Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Oct. 26, 2018 | |
Document and Entity Information | ||
Entity Registrant Name | PROTECTIVE LIFE INSURANCE CO | |
Entity Central Index Key | 310,826 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Entity Current Reporting Status | Yes | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 5,000,000 | |
Entity Emerging Growth Company | false | |
Entity Small Business | false |
CONSOLIDATED CONDENSED STATEMEN
CONSOLIDATED CONDENSED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenues | ||||
Premiums and policy fees | $ 871,892 | $ 849,743 | $ 2,691,233 | $ 2,568,228 |
Reinsurance ceded | (267,910) | (326,572) | (1,005,398) | (989,835) |
Net of reinsurance ceded | 603,982 | 523,171 | 1,685,835 | 1,578,393 |
Net investment income | 631,955 | 477,011 | 1,699,787 | 1,427,442 |
Realized investment gains (losses): | ||||
Derivative financial instruments | (26,710) | 5,302 | 37,176 | (119,392) |
All other investments | (20,156) | 18,150 | (157,350) | 94,526 |
Other-than-temporary impairment losses | (14) | (366) | (715) | (494) |
Portion recognized in other comprehensive income (before taxes) | 0 | 93 | (2,949) | (7,765) |
Net impairment losses recognized in earnings | (14) | (273) | (3,664) | (8,259) |
Other income | 80,906 | 82,031 | 241,334 | 243,501 |
Total revenues | 1,269,963 | 1,105,392 | 3,503,118 | 3,216,211 |
Benefits and expenses | ||||
Benefits and settlement expenses, net of reinsurance ceded: (three months: 2018 - $214,326; 2017 - $255,063; nine months: 2018 - $855,929; 2017 - $800,868) | 950,942 | 742,789 | 2,598,151 | 2,203,883 |
Amortization of deferred policy acquisition costs and value of business acquired | 33,469 | 4,267 | 144,172 | 48,505 |
Other operating expenses, net of reinsurance ceded: (three months: 2018 - $50,067; 2017 - $58,009; nine months: 2018 - $152,694; 2017 - $163,902) | 190,382 | 192,354 | 582,795 | 577,911 |
Total benefits and expenses | 1,174,793 | 939,410 | 3,325,118 | 2,830,299 |
Income before income tax | 95,170 | 165,982 | 178,000 | 385,912 |
Income tax expense | 16,646 | 49,016 | 28,933 | 120,975 |
Net income | $ 78,524 | $ 116,966 | $ 149,067 | $ 264,937 |
CONSOLIDATED CONDENSED STATEM_2
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Statement [Abstract] | ||||
Benefits and settlement expenses, reinsurance ceded | $ 214,326 | $ 255,063 | $ 855,929 | $ 800,868 |
Other operating expenses, reinsurance ceded | $ 50,067 | $ 58,009 | $ 152,694 | $ 163,902 |
CONSOLIDATED CONDENSED STATEM_3
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 78,524 | $ 116,966 | $ 149,067 | $ 264,937 |
Other comprehensive income (loss): | ||||
Change in net unrealized gains (losses) on investments, net of income tax: (three months: 2018 - $(53,407); 2017 - $54,143; nine months: 2018 - $(318,444); 2017 - $295,015) | (200,912) | 100,553 | (1,198,669) | 547,885 |
Reclassification adjustment for investment amounts included in net income, net of income tax: (three months: 2018 - $427; 2017 - $(146); nine months: 2018 - $(542); 2017 - $(289)) | 1,605 | (271) | (2,042) | (536) |
Change in net unrealized gains (losses) relating to other-than-temporary impaired investments for which a portion has been recognized in earnings, net of income tax: (three months: 2018 - $0; 2017 - $452; nine months: 2018 - $6; 2017 - $3,837) | 0 | 839 | 22 | 7,125 |
Change in accumulated (loss) gain - derivatives, net of income tax: (three months: 2018 - $61; 2017 - $445; nine months: 2018 - $813; 2017 - $19) | 229 | 828 | 3,060 | 36 |
Reclassification adjustment for derivative amounts included in net income, net of income tax: (three months: 2018 - $101; 2017 - $14; nine months: 2018 - $168; 2017 - $139) | 380 | 24 | 631 | 257 |
Total other comprehensive income (loss) | (198,698) | 101,973 | (1,196,998) | 554,767 |
Total comprehensive income (loss) | $ (120,174) | $ 218,939 | $ (1,047,931) | $ 819,704 |
CONSOLIDATED CONDENSED STATEM_4
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Change in net unrealized gains (losses) on investments, income tax | $ (53,407) | $ 54,143 | $ (318,444) | $ 295,015 |
Reclassification adjustment for investment amounts included in net income, income tax | 427 | (146) | (542) | (289) |
Change in net unrealized gains (losses) relating to other-than-temporary impaired investments for which a portion has been recognized in earnings, income tax | 0 | 452 | 6 | 3,837 |
Change in accumulated (loss) gain - derivatives, income tax | 61 | 445 | 813 | 19 |
Reclassification adjustment for derivative amounts included in net income, income tax | $ 101 | $ 14 | $ 168 | $ 139 |
CONSOLIDATED CONDENSED BALANCE
CONSOLIDATED CONDENSED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Assets | ||
Fixed maturities, at fair value (amortized cost: 2018 - $54,348,551; 2017 - $40,952,535) | $ 52,180,974 | $ 40,971,486 |
Fixed maturities, at amortized cost (fair value: 2018 - $2,577,841; 2017 - $2,776,327) | 2,653,605 | 2,718,904 |
Equity securities, at fair value (cost: 2018 - $623,882; 2017 - $701,951) | 623,201 | 715,498 |
Mortgage loans (related to securitizations: 2018 - $505; 2017 - $226,409) | 7,572,349 | 6,817,723 |
Investment real estate, net of accumulated depreciation (2018 - $219; 2017 - $132) | 7,147 | 8,355 |
Policy loans | 1,703,462 | 1,615,615 |
Other long-term investments | 1,050,741 | 940,047 |
Short-term investments | 366,586 | 527,144 |
Total investments | 66,158,065 | 54,314,772 |
Cash | 161,173 | 178,855 |
Accrued investment income | 650,573 | 489,979 |
Accounts and premiums receivable | 180,971 | 152,086 |
Reinsurance receivables | 4,532,362 | 4,800,891 |
Deferred policy acquisition costs and value of business acquired | 2,979,384 | 2,205,401 |
Goodwill | 793,470 | 793,470 |
Other intangibles, net of accumulated amortization (2018 - $183,072; 2017 - $140,232) | 625,828 | 662,916 |
Property and equipment, net of accumulated depreciation (2018 - $28,459; 2017 - $21,305) | 105,424 | 109,711 |
Other assets | 370,742 | 337,395 |
Income tax receivable | 0 | 76,986 |
Assets related to separate accounts | ||
Variable annuity | 13,555,469 | 13,956,071 |
Variable universal life | 1,077,842 | 1,035,202 |
Total assets | 91,191,303 | 79,113,735 |
Liabilities | ||
Future policy benefits and claims | 42,012,551 | 30,956,792 |
Unearned premiums | 772,139 | 751,130 |
Total policy liabilities and accruals | 42,784,690 | 31,707,922 |
Stable value product account balances | 5,211,668 | 4,698,371 |
Annuity account balances | 13,590,482 | 10,921,190 |
Other policyholders’ funds | 1,142,522 | 1,267,198 |
Other liabilities | 2,150,163 | 1,859,254 |
Income tax payable | 3,590 | 0 |
Deferred income taxes | 970,859 | 1,371,989 |
Subordinated debt | 110,000 | 0 |
Debt | 1,410 | 1,682 |
Non-recourse funding obligations | 2,890,435 | 2,952,822 |
Secured financing liabilities | 514,413 | 1,017,749 |
Liabilities related to separate accounts | ||
Variable annuity | 13,555,469 | 13,956,071 |
Variable universal life | 1,077,842 | 1,035,202 |
Total liabilities | 84,003,543 | 70,789,450 |
Commitments and contingencies - Note 12 | ||
Shareowner’s equity | ||
Preferred Stock; $1 par value, shares authorized: 2,000; Liquidation preference: $2 | 2 | 2 |
Common Stock, $1 par value, shares authorized and issued: 2018 and 2017 - 5,000,000 | 5,000 | 5,000 |
Additional paid-in-capital | 7,378,496 | 7,378,496 |
Retained earnings | 987,996 | 916,971 |
Accumulated other comprehensive income (loss): | ||
Net unrealized gains (losses) on investments, net of income tax: (2018 - $(315,843); 2017 - $6,138) | (1,188,172) | 23,091 |
Net unrealized losses relating to other-than-temporary impaired investments for which a portion has been recognized in earnings, net of income tax: (2018 - $0; 2017 - $(6)) | 0 | (22) |
Accumulated gain (loss) - derivatives, net of income tax: (2018 - $1,180; 2017 - $198) | 4,438 | 747 |
Total shareowner’s equity | 7,187,760 | 8,324,285 |
Total liabilities and shareowner’s equity | $ 91,191,303 | $ 79,113,735 |
CONSOLIDATED CONDENSED BALANC_2
CONSOLIDATED CONDENSED BALANCE SHEETS (Parenthetical) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Fixed maturities, amortized cost | $ 54,348,551,000 | $ 40,952,535,000 |
Fixed maturities, fair value | 2,577,841,000 | 2,776,327,000 |
Equity securities, cost | 623,882,000 | 701,951,000 |
Mortgage loans, securitizations | 505,000 | 226,409,000 |
Investment real estate, accumulated depreciation | 219,000 | 132,000 |
Other intangibles, accumulated amortization | 183,072,000 | 140,232,000 |
Property and equipment, accumulated depreciation | $ 28,459,000 | $ 21,305,000 |
Preferred Stock, par value (in dollars per share) | $ 1 | $ 1 |
Preferred Stock, shares authorized (in shares) | 2,000 | 2,000 |
Preferred Stock, Liquidation preference | $ 2,000 | $ 2,000 |
Common Stock, par value (in dollars per share) | $ 1 | $ 1 |
Common Stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Common Stock, shares issued (in shares) | 5,000,000 | 5,000,000 |
Net unrealized gains on investments, income tax | $ (315,843,000) | $ 6,138,000 |
Net unrealized (losses) gains relating to other-than-temporary impaired investments for which a portion has been recognized in earnings, income tax | 0 | (6,000) |
Accumulated loss - derivatives, income tax | $ 1,180,000 | $ 198,000 |
CONSOLIDATED CONDENSED STATEM_5
CONSOLIDATED CONDENSED STATEMENTS OF SHAREOWNER'S EQUITY - USD ($) $ in Thousands | Total | Preferred Stock | Common Stock | Additional Paid-In-Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) |
Beginning Balance at Dec. 31, 2016 | $ (655,040) | |||||
Increase (decrease) in shareowner's equity | ||||||
Other comprehensive loss | 705,194 | |||||
Ending Balance at Dec. 31, 2017 | $ 8,324,285 | $ 2 | $ 5,000 | $ 7,378,496 | $ 916,971 | 23,816 |
Increase (decrease) in shareowner's equity | ||||||
Cumulative effect adjustments | (88,594) | (78,042) | (10,552) | |||
Net income for the six months ended June 30, 2018 | 149,067 | 149,067 | ||||
Other comprehensive loss | (1,196,998) | (1,196,998) | ||||
Total comprehensive income (loss) | (1,047,931) | |||||
Ending Balance at Sep. 30, 2018 | $ 7,187,760 | $ 2 | $ 5,000 | $ 7,378,496 | $ 987,996 | $ (1,183,734) |
CONSOLIDATED CONDENSED STATEM_6
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities | ||
Net income | $ 149,067 | $ 264,937 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Realized investment (gains) losses | 123,838 | 33,125 |
Amortization of DAC and VOBA | 144,172 | 48,505 |
Capitalization of DAC | (333,222) | (251,472) |
Depreciation and amortization expense | 50,205 | 48,591 |
Deferred income tax | (52,071) | 82,835 |
Accrued income tax | 80,576 | 9,350 |
Interest credited to universal life and investment products | 630,770 | 507,229 |
Policy fees assessed on universal life and investment products | (1,146,980) | (1,004,829) |
Change in reinsurance receivables | 268,866 | 150,137 |
Change in accrued investment income and other receivables | 2,059 | (1,498) |
Change in policy liabilities and other policyholders’ funds of traditional life and health products | (491,751) | (282,841) |
Trading securities: | ||
Maturities and principal reductions of investments | 140,851 | 131,563 |
Sale of investments | 307,632 | 195,733 |
Cost of investments acquired | (403,355) | (277,423) |
Other net change in trading securities | 10,641 | 9,357 |
Amortization of premiums and accretion of discounts on investments and mortgage loans | 232,448 | 232,694 |
Change in other liabilities | 98,321 | 181,696 |
Other, net | (27,322) | (61,295) |
Net cash (used in) provided by operating activities | (215,255) | 16,394 |
Cash flows from investing activities | ||
Maturities and principal reductions of investments, available-for-sale | 895,175 | 541,024 |
Sale of investments, available-for-sale | 1,932,956 | 1,302,130 |
Cost of investments acquired, available-for-sale | (3,942,180) | (3,232,925) |
Change in investments, held-to-maturity | 62,000 | 36,000 |
Mortgage loans: | ||
New lendings | (1,185,316) | (1,081,226) |
Repayments | 797,450 | 644,189 |
Change in investment real estate, net | 647 | 3,679 |
Change in policy loans, net | 43,642 | 24,280 |
Change in other long-term investments, net | (293,208) | (282,688) |
Change in short-term investments, net | 160,149 | (106,888) |
Net unsettled security transactions | 84,036 | 349,544 |
Purchase of property, equipment, and intangibles | (9,629) | (34,067) |
Cash received from reinsurance transaction | 20,669 | 0 |
Net cash used in investing activities | (1,433,609) | (1,836,948) |
Cash flows from financing activities | ||
Borrowings under subordinated debt | 110,000 | 0 |
Issuance (repayment) of non-recourse funding obligations | (61,981) | (35,984) |
Secured financing liabilities | (503,336) | (198,165) |
Dividends/Return of capital to parent company | 0 | (162,999) |
Investment product deposits and change in universal life deposits | 4,397,886 | 3,901,051 |
Investment product withdrawals | (2,311,096) | (1,698,062) |
Other financing activities, net | (291) | (93) |
Net cash provided by financing activities | 1,631,182 | 1,805,748 |
Change in cash | (17,682) | (14,806) |
Cash at beginning of period | 178,855 | 214,439 |
Cash at end of period | $ 161,173 | $ 199,633 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION Basis of Presentation Protective Life Insurance Company (the “Company”), a stock life insurance company, was founded in 1907. The Company is a wholly owned subsidiary of Protective Life Corporation (“PLC”), an insurance holding company. On February 1, 2015, PLC became a wholly owned subsidiary of The Dai-ichi Life Insurance Company, Limited, a kabushiki kaisha organized under the laws of Japan (now known as Dai-ichi Life Holdings, Inc., “Dai-ichi Life”), when DL Investment (Delaware), Inc. a wholly owned subsidiary of Dai-ichi Life, merged with and into PLC. Prior to February 1, 2015, PLC’s stock was publicly traded on the New York Stock Exchange. Subsequent to the Merger date, PLC and the Company remain as SEC registrants within the United States. The Company markets individual life insurance, credit life and disability insurance, guaranteed investment contracts, guaranteed funding agreements, fixed and variable annuities, and extended service contracts throughout the United States. The Company also maintains a separate segment devoted to the acquisition of insurance policies from other companies. PLC is a holding company with subsidiaries that provide financial services through the production, distribution, and administration of insurance and investment products. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for the interim periods presented herein. In the opinion of management, the accompanying financial statements reflect all adjustments (consisting only of normal recurring items) necessary for a fair statement of the results for the interim periods presented. Operating results for the three and nine months ended September 30, 2018 , are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2018 . The year-end consolidated condensed financial data included herein was derived from audited financial statements but does not include all disclosures required by GAAP within this report. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 . The operating results of companies in the insurance industry have historically been subject to significant fluctuations due to changing competition, economic conditions, interest rates, investment performance, insurance ratings, claims, persistency, and other factors. Entities Included The consolidated condensed financial statements in this report include the accounts of Protective Life Insurance Company and its affiliate companies in which the Company holds a majority voting or economic interest. Intercompany balances and transactions have been eliminated. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Significant Accounting Policies For a full description of significant accounting policies, see Note 2 to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 . There were no significant changes to the Company’s accounting policies during the nine months ended September 30, 2018 other than those discussed below. Property and Casualty Insurance Products Property and casualty insurance products include service contract business, surety bonds, and guaranteed asset protection (“GAP”). Premiums and fees associated with service contracts and GAP products are recognized based on expected claim patterns. For all other products, premiums are generally recognized over the terms of the contract on a pro-rata basis. Commissions and fee income associated with other products are recognized as earned when the related services are provided to the customer. Unearned premium reserves are maintained for the portion of the premiums that is related to the unexpired period of the policy. Benefit reserves are recorded when insured events occur. Benefit reserves include case basis reserves for known but unpaid claims as of the balance sheet date as well as incurred but not reported (“IBNR”) reserves for claims where the insured event has occurred but has not been reported to the Company as of the balance sheet date. The case basis reserves and IBNR are calculated based on historical experience and on assumptions relating to claim severity and frequency, the level of used vehicle prices, and other factors. These assumptions are modified as necessary to reflect anticipated trends. Effective January 1, 2018, the Company adopted Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers . In consideration of the amendments in this Update, the Company revised its recognition pattern for administrative fees associated with certain vehicle service and GAP products. Previously, these fees were recognized based on the work effort involved in satisfying the Company’s contract obligations. The Company will recognize these fees on a claims occurrence basis in future periods. To reflect this change in accounting principle, the Company recorded a cumulative effect adjustment as of January 1, 2018 that resulted in a decrease in retained earnings of $88.6 million . The pre-tax impact to each affected line item on the Company’s financial statements is reflected in the table below: As of September 30, 2018 As Reported Previous Accounting Method (Dollars In Millions) Financial Statement Line Item: Balance Sheet Deferred policy acquisition costs and value of business acquired $ 2,979.4 $ 2,840.0 Other liabilities $ 2,150.2 $ 1,891.4 For the Three Months Ended September 30, 2018 For The Nine Months Ended September 30, 2018 As Reported Previous Accounting Method As Reported Previous Accounting Method (Dollars In Millions) (Dollars In Millions) Financial Statement Line Item: Statements of Income Other income $ 80.9 $ 82.4 $ 241.3 $ 244.9 Amortization of deferred policy acquisition costs and value of business acquired $ 33.5 $ 21.9 $ 144.2 $ 108.1 Other operating expenses, net of reinsurance ceded $ 190.4 $ 203.2 $ 582.8 $ 622.3 Accounting Pronouncements Recently Adopted ASU No. 2014-09 - Revenue from Contracts with Customers (Topic 606). This Update provides for significant revisions to the recognition of revenue from contracts with customers across various industries. Under the new guidance, entities are required to apply a prescribed 5-step process to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The accounting for revenues associated with insurance products is not within the scope of this Update. The Update was originally effective for annual and interim periods beginning after December 15, 2016. However, in August 2015, the FASB issued ASU No. 2015-14 - Revenues from Contracts with Customers: Deferral of the Effective Date , to defer the effective date of ASU No. 2014-09 by one year to annual and interim periods beginning after December 15, 2017. The Company adopted this Update using the modified retrospective approach via a cumulative effect adjustment to retained earnings as of January 1, 2018. The amendments in the Update, along with clarifying updates issued subsequent to ASU 2014-09, impacted certain revenues associated with the Company’s Asset Protection products. The lines of business to which the revised guidance applies are not material to the Company’s financial statements. In consideration of the amendments in this Update, the Company revised its recognition pattern for administrative fees associated with certain vehicle service and GAP products. Previously, these fees were recognized based on the work effort involved in satisfying the Company’s contract obligations. The Company will recognize these fees on a claims occurrence basis in future periods. To reflect this change in accounting principle, the Company recorded a cumulative effect adjustment as of January 1, 2018 that resulted in a decrease in retained earnings of $88.6 million . See above for additional discussion. ASU No. 2016-01 - Financial Instruments - Recognition and Measurement of Financial Assets and Financial Liabilities. The amendments in this Update address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Most notably, the Update requires that equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) be measured at fair value with changes in fair value recognized in net income. The Update also introduces a single-step impairment model for equity investments without a readily determinable fair value. Additionally, the Update requires changes in instrument-specific credit risk for fair value option liabilities to be recorded in other comprehensive income. The amendments in this Update are effective for annual and interim periods beginning after December 15, 2017 and were applied on a modified retrospective basis. The Company recorded a cumulative-effect adjustment at the date of adoption, January 1, 2018, transferring unrealized gains and losses on available-for-sale equity securities to retained earnings from accumulated other comprehensive income. The impact of this adjustment, net of income tax, resulted in a $10.6 million increase to retained earnings and a corresponding decrease to accumulated other comprehensive income, resulting in no net impact to consolidated shareowner’s equity. The Company has updated its disclosures in Note 5, Investment Operations and Note 6, Fair Value of Financial Instruments in accordance with the ASU. ASU No. 2016-15 - Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments. The amendments in this Update are intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. Specific transactions addressed in the new guidance include: Debt prepayment/extinguishment costs, contingent consideration payments, proceeds from the settlement of corporate-owned life insurance policies, and distributions received from equity method investments. The Update does not introduce any new accounting or financial reporting requirements, and is effective for annual and interim periods beginning after December 15, 2017 using the retrospective method. There was no financial impact. ASU No. 2016-18 - Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Task Force). The amendments in this update provide guidance on the presentation of restricted cash or restricted cash equivalents in the statement of cash flows, thereby reducing diversity in practice related to the presentation of these amounts. The amendments require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The Update is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. There was no impact to the Company on adoption. ASU No. 2017-01 - Business Combinations (Topic 805): Clarifying the Definition of a Business. The purpose of this update is to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in the Update provide a specific test by which an entity may determine whether an acquisition involves a set of assets or a business. The amendments in the Update are to be applied prospectively for periods beginning after December 15, 2017. The Company has reviewed the revised requirements, and does not anticipate that the changes will impact its policies or recent conclusions related to its acquisition activities. ASU No. 2017-07 - Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The amendments in this update require entities to disaggregate the current-service-cost component from other components of net benefit cost and present it with other current compensation costs in the income statement. The other components of net benefit cost must be presented outside of income from operations if that subtotal is presented. In addition, the Update requires entities to disclose the income statement lines that contain the other components if they are not presented on appropriately described separate lines. The amendments in this update are effective for interim and annual periods beginning after December 15, 2017. As provided for in the ASU, the Company expects to apply the provisions of the statement retrospectively for components of net periodic pension costs and prospectively for capitalization of the service costs component of net periodic costs and net periodic postretirement benefits. The Update did not impact the Company’s financial position, results of operations, or current disclosures. Accounting Pronouncements Not Yet Adopted ASU No. 2016-02 - Leases. The amendments in this Update address certain aspects of recognition, measurement, presentation, and disclosure of leases. The most significant change will relate to the accounting model used by lessees. The Update will require all leases with terms greater than 12 months to be recorded on the balance sheet in the form of a lease asset and liability. The lease asset and liability will be measured at the present value of the minimum lease payments less any upfront payments or fees. The amendments in the Update are effective for annual and interim periods beginning after December 15, 2018 on a modified retrospective basis. The Company has completed an inventory of all leases in the organization. Based on our lease portfolio as of September 30, 2018, the Company expects to record a right of use asset and lease liability of approximately $21 million on its consolidated condensed balance sheet in the period of adoption. However, the ultimate impact of adopting the ASU will depend on the Company’s lease portfolio as of the adoption date. ASU No. 2016-13 - Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments. The amendments in this Update introduce a new current expected credit loss (“CECL”) model for certain financial assets, including mortgage loans and reinsurance receivables. The new model will not apply to debt securities classified as available-for-sale. For assets within the scope of the new model, an entity will recognize as an allowance against earnings its estimate of the contractual cash flows not expected to be collected on day one of the asset’s acquisition. The allowance may be reversed through earnings if a security recovers in value. This differs from the current impairment model, which requires recognition of credit losses when they have been incurred and recognizes a security’s subsequent recovery in value in other comprehensive income. The Update also makes targeted changes to the current impairment model for available-for-sale debt securities, which comprise the majority of the Company’s invested assets. Similar to the CECL model, credit loss impairments will be recorded in an allowance against earnings that may be reversed for subsequent recoveries in value. The amendments in this Update are effective for annual and interim periods beginning after December 15, 2019 on a modified retrospective basis. The Company is reviewing its policies and processes to ensure compliance with the requirements in this Update, upon adoption, and assessing the impact this standard will have on its operations and financial results. ASU No. 2017-08 - Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. The amendments in this Update require that premiums on callable debt securities be amortized to the first call date. This is a change from current guidance, under which premiums are amortized to the maturity date of the security. The amendments are effective for annual and interim periods beginning after December 15, 2018, and early adoption is permitted. Transition will be through a modified retrospective approach in which the cumulative effect of application is recorded to retained earnings at the beginning of the annual period in which an entity adopts the revised guidance. Based on our population of callable debt securities held as of September 30, 2018, the Company estimates it would record a reduction to retained earnings of approximately $56.1 million as a result of adopting the ASU. However, the adoption impact will ultimately depend on the population of callable debt securities held as of the adoption date. ASU No. 2017-12 - Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The amendments in this Update are designed to permit hedge accounting to be applied to a broader range of hedging strategies as well as to more closely align hedge accounting and risk management objectives. Specific provisions include requiring changes in the fair value of a hedging instrument be recorded in the same income statement line as the hedged item when it affects earnings. In addition, after a hedge has initially qualified as an effective hedge the Update permits the use of a qualitative hedge effectiveness test in subsequent periods. The amendments in this Update are effective for annual and interim periods beginning after December 15, 2018 and early adoption is permitted. The Company does not expect the adoption of this standard to have a material impact on its operations or financial results. ASU No. 2018-12 - Financial Services - Insurance (Topic 944): Targeted Improvements to Accounting for Long-Duration Contracts. The amendments in this Update are designed to make improvements to the existing recognition, measurement, presentation, and disclosure requirements for certain long-duration contracts issued by an insurance company. The new amendments require insurance entities to provide a more current measure of the liability for future policy benefits for traditional and limited-payment contracts by regularly refining the liability for actual past experience and updated future assumptions. This differs from current requirements where assumptions are locked-in at contract issuance for these contract types. In addition, the updated liability will be discounted using an upper-medium grade (low-credit-risk) fixed income instrument yield that reflects the characteristics of the liability which differs from currently used rates based on the invested assets supporting the liability. In addition, the amendments introduce new requirements to assess market-based insurance contract options and guarantees for Market Risk Benefits and measure them at fair value. This Update also requires insurance entities to amortize deferred acquisition costs on a constant-level basis over the expected life of the contract. Finally this Update requires new disclosures including liability rollforwards and information about significant inputs, judgments, assumptions, and methods used in the measurement. The amendments in this Update are effective for annual and interim periods beginning after December 15, 2020 with early adoption permitted. The Company is currently reviewing its policies, processes, and applicable systems to determine the impact this standard will have on its operations and financial results. |
SIGNIFICANT TRANSACTIONS
SIGNIFICANT TRANSACTIONS | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
SIGNIFICANT TRANSACTIONS | SIGNIFICANT TRANSACTIONS On May 1, 2018, The Lincoln National Life Insurance Company (“Lincoln Life”) completed its previously announced acquisition (the “Closing”) of Liberty Mutual Group Inc.’s (“Liberty Mutual”) Group Benefits Business and Individual Life and Annuity Business (the “Life Business”) through the acquisition of all of the issued and outstanding capital stock of Liberty Life Assurance Company of Boston (“Liberty”). In connection with the Closing and pursuant to the Master Transaction Agreement, dated January 18, 2018 (the “Master Transaction Agreement”), previously reported in our Current Report on Form 8-K filed on January 23, 2018, the Company and Protective Life and Annuity Insurance Company (“PLAIC”), a wholly owned subsidiary of the Company, entered into reinsurance agreements (the “Reinsurance Agreements”) and related ancillary documents (including administrative services agreements and transition services agreements) providing for the reinsurance and administration of the Life Business. Pursuant to the Reinsurance Agreements, Liberty ceded to the Company and PLAIC the insurance policies related to the Life Business on a 100% coinsurance basis. The aggregate ceding commission for the reinsurance of the Life Business was $422.4 million , which is the purchase price. Other than cash received as part of the acquired Liberty investment portfolio as reflected in “amounts received from reinsurance transaction” in the Consolidated Condensed Statements of Cash Flows and as reflected in the table below, this was a non-cash transaction. All policies issued in states other than New York were ceded to the Company under a reinsurance agreement between Liberty and the Company, and all policies issued in New York were ceded to PLAIC under a reinsurance agreement between Liberty and PLAIC. The aggregate statutory reserves of Liberty ceded to the Company and PLAIC as of the closing of the Transaction were approximately $13.3 billion , which amount was based on initial estimates and is subject to adjustment following the Closing. Pursuant to the terms of the Reinsurance Agreements, each of the Company and PLAIC are required to maintain assets in trust for the benefit of Liberty to secure their respective obligations to Liberty under the Reinsurance Agreements. The trust accounts were initially funded by each of the Company and PLAIC principally with the investment assets that were received from Liberty. Additionally, the Company and PLAIC have each agreed to provide, on behalf of Liberty, administration and policyholder servicing of the Life Business reinsured by it pursuant to administrative services agreements between Liberty and each of the Company and PLAIC. The terms of the Reinsurance Agreements resulted in an acquisition of the Life Business by the Company in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations . The following table details the purchase consideration and preliminary allocation of assets acquired and liabilities assumed from the Life Business reinsurance transaction as of the transaction date. These estimates remain preliminary and are subject to adjustment. While they are not expected to be materially different than those shown, any material adjustments to the estimates will be reflected, retroactively, as of the date of the acquisition. Fair Value as of May 1, 2018 (Dollars In Thousands) ASSETS Fixed maturities $ 12,588,512 Mortgage loans 435,405 Policy loans 131,489 Total investments 13,155,406 Cash 20,669 Accrued investment income 151,610 Reinsurance receivables 337 Value of business acquired 336,437 Other assets 2,542 Total assets 13,667,001 LIABILITIES Future policy benefits and claims $ 11,744,496 Unearned premiums — Total policy liabilities and accruals 11,744,496 Annuity account balances 1,823,444 Other policyholders’ funds 41,954 Other liabilities 57,107 Total liabilities 13,667,001 NET ASSETS ACQUIRED $ — The following unaudited pro forma condensed consolidated results of operations assumes that the aforementioned transactions of the Life Business were completed as of January 1, 2017. The unaudited pro forma condensed results of operations are presented solely for information purposes and are not necessarily indicative of the consolidated condensed results of operations that might have been achieved had the transaction been completed as of the date indicated. Unaudited Unaudited For The For The 2018 2017 2018 2017 (Dollars In Thousands) Revenue $ 1,269,963 $ 1,418,743 $ 3,826,857 $ 4,170,636 Net income $ 78,524 $ 152,971 $ 195,211 $ 369,826 The amount of revenue and income before income tax of the Life Business since the transaction date, May 1, 2018, included in the consolidated condensed statements of income for the three and nine months ended September 30, 2018 amounted to $218.1 million and $360.9 million and $26.1 million and $33.7 million , respectively. Also, included in the income before income tax for the nine months ended September 30, 2018, is approximately $5.5 million of non-recurring transaction costs. Based on the balance recorded as of May 1, 2018, the expected amortization of VOBA for the next five years is as follows: Years Expected Amortization (Dollars In Thousands) Remainder of 2018 $ 5,265 2019 21,063 2020 19,950 2021 18,329 2022 16,611 |
MONY CLOSED BLOCK OF BUSINESS
MONY CLOSED BLOCK OF BUSINESS | 9 Months Ended |
Sep. 30, 2018 | |
Closed Block Disclosure [Abstract] | |
MONY CLOSED BLOCK OF BUSINESS | MONY CLOSED BLOCK OF BUSINESS In 1998, MONY Life Insurance Company (“MONY”) converted from a mutual insurance company to a stock corporation (“demutualization”). In connection with its demutualization, an accounting mechanism known as a closed block (the “Closed Block”) was established for certain individuals’ participating policies in force as of the date of demutualization. Assets, liabilities, and earnings of the Closed Block are specifically identified to support its participating policyholders. The Company acquired the Closed Block in conjunction with the acquisition of MONY in 2013. Assets allocated to the Closed Block inure solely to the benefit of each Closed Block’s policyholders and will not revert to the benefit of MONY or the Company. No reallocation, transfer, borrowing or lending of assets can be made between the Closed Block and other portions of MONY’s general account, any of MONY’s separate accounts or any affiliate of MONY without the approval of the Superintendent of The New York State Department of Financial Services (the “Superintendent”). Closed Block assets and liabilities are carried on the same basis as similar assets and liabilities held in the general account. The excess of Closed Block liabilities over Closed Block assets (adjusted to exclude the impact of related amounts in AOCI) at the acquisition date of October 1, 2013, represented the estimated maximum future post-tax earnings from the Closed Block that would be recognized in income from continuing operations over the period the policies and contracts in the Closed Block remain in force. In connection with the acquisition of MONY, the Company developed an actuarial calculation of the expected timing of MONY’s Closed Block’s earnings as of October 1, 2013. Pursuant to the acquisition of the Company by Dai-ichi Life, this actuarial calculation of the expected timing of MONY’s Closed Block earnings was recalculated and reset as February 1, 2015, along with the establishment of a policyholder dividend obligation as of such date. If the actual cumulative earnings from the Closed Block are greater than the expected cumulative earnings, only the expected earnings will be recognized in the Company’s net income. Actual cumulative earnings in excess of expected cumulative earnings at any point in time are recorded as a policyholder dividend obligation because they will ultimately be paid to Closed Block policyholders as an additional policyholder dividend unless offset by future performance that is less favorable than originally expected. If a policyholder dividend obligation has been previously established and the actual Closed Block earnings in a subsequent period are less than the expected earnings for that period, the policyholder dividend obligation would be reduced (but not below zero). If, over the period the policies and contracts in the Closed Block remain in force, the actual cumulative earnings of the Closed Block are less than the expected cumulative earnings, only actual earnings would be recognized in income from continuing operations. If the Closed Block has insufficient funds to make guaranteed policy benefit payments, such payments will be made from assets outside the Closed Block. Many expenses related to Closed Block operations, including amortization of VOBA, are charged to operations outside of the Closed Block; accordingly, net revenues of the Closed Block do not represent the actual profitability of the Closed Block operations. Operating costs and expenses outside of the Closed Block are, therefore, disproportionate to the business outside of the Closed Block. Summarized financial information for the Closed Block as of September 30, 2018 and December 31, 2017 is as follows: As of September 30, 2018 December 31, 2017 (Dollars In Thousands) Closed block liabilities Future policy benefits, policyholders’ account balances and other policyholder liabilities $ 5,699,118 $ 5,791,867 Policyholder dividend obligation — 160,712 Other liabilities 42,640 30,764 Total closed block liabilities 5,741,758 5,983,343 Closed block assets Fixed maturities, available-for-sale, at fair value $ 4,339,342 $ 4,669,856 Mortgage loans on real estate 76,608 108,934 Policy loans 679,760 700,769 Cash 72,868 31,182 Other assets 144,077 122,637 Total closed block assets 5,312,655 5,633,378 Excess of reported closed block liabilities over closed block assets 429,103 349,965 Portion of above representing accumulated other comprehensive income: Net unrealized investment gains (losses) net of policyholder dividend obligation: $(149,219) and $(13,429); and net of income tax: $57,054 and $2,820 (96,749 ) — Future earnings to be recognized from closed block assets and closed block liabilities $ 332,354 $ 349,965 Reconciliation of the policyholder dividend obligation is as follows: For The 2018 2017 (Dollars In Thousands) Policyholder dividend obligation, beginning of period $ 160,712 $ 31,932 Applicable to net revenue (losses) (24,922 ) (38,147 ) Change in net unrealized investment gains (losses) allocated to the policyholder dividend obligation (135,790 ) 142,219 Policyholder dividend obligation, end of period $ — $ 136,004 Closed Block revenues and expenses were as follows: For The For The 2018 2017 2018 2017 (Dollars In Thousands) Revenues Premiums and other income $ 39,691 $ 40,962 $ 121,768 $ 128,697 Net investment income 50,833 50,780 152,248 153,481 Net investment gains 40 341 66 448 Total revenues 90,564 92,083 274,082 282,626 Benefits and other deductions Benefits and settlement expenses 83,588 81,721 251,480 249,319 Other operating expenses 291 621 310 1,216 Total benefits and other deductions 83,879 82,342 251,790 250,535 Net revenues before income taxes 6,685 9,741 22,292 32,091 Income tax expense 1,404 3,409 4,681 11,232 Net revenues $ 5,281 $ 6,332 $ 17,611 $ 20,859 |
INVESTMENT OPERATIONS
INVESTMENT OPERATIONS | 9 Months Ended |
Sep. 30, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
INVESTMENT OPERATIONS | INVESTMENT OPERATIONS Net realized gains (losses) for all other investments are summarized as follows: For The For The 2018 2017 2018 2017 (Dollars In Thousands) Fixed maturities $ (2,018 ) $ 1,042 $ 6,248 $ 10,482 Equity gains and losses (1) (6,925 ) (352 ) (16,693 ) (1,398 ) Impairments (14 ) (273 ) (3,664 ) (8,259 ) Modco trading portfolio (10,901 ) 19,399 (148,427 ) 93,181 Other investments (312 ) (1,939 ) 1,522 (7,739 ) Total realized gains (losses) - investments $ (20,170 ) $ 17,877 $ (161,014 ) $ 86,267 (1) Beginning January 1, 2018, all changes in the fair market value of equity securities are recorded as a realized gains (loss) as a result of the adoption of ASU No. 2016-01. Gross realized gains and gross realized losses on investments available-for-sale (fixed maturities and short-term investments) are as follows: For The For The 2018 2017 2018 2017 (Dollars In Thousands) Gross realized gains $ 3,410 $ 1,933 $ 21,540 $ 14,968 Gross realized losses: Impairment losses $ (14 ) $ (273 ) $ (3,664 ) $ (8,259 ) Other realized losses $ (5,428 ) $ (1,243 ) $ (15,292 ) $ (5,884 ) The chart below summarizes the fair value (proceeds) and the gains (losses) realized on available-for-sale securities the Company sold that were in an unrealized gain position and an unrealized loss position. For The For The 2018 2017 2018 2017 (Dollars In Thousands) Securities in an unrealized gain position: Fair value (proceeds) $ 306,600 $ 121,459 $ 909,846 $ 566,064 Gains realized $ 3,410 $ 1,933 $ 21,540 $ 14,967 Securities in an unrealized loss position (1) : Fair value (proceeds) $ 122,317 $ 37,186 $ 380,493 $ 121,450 Losses realized $ (5,428 ) $ (1,243 ) $ (15,292 ) $ (5,884 ) (1) The Company made the decision to exit these holdings in conjunction with its overall asset/liability management process. The chart below summarizes the realized gains (losses) on equity securities sold during the period and equity securities still held at the reporting date. For The Three Months Ended September 30, 2018 For The Nine Months Ended September 30, 2018 (Dollars In Thousands) Net gains (losses) recognized during the period on equity securities $ (6,925 ) $ (16,693 ) Less: net gains (losses) recognized on equity securities sold during the period $ (1,476 ) $ (3,858 ) Gains (losses) recognized during the period on equity securities still held $ (5,449 ) $ (12,835 ) The amortized cost and fair value of the Company’s investments classified as available-for-sale are as follows: As of September 30, 2018 Amortized Gross Gross Fair Total OTTI (1) (Dollars In Thousands) Fixed maturities: Residential mortgage-backed securities $ 3,506,384 $ 5,808 $ (105,531 ) $ 3,406,661 $ — Commercial mortgage-backed securities 2,314,831 180 (80,633 ) 2,234,378 — Other asset-backed securities 1,456,768 13,749 (16,382 ) 1,454,135 — U.S. government-related securities 1,653,626 160 (72,807 ) 1,580,979 — Other government-related securities 546,356 2,925 (21,635 ) 527,646 — States, municipals, and political subdivisions 3,691,930 6,070 (139,927 ) 3,558,073 — Corporate securities 38,612,538 166,917 (1,919,248 ) 36,860,207 — Redeemable preferred stock 94,362 — (7,223 ) 87,139 — 51,876,795 195,809 (2,363,386 ) 49,709,218 — Short-term investments 310,721 — — 310,721 — $ 52,187,516 $ 195,809 $ (2,363,386 ) $ 50,019,939 $ — As of December 31, 2017 Amortized Gross Gross Fair Total OTTI (1) (Dollars In Thousands) Fixed maturities: Residential mortgage-backed securities $ 2,321,811 $ 19,412 $ (22,730 ) $ 2,318,493 $ 10 Commercial mortgage-backed securities 1,885,109 4,931 (29,552 ) 1,860,488 — Other asset-backed securities 1,234,376 20,936 (5,763 ) 1,249,549 — U.S. government-related securities 1,255,244 185 (32,177 ) 1,223,252 — Other government-related securities 280,780 9,401 (4,948 ) 285,233 — States, municipals, and political subdivisions 1,770,299 16,959 (45,613 ) 1,741,645 (37 ) Corporate securities 29,446,365 618,582 (527,401 ) 29,537,546 (1 ) Redeemable preferred stock 94,362 232 (3,503 ) 91,091 — 38,288,346 690,638 (671,687 ) 38,307,297 (28 ) Equity securities 696,706 22,319 (8,771 ) 710,254 — Short-term investments 470,883 — — 470,883 — $ 39,455,935 $ 712,957 $ (680,458 ) $ 39,488,434 $ (28 ) (1) These amounts are included in the gross unrealized gains and gross unrealized losses columns above. The fair values of the Company’s investments classified as trading are as follows: As of September 30, 2018 As of December 31, 2017 (Dollars In Thousands) Fixed maturities: Residential mortgage-backed securities $ 254,037 $ 259,694 Commercial mortgage-backed securities 135,403 146,804 Other asset-backed securities 111,770 138,097 U.S. government-related securities 58,081 27,234 Other government-related securities 43,030 63,925 States, municipals, and political subdivisions 296,618 326,925 Corporate securities 1,569,652 1,698,183 Redeemable preferred stock 3,165 3,327 2,471,756 2,664,189 Equity securities 3,801 5,244 Short-term investments 55,865 56,261 $ 2,531,422 $ 2,725,694 The amortized cost and fair value of available-for-sale and held-to-maturity fixed maturities as of September 30, 2018 , by expected maturity, are shown below. Expected maturities of securities without a single maturity date are allocated based on estimated rates of prepayment that may differ from actual rates of prepayment. Available-for-sale Held-to-maturity Amortized Cost Fair Value Amortized Cost Fair Value (Dollars In Thousands) Due in one year or less $ 957,984 $ 955,779 $ — $ — Due after one year through five years 9,252,383 9,079,479 — — Due after five years through ten years 9,099,912 8,847,681 — — Due after ten years 32,566,516 30,826,279 2,653,605 2,577,841 $ 51,876,795 $ 49,709,218 $ 2,653,605 $ 2,577,841 The charts below summarize the Company’s other-than-temporary impairments of investments. All of the impairments were related to fixed maturities. For The Three Months Ended September 30, 2018 For The Nine Months Ended September 30, 2018 Fixed Maturities Fixed Maturities (Dollars In Thousands) Other-than-temporary impairments $ (14 ) $ (715 ) Non-credit impairment losses recorded in other comprehensive income — (2,949 ) Net impairment losses recognized in earnings $ (14 ) $ (3,664 ) For The Three Months Ended September 30, 2017 For The Nine Months Ended Fixed Maturities Fixed Maturities (Dollars In Thousands) Other-than-temporary impairments $ (366 ) $ (494 ) Non-credit impairment losses recorded in other comprehensive income 93 (7,765 ) Net impairment losses recognized in earnings $ (273 ) $ (8,259 ) There were no other-than-temporary impairments related to fixed maturities or equity securities that the Company intended to sell or expected to be required to sell for the three and nine months ended September 30, 2018 and 2017 . The following chart is a rollforward of available-for-sale credit losses on fixed maturities held by the Company for which a portion of an other-than-temporary impairment was recognized in other comprehensive income (loss): For The For The 2018 2017 2018 2017 (Dollars In Thousands) Beginning balance $ 2 $ 2,783 $ 3,268 $ 12,685 Additions for newly impaired securities — 266 — 266 Additions for previously impaired securities — 6 2 2,791 Reductions for previously impaired securities due to a change in expected cash flows — (37 ) — (12,724 ) Reductions for previously impaired securities that were sold in the current period (2 ) (600 ) (3,270 ) (600 ) Ending balance $ — $ 2,418 $ — $ 2,418 The following table includes the gross unrealized losses and fair value of the Company’s investments that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of September 30, 2018 : Less Than 12 Months 12 Months or More Total Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss (Dollars In Thousands) Residential mortgage-backed securities $ 2,831,194 $ (80,839 ) $ 399,676 $ (24,692 ) $ 3,230,870 $ (105,531 ) Commercial mortgage-backed securities 1,433,287 (39,701 ) 740,262 (40,932 ) 2,173,549 (80,633 ) Other asset-backed securities 645,956 (9,131 ) 125,847 (7,251 ) 771,803 (16,382 ) U.S. government-related securities 551,939 (14,066 ) 1,012,450 (58,741 ) 1,564,389 (72,807 ) Other government-related securities 254,968 (7,405 ) 111,089 (14,230 ) 366,057 (21,635 ) States, municipalities, and political subdivisions 2,268,935 (51,019 ) 998,399 (88,908 ) 3,267,334 (139,927 ) Corporate securities 21,709,122 (782,983 ) 9,756,347 (1,136,265 ) 31,465,469 (1,919,248 ) Redeemable preferred stock 43,712 (1,902 ) 43,427 (5,321 ) 87,139 (7,223 ) $ 29,739,113 $ (987,046 ) $ 13,187,497 $ (1,376,340 ) $ 42,926,610 $ (2,363,386 ) RMBS and CMBS had gross unrealized losses greater than twelve months of $24.7 million and $40.9 million , respectively, as of September 30, 2018 . Factors such as the credit enhancement within the deal structure, the average life of the securities, and the performance of the underlying collateral support the recoverability of these investments. The other asset-backed securities had a gross unrealized loss greater than twelve months of $7.3 million as of September 30, 2018 . This category predominately includes student loan backed auction rate securities whose underlying collateral is at least 97% guaranteed by the Federal Family Education Loan Program (“FFELP”). At this time, the Company has no reason to believe that the U.S. Department of Education would not honor the FFELP guarantee, if it were necessary. The U.S. government-related securities and the other government-related securities had gross unrealized losses greater than twelve months of $58.7 million and $14.2 million as of September 30, 2018 , respectively. These declines were related to changes in interest rates. The states, municipalities, and political subdivisions category had gross unrealized losses greater than twelve months of $88.9 million as of September 30, 2018 . The aggregate decline in market value of these securities was deemed temporary due to positive factors supporting the recoverability of the respective investments. Positive factors considered include credit ratings, the financial health of the issuer, the continued access of the issuer to capital markets, and other pertinent information. The corporate securities category had gross unrealized losses greater than twelve months of $1.1 billion as of September 30, 2018 . The aggregate decline in market value of these securities was deemed temporary due to positive factors supporting the recoverability of the respective investments. Positive factors considered include credit ratings, the financial health of the issuer, the continued access of the issuer to capital markets, and other pertinent information. As of September 30, 2018 , the Company had a total of 4,367 positions that were in an unrealized loss position, but the Company does not consider these unrealized loss positions to be other-than-temporary. This is based on the aggregate factors discussed previously and because the Company has the ability and intent to hold these investments until the fair values recover, and the Company does not intend to sell or expect to be required to sell the securities before recovering the Company’s amortized cost of the securities. The following table includes the gross unrealized losses and fair value of the Company’s investments that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2017 : Less Than 12 Months 12 Months or More Total Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss (Dollars In Thousands) Residential mortgage-backed securities $ 765,641 $ (9,666 ) $ 408,460 $ (13,064 ) $ 1,174,101 $ (22,730 ) Commercial mortgage-backed securities 750,643 (8,521 ) 779,086 (21,031 ) 1,529,729 (29,552 ) Other asset-backed securities 86,506 (322 ) 134,316 (5,441 ) 220,822 (5,763 ) U.S. government-related securities 94,110 (688 ) 1,072,232 (31,489 ) 1,166,342 (32,177 ) Other government-related securities 24,830 (169 ) 115,294 (4,779 ) 140,124 (4,948 ) States, municipalities, and political subdivisions 170,268 (1,738 ) 1,027,747 (43,875 ) 1,198,015 (45,613 ) Corporate securities 5,026,417 (55,649 ) 10,947,027 (471,752 ) 15,973,444 (527,401 ) Redeemable preferred stock 22,048 (1,120 ) 23,197 (2,383 ) 45,245 (3,503 ) Equities 86,194 (1,400 ) 91,195 (7,371 ) 177,389 (8,771 ) $ 7,026,657 $ (79,273 ) $ 14,598,554 $ (601,185 ) $ 21,625,211 $ (680,458 ) RMBS and CMBS had gross unrealized losses greater than twelve months of $13.1 million and $21.0 million , respectively, as of December 31, 2017 . Factors such as the credit enhancement within the deal structure, the average life of the securities, and the performance of the underlying collateral support the recoverability of these investments. The other asset-backed securities had a gross unrealized loss greater than twelve months of $5.4 million as of December 31, 2017 . This category predominately includes student loan backed auction rate securities whose underlying collateral is at least 97% guaranteed by the FFELP. At this time, the Company has no reason to believe that the U.S. Department of Education would not honor the FFELP guarantee, if it were necessary. The U.S. government-related securities and other government-related securities had gross unrealized losses greater than twelve months of $31.5 million and $4.8 million as of December 31, 2017, respectively. These declines were related to changes in interest rates. The states, municipalities, and political subdivisions category had gross unrealized losses greater than twelve months of $43.9 million as of December 31, 2017 . These declines were related to changes in interest rates. The corporate securities category had gross unrealized losses greater than twelve months of $471.8 million as of December 31, 2017 . The aggregate decline in market value of these securities was deemed temporary due to positive factors supporting the recoverability of the respective investments. Positive factors considered include credit ratings, the financial health of the issuer, the continued access of the issuer to capital markets, and other pertinent information. As of September 30, 2018 , the Company had securities in its available-for-sale portfolio which were rated below investment grade of $1.7 billion and had an amortized cost of $1.7 billion . In addition, included in the Company’s trading portfolio, the Company held $175.6 million of securities which were rated below investment grade. Approximately $263.1 million of the available-for-sale and trading securities that were below investment grade were not publicly traded. The change in unrealized gains (losses), net of income tax, on fixed matur ities, classified as available-for-sale is summarized as follows: For The For The 2018 2017 2018 2017 (Dollars In Thousands) Fixed maturities $ (229,609 ) $ 167,488 $ (1,727,358 ) $ 865,743 The amortized cost and fair value of the Company’s investments classified as held-to-maturity as of September 30, 2018 and December 31, 2017 , are as follows: As of September 30, 2018 Amortized Gross Holding Gross Holding Fair Total OTTI (Dollars In Thousands) Fixed maturities: Securities issued by affiliates: Red Mountain, LLC $ 736,605 $ — $ (77,492 ) $ 659,113 $ — Steel City, LLC 1,917,000 1,728 — 1,918,728 — $ 2,653,605 $ 1,728 $ (77,492 ) $ 2,577,841 $ — As of December 31, 2017 Amortized Gross Gross Fair Total OTTI (Dollars In Thousands) Fixed maturities: Securities issued by affiliates: Red Mountain, LLC $ 704,904 $ — $ (19,163 ) $ 685,741 $ — Steel City, LLC 2,014,000 76,586 — 2,090,586 — $ 2,718,904 $ 76,586 $ (19,163 ) $ 2,776,327 $ — During the three and nine months ended September 30, 2018 and 2017 , the Company recorded no other-than-temporary impairments on held-to-maturity securities. The Company’s held-to-maturity securi ties had $1.7 million of gross unrecognized holding gains and $77.5 million of gross unrecognized holding losses by maturity as of September 30, 2018 . The Company does not consider these unrecognized holding losses to be other-than-temporary based on certain positive factors associated with the securities which include credit ratings of the guarantor, financial health of the issuer and guarantor, continued access of the issuer to capital markets and other pertinent information. These held-to-maturity securities are issued by affiliates of the Company which are considered variable interest entities (“VIEs”). The Company is not the primary beneficiary of these entities and thus the securities are not eliminated in consolidation. These securities are collateralized by non-recourse funding obligations issued by captive insurance companies that are affiliates of the Company. The Company’s held-to-maturity securities had $76.6 million of gross unrecognized holding gains and $19.2 million of gross unrecognized holding losses by maturity as of December 31, 2017. The Company does not consider these unrecognized holding losses to be other-than-temporary based on certain positive factors associated with the securities which include credit ratings of the guarantor, financial health of the issuer and guarantor, continued access of the issuer to capital markets and other pertinent information. Variable Interest Entity The Company holds certain investments in entities in which its ownership interests could possibly be considered variable interests under Topic 810 of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC” or “Codification”) (excluding debt and equity securities held as trading, available for sale, or held to maturity). The Company reviews the characteristics of each of these applicable entities and compares those characteristics to applicable criteria to determine whether the entity is a VIE. If the entity is determined to be a VIE, the Company then performs a detailed review to determine whether the interest would be considered a variable interest under the guidance. The Company then performs a qualitative review of all variable interests with the entity and determines whether the Company is the primary beneficiary. ASC 810 provides that an entity is the primary beneficiary of a VIE if the entity has 1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and 2) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE. Based on this analysis, the Company had an interest in one wholly owned subsidiary, Red Mountain, LLC (“Red Mountain”) as of September 30, 2018 and December 31, 2017 , that was determined to be a VIE. The activity most significant to Red Mountain is the issuance of a note in connection with a financing transaction involving Golden Gate V Vermont Captive Insurance Company (“Golden Gate V”) and the Company in which Golden Gate V issued non-recourse funding obligations to Red Mountain and Red Mountain issued the note to Golden Gate V. Credit enhancement on the Red Mountain Note is provided by an unrelated third party. The Company had the power, via its 100% ownership through an affiliate, to direct the activities of the VIE, but did not have the obligation to absorb losses related to the primary risks or sources of variability to the VIE. The variability of loss would be borne primarily by the third party in its function as provider of credit enhancement on the Red Mountain Note. Accordingly, it was determined that the Company is not the primary beneficiary of the VIE. The Company’s risk of loss related to the VIE is limited to its investment of $10,000 . Additionally, the Company has guaranteed Red Mountain’s payment obligation for the credit enhancement fee to the unrelated third party provider. As of September 30, 2018 , no payments have been made or required related to this guarantee. |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | FAIR VALUE OF FINANCIAL INSTRUMENTS The Company determined the fair value of its financial instruments based on the fair value hierarchy established in FASB guidance referenced in the Fair Value Measurements and Disclosures Topic which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company has adopted the provisions from the FASB guidance that is referenced in the Fair Value Measurements and Disclosures Topic for non-financial assets and liabilities (such as property and equipment, goodwill, and other intangible assets) that are required to be measured at fair value on a periodic basis. The effect on the Company’s periodic fair value measurements for non-financial assets and liabilities was not material. 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 consolidated balance sheets are categorized as follows: • Level 1: Unadjusted quoted prices for identical assets or liabilities in an active market. • Level 2: Quoted prices in markets that are not active or significant inputs that are observable either directly or indirectly. Level 2 inputs include the following: a. Quoted prices for similar assets or liabilities in active markets; b. Quoted prices for identical or similar assets or liabilities in non-active markets; c. Inputs other than quoted market prices that are observable; and d. Inputs that are derived principally from or corroborated by observable market data through correlation or other means. • Level 3: Prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. They reflect management’s own estimates about the assumptions a market participant would use in pricing the asset or liability. The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of September 30, 2018 : Measurement Category Level 1 Level 2 Level 3 Total (Dollars In Thousands) Assets: Fixed maturity securities - available-for-sale Residential mortgage-backed securities 4 $ — $ 3,406,661 $ — $ 3,406,661 Commercial mortgage-backed securities 4 — 2,214,911 19,467 2,234,378 Other asset-backed securities 4 — 951,874 502,261 1,454,135 U.S. government-related securities 4 946,679 634,300 — 1,580,979 State, municipalities, and political subdivisions 4 — 3,558,073 — 3,558,073 Other government-related securities 4 — 527,646 — 527,646 Corporate securities 4 — 36,231,923 628,284 36,860,207 Redeemable preferred stock 4 69,550 17,589 — 87,139 Total fixed maturity securities - available-for-sale 1,016,229 47,542,977 1,150,012 49,709,218 Fixed maturity securities - trading Residential mortgage-backed securities 3 — 254,037 — 254,037 Commercial mortgage-backed securities 3 — 135,403 — 135,403 Other asset-backed securities 3 — 83,758 28,012 111,770 U.S. government-related securities 3 26,859 31,222 — 58,081 State, municipalities, and political subdivisions 3 — 296,618 — 296,618 Other government-related securities 3 — 43,030 — 43,030 Corporate securities 3 — 1,564,429 5,223 1,569,652 Redeemable preferred stock 3 3,165 — — 3,165 Total fixed maturity securities - trading 30,024 2,408,497 33,235 2,471,756 Total fixed maturity securities 1,046,253 49,951,474 1,183,247 52,180,974 Equity securities 3 559,750 — 63,451 623,201 Other long-term investments (1) 3 & 4 52,728 402,312 180,578 635,618 Short-term investments 3 269,266 97,320 — 366,586 Total investments 1,927,997 50,451,106 1,427,276 53,806,379 Cash 3 161,173 — — 161,173 Assets related to separate accounts 3 Variable annuity 3 13,555,469 — — 13,555,469 Variable universal life 3 1,077,842 — — 1,077,842 Total assets measured at fair value on a recurring basis $ 16,722,481 $ 50,451,106 $ 1,427,276 $ 68,600,863 Liabilities: Annuity account balances (2) 3 $ — $ — $ 78,463 $ 78,463 Other liabilities (1) 3 & 4 8,243 333,156 460,373 801,772 Total liabilities measured at fair value on a recurring basis $ 8,243 $ 333,156 $ 538,836 $ 880,235 (1) Includes certain freestanding and embedded derivatives. (2) Represents liabilities related to fixed indexed annuities. (3) Fair Value through Net Income (4) Fair Value through Other Comprehensive Income The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of December 31, 2017 : Level 1 Level 2 Level 3 Total (Dollars In Thousands) Assets: Fixed maturity securities - available-for-sale Residential mortgage-backed securities $ — $ 2,318,493 $ — $ 2,318,493 Commercial mortgage-backed securities — 1,860,488 — 1,860,488 Other asset-backed securities — 745,184 504,365 1,249,549 U.S. government-related securities 958,775 264,477 — 1,223,252 State, municipalities, and political subdivisions — 1,741,645 — 1,741,645 Other government-related securities — 285,233 — 285,233 Corporate securities — 28,910,645 626,901 29,537,546 Redeemable preferred stock 72,471 18,620 — 91,091 Total fixed maturity securities - available-for-sale 1,031,246 36,144,785 1,131,266 38,307,297 Fixed maturity securities - trading Residential mortgage-backed securities — 259,694 — 259,694 Commercial mortgage-backed securities — 146,804 — 146,804 Other asset-backed securities — 102,875 35,222 138,097 U.S. government-related securities 21,183 6,051 — 27,234 State, municipalities, and political subdivisions — 326,925 — 326,925 Other government-related securities — 63,925 — 63,925 Corporate securities — 1,692,741 5,442 1,698,183 Redeemable preferred stock 3,327 — — 3,327 Total fixed maturity securities - trading 24,510 2,599,015 40,664 2,664,189 Total fixed maturity securities 1,055,756 38,743,800 1,171,930 40,971,486 Equity securities 649,981 — 65,517 715,498 Other long-term investments (1) 51,102 417,969 160,466 629,537 Short-term investments 394,394 132,750 — 527,144 Total investments 2,151,233 39,294,519 1,397,913 42,843,665 Cash 178,855 — — 178,855 Assets related to separate accounts Variable annuity 13,956,071 — — 13,956,071 Variable universal life 1,035,202 — — 1,035,202 Total assets measured at fair value on a recurring basis $ 17,321,361 $ 39,294,519 $ 1,397,913 $ 58,013,793 Liabilities: Annuity account balances (2) $ — $ — $ 83,472 $ 83,472 Other liabilities (1) 5,755 302,656 597,562 905,973 Total liabilities measured at fair value on a recurring basis $ 5,755 $ 302,656 $ 681,034 $ 989,445 (1) Includes certain freestanding and embedded derivatives. (2) Represents liabilities related to fixed indexed annuities. Determination of fair values The valuation methodologies used to determine the fair values of assets and liabilities reflect market participant assumptions and are based on the application of the fair value hierarchy that prioritizes observable market inputs over unobservable inputs. The Company determines the fair values of certain financial assets and financial liabilities based on quoted market prices, where available. The Company also determines certain fair values based on future cash flows discounted at the appropriate current market rate. Fair values reflect adjustments for counterparty credit quality, the Company’s credit standing, liquidity, and where appropriate, risk margins on unobservable parameters. The following is a discussion of the methodologies used to determine fair values for the financial instruments as listed in the above table. The fair value of fixed maturity, short-term, and equity securities is determined by management after considering one of three primary sources of information: third party pricing services, non-binding independent broker quotations, or pricing matrices. Security pricing is applied using a “waterfall” approach whereby publicly available prices are first sought from third party pricing services, the remaining unpriced securities are submitted to independent brokers for non-binding prices, or lastly, securities are priced using a pricing matrix. Typical inputs used by these three pricing methods include, but are not limited to: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research publications. Third party pricing services price approximately 93.3% of the Company’s available-for-sale and trading fixed maturity securities. Based on the typical trading volumes and the lack of quoted market prices for available-for-sale and trading fixed maturities, third party pricing services derive the majority of security prices from observable market inputs such as recent reported trades for identical or similar securities making adjustments through the reporting date based upon available market observable information outlined above. If there are no recent reported trades, the third party pricing services and brokers may use matrix or model processes to develop a security price where future cash flow expectations are developed based upon collateral performance and discounted at an estimated market rate. Certain securities are priced via independent non-binding broker quotations, which are considered to have no significant unobservable inputs. When using non-binding independent broker quotations, the Company obtains one quote per security, typically from the broker from which we purchased the security. A pricing matrix is used to price securities for which the Company is unable to obtain or effectively rely on either a price from a third party pricing service or an independent broker quotation. The pricing matrix used by the Company begins with current spread levels to determine the market price for the security. The credit spreads, assigned by brokers, incorporate the issuer’s credit rating, liquidity discounts, weighted- average of contracted cash flows, risk premium, if warranted, due to the issuer’s industry, and the security’s time to maturity. The Company uses credit ratings provided by nationally recognized rating agencies. For securities that are priced via non-binding independent broker quotations, the Company assesses whether prices received from independent brokers represent a reasonable estimate of fair value through an analysis using internal and external cash flow models developed based on spreads and, when available, market indices. The Company uses a market-based cash flow analysis to validate the reasonableness of prices received from independent brokers. These analytics, which are updated daily, incorporate various metrics (yield curves, credit spreads, prepayment rates, etc.) to determine the valuation of such holdings. As a result of this analysis, if the Company determines there is a more appropriate fair value based upon the analytics, the price received from the independent broker is adjusted accordingly. The Company did not adjust any quotes or prices received from brokers during the nine months ended September 30, 2018 . The Company has analyzed the third party pricing services’ valuation methodologies and related inputs and has also evaluated the various types of securities in its investment portfolio to determine an appropriate fair value hierarchy level based upon trading activity and the observability of market inputs that is in accordance with the Fair Value Measurements and Disclosures Topic of the ASC. Based on this evaluation and investment class analysis, each price was classified into Level 1, 2, or 3. Most prices provided by third party pricing services are classified into Level 2 because the significant inputs used in pricing the securities are market observable and the observable inputs are corroborated by the Company. Since the matrix pricing of certain debt securities includes significant non-observable inputs, they are classified as Level 3. Asset-Backed Securities This category mainly consists of residential mortgage-backed securities, commercial mortgage-backed securities, and other asset-backed securities (collectively referred to as asset-backed securities or “ABS”). As of September 30, 2018 , the Company held $7.0 billion of ABS classified as Level 2. These securities are priced from information provided by a third party pricing service and independent broker quotes. The third party pricing services and brokers mainly value securities using both a market and income approach to valuation. As part of this valuation process they consider the following characteristics of the item being measured to be relevant inputs: 1) weighted-average coupon rate, 2) weighted-average years to maturity, 3) types of underlying assets, 4) weighted-average coupon rate of the underlying assets, 5) weighted-average years to maturity of the underlying assets, 6) seniority level of the tranches owned, and 7) credit ratings of the securities. After reviewing these characteristics of the ABS, the third party pricing service and brokers use certain inputs to determine the value of the security. For ABS classified as Level 2, the valuation would consist of predominantly market observable inputs such as, but not limited to: 1) monthly principal and interest payments on the underlying assets, 2) average life of the security, 3) prepayment speeds, 4) credit spreads, 5) treasury and swap yield curves, and 6) discount margin. The Company reviews the methodologies and valuation techniques (including the ability to observe inputs) in assessing the information received from external pricing services and in consideration of the fair value presentation. As of September 30, 2018 , the Company held $549.7 million of Level 3 ABS, which included $521.7 million of other asset-backed securities classified as available-for-sale and $28.0 million of other asset-backed securities classified as trading. These securities are predominantly ARS whose underlying collateral is at least 97% guaranteed by the FFELP. The Company prices its ARS using an income approach valuation model. As part of the valuation process the Company reviews the following characteristics of the ARS in determining the relevant inputs: 1) weighted-average coupon rate, 2) weighted-average years to maturity, 3) types of underlying assets, 4) weighted-average coupon rate of the underlying assets, 5) weighted-average years to maturity of the underlying assets, 6) seniority level of the tranches owned, 7) credit ratings of the securities, 8) liquidity premium, and 9) paydown rate. In periods where market activity increases and there are transactions at a price that is not the result of a distressed or forced sale we consider those prices as part of our valuation. If the market activity during a period is solely the result of the issuer redeeming positions we consider those transactions in our valuation, but still consider them to be level three measurements due to the nature of the transaction. Corporate Securities, U.S. Government-Related Securities, States, Municipals, and Political Subdivisions, and Other Government-Related Securities As of September 30, 2018 , the Company classified approximately $42.9 billion of corporate securities, U.S. government-related securities, states, municipals, and political subdivisions, and other government-related securities as Level 2. The fair value of the Level 2 securities is predominantly priced by broker quotes and a third party pricing service. The Company has reviewed the valuation techniques of the brokers and third party pricing service and has determined that such techniques used Level 2 market observable inputs. The following characteristics of the securities are considered to be the primary relevant inputs to the valuation: 1) weighted- average coupon rate, 2) weighted-average years to maturity, 3) seniority, and 4) credit ratings. The Company reviews the methodologies and valuation techniques (including the ability to observe inputs) in assessing the information received from external pricing services and in consideration of the fair value presentation. The brokers and third party pricing service utilize valuation models that consist of a hybrid income and market approach to valuation. The pricing models utilize the following inputs: 1) principal and interest payments, 2) treasury yield curve, 3) credit spreads from new issue and secondary trading markets, 4) dealer quotes with adjustments for issues with early redemption features, 5) liquidity premiums present on private placements, and 6) discount margins from dealers in the new issue market. As of September 30, 2018 , the Company classified approximately $633.5 million of securities as Level 3 valuations. Level 3 securities primarily represent investments in illiquid bonds for which no price is readily available. To determine a price, the Company uses a discounted cash flow model with both observable and unobservable inputs. These inputs are entered into an industry standard pricing model to determine the final price of the security. These inputs include: 1) principal and interest payments, 2) coupon rate, 3) sector and issuer level spread over treasury, 4) underlying collateral, 5) credit ratings, 6) maturity, 7) embedded options, 8) recent new issuance, 9) comparative bond analysis, and 10) an illiquidity premium. Equities As of September 30, 2018 , the Company held approximately $63.5 million of equity securities classified as Level 2 and Level 3. Of this total, $63.4 million represents Federal Home Loan Bank (“FHLB”) stock. The Company believes that the cost of the FHLB stock approximates fair value. Other Long-Term Investments and Other Liabilities Other long-term investments and other liabilities consist entirely of free-standing and embedded derivative financial instruments. Refer to Note 7, Derivative Financial Instruments for additional information related to derivatives. Derivative financial instruments are valued using exchange prices, independent broker quotations, or pricing valuation models, which utilize market data inputs. Excluding embedded derivatives, as of September 30, 2018 , 84.0% of derivatives based upon notional values were priced using exchange prices or independent broker quotations. The remaining derivatives were priced by pricing valuation models, which utilize observable market data inputs to the extent they are available. Inputs used to value derivatives include, but are not limited to, interest swap rates, credit spreads, interest rate and equity market volatility indices, equity index levels, and treasury rates. The Company performs monthly analysis on derivative valuations that includes both quantitative and qualitative analyses. Derivative instruments classified as Level 1 generally include futures and options, which are traded on active exchange markets. Derivative instruments classified as Level 2 primarily include swaps, options, and swaptions, which are traded over-the-counter. Level 2 also includes certain centrally cleared derivatives. These derivative valuations are determined using independent broker quotations, which are corroborated with observable market inputs. Derivative instruments classified as Level 3 were embedded derivatives and include at least one significant non-observable input. A derivative instrument containing Level 1 and Level 2 inputs will be classified as a Level 3 financial instrument in its entirety if it has at least one significant Level 3 input. The Company utilizes derivative instruments to manage the risk associated with certain assets and liabilities. However, the derivative instruments may not be classified within the same fair value hierarchy level as the associated assets and liabilities. Therefore, the changes in fair value on derivatives reported in Level 3 may not reflect the offsetting impact of the changes in fair value of the associated assets and liabilities. The embedded derivatives are carried at fair value in “other long-term investments” and “other liabilities” on the Company’s consolidated condensed balance sheet. The changes in fair value are recorded in earnings as “Realized investment gains (losses)-Derivative financial instruments”. Refer to Note 7, Derivative Financial Instruments for more information related to each embedded derivatives gains and losses. The fair value of the guaranteed living withdrawal benefits (“GLWB”) embedded derivative is derived through the income method of valuation using a valuation model that projects future cash flows using multiple risk neutral stochastic equity scenarios and policyholder behavior assumptions. The risk neutral scenarios are generated using the current swap curve and projected equity volatilities and correlations. The projected equity volatilities are based on a blend of historical volatility and near-term equity market implied volatilities. The equity correlations are based on historical price observations. For policyholder behavior assumptions, expected lapse and utilization assumptions are used and updated for actual experience, as necessary. The Company assumes age-based mortality from the Ruark 2015 ALB table with attained age factors varying from 91.1% - 106.6% . The present value of the cash flows is determined using the discount rate curve, which is based upon LIBOR plus a credit spread (to represent the Company’s non-performance risk). As a result of using significant unobservable inputs, the GLWB embedded derivative is categorized as Level 3. Policyholder assumptions are reviewed on an annual basis. The balance of the FIA embedded derivative is impacted by policyholder cash flows associated with the FIA product that are allocated to the embedded derivative in addition to changes in the fair value of the embedded derivative during the reporting period. The fair value of the FIA embedded derivative is derived through the income method of valuation using a valuation model that projects future cash flows using current index values and volatility, the hedge budget used to price the product, and policyholder assumptions (both elective and non-elective). For policyholder behavior assumptions, expected lapse and withdrawal assumptions are used and updated for actual experience, as necessary. The Company assumes age-based mortality from the 2015 Ruark ALB mortality table modified with company experience, with attained age factors varying from 87% - 100% . The present value of the cash flows is determined using the discount rate curve, which is based upon LIBOR up to one year and constant maturity treasury rates plus a credit spread (to represent the Company’s non-performance risk) thereafter. Policyholder assumptions are reviewed on an annual basis. As a result of using significant unobservable inputs, the FIA embedded derivative is categorized as Level 3. The balance of the indexed universal life (“IUL”) embedded derivative is impacted by policyholder cash flows associated with the IUL product that are allocated to the embedded derivative in addition to changes in the fair value of the embedded derivative during the reporting period. The fair value of the IUL embedded derivative is derived through the income method of valuation using a valuation model that projects future cash flows using current index values and volatility, the hedge budget used to price the product, and policyholder assumptions (both elective and non-elective). For policyholder behavior assumptions, expected lapse and withdrawal assumptions are used and updated for actual experience, as necessary. The Company assumes age-based mortality from the SOA 2015 VBT Primary Tables modified with company experience, with attained age factors varying from 37% - 577% . The present value of the cash flows is determined using the discount rate curve, which is based upon LIBOR up to one year and constant maturity treasury rates plus a credit spread (to represent the Company’s non-performance risk) thereafter. Policyholder assumptions are reviewed on an annual basis. As a result of using significant unobservable inputs, the IUL embedded derivative is categorized as Level 3. The Company has assumed and ceded certain blocks of policies under modified coinsurance agreements in which the investment results of the underlying portfolios inure directly to the reinsurers. As a result, these agreements contain embedded derivatives that are reported at fair value. Changes in their fair value are reported in earnings. The investments supporting these agreements are designated as “trading securities”; therefore changes in their fair value are also reported in earnings. As of September 30, 2018 , the fair value of the embedded derivative is based upon the relationship between the statutory policy liabilities (net of policy loans) of $2.3 billion and the statutory unrealized gain (loss) of the securities of $60.0 million . As a result, changes in the fair value of the embedded derivatives are largely offset by the changes in fair value of the related investments and each are reported in earnings. The fair value of the embedded derivative is considered a Level 3 valuation due to the unobservable nature of the policy liabilities. The Company and certain of its subsidiaries have entered into interest support, yearly renewable term (“YRT”) premium support, and portfolio maintenance agreements with PLC. These agreements meet the definition of a derivative and are accounted for at fair value and are considered Level 3 valuations. The fair value of these derivatives as of September 30, 2018 was $90.9 million and is included in Other long-term investments. For information regarding realized gains on these derivatives please refer to Note 7, Derivative Financial Instruments . The Interest Support Agreement provides that PLC will make payments to Golden Gate II Captive Insurance Company (“Golden Gate II”) if actual investment income on certain of Golden Gate II’s asset portfolios falls below a calculated investment income amount as defined in the Interest Support Agreement. The calculated investment income amount is a level of investment income deemed to be sufficient to support certain of Golden Gate II’s obligations under a reinsurance agreement with the Company, dated July 1, 2007. The derivative is valued using an internal valuation model that assumes a conservative projection of investment income under an adverse interest rate scenario and the probability that the expectation falls below the calculated investment income amount. This derivative had a fair value of $38.5 million as of September 30, 2018 . During the three months ended September 30, 2018, Golden Gate II received no payments under this agreement, and during the nine months ended September 30, 2018, Golden Gate II received $0.6 million in payments under this agreement. As of September 30, 2018, certain interest support agreement obligations to Golden Gate II of approximately $4.9 million have been collateralized by PLC. Re-evaluation and, if necessary, adjustments of any support agreement collateralization amounts occur annually during the first quarter pursuant to the terms of the support agreement. The YRT premium support agreements provide that PLC will make payments to Golden Gate Captive Insurance Company (“Golden Gate”) and Golden Gate II in the event that YRT premium rates increase. The derivatives are valued using an internal valuation model. The valuation model is a probability weighted discounted cash flow model. The value is primarily a function of the likelihood and severity of future YRT premium increases. The fair value of these derivatives as of September 30, 2018 was $49.8 million . As of September 30, 2018 , no payments have been made under these agreements. The portfolio maintenance agreements provide that PLC will make payments to Golden Gate, Golden Gate V, and West Coast Life Insurance Company (“WCL”) in the event of other-than-temporary impairments on investments that exceed defined thresholds. The derivatives are valued using an internal discounted cash flow model. The significant unobservable inputs are the projected probability and severity of credit losses used to project future cash flows on the investment portfolios. The fair value of the portfolio maintenance agreements as of September 30, 2018 , was $2.7 million . As of September 30, 2018 , no payments have been made under these agreements. The Funds Withheld derivative results from a reinsurance agreement with Shades Creek where the economic performance of certain hedging instruments held by the Company is ceded to Shades Creek. The value of the Funds Withheld derivative is directly tied to the value of the hedging instruments held in the funds withheld account. The hedging instruments predominantly consist of derivative instruments the fair values of which are classified as a Level 2 measurement; as such, the fair value of the Funds Withheld derivative has been classified as a Level 2 measurement. The fair value of the Funds Withheld derivative as of September 30, 2018 , was a liability of $60.4 million . Annuity Account Balances The Company records a certain legacy block of FIA reserves at fair value. Based on the characteristics of these reserves, the Company believes that the fund value approximates fair value. The fair value measurement of these reserves is considered a Level 3 valuation due to the unobservable nature of the fund values. The Level 3 fair value as of September 30, 2018 is $78.5 million . Separate Accounts Separate account assets are invested in open-ended mutual funds and are included in Level 1. Valuation of Level 3 Financial Instruments The following table presents the valuation method for material financial instruments included in Level 3, as well as the unobservable inputs used in the valuation of those financial instruments: Fair Value Valuation Technique Unobservable Input Range (Weighted Average) (Dollars In Thousands) Assets: Other asset-backed securities $ 502,020 Liquidation Liquidation value $90 - $97 ($94.92) Discounted cash flow Liquidity premium 0.0% - 1.40% (0.62%) Paydown rate 11.09% - 13.15% (12.38%) Corporate securities 621,392 Discounted cash flow Spread over treasury 0.90% - 4.23% (1.51%) Embedded derivatives - GLWB (2) $ 40,048 Actuarial cash flow model Mortality 87% to 100% of Lapse Ruark Predictive Model Utilization 99%. 10% of policies have a one-time over-utilization of 400% Nonperformance risk 0.13% - 0.88% Liabilities: (1) Embedded derivative - FIA 256,912 Actuarial cash flow model Expenses $145 per policy Withdrawal rate 1.5% prior to age 70, 100% of the RMD for ages 70+ Mortality 1994 MGDB table with company experience Lapse 1.0% - 30.0%, depending on duration/surrender charge period Nonperformance risk 0.13% - 0.88% Embedded derivative - IUL 95,739 Actuarial cash flow model Mortality 37% - 577% of 2015 VBT Primary Tables Lapse 0.5% - 0.10%, depending on duration/distribution channel and smoking class Nonperformance risk 0.13% - 0.88% (1) Excludes modified coinsurance arrangements. (2) The fair value for the GLWB embedded derivative is presented as a net asset. The chart above excludes Level 3 financial instruments that are valued using broker quotes and for which book value approximates fair value. The Company has considered all reasonably available quantitative inputs as of September 30, 2018 , but the valuation techniques and inputs used by some brokers in pricing certain financial instruments are not shared with the Company. This resulted in $59.9 million of financial instruments being classified as Level 3 as of September 30, 2018 . Of the $59.9 million , $47.7 million are other asset-backed securities, and $12.1 million are corporate securities. In certain cases the Company has determined that book value materially approximates fair value. As of September 30, 2018 , the Company held $63.4 million of financial instruments where book value approximates fair value which were predominantly FHLB stock. The following table presents the valuation method for material financial instruments included in Level 3, as well as the unobservable inputs used in the valuation of those financial instruments: Fair Value Valuation Technique Unobservable Input Range (Weighted Average) (Dollars In Thousands) Assets: Other asset-backed securities $ 504,228 Liquidation Liquidation value $90 - $97 ($94.91) Dis |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE FINANCIAL INSTRUMENTS | DERIVATIVE FINANCIAL INSTRUMENTS Types of Derivative Instruments and Derivative Strategies The Company utilizes a risk management strategy that incorporates the use of derivative financial instruments to reduce exposure to certain risks, including but not limited to, interest rate risk, currency exchange risk, volatility risk, and equity market risk. These strategies are developed through the Company’s analysis of data from financial simulation models and other internal and industry sources and are then incorporated into the Company’s risk management program. Derivative instruments expose the Company to credit and market risk and could result in material changes from period to period. The Company attempts to minimize its credit in connection with its overall asset/liability management programs and risk management strategies. In addition, all derivative programs are monitored by our risk management department. Derivatives Related to Interest Rate Risk Management Derivative instruments that are used as part of the Company’s interest rate risk management strategy include interest rate swaps, interest rate futures, interest rate caps, and interest rate swaptions. Derivatives Related to Foreign Currency Exchange Risk Management Derivative instruments that are used as part of the Company’s foreign currency exchange risk management strategy include foreign currency swaps, foreign currency futures, foreign equity futures, and foreign equity options. Derivatives Related to Risk Mitigation of Certain Annuity Contracts The Company may use the following types of derivative contracts to mitigate its exposure to certain guaranteed benefits related to VA contracts, fixed indexed annuities, and indexed universal life contracts: • Foreign Currency Futures • Variance Swaps • Interest Rate Futures • Equity Options • Equity Futures • Credit Derivatives • Interest Rate Swaps • Interest Rate Swaptions • Volatility Futures • Volatility Options • Funds Withheld Agreement • Total Return Swaps Other Derivatives The Company and certain of its subsidiaries have derivatives with PLC. These derivatives consist of an interest support agreement, YRT premium support agreements, and portfolio maintenance agreements with PLC. The Company has a funds withheld account that consists of various derivative instruments held by us that is used to hedge the GLWB and GMDB riders. The economic performance of derivatives in the funds withheld account is ceded to Shades Creek. The funds withheld account is accounted for as a derivative financial instrument. Accounting for Derivative Instruments The Company records its derivative financial instruments in the consolidated balance sheet in “other long-term investments” and “other liabilities” in accordance with GAAP, which requires that all derivative instruments be recognized in the balance sheet at fair value. The change in the fair value of derivative financial instruments is reported either in the statement of income or in other comprehensive income (loss), depending upon whether it qualified for and also has been properly identified as being part of a hedging relationship, and also on the type of hedging relationship that exists. For a derivative financial instrument to be accounted for as an accounting hedge, it must be identified and documented as such on the date of designation. For cash flow hedges, the effective portion of their realized gain or loss is reported as a component of other comprehensive income and reclassified into earnings in the same period during which the hedged item impacts earnings. Any remaining gain or loss, the ineffective portion, is recognized in current earnings. For fair value hedge derivatives, their gain or loss as well as the offsetting loss or gain attributable to the hedged risk of the hedged item is recognized in current earnings. Effectiveness of the Company’s hedge relationships is assessed on a quarterly basis. The Company reports changes in fair values of derivatives that are not part of a qualifying hedge relationship through earnings in the period of change. Changes in the fair value of derivatives that are recognized in current earnings are reported in “Realized investment gains (losses)-Derivative financial instruments.” Derivative Instruments Designated and Qualifying as Hedging Instruments Cash-Flow Hedges • To hedge a fixed rate note denominated in a foreign currency, the Company entered into a fixed-to-fixed foreign currency swap in order to hedge the foreign currency exchange risk associated with the note. The cash flows received on the swap are identical to the cash flow paid on the note. • To hedge a floating rate note, the Company entered into an interest rate swap to exchange the floating rate on the note for a fixed rate in order to hedge the interest rate risk associated with the note. The cash flows received on the swap are identical to the cash flow variability paid on the note. Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments The Company uses various other derivative instruments for risk management purposes that do not qualify for hedge accounting treatment. Changes in the fair value of these derivatives are recognized in earnings during the period of change. Derivatives Related to Variable Annuity Contracts • The Company uses equity futures, equity options, total return swaps, interest rate futures, interest rate swaps, interest rate swaptions, currency futures, volatility futures, volatility options, and variance swaps to mitigate the risk related to certain guaranteed minimum benefits, including GLWB, within its VA products. In general, the cost of such benefits varies with the level of equity and interest rate markets, foreign currency levels, and overall volatility. • The Company markets certain VA products with a GLWB rider. The GLWB component is considered an embedded derivative, not considered to be clearly and closely related to the host contract. • The Company has a funds withheld account that consists of various derivative instruments held by the Company that are used to hedge the GLWB and GMDB riders. The economic performance of derivatives in the funds withheld account is ceded to Shades Creek. The funds withheld account is accounted for as a derivative financial instrument. Derivatives Related to Fixed Annuity Contracts • The Company uses equity futures and options to mitigate the risk within its fixed indexed annuity products. In general, the cost of such benefits varies with the level of equity markets and overall volatility. • The Company markets certain fixed indexed annuity products. The FIA component is considered an embedded derivative as it is, not considered to be clearly and closely related to the host contract. Derivatives Related to Indexed Universal Life Contracts • The Company uses equity, futures, and options to mitigate the risk within its indexed universal life products. In general, the cost of such benefits varies with the level of equity markets. • The Company markets certain IUL products. The IUL component is considered an embedded derivative as it is not considered to be clearly and closely related to the host contract. Other Derivatives • The Company and certain of its subsidiaries have an interest support agreement, two YRT premium support agreements, and three portfolio maintenance agreements with PLC. The Company entered into three separate portfolio maintenance agreements, two in October 2012 and one in January 2016. • The Company uses various swaps and other types of derivatives to manage risk related to other exposures. • The Company is involved in various modified coinsurance and funds withheld arrangements which contain embedded derivatives. Changes in their fair value are recorded in current period earnings. The investment portfolios that support the related modified coinsurance reserves and funds withheld arrangements had fair value changes which substantially offset the gains or losses on these embedded derivatives. The following table sets forth realized investments gains and losses for the periods shown: Realized investment gains (losses) - derivative financial instruments For The For The 2018 2017 2018 2017 (Dollars In Thousands) Derivatives related to VA contracts: Interest rate futures $ 2,111 $ 549 $ (13,229 ) $ 16,746 Equity futures (5,733 ) (25,959 ) (23,025 ) (75,389 ) Currency futures 3,410 (6,092 ) 7,890 (22,366 ) Equity options (21,206 ) (23,307 ) (47,406 ) (76,376 ) Interest rate swaptions — (292 ) (14 ) (2,423 ) Interest rate swaps (41,288 ) 5,342 (131,147 ) 31,331 Total return swaps (32,343 ) (8,057 ) (35,908 ) (9,675 ) Embedded derivative - GLWB 22,931 485 55,595 (13,306 ) Funds withheld derivative 37,444 35,821 68,341 103,746 Total derivatives related to VA contracts (34,674 ) (21,510 ) (118,903 ) (47,712 ) Derivatives related to FIA contracts: Embedded derivative (14,360 ) (18,606 ) (7,957 ) (40,351 ) Equity futures (388 ) 66 (716 ) 161 Equity options 18,474 11,242 21,203 29,511 Total derivatives related to FIA contracts 3,726 (7,298 ) 12,530 (10,679 ) Derivatives related to IUL contracts: Embedded derivative (9,535 ) (297 ) (877 ) (10,958 ) Equity futures (1 ) 58 135 (878 ) Equity options 4,928 1,975 5,764 6,437 Total derivatives related to IUL contracts (4,608 ) 1,736 5,022 (5,399 ) Embedded derivative - Modco reinsurance treaties 10,811 (19,746 ) 138,652 (90,314 ) Derivatives with PLC (1) (1,913 ) 52,077 (66 ) 34,671 Other derivatives (52 ) 43 (59 ) 41 Total realized gains (losses) - derivatives $ (26,710 ) $ 5,302 $ 37,176 $ (119,392 ) (1) These derivatives include the Interest, YRT premium support, and portfolio maintenance agreements between certain of the Company’s subsidiaries and PLC. The following table presents the components of the gain or loss on derivatives that qualify as a cash flow hedging relationship. Gain (Loss) on Derivatives in Cash Flow Hedging Relationship Amount of Gains (Losses) Deferred in Accumulated Other Comprehensive Income (Loss) on Derivatives Amount and Location of Gains (Losses) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (Loss) Amount and Location of (Losses) Recognized in Income (Loss) on Derivatives (Effective Portion) (Effective Portion) (Ineffective Portion) Benefits and settlement expenses Realized investment gains (losses) (Dollars In Thousands) For The Three Months Ended September 30, 2018 Foreign currency swaps $ 190 $ (155 ) $ — Interest rate swaps 101 (326 ) — Total $ 291 $ (481 ) $ — For The Nine Months Ended September 30, 2018 Foreign currency swaps $ 3,772 $ (473 ) $ — Interest rate swaps 101 (326 ) — Total $ 3,873 $ (799 ) $ — For The Three Months Ended September 30, 2017 Foreign currency swaps $ 1,273 $ (38 ) $ — Total $ 1,273 $ (38 ) $ — For The Nine Months Ended September 30, 2017 Foreign currency swaps $ 55 $ (396 ) $ — Total $ 55 $ (396 ) $ — Based on expected cash flows of the underlying hedged items, the Company expects to reclassify $0.3 million out of accumulated other comprehensive income into earnings during the next twelve months. The table below presents information about the nature and accounting treatment of the Company’s primary derivative financial instruments and the location in and effect on the consolidated condensed financial statements for the periods presented below: As of September 30, 2018 December 31, 2017 Notional Amount Fair Value Notional Amount Fair Value (Dollars In Thousands) Other long-term investments Cash flow hedges: Interest rate swaps $ 350,000 $ — $ — $ — Foreign currency swaps 117,178 10,902 117,178 6,016 Derivatives not designated as hedging instruments: Interest rate swaps 565,000 8,402 1,265,000 55,411 Total return swaps 482,523 3,676 190,938 135 Derivatives with PLC (1) 2,863,575 90,885 2,810,469 91,578 Embedded derivative - Modco reinsurance treaties 322,308 2,650 64,472 1,009 Embedded derivative - GLWB 2,692,724 87,043 2,116,935 67,879 Interest rate futures 875,566 8,329 1,071,870 3,178 Equity futures 205,872 2,387 62,266 154 Currency futures 135,112 1,096 1,117 2 Equity options 6,026,348 420,107 4,436,467 403,961 Interest rate swaptions — — 225,000 14 Other 157 141 157 200 $ 14,636,363 $ 635,618 $ 12,361,869 $ 629,537 Other liabilities Derivatives not designated as hedging instruments: Interest rate swaps $ 1,547,500 $ 26,321 $ 597,500 $ 2,960 Total return swaps — — 243,388 318 Embedded derivative - Modco reinsurance treaties 2,082,638 60,683 2,390,539 215,247 Funds withheld derivative 1,813,454 60,432 1,502,726 61,729 Embedded derivative - GLWB 1,385,123 46,995 1,939,320 83,427 Embedded derivative - FIA 2,459,246 256,912 1,951,650 218,676 Embedded derivative - IUL 219,226 95,739 168,349 80,212 Interest rate futures 348,749 7,122 230,404 917 Equity futures 77,916 1,043 318,795 2,593 Currency futures 79,861 15 255,248 2,087 Equity options 4,174,072 246,466 3,112,812 237,807 Other 341 44 — — $ 14,188,126 $ 801,772 $ 12,710,731 $ 905,973 (1) These derivatives include the Interest, YRT premium support, and portfolio maintenance agreements between certain of the Company’s subsidiaries and PLC. |
OFFSETTING OF ASSETS AND LIABIL
OFFSETTING OF ASSETS AND LIABILITIES | 9 Months Ended |
Sep. 30, 2018 | |
Offsetting [Abstract] | |
OFFSETTING OF ASSETS AND LIABILITIES | OFFSETTING OF ASSETS AND LIABILITIES Certain of the Company’s derivative instruments are subject to enforceable master netting arrangements that provide for the net settlement of all derivative contracts between the Company and a counterparty in the event of default or upon the occurrence of certain termination events. Collateral support agreements associated with each master netting arrangement provide that the Company will receive or pledge financial collateral in the event either minimum thresholds, or in certain cases ratings levels, have been reached. Additionally, certain of the Company’s repurchase agreements provide for net settlement on termination of the agreement. Refer to Note 11, Debt and Other Obligations for details of the Company’s repurchase agreement programs. Collateral received includes both cash and non-cash collateral. Cash collateral received by the Company is recorded on the consolidated condensed balance sheet as “cash”, with a corresponding amount recorded in “other liabilities” to represent the Company’s obligation to return the collateral. Non-cash collateral received by the Company is not recognized on the consolidated condensed balance sheet unless the company exercises its right to sell or re-pledge the underlying asset. As of September 30, 2018, the fair value of non-cash collateral received was $8.2 million . As of December 31, 2017, the Company had no t received any non-cash collateral. The tables below present the derivative instruments by assets and liabilities for the Company as of September 30, 2018 . Gross Amounts of Recognized Assets Gross Amounts Offset in the Statement of Financial Position Net Amounts of Assets Presented in the Statement of Financial Position Gross Amounts Not Offset in the Statement of Financial Position Financial Instruments Collateral Received Net Amount (Dollars In Thousands) Offsetting of Assets Derivatives: Free-Standing derivatives $ 454,899 $ — $ 454,899 $ 270,878 $ 68,809 $ 115,212 Total derivatives, subject to a master netting arrangement or similar arrangement 454,899 — 454,899 270,878 68,809 115,212 Derivatives not subject to a master netting arrangement or similar arrangement Embedded derivative - Modco reinsurance treaties 2,650 — 2,650 — — 2,650 Embedded derivative - GLWB 87,043 — 87,043 — — 87,043 Derivatives with PLC 90,885 — 90,885 — — 90,885 Other 141 — 141 — — 141 Total derivatives, not subject to a master netting arrangement or similar arrangement 180,719 — 180,719 — — 180,719 Total derivatives 635,618 — 635,618 270,878 68,809 295,931 Total Assets $ 635,618 $ — $ 635,618 $ 270,878 $ 68,809 $ 295,931 Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Statement of Financial Position Net Amounts of Liabilities Presented in the Statement of Financial Position Gross Amounts Not Offset in the Statement of Financial Position Financial Instruments Collateral Posted Net Amount (Dollars In Thousands) Offsetting of Liabilities Derivatives: Free-Standing derivatives $ 280,967 $ — $ 280,967 $ 270,878 $ 10,089 $ — Total derivatives, subject to a master netting arrangement or similar arrangement 280,967 — 280,967 270,878 10,089 — Derivatives, not subject to a master netting arrangement or similar arrangement Embedded derivative - Modco reinsurance treaties 60,683 — 60,683 — — 60,683 Funds withheld derivative 60,432 — 60,432 — — 60,432 Embedded derivative - GLWB 46,995 — 46,995 — — 46,995 Embedded derivative - FIA 256,912 — 256,912 — — 256,912 Embedded derivative - IUL 95,739 — 95,739 — — 95,739 Other 44 — 44 — — 44 Total derivatives, not subject to a master netting arrangement or similar arrangement 520,805 — 520,805 — — 520,805 Total derivatives 801,772 — 801,772 270,878 10,089 520,805 Repurchase agreements (1) 417,094 — 417,094 — — 417,094 Total Liabilities $ 1,218,866 $ — $ 1,218,866 $ 270,878 $ 10,089 $ 937,899 (1) Borrowings under repurchase agreements are for a term less than 90 days. The tables below present the derivative instruments by assets and liabilities for the Company as of December 31, 2017 . Gross Amounts of Recognized Assets Gross Amounts Offset in the Statement of Financial Position Net Amounts of Assets Presented in the Statement of Financial Position Gross Amounts Not Offset in the Statement of Financial Position Financial Instruments Collateral Received Net Amount (Dollars In Thousands) Offsetting of Assets Derivatives: Free-Standing derivatives $ 468,871 $ — $ 468,871 $ 242,105 $ 108,830 $ 117,936 Total derivatives, subject to a master netting arrangement or similar arrangement 468,871 — 468,871 242,105 108,830 117,936 Derivatives not subject to a master netting arrangement or similar arrangement Embedded derivative - Modco reinsurance treaties 1,009 — 1,009 — — 1,009 Embedded derivative - GLWB 67,879 — 67,879 — — 67,879 Derivatives with PLC 91,578 — 91,578 — — 91,578 Other 200 — 200 — — 200 Total derivatives, not subject to a master netting arrangement or similar arrangement 160,666 — 160,666 — — 160,666 Total derivatives 629,537 — 629,537 242,105 108,830 278,602 Total Assets $ 629,537 $ — $ 629,537 $ 242,105 $ 108,830 $ 278,602 Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Statement of Financial Position Net Amounts of Liabilities Presented in the Statement of Financial Position Gross Amounts Not Offset in the Statement of Financial Position Financial Instruments Collateral Posted Net Amount (Dollars In Thousands) Offsetting of Liabilities Derivatives: Free-Standing derivatives $ 246,682 $ — $ 246,682 $ 242,105 $ 4,577 $ — Total derivatives, subject to a master netting arrangement or similar arrangement 246,682 — 246,682 242,105 4,577 — Derivatives not subject to a master netting arrangement or similar arrangement Embedded derivative - Modco reinsurance treaties 215,247 — 215,247 — — 215,247 Funds withheld derivative 61,729 — 61,729 — — 61,729 Embedded derivative - GLWB 83,427 — 83,427 — — 83,427 Embedded derivative - FIA 218,676 — 218,676 — — 218,676 Embedded derivative - IUL 80,212 — 80,212 — — 80,212 Total derivatives, not subject to a master netting arrangement or similar arrangement 659,291 — 659,291 — — 659,291 Total derivatives 905,973 — 905,973 242,105 4,577 659,291 Repurchase agreements (1) 885,000 — 885,000 — — 885,000 Total Liabilities $ 1,790,973 $ — $ 1,790,973 $ 242,105 $ 4,577 $ 1,544,291 (1) Borrowings under repurchase agreements are for a term less than 90 days. |
MORTGAGE LOANS
MORTGAGE LOANS | 9 Months Ended |
Sep. 30, 2018 | |
MORTGAGE LOANS | |
MORTGAGE LOANS | MORTGAGE LOANS Mortgage Loans The Company invests a portion of its investment portfolio in commercial mortgage loans. As of September 30, 2018 , the Company’s mortgage loan holdings were appr oximately $7.6 billion . The Company has specialized in making loans on credit-oriented commercial properties, credit-anchored strip shopping centers, senior living facilities, and apartments. The Company’s underwriting procedures relative to its commercial loan portfolio are based, in the Company’s view, on a conservative and disciplined approach. The Company concentrates on a small number of commercial real estate asset types associated with the necessities of life (retail, multi-family, senior living, professional office buildings, and warehouses). The Company believes that these asset types tend to weather economic downturns better than other commercial asset classes in which it has chosen not to participate. The Company believes this disciplined approach has helped to maintain a relatively low delinquency and foreclosure rate throughout its history. The majority of the Company’s mortgage loans portfolio was underwritten by the Company. From time to time, the Company may acquire loans in conjunction with an acquisition. The Company’s commercial mortgage loans are stated at unpaid principal balance, adjusted for any unamortized premium or discount, and net of valuation allowances. Interest income is accrued on the principal amount of the loan based on the loan’s contractual interest rate. Amortization of premiums and discounts is recorded using the effective yield method. Interest income, amortization of premiums and discounts and prepayment fees are reported in net investment income. Certain of the mortgage loans have call options that occur within the next 11 years. However, if interest rates were to significantly increase, the Company may be unable to exercise the call options on its existing mortgage loans commensurate with the significantly increased market rates. As of September 30, 2018 , assuming the loans are called at their next call dates, approximately $80.7 million of principal would become due for the remainder of 2018 , $933.4 million in 2019 through 2023 , $91.8 million in 2024 through 2028 , and $1.9 million thereafter. The Company offers a type of commercial mortgage loan under which the Company will permit a loan-to-value ratio of up to 85% in exchange for a participating interest in the cash flows from the underlying real estate. As of September 30, 2018 and December 31, 2017 , approximately $757.0 million and $669.3 million , respectively, of the Company’s total mortgage loans principal balance have this participation feature. Cash flows received as a result of this participation feature are recorded as interest income. During the three and nine months ended September 30, 2018 and 2017 , the Company recognized $9.5 million , $22.0 million , $14.2 million , and $25.7 million , respectively, of participating mortgage loan income. As of September 30, 2018 , $3.0 million of the Company’s invested assets consisted of nonperforming mortgage loans, restructured mortgage loans, or mortgage loans that were foreclosed and were converted to real estate properties. For all mortgage loans, the impact of troubled debt restructurings is generally reflected in our investment balance and in the allowance for mortgage loan credit losses. During the nine months ended September 30, 2018, the Company recognized one troubled debt restructuring as a result of the Company granting a concession to a borrower which included loan terms unavailable from other lenders. This concession was the result of an agreement between the creditor and the debtor, and the Company did not identify any loans whose principal was permanently impaired. The Company’s mortgage loan portfolio consists of two categories of loans: 1) those not subject to a pooling and servicing agreement and 2) those subject to a contractual pooling and servicing agreement. As of September 30, 2018 , the Company held $3.0 million of mortgage loans not subject to a pooling and servicing agreement that were nonperforming mortgage loans, restructured, or mortgage loans that were foreclosed and were converted to real estate properties. The Company did no t foreclose on any nonperforming loans not subject to a pooling and servicing agreement during the nine months ended September 30, 2018 . As of September 30, 2018 , none of the loans subject to a pooling and servicing agreement were nonperforming or restructured. The Company did no t foreclose on any nonperforming loans subject to a pooling and servicing agreement during the nine months ended September 30, 2018 . As of September 30, 2018 , the Company had an allowance for mortgage loan credit losses of $1.5 million and as of December 31, 2017 , there was no allowance for mortgage loan credit losses. Due to the Company’s loss experience and nature of the loan portfolio, the Company believes that a collectively evaluated allowance would be inappropriate. The Company believes an allowance calculated through an analysis of specific loans that are believed to have a higher risk of credit impairment provides a more accurate presentation of expected losses in the portfolio and is consistent with the applicable guidance for loan impairments in ASC Subtopic 310. Since the Company uses the specific identification method for calculating the allowance, it is necessary to review the economic situation of each borrower to determine those that have higher risk of credit impairment. The Company has a team of professionals that monitors borrower conditions such as payment practices, borrower credit, operating performance, and property conditions, as well as ensuring the timely payment of property taxes and insurance. Through this monitoring process, the Company assesses the risk of each loan. When issues are identified, the severity of the issues are assessed and reviewed for possible credit impairment. If a loss is probable, an expected loss calculation is performed and an allowance is established for that loan based on the expected loss. The expected loss is calculated as the excess carrying value of a loan over either the present value of expected future cash flows discounted at the loan’s original effective interest rate, or the current estimated fair value of the loan’s underlying collateral. A loan may be subsequently charged off at such point that the Company no longer expects to receive cash payments, the present value of future expected payments of the renegotiated loan is less than the current principal balance, or at such time that the Company is party to foreclosure or bankruptcy proceedings associated with the borrower and does not expect to recover the principal balance of the loan. A charge off is recorded by eliminating the allowance against the mortgage loan and recording the renegotiated loan or the collateral property related to the loan as investment real estate on the balance sheet, which is carried at the lower of the appraised fair value of the property or the unpaid principal balance of the loan, less estimated selling costs associated with the property. For The Nine Months Ended September 30, 2018 (Dollars In Thousands) Beginning balance, December 31, 2017 $ — Charge offs — Recoveries (24 ) Provision 1,505 Ending balance, September 30, 2018 $ 1,481 It is the Company’s policy to cease to carry accrued interest on loans that are over 90 days delinquent. For loans less than 90 days delinquent, interest is accrued unless it is determined that the accrued interest is not collectible. If a loan becomes over 90 days delinquent, it is the Company’s general policy to initiate foreclosure proceedings unless a workout arrangement to bring the loan current is in place. For loans subject to a pooling and servicing agreement, there are certain additional restrictions and/or requirements related to workout proceedings, and as such, these loans may have different attributes and/or circumstances affecting the status of delinquency or categorization of those in nonperforming status. An analysis of the delinquent loans is shown in the following chart. Greater 30-59 Days 60-89 Days than 90 Days Total As of September 30, 2018 Delinquent Delinquent Delinquent Delinquent (Dollars In Thousands) Commercial mortgage loans $ 1,180 $ — $ 1,243 $ 2,423 Number of delinquent commercial mortgage loans 1 — 1 2 As of December 31, 2017 Commercial mortgage loans $ 1,817 $ — $ — $ 1,817 Number of delinquent commercial mortgage loans 2 — — 2 The Company’s commercial mortgage loan portfolio consists of mortgage loans that are collateralized by real estate. Due to the collateralized nature of the loans, any assessment of impairment and ultimate loss given a default on the loans is based upon a consideration of the estimated fair value of the real estate. The Company limits accrued interest income on impaired loans to 90 days of interest. Once accrued interest on the impaired loan is received, interest income is recognized on a cash basis. Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized Cash Basis Interest Income (Dollars In Thousands) As of September 30, 2018 Commercial mortgage loans: With no related allowance recorded $ — $ — $ — $ — $ — $ — With an allowance recorded 5,714 5,327 1,481 1,905 197 225 As of December 31, 2017 Commercial mortgage loans: With no related allowance recorded $ — $ — $ — $ — $ — $ — With an allowance recorded — — — — — — Mortgage loans that were modified in a troubled debt restructuring as of September 30, 2018 and December 31, 2017 were as follows: Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment (Dollars In Thousands) As of September 30, 2018 Troubled debt restructuring: Commercial mortgage loans 1 $ 2,694 $ 1,748 As of December 31, 2017 Troubled debt restructuring: Commercial mortgage loans 1 $ 418 $ 418 |
GOODWILL
GOODWILL | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL | GOODWILL The balance of goodwill for the Company as of September 30, 2018 was $793.5 million . There has been no change to goodwill during the nine months ended September 30, 2018 . Accounting for goodwill requires an estimate of the future profitability of the associated lines of business to assess the recoverability of the capitalized acquisition goodwill. The Company evaluates the carrying value of goodwill at the segment (or reporting unit) level at least annually and between annual evaluations if events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. Such circumstances could include, but are not limited to: 1) a significant adverse change in legal factors or in business climate, 2) unanticipated competition, or 3) an adverse action or assessment by a regulator. When evaluating whether goodwill is impaired, the Company first determines through qualitative analysis whether relevant events and circumstances indicate that it is more likely than not that segment goodwill balances are impaired as of the testing date. If it is determined that it is more likely than not that impairment exists, the Company compares its estimate of the fair value of the reporting unit to which the goodwill is assigned to the reporting unit’s carrying amount, including goodwill. The Company utilizes a fair value measurement (which includes a discounted cash flows analysis) to assess the carrying value of the reporting units in consideration of the recoverability of the goodwill balance assigned to each reporting unit as of the measurement date. The Company’s material goodwill balances are attributable to certain of its operating segments (which are each considered to be reporting units). The cash flows used to determine the fair value of the Company’s reporting units are dependent on a number of significant assumptions. The Company’s estimates, which consider a market participant view of fair value, are subject to change given the inherent uncertainty in predicting future results and cash flows, which are impacted by such things as policyholder behavior, competitor pricing, capital limitations, new product introductions, and specific industry and market conditions. The balance recognized as goodwill is not amortized, but is reviewed for impairment on an annual basis, or more frequently as events or circumstances may warrant, including those circumstances which would more likely than not reduce the fair value of the Company’s reporting units below its carrying amount. During the fourth quarter of 2017 , the Company performed its annual evaluation of goodwill based on information as of October 1, 2017 , and determined that no adjustment to impair goodwill was necessary. During the nine months ended September 30, 2018 , the Company did not identify any events or circumstances which would indicate that the fair value of its operating segments would have declined below their book value, either individually or in the aggregate. |
DEBT AND OTHER OBLIGATIONS
DEBT AND OTHER OBLIGATIONS | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
DEBT AND OTHER OBLIGATIONS | DEBT AND OTHER OBLIGATIONS Under a revolving line of credit arrangement that was in effect until May 3, 2018 (the “2015 Credit Facility”), the Company had the ability to borrow on an unsecured basis up to an aggregate principal amount of $1.0 billion . The Company had the right in certain circumstances to request that the commitment under the 2015 Credit Facility be increased up to a maximum principal amount of $1.25 billion . Balances outstanding under the 2015 Credit Facility accrued interest at a rate equal to, at the option of the Borrowers, (i) LIBOR plus a spread based on the ratings of PLC’s Senior Debt, or (ii) the sum of (A) a rate equal to the highest of (x) the Administrative Agent’s Prime rate , (y) 0.50% above the Funds rate , or (z) the one-month LIBOR plus 1.00% and (B) a spread based on the ratings of PLC’s Senior Debt. The 2015 Credit Facility also provided for a facility fee at a rate that varies with the ratings of PLC’s Senior Debt and that is calculated on the aggregate amount of commitments under the 2015 Credit Facility, whether used or unused. The annual facility fee rate is 0.125% of the aggregate principal amount. The 2015 Credit Facility provides that PLC is liable for the full amount of any obligations for borrowings or letters of credit, including those of the Company, under the Credit Facility. The maturity date of the 2015 Credit Facility was February 2, 2020. On May 3, 2018, the Company amended the 2015 Credit Facility (as amended, the “Credit Facility”). Under the Credit Facility, the Company has the ability to borrow on an unsecured basis up to an aggregate principal amount of $1.0 billion . The Company has the right in certain circumstances to request that the commitment under the Credit Facility be increased up to a maximum principal amount of $1.5 billion . Balances outstanding under the Credit Facility accrue interest at a rate equal to, at the option of the Borrowers, (i) LIBOR plus a spread based on the ratings of PLC’s Senior Debt, or (ii) the sum of (A) a rate equal to the highest of (x) the Administrative Agent’s Prime rate, (y) 0.50% above the Funds rate, or (z) the one-month LIBOR plus 1.00% and (B) a spread based on the ratings of PLC’s Senior Debt. The Credit Facility also provided for a facility fee at a rate that varies with the ratings of PLC’s Senior Debt and that is calculated on the aggregate amount of commitments under the Credit Facility, whether used or unused. The annual facility fee rate is 0.125% of the aggregate principal amount. The Credit Facility provides that PLC is liable for the full amount of any obligations for borrowings or letters of credit, including those of the Company, under the Credit Facility. The maturity date of the Credit Facility is May 3, 2023. The Company is not aware of any non-compliance with the financial debt covenants of the Credit Facility as of September 30, 2018. PLC had no outstanding balance as of September 30, 2018 . During 2018, the Company issued $110.0 million of Subordinated Funding Obligations at a rate of 3.55% due 2038. Non-Recourse Funding Obligations Non-recourse funding obligations outstanding as of September 30, 2018 , on a consolidated basis, are shown in the following table: Issuer Outstanding Principal Carrying Value (1) Maturity Year Year-to-Date Weighted-Avg Interest Rate (Dollars In Thousands) Golden Gate Captive Insurance Company (2)(3) $ 1,917,000 $ 1,917,000 2039 4.75 % Golden Gate II Captive Insurance Company 309,849 256,157 2052 4.07 % Golden Gate V Vermont Captive Insurance Company (2)(3) 655,000 714,921 2037 5.12 % MONY Life Insurance Company (3) 1,091 2,357 2024 6.19 % Total $ 2,882,940 $ 2,890,435 (1) Carrying values include premiums and discounts and do not represent unpaid principal balances. (2) Obligations are issued to non-consolidated subsidiaries of PLC. These obligations collateralize certain held-to-maturity securities issued by wholly owned subsidiaries of the Company. (3) Fixed rate obligations. Non-recourse funding obligations outstanding as of December 31, 2017 , on a consolidated basis, are shown in the following table: Issuer Outstanding Principal Carrying Value (1) Maturity Year Year-to-Date Weighted-Avg Interest Rate (Dollars In Thousands) Golden Gate Captive Insurance Company (2)(3) $ 2,014,000 $ 2,014,000 2039 4.75 % Golden Gate II Captive Insurance Company 309,849 255,132 2052 3.11 % Golden Gate V Vermont Captive Insurance Company (2)(3) 620,000 681,285 2037 5.12 % MONY Life Insurance Company (3) 1,091 2,405 2024 6.19 % Total $ 2,944,940 $ 2,952,822 (1) Carrying values include premiums and discounts and do not represent unpaid principal balances. (2) Obligations are issued to non-consolidated subsidiaries of PLC. These obligations collateralize certain held-to-maturity securities issued by wholly owned subsidiaries of the Company. (3) Fixed rate obligations. Secured Financing Transactions Repurchase Program Borrowings While the Company anticipates that the cash flows of its operating subsidiaries will be sufficient to meet its investment commitments and operating cash needs in a normal credit market environment, the Company recognizes that investment commitments scheduled to be funded may, from time to time, exceed the funds then available. Therefore, the Company has established repurchase agreement programs for certain of its insurance subsidiaries to provide liquidity when needed. The Company expects that the rate received on its investments will equal or exceed its borrowing rate. Under this program, the Company may, from time to time, sell an investment security at a specific price and agree to repurchase that security at another specified price at a later date. These borrowings are typically for a term less than 90 days . The market value of securities to be repurchased is monitored and collateral levels are adjusted where appropriate to protect the counterparty against credit exposure. Cash received is invested in fixed maturi ty securities, and the agreements provided for net settlement in the event of default or on termination of the agreements. As of September 30, 2018 , the fair value of securities pledged under the repurchase program was $457.5 million , and the repurchase obligation of $417.1 million was included in the Company’s consolidated condensed balance sheets (at an average borrowing rate of 223 basis points). During the nine months ended September 30, 2018 , the maximum balance outstanding at any one point in time related to these programs was $427.5 million . The average daily balance was $225.9 million (at an average borrowing rate of 208 basis points) during the nine months ended September 30, 2018 . As of December 31, 2017 , the fair value of securities pledged under the repurchase program wa s $1,006.6 million , and the repurchase obligation of $885.0 million w as included in the Company’s consolidated condensed balance sheets (at an average borrowing rate of 142 basis points). During 2017 , the maximum balance outstanding at any one point in time related to these programs w as $988.5 million . The average daily balance was $624.7 million (at an average borrowing rate of 101 basis points) during the year ended December 31, 2017 . Securities Lending The Company participates in securities lending, primarily as an investment yield enhancement, whereby securities that are held as investments are loaned out to third parties for short periods of time. The Company requires initial collateral of 102% of the market value of the loaned securities to be separately maintained. The loaned securities’ market value is monitored on a daily basis. As of September 30, 2018, securities with a market value of $92.0 million were loaned under this program. As collateral for the loaned securities, the Company receives short-term investments, which are recorded in “short-term investments” with a corresponding liability recorded in “secured financing liabilities” to account for its obligation to return the collateral. As of September 30, 2018, the fair value of the collateral related to this program was $97.3 million and the Company has an obligation to return $97.3 million of collateral to the securities borrowers. The following table provides the amount by asset class of securities of collateral pledged for repurchase agreements and securities that have been loaned as part of securities lending transactions as of September 30, 2018 and December 31, 2017: Repurchase Agreements, Securities Lending Transactions, and Repurchase-to-Maturity Transactions Accounted for as Secured Borrowings Remaining Contractual Maturity of the Agreements As of September 30, 2018 (Dollars In Thousands) Overnight and Continuous Up to 30 days 30-90 days Greater Than 90 days Total Repurchase agreements and repurchase-to-maturity transactions U.S. Treasury and agency securities $ 401,011 $ 56,513 $ — $ — $ 457,524 Mortgage loans — — — — — Total repurchase agreements and repurchase-to-maturity transactions 401,011 56,513 — — 457,524 Securities lending transactions Fixed maturities 91,040 — — — 91,040 Equity securities 982 — — — 982 Redeemable preferred stock — — — — — Other government related securities — — — — — Total securities lending transactions 92,022 — — — 92,022 Total securities $ 493,033 $ 56,513 $ — $ — $ 549,546 Repurchase Agreements, Securities Lending Transactions, and Repurchase-to-Maturity Transactions Accounted for as Secured Borrowings Remaining Contractual Maturity of the Agreements As of December 31, 2017 (Dollars In Thousands) Overnight and Continuous Up to 30 days 30-90 days Greater Than 90 days Total Repurchase agreements and repurchase-to-maturity transactions U.S. Treasury and agency securities $ 307,633 $ — $ — $ — $ 307,633 Mortgage loans 698,974 — — — 698,974 Total repurchase agreements and repurchase-to-maturity transactions 1,006,607 — — — 1,006,607 Securities lending transactions Corporate securities 118,817 — — — 118,817 Equity securities 5,699 — — — 5,699 Redeemable preferred stock 755 — — — 755 Total securities lending transactions 125,271 — — — 125,271 Total securities $ 1,131,878 $ — $ — $ — $ 1,131,878 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Under the insurance guaranty fund laws in most states, insurance companies doing business therein can be assessed up to prescribed limits for policyholder losses incurred by insolvent companies. From time to time, companies may be asked to contribute amounts beyond prescribed limits. It is possible that the Company could be assessed with respect to product lines not offered by the Company. In addition, legislation may be introduced in various states with respect to guaranty fund assessment laws related to insurance products, including long term care insurance and other specialty products, that increases the cost of future assessments or alters future premium tax offsets received in connection with guaranty fund assessments. The Company cannot predict the amount, nature or timing of any future assessments or legislation, any of which could have a material and adverse impact on the Company’s financial condition or results of operations. A number of civil jury verdicts have been returned against insurers, broker-dealers, and other providers of financial services involving sales, refund or claims practices, alleged agent misconduct, failure to properly supervise representatives, relationships with agents or persons with whom the insurer does business, and other matters. Often these lawsuits have resulted in the award of substantial judgments that are disproportionate to the actual damages, including material amounts of punitive and non-economic compensatory damages. In some states, juries, judges, and arbitrators have substantial discretion in awarding punitive and non-economic compensatory damages which creates the potential for unpredictable material adverse judgments or awards in any given lawsuit or arbitration. Arbitration awards are subject to very limited appellate review. In addition, in some class action and other lawsuits, companies have made material settlement payments. The financial services and insurance industries in particular are also sometimes the target of law enforcement and regulatory investigations relating to the numerous laws and regulations that govern such companies. Some companies have been the subject of law enforcement or regulatory actions or other actions resulting from such investigations. The Company, in the ordinary course of business, is involved in such matters. The Company establishes liabilities for litigation and regulatory actions when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. For matters where a loss is believed to be reasonably possible, but not probable, no liability is established. For such matters, the Company may provide an estimate of the possible loss or range of loss or a statement that such an estimate cannot be made. The Company reviews relevant information with respect to litigation and regulatory matters on a quarterly and annual basis and updates its established liabilities, disclosures and estimates of reasonably possible losses or range of loss based on such reviews. The Company and certain of its insurance subsidiaries, as well as certain other insurance companies for which the Company has coinsured blocks of life insurance and annuity policies, are under audit for compliance with the unclaimed property laws of a number of states. The audits are being conducted on behalf of the treasury departments or unclaimed property administrators in such states. The focus of the audits is on whether there have been unreported deaths, maturities, or policies that have exceeded limiting age with respect to which death benefits or other payments under life insurance or annuity policies should be treated as unclaimed property that should be escheated to the state. The Company is presently unable to estimate the reasonably possible loss or range of loss that may result from the audits due to a number of factors, including uncertainty as to the legal theory or theories that may give rise to liability, the early stages of the audits being conducted, and uncertainty as to whether the Company or other companies are responsible for the liabilities, if any, arising in connection with certain co-insured policies. The Company will continue to monitor the matter for any developments that would make the loss contingency associated with the audits reasonably estimable. The Company and certain of its insurance subsidiaries are under a targeted multi-state examination with respect to their claims paying practices and their use of the U.S. Social Security Administration’s Death Master File or similar databases (a “Death Database”) to identify unreported deaths in their life insurance policies, annuity contracts and retained asset accounts. There is no clear basis in previously existing law for requiring a life insurer to search for unreported deaths in order to determine whether a benefit is owed, and substantial legal authority exists to support the position that the prevailing industry practice was lawful. A number of life insurers, however, have entered into settlement or consent agreements with state insurance regulators under which the life insurers agreed to implement procedures for periodically comparing their life insurance and annuity contracts and retained asset accounts against a Death Database, treating confirmed deaths as giving rise to a death benefit under their policies, locating beneficiaries and paying them the benefits and interest, escheating the benefits and interest to the state if the beneficiary could not be found, and paying penalties to the state, if required. It has been publicly reported that the life insurers have paid administrative and/or examination fees to the insurance regulators in connection with the settlement or consent agreements. The Company believes that insurance regulators could demand from the Company administrative and/or examination fees relating to the targeted multi-state examination. Based on publicly reported payments by other life insurers, the Company does not believe such fees, if assessed, would have a material effect on its financial statements. Advance Trust & Life Escrow Services, LTA, as Securities Intermediary of Life Partners Position Holder Trust v. Protective Life Insurance Company, Case No. 2:18-CV-01290, is a putative class action that was filed on August 13, 2018 in the United States District Court for the Northern District of Alabama. Plaintiff alleges that the Company required policyholders to pay unlawful and excessive cost of insurance charges. Plaintiff seeks to represent all owners of universal life and variable universal life policies issued or administered by the Company or its predecessors that provide that cost of insurance rates are to be determined based on expectations of future mortality experience. The plaintiff seeks class certification, compensatory damages, pre-judgment and post judgment interest, costs, and other unspecified relief. The Company is vigorously defending this matter and cannot predict the outcome of or reasonably estimate the possible loss or range of loss that might result from this litigation. |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 9 Months Ended |
Sep. 30, 2018 | |
Pension and Other Postretirement Benefits Cost (Reversal of Cost) [Abstract] | |
EMPLOYEE BENEFIT PLANS | EMPLOYEE BENEFIT PLANS Components of the net periodic benefit cost of PLC’s defined benefit pension plan for the three and nine months ended September 30, 2018 and 2017 , are as follows: For The For The 2018 2017 2018 2017 Qualified Nonqualified Qualified Nonqualified Qualified Pension Plan Nonqualified Excess Pension Plan Qualified Nonqualified (Dollars In Thousands) Service cost — benefits earned during the period $ 3,006 $ 288 $ 3,348 $ 334 $ 9,888 $ 1,062 $ 10,044 $ 1,002 Interest cost on projected benefit obligation 2,577 359 2,191 297 7,371 1,077 6,573 891 Expected return on plan assets (4,743 ) — (3,352 ) — (12,795 ) — (10,056 ) — Amortization of prior service cost — — — — — — — — Amortization of actuarial loss/(gain) — 196 — 118 — 726 — 354 Preliminary net periodic benefit cost 840 843 2,187 749 4,464 2,865 6,561 2,247 Settlement/curtailment expense (1) — 986 — — — 986 — — Total net periodic benefit costs $ 840 $ 1,829 $ 2,187 $ 749 $ 4,464 $ 3,851 $ 6,561 $ 2,247 (1) The unfunded excess benefit plan triggered settlement accounting for the nine months ended September 30, 2018 since total lump sum payments exceeded the settlement threshold of service cost plus interest cost. During the nine months ended September 30, 2018 , PLC contributed $18.8 million to its defined benefit pension plan for the 2017 plan year. PLC will make contributions in future periods as necessary to at least satisfy minimum funding requirements, to maintain an adjusted funding target attainment percentage (“AFTAP”) of at least 80% and to avoid certain Pension Benefit Guaranty Corporation (“PBGC”) reporting triggers. PLC may also make additional discretionary contributions in excess of the contribution amounts established by the current funding policy. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The following tables summarize the changes in the accumulated balances for each component of accumulated other comprehensive income (loss) (“AOCI”) as of September 30, 2018 and December 31, 2017 . Changes in Accumulated Other Comprehensive Income (Loss) by Component Unrealized Gains and Losses on Investments (2) Accumulated Gain and Loss Derivatives Total Accumulated Other Comprehensive Income (Loss) (Dollars In Thousands, Net of Tax) Beginning Balance, December 31, 2017 $ 23,069 $ 747 $ 23,816 Other comprehensive income (loss) before reclassifications (1,198,669 ) 3,060 (1,195,609 ) Other comprehensive income (loss) relating to other-than-temporary impaired investments for which a portion has been recognized in earnings 22 — 22 Amounts reclassified from accumulated other comprehensive income (loss) (1) (2,042 ) 631 (1,411 ) Net current-period other comprehensive income (loss) (1,200,689 ) 3,691 (1,196,998 ) Cumulative effect adjustment (10,552 ) — (10,552 ) Ending Balance, September 30, 2018 $ (1,188,172 ) $ 4,438 $ (1,183,734 ) (1) See Reclassification table below for details. (2) As of September 30, 2018, net unrealized losses reported in AOCI were offset by $524.1 million due to the impact those net unrealized losses would have had on certain of the Company’s insurance assets and liabilities if the net unrealized losses had been recognized in net income. Changes in Accumulated Other Comprehensive Income (Loss) by Component Unrealized Gains and Losses on Investments (2) Accumulated Gain and Loss Derivatives Total Accumulated Other Comprehensive Income (Loss) (Dollars In Thousands, Net of Tax) Beginning Balance, December 31, 2016 $ (655,767 ) $ 727 $ (655,040 ) Other comprehensive income (loss) before reclassifications 699,097 (563 ) 698,534 Other comprehensive income (loss) relating to other-than-temporary impaired investments for which a portion has been recognized in earnings 7,153 — 7,153 Amounts reclassified from accumulated other comprehensive income (loss) (1) (944 ) 451 (493 ) Net current-period other comprehensive income (loss) 705,306 (112 ) 705,194 Cumulative effect adjustments (26,470 ) 132 (26,338 ) Ending Balance, December 31, 2017 $ 23,069 $ 747 $ 23,816 (1) See Reclassification table below for details. (2) As of December 31, 2016 and December 31, 2017, net unrealized losses reported in AOCI were offset by $424.1 million and $(6.3) million, respectively, due to the impact those net unrealized losses would have had on certain of the Company’s insurance assets and liabilities if the net unrealized losses had been recognized in net income. The following tables summarize the reclassifications amounts out of AOCI for the three and nine months ended September 30, 2018 and 2017 . Reclassifications Out of Accumulated Other Comprehensive Income (Loss) For The Three Months Ended September 30, 2018 Amount Affected Line Item in the (Dollars In Thousands) Gains and losses on derivative instruments Net settlement (expense)/benefit (1) $ (481 ) Benefits and settlement expenses, net of reinsurance ceded (481 ) Total before tax 101 Tax (expense) or benefit $ (380 ) Net of tax Unrealized gains and losses on available-for-sale securities Net investment gains (losses) $ (2,018 ) Realized investment gains (losses): All other investments Impairments recognized in earnings (14 ) Net impairment losses recognized in earnings (2,032 ) Total before tax 427 Tax (expense) or benefit $ (1,605 ) Net of tax (1) See Note 7, Derivative Financial Instruments for additional information For The Nine Months September 30, 2018 Amount Affected Line Item in the (Dollars In Thousands) Gains and losses on derivative instruments Net settlement (expense)/benefit (1) $ (799 ) Benefits and settlement expenses, net of reinsurance ceded (799 ) Total before tax 168 Tax (expense) or benefit $ (631 ) Net of tax Unrealized gains and losses on available-for-sale securities Net investment gains (losses) $ 6,248 Realized investment gains (losses): All other investments Impairments recognized in earnings (3,664 ) Net impairment losses recognized in earnings 2,584 Total before tax (542 ) Tax (expense) or benefit $ 2,042 Net of tax (1) See Note 7, Derivative Financial Instruments for additional information Reclassifications Out of Accumulated Other Comprehensive Income (Loss) For The Three Months Ended September 30, 2017 Amount Affected Line Item in the (Dollars In Thousands) Gains and losses on derivative instruments Net settlement (expense)/benefit (1) $ (38 ) Benefits and settlement expenses, net of reinsurance ceded (38 ) Total before tax 14 Tax (expense) or benefit $ (24 ) Net of tax Unrealized gains and losses on available-for-sale securities Net investment gains (losses) $ 690 Realized investment gains (losses): All other investments Impairments recognized in earnings (273 ) Net impairment losses recognized in earnings 417 Total before tax (146 ) Tax (expense) or benefit $ 271 Net of tax For The Nine Months Ended September 30, 2017 Amount Affected Line Item in the (Dollars In Thousands) Gains and losses on derivative instruments Net settlement (expense)/benefit (1) $ (396 ) Benefits and settlement expenses, net of reinsurance ceded (396 ) Total before tax 139 Tax (expense) or benefit $ (257 ) Net of tax Unrealized gains and losses on available-for-sale securities Net investment gains (losses) $ 9,084 Realized investment gains (losses): All other investments Impairments recognized in earnings (8,259 ) Net impairment losses recognized in earnings 825 Total before tax (289 ) Tax (expense) or benefit $ 536 Net of tax |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company used its respective estimates for its annual 2018 and 2017 incomes in computing its effective income tax rates for the three and nine months ended September 30, 2018 and 2017. The estimate of the annual 2018 income excluded unrealized gains and losses on equity securities due to an inability to forecast future gains and losses. The Company’s effective tax rate related to continuing operations varied from the maximum federal income tax rates as follows: For The Three Months Ended September 30, For The Nine Months Ended September 30, 2018 2017 2018 2017 Statutory federal income tax rate applied to pre-tax income 21.0 % 35.0 % 21.0 % 35.0 % State income taxes 0.5 0.4 0.5 0.5 Investment income not subject to tax (3.4 ) (4.0 ) (3.9 ) (3.6 ) Uncertain tax positions — (0.1 ) — 0.2 Change in State Tax Rate — — (0.8 ) — Prior period adjustments — (1.7 ) — (0.8 ) Other (0.6 ) (0.1 ) (0.5 ) 0.1 17.5 % 29.5 % 16.3 % 31.4 % In April 2017, a routine review by Congress’ Joint Committee on Taxation related to IRS examinations for 2003 through 2011 was finalized and the Company received an approximate $6.2 million net refund in the fourth quarter of 2017. The resulting net adjustment to the Company’s current income taxes and the collection of this refund for the years 2003 through 2011 did not materially affect the Company or its effective tax rate. There have been no material changes to the balance of unrecognized tax benefits, where the changes impact earnings, during the quarter ending September 30, 2018. The Company believes that in the next twelve months, none of the unrecognized tax benefits will be reduced. In general, the Company is no longer subject to income tax examinations by taxing authorities for tax years that began before 2014. Furthermore, due to the aforementioned IRS adjustments to the Company’s pre-2014 taxable income, the Company has amended certain of its 2003 through 2013 state income tax returns. Such amendments will cause such years to remain open, pending the states’ acceptances of the returns. During the year ended December 31, 2016, the Company entered into a reinsurance transaction. This transaction generated an operating loss on the Company’s consolidated 2016 U.S. income tax return. The Company partially carried back this loss and received refunds for substantially all of the U.S. income taxes it paid in 2014 and 2015 and expects to fully utilize the remaining operating loss carryforward during the carryforward period. Based on the Company’s current assessment of future taxable income, including available tax planning opportunities, the Company anticipates that it is more likely than not that it will generate sufficient taxable income to realize all of its material deferred tax assets. The Company did not record a valuation allowance against its material deferred tax assets as of September 30, 2018 and December 31, 2017. In the tax year ended December 31, 2017, the Company recognized provisional impacts related to the revaluation of certain deferred tax assets under the Tax Reform Act under Staff Accounting Bulletin No. 118. The ultimate impact may differ from these provisional amounts, possibly materially, due to, among other things, additional regulatory guidance that may be issued, additional analysis, and resulting changes in interpretations and assumptions the Company has made. Any adjustments to these provisional amounts will be reported as a component of income tax expense (benefit) in the reporting period in which any such adjustments are determined. There are no material adjustments for the nine months ended September 30, 2018. The accounting is expected to be complete by December 22, 2018. |
OPERATING SEGMENTS
OPERATING SEGMENTS | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
OPERATING SEGMENTS | OPERATING SEGMENTS The Company has several operating segments, each having a strategic focus. An operating segment is distinguished by products, channels of distribution, and/or other strategic distinctions. The Company periodically evaluates its operating segments and makes adjustments to its segment reporting as needed. A brief description of each segment follows. • The Life Marketing segment markets fixed universal life (“UL”), indexed universal life (“IUL”), variable universal life (“VUL”), bank-owned life insurance (“BOLI”), and level premium term insurance (“traditional”) products on a national basis primarily through networks of independent insurance agents and brokers, broker-dealers, financial institutions, independent marketing organizations, and affinity groups. • The Acquisitions segment focuses on acquiring, converting, and servicing policies and contracts acquired from other companies. The segment’s primary focus is on life insurance policies and annuity products that were sold to individuals. The level of the segment’s acquisition activity is predicated upon many factors, including available capital, operating capacity, potential return on capital, and market dynamics. Policies acquired through the Acquisitions segment are typically blocks of business where no new policies are being marketed. Therefore earnings and account values are expected to decline as the result of lapses, deaths, and other terminations of coverage unless new acquisitions are made. • The Annuities segment markets fixed and VA products. These products are primarily sold through broker-dealers, financial institutions, and independent agents and brokers. • The Stable Value Products segment sells fixed and floating rate funding agreements directly to the trustees of municipal bond proceeds, money market funds, bank trust departments, and other institutional investors. This segment also issues funding agreements to the FHLB, and markets guaranteed investment contracts (“GICs”) to 401(k) and other qualified retirement savings plans. The Company also has an unregistered funding agreement-backed notes program which provides for offers of notes to both domestic and international institutional investors. • The Asset Protection segment markets extended service contracts, GAP products, credit life and disability insurance, and other specialized ancillary products to protect consumers’ investments in automobiles and recreational vehicles. GAP products are designed to cover the difference between the scheduled loan pay-off amount and an asset’s actual cash value in the case of a total loss. Each type of specialized ancillary product protects against damage or other loss to a particular aspect of the underlying asset. • The Corporate and Other segment primarily consists of net investment income on assets supporting our equity capital, unallocated corporate overhead and expenses not attributable to the segments above. This segment includes earnings from several non-strategic or runoff lines of business, various financing and investment-related transactions, and the operations of several small subsidiaries. The Company’s management and Board of Directors analyzes and assesses the operating performance of each segment using “pre-tax adjusted operating income (loss)” and “after-tax adjusted operating income (loss)”. Consistent with GAAP accounting guidance for segment reporting, pre-tax adjusted operating income (loss) is the Company’s measure of segment performance. Pre-tax adjusted operating income (loss) is calculated by adjusting “income (loss) before income tax”, by excluding the following items: • realized gains and losses on investments and derivatives, • changes in the GLWB embedded derivatives exclusive of the portion attributable to the economic cost of the GLWB, • actual GLWB incurred claims, and • the amortization of deferred policy acquisition costs (“DAC”), value of business acquired (“VOBA”), and certain policy liabilities that is impacted by the exclusion of these items. The items excluded from adjusted operating income (loss) are important to understanding the overall results of operations. Pre-tax adjusted operating income (loss) and after-tax adjusted operating income (loss) are not substitutes for income before income taxes or net income (loss), respectively. These measures may not be comparable to similarly titled measures reported by other companies. The Company believes that pre-tax and after-tax adjusted operating income (loss) enhances management’s and the Board of Directors’ understanding of the ongoing operations, the underlying profitability of each segment, and helps facilitate the allocation of resources. After-tax adjusted operating income (loss) is derived from pre-tax adjusted operating income (loss) with the inclusion of income tax expense or benefits associated with pre-tax adjusted operating income. Income tax expense or benefits is allocated to the items excluded from pre-tax adjusted operating income (loss) at the statutory federal income tax rate for the associated period. For periods ending on and prior to December 31, 2017, a rate of 35% was used. Beginning in 2018, a statutory federal income tax rate of 21% will be used to allocate income tax expense or benefits to items excluded from pre-tax adjusted operating income (loss). Income tax expense or benefits allocated to after-tax adjusted operating income (loss) can vary period to period based on changes in the Company’s effective income tax rate. In determining the components of the pre-tax adjusted operating income (loss) for each segment, premiums and policy fees, other income, benefits and settlement expenses, and amortization of DAC and VOBA are attributed directly to each operating segment. Net investment income is allocated based on directly related assets required for transacting the business of that segment. Realized investment gains (losses) and other operating expenses are allocated to the segments in a manner that most appropriately reflects the operations of that segment. Investments and other assets are allocated based on statutory policy liabilities net of associated statutory policy assets, while DAC/VOBA and goodwill are shown in the segments to which they are attributable. There were no significant intersegment transactions during the three and nine months ended September 30, 2018 and 2017. The following tables present a summary of results and reconciles pre-tax adjusted operating income (loss) to consolidated income before income tax and net income: For The For The 2018 2017 2018 2017 (Dollars In Thousands) Revenues Life Marketing $ 407,708 $ 397,096 $ 1,195,074 $ 1,174,048 Acquisitions 581,054 375,819 1,469,787 1,164,650 Annuities 110,386 110,870 321,880 357,589 Stable Value Products 59,328 49,933 158,944 132,863 Asset Protection 90,926 93,799 266,747 277,433 Corporate and Other 20,561 77,875 90,686 109,628 Total revenues $ 1,269,963 $ 1,105,392 $ 3,503,118 $ 3,216,211 Pre-tax Adjusted Operating Income (Loss) Life Marketing $ 3,647 10,798 (18,326 ) $ 55,217 Acquisitions 93,648 62,880 208,206 184,825 Annuities 36,249 51,779 112,234 130,128 Stable Value Products 27,126 27,992 76,198 74,258 Asset Protection 7,051 5,187 16,991 13,812 Corporate and Other (41,927 ) (38,054 ) (119,474 ) (107,741 ) Pre-tax adjusted operating income 125,794 120,582 275,829 350,499 Realized (losses) gains on investments and derivatives (30,624 ) 45,400 (97,829 ) 35,413 Income before income tax 95,170 165,982 178,000 385,912 Income tax expense (16,646 ) (49,016 ) (28,933 ) (120,975 ) Net income $ 78,524 $ 116,966 $ 149,067 $ 264,937 Pre-tax adjusted operating income $ 125,794 $ 120,582 $ 275,829 $ 350,499 Adjusted operating income tax (expense) benefit (23,077 ) (33,126 ) (49,477 ) (108,580 ) After-tax adjusted operating income 102,717 87,456 226,352 241,919 Realized (losses) gains on investments and derivatives (30,624 ) 45,400 (97,829 ) 35,413 Income tax benefit (expense) on adjustments 6,431 (15,890 ) 20,544 (12,395 ) Net income $ 78,524 $ 116,966 $ 149,067 $ 264,937 Realized investment (losses) gains: Derivative financial instruments $ (26,710 ) $ 5,302 $ 37,176 $ (119,392 ) All other investments (20,156 ) 18,150 (157,350 ) 94,526 Net impairment losses recognized in earnings (14 ) (273 ) (3,664 ) (8,259 ) Less: related amortization (1) (5,859 ) (12,123 ) 5,060 (38,570 ) Less: VA GLWB economic cost (10,397 ) (10,098 ) (31,069 ) (29,968 ) Realized (losses) gains on investments and derivatives $ (30,624 ) $ 45,400 $ (97,829 ) $ 35,413 (1) Includes amortization of DAC/VOBA and benefits and settlement expenses that are impacted by realized gains (losses). Operating Segment Assets (Dollars In Thousands) Life Marketing Acquisitions Annuities Stable Value Products Investments and other assets $ 14,709,504 $ 32,234,422 $ 21,083,522 $ 5,083,328 DAC and VOBA 1,468,989 455,343 876,390 7,001 Other intangibles 267,087 32,622 160,118 7,556 Goodwill 200,274 14,524 336,677 113,813 Total assets $ 16,645,854 $ 32,736,911 $ 22,456,707 $ 5,211,698 Asset Protection Corporate and Other Total Consolidated Investments and other assets $ 824,282 $ 12,857,563 $ 86,792,621 DAC and VOBA 171,661 — 2,979,384 Other intangibles 125,251 33,194 625,828 Goodwill 128,182 — 793,470 Total assets $ 1,249,376 $ 12,890,757 $ 91,191,303 Operating Segment Assets (Dollars In Thousands) Life Marketing Acquisitions Annuities Stable Value Products Investments and other assets $ 14,917,752 $ 19,588,133 $ 20,774,566 $ 4,569,639 DAC and VOBA 1,320,776 74,862 772,634 6,864 Other intangibles 281,705 34,548 170,117 8,056 Goodwill 200,274 14,524 336,677 113,813 Total assets $ 16,720,507 $ 19,712,067 $ 22,053,994 $ 4,698,372 Asset Protection Corporate and Other Total Consolidated Investments and other assets $ 708,605 $ 14,893,253 $ 75,451,948 DAC and VOBA 30,265 — 2,205,401 Other intangibles 133,234 35,256 662,916 Goodwill 128,182 — 793,470 Total assets $ 1,000,286 $ 14,928,509 $ 79,113,735 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS The Company has evaluated the effects of events subsequent to September 30, 2018 , and through the date we filed our consolidated condensed financial statements with the United States Securities and Exchange Commission. All accounting and disclosure requirements related to subsequent events are included in our consolidated condensed financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation Protective Life Insurance Company (the “Company”), a stock life insurance company, was founded in 1907. The Company is a wholly owned subsidiary of Protective Life Corporation (“PLC”), an insurance holding company. On February 1, 2015, PLC became a wholly owned subsidiary of The Dai-ichi Life Insurance Company, Limited, a kabushiki kaisha organized under the laws of Japan (now known as Dai-ichi Life Holdings, Inc., “Dai-ichi Life”), when DL Investment (Delaware), Inc. a wholly owned subsidiary of Dai-ichi Life, merged with and into PLC. Prior to February 1, 2015, PLC’s stock was publicly traded on the New York Stock Exchange. Subsequent to the Merger date, PLC and the Company remain as SEC registrants within the United States. The Company markets individual life insurance, credit life and disability insurance, guaranteed investment contracts, guaranteed funding agreements, fixed and variable annuities, and extended service contracts throughout the United States. The Company also maintains a separate segment devoted to the acquisition of insurance policies from other companies. PLC is a holding company with subsidiaries that provide financial services through the production, distribution, and administration of insurance and investment products. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for the interim periods presented herein. In the opinion of management, the accompanying financial statements reflect all adjustments (consisting only of normal recurring items) necessary for a fair statement of the results for the interim periods presented. Operating results for the three and nine months ended September 30, 2018 , are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2018 . The year-end consolidated condensed financial data included herein was derived from audited financial statements but does not include all disclosures required by GAAP within this report. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 . The operating results of companies in the insurance industry have historically been subject to significant fluctuations due to changing competition, economic conditions, interest rates, investment performance, insurance ratings, claims, persistency, and other factors. |
Entities Included | Entities Included The consolidated condensed financial statements in this report include the accounts of Protective Life Insurance Company and its affiliate companies in which the Company holds a majority voting or economic interest. Intercompany balances and transactions have been eliminated. |
Insurance Revenue | Property and casualty insurance products include service contract business, surety bonds, and guaranteed asset protection (“GAP”). Premiums and fees associated with service contracts and GAP products are recognized based on expected claim patterns. For all other products, premiums are generally recognized over the terms of the contract on a pro-rata basis. Commissions and fee income associated with other products are recognized as earned when the related services are provided to the customer. Unearned premium reserves are maintained for the portion of the premiums that is related to the unexpired period of the policy. Benefit reserves are recorded when insured events occur. |
Reserves | Benefit reserves include case basis reserves for known but unpaid claims as of the balance sheet date as well as incurred but not reported (“IBNR”) reserves for claims where the insured event has occurred but has not been reported to the Company as of the balance sheet date. The case basis reserves and IBNR are calculated based on historical experience and on assumptions relating to claim severity and frequency, the level of used vehicle prices, and other factors. These assumptions are modified as necessary to reflect anticipated trends. |
Accounting Pronouncements Recently Adopted and Not Yet Adopted | Effective January 1, 2018, the Company adopted Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers . In consideration of the amendments in this Update, the Company revised its recognition pattern for administrative fees associated with certain vehicle service and GAP products. Previously, these fees were recognized based on the work effort involved in satisfying the Company’s contract obligations. The Company will recognize these fees on a claims occurrence basis in future periods. To reflect this change in accounting principle, the Company recorded a cumulative effect adjustment as of January 1, 2018 that resulted in a decrease in retained earnings of $88.6 million . The pre-tax impact to each affected line item on the Company’s financial statements is reflected in the table below: As of September 30, 2018 As Reported Previous Accounting Method (Dollars In Millions) Financial Statement Line Item: Balance Sheet Deferred policy acquisition costs and value of business acquired $ 2,979.4 $ 2,840.0 Other liabilities $ 2,150.2 $ 1,891.4 For the Three Months Ended September 30, 2018 For The Nine Months Ended September 30, 2018 As Reported Previous Accounting Method As Reported Previous Accounting Method (Dollars In Millions) (Dollars In Millions) Financial Statement Line Item: Statements of Income Other income $ 80.9 $ 82.4 $ 241.3 $ 244.9 Amortization of deferred policy acquisition costs and value of business acquired $ 33.5 $ 21.9 $ 144.2 $ 108.1 Other operating expenses, net of reinsurance ceded $ 190.4 $ 203.2 $ 582.8 $ 622.3 Accounting Pronouncements Recently Adopted ASU No. 2014-09 - Revenue from Contracts with Customers (Topic 606). This Update provides for significant revisions to the recognition of revenue from contracts with customers across various industries. Under the new guidance, entities are required to apply a prescribed 5-step process to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The accounting for revenues associated with insurance products is not within the scope of this Update. The Update was originally effective for annual and interim periods beginning after December 15, 2016. However, in August 2015, the FASB issued ASU No. 2015-14 - Revenues from Contracts with Customers: Deferral of the Effective Date , to defer the effective date of ASU No. 2014-09 by one year to annual and interim periods beginning after December 15, 2017. The Company adopted this Update using the modified retrospective approach via a cumulative effect adjustment to retained earnings as of January 1, 2018. The amendments in the Update, along with clarifying updates issued subsequent to ASU 2014-09, impacted certain revenues associated with the Company’s Asset Protection products. The lines of business to which the revised guidance applies are not material to the Company’s financial statements. In consideration of the amendments in this Update, the Company revised its recognition pattern for administrative fees associated with certain vehicle service and GAP products. Previously, these fees were recognized based on the work effort involved in satisfying the Company’s contract obligations. The Company will recognize these fees on a claims occurrence basis in future periods. To reflect this change in accounting principle, the Company recorded a cumulative effect adjustment as of January 1, 2018 that resulted in a decrease in retained earnings of $88.6 million . See above for additional discussion. ASU No. 2016-01 - Financial Instruments - Recognition and Measurement of Financial Assets and Financial Liabilities. The amendments in this Update address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Most notably, the Update requires that equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) be measured at fair value with changes in fair value recognized in net income. The Update also introduces a single-step impairment model for equity investments without a readily determinable fair value. Additionally, the Update requires changes in instrument-specific credit risk for fair value option liabilities to be recorded in other comprehensive income. The amendments in this Update are effective for annual and interim periods beginning after December 15, 2017 and were applied on a modified retrospective basis. The Company recorded a cumulative-effect adjustment at the date of adoption, January 1, 2018, transferring unrealized gains and losses on available-for-sale equity securities to retained earnings from accumulated other comprehensive income. The impact of this adjustment, net of income tax, resulted in a $10.6 million increase to retained earnings and a corresponding decrease to accumulated other comprehensive income, resulting in no net impact to consolidated shareowner’s equity. The Company has updated its disclosures in Note 5, Investment Operations and Note 6, Fair Value of Financial Instruments in accordance with the ASU. ASU No. 2016-15 - Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments. The amendments in this Update are intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. Specific transactions addressed in the new guidance include: Debt prepayment/extinguishment costs, contingent consideration payments, proceeds from the settlement of corporate-owned life insurance policies, and distributions received from equity method investments. The Update does not introduce any new accounting or financial reporting requirements, and is effective for annual and interim periods beginning after December 15, 2017 using the retrospective method. There was no financial impact. ASU No. 2016-18 - Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Task Force). The amendments in this update provide guidance on the presentation of restricted cash or restricted cash equivalents in the statement of cash flows, thereby reducing diversity in practice related to the presentation of these amounts. The amendments require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The Update is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. There was no impact to the Company on adoption. ASU No. 2017-01 - Business Combinations (Topic 805): Clarifying the Definition of a Business. The purpose of this update is to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in the Update provide a specific test by which an entity may determine whether an acquisition involves a set of assets or a business. The amendments in the Update are to be applied prospectively for periods beginning after December 15, 2017. The Company has reviewed the revised requirements, and does not anticipate that the changes will impact its policies or recent conclusions related to its acquisition activities. ASU No. 2017-07 - Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The amendments in this update require entities to disaggregate the current-service-cost component from other components of net benefit cost and present it with other current compensation costs in the income statement. The other components of net benefit cost must be presented outside of income from operations if that subtotal is presented. In addition, the Update requires entities to disclose the income statement lines that contain the other components if they are not presented on appropriately described separate lines. The amendments in this update are effective for interim and annual periods beginning after December 15, 2017. As provided for in the ASU, the Company expects to apply the provisions of the statement retrospectively for components of net periodic pension costs and prospectively for capitalization of the service costs component of net periodic costs and net periodic postretirement benefits. The Update did not impact the Company’s financial position, results of operations, or current disclosures. Accounting Pronouncements Not Yet Adopted ASU No. 2016-02 - Leases. The amendments in this Update address certain aspects of recognition, measurement, presentation, and disclosure of leases. The most significant change will relate to the accounting model used by lessees. The Update will require all leases with terms greater than 12 months to be recorded on the balance sheet in the form of a lease asset and liability. The lease asset and liability will be measured at the present value of the minimum lease payments less any upfront payments or fees. The amendments in the Update are effective for annual and interim periods beginning after December 15, 2018 on a modified retrospective basis. The Company has completed an inventory of all leases in the organization. Based on our lease portfolio as of September 30, 2018, the Company expects to record a right of use asset and lease liability of approximately $21 million on its consolidated condensed balance sheet in the period of adoption. However, the ultimate impact of adopting the ASU will depend on the Company’s lease portfolio as of the adoption date. ASU No. 2016-13 - Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments. The amendments in this Update introduce a new current expected credit loss (“CECL”) model for certain financial assets, including mortgage loans and reinsurance receivables. The new model will not apply to debt securities classified as available-for-sale. For assets within the scope of the new model, an entity will recognize as an allowance against earnings its estimate of the contractual cash flows not expected to be collected on day one of the asset’s acquisition. The allowance may be reversed through earnings if a security recovers in value. This differs from the current impairment model, which requires recognition of credit losses when they have been incurred and recognizes a security’s subsequent recovery in value in other comprehensive income. The Update also makes targeted changes to the current impairment model for available-for-sale debt securities, which comprise the majority of the Company’s invested assets. Similar to the CECL model, credit loss impairments will be recorded in an allowance against earnings that may be reversed for subsequent recoveries in value. The amendments in this Update are effective for annual and interim periods beginning after December 15, 2019 on a modified retrospective basis. The Company is reviewing its policies and processes to ensure compliance with the requirements in this Update, upon adoption, and assessing the impact this standard will have on its operations and financial results. ASU No. 2017-08 - Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. The amendments in this Update require that premiums on callable debt securities be amortized to the first call date. This is a change from current guidance, under which premiums are amortized to the maturity date of the security. The amendments are effective for annual and interim periods beginning after December 15, 2018, and early adoption is permitted. Transition will be through a modified retrospective approach in which the cumulative effect of application is recorded to retained earnings at the beginning of the annual period in which an entity adopts the revised guidance. Based on our population of callable debt securities held as of September 30, 2018, the Company estimates it would record a reduction to retained earnings of approximately $56.1 million as a result of adopting the ASU. However, the adoption impact will ultimately depend on the population of callable debt securities held as of the adoption date. ASU No. 2017-12 - Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The amendments in this Update are designed to permit hedge accounting to be applied to a broader range of hedging strategies as well as to more closely align hedge accounting and risk management objectives. Specific provisions include requiring changes in the fair value of a hedging instrument be recorded in the same income statement line as the hedged item when it affects earnings. In addition, after a hedge has initially qualified as an effective hedge the Update permits the use of a qualitative hedge effectiveness test in subsequent periods. The amendments in this Update are effective for annual and interim periods beginning after December 15, 2018 and early adoption is permitted. The Company does not expect the adoption of this standard to have a material impact on its operations or financial results. ASU No. 2018-12 - Financial Services - Insurance (Topic 944): Targeted Improvements to Accounting for Long-Duration Contracts. The amendments in this Update are designed to make improvements to the existing recognition, measurement, presentation, and disclosure requirements for certain long-duration contracts issued by an insurance company. The new amendments require insurance entities to provide a more current measure of the liability for future policy benefits for traditional and limited-payment contracts by regularly refining the liability for actual past experience and updated future assumptions. This differs from current requirements where assumptions are locked-in at contract issuance for these contract types. In addition, the updated liability will be discounted using an upper-medium grade (low-credit-risk) fixed income instrument yield that reflects the characteristics of the liability which differs from currently used rates based on the invested assets supporting the liability. In addition, the amendments introduce new requirements to assess market-based insurance contract options and guarantees for Market Risk Benefits and measure them at fair value. This Update also requires insurance entities to amortize deferred acquisition costs on a constant-level basis over the expected life of the contract. Finally this Update requires new disclosures including liability rollforwards and information about significant inputs, judgments, assumptions, and methods used in the measurement. The amendments in this Update are effective for annual and interim periods beginning after December 15, 2020 with early adoption permitted. The Company is currently reviewing its policies, processes, and applicable systems to determine the impact this standard will have on its operations and financial results. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The pre-tax impact to each affected line item on the Company’s financial statements is reflected in the table below: As of September 30, 2018 As Reported Previous Accounting Method (Dollars In Millions) Financial Statement Line Item: Balance Sheet Deferred policy acquisition costs and value of business acquired $ 2,979.4 $ 2,840.0 Other liabilities $ 2,150.2 $ 1,891.4 For the Three Months Ended September 30, 2018 For The Nine Months Ended September 30, 2018 As Reported Previous Accounting Method As Reported Previous Accounting Method (Dollars In Millions) (Dollars In Millions) Financial Statement Line Item: Statements of Income Other income $ 80.9 $ 82.4 $ 241.3 $ 244.9 Amortization of deferred policy acquisition costs and value of business acquired $ 33.5 $ 21.9 $ 144.2 $ 108.1 Other operating expenses, net of reinsurance ceded $ 190.4 $ 203.2 $ 582.8 $ 622.3 |
SIGNIFICANT TRANSACTIONS (Table
SIGNIFICANT TRANSACTIONS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table details the purchase consideration and preliminary allocation of assets acquired and liabilities assumed from the Life Business reinsurance transaction as of the transaction date. These estimates remain preliminary and are subject to adjustment. While they are not expected to be materially different than those shown, any material adjustments to the estimates will be reflected, retroactively, as of the date of the acquisition. Fair Value as of May 1, 2018 (Dollars In Thousands) ASSETS Fixed maturities $ 12,588,512 Mortgage loans 435,405 Policy loans 131,489 Total investments 13,155,406 Cash 20,669 Accrued investment income 151,610 Reinsurance receivables 337 Value of business acquired 336,437 Other assets 2,542 Total assets 13,667,001 LIABILITIES Future policy benefits and claims $ 11,744,496 Unearned premiums — Total policy liabilities and accruals 11,744,496 Annuity account balances 1,823,444 Other policyholders’ funds 41,954 Other liabilities 57,107 Total liabilities 13,667,001 NET ASSETS ACQUIRED $ — |
Business Acquisition, Pro Forma Information | The following unaudited pro forma condensed consolidated results of operations assumes that the aforementioned transactions of the Life Business were completed as of January 1, 2017. The unaudited pro forma condensed results of operations are presented solely for information purposes and are not necessarily indicative of the consolidated condensed results of operations that might have been achieved had the transaction been completed as of the date indicated. Unaudited Unaudited For The For The 2018 2017 2018 2017 (Dollars In Thousands) Revenue $ 1,269,963 $ 1,418,743 $ 3,826,857 $ 4,170,636 Net income $ 78,524 $ 152,971 $ 195,211 $ 369,826 |
Schedule of Amortization Of Valuation Of Business Acquired | Based on the balance recorded as of May 1, 2018, the expected amortization of VOBA for the next five years is as follows: Years Expected Amortization (Dollars In Thousands) Remainder of 2018 $ 5,265 2019 21,063 2020 19,950 2021 18,329 2022 16,611 |
MONY CLOSED BLOCK OF BUSINESS (
MONY CLOSED BLOCK OF BUSINESS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Closed Block Disclosure [Abstract] | |
Summary of Financial Information of the Policyholder Dividend Obligation | Summarized financial information for the Closed Block as of September 30, 2018 and December 31, 2017 is as follows: As of September 30, 2018 December 31, 2017 (Dollars In Thousands) Closed block liabilities Future policy benefits, policyholders’ account balances and other policyholder liabilities $ 5,699,118 $ 5,791,867 Policyholder dividend obligation — 160,712 Other liabilities 42,640 30,764 Total closed block liabilities 5,741,758 5,983,343 Closed block assets Fixed maturities, available-for-sale, at fair value $ 4,339,342 $ 4,669,856 Mortgage loans on real estate 76,608 108,934 Policy loans 679,760 700,769 Cash 72,868 31,182 Other assets 144,077 122,637 Total closed block assets 5,312,655 5,633,378 Excess of reported closed block liabilities over closed block assets 429,103 349,965 Portion of above representing accumulated other comprehensive income: Net unrealized investment gains (losses) net of policyholder dividend obligation: $(149,219) and $(13,429); and net of income tax: $57,054 and $2,820 (96,749 ) — Future earnings to be recognized from closed block assets and closed block liabilities $ 332,354 $ 349,965 |
Schedule of Reconciliation of the Policyholder Dividend Obligation | Reconciliation of the policyholder dividend obligation is as follows: For The 2018 2017 (Dollars In Thousands) Policyholder dividend obligation, beginning of period $ 160,712 $ 31,932 Applicable to net revenue (losses) (24,922 ) (38,147 ) Change in net unrealized investment gains (losses) allocated to the policyholder dividend obligation (135,790 ) 142,219 Policyholder dividend obligation, end of period $ — $ 136,004 |
Schedule of Closed Block Revenues and Expenses | Closed Block revenues and expenses were as follows: For The For The 2018 2017 2018 2017 (Dollars In Thousands) Revenues Premiums and other income $ 39,691 $ 40,962 $ 121,768 $ 128,697 Net investment income 50,833 50,780 152,248 153,481 Net investment gains 40 341 66 448 Total revenues 90,564 92,083 274,082 282,626 Benefits and other deductions Benefits and settlement expenses 83,588 81,721 251,480 249,319 Other operating expenses 291 621 310 1,216 Total benefits and other deductions 83,879 82,342 251,790 250,535 Net revenues before income taxes 6,685 9,741 22,292 32,091 Income tax expense 1,404 3,409 4,681 11,232 Net revenues $ 5,281 $ 6,332 $ 17,611 $ 20,859 |
INVESTMENT OPERATIONS (Tables)
INVESTMENT OPERATIONS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Realized Gain (Loss) on Investments | Net realized gains (losses) for all other investments are summarized as follows: For The For The 2018 2017 2018 2017 (Dollars In Thousands) Fixed maturities $ (2,018 ) $ 1,042 $ 6,248 $ 10,482 Equity gains and losses (1) (6,925 ) (352 ) (16,693 ) (1,398 ) Impairments (14 ) (273 ) (3,664 ) (8,259 ) Modco trading portfolio (10,901 ) 19,399 (148,427 ) 93,181 Other investments (312 ) (1,939 ) 1,522 (7,739 ) Total realized gains (losses) - investments $ (20,170 ) $ 17,877 $ (161,014 ) $ 86,267 (1) Beginning January 1, 2018, all changes in the fair market value of equity securities are recorded as a realized gains (loss) as a result of the adoption of ASU No. 2016-01. Gross realized gains and gross realized losses on investments available-for-sale (fixed maturities and short-term investments) are as follows: For The For The 2018 2017 2018 2017 (Dollars In Thousands) Gross realized gains $ 3,410 $ 1,933 $ 21,540 $ 14,968 Gross realized losses: Impairment losses $ (14 ) $ (273 ) $ (3,664 ) $ (8,259 ) Other realized losses $ (5,428 ) $ (1,243 ) $ (15,292 ) $ (5,884 ) |
Schedule of Investments' Gross Unrealized Losses and Fair Value of the Company's Investments that are Not Deemed to be Other-than-Temporarily Impaired | The following table includes the gross unrealized losses and fair value of the Company’s investments that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2017 : Less Than 12 Months 12 Months or More Total Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss (Dollars In Thousands) Residential mortgage-backed securities $ 765,641 $ (9,666 ) $ 408,460 $ (13,064 ) $ 1,174,101 $ (22,730 ) Commercial mortgage-backed securities 750,643 (8,521 ) 779,086 (21,031 ) 1,529,729 (29,552 ) Other asset-backed securities 86,506 (322 ) 134,316 (5,441 ) 220,822 (5,763 ) U.S. government-related securities 94,110 (688 ) 1,072,232 (31,489 ) 1,166,342 (32,177 ) Other government-related securities 24,830 (169 ) 115,294 (4,779 ) 140,124 (4,948 ) States, municipalities, and political subdivisions 170,268 (1,738 ) 1,027,747 (43,875 ) 1,198,015 (45,613 ) Corporate securities 5,026,417 (55,649 ) 10,947,027 (471,752 ) 15,973,444 (527,401 ) Redeemable preferred stock 22,048 (1,120 ) 23,197 (2,383 ) 45,245 (3,503 ) Equities 86,194 (1,400 ) 91,195 (7,371 ) 177,389 (8,771 ) $ 7,026,657 $ (79,273 ) $ 14,598,554 $ (601,185 ) $ 21,625,211 $ (680,458 ) The chart below summarizes the fair value (proceeds) and the gains (losses) realized on available-for-sale securities the Company sold that were in an unrealized gain position and an unrealized loss position. For The For The 2018 2017 2018 2017 (Dollars In Thousands) Securities in an unrealized gain position: Fair value (proceeds) $ 306,600 $ 121,459 $ 909,846 $ 566,064 Gains realized $ 3,410 $ 1,933 $ 21,540 $ 14,967 Securities in an unrealized loss position (1) : Fair value (proceeds) $ 122,317 $ 37,186 $ 380,493 $ 121,450 Losses realized $ (5,428 ) $ (1,243 ) $ (15,292 ) $ (5,884 ) (1) The Company made the decision to exit these holdings in conjunction with its overall asset/liability management process. The following table includes the gross unrealized losses and fair value of the Company’s investments that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of September 30, 2018 : Less Than 12 Months 12 Months or More Total Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss (Dollars In Thousands) Residential mortgage-backed securities $ 2,831,194 $ (80,839 ) $ 399,676 $ (24,692 ) $ 3,230,870 $ (105,531 ) Commercial mortgage-backed securities 1,433,287 (39,701 ) 740,262 (40,932 ) 2,173,549 (80,633 ) Other asset-backed securities 645,956 (9,131 ) 125,847 (7,251 ) 771,803 (16,382 ) U.S. government-related securities 551,939 (14,066 ) 1,012,450 (58,741 ) 1,564,389 (72,807 ) Other government-related securities 254,968 (7,405 ) 111,089 (14,230 ) 366,057 (21,635 ) States, municipalities, and political subdivisions 2,268,935 (51,019 ) 998,399 (88,908 ) 3,267,334 (139,927 ) Corporate securities 21,709,122 (782,983 ) 9,756,347 (1,136,265 ) 31,465,469 (1,919,248 ) Redeemable preferred stock 43,712 (1,902 ) 43,427 (5,321 ) 87,139 (7,223 ) $ 29,739,113 $ (987,046 ) $ 13,187,497 $ (1,376,340 ) $ 42,926,610 $ (2,363,386 ) |
Debt Securities, Trading, and Equity Securities | The chart below summarizes the realized gains (losses) on equity securities sold during the period and equity securities still held at the reporting date. For The Three Months Ended September 30, 2018 For The Nine Months Ended September 30, 2018 (Dollars In Thousands) Net gains (losses) recognized during the period on equity securities $ (6,925 ) $ (16,693 ) Less: net gains (losses) recognized on equity securities sold during the period $ (1,476 ) $ (3,858 ) Gains (losses) recognized during the period on equity securities still held $ (5,449 ) $ (12,835 ) |
Schedule of Amortized Cost and Fair Value of the Company's Investments Classified as Available-for-Sale | The amortized cost and fair value of the Company’s investments classified as available-for-sale are as follows: As of September 30, 2018 Amortized Gross Gross Fair Total OTTI (1) (Dollars In Thousands) Fixed maturities: Residential mortgage-backed securities $ 3,506,384 $ 5,808 $ (105,531 ) $ 3,406,661 $ — Commercial mortgage-backed securities 2,314,831 180 (80,633 ) 2,234,378 — Other asset-backed securities 1,456,768 13,749 (16,382 ) 1,454,135 — U.S. government-related securities 1,653,626 160 (72,807 ) 1,580,979 — Other government-related securities 546,356 2,925 (21,635 ) 527,646 — States, municipals, and political subdivisions 3,691,930 6,070 (139,927 ) 3,558,073 — Corporate securities 38,612,538 166,917 (1,919,248 ) 36,860,207 — Redeemable preferred stock 94,362 — (7,223 ) 87,139 — 51,876,795 195,809 (2,363,386 ) 49,709,218 — Short-term investments 310,721 — — 310,721 — $ 52,187,516 $ 195,809 $ (2,363,386 ) $ 50,019,939 $ — As of December 31, 2017 Amortized Gross Gross Fair Total OTTI (1) (Dollars In Thousands) Fixed maturities: Residential mortgage-backed securities $ 2,321,811 $ 19,412 $ (22,730 ) $ 2,318,493 $ 10 Commercial mortgage-backed securities 1,885,109 4,931 (29,552 ) 1,860,488 — Other asset-backed securities 1,234,376 20,936 (5,763 ) 1,249,549 — U.S. government-related securities 1,255,244 185 (32,177 ) 1,223,252 — Other government-related securities 280,780 9,401 (4,948 ) 285,233 — States, municipals, and political subdivisions 1,770,299 16,959 (45,613 ) 1,741,645 (37 ) Corporate securities 29,446,365 618,582 (527,401 ) 29,537,546 (1 ) Redeemable preferred stock 94,362 232 (3,503 ) 91,091 — 38,288,346 690,638 (671,687 ) 38,307,297 (28 ) Equity securities 696,706 22,319 (8,771 ) 710,254 — Short-term investments 470,883 — — 470,883 — $ 39,455,935 $ 712,957 $ (680,458 ) $ 39,488,434 $ (28 ) (1) These amounts are included in the gross unrealized gains and gross unrealized losses columns above. |
Schedule of Fair Value of Trading Securities | The fair values of the Company’s investments classified as trading are as follows: As of September 30, 2018 As of December 31, 2017 (Dollars In Thousands) Fixed maturities: Residential mortgage-backed securities $ 254,037 $ 259,694 Commercial mortgage-backed securities 135,403 146,804 Other asset-backed securities 111,770 138,097 U.S. government-related securities 58,081 27,234 Other government-related securities 43,030 63,925 States, municipals, and political subdivisions 296,618 326,925 Corporate securities 1,569,652 1,698,183 Redeemable preferred stock 3,165 3,327 2,471,756 2,664,189 Equity securities 3,801 5,244 Short-term investments 55,865 56,261 $ 2,531,422 $ 2,725,694 |
Schedule of Amortized Cost and Fair Value of Available-for-Sale and Held-to-Maturity Fixed Maturities, by Expected Maturity | The amortized cost and fair value of available-for-sale and held-to-maturity fixed maturities as of September 30, 2018 , by expected maturity, are shown below. Expected maturities of securities without a single maturity date are allocated based on estimated rates of prepayment that may differ from actual rates of prepayment. Available-for-sale Held-to-maturity Amortized Cost Fair Value Amortized Cost Fair Value (Dollars In Thousands) Due in one year or less $ 957,984 $ 955,779 $ — $ — Due after one year through five years 9,252,383 9,079,479 — — Due after five years through ten years 9,099,912 8,847,681 — — Due after ten years 32,566,516 30,826,279 2,653,605 2,577,841 $ 51,876,795 $ 49,709,218 $ 2,653,605 $ 2,577,841 |
Gain (Loss) on Investments | The charts below summarize the Company’s other-than-temporary impairments of investments. All of the impairments were related to fixed maturities. For The Three Months Ended September 30, 2018 For The Nine Months Ended September 30, 2018 Fixed Maturities Fixed Maturities (Dollars In Thousands) Other-than-temporary impairments $ (14 ) $ (715 ) Non-credit impairment losses recorded in other comprehensive income — (2,949 ) Net impairment losses recognized in earnings $ (14 ) $ (3,664 ) For The Three Months Ended September 30, 2017 For The Nine Months Ended Fixed Maturities Fixed Maturities (Dollars In Thousands) Other-than-temporary impairments $ (366 ) $ (494 ) Non-credit impairment losses recorded in other comprehensive income 93 (7,765 ) Net impairment losses recognized in earnings $ (273 ) $ (8,259 ) |
Schedule of Available-for-Sale Credit Losses on Fixed Maturities Held by the Company for Which a Portion of Other-than-Temporary Impairments were Recognized in Other Comprehensive Income (Loss) | The following chart is a rollforward of available-for-sale credit losses on fixed maturities held by the Company for which a portion of an other-than-temporary impairment was recognized in other comprehensive income (loss): For The For The 2018 2017 2018 2017 (Dollars In Thousands) Beginning balance $ 2 $ 2,783 $ 3,268 $ 12,685 Additions for newly impaired securities — 266 — 266 Additions for previously impaired securities — 6 2 2,791 Reductions for previously impaired securities due to a change in expected cash flows — (37 ) — (12,724 ) Reductions for previously impaired securities that were sold in the current period (2 ) (600 ) (3,270 ) (600 ) Ending balance $ — $ 2,418 $ — $ 2,418 |
Summary of Change in Unrealized Gains (Losses), Net of Income Tax, on Fixed Maturity and Equity Securities, Classified as Available-for-Sale | The change in unrealized gains (losses), net of income tax, on fixed matur ities, classified as available-for-sale is summarized as follows: For The For The 2018 2017 2018 2017 (Dollars In Thousands) Fixed maturities $ (229,609 ) $ 167,488 $ (1,727,358 ) $ 865,743 |
Schedule of Amortized Cost and Fair Value of the Company's Investments Classified as Held-to-Maturity | The amortized cost and fair value of the Company’s investments classified as held-to-maturity as of September 30, 2018 and December 31, 2017 , are as follows: As of September 30, 2018 Amortized Gross Holding Gross Holding Fair Total OTTI (Dollars In Thousands) Fixed maturities: Securities issued by affiliates: Red Mountain, LLC $ 736,605 $ — $ (77,492 ) $ 659,113 $ — Steel City, LLC 1,917,000 1,728 — 1,918,728 — $ 2,653,605 $ 1,728 $ (77,492 ) $ 2,577,841 $ — As of December 31, 2017 Amortized Gross Gross Fair Total OTTI (Dollars In Thousands) Fixed maturities: Securities issued by affiliates: Red Mountain, LLC $ 704,904 $ — $ (19,163 ) $ 685,741 $ — Steel City, LLC 2,014,000 76,586 — 2,090,586 — $ 2,718,904 $ 76,586 $ (19,163 ) $ 2,776,327 $ — |
FAIR VALUE OF FINANCIAL INSTR_2
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of September 30, 2018 : Measurement Category Level 1 Level 2 Level 3 Total (Dollars In Thousands) Assets: Fixed maturity securities - available-for-sale Residential mortgage-backed securities 4 $ — $ 3,406,661 $ — $ 3,406,661 Commercial mortgage-backed securities 4 — 2,214,911 19,467 2,234,378 Other asset-backed securities 4 — 951,874 502,261 1,454,135 U.S. government-related securities 4 946,679 634,300 — 1,580,979 State, municipalities, and political subdivisions 4 — 3,558,073 — 3,558,073 Other government-related securities 4 — 527,646 — 527,646 Corporate securities 4 — 36,231,923 628,284 36,860,207 Redeemable preferred stock 4 69,550 17,589 — 87,139 Total fixed maturity securities - available-for-sale 1,016,229 47,542,977 1,150,012 49,709,218 Fixed maturity securities - trading Residential mortgage-backed securities 3 — 254,037 — 254,037 Commercial mortgage-backed securities 3 — 135,403 — 135,403 Other asset-backed securities 3 — 83,758 28,012 111,770 U.S. government-related securities 3 26,859 31,222 — 58,081 State, municipalities, and political subdivisions 3 — 296,618 — 296,618 Other government-related securities 3 — 43,030 — 43,030 Corporate securities 3 — 1,564,429 5,223 1,569,652 Redeemable preferred stock 3 3,165 — — 3,165 Total fixed maturity securities - trading 30,024 2,408,497 33,235 2,471,756 Total fixed maturity securities 1,046,253 49,951,474 1,183,247 52,180,974 Equity securities 3 559,750 — 63,451 623,201 Other long-term investments (1) 3 & 4 52,728 402,312 180,578 635,618 Short-term investments 3 269,266 97,320 — 366,586 Total investments 1,927,997 50,451,106 1,427,276 53,806,379 Cash 3 161,173 — — 161,173 Assets related to separate accounts 3 Variable annuity 3 13,555,469 — — 13,555,469 Variable universal life 3 1,077,842 — — 1,077,842 Total assets measured at fair value on a recurring basis $ 16,722,481 $ 50,451,106 $ 1,427,276 $ 68,600,863 Liabilities: Annuity account balances (2) 3 $ — $ — $ 78,463 $ 78,463 Other liabilities (1) 3 & 4 8,243 333,156 460,373 801,772 Total liabilities measured at fair value on a recurring basis $ 8,243 $ 333,156 $ 538,836 $ 880,235 (1) Includes certain freestanding and embedded derivatives. (2) Represents liabilities related to fixed indexed annuities. (3) Fair Value through Net Income (4) Fair Value through Other Comprehensive Income The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of December 31, 2017 : Level 1 Level 2 Level 3 Total (Dollars In Thousands) Assets: Fixed maturity securities - available-for-sale Residential mortgage-backed securities $ — $ 2,318,493 $ — $ 2,318,493 Commercial mortgage-backed securities — 1,860,488 — 1,860,488 Other asset-backed securities — 745,184 504,365 1,249,549 U.S. government-related securities 958,775 264,477 — 1,223,252 State, municipalities, and political subdivisions — 1,741,645 — 1,741,645 Other government-related securities — 285,233 — 285,233 Corporate securities — 28,910,645 626,901 29,537,546 Redeemable preferred stock 72,471 18,620 — 91,091 Total fixed maturity securities - available-for-sale 1,031,246 36,144,785 1,131,266 38,307,297 Fixed maturity securities - trading Residential mortgage-backed securities — 259,694 — 259,694 Commercial mortgage-backed securities — 146,804 — 146,804 Other asset-backed securities — 102,875 35,222 138,097 U.S. government-related securities 21,183 6,051 — 27,234 State, municipalities, and political subdivisions — 326,925 — 326,925 Other government-related securities — 63,925 — 63,925 Corporate securities — 1,692,741 5,442 1,698,183 Redeemable preferred stock 3,327 — — 3,327 Total fixed maturity securities - trading 24,510 2,599,015 40,664 2,664,189 Total fixed maturity securities 1,055,756 38,743,800 1,171,930 40,971,486 Equity securities 649,981 — 65,517 715,498 Other long-term investments (1) 51,102 417,969 160,466 629,537 Short-term investments 394,394 132,750 — 527,144 Total investments 2,151,233 39,294,519 1,397,913 42,843,665 Cash 178,855 — — 178,855 Assets related to separate accounts Variable annuity 13,956,071 — — 13,956,071 Variable universal life 1,035,202 — — 1,035,202 Total assets measured at fair value on a recurring basis $ 17,321,361 $ 39,294,519 $ 1,397,913 $ 58,013,793 Liabilities: Annuity account balances (2) $ — $ — $ 83,472 $ 83,472 Other liabilities (1) 5,755 302,656 597,562 905,973 Total liabilities measured at fair value on a recurring basis $ 5,755 $ 302,656 $ 681,034 $ 989,445 (1) Includes certain freestanding and embedded derivatives. (2) Represents liabilities related to fixed indexed annuities. |
Schedule of Valuation Method for Material Financial Instruments Included in Level 3, as Well as the Unobservable Inputs Used in the Valuation of Those Financial Instruments | The following table presents the valuation method for material financial instruments included in Level 3, as well as the unobservable inputs used in the valuation of those financial instruments: Fair Value Valuation Technique Unobservable Input Range (Weighted Average) (Dollars In Thousands) Assets: Other asset-backed securities $ 502,020 Liquidation Liquidation value $90 - $97 ($94.92) Discounted cash flow Liquidity premium 0.0% - 1.40% (0.62%) Paydown rate 11.09% - 13.15% (12.38%) Corporate securities 621,392 Discounted cash flow Spread over treasury 0.90% - 4.23% (1.51%) Embedded derivatives - GLWB (2) $ 40,048 Actuarial cash flow model Mortality 87% to 100% of Lapse Ruark Predictive Model Utilization 99%. 10% of policies have a one-time over-utilization of 400% Nonperformance risk 0.13% - 0.88% Liabilities: (1) Embedded derivative - FIA 256,912 Actuarial cash flow model Expenses $145 per policy Withdrawal rate 1.5% prior to age 70, 100% of the RMD for ages 70+ Mortality 1994 MGDB table with company experience Lapse 1.0% - 30.0%, depending on duration/surrender charge period Nonperformance risk 0.13% - 0.88% Embedded derivative - IUL 95,739 Actuarial cash flow model Mortality 37% - 577% of 2015 VBT Primary Tables Lapse 0.5% - 0.10%, depending on duration/distribution channel and smoking class Nonperformance risk 0.13% - 0.88% (1) Excludes modified coinsurance arrangements. (2) The fair value for the GLWB embedded derivative is presented as a net asset. The following table presents the valuation method for material financial instruments included in Level 3, as well as the unobservable inputs used in the valuation of those financial instruments: Fair Value Valuation Technique Unobservable Input Range (Weighted Average) (Dollars In Thousands) Assets: Other asset-backed securities $ 504,228 Liquidation Liquidation value $90 - $97 ($94.91) Discounted cash flow Liquidity premium 0.06% - 1.17% (0.75%) Paydown Rate 11.31% - 11.97% (11.54%) Corporate securities 617,770 Discounted cash flow Spread over treasury 0.31% - 4.50% (1.06%) Liabilities: (1) Embedded derivatives - GLWB (2) $ 15,554 Actuarial cash flow model Mortality 91.1% to 106.6% of Lapse 1.0% - 30.0%, depending on product/duration/funded status of guarantee Utilization 99%. 10% of policies have a one-time over-utilization of 400% Nonperformance risk 0.11% - 0.79% Embedded derivative - FIA 218,676 Actuarial cash flow model Expenses $146 per policy Withdrawal rate 1.5% prior to age 70, 100% of the RMD for ages 70+ Mortality 1994 MGDB table with company experience Lapse 1.0% - 30.0%, depending on duration/surrender charge period Nonperformance risk 0.11% - 0.79% Embedded derivative - IUL 80,212 Actuarial cash flow model Mortality 34% - 152% of 2015 Lapse 0.5% - 10.0%, depending on duration/distribution channel and smoking class Nonperformance risk 0.11% - 0.79% (1) Excludes modified coinsurance arrangements. (2) The fair value for the GLWB embedded derivative is presented as a net liability. |
Schedule of Reconciliation of the Beginning and Ending Balances for Fair Value Measurements, for Which the Company Has Used Significant Unobservable Inputs (Level 3) | The following table presents a reconciliation of the beginning and ending balances for fair value measurements for the nine months ended September 30, 2017 , for which the Company has used significant unobservable inputs (Level 3): Total Realized and Unrealized Gains Total Realized and Unrealized Losses Total Gains (losses) included in Earnings related to Instruments still held at Beginning Balance Included in Earnings Included in Other Comprehensive Income Included in Earnings Included in Other Comprehensive Income Purchases Sales Issuances Settlements Transfers in/out of Level 3 Other Ending Balance (Dollars In Thousands) Assets: Fixed maturity securities available-for-sale Residential mortgage-backed securities $ 3 $ — $ 83 $ — $ — $ 11,862 $ (3 ) $ — $ — $ (11,944 ) $ (1 ) $ — $ — Other asset-backed securities 562,604 — 5,212 — (7,374 ) 100 (2,135 ) — — (6,643 ) 1,385 553,149 — Corporate securities 664,046 — 26,099 — (2,764 ) 85,822 (135,192 ) — — (10,353 ) (3,105 ) 624,553 — Total fixed maturity securities - available-for-sale 1,226,653 — 31,394 — (10,138 ) 97,784 (137,330 ) — — (28,940 ) (1,721 ) 1,177,702 — Fixed maturity securities - trading Other asset-backed securities 84,563 3,679 — (1,154 ) — — (52,516 ) — — — 918 35,490 3,397 Corporate securities 5,492 101 — — — — — — — — (69 ) 5,524 101 Total fixed maturity securities - trading 90,055 3,780 — (1,154 ) — — (52,516 ) — — — 849 41,014 3,498 Total fixed maturity securities 1,316,708 3,780 31,394 (1,154 ) (10,138 ) 97,784 (189,846 ) — — (28,940 ) (872 ) 1,218,716 3,498 Equity securities 65,786 1 — — — — (274 ) — — 3 — 65,516 2 Other long-term investments (1) 115,516 62,467 — (28,249 ) — — — — — — — 149,734 34,218 Short-term investments — — — — — — — — — — — — — Total investments 1,498,010 66,248 31,394 (29,403 ) (10,138 ) 97,784 (190,120 ) — — (28,937 ) (872 ) 1,433,966 37,718 Total assets measured at fair value on a recurring basis $ 1,498,010 $ 66,248 $ 31,394 $ (29,403 ) $ (10,138 ) $ 97,784 $ (190,120 ) $ — $ — $ (28,937 ) $ (872 ) $ 1,433,966 $ 37,718 Liabilities: Annuity account balances (2) $ 87,616 $ — $ — $ (2,973 ) $ — $ — $ — $ 402 $ 5,963 $ — $ — $ 85,028 $ — Other liabilities (1) 405,803 21,982 — (177,475 ) — — — — — — — 561,296 (155,493 ) Total liabilities measured at fair value on a recurring basis $ 493,419 $ 21,982 $ — $ (180,448 ) $ — $ — $ — $ 402 $ 5,963 $ — $ — $ 646,324 $ (155,493 ) (1) Represents certain freestanding and embedded derivatives. (2) Represents liabilities related to fixed indexed annuities. The following table presents a reconciliation of the beginning and ending balances for fair value measurements for the three months ended September 30, 2017 , for which the Company has used significant unobservable inputs (Level 3): Total Realized and Unrealized Gains Total Realized and Unrealized Losses Total Gains (losses) included in Earnings related to Instruments still held at Beginning Balance Included in Earnings Included in Other Comprehensive Income Included in Earnings Included in Other Comprehensive Income Purchases Sales Issuances Settlements Transfers in/out of Level 3 Other Ending Balance (Dollars In Thousands) Assets: Fixed maturity securities available-for-sale Residential mortgage-backed securities $ 11,862 $ — $ 83 $ — $ — $ — $ — $ — $ — $ (11,944 ) $ (1 ) $ — $ — Commercial mortgage-backed securities — — — — — — — — — — — — — Other asset-backed securities 552,963 — 1,682 — (2,285 ) 100 (109 ) — — — 798 553,149 — Corporate securities 662,654 — 8,301 — (2,222 ) 5,071 (42,242 ) — — (5,486 ) (1,523 ) 624,553 — Total fixed maturity securities - available-for-sale 1,227,479 — 10,066 — (4,507 ) 5,171 (42,351 ) — — (17,430 ) (726 ) 1,177,702 — Fixed maturity securities - trading Other asset-backed securities 54,923 — — (353 ) — — (19,188 ) — — — 108 35,490 (209 ) Corporate securities 5,520 27 — — — — — — — — (23 ) 5,524 27 Total fixed maturity securities - trading 60,443 27 — (353 ) — — (19,188 ) — — — 85 41,014 (182 ) Total fixed maturity securities 1,287,922 27 10,066 (353 ) (4,507 ) 5,171 (61,539 ) — — (17,430 ) (641 ) 1,218,716 (182 ) Equity securities 65,686 — — — — — (170 ) — — — — 65,516 — Other long-term investments (1) 93,245 56,491 — (2 ) — — — — — — — 149,734 56,489 Total investments 1,446,853 56,518 10,066 (355 ) (4,507 ) 5,171 (61,709 ) — — (17,430 ) (641 ) 1,433,966 56,307 Total assets measured at fair value on a recurring basis $ 1,446,853 $ 56,518 $ 10,066 $ (355 ) $ (4,507 ) $ 5,171 $ (61,709 ) $ — $ — $ (17,430 ) $ (641 ) $ 1,433,966 $ 56,307 Liabilities: Annuity account balances (2) $ 86,094 $ — $ — $ (977 ) $ — $ — $ — $ 9 $ 2,052 $ — $ — $ 85,028 $ — Other liabilities (1) 532,763 6,702 — (35,235 ) — — — — — — — 561,296 (28,533 ) Total liabilities measured at fair value on a recurring basis $ 618,857 $ 6,702 $ — $ (36,212 ) $ — $ — $ — $ 9 $ 2,052 $ — $ — $ 646,324 $ (28,533 ) (1) Represents certain freestanding and embedded derivatives. (2) Represents liabilities related to fixed indexed annuities. The following table presents a reconciliation of the beginning and ending balances for fair value measurements for the three months ended September 30, 2018 , for which the Company has used significant unobservable inputs (Level 3): Total Realized and Unrealized Gains Total Realized and Unrealized Losses Total Gains (losses) included in Earnings related to Instruments still held at Beginning Balance Included in Earnings Included in Other Comprehensive Income Included in Earnings Included in Other Comprehensive Income Purchases Sales Issuances Settlements Transfers in/out of Level 3 Other Ending Balance (Dollars In Thousands) Assets: Fixed maturity securities available-for-sale Residential mortgage-backed securities $ 21,780 $ — $ — $ — $ (538 ) $ — $ — $ — $ — $ (21,281 ) $ 39 $ — $ — Commercial mortgage-backed securities 47,227 — — — (1,212 ) — (151 ) — — (26,372 ) (25 ) 19,467 — Other asset-backed securities 515,701 — 17 (62 ) (14,802 ) — (24 ) — — — 1,431 502,261 — Corporate securities 644,811 — 1,422 — (4,044 ) 15,000 (47,935 ) — — 19,903 (873 ) 628,284 — Total fixed maturity securities - available-for-sale 1,229,519 — 1,439 (62 ) (20,596 ) 15,000 (48,110 ) — — (27,750 ) 572 1,150,012 — Fixed maturity securities - trading Other asset-backed securities 24,852 84 — (76 ) — 4,128 (926 ) — — — (50 ) 28,012 68 Corporate securities 5,254 — — (6 ) — — — — — — (25 ) 5,223 (6 ) Total fixed maturity securities - trading 30,106 84 — (82 ) — 4,128 (926 ) — — — (75 ) 33,235 62 Total fixed maturity securities 1,259,625 84 1,439 (144 ) (20,596 ) 19,128 (49,036 ) — — (27,750 ) 497 1,183,247 62 Equity securities 65,553 — — — — — (2,102 ) — — — — 63,451 287 Other long-term investments (1) 170,594 11,899 — (1,915 ) — — — — — — — 180,578 9,984 Total investments 1,495,772 11,983 1,439 (2,059 ) (20,596 ) 19,128 (51,138 ) — — (27,750 ) 497 1,427,276 10,333 Total assets measured at fair value on a recurring basis $ 1,495,772 $ 11,983 $ 1,439 $ (2,059 ) $ (20,596 ) $ 19,128 $ (51,138 ) $ — $ — $ (27,750 ) $ 497 $ 1,427,276 $ 10,333 Liabilities: Annuity account balances (2) $ 80,098 $ — $ — $ (896 ) $ — $ — $ — $ 40 $ 2,571 — $ — $ 78,463 $ — Other liabilities (1) 457,008 38,249 — (41,614 ) — — — — — — — 460,373 (3,365 ) Total liabilities measured at fair value on a recurring basis $ 537,106 $ 38,249 $ — $ (42,510 ) $ — $ — $ — $ 40 $ 2,571 $ — $ — $ 538,836 $ (3,365 ) (1) Represents certain freestanding and embedded derivatives. (2) Represents liabilities related to fixed indexed annuities. The following table presents a reconciliation of the beginning and ending balances for fair value measurements for the nine months ended September 30, 2018 , for which the Company has used significant unobservable inputs (Level 3): Total Realized and Unrealized Gains Total Realized and Unrealized Losses Total Gains (losses) included in Earnings related to Instruments still held at Beginning Balance Included in Earnings Included in Other Comprehensive Income Included in Earnings Included in Other Comprehensive Income Purchases Sales Issuances Settlements Transfers in/out of Level 3 Other Ending Balance (Dollars In Thousands) Assets: Fixed maturity securities available-for-sale Residential mortgage-backed securities $ — $ — $ — $ — $ (995 ) $ 22,225 $ — $ — $ — $ (21,281 ) $ 51 $ — $ — Commercial mortgage-backed securities — — — — (2,496 ) 48,621 (245 ) — — (26,372 ) (41 ) 19,467 — Other asset-backed securities 504,365 — 11,884 (62 ) (16,449 ) — (47 ) — — 222 2,348 502,261 — Corporate securities 626,901 — 8,483 — (22,973 ) 93,491 (86,388 ) — — 12,009 (3,239 ) 628,284 — Total fixed maturity securities - available-for-sale 1,131,266 — 20,367 (62 ) (42,913 ) 164,337 (86,680 ) — — (35,422 ) (881 ) 1,150,012 — Fixed maturity securities - trading Other asset-backed securities 35,222 278 — (3,674 ) — 8,728 (12,595 ) — — 164 (111 ) 28,012 (3,337 ) Corporate securities 5,442 — — (145 ) — — — — — — (74 ) 5,223 (145 ) Total fixed maturity securities - trading 40,664 278 — (3,819 ) — 8,728 (12,595 ) — — 164 (185 ) 33,235 (3,482 ) Total fixed maturity securities 1,171,930 278 20,367 (3,881 ) (42,913 ) 173,065 (99,275 ) — — (35,258 ) (1,066 ) 1,183,247 (3,482 ) Equity securities 65,518 1 — (1 ) — 36 (2,102 ) — — — (1 ) 63,451 224 Other long-term investments (1) 160,466 34,303 — (13,564 ) — — — — (627 ) — — 180,578 20,112 Short-term investments — — — — — — — — — — — — — Total investments 1,397,914 34,582 20,367 (17,446 ) (42,913 ) 173,101 (101,377 ) — (627 ) (35,258 ) (1,067 ) 1,427,276 16,854 Total assets measured at fair value on a recurring basis $ 1,397,914 $ 34,582 $ 20,367 $ (17,446 ) $ (42,913 ) $ 173,101 $ (101,377 ) $ — $ (627 ) $ (35,258 ) $ (1,067 ) $ 1,427,276 $ 16,854 Liabilities: Annuity account balances (2) $ 83,472 $ — $ — $ (2,749 ) $ — $ — $ — $ 570 $ 8,328 — $ — $ 78,463 $ — Other liabilities (1) 597,562 226,359 — (89,170 ) — — — — — — — 460,373 137,189 Total liabilities measured at fair value on a recurring basis $ 681,034 $ 226,359 $ — $ (91,919 ) $ — $ — $ — $ 570 $ 8,328 $ — $ — $ 538,836 $ 137,189 (1) Represents certain freestanding and embedded derivatives. (2) Represents liabilities related to fixed indexed annuities. |
Schedule of the Carrying Amounts and Estimated Fair Value of the Company's Financial Instruments | The carrying amounts and estimated fair values of the Company’s financial instruments as of the periods shown below are as follows: As of September 30, 2018 December 31, 2017 Fair Value Level Carrying Amounts Fair Values Carrying Amounts Fair Values (Dollars In Thousands) Assets: Mortgage loans on real estate 3 $ 7,572,349 $ 7,335,547 $ 6,817,723 $ 6,740,177 Policy loans 3 1,703,462 1,703,462 1,615,615 1,615,615 Fixed maturities, held-to-maturity (1) 3 2,653,605 2,577,841 2,718,904 2,776,327 Liabilities: Stable value product account balances 3 $ 5,211,668 $ 5,147,084 $ 4,698,371 $ 4,698,868 Future policy benefits and claims (2) 3 223,091 223,091 220,498 220,498 Other policyholders’ funds (3) 3 131,338 130,672 133,508 134,253 Debt: (4) Non-recourse funding obligations (5) 3 $ 2,890,435 $ 2,814,355 $ 2,952,822 $ 2,980,495 Subordinated funding obligations 3 110,000 97,451 — — Except as noted below, fair values were estimated using quoted market prices. (1) Securities purchased from unconsolidated affiliates, Red Mountain, LLC and Steel City, LLC. (2) Single premium immediate annuity without life contingencies. (3) Supplementary contracts without life contingencies. (4) Excludes capital lease obligations of $1.4 million and $1.7 million as of September 30, 2018 and December 31, 2017, respectively. (5) As of September 30, 2018, carrying amount of $2.6 billion and a fair value of $2.6 billion related to non-recourse funding obligations issued by Golden Gate and Golden Gate V. As of December 31, 2017, carrying amount of $2.7 billion and a fair value of $2.8 billion related to non-recourse funding obligations issued by Golden Gate and Golden Gate V. |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Realized Investments Gains and Losses | The following table sets forth realized investments gains and losses for the periods shown: Realized investment gains (losses) - derivative financial instruments For The For The 2018 2017 2018 2017 (Dollars In Thousands) Derivatives related to VA contracts: Interest rate futures $ 2,111 $ 549 $ (13,229 ) $ 16,746 Equity futures (5,733 ) (25,959 ) (23,025 ) (75,389 ) Currency futures 3,410 (6,092 ) 7,890 (22,366 ) Equity options (21,206 ) (23,307 ) (47,406 ) (76,376 ) Interest rate swaptions — (292 ) (14 ) (2,423 ) Interest rate swaps (41,288 ) 5,342 (131,147 ) 31,331 Total return swaps (32,343 ) (8,057 ) (35,908 ) (9,675 ) Embedded derivative - GLWB 22,931 485 55,595 (13,306 ) Funds withheld derivative 37,444 35,821 68,341 103,746 Total derivatives related to VA contracts (34,674 ) (21,510 ) (118,903 ) (47,712 ) Derivatives related to FIA contracts: Embedded derivative (14,360 ) (18,606 ) (7,957 ) (40,351 ) Equity futures (388 ) 66 (716 ) 161 Equity options 18,474 11,242 21,203 29,511 Total derivatives related to FIA contracts 3,726 (7,298 ) 12,530 (10,679 ) Derivatives related to IUL contracts: Embedded derivative (9,535 ) (297 ) (877 ) (10,958 ) Equity futures (1 ) 58 135 (878 ) Equity options 4,928 1,975 5,764 6,437 Total derivatives related to IUL contracts (4,608 ) 1,736 5,022 (5,399 ) Embedded derivative - Modco reinsurance treaties 10,811 (19,746 ) 138,652 (90,314 ) Derivatives with PLC (1) (1,913 ) 52,077 (66 ) 34,671 Other derivatives (52 ) 43 (59 ) 41 Total realized gains (losses) - derivatives $ (26,710 ) $ 5,302 $ 37,176 $ (119,392 ) (1) These derivatives include the Interest, YRT premium support, and portfolio maintenance agreements between certain of the Company’s subsidiaries and PLC. |
Components of the Gain or Loss on Derivatives that Quality as a Cash Flow Hedging Relationship | The following table presents the components of the gain or loss on derivatives that qualify as a cash flow hedging relationship. Gain (Loss) on Derivatives in Cash Flow Hedging Relationship Amount of Gains (Losses) Deferred in Accumulated Other Comprehensive Income (Loss) on Derivatives Amount and Location of Gains (Losses) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (Loss) Amount and Location of (Losses) Recognized in Income (Loss) on Derivatives (Effective Portion) (Effective Portion) (Ineffective Portion) Benefits and settlement expenses Realized investment gains (losses) (Dollars In Thousands) For The Three Months Ended September 30, 2018 Foreign currency swaps $ 190 $ (155 ) $ — Interest rate swaps 101 (326 ) — Total $ 291 $ (481 ) $ — For The Nine Months Ended September 30, 2018 Foreign currency swaps $ 3,772 $ (473 ) $ — Interest rate swaps 101 (326 ) — Total $ 3,873 $ (799 ) $ — For The Three Months Ended September 30, 2017 Foreign currency swaps $ 1,273 $ (38 ) $ — Total $ 1,273 $ (38 ) $ — For The Nine Months Ended September 30, 2017 Foreign currency swaps $ 55 $ (396 ) $ — Total $ 55 $ (396 ) $ — |
Schedule of Information About the Nature and Accounting Treatment of the Company's Primary Derivative Financial Instruments and the Location in and Effect on the Consolidated Financial Statements | The table below presents information about the nature and accounting treatment of the Company’s primary derivative financial instruments and the location in and effect on the consolidated condensed financial statements for the periods presented below: As of September 30, 2018 December 31, 2017 Notional Amount Fair Value Notional Amount Fair Value (Dollars In Thousands) Other long-term investments Cash flow hedges: Interest rate swaps $ 350,000 $ — $ — $ — Foreign currency swaps 117,178 10,902 117,178 6,016 Derivatives not designated as hedging instruments: Interest rate swaps 565,000 8,402 1,265,000 55,411 Total return swaps 482,523 3,676 190,938 135 Derivatives with PLC (1) 2,863,575 90,885 2,810,469 91,578 Embedded derivative - Modco reinsurance treaties 322,308 2,650 64,472 1,009 Embedded derivative - GLWB 2,692,724 87,043 2,116,935 67,879 Interest rate futures 875,566 8,329 1,071,870 3,178 Equity futures 205,872 2,387 62,266 154 Currency futures 135,112 1,096 1,117 2 Equity options 6,026,348 420,107 4,436,467 403,961 Interest rate swaptions — — 225,000 14 Other 157 141 157 200 $ 14,636,363 $ 635,618 $ 12,361,869 $ 629,537 Other liabilities Derivatives not designated as hedging instruments: Interest rate swaps $ 1,547,500 $ 26,321 $ 597,500 $ 2,960 Total return swaps — — 243,388 318 Embedded derivative - Modco reinsurance treaties 2,082,638 60,683 2,390,539 215,247 Funds withheld derivative 1,813,454 60,432 1,502,726 61,729 Embedded derivative - GLWB 1,385,123 46,995 1,939,320 83,427 Embedded derivative - FIA 2,459,246 256,912 1,951,650 218,676 Embedded derivative - IUL 219,226 95,739 168,349 80,212 Interest rate futures 348,749 7,122 230,404 917 Equity futures 77,916 1,043 318,795 2,593 Currency futures 79,861 15 255,248 2,087 Equity options 4,174,072 246,466 3,112,812 237,807 Other 341 44 — — $ 14,188,126 $ 801,772 $ 12,710,731 $ 905,973 (1) These derivatives include the Interest, YRT premium support, and portfolio maintenance agreements between certain of the Company’s subsidiaries and PLC. |
OFFSETTING OF ASSETS AND LIAB_2
OFFSETTING OF ASSETS AND LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Offsetting [Abstract] | |
Schedule of Derivative Instruments by Assets | Gross Amounts of Recognized Assets Gross Amounts Offset in the Statement of Financial Position Net Amounts of Assets Presented in the Statement of Financial Position Gross Amounts Not Offset in the Statement of Financial Position Financial Instruments Collateral Received Net Amount (Dollars In Thousands) Offsetting of Assets Derivatives: Free-Standing derivatives $ 454,899 $ — $ 454,899 $ 270,878 $ 68,809 $ 115,212 Total derivatives, subject to a master netting arrangement or similar arrangement 454,899 — 454,899 270,878 68,809 115,212 Derivatives not subject to a master netting arrangement or similar arrangement Embedded derivative - Modco reinsurance treaties 2,650 — 2,650 — — 2,650 Embedded derivative - GLWB 87,043 — 87,043 — — 87,043 Derivatives with PLC 90,885 — 90,885 — — 90,885 Other 141 — 141 — — 141 Total derivatives, not subject to a master netting arrangement or similar arrangement 180,719 — 180,719 — — 180,719 Total derivatives 635,618 — 635,618 270,878 68,809 295,931 Total Assets $ 635,618 $ — $ 635,618 $ 270,878 $ 68,809 $ 295,931 Gross Amounts of Recognized Assets Gross Amounts Offset in the Statement of Financial Position Net Amounts of Assets Presented in the Statement of Financial Position Gross Amounts Not Offset in the Statement of Financial Position Financial Instruments Collateral Received Net Amount (Dollars In Thousands) Offsetting of Assets Derivatives: Free-Standing derivatives $ 468,871 $ — $ 468,871 $ 242,105 $ 108,830 $ 117,936 Total derivatives, subject to a master netting arrangement or similar arrangement 468,871 — 468,871 242,105 108,830 117,936 Derivatives not subject to a master netting arrangement or similar arrangement Embedded derivative - Modco reinsurance treaties 1,009 — 1,009 — — 1,009 Embedded derivative - GLWB 67,879 — 67,879 — — 67,879 Derivatives with PLC 91,578 — 91,578 — — 91,578 Other 200 — 200 — — 200 Total derivatives, not subject to a master netting arrangement or similar arrangement 160,666 — 160,666 — — 160,666 Total derivatives 629,537 — 629,537 242,105 108,830 278,602 Total Assets $ 629,537 $ — $ 629,537 $ 242,105 $ 108,830 $ 278,602 |
Schedule of Derivative Instruments by Liabilities | Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Statement of Financial Position Net Amounts of Liabilities Presented in the Statement of Financial Position Gross Amounts Not Offset in the Statement of Financial Position Financial Instruments Collateral Posted Net Amount (Dollars In Thousands) Offsetting of Liabilities Derivatives: Free-Standing derivatives $ 280,967 $ — $ 280,967 $ 270,878 $ 10,089 $ — Total derivatives, subject to a master netting arrangement or similar arrangement 280,967 — 280,967 270,878 10,089 — Derivatives, not subject to a master netting arrangement or similar arrangement Embedded derivative - Modco reinsurance treaties 60,683 — 60,683 — — 60,683 Funds withheld derivative 60,432 — 60,432 — — 60,432 Embedded derivative - GLWB 46,995 — 46,995 — — 46,995 Embedded derivative - FIA 256,912 — 256,912 — — 256,912 Embedded derivative - IUL 95,739 — 95,739 — — 95,739 Other 44 — 44 — — 44 Total derivatives, not subject to a master netting arrangement or similar arrangement 520,805 — 520,805 — — 520,805 Total derivatives 801,772 — 801,772 270,878 10,089 520,805 Repurchase agreements (1) 417,094 — 417,094 — — 417,094 Total Liabilities $ 1,218,866 $ — $ 1,218,866 $ 270,878 $ 10,089 $ 937,899 (1) Borrowings under repurchase agreements are for a term less than 90 days. Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Statement of Financial Position Net Amounts of Liabilities Presented in the Statement of Financial Position Gross Amounts Not Offset in the Statement of Financial Position Financial Instruments Collateral Posted Net Amount (Dollars In Thousands) Offsetting of Liabilities Derivatives: Free-Standing derivatives $ 246,682 $ — $ 246,682 $ 242,105 $ 4,577 $ — Total derivatives, subject to a master netting arrangement or similar arrangement 246,682 — 246,682 242,105 4,577 — Derivatives not subject to a master netting arrangement or similar arrangement Embedded derivative - Modco reinsurance treaties 215,247 — 215,247 — — 215,247 Funds withheld derivative 61,729 — 61,729 — — 61,729 Embedded derivative - GLWB 83,427 — 83,427 — — 83,427 Embedded derivative - FIA 218,676 — 218,676 — — 218,676 Embedded derivative - IUL 80,212 — 80,212 — — 80,212 Total derivatives, not subject to a master netting arrangement or similar arrangement 659,291 — 659,291 — — 659,291 Total derivatives 905,973 — 905,973 242,105 4,577 659,291 Repurchase agreements (1) 885,000 — 885,000 — — 885,000 Total Liabilities $ 1,790,973 $ — $ 1,790,973 $ 242,105 $ 4,577 $ 1,544,291 (1) Borrowings under repurchase agreements are for a term less than 90 days. |
MORTGAGE LOANS (Tables)
MORTGAGE LOANS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
MORTGAGE LOANS | |
Allowance for Credit Losses on Financing Receivables | A charge off is recorded by eliminating the allowance against the mortgage loan and recording the renegotiated loan or the collateral property related to the loan as investment real estate on the balance sheet, which is carried at the lower of the appraised fair value of the property or the unpaid principal balance of the loan, less estimated selling costs associated with the property. For The Nine Months Ended September 30, 2018 (Dollars In Thousands) Beginning balance, December 31, 2017 $ — Charge offs — Recoveries (24 ) Provision 1,505 Ending balance, September 30, 2018 $ 1,481 |
Schedule of an Analysis of the Delinquent Loans | An analysis of the delinquent loans is shown in the following chart. Greater 30-59 Days 60-89 Days than 90 Days Total As of September 30, 2018 Delinquent Delinquent Delinquent Delinquent (Dollars In Thousands) Commercial mortgage loans $ 1,180 $ — $ 1,243 $ 2,423 Number of delinquent commercial mortgage loans 1 — 1 2 As of December 31, 2017 Commercial mortgage loans $ 1,817 $ — $ — $ 1,817 Number of delinquent commercial mortgage loans 2 — — 2 |
Impaired Financing Receivables | Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized Cash Basis Interest Income (Dollars In Thousands) As of September 30, 2018 Commercial mortgage loans: With no related allowance recorded $ — $ — $ — $ — $ — $ — With an allowance recorded 5,714 5,327 1,481 1,905 197 225 As of December 31, 2017 Commercial mortgage loans: With no related allowance recorded $ — $ — $ — $ — $ — $ — With an allowance recorded — — — — — — |
Schedule of Mortgage Loans Modified in Troubled Debt Restructuring | Mortgage loans that were modified in a troubled debt restructuring as of September 30, 2018 and December 31, 2017 were as follows: Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment (Dollars In Thousands) As of September 30, 2018 Troubled debt restructuring: Commercial mortgage loans 1 $ 2,694 $ 1,748 As of December 31, 2017 Troubled debt restructuring: Commercial mortgage loans 1 $ 418 $ 418 |
DEBT AND OTHER OBLIGATIONS (Tab
DEBT AND OTHER OBLIGATIONS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Non-Recourse Funding Obligations Outstanding | Non-recourse funding obligations outstanding as of September 30, 2018 , on a consolidated basis, are shown in the following table: Issuer Outstanding Principal Carrying Value (1) Maturity Year Year-to-Date Weighted-Avg Interest Rate (Dollars In Thousands) Golden Gate Captive Insurance Company (2)(3) $ 1,917,000 $ 1,917,000 2039 4.75 % Golden Gate II Captive Insurance Company 309,849 256,157 2052 4.07 % Golden Gate V Vermont Captive Insurance Company (2)(3) 655,000 714,921 2037 5.12 % MONY Life Insurance Company (3) 1,091 2,357 2024 6.19 % Total $ 2,882,940 $ 2,890,435 (1) Carrying values include premiums and discounts and do not represent unpaid principal balances. (2) Obligations are issued to non-consolidated subsidiaries of PLC. These obligations collateralize certain held-to-maturity securities issued by wholly owned subsidiaries of the Company. (3) Fixed rate obligations. Non-recourse funding obligations outstanding as of December 31, 2017 , on a consolidated basis, are shown in the following table: Issuer Outstanding Principal Carrying Value (1) Maturity Year Year-to-Date Weighted-Avg Interest Rate (Dollars In Thousands) Golden Gate Captive Insurance Company (2)(3) $ 2,014,000 $ 2,014,000 2039 4.75 % Golden Gate II Captive Insurance Company 309,849 255,132 2052 3.11 % Golden Gate V Vermont Captive Insurance Company (2)(3) 620,000 681,285 2037 5.12 % MONY Life Insurance Company (3) 1,091 2,405 2024 6.19 % Total $ 2,944,940 $ 2,952,822 (1) Carrying values include premiums and discounts and do not represent unpaid principal balances. (2) Obligations are issued to non-consolidated subsidiaries of PLC. These obligations collateralize certain held-to-maturity securities issued by wholly owned subsidiaries of the Company. (3) Fixed rate obligations. |
Schedule of Collateral Pledged for Repurchase Agreements | The following table provides the amount by asset class of securities of collateral pledged for repurchase agreements and securities that have been loaned as part of securities lending transactions as of September 30, 2018 and December 31, 2017: Repurchase Agreements, Securities Lending Transactions, and Repurchase-to-Maturity Transactions Accounted for as Secured Borrowings Remaining Contractual Maturity of the Agreements As of September 30, 2018 (Dollars In Thousands) Overnight and Continuous Up to 30 days 30-90 days Greater Than 90 days Total Repurchase agreements and repurchase-to-maturity transactions U.S. Treasury and agency securities $ 401,011 $ 56,513 $ — $ — $ 457,524 Mortgage loans — — — — — Total repurchase agreements and repurchase-to-maturity transactions 401,011 56,513 — — 457,524 Securities lending transactions Fixed maturities 91,040 — — — 91,040 Equity securities 982 — — — 982 Redeemable preferred stock — — — — — Other government related securities — — — — — Total securities lending transactions 92,022 — — — 92,022 Total securities $ 493,033 $ 56,513 $ — $ — $ 549,546 Repurchase Agreements, Securities Lending Transactions, and Repurchase-to-Maturity Transactions Accounted for as Secured Borrowings Remaining Contractual Maturity of the Agreements As of December 31, 2017 (Dollars In Thousands) Overnight and Continuous Up to 30 days 30-90 days Greater Than 90 days Total Repurchase agreements and repurchase-to-maturity transactions U.S. Treasury and agency securities $ 307,633 $ — $ — $ — $ 307,633 Mortgage loans 698,974 — — — 698,974 Total repurchase agreements and repurchase-to-maturity transactions 1,006,607 — — — 1,006,607 Securities lending transactions Corporate securities 118,817 — — — 118,817 Equity securities 5,699 — — — 5,699 Redeemable preferred stock 755 — — — 755 Total securities lending transactions 125,271 — — — 125,271 Total securities $ 1,131,878 $ — $ — $ — $ 1,131,878 |
EMPLOYEE BENEFIT PLANS (Tables)
EMPLOYEE BENEFIT PLANS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Pension and Other Postretirement Benefits Cost (Reversal of Cost) [Abstract] | |
Components of the Net Periodic Benefit Cost | Components of the net periodic benefit cost of PLC’s defined benefit pension plan for the three and nine months ended September 30, 2018 and 2017 , are as follows: For The For The 2018 2017 2018 2017 Qualified Nonqualified Qualified Nonqualified Qualified Pension Plan Nonqualified Excess Pension Plan Qualified Nonqualified (Dollars In Thousands) Service cost — benefits earned during the period $ 3,006 $ 288 $ 3,348 $ 334 $ 9,888 $ 1,062 $ 10,044 $ 1,002 Interest cost on projected benefit obligation 2,577 359 2,191 297 7,371 1,077 6,573 891 Expected return on plan assets (4,743 ) — (3,352 ) — (12,795 ) — (10,056 ) — Amortization of prior service cost — — — — — — — — Amortization of actuarial loss/(gain) — 196 — 118 — 726 — 354 Preliminary net periodic benefit cost 840 843 2,187 749 4,464 2,865 6,561 2,247 Settlement/curtailment expense (1) — 986 — — — 986 — — Total net periodic benefit costs $ 840 $ 1,829 $ 2,187 $ 749 $ 4,464 $ 3,851 $ 6,561 $ 2,247 (1) The unfunded excess benefit plan triggered settlement accounting for the nine months ended September 30, 2018 since total lump sum payments exceeded the settlement threshold of service cost plus interest cost. |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Summary of Changes in the Accumulated Balances for Each Component of AOCI | The following tables summarize the changes in the accumulated balances for each component of accumulated other comprehensive income (loss) (“AOCI”) as of September 30, 2018 and December 31, 2017 . Changes in Accumulated Other Comprehensive Income (Loss) by Component Unrealized Gains and Losses on Investments (2) Accumulated Gain and Loss Derivatives Total Accumulated Other Comprehensive Income (Loss) (Dollars In Thousands, Net of Tax) Beginning Balance, December 31, 2017 $ 23,069 $ 747 $ 23,816 Other comprehensive income (loss) before reclassifications (1,198,669 ) 3,060 (1,195,609 ) Other comprehensive income (loss) relating to other-than-temporary impaired investments for which a portion has been recognized in earnings 22 — 22 Amounts reclassified from accumulated other comprehensive income (loss) (1) (2,042 ) 631 (1,411 ) Net current-period other comprehensive income (loss) (1,200,689 ) 3,691 (1,196,998 ) Cumulative effect adjustment (10,552 ) — (10,552 ) Ending Balance, September 30, 2018 $ (1,188,172 ) $ 4,438 $ (1,183,734 ) (1) See Reclassification table below for details. (2) As of September 30, 2018, net unrealized losses reported in AOCI were offset by $524.1 million due to the impact those net unrealized losses would have had on certain of the Company’s insurance assets and liabilities if the net unrealized losses had been recognized in net income. Changes in Accumulated Other Comprehensive Income (Loss) by Component Unrealized Gains and Losses on Investments (2) Accumulated Gain and Loss Derivatives Total Accumulated Other Comprehensive Income (Loss) (Dollars In Thousands, Net of Tax) Beginning Balance, December 31, 2016 $ (655,767 ) $ 727 $ (655,040 ) Other comprehensive income (loss) before reclassifications 699,097 (563 ) 698,534 Other comprehensive income (loss) relating to other-than-temporary impaired investments for which a portion has been recognized in earnings 7,153 — 7,153 Amounts reclassified from accumulated other comprehensive income (loss) (1) (944 ) 451 (493 ) Net current-period other comprehensive income (loss) 705,306 (112 ) 705,194 Cumulative effect adjustments (26,470 ) 132 (26,338 ) Ending Balance, December 31, 2017 $ 23,069 $ 747 $ 23,816 (1) See Reclassification table below for details. (2) As of December 31, 2016 and December 31, 2017, net unrealized losses reported in AOCI were offset by $424.1 million and $(6.3) million, respectively, due to the impact those net unrealized losses would have had on certain of the Company’s insurance assets and liabilities if the net unrealized losses had been recognized in net income. |
Schedule of Reclassifications Amounts Out of AOCI | The following tables summarize the reclassifications amounts out of AOCI for the three and nine months ended September 30, 2018 and 2017 . Reclassifications Out of Accumulated Other Comprehensive Income (Loss) For The Three Months Ended September 30, 2018 Amount Affected Line Item in the (Dollars In Thousands) Gains and losses on derivative instruments Net settlement (expense)/benefit (1) $ (481 ) Benefits and settlement expenses, net of reinsurance ceded (481 ) Total before tax 101 Tax (expense) or benefit $ (380 ) Net of tax Unrealized gains and losses on available-for-sale securities Net investment gains (losses) $ (2,018 ) Realized investment gains (losses): All other investments Impairments recognized in earnings (14 ) Net impairment losses recognized in earnings (2,032 ) Total before tax 427 Tax (expense) or benefit $ (1,605 ) Net of tax (1) See Note 7, Derivative Financial Instruments for additional information For The Nine Months September 30, 2018 Amount Affected Line Item in the (Dollars In Thousands) Gains and losses on derivative instruments Net settlement (expense)/benefit (1) $ (799 ) Benefits and settlement expenses, net of reinsurance ceded (799 ) Total before tax 168 Tax (expense) or benefit $ (631 ) Net of tax Unrealized gains and losses on available-for-sale securities Net investment gains (losses) $ 6,248 Realized investment gains (losses): All other investments Impairments recognized in earnings (3,664 ) Net impairment losses recognized in earnings 2,584 Total before tax (542 ) Tax (expense) or benefit $ 2,042 Net of tax (1) See Note 7, Derivative Financial Instruments for additional information Reclassifications Out of Accumulated Other Comprehensive Income (Loss) For The Three Months Ended September 30, 2017 Amount Affected Line Item in the (Dollars In Thousands) Gains and losses on derivative instruments Net settlement (expense)/benefit (1) $ (38 ) Benefits and settlement expenses, net of reinsurance ceded (38 ) Total before tax 14 Tax (expense) or benefit $ (24 ) Net of tax Unrealized gains and losses on available-for-sale securities Net investment gains (losses) $ 690 Realized investment gains (losses): All other investments Impairments recognized in earnings (273 ) Net impairment losses recognized in earnings 417 Total before tax (146 ) Tax (expense) or benefit $ 271 Net of tax For The Nine Months Ended September 30, 2017 Amount Affected Line Item in the (Dollars In Thousands) Gains and losses on derivative instruments Net settlement (expense)/benefit (1) $ (396 ) Benefits and settlement expenses, net of reinsurance ceded (396 ) Total before tax 139 Tax (expense) or benefit $ (257 ) Net of tax Unrealized gains and losses on available-for-sale securities Net investment gains (losses) $ 9,084 Realized investment gains (losses): All other investments Impairments recognized in earnings (8,259 ) Net impairment losses recognized in earnings 825 Total before tax (289 ) Tax (expense) or benefit $ 536 Net of tax |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Income Tax Rate Reconciliation | The Company’s effective tax rate related to continuing operations varied from the maximum federal income tax rates as follows: For The Three Months Ended September 30, For The Nine Months Ended September 30, 2018 2017 2018 2017 Statutory federal income tax rate applied to pre-tax income 21.0 % 35.0 % 21.0 % 35.0 % State income taxes 0.5 0.4 0.5 0.5 Investment income not subject to tax (3.4 ) (4.0 ) (3.9 ) (3.6 ) Uncertain tax positions — (0.1 ) — 0.2 Change in State Tax Rate — — (0.8 ) — Prior period adjustments — (1.7 ) — (0.8 ) Other (0.6 ) (0.1 ) (0.5 ) 0.1 17.5 % 29.5 % 16.3 % 31.4 % |
OPERATING SEGMENTS (Tables)
OPERATING SEGMENTS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Summary of Financial Information for the Company's Segments | The following tables present a summary of results and reconciles pre-tax adjusted operating income (loss) to consolidated income before income tax and net income: For The For The 2018 2017 2018 2017 (Dollars In Thousands) Revenues Life Marketing $ 407,708 $ 397,096 $ 1,195,074 $ 1,174,048 Acquisitions 581,054 375,819 1,469,787 1,164,650 Annuities 110,386 110,870 321,880 357,589 Stable Value Products 59,328 49,933 158,944 132,863 Asset Protection 90,926 93,799 266,747 277,433 Corporate and Other 20,561 77,875 90,686 109,628 Total revenues $ 1,269,963 $ 1,105,392 $ 3,503,118 $ 3,216,211 Pre-tax Adjusted Operating Income (Loss) Life Marketing $ 3,647 10,798 (18,326 ) $ 55,217 Acquisitions 93,648 62,880 208,206 184,825 Annuities 36,249 51,779 112,234 130,128 Stable Value Products 27,126 27,992 76,198 74,258 Asset Protection 7,051 5,187 16,991 13,812 Corporate and Other (41,927 ) (38,054 ) (119,474 ) (107,741 ) Pre-tax adjusted operating income 125,794 120,582 275,829 350,499 Realized (losses) gains on investments and derivatives (30,624 ) 45,400 (97,829 ) 35,413 Income before income tax 95,170 165,982 178,000 385,912 Income tax expense (16,646 ) (49,016 ) (28,933 ) (120,975 ) Net income $ 78,524 $ 116,966 $ 149,067 $ 264,937 Pre-tax adjusted operating income $ 125,794 $ 120,582 $ 275,829 $ 350,499 Adjusted operating income tax (expense) benefit (23,077 ) (33,126 ) (49,477 ) (108,580 ) After-tax adjusted operating income 102,717 87,456 226,352 241,919 Realized (losses) gains on investments and derivatives (30,624 ) 45,400 (97,829 ) 35,413 Income tax benefit (expense) on adjustments 6,431 (15,890 ) 20,544 (12,395 ) Net income $ 78,524 $ 116,966 $ 149,067 $ 264,937 Realized investment (losses) gains: Derivative financial instruments $ (26,710 ) $ 5,302 $ 37,176 $ (119,392 ) All other investments (20,156 ) 18,150 (157,350 ) 94,526 Net impairment losses recognized in earnings (14 ) (273 ) (3,664 ) (8,259 ) Less: related amortization (1) (5,859 ) (12,123 ) 5,060 (38,570 ) Less: VA GLWB economic cost (10,397 ) (10,098 ) (31,069 ) (29,968 ) Realized (losses) gains on investments and derivatives $ (30,624 ) $ 45,400 $ (97,829 ) $ 35,413 (1) Includes amortization of DAC/VOBA and benefits and settlement expenses that are impacted by realized gains (losses). Operating Segment Assets (Dollars In Thousands) Life Marketing Acquisitions Annuities Stable Value Products Investments and other assets $ 14,709,504 $ 32,234,422 $ 21,083,522 $ 5,083,328 DAC and VOBA 1,468,989 455,343 876,390 7,001 Other intangibles 267,087 32,622 160,118 7,556 Goodwill 200,274 14,524 336,677 113,813 Total assets $ 16,645,854 $ 32,736,911 $ 22,456,707 $ 5,211,698 Asset Protection Corporate and Other Total Consolidated Investments and other assets $ 824,282 $ 12,857,563 $ 86,792,621 DAC and VOBA 171,661 — 2,979,384 Other intangibles 125,251 33,194 625,828 Goodwill 128,182 — 793,470 Total assets $ 1,249,376 $ 12,890,757 $ 91,191,303 Operating Segment Assets (Dollars In Thousands) Life Marketing Acquisitions Annuities Stable Value Products Investments and other assets $ 14,917,752 $ 19,588,133 $ 20,774,566 $ 4,569,639 DAC and VOBA 1,320,776 74,862 772,634 6,864 Other intangibles 281,705 34,548 170,117 8,056 Goodwill 200,274 14,524 336,677 113,813 Total assets $ 16,720,507 $ 19,712,067 $ 22,053,994 $ 4,698,372 Asset Protection Corporate and Other Total Consolidated Investments and other assets $ 708,605 $ 14,893,253 $ 75,451,948 DAC and VOBA 30,265 — 2,205,401 Other intangibles 133,234 35,256 662,916 Goodwill 128,182 — 793,470 Total assets $ 1,000,286 $ 14,928,509 $ 79,113,735 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) - USD ($) $ in Thousands | Jan. 01, 2019 | Sep. 30, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Decrease in retained earnings | $ (987,996) | $ (916,971) | ||
Cumulative effect adjustments | (88,594) | |||
Retained Earnings | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cumulative effect adjustments | (78,042) | |||
Accumulated Other Comprehensive Income (Loss) | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cumulative effect adjustments | $ (10,552) | |||
Accounting Standards Update 2016-02 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Right-of-use asset and lease liability | $ 21,000 | |||
ASU No. 2016-01 - Financial Instruments - Recognition and Measurement of Financial Assets and Financial Liabilities | Retained Earnings | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cumulative effect adjustments | $ 10,600 | |||
ASU No. 2016-01 - Financial Instruments - Recognition and Measurement of Financial Assets and Financial Liabilities | Accumulated Other Comprehensive Income (Loss) | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cumulative effect adjustments | (10,600) | |||
Difference between Revenue Guidance in Effect before and after Topic 606 | ASU No. 2014-09 - Revenue from Contracts with Customers | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Decrease in retained earnings | $ 88,600 | |||
Scenario, Forecast | ASU No. 2017-08 - Receivables | Retained Earnings | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cumulative effect adjustments | $ (56,100) |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Effect of New Accounting Pronouncements (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Balance Sheet | |||||
Deferred policy acquisition costs and value of business acquired | $ 2,979,384 | $ 2,979,384 | $ 2,205,401 | ||
Other liabilities | 2,150,163 | 2,150,163 | $ 1,859,254 | ||
Statements of Income | |||||
Other income | 80,906 | $ 82,031 | 241,334 | $ 243,501 | |
Amortization of deferred policy acquisition costs and value of business acquired | 33,469 | 4,267 | 144,172 | 48,505 | |
Other operating expenses, net of reinsurance ceded | 190,382 | $ 192,354 | 582,795 | $ 577,911 | |
Before ASC 606 | |||||
Balance Sheet | |||||
Deferred policy acquisition costs and value of business acquired | 2,840,000 | 2,840,000 | |||
Other liabilities | 1,891,400 | 1,891,400 | |||
Statements of Income | |||||
Other income | 82,400 | 244,900 | |||
Amortization of deferred policy acquisition costs and value of business acquired | 21,900 | 108,100 | |||
Other operating expenses, net of reinsurance ceded | $ 203,200 | $ 622,300 |
SIGNIFICANT TRANSACTIONS - Narr
SIGNIFICANT TRANSACTIONS - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2018 | May 01, 2018 | |
Business Combination Segment Allocation [Line Items] | |||
Coinsurance basis percentage | 100.00% | ||
Ceding commissions for reinsurance | $ 422.4 | ||
Statutory reserves resulting from reinsurance business acquired | $ 13,300 | ||
Life Business | |||
Business Combination Segment Allocation [Line Items] | |||
Revenue | $ 218.1 | $ 360.9 | |
Net income | 26.1 | 33.7 | |
Acquisition related costs | $ 5.5 | $ 5.5 |
SIGNIFICANT TRANSACTIONS - Purc
SIGNIFICANT TRANSACTIONS - Purchase Consideration (Details) - Life Business - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | May 01, 2018 | |
ASSETS | |||||
Fixed maturities | $ 12,588,512 | ||||
Mortgage loans | 435,405 | ||||
Policy loans | 131,489 | ||||
Total investments | 13,155,406 | ||||
Cash | 20,669 | ||||
Accrued investment income | 151,610 | ||||
Reinsurance receivables | 337 | ||||
Value of business acquired | 336,437 | ||||
Other assets | 2,542 | ||||
Total assets | 13,667,001 | ||||
LIABILITIES | |||||
Future policy benefits and claims | 11,744,496 | ||||
Unearned premiums | 0 | ||||
Total policy liabilities and accruals | 11,744,496 | ||||
Annuity account balances | 1,823,444 | ||||
Other policyholders’ funds | 41,954 | ||||
Other liabilities | 57,107 | ||||
Total liabilities | 13,667,001 | ||||
NET ASSETS ACQUIRED | 0 | ||||
Pro Forma [Abstract] | |||||
Revenue | $ 1,269,963 | $ 1,418,743 | $ 3,826,857 | $ 4,170,636 | |
Net income | $ 78,524 | $ 152,971 | $ 195,211 | $ 369,826 | |
Expected Amortization | |||||
Remainder of 2018 | 5,265 | ||||
2,019 | 21,063 | ||||
2,020 | 19,950 | ||||
2,021 | 18,329 | ||||
2,022 | $ 16,611 |
MONY CLOSED BLOCK OF BUSINESS -
MONY CLOSED BLOCK OF BUSINESS - Summary of Financial Information of the Policyholder Dividend Obligation (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 | |
Closed block liabilities | ||||
Future policy benefits, policyholders’ account balances and other policyholder liabilities | $ 5,699,118 | $ 5,791,867 | ||
Policyholder dividend obligation | 0 | 160,712 | $ 136,004 | $ 31,932 |
Other liabilities | 42,640 | 30,764 | ||
Total closed block liabilities | 5,741,758 | 5,983,343 | ||
Closed block assets | ||||
Fixed maturities, available-for-sale, at fair value | 4,339,342 | 4,669,856 | ||
Mortgage loans on real estate | 76,608 | 108,934 | ||
Policy loans | 679,760 | 700,769 | ||
Cash | 72,868 | 31,182 | ||
Other assets | 144,077 | 122,637 | ||
Total closed block assets | 5,312,655 | 5,633,378 | ||
Excess of reported closed block liabilities over closed block assets | 429,103 | 349,965 | ||
Portion of above representing accumulated other comprehensive income: | ||||
Net unrealized investment gains (losses) net of policyholder dividend obligation: $(149,219) and $(13,429); and net of income tax: $57,054 and $2,820 | (96,749) | 0 | ||
Future earnings to be recognized from closed block assets and closed block liabilities | 332,354 | 349,965 | ||
Net unrealized investment gains (losses) allocated to policyholder dividend obligation, net of deferred tax benefits | (149,219) | (13,429) | ||
Net unrealized investment gains (losses), income tax | $ 57,054 | $ 2,820 |
MONY CLOSED BLOCK OF BUSINESS_2
MONY CLOSED BLOCK OF BUSINESS - Schedule of Reconciliation of the Policyholder Dividend Obligation (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Movement in Closed Block Dividend Obligation [Roll Forward] | ||
Policyholder dividend obligation, beginning of period | $ 160,712 | $ 31,932 |
Applicable to net revenue (losses) | (24,922) | (38,147) |
Change in net unrealized investment gains (losses) allocated to the policyholder dividend obligation | (135,790) | 142,219 |
Policyholder dividend obligation, end of period | $ 0 | $ 136,004 |
MONY CLOSED BLOCK OF BUSINESS_3
MONY CLOSED BLOCK OF BUSINESS - Schedule of Closed Block Revenues and Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenues | ||||
Premiums and other income | $ 39,691 | $ 40,962 | $ 121,768 | $ 128,697 |
Net investment income | 50,833 | 50,780 | 152,248 | 153,481 |
Net investment gains | 40 | 341 | 66 | 448 |
Total revenues | 90,564 | 92,083 | 274,082 | 282,626 |
Benefits and other deductions | ||||
Benefits and settlement expenses | 83,588 | 81,721 | 251,480 | 249,319 |
Other operating expenses | 291 | 621 | 310 | 1,216 |
Total benefits and other deductions | 83,879 | 82,342 | 251,790 | 250,535 |
Net revenues before income taxes | 6,685 | 9,741 | 22,292 | 32,091 |
Income tax expense | 1,404 | 3,409 | 4,681 | 11,232 |
Net revenues | $ 5,281 | $ 6,332 | $ 17,611 | $ 20,859 |
INVESTMENT OPERATIONS - Summary
INVESTMENT OPERATIONS - Summary of Net Realized Investment Gains (Losses) for All Other Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | ||||
Fixed maturities | $ (2,018) | $ 1,042 | $ 6,248 | $ 10,482 |
Equity gains and losses | (6,925) | (352) | (16,693) | (1,398) |
Impairments | (14) | (273) | (3,664) | (8,259) |
Modco trading portfolio | (10,901) | 19,399 | (148,427) | 93,181 |
Other investments | (312) | (1,939) | 1,522 | (7,739) |
Total realized gains (losses) - investments | $ (20,170) | $ 17,877 | $ (161,014) | $ 86,267 |
INVESTMENT OPERATIONS - Schedul
INVESTMENT OPERATIONS - Schedule of Gross Realized Gains (Losses) on Investments Available-for-Sale (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | ||||
Gross realized gains | $ 3,410 | $ 1,933 | $ 21,540 | $ 14,968 |
Gross realized losses: | ||||
Impairment losses | (14) | (273) | (3,664) | (8,259) |
Other realized losses | $ (5,428) | $ (1,243) | $ (15,292) | $ (5,884) |
INVESTMENT OPERATIONS - Sched_2
INVESTMENT OPERATIONS - Schedule of Fair Value (Proceeds) and Gains/Losses Realized on Securities Sold in an Unrealized Gain/Loss Position (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Securities in an unrealized gain position: | ||||
Fair value (proceeds) | $ 306,600 | $ 121,459 | $ 909,846 | $ 566,064 |
Gains realized | 3,410 | 1,933 | 21,540 | 14,967 |
Securities in an unrealized loss position: | ||||
Fair value (proceeds) | 122,317 | 37,186 | 380,493 | 121,450 |
Losses realized | $ (5,428) | $ (1,243) | $ (15,292) | $ (5,884) |
INVESTMENT OPERATIONS - Sched_3
INVESTMENT OPERATIONS - Schedule of Realized Gain (Losses) on Equity Securities Sold (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | ||||
Net gains (losses) recognized during the period on equity securities | $ (6,925) | $ (352) | $ (16,693) | $ (1,398) |
Less: net gains (losses) recognized on equity securities sold during the period | (1,476) | (3,858) | ||
Gains (losses) recognized during the period on equity securities still held | $ (5,449) | $ (12,835) |
INVESTMENT OPERATIONS - Sched_4
INVESTMENT OPERATIONS - Schedule of Amortized Cost and Fair Value of the Company's Investments Classified as Available-for-Sale (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Investment [Line Items] | ||
Total | $ 52,187,516 | $ 39,455,935 |
Gross Unrealized Gains | 195,809 | 712,957 |
Gross Unrealized Losses | (2,363,386) | (680,458) |
Fair Value | 50,019,939 | 39,488,434 |
Total OTTI Recognized in OCI | 0 | (28) |
Residential mortgage-backed securities | ||
Investment [Line Items] | ||
Total | 3,506,384 | 2,321,811 |
Gross Unrealized Gains | 5,808 | 19,412 |
Gross Unrealized Losses | (105,531) | (22,730) |
Fair Value | 3,406,661 | 2,318,493 |
Total OTTI Recognized in OCI | 0 | 10 |
Commercial mortgage-backed securities | ||
Investment [Line Items] | ||
Total | 2,314,831 | 1,885,109 |
Gross Unrealized Gains | 180 | 4,931 |
Gross Unrealized Losses | (80,633) | (29,552) |
Fair Value | 2,234,378 | 1,860,488 |
Total OTTI Recognized in OCI | 0 | 0 |
Other asset-backed securities | ||
Investment [Line Items] | ||
Total | 1,456,768 | 1,234,376 |
Gross Unrealized Gains | 13,749 | 20,936 |
Gross Unrealized Losses | (16,382) | (5,763) |
Fair Value | 1,454,135 | 1,249,549 |
Total OTTI Recognized in OCI | 0 | 0 |
U.S. government-related securities | ||
Investment [Line Items] | ||
Total | 1,653,626 | 1,255,244 |
Gross Unrealized Gains | 160 | 185 |
Gross Unrealized Losses | (72,807) | (32,177) |
Fair Value | 1,580,979 | 1,223,252 |
Total OTTI Recognized in OCI | 0 | 0 |
Other government-related securities | ||
Investment [Line Items] | ||
Total | 546,356 | 280,780 |
Gross Unrealized Gains | 2,925 | 9,401 |
Gross Unrealized Losses | (21,635) | (4,948) |
Fair Value | 527,646 | 285,233 |
Total OTTI Recognized in OCI | 0 | 0 |
States, municipals, and political subdivisions | ||
Investment [Line Items] | ||
Total | 3,691,930 | 1,770,299 |
Gross Unrealized Gains | 6,070 | 16,959 |
Gross Unrealized Losses | (139,927) | (45,613) |
Fair Value | 3,558,073 | 1,741,645 |
Total OTTI Recognized in OCI | 0 | (37) |
Corporate securities | ||
Investment [Line Items] | ||
Total | 38,612,538 | 29,446,365 |
Gross Unrealized Gains | 166,917 | 618,582 |
Gross Unrealized Losses | (1,919,248) | (527,401) |
Fair Value | 36,860,207 | 29,537,546 |
Total OTTI Recognized in OCI | 0 | (1) |
Redeemable preferred stock | ||
Investment [Line Items] | ||
Total | 94,362 | 94,362 |
Gross Unrealized Gains | 0 | 232 |
Gross Unrealized Losses | (7,223) | (3,503) |
Fair Value | 87,139 | 91,091 |
Total OTTI Recognized in OCI | 0 | 0 |
Fixed maturities | ||
Investment [Line Items] | ||
Total | 51,876,795 | 38,288,346 |
Gross Unrealized Gains | 195,809 | 690,638 |
Gross Unrealized Losses | (2,363,386) | (671,687) |
Fair Value | 49,709,218 | 38,307,297 |
Total OTTI Recognized in OCI | 0 | (28) |
Equity securities | ||
Investment [Line Items] | ||
Total | 696,706 | |
Gross Unrealized Gains | 22,319 | |
Gross Unrealized Losses | (8,771) | |
Fair Value | 710,254 | |
Total OTTI Recognized in OCI | 0 | |
Short-term investments | ||
Investment [Line Items] | ||
Total | 310,721 | 470,883 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 310,721 | 470,883 |
Total OTTI Recognized in OCI | $ 0 | $ 0 |
INVESTMENT OPERATIONS - Sched_5
INVESTMENT OPERATIONS - Schedule of Fair Value of Trading Securities (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Debt and Equity Securities, FV-NI [Line Items] | ||
Trading securities | $ 2,531,422 | $ 2,725,694 |
Residential mortgage-backed securities | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Trading securities | 254,037 | 259,694 |
Commercial mortgage-backed securities | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Trading securities | 135,403 | 146,804 |
Other asset-backed securities | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Trading securities | 111,770 | 138,097 |
U.S. government-related securities | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Trading securities | 58,081 | 27,234 |
Other government-related securities | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Trading securities | 43,030 | 63,925 |
States, municipals, and political subdivisions | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Trading securities | 296,618 | 326,925 |
Corporate securities | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Trading securities | 1,569,652 | 1,698,183 |
Redeemable preferred stock | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Trading securities | 3,165 | 3,327 |
Fixed maturities | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Trading securities | 2,471,756 | 2,664,189 |
Equity securities | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Trading securities | 3,801 | 5,244 |
Short-term investments | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Trading securities | $ 55,865 | $ 56,261 |
INVESTMENT OPERATIONS - Sched_6
INVESTMENT OPERATIONS - Schedule of Amortized Cost and Fair Value of Available-for-Sale and Held-to-Maturity Fixed Maturities, by Expected Maturity (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Available-for-sale, Amortized Cost | ||
Total | $ 52,187,516 | $ 39,455,935 |
Available-for-sale, Fair Value | ||
Total | 50,019,939 | 39,488,434 |
Held-to-maturity, Fair Value | ||
Fair Value | 2,577,841 | 2,776,327 |
Fixed maturities | ||
Available-for-sale, Amortized Cost | ||
Due in one year or less | 957,984 | |
Due after one year through five years | 9,252,383 | |
Due after five years through ten years | 9,099,912 | |
Due after ten years | 32,566,516 | |
Total | 51,876,795 | 38,288,346 |
Available-for-sale, Fair Value | ||
Due in one year or less | 955,779 | |
Due after one year through five years | 9,079,479 | |
Due after five years through ten years | 8,847,681 | |
Due after ten years | 30,826,279 | |
Total | 49,709,218 | 38,307,297 |
Held-to-maturity, Amortized Cost | ||
Due in one year or less | 0 | |
Due after one year through five years | 0 | |
Due after five years through ten years | 0 | |
Due after ten years | 2,653,605 | |
Amortized Cost | 2,653,605 | 2,718,904 |
Held-to-maturity, Fair Value | ||
Due in one year or less | 0 | |
Due after one year through five years | 0 | |
Due after five years through ten years | 0 | |
Due after ten years | 2,577,841 | |
Fair Value | $ 2,577,841 | $ 2,776,327 |
INVESTMENT OPERATIONS - Sched_7
INVESTMENT OPERATIONS - Schedule of Other-than-Temporary Impairments of Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Investment [Line Items] | ||||
Other-than-temporary impairments | $ (14) | $ (366) | $ (715) | $ (494) |
Non-credit impairment losses recorded in other comprehensive income | 0 | 93 | (2,949) | (7,765) |
Net impairment losses recognized in earnings | (14) | (273) | (3,664) | (8,259) |
Fixed maturities | ||||
Investment [Line Items] | ||||
Other-than-temporary impairments | (14) | (366) | (715) | (494) |
Non-credit impairment losses recorded in other comprehensive income | 0 | 93 | (2,949) | (7,765) |
Net impairment losses recognized in earnings | $ (14) | $ (273) | $ (3,664) | $ (8,259) |
INVESTMENT OPERATIONS - Sched_8
INVESTMENT OPERATIONS - Schedule of Available-for-Sale Credit Losses on Fixed Maturities Held by the Company for Which a Portion of Other-than-Temporary Impairments were Recognized in Other Comprehensive Income (Loss) (Details) - Fixed maturities - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward] | ||||
Beginning balance | $ 2 | $ 2,783 | $ 3,268 | $ 12,685 |
Additions for newly impaired securities | 0 | 266 | 0 | 266 |
Additions for previously impaired securities | 0 | 6 | 2 | 2,791 |
Reductions for previously impaired securities due to a change in expected cash flows | 0 | (37) | 0 | (12,724) |
Reductions for previously impaired securities that were sold in the current period | (2) | (600) | (3,270) | (600) |
Ending balance | $ 0 | $ 2,418 | $ 0 | $ 2,418 |
INVESTMENT OPERATIONS - Sched_9
INVESTMENT OPERATIONS - Schedule of Investments' Gross Unrealized Losses and Fair Value of the Company's Investments that are Not Deemed to be Other-than-Temporarily Impaired (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Fair Value | ||
Less Than 12 Months | $ 29,739,113 | $ 7,026,657 |
12 Months or More | 13,187,497 | 14,598,554 |
Total | 42,926,610 | 21,625,211 |
Unrealized Loss | ||
Less Than 12 Months | (987,046) | (79,273) |
12 Months or More | (1,376,340) | (601,185) |
Total | (2,363,386) | (680,458) |
Residential mortgage-backed securities | ||
Fair Value | ||
Less Than 12 Months | 2,831,194 | 765,641 |
12 Months or More | 399,676 | 408,460 |
Total | 3,230,870 | 1,174,101 |
Unrealized Loss | ||
Less Than 12 Months | (80,839) | (9,666) |
12 Months or More | (24,692) | (13,064) |
Total | (105,531) | (22,730) |
Commercial mortgage-backed securities | ||
Fair Value | ||
Less Than 12 Months | 1,433,287 | 750,643 |
12 Months or More | 740,262 | 779,086 |
Total | 2,173,549 | 1,529,729 |
Unrealized Loss | ||
Less Than 12 Months | (39,701) | (8,521) |
12 Months or More | (40,932) | (21,031) |
Total | (80,633) | (29,552) |
Other asset-backed securities | ||
Fair Value | ||
Less Than 12 Months | 645,956 | 86,506 |
12 Months or More | 125,847 | 134,316 |
Total | 771,803 | 220,822 |
Unrealized Loss | ||
Less Than 12 Months | (9,131) | (322) |
12 Months or More | (7,251) | (5,441) |
Total | (16,382) | (5,763) |
U.S. government-related securities | ||
Fair Value | ||
Less Than 12 Months | 551,939 | 94,110 |
12 Months or More | 1,012,450 | 1,072,232 |
Total | 1,564,389 | 1,166,342 |
Unrealized Loss | ||
Less Than 12 Months | (14,066) | (688) |
12 Months or More | (58,741) | (31,489) |
Total | (72,807) | (32,177) |
Other government-related securities | ||
Fair Value | ||
Less Than 12 Months | 254,968 | 24,830 |
12 Months or More | 111,089 | 115,294 |
Total | 366,057 | 140,124 |
Unrealized Loss | ||
Less Than 12 Months | (7,405) | (169) |
12 Months or More | (14,230) | (4,779) |
Total | (21,635) | (4,948) |
States, municipals, and political subdivisions | ||
Fair Value | ||
Less Than 12 Months | 2,268,935 | 170,268 |
12 Months or More | 998,399 | 1,027,747 |
Total | 3,267,334 | 1,198,015 |
Unrealized Loss | ||
Less Than 12 Months | (51,019) | (1,738) |
12 Months or More | (88,908) | (43,875) |
Total | (139,927) | (45,613) |
Corporate securities | ||
Fair Value | ||
Less Than 12 Months | 21,709,122 | 5,026,417 |
12 Months or More | 9,756,347 | 10,947,027 |
Total | 31,465,469 | 15,973,444 |
Unrealized Loss | ||
Less Than 12 Months | (782,983) | (55,649) |
12 Months or More | (1,136,265) | (471,752) |
Total | (1,919,248) | (527,401) |
Redeemable preferred stock | ||
Fair Value | ||
Less Than 12 Months | 43,712 | 22,048 |
12 Months or More | 43,427 | 23,197 |
Total | 87,139 | 45,245 |
Unrealized Loss | ||
Less Than 12 Months | (1,902) | (1,120) |
12 Months or More | (5,321) | (2,383) |
Total | $ (7,223) | (3,503) |
Equities | ||
Fair Value | ||
Less Than 12 Months | 86,194 | |
12 Months or More | 91,195 | |
Total | 177,389 | |
Unrealized Loss | ||
Less Than 12 Months | (1,400) | |
12 Months or More | (7,371) | |
Total | $ (8,771) |
INVESTMENT OPERATIONS - Additio
INVESTMENT OPERATIONS - Additional Information (Details) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018USD ($)positionsubsidiary | Dec. 31, 2017USD ($)subsidiary | |
Investment [Line Items] | ||
Unrealized loss, greater than 12 months | $ 1,376,340,000 | $ 601,185,000 |
Underlying collateral, percentage guaranteed by the Federal Family Education Loan Program | 97.00% | |
Total positions that were in an unrealized loss position | position | 4,367 | |
Fixed maturity securities - available-for-sale | $ 50,019,939,000 | $ 39,488,434,000 |
Available-for-sale, amortized cost | 52,187,516,000 | 39,455,935,000 |
Fixed maturity securities - trading | 2,531,422,000 | $ 2,725,694,000 |
Payments made | $ 0 | |
Red Mountain, LLC | ||
Investment [Line Items] | ||
Number of wholly owned subsidiaries that were determined to be VIEs | subsidiary | 1 | 1 |
Ownership interest through an affiliate (as a percent) | 100.00% | |
Investment to which risk of loss related to the VIE is limited | $ 10,000 | |
Below investment grade | ||
Investment [Line Items] | ||
Fixed maturity securities - available-for-sale | 1,700,000,000 | |
Available-for-sale, amortized cost | 1,700,000,000 | |
Fixed maturity securities - trading | 175,600,000 | |
Securities not publicly traded | 263,100,000 | |
Residential mortgage-backed securities | ||
Investment [Line Items] | ||
Unrealized loss, greater than 12 months | 24,692,000 | $ 13,064,000 |
Fixed maturity securities - available-for-sale | 3,406,661,000 | 2,318,493,000 |
Available-for-sale, amortized cost | 3,506,384,000 | 2,321,811,000 |
Fixed maturity securities - trading | 254,037,000 | 259,694,000 |
Commercial mortgage-backed securities | ||
Investment [Line Items] | ||
Unrealized loss, greater than 12 months | 40,932,000 | 21,031,000 |
Fixed maturity securities - available-for-sale | 2,234,378,000 | 1,860,488,000 |
Available-for-sale, amortized cost | 2,314,831,000 | 1,885,109,000 |
Fixed maturity securities - trading | 135,403,000 | 146,804,000 |
Other asset-backed securities | ||
Investment [Line Items] | ||
Unrealized loss, greater than 12 months | $ 7,251,000 | 5,441,000 |
Underlying collateral, percentage guaranteed by the Federal Family Education Loan Program | 97.00% | |
Fixed maturity securities - available-for-sale | $ 1,454,135,000 | 1,249,549,000 |
Available-for-sale, amortized cost | 1,456,768,000 | 1,234,376,000 |
Fixed maturity securities - trading | 111,770,000 | 138,097,000 |
U.S. government-related securities | ||
Investment [Line Items] | ||
Unrealized loss, greater than 12 months | 58,741,000 | 31,489,000 |
Fixed maturity securities - available-for-sale | 1,580,979,000 | 1,223,252,000 |
Available-for-sale, amortized cost | 1,653,626,000 | 1,255,244,000 |
Fixed maturity securities - trading | 58,081,000 | 27,234,000 |
Other government-related securities | ||
Investment [Line Items] | ||
Unrealized loss, greater than 12 months | 14,230,000 | 4,779,000 |
Fixed maturity securities - available-for-sale | 527,646,000 | 285,233,000 |
Available-for-sale, amortized cost | 546,356,000 | 280,780,000 |
Fixed maturity securities - trading | 43,030,000 | 63,925,000 |
States, municipals, and political subdivisions | ||
Investment [Line Items] | ||
Unrealized loss, greater than 12 months | 88,908,000 | 43,875,000 |
Fixed maturity securities - available-for-sale | 3,558,073,000 | 1,741,645,000 |
Available-for-sale, amortized cost | 3,691,930,000 | 1,770,299,000 |
Fixed maturity securities - trading | 296,618,000 | 326,925,000 |
Corporate securities | ||
Investment [Line Items] | ||
Unrealized loss, greater than 12 months | 1,136,265,000 | 471,752,000 |
Fixed maturity securities - available-for-sale | 36,860,207,000 | 29,537,546,000 |
Available-for-sale, amortized cost | 38,612,538,000 | 29,446,365,000 |
Fixed maturity securities - trading | 1,569,652,000 | 1,698,183,000 |
Fixed maturities | ||
Investment [Line Items] | ||
Fixed maturity securities - available-for-sale | 49,709,218,000 | 38,307,297,000 |
Available-for-sale, amortized cost | 51,876,795,000 | 38,288,346,000 |
Fixed maturity securities - trading | 2,471,756,000 | 2,664,189,000 |
Gross unrecognized holding gains | 1,728,000 | 76,586,000 |
Gross unrecognized holding losses | $ 77,492,000 | $ 19,163,000 |
INVESTMENT OPERATIONS - Summa_2
INVESTMENT OPERATIONS - Summary of Change in Unrealized Gains (Losses), Net of Income Tax, on Fixed Maturity and Equity Securities, Classified as Available-for-Sale (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Fixed maturities | ||||
Investment Holdings [Line Items] | ||||
Change in unrealized gains (losses), net of income tax | $ (229,609) | $ 167,488 | $ (1,727,358) | $ 865,743 |
INVESTMENT OPERATIONS - Sche_10
INVESTMENT OPERATIONS - Schedule of Amortized Cost and Fair Value of the Company's Investments Classified as Held-to-Maturity (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Investment [Line Items] | ||
Fair Value | $ 2,577,841 | $ 2,776,327 |
Fixed maturities | ||
Investment [Line Items] | ||
Amortized Cost | 2,653,605 | 2,718,904 |
Gross Unrecognized Holding Gains | 1,728 | 76,586 |
Gross Unrecognized Holding Losses | (77,492) | (19,163) |
Fair Value | 2,577,841 | 2,776,327 |
Total OTTI Recognized in OCI | 0 | 0 |
Fixed maturities | Red Mountain, LLC | ||
Investment [Line Items] | ||
Amortized Cost | 736,605 | 704,904 |
Gross Unrecognized Holding Gains | 0 | 0 |
Gross Unrecognized Holding Losses | (77,492) | (19,163) |
Fair Value | 659,113 | 685,741 |
Total OTTI Recognized in OCI | 0 | 0 |
Fixed maturities | Steel City, LLC | ||
Investment [Line Items] | ||
Amortized Cost | 1,917,000 | 2,014,000 |
Gross Unrecognized Holding Gains | 1,728 | 76,586 |
Gross Unrecognized Holding Losses | 0 | 0 |
Fair Value | 1,918,728 | 2,090,586 |
Total OTTI Recognized in OCI | $ 0 | $ 0 |
FAIR VALUE OF FINANCIAL INSTR_3
FAIR VALUE OF FINANCIAL INSTRUMENTS - Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Assets: | ||
Fixed maturity securities - available-for-sale | $ 50,019,939 | $ 39,488,434 |
Fixed maturity securities - trading | 52,180,974 | 40,971,486 |
Equity securities | 623,201 | 715,498 |
Other long-term investments | 635,618 | 629,537 |
Short-term investments | 366,586 | 527,144 |
Assets related to separate accounts | ||
Variable annuity | 13,555,469 | 13,956,071 |
Variable universal life | 1,077,842 | 1,035,202 |
Fixed maturities | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 49,709,218 | 38,307,297 |
Residential mortgage-backed securities | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 3,406,661 | 2,318,493 |
Commercial mortgage-backed securities | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 2,234,378 | 1,860,488 |
Other asset-backed securities | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 1,454,135 | 1,249,549 |
States, municipals, and political subdivisions | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 3,558,073 | 1,741,645 |
Other government-related securities | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 527,646 | 285,233 |
Corporate securities | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 36,860,207 | 29,537,546 |
Level 3 | Other asset-backed securities | ||
Assets: | ||
Total investments | 502,020 | 504,228 |
Level 3 | Corporate securities | ||
Assets: | ||
Total investments | 621,392 | 617,770 |
Measured at fair value on a recurring basis | ||
Assets: | ||
Total fixed maturity securities | 52,180,974 | 40,971,486 |
Equity securities | 623,201 | 715,498 |
Other long-term investments | 635,618 | 629,537 |
Short-term investments | 366,586 | 527,144 |
Total investments | 53,806,379 | 42,843,665 |
Cash | 161,173 | 178,855 |
Assets related to separate accounts | ||
Variable annuity | 13,555,469 | 13,956,071 |
Variable universal life | 1,077,842 | 1,035,202 |
Total assets measured at fair value on a recurring basis | 68,600,863 | 58,013,793 |
Liabilities: | ||
Annuity account balances | 78,463 | 83,472 |
Other liabilities | 801,772 | 905,973 |
Total liabilities measured at fair value on a recurring basis | 880,235 | 989,445 |
Measured at fair value on a recurring basis | Fixed maturities | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 49,709,218 | 38,307,297 |
Fixed maturity securities - trading | 2,471,756 | 2,664,189 |
Measured at fair value on a recurring basis | Residential mortgage-backed securities | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 3,406,661 | 2,318,493 |
Fixed maturity securities - trading | 254,037 | 259,694 |
Measured at fair value on a recurring basis | Commercial mortgage-backed securities | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 2,234,378 | 1,860,488 |
Fixed maturity securities - trading | 135,403 | 146,804 |
Measured at fair value on a recurring basis | Other asset-backed securities | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 1,454,135 | 1,249,549 |
Fixed maturity securities - trading | 111,770 | 138,097 |
Measured at fair value on a recurring basis | U.S. government-related securities | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 1,580,979 | 1,223,252 |
Fixed maturity securities - trading | 58,081 | 27,234 |
Measured at fair value on a recurring basis | States, municipals, and political subdivisions | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 3,558,073 | 1,741,645 |
Fixed maturity securities - trading | 296,618 | 326,925 |
Measured at fair value on a recurring basis | Other government-related securities | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 527,646 | 285,233 |
Fixed maturity securities - trading | 43,030 | 63,925 |
Measured at fair value on a recurring basis | Corporate securities | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 36,860,207 | 29,537,546 |
Fixed maturity securities - trading | 1,569,652 | 1,698,183 |
Measured at fair value on a recurring basis | Redeemable preferred stock | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 87,139 | 91,091 |
Fixed maturity securities - trading | 3,165 | 3,327 |
Measured at fair value on a recurring basis | Level 1 | ||
Assets: | ||
Total fixed maturity securities | 1,046,253 | 1,055,756 |
Equity securities | 559,750 | 649,981 |
Other long-term investments | 52,728 | 51,102 |
Short-term investments | 269,266 | 394,394 |
Total investments | 1,927,997 | 2,151,233 |
Cash | 161,173 | 178,855 |
Assets related to separate accounts | ||
Variable annuity | 13,555,469 | 13,956,071 |
Variable universal life | 1,077,842 | 1,035,202 |
Total assets measured at fair value on a recurring basis | 16,722,481 | 17,321,361 |
Liabilities: | ||
Annuity account balances | 0 | 0 |
Other liabilities | 8,243 | 5,755 |
Total liabilities measured at fair value on a recurring basis | 8,243 | 5,755 |
Measured at fair value on a recurring basis | Level 1 | Fixed maturities | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 1,016,229 | 1,031,246 |
Fixed maturity securities - trading | 30,024 | 24,510 |
Measured at fair value on a recurring basis | Level 1 | Residential mortgage-backed securities | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 0 | 0 |
Fixed maturity securities - trading | 0 | 0 |
Measured at fair value on a recurring basis | Level 1 | Commercial mortgage-backed securities | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 0 | 0 |
Fixed maturity securities - trading | 0 | 0 |
Measured at fair value on a recurring basis | Level 1 | Other asset-backed securities | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 0 | 0 |
Fixed maturity securities - trading | 0 | 0 |
Measured at fair value on a recurring basis | Level 1 | U.S. government-related securities | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 946,679 | 958,775 |
Fixed maturity securities - trading | 26,859 | 21,183 |
Measured at fair value on a recurring basis | Level 1 | States, municipals, and political subdivisions | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 0 | 0 |
Fixed maturity securities - trading | 0 | 0 |
Measured at fair value on a recurring basis | Level 1 | Other government-related securities | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 0 | 0 |
Fixed maturity securities - trading | 0 | 0 |
Measured at fair value on a recurring basis | Level 1 | Corporate securities | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 0 | 0 |
Fixed maturity securities - trading | 0 | 0 |
Measured at fair value on a recurring basis | Level 1 | Redeemable preferred stock | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 69,550 | 72,471 |
Fixed maturity securities - trading | 3,165 | 3,327 |
Measured at fair value on a recurring basis | Level 2 | ||
Assets: | ||
Total fixed maturity securities | 49,951,474 | 38,743,800 |
Equity securities | 0 | 0 |
Other long-term investments | 402,312 | 417,969 |
Short-term investments | 97,320 | 132,750 |
Total investments | 50,451,106 | 39,294,519 |
Cash | 0 | 0 |
Assets related to separate accounts | ||
Variable annuity | 0 | 0 |
Variable universal life | 0 | 0 |
Total assets measured at fair value on a recurring basis | 50,451,106 | 39,294,519 |
Liabilities: | ||
Annuity account balances | 0 | 0 |
Other liabilities | 333,156 | 302,656 |
Total liabilities measured at fair value on a recurring basis | 333,156 | 302,656 |
Measured at fair value on a recurring basis | Level 2 | Fixed maturities | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 47,542,977 | 36,144,785 |
Fixed maturity securities - trading | 2,408,497 | 2,599,015 |
Measured at fair value on a recurring basis | Level 2 | Residential mortgage-backed securities | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 3,406,661 | 2,318,493 |
Fixed maturity securities - trading | 254,037 | 259,694 |
Measured at fair value on a recurring basis | Level 2 | Commercial mortgage-backed securities | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 2,214,911 | 1,860,488 |
Fixed maturity securities - trading | 135,403 | 146,804 |
Measured at fair value on a recurring basis | Level 2 | Other asset-backed securities | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 951,874 | 745,184 |
Fixed maturity securities - trading | 83,758 | 102,875 |
Measured at fair value on a recurring basis | Level 2 | U.S. government-related securities | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 634,300 | 264,477 |
Fixed maturity securities - trading | 31,222 | 6,051 |
Measured at fair value on a recurring basis | Level 2 | States, municipals, and political subdivisions | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 3,558,073 | 1,741,645 |
Fixed maturity securities - trading | 296,618 | 326,925 |
Measured at fair value on a recurring basis | Level 2 | Other government-related securities | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 527,646 | 285,233 |
Fixed maturity securities - trading | 43,030 | 63,925 |
Measured at fair value on a recurring basis | Level 2 | Corporate securities | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 36,231,923 | 28,910,645 |
Fixed maturity securities - trading | 1,564,429 | 1,692,741 |
Measured at fair value on a recurring basis | Level 2 | Redeemable preferred stock | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 17,589 | 18,620 |
Fixed maturity securities - trading | 0 | 0 |
Measured at fair value on a recurring basis | Level 3 | ||
Assets: | ||
Total fixed maturity securities | 1,183,247 | 1,171,930 |
Equity securities | 63,451 | 65,517 |
Other long-term investments | 180,578 | 160,466 |
Short-term investments | 0 | 0 |
Total investments | 1,427,276 | 1,397,913 |
Cash | 0 | 0 |
Assets related to separate accounts | ||
Variable annuity | 0 | 0 |
Variable universal life | 0 | 0 |
Total assets measured at fair value on a recurring basis | 1,427,276 | 1,397,913 |
Liabilities: | ||
Annuity account balances | 78,463 | 83,472 |
Other liabilities | 460,373 | 597,562 |
Total liabilities measured at fair value on a recurring basis | 538,836 | 681,034 |
Measured at fair value on a recurring basis | Level 3 | Fixed maturities | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 1,150,012 | 1,131,266 |
Fixed maturity securities - trading | 33,235 | 40,664 |
Measured at fair value on a recurring basis | Level 3 | Residential mortgage-backed securities | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 0 | 0 |
Fixed maturity securities - trading | 0 | 0 |
Measured at fair value on a recurring basis | Level 3 | Commercial mortgage-backed securities | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 19,467 | 0 |
Fixed maturity securities - trading | 0 | 0 |
Measured at fair value on a recurring basis | Level 3 | Other asset-backed securities | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 502,261 | 504,365 |
Fixed maturity securities - trading | 28,012 | 35,222 |
Measured at fair value on a recurring basis | Level 3 | U.S. government-related securities | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 0 | 0 |
Fixed maturity securities - trading | 0 | 0 |
Measured at fair value on a recurring basis | Level 3 | States, municipals, and political subdivisions | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 0 | 0 |
Fixed maturity securities - trading | 0 | 0 |
Measured at fair value on a recurring basis | Level 3 | Other government-related securities | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 0 | 0 |
Fixed maturity securities - trading | 0 | 0 |
Measured at fair value on a recurring basis | Level 3 | Corporate securities | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 628,284 | 626,901 |
Fixed maturity securities - trading | 5,223 | 5,442 |
Measured at fair value on a recurring basis | Level 3 | Redeemable preferred stock | ||
Assets: | ||
Fixed maturity securities - available-for-sale | 0 | 0 |
Fixed maturity securities - trading | $ 0 | $ 0 |
FAIR VALUE OF FINANCIAL INSTR_4
FAIR VALUE OF FINANCIAL INSTRUMENTS - Additional Information (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)quoteprimary_sourceinput_method | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Dec. 31, 2016USD ($) | |
Determination of fair values | ||||||||
Number of sources of information considered | primary_source | 1 | |||||||
Number of sources of information | input_method | 3 | |||||||
Percentage of the Company's fixed maturity securities priced by third party pricing services | 93.30% | |||||||
Number of broker quotes obtained per security | quote | 1 | |||||||
Underlying collateral, percentage guaranteed by the Federal Family Education Loan Program | 97.00% | |||||||
Percentage of derivatives excluding embedded derivatives that were priced using exchange prices or independent broker quotations | 84.00% | |||||||
Other long-term investments | $ 635,618,000 | $ 635,618,000 | $ 629,537,000 | |||||
Financial instruments owned, other | 63,400,000 | 63,400,000 | 65,500,000 | |||||
Securities transferred into Level 3 | 19,900,000 | $ 0 | 30,900,000 | $ 0 | ||||
Securities transferred into Level 2 from Level 3 | 47,700,000 | 17,400,000 | 66,200,000 | 28,900,000 | ||||
Transfer from level 2 to level 1 | 0 | 0 | 0 | 0 | ||||
Transfers from level 1 into level 2 | 0 | 0 | 0 | 0 | ||||
Interest support, YRT premium support and portfolio maintenance agreement | ||||||||
Determination of fair values | ||||||||
Other long-term investments | 90,900,000 | 90,900,000 | ||||||
Golden Gate II | Interest Support Agreement | ||||||||
Determination of fair values | ||||||||
Other long-term investments | 38,500,000 | 38,500,000 | ||||||
Payments made under agreement | 0 | 600,000 | ||||||
Amount of collateralized support agreement obligations by PLC | 4,900,000 | 4,900,000 | ||||||
Golden Gate II | YRT premium support agreement | ||||||||
Determination of fair values | ||||||||
Other long-term investments | 49,800,000 | 49,800,000 | ||||||
Payments made under agreement | 0 | |||||||
Golden Gate V and West Coast Life | Portfolio maintenance agreements | ||||||||
Determination of fair values | ||||||||
Other long-term investments | 2,700,000 | 2,700,000 | ||||||
Payments made under agreement | 0 | |||||||
Level 3 | ||||||||
Determination of fair values | ||||||||
Level 3 fair value | 538,836,000 | $ 646,324,000 | 538,836,000 | $ 646,324,000 | 681,034,000 | $ 537,106,000 | $ 618,857,000 | $ 493,419,000 |
Financial instruments valued in broker quotes | 59,900,000 | 59,900,000 | 50,000,000 | |||||
Level 3 | Annuity account | ||||||||
Determination of fair values | ||||||||
Level 3 fair value | 78,500,000 | 78,500,000 | ||||||
Asset-backed securities | Level 2 | ||||||||
Determination of fair values | ||||||||
Fair value | 7,000,000,000 | 7,000,000,000 | ||||||
Asset-backed securities | Level 3 | ||||||||
Determination of fair values | ||||||||
Fair value | 549,700,000 | $ 549,700,000 | ||||||
Other asset-backed securities | ||||||||
Determination of fair values | ||||||||
Underlying collateral, percentage guaranteed by the Federal Family Education Loan Program | 97.00% | |||||||
Other asset-backed securities | Level 3 | ||||||||
Determination of fair values | ||||||||
Fair value | 502,020,000 | $ 502,020,000 | 504,228,000 | |||||
Underlying collateral, percentage guaranteed by the Federal Family Education Loan Program | 97.00% | |||||||
Financial instruments valued in broker quotes | 47,700,000 | $ 47,700,000 | 35,400,000 | |||||
Other asset-backed securities | Level 3 | Available-for-sale securities | ||||||||
Determination of fair values | ||||||||
Fair value | 521,700,000 | 521,700,000 | ||||||
Other asset-backed securities | Level 3 | Trading securities | ||||||||
Determination of fair values | ||||||||
Fair value | 28,000,000 | 28,000,000 | ||||||
Corporate Bonds and Securities | Level 2 | ||||||||
Determination of fair values | ||||||||
Fair value | 42,900,000,000 | 42,900,000,000 | ||||||
Corporate Bonds and Securities | Level 3 | ||||||||
Determination of fair values | ||||||||
Fair value | 633,500,000 | 633,500,000 | ||||||
Equity securities | ||||||||
Determination of fair values | ||||||||
Fair value | 63,500,000 | 63,500,000 | ||||||
Federal Home Loan Bank stock | 63,400,000 | 63,400,000 | ||||||
Embedded derivative - GLWB | Level 3 | ||||||||
Determination of fair values | ||||||||
Fair value | 40,048,000 | $ 40,048,000 | ||||||
Embedded derivative - GLWB | Level 3 | Minimum | ||||||||
Determination of fair values | ||||||||
Mortality rate | 91.10% | |||||||
Embedded derivative - GLWB | Level 3 | Maximum | ||||||||
Determination of fair values | ||||||||
Mortality rate | 106.60% | |||||||
Embedded derivative - FIA | Level 3 | Minimum | ||||||||
Determination of fair values | ||||||||
Mortality rate | 87.00% | |||||||
Embedded derivative - FIA | Level 3 | Maximum | ||||||||
Determination of fair values | ||||||||
Mortality rate | 100.00% | |||||||
Embedded derivative - IUL | Level 3 | Minimum | ||||||||
Determination of fair values | ||||||||
Mortality rate | 37.00% | |||||||
Embedded derivative - IUL | Level 3 | Maximum | ||||||||
Determination of fair values | ||||||||
Mortality rate | 577.00% | |||||||
Embedded derivative - Modified coinsurance agreements | ||||||||
Determination of fair values | ||||||||
Statutory policy liabilities (net of policy loans) | 2,300,000,000 | $ 2,300,000,000 | ||||||
Embedded derivative - Modified coinsurance agreements | Trading securities | ||||||||
Determination of fair values | ||||||||
Fair value | 60,000,000 | 60,000,000 | ||||||
Funds withheld derivative | Level 2 | ||||||||
Determination of fair values | ||||||||
Other liabilities | 60,400,000 | 60,400,000 | ||||||
Corporate securities | Level 3 | ||||||||
Determination of fair values | ||||||||
Fair value | 621,392,000 | 621,392,000 | 617,770,000 | |||||
Financial instruments valued in broker quotes | $ 12,100,000 | $ 12,100,000 | $ 14,600,000 |
FAIR VALUE OF FINANCIAL INSTR_5
FAIR VALUE OF FINANCIAL INSTRUMENTS - Valuation of Level 3 Financial Instruments (Details) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018USD ($)usd_per_policy | Dec. 31, 2017USD ($)usd_per_policy | |
Liabilities | ||
Fair Value | $ 801,772,000 | $ 905,973,000 |
Level 3 | Other asset-backed securities | ||
Assets: | ||
Fair value | 502,020,000 | 504,228,000 |
Level 3 | Corporate securities | ||
Assets: | ||
Fair value | 621,392,000 | 617,770,000 |
Level 3 | Embedded derivative - GLWB | ||
Assets: | ||
Fair value | 40,048,000 | |
Liabilities | ||
Fair Value | 15,554,000 | |
Level 3 | Embedded derivative - FIA | ||
Liabilities | ||
Fair Value | 256,912,000 | 218,676,000 |
Level 3 | Embedded derivative - IUL | ||
Liabilities | ||
Fair Value | $ 95,739,000 | $ 80,212,000 |
Level 3 | Discounted cash flow | Corporate securities | Minimum | ||
Liabilities | ||
Debt securities,measurement input | 0.0090 | 0.0031 |
Level 3 | Discounted cash flow | Corporate securities | Maximum | ||
Liabilities | ||
Debt securities,measurement input | 0.0423 | 0.0450 |
Level 3 | Discounted cash flow | Corporate securities | Weighted Average | ||
Liabilities | ||
Debt securities,measurement input | 0.0151 | 0.0106 |
Level 3 | Actuarial cash flow model | Embedded derivative - FIA | ||
Liabilities | ||
Embedded derivative, measurement input | usd_per_policy | 145 | 146 |
Liquidation value | Level 3 | Liquidation | Other asset-backed securities | Minimum | ||
Liabilities | ||
Debt securities, measurement input, value | $ 90 | $ 90 |
Liquidation value | Level 3 | Liquidation | Other asset-backed securities | Maximum | ||
Liabilities | ||
Debt securities, measurement input, value | 97 | 97 |
Liquidation value | Level 3 | Liquidation | Other asset-backed securities | Weighted Average | ||
Liabilities | ||
Debt securities, measurement input, value | $ 94.92 | $ 94.91 |
Liquidity premium | Level 3 | Discounted cash flow | Other asset-backed securities | Minimum | ||
Liabilities | ||
Debt securities,measurement input | 0 | 0.0006 |
Liquidity premium | Level 3 | Discounted cash flow | Other asset-backed securities | Maximum | ||
Liabilities | ||
Debt securities,measurement input | 0.0140 | 0.0117 |
Liquidity premium | Level 3 | Discounted cash flow | Other asset-backed securities | Weighted Average | ||
Liabilities | ||
Debt securities,measurement input | 0.0062 | 0.0075 |
Paydown rate | Level 3 | Discounted cash flow | Other asset-backed securities | Minimum | ||
Liabilities | ||
Debt securities,measurement input | 0.1109 | 0.1131 |
Paydown rate | Level 3 | Discounted cash flow | Other asset-backed securities | Maximum | ||
Liabilities | ||
Debt securities,measurement input | 0.1315 | 0.1197 |
Paydown rate | Level 3 | Discounted cash flow | Other asset-backed securities | Weighted Average | ||
Liabilities | ||
Debt securities,measurement input | 0.1238 | 0.1154 |
Mortality | Level 3 | Actuarial cash flow model | Embedded derivative - GLWB | Minimum | ||
Liabilities | ||
Embedded derivative, measurement input | 0.87 | 0.911 |
Mortality | Level 3 | Actuarial cash flow model | Embedded derivative - GLWB | Maximum | ||
Liabilities | ||
Embedded derivative, measurement input | 1 | 1.066 |
Mortality | Level 3 | Actuarial cash flow model | Embedded derivative - IUL | Minimum | ||
Liabilities | ||
Embedded derivative, measurement input | 0.37 | 0.34 |
Mortality | Level 3 | Actuarial cash flow model | Embedded derivative - IUL | Maximum | ||
Liabilities | ||
Embedded derivative, measurement input | 5.77 | 1.52 |
Utilization | Level 3 | Actuarial cash flow model | Embedded derivative - GLWB | ||
Liabilities | ||
Embedded derivative, measurement input | 0.99 | 0.99 |
Policies that have a one-time over-utilization rate of a specified amount (as a percent) | 10.00% | 10.00% |
Specified level of one-time over-utilization (as a percent) | 400.00% | 400.00% |
Nonperformance risk | Level 3 | Actuarial cash flow model | Embedded derivative - GLWB | Minimum | ||
Liabilities | ||
Embedded derivative, measurement input | 0.0013 | 0.0011 |
Nonperformance risk | Level 3 | Actuarial cash flow model | Embedded derivative - GLWB | Maximum | ||
Liabilities | ||
Embedded derivative, measurement input | 0.0088 | 0.0079 |
Nonperformance risk | Level 3 | Actuarial cash flow model | Embedded derivative - FIA | Minimum | ||
Liabilities | ||
Embedded derivative, measurement input | 0.0013 | 0.0011 |
Nonperformance risk | Level 3 | Actuarial cash flow model | Embedded derivative - FIA | Maximum | ||
Liabilities | ||
Embedded derivative, measurement input | 0.0088 | 0.0079 |
Nonperformance risk | Level 3 | Actuarial cash flow model | Embedded derivative - IUL | Minimum | ||
Liabilities | ||
Embedded derivative, measurement input | 0.0013 | 0.0011 |
Nonperformance risk | Level 3 | Actuarial cash flow model | Embedded derivative - IUL | Maximum | ||
Liabilities | ||
Embedded derivative, measurement input | 0.0088 | 0.0079 |
Withdrawal rate prior to age 70 | Level 3 | Actuarial cash flow model | Embedded derivative - FIA | ||
Liabilities | ||
Embedded derivative, measurement input | 0.015 | 0.015 |
Withdrawal rate | Level 3 | Actuarial cash flow model | Embedded derivative - FIA | ||
Liabilities | ||
Embedded derivative, measurement input | 1 | 1 |
Lapse | Minimum | ||
Liabilities | ||
Embedded derivative, measurement input | 0.010 | |
Lapse | Maximum | ||
Liabilities | ||
Embedded derivative, measurement input | 0.300 | |
Lapse | Level 3 | Actuarial cash flow model | Embedded derivative - FIA | Minimum | ||
Liabilities | ||
Embedded derivative, measurement input | 0.010 | 0.010 |
Lapse | Level 3 | Actuarial cash flow model | Embedded derivative - FIA | Maximum | ||
Liabilities | ||
Embedded derivative, measurement input | 0.300 | 0.300 |
Lapse | Level 3 | Actuarial cash flow model | Embedded derivative - IUL | Minimum | ||
Liabilities | ||
Embedded derivative, measurement input | 0.005 | 0.005 |
Lapse | Level 3 | Actuarial cash flow model | Embedded derivative - IUL | Maximum | ||
Liabilities | ||
Embedded derivative, measurement input | 0.001 | 0.100 |
FAIR VALUE OF FINANCIAL INSTR_6
FAIR VALUE OF FINANCIAL INSTRUMENTS - Reconciliation of Beginning and Ending Balances for Fair Value Measurements (Details) - Level 3 - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Assets: | ||||
Beginning Balance | $ 1,495,772 | $ 1,446,853 | $ 1,397,914 | $ 1,498,010 |
Total Realized and Unrealized Gains, Included in Earnings, Assets | 11,983 | 56,518 | 34,582 | 66,248 |
Total Realized and Unrealized Gains, Included in Other Comprehensive Income, Assets | 1,439 | 10,066 | 20,367 | 31,394 |
Total Realized and Unrealized Losses, Included in Earnings, Assets | (2,059) | (355) | (17,446) | (29,403) |
Total Realized and Unrealized Losses, Included in Other Comprehensive Income, Assets | (20,596) | (4,507) | (42,913) | (10,138) |
Purchases | 19,128 | 5,171 | 173,101 | 97,784 |
Sales | (51,138) | (61,709) | (101,377) | (190,120) |
Issuances | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | (627) | 0 |
Transfers in/out of Level 3 | (27,750) | (17,430) | (35,258) | (28,937) |
Other | 497 | (641) | (1,067) | (872) |
Ending Balance | 1,427,276 | 1,433,966 | 1,427,276 | 1,433,966 |
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | 10,333 | 56,307 | 16,854 | 37,718 |
Liabilities: | ||||
Beginning Balance | 537,106 | 618,857 | 681,034 | 493,419 |
Total Realized and Unrealized Gains Included in Earnings | 38,249 | 6,702 | 226,359 | 21,982 |
Total Realized and Unrealized Gains, Included in Other Comprehensive Income, Liabilities | 0 | 0 | 0 | 0 |
Total Realized and Unrealized Losses, Included in Earnings, Liabilities | (42,510) | (36,212) | (91,919) | (180,448) |
Total Realized and Unrealized Losses, Included in Other Comprehensive Income, Liabilities | 0 | 0 | 0 | 0 |
Purchases | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | 0 |
Issuances | 40 | 9 | 570 | 402 |
Settlements | 2,571 | 2,052 | 8,328 | 5,963 |
Transfers in/out of Level 3 | 0 | 0 | 0 | 0 |
Other | 0 | 0 | 0 | 0 |
Ending Balance | 538,836 | 646,324 | 538,836 | 646,324 |
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | (3,365) | (28,533) | 137,189 | (155,493) |
Annuity account balances | ||||
Liabilities: | ||||
Beginning Balance | 80,098 | 86,094 | 83,472 | 87,616 |
Total Realized and Unrealized Gains Included in Earnings | 0 | 0 | 0 | 0 |
Total Realized and Unrealized Gains, Included in Other Comprehensive Income, Liabilities | 0 | 0 | 0 | 0 |
Total Realized and Unrealized Losses, Included in Earnings, Liabilities | (896) | (977) | (2,749) | (2,973) |
Total Realized and Unrealized Losses, Included in Other Comprehensive Income, Liabilities | 0 | 0 | 0 | 0 |
Purchases | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | 0 |
Issuances | 40 | 9 | 570 | 402 |
Settlements | 2,571 | 2,052 | 8,328 | 5,963 |
Transfers in/out of Level 3 | 0 | 0 | 0 | 0 |
Other | 0 | 0 | 0 | 0 |
Ending Balance | 78,463 | 85,028 | 78,463 | 85,028 |
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | 0 | 0 | 0 | 0 |
Other liabilities | ||||
Liabilities: | ||||
Beginning Balance | 457,008 | 532,763 | 597,562 | 405,803 |
Total Realized and Unrealized Gains Included in Earnings | 38,249 | 6,702 | 226,359 | 21,982 |
Total Realized and Unrealized Gains, Included in Other Comprehensive Income, Liabilities | 0 | 0 | 0 | 0 |
Total Realized and Unrealized Losses, Included in Earnings, Liabilities | (41,614) | (35,235) | (89,170) | (177,475) |
Total Realized and Unrealized Losses, Included in Other Comprehensive Income, Liabilities | 0 | 0 | 0 | 0 |
Purchases | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | 0 |
Issuances | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Transfers in/out of Level 3 | 0 | 0 | 0 | 0 |
Other | 0 | 0 | 0 | 0 |
Ending Balance | 460,373 | 561,296 | 460,373 | 561,296 |
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | (3,365) | (28,533) | 137,189 | (155,493) |
Total investments | ||||
Assets: | ||||
Beginning Balance | 1,495,772 | 1,446,853 | 1,397,914 | 1,498,010 |
Total Realized and Unrealized Gains, Included in Earnings, Assets | 11,983 | 56,518 | 34,582 | 66,248 |
Total Realized and Unrealized Gains, Included in Other Comprehensive Income, Assets | 1,439 | 10,066 | 20,367 | 31,394 |
Total Realized and Unrealized Losses, Included in Earnings, Assets | (2,059) | (355) | (17,446) | (29,403) |
Total Realized and Unrealized Losses, Included in Other Comprehensive Income, Assets | (20,596) | (4,507) | (42,913) | (10,138) |
Purchases | 19,128 | 5,171 | 173,101 | 97,784 |
Sales | (51,138) | (61,709) | (101,377) | (190,120) |
Issuances | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | (627) | 0 |
Transfers in/out of Level 3 | (27,750) | (17,430) | (35,258) | (28,937) |
Other | 497 | (641) | (1,067) | (872) |
Ending Balance | 1,427,276 | 1,433,966 | 1,427,276 | 1,433,966 |
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | 10,333 | 56,307 | 16,854 | 37,718 |
Fixed maturities | ||||
Assets: | ||||
Beginning Balance | 1,259,625 | 1,287,922 | 1,171,930 | 1,316,708 |
Total Realized and Unrealized Gains, Included in Earnings, Assets | 84 | 27 | 278 | 3,780 |
Total Realized and Unrealized Gains, Included in Other Comprehensive Income, Assets | 1,439 | 10,066 | 20,367 | 31,394 |
Total Realized and Unrealized Losses, Included in Earnings, Assets | (144) | (353) | (3,881) | (1,154) |
Total Realized and Unrealized Losses, Included in Other Comprehensive Income, Assets | (20,596) | (4,507) | (42,913) | (10,138) |
Purchases | 19,128 | 5,171 | 173,065 | 97,784 |
Sales | (49,036) | (61,539) | (99,275) | (189,846) |
Issuances | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Transfers in/out of Level 3 | (27,750) | (17,430) | (35,258) | (28,940) |
Other | 497 | (641) | (1,066) | (872) |
Ending Balance | 1,183,247 | 1,218,716 | 1,183,247 | 1,218,716 |
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | 62 | (182) | (3,482) | 3,498 |
Fixed maturities | Available-for-sale securities | ||||
Assets: | ||||
Beginning Balance | 1,229,519 | 1,227,479 | 1,131,266 | 1,226,653 |
Total Realized and Unrealized Gains, Included in Earnings, Assets | 0 | 0 | 0 | 0 |
Total Realized and Unrealized Gains, Included in Other Comprehensive Income, Assets | 1,439 | 10,066 | 20,367 | 31,394 |
Total Realized and Unrealized Losses, Included in Earnings, Assets | (62) | 0 | (62) | 0 |
Total Realized and Unrealized Losses, Included in Other Comprehensive Income, Assets | (20,596) | (4,507) | (42,913) | (10,138) |
Purchases | 15,000 | 5,171 | 164,337 | 97,784 |
Sales | (48,110) | (42,351) | (86,680) | (137,330) |
Issuances | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Transfers in/out of Level 3 | (27,750) | (17,430) | (35,422) | (28,940) |
Other | 572 | (726) | (881) | (1,721) |
Ending Balance | 1,150,012 | 1,177,702 | 1,150,012 | 1,177,702 |
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | 0 | 0 | 0 | 0 |
Fixed maturities | Trading securities | ||||
Assets: | ||||
Beginning Balance | 30,106 | 60,443 | 40,664 | 90,055 |
Total Realized and Unrealized Gains, Included in Earnings, Assets | 84 | 27 | 278 | 3,780 |
Total Realized and Unrealized Gains, Included in Other Comprehensive Income, Assets | 0 | 0 | 0 | 0 |
Total Realized and Unrealized Losses, Included in Earnings, Assets | (82) | (353) | (3,819) | (1,154) |
Total Realized and Unrealized Losses, Included in Other Comprehensive Income, Assets | 0 | 0 | 0 | 0 |
Purchases | 4,128 | 0 | 8,728 | 0 |
Sales | (926) | (19,188) | (12,595) | (52,516) |
Issuances | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Transfers in/out of Level 3 | 0 | 0 | 164 | 0 |
Other | (75) | 85 | (185) | 849 |
Ending Balance | 33,235 | 41,014 | 33,235 | 41,014 |
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | 62 | (182) | (3,482) | 3,498 |
Residential mortgage-backed securities | Available-for-sale securities | ||||
Assets: | ||||
Beginning Balance | 21,780 | 11,862 | 0 | 3 |
Total Realized and Unrealized Gains, Included in Earnings, Assets | 0 | 0 | 0 | 0 |
Total Realized and Unrealized Gains, Included in Other Comprehensive Income, Assets | 0 | 83 | 0 | 83 |
Total Realized and Unrealized Losses, Included in Earnings, Assets | 0 | 0 | 0 | 0 |
Total Realized and Unrealized Losses, Included in Other Comprehensive Income, Assets | (538) | 0 | (995) | 0 |
Purchases | 0 | 0 | 22,225 | 11,862 |
Sales | 0 | 0 | 0 | (3) |
Issuances | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Transfers in/out of Level 3 | (21,281) | (11,944) | (21,281) | (11,944) |
Other | 39 | (1) | 51 | (1) |
Ending Balance | 0 | 0 | 0 | 0 |
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | 0 | 0 | 0 | 0 |
Commercial mortgage-backed securities | Available-for-sale securities | ||||
Assets: | ||||
Beginning Balance | 47,227 | 0 | 0 | |
Total Realized and Unrealized Gains, Included in Earnings, Assets | 0 | 0 | 0 | |
Total Realized and Unrealized Gains, Included in Other Comprehensive Income, Assets | 0 | 0 | 0 | |
Total Realized and Unrealized Losses, Included in Earnings, Assets | 0 | 0 | 0 | |
Total Realized and Unrealized Losses, Included in Other Comprehensive Income, Assets | (1,212) | 0 | (2,496) | |
Purchases | 0 | 0 | 48,621 | |
Sales | (151) | 0 | (245) | |
Issuances | 0 | 0 | 0 | |
Settlements | 0 | 0 | 0 | |
Transfers in/out of Level 3 | (26,372) | 0 | (26,372) | |
Other | (25) | 0 | (41) | |
Ending Balance | 19,467 | 0 | 19,467 | 0 |
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | 0 | 0 | 0 | |
Other asset-backed securities | Available-for-sale securities | ||||
Assets: | ||||
Beginning Balance | 515,701 | 552,963 | 504,365 | 562,604 |
Total Realized and Unrealized Gains, Included in Earnings, Assets | 0 | 0 | 0 | 0 |
Total Realized and Unrealized Gains, Included in Other Comprehensive Income, Assets | 17 | 1,682 | 11,884 | 5,212 |
Total Realized and Unrealized Losses, Included in Earnings, Assets | (62) | 0 | (62) | 0 |
Total Realized and Unrealized Losses, Included in Other Comprehensive Income, Assets | (14,802) | (2,285) | (16,449) | (7,374) |
Purchases | 0 | 100 | 0 | 100 |
Sales | (24) | (109) | (47) | (2,135) |
Issuances | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Transfers in/out of Level 3 | 0 | 0 | 222 | (6,643) |
Other | 1,431 | 798 | 2,348 | 1,385 |
Ending Balance | 502,261 | 553,149 | 502,261 | 553,149 |
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | 0 | 0 | 0 | 0 |
Other asset-backed securities | Trading securities | ||||
Assets: | ||||
Beginning Balance | 24,852 | 54,923 | 35,222 | 84,563 |
Total Realized and Unrealized Gains, Included in Earnings, Assets | 84 | 0 | 278 | 3,679 |
Total Realized and Unrealized Gains, Included in Other Comprehensive Income, Assets | 0 | 0 | 0 | 0 |
Total Realized and Unrealized Losses, Included in Earnings, Assets | (76) | (353) | (3,674) | (1,154) |
Total Realized and Unrealized Losses, Included in Other Comprehensive Income, Assets | 0 | 0 | 0 | 0 |
Purchases | 4,128 | 0 | 8,728 | 0 |
Sales | (926) | (19,188) | (12,595) | (52,516) |
Issuances | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Transfers in/out of Level 3 | 0 | 0 | 164 | 0 |
Other | (50) | 108 | (111) | 918 |
Ending Balance | 28,012 | 35,490 | 28,012 | 35,490 |
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | 68 | (209) | (3,337) | 3,397 |
Corporate securities | Available-for-sale securities | ||||
Assets: | ||||
Beginning Balance | 644,811 | 662,654 | 626,901 | 664,046 |
Total Realized and Unrealized Gains, Included in Earnings, Assets | 0 | 0 | 0 | 0 |
Total Realized and Unrealized Gains, Included in Other Comprehensive Income, Assets | 1,422 | 8,301 | 8,483 | 26,099 |
Total Realized and Unrealized Losses, Included in Earnings, Assets | 0 | 0 | 0 | 0 |
Total Realized and Unrealized Losses, Included in Other Comprehensive Income, Assets | (4,044) | (2,222) | (22,973) | (2,764) |
Purchases | 15,000 | 5,071 | 93,491 | 85,822 |
Sales | (47,935) | (42,242) | (86,388) | (135,192) |
Issuances | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Transfers in/out of Level 3 | 19,903 | (5,486) | 12,009 | (10,353) |
Other | (873) | (1,523) | (3,239) | (3,105) |
Ending Balance | 628,284 | 624,553 | 628,284 | 624,553 |
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | 0 | 0 | 0 | 0 |
Corporate securities | Trading securities | ||||
Assets: | ||||
Beginning Balance | 5,254 | 5,520 | 5,442 | 5,492 |
Total Realized and Unrealized Gains, Included in Earnings, Assets | 0 | 27 | 0 | 101 |
Total Realized and Unrealized Gains, Included in Other Comprehensive Income, Assets | 0 | 0 | 0 | 0 |
Total Realized and Unrealized Losses, Included in Earnings, Assets | (6) | 0 | (145) | 0 |
Total Realized and Unrealized Losses, Included in Other Comprehensive Income, Assets | 0 | 0 | 0 | 0 |
Purchases | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | 0 |
Issuances | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Transfers in/out of Level 3 | 0 | 0 | 0 | 0 |
Other | (25) | (23) | (74) | (69) |
Ending Balance | 5,223 | 5,524 | 5,223 | 5,524 |
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | (6) | 27 | (145) | 101 |
Equity securities | ||||
Assets: | ||||
Beginning Balance | 65,553 | 65,686 | 65,518 | 65,786 |
Total Realized and Unrealized Gains, Included in Earnings, Assets | 0 | 0 | 1 | 1 |
Total Realized and Unrealized Gains, Included in Other Comprehensive Income, Assets | 0 | 0 | 0 | 0 |
Total Realized and Unrealized Losses, Included in Earnings, Assets | 0 | 0 | (1) | 0 |
Total Realized and Unrealized Losses, Included in Other Comprehensive Income, Assets | 0 | 0 | 0 | 0 |
Purchases | 0 | 0 | 36 | 0 |
Sales | (2,102) | (170) | (2,102) | (274) |
Issuances | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Transfers in/out of Level 3 | 0 | 0 | 0 | 3 |
Other | 0 | 0 | (1) | 0 |
Ending Balance | 63,451 | 65,516 | 63,451 | 65,516 |
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | 287 | 0 | 224 | 2 |
Other long-term investments | ||||
Assets: | ||||
Beginning Balance | 170,594 | 93,245 | 160,466 | 115,516 |
Total Realized and Unrealized Gains, Included in Earnings, Assets | 11,899 | 56,491 | 34,303 | 62,467 |
Total Realized and Unrealized Gains, Included in Other Comprehensive Income, Assets | 0 | 0 | 0 | 0 |
Total Realized and Unrealized Losses, Included in Earnings, Assets | (1,915) | (2) | (13,564) | (28,249) |
Total Realized and Unrealized Losses, Included in Other Comprehensive Income, Assets | 0 | 0 | 0 | 0 |
Purchases | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | 0 |
Issuances | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | (627) | 0 |
Transfers in/out of Level 3 | 0 | 0 | 0 | 0 |
Other | 0 | 0 | 0 | 0 |
Ending Balance | 180,578 | 149,734 | 180,578 | 149,734 |
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | 9,984 | 56,489 | 20,112 | 34,218 |
Short-term investments | ||||
Assets: | ||||
Beginning Balance | 0 | 0 | ||
Total Realized and Unrealized Gains, Included in Earnings, Assets | 0 | 0 | ||
Total Realized and Unrealized Gains, Included in Other Comprehensive Income, Assets | 0 | 0 | ||
Total Realized and Unrealized Losses, Included in Earnings, Assets | 0 | 0 | ||
Total Realized and Unrealized Losses, Included in Other Comprehensive Income, Assets | 0 | 0 | ||
Purchases | 0 | 0 | ||
Sales | 0 | 0 | ||
Issuances | 0 | 0 | ||
Settlements | 0 | 0 | ||
Transfers in/out of Level 3 | 0 | 0 | ||
Other | 0 | 0 | ||
Ending Balance | $ 0 | $ 0 | 0 | 0 |
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | $ 0 | $ 0 |
FAIR VALUE OF FINANCIAL INSTR_7
FAIR VALUE OF FINANCIAL INSTRUMENTS - Estimated Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Assets: | ||
Mortgage loans on real estate | $ 7,572,349 | $ 6,817,723 |
Policy loans | 1,703,462 | 1,615,615 |
Fixed maturities, held-to-maturity | 2,653,605 | 2,718,904 |
Liabilities: | ||
Stable value product account balances | 5,211,668 | 4,698,371 |
Future policy benefits and claims | 13,590,482 | 10,921,190 |
Other policyholders’ funds | 1,142,522 | 1,267,198 |
Debt | ||
Non-recourse funding obligations | 2,890,435 | 2,952,822 |
Capital lease obligations | 1,400 | 1,700 |
Golden Gate V | ||
Debt | ||
Non-recourse funding obligations | 714,921 | 681,285 |
Level 3 | Carrying Amounts | ||
Assets: | ||
Mortgage loans on real estate | 7,572,349 | 6,817,723 |
Policy loans | 1,703,462 | 1,615,615 |
Liabilities: | ||
Stable value product account balances | 5,211,668 | 4,698,371 |
Future policy benefits and claims | 223,091 | 220,498 |
Other policyholders’ funds | 131,338 | 133,508 |
Debt | ||
Non-recourse funding obligations | 2,890,435 | 2,952,822 |
Subordinated funding obligations | 110,000 | 0 |
Level 3 | Carrying Amounts | Golden Gate V | ||
Debt | ||
Non-recourse funding obligations | 2,600,000 | 2,700,000 |
Level 3 | Carrying Amounts | Fixed maturities | ||
Assets: | ||
Fixed maturities, held-to-maturity | 2,653,605 | 2,718,904 |
Level 3 | Fair Values | ||
Assets: | ||
Mortgage loans on real estate | 7,335,547 | 6,740,177 |
Policy loans | 1,703,462 | 1,615,615 |
Liabilities: | ||
Stable value product account balances | 5,147,084 | 4,698,868 |
Future policy benefits and claims | 223,091 | 220,498 |
Other policyholders’ funds | 130,672 | 134,253 |
Debt | ||
Non-recourse funding obligations | 2,814,355 | 2,980,495 |
Subordinated funding obligations | 97,451 | 0 |
Level 3 | Fair Values | Golden Gate V | ||
Debt | ||
Non-recourse funding obligations | 2,600,000 | 2,800,000 |
Level 3 | Fair Values | Fixed maturities | ||
Assets: | ||
Fixed maturities, held-to-maturity | $ 2,577,841 | $ 2,776,327 |
DERIVATIVE FINANCIAL INSTRUME_3
DERIVATIVE FINANCIAL INSTRUMENTS - Additional Information (Details) | Sep. 30, 2018portfolio_maintenance_agreementsupport_agreement | Jan. 31, 2016portfolio_maintenance_agreement | Oct. 31, 2012portfolio_maintenance_agreement |
Derivative [Line Items] | |||
Number of premium support agreements | support_agreement | 2 | ||
PLC | |||
Derivative [Line Items] | |||
Number of portfolio maintenance agreements | portfolio_maintenance_agreement | 3 | 1 | 2 |
DERIVATIVE FINANCIAL INSTRUME_4
DERIVATIVE FINANCIAL INSTRUMENTS - Realized Investments Gains and Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Notional amount and fair value of the entity's derivative financial instruments | ||||
Total realized gains (losses) - derivatives | $ (26,710) | $ 5,302 | $ 37,176 | $ (119,392) |
Derivatives not designated as hedging instruments | ||||
Notional amount and fair value of the entity's derivative financial instruments | ||||
Total realized gains (losses) - derivatives | (26,710) | 5,302 | 37,176 | (119,392) |
Derivatives not designated as hedging instruments | Embedded derivative - Modco reinsurance treaties | ||||
Notional amount and fair value of the entity's derivative financial instruments | ||||
Total realized gains (losses) - derivatives | 10,811 | (19,746) | 138,652 | (90,314) |
Derivatives not designated as hedging instruments | Derivatives with PLC | ||||
Notional amount and fair value of the entity's derivative financial instruments | ||||
Total realized gains (losses) - derivatives | (1,913) | 52,077 | (66) | 34,671 |
Derivatives not designated as hedging instruments | Other derivatives | ||||
Notional amount and fair value of the entity's derivative financial instruments | ||||
Total realized gains (losses) - derivatives | (52) | 43 | (59) | 41 |
Derivatives not designated as hedging instruments | VA | ||||
Notional amount and fair value of the entity's derivative financial instruments | ||||
Total realized gains (losses) - derivatives | (34,674) | (21,510) | (118,903) | (47,712) |
Derivatives not designated as hedging instruments | VA | Interest rate futures | ||||
Notional amount and fair value of the entity's derivative financial instruments | ||||
Total realized gains (losses) - derivatives | 2,111 | 549 | (13,229) | 16,746 |
Derivatives not designated as hedging instruments | VA | Equity futures | ||||
Notional amount and fair value of the entity's derivative financial instruments | ||||
Total realized gains (losses) - derivatives | (5,733) | (25,959) | (23,025) | (75,389) |
Derivatives not designated as hedging instruments | VA | Currency futures | ||||
Notional amount and fair value of the entity's derivative financial instruments | ||||
Total realized gains (losses) - derivatives | 3,410 | (6,092) | 7,890 | (22,366) |
Derivatives not designated as hedging instruments | VA | Equity options | ||||
Notional amount and fair value of the entity's derivative financial instruments | ||||
Total realized gains (losses) - derivatives | (21,206) | (23,307) | (47,406) | (76,376) |
Derivatives not designated as hedging instruments | VA | Interest rate swaptions | ||||
Notional amount and fair value of the entity's derivative financial instruments | ||||
Total realized gains (losses) - derivatives | 0 | (292) | (14) | (2,423) |
Derivatives not designated as hedging instruments | VA | Interest rate swaps | ||||
Notional amount and fair value of the entity's derivative financial instruments | ||||
Total realized gains (losses) - derivatives | (41,288) | 5,342 | (131,147) | 31,331 |
Derivatives not designated as hedging instruments | VA | Total return swaps | ||||
Notional amount and fair value of the entity's derivative financial instruments | ||||
Total realized gains (losses) - derivatives | (32,343) | (8,057) | (35,908) | (9,675) |
Derivatives not designated as hedging instruments | VA | Embedded derivative - GLWB | ||||
Notional amount and fair value of the entity's derivative financial instruments | ||||
Total realized gains (losses) - derivatives | 22,931 | 485 | 55,595 | (13,306) |
Derivatives not designated as hedging instruments | VA | Funds withheld derivative | ||||
Notional amount and fair value of the entity's derivative financial instruments | ||||
Total realized gains (losses) - derivatives | 37,444 | 35,821 | 68,341 | 103,746 |
Derivatives not designated as hedging instruments | FIA | ||||
Notional amount and fair value of the entity's derivative financial instruments | ||||
Total realized gains (losses) - derivatives | 3,726 | (7,298) | 12,530 | (10,679) |
Derivatives not designated as hedging instruments | FIA | Equity futures | ||||
Notional amount and fair value of the entity's derivative financial instruments | ||||
Total realized gains (losses) - derivatives | (388) | 66 | (716) | 161 |
Derivatives not designated as hedging instruments | FIA | Equity options | ||||
Notional amount and fair value of the entity's derivative financial instruments | ||||
Total realized gains (losses) - derivatives | 18,474 | 11,242 | 21,203 | 29,511 |
Derivatives not designated as hedging instruments | FIA | Embedded derivative - FIA | ||||
Notional amount and fair value of the entity's derivative financial instruments | ||||
Total realized gains (losses) - derivatives | (14,360) | (18,606) | (7,957) | (40,351) |
Derivatives not designated as hedging instruments | IUL | ||||
Notional amount and fair value of the entity's derivative financial instruments | ||||
Total realized gains (losses) - derivatives | (4,608) | 1,736 | 5,022 | (5,399) |
Derivatives not designated as hedging instruments | IUL | Equity futures | ||||
Notional amount and fair value of the entity's derivative financial instruments | ||||
Total realized gains (losses) - derivatives | (1) | 58 | 135 | (878) |
Derivatives not designated as hedging instruments | IUL | Equity options | ||||
Notional amount and fair value of the entity's derivative financial instruments | ||||
Total realized gains (losses) - derivatives | 4,928 | 1,975 | 5,764 | 6,437 |
Derivatives not designated as hedging instruments | IUL | Embedded derivative - IUL | ||||
Notional amount and fair value of the entity's derivative financial instruments | ||||
Total realized gains (losses) - derivatives | $ (9,535) | $ (297) | $ (877) | $ (10,958) |
DERIVATIVE FINANCIAL INSTRUME_5
DERIVATIVE FINANCIAL INSTRUMENTS - Components of the Gain or Loss on Derivatives that Quality as a Cash Flow Hedging Relationship (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Gain (Loss) on Derivatives in Cash Flow Hedging Relationship | ||||
Amount of gains (losses) reclassified from accumulated other comprehensive income (loss) in the next twelve months | $ 300 | |||
Cash flow hedges | ||||
Gain (Loss) on Derivatives in Cash Flow Hedging Relationship | ||||
Amount of Gains (Losses) Deferred in Accumulated Other Comprehensive Income (Loss) on Derivatives | $ 291 | $ 1,273 | 3,873 | $ 55 |
Amount and Location of Gains (Losses) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (Loss) | (481) | (38) | (799) | (396) |
Amount and Location of (Losses) Recognized in Income (Loss) on Derivatives | 0 | 0 | 0 | 0 |
Cash flow hedges | Foreign currency swaps | ||||
Gain (Loss) on Derivatives in Cash Flow Hedging Relationship | ||||
Amount of Gains (Losses) Deferred in Accumulated Other Comprehensive Income (Loss) on Derivatives | 190 | 1,273 | 3,772 | 55 |
Amount and Location of Gains (Losses) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (Loss) | (155) | (38) | (473) | (396) |
Amount and Location of (Losses) Recognized in Income (Loss) on Derivatives | 0 | $ 0 | 0 | $ 0 |
Cash flow hedges | Interest rate swaps | ||||
Gain (Loss) on Derivatives in Cash Flow Hedging Relationship | ||||
Amount of Gains (Losses) Deferred in Accumulated Other Comprehensive Income (Loss) on Derivatives | 101 | 101 | ||
Amount and Location of Gains (Losses) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (Loss) | (326) | (326) | ||
Amount and Location of (Losses) Recognized in Income (Loss) on Derivatives | $ 0 | $ 0 |
DERIVATIVE FINANCIAL INSTRUME_6
DERIVATIVE FINANCIAL INSTRUMENTS - Nature and Accounting Treatment of Derivative Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Derivative [Line Items] | ||
Other long-term investments, Fair Value | $ 635,618 | $ 629,537 |
Derivatives with PLC | ||
Derivative [Line Items] | ||
Other long-term investments, Fair Value | 90,885 | 91,578 |
Embedded derivative - Modco reinsurance treaties | ||
Derivative [Line Items] | ||
Other long-term investments, Fair Value | 2,650 | 1,009 |
Embedded derivative - GLWB | ||
Derivative [Line Items] | ||
Other long-term investments, Fair Value | 87,043 | 67,879 |
Derivatives designated as hedging instrument | Cash flow hedges | Interest rate swaps | ||
Derivative [Line Items] | ||
Other long-term investments, Notional Amounts | 350,000 | 0 |
Other long-term investments, Fair Value | 0 | 0 |
Derivatives designated as hedging instrument | Cash flow hedges | Foreign currency swaps | ||
Derivative [Line Items] | ||
Other long-term investments, Notional Amounts | 117,178 | 117,178 |
Other long-term investments, Fair Value | 10,902 | 6,016 |
Derivatives not designated as hedging instruments | ||
Derivative [Line Items] | ||
Other long-term investments, Notional Amounts | 14,636,363 | 12,361,869 |
Other long-term investments, Fair Value | 635,618 | 629,537 |
Other liabilities. Notional Amount | 14,188,126 | 12,710,731 |
Other liabilities, Fair Value | 801,772 | 905,973 |
Derivatives not designated as hedging instruments | Interest rate swaps | ||
Derivative [Line Items] | ||
Other long-term investments, Notional Amounts | 565,000 | 1,265,000 |
Other long-term investments, Fair Value | 8,402 | 55,411 |
Other liabilities. Notional Amount | 1,547,500 | 597,500 |
Other liabilities, Fair Value | 26,321 | 2,960 |
Derivatives not designated as hedging instruments | Total return swaps | ||
Derivative [Line Items] | ||
Other long-term investments, Notional Amounts | 482,523 | 190,938 |
Other long-term investments, Fair Value | 3,676 | 135 |
Other liabilities. Notional Amount | 0 | 243,388 |
Other liabilities, Fair Value | 0 | 318 |
Derivatives not designated as hedging instruments | Derivatives with PLC | ||
Derivative [Line Items] | ||
Other long-term investments, Notional Amounts | 2,863,575 | 2,810,469 |
Other long-term investments, Fair Value | 90,885 | 91,578 |
Derivatives not designated as hedging instruments | Embedded derivative - Modco reinsurance treaties | ||
Derivative [Line Items] | ||
Other long-term investments, Notional Amounts | 322,308 | 64,472 |
Other long-term investments, Fair Value | 2,650 | 1,009 |
Other liabilities. Notional Amount | 2,082,638 | 2,390,539 |
Other liabilities, Fair Value | 60,683 | 215,247 |
Derivatives not designated as hedging instruments | Funds withheld derivative | ||
Derivative [Line Items] | ||
Other liabilities. Notional Amount | 1,813,454 | 1,502,726 |
Other liabilities, Fair Value | 60,432 | 61,729 |
Derivatives not designated as hedging instruments | Embedded derivative - GLWB | ||
Derivative [Line Items] | ||
Other long-term investments, Notional Amounts | 2,692,724 | 2,116,935 |
Other long-term investments, Fair Value | 87,043 | 67,879 |
Other liabilities. Notional Amount | 1,385,123 | 1,939,320 |
Other liabilities, Fair Value | 46,995 | 83,427 |
Derivatives not designated as hedging instruments | Embedded derivative - FIA | ||
Derivative [Line Items] | ||
Other liabilities. Notional Amount | 2,459,246 | 1,951,650 |
Other liabilities, Fair Value | 256,912 | 218,676 |
Derivatives not designated as hedging instruments | Embedded derivative - IUL | ||
Derivative [Line Items] | ||
Other liabilities. Notional Amount | 219,226 | 168,349 |
Other liabilities, Fair Value | 95,739 | 80,212 |
Derivatives not designated as hedging instruments | Interest rate futures | ||
Derivative [Line Items] | ||
Other long-term investments, Notional Amounts | 875,566 | 1,071,870 |
Other long-term investments, Fair Value | 8,329 | 3,178 |
Other liabilities. Notional Amount | 348,749 | 230,404 |
Other liabilities, Fair Value | 7,122 | 917 |
Derivatives not designated as hedging instruments | Equity futures | ||
Derivative [Line Items] | ||
Other long-term investments, Notional Amounts | 205,872 | 62,266 |
Other long-term investments, Fair Value | 2,387 | 154 |
Other liabilities. Notional Amount | 77,916 | 318,795 |
Other liabilities, Fair Value | 1,043 | 2,593 |
Derivatives not designated as hedging instruments | Currency futures | ||
Derivative [Line Items] | ||
Other long-term investments, Notional Amounts | 135,112 | 1,117 |
Other long-term investments, Fair Value | 1,096 | 2 |
Other liabilities. Notional Amount | 79,861 | 255,248 |
Other liabilities, Fair Value | 15 | 2,087 |
Derivatives not designated as hedging instruments | Equity options | ||
Derivative [Line Items] | ||
Other long-term investments, Notional Amounts | 6,026,348 | 4,436,467 |
Other long-term investments, Fair Value | 420,107 | 403,961 |
Other liabilities. Notional Amount | 4,174,072 | 3,112,812 |
Other liabilities, Fair Value | 246,466 | 237,807 |
Derivatives not designated as hedging instruments | Interest rate swaptions | ||
Derivative [Line Items] | ||
Other long-term investments, Notional Amounts | 0 | 225,000 |
Other long-term investments, Fair Value | 0 | 14 |
Derivatives not designated as hedging instruments | Other derivatives | ||
Derivative [Line Items] | ||
Other long-term investments, Notional Amounts | 157 | 157 |
Other long-term investments, Fair Value | 141 | 200 |
Other liabilities. Notional Amount | 341 | 0 |
Other liabilities, Fair Value | $ 44 | $ 0 |
OFFSETTING OF ASSETS AND LIAB_3
OFFSETTING OF ASSETS AND LIABILITIES - Schedule of Derivative Instruments by Assets (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Derivative instruments by assets | ||
Fair value of non-cash collateral | $ 8,200,000 | $ 0 |
Offsetting of Assets | ||
Gross Amounts of Recognized Assets, Derivatives Not Subject to a master netting arrangement | 635,618,000 | 629,537,000 |
Gross Amounts Offset in the Statement of Financial Position | 0 | 0 |
Net Amounts of Assets Presented in the Statement of Financial Position | 635,618,000 | 629,537,000 |
Derivative Asset, Not Offset, Policy Election Deduction | 270,878,000 | 242,105,000 |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received | 68,809,000 | 108,830,000 |
Net Amount | 295,931,000 | 278,602,000 |
Free-Standing derivatives | ||
Offsetting of Assets | ||
Gross Amounts of Recognized Assets, Derivatives | 454,899,000 | 468,871,000 |
Gross Amounts Offset in the Statement of Financial Position | 0 | 0 |
Net Amounts of Assets Presented in the Statement of Financial Position | 454,899,000 | 468,871,000 |
Derivative Asset, Not Subject to Master Netting Arrangement Deduction | 270,878,000 | 242,105,000 |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received | 68,809,000 | 108,830,000 |
Net Amount | 115,212,000 | 117,936,000 |
Total derivatives, subject to a master netting arrangement or similar arrangement | ||
Offsetting of Assets | ||
Gross Amounts of Recognized Assets, Derivatives | 454,899,000 | 468,871,000 |
Gross Amounts Offset in the Statement of Financial Position | 0 | 0 |
Net Amounts of Assets Presented in the Statement of Financial Position | 454,899,000 | 468,871,000 |
Derivative Asset, Not Subject to Master Netting Arrangement Deduction | 270,878,000 | 242,105,000 |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received | 68,809,000 | 108,830,000 |
Net Amount | 115,212,000 | 117,936,000 |
Embedded derivative - Modco reinsurance treaties | ||
Offsetting of Assets | ||
Gross Amounts of Recognized Assets, Derivatives Not Subject to a master netting arrangement | 2,650,000 | 1,009,000 |
Gross Amounts Offset in the Statement of Financial Position | 0 | 0 |
Net Amounts of Assets Presented in the Statement of Financial Position | 2,650,000 | 1,009,000 |
Derivative Asset, Not Offset, Policy Election Deduction | 0 | 0 |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received | 0 | 0 |
Net Amount | 2,650,000 | 1,009,000 |
Embedded derivative - GLWB | ||
Offsetting of Assets | ||
Gross Amounts of Recognized Assets, Derivatives Not Subject to a master netting arrangement | 87,043,000 | 67,879,000 |
Gross Amounts Offset in the Statement of Financial Position | 0 | 0 |
Net Amounts of Assets Presented in the Statement of Financial Position | 87,043,000 | 67,879,000 |
Derivative Asset, Not Offset, Policy Election Deduction | 0 | 0 |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received | 0 | 0 |
Net Amount | 87,043,000 | 67,879,000 |
Derivatives with PLC | ||
Offsetting of Assets | ||
Gross Amounts of Recognized Assets, Derivatives Not Subject to a master netting arrangement | 90,885,000 | 91,578,000 |
Gross Amounts Offset in the Statement of Financial Position | 0 | 0 |
Net Amounts of Assets Presented in the Statement of Financial Position | 90,885,000 | 91,578,000 |
Derivative Asset, Not Offset, Policy Election Deduction | 0 | 0 |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received | 0 | 0 |
Net Amount | 90,885,000 | 91,578,000 |
Other | ||
Offsetting of Assets | ||
Gross Amounts of Recognized Assets, Derivatives Not Subject to a master netting arrangement | 141,000 | 200,000 |
Gross Amounts Offset in the Statement of Financial Position | 0 | 0 |
Net Amounts of Assets Presented in the Statement of Financial Position | 141,000 | 200,000 |
Derivative Asset, Not Offset, Policy Election Deduction | 0 | 0 |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received | 0 | 0 |
Net Amount | 141,000 | 200,000 |
Total derivatives, not subject to a master netting arrangement or similar arrangement | ||
Offsetting of Assets | ||
Gross Amounts of Recognized Assets, Derivatives Not Subject to a master netting arrangement | 180,719,000 | 160,666,000 |
Gross Amounts Offset in the Statement of Financial Position | 0 | 0 |
Net Amounts of Assets Presented in the Statement of Financial Position | 180,719,000 | 160,666,000 |
Derivative Asset, Not Offset, Policy Election Deduction | 0 | 0 |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received | 0 | 0 |
Net Amount | $ 180,719,000 | $ 160,666,000 |
OFFSETTING OF ASSETS AND LIAB_4
OFFSETTING OF ASSETS AND LIABILITIES - Schedule of Derivative Instruments by Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Offsetting of Liabilities | ||
Gross Amounts of Recognized Liabilities, Not subject to a master netting arrangement or similar arrangement | $ 801,772 | $ 905,973 |
Gross Amounts Offset in the Statement of Financial Position | 0 | 0 |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 801,772 | 905,973 |
Derivative Liability, Not Subject to Master Netting Arrangement Deduction | 270,878 | 242,105 |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Paid | 10,089 | 4,577 |
Net Amount | 520,805 | 659,291 |
Repurchase agreements | ||
Gross Amounts of Recognized Liabilities | 417,094 | 885,000 |
Gross Amounts Offset in the Statement of Financial Position | 0 | 0 |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 417,094 | 885,000 |
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments | 0 | 0 |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Paid | 0 | 0 |
Net Amount | 417,094 | 885,000 |
Total Liabilities | ||
Gross Amounts of Recognized Liabilities | 1,218,866 | 1,790,973 |
Gross Amounts Offset in the Statement of Financial Position | 0 | 0 |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 1,218,866 | 1,790,973 |
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments | 270,878 | 242,105 |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Paid | 10,089 | 4,577 |
Net Amount | 937,899 | 1,544,291 |
Free-Standing derivatives | ||
Offsetting of Liabilities | ||
Gross Amounts of Recognized Liabilities, Subject to master netting arrangement or similar arrangement | 280,967 | 246,682 |
Gross Amounts Offset in the Statement of Financial Position | 0 | 0 |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 280,967 | 246,682 |
Derivative Liability, Not Offset, Policy Election Deduction | 270,878 | 242,105 |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Paid | 10,089 | 4,577 |
Net Amount | 0 | 0 |
Total derivatives, subject to a master netting arrangement or similar arrangement | ||
Offsetting of Liabilities | ||
Gross Amounts of Recognized Liabilities, Subject to master netting arrangement or similar arrangement | 280,967 | 246,682 |
Gross Amounts Offset in the Statement of Financial Position | 0 | 0 |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 280,967 | 246,682 |
Derivative Liability, Not Offset, Policy Election Deduction | 270,878 | 242,105 |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Paid | 10,089 | 4,577 |
Net Amount | 0 | 0 |
Embedded derivative - Modco reinsurance treaties | ||
Offsetting of Liabilities | ||
Gross Amounts of Recognized Liabilities, Not subject to a master netting arrangement or similar arrangement | 60,683 | 215,247 |
Gross Amounts Offset in the Statement of Financial Position | 0 | 0 |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 60,683 | 215,247 |
Derivative Liability, Not Subject to Master Netting Arrangement Deduction | 0 | 0 |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Paid | 0 | 0 |
Net Amount | 60,683 | 215,247 |
Funds withheld derivative | ||
Offsetting of Liabilities | ||
Gross Amounts of Recognized Liabilities, Not subject to a master netting arrangement or similar arrangement | 60,432 | 61,729 |
Gross Amounts Offset in the Statement of Financial Position | 0 | 0 |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 60,432 | 61,729 |
Derivative Liability, Not Subject to Master Netting Arrangement Deduction | 0 | 0 |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Paid | 0 | 0 |
Net Amount | 60,432 | 61,729 |
Embedded derivative - GLWB | ||
Offsetting of Liabilities | ||
Gross Amounts of Recognized Liabilities, Not subject to a master netting arrangement or similar arrangement | 46,995 | 83,427 |
Gross Amounts Offset in the Statement of Financial Position | 0 | 0 |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 46,995 | 83,427 |
Derivative Liability, Not Subject to Master Netting Arrangement Deduction | 0 | 0 |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Paid | 0 | 0 |
Net Amount | 46,995 | 83,427 |
Embedded derivative - FIA | ||
Offsetting of Liabilities | ||
Gross Amounts of Recognized Liabilities, Not subject to a master netting arrangement or similar arrangement | 256,912 | 218,676 |
Gross Amounts Offset in the Statement of Financial Position | 0 | 0 |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 256,912 | 218,676 |
Derivative Liability, Not Subject to Master Netting Arrangement Deduction | 0 | 0 |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Paid | 0 | 0 |
Net Amount | 256,912 | 218,676 |
Embedded derivative - IUL | ||
Offsetting of Liabilities | ||
Gross Amounts of Recognized Liabilities, Not subject to a master netting arrangement or similar arrangement | 95,739 | 80,212 |
Gross Amounts Offset in the Statement of Financial Position | 0 | 0 |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 95,739 | 80,212 |
Derivative Liability, Not Subject to Master Netting Arrangement Deduction | 0 | 0 |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Paid | 0 | 0 |
Net Amount | 95,739 | 80,212 |
Other | ||
Offsetting of Liabilities | ||
Gross Amounts of Recognized Liabilities, Not subject to a master netting arrangement or similar arrangement | 44 | |
Gross Amounts Offset in the Statement of Financial Position | 0 | |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 44 | |
Derivative Liability, Not Subject to Master Netting Arrangement Deduction | 0 | |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Paid | 0 | |
Net Amount | 44 | |
Total derivatives, not subject to a master netting arrangement or similar arrangement | ||
Offsetting of Liabilities | ||
Gross Amounts of Recognized Liabilities, Not subject to a master netting arrangement or similar arrangement | 520,805 | 659,291 |
Gross Amounts Offset in the Statement of Financial Position | 0 | 0 |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 520,805 | 659,291 |
Derivative Liability, Not Subject to Master Netting Arrangement Deduction | 0 | 0 |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Paid | 0 | 0 |
Net Amount | $ 520,805 | $ 659,291 |
MORTGAGE LOANS - Additional Inf
MORTGAGE LOANS - Additional Information (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018USD ($)loan | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)restructuringloancategory | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) | |
Mortgage loans | |||||
Mortgage loans on real estate | $ 7,572,349,000 | $ 7,572,349,000 | $ 6,817,723,000 | ||
Period for exercise of call options or interest rate reset options | 11 years | ||||
Amount that would become due in remainder of 2018, if loans are called at their next call dates | 80,700,000 | $ 80,700,000 | |||
Amount that would become due in 2019 through 2023, if loans are called at their next call dates | 933,400,000 | 933,400,000 | |||
Amount that would become due in 2024 through 2028, if loans are called at their next call dates | 91,800,000 | 91,800,000 | |||
Amount that would become due after 2028, if loans are called at their next call dates | 1,900,000 | $ 1,900,000 | |||
Number of troubled debt restructurings | restructuring | 1 | ||||
Financing receivable not subject to pooling and servicing agreement, non performing or restructured amount | $ 0 | $ 0 | |||
Loans subject to a pooling and servicing agreement which are either nonperforming or restructured | loan | 0 | 0 | |||
Number of nonperforming financing receivable subject to pooling and servicing agreement which have been restructured | loan | 0 | ||||
Commercial mortgage loans | |||||
Mortgage loans | |||||
Mortgage loans having participation feature | $ 757,000,000 | $ 757,000,000 | 669,300,000 | ||
Income recognized on participating mortgage loans | 9,500,000 | $ 14,200,000 | 22,000,000 | $ 25,700,000 | |
Nonperforming mortgage loans, foreclosed properties and restructured loans to invested assets | 3,000,000 | $ 3,000,000 | |||
Number of loan categories | category | 2 | ||||
Financing receivable not subject to pooling and servicing agreement, non performing or restructured amount | 3,000,000 | $ 3,000,000 | |||
Allowance for mortgage loan credit losses | $ 1,481,000 | $ 1,481,000 | $ 0 | ||
Minimum number of days for ceasing accrued interest | 90 days | ||||
Minimum number of days past due to initiate foreclosure proceedings | 90 days | ||||
Maximum number of days accrued interest on impaired loans | 90 days | ||||
Maximum | Commercial mortgage loans | |||||
Mortgage loans | |||||
Loan-to-value ratio with participating interest (as a percent) | 85.00% | 85.00% |
MORTGAGE LOANS - Change in Allo
MORTGAGE LOANS - Change in Allowance for Credit Losses (Details) - Commercial mortgage loans | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Financing Receivable, Allowance for Credit Losses [Roll Forward] | |
Beginning Balance | $ 0 |
Charge offs | 0 |
Recoveries | (24,000) |
Provision | 1,505,000 |
Ending Balance | $ 1,481,000 |
MORTGAGE LOANS - Delinquent Loa
MORTGAGE LOANS - Delinquent Loans (Details) - Commercial mortgage loans $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018USD ($)loan | Dec. 31, 2017USD ($)loan | |
Delinquent loans | ||
Commercial mortgage loans | $ | $ 2,423 | $ 1,817 |
Number of delinquent commercial mortgage loans | loan | 2 | 2 |
30-59 Days Delinquent | ||
Delinquent loans | ||
Commercial mortgage loans | $ | $ 1,180 | $ 1,817 |
Number of delinquent commercial mortgage loans | loan | 1 | 2 |
60-89 Days Delinquent | ||
Delinquent loans | ||
Commercial mortgage loans | $ | $ 0 | $ 0 |
Number of delinquent commercial mortgage loans | loan | 0 | 0 |
Greater than 90 Days Delinquent | ||
Delinquent loans | ||
Commercial mortgage loans | $ | $ 1,243 | $ 0 |
Number of delinquent commercial mortgage loans | loan | 1 | 0 |
MORTGAGE LOANS - Impaired Loans
MORTGAGE LOANS - Impaired Loans (Details) - Commercial mortgage loans - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Recorded Investment | ||
With no related allowance recorded | $ 0 | $ 0 |
With an allowance recorded | 5,714 | 0 |
Unpaid Principal Balance | ||
With no related allowance recorded | 0 | 0 |
With an allowance recorded | 5,327 | 0 |
Related Allowance | ||
With an allowance recorded | 1,481 | 0 |
Average Recorded Investment | ||
With no related allowance recorded | 0 | 0 |
With an allowance recorded | 1,905 | 0 |
Interest Income Recognized | ||
With no related allowance recorded | 0 | 0 |
With an allowance recorded | 197 | 0 |
Cash Basis Interest Income | ||
With no related allowance recorded | 0 | 0 |
With an allowance recorded | $ 225 | $ 0 |
MORTGAGE LOANS - Troubled Debt
MORTGAGE LOANS - Troubled Debt Restructuring (Details) - Commercial mortgage loans $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018USD ($)contract | Dec. 31, 2017USD ($)contract | |
Financing Receivable, Modifications [Line Items] | ||
Number of Contracts | contract | 1 | 1 |
Pre-Modification Outstanding Recorded Investment | $ 2,694 | $ 418 |
Post-Modification Outstanding Recorded Investment | $ 1,748 | $ 418 |
GOODWILL (Details)
GOODWILL (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Changes in the carrying amount of goodwill | ||
Goodwill | $ 793,470,000 | $ 793,470,000 |
Increase (decrease) to goodwill | $ 0 |
DEBT AND OTHER OBLIGATIONS - De
DEBT AND OTHER OBLIGATIONS - Debt and Subordinated Debt Securities (Details) - USD ($) | May 03, 2018 | Sep. 30, 2018 |
2015 Credit Facility | ||
Debt Instrument [Line Items] | ||
Line of credit, maximum borrowing capacity | $ 1,000,000,000 | |
Line of credit, maximum borrowing capacity to be granted upon entity's request | $ 1,250,000,000 | |
Facility fee percentage | 0.125% | |
2015 Credit Facility | Federal Funds rate | ||
Debt Instrument [Line Items] | ||
Interest rate added to the base rate (as a percent) | 0.50% | |
2015 Credit Facility | London Interbank Offered Rate (LIBOR) | ||
Debt Instrument [Line Items] | ||
Interest rate added to the base rate (as a percent) | 1.00% | |
Credit Facility | ||
Debt Instrument [Line Items] | ||
Line of credit, maximum borrowing capacity | $ 1,000,000,000 | |
Line of credit, maximum borrowing capacity to be granted upon entity's request | $ 1,500,000,000 | |
Credit Facility | PLC | ||
Debt Instrument [Line Items] | ||
Facility fee percentage | 0.125% | |
Line of credit, amount outstanding | $ 0 | |
Credit Facility | Federal Funds rate | PLC | ||
Debt Instrument [Line Items] | ||
Interest rate added to the base rate (as a percent) | 0.50% | |
Credit Facility | London Interbank Offered Rate (LIBOR) | PLC | ||
Debt Instrument [Line Items] | ||
Interest rate added to the base rate (as a percent) | 1.00% | |
3.55% Due 2038 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 3.55% | |
3.55% Due 2038 | Subordinated Debt | ||
Debt Instrument [Line Items] | ||
Outstanding principal | $ 110,000,000 |
DEBT AND OTHER OBLIGATIONS - No
DEBT AND OTHER OBLIGATIONS - Non-Recourse Funding Obligations (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Debt Instrument [Line Items] | ||
Outstanding Principal | $ 2,882,940 | $ 2,944,940 |
Carrying Value | 2,890,435 | 2,952,822 |
Golden Gate Captive Insurance Company | ||
Debt Instrument [Line Items] | ||
Outstanding Principal | 1,917,000 | 2,014,000 |
Carrying Value | $ 1,917,000 | $ 2,014,000 |
Year-to-Date Weighted-Avg Interest Rate | 4.75% | 4.75% |
Golden Gate II Captive Insurance Company | ||
Debt Instrument [Line Items] | ||
Outstanding Principal | $ 309,849 | $ 309,849 |
Carrying Value | $ 256,157 | $ 255,132 |
Year-to-Date Weighted-Avg Interest Rate | 4.07% | 3.11% |
Golden Gate V Vermont Captive Insurance Company | ||
Debt Instrument [Line Items] | ||
Outstanding Principal | $ 655,000 | $ 620,000 |
Carrying Value | $ 714,921 | $ 681,285 |
Year-to-Date Weighted-Avg Interest Rate | 5.12% | 5.12% |
MONY Life Insurance Company | ||
Debt Instrument [Line Items] | ||
Outstanding Principal | $ 1,091 | $ 1,091 |
Carrying Value | $ 2,357 | $ 2,405 |
Year-to-Date Weighted-Avg Interest Rate | 6.19% | 6.19% |
DEBT AND OTHER OBLIGATIONS - Se
DEBT AND OTHER OBLIGATIONS - Secured Financing Transactions (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Debt Instrument [Line Items] | ||
Initial collateral required (as a percent) | 102.00% | |
Securities lending transactions | $ 92,022 | $ 125,271 |
Fair value of collateral | 97,300 | |
Obligation to return collateral | 97,300 | |
Repurchase Program Borrowings | ||
Debt Instrument [Line Items] | ||
Fair value of securities pledged under the repurchase program | 457,500 | 1,006,600 |
Secured financing liabilities | $ 417,100 | $ 885,000 |
Average interest rate | 2.23% | 1.42% |
Maximum outstanding balance | $ 427,500 | $ 988,500 |
Average daily balance | $ 225,900 | $ 624,700 |
Average borrowing rate (as a percent) | 2.08% | 1.01% |
Repurchase Program Borrowings | Maximum | ||
Debt Instrument [Line Items] | ||
Term of financing agreement | 90 days |
DEBT AND OTHER OBLIGATIONS - Am
DEBT AND OTHER OBLIGATIONS - Amount of Collateral Pledged for Repurchase Agreements, Grouped by Asset Class (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||
Repurchase agreements and repurchase-to-maturity transactions | $ 457,524 | $ 1,006,607 |
Securities lending transactions | 92,022 | 125,271 |
Total securities | 549,546 | 1,131,878 |
U.S. Treasury and agency securities | ||
Debt Instrument [Line Items] | ||
Repurchase agreements and repurchase-to-maturity transactions | 457,524 | 307,633 |
Mortgage loans | ||
Debt Instrument [Line Items] | ||
Repurchase agreements and repurchase-to-maturity transactions | 0 | 698,974 |
Corporate securities | ||
Debt Instrument [Line Items] | ||
Securities lending transactions | 91,040 | 118,817 |
Equity securities | ||
Debt Instrument [Line Items] | ||
Securities lending transactions | 982 | 5,699 |
Redeemable preferred stock | ||
Debt Instrument [Line Items] | ||
Securities lending transactions | 0 | 755 |
Other government related securities | ||
Debt Instrument [Line Items] | ||
Securities lending transactions | 0 | |
Overnight and Continuous | ||
Debt Instrument [Line Items] | ||
Repurchase agreements and repurchase-to-maturity transactions | 401,011 | 1,006,607 |
Securities lending transactions | 92,022 | 125,271 |
Total securities | 493,033 | 1,131,878 |
Overnight and Continuous | U.S. Treasury and agency securities | ||
Debt Instrument [Line Items] | ||
Repurchase agreements and repurchase-to-maturity transactions | 401,011 | 307,633 |
Overnight and Continuous | Mortgage loans | ||
Debt Instrument [Line Items] | ||
Repurchase agreements and repurchase-to-maturity transactions | 0 | 698,974 |
Overnight and Continuous | Corporate securities | ||
Debt Instrument [Line Items] | ||
Securities lending transactions | 91,040 | 118,817 |
Overnight and Continuous | Equity securities | ||
Debt Instrument [Line Items] | ||
Securities lending transactions | 982 | 5,699 |
Overnight and Continuous | Redeemable preferred stock | ||
Debt Instrument [Line Items] | ||
Securities lending transactions | 0 | 755 |
Overnight and Continuous | Other government related securities | ||
Debt Instrument [Line Items] | ||
Securities lending transactions | 0 | |
Up to 30 days | ||
Debt Instrument [Line Items] | ||
Repurchase agreements and repurchase-to-maturity transactions | 56,513 | 0 |
Securities lending transactions | 0 | 0 |
Total securities | 56,513 | 0 |
Up to 30 days | U.S. Treasury and agency securities | ||
Debt Instrument [Line Items] | ||
Repurchase agreements and repurchase-to-maturity transactions | 56,513 | 0 |
Up to 30 days | Mortgage loans | ||
Debt Instrument [Line Items] | ||
Repurchase agreements and repurchase-to-maturity transactions | 0 | 0 |
Up to 30 days | Corporate securities | ||
Debt Instrument [Line Items] | ||
Securities lending transactions | 0 | 0 |
Up to 30 days | Equity securities | ||
Debt Instrument [Line Items] | ||
Securities lending transactions | 0 | 0 |
Up to 30 days | Redeemable preferred stock | ||
Debt Instrument [Line Items] | ||
Securities lending transactions | 0 | 0 |
Up to 30 days | Other government related securities | ||
Debt Instrument [Line Items] | ||
Securities lending transactions | 0 | |
30-90 days | ||
Debt Instrument [Line Items] | ||
Repurchase agreements and repurchase-to-maturity transactions | 0 | 0 |
Securities lending transactions | 0 | 0 |
Total securities | 0 | 0 |
30-90 days | U.S. Treasury and agency securities | ||
Debt Instrument [Line Items] | ||
Repurchase agreements and repurchase-to-maturity transactions | 0 | 0 |
30-90 days | Mortgage loans | ||
Debt Instrument [Line Items] | ||
Repurchase agreements and repurchase-to-maturity transactions | 0 | 0 |
30-90 days | Corporate securities | ||
Debt Instrument [Line Items] | ||
Securities lending transactions | 0 | 0 |
30-90 days | Equity securities | ||
Debt Instrument [Line Items] | ||
Securities lending transactions | 0 | 0 |
30-90 days | Redeemable preferred stock | ||
Debt Instrument [Line Items] | ||
Securities lending transactions | 0 | 0 |
30-90 days | Other government related securities | ||
Debt Instrument [Line Items] | ||
Securities lending transactions | 0 | |
Greater Than 90 days | ||
Debt Instrument [Line Items] | ||
Repurchase agreements and repurchase-to-maturity transactions | 0 | 0 |
Securities lending transactions | 0 | 0 |
Total securities | 0 | 0 |
Greater Than 90 days | U.S. Treasury and agency securities | ||
Debt Instrument [Line Items] | ||
Repurchase agreements and repurchase-to-maturity transactions | 0 | 0 |
Greater Than 90 days | Mortgage loans | ||
Debt Instrument [Line Items] | ||
Repurchase agreements and repurchase-to-maturity transactions | 0 | 0 |
Greater Than 90 days | Corporate securities | ||
Debt Instrument [Line Items] | ||
Securities lending transactions | 0 | 0 |
Greater Than 90 days | Equity securities | ||
Debt Instrument [Line Items] | ||
Securities lending transactions | 0 | 0 |
Greater Than 90 days | Redeemable preferred stock | ||
Debt Instrument [Line Items] | ||
Securities lending transactions | 0 | $ 0 |
Greater Than 90 days | Other government related securities | ||
Debt Instrument [Line Items] | ||
Securities lending transactions | $ 0 |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details) - Pension Plan - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
EMPLOYEE BENEFIT PLANS | ||||
Contributions by employer | $ 18,800 | |||
Minimum | ||||
EMPLOYEE BENEFIT PLANS | ||||
Adjusted funding target percentage to be maintained | 80.00% | |||
Qualified Pension Plan | ||||
EMPLOYEE BENEFIT PLANS | ||||
Service cost — benefits earned during the period | $ 3,006 | $ 3,348 | $ 9,888 | $ 10,044 |
Interest cost on projected benefit obligation | 2,577 | 2,191 | 7,371 | 6,573 |
Expected return on plan assets | (4,743) | (3,352) | (12,795) | (10,056) |
Amortization of prior service cost | 0 | 0 | 0 | 0 |
Amortization of actuarial loss/(gain) | 0 | 0 | 0 | 0 |
Preliminary net periodic benefit cost | 840 | 2,187 | 4,464 | 6,561 |
Settlement/curtailment expense(1) | 0 | 0 | 0 | 0 |
Total net periodic benefit costs | 840 | 2,187 | 4,464 | 6,561 |
Nonqualified Excess Pension Plan | ||||
EMPLOYEE BENEFIT PLANS | ||||
Service cost — benefits earned during the period | 288 | 334 | 1,062 | 1,002 |
Interest cost on projected benefit obligation | 359 | 297 | 1,077 | 891 |
Expected return on plan assets | 0 | 0 | 0 | 0 |
Amortization of prior service cost | 0 | 0 | 0 | 0 |
Amortization of actuarial loss/(gain) | 196 | 118 | 726 | 354 |
Preliminary net periodic benefit cost | 843 | 749 | 2,865 | 2,247 |
Settlement/curtailment expense(1) | 986 | 0 | 986 | 0 |
Total net periodic benefit costs | $ 1,829 | $ 749 | $ 3,851 | $ 2,247 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - Changes in AOCI by Component (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||
Beginning Balance | $ 8,324,285 | |||||
Total other comprehensive income (loss) | $ (198,698) | $ 101,973 | (1,196,998) | $ 554,767 | ||
Ending Balance | 7,187,760 | 7,187,760 | $ 8,324,285 | |||
Offset of net unrealized losses in AOCI due to impact those net unrealized losses would have on certain of the Company's insurance assets and liabilities had the net unrealized losses been recognized in net income | 524,100 | (6,300) | $ 424,100 | |||
Unrealized Gains and Losses on Investments | ||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||
Beginning Balance | 23,069 | (655,767) | (655,767) | |||
Other comprehensive income (loss) before reclassifications | (1,198,669) | 699,097 | ||||
Other comprehensive income (loss) relating to other-than-temporary impaired investments for which a portion has been recognized in earnings | 22 | 7,153 | ||||
Amounts reclassified from accumulated other comprehensive income (loss) | (2,042) | (944) | ||||
Total other comprehensive income (loss) | (1,200,689) | 705,306 | ||||
Cumulative effect adjustment | (10,552) | (26,470) | ||||
Ending Balance | (1,188,172) | (1,188,172) | 23,069 | (655,767) | ||
Accumulated Gain and Loss Derivatives | ||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||
Beginning Balance | 747 | 727 | 727 | |||
Other comprehensive income (loss) before reclassifications | 3,060 | (563) | ||||
Other comprehensive income (loss) relating to other-than-temporary impaired investments for which a portion has been recognized in earnings | 0 | 0 | ||||
Amounts reclassified from accumulated other comprehensive income (loss) | 631 | 451 | ||||
Total other comprehensive income (loss) | 3,691 | (112) | ||||
Cumulative effect adjustment | 0 | 132 | ||||
Ending Balance | 4,438 | 4,438 | 747 | 727 | ||
Total Accumulated Other Comprehensive Income (Loss) | ||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||
Beginning Balance | 23,816 | $ (655,040) | (655,040) | |||
Other comprehensive income (loss) before reclassifications | (1,195,609) | 698,534 | ||||
Other comprehensive income (loss) relating to other-than-temporary impaired investments for which a portion has been recognized in earnings | 22 | 7,153 | ||||
Amounts reclassified from accumulated other comprehensive income (loss) | (1,411) | (493) | ||||
Total other comprehensive income (loss) | (1,196,998) | 705,194 | ||||
Cumulative effect adjustment | (10,552) | (26,338) | ||||
Ending Balance | $ (1,183,734) | $ (1,183,734) | $ 23,816 | $ (655,040) |
ACCUMULATED OTHER COMPREHENSI_4
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - Reclassifications (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) | ||||
Benefits and settlement expenses, net of reinsurance ceded | $ (950,942) | $ (742,789) | $ (2,598,151) | $ (2,203,883) |
Realized investment gains (losses): All other investments | (20,156) | 18,150 | (157,350) | 94,526 |
Net impairment losses recognized in earnings | (14) | (273) | (3,664) | (8,259) |
Income before income tax | 95,170 | 165,982 | 178,000 | 385,912 |
Tax (expense) or benefit | (16,646) | (49,016) | (28,933) | (120,975) |
Net income | 78,524 | 116,966 | 149,067 | 264,937 |
Amount Reclassified from Accumulated Other Comprehensive Income (Loss) | Gains and losses on derivative instruments | ||||
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) | ||||
Benefits and settlement expenses, net of reinsurance ceded | (481) | (38) | (799) | (396) |
Income before income tax | (481) | (38) | (799) | (396) |
Tax (expense) or benefit | 101 | 14 | 168 | 139 |
Net income | (380) | (24) | (631) | (257) |
Amount Reclassified from Accumulated Other Comprehensive Income (Loss) | Unrealized gains and losses on available-for-sale securities | ||||
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) | ||||
Realized investment gains (losses): All other investments | (2,018) | 690 | 6,248 | 9,084 |
Net impairment losses recognized in earnings | (14) | (273) | (3,664) | (8,259) |
Income before income tax | (2,032) | 417 | 2,584 | 825 |
Tax (expense) or benefit | 427 | (146) | (542) | (289) |
Net income | $ (1,605) | $ 271 | $ 2,042 | $ 536 |
INCOME TAXES - Effective Tax Ra
INCOME TAXES - Effective Tax Rate Reconciliation (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Statutory federal income tax rate applied to pre-tax income | 21.00% | 35.00% | 21.00% | 35.00% |
State income taxes | 0.50% | 0.40% | 0.50% | 0.50% |
Investment income not subject to tax | (3.40%) | (4.00%) | (3.90%) | (3.60%) |
Uncertain tax positions | 0.00% | (0.10%) | 0.00% | 0.20% |
Change in State Tax Rate | 0.00% | 0.00% | (0.80%) | 0.00% |
Prior period adjustments | 0.00% | (1.70%) | 0.00% | (0.80%) |
Other | (0.60%) | (0.10%) | (0.50%) | 0.10% |
Effective income tax rate (as a percent) | 17.50% | 29.50% | 16.30% | 31.40% |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | ||
Approximate net refund in future period | $ 6,200,000 | |
Unrecognized tax benefits significant reduction in the next 12 months | $ 0 |
OPERATING SEGMENTS (Details)
OPERATING SEGMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Summarized financial information for the company's segments | |||||
Revenues | $ 1,269,963 | $ 1,105,392 | $ 3,503,118 | $ 3,216,211 | |
Pre-tax Adjusted Operating Income (Loss) | 125,794 | 120,582 | 275,829 | 350,499 | |
Realized (losses) gains on investments and derivatives | (30,624) | 45,400 | (97,829) | 35,413 | |
Income before income tax | 95,170 | 165,982 | 178,000 | 385,912 | |
Income tax expense | (16,646) | (49,016) | (28,933) | (120,975) | |
Net income | 78,524 | 116,966 | 149,067 | 264,937 | |
Adjusted operating income tax (expense) benefit | (23,077) | (33,126) | (49,477) | (108,580) | |
After-tax adjusted operating income | 102,717 | 87,456 | 226,352 | 241,919 | |
Income tax benefit (expense) on adjustments | 6,431 | (15,890) | 20,544 | (12,395) | |
Realized investment (losses) gains: | |||||
Derivative financial instruments | (26,710) | 5,302 | 37,176 | (119,392) | |
All other investments | (20,156) | 18,150 | (157,350) | 94,526 | |
Net impairment losses recognized in earnings | (14) | (273) | (3,664) | (8,259) | |
Less: related amortization | (5,859) | (12,123) | 5,060 | (38,570) | |
Less: VA GLWB economic cost | (10,397) | (10,098) | (31,069) | (29,968) | |
Operating Segment Assets | |||||
Investments and other assets | 86,792,621 | 86,792,621 | $ 75,451,948 | ||
DAC and VOBA | 2,979,384 | 2,979,384 | 2,205,401 | ||
Other intangibles | 625,828 | 625,828 | 662,916 | ||
Goodwill | 793,470 | 793,470 | 793,470 | ||
Total assets | 91,191,303 | 91,191,303 | 79,113,735 | ||
Life Marketing | |||||
Summarized financial information for the company's segments | |||||
Revenues | 407,708 | 397,096 | 1,195,074 | 1,174,048 | |
Pre-tax Adjusted Operating Income (Loss) | 3,647 | 10,798 | (18,326) | 55,217 | |
Operating Segment Assets | |||||
Investments and other assets | 14,709,504 | 14,709,504 | 14,917,752 | ||
DAC and VOBA | 1,468,989 | 1,468,989 | 1,320,776 | ||
Other intangibles | 267,087 | 267,087 | 281,705 | ||
Goodwill | 200,274 | 200,274 | 200,274 | ||
Total assets | 16,645,854 | 16,645,854 | 16,720,507 | ||
Acquisitions | |||||
Summarized financial information for the company's segments | |||||
Revenues | 581,054 | 375,819 | 1,469,787 | 1,164,650 | |
Pre-tax Adjusted Operating Income (Loss) | 93,648 | 62,880 | 208,206 | 184,825 | |
Operating Segment Assets | |||||
Investments and other assets | 32,234,422 | 32,234,422 | 19,588,133 | ||
DAC and VOBA | 455,343 | 455,343 | 74,862 | ||
Other intangibles | 32,622 | 32,622 | 34,548 | ||
Goodwill | 14,524 | 14,524 | 14,524 | ||
Total assets | 32,736,911 | 32,736,911 | 19,712,067 | ||
Annuities | |||||
Summarized financial information for the company's segments | |||||
Revenues | 110,386 | 110,870 | 321,880 | 357,589 | |
Pre-tax Adjusted Operating Income (Loss) | 36,249 | 51,779 | 112,234 | 130,128 | |
Operating Segment Assets | |||||
Investments and other assets | 21,083,522 | 21,083,522 | 20,774,566 | ||
DAC and VOBA | 876,390 | 876,390 | 772,634 | ||
Other intangibles | 160,118 | 160,118 | 170,117 | ||
Goodwill | 336,677 | 336,677 | 336,677 | ||
Total assets | 22,456,707 | 22,456,707 | 22,053,994 | ||
Stable Value Products | |||||
Summarized financial information for the company's segments | |||||
Revenues | 59,328 | 49,933 | 158,944 | 132,863 | |
Pre-tax Adjusted Operating Income (Loss) | 27,126 | 27,992 | 76,198 | 74,258 | |
Operating Segment Assets | |||||
Investments and other assets | 5,083,328 | 5,083,328 | 4,569,639 | ||
DAC and VOBA | 7,001 | 7,001 | 6,864 | ||
Other intangibles | 7,556 | 7,556 | 8,056 | ||
Goodwill | 113,813 | 113,813 | 113,813 | ||
Total assets | 5,211,698 | 5,211,698 | 4,698,372 | ||
Asset Protection | |||||
Summarized financial information for the company's segments | |||||
Revenues | 90,926 | 93,799 | 266,747 | 277,433 | |
Pre-tax Adjusted Operating Income (Loss) | 7,051 | 5,187 | 16,991 | 13,812 | |
Operating Segment Assets | |||||
Investments and other assets | 824,282 | 824,282 | 708,605 | ||
DAC and VOBA | 171,661 | 171,661 | 30,265 | ||
Other intangibles | 125,251 | 125,251 | 133,234 | ||
Goodwill | 128,182 | 128,182 | 128,182 | ||
Total assets | 1,249,376 | 1,249,376 | 1,000,286 | ||
Corporate and Other | |||||
Summarized financial information for the company's segments | |||||
Revenues | 20,561 | 77,875 | 90,686 | 109,628 | |
Pre-tax Adjusted Operating Income (Loss) | (41,927) | $ (38,054) | (119,474) | $ (107,741) | |
Operating Segment Assets | |||||
Investments and other assets | 12,857,563 | 12,857,563 | 14,893,253 | ||
DAC and VOBA | 0 | 0 | 0 | ||
Other intangibles | 33,194 | 33,194 | 35,256 | ||
Goodwill | 0 | 0 | 0 | ||
Total assets | $ 12,890,757 | $ 12,890,757 | $ 14,928,509 |