Cover Page
Cover Page - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 06, 2020 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 000-55522 | |
Entity Registrant Name | NATIONAL WESTERN LIFE GROUP, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 47-3339380 | |
Entity Address, Address Line One | 10801 N. Mopac Expy Bldg 3 | |
Entity Address, City or Town | Austin, | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 78759 | |
City Area Code | (512) | |
Local Phone Number | 836-1010 | |
Title of 12(b) Security | Class A Common Stock, $0.01 par value | |
Trading Symbol | NWLI | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001635984 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Class A | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding (in shares) | 3,436,020 | |
Class B | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding (in shares) | 200,000 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Investments: | ||
Debt securities held to maturity, at amortized cost, net of allowance for credit losses ($4,940 and $0; fair value: $7,432,702 and $7,407,703) | $ 6,898,842 | $ 7,106,245 |
Debt securities available for sale, at fair value (cost: $3,166,206 and $3,206,120) | 3,373,113 | 3,356,945 |
Mortgage loans, net of allowance for credit losses ($2,227 and $675) | 273,701 | 272,422 |
Policy loans | 76,811 | 80,008 |
Derivatives, index options | 66,738 | 157,588 |
Equity securities, at fair value (cost: $15,361 and $16,894) | 17,918 | 23,594 |
Other long-term investments | 70,585 | 62,090 |
Total investments | 10,777,708 | 11,058,892 |
Cash and cash equivalents | 450,703 | 253,525 |
Deferred policy acquisition costs | 679,553 | 723,972 |
Deferred sales inducements | 94,837 | 104,359 |
Value of business acquired | 134,270 | 138,071 |
Accrued investment income | 91,068 | 93,298 |
Other assets | 163,592 | 181,330 |
Total assets | 12,391,731 | 12,553,447 |
Future policy benefits: | ||
Universal life and annuity contracts (Note 1) | 9,040,773 | 9,303,233 |
Traditional life reserves | 845,347 | 838,738 |
Other policyholder liabilities | 135,870 | 127,607 |
Deferred Federal income tax liability (Note 1) | 55,428 | 36,767 |
Federal income tax payable | 1,458 | 3,748 |
Other liabilities | 130,125 | 126,924 |
Total liabilities | 10,209,001 | 10,437,017 |
COMMITMENTS AND CONTINGENCIES (Note 8) | ||
Common stock: | ||
Additional paid-in capital | 41,716 | 41,716 |
Accumulated other comprehensive income (loss) | 83,089 | 60,108 |
Retained earnings (Note 1) | 2,057,889 | 2,014,570 |
Total stockholders’ equity | 2,182,730 | 2,116,430 |
Total liabilities and stockholders' equity | 12,391,731 | 12,553,447 |
Class A | ||
Common stock: | ||
Common stock, value outstanding | 34 | 34 |
Class B | ||
Common stock: | ||
Common stock, value outstanding | $ 2 | $ 2 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Debt securities held to maturity, allowance for expected credit losses | $ 4,940 | $ 0 |
Debt securities held to maturity - fair value | 7,432,702 | 7,407,703 |
Debt securities available for sale, amortized cost | 3,166,206 | 3,206,120 |
Mortgage loans - allowance for possible losses | 2,227 | 675 |
Equity securities - cost | $ 15,361 | $ 16,894 |
Class A | ||
STOCKHOLDERS’ EQUITY: | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 7,500,000 | 7,500,000 |
Common stock, shares issued (in shares) | 3,436,020 | 3,436,020 |
Common stock, shares outstanding (in shares) | 3,436,020 | 3,436,020 |
Class B | ||
STOCKHOLDERS’ EQUITY: | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 200,000 | 200,000 |
Common stock, shares issued (in shares) | 200,000 | 200,000 |
Common stock, shares outstanding (in shares) | 200,000 | 200,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Earnings (Loss) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Premiums and other revenues: | ||||
Universal life and annuity contract charges | $ 36,869 | $ 36,910 | $ 72,175 | $ 74,863 |
Traditional life premiums | 22,741 | 23,810 | 46,263 | 41,393 |
Net investment income (loss) | 145,694 | 128,424 | 132,215 | 279,755 |
Other revenues | 7,586 | 3,966 | 11,240 | 10,379 |
Net realized investment gains (losses): | ||||
Total other-than-temporary impairment (“OTTI”) gains (losses) | 2 | (5,900) | 4 | (5,897) |
Portion of OTTI (gains) losses recognized in other comprehensive income | (2) | (2) | (4) | (5) |
Net OTTI losses recognized in earnings | 0 | (5,902) | 0 | (5,902) |
Other net investment gains (losses) | 3,125 | 5,477 | 6,610 | 10,106 |
Total net realized investment gains (losses) | 3,125 | (425) | 6,610 | 4,204 |
Total revenues | 216,015 | 192,685 | 268,503 | 410,594 |
Benefits and expenses: | ||||
Life and other policy benefits | 33,431 | 33,657 | 67,065 | 61,846 |
Amortization of deferred policy acquisition costs and value of business acquired | 31,100 | 31,411 | 61,137 | 63,575 |
Universal life and annuity contract interest | 61,772 | 60,139 | 33,746 | 141,055 |
Other operating expenses | 29,154 | 25,334 | 48,976 | 51,383 |
Total benefits and expenses | 155,457 | 150,541 | 210,924 | 317,859 |
Earnings (loss) before Federal income taxes | 60,558 | 42,144 | 57,579 | 92,735 |
Federal income taxes | 12,145 | 8,448 | 11,228 | 18,841 |
Net earnings (loss) | 48,413 | 33,696 | 46,351 | 73,894 |
Class A | ||||
Benefits and expenses: | ||||
Net earnings (loss) | $ 47,044 | $ 32,743 | $ 45,040 | $ 71,804 |
Basic earnings (loss) per share: | ||||
Earnings (loss) per share, basic (in dollars per share) | $ 13.69 | $ 9.53 | $ 13.11 | $ 20.90 |
Diluted earnings (loss) per share: | ||||
Earnings (loss) per share, diluted (in dollars per share) | $ 13.69 | $ 9.53 | $ 13.11 | $ 20.90 |
Class B | ||||
Benefits and expenses: | ||||
Net earnings (loss) | $ 1,369 | $ 953 | $ 1,311 | $ 2,090 |
Basic earnings (loss) per share: | ||||
Earnings (loss) per share, basic (in dollars per share) | $ 6.85 | $ 4.76 | $ 6.55 | $ 10.45 |
Diluted earnings (loss) per share: | ||||
Earnings (loss) per share, diluted (in dollars per share) | $ 6.85 | $ 4.76 | $ 6.55 | $ 10.45 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net earnings | $ 48,413 | $ 33,696 | $ 46,351 | $ 73,894 |
Unrealized gains (losses) on securities: | ||||
Net unrealized holding gains (losses) arising during period | 107,365 | 35,401 | 29,212 | 78,144 |
Net unrealized liquidity gains (losses) | 0 | 1 | 1 | 2 |
Reclassification adjustment for net amounts included in net earnings | (1,367) | 3,740 | (1,968) | 2,872 |
Net unrealized gains (losses) on securities | 105,998 | 39,142 | 27,245 | 81,018 |
Foreign currency translation adjustments | (92) | (86) | (131) | 467 |
Benefit plans: | ||||
Amortization of net prior service cost and net gain (loss) | (2,067) | (504) | (4,133) | (1,008) |
Other comprehensive income (loss) | 103,839 | 38,552 | 22,981 | 80,477 |
Comprehensive income (loss) | $ 152,252 | $ 72,248 | $ 69,332 | $ 154,371 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands | Total | Common stock | Additional paid-in capital | Accumulated other comprehensive income (loss) | Unrealized gains (losses) on non-impaired securities | Unrealized gains (losses) on non-impaired securitiesCumulative effect, adjustment | Unrealized losses on impaired held to maturity securities | Unrealized losses on impaired held to maturity securitiesCumulative effect, adjustment | Unrealized losses on impaired available for sale securities | Foreign currency translation adjustments | Benefit plan liability adjustment | Retained earnings | Retained earningsCumulative effect, adjustment |
Total stockholders’ equity, beginning of period at Dec. 31, 2018 | $ 36 | $ 41,716 | $ (30,286) | $ 0 | $ (7) | $ (2) | $ 4,577 | $ (11,297) | $ 1,896,040 | $ 0 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Shares exercised under stock option plan | 0 | 0 | |||||||||||
Change in unrealized gains (losses) during period, net of tax | $ 78,144 | 81,016 | |||||||||||
Amortization | 4 | ||||||||||||
Other-than-temporary impairments, non-credit, net of tax | 0 | ||||||||||||
Additional credit loss on previously impaired securities | 0 | ||||||||||||
Change in shadow deferred policy acquisition costs | (2) | 0 | |||||||||||
Other-than-temporary impairments, non-credit, net of tax | 0 | ||||||||||||
Recoveries, net of tax | 0 | ||||||||||||
Change in translation adjustments during period | 467 | ||||||||||||
Amortization of net prior service cost and net loss, net of tax | (1,008) | (1,008) | |||||||||||
Net earnings | 73,894 | 73,894 | |||||||||||
Total stockholders’ equity, end of period at Jun. 30, 2019 | 2,055,148 | 36 | 41,716 | $ 43,462 | 50,730 | (5) | (2) | 5,044 | (12,305) | 1,969,934 | |||
Total stockholders’ equity, beginning of period at Mar. 31, 2019 | 36 | 41,716 | 11,589 | (6) | $ 0 | (2) | 5,130 | (11,801) | 1,936,238 | 0 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Shares exercised under stock option plan | 0 | 0 | |||||||||||
Change in unrealized gains (losses) during period, net of tax | 35,401 | 39,141 | |||||||||||
Amortization | 2 | ||||||||||||
Other-than-temporary impairments, non-credit, net of tax | 0 | ||||||||||||
Additional credit loss on previously impaired securities | 0 | ||||||||||||
Change in shadow deferred policy acquisition costs | (1) | 0 | |||||||||||
Other-than-temporary impairments, non-credit, net of tax | 0 | ||||||||||||
Recoveries, net of tax | 0 | ||||||||||||
Change in translation adjustments during period | (86) | ||||||||||||
Amortization of net prior service cost and net loss, net of tax | (504) | (504) | |||||||||||
Net earnings | 33,696 | 33,696 | |||||||||||
Total stockholders’ equity, end of period at Jun. 30, 2019 | 2,055,148 | 36 | 41,716 | 43,462 | 50,730 | (5) | (2) | 5,044 | (12,305) | 1,969,934 | |||
Total stockholders’ equity, beginning of period at Dec. 31, 2019 | 2,116,430 | 36 | 41,716 | 70,665 | $ 0 | (4) | (2) | 5,101 | (15,652) | 2,014,570 | (3,032) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Shares exercised under stock option plan | 0 | 0 | |||||||||||
Change in unrealized gains (losses) during period, net of tax | 29,212 | 27,244 | |||||||||||
Amortization | 3 | ||||||||||||
Other-than-temporary impairments, non-credit, net of tax | 0 | ||||||||||||
Additional credit loss on previously impaired securities | 0 | ||||||||||||
Change in shadow deferred policy acquisition costs | (2) | 0 | |||||||||||
Other-than-temporary impairments, non-credit, net of tax | 0 | ||||||||||||
Recoveries, net of tax | 0 | ||||||||||||
Change in translation adjustments during period | (131) | ||||||||||||
Amortization of net prior service cost and net loss, net of tax | (4,133) | (4,133) | |||||||||||
Net earnings | 46,351 | 46,351 | |||||||||||
Total stockholders’ equity, end of period at Jun. 30, 2020 | 2,182,730 | 36 | 41,716 | 83,089 | 97,909 | (3) | (2) | 4,970 | (19,785) | 2,057,889 | |||
Total stockholders’ equity, beginning of period at Mar. 31, 2020 | 36 | 41,716 | (8,089) | (3) | $ 0 | (2) | 5,062 | (17,718) | 2,009,476 | $ 0 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Shares exercised under stock option plan | 0 | 0 | |||||||||||
Change in unrealized gains (losses) during period, net of tax | 107,365 | 105,998 | |||||||||||
Amortization | 1 | ||||||||||||
Other-than-temporary impairments, non-credit, net of tax | 0 | ||||||||||||
Additional credit loss on previously impaired securities | 0 | ||||||||||||
Change in shadow deferred policy acquisition costs | (1) | 0 | |||||||||||
Other-than-temporary impairments, non-credit, net of tax | 0 | ||||||||||||
Recoveries, net of tax | 0 | ||||||||||||
Change in translation adjustments during period | (92) | ||||||||||||
Amortization of net prior service cost and net loss, net of tax | (2,067) | (2,067) | |||||||||||
Net earnings | 48,413 | 48,413 | |||||||||||
Total stockholders’ equity, end of period at Jun. 30, 2020 | $ 2,182,730 | $ 36 | $ 41,716 | $ 83,089 | $ 97,909 | $ (3) | $ (2) | $ 4,970 | $ (19,785) | $ 2,057,889 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash flows from operating activities: | ||
Net earnings | $ 46,351 | $ 73,894 |
Adjustments to reconcile net earnings to net cash from operating activities: | ||
Universal life and annuity contract interest | 33,746 | 141,055 |
Surrender charges and other policy revenues | (15,027) | (16,975) |
Realized (gains) losses on investments | (6,610) | (4,204) |
Accretion/amortization of discounts and premiums, investments | 1,237 | 1,362 |
Depreciation and amortization | 5,776 | 5,464 |
Increase (decrease) in estimated credit losses on investments | 2,654 | 0 |
(Increase) decrease in value of equity securities | 3,990 | (2,338) |
(Increase) decrease in value of derivatives | 66,385 | (59,830) |
(Increase) decrease in deferred policy acquisition and sales inducement costs, and value of business acquired | 36,144 | 42,652 |
(Increase) decrease in accrued investment income | 2,230 | 3,899 |
(Increase) decrease in other assets | 8,119 | (2,757) |
Increase (decrease) in liabilities for future policy benefits | 10,463 | 769 |
Increase (decrease) in other policyholder liabilities | 8,263 | (7,831) |
Increase (decrease) in Federal income tax liability | (2,290) | 7,895 |
Increase (decrease) in deferred Federal income tax | 13,357 | (13,306) |
Increase (decrease) in other liabilities | (6,209) | (5,862) |
Net cash provided by operating activities | 208,579 | 163,887 |
Proceeds from sales of: | ||
Debt securities available for sale | 0 | 80,528 |
Other investments | 9,733 | 34,984 |
Proceeds from maturities and redemptions of: | ||
Debt securities held to maturity | 375,315 | 310,618 |
Debt securities available for sale | 156,929 | 137,823 |
Derivatives, index options | 67,729 | 21,405 |
Purchases of: | ||
Debt securities held to maturity | (169,704) | (103,710) |
Debt securities available for sale | (109,893) | (77,118) |
Equity securities | (623) | (295) |
Derivatives, index options | (39,676) | (37,089) |
Other investments | (12,546) | (11,953) |
Property and equipment | (275) | (1,002) |
Payment to acquire businesses, net of cash acquired | 0 | (189,121) |
Principal payments on mortgage loans | 3,971 | 22,252 |
Cost of mortgage loans acquired | (10,359) | (33,247) |
Decrease (increase) in policy loans | 3,197 | 2,697 |
Net cash provided by (used in) investing activities | 273,798 | 156,772 |
Cash flows from financing activities: | ||
Deposits to account balances for universal life and annuity contracts | 223,630 | 187,377 |
Return of account balances on universal life and annuity contracts | (508,663) | (499,801) |
Borrowings under line of credit agreement | 0 | 75,000 |
Principal payments on line of credit borrowings | 0 | (75,000) |
Net cash provided by (used in) financing activities | (285,033) | (312,424) |
Effect of foreign exchange | (166) | 591 |
Net increase (decrease) in cash, cash equivalents, and restricted cash | 197,178 | 8,826 |
Cash, cash equivalents, and restricted cash at beginning of period | 253,525 | 131,976 |
Cash, cash equivalents and restricted cash at end of period | 450,703 | 140,802 |
Cash paid (received) during the period for: | ||
Interest | 38 | 29 |
Income taxes | 2 | 24,150 |
Noncash operating activities: | ||
Net deferral and amortization of sales inducements | (6,651) | (8,822) |
Noncash investing and financing activities: | ||
Contingent consideration to acquire businesses | $ 0 | $ 3,700 |
Consolidation and Basis of Pres
Consolidation and Basis of Presentation | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Consolidation and Basis of Presentation | CONSOLIDATION AND BASIS OF PRESENTATION The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for annual financial statements. In the opinion of management, the accompanying Condensed Consolidated Financial Statements contain all adjustments necessary to present fairly the financial position of National Western Life Group, Inc. ("NWLGI") and its wholly owned subsidiaries (“Company”) as of June 30, 2020, and the results of its operations and its cash flows for the three and six months ended June 30, 2020 and June 30, 2019. Such adjustments are of a normal recurring nature. The results of operations for the six months ended June 30, 2020 are not necessarily indicative of the results to be expected for the full year. It is recommended that these Condensed Consolidated Financial Statements be read in conjunction with the audited consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 which is accessible free of charge through the Company's internet site at www.nwlgi.com or the Securities and Exchange Commission internet site at www.sec.gov . The Condensed Consolidated Balance Sheet at December 31, 2019 has been derived from the audited consolidated financial statements as of that date. The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of NWLGI and its wholly owned subsidiaries: National Western Life Insurance Company ("NWLIC" or "National Western"), Regent Care San Marcos Holdings, LLC, NWL Services, Inc., and N.I.S. Financial Services, Inc. ("NIS"). National Western's wholly owned subsidiaries include The Westcap Corporation, NWL Financial, Inc., NWLSM, Inc., Braker P III, LLC, and Ozark National Life Insurance Company ("Ozark National"). The results of operations for Ozark National and NIS include their respective business activity subsequent to their acquisition effective January 31, 2019. All significant intercorporate transactions and accounts have been eliminated in consolidation. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Significant estimates in the accompanying Condensed Consolidated Financial Statements include: (1) liabilities for future policy benefits, (2) valuation of derivative instruments, (3) recoverability and amortization of deferred policy acquisition costs ("DPAC"), deferred sales inducements ("DSI") and the value of business acquired ("VOBA"), (4) valuation allowances for deferred tax assets, (5) goodwill, (6) allowances for credit losses and other-than-temporary impairment losses on debt securities, (7) commitments and contingencies, and (8) credit loss and valuation allowances for mortgage loans and real estate. During the first quarter of 2019, the Company incorporated accounting estimates for business combinations, value of business acquired, and fair value measurement as a result of its acquisition of Ozark National and NIS. Revision of Prior Period Consolidated Financial Statements During the first quarter of 2020, management identified an understatement of an excess benefit reserve on a specific block of policies that dated back to the first quarter of 2004 with the adoption of the Statement of Position 03-1, Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts (SOP 03-1). Management concluded that this error was not material to previously issued consolidated financial statements and would be corrected through a revision to the comparative consolidated balance sheet presented for the year ended December 31, 2019. The impact of this revision as of December 31, 2019 was an increase to the future policy benefits liability of $15.0 million, a decrease to deferred federal income tax liability of $3.2 million, and a decrease to retained earnings of $11.8 million. The table below shows the unrealized gains and losses on available-for-sale securities that were reclassified out of accumulated other comprehensive income for the three and six months ended June 30, 2020 and June 30, 2019. Affected Line Item in the Amount Reclassified From Accumulated Other Comprehensive Income Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In thousands) Other net investment gains (losses) $ 1,729 1,168 2,491 2,267 Net OTTI losses recognized in earnings — (5,902) — (5,902) Earnings before Federal income taxes 1,729 (4,734) 2,491 (3,635) Federal income taxes 363 (994) 523 (763) Net earnings $ 1,366 (3,740) 1,968 (2,872) |
New Accounting Pronouncements
New Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
New Accounting Pronouncements | NEW ACCOUNTING PRONOUNCEMENTS Recent accounting pronouncements not yet adopted In August 2018, the FASB issued ASU 2018-12 Financial Services-Insurance (Topic 944) - Targeted Improvements to the Accounting for Long-Duration Contracts . This update is aimed at improving the Codification as it relates to long-duration contracts which will improve the timeliness of recognizing changes in the liability for future policy benefits, simplify accounting for certain market-based options, simplify the amortization of deferred acquisition costs, and improve the effectiveness of required disclosures. Amendments include the following: A. Require insurance entity to (1) review and update assumptions used to measure cash flows at least annually (with changes recognized in net income) and (2) update discount rate assumption at each reporting date (with changes recognized in other comprehensive income). B. Require insurance entity to measure all market risk benefits associated with deposit (i.e. account balance) contracts at fair value, with change in fair value attributable to change in instrument-specific credit risk recognized in other comprehensive income. C. Simplify amortization of deferred acquisition costs and other balances amortized in proportion to premiums, gross profits, or gross margins and require those balances be amortized on constant level basis over expected term of related contract. Deferred acquisition costs are required to be written off for unexpected contract terminations but are not subject to impairment test. D. Require insurance entity to add disclosures of disaggregated rollforwards of beginning to ending balances of the liability for future policy benefits, policyholder account balances, market risk benefits, separate account liabilities, and deferred acquisition costs. Insurance entity must also disclose information about significant inputs, judgments, assumptions, and methods used in measurement, including changes in those inputs, judgments, and assumptions, and the effect of those changes on measurement. These updates are required to be applied retrospectively to the earliest period presented in the financial statements for fiscal periods beginning after December 15, 2022, with early adoption permitted. The Company has performed a preliminary gap analysis and created a roadmap for implementation of this standard by the effective date and is evaluating the impact of the new guidance on its Consolidated Financial Statements. In December 2019, the FASB issued ASU 2019-12 Income Taxes - Simplifying the Accounting for Income Taxes (Topic 740) , which simplifies various aspects of the income tax accounting guidance and will be applied using different approaches depending on the specific amendment. The amendments will be effective for fiscal periods beginning after December 15, 2020. Early adoption is permitted. The Company does not expect this guidance to have a material impact on the Consolidated Financial Statements and related disclosures upon adoption. Accounting pronouncements adopted In June 2016, the FASB released ASU 2016-13, Financial Instruments-Credit Losses , which revises the credit loss recognition criteria for certain financial assets measured at amortized cost. The new guidance replaces the existing incurred loss recognition model with an expected loss recognition model (“CECL”). The objective of the CECL model is for the reporting entity to recognize its estimate of current 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. In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments . The amendments in this Update add clarification and correction to ASU 2016-13 around accrued interest, transfers between classifications or categories for loans and debt securities, consideration of recoveries in estimating allowances, reinsurance recoveries, consideration of prepayments and estimated costs to sell when foreclosure is probable. In November, the FASB issued ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments - Credit Losses. The amendments in this Update add clarification and correction to ASU 2016-13 around expected recoveries for purchased financial assets with credit deterioration, transition relief for troubled debt restructurings, disclosures related to accrued interest receivables, and financial assets secured by collateral maintenance provisions. The guidance for these pronouncements was effective for interim and annual periods beginning after December 15, 2019, and for most affected instruments must be adopted using a modified retrospective approach, with a cumulative effect adjustment recorded to beginning retained earnings. Effective January 1, 2020, the Company adopted the expected loss recognition model related to mortgage loans, debt securities held to maturity and reinsurance recoverable. The change in accounting, net of tax, of $3.0 million was recorded to retained earnings in the first quarter of 2020 to set up an initial allowance for estimated credit losses of $1.2 million on mortgage loans and $3.3 million on debt securities held to maturity. The estimated credit losses for the reinsurance recoverable were immaterial to the financial statements, but will be monitored on a quarterly basis for any changes. Refer to Note (9) Investments for more information. Certain disclosures required by ASU 2016-13 Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC did not, or are not believed by management to, have a material impact on the Company’s present or future Consolidated Financial Statements. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2020 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | STOCKHOLDERS' EQUITY The Robert L. Moody Revocable Trust beneficially owns 99.0% of the total outstanding shares of the Company's Class B common stock as of June 30, 2020. Holders of the Company's Class A common stock elect one-third of the Board of Directors of the Company, and holders of the Class B common stock elect the remainder. Any cash or in-kind dividends paid on each share of Class B common stock are to be only one-half of the cash or in-kind dividends paid on each share of Class A common stock. In the event of liquidation of the Company, the Class A stockholders will receive the par value of their shares; then the Class B stockholders shall receive the par value of their shares; and the remaining net assets of the Company shall be divided between the stockholders of both Class A and Class B stock based upon the number of shares held. National Western is restricted by state insurance laws as to dividend amounts which may be paid to stockholders without prior approval from the Colorado Division of Insurance. The restrictions are based on the lesser of statutory earnings from operations, excluding capital gains, or 10% of statutory surplus of National Western as of the previous year-end. Under these guidelines the maximum dividend payment which may be made without prior approval in 2020 is $152.8 million. As the sole owner of NWLIC, all dividends declared by National Western are payable entirely to NWLGI and are eliminated in consolidation. Ozark National is similarly restricted under the state insurance laws of Missouri as to dividend amounts which may be paid to stockholders without prior approval to the greater of 10.0% of the statutory surplus of the company from the preceding year-end or the company's net gain from operations, excluding capital gains, from the prior calendar year. Based upon this restriction, the maximum dividend payment which may be made in 2020 without prior approval is $17.2 million. As part of the Stock Purchase Agreement dated October 3, 2018, by and between NWLIC and Ozark National's previous owner, the Missouri Department of Commerce and Insurance granted approval for an extraordinary dividend of $102.7 million to be paid to the prior owner concurrent with the closing of the transaction effective January 31, 2019. All dividends declared by Ozark National thereafter are payable entirely to NWLIC as the sole owner and are eliminated in consolidation. National Western did not declare or pay cash dividends to NWLGI in the six months ended June 30, 2020. In the first quarter of 2019, National Western declared and paid a $32.0 million dividend to NWLGI, the proceeds of which were used as part of the cash purchase of NIS. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | EARNINGS PER SHARE Basic earnings per share of common stock are computed by dividing net earnings available to each class of common stockholders on an as if distributed basis by the weighted-average number of common shares outstanding for the period. Diluted earnings per share, by definition, reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock, that then shared in the distributed earnings of each class of common stock. U.S. GAAP requires a two-class presentation for the Company's two classes of common stock. The Company currently has no share-based compensation awards outstanding that could be redeemed for shares of common stock. Net earnings for the periods shown below is allocated between Class A shares and Class B shares based upon (1) the proportionate number of shares issued and outstanding as of the end of the period, and (2) the per share dividend rights of the two classes under the Company's Restated Certificate of Incorporation (the Class B dividend per share is equal to one-half the Class A dividend per share). Three Months Ended June 30, 2020 2019 Class A Class B Class A Class B (In thousands except per share amounts) Numerator for Basic and Diluted Earnings Per Share: Net earnings $ 48,413 33,696 Dividends - Class A shares — — Dividends - Class B shares — — Undistributed earnings $ 48,413 33,696 Allocation of net earnings: Dividends $ — — — — Allocation of undistributed earnings 47,044 1,369 32,743 953 Net earnings $ 47,044 1,369 32,743 953 Denominator: Basic earnings per share - weighted-average shares 3,436 200 3,436 200 Effect of dilutive stock options — — — — Diluted earnings per share - adjusted weighted-average shares for assumed conversions 3,436 200 3,436 200 Basic earnings per share $ 13.69 6.85 9.53 4.76 Diluted earnings per share $ 13.69 6.85 9.53 4.76 Six Months Ended June 30, 2020 2019 Class A Class B Class A Class B (In thousands except per share amounts) Numerator for Basic and Diluted Earnings Per Share: Net earnings $ 46,351 73,894 Dividends - Class A shares — — Dividends - Class B shares — — Undistributed earnings $ 46,351 73,894 Allocation of net earnings: Dividends $ — — — — Allocation of undistributed earnings 45,040 1,311 71,804 2,090 Net earnings $ 45,040 1,311 71,804 2,090 Denominator: Basic earnings per share - weighted-average shares 3,436 200 3,436 200 Effect of dilutive stock options — — — — Diluted earnings per share - adjusted weighted-average shares for assumed conversions 3,436 200 3,436 200 Basic Earnings Per Share $ 13.11 6.55 20.90 10.45 Diluted Earnings Per Share $ 13.11 6.55 20.90 10.45 |
Pension and Other Postretiremen
Pension and Other Postretirement Plans | 6 Months Ended |
Jun. 30, 2020 | |
Retirement Benefits [Abstract] | |
Pension and Other Postretirement Plans | PENSION AND OTHER POSTRETIREMENT PLANS (A) Defined Benefit Pension Plans National Western sponsors a qualified defined benefit pension plan covering employees enrolled prior to 2008. The plan provides benefits based on the participants' years of service and compensation. The Company makes annual contributions to the plan that comply with the minimum funding provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). On October 19, 2007, National Western's Board of Directors approved an amendment to freeze the pension plan as of December 31, 2007. The freeze ceased future benefit accruals to all participants and closed the plan to any new participants. In addition, all participants became immediately 100% vested in their accrued benefits as of that date. As participants are no longer earning a credit for service, future qualified defined benefit plan expense is projected to be minimal. Fair values of plan assets and liabilities are measured as of the prior December 31 for each year. The following table summarizes the components of net periodic benefit cost. Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 (In thousands) Service cost $ 27 24 54 48 Interest cost 169 210 337 420 Expected return on plan assets (316) (272) (631) (544) Amortization of prior service cost — — — — Amortization of net loss 145 165 290 330 Net periodic benefit cost $ 25 127 50 254 The service cost shown above for each period represents plan expenses expected to be paid out of plan assets. Under the clarified rules of the Pension Protection Act, plan expenses paid from plan assets are to be included in the plan's service cost component. The Company's minimum required contribution for the 2020 plan year is $0.0 million. There was $0.8 million in planned contributions remaining for the 2019 plan year as of June 30, 2020. As of June 30, 2020, the Company had made $0.2 million in contributions to the plan for the 2020 plan year. The components of net periodic benefit cost including service cost are reported in the line item “Other operating expenses” in the Condensed Consolidated Statements of Earnings (Loss). National Western also sponsors three non-qualified defined benefit pension plans. The first plan covers certain senior officers and provides benefits based on the participants' years of service and compensation. The primary pension obligations and administrative responsibilities of the plan are maintained by a pension administration firm, which is a subsidiary of American National Insurance Company ("ANICO"), a related party. ANICO has guaranteed the payment of pension obligations under the plan. However, the company has a contingent liability with respect to the plan should these entities be unable to meet their obligations under the existing agreements. Also, the Company has a contingent liability with respect to the plan in the event that a plan participant continues employment with National Western beyond age seventy, the aggregate average annual participant salary increases exceed 10% per year, or any additional employees become eligible to participate in the plan. If any of these conditions are met, the Company would be responsible for any additional pension obligations resulting from these items. Amendments were made to the plan to allow an additional employee to participate and to change the benefit formula for the then Chairman of the Company. As previously mentioned, these additional obligations are a liability to the Company. Effective December 31, 2004, this plan was frozen with respect to the continued accrual of benefits of the then Chairman and the then President of the Company in order to comply with law changes under the American Jobs Creation Act of 2004 ("Act"). Effective July 1, 2005, National Western established a second non-qualified defined benefit plan for the benefit of the then Chairman of the Company. This plan is intended to provide for post-2004 benefit accruals that mirror and supplement the pre-2005 benefit accruals under the previously discussed non-qualified plan, while complying with the requirements of the Act. Effective November 1, 2005, National Western established a third non-qualified defined benefit plan for the benefit of the then President of the Company. This plan is intended to provide for post-2004 benefit accruals that supplement the pre-2005 benefit accruals under the first non-qualified plan as previously discussed, while complying with the requirements of the Act. The following table summarizes the components of net periodic benefit costs for the non-qualified defined benefit plans. Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 (In thousands) Service cost $ 303 126 605 251 Interest cost 337 256 675 512 Amortization of prior service cost 15 15 30 30 Amortization of net loss 1,445 348 2,890 696 Net periodic benefit cost $ 2,100 745 4,200 1,489 As the plans are not funded, there is no expected return on plan assets shown in the net periodic benefit cost table above. The Company expects to contribute $2.0 million to these plans in 2020. As of June 30, 2020, the Company has contributed $0.9 million to the plans. The components of net periodic benefit cost including service cost are reported in the line item “Other operating expenses” in the Condensed Consolidated Statements of Earnings (Loss). Ozark National and NIS have no defined benefit plans. (B) Postretirement Employment Plans Other Than Pension National Western sponsors two healthcare plans that were amended in 2004 to provide postretirement benefits to certain fully-vested individuals. The plans are unfunded. The following table summarizes the components of net periodic benefit costs. Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 (In thousands) Interest cost $ 42 50 83 99 Amortization of prior service cost — 13 — 26 Amortization of net loss 39 61 79 122 Net periodic benefit cost $ 81 124 162 247 As the plans are not funded, there is no expected return on plan assets shown in the net periodic benefit cost table above. The Company expects to contribute minimal amounts to the plans in 2020. Ozark National and NIS do not offer postemployment benefits. The components of net periodic benefit cost including service cost are reported in the line item “Other operating expenses” in the Condensed Consolidated Statements of Earnings (Loss). |
Segment and Other Operating Inf
Segment and Other Operating Information | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Segment and Other Operating Information | SEGMENT AND OTHER OPERATING INFORMATION The Company defines its reportable operating segments as domestic life insurance, international life insurance, annuities, and acquired businesses. These segments are organized based on product types, geographic marketing areas, and business groupings. Ozark National and NIS have been combined into the segment "Acquired Businesses" given its inter-related marketing and sales approach which consists of a coordinated sale of a non-participating whole life insurance product (Ozark National) and a mutual fund investment product (NIS). A fifth category "All Others" primarily includes investments and earnings of non-operating subsidiaries as well as other remaining investments and assets not otherwise supporting specific segment operations. A summary of segment information as of June 30, 2020 and December 31, 2019 for the Condensed Consolidated Balance Sheet items and for the three and six months ended June 30, 2020 and June 30, 2019 for the Condensed Consolidated Statements of Earnings (Loss) is provided below. Condensed Consolidated Balance Sheet Items: June 30, 2020 Domestic International Annuities Acquired Businesses All Totals (In thousands) Deferred policy acquisition costs, sales inducements, and value of business acquired $ 130,961 192,498 444,772 140,429 — 908,660 Total segment assets 1,419,575 1,086,774 7,867,906 1,006,618 363,950 11,744,823 Future policy benefits 1,229,105 827,711 7,113,037 716,267 — 9,886,120 Other policyholder liabilities 14,544 12,150 94,190 14,986 — 135,870 December 31, 2019 Domestic International Annuities Acquired Businesses All Totals (In thousands) Deferred policy acquisition costs, sales inducements, and value of business acquired $ 127,557 209,858 486,553 142,434 — 966,402 Total segment assets 1,399,818 1,153,105 8,198,730 978,243 362,900 12,092,796 Future policy benefits (1) 1,198,103 870,461 7,366,894 706,513 — 10,141,971 Other policyholder liabilities 18,016 14,903 80,002 14,686 — 127,607 (1) Revised to correct for an adjustment related to an understatement of reserve liabilities of $15.0 million. Refer to Note 1. Condensed Consolidated Statements of Earnings (Loss): Three Months Ended June 30, 2020 Domestic International Annuities Acquired Businesses All Totals (In thousands) Premiums and contract revenues $ 12,009 23,061 4,699 19,841 — 59,610 Net investment income (loss) 21,475 11,153 97,666 6,549 8,851 145,694 Other revenues 1 (6) (8) 2,319 5,280 7,586 Total revenues 33,485 34,208 102,357 28,709 14,131 212,890 Life and other policy benefits 4,169 3,684 8,880 16,698 — 33,431 Amortization of deferred policy acquisition costs and value of business acquired 3,209 6,844 19,344 1,703 — 31,100 Universal life and annuity contract interest 19,172 9,492 33,108 — — 61,772 Other operating expenses 5,643 4,517 12,715 4,794 1,485 29,154 Federal income taxes (benefit) 172 934 6,173 1,918 2,292 11,489 Total expenses 32,365 25,471 80,220 25,113 3,777 166,946 Segment earnings (loss) $ 1,120 8,737 22,137 3,596 10,354 45,944 Six Months Ended June 30, 2020 Domestic International Annuities Acquired Businesses All Totals (In thousands) Premiums and contract revenues $ 23,237 45,928 9,349 39,924 — 118,438 Net investment income 2,092 2,153 108,297 12,850 6,823 132,215 Other revenues 30 48 (4) 4,741 6,425 11,240 Total revenues 25,359 48,129 117,642 57,515 13,248 261,893 Life and other policy benefits 10,046 7,015 17,069 32,935 — 67,065 Amortization of deferred policy acquisition costs and value of business acquired 5,782 12,896 38,365 4,094 — 61,137 Universal life and annuity contract interest (2,521) (1,345) 37,612 — — 33,746 Other operating expenses 9,938 7,613 19,582 8,863 2,980 48,976 Federal income taxes (benefit) 360 3,738 854 3,140 1,748 9,840 Total expenses 23,605 29,917 113,482 49,032 4,728 220,764 Segment earnings (loss) $ 1,754 18,212 4,160 8,483 8,520 41,129 Three Months Ended June 30, 2019 Domestic International Annuities Acquired Businesses All Totals (In thousands) Premiums and contract revenues $ 10,706 23,777 5,857 20,380 — 60,720 Net investment income 14,995 9,276 89,572 6,007 8,574 128,424 Other revenues 20 33 64 2,290 1,559 3,966 Total revenues 25,721 33,086 95,493 28,677 10,133 193,110 Life and other policy benefits 3,829 2,959 9,876 16,993 — 33,657 Amortization of deferred acquisition costs and value of business acquired 3,307 6,948 18,750 2,406 — 31,411 Universal life and annuity contract interest 12,985 7,337 39,817 — — 60,139 Other operating expenses 5,017 4,521 9,374 4,491 1,931 25,334 Federal income taxes (benefit) 89 2,014 3,155 956 2,323 8,537 Total expenses 25,227 23,779 80,972 24,846 4,254 159,078 Segment earnings (loss) $ 494 9,307 14,521 3,831 5,879 34,032 Six Months Ended June 30, 2019 Domestic International Annuities Acquired Businesses All Totals (In thousands) Premiums and contract revenues $ 21,510 49,840 10,725 34,181 — 116,256 Net investment income 38,494 23,293 192,726 9,983 15,259 279,755 Other revenues 64 54 72 3,731 6,458 10,379 Total revenues 60,068 73,187 203,523 47,895 21,717 406,390 Life and other policy benefits 7,751 5,121 21,306 27,668 — 61,846 Amortization of deferred acquisition costs and value of business acquired 6,717 14,242 38,462 4,154 — 63,575 Universal life and annuity contract interest 34,426 19,330 87,299 — — 141,055 Other operating expenses 9,140 8,785 16,882 7,576 9,000 51,383 Federal income taxes (benefit) 413 5,222 8,038 1,703 2,582 17,958 Total expenses 58,447 52,700 171,987 41,101 11,582 335,817 Segment earnings (loss) $ 1,621 20,487 31,536 6,794 10,135 70,573 Reconciliations of segment information to the Company's Condensed Consolidated Financial Statements are provided below. Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In thousands) Premiums and Other Revenues : Premiums and contract revenues $ 59,610 60,720 118,438 116,256 Net investment income (loss) 145,694 128,424 132,215 279,755 Other revenues 7,586 3,966 11,240 10,379 Realized gains (losses) on investments 3,125 (425) 6,610 4,204 Total condensed consolidated premiums and other revenues $ 216,015 192,685 268,503 410,594 Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In thousands) Federal Income Taxes : Total segment Federal income taxes $ 11,489 8,537 9,840 17,958 Taxes on realized gains (losses) on investments 656 (89) 1,388 883 Total condensed consolidated Federal income taxes $ 12,145 8,448 11,228 18,841 Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In thousands) Net Earnings : Total segment earnings $ 45,944 34,032 41,129 70,573 Realized gains (losses) on investments, net of taxes 2,469 (336) 5,222 3,321 Total condensed consolidated net earnings $ 48,413 33,696 46,351 73,894 June 30, December 31, 2020 2019 (In thousands) Assets : Total segment assets $ 11,744,823 12,092,796 Other unallocated assets 646,908 460,651 Total condensed consolidated assets $ 12,391,731 $ 12,553,447 |
Share-Based Payments
Share-Based Payments | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Payments | SHARE-BASED PAYMENTSEffective June 20, 2008, the Company's shareholders approved a 2008 Incentive Plan (“2008 Plan”) which provided for the grant of any or all of the following types of awards to eligible employees: (1) stock options, including incentive stock options and nonqualified stock options; (2) stock appreciation rights ("SARs"), in tandem with stock options or freestanding; (3) restricted stock or restricted stock units; and, (4) performance awards. The number of shares of Class A, $1.00 par value, common stock which were allowed to be issued under the 2008 Plan, or as to which SARs or other awards were allowed to be granted, could not exceed 300,000. This plan was assumed by NWLGI from National Western pursuant to the terms of the holding company reorganization in 2015. On June 15, 2016, stockholders of NWLGI approved an amended and restated 2008 Plan ("Incentive Plan"), which extended the term of the 2008 Plan for ten years from the date of stockholder approval. The Incentive Plan includes additional provisions, most notably regarding the definition of performance objectives which could be used in the issuance of the fourth type of award noted above (performance awards). All of the employees of the Company and its subsidiaries are eligible to participate in the current Incentive Plan. In addition, directors of the Company are eligible to receive the same types of awards as employees except that they are not eligible to receive incentive stock options. Company directors, including members of the Compensation and Stock Option Committee, are eligible for nondiscretionary stock options. At the end of 2018, all stock options granted under the 2008 Plan had been exercised, forfeited, or expired. SARs granted prior to 2016 vest 20% annually following three years of service following the grant date. Employee SARs granted 2016 and thereafter vest 33.3% annually following one year of service from the date of the grant. Directors' SARs grants vest 20% annually following one year of service from the date of grant. Effective during August 2008, the Company adopted and implemented a limited stock buy-back program with respect to the 2008 Plan which provided stock option holders the additional alternative of selling shares acquired through the exercise of options directly back to the Company. Option holders could elect to sell such acquired shares back to the Company at any time within ninety (90) days after the exercise of options at the prevailing market price as of the date of notice of election. The buy-back program did not alter the terms and conditions of the 2008 Plan. This plan was assumed as well by NWLGI from National Western pursuant to the terms of the holding company reorganization. There are currently no stock options issued and outstanding. The Incentive Plan allows for certain other share or unit awards which are solely paid out in cash based on the value of the Company's shares, or changes therein, as well as the financial performance of the Company under pre-determined target performance metrics. Certain awards, such as restricted stock units ("RSUs") provide solely for cash settlement based upon the market price of the Company's Class A common shares, often referred to as "phantom stock-based awards" in equity compensation plans. Unlike share-settled awards, which have a fixed grant-date fair value, the fair value of unsettled or unvested liability awards is remeasured at the end of each reporting period based on the change in fair value of a share. The liability and corresponding expense are adjusted accordingly until the award is settled. For employees, the vesting period for RSUs is 100% at the end of 3 years from the grant date. RSUs granted prior to 2019 are payable in cash at the vesting date equal to the closing price of the Company's Class A common share on the three years anniversary date. RSUs granted in 2019 are payable in cash at the 3 years vesting date equal to the 20-day moving average closing price of the Company’s Class A common share at that time. Other awards may involve performance share units ("PSUs") which are units granted at a specified dollar amount per unit, typically linked to the Company's Class A common share price, that are subsequently multiplied by an attained performance factor to derive the number of PSUs to be paid as cash compensation at the vesting date. PSUs also vest three years from the date of grant. For PSUs, the performance period begins the first day of the calendar year for which the PSUs are granted and runs three PSU awards covering the three year measurement period ended December 31, 2018 were paid out in the first quarter of 2019. The performance factor during the measurement period used to determine compensation payouts was 93.86% of the pre-defined metric target. PSU awards covering the three year measurement period ended December 31, 2019 were paid out in the first quarter of 2020. The performance factor during the measurement period used to determine compensation payouts was 101.19% of the pre-defined metric target. Directors of the Company are eligible to receive RSUs under the Incentive Plan. Unlike RSUs granted to officers, the RSUs granted to directors vest one year from the date of grant. RSUs granted prior to 2019 are payable in cash at the vesting date equal to the closing price of the Company's Class A common share at that time. RSUs granted in 2019 are payable in cash at the vesting date equal to the 20-day moving average closing price of the Company’s Class A common share at that time. No awards were granted to officers and directors during the six months ended June 30, 2020 and 2019. The Company uses the current fair value method to measure compensation costs for awards granted under the share-based plans. As of June 30, 2020 and December 31, 2019, the liability balance was $5.5 million and $11.2 million, respectively. A summary of awards by type and related activity is detailed below. Options Outstanding Shares Shares Weighted- Stock Options: Balance at January 1, 2020 291,000 — $ — Exercised — — $ — Forfeited — — $ — Expired — — $ — Stock options granted — — $ — Balance at June 30, 2020 291,000 — $ — Liability Awards SAR RSU PSU Other Share/Unit Awards: Balance at January 1, 2020 107,517 14,352 19,108 Exercised (1,372) (2,357) (4,150) Forfeited (992) — — Granted — — — Balance at June 30, 2020 105,153 11,995 14,958 SARs, RSUs, and PSUs shown as forfeited in the above tables represent vested and unvested awards not exercised by plan participants upon their termination from the Company in accordance with the expiration provisions of the awards. The total intrinsic value of share-based compensation exercised was $1.9 million and $2.5 million for the six months ended June 30, 2020 and 2019, respectively. The total share-based compensation paid was $1.9 million and $2.5 million for the six months ended June 30, 2020 and 2019, respectively. The total fair value of SARs, RSUs, and PSUs vested during the six months ended June 30, 2020 and 2019 was $1.8 million and $2.9 million, respectively. No cash amounts were received from the exercise of stock options under the Plans during the periods reported on. The following table summarizes information about SARs outstanding at June 30, 2020. There were no options outstanding as of June 30, 2020. SARs Outstanding Number Weighted- Number Exercise prices: $132.56 19,118 1.5 years 19,118 $210.22 23,650 3.4 years 19,600 $216.48 11,149 5.6 years 11,149 $311.16 9,897 6.6 years 9,897 $310.55 203 6.8 years 203 $334.34 9,310 7.5 years 6,202 $303.77 11,566 8.5 years 3,848 $252.91 20,260 9.4 years 120 Totals 105,153 70,137 Aggregate intrinsic value (in thousands) $ 1,350 $ 1,350 The aggregate intrinsic value in the table above is based on the closing Class A stock price of $203.19 per share on June 30, 2020. In estimating the fair value of the SARs outstanding at June 30, 2020 and December 31, 2019, the Company employed the Black-Scholes option pricing model with assumptions detailed below. June 30, December 31, Expected term 1.5 to 9.4 years 1.9 to 10 years Expected volatility weighted-average 31.72 % 22.19 % Expected dividend yield 0.18 % 0.12 % Risk-free rate weighted-average 0.20 % 1.61 % The Company reviewed the contractual term relative to the SARs as well as perceived future behavior patterns of exercise. Volatility is based on the Company’s historical volatility over the expected term of the SARs by expected exercise date. The pre-tax compensation cost/(benefit) recognized in the financial statements related to these plans was $2.4 million and $(3.8) million for the three and six months ended June 30, 2020 and $0.1 million and $(1.4) million for the three and six months ended June 30, 2019, respectively. The related tax expense/(benefit) recognized was $(0.5) million and $0.8 million for the three and six months ended June 30, 2020 and $0.0 million and $0.3 million for the three and six months ended June 30, 2019. As of June 30, 2020, the total pre-tax compensation expense related to non-vested share-based awards not yet recognized was $3.7 million. This amount is expected to be recognized over a weighted-average period of 1.3 years. The Company recognizes compensation cost over the graded vesting periods. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES (A) Legal Proceedings In the normal course of business, the Company is involved or may become involved in various legal actions in which claims for alleged economic and punitive damages have been or may be asserted, some for substantial amounts. In recent years, carriers offering life insurance and annuity products have faced litigation, including class action lawsuits, alleging improper product design, improper sales practices, and similar claims. As previously disclosed, the Company has been a defendant in prior years in such class action lawsuits. Given the uncertainty involved in these types of actions, the ability to make a reliable evaluation of the likelihood of an unfavorable outcome or an estimate of the amount of or range of potential loss is endemic to the particular circumstances and evolving developments of each individual matter on its own merits. On September 28, 2017, a purported shareholder derivative lawsuit was filed in the 122nd District Court of Galveston County, State of Texas entitled Robert L. Moody, Jr. derivatively on behalf of National Western Life Insurance Company and National Western Life Group, Inc. v. Ross Rankin Moody, et al., naming certain current and former directors and current officers as defendants. The complaint challenged the directors’ oversight of insurance sales to non-U.S. residents and alleged that the defendants breached their fiduciary duties in the conduct of their duties as board members by failing to act (i) on an informed basis and (ii) in good faith or with the honest belief that their actions were in the best interests of the Company. The complaint sought an undetermined amount of damages, attorneys’ fees and costs, and equitable relief, including the removal of the Company’s Chairman and Chief Executive Officer and other board members and/or officers of the Company. The Company believes that the claims in the complaint were baseless and without merit, will continue to vigorously defend this lawsuit, and was awarded reimbursement of legal costs and expenses from plaintiff as detailed below. The Company believes, based on information currently available, that the final outcome of this lawsuit will not have a material adverse effect on the Company’s business, results of operations, or consolidated financial position. The companies and directors filed their respective Pleas to the Jurisdiction ("Pleas") contesting the plaintiff's standing to even pursue this action, along with their Answers, on October 27, 2017. On December 14, 2017, plaintiff filed a Response to the Pleas and on December 21, 2017, the Court heard oral argument on the Pleas. Plaintiff then filed a First Amended Petition on January 11, 2018. The companies and directors filed a Supplement to the Pleas on January 30, 2018, to which plaintiff responded on February 1, 2018, and the companies and directors replied on February 9, 2018. On May 3, 2018, the Court issued a memorandum to all attorneys of record stating that the Court would grant the defendants' Pleas and asked the attorney for defendants to prepare and submit proposed orders/judgments granting the requested relief for consideration by the Court. The defendants filed such proposed order granting the Pleas on May 7, 2018. On May 16, 2018 the Court issued an Order granting the Pleas and dismissing Robert L. Moody, Jr.’s claims with prejudice, and plaintiff then filed a Motion to Transfer Venue (“MTTV”). Defendants filed an Application for Fees, seeking to recover defendants’ legal costs and expenses from plaintiff, and a Response to the MTTV on June 8, 2018. In response plaintiff filed a Motion to Vacate, a Response to the Application for Fees, and his own Request for Attorney’s Fees on July 5, 2018. Defendants filed a Response to the Motion to Vacate and to plaintiff’s Request for Attorney’s Fees on July 11, 2018, and the Court heard oral arguments on July 16, 2018. Plaintiff filed supplemental briefing in support of his July 5, 2018 filings on July 25, 2018, and defendants filed their response to plaintiff's supplemental briefing on July 27, 2018. On August 8, 2018 the Court issued an Order denying plaintiff's Motion to Vacate. Pursuant to the Court’s instructions, on October 5, 2018, defendants filed an Order Granting Application for Expenses. Defendants then filed a Motion for Entry of Final Judgment and a Request for Submission Date on Motion for Entry of Final Judgment on October 11, 2018, which the Court set as October 30, 2018. Plaintiff filed his Objection to Proposed Final Judgment and Objection to Proposed Order on Attorneys’ Fees on October 25, 2018, to which defendants filed a response on October 30, 2018. On November 11, 2018, the Court issued its Final Judgment: ordering Plaintiff to pay the companies $1,314,054 for reasonable and necessary fees and expenses; denying Plaintiff’s Motion to Transfer Venue, and; dismissing Plaintiff’s counterclaim. Plaintiff has appealed the Court’s Final Judgment and that appeal is pending before the First District Court of Appeals in Houston, TX. In April of 2019, National Western defended a two-week jury trial in which it was alleged that it committed actionable Financial Elder Abuse in its issuance of a $100,000 equity indexed annuity to the Plaintiff in the case of Williams v Pantaleoni et al , Case No. 17CV03462, Butte County California Superior Court. The Court entered an Amended Judgment on the Jury Verdict on July 27, 2019 against National Western in the amount of $14,949 for economic damages and $2.9 million in non-economic and punitive damages. National Western vigorously disputes the verdicts and the amounts awarded, and in furtherance of such, filed a Motion for Judgment Notwithstanding Jury Verdict and a Motion for New Trial, both of which were rejected by the Court. On September 9, 2019, NWLIC filed its Notice of Appeal. On November 11, 2019, the judge awarded the Plaintiff attorney’s fees in the amount of $1.3 million. Both the Plaintiff and NWLIC have appealed this ruling. Although there can be no assurances, at the present time, the Company does not anticipate that the ultimate liability arising from such other potential, pending, or threatened legal actions will have a material adverse effect on the financial condition or operating results of the Company. Separately, Brazilian authorities commenced an investigation into possible violations of Brazilian criminal law in connection with the issuance of National Western insurance policies to Brazilian residents, and in assistance of such investigation a Commissioner appointed by the U.S. District Court for the Western District of Texas issued a subpoena in March of 2015 upon NWLIC to provide information relating to such possible violations. No conclusion can be drawn at this time as to its outcome or how such outcome may impact the Company’s business, results of operations or financial condition. National Western has been cooperating with the relevant governmental authorities in regard to this matter. (B) Financial Instruments In order to meet the financing needs of its customers in the normal course of business, the Company is a party to financial instruments with off-balance sheet risk. These financial instruments are commitments to extend credit which involve elements of credit and interest rate risk in excess of the amounts recognized in the Condensed Consolidated Balance Sheets. The Company's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual amounts, assuming that the amounts are fully advanced and that collateral or other security is of no value. Commitments to extend credit are legally binding agreements to lend to a customer that generally have fixed expiration dates or other termination clauses and may require payment of a fee. Commitments do not necessarily represent future liquidity requirements, as some could expire without being drawn upon. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. The Company controls the credit risk of these transactions through credit approvals, limits, and monitoring procedures. The Company had no commitments to fund new loans and $8.8 million of commitments to extend credit relating to existing loans at June 30, 2020. The Company evaluates each customer's creditworthiness on a case-by-case basis. The Company had commitments to make capital contributions to investment funds of $59.0 million as of June 30, 2020. |
Investments
Investments | 6 Months Ended |
Jun. 30, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | INVESTMENTS (A) Investment Gains and Losses The Company uses the specific identification method in computing realized gains and losses. The table below presents realized gains and losses, excluding impairment losses, for the periods indicated. Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In thousands) Available for sale debt securities: Realized gains on disposal $ 1,730 1,168 2,491 2,351 Realized losses on disposal — — — (84) Held to maturity debt securities: Realized gains on disposal 1,395 924 4,119 951 Realized losses on disposal — — — — Equity securities realized gains (losses) — — — — Real estate gains (losses) — 3,385 — 6,888 Mortgage loans write-downs — — — — Other — — — — Totals $ 3,125 5,477 6,610 10,106 Disposals in the held to maturity category during the periods shown represent calls initiated by the credit issuer of the debt security. It is the Company's policy to initiate disposals of debt securities in the held to maturity category only in instances in which the credit status of the issuer comes into question and the realization of all or a significant portion of the investment principal of the holding is deemed to be in jeopardy. Net real estate gains for the three and six months ended June 30, 2019 primarily pertain to the Company's sale of its nursing home operations in Reno, Nevada and San Marcos, Texas as well as a property sold located in Austin, Texas. The sale of the Reno nursing home was completed effective during the first quarter of 2019 and a gain of $5.7 million was realized on the sale of the land and building associated with the operation. The sale of the San Marcos nursing home was concluded during the second quarter of 2019 and the Company recorded a loss of $(2.0) million associated with the sale of the land and building of this operation. The sale of the Company's prior home office was also completed during the second quarter of 2019 and realized a gain on the sale of $3.2 million. For the three months ended June 30, 2020 and 2019 the percentage of total gains on bonds due to the call of securities was 99.9% and 89.4%, respectively. This includes calls out of the Company's available for sale portfolio of debt securities. For the six months ended June 30, 2020 and 2019 the percentage of gains and bonds due to the call of securities was 99.8% and 72.6%, respectively. (B) Debt Securities The table below presents amortized costs and fair values of debt securities held to maturity at June 30, 2020. Debt Securities Held to Maturity Amortized Gross Gross Fair Allowance for Credit Losses (In thousands) U.S. agencies $ 81,855 3,501 — 85,356 (4) U.S. Treasury 3,792 190 — 3,982 — States and political subdivisions 401,264 23,915 (57) 425,122 (65) Foreign governments 1,133 154 — 1,287 — Public utilities 854,139 64,981 — 919,120 (879) Corporate 4,559,466 378,165 (7,068) 4,930,563 (3,992) Commercial mortgage-backed 3,024 52 — 3,076 — Residential mortgage-backed 996,802 65,045 — 1,061,847 — Asset-backed 2,307 42 — 2,349 — Totals $ 6,903,782 536,045 (7,125) 7,432,702 (4,940) The table below presents amortized costs and fair values of debt securities available for sale at June 30, 2020. Debt Securities Available for Sale Amortized Gross Gross Fair Allowance for Credit Losses (In thousands) States and political subdivisions $ 89,288 7,192 (5) 96,475 — Foreign governments 9,988 312 — 10,300 — Public utilities 64,407 4,915 — 69,322 — Corporate 2,905,567 218,647 (26,288) 3,097,926 — Commercial mortgage-backed 27,137 613 (319) 27,431 — Residential mortgage-backed 11,381 1,319 (159) 12,541 — Asset-backed 58,438 1,341 (661) 59,118 — Totals $ 3,166,206 234,339 (27,432) 3,373,113 — The table below presents amortized costs and fair values of debt securities held to maturity at December 31, 2019. Debt Securities Held to Maturity Amortized Gross Gross Fair (In thousands) U.S. agencies $ 100,910 1,686 — 102,596 U.S. Treasury 3,782 140 — 3,922 States and political subdivisions 431,433 19,440 (84) 450,789 Foreign governments 1,144 55 — 1,199 Public utilities 888,444 36,638 (83) 924,999 Corporate 4,607,826 212,281 (718) 4,819,389 Commercial mortgage-backed 3,032 52 — 3,084 Residential mortgage-backed 1,066,899 32,706 (716) 1,098,889 Asset-backed 2,775 62 (1) 2,836 Totals $ 7,106,245 303,060 (1,602) 7,407,703 The table below presents amortized costs and fair values of debt securities available for sale at December 31, 2019. Debt Securities Available for Sale Amortized Gross Gross Fair (In thousands) States and political subdivisions $ 98,037 4,495 (3) 102,529 Foreign governments 9,983 203 — 10,186 Public utilities 67,895 3,476 — 71,371 Corporate 2,921,431 141,705 (2,479) 3,060,657 Commercial mortgage-backed 28,871 1,071 — 29,942 Residential mortgage-backed 12,815 1,077 (117) 13,775 Asset-backed 67,088 1,397 — 68,485 Totals $ 3,206,120 153,424 (2,599) 3,356,945 Unrealized losses for debt securities held to maturity and debt securities available for sale increased at June 30, 2020 from comparable balances at December 31, 2019 primarily due to the widening in interest rate spreads that occurred during the period as a result of COVID-19 effects on financial markets. Debt securities balances at June 30, 2020 and December 31, 2019 include Ozark National holdings of $329.8 million and $307.2 million in held to maturity and $408.3 million and $415.7 million in available for sale. As part of the acquisition effective January 31, 2019 the Company employed purchase accounting procedures in accordance with GAAP which revalued the acquired investment portfolio to their fair values as of the date of the acquisition. These fair values became the book values for Ozark National from that point going forward. Accordingly, unrealized gains and losses for the Ozark National debt securities represent the changes subsequent to the purchase accounting book values established at the acquisition. The following table shows the gross unrealized losses and fair values of the Company's held to maturity debt securities by investment category and length of time the individual securities have been in a continuous unrealized loss position at June 30, 2020. Debt Securities Held to Maturity Less than 12 Months 12 Months or Greater Total Fair Unrealized Fair Unrealized Fair Unrealized (In thousands) States and political subdivisions $ — — 1,749 (57) 1,749 (57) Public utilities — — — — — — Corporate 157,752 (7,068) — — 157,752 (7,068) Commercial mortgage-backed — — — — — — Residential mortgage-backed — — — — — — Asset-backed — — — — — — Totals $ 157,752 (7,068) 1,749 (57) 159,501 (7,125) The following table shows the gross unrealized losses and fair values of the Company's available for sale debt securities by investment category and length of time the individual securities have been in a continuous unrealized loss position at June 30, 2020. Debt Securities Available for Sale Less than 12 Months 12 Months or Greater Total Fair Unrealized Fair Unrealized Fair Unrealized (In thousands) States and political subdivisions $ 558 (4) 464 (1) 1,022 (5) Public utilities — — — — — — Corporate 217,451 (23,582) 28,249 (2,706) 245,700 (26,288) Commercial mortgage-backed 8,772 (319) — — 8,772 (319) Residential mortgage-backed — — 594 (159) 594 (159) Asset-backed 22,656 (661) — — 22,656 (661) Totals $ 249,437 (24,566) 29,307 (2,866) 278,744 (27,432) The following table shows the gross unrealized losses and fair values of the Company's held to maturity debt securities by investment category and length of time the individual securities have been in a continuous unrealized loss position at December 31, 2019. Debt Securities Held to Maturity Less than 12 Months 12 Months or Greater Total Fair Unrealized Fair Unrealized Fair Unrealized (In thousands) States and political subdivisions $ 5,013 (33) 1,712 (51) 6,725 (84) Public utilities 2,345 (83) — — 2,345 (83) Corporate 31,419 (337) 17,191 (381) 48,610 (718) Residential mortgage-backed 25,859 (63) 43,498 (653) 69,357 (716) Asset-backed 1,349 (1) — — 1,349 (1) Totals $ 65,985 (517) 62,401 (1,085) 128,386 (1,602) The following table shows the gross unrealized losses and fair values of the Company's available for sale debt securities by investment category and length of time that the individual securities have been in a continuous unrealized loss position at December 31, 2019. Debt Securities Available for Sale Less than 12 Months 12 Months or Greater Total Fair Unrealized Fair Unrealized Fair Unrealized (In thousands) States and political subdivisions $ 470 (3) — — 470 (3) Public utilities — — — — — — Corporate 40,080 (105) 28,582 (2,374) 68,662 (2,479) Residential mortgage-backed — — 710 (117) 710 (117) Totals $ 40,550 (108) 29,292 (2,491) 69,842 (2,599) Debt securities. The gross unrealized losses for debt securities are made up of 75 individual issues, or 5.4% of the total debt securities held by the Company at June 30, 2020. The market value of these bonds as a percent of amortized cost approximates 92.7%. Of the 75 securities, 8, or 10.7%, fall in the 12 months or greater aging category; and 55 were rated investment grade at June 30, 2020. The amortized cost and fair value of investments in debt securities at June 30, 2020, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Debt Securities Available for Sale Debt Securities Held to Maturity Amortized Cost Fair Value Amortized Cost Fair Value (In thousands) Due in 1 year or less $ 168,818 171,286 581,153 590,157 Due after 1 year through 5 years 1,370,814 1,447,182 3,018,245 3,203,154 Due after 5 years through 10 years 1,231,850 1,321,137 1,587,587 1,763,367 Due after 10 years 297,768 334,418 714,664 808,752 3,069,250 3,274,023 5,901,649 6,365,430 Mortgage and asset-backed securities 96,956 99,090 1,002,133 1,067,272 Totals before allowance for credit losses 3,166,206 3,373,113 6,903,782 7,432,702 Allowance for credit losses — — (4,940) — Totals $ 3,166,206 3,373,113 6,898,842 7,432,702 As disclosed in Note (2) New Accounting Pronouncements in the Notes to Condensed Consolidated Financial Statements, the Company adopted new accounting guidance as of January 1, 2020 for credit loss recognition of certain financial assets, including debt securities classified in the held to maturity category. The Company employs a cohort cumulative loss rate method in estimating current expected credit losses with respect to its held to maturity debt securities. This method applies publicly available industry wide statistics of default incidence by defined segmentations of debt security investments combined with future assumptions regarding economic conditions (i.e. GDP forecasts) both in the near term and the long term. The Company utilizes Moody's loss rates by industry type and credit ratings and applies them to each major bond category. These bond categories are further segmented by credit ratings and by maturities of two years and less and more than two years. The following table presents the allowance for credit losses for the three and six months ended June 30, 2020 and 2019. Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Debt Securities Held to Maturity Debt Securities Available for Sale Debt Securities Held to Maturity Debt Securities Available for Sale (In thousands) Balance, beginning of period $ 6,039 — — — Provision January 1, 2020 for adoption of new accounting guidance — — 3,334 — (Releases)/provision during period (1,099) — 1,606 — Balance, end of period $ 4,940 — 4,940 — Provisions to and releases from the allowance for credit losses are recorded in net investment income in the Condensed Consolidated Statements of Earnings (Loss). Previous accounting guidance required the Company to review its portfolio for potential other-than-temporary impairments which would require that affected securities be written down to an adjusted cost basis with the amount of the writedown recorded as part of net realized gains and losses in the Condensed Consolidated Statements of Earnings (Loss). The Company determines current expected credit losses for available-for-sale debt securities in accordance with FASB ASC Subtopic 326-30 when fair value is less than amortized cost, interest payments are missed and the security is experiencing credit issues. At June 30, 2020, the Company performed additional analyses on certain available-for-sale securities whose market values were negatively impacted by the change in the economic environment precipitated by the COVID-19 pandemic crisis. Based on its review, the Company determined none of these investments required an allowance for credit loss at June 30, 2020. Under the previous guidance, debt securities were not considered to be other-than-temporarily impaired when a decline in market value was attributable to factors such as market volatility, liquidity, spread widening and credit quality in which it was anticipated that a recovery of all amounts due under the contractual terms of the security would occur and the Company had the intent and ability to hold the security until recovery or maturity. There was a $5.9 million other-than-temporary impairment recorded on a single debt security during the three and six months ended June 30, 2019. The Company's operating procedures include monitoring the investment portfolio on an ongoing basis for any changes in issuer facts and circumstances that might lead to future need for a credit loss allowance. In the table below, held to maturity securities and their corresponding allowance for credit losses are represented according to credit ratings by nationally recognized statistical rating organizations. Debt Securities Held to Maturity Amortized Cost Allowance for Credit Losses Carrying Value (In thousands) AAA $ 93,438 — 93,438 AA 1,739,557 (56) 1,739,501 A 2,234,460 (985) 2,233,475 BBB 2,733,811 (3,580) 2,730,231 BB and other below investment 102,516 (319) 102,197 Bonds Total $ 6,903,782 (4,940) 6,898,842 (C) Transfer of Securities During the three and six months ended June 30, 2020 the Company made no transfers from the held to maturity category to securities available for sale. (D) Mortgage Loans and Real Estate A financing receivable is a contractual right to receive money on demand or on fixed or determinable dates that is recognized as an asset in a company's statement of financial position. The Company's mortgage, participation and mezzanine loans on real estate are the only financing receivables included in the Condensed Consolidated Balance Sheets. Credit and default risk are minimized through strict underwriting guidelines and diversification of underlying property types and geographic locations. In addition to being secured by the property, mortgage loans with leases on the underlying property are often guaranteed by the lease payments. This approach has proved to result in quality mortgage loans with few defaults. Mortgage loan interest income is recognized on an accrual basis with any premium or discount amortized over the life of the loan. Prepayment and late fees are recorded on the date of collection. Loans in foreclosure, loans considered impaired or loans past due 90 days or more are placed on a non-accrual status. If a mortgage loan is determined to be on non-accrual status, the mortgage loan does not accrue any revenue into the Condensed Consolidated Statements of Earnings (Loss). The loan is independently monitored and evaluated as to potential impairment or foreclosure. If delinquent payments are made and the loan is brought current, then the Company returns the loan to active status and accrues income accordingly. The Company had no mortgage loans past due 90 days or more at June 30, 2020 or 2019 and as a result all interest income was recognized at June 30, 2020 and 2019. As a result of the economic climate change induced by the COVID-19 virus, various mortgage loan borrowers of the Company have requested a temporary forbearance of principal payments on loans in the range of three to nine months. For those borrowers meeting specified criteria of the Company, such terms have been agreed to on approximately a dozen loans. The following table represents the mortgage loan portfolio by loan-to-value ratio. June 30, 2020 December 31, 2019 Amount % Amount % (In thousands) (In thousands) Mortgage Loans by Loan-to-Value Ratio (1): Less than 50% $ 52,852 19.2 $ 52,778 19.3 50% to 60% 50,261 18.2 56,929 20.8 60% to 70% 126,960 46.0 117,377 43.0 70% to 80% 45,855 16.6 46,013 16.9 80% to 90% — — — — Greater than 90% — — — — Gross balance 275,928 100.0 273,097 100.0 Allowance for credit losses (2,227) (0.8) (675) (0.2) Totals $ 273,701 99.2 $ 272,422 99.8 (1) Loan-to-Value Ratio is determined using the most recent appraised value. Appraisals are required at the time of funding and may be updated if a material change occurs from the original loan agreement. All mortgage loans are analyzed quarterly in order to monitor the financial quality of these assets. Based on ongoing monitoring, mortgage loans with a likelihood of becoming delinquent are identified and placed on an internal “watch list.” Among the criteria that may indicate a potential problem include: major tenant vacancies or bankruptcies, late payments, and loan relief/restructuring requests. The mortgage loan portfolio is analyzed for the need for a valuation allowance on any loan that is on the internal watch list, in the process of foreclosure or that currently has a valuation allowance. Prior to January 1, 2020, mortgage loans were considered impaired when, based on current information and events, it was probable that the Company would be unable to collect all amounts due according to the contractual terms of the loan agreement. When it was determined that a loan was impaired, a loss was recognized for the difference between the carrying amount of the mortgage loan and the estimated value reduced by the cost to sell. Estimated value was typically based on the loan's observable market price or the fair value of the collateral less cost to sell. Impairments and changes in the valuation allowance were reported in net realized investment gains (losses) in the Condensed Consolidated Statements of Earnings (Loss). The Company held a valuation allowance of $0.7 million at December 31, 2019. Effective January 1, 2020, the Company implemented FASB ASU 2016-13 Financial Instruments-Credit Losses , which revises the credit loss recognition criteria for certain financial assets measured at amortized cost. The new guidance replaces the existing incurred loss recognition model with an expected loss recognition model (“CECL”). The objective of the CECL model is for the reporting entity to recognize its estimate of current 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. For mortgage loan investments the Company is using the Weighted Average Remaining Maturity ("WARM") method, which uses an average annual charge-off rate applied to each mortgage loan risk category. Under this new accounting guidance, at January 1, 2020 a balance of $1.2 million was recorded which incorporated the previous year-end balance under the prior accounting method. The adjustment resulted in a charge to retained earnings as a change in accounting, net of tax, of $0.4 million. Subsequent changes in the allowance for current expected credit losses are reported in net investment income in the Condensed Consolidated Statements of Earnings (Loss). The following table represents the mortgage loan allowance for credit losses. Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In thousands) Balance, beginning of the period $ 1,885 675 675 675 Provision January 1, 2020 for adoption of new accounting guidance — — 504 — Provision during the period 342 — 1,048 — Releases — — — — Total ending allowance for credit losses $ 2,227 675 2,227 675 |
Fair Values of Financial Instru
Fair Values of Financial Instruments | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Values of Financial Instruments | FAIR VALUES OF FINANCIAL INSTRUMENTS For financial instruments, the FASB provides guidance which defines fair value, establishes a framework for measuring fair value under GAAP, and requires additional disclosures about fair value measurements. In compliance with this GAAP guidance, the Company has categorized its financial instruments, based on the priority of the inputs to the valuation technique, into a three level hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities ("Level 1") and the lowest priority to unobservable inputs ("Level 3"). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument. Financial assets and liabilities recorded at fair value on the Condensed Consolidated Balance Sheets are categorized as follows: Level 1: Fair value is based on unadjusted quoted prices in active markets that are accessible to the Company for identical assets or liabilities. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. These generally provide the most reliable evidence and are used to measure fair value whenever available. The Company's Level 1 assets are equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets. Level 2: Fair value is based upon significant inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable for substantially the full term of the asset or liability through corroboration with observable market data as of the reporting date. Level 2 inputs include quoted market prices in active markets for similar assets and liabilities, quoted market prices in markets that are not active for identical or similar assets or liabilities, model-derived valuations whose inputs are observable or whose significant value drivers are observable and other observable inputs. The Company’s Level 2 assets include fixed maturity debt securities (corporate and private bonds, government or agency securities, asset-backed and mortgage-backed securities). Valuations are generally obtained from third party pricing services for identical or comparable assets or determined through use of valuation methodologies using observable market inputs. Level 3: Fair value is based on significant unobservable inputs which reflect the entity’s or third party pricing service’s assumptions about the assumptions market participants would use in pricing an asset or liability. The Company’s Level 3 assets are over-the-counter derivative contracts. The Company’s Level 3 liabilities consist of share-based compensation obligations, certain product-related embedded derivatives, and contingent consideration in the acquisition of businesses. Valuations are estimated based on non-binding broker prices or internally developed valuation models or methodologies, discounted cash flow models and other similar techniques. The following tables set forth the Company’s assets and liabilities that are measured at fair value on a recurring basis as of the date indicated: June 30, 2020 Total Level 1 Level 2 Level 3 (In thousands) Debt securities, available for sale $ 3,373,113 — 3,373,113 — Equity securities 17,918 17,918 — — Derivatives, index options 66,738 — — 66,738 Other invested assets 2 2 — — Total assets $ 3,457,771 17,920 3,373,113 66,738 Policyholder account balances (a) $ 87,573 — — 87,573 Other liabilities (b) 5,497 — — 5,497 Total liabilities $ 93,070 — — 93,070 During the three and six months ended June 30, 2020, the Company made no transfers into or out of Levels 1, 2 or 3. December 31, 2019 Total Level 1 Level 2 Level 3 (In thousands) Debt securities, available for sale $ 3,356,945 — 3,356,945 — Equity securities 23,594 23,594 — — Derivatives, index options 157,588 — — 157,588 Other invested assets 2 2 — — Total assets $ 3,538,129 23,596 3,356,945 157,588 Policyholder account balances (a) $ 155,902 — — 155,902 Other liabilities (c) 15,301 — — 15,301 Total liabilities $ 171,203 — — 171,203 (a) Represents the fair value of certain product-related embedded derivatives that were recorded at fair value. (b) Represents the liability for share-based compensation. (c) Represents the liability for share-based compensation and the contingent consideration for businesses acquired. The following tables present, by pricing source and fair value hierarchy level, the Company's assets that are measured at fair value on a recurring basis: June 30, 2020 Total Level 1 Level 2 Level 3 (In thousands) Debt securities, available for sale: Priced by third-party vendors $ 3,373,113 — 3,373,113 — Priced internally — — — — Subtotal 3,373,113 — 3,373,113 — Equity securities, available for sale: Priced by third-party vendors 17,918 17,918 — — Priced internally — — — — Subtotal 17,918 17,918 — — Derivatives, index options: Priced by third-party vendors 66,738 — — 66,738 Priced internally — — — — Subtotal 66,738 — — 66,738 Other invested assets: Priced by third-party vendors 2 2 — — Priced internally — — — — Subtotal 2 2 — — Total $ 3,457,771 17,920 3,373,113 66,738 Percent of total 100.0 % 0.5 % 97.6 % 1.9 % December 31, 2019 Total Level 1 Level 2 Level 3 (In thousands) Debt securities, available for sale: Priced by third-party vendors $ 3,356,945 — 3,356,945 — Priced internally — — — — Subtotal 3,356,945 — 3,356,945 — Equity securities, available for sale: Priced by third-party vendors 23,594 23,594 — — Priced internally — — — — Subtotal 23,594 23,594 — — Derivatives, index options: Priced by third-party vendors 157,588 — — 157,588 Priced internally — — — — Subtotal 157,588 — — 157,588 Other invested assets: Priced by third-party vendors 2 2 — — Priced internally — — — — Subtotal 2 2 — — Total $ 3,538,129 23,596 3,356,945 157,588 Percent of total 100.0 % 0.7 % 94.8 % 4.5 % The following tables provide additional information about fair value measurements for which significant unobservable (Level 3) inputs were utilized to determine fair value. For the Three Months Ended June 30, 2020 Assets Other Liabilities Derivatives, Index Options Total Assets Policyholder Account Balances Stock Options Contingent Consideration Total Other Liabilities (In thousands) Beginning balance, April 1, 2020 $ 24,335 24,335 61,625 3,081 4,174 68,880 Total realized and unrealized gains (losses): Included in net earnings 40,243 40,243 23,790 2,444 (4,174) 22,060 Included in other comprehensive income — — — — — — Purchases, sales, issuances and settlements, net: Purchases 16,458 16,458 16,458 — — 16,458 Sales — — — — — — Issuances — — — — — — Settlements (14,298) (14,298) (14,300) (28) — (14,328) Transfers into (out of) Level 3 — — — — — — Balance at end of period $ 66,738 66,738 87,573 5,497 — 93,070 Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period: Net investment income $ 62,328 62,328 — — — — Benefits and expenses — — 62,328 2,444 (4,174) 60,598 Total $ 62,328 62,328 62,328 2,444 (4,174) 60,598 For the Three Months Ended June 30, 2019 Assets Other Liabilities Derivatives, Index Options Total Assets Policyholder Account Balances Stock Options Contingent Consideration Total Other Liabilities (In thousands) Beginning balance, April 1, 2019 $ 71,001 71,001 86,127 7,898 3,700 97,725 Total realized and unrealized gains (losses): Included in net earnings 17,828 17,828 13,440 93 171 13,704 Included in other comprehensive income — — — — — — Purchases, sales, issuances and settlements, net: Purchases 19,030 19,030 19,030 — — 19,030 Sales — — — — — — Issuances — — — — — — Settlements (17,959) (17,959) (17,959) — — (17,959) Transfers into (out of) Level 3 — — — — — — Balance at end of period $ 89,900 89,900 100,638 7,991 3,871 112,500 Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period: Net investment income $ 4,350 4,350 — — — — Benefits and expenses — — 4,350 93 171 4,614 Total $ 4,350 4,350 4,350 93 171 4,614 For the Six Months Ended June 30, 2020 Assets Other Liabilities Derivatives, Index Options Total Assets Policyholder Account Balances Stock Options Contingent Consideration Total Other Liabilities (In thousands) Beginning balance, January 1, 2020 $ 157,588 157,588 155,902 11,225 4,076 171,203 Total realized and unrealized gains (losses): Included in net earnings (66,386) (66,386) (43,865) (3,849) (4,076) (51,790) Included in other comprehensive income — — — — — — Purchases, sales, issuances and settlements, net: Purchases 38,861 38,861 38,861 — — 38,861 Sales — — — — — — Issuances — — — — — — Settlements (63,325) (63,325) (63,325) (1,879) — (65,204) Transfers into (out of) Level 3 — — — — — — Balance at end of period $ 66,738 66,738 87,573 5,497 — 93,070 Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period: Net investment income $ (43,670) (43,670) — — — — Benefits and expenses — — (43,670) (3,849) (4,076) (51,595) Total $ (43,670) (43,670) (43,670) (3,849) (4,076) (51,595) For the Six Months Ended June 30, 2019 Assets Other Liabilities Derivatives, Index Options Total Assets Policyholder Account Balances Stock Options Contingent Consideration Total Other Liabilities (In thousands) Beginning balance, January 1, 2019 $ 14,684 14,684 44,781 11,923 — 56,704 Total realized and unrealized gains (losses): Included in net earnings 59,830 59,830 40,471 (1,410) 171 39,232 Included in other comprehensive income — — — — — — Purchases, sales, issuances and settlements, net: Purchases 36,622 36,622 36,622 — — 36,622 Sales — — — — — — Issuances — — — — 3,700 3,700 Settlements (21,236) (21,236) (21,236) (2,522) — (23,758) Transfers into (out of) Level 3 — — — — — — Balance at end of period $ 89,900 89,900 100,638 7,991 3,871 112,500 Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period: Net investment income $ 44,814 44,814 — — — — Benefits and expenses — — 44,814 (1,410) 171 43,575 Total $ 44,814 44,814 44,814 (1,410) 171 43,575 The following table presents the valuation method for financial assets and liabilities categorized as level 3, as well as the unobservable inputs used in the valuation of those financial instruments: June 30, 2020 Fair Value Valuation Technique Unobservable Input Range (Weighted Average) (In thousands) Assets: Derivatives, index options $ 66,738 Broker prices Implied volatility 12.96% - 53.69% (18.55%) Total assets $ 66,738 Liabilities: Policyholder account balances $ 87,573 Deterministic cash flow model Projected option cost 0.0% - 31.12% (4.56%) Share based compensation 5,497 Black-Scholes model Expected term 1.5 to 9.4 years Expected volatility 31.72% Total liabilities $ 93,070 December 31, 2019 Fair Value Valuation Technique Unobservable Input Range (Weighted Average) (In thousands) Assets: Derivatives, index options $ 157,588 Broker prices Implied volatility 13.10% - 19.90% (15.25%) Total assets $ 157,588 Liabilities: Policyholder account balances $ 155,902 Deterministic cash flow model Projected option cost 0.0% - 17.55% (3.14%) Share based compensation 11,225 Black-Scholes model Expected term 1.9 to 10 years Expected volatility 22.19% Contingent consideration on businesses acquired 4,076 Probabilistic Method Discount rate 10.0% Projected renewal premium $57.2 - $82.4 million ($71.9) Total liabilities $ 171,203 Realized gains (losses) on debt securities are reported in the Condensed Consolidated Statements of Earnings (Loss) as net investment gains (losses) with liabilities reported as expenses. Unrealized gains (losses) on available for sale debt securities are reported as other comprehensive income (loss) within the stockholders' equity section of the Condensed Consolidated Balance Sheet. The fair value hierarchy classifications are reviewed each reporting period. Reclassification of certain financial assets and liabilities may result based on changes in the observability of valuation attributes. Reclassifications are reported as transfers into and out of Level 3 at the beginning fair value for the reporting period in which the changes occur. The carrying amounts and fair values of the Company's financial instruments are as follows: June 30, 2020 Fair Value Hierarchy Level Carrying Fair Level 1 Level 2 Level 3 (In thousands) ASSETS Debt securities held to maturity $ 6,898,842 7,432,702 — 7,432,702 — Debt securities available for sale 3,373,113 3,373,113 — 3,373,113 — Cash and cash equivalents 450,703 450,703 450,703 — — Mortgage loans 273,701 272,336 — — 272,336 Real estate 34,298 48,547 — — 48,547 Policy loans 76,811 132,257 — — 132,257 Other loans 18,064 18,365 — — 18,365 Derivatives, index options 66,738 66,738 — — 66,738 Equity securities 17,918 17,918 17,918 — — Life interest in Libbie Shearn Moody Trust 9,230 12,775 — — 12,775 Other investments 4,515 22,582 2 — 22,580 LIABILITIES Deferred annuity contracts $ 6,755,394 5,511,416 — — 5,511,416 Immediate annuity and supplemental contracts 403,856 455,875 — — 455,875 Contingent consideration on businesses acquired — — — — — December 31, 2019 Fair Value Hierarchy Level Carrying Fair Level 1 Level 2 Level 3 (In thousands) ASSETS Debt securities held to maturity $ 7,106,245 7,407,703 — 7,407,703 — Debt securities available for sale 3,356,945 3,356,945 — 3,356,945 — Cash and cash equivalents 253,524 253,524 253,524 — — Mortgage loans 272,422 270,931 — — 270,931 Real estate 34,588 57,204 — — 57,204 Policy loans 80,008 123,650 — — 123,650 Other loans 13,547 13,698 — — 13,698 Derivatives, index options 157,588 157,588 — — 157,588 Equity securities 23,594 23,594 23,594 — — Life interest in Libbie Shearn Moody Trust 9,230 12,775 — — 12,775 Other investments 197 16,182 2 — 16,180 LIABILITIES Deferred annuity contracts (1) $ 7,014,833 5,931,352 — — 5,931,352 Immediate annuity and supplemental contracts 400,465 422,931 — — 422,931 Contingent consideration on businesses acquired 4,076 4,076 — — 4,076 (1) Revised to correct for an adjustment related to the understatement of reserve liabilities of $15.0 million. See Note 1. Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instruments. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument. Because no market exists for a portion of the Company's financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. |
Derivative Investments
Derivative Investments | 6 Months Ended |
Jun. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Investments | DERIVATIVE INVESTMENTSFixed-index products provide traditional fixed annuities and universal life contracts with the option to have credited interest rates linked in part to an underlying equity index or a combination of equity indices. The equity return component of such policy contracts is identified separately and accounted for in future policy benefits as embedded derivatives on the Condensed Consolidated Balance Sheets. The remaining portions of these policy contracts are considered the host contracts and are recorded separately as fixed annuity or universal life contracts. The host contracts are accounted for under debt instrument type accounting in which future policy benefits are recorded as discounted debt instruments and accreted, using the effective yield method, to their minimum account values at their projected maturities or termination dates. The Company purchases over-the-counter index options, which are derivative financial instruments, to hedge the equity return component of its fixed-index annuity and life products. The index options act as hedges to match closely the returns on the underlying index or indices. The amounts which may be credited to policyholders are linked, in part, to the returns of the underlying index or indices. As a result, changes to policyholders' liabilities are substantially offset by changes in the value of the options. Cash is exchanged upon purchase of the index options and no principal or interest payments are made by either party during the option periods. Upon maturity or expiration of the options, cash may be paid to the Company depending on the performance of the underlying index or indices and terms of the contract. The Company does not elect hedge accounting relative to these derivative instruments. The index options are reported at fair value in the accompanying Condensed Consolidated Financial Statements. The changes in the values of the index options and the changes in the policyholder liabilities are both reflected in the Condensed Consolidated Statements of Earnings (Loss). Any changes relative to the embedded derivatives associated with policy contracts are reflected in contract interest in the Condensed Consolidated Statements of Earnings (Loss). Any gains or losses from the sale or expiration of the options, as well as period-to-period changes in values, are reflected as net investment income in the Condensed Consolidated Statements of Earnings (Loss). Although there is credit risk in the event of nonperformance by counterparties to the index options, the Company does not expect any of its counterparties to fail to meet their obligations, given their high credit ratings. In addition, credit support agreements are in place with all counterparties for option holdings in excess of specific limits, which may further reduce the Company's credit exposure. The tables below present the fair value of derivative instruments as of June 30, 2020 and December 31, 2019, respectively. June 30, 2020 Asset Derivatives Liability Derivatives Balance Fair Balance Fair (In thousands) (In thousands) Derivatives not designated as hedging instruments Equity index options Derivatives, Index Options $ 66,738 Fixed-index products Universal Life and Annuity Contracts $ 87,573 Total $ 66,738 $ 87,573 December 31, 2019 Asset Derivatives Liability Derivatives Balance Fair Balance Fair (In thousands) (In thousands) Derivatives not designated as hedging instruments Equity index options Derivatives, Index Options $ 157,588 Fixed-index products Universal Life and Annuity Contracts $ 155,902 Total $ 157,588 $ 155,902 The table below presents the effect of derivative instruments in the Condensed Consolidated Statements of Earnings (Loss) for the three months ended June 30, 2020 and 2019. June 30, June 30, Derivatives Not Designated Location of Gain Amount of Gain or (In thousands) Equity index options Net investment income (loss) $ 40,243 17,828 Fixed-index products Universal life and annuity contract interest (23,790) (13,439) $ 16,453 4,389 The table below presents the effect of derivative instruments in the Condensed Consolidated Statements of Earnings (Loss) for the six months ended June 30, 2020 and 2019. June 30, June 30, Derivatives Not Designated Location of Gain Amount of Gain or (In thousands) Equity index options Net investment income $ (66,386) 59,830 Fixed-index products Universal life and annuity contract interest 43,865 (40,470) $ (22,521) 19,360 |
Business Combinations
Business Combinations | 6 Months Ended |
Jun. 30, 2020 | |
Business Combinations [Abstract] | |
Business Combinations | BUSINESS COMBINATIONS Effective January 31, 2019, the Company acquired Ozark National and NIS following the receipt of regulatory approvals. NWLGI and National Western paid cash in an aggregate amount of approximately $205.4 million in exchange for all of the outstanding stock of Ozark National (wholly owned by National Western) and NIS (wholly owned by NWLGI). In addition to the cash price paid, National Western recorded a contingent liability for an "earn-out payment" based upon the subsequent persistency of Ozark National's acquired in force business achieving thresholds as specified in the Stock Purchase Agreement ("Agreement"). The earn-out payment to the seller per the Agreement had a maximum limit of $5.0 million. Using a probabilistic method for valuing contingent consideration, the Company at January 31, 2019 recorded a liability of $3.7 million representing the estimated fair value of the additional consideration estimated to be paid as part of the acquisition. The contingent consideration was revalued during the earn-out term using the same probabilistic method and had a fair value of $4.1 million as of December 31, 2019. Changes in the fair value during year ended December 31, 2019 were recorded through Other operating expenses. During the quarter ended June 30, 2020, the Company and and the Seller executed an agreement under which the parties agreed that the Company had fulfilled its payment obligation under the Stock Purchase Agreement executed October 3, 2018. As a result, the Company reversed the contingent earn-out liability balance of $4.2 million recorded at March 31, 2020 and reflected this amount in Other revenues. In addition to the purchase price, the Company incurred $3.3 million of acquisition-related costs. In accordance with GAAP, these costs are included in Other operating expenses in the Condensed Consolidated Statements of Earnings (Loss) for the six months ended June 30, 2019 and are not considered part of the purchase price. The acquisition has been accounted for in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations . Purchase accounting, as defined by ASC 805, requires that the assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The fair values shown below were determined based on management’s best estimates, employing fair valuation methodologies commonly utilized in preparing financial statements in accordance with GAAP, and are subject to revision for one year following the acquisition date. The excess of the purchase price paid above net tangible assets acquired has been assigned to identifiable intangible assets and goodwill. The following table presents the fair values of the net assets acquired as of January 31, 2019. January 31, 2019 Fair value Assets (In thousands) Debt securities held to maturity $ 261,059 Debt securities available for sale 400,719 Policy loans 28,128 Real estate 4,600 Cash and cash equivalents 16,275 Accrued investment income 6,116 Value of business acquired 145,768 Reinsurance recoverables 21,895 Other intangible assets 9,600 Other assets acquired 12,075 Total assets acquired 906,235 Liabilities Traditional life reserves 691,297 Other policyholder liabilities 13,867 Other liabilities acquired 5,840 711,004 Net identifiable assets acquired 195,231 Goodwill 13,864 Net assets acquired $ 209,095 Identifiable Intangible Assets The following table presents the fair value of identifiable intangible assets acquired at January 31, 2019: Fair Value Weighted-Average Amortization Period (In thousands) Trademarks / trade names $ 2,800 15 Internally developed software 3,800 7 Insurance licenses 3,000 NA $ 9,600 The gross carrying amounts and accumulated amortization for each specifically identifiable intangible asset were as follows. June 30, 2020 December 31, 2019 Weighted-Average Amortization Period Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization (In thousands) Trademarks/trade names 15 $ 2,800 (264) 2,800 (171) Internally developed software 7 3,800 (769) 3,800 (498) Insurance licenses (1) N/A 3,000 — 3,000 — $ 9,600 (1,033) 9,600 (669) The value of trademarks was estimated using the relief from royalty method, based on the assumption that in lieu of ownership, an organization would be willing to pay a royalty in order to receive the related benefits of using the brand. The value of insurance licenses was estimated using the market approach to value, based on values paid for licenses in recent shell company transactions. The value of internally developed software was estimated using the replacement cost method. Trademarks, trade names and internally developed software are amortized using a straight-line method over the estimated useful lives. These intangible assets will be evaluated for impairment if indicators of impairment arise. Insurance licenses were determined to have an indefinite useful life. The Company evaluates the useful life insurance licenses at each reporting period to determine whether the useful life remains indefinite. Value of Business Acquired ("VOBA") VOBA is a purchase accounting convention for life insurance companies in business combinations based upon an actuarial determination of the difference between the fair value of policyholder liabilities acquired and the same policyholder liabilities measured in accordance with the acquiring company's accounting policies. The difference, referred to as VOBA, is an intangible asset subject to periodic amortization. As of the January 31, 2019 acquisition date, the VOBA balance recorded was $145.8 million. Changes in VOBA were as follows for the periods shown: June 30, December 31, 2020 2019 (In thousands) Balance, beginning of year $ 138,071 — Business acquired — 145,768 Amortization: Amortization, excluding unlocking (3,801) (7,697) Balance as of end of period $ 134,270 138,071 Estimated future amortization of VOBA, net of interest (in thousands), as of June 30, 2020, is as follows: Expected Amortization (In thousands) Remainder of 2020 $ 3,218 2021 $ 6,107 2022 $ 5,797 2023 $ 5,528 2024 $ 5,287 Goodwill The changes in the carrying amount of goodwill (in thousands) were as follows: June 30, December 31, 2020 2019 (In thousands) Gross goodwill as of beginning of year $ 13,864 — Goodwill resulting from business acquisition — 13,864 Gross goodwill, before impairments 13,864 13,864 Accumulated impairment as of beginning of year — — Current year impairments — — Net goodwill as of end of period $ 13,864 13,864 Due to the severe change in economic climate as a result of the COVID-19 pandemic, the Company evaluated the goodwill balance for potential impairment as of June 30, 2020 and determined that there was evidence to support not impairing the balance. Financial Information Subsequent to the acquisition date of January 31, 2019, Ozark National and NIS total revenues of $48.4 million and net earnings of $7.2 million were included in Condensed Consolidated Statements of Earnings (Loss) for the six month period ended June 30, 2019. Their results for segment reporting purposes are combined in the Acquired Businesses segment. The following unaudited comparative pro forma total revenues and net earnings represent Condensed Consolidated Results of Operations for the Company which assume amounts estimated had the acquisition of Ozark National and NIS by the Company been effective January 1, 2018. Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In thousands) Total revenues $ 216,015 192,685 268,503 420,268 Net earnings (loss) $ 48,413 33,696 46,351 75,328 The pro forma amounts shown above include the estimated total revenues and net earnings of the acquired businesses for each period incorporating amortization of identifiable intangible assets acquired and fair value adjustments to acquired invested assets and traditional life insurance reserves. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTSSubsequent events have been evaluated through the date of filing and no reportable items were identified. |
New Accounting Pronouncements (
New Accounting Pronouncements (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
New Accounting Pronouncements | Recent accounting pronouncements not yet adopted In August 2018, the FASB issued ASU 2018-12 Financial Services-Insurance (Topic 944) - Targeted Improvements to the Accounting for Long-Duration Contracts . This update is aimed at improving the Codification as it relates to long-duration contracts which will improve the timeliness of recognizing changes in the liability for future policy benefits, simplify accounting for certain market-based options, simplify the amortization of deferred acquisition costs, and improve the effectiveness of required disclosures. Amendments include the following: A. Require insurance entity to (1) review and update assumptions used to measure cash flows at least annually (with changes recognized in net income) and (2) update discount rate assumption at each reporting date (with changes recognized in other comprehensive income). B. Require insurance entity to measure all market risk benefits associated with deposit (i.e. account balance) contracts at fair value, with change in fair value attributable to change in instrument-specific credit risk recognized in other comprehensive income. C. Simplify amortization of deferred acquisition costs and other balances amortized in proportion to premiums, gross profits, or gross margins and require those balances be amortized on constant level basis over expected term of related contract. Deferred acquisition costs are required to be written off for unexpected contract terminations but are not subject to impairment test. D. Require insurance entity to add disclosures of disaggregated rollforwards of beginning to ending balances of the liability for future policy benefits, policyholder account balances, market risk benefits, separate account liabilities, and deferred acquisition costs. Insurance entity must also disclose information about significant inputs, judgments, assumptions, and methods used in measurement, including changes in those inputs, judgments, and assumptions, and the effect of those changes on measurement. These updates are required to be applied retrospectively to the earliest period presented in the financial statements for fiscal periods beginning after December 15, 2022, with early adoption permitted. The Company has performed a preliminary gap analysis and created a roadmap for implementation of this standard by the effective date and is evaluating the impact of the new guidance on its Consolidated Financial Statements. In December 2019, the FASB issued ASU 2019-12 Income Taxes - Simplifying the Accounting for Income Taxes (Topic 740) , which simplifies various aspects of the income tax accounting guidance and will be applied using different approaches depending on the specific amendment. The amendments will be effective for fiscal periods beginning after December 15, 2020. Early adoption is permitted. The Company does not expect this guidance to have a material impact on the Consolidated Financial Statements and related disclosures upon adoption. Accounting pronouncements adopted In June 2016, the FASB released ASU 2016-13, Financial Instruments-Credit Losses , which revises the credit loss recognition criteria for certain financial assets measured at amortized cost. The new guidance replaces the existing incurred loss recognition model with an expected loss recognition model (“CECL”). The objective of the CECL model is for the reporting entity to recognize its estimate of current 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. In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments . The amendments in this Update add clarification and correction to ASU 2016-13 around accrued interest, transfers between classifications or categories for loans and debt securities, consideration of recoveries in estimating allowances, reinsurance recoveries, consideration of prepayments and estimated costs to sell when foreclosure is probable. In November, the FASB issued ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments - Credit Losses. The amendments in this Update add clarification and correction to ASU 2016-13 around expected recoveries for purchased financial assets with credit deterioration, transition relief for troubled debt restructurings, disclosures related to accrued interest receivables, and financial assets secured by collateral maintenance provisions. The guidance for these pronouncements was effective for interim and annual periods beginning after December 15, 2019, and for most affected instruments must be adopted using a modified retrospective approach, with a cumulative effect adjustment recorded to beginning retained earnings. Effective January 1, 2020, the Company adopted the expected loss recognition model related to mortgage loans, debt securities held to maturity and reinsurance recoverable. The change in accounting, net of tax, of $3.0 million was recorded to retained earnings in the first quarter of 2020 to set up an initial allowance for estimated credit losses of $1.2 million on mortgage loans and $3.3 million on debt securities held to maturity. The estimated credit losses for the reinsurance recoverable were immaterial to the financial statements, but will be monitored on a quarterly basis for any changes. Refer to Note (9) Investments for more information. Certain disclosures required by ASU 2016-13 Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC did not, or are not believed by management to, have a material impact on the Company’s present or future Consolidated Financial Statements. |
Consolidation and Basis of Pr_2
Consolidation and Basis of Presentation (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of the unrealized gains and losses on available-for-sale securities that were reclassified out of accumulated other comprehensive income | The table below shows the unrealized gains and losses on available-for-sale securities that were reclassified out of accumulated other comprehensive income for the three and six months ended June 30, 2020 and June 30, 2019. Affected Line Item in the Amount Reclassified From Accumulated Other Comprehensive Income Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In thousands) Other net investment gains (losses) $ 1,729 1,168 2,491 2,267 Net OTTI losses recognized in earnings — (5,902) — (5,902) Earnings before Federal income taxes 1,729 (4,734) 2,491 (3,635) Federal income taxes 363 (994) 523 (763) Net earnings $ 1,366 (3,740) 1,968 (2,872) |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of earnings per share | Three Months Ended June 30, 2020 2019 Class A Class B Class A Class B (In thousands except per share amounts) Numerator for Basic and Diluted Earnings Per Share: Net earnings $ 48,413 33,696 Dividends - Class A shares — — Dividends - Class B shares — — Undistributed earnings $ 48,413 33,696 Allocation of net earnings: Dividends $ — — — — Allocation of undistributed earnings 47,044 1,369 32,743 953 Net earnings $ 47,044 1,369 32,743 953 Denominator: Basic earnings per share - weighted-average shares 3,436 200 3,436 200 Effect of dilutive stock options — — — — Diluted earnings per share - adjusted weighted-average shares for assumed conversions 3,436 200 3,436 200 Basic earnings per share $ 13.69 6.85 9.53 4.76 Diluted earnings per share $ 13.69 6.85 9.53 4.76 Six Months Ended June 30, 2020 2019 Class A Class B Class A Class B (In thousands except per share amounts) Numerator for Basic and Diluted Earnings Per Share: Net earnings $ 46,351 73,894 Dividends - Class A shares — — Dividends - Class B shares — — Undistributed earnings $ 46,351 73,894 Allocation of net earnings: Dividends $ — — — — Allocation of undistributed earnings 45,040 1,311 71,804 2,090 Net earnings $ 45,040 1,311 71,804 2,090 Denominator: Basic earnings per share - weighted-average shares 3,436 200 3,436 200 Effect of dilutive stock options — — — — Diluted earnings per share - adjusted weighted-average shares for assumed conversions 3,436 200 3,436 200 Basic Earnings Per Share $ 13.11 6.55 20.90 10.45 Diluted Earnings Per Share $ 13.11 6.55 20.90 10.45 |
Pension and Other Postretirem_2
Pension and Other Postretirement Plans (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Defined Benefit Pension Plans | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Schedule of net periodic benefit costs | The following table summarizes the components of net periodic benefit cost. Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 (In thousands) Service cost $ 27 24 54 48 Interest cost 169 210 337 420 Expected return on plan assets (316) (272) (631) (544) Amortization of prior service cost — — — — Amortization of net loss 145 165 290 330 Net periodic benefit cost $ 25 127 50 254 |
Chairman and President Non-Qualified Defined Benefit Plans | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Schedule of net periodic benefit costs | The following table summarizes the components of net periodic benefit costs for the non-qualified defined benefit plans. Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 (In thousands) Service cost $ 303 126 605 251 Interest cost 337 256 675 512 Amortization of prior service cost 15 15 30 30 Amortization of net loss 1,445 348 2,890 696 Net periodic benefit cost $ 2,100 745 4,200 1,489 |
Defined Benefit Postretirement Healthcare Plans | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Schedule of net periodic benefit costs | The following table summarizes the components of net periodic benefit costs. Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 (In thousands) Interest cost $ 42 50 83 99 Amortization of prior service cost — 13 — 26 Amortization of net loss 39 61 79 122 Net periodic benefit cost $ 81 124 162 247 |
Segment and Other Operating I_2
Segment and Other Operating Information (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Summary of segment information, by quarter | A summary of segment information as of June 30, 2020 and December 31, 2019 for the Condensed Consolidated Balance Sheet items and for the three and six months ended June 30, 2020 and June 30, 2019 for the Condensed Consolidated Statements of Earnings (Loss) is provided below. Condensed Consolidated Balance Sheet Items: June 30, 2020 Domestic International Annuities Acquired Businesses All Totals (In thousands) Deferred policy acquisition costs, sales inducements, and value of business acquired $ 130,961 192,498 444,772 140,429 — 908,660 Total segment assets 1,419,575 1,086,774 7,867,906 1,006,618 363,950 11,744,823 Future policy benefits 1,229,105 827,711 7,113,037 716,267 — 9,886,120 Other policyholder liabilities 14,544 12,150 94,190 14,986 — 135,870 December 31, 2019 Domestic International Annuities Acquired Businesses All Totals (In thousands) Deferred policy acquisition costs, sales inducements, and value of business acquired $ 127,557 209,858 486,553 142,434 — 966,402 Total segment assets 1,399,818 1,153,105 8,198,730 978,243 362,900 12,092,796 Future policy benefits (1) 1,198,103 870,461 7,366,894 706,513 — 10,141,971 Other policyholder liabilities 18,016 14,903 80,002 14,686 — 127,607 (1) Revised to correct for an adjustment related to an understatement of reserve liabilities of $15.0 million. Refer to Note 1. Condensed Consolidated Statements of Earnings (Loss): Three Months Ended June 30, 2020 Domestic International Annuities Acquired Businesses All Totals (In thousands) Premiums and contract revenues $ 12,009 23,061 4,699 19,841 — 59,610 Net investment income (loss) 21,475 11,153 97,666 6,549 8,851 145,694 Other revenues 1 (6) (8) 2,319 5,280 7,586 Total revenues 33,485 34,208 102,357 28,709 14,131 212,890 Life and other policy benefits 4,169 3,684 8,880 16,698 — 33,431 Amortization of deferred policy acquisition costs and value of business acquired 3,209 6,844 19,344 1,703 — 31,100 Universal life and annuity contract interest 19,172 9,492 33,108 — — 61,772 Other operating expenses 5,643 4,517 12,715 4,794 1,485 29,154 Federal income taxes (benefit) 172 934 6,173 1,918 2,292 11,489 Total expenses 32,365 25,471 80,220 25,113 3,777 166,946 Segment earnings (loss) $ 1,120 8,737 22,137 3,596 10,354 45,944 Six Months Ended June 30, 2020 Domestic International Annuities Acquired Businesses All Totals (In thousands) Premiums and contract revenues $ 23,237 45,928 9,349 39,924 — 118,438 Net investment income 2,092 2,153 108,297 12,850 6,823 132,215 Other revenues 30 48 (4) 4,741 6,425 11,240 Total revenues 25,359 48,129 117,642 57,515 13,248 261,893 Life and other policy benefits 10,046 7,015 17,069 32,935 — 67,065 Amortization of deferred policy acquisition costs and value of business acquired 5,782 12,896 38,365 4,094 — 61,137 Universal life and annuity contract interest (2,521) (1,345) 37,612 — — 33,746 Other operating expenses 9,938 7,613 19,582 8,863 2,980 48,976 Federal income taxes (benefit) 360 3,738 854 3,140 1,748 9,840 Total expenses 23,605 29,917 113,482 49,032 4,728 220,764 Segment earnings (loss) $ 1,754 18,212 4,160 8,483 8,520 41,129 Three Months Ended June 30, 2019 Domestic International Annuities Acquired Businesses All Totals (In thousands) Premiums and contract revenues $ 10,706 23,777 5,857 20,380 — 60,720 Net investment income 14,995 9,276 89,572 6,007 8,574 128,424 Other revenues 20 33 64 2,290 1,559 3,966 Total revenues 25,721 33,086 95,493 28,677 10,133 193,110 Life and other policy benefits 3,829 2,959 9,876 16,993 — 33,657 Amortization of deferred acquisition costs and value of business acquired 3,307 6,948 18,750 2,406 — 31,411 Universal life and annuity contract interest 12,985 7,337 39,817 — — 60,139 Other operating expenses 5,017 4,521 9,374 4,491 1,931 25,334 Federal income taxes (benefit) 89 2,014 3,155 956 2,323 8,537 Total expenses 25,227 23,779 80,972 24,846 4,254 159,078 Segment earnings (loss) $ 494 9,307 14,521 3,831 5,879 34,032 Six Months Ended June 30, 2019 Domestic International Annuities Acquired Businesses All Totals (In thousands) Premiums and contract revenues $ 21,510 49,840 10,725 34,181 — 116,256 Net investment income 38,494 23,293 192,726 9,983 15,259 279,755 Other revenues 64 54 72 3,731 6,458 10,379 Total revenues 60,068 73,187 203,523 47,895 21,717 406,390 Life and other policy benefits 7,751 5,121 21,306 27,668 — 61,846 Amortization of deferred acquisition costs and value of business acquired 6,717 14,242 38,462 4,154 — 63,575 Universal life and annuity contract interest 34,426 19,330 87,299 — — 141,055 Other operating expenses 9,140 8,785 16,882 7,576 9,000 51,383 Federal income taxes (benefit) 413 5,222 8,038 1,703 2,582 17,958 Total expenses 58,447 52,700 171,987 41,101 11,582 335,817 Segment earnings (loss) $ 1,621 20,487 31,536 6,794 10,135 70,573 |
Reconciliation of segment premiums and other revenues to condensed consolidated financial statements | Reconciliations of segment information to the Company's Condensed Consolidated Financial Statements are provided below. Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In thousands) Premiums and Other Revenues : Premiums and contract revenues $ 59,610 60,720 118,438 116,256 Net investment income (loss) 145,694 128,424 132,215 279,755 Other revenues 7,586 3,966 11,240 10,379 Realized gains (losses) on investments 3,125 (425) 6,610 4,204 Total condensed consolidated premiums and other revenues $ 216,015 192,685 268,503 410,594 |
Reconciliation of segment federal income taxes to condensed consolidated financial statements | Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In thousands) Federal Income Taxes : Total segment Federal income taxes $ 11,489 8,537 9,840 17,958 Taxes on realized gains (losses) on investments 656 (89) 1,388 883 Total condensed consolidated Federal income taxes $ 12,145 8,448 11,228 18,841 |
Reconciliation of segment net earnings to condensed consolidated financial statements | Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In thousands) Net Earnings : Total segment earnings $ 45,944 34,032 41,129 70,573 Realized gains (losses) on investments, net of taxes 2,469 (336) 5,222 3,321 Total condensed consolidated net earnings $ 48,413 33,696 46,351 73,894 |
Reconciliation of segment assets to condensed consolidated financial statements | June 30, December 31, 2020 2019 (In thousands) Assets : Total segment assets $ 11,744,823 12,092,796 Other unallocated assets 646,908 460,651 Total condensed consolidated assets $ 12,391,731 $ 12,553,447 |
Share-Based Payments (Tables)
Share-Based Payments (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Summary of shares available for grant and stock option activity | A summary of awards by type and related activity is detailed below. Options Outstanding Shares Shares Weighted- Stock Options: Balance at January 1, 2020 291,000 — $ — Exercised — — $ — Forfeited — — $ — Expired — — $ — Stock options granted — — $ — Balance at June 30, 2020 291,000 — $ — |
Schedule of activity | Liability Awards SAR RSU PSU Other Share/Unit Awards: Balance at January 1, 2020 107,517 14,352 19,108 Exercised (1,372) (2,357) (4,150) Forfeited (992) — — Granted — — — Balance at June 30, 2020 105,153 11,995 14,958 |
Summary of information about stock options and SARs outstanding | The following table summarizes information about SARs outstanding at June 30, 2020. There were no options outstanding as of June 30, 2020. SARs Outstanding Number Weighted- Number Exercise prices: $132.56 19,118 1.5 years 19,118 $210.22 23,650 3.4 years 19,600 $216.48 11,149 5.6 years 11,149 $311.16 9,897 6.6 years 9,897 $310.55 203 6.8 years 203 $334.34 9,310 7.5 years 6,202 $303.77 11,566 8.5 years 3,848 $252.91 20,260 9.4 years 120 Totals 105,153 70,137 Aggregate intrinsic value (in thousands) $ 1,350 $ 1,350 |
Summary of assumptions employed using Black-Scholes option pricing model | In estimating the fair value of the SARs outstanding at June 30, 2020 and December 31, 2019, the Company employed the Black-Scholes option pricing model with assumptions detailed below. June 30, December 31, Expected term 1.5 to 9.4 years 1.9 to 10 years Expected volatility weighted-average 31.72 % 22.19 % Expected dividend yield 0.18 % 0.12 % Risk-free rate weighted-average 0.20 % 1.61 % |
Investments (Tables)
Investments (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Realized investment gains and losses, excluding impairment losses | The table below presents realized gains and losses, excluding impairment losses, for the periods indicated. Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In thousands) Available for sale debt securities: Realized gains on disposal $ 1,730 1,168 2,491 2,351 Realized losses on disposal — — — (84) Held to maturity debt securities: Realized gains on disposal 1,395 924 4,119 951 Realized losses on disposal — — — — Equity securities realized gains (losses) — — — — Real estate gains (losses) — 3,385 — 6,888 Mortgage loans write-downs — — — — Other — — — — Totals $ 3,125 5,477 6,610 10,106 |
Schedule of held-to-maturity securities | The table below presents amortized costs and fair values of debt securities held to maturity at June 30, 2020. Debt Securities Held to Maturity Amortized Gross Gross Fair Allowance for Credit Losses (In thousands) U.S. agencies $ 81,855 3,501 — 85,356 (4) U.S. Treasury 3,792 190 — 3,982 — States and political subdivisions 401,264 23,915 (57) 425,122 (65) Foreign governments 1,133 154 — 1,287 — Public utilities 854,139 64,981 — 919,120 (879) Corporate 4,559,466 378,165 (7,068) 4,930,563 (3,992) Commercial mortgage-backed 3,024 52 — 3,076 — Residential mortgage-backed 996,802 65,045 — 1,061,847 — Asset-backed 2,307 42 — 2,349 — Totals $ 6,903,782 536,045 (7,125) 7,432,702 (4,940) The table below presents amortized costs and fair values of debt securities held to maturity at December 31, 2019. Debt Securities Held to Maturity Amortized Gross Gross Fair (In thousands) U.S. agencies $ 100,910 1,686 — 102,596 U.S. Treasury 3,782 140 — 3,922 States and political subdivisions 431,433 19,440 (84) 450,789 Foreign governments 1,144 55 — 1,199 Public utilities 888,444 36,638 (83) 924,999 Corporate 4,607,826 212,281 (718) 4,819,389 Commercial mortgage-backed 3,032 52 — 3,084 Residential mortgage-backed 1,066,899 32,706 (716) 1,098,889 Asset-backed 2,775 62 (1) 2,836 Totals $ 7,106,245 303,060 (1,602) 7,407,703 |
Schedule of debt securities, available-for-sale securities | The table below presents amortized costs and fair values of debt securities available for sale at June 30, 2020. Debt Securities Available for Sale Amortized Gross Gross Fair Allowance for Credit Losses (In thousands) States and political subdivisions $ 89,288 7,192 (5) 96,475 — Foreign governments 9,988 312 — 10,300 — Public utilities 64,407 4,915 — 69,322 — Corporate 2,905,567 218,647 (26,288) 3,097,926 — Commercial mortgage-backed 27,137 613 (319) 27,431 — Residential mortgage-backed 11,381 1,319 (159) 12,541 — Asset-backed 58,438 1,341 (661) 59,118 — Totals $ 3,166,206 234,339 (27,432) 3,373,113 — The table below presents amortized costs and fair values of debt securities available for sale at December 31, 2019. Debt Securities Available for Sale Amortized Gross Gross Fair (In thousands) States and political subdivisions $ 98,037 4,495 (3) 102,529 Foreign governments 9,983 203 — 10,186 Public utilities 67,895 3,476 — 71,371 Corporate 2,921,431 141,705 (2,479) 3,060,657 Commercial mortgage-backed 28,871 1,071 — 29,942 Residential mortgage-backed 12,815 1,077 (117) 13,775 Asset-backed 67,088 1,397 — 68,485 Totals $ 3,206,120 153,424 (2,599) 3,356,945 |
Schedule of gross unrealized losses and fair values of held-to-maturity investments, continuous unrealized loss position | The following table shows the gross unrealized losses and fair values of the Company's held to maturity debt securities by investment category and length of time the individual securities have been in a continuous unrealized loss position at June 30, 2020. Debt Securities Held to Maturity Less than 12 Months 12 Months or Greater Total Fair Unrealized Fair Unrealized Fair Unrealized (In thousands) States and political subdivisions $ — — 1,749 (57) 1,749 (57) Public utilities — — — — — — Corporate 157,752 (7,068) — — 157,752 (7,068) Commercial mortgage-backed — — — — — — Residential mortgage-backed — — — — — — Asset-backed — — — — — — Totals $ 157,752 (7,068) 1,749 (57) 159,501 (7,125) The following table shows the gross unrealized losses and fair values of the Company's held to maturity debt securities by investment category and length of time the individual securities have been in a continuous unrealized loss position at December 31, 2019. Debt Securities Held to Maturity Less than 12 Months 12 Months or Greater Total Fair Unrealized Fair Unrealized Fair Unrealized (In thousands) States and political subdivisions $ 5,013 (33) 1,712 (51) 6,725 (84) Public utilities 2,345 (83) — — 2,345 (83) Corporate 31,419 (337) 17,191 (381) 48,610 (718) Residential mortgage-backed 25,859 (63) 43,498 (653) 69,357 (716) Asset-backed 1,349 (1) — — 1,349 (1) Totals $ 65,985 (517) 62,401 (1,085) 128,386 (1,602) |
Schedule of gross unrealized losses and fair values of debt securities, available-for-sale investments, continuous unrealized loss position | The following table shows the gross unrealized losses and fair values of the Company's available for sale debt securities by investment category and length of time the individual securities have been in a continuous unrealized loss position at June 30, 2020. Debt Securities Available for Sale Less than 12 Months 12 Months or Greater Total Fair Unrealized Fair Unrealized Fair Unrealized (In thousands) States and political subdivisions $ 558 (4) 464 (1) 1,022 (5) Public utilities — — — — — — Corporate 217,451 (23,582) 28,249 (2,706) 245,700 (26,288) Commercial mortgage-backed 8,772 (319) — — 8,772 (319) Residential mortgage-backed — — 594 (159) 594 (159) Asset-backed 22,656 (661) — — 22,656 (661) Totals $ 249,437 (24,566) 29,307 (2,866) 278,744 (27,432) The following table shows the gross unrealized losses and fair values of the Company's available for sale debt securities by investment category and length of time that the individual securities have been in a continuous unrealized loss position at December 31, 2019. Debt Securities Available for Sale Less than 12 Months 12 Months or Greater Total Fair Unrealized Fair Unrealized Fair Unrealized (In thousands) States and political subdivisions $ 470 (3) — — 470 (3) Public utilities — — — — — — Corporate 40,080 (105) 28,582 (2,374) 68,662 (2,479) Residential mortgage-backed — — 710 (117) 710 (117) Totals $ 40,550 (108) 29,292 (2,491) 69,842 (2,599) |
Investments classified by contractual maturity date | The amortized cost and fair value of investments in debt securities at June 30, 2020, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Debt Securities Available for Sale Debt Securities Held to Maturity Amortized Cost Fair Value Amortized Cost Fair Value (In thousands) Due in 1 year or less $ 168,818 171,286 581,153 590,157 Due after 1 year through 5 years 1,370,814 1,447,182 3,018,245 3,203,154 Due after 5 years through 10 years 1,231,850 1,321,137 1,587,587 1,763,367 Due after 10 years 297,768 334,418 714,664 808,752 3,069,250 3,274,023 5,901,649 6,365,430 Mortgage and asset-backed securities 96,956 99,090 1,002,133 1,067,272 Totals before allowance for credit losses 3,166,206 3,373,113 6,903,782 7,432,702 Allowance for credit losses — — (4,940) — Totals $ 3,166,206 3,373,113 6,898,842 7,432,702 |
Allowance for debt securities held to maturity | The following table presents the allowance for credit losses for the three and six months ended June 30, 2020 and 2019. Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Debt Securities Held to Maturity Debt Securities Available for Sale Debt Securities Held to Maturity Debt Securities Available for Sale (In thousands) Balance, beginning of period $ 6,039 — — — Provision January 1, 2020 for adoption of new accounting guidance — — 3,334 — (Releases)/provision during period (1,099) — 1,606 — Balance, end of period $ 4,940 — 4,940 — In the table below, held to maturity securities and their corresponding allowance for credit losses are represented according to credit ratings by nationally recognized statistical rating organizations. Debt Securities Held to Maturity Amortized Cost Allowance for Credit Losses Carrying Value (In thousands) AAA $ 93,438 — 93,438 AA 1,739,557 (56) 1,739,501 A 2,234,460 (985) 2,233,475 BBB 2,733,811 (3,580) 2,730,231 BB and other below investment 102,516 (319) 102,197 Bonds Total $ 6,903,782 (4,940) 6,898,842 |
Allowance for debt securities available for sale | The following table presents the allowance for credit losses for the three and six months ended June 30, 2020 and 2019. Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Debt Securities Held to Maturity Debt Securities Available for Sale Debt Securities Held to Maturity Debt Securities Available for Sale (In thousands) Balance, beginning of period $ 6,039 — — — Provision January 1, 2020 for adoption of new accounting guidance — — 3,334 — (Releases)/provision during period (1,099) — 1,606 — Balance, end of period $ 4,940 — 4,940 — |
Schedule of mortgage loans by loan-to-value ratio | The following table represents the mortgage loan portfolio by loan-to-value ratio. June 30, 2020 December 31, 2019 Amount % Amount % (In thousands) (In thousands) Mortgage Loans by Loan-to-Value Ratio (1): Less than 50% $ 52,852 19.2 $ 52,778 19.3 50% to 60% 50,261 18.2 56,929 20.8 60% to 70% 126,960 46.0 117,377 43.0 70% to 80% 45,855 16.6 46,013 16.9 80% to 90% — — — — Greater than 90% — — — — Gross balance 275,928 100.0 273,097 100.0 Allowance for credit losses (2,227) (0.8) (675) (0.2) Totals $ 273,701 99.2 $ 272,422 99.8 (1) Loan-to-Value Ratio is determined using the most recent appraised value. Appraisals are required at the time of funding and may be updated if a material change occurs from the original loan agreement. |
Schedule of allowance for mortgage loans | The following table represents the mortgage loan allowance for credit losses. Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In thousands) Balance, beginning of the period $ 1,885 675 675 675 Provision January 1, 2020 for adoption of new accounting guidance — — 504 — Provision during the period 342 — 1,048 — Releases — — — — Total ending allowance for credit losses $ 2,227 675 2,227 675 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of assets and liabilities that are measured at fair value on a recurring basis | The following tables set forth the Company’s assets and liabilities that are measured at fair value on a recurring basis as of the date indicated: June 30, 2020 Total Level 1 Level 2 Level 3 (In thousands) Debt securities, available for sale $ 3,373,113 — 3,373,113 — Equity securities 17,918 17,918 — — Derivatives, index options 66,738 — — 66,738 Other invested assets 2 2 — — Total assets $ 3,457,771 17,920 3,373,113 66,738 Policyholder account balances (a) $ 87,573 — — 87,573 Other liabilities (b) 5,497 — — 5,497 Total liabilities $ 93,070 — — 93,070 During the three and six months ended June 30, 2020, the Company made no transfers into or out of Levels 1, 2 or 3. December 31, 2019 Total Level 1 Level 2 Level 3 (In thousands) Debt securities, available for sale $ 3,356,945 — 3,356,945 — Equity securities 23,594 23,594 — — Derivatives, index options 157,588 — — 157,588 Other invested assets 2 2 — — Total assets $ 3,538,129 23,596 3,356,945 157,588 Policyholder account balances (a) $ 155,902 — — 155,902 Other liabilities (c) 15,301 — — 15,301 Total liabilities $ 171,203 — — 171,203 (a) Represents the fair value of certain product-related embedded derivatives that were recorded at fair value. (b) Represents the liability for share-based compensation. (c) Represents the liability for share-based compensation and the contingent consideration for businesses acquired. |
Schedule of assets by by pricing source and fair value hierarchy level | The following tables present, by pricing source and fair value hierarchy level, the Company's assets that are measured at fair value on a recurring basis: June 30, 2020 Total Level 1 Level 2 Level 3 (In thousands) Debt securities, available for sale: Priced by third-party vendors $ 3,373,113 — 3,373,113 — Priced internally — — — — Subtotal 3,373,113 — 3,373,113 — Equity securities, available for sale: Priced by third-party vendors 17,918 17,918 — — Priced internally — — — — Subtotal 17,918 17,918 — — Derivatives, index options: Priced by third-party vendors 66,738 — — 66,738 Priced internally — — — — Subtotal 66,738 — — 66,738 Other invested assets: Priced by third-party vendors 2 2 — — Priced internally — — — — Subtotal 2 2 — — Total $ 3,457,771 17,920 3,373,113 66,738 Percent of total 100.0 % 0.5 % 97.6 % 1.9 % December 31, 2019 Total Level 1 Level 2 Level 3 (In thousands) Debt securities, available for sale: Priced by third-party vendors $ 3,356,945 — 3,356,945 — Priced internally — — — — Subtotal 3,356,945 — 3,356,945 — Equity securities, available for sale: Priced by third-party vendors 23,594 23,594 — — Priced internally — — — — Subtotal 23,594 23,594 — — Derivatives, index options: Priced by third-party vendors 157,588 — — 157,588 Priced internally — — — — Subtotal 157,588 — — 157,588 Other invested assets: Priced by third-party vendors 2 2 — — Priced internally — — — — Subtotal 2 2 — — Total $ 3,538,129 23,596 3,356,945 157,588 Percent of total 100.0 % 0.7 % 94.8 % 4.5 % |
Schedule of significant unobservable inputs for fair value measurements | The following tables provide additional information about fair value measurements for which significant unobservable (Level 3) inputs were utilized to determine fair value. For the Three Months Ended June 30, 2020 Assets Other Liabilities Derivatives, Index Options Total Assets Policyholder Account Balances Stock Options Contingent Consideration Total Other Liabilities (In thousands) Beginning balance, April 1, 2020 $ 24,335 24,335 61,625 3,081 4,174 68,880 Total realized and unrealized gains (losses): Included in net earnings 40,243 40,243 23,790 2,444 (4,174) 22,060 Included in other comprehensive income — — — — — — Purchases, sales, issuances and settlements, net: Purchases 16,458 16,458 16,458 — — 16,458 Sales — — — — — — Issuances — — — — — — Settlements (14,298) (14,298) (14,300) (28) — (14,328) Transfers into (out of) Level 3 — — — — — — Balance at end of period $ 66,738 66,738 87,573 5,497 — 93,070 Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period: Net investment income $ 62,328 62,328 — — — — Benefits and expenses — — 62,328 2,444 (4,174) 60,598 Total $ 62,328 62,328 62,328 2,444 (4,174) 60,598 For the Three Months Ended June 30, 2019 Assets Other Liabilities Derivatives, Index Options Total Assets Policyholder Account Balances Stock Options Contingent Consideration Total Other Liabilities (In thousands) Beginning balance, April 1, 2019 $ 71,001 71,001 86,127 7,898 3,700 97,725 Total realized and unrealized gains (losses): Included in net earnings 17,828 17,828 13,440 93 171 13,704 Included in other comprehensive income — — — — — — Purchases, sales, issuances and settlements, net: Purchases 19,030 19,030 19,030 — — 19,030 Sales — — — — — — Issuances — — — — — — Settlements (17,959) (17,959) (17,959) — — (17,959) Transfers into (out of) Level 3 — — — — — — Balance at end of period $ 89,900 89,900 100,638 7,991 3,871 112,500 Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period: Net investment income $ 4,350 4,350 — — — — Benefits and expenses — — 4,350 93 171 4,614 Total $ 4,350 4,350 4,350 93 171 4,614 For the Six Months Ended June 30, 2020 Assets Other Liabilities Derivatives, Index Options Total Assets Policyholder Account Balances Stock Options Contingent Consideration Total Other Liabilities (In thousands) Beginning balance, January 1, 2020 $ 157,588 157,588 155,902 11,225 4,076 171,203 Total realized and unrealized gains (losses): Included in net earnings (66,386) (66,386) (43,865) (3,849) (4,076) (51,790) Included in other comprehensive income — — — — — — Purchases, sales, issuances and settlements, net: Purchases 38,861 38,861 38,861 — — 38,861 Sales — — — — — — Issuances — — — — — — Settlements (63,325) (63,325) (63,325) (1,879) — (65,204) Transfers into (out of) Level 3 — — — — — — Balance at end of period $ 66,738 66,738 87,573 5,497 — 93,070 Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period: Net investment income $ (43,670) (43,670) — — — — Benefits and expenses — — (43,670) (3,849) (4,076) (51,595) Total $ (43,670) (43,670) (43,670) (3,849) (4,076) (51,595) For the Six Months Ended June 30, 2019 Assets Other Liabilities Derivatives, Index Options Total Assets Policyholder Account Balances Stock Options Contingent Consideration Total Other Liabilities (In thousands) Beginning balance, January 1, 2019 $ 14,684 14,684 44,781 11,923 — 56,704 Total realized and unrealized gains (losses): Included in net earnings 59,830 59,830 40,471 (1,410) 171 39,232 Included in other comprehensive income — — — — — — Purchases, sales, issuances and settlements, net: Purchases 36,622 36,622 36,622 — — 36,622 Sales — — — — — — Issuances — — — — 3,700 3,700 Settlements (21,236) (21,236) (21,236) (2,522) — (23,758) Transfers into (out of) Level 3 — — — — — — Balance at end of period $ 89,900 89,900 100,638 7,991 3,871 112,500 Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period: Net investment income $ 44,814 44,814 — — — — Benefits and expenses — — 44,814 (1,410) 171 43,575 Total $ 44,814 44,814 44,814 (1,410) 171 43,575 |
Schedule of quantitative information of Level 3 assets | The following table presents the valuation method for financial assets and liabilities categorized as level 3, as well as the unobservable inputs used in the valuation of those financial instruments: June 30, 2020 Fair Value Valuation Technique Unobservable Input Range (Weighted Average) (In thousands) Assets: Derivatives, index options $ 66,738 Broker prices Implied volatility 12.96% - 53.69% (18.55%) Total assets $ 66,738 Liabilities: Policyholder account balances $ 87,573 Deterministic cash flow model Projected option cost 0.0% - 31.12% (4.56%) Share based compensation 5,497 Black-Scholes model Expected term 1.5 to 9.4 years Expected volatility 31.72% Total liabilities $ 93,070 December 31, 2019 Fair Value Valuation Technique Unobservable Input Range (Weighted Average) (In thousands) Assets: Derivatives, index options $ 157,588 Broker prices Implied volatility 13.10% - 19.90% (15.25%) Total assets $ 157,588 Liabilities: Policyholder account balances $ 155,902 Deterministic cash flow model Projected option cost 0.0% - 17.55% (3.14%) Share based compensation 11,225 Black-Scholes model Expected term 1.9 to 10 years Expected volatility 22.19% Contingent consideration on businesses acquired 4,076 Probabilistic Method Discount rate 10.0% Projected renewal premium $57.2 - $82.4 million ($71.9) Total liabilities $ 171,203 |
Schedule of carrying amounts and fair values of the Company's financial instruments | The carrying amounts and fair values of the Company's financial instruments are as follows: June 30, 2020 Fair Value Hierarchy Level Carrying Fair Level 1 Level 2 Level 3 (In thousands) ASSETS Debt securities held to maturity $ 6,898,842 7,432,702 — 7,432,702 — Debt securities available for sale 3,373,113 3,373,113 — 3,373,113 — Cash and cash equivalents 450,703 450,703 450,703 — — Mortgage loans 273,701 272,336 — — 272,336 Real estate 34,298 48,547 — — 48,547 Policy loans 76,811 132,257 — — 132,257 Other loans 18,064 18,365 — — 18,365 Derivatives, index options 66,738 66,738 — — 66,738 Equity securities 17,918 17,918 17,918 — — Life interest in Libbie Shearn Moody Trust 9,230 12,775 — — 12,775 Other investments 4,515 22,582 2 — 22,580 LIABILITIES Deferred annuity contracts $ 6,755,394 5,511,416 — — 5,511,416 Immediate annuity and supplemental contracts 403,856 455,875 — — 455,875 Contingent consideration on businesses acquired — — — — — December 31, 2019 Fair Value Hierarchy Level Carrying Fair Level 1 Level 2 Level 3 (In thousands) ASSETS Debt securities held to maturity $ 7,106,245 7,407,703 — 7,407,703 — Debt securities available for sale 3,356,945 3,356,945 — 3,356,945 — Cash and cash equivalents 253,524 253,524 253,524 — — Mortgage loans 272,422 270,931 — — 270,931 Real estate 34,588 57,204 — — 57,204 Policy loans 80,008 123,650 — — 123,650 Other loans 13,547 13,698 — — 13,698 Derivatives, index options 157,588 157,588 — — 157,588 Equity securities 23,594 23,594 23,594 — — Life interest in Libbie Shearn Moody Trust 9,230 12,775 — — 12,775 Other investments 197 16,182 2 — 16,180 LIABILITIES Deferred annuity contracts (1) $ 7,014,833 5,931,352 — — 5,931,352 Immediate annuity and supplemental contracts 400,465 422,931 — — 422,931 Contingent consideration on businesses acquired 4,076 4,076 — — 4,076 (1) Revised to correct for an adjustment related to the understatement of reserve liabilities of $15.0 million. See Note 1. |
Derivative Investments (Tables)
Derivative Investments (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of fair value of derivative instruments | The tables below present the fair value of derivative instruments as of June 30, 2020 and December 31, 2019, respectively. June 30, 2020 Asset Derivatives Liability Derivatives Balance Fair Balance Fair (In thousands) (In thousands) Derivatives not designated as hedging instruments Equity index options Derivatives, Index Options $ 66,738 Fixed-index products Universal Life and Annuity Contracts $ 87,573 Total $ 66,738 $ 87,573 December 31, 2019 Asset Derivatives Liability Derivatives Balance Fair Balance Fair (In thousands) (In thousands) Derivatives not designated as hedging instruments Equity index options Derivatives, Index Options $ 157,588 Fixed-index products Universal Life and Annuity Contracts $ 155,902 Total $ 157,588 $ 155,902 |
Schedule of derivative instruments in the condensed consolidated statements of earnings | The table below presents the effect of derivative instruments in the Condensed Consolidated Statements of Earnings (Loss) for the three months ended June 30, 2020 and 2019. June 30, June 30, Derivatives Not Designated Location of Gain Amount of Gain or (In thousands) Equity index options Net investment income (loss) $ 40,243 17,828 Fixed-index products Universal life and annuity contract interest (23,790) (13,439) $ 16,453 4,389 The table below presents the effect of derivative instruments in the Condensed Consolidated Statements of Earnings (Loss) for the six months ended June 30, 2020 and 2019. June 30, June 30, Derivatives Not Designated Location of Gain Amount of Gain or (In thousands) Equity index options Net investment income $ (66,386) 59,830 Fixed-index products Universal life and annuity contract interest 43,865 (40,470) $ (22,521) 19,360 |
Business Combinations (Tables)
Business Combinations (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Business Combinations [Abstract] | |
Schedule of fair value of net assets acquired | The following table presents the fair values of the net assets acquired as of January 31, 2019. January 31, 2019 Fair value Assets (In thousands) Debt securities held to maturity $ 261,059 Debt securities available for sale 400,719 Policy loans 28,128 Real estate 4,600 Cash and cash equivalents 16,275 Accrued investment income 6,116 Value of business acquired 145,768 Reinsurance recoverables 21,895 Other intangible assets 9,600 Other assets acquired 12,075 Total assets acquired 906,235 Liabilities Traditional life reserves 691,297 Other policyholder liabilities 13,867 Other liabilities acquired 5,840 711,004 Net identifiable assets acquired 195,231 Goodwill 13,864 Net assets acquired $ 209,095 |
Schedule of fair value of identifiable intangible assets acquired | The following table presents the fair value of identifiable intangible assets acquired at January 31, 2019: Fair Value Weighted-Average Amortization Period (In thousands) Trademarks / trade names $ 2,800 15 Internally developed software 3,800 7 Insurance licenses 3,000 NA $ 9,600 The gross carrying amounts and accumulated amortization for each specifically identifiable intangible asset were as follows. June 30, 2020 December 31, 2019 Weighted-Average Amortization Period Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization (In thousands) Trademarks/trade names 15 $ 2,800 (264) 2,800 (171) Internally developed software 7 3,800 (769) 3,800 (498) Insurance licenses (1) N/A 3,000 — 3,000 — $ 9,600 (1,033) 9,600 (669) |
Schedule of changes in VOBA | Changes in VOBA were as follows for the periods shown: June 30, December 31, 2020 2019 (In thousands) Balance, beginning of year $ 138,071 — Business acquired — 145,768 Amortization: Amortization, excluding unlocking (3,801) (7,697) Balance as of end of period $ 134,270 138,071 |
Schedule of expected amortization of VOBA | Estimated future amortization of VOBA, net of interest (in thousands), as of June 30, 2020, is as follows: Expected Amortization (In thousands) Remainder of 2020 $ 3,218 2021 $ 6,107 2022 $ 5,797 2023 $ 5,528 2024 $ 5,287 |
Schedule of changes in carrying amount of goodwill | The changes in the carrying amount of goodwill (in thousands) were as follows: June 30, December 31, 2020 2019 (In thousands) Gross goodwill as of beginning of year $ 13,864 — Goodwill resulting from business acquisition — 13,864 Gross goodwill, before impairments 13,864 13,864 Accumulated impairment as of beginning of year — — Current year impairments — — Net goodwill as of end of period $ 13,864 13,864 |
Schedule of pro forma total revenues and net earnings | The following unaudited comparative pro forma total revenues and net earnings represent Condensed Consolidated Results of Operations for the Company which assume amounts estimated had the acquisition of Ozark National and NIS by the Company been effective January 1, 2018. Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In thousands) Total revenues $ 216,015 192,685 268,503 420,268 Net earnings (loss) $ 48,413 33,696 46,351 75,328 The pro forma amounts shown above include the estimated total revenues and net earnings of the acquired businesses for each period incorporating amortization of identifiable intangible assets acquired and fair value adjustments to acquired invested assets and traditional life insurance reserves. |
Consolidation and Basis of Pr_3
Consolidation and Basis of Presentation (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||
Decrease to deferred federal income tax liability | $ (55,428) | $ (55,428) | $ (36,767) | ||
Decrease to retained earnings | (2,057,889) | (2,057,889) | (2,014,570) | ||
Other net investment gains (losses) | 3,125 | $ 5,477 | 6,610 | $ 10,106 | |
Net OTTI losses recognized in earnings | 0 | (5,902) | 0 | (5,902) | |
Earnings (loss) before Federal income taxes | 60,558 | 42,144 | 57,579 | 92,735 | |
Federal income taxes | 12,145 | 8,448 | 11,228 | 18,841 | |
Net earnings (loss) | 48,413 | 33,696 | 46,351 | 73,894 | |
Unrealized Gains and Losses on Available-for-sale Securities | Amount Reclassified From Accumulated Other Comprehensive Income | |||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||
Other net investment gains (losses) | 1,729 | 1,168 | 2,491 | 2,267 | |
Net OTTI losses recognized in earnings | 0 | (5,902) | 0 | (5,902) | |
Earnings (loss) before Federal income taxes | 1,729 | (4,734) | 2,491 | (3,635) | |
Federal income taxes | 363 | (994) | 523 | (763) | |
Net earnings (loss) | $ 1,366 | $ (3,740) | $ 1,968 | $ (2,872) | |
Restatement Adjustment | |||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||
Increase in future policy benefits liability | 15,000 | ||||
Decrease to deferred federal income tax liability | 3,200 | ||||
Decrease to retained earnings | $ 11,800 |
New Accounting Pronouncements_2
New Accounting Pronouncements (Details) - USD ($) $ in Thousands | 6 Months Ended | ||||||
Jun. 30, 2020 | Mar. 31, 2020 | Jan. 01, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Retained earnings | $ 2,057,889 | $ 2,014,570 | |||||
Valuation allowance for mortgage loans | 2,227 | $ 1,885 | $ 1,200 | 675 | $ 675 | $ 675 | $ 675 |
Debt securities held to maturity, allowance for expected credit losses | $ 4,940 | 6,039 | 3,300 | 0 | |||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201613Member | ||||||
Cumulative effect, adjustment | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Retained earnings | $ 3,000 | ||||||
Valuation allowance for mortgage loans | 0 | 504 | $ 0 | $ 0 | |||
Debt securities held to maturity, allowance for expected credit losses | $ 0 | $ 3,334 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | Jan. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 |
Dividends Payable [Line Items] | ||||||
Dividends declared and paid | $ 0 | $ 0 | ||||
NWLIC | ||||||
Dividends Payable [Line Items] | ||||||
Maximum dividend payment which may be paid without prior approval | $ 152,800,000 | 152,800,000 | ||||
Dividends declared and paid | $ 32,000,000 | |||||
Ozark National Life Insurance Company | ||||||
Dividends Payable [Line Items] | ||||||
Maximum dividend payment which may be paid without prior approval | 17,200,000 | 17,200,000 | ||||
Extraordinary dividend paid | $ 102,700,000 | |||||
Class B | ||||||
Dividends Payable [Line Items] | ||||||
Dividends declared and paid | $ 0 | $ 0 | $ 0 | $ 0 | ||
Class B | Board of Directors Chairman | ||||||
Dividends Payable [Line Items] | ||||||
Common stock, percentage ownership | 99.00% | 99.00% |
Earnings Per Share (EPS Calcula
Earnings Per Share (EPS Calculation) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||||
Net earnings | $ 48,413 | $ 33,696 | $ 46,351 | $ 73,894 |
Dividends | 0 | 0 | ||
Undistributed earnings | 48,413 | 33,696 | 46,351 | 73,894 |
Allocation of net earnings: | ||||
Dividends | 0 | 0 | ||
Undistributed earnings | 48,413 | 33,696 | 46,351 | 73,894 |
Net earnings | 48,413 | 33,696 | 46,351 | 73,894 |
Class A | ||||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||||
Net earnings | 47,044 | 32,743 | 45,040 | 71,804 |
Dividends | 0 | 0 | 0 | 0 |
Undistributed earnings | 47,044 | 32,743 | 45,040 | 71,804 |
Allocation of net earnings: | ||||
Dividends | 0 | 0 | 0 | 0 |
Undistributed earnings | 47,044 | 32,743 | 45,040 | 71,804 |
Net earnings | $ 47,044 | $ 32,743 | $ 45,040 | $ 71,804 |
Denominator: | ||||
Basic earnings per share - weighted-average shares (in shares) | 3,436 | 3,436 | 3,436 | 3,436 |
Effect of dilutive stock options (in shares) | 0 | 0 | 0 | 0 |
Diluted earnings per share - adjusted weighted-average shares for assumed conversions (in shares) | 3,436 | 3,436 | 3,436 | 3,436 |
Basic earnings per share (in dollars per share) | $ 13.69 | $ 9.53 | $ 13.11 | $ 20.90 |
Diluted earnings per share (in dollars per share) | $ 13.69 | $ 9.53 | $ 13.11 | $ 20.90 |
Class B | ||||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||||
Net earnings | $ 1,369 | $ 953 | $ 1,311 | $ 2,090 |
Dividends | 0 | 0 | 0 | 0 |
Undistributed earnings | 1,369 | 953 | 1,311 | 2,090 |
Allocation of net earnings: | ||||
Dividends | 0 | 0 | 0 | 0 |
Undistributed earnings | 1,369 | 953 | 1,311 | 2,090 |
Net earnings | $ 1,369 | $ 953 | $ 1,311 | $ 2,090 |
Denominator: | ||||
Basic earnings per share - weighted-average shares (in shares) | 200 | 200 | 200 | 200 |
Effect of dilutive stock options (in shares) | 0 | 0 | 0 | 0 |
Diluted earnings per share - adjusted weighted-average shares for assumed conversions (in shares) | 200 | 200 | 200 | 200 |
Basic earnings per share (in dollars per share) | $ 6.85 | $ 4.76 | $ 6.55 | $ 10.45 |
Diluted earnings per share (in dollars per share) | $ 6.85 | $ 4.76 | $ 6.55 | $ 10.45 |
Pension and Other Postretirem_3
Pension and Other Postretirement Plans (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020USD ($)benefit_plan | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)benefit_plan | Jun. 30, 2019USD ($) | Dec. 31, 2007 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||||
Number of non-qualified defined benefit pension plans | benefit_plan | 3 | 3 | |||
Number of healthcare plans | benefit_plan | 2 | 2 | |||
Defined Benefit Pension Plans | |||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||||
Vesting percentage in accrued benefits from plan freeze | 100.00% | ||||
Service cost | $ 27 | $ 24 | $ 54 | $ 48 | |
Interest cost | 169 | 210 | 337 | 420 | |
Expected return on plan assets | (316) | (272) | (631) | (544) | |
Amortization of prior service cost | 0 | 0 | 0 | 0 | |
Amortization of net loss | 145 | 165 | 290 | 330 | |
Net periodic benefit cost | 25 | 127 | 50 | 254 | |
Minimum required contribution | 0 | 0 | |||
Planned contributions remaining | 800 | 800 | |||
Company contributions to plan | 200 | ||||
Chairman and President Non-Qualified Defined Benefit Plans | |||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||||
Service cost | 303 | 126 | 605 | 251 | |
Interest cost | 337 | 256 | 675 | 512 | |
Amortization of prior service cost | 15 | 15 | 30 | 30 | |
Amortization of net loss | 1,445 | 348 | 2,890 | 696 | |
Net periodic benefit cost | 2,100 | 745 | 4,200 | 1,489 | |
Company contributions to plan | 900 | ||||
Company expected contributions to plans in fiscal year | 2,000 | 2,000 | |||
Defined Benefit Postretirement Healthcare Plans | |||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||||
Interest cost | 42 | 50 | 83 | 99 | |
Amortization of prior service cost | 0 | 13 | 0 | 26 | |
Amortization of net loss | 39 | 61 | 79 | 122 | |
Net periodic benefit cost | $ 81 | $ 124 | $ 162 | $ 247 | |
Minimum | Chairman and President Non-Qualified Defined Benefit Plans | |||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||||
Aggregate average annual participant salary increase | 10.00% |
Segment and Other Operating I_3
Segment and Other Operating Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Selected Condensed Consolidated Balance Sheet Items: | |||||
Total segment assets | $ 12,391,731 | $ 12,391,731 | $ 12,553,447 | ||
Other policyholder liabilities | 135,870 | 135,870 | 127,607 | ||
Condensed Consolidated Income Statements: | |||||
Premiums and contract revenues | 59,610 | $ 60,720 | 118,438 | $ 116,256 | |
Net investment income (loss) | 145,694 | 128,424 | 132,215 | 279,755 | |
Other revenues | 7,586 | 3,966 | 11,240 | 10,379 | |
Total revenues | 216,015 | 192,685 | 268,503 | 410,594 | |
Life and other policy benefits | 33,431 | 33,657 | 67,065 | 61,846 | |
Amortization of deferred policy acquisition costs and value of business acquired | 31,100 | 31,411 | 61,137 | 63,575 | |
Universal life and annuity contract interest | 61,772 | 60,139 | 33,746 | 141,055 | |
Other operating expenses | 29,154 | 25,334 | 48,976 | 51,383 | |
Total condensed consolidated Federal income taxes | 12,145 | 8,448 | 11,228 | 18,841 | |
Net earnings (loss) | 48,413 | 33,696 | 46,351 | 73,894 | |
Realized gains (losses) on investments | 3,125 | (425) | 6,610 | 4,204 | |
Segments | |||||
Selected Condensed Consolidated Balance Sheet Items: | |||||
Deferred policy acquisition costs, sales inducements, and value of business acquired | 908,660 | 908,660 | 966,402 | ||
Total segment assets | 11,744,823 | 11,744,823 | 12,092,796 | ||
Future policy benefits | 9,886,120 | 9,886,120 | 10,141,971 | ||
Other policyholder liabilities | 135,870 | 135,870 | 127,607 | ||
Condensed Consolidated Income Statements: | |||||
Premiums and contract revenues | 59,610 | 60,720 | 118,438 | 116,256 | |
Net investment income (loss) | 145,694 | 128,424 | 132,215 | 279,755 | |
Other revenues | 7,586 | 3,966 | 11,240 | 10,379 | |
Total revenues | 212,890 | 193,110 | 261,893 | 406,390 | |
Life and other policy benefits | 33,431 | 33,657 | 67,065 | 61,846 | |
Amortization of deferred policy acquisition costs and value of business acquired | 31,100 | 31,411 | 61,137 | 63,575 | |
Universal life and annuity contract interest | 61,772 | 60,139 | 33,746 | 141,055 | |
Other operating expenses | 29,154 | 25,334 | 48,976 | 51,383 | |
Total condensed consolidated Federal income taxes | 11,489 | 8,537 | 9,840 | 17,958 | |
Total expenses | 166,946 | 159,078 | 220,764 | 335,817 | |
Net earnings (loss) | 45,944 | 34,032 | 41,129 | 70,573 | |
Segments | Domestic Life Insurance | |||||
Selected Condensed Consolidated Balance Sheet Items: | |||||
Deferred policy acquisition costs, sales inducements, and value of business acquired | 130,961 | 130,961 | 127,557 | ||
Total segment assets | 1,419,575 | 1,419,575 | 1,399,818 | ||
Future policy benefits | 1,229,105 | 1,229,105 | 1,198,103 | ||
Other policyholder liabilities | 14,544 | 14,544 | 18,016 | ||
Condensed Consolidated Income Statements: | |||||
Premiums and contract revenues | 12,009 | 10,706 | 23,237 | 21,510 | |
Net investment income (loss) | 21,475 | 14,995 | 2,092 | 38,494 | |
Other revenues | 1 | 20 | 30 | 64 | |
Total revenues | 33,485 | 25,721 | 25,359 | 60,068 | |
Life and other policy benefits | 4,169 | 3,829 | 10,046 | 7,751 | |
Amortization of deferred policy acquisition costs and value of business acquired | 3,209 | 3,307 | 5,782 | 6,717 | |
Universal life and annuity contract interest | 19,172 | 12,985 | (2,521) | 34,426 | |
Other operating expenses | 5,643 | 5,017 | 9,938 | 9,140 | |
Total condensed consolidated Federal income taxes | 172 | 89 | 360 | 413 | |
Total expenses | 32,365 | 25,227 | 23,605 | 58,447 | |
Net earnings (loss) | 1,120 | 494 | 1,754 | 1,621 | |
Segments | International Life Insurance | |||||
Selected Condensed Consolidated Balance Sheet Items: | |||||
Deferred policy acquisition costs, sales inducements, and value of business acquired | 192,498 | 192,498 | 209,858 | ||
Total segment assets | 1,086,774 | 1,086,774 | 1,153,105 | ||
Future policy benefits | 827,711 | 827,711 | 870,461 | ||
Other policyholder liabilities | 12,150 | 12,150 | 14,903 | ||
Condensed Consolidated Income Statements: | |||||
Premiums and contract revenues | 23,061 | 23,777 | 45,928 | 49,840 | |
Net investment income (loss) | 11,153 | 9,276 | 2,153 | 23,293 | |
Other revenues | (6) | 33 | 48 | 54 | |
Total revenues | 34,208 | 33,086 | 48,129 | 73,187 | |
Life and other policy benefits | 3,684 | 2,959 | 7,015 | 5,121 | |
Amortization of deferred policy acquisition costs and value of business acquired | 6,844 | 6,948 | 12,896 | 14,242 | |
Universal life and annuity contract interest | 9,492 | 7,337 | (1,345) | 19,330 | |
Other operating expenses | 4,517 | 4,521 | 7,613 | 8,785 | |
Total condensed consolidated Federal income taxes | 934 | 2,014 | 3,738 | 5,222 | |
Total expenses | 25,471 | 23,779 | 29,917 | 52,700 | |
Net earnings (loss) | 8,737 | 9,307 | 18,212 | 20,487 | |
Segments | Annuities | |||||
Selected Condensed Consolidated Balance Sheet Items: | |||||
Deferred policy acquisition costs, sales inducements, and value of business acquired | 444,772 | 444,772 | 486,553 | ||
Total segment assets | 7,867,906 | 7,867,906 | 8,198,730 | ||
Future policy benefits | 7,113,037 | 7,113,037 | 7,366,894 | ||
Other policyholder liabilities | 94,190 | 94,190 | 80,002 | ||
Condensed Consolidated Income Statements: | |||||
Premiums and contract revenues | 4,699 | 5,857 | 9,349 | 10,725 | |
Net investment income (loss) | 97,666 | 89,572 | 108,297 | 192,726 | |
Other revenues | (8) | 64 | (4) | 72 | |
Total revenues | 102,357 | 95,493 | 117,642 | 203,523 | |
Life and other policy benefits | 8,880 | 9,876 | 17,069 | 21,306 | |
Amortization of deferred policy acquisition costs and value of business acquired | 19,344 | 18,750 | 38,365 | 38,462 | |
Universal life and annuity contract interest | 33,108 | 39,817 | 37,612 | 87,299 | |
Other operating expenses | 12,715 | 9,374 | 19,582 | 16,882 | |
Total condensed consolidated Federal income taxes | 6,173 | 3,155 | 854 | 8,038 | |
Total expenses | 80,220 | 80,972 | 113,482 | 171,987 | |
Net earnings (loss) | 22,137 | 14,521 | 4,160 | 31,536 | |
Segments | Acquired Businesses | |||||
Selected Condensed Consolidated Balance Sheet Items: | |||||
Deferred policy acquisition costs, sales inducements, and value of business acquired | 140,429 | 140,429 | 142,434 | ||
Total segment assets | 1,006,618 | 1,006,618 | 978,243 | ||
Future policy benefits | 716,267 | 716,267 | 706,513 | ||
Other policyholder liabilities | 14,986 | 14,986 | 14,686 | ||
Condensed Consolidated Income Statements: | |||||
Premiums and contract revenues | 19,841 | 20,380 | 39,924 | 34,181 | |
Net investment income (loss) | 6,549 | 6,007 | 12,850 | 9,983 | |
Other revenues | 2,319 | 2,290 | 4,741 | 3,731 | |
Total revenues | 28,709 | 28,677 | 57,515 | 47,895 | |
Life and other policy benefits | 16,698 | 16,993 | 32,935 | 27,668 | |
Amortization of deferred policy acquisition costs and value of business acquired | 1,703 | 2,406 | 4,094 | 4,154 | |
Universal life and annuity contract interest | 0 | 0 | 0 | 0 | |
Other operating expenses | 4,794 | 4,491 | 8,863 | 7,576 | |
Total condensed consolidated Federal income taxes | 1,918 | 956 | 3,140 | 1,703 | |
Total expenses | 25,113 | 24,846 | 49,032 | 41,101 | |
Net earnings (loss) | 3,596 | 3,831 | 8,483 | 6,794 | |
Segments | All Others | |||||
Selected Condensed Consolidated Balance Sheet Items: | |||||
Deferred policy acquisition costs, sales inducements, and value of business acquired | 0 | 0 | 0 | ||
Total segment assets | 363,950 | 363,950 | 362,900 | ||
Future policy benefits | 0 | 0 | 0 | ||
Other policyholder liabilities | 0 | 0 | 0 | ||
Condensed Consolidated Income Statements: | |||||
Premiums and contract revenues | 0 | 0 | 0 | 0 | |
Net investment income (loss) | 8,851 | 8,574 | 6,823 | 15,259 | |
Other revenues | 5,280 | 1,559 | 6,425 | 6,458 | |
Total revenues | 14,131 | 10,133 | 13,248 | 21,717 | |
Life and other policy benefits | 0 | 0 | 0 | 0 | |
Amortization of deferred policy acquisition costs and value of business acquired | 0 | 0 | 0 | 0 | |
Universal life and annuity contract interest | 0 | 0 | 0 | 0 | |
Other operating expenses | 1,485 | 1,931 | 2,980 | 9,000 | |
Total condensed consolidated Federal income taxes | 2,292 | 2,323 | 1,748 | 2,582 | |
Total expenses | 3,777 | 4,254 | 4,728 | 11,582 | |
Net earnings (loss) | 10,354 | 5,879 | 8,520 | 10,135 | |
Other unallocated | |||||
Selected Condensed Consolidated Balance Sheet Items: | |||||
Total segment assets | 646,908 | 646,908 | 460,651 | ||
Segment Reconciling Items | |||||
Condensed Consolidated Income Statements: | |||||
Taxes on realized gains (losses) on investments | 656 | (89) | 1,388 | 883 | |
Realized gains (losses) on investments, net of taxes | $ 2,469 | $ (336) | $ 5,222 | $ 3,321 | |
Restatement Adjustment | |||||
Selected Condensed Consolidated Balance Sheet Items: | |||||
Future policy benefits | $ 15,000 |
Share-Based Payments (General D
Share-Based Payments (General Descriptions) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | ||||||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | Jun. 20, 2008 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Period in force, from which option holders may elect to sell back acquired shares | 90 days | |||||||
Compensation cost not yet recognized | $ 5.5 | $ 5.5 | $ 11.2 | |||||
Pre-tax compensation cost (benefit) recognized | 2.4 | $ 0.1 | (3.8) | $ (1.4) | ||||
Compensation cost (benefit), tax expense (benefit) | (0.5) | $ 0 | 0.8 | $ 0.3 | ||||
Compensation cost related to nonvested options not yet recognized | $ 3.7 | $ 3.7 | ||||||
Weighted average period over which the compensation is expected to be recognized | 1 year 3 months 18 days | |||||||
Employee SARs granted before 2016 | Employees | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Requisite service period of awards (in years) | 3 years | |||||||
Employee SARs | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Requisite service period of awards (in years) | 1 year | |||||||
Employee Stock Options and SARs | Director | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Requisite service period of awards (in years) | 1 year | |||||||
RSU | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentage (in percentage) | 100.00% | |||||||
Requisite service period of awards (in years) | 3 years | |||||||
Vesting period (in years) | 3 years | |||||||
RSU | Director | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Requisite service period of awards (in years) | 1 year | |||||||
PSU | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting period (in years) | 3 years | |||||||
Performance period (in years) | 3 years | |||||||
Performance factor used to determine compensation payout | 101.19% | 93.86% | ||||||
Vesting After Service Period, Year One | Employee SARs granted before 2016 | Employees | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentage (in percentage) | 20.00% | |||||||
Vesting After Service Period, Year One | Employee SARs | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentage (in percentage) | 33.30% | |||||||
Vesting After Service Period, Year One | Employee Stock Options and SARs | Director | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentage (in percentage) | 20.00% | |||||||
Vesting After Service Period, Year Two | Employee SARs granted before 2016 | Employees | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentage (in percentage) | 20.00% | |||||||
Vesting After Service Period, Year Two | Employee SARs | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentage (in percentage) | 33.30% | |||||||
Vesting After Service Period, Year Two | Employee Stock Options and SARs | Director | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentage (in percentage) | 20.00% | |||||||
Vesting After Service Period, Year Three | Employee SARs granted before 2016 | Employees | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentage (in percentage) | 20.00% | |||||||
Vesting After Service Period, Year Three | Employee SARs | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentage (in percentage) | 33.30% | |||||||
Vesting After Service Period, Year Three | Employee Stock Options and SARs | Director | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentage (in percentage) | 20.00% | |||||||
Vesting After Service Period, Year Four | Employee SARs granted before 2016 | Employees | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentage (in percentage) | 20.00% | |||||||
Vesting After Service Period, Year Four | Employee Stock Options and SARs | Director | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentage (in percentage) | 20.00% | |||||||
Vesting After Service Period, Year Five | Employee SARs granted before 2016 | Employees | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentage (in percentage) | 20.00% | |||||||
Vesting After Service Period, Year Five | Employee Stock Options and SARs | Director | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentage (in percentage) | 20.00% | |||||||
Class A | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | |||||
Class A | 2008 Plan | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Common stock, par value (in dollars per share) | $ 1 | |||||||
Share-based payments, number of shares authorized under plans (in shares) | 300,000 |
Share-Based Payments (Options a
Share-Based Payments (Options and Stock Appreciation Rights Outstanding) (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Shares Available For Grant | ||
Shares Available For Grant, Beginning Balance (in shares) | 291,000 | |
Shares Available For Grant, Exercised (in shares) | 0 | |
Shares Available For Grant, Forfeited (in shares) | 0 | |
Shares Available For Grant, Expired (in shares) | 0 | |
Shares Available For Grant, Granted (in shares) | 0 | |
Shares Available For Grant, Ending Balance (in shares) | 291,000 | |
Shares/Awards | ||
Opening Balance (in shares) | 0 | |
Exercised (in shares) | 0 | |
Forfeited (in shares) | 0 | |
Expired (in shares) | 0 | |
Granted (in shares) | 0 | |
Ending Balance (in shares) | 0 | |
Weighted-Average Exercise Price (usd per share) | ||
Beginning Balance (in dollars per share) | $ 0 | |
Exercised (in dollars per share) | 0 | |
Forfeited (in dollars per share) | 0 | |
Expired (in dollars per share) | 0 | |
Granted (in dollars per share) | 0 | |
Ending Balance (in dollars per share) | $ 0 | |
Liability Awards | ||
Total intrinsic value of options exercised | $ 1,900,000 | $ 2,500,000 |
Total share-based liabilities paid | 1,900,000 | 2,500,000 |
Fair value of vested awards | 1,800,000 | $ 2,900,000 |
Cash received from exercise of stock options | $ 0 | |
Shares outstanding (in shares) | 0 | |
SAR | ||
Liability Awards | ||
Opening balance (in shares) | 107,517 | |
Exercised (in shares) | (1,372) | |
Forfeited (in shares) | (992) | |
Granted (in shares) | 0 | |
Closing balance (in shares) | 105,153 | |
RSU | ||
Liability Awards | ||
Opening balance (in shares) | 14,352 | |
Exercised (in shares) | (2,357) | |
Forfeited (in shares) | 0 | |
Granted (in shares) | 0 | |
Closing balance (in shares) | 11,995 | |
PSU | ||
Liability Awards | ||
Opening balance (in shares) | 19,108 | |
Exercised (in shares) | (4,150) | |
Forfeited (in shares) | 0 | |
Granted (in shares) | 0 | |
Closing balance (in shares) | 14,958 |
Share-Based Payments (Exercise
Share-Based Payments (Exercise Range) (Details) $ / shares in Units, $ in Thousands | 6 Months Ended |
Jun. 30, 2020USD ($)$ / sharesshares | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Number Outstanding (in shares) | 105,153 |
Number Exercisable (in shares) | 70,137 |
Closing stock price (in dollars per share) | $ / shares | $ 203.19 |
SAR | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Number Outstanding, Aggregate intrinsic value | $ | $ 1,350 |
Options Exercisable, Aggregate intrinsic value | $ | $ 1,350 |
SAR | 132.56 | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Exercise price (in dollars per share) | $ / shares | $ 132.56 |
Number Outstanding (in shares) | 19,118 |
Weighted- Average Remaining Contractual Life | 1 year 6 months |
Number Exercisable (in shares) | 19,118 |
SAR | 210.22 | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Exercise price (in dollars per share) | $ / shares | $ 210.22 |
Number Outstanding (in shares) | 23,650 |
Weighted- Average Remaining Contractual Life | 3 years 4 months 24 days |
Number Exercisable (in shares) | 19,600 |
SAR | 216.48 | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Exercise price (in dollars per share) | $ / shares | $ 216.48 |
Number Outstanding (in shares) | 11,149 |
Weighted- Average Remaining Contractual Life | 5 years 7 months 6 days |
Number Exercisable (in shares) | 11,149 |
SAR | 311.16 | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Exercise price (in dollars per share) | $ / shares | $ 311.16 |
Number Outstanding (in shares) | 9,897 |
Weighted- Average Remaining Contractual Life | 6 years 7 months 6 days |
Number Exercisable (in shares) | 9,897 |
SAR | 310.55 | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Exercise price (in dollars per share) | $ / shares | $ 310.55 |
Number Outstanding (in shares) | 203 |
Weighted- Average Remaining Contractual Life | 6 years 9 months 18 days |
Number Exercisable (in shares) | 203 |
SAR | 334.34 | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Exercise price (in dollars per share) | $ / shares | $ 334.34 |
Number Outstanding (in shares) | 9,310 |
Weighted- Average Remaining Contractual Life | 7 years 6 months |
Number Exercisable (in shares) | 6,202 |
SAR | 303.77 | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Exercise price (in dollars per share) | $ / shares | $ 303.77 |
Number Outstanding (in shares) | 11,566 |
Weighted- Average Remaining Contractual Life | 8 years 6 months |
Number Exercisable (in shares) | 3,848 |
SAR | 252.91 | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Exercise price (in dollars per share) | $ / shares | $ 252.91 |
Number Outstanding (in shares) | 20,260 |
Weighted- Average Remaining Contractual Life | 9 years 4 months 24 days |
Number Exercisable (in shares) | 120 |
Share-Based Payments (Black Sch
Share-Based Payments (Black Scholes Option Pricing Model Assumptions) (Details) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected dividend yield | 0.18% | 0.12% |
Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected term | 1 year 6 months | 1 year 10 months 24 days |
Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected term | 9 years 4 months 24 days | 10 years |
Weighted-Average | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected volatility weighted-average | 31.72% | 22.19% |
Risk-free rate weighted-average | 0.20% | 1.61% |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | Nov. 11, 2019 | Jul. 27, 2019 | Nov. 11, 2018 | Jun. 30, 2020 | Apr. 30, 2019 |
New Loans | |||||
Loss Contingencies [Line Items] | |||||
Other commitment | $ 0 | ||||
Existing Loans | |||||
Loss Contingencies [Line Items] | |||||
Other commitment | 8,800,000 | ||||
Capital Contributions To Investment Funds | |||||
Loss Contingencies [Line Items] | |||||
Other commitment | $ 59,000,000 | ||||
Williams v Pantaleoni et al | |||||
Loss Contingencies [Line Items] | |||||
Equity indexed annuity | $ 100,000 | ||||
Loss contingency, compensatory damages awarded | $ 14,949 | ||||
Loss contingency, punitive damages awarded | $ 2,900,000 | ||||
Loss contingency, damages sought | $ 1,300,000 | ||||
Settled Litigation | National Western Life Insurance Company and National Western Life Group, Inc. v. Ross Rankin Moody et. al | |||||
Loss Contingencies [Line Items] | |||||
Loss contingency, damages awarded | $ 1,314,054 |
Investments (Investment Gains a
Investments (Investment Gains and Losses) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Available for sale debt securities: | ||||
Realized gains on disposal | $ 1,730 | $ 1,168 | $ 2,491 | $ 2,351 |
Realized losses on disposal | 0 | 0 | 0 | (84) |
Held to maturity debt securities: | ||||
Realized gains on disposal | 1,395 | 924 | 4,119 | 951 |
Realized losses on disposal | 0 | 0 | 0 | 0 |
Equity securities realized gains (losses) | 0 | 0 | 0 | 0 |
Real estate gains (losses) | 0 | 3,385 | 0 | 6,888 |
Mortgage loans write-downs | 0 | 0 | 0 | 0 |
Other | 0 | 0 | 0 | 0 |
Totals | $ 3,125 | $ 5,477 | $ 6,610 | $ 10,106 |
Investments (Details)
Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Real Estate [Line Items] | |||||
Real estate gains (losses) | $ 0 | $ 3,385 | $ 0 | $ 6,888 | |
Percentage of gains on bonds due to calls of securities | 99.90% | 89.40% | 99.80% | 72.60% | |
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201613Member | ||||
Nursing Home Operations in Reno, Nevada | |||||
Real Estate [Line Items] | |||||
Real estate gains (losses) | $ 5,700 | ||||
Nursing Home Operations, San Marcos, Texas | |||||
Real Estate [Line Items] | |||||
Real estate gains (losses) | $ (2,000) | ||||
Prior Home Office | |||||
Real Estate [Line Items] | |||||
Real estate gains (losses) | $ 3,200 |
Investments (Securities Held to
Investments (Securities Held to Maturity) (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Mar. 31, 2020 | Jan. 01, 2020 | Dec. 31, 2019 |
Schedule of Held-to-maturity Securities [Line Items] | ||||
Totals before allowance for credit losses | $ 6,903,782 | $ 7,106,245 | ||
Gross Unrealized Gains | 536,045 | 303,060 | ||
Gross Unrealized Losses | (7,125) | (1,602) | ||
Fair Value | 7,432,702 | 7,407,703 | ||
Allowance for Credit Losses | (4,940) | $ (6,039) | $ (3,300) | 0 |
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position [Abstract] | ||||
Less than 12 Months, Fair Value | 157,752 | 65,985 | ||
Less than 12 Months, Unrealized Losses | (7,068) | (517) | ||
12 Months or Greater, Fair Value | 1,749 | 62,401 | ||
12 Months or Greater, Unrealized Losses | (57) | (1,085) | ||
Total, Fair Value | 159,501 | 128,386 | ||
Total, Unrealized Losses | (7,125) | (1,602) | ||
U.S. agencies | ||||
Schedule of Held-to-maturity Securities [Line Items] | ||||
Totals before allowance for credit losses | 81,855 | 100,910 | ||
Gross Unrealized Gains | 3,501 | 1,686 | ||
Gross Unrealized Losses | 0 | 0 | ||
Fair Value | 85,356 | 102,596 | ||
Allowance for Credit Losses | (4) | |||
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position [Abstract] | ||||
Total, Unrealized Losses | 0 | 0 | ||
U.S. Treasury | ||||
Schedule of Held-to-maturity Securities [Line Items] | ||||
Totals before allowance for credit losses | 3,792 | 3,782 | ||
Gross Unrealized Gains | 190 | 140 | ||
Gross Unrealized Losses | 0 | 0 | ||
Fair Value | 3,982 | 3,922 | ||
Allowance for Credit Losses | 0 | |||
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position [Abstract] | ||||
Total, Unrealized Losses | 0 | 0 | ||
States and political subdivisions | ||||
Schedule of Held-to-maturity Securities [Line Items] | ||||
Totals before allowance for credit losses | 401,264 | 431,433 | ||
Gross Unrealized Gains | 23,915 | 19,440 | ||
Gross Unrealized Losses | (57) | (84) | ||
Fair Value | 425,122 | 450,789 | ||
Allowance for Credit Losses | (65) | |||
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position [Abstract] | ||||
Less than 12 Months, Fair Value | 0 | 5,013 | ||
Less than 12 Months, Unrealized Losses | 0 | (33) | ||
12 Months or Greater, Fair Value | 1,749 | 1,712 | ||
12 Months or Greater, Unrealized Losses | (57) | (51) | ||
Total, Fair Value | 1,749 | 6,725 | ||
Total, Unrealized Losses | (57) | (84) | ||
Foreign governments | ||||
Schedule of Held-to-maturity Securities [Line Items] | ||||
Totals before allowance for credit losses | 1,133 | 1,144 | ||
Gross Unrealized Gains | 154 | 55 | ||
Gross Unrealized Losses | 0 | 0 | ||
Fair Value | 1,287 | 1,199 | ||
Allowance for Credit Losses | 0 | |||
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position [Abstract] | ||||
Total, Unrealized Losses | 0 | 0 | ||
Public utilities | ||||
Schedule of Held-to-maturity Securities [Line Items] | ||||
Totals before allowance for credit losses | 854,139 | 888,444 | ||
Gross Unrealized Gains | 64,981 | 36,638 | ||
Gross Unrealized Losses | 0 | (83) | ||
Fair Value | 919,120 | 924,999 | ||
Allowance for Credit Losses | (879) | |||
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position [Abstract] | ||||
Less than 12 Months, Fair Value | 0 | 2,345 | ||
Less than 12 Months, Unrealized Losses | 0 | (83) | ||
12 Months or Greater, Fair Value | 0 | 0 | ||
12 Months or Greater, Unrealized Losses | 0 | 0 | ||
Total, Fair Value | 0 | 2,345 | ||
Total, Unrealized Losses | 0 | (83) | ||
Corporate | ||||
Schedule of Held-to-maturity Securities [Line Items] | ||||
Totals before allowance for credit losses | 4,559,466 | 4,607,826 | ||
Gross Unrealized Gains | 378,165 | 212,281 | ||
Gross Unrealized Losses | (7,068) | (718) | ||
Fair Value | 4,930,563 | 4,819,389 | ||
Allowance for Credit Losses | (3,992) | |||
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position [Abstract] | ||||
Less than 12 Months, Fair Value | 157,752 | 31,419 | ||
Less than 12 Months, Unrealized Losses | (7,068) | (337) | ||
12 Months or Greater, Fair Value | 0 | 17,191 | ||
12 Months or Greater, Unrealized Losses | 0 | (381) | ||
Total, Fair Value | 157,752 | 48,610 | ||
Total, Unrealized Losses | (7,068) | (718) | ||
Commercial mortgage-backed | ||||
Schedule of Held-to-maturity Securities [Line Items] | ||||
Totals before allowance for credit losses | 3,024 | 3,032 | ||
Gross Unrealized Gains | 52 | 52 | ||
Gross Unrealized Losses | 0 | 0 | ||
Fair Value | 3,076 | 3,084 | ||
Allowance for Credit Losses | 0 | |||
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position [Abstract] | ||||
Less than 12 Months, Fair Value | 0 | |||
Less than 12 Months, Unrealized Losses | 0 | |||
12 Months or Greater, Fair Value | 0 | |||
12 Months or Greater, Unrealized Losses | 0 | |||
Total, Fair Value | 0 | |||
Total, Unrealized Losses | 0 | 0 | ||
Residential mortgage-backed | ||||
Schedule of Held-to-maturity Securities [Line Items] | ||||
Totals before allowance for credit losses | 996,802 | 1,066,899 | ||
Gross Unrealized Gains | 65,045 | 32,706 | ||
Gross Unrealized Losses | 0 | (716) | ||
Fair Value | 1,061,847 | 1,098,889 | ||
Allowance for Credit Losses | 0 | |||
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position [Abstract] | ||||
Less than 12 Months, Fair Value | 0 | 25,859 | ||
Less than 12 Months, Unrealized Losses | 0 | (63) | ||
12 Months or Greater, Fair Value | 0 | 43,498 | ||
12 Months or Greater, Unrealized Losses | 0 | (653) | ||
Total, Fair Value | 0 | 69,357 | ||
Total, Unrealized Losses | 0 | (716) | ||
Asset-backed | ||||
Schedule of Held-to-maturity Securities [Line Items] | ||||
Totals before allowance for credit losses | 2,307 | 2,775 | ||
Gross Unrealized Gains | 42 | 62 | ||
Gross Unrealized Losses | 0 | (1) | ||
Fair Value | 2,349 | 2,836 | ||
Allowance for Credit Losses | 0 | |||
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position [Abstract] | ||||
Less than 12 Months, Fair Value | 0 | 1,349 | ||
Less than 12 Months, Unrealized Losses | 0 | (1) | ||
12 Months or Greater, Fair Value | 0 | 0 | ||
12 Months or Greater, Unrealized Losses | 0 | 0 | ||
Total, Fair Value | 0 | 1,349 | ||
Total, Unrealized Losses | $ 0 | $ (1) |
Investments (Securities Availab
Investments (Securities Available for Sale) (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Debt securities: | |||||
Total | $ 3,166,206 | $ 3,206,120 | |||
Gross Unrealized Gains | 234,339 | 153,424 | |||
Gross Unrealized Losses | (27,432) | (2,599) | |||
Fair Value | 3,373,113 | 3,356,945 | |||
Allowance for Credit Losses | 0 | $ 0 | $ 0 | $ 0 | |
Fair Value | |||||
Less than 12 Months | 249,437 | 40,550 | |||
12 Months or Greater | 29,307 | 29,292 | |||
Total | 278,744 | 69,842 | |||
Unrealized Losses | |||||
Less than 12 Months | (24,566) | (108) | |||
12 Months or Greater | (2,866) | (2,491) | |||
Total | (27,432) | (2,599) | |||
States and political subdivisions | |||||
Debt securities: | |||||
Total | 89,288 | 98,037 | |||
Gross Unrealized Gains | 7,192 | 4,495 | |||
Gross Unrealized Losses | (5) | (3) | |||
Fair Value | 96,475 | 102,529 | |||
Allowance for Credit Losses | 0 | ||||
Fair Value | |||||
Less than 12 Months | 558 | 470 | |||
12 Months or Greater | 464 | 0 | |||
Total | 1,022 | 470 | |||
Unrealized Losses | |||||
Less than 12 Months | (4) | (3) | |||
12 Months or Greater | (1) | 0 | |||
Total | (5) | (3) | |||
Foreign governments | |||||
Debt securities: | |||||
Total | 9,988 | 9,983 | |||
Gross Unrealized Gains | 312 | 203 | |||
Gross Unrealized Losses | 0 | 0 | |||
Fair Value | 10,300 | 10,186 | |||
Allowance for Credit Losses | 0 | ||||
Public utilities | |||||
Debt securities: | |||||
Total | 64,407 | 67,895 | |||
Gross Unrealized Gains | 4,915 | 3,476 | |||
Gross Unrealized Losses | 0 | 0 | |||
Fair Value | 69,322 | 71,371 | |||
Allowance for Credit Losses | 0 | ||||
Fair Value | |||||
Less than 12 Months | 0 | 0 | |||
12 Months or Greater | 0 | 0 | |||
Total | 0 | 0 | |||
Unrealized Losses | |||||
Less than 12 Months | 0 | 0 | |||
12 Months or Greater | 0 | 0 | |||
Total | 0 | 0 | |||
Corporate | |||||
Debt securities: | |||||
Total | 2,905,567 | 2,921,431 | |||
Gross Unrealized Gains | 218,647 | 141,705 | |||
Gross Unrealized Losses | (26,288) | (2,479) | |||
Fair Value | 3,097,926 | 3,060,657 | |||
Allowance for Credit Losses | 0 | ||||
Fair Value | |||||
Less than 12 Months | 217,451 | 40,080 | |||
12 Months or Greater | 28,249 | 28,582 | |||
Total | 245,700 | 68,662 | |||
Unrealized Losses | |||||
Less than 12 Months | (23,582) | (105) | |||
12 Months or Greater | (2,706) | (2,374) | |||
Total | (26,288) | (2,479) | |||
Commercial mortgage-backed | |||||
Debt securities: | |||||
Total | 27,137 | 28,871 | |||
Gross Unrealized Gains | 613 | 1,071 | |||
Gross Unrealized Losses | (319) | 0 | |||
Fair Value | 27,431 | 29,942 | |||
Allowance for Credit Losses | 0 | ||||
Fair Value | |||||
Less than 12 Months | 8,772 | ||||
12 Months or Greater | 0 | ||||
Total | 8,772 | ||||
Unrealized Losses | |||||
Less than 12 Months | (319) | ||||
12 Months or Greater | 0 | ||||
Total | (319) | ||||
Residential mortgage-backed | |||||
Debt securities: | |||||
Total | 11,381 | 12,815 | |||
Gross Unrealized Gains | 1,319 | 1,077 | |||
Gross Unrealized Losses | (159) | (117) | |||
Fair Value | 12,541 | 13,775 | |||
Allowance for Credit Losses | 0 | ||||
Fair Value | |||||
Less than 12 Months | 0 | 0 | |||
12 Months or Greater | 594 | 710 | |||
Total | 594 | 710 | |||
Unrealized Losses | |||||
Less than 12 Months | 0 | 0 | |||
12 Months or Greater | (159) | (117) | |||
Total | (159) | (117) | |||
Asset-backed | |||||
Debt securities: | |||||
Total | 58,438 | 67,088 | |||
Gross Unrealized Gains | 1,341 | 1,397 | |||
Gross Unrealized Losses | (661) | 0 | |||
Fair Value | 59,118 | $ 68,485 | |||
Allowance for Credit Losses | 0 | ||||
Fair Value | |||||
Less than 12 Months | 22,656 | ||||
12 Months or Greater | 0 | ||||
Total | 22,656 | ||||
Unrealized Losses | |||||
Less than 12 Months | (661) | ||||
12 Months or Greater | 0 | ||||
Total | $ (661) |
Investments (Unrealized Losses)
Investments (Unrealized Losses) (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||||
Jun. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)security | Mar. 31, 2020USD ($) | Jan. 01, 2020USD ($) | Dec. 31, 2019USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Available-for-Sale Securities and Held-to-Maturity Securities [Line Items] | ||||||||
Debt securities, held to maturity | $ 6,903,782 | $ 7,106,245 | ||||||
Debt securities available for sale | 3,373,113 | 3,356,945 | ||||||
Securities, other-than-temporarily impaired | $ 5,900 | $ 5,900 | ||||||
Valuation allowance for mortgage loans | $ 675 | $ 675 | $ 2,227 | $ 1,885 | $ 1,200 | 675 | $ 675 | $ 675 |
Debt Securities | ||||||||
Available-for-Sale Securities and Held-to-Maturity Securities [Line Items] | ||||||||
Gross unrealized losses, number of issues | security | 75 | |||||||
Gross unrealized losses, percentage of total debt | 5.40% | |||||||
Gross unrealized losses, market value as a percent of amortized cost | 92.70% | |||||||
Gross unrealized losses, number of securities with maturities of 12 months or greater | security | 8 | |||||||
Gross unrealized losses, number of securities with maturities of 12 months or greater (as a percentage) | 10.70% | |||||||
External Credit Rating, Investment Grade | Debt Securities | ||||||||
Available-for-Sale Securities and Held-to-Maturity Securities [Line Items] | ||||||||
Gross unrealized losses, number of securities rated investment grade | security | 55 | |||||||
Ozark National Life Insurance Company | ||||||||
Available-for-Sale Securities and Held-to-Maturity Securities [Line Items] | ||||||||
Debt securities, held to maturity | $ 329,800 | 307,200 | ||||||
Debt securities available for sale | $ 408,300 | $ 415,700 |
Investments (Contractual Maturi
Investments (Contractual Maturity) (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Mar. 31, 2020 | Jan. 01, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Debt Securities Available for Sale- Amortized Cost | |||||||
Due in 1 year or less | $ 168,818 | ||||||
Due after 1 year through 5 years | 1,370,814 | ||||||
Due after 5 years through 10 years | 1,231,850 | ||||||
Due after 10 years | 297,768 | ||||||
Amortized Cost | 3,069,250 | ||||||
Mortgage and asset-backed securities | 96,956 | ||||||
Total | 3,166,206 | $ 3,206,120 | |||||
Allowance for Credit Losses | 0 | $ 0 | $ 0 | $ 0 | |||
Totals | 3,166,206 | ||||||
Debt Securities Available for Sale- Fair Value | |||||||
Due in 1 year or less | 171,286 | ||||||
Due after 1 year through 5 years | 1,447,182 | ||||||
Due after 5 years through 10 years | 1,321,137 | ||||||
Due after 10 years | 334,418 | ||||||
Fair Value | 3,274,023 | ||||||
Mortgage and asset-backed securities | 99,090 | ||||||
Total | 3,373,113 | 3,356,945 | |||||
Debt Securities Held to Maturity - Amortized Costs | |||||||
Due in 1 year or less | 581,153 | ||||||
Due after 1 year through 5 years | 3,018,245 | ||||||
Due after 5 years through 10 years | 1,587,587 | ||||||
Due after 10 years | 714,664 | ||||||
Amortized Cost | 5,901,649 | ||||||
Mortgage and asset-backed securities | 1,002,133 | ||||||
Totals before allowance for credit losses | 6,903,782 | 7,106,245 | |||||
Allowance for Credit Losses | (4,940) | $ (6,039) | $ (3,300) | 0 | |||
Totals | 6,898,842 | 7,106,245 | |||||
Debt Securities Held to Maturity - Fair Value | |||||||
Due in 1 year or less | 590,157 | ||||||
Due after 1 year through 5 years | 3,203,154 | ||||||
Due after 5 years through 10 years | 1,763,367 | ||||||
Due after 10 years | 808,752 | ||||||
Fair Value | 6,365,430 | ||||||
Mortgage and asset-backed securities | 1,067,272 | ||||||
Total | $ 7,432,702 | $ 7,407,703 |
Investments (Debt Securities Al
Investments (Debt Securities Allowance For Credit Losses) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Roll Forward] | ||||
Debt Securities, Held to Maturity, beginning balance | $ 6,039 | $ 0 | ||
Debt Securities, Held-to-maturity, (releases)/provision during period | (1,099) | 1,606 | ||
Debt Securities, Held to Maturity, ending balance | 4,940 | 4,940 | ||
Debt Securities, Available-for-sale, Allowance for Credit Loss [Roll Forward] | ||||
Debt Securities, Available for sale, beginning balance | $ 0 | $ 0 | ||
Debt Securities, Available-for-sale, (releases)/provision during period | 0 | 0 | ||
Debt Securities, Available for sale, ending balance | 0 | 0 | 0 | 0 |
Cumulative Effect, Period Of Adoption, Adjustment | ||||
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Roll Forward] | ||||
Debt Securities, Held to Maturity, beginning balance | $ 0 | $ 3,334 | ||
Debt Securities, Available-for-sale, Allowance for Credit Loss [Roll Forward] | ||||
Debt Securities, Available for sale, beginning balance | $ 0 | $ 0 |
Investments (Held To Maturity S
Investments (Held To Maturity Securities Allowance for Credit Losses by Credit Rating) (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Mar. 31, 2020 | Jan. 01, 2020 | Dec. 31, 2019 |
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||||
Amortized Cost | $ 6,903,782 | $ 7,106,245 | ||
Allowance for Credit Losses | (4,940) | $ (6,039) | $ (3,300) | 0 |
Totals | 6,898,842 | $ 7,106,245 | ||
AAA | ||||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||||
Amortized Cost | 93,438 | |||
Allowance for Credit Losses | 0 | |||
Totals | 93,438 | |||
AA | ||||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||||
Amortized Cost | 1,739,557 | |||
Allowance for Credit Losses | (56) | |||
Totals | 1,739,501 | |||
A | ||||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||||
Amortized Cost | 2,234,460 | |||
Allowance for Credit Losses | (985) | |||
Totals | 2,233,475 | |||
BBB | ||||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||||
Amortized Cost | 2,733,811 | |||
Allowance for Credit Losses | (3,580) | |||
Totals | 2,730,231 | |||
BB and other below investment | ||||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||||
Amortized Cost | 102,516 | |||
Allowance for Credit Losses | (319) | |||
Totals | $ 102,197 |
Investments (Mortgage Loans and
Investments (Mortgage Loans and Real Estate) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jan. 01, 2020 | Dec. 31, 2019 | |
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||||||
Allowance for possible losses, amount | $ (1,885) | $ (675) | $ (675) | $ (675) | $ (2,227) | $ (1,200) | $ (675) |
Totals, amount | 273,701 | 272,422 | |||||
Decrease to retained earnings | (2,057,889) | (2,014,570) | |||||
Allowance for Loan and Lease Losses [Roll Forward] | |||||||
Balance, beginning of the period | 1,885 | 675 | 675 | 675 | |||
Provision | 342 | 0 | 1,048 | 0 | |||
Releases | 0 | 0 | 0 | 0 | |||
Total ending allowance for credit losses | 2,227 | 675 | 2,227 | 675 | |||
Cumulative Effect, Period Of Adoption, Adjustment | |||||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||||||
Allowance for possible losses, amount | 0 | 0 | (504) | 0 | (504) | ||
Decrease to retained earnings | (3,000) | ||||||
Allowance for Loan and Lease Losses [Roll Forward] | |||||||
Balance, beginning of the period | 0 | $ 0 | 504 | $ 0 | |||
Cumulative Effect, Period Of Adoption, Adjustment | Accounting Standards Update 2016-13 | |||||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||||||
Decrease to retained earnings | $ 400 | ||||||
Commercial Real Estate | |||||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||||||
Mortgage loan, amount | 275,928 | 273,097 | |||||
Allowance for possible losses, amount | (2,227) | (675) | (2,227) | (675) | |||
Totals, amount | $ 273,701 | $ 272,422 | |||||
Mortgage loans, percentage | 100.00% | 100.00% | |||||
Allowance for possible losses, percentage | (0.80%) | (0.20%) | |||||
Totals, percentage | 99.20% | 99.80% | |||||
Allowance for Loan and Lease Losses [Roll Forward] | |||||||
Balance, beginning of the period | 675 | ||||||
Total ending allowance for credit losses | $ 2,227 | $ 2,227 | |||||
Commercial Real Estate | Less than 50% | |||||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||||||
Mortgage loan, amount | $ 52,852 | $ 52,778 | |||||
Mortgage loans, percentage | 19.20% | 19.30% | |||||
Commercial Real Estate | 50% to 60% | |||||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||||||
Mortgage loan, amount | $ 50,261 | $ 56,929 | |||||
Mortgage loans, percentage | 18.20% | 20.80% | |||||
Commercial Real Estate | 60% to 70% | |||||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||||||
Mortgage loan, amount | $ 126,960 | $ 117,377 | |||||
Mortgage loans, percentage | 46.00% | 43.00% | |||||
Commercial Real Estate | 70% to 80% | |||||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||||||
Mortgage loan, amount | $ 45,855 | $ 46,013 | |||||
Mortgage loans, percentage | 16.60% | 16.90% | |||||
Commercial Real Estate | 80% to 90% | |||||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||||||
Mortgage loan, amount | $ 0 | $ 0 | |||||
Mortgage loans, percentage | 0.00% | 0.00% | |||||
Commercial Real Estate | Greater than 90% | |||||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||||||
Mortgage loan, amount | $ 0 | $ 0 | |||||
Mortgage loans, percentage | 0.00% | 0.00% |
Investments (Real Estate) (Deta
Investments (Real Estate) (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Real Estate Investments [Abstract] | |||
Other long-term investments | $ 70,585 | $ 62,090 | |
Real Estate | |||
Real Estate Investments [Abstract] | |||
Other long-term investments | 34,300 | $ 34,600 | |
Operating income from real estate | $ 1,500 | $ 1,400 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Assets and Liabilities Measured on Recurring Basis) (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities available for sale | $ 3,373,113 | $ 3,356,945 |
Equity securities | 17,918 | 23,594 |
Derivatives, index options | 66,738 | 157,588 |
Other invested assets | 2 | 2 |
Total assets | 3,457,771 | 3,538,129 |
Policyholder account balances | 87,573 | 155,902 |
Other liabilities | 5,497 | 15,301 |
Total liabilities | $ 93,070 | $ 171,203 |
Percent of total | 100.00% | 100.00% |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities available for sale | $ 0 | $ 0 |
Equity securities | 17,918 | 23,594 |
Derivatives, index options | 0 | 0 |
Other invested assets | 2 | 2 |
Total assets | 17,920 | 23,596 |
Policyholder account balances | 0 | 0 |
Other liabilities | 0 | 0 |
Total liabilities | $ 0 | $ 0 |
Percent of total | 0.50% | 0.70% |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities available for sale | $ 3,373,113 | $ 3,356,945 |
Equity securities | 0 | 0 |
Derivatives, index options | 0 | 0 |
Other invested assets | 0 | 0 |
Total assets | 3,373,113 | 3,356,945 |
Policyholder account balances | 0 | 0 |
Other liabilities | 0 | 0 |
Total liabilities | $ 0 | $ 0 |
Percent of total | 97.60% | 94.80% |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities available for sale | $ 0 | $ 0 |
Equity securities | 0 | 0 |
Derivatives, index options | 66,738 | 157,588 |
Other invested assets | 0 | 0 |
Total assets | 66,738 | 157,588 |
Policyholder account balances | 87,573 | 155,902 |
Other liabilities | 5,497 | 15,301 |
Total liabilities | $ 93,070 | $ 171,203 |
Percent of total | 1.90% | 4.50% |
Priced by third-party vendors | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities available for sale | $ 3,373,113 | $ 3,356,945 |
Equity securities | 17,918 | 23,594 |
Derivatives, index options | 66,738 | 157,588 |
Other invested assets | 2 | 2 |
Priced by third-party vendors | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities available for sale | 0 | 0 |
Equity securities | 17,918 | 23,594 |
Derivatives, index options | 0 | 0 |
Other invested assets | 2 | 2 |
Priced by third-party vendors | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities available for sale | 3,373,113 | 3,356,945 |
Equity securities | 0 | 0 |
Derivatives, index options | 0 | 0 |
Other invested assets | 0 | 0 |
Priced by third-party vendors | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities available for sale | 0 | 0 |
Equity securities | 0 | 0 |
Derivatives, index options | 66,738 | 157,588 |
Other invested assets | 0 | 0 |
Priced internally | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities available for sale | 0 | 0 |
Equity securities | 0 | 0 |
Derivatives, index options | 0 | 0 |
Other invested assets | 0 | 0 |
Priced internally | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities available for sale | 0 | 0 |
Equity securities | 0 | 0 |
Derivatives, index options | 0 | 0 |
Other invested assets | 0 | 0 |
Priced internally | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities available for sale | 0 | 0 |
Equity securities | 0 | 0 |
Derivatives, index options | 0 | 0 |
Other invested assets | 0 | 0 |
Priced internally | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities available for sale | 0 | 0 |
Equity securities | 0 | 0 |
Derivatives, index options | 0 | 0 |
Other invested assets | $ 0 | $ 0 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Fair Value Measurements for Level 3 Instruments) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Balance at beginning of period | $ 24,335 | $ 71,001 | $ 157,588 | $ 14,684 |
Total realized and unrealized gains (losses): | ||||
Included in net earnings | 40,243 | 17,828 | (66,386) | 59,830 |
Included in other comprehensive income | 0 | 0 | 0 | 0 |
Purchases | 16,458 | 19,030 | 38,861 | 36,622 |
Sales | 0 | 0 | 0 | 0 |
Issuances | 0 | 0 | 0 | 0 |
Settlements | (14,298) | (17,959) | (63,325) | (21,236) |
Transfers into (out of) Level 3 | 0 | 0 | 0 | 0 |
Balance at end of period | 66,738 | 89,900 | 66,738 | 89,900 |
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period: | 62,328 | 4,350 | (43,670) | 44,814 |
Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Balance at beginning of period | 68,880 | 97,725 | 171,203 | 56,704 |
Total realized and unrealized gains (losses): | ||||
Included in net earnings | 22,060 | 13,704 | (51,790) | 39,232 |
Included in other comprehensive income | 0 | 0 | 0 | 0 |
Purchases | 16,458 | 19,030 | 38,861 | 36,622 |
Sales | 0 | 0 | 0 | 0 |
Issuances | 0 | 0 | 0 | 3,700 |
Settlements | (14,328) | (17,959) | (65,204) | (23,758) |
Transfers into (out of) Level 3 | 0 | 0 | 0 | 0 |
Balance at end of period | 93,070 | 112,500 | 93,070 | 112,500 |
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period: | 60,598 | 4,614 | (51,595) | 43,575 |
Net investment income | ||||
Total realized and unrealized gains (losses): | ||||
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period: | 62,328 | 4,350 | (43,670) | 44,814 |
Total realized and unrealized gains (losses): | ||||
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period: | 0 | 0 | 0 | 0 |
Benefits and expenses | ||||
Total realized and unrealized gains (losses): | ||||
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period: | 0 | 0 | 0 | 0 |
Total realized and unrealized gains (losses): | ||||
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period: | 60,598 | 4,614 | (51,595) | 43,575 |
Policyholder Account Balances | ||||
Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Balance at beginning of period | 61,625 | 86,127 | 155,902 | 44,781 |
Total realized and unrealized gains (losses): | ||||
Included in net earnings | 23,790 | 13,440 | (43,865) | 40,471 |
Included in other comprehensive income | 0 | 0 | 0 | 0 |
Purchases | 16,458 | 19,030 | 38,861 | 36,622 |
Sales | 0 | 0 | 0 | 0 |
Issuances | 0 | 0 | 0 | 0 |
Settlements | (14,300) | (17,959) | (63,325) | (21,236) |
Transfers into (out of) Level 3 | 0 | 0 | 0 | 0 |
Balance at end of period | 87,573 | 100,638 | 87,573 | 100,638 |
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period: | 62,328 | 4,350 | (43,670) | 44,814 |
Policyholder Account Balances | Net investment income | ||||
Total realized and unrealized gains (losses): | ||||
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period: | 0 | 0 | 0 | 0 |
Policyholder Account Balances | Benefits and expenses | ||||
Total realized and unrealized gains (losses): | ||||
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period: | 62,328 | 4,350 | (43,670) | 44,814 |
Stock Options | ||||
Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Balance at beginning of period | 3,081 | 7,898 | 11,225 | 11,923 |
Total realized and unrealized gains (losses): | ||||
Included in net earnings | 2,444 | 93 | (3,849) | (1,410) |
Included in other comprehensive income | 0 | 0 | 0 | 0 |
Purchases | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | 0 |
Issuances | 0 | 0 | 0 | 0 |
Settlements | (28) | 0 | (1,879) | (2,522) |
Transfers into (out of) Level 3 | 0 | 0 | 0 | 0 |
Balance at end of period | 5,497 | 7,991 | 5,497 | 7,991 |
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period: | 2,444 | 93 | (3,849) | (1,410) |
Stock Options | Net investment income | ||||
Total realized and unrealized gains (losses): | ||||
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period: | 0 | 0 | 0 | 0 |
Stock Options | Benefits and expenses | ||||
Total realized and unrealized gains (losses): | ||||
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period: | 2,444 | 93 | (3,849) | (1,410) |
Contingent Consideration | ||||
Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Balance at beginning of period | 4,174 | 3,700 | 4,076 | 0 |
Total realized and unrealized gains (losses): | ||||
Included in net earnings | (4,174) | 171 | (4,076) | 171 |
Included in other comprehensive income | 0 | 0 | 0 | 0 |
Purchases | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | 0 |
Issuances | 0 | 0 | 0 | 3,700 |
Settlements | 0 | 0 | 0 | 0 |
Transfers into (out of) Level 3 | 0 | 0 | 0 | 0 |
Balance at end of period | 0 | 3,871 | 0 | 3,871 |
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period: | (4,174) | 171 | (4,076) | 171 |
Contingent Consideration | Net investment income | ||||
Total realized and unrealized gains (losses): | ||||
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period: | 0 | 0 | 0 | 0 |
Contingent Consideration | Benefits and expenses | ||||
Total realized and unrealized gains (losses): | ||||
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period: | (4,174) | 171 | (4,076) | 171 |
Derivatives, Index Options | ||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Balance at beginning of period | 24,335 | 71,001 | 157,588 | 14,684 |
Total realized and unrealized gains (losses): | ||||
Included in net earnings | 40,243 | 17,828 | (66,386) | 59,830 |
Included in other comprehensive income | 0 | 0 | 0 | 0 |
Purchases | 16,458 | 19,030 | 38,861 | 36,622 |
Sales | 0 | 0 | 0 | 0 |
Issuances | 0 | 0 | 0 | 0 |
Settlements | (14,298) | (17,959) | (63,325) | (21,236) |
Transfers into (out of) Level 3 | 0 | 0 | 0 | 0 |
Balance at end of period | 66,738 | 89,900 | 66,738 | 89,900 |
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period: | 62,328 | 4,350 | (43,670) | 44,814 |
Derivatives, Index Options | Net investment income | ||||
Total realized and unrealized gains (losses): | ||||
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period: | 62,328 | 4,350 | (43,670) | 44,814 |
Derivatives, Index Options | Benefits and expenses | ||||
Total realized and unrealized gains (losses): | ||||
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period: | $ 0 | $ 0 | $ 0 | $ 0 |
Fair Values of Financial Inst_2
Fair Values of Financial Instruments (Quantitative Information) (Details) $ in Thousands | Jun. 30, 2020USD ($)year | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($)year |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Derivatives, index options | $ 66,738 | $ 157,588 | |
Total assets | 3,457,771 | 3,538,129 | |
Contingent consideration on businesses acquired | $ 4,200 | ||
Total liabilities | 93,070 | 171,203 | |
Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Derivatives, index options | 66,738 | 157,588 | |
Total assets | 66,738 | 157,588 | |
Contingent consideration on businesses acquired | 0 | 4,076 | |
Total liabilities | 93,070 | 171,203 | |
Broker prices | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Derivatives, index options | 66,738 | 157,588 | |
Deterministic cash flow model | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Policyholder account balances | 87,573 | 155,902 | |
Black-Scholes model | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Share based compensation | $ 5,497 | 11,225 | |
Probabilistic Method | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Contingent consideration on businesses acquired | $ 4,076 | ||
Expected volatility | Black-Scholes model | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Share based compensation, measurement input | 0.3172 | 0.2219 | |
Discount rate | Probabilistic Method | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Contingent consideration on businesses acquired, measurement input | 0.100 | ||
Minimum | Implied volatility | Broker prices | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Derivatives, index options, measurement input | 0.1296 | 0.1310 | |
Minimum | Projected option cost | Deterministic cash flow model | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Policyholder account balances, measurement input | 0 | 0 | |
Minimum | Expected term | Black-Scholes model | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Share based compensation, measurement input | year | 1.5 | 1.9 | |
Minimum | Projected renewal premium | Probabilistic Method | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Contingent consideration on businesses acquired, measurement input | 57,200 | ||
Maximum | Implied volatility | Broker prices | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Derivatives, index options, measurement input | 0.5369 | 0.1990 | |
Maximum | Projected option cost | Deterministic cash flow model | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Policyholder account balances, measurement input | 0.3112 | 0.1755 | |
Maximum | Expected term | Black-Scholes model | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Share based compensation, measurement input | year | 9.4 | 10 | |
Maximum | Projected renewal premium | Probabilistic Method | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Contingent consideration on businesses acquired, measurement input | 82,400 | ||
Weighted-Average | Implied volatility | Broker prices | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Derivatives, index options, measurement input | 0.1855 | 0.1525 | |
Weighted-Average | Projected option cost | Deterministic cash flow model | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Policyholder account balances, measurement input | 0.0456 | 0.0314 | |
Weighted-Average | Projected renewal premium | Probabilistic Method | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Contingent consideration on businesses acquired, measurement input | 71,900 |
Fair Values of Financial Inst_3
Fair Values of Financial Instruments (Fair Value by Balance Sheet Grouping) (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
ASSETS | |||
Debt securities held to maturity | $ 7,432,702 | $ 7,407,703 | |
Debt securities available for sale | 3,373,113 | 3,356,945 | |
Derivatives, index options | 66,738 | 157,588 | |
Equity securities | 17,918 | 23,594 | |
LIABILITIES | |||
Contingent consideration on businesses acquired | $ 4,200 | ||
Carrying Values | |||
ASSETS | |||
Debt securities held to maturity | 6,898,842 | 7,106,245 | |
Debt securities available for sale | 3,373,113 | 3,356,945 | |
Cash and cash equivalents | 450,703 | 253,524 | |
Mortgage loans | 273,701 | 272,422 | |
Real estate | 34,298 | 34,588 | |
Policy loans | 76,811 | 80,008 | |
Other loans | 18,064 | 13,547 | |
Derivatives, index options | 66,738 | 157,588 | |
Equity securities | 17,918 | 23,594 | |
Life interest in Libbie Shearn Moody Trust | 9,230 | 9,230 | |
Other investments | 4,515 | 197 | |
LIABILITIES | |||
Deferred annuity contracts | 6,755,394 | 7,014,833 | |
Immediate annuity and supplemental contracts | 403,856 | 400,465 | |
Contingent consideration on businesses acquired | 0 | 4,076 | |
Fair Values | |||
ASSETS | |||
Debt securities held to maturity | 7,432,702 | 7,407,703 | |
Debt securities available for sale | 3,373,113 | 3,356,945 | |
Cash and cash equivalents | 450,703 | 253,524 | |
Mortgage loans | 272,336 | 270,931 | |
Real estate | 48,547 | 57,204 | |
Policy loans | 132,257 | 123,650 | |
Other loans | 18,365 | 13,698 | |
Derivatives, index options | 66,738 | 157,588 | |
Equity securities | 17,918 | 23,594 | |
Life interest in Libbie Shearn Moody Trust | 12,775 | 12,775 | |
Other investments | 22,582 | 16,182 | |
LIABILITIES | |||
Deferred annuity contracts | 5,511,416 | 5,931,352 | |
Immediate annuity and supplemental contracts | 455,875 | 422,931 | |
Contingent consideration on businesses acquired | 0 | 4,076 | |
Level 1 | |||
ASSETS | |||
Debt securities held to maturity | 0 | 0 | |
Debt securities available for sale | 0 | 0 | |
Cash and cash equivalents | 450,703 | 253,524 | |
Mortgage loans | 0 | 0 | |
Real estate | 0 | 0 | |
Policy loans | 0 | 0 | |
Other loans | 0 | 0 | |
Derivatives, index options | 0 | 0 | |
Equity securities | 17,918 | 23,594 | |
Life interest in Libbie Shearn Moody Trust | 0 | 0 | |
Other investments | 2 | 2 | |
LIABILITIES | |||
Deferred annuity contracts | 0 | 0 | |
Immediate annuity and supplemental contracts | 0 | 0 | |
Contingent consideration on businesses acquired | 0 | 0 | |
Level 2 | |||
ASSETS | |||
Debt securities held to maturity | 7,432,702 | 7,407,703 | |
Debt securities available for sale | 3,373,113 | 3,356,945 | |
Cash and cash equivalents | 0 | 0 | |
Mortgage loans | 0 | 0 | |
Real estate | 0 | 0 | |
Policy loans | 0 | 0 | |
Other loans | 0 | 0 | |
Derivatives, index options | 0 | 0 | |
Equity securities | 0 | 0 | |
Life interest in Libbie Shearn Moody Trust | 0 | 0 | |
Other investments | 0 | 0 | |
LIABILITIES | |||
Deferred annuity contracts | 0 | 0 | |
Immediate annuity and supplemental contracts | 0 | 0 | |
Contingent consideration on businesses acquired | 0 | 0 | |
Level 3 | |||
ASSETS | |||
Debt securities held to maturity | 0 | 0 | |
Debt securities available for sale | 0 | 0 | |
Cash and cash equivalents | 0 | 0 | |
Mortgage loans | 272,336 | 270,931 | |
Real estate | 48,547 | 57,204 | |
Policy loans | 132,257 | 123,650 | |
Other loans | 18,365 | 13,698 | |
Derivatives, index options | 66,738 | 157,588 | |
Equity securities | 0 | 0 | |
Life interest in Libbie Shearn Moody Trust | 12,775 | 12,775 | |
Other investments | 22,580 | 16,180 | |
LIABILITIES | |||
Deferred annuity contracts | 5,511,416 | 5,931,352 | |
Immediate annuity and supplemental contracts | 455,875 | 422,931 | |
Contingent consideration on businesses acquired | $ 0 | 4,076 | |
Restatement Adjustment | |||
LIABILITIES | |||
Increase in future policy benefits liability | $ 15,000 |
Derivative Investments (Balance
Derivative Investments (Balance Sheet) (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Derivatives, Fair Value [Line Items] | ||
Asset Derivatives | $ 66,738 | $ 157,588 |
Liability Derivatives | 87,573 | 155,902 |
Derivatives not designated as hedging instruments | ||
Derivatives, Fair Value [Line Items] | ||
Asset Derivatives | 66,738 | 157,588 |
Liability Derivatives | 87,573 | 155,902 |
Derivatives not designated as hedging instruments | Equity index options | Derivatives, Index Options | ||
Derivatives, Fair Value [Line Items] | ||
Asset Derivatives | 66,738 | 157,588 |
Derivatives not designated as hedging instruments | Fixed-index products | Universal Life and Annuity Contracts | ||
Derivatives, Fair Value [Line Items] | ||
Liability Derivatives | $ 87,573 | $ 155,902 |
Derivative Investments (Stateme
Derivative Investments (Statements of Earnings) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Increase (decrease) in contract interest expense | $ (3,700) | $ (4,700) | $ 25,600 | $ (20,300) |
Derivatives not designated as hedging instruments | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of Gain or (Loss) Recognized in Income on Derivatives | 16,453 | 4,389 | (22,521) | 19,360 |
Derivatives not designated as hedging instruments | Equity index options | Net investment income (loss) | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of Gain or (Loss) Recognized in Income on Derivatives | 40,243 | 17,828 | (66,386) | 59,830 |
Derivatives not designated as hedging instruments | Fixed-index products | Universal life and annuity contract interest | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of Gain or (Loss) Recognized in Income on Derivatives | $ (23,790) | $ (13,439) | $ 43,865 | $ (40,470) |
Business Combinations (Details)
Business Combinations (Details) - USD ($) | Jan. 31, 2019 | Jun. 30, 2019 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Business Acquisition [Line Items] | ||||||
Contingent consideration on businesses acquired | $ 4,200,000 | |||||
Value of business acquired | $ 134,270,000 | $ 138,071,000 | $ 0 | |||
Ozark National Life Insurance Company and NIS | ||||||
Business Acquisition [Line Items] | ||||||
Payments to acquire business | $ 205,400,000 | |||||
Acquisition-related costs | $ 3,300,000 | |||||
Revenues of acquiree since acquisition date | 48,400,000 | |||||
Net earnings of acquiree since acquisition date | $ 7,200,000 | |||||
Ozark National Life Insurance Company | ||||||
Business Acquisition [Line Items] | ||||||
Earn-out payment maximum | 5,000,000 | |||||
Contingent consideration on businesses acquired | 3,700,000 | $ 4,100,000 | ||||
Value of business acquired | $ 145,800,000 |
Business Combinations (Fair Val
Business Combinations (Fair Value of Net Assets Acquired) (Details) - Ozark National Life Insurance Company - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 | Jan. 31, 2019 |
Assets | |||
Debt securities held to maturity | $ 261,059 | ||
Debt securities available for sale | 400,719 | ||
Policy loans | 28,128 | ||
Real estate | 4,600 | ||
Cash and cash equivalents | 16,275 | ||
Accrued investment income | 6,116 | ||
Value of business acquired | 145,768 | ||
Reinsurance recoverables | 21,895 | ||
Other intangible assets | 9,600 | ||
Other assets acquired | 12,075 | ||
Total assets acquired | 906,235 | ||
Liabilities | |||
Traditional life reserves | 691,297 | ||
Other policyholder liabilities | 13,867 | ||
Other liabilities acquired | 5,840 | ||
Total liabilities acquired | 711,004 | ||
Net identifiable assets acquired | 195,231 | ||
Goodwill | $ 13,864 | $ 13,864 | 13,864 |
Net assets acquired | $ 209,095 |
Business Combinations (Fair V_2
Business Combinations (Fair Value of Intangible Assets Acquired) (Details) - Ozark National Life Insurance Company - USD ($) $ in Thousands | Jan. 31, 2019 | Jun. 30, 2020 |
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets acquired | $ 9,600 | |
Trademarks / trade names | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets acquired | $ 2,800 | |
Weighted-Average Amortization Period | 15 years | 15 years |
Internally developed software | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets acquired | $ 3,800 | |
Weighted-Average Amortization Period | 7 years | 7 years |
Insurance licenses | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets acquired | $ 3,000 |
Business Combinations (Gross Ca
Business Combinations (Gross Carrying Amounts and Accumulated Amortization) (Details) - Ozark National Life Insurance Company - USD ($) $ in Thousands | Jan. 31, 2019 | Jun. 30, 2020 | Dec. 31, 2019 |
Business Acquisition [Line Items] | |||
Gross Carrying Amount | $ 9,600 | $ 9,600 | |
Accumulated Amortization | $ (1,033) | (669) | |
Trademarks / trade names | |||
Business Acquisition [Line Items] | |||
Weighted-Average Amortization Period | 15 years | 15 years | |
Gross Carrying Amount | $ 2,800 | 2,800 | |
Accumulated Amortization | $ (264) | (171) | |
Internally developed software | |||
Business Acquisition [Line Items] | |||
Weighted-Average Amortization Period | 7 years | 7 years | |
Gross Carrying Amount | $ 3,800 | 3,800 | |
Accumulated Amortization | (769) | (498) | |
Insurance licenses | |||
Business Acquisition [Line Items] | |||
Gross Carrying Amount | 3,000 | 3,000 | |
Accumulated Amortization | $ 0 | $ 0 |
Business Combinations (VOBA) (D
Business Combinations (VOBA) (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Movement in Present Value of Future Insurance Profits [Roll Forward] | ||
Balance, beginning of year | $ 138,071 | $ 0 |
Business acquired | 0 | 145,768 |
Amortization, excluding unlocking | (3,801) | (7,697) |
Balance as of end of period | $ 134,270 | $ 138,071 |
Business Combinations (Expected
Business Combinations (Expected Amortization) (Details) - Ozark National Life Insurance Company $ in Thousands | Jun. 30, 2020USD ($) |
Business Acquisition [Line Items] | |
Remainder of 2020 | $ 3,218 |
2021 | 6,107 |
2022 | 5,797 |
2023 | 5,528 |
2024 | $ 5,287 |
Business Combinations (Changes
Business Combinations (Changes in Goodwill) (Details) - Ozark National Life Insurance Company - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2020 | Dec. 31, 2019 | Jan. 31, 2019 | Dec. 31, 2018 | |
Goodwill [Roll Forward] | ||||
Gross goodwill as of beginning of year | $ 13,864 | $ 0 | ||
Goodwill resulting from business acquisition | 0 | 13,864 | ||
Gross goodwill, before impairments | 13,864 | 13,864 | ||
Accumulated impairment as of beginning of year | 0 | $ 0 | ||
Current year impairments | 0 | 0 | ||
Goodwill | $ 13,864 | $ 13,864 | $ 13,864 |
Business Combinations (Pro Form
Business Combinations (Pro Forma) (Details) - Ozark National Life Insurance Company - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Business Acquisition [Line Items] | ||||
Total revenues | $ 216,015 | $ 192,685 | $ 268,503 | $ 420,268 |
Net earnings (loss) | $ 48,413 | $ 33,696 | $ 46,351 | $ 75,328 |