable from affiliate $ 23,927 $ — $ 23,927 Assets on deposit — 4,274,964 4,274,964 Claim and policy benefit reserves - life and health 22,551 — 22,551 Policyholder account balances 6,715 4,274,964 4,281,679 The following table sets forth financial information regarding the Company’s two reportable business segments for the year ended December 31, 2018. Life and Year ended or as of December 31, 2018 Health Annuities Total Revenues Net investment income $ 762 $ — $ 762 Net realized investment (losses) (17 ) — (17 ) Other income 18 — 18 Total revenues 763 — 763 Benefits and expenses Life and health insurance claims and benefits, net — — — Interest credited to policyholder account balances, net — (15 ) (15 ) Operating and other expenses 151 — 151 Total benefits and expenses 151 (15 ) 136 Income before income taxes 612 15 627 Income tax expense (benefit) (185 ) 3 (182 ) Net income 797 12 809 Change in unrealized gains (losses), net of tax expense (benefit) (188 ) — (188 ) Reclassification adjustment for (gains) included in net income, net of tax (benefit) (52 ) — (52 ) Other comprehensive income (loss) (240 ) — (240 ) Total comprehensive income $ 557 $ 12 $ 569 Reinsurance recoverable from affiliate $ 24,034 $ — $ 24,034 Assets on deposit — 3,138,096 3,138,096 Claim and policy benefit reserves - life and health 20,769 6,067 26,836 Policyholder account balances 3,981 3,138,096 3,142,077 The following table sets forth financial information regarding the Company’s two reportable business segments for the year ended December 31, 2017. Life and Year ended or as of December 31, 2017 Health Annuities Total Revenues Net investment income $ 517 $ — $ 517 Net realized investment (losses) — — — Other income 3,996 — 3,996 Total revenues 4,513 — 4,513 Benefits and expenses Life and health insurance claims and benefits, net 2 — 2 Interest credited to policyholder account balances, net — — — Operating and other expenses 1,596 113 1,709 Total benefits and expenses 1,598 113 1,711 Income before income taxes 2,915 (113 ) 2,802 Income tax expense (benefit) 763 (40 ) 723 Net income 2,152 (73 ) 2,079 Change in unrealized gains (losses), net of tax expense (benefit) 334 — 334 Reclassification adjustment for (gains) included in net income, net of tax (benefit) — — — Other comprehensive income (loss) 334 — 334 Total comprehensive income $ 2,486 $ (73 ) $ 2,413 Reinsurance recoverable from affiliate $ 23,973 $ — $ 23,973 Assets on deposit — 2,453,033 2,453,033 Claim and policy benefit reserves - life and health 20,688 2,364 23,052 Policyholder account balances 3,601 2,453,033 2,456,634 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 11: Commitments and Contingencies Insurance Guaranty Funds The Company is liable for guaranty fund assessments related to certain unaffiliated insurance companies that have become insolvent during 2019 and prior years. The Company includes a provision for all known assessments that will be levied as well as an estimate of amounts that it believes will be assessed in the future relating to past insolvencies. The Company has established a liability of $116 and $1,224 at December 31, 2019 and 2018, respectively, for guaranty fund assessments. The Company also estimates the amount recoverable from future premium tax payments related to these assessments and has not established an asset as of December 31, 2019 and 2018 since it does not believe any amount will be recoverable. Recoveries of assessments from premium taxes are generally made over a five-year period. Legal Matters Like other members of the insurance industry, the Company is occasionally a party to lawsuits and other types of proceedings, some of which may involve claims for substantial or indeterminate amounts. These actions are based on a variety of issues and involve a range of the Company’s practices. The Company has established procedures and policies to facilitate compliance with laws and regulations and to support financial reporting. In connection with regulatory examinations and proceedings, government authorities may seek various forms of relief, including penalties, restitution and changes in business practices. The Company may not be advised of the nature and extent of relief sought until the final stages of the examination or proceeding. In the opinion of management, the ultimate liability, if any, resulting from all such pending actions will not materially affect the financial statements of the Company. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 12: Subsequent Events The Company evaluated subsequent events through the date the financial statements were issued. During this period, there were no subsequent events that required adjustment to or disclosure in the accompanying financial statements. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and in some cases the difference could be material. Investment valuations, embedded derivatives, deferred tax asset valuation reserves, and claim and policy benefit reserves are most affected by the use of estimates and assumptions. |
Segment Reporting | Segment Reporting The Company is currently managed as two reportable business segments, (1) life and health and (2) annuities. The Company’s life and health segment includes individual and group life policies that the Company no longer actively markets. The annuities segment includes its single premium deferred index annuity contracts, single premium deferred modified guaranteed index annuity contracts and flexible premium deferred variable and index linked annuity contracts. See Note 7, Reinsurance, for information on the Company’s reinsurance agreements, which impact the financial statement presentation of these segments. |
Investments | Investments Debt securities: Unrealized gains and losses on investments in debt securities, net of deferred federal income taxes, are included in accumulated other comprehensive income (loss) as a separate component of stockholder’s equity. Policy loans: Net investment income: Net realized gains and losses: |
Assets on Deposit | Assets on Deposit Assets on deposit represent the amount of policyholder account balances related to reinsurance of the single premium deferred index annuity and single premium deferred modified guaranteed index annuity and risk control accounts of the flexible premium deferred variable and index linked annuity contracts (investment-type contracts) that are ceded to CMFG Life. Assets on deposit are accounted for on a basis consistent with accounting for the underlying investment-type contracts; therefore, the Company accounts for the reinsurance of these contracts using the deposit method of accounting consistent with the terms of the reinsurance agreement with CMFG Life. The related contract charges and interest credited to policyholder account balances in the statements of operations and comprehensive income (loss) are reported net of the amounts ceded under the agreement. See Note 7 for a further discussion of the ceding and reinsurance agreements. |
Derivative Financial Instruments | Derivative Financial Instruments The Company issues single premium deferred index annuity, single premium deferred modified guaranteed index annuity and flexible premium deferred variable and index linked annuity contracts that contain embedded derivatives. Derivatives embedded within non-derivative host contracts are separated from the host instrument when the embedded derivative is not clearly and closely related to the host instrument. Such embedded derivatives are recorded at fair value, and they are reported as part of assets on deposit and policyholder account balances in the balance sheets, with the change in the value being recorded in net realized investment gains. See Note 3, Investments-Embedded Derivatives for additional information. Changes in the embedded derivatives are included with policyholder account balances and assets on deposits withdrawal and deposits in the financing section of the statements of cash flows. Changes in the fair value of the embedded derivative in assets on deposit offset changes in the fair value of the embedded derivative in policyholder account balances; both of these changes are included in net realized investment gains and are ceded as part of the ceding and reinsurance agreements. Accretion of the interest on assets on deposit offsets accretion of the interest on the host contract; both of these amounts are included in interest credited on policyholder account balances and are ceded pursuant to the ceding and reinsurance agreements. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include unrestricted deposits in financial institutions with maturities of 90 days or less. Cash and cash equivalents are stated at amortized cost, which approximates fair value. The Company recognizes a liability in accounts payable and other liabilities for the amount of checks issued in excess of its current cash balance. The change in this overdraft amount is recognized as a financing activity in the Company’s statement of cash flows. |
Variable Interest Entities | Variable Interest Entities A variable interest entity (“VIE”) is a legal entity that does not have sufficient equity at risk to finance its activities without additional subordinated financial support or is structured such that equity investors lack the ability to make significant decisions relating to the entity’s operations through voting rights or do not substantively participate in the gains and losses of the entity. Consolidation of a VIE by its primary beneficiary is not based on majority voting interest, but is based on a review of the VIE’s capital structure, contractual relationships and terms, nature of the VIE’s operations and purpose, nature of the VIE’s interests issued and the Company’s involvement with the entity. When assessing the need to consolidate a VIE, the Company evaluates the design of the VIE as well as the related exposure to the variable interest holders. The primary beneficiary is the entity that has both the power to direct the activities of the VIE that most significantly affect the entity’s economic performance and the obligation to absorb losses or the right to receive benefits that could be potentially significant to the VIE. While also considering these factors, the consolidation conclusion depends on the breadth of the Company’s decision-making ability and the Company’s ability to influence activities that significantly affect the economic performance of the VIE. Unconsolidated VIEs: |
Recognition of Insurance Revenue and Related Benefits | Recognition of Insurance Revenue and Related Benefits Term-life and whole-life insurance premiums are recognized as premium income when due. Policy benefits for these products are recognized in relation to the premiums so as to result in the recognition of profits over the expected lives of the policies and contracts. Policies not subject to significant mortality or longevity risk, such as the Company’s single premium deferred index annuity, single premium deferred modified guaranteed index annuity and flexible premium deferred variable and index linked annuity contracts, are considered investment-type contracts. Amounts collected on these products, with the exception of the variable annuity component of the flexible premium deferred variable and index linked annuity, are recorded as increases in policyholder account balances. The variable annuity component of the flexible premium deferred variable and index linked annuity is recorded in separate account assets and liabilities. Revenues from investment-type contracts principally consist of net investment income and contract charges such as expense and surrender charges. Expenses for investment-type contracts consist of interest credited to contracts, benefits incurred in excess of related policyholder account balances and policy maintenance costs. Because the Company has entered into an agreement with CMFG Life to cede 100% of this business, these revenues and expenses are ceded and do not impact the statement of operations and comprehensive income (loss). See Note 7, Reinsurance for additional information on this agreement. |
Other Income / Operating and Other Expenses | Other Income / Operating and Other Expenses Other income in 2019 and 2018 represents advisory fees based on a percentage of assets under management. Other income in 2017 includes legal settlements received on structured security investments that had previously been sold. There were no legal settlements in 2019 and 2018. Operating and other expenses in 2017 include legal expenses related to settlements received. |
Deferred Policy Acquisition Costs | Deferred Policy Acquisition Costs The costs of acquiring insurance business that are directly related to the successful acquisition of new and renewal business are deferred to the extent that such costs are expected to be recoverable from future profits. Such costs principally include commissions and sales costs, premium taxes, and certain policy issuance and underwriting costs. Costs deferred on term-life and whole-life insurance products, deferred policy acquisition costs (“DAC”), are amortized in proportion to the ratio of the annual premium to the total anticipated premiums generated. Due to the age of the life insurance policies, all DAC has been fully amortized as of December 31, 2019 and 2018 and there was no amortization expense in 2019, 2018 or 2017. Acquisition costs on the Company’s single premium deferred index annuity, single premium deferred modified guaranteed index annuity contracts and flexible premium deferred variable and index linked annuity contracts are reimbursed through a ceding commission by CMFG Life, which assumes all deferrable costs as part of its agreement to assume 100% of this business from the Company. See Note 7, Reinsurance for additional information on these agreements. Accordingly, there is no DAC asset associated with annuities. |
Claim and Policy Benefits Reserves - Life and Health | Claim and Policy Benefits Reserves – Life and Health Life and health claim and policy benefit reserves consist principally of future policy benefit reserves and reserves for estimates of future payments on incurred claims reported but not yet paid and unreported incurred claims. Estimates for future payments on incurred claims are developed using actuarial principles and assumptions based on past experience adjusted for current trends. Any change in the probable ultimate liabilities is reflected in net income in the period in which the change is determined. When actual experience indicates that existing contract liabilities, together with the present value of future gross premiums will not be sufficient to recover the present value of future benefits or recover unamortized deferred acquisition costs, a premium deficiency will be recognized by either a reduction in unamortized acquisition costs or an increase in the liability for future benefits. The liability for premium deficiency is insignificant as of December 31, 2019 and 2018. Additionally, the liability for future policy benefits may not be deficient in the aggregate to trigger a premium deficiency, but the pattern of earnings may be such that profits are expected to be recognized in early years followed by losses in later years. In those situations, the liability for future benefits will be increased to offset losses that would be recognized in later years. The Company recorded a liability of $153 as of December 31, 2019 and $138 as of December 31, 2018 for the profits that are expected to be followed by losses in the future. There was no liability recorded as of December 31, 2017. |
Policyholder Account Balances | Policyholder Account Balances The single premium deferred index annuities, single premium deferred modified guaranteed index annuities and risk control accounts the flexible premium variable and index linked deferred annuities are included in policyholder account balances. These products have two risk control accounts, referred to as the Secure and Growth Accounts; the Secure Account has a yearly credited interest rate floor of 0% and the yearly Growth Account floor is -10%. The Secure and Growth Accounts both have credited interest rate caps that vary based on the issuance date of the contract. Interest is credited at the end of each contract year during the selected index term based on the allocation between risk control accounts and the performance of an external index (reference index) during that contract year. For the single premium deferred index annuity, the Company offers one reference index, which is the S&P 500 Index. For the single premium deferred modified guaranteed index annuity, the Company offers three reference indices, which are the S&P 500 Index, the MSCI EAFE Index and the Russell 2000 Price Return Index. For the flexible premium deferred variable and index linked annuity, the Company offers two reference indices, which are the S&P 500 Index and the MSCI EAFE Index. Policyholders are able to allocate funds in both the Secure and Growth Accounts for the available indices. At the end of the initial index term, only the Secure Account is available as an option to the policyholder. The average annualized credited rate for the single premium deferred index annuity was 1.14%, 1.50% and 1.44% in 2019, 2018 and 2017, respectively. The average annualized credited rate for the single premium deferred modified guaranteed index annuity was 1.83% in 2019. The average annualized credited rate for the risk control accounts of the flexible premium variable and index linked deferred annuity was 2.51%, 1.20% and 1.59% in 2019, 2018 and 2017, respectively. Interest credited does not represent the actual return to a policyholder. The Company recognizes a liability at the stated account value for policyholder deposits that are not subject to significant policyholder mortality or longevity risk and for universal life-type policies. The account value equals the sum of the original deposit and accumulated interest, less any withdrawals and expense charges. The average credited rate was 4.5% in 2019, 2018 and 2017. The future minimum guaranteed interest rate during the life of the contracts is 4.5%. |
Accounts Payable and Other Liabilities | Accounts Payable and Other Liabilities The Company issues the single premium deferred index annuity contracts, single premium deferred modified guaranteed index annuity contracts and flexible premium deferred variable and index linked annuity contracts on the 10th and 25th of each month. The Company recognizes a liability on contracts for which it has received cash, but has not issued a contract. |
Reinsurance | Reinsurance Reinsurance premiums, claims and benefits, commission expense reimbursements, and reserves related to reinsured business ceded are accounted for on a basis consistent with the accounting for the underlying direct policies that have been ceded and the terms of the reinsurance contracts. Premiums and insurance claims and benefits in the statements of operations and comprehensive income (loss) are reported net of the amounts ceded to other companies under such reinsurance contracts. Ceded insurance reserves and ceded benefits paid are included in reinsurance recoverables along with certain ceded policyholder account balances, which include mortality risk. A prepaid reinsurance asset is also recorded for the portion of unearned premiums related to ceded policies. |
Separate Accounts | Separate Accounts Separate accounts represent customer accounts related to the variable annuity component of the single premium deferred modified guaranteed index annuity and flexible premium deferred variable and index linked annuity contracts issued by the Company, where investment income and investment gains and losses accrue directly to the contract holders who bear the investment risk. Contract holders are able to invest in investment funds managed for their benefit. All of the separate account assets are invested in unit investment trusts that are registered with the Securities and Exchange Commission (“SEC”) as of December 31, 2019. Separate account assets are legally segregated and may only be used to settle separate account liabilities. Separate account assets are carried at fair value, which is based on daily quoted net asset values at which the Company could transact on behalf of the contract holder. Separate account liabilities are equal to the separate account assets and represent contract holders’ claims to the related assets. Contract holder deposits to and withdrawals from the separate accounts are recorded directly to the separate account assets and liabilities and are not included in the Company’s statements of operations and comprehensive income (loss). Charges made by the Company to the contract holders’ balances include fees for maintenance, administration, cost of insurance, and surrenders of contracts prior to the contractually specified dates. Because the Company has entered into an agreement with CMFG Life to cede 100% of this business, these revenues are ceded and do not impact the statement of operations and comprehensive income (loss). See Note 7, Reinsurance for additional information on this agreement. |
Income Tax | Income Tax The Company recognizes taxes payable or refundable and deferred taxes for the tax consequences of differences between the financial reporting and tax basis of assets and liabilities. Deferred tax assets and liabilities are measured by applying the enacted tax rates to the difference between the financial statement and tax basis of assets and liabilities. The Company records current tax benefits and deferred tax assets utilizing a benefits-for-loss approach. Under this approach, current benefits are realized and deferred tax assets are considered realizable by the Company when realized or realizable by the consolidated group of which the Company is a member even if the benefits would not be realized on a stand-alone basis. The Company records a valuation allowance for deferred tax assets if it determines it is more likely than not that the asset will not be realized by the consolidated group. Deferred income tax assets can be realized through future earnings, including, but not limited to, the generation of future income, reversal of existing temporary differences and available tax planning strategies. The Company is subject to tax-related audits. These audits may result in additional tax assets or liabilities. In establishing tax liabilities, the Company determines whether a tax position is more likely than not to be sustained under examination by the appropriate taxing authority. Tax positions that do not meet the more likely than not standard are not recognized. Tax positions that meet this standard are recognized in the financial statements within net deferred tax assets or liabilities or federal income taxes recoverable or payable. |
Accounting Standards Updates Pending Adoption | Accounting Standards Updates Pending Adoption In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Measurement of Credit Losses of Financial Instruments (“ASU 2016-13”) with an effective date in 2020 for public business entities and 2023 for others. The guidance for credit losses was further amended by ASU No. 2019-04 and 2019-05. The new standard replaces the existing incurred loss recognition model with an expected credit loss recognition model. The objective of the expected credit loss model is for the Company to recognize its estimate of expected credit losses for affected financial assets in a valuation allowance deducted from the amortized cost basis of the related financial assets that results in presenting the net carrying value of the financial assets at the amount expected to be collected. The Company must consider all available relevant information when estimating expected credit losses, including details about past events, current conditions, and reasonable and supportable forecasts over the contractual life of an asset. Financial assets may be evaluated individually or on a pooled basis when they share similar risk characteristics. The measurement of credit losses for available-for-sale debt securities measured at fair value is not affected, except that credit losses recognized are limited to the amount by which fair value is below amortized cost and the carrying value adjustment is recognized through an allowance and not as a direct write-down. The impact of ASU 2016-13 will not be material. In August 2018, the FASB adopted ASU No. 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts ● Under current guidance, the liability for future policy benefits for long-duration products is established based on assumptions set at issue which are not changed unless there is a premium deficiency. Under ASU 2018-12, these assumptions, which include mortality, morbidity, persistency, expenses, and the discount rate, must be reviewed for changes at least annually. The existing guidance is retained for participating policies. When assumptions other than the discount rate are changed, the liability is recomputed and a cumulative catch-up adjustment is recorded in the current year income statement. The discount rate, which is based on the yield of an upper-medium-grade fixed income instrument, must be updated each reporting period; changes in the liability resulting from the discount rate are recorded in other comprehensive income (loss). ● The liability for future policy benefits can no longer include a provision for adverse deviation except for participating policies. ● Because liability assumptions are updated periodically, the test for premium deficiency is no longer required for nonparticipating traditional and limited payment contracts. ● ASU 2018-12 introduces the concept of market risk benefits for product features that protect the contract holder from capital market risk, which must be accounted for at fair value. ● Deferred acquisition costs will generally be amortized to expense on a constant level basis, either individually or grouped consistent with reserve cohorts, over the expected term of the contracts inforce. Amortization based on estimated gross profits or gross margins will be eliminated. The deferred policy acquisition costs asset does not need to be tested for impairment, no interest is accreted, and shadow adjustments are no longer required. ● Insurers must provide disclosures that allow financial statement users to understand the amount, timing, and uncertainty of future cash flows arising from the insurance liabilities. The Company is currently evaluating the impact of ASU 2018-12 on its financial statements. The future impact may be material. |
Nature of Business (Tables)
Nature of Business (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of states with premiums greater than 5% | The following table identifies states with premiums greater than 5% of total direct premium and states with deposits on annuity contracts greater than 5% of total deposits: Deposits on Direct Life and Health Premium Annuity Contracts 2019 2018 2017 2019 2018 2017 Michigan 60 % 62 % 62 % 6 % 7 % 9 % Texas 25 24 24 5 * 5 California 5 5 5 * * 6 Pennsylvania * * * 7 8 8 Iowa * * * 5 6 7 Florida * * * 5 6 * Indiana * * * * 5 6 Wisconsin * * * 6 5 6 *Less than 5% |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of investments in debt securities | The amortized cost, gross unrealized gains and losses, and estimated fair values, as reported on the balance sheet, of debt securities at December 31, 2019 are as follows: Amortized Gross Unrealized Estimated Cost Gains Losses Fair Value U.S. government and agencies $ 8,739 $ 454 $ — $ 9,193 Domestic corporate securities 16,478 757 — 17,235 Residential mortgage-backed securities 3,217 17 — 3,234 Other structured securities 2,001 — — 2,001 Foreign corporate securities 3,999 82 — 4,081 Total debt securities $ 34,434 $ 1,310 $ — $ 35,744 The amortized cost, gross unrealized gains and losses, and estimated fair values, as reported on the balance sheet, of debt securities at December 31, 2018 are as follows: Amortized Gross Unrealized Estimated Cost Gains Losses Fair Value U.S. government and agencies $ 8,744 $ — $ (521 ) $ 8,223 Domestic corporate securities 16,476 188 (9 ) 16,655 Residential mortgage-backed securities 639 14 — 653 Foreign corporate securities 3,997 44 (3 ) 4,038 Total debt securities $ 29,856 $ 246 $ (533 ) $ 29,569 |
Schedule of investments classified by contractual maturity date | Because of the potential for prepayment on residential mortgage-backed securities, such securities have not been displayed in the table below by contractual maturity. Amortized Estimated Cost Fair Value Due in one year or less $ 6,495 $ 6,554 Due after one year through five years 10,990 11,511 Due after five years through ten years 2,993 3,250 Due after ten years 8,738 9,194 Residential mortgage-backed securities 3,217 3,234 Other structured securities 2,001 2,001 Total debt securities $ 34,434 $ 35,744 |
Schedule of investment income | Sources of investment income for the years ended December 31 are summarized as follows: 2019 2018 2017 Gross investment income: Debt securities $ 1,022 $ 368 $ 321 Cash and cash equivalents 709 452 217 Total gross investment income 1,731 820 538 Investment expenses (54 ) (58 ) (21 ) Net investment income $ 1,677 $ 762 $ 517 |
Schedule of unrealized gain (loss) on investments | The components of net unrealized investment gains (losses) included in accumulated other comprehensive income (loss) at December 31 were as follows: 2019 2018 2017 Debt securities $ 1,310 $ (287 ) $ 17 Deferred income taxes (275 ) 61 (6 ) Net unrealized investment gains (losses) $ 1,035 $ (226 ) $ 11 |
Schedule of embedded derivatives | The following table presents the fair value of embedded derivatives, which are reported as part of policyholder account balances in the consolidated balance sheets, as of December 31: 2019 2018 Single premium deferred index annuities $ 799,912 $ 456,088 Flexible premium variable and index linked deferred annuities 147,328 68,090 Single premium deferred modified guaranteed index annuities 4,762 — Total embedded derivatives $ 952,002 $ 524,178 |
Fair Value (Tables)
Fair Value (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value assets measured on a recurring basis | The following table summarizes the Company’s assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2019. Assets, at Fair Value Level 1 Level 2 Level 3 Total Cash equivalents 1 $ 28,122 $ — $ — $ 28,122 Debt securities: U.S. government and agencies — 9,193 — 9,193 Domestic corporate securities — 17,235 — 17,235 Residential mortgage-backed securities — 3,234 — 3,234 Other structured securities — 2,001 — 2,001 Foreign corporate securities — 4,081 — 4,081 Total debt securities — 35,744 — 35,744 Derivatives embedded in assets on deposit — — 952,002 952,002 Separate account assets — 169,654 — 169,654 Total assets $ 28,122 $ 205,398 $ 952,002 $ 1,185,522 Liabilities, at Fair Value Level 1 Level 2 Level 3 Total Derivatives embedded in annuity contracts $ — $ — $ 952,002 $ 952,002 Total liabilities $ — $ — $ 952,002 $ 952,002 1 The following table summarizes the Company’s assets that are measured at fair value on a recurring basis as of December 31, 2018. Assets, at Fair Value Level 1 Level 2 Level 3 Total Cash equivalents 1 $ 21,630 $ — $ — $ 21,630 Debt securities: U.S. government and agencies — 8,223 — 8,223 Domestic corporate securities — 16,655 — 16,655 Residential mortgage-backed securities — 653 — 653 Foreign corporate securities — 4,038 — 4,038 Total debt securities — 29,569 — 29,569 Derivatives embedded in assets on deposit — — 524,178 524,178 Separate account assets — 103,205 — 103,205 Total assets $ 21,630 $ 132,774 $ 524,178 $ 678,582 Liabilities, at Fair Value Level 1 Level 2 Level 3 Total Derivatives embedded in annuity contracts $ — $ — $ 524,178 $ 524,178 Total liabilities $ — $ — $ 524,178 $ 524,178 1 |
Schedule of significant unobservable inputs | The following table presents information about significant unobservable inputs used in Level 3 embedded derivative liabilities and related assets on deposit measured at fair value developed by internal models as of December 31, 2019 and 2018: Predominant Significant Range of Values - Unobservable Input Valuation Method Unobservable Input 2019 2018 Single premium deferred index annuity Discounted cash flow Lapse rates 1% to 4% with an excess lapse rate at the end of the index period of 50% or 75%. Weighted average is 4.9% 2% to 4% with an excess lapse rate at the end of the index period of 50% or 95%. Weighted average is 3.7% Company's own credit and risk margin 71 - 102 basis points added on to discount rate. Weighted average is 90 basis points 51 - 113 basis points added on to discount rate. Weighted average is 80 basis points Flexible premium variable and index linked deferred annuity Discounted cash flow Lapse rates 2% to 10% with an excess lapse rate at the end of the index period of 5% to 20%. Weighted average is 2.6% 2% to 10% with an excess lapse rate at the end of the index period of 5% to 20%. Weighted average Company's own credit and risk margin 71 - 102 basis points added on to discount rate. Weighted average is 90 basis points 51 - 113 basis points added on to discount rate. Weighted average is 80 basis points Single premium deferred modified guaranteed index annuity Discounted cash flow Lapse rates 1% to 13% with an excess lapse rate at the end of the index period of 1% to 2%. Weighted average is 1.0% N/A Company's own credit and risk margin 71 - 102 basis points added on to discount rate. Weighted average is 90 basis points N/A |
Schedule of changes in assets and liabilities classified as level 3 | The following table sets forth the values of assets and liabilities classified as Level 3 within the fair value hierarchy at December 31, 2019. Total Realized/Unrealized Balance Balance January 1, December 31, 2019 Purchases Maturities Earnings 1 2019 Derivatives embedded in assets on deposit $ 524,178 $ 152,501 $ (20,410 ) $ 295,733 $ 952,002 Total assets $ 524,178 $ 152,501 $ (20,410 ) $ 295,733 $ 952,002 Derivatives embedded in annuity contracts $ 524,178 $ 152,501 $ (20,410 ) $ 295,733 $ 952,002 Total liabilities $ 524,178 $ 152,501 $ (20,410 ) $ 295,733 $ 952,002 1 The following table sets forth the values of assets and liabilities classified as Level 3 within the fair value hierarchy at December 31, 2018. Total Realized/Unrealized Balance Balance January 1, December 31, 2018 Purchases Maturities Earnings 1 2018 Derivatives embedded in assets on deposit $ 471,192 $ 109,477 $ (11,390 ) $ (45,101 ) $ 524,178 Total assets $ 471,192 $ 109,477 $ (11,390 ) $ (45,101 ) $ 524,178 Derivatives embedded in annuity contracts $ 471,192 $ 109,477 $ (11,390 ) $ (45,101 ) $ 524,178 Total liabilities $ 471,192 $ 109,477 $ (11,390 ) $ (45,101 ) $ 524,178 1 |
Schedule of financial instruments not measured at fair value on a recurring basis | The carrying amounts and estimated fair values of the Company’s financial instruments which are not measured at fair value on a recurring basis at December 31, 2019 and 2018 are as follows: 2019 2018 Carrying Estimated Carrying Estimated Amount Fair Value Level Amount Fair Value Level Financial instruments recorded as assets: Cash $ 915 $ 915 1 $ 3,282 $ 3,282 1 Assets on deposit 3,322,962 3,251,078 2 2,613,918 2,303,358 2 Financial instruments recorded as liabilities: Investment-type contracts 3,322,962 3,251,078 2 2,613,918 2,303,358 2 Separate account liabilities 169,654 169,654 2 103,205 103,205 2 |
Income Tax (Tables)
Income Tax (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of components of income tax expense (benefit) | Income tax expense for the years ended December 31 is as follows: 2019 2018 2017 Current tax expense (benefit) $ (36 ) $ 80 $ 481 Deferred tax expense (benefit) 34 (262 ) 193 Adjustment of deferred tax assets and liabilities for enacted rate change — — 49 Total income tax expense (benefit) $ (2 ) $ (182 ) $ 723 |
Schedule of effective income tax rate reconciliation | Income tax expense differs from the amount computed by applying the U.S. federal corporate income tax rate of 21% for 2019 and 2018 and 35% in 2017 to income before income taxes due to the items listed in the following reconciliation: 2019 2018 2017 Amount Rate Amount Rate Amount Rate Tax expense computed at federal corporate tax rate $ 283 21.0 % $ 132 21.0 % $ 981 35.0 % Income tax expense (benefit) related to prior years (159 ) (11.8 ) (240 ) (38.2 ) (221 ) (7.8 ) Dividends-received deduction (87 ) (6.5 ) (59 ) (9.4 ) (83 ) (3.0 ) Foreign tax credit (40 ) (3.0 ) (14 ) (2.2 ) — — Adjustment of deferred tax assets and liabilities for enacted rate change — — — — 49 1.7 Other 1 0.1 (1 ) (0.2 ) (3 ) (0.1 ) Total income tax expense (benefit) $ (2 ) -0.2 % $ (182 ) -29.0 % $ 723 25.8 % |
Schedule of deferred tax assets and liabilities | Significant components of the Company’s deferred tax assets and liabilities at December 31, 2019 and 2018 are as follows: 2019 2018 Deferred tax assets Tax reserves method change $ 7 $ 11 Unrealized investment losses — 61 Accrued expenses 140 293 Deferred policy acquisition costs 479 380 Other 12 — Gross deferred tax assets 638 745 Deferred tax liabilities Investments 344 354 Deferred reinsurance expense 13 16 Unrealized investment gains 275 — Gross deferred tax liabilities 632 370 Net deferred tax asset $ 6 $ 375 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
Schedule of related party transactions | Amounts receivable/payable from/to affiliates are shown in the following table: 2019 2018 Receivable from: CMFG Life $ 476 $ 5,001 Other 8 26 Total $ 484 $ 5,027 Payable to: CUNA Brokerage Services, Inc. $ 3,383 $ 2,948 Other 150 58 Total $ 3,533 $ 3,006 |
Reinsurance (Tables)
Reinsurance (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Reinsurance Recoverables, Including Reinsurance Premium Paid [Abstract] | |
Schedule of effects of reinsurance | The effects of reinsurance on contract charges, interest credited to policyholder accounts, premiums and on claims, benefits, and losses incurred for the years ended December 31 are as follows: 2019 2018 2017 Face amount of policies in force $ 72,193 $ 80,872 $ 86,587 Premiums: Direct - written $ 4,094 $ 2,812 $ 3,145 Direct - change in unearned — — 5 Direct - earned 4,094 2,812 3,150 Ceded to affiliate - written (4,094 ) (2,812 ) (3,145 ) Ceded to affiliate - change in unearned — — (5 ) Ceded to affiliate - earned (4,094 ) (2,812 ) (3,150 ) Premiums - written, net — — 5 Premiums - change in unearned, net — — (5 ) Premiums, net $ — $ — $ — Contract charges: Direct $ 10,935 $ 7,535 $ 3,498 Ceded to affiliate (10,935 ) (7,535 ) (3,498 ) Contract charges, net $ — $ — $ — Claims, benefits and losses incurred: Direct $ 4,317 $ 2,507 $ 2,779 Ceded to affiliate (4,317 ) (2,507 ) (2,777 ) Claims, benefits and losses, net $ — $ — $ 2 Interest credited to policyholder account balances: Direct $ 34,571 $ 41,175 $ 30,469 Ceded to affiliate (34,531 ) (41,190 ) (30,469 ) Interest credited to policyholder account balances, net $ 40 $ (15 ) $ — |
Statutory Financial Data and _2
Statutory Financial Data and Dividend Restrictions (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Statutory Financial Data And Dividend Restrictions | |
Schedule of certain statutory basis financial information | Certain statutory basis financial information for MLIC is presented in the table below as of and for the years ended December 31. Statutory Basis Statutory Basis Capital and Surplus Net Income 2019 2018 2019 2018 2017 MLIC $ 39,989 $ 39,447 $ 1,249 $ 419 $ 1,914 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule of accumulated other comprehensive income (loss) | The components of accumulated other comprehensive income (loss), net of tax, are as follows: Accumulated Unrealized Other Investment Comprehensive Gains (Loss) Income (Loss) Balance, January 1, 2017 $ (323 ) $ (323 ) Change in unrealized holding gains (losses), net of tax - $181 334 334 Balance, December 31, 2017 11 11 Effect of change for Cumulative effect of reclassification for the stranded tax effects 3 3 Change in unrealized holding gains (losses), net of tax - ($64) (240 ) (240 ) Balance, December 31, 2018 (226 ) (226 ) Change in unrealized holding gains (losses), net of tax - $336 1,261 1,261 Balance, December 31, 2019 $ 1,035 $ 1,035 |
Business Segment Information (T
Business Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Schedule of segment reporting information, by segment | The following table sets forth financial information regarding the Company’s two reportable business segments for the year ended December 31, 2019. Life and Year ended or as of December 31, 2019 Health Annuities Total Revenues Net investment income $ 1,677 $ — $ 1,677 Net realized investment (losses) 17 — 17 Other income 38 — 38 Total revenues 1,732 — 1,732 Benefits and expenses Life and health insurance claims and benefits, net — — — Interest credited to policyholder account balances, net — 40 40 Operating and other expenses 343 — 343 Total benefits and expenses 343 40 383 Income (loss) before income taxes 1,389 (40 ) 1,349 Income tax expense (benefit) (2 ) — (2 ) Net income (loss) 1,391 (40 ) 1,351 Change in unrealized gains (losses), net of tax expense (benefit) 1,268 — 1,268 Reclassification adjustment for (gains) included in net income, net of tax (benefit) (7 ) — (7 ) Other comprehensive income (loss) 1,261 — 1,261 Total comprehensive income (loss) $ 2,652 $ (40 ) $ 2,612 Reinsurance recoverable from affiliate $ 23,927 $ — $ 23,927 Assets on deposit — 4,274,964 4,274,964 Claim and policy benefit reserves - life and health 22,551 — 22,551 Policyholder account balances 6,715 4,274,964 4,281,679 The following table sets forth financial information regarding the Company’s two reportable business segments for the year ended December 31, 2018. Life and Year ended or as of December 31, 2018 Health Annuities Total Revenues Net investment income $ 762 $ — $ 762 Net realized investment (losses) (17 ) — (17 ) Other income 18 — 18 Total revenues 763 — 763 Benefits and expenses Life and health insurance claims and benefits, net — — — Interest credited to policyholder account balances, net — (15 ) (15 ) Operating and other expenses 151 — 151 Total benefits and expenses 151 (15 ) 136 Income before income taxes 612 15 627 Income tax expense (benefit) (185 ) 3 (182 ) Net income 797 12 809 Change in unrealized gains (losses), net of tax expense (benefit) (188 ) — (188 ) Reclassification adjustment for (gains) included in net income, net of tax (benefit) (52 ) — (52 ) Other comprehensive income (loss) (240 ) — (240 ) Total comprehensive income $ 557 $ 12 $ 569 Reinsurance recoverable from affiliate $ 24,034 $ — $ 24,034 Assets on deposit — 3,138,096 3,138,096 Claim and policy benefit reserves - life and health 20,769 6,067 26,836 Policyholder account balances 3,981 3,138,096 3,142,077 The following table sets forth financial information regarding the Company’s two reportable business segments for the year ended December 31, 2017. Life and Year ended or as of December 31, 2017 Health Annuities Total Revenues Net investment income $ 517 $ — $ 517 Net realized investment (losses) — — — Other income 3,996 — 3,996 Total revenues 4,513 — 4,513 Benefits and expenses Life and health insurance claims and benefits, net 2 — 2 Interest credited to policyholder account balances, net — — — Operating and other expenses 1,596 113 1,709 Total benefits and expenses 1,598 113 1,711 Income before income taxes 2,915 (113 ) 2,802 Income tax expense (benefit) 763 (40 ) 723 Net income 2,152 (73 ) 2,079 Change in unrealized gains (losses), net of tax expense (benefit) 334 — 334 Reclassification adjustment for (gains) included in net income, net of tax (benefit) — — — Other comprehensive income (loss) 334 — 334 Total comprehensive income $ 2,486 $ (73 ) $ 2,413 Reinsurance recoverable from affiliate $ 23,973 $ — $ 23,973 Assets on deposit — 2,453,033 2,453,033 Claim and policy benefit reserves - life and health 20,688 2,364 23,052 Policyholder account balances 3,601 2,453,033 2,456,634 |
Nature of Business (Details)
Nature of Business (Details) | 12 Months Ended | ||||||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |||||
MICHIGAN | |||||||
Direct Life and Health Premiums greater than 5% of total direct premiums | 60.00% | 62.00% | 62.00% | ||||
Deposits on Annuity Contracts greater than 5% of total deposits | 6.00% | 7.00% | 9.00% | ||||
TEXAS | |||||||
Direct Life and Health Premiums greater than 5% of total direct premiums | 25.00% | 24.00% | 24.00% | ||||
Deposits on Annuity Contracts greater than 5% of total deposits | 5.00% | [1] | 5.00% | ||||
CALIFORNIA | |||||||
Direct Life and Health Premiums greater than 5% of total direct premiums | 5.00% | 5.00% | 5.00% | ||||
Deposits on Annuity Contracts greater than 5% of total deposits | [1] | [1] | 6.00% | ||||
PENNSYLVANIA | |||||||
Direct Life and Health Premiums greater than 5% of total direct premiums | [1] | ||||||
Deposits on Annuity Contracts greater than 5% of total deposits | 7.00% | 8.00% | 8.00% | ||||
IOWA | |||||||
Direct Life and Health Premiums greater than 5% of total direct premiums | [1] | ||||||
Deposits on Annuity Contracts greater than 5% of total deposits | 5.00% | 6.00% | 7.00% | ||||
FLORIDA | |||||||
Direct Life and Health Premiums greater than 5% of total direct premiums | [1] | ||||||
Deposits on Annuity Contracts greater than 5% of total deposits | 5.00% | 6.00% | [1] | ||||
INDIANA | |||||||
Direct Life and Health Premiums greater than 5% of total direct premiums | [1] | ||||||
Deposits on Annuity Contracts greater than 5% of total deposits | [1] | 5.00% | 6.00% | ||||
WISCONSIN | |||||||
Direct Life and Health Premiums greater than 5% of total direct premiums | [1] | ||||||
Deposits on Annuity Contracts greater than 5% of total deposits | 6.00% | 5.00% | 6.00% | ||||
[1] | Less than 5% |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details Narrative) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019USD ($)Number | Dec. 31, 2018USD ($)Number | Dec. 31, 2017Number | |
Accounting Policies [Abstract] | |||
Number of operating segments | Number | 2 | 2 | 2 |
Policy loans allocated to related party | $ 1,325 | $ 1,367 | |
Average annualized credited rate for the single premium deferred index annuity | 1.14% | 1.50% | 1.44% |
Average annualized credited rate for the single premium deferred modified guaranteed index annuity | 1.83% | ||
Average annualized credited rate for the risk control accounts of the flexible premium deferred variableand index linked deferred annuity | 2.51% | 1.20% | 1.59% |
Average credited interest rate | 4.50% | 4.50% | 4.50% |
Future minimum guaranteed interest rate | 4.50% | ||
Loss contingency liabilities | $ 153 | $ 138 | |
Credited interest rate floor | 0.00% | ||
Growth account floor | (10.00%) |
Investments (Details)
Investments (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Debt Securities, Available-for-sale, Amortized Cost | $ 34,434 | $ 29,856 |
Debt Securities, Available-for-sale, Unrealized Gain | ||
Debt securities, available for sale, at fair value | 35,744 | 29,569 |
U.S. Government and Agencies [Member] | ||
Debt Securities, Available-for-sale, Amortized Cost | 8,739 | 8,744 |
Debt Securities, Available-for-sale, Unrealized Gain | 454 | |
Debt Securities, Available-for-sale, Unrealized Loss | (521) | |
Debt securities, available for sale, at fair value | 9,193 | 8,223 |
Domestic Corporate Securities [Member] | ||
Debt Securities, Available-for-sale, Amortized Cost | 16,478 | 16,476 |
Debt Securities, Available-for-sale, Unrealized Gain | 757 | 188 |
Debt Securities, Available-for-sale, Unrealized Loss | (9) | |
Debt securities, available for sale, at fair value | 17,235 | 16,655 |
Residential Mortgage Backed Securities [Member] | ||
Debt Securities, Available-for-sale, Amortized Cost | 3,217 | 639 |
Debt Securities, Available-for-sale, Unrealized Gain | 17 | 14 |
Debt Securities, Available-for-sale, Unrealized Loss | ||
Debt securities, available for sale, at fair value | 3,234 | 653 |
Foreign Corporate Securities [Member] | ||
Debt Securities, Available-for-sale, Amortized Cost | 3,999 | 3,997 |
Debt Securities, Available-for-sale, Unrealized Gain | 82 | 44 |
Debt Securities, Available-for-sale, Unrealized Loss | (3) | |
Debt securities, available for sale, at fair value | 4,081 | 4,038 |
Debt Securities [Member] | ||
Debt Securities, Available-for-sale, Amortized Cost | 34,434 | 29,856 |
Debt Securities, Available-for-sale, Unrealized Gain | 1,310 | 246 |
Debt Securities, Available-for-sale, Unrealized Loss | (533) | |
Debt securities, available for sale, at fair value | 35,744 | $ 29,569 |
Other Structured Securities [Member] | ||
Debt Securities, Available-for-sale, Amortized Cost | 2,001 | |
Debt Securities, Available-for-sale, Unrealized Gain | ||
Debt Securities, Available-for-sale, Unrealized Loss | ||
Debt securities, available for sale, at fair value | $ 2,001 |
Investments (Details 1)
Investments (Details 1) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Debt Securities, Available-for-sale, Amortized Cost | $ 34,434 | $ 29,856 |
Debt Securities, Available-for-sale, Fair Value | 35,744 | 29,569 |
Due in One Year Or Less [Member] | ||
Debt Securities, Available-for-sale, Amortized Cost | 6,495 | |
Debt Securities, Available-for-sale, Fair Value | 6,554 | |
Due After One Year Through Five Years [Member] | ||
Debt Securities, Available-for-sale, Amortized Cost | 10,990 | |
Debt Securities, Available-for-sale, Fair Value | 11,511 | |
Due After One Year Through Ten Years [Member] | ||
Debt Securities, Available-for-sale, Amortized Cost | 2,993 | |
Debt Securities, Available-for-sale, Fair Value | 3,250 | |
Due After Ten Years [Member] | ||
Debt Securities, Available-for-sale, Amortized Cost | 8,738 | |
Debt Securities, Available-for-sale, Fair Value | 9,194 | |
Debt Securities [Member] | ||
Debt Securities, Available-for-sale, Amortized Cost | 34,434 | 29,856 |
Debt Securities, Available-for-sale, Fair Value | 35,744 | 29,569 |
Residential Mortgage Backed Securities [Member] | ||
Debt Securities, Available-for-sale, Amortized Cost | 3,217 | 639 |
Debt Securities, Available-for-sale, Fair Value | 3,234 | $ 653 |
Other Structured Securities [Member] | ||
Debt Securities, Available-for-sale, Amortized Cost | 2,001 | |
Debt Securities, Available-for-sale, Fair Value | $ 2,001 |
Investments (Details 2)
Investments (Details 2) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Gross Investment Income, Operating | $ 1,731 | $ 820 | $ 538 |
Investment Income, Investment Expense | (54) | (58) | (21) |
Net Investment Income | 1,677 | 762 | 517 |
Cash Equivalents [Member] | |||
Gross Investment Income, Operating | 709 | 452 | 217 |
Debt Securities [Member] | |||
Gross Investment Income, Operating | $ 1,022 | $ 368 | $ 321 |
Investments (Details 3)
Investments (Details 3) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Net unrealized investment gains (losses) | $ 1,035 | $ (226) | $ 11 |
Deferred Income Taxes [Member] | |||
Net unrealized investment gains (losses) | (275) | 61 | (6) |
Debt Securities [Member] | |||
Net unrealized investment gains (losses) | $ 1,310 | $ (287) | $ 17 |
Investments (Details 4)
Investments (Details 4) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Total embedded derivatives | $ 952,002 | $ 524,178 |
Single Premium Deferred Index Annuities [Member] | ||
Total embedded derivatives | 799,912 | 456,088 |
Flexible Premium Variable and Index linked Deferred Annuities [Member] | ||
Total embedded derivatives | 147,328 | 68,090 |
Single Premium Deferred Modified Guaranteed Index Annuities [Member] | ||
Total embedded derivatives | $ 4,762 |
Investments (Details Narrative)
Investments (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Proceeds from sale of debt securities | $ 338 | $ 651 | $ 0 |
Debt securities, unrealized investment loss position | 10,209 | ||
Fair value, of investment grade | 10,209 | ||
Description of price impairement,unrealized loss for debt securities | The Company owned no securities in an unrealized investment loss position under or over 12 months. | ||
Embedded Derivatives, Increase (Decrease) in fair value | $ 295,733 | (45,101) | $ 136,078 |
Debt securities and cash designated for Iowa | 33,566 | 27,621 | |
Securities on deposit other regulatory jurisdictions with a fair value | 2,227 | 1,998 | |
Debt securities, available for sale, unrealized loss position under 12 months | 35,744 | 29,569 | |
Two Securities [Member] | |||
Debt securities, available for sale, unrealized loss position under 12 months | 1,986 | ||
Debt Securities, Available-for-sale, Unrealized Loss Under 12 months | $ 12 | ||
Price impairment | 6.00% | ||
Domestic Corporate Securities [Member] | |||
Debt securities, available for sale, unrealized loss position under 12 months | 17,235 | $ 16,655 | |
U.S. Government and Agencies [Member] | |||
Debt securities, available for sale, unrealized loss position under 12 months | 9,193 | 8,223 | |
Debt Securities, Available-for-sale, Unrealized Loss Over 12 months | 521 | ||
Debt Securities [Member] | |||
Debt securities, available for sale, unrealized loss position under 12 months | 35,744 | 29,569 | |
Residential Mortgage Backed Securities [Member] | |||
Debt securities, available for sale, unrealized loss position under 12 months | 3,234 | 653 | |
Foreign Corporate Securities [Member] | |||
Debt securities, available for sale, unrealized loss position under 12 months | $ 4,081 | $ 4,038 |
Fair Value (Details)
Fair Value (Details) - Recurring [Member] - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | ||
Assets, at Fair Value | $ 1,185,522 | $ 678,582 | ||
Liabilities, at Fair Value | 952,002 | 524,178 | ||
Cash Equivalents [Member] | ||||
Assets, at Fair Value | 28,122 | [1] | 21,630 | [2] |
U.S. Government and Agencies [Member] | ||||
Assets, at Fair Value | 9,193 | 8,223 | ||
Domestic Corporate Securities [Member] | ||||
Assets, at Fair Value | 17,235 | 16,655 | ||
Residential Mortgage Backed Securities [Member] | ||||
Assets, at Fair Value | 3,234 | 653 | ||
Foreign Corporate Securities [Member] | ||||
Assets, at Fair Value | 4,081 | 4,038 | ||
Debt Securities [Member] | ||||
Assets, at Fair Value | 35,744 | 29,569 | ||
Derivatives Embedded in Assets on Deposits [Member] | ||||
Assets, at Fair Value | 952,002 | 524,178 | ||
Liabilities, at Fair Value | 952,002 | 524,178 | ||
Separate Account Assets [Member] | ||||
Assets, at Fair Value | 169,654 | 103,205 | ||
Other Structured Securities [Member] | ||||
Assets, at Fair Value | 2,001 | |||
Level 1 [Member] | ||||
Assets, at Fair Value | 28,122 | 21,630 | ||
Liabilities, at Fair Value | ||||
Level 1 [Member] | Cash Equivalents [Member] | ||||
Assets, at Fair Value | 28,122 | [1] | 21,630 | [2] |
Level 1 [Member] | U.S. Government and Agencies [Member] | ||||
Assets, at Fair Value | ||||
Level 1 [Member] | Domestic Corporate Securities [Member] | ||||
Assets, at Fair Value | ||||
Level 1 [Member] | Residential Mortgage Backed Securities [Member] | ||||
Assets, at Fair Value | ||||
Level 1 [Member] | Foreign Corporate Securities [Member] | ||||
Assets, at Fair Value | ||||
Level 1 [Member] | Debt Securities [Member] | ||||
Assets, at Fair Value | ||||
Level 1 [Member] | Derivatives Embedded in Assets on Deposits [Member] | ||||
Assets, at Fair Value | ||||
Liabilities, at Fair Value | ||||
Level 1 [Member] | Separate Account Assets [Member] | ||||
Assets, at Fair Value | ||||
Level 1 [Member] | Other Structured Securities [Member] | ||||
Assets, at Fair Value | ||||
Level 2 [Member] | ||||
Assets, at Fair Value | 205,398 | 132,774 | ||
Liabilities, at Fair Value | ||||
Level 2 [Member] | Cash Equivalents [Member] | ||||
Assets, at Fair Value | [1] | [2] | ||
Level 2 [Member] | U.S. Government and Agencies [Member] | ||||
Assets, at Fair Value | 9,193 | 8,223 | ||
Level 2 [Member] | Domestic Corporate Securities [Member] | ||||
Assets, at Fair Value | 17,235 | 16,655 | ||
Level 2 [Member] | Residential Mortgage Backed Securities [Member] | ||||
Assets, at Fair Value | 3,234 | 653 | ||
Level 2 [Member] | Foreign Corporate Securities [Member] | ||||
Assets, at Fair Value | 4,081 | 4,038 | ||
Level 2 [Member] | Debt Securities [Member] | ||||
Assets, at Fair Value | 35,744 | 29,569 | ||
Level 2 [Member] | Derivatives Embedded in Assets on Deposits [Member] | ||||
Assets, at Fair Value | ||||
Liabilities, at Fair Value | ||||
Level 2 [Member] | Separate Account Assets [Member] | ||||
Assets, at Fair Value | 169,654 | 103,205 | ||
Level 2 [Member] | Other Structured Securities [Member] | ||||
Assets, at Fair Value | 2,001 | |||
Level 3 [Member] | ||||
Assets, at Fair Value | 952,002 | 524,178 | ||
Liabilities, at Fair Value | 952,002 | 524,178 | ||
Level 3 [Member] | Cash Equivalents [Member] | ||||
Assets, at Fair Value | [1] | [2] | ||
Level 3 [Member] | U.S. Government and Agencies [Member] | ||||
Assets, at Fair Value | ||||
Level 3 [Member] | Domestic Corporate Securities [Member] | ||||
Assets, at Fair Value | ||||
Level 3 [Member] | Residential Mortgage Backed Securities [Member] | ||||
Assets, at Fair Value | ||||
Level 3 [Member] | Foreign Corporate Securities [Member] | ||||
Assets, at Fair Value | ||||
Level 3 [Member] | Debt Securities [Member] | ||||
Assets, at Fair Value | ||||
Level 3 [Member] | Derivatives Embedded in Assets on Deposits [Member] | ||||
Assets, at Fair Value | 952,002 | 524,178 | ||
Liabilities, at Fair Value | 952,002 | 524,178 | ||
Level 3 [Member] | Separate Account Assets [Member] | ||||
Assets, at Fair Value | ||||
Level 3 [Member] | Other Structured Securities [Member] | ||||
Assets, at Fair Value | ||||
[1] | Excludes cash of $915 that is not subject to fair value accounting. | |||
[2] | Excludes cash of $3,282 that is not subject to fair value accounting. |
Fair Value (Details 1)
Fair Value (Details 1) - Level 3 [Member] - Discounted Cash Flow [Member] | 12 Months Ended | |
Dec. 31, 2019Number | Dec. 31, 2018Number | |
Single Premium Deferred Index Annuity [Member] | Lapse Rate [Member] | ||
Derivative asset (liability), index period | 50% or 75% | 50% or 95% |
Single Premium Deferred Index Annuity [Member] | Lapse Rate [Member] | Weighted Average [Member] | ||
Derivative asset (liability), measurement input | 0.049 | 0.037 |
Single Premium Deferred Index Annuity [Member] | Lapse Rate [Member] | Minimum [Member] | ||
Derivative asset (liability), measurement input | 0.01 | 0.02 |
Single Premium Deferred Index Annuity [Member] | Lapse Rate [Member] | Maximum [Member] | ||
Derivative asset (liability), measurement input | 0.04 | 0.04 |
Single Premium Deferred Index Annuity [Member] | Credit And Risk Margin [Member] | Weighted Average [Member] | ||
Derivative asset (liability), measurement input | 0.90 | 0.80 |
Single Premium Deferred Index Annuity [Member] | Credit And Risk Margin [Member] | Minimum [Member] | ||
Derivative asset (liability), measurement input | 0.71 | 0.51 |
Single Premium Deferred Index Annuity [Member] | Credit And Risk Margin [Member] | Maximum [Member] | ||
Derivative asset (liability), measurement input | 1.02 | 1.13 |
Flexible Premium Variable And Index Linked Deferred Annuity [Member] | Lapse Rate [Member] | ||
Derivative asset (liability), index period | 5% to 20% | 5% to 20% |
Flexible Premium Variable And Index Linked Deferred Annuity [Member] | Lapse Rate [Member] | Weighted Average [Member] | ||
Derivative asset (liability), measurement input | 0.026 | 0.026 |
Flexible Premium Variable And Index Linked Deferred Annuity [Member] | Lapse Rate [Member] | Minimum [Member] | ||
Derivative asset (liability), measurement input | 0.02 | 0.02 |
Flexible Premium Variable And Index Linked Deferred Annuity [Member] | Lapse Rate [Member] | Maximum [Member] | ||
Derivative asset (liability), measurement input | 0.10 | 0.10 |
Flexible Premium Variable And Index Linked Deferred Annuity [Member] | Credit And Risk Margin [Member] | Weighted Average [Member] | ||
Derivative asset (liability), measurement input | 0.90 | 0.80 |
Flexible Premium Variable And Index Linked Deferred Annuity [Member] | Credit And Risk Margin [Member] | Minimum [Member] | ||
Derivative asset (liability), measurement input | 0.71 | 0.51 |
Flexible Premium Variable And Index Linked Deferred Annuity [Member] | Credit And Risk Margin [Member] | Maximum [Member] | ||
Derivative asset (liability), measurement input | 1.02 | 1.13 |
Single Premium Deferred Modified Guaranteed Index Annuity [Member] | Lapse Rate [Member] | ||
Derivative asset (liability), index period | 1% to 2% | |
Single Premium Deferred Modified Guaranteed Index Annuity [Member] | Lapse Rate [Member] | Weighted Average [Member] | ||
Derivative asset (liability), measurement input | 0.010 | |
Single Premium Deferred Modified Guaranteed Index Annuity [Member] | Lapse Rate [Member] | Minimum [Member] | ||
Derivative asset (liability), measurement input | 0.01 | |
Single Premium Deferred Modified Guaranteed Index Annuity [Member] | Lapse Rate [Member] | Maximum [Member] | ||
Derivative asset (liability), measurement input | 0.13 | |
Single Premium Deferred Modified Guaranteed Index Annuity [Member] | Credit And Risk Margin [Member] | Weighted Average [Member] | ||
Derivative asset (liability), measurement input | 0.90 | |
Single Premium Deferred Modified Guaranteed Index Annuity [Member] | Credit And Risk Margin [Member] | Minimum [Member] | ||
Derivative asset (liability), measurement input | 0.71 | |
Single Premium Deferred Modified Guaranteed Index Annuity [Member] | Credit And Risk Margin [Member] | Maximum [Member] | ||
Derivative asset (liability), measurement input | 1.02 |
Fair Value (Details 2)
Fair Value (Details 2) - Level 3 [Member] - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | ||
Assets classified as level 3 | $ 524,178 | $ 471,192 | |
Assets classified as level 3, Purchases | 152,501 | 109,477 | |
Assets classified as level 3, Maturities | (20,410) | (11,390) | |
Assets classified as level 3, Earnings | [1] | 295,733 | (45,101) |
Assets classified as level 3 | 952,002 | 524,178 | |
Liabilities classified as level 3 | 524,178 | 471,192 | |
Liabilities classified as level 3, Purchases | 152,501 | 109,477 | |
Liabilities classified as level 3, Maturities | (20,410) | (11,390) | |
Liabilities classified as level 3, Earnings | [1] | 295,733 | (45,101) |
Liabilities classified as level 3 | 952,002 | 524,178 | |
Derivatives Embedded in Assets on Deposits [Member] | |||
Assets classified as level 3 | 524,178 | 471,192 | |
Assets classified as level 3, Purchases | 152,501 | 109,477 | |
Assets classified as level 3, Maturities | (20,410) | (11,390) | |
Assets classified as level 3, Earnings | [1] | 295,733 | (45,101) |
Assets classified as level 3 | 952,002 | 524,178 | |
Liabilities classified as level 3 | 524,178 | 471,192 | |
Liabilities classified as level 3, Purchases | 152,501 | 109,477 | |
Liabilities classified as level 3, Maturities | (20,410) | (11,390) | |
Liabilities classified as level 3, Earnings | [1] | 295,733 | (45,101) |
Liabilities classified as level 3 | $ 952,002 | $ 524,178 | |
[1] | Included in net income is realized gains and losses associated with embedded derivatives. |
Fair Value (Details 3)
Fair Value (Details 3) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Carrying Amount [Member] | Level 2 [Member] | ||
Financial instruments recorded as assets: | ||
Assets on deposit | $ 3,322,962 | $ 2,613,918 |
Financial instruments recorded as liabilities: | ||
Investment-type contracts | 3,322,962 | 2,613,918 |
Separate account liabilities | 169,654 | 103,205 |
Carrying Amount [Member] | Level 1 [Member] | ||
Financial instruments recorded as assets: | ||
Cash | 915 | 3,282 |
Estimate Fair Value [Member] | Level 2 [Member] | ||
Financial instruments recorded as assets: | ||
Assets on deposit | 3,251,078 | 2,303,358 |
Financial instruments recorded as liabilities: | ||
Investment-type contracts | 3,251,078 | 2,303,358 |
Separate account liabilities | 169,654 | 103,205 |
Estimate Fair Value [Member] | Level 1 [Member] | ||
Financial instruments recorded as assets: | ||
Cash | $ 915 | $ 3,282 |
Income Tax (Details)
Income Tax (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
Current tax expense (benefit) | $ (36) | $ 80 | $ 481 |
Deferred tax expense (benefit) | 34 | (262) | 193 |
Adjustment of deferred tax assets and liabilities for enacted rate change | 49 | ||
Total income tax expense (benefit) | $ (2) | $ (182) | $ 723 |
Income Tax (Details 1)
Income Tax (Details 1) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Effective Income Tax Rate Reconciliation, Amount [Abstract] | |||
Federal corporate tax rate, Amount | $ 283 | $ 132 | $ 981 |
Prior Year Income Taxes, Amount | (159) | (240) | (221) |
Dividends-received deduction, Amount | (87) | (59) | (83) |
Foreign tax credit, Amount | (40) | (14) | |
Adjustment of deferred tax assets and liabilities for enacted rate change, Amount | 49 | ||
Other, Amount | 1 | (1) | (3) |
Total income tax expense (benefit) | $ (2) | $ (182) | $ 723 |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | |||
Federal corporate tax rate, Percent | 21.00% | 21.00% | 35.00% |
Prior Year Income Taxes, Percent | (11.80%) | (38.20%) | (7.80%) |
Dividends-received deduction, Percent | (6.50%) | (9.40%) | (3.00%) |
Foreign tax credit, Percent | (3.00%) | (2.20%) | |
Adjustment of deferred tax assets and liabilities for enacted rate change, Percentage | 1.70% | ||
Other, Percent | 0.10% | (0.20%) | (0.10%) |
Effective Income Tax Rate Reconciliation, Percent | (0.20%) | (29.00%) | 25.80% |
Income Tax (Details 2)
Income Tax (Details 2) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets | ||
Tax reserves method change | $ 7 | $ 11 |
Unrealized investment losses | 61 | |
Accrued expenses | 140 | 293 |
Deferred policy acquisition costs | 479 | 380 |
Other | 12 | |
Gross deferred tax assets | 638 | 745 |
Deferred tax liabilities | ||
Investments | 344 | 354 |
Deferred reinsurance expense | 13 | 16 |
Unrealized investment gains | 275 | |
Gross deferred tax liabilities | 632 | 370 |
Net deferred tax asset | $ 6 | $ 375 |
Income Tax (Details Narrative)
Income Tax (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
U.S. federal corporate income tax rate | 21.00% | 21.00% | 35.00% |
Recognized a reduction in interest and penalties | $ 5 | ||
Accruals for payment of interest and penalties | $ 2 | $ 2 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Receivable from Related Parties, Current | $ 484 | $ 5,027 |
Payable to Related Parties, Current | 3,533 | 3,006 |
CMFG Life Insurance Company [Member] | ||
Receivable from Related Parties, Current | 476 | 5,001 |
Other Related Parties [Member] | ||
Receivable from Related Parties, Current | 8 | 26 |
Payable to Related Parties, Current | 150 | 58 |
CUNA Brokerage Services, Inc [Member] | ||
Payable to Related Parties, Current | $ 3,383 | $ 2,948 |
Related Party Transactions (D_2
Related Party Transactions (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Expenses reimbursed | $ 38,579 | $ 30,131 | $ 20,808 |
Investment management fees | 54 | 58 | 21 |
Commission Expense | 34,180 | 29,996 | 29,114 |
Additional paid in capital | 31,153 | 31,153 | |
Deferred tax liability | 632 | $ 370 | |
Dividend paid in cash | $ 7,000 | ||
CUNA Mutual Investment Corporation [Member] | |||
Additional paid in capital | 20,653 | ||
Deferred tax liability | $ 24 |
Reinsurance (Details)
Reinsurance (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Reinsurance Recoverables, Including Reinsurance Premium Paid [Abstract] | |||
Face amount of policies in force | $ 72,193 | $ 80,872 | $ 86,587 |
Premiums Written and Earned | |||
Direct Premiums Written | 4,094 | 2,812 | 3,145 |
Direct Premiums Unearned | 5 | ||
Direct Premiums Earned | 4,094 | 2,812 | 3,150 |
Ceded Premiums Written | (4,094) | (2,812) | (3,145) |
Ceded Premiums Unearned | (5) | ||
Ceded Premiums Earned | (4,094) | (2,812) | (3,150) |
Premiums written, net | 5 | ||
Change in unearned premiums, net | (5) | ||
Premiums, net | |||
Contract revenue direct | 10,935 | 7,535 | 3,498 |
Contract revenue ceded to affiliate | (10,935) | (7,535) | (3,498) |
Contract charges, net | |||
Policyholder Benefits and Claims Incurred, Net | |||
Policyholder Benefits and Claims Incurred, Direct | 4,317 | 2,507 | 2,779 |
Policyholder Benefits and Claims Incurred, Ceded | (4,317) | (2,507) | (2,777) |
Policyholder Benefits and Claims Incurred, Net | 2 | ||
Interest credited to policyholder account balances, Direct | 34,571 | 41,175 | 30,469 |
Interest credited to policyholder account balances, Ceded to affiliate | (34,531) | (41,190) | (30,469) |
Interest credited to policyholder account balances, net | $ 40 | $ (15) |
Reinsurance (Details Narrative)
Reinsurance (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Separate Account Assets | $ 169,654 | $ 103,205 | |
Separate account liabilities | 169,654 | 103,205 | |
Reinsurance recoverable from affiliate | 23,927 | 24,034 | $ 23,973 |
CMFG Life Insurance Company [Member] | Amended Reinsurance Agreement [Member] | |||
Commissions on flexible premium | 767 | 839 | |
Refund amount | 668 | ||
CMFG Life Insurance Company [Member] | Third Agreement [Member] | |||
Deposit contracts | 44,465 | ||
Related liabilities | 44,465 | ||
Commission on single premium | 3,752 | ||
CMFG Life Insurance Company [Member] | Reinsurance Agreement [Member] | |||
Deposit contracts | 565,370 | 337,755 | |
Related liabilities | 565,370 | 337,755 | |
Separate Account Assets | 169,654 | 103,205 | |
Separate account liabilities | 169,654 | 103,205 | |
Commissions on flexible premium | 26,384 | 17,738 | 11,019 |
CMFG Life Insurance Company [Member] | Second Agreement [Member] | |||
Deposit contracts | 3,665,129 | 2,800,341 | |
Related liabilities | 3,665,129 | 2,800,341 | |
Commission on single premium | $ 56,991 | $ 52,652 | $ 44,773 |
Statutory Financial Data and _3
Statutory Financial Data and Dividend Restrictions (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Statutory Financial Data And Dividend Restrictions | |||
Statutory Accounting Practices, Statutory Capital and Surplus, Balance | $ 39,989 | $ 39,447 | |
Statutory Accounting Practices, Statutory Net Income Amount | $ 1,249 | $ 419 | $ 1,914 |
Statutory Financial Data and _4
Statutory Financial Data and Dividend Restrictionss (Details Narrative) $ in Thousands | Dec. 31, 2019USD ($) |
Statutory Financial Data And Dividend Restrictions | |
2020 dividends without prior approval | $ 3,836 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||
Unrealized Investment Gain (Loss), Beginning balance | $ (226) | $ 11 | $ (323) |
Unrealized Investment Gains (Loss), Cumulative effect of reclassification for stranded tax effects | 3 | ||
Unrealized Investment Gains (Loss), Change in unrealized holding gains (losses), net of tax | 1,261 | (240) | 334 |
Unrealized Investment Gain (Loss), Ending balance | 1,035 | (226) | 11 |
Accumulated Other Comprehensive Income (Loss), net of tax, Beginning balance | (226) | 11 | (323) |
Accumulated Other Comprehensive Income (Loss), Cumulative effect of reclassification for stranded tax effects | 3 | ||
Accumulated Other Comprehensive Income (Loss), Change in unrealized holding gains (losses), net of tax | 1,261 | (240) | 334 |
Accumulated Other Comprehensive Income (Loss), net of tax, Ending balance | $ 1,035 | $ (226) | $ 11 |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Income (Loss) (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||
Change in unrealized holding gains (losses), net of tax | $ 336 | $ (64) | $ 181 |
Reclassification from Accumulated Other Comprehensive Income (Loss), Current Period, Net of Tax | 7 | 52 | |
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Deferred Taxes | $ 3 | $ 14 |
Business Segment Information (D
Business Segment Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues | |||
Net investment income | $ 1,677 | $ 762 | $ 517 |
Net realized investment gains (losses) | 17 | (17) | |
Other income | 38 | 18 | 3,996 |
Total revenues | 1,732 | 763 | 4,513 |
Benefits and expenses | |||
Life and health insurance claims and benefits, net | 2 | ||
Interest credited to policyholder account balances, net | 40 | (15) | |
Operating and other expenses | 343 | 151 | 1,709 |
Total benefits and expenses | 383 | 136 | 1,711 |
Income (loss) before income taxes | 1,349 | 627 | 2,802 |
Income tax expense (benefit) | (2) | (182) | 723 |
Net income (loss) | 1,351 | 809 | 2,079 |
Change in unrealized gains (losses), net of tax expense (benefit) | 1,268 | (188) | 334 |
Reclassification adjustment for (gains) included in net income, net of tax (benefit) | (7) | (52) | |
Other comprehensive income (loss) | 1,261 | (240) | 334 |
Total comprehensive income (loss) | 2,612 | 569 | 2,413 |
Reinsurance recoverable from affiliate | 23,927 | 24,034 | 23,973 |
Assets on deposit | 4,274,964 | 3,138,096 | 2,453,033 |
Claim and policy benefit reserves - life and health | 22,551 | 26,836 | 23,052 |
Policyholder account balances | 4,281,679 | 3,142,077 | 2,456,634 |
Annuities [Member] | |||
Revenues | |||
Net investment income | |||
Net realized investment gains (losses) | |||
Other income | |||
Total revenues | |||
Benefits and expenses | |||
Life and health insurance claims and benefits, net | |||
Interest credited to policyholder account balances, net | 40 | (15) | |
Operating and other expenses | 113 | ||
Total benefits and expenses | 40 | (15) | 113 |
Income (loss) before income taxes | (40) | 15 | (113) |
Income tax expense (benefit) | 3 | (40) | |
Net income (loss) | (40) | 12 | (73) |
Change in unrealized gains (losses), net of tax expense (benefit) | |||
Reclassification adjustment for (gains) included in net income, net of tax (benefit) | |||
Other comprehensive income (loss) | |||
Total comprehensive income (loss) | (40) | 12 | (73) |
Reinsurance recoverable from affiliate | |||
Assets on deposit | 4,274,964 | 3,138,096 | 2,453,033 |
Claim and policy benefit reserves - life and health | 6,067 | 2,364 | |
Policyholder account balances | 4,274,964 | 3,138,096 | 2,453,033 |
Life and Health [Member] | |||
Revenues | |||
Net investment income | 1,677 | 762 | 517 |
Net realized investment gains (losses) | 17 | (17) | |
Other income | 38 | 18 | 3,996 |
Total revenues | 1,732 | 763 | 4,513 |
Benefits and expenses | |||
Life and health insurance claims and benefits, net | 2 | ||
Interest credited to policyholder account balances, net | |||
Operating and other expenses | 343 | 151 | 1,596 |
Total benefits and expenses | 343 | 151 | 1,598 |
Income (loss) before income taxes | 1,389 | 612 | 2,915 |
Income tax expense (benefit) | (2) | (185) | 763 |
Net income (loss) | 1,391 | 797 | 2,152 |
Change in unrealized gains (losses), net of tax expense (benefit) | 1,268 | (188) | 334 |
Reclassification adjustment for (gains) included in net income, net of tax (benefit) | (7) | (52) | |
Other comprehensive income (loss) | 1,261 | (240) | 334 |
Total comprehensive income (loss) | 2,652 | 557 | 2,486 |
Reinsurance recoverable from affiliate | 23,927 | 24,034 | 23,973 |
Assets on deposit | |||
Claim and policy benefit reserves - life and health | 22,551 | 20,769 | 20,688 |
Policyholder account balances | $ 6,715 | $ 3,981 | $ 3,601 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Guaranty fund assessments | $ 116 | $ 1,224 |
Recoveries of assessments from premium taxes | 5 years |