Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Aug. 01, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | PROTECTIVE LIFE INSURANCE CO | |
Entity Central Index Key | 310,826 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 5,000,000 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 |
CONSOLIDATED CONDENSED STATEMEN
CONSOLIDATED CONDENSED STATEMENTS OF INCOME - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 5 Months Ended | 6 Months Ended | |
Jan. 31, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Revenues | |||||
Premiums and policy fees | $ 828,058 | $ 1,334,444 | |||
Reinsurance ceded | (351,196) | (498,009) | |||
Net of reinsurance ceded | 476,862 | 836,435 | |||
Net investment income | 408,147 | 680,358 | |||
Realized investment gains (losses): | |||||
Derivative financial instruments | 10,566 | 5,618 | |||
All other investments | (102,347) | (137,403) | |||
Other-than-temporary impairment losses | (13,395) | (13,395) | |||
Portion recognized in other comprehensive income (before taxes) | 7,661 | 7,661 | |||
Net impairment losses recognized in earnings | (5,734) | (5,734) | |||
Other income | 75,459 | 124,640 | |||
Total revenues | 862,953 | 1,503,914 | |||
Benefits and expenses | |||||
Benefits and settlement expenses, net of reinsurance ceded: (2015 Successor - $303,055 and $419,941); (2015 Predecessor - $87,830; 2014 Predecessor - three months: $327,836; six months: $631,972) | 693,392 | 1,178,816 | |||
Amortization of deferred policy acquisition costs and value of business acquired | 40,348 | 68,384 | |||
Other operating expenses, net of reinsurance ceded: (2015 Successor - $51,146 and $86,839); (2015 Predecessor - $17,700; 2014 Predecessor - three months: $47,201; six months: $91,593) | 164,780 | 267,745 | |||
Total benefits and expenses | 898,520 | 1,514,945 | |||
Total before tax | (35,567) | (11,031) | |||
Income tax (benefit) expense | (9,991) | (1,875) | |||
Net income | $ (25,576) | $ (9,156) | |||
Predecessor | |||||
Revenues | |||||
Premiums and policy fees | $ 260,582 | $ 848,183 | $ 1,660,506 | ||
Reinsurance ceded | (91,632) | (348,255) | (681,761) | ||
Net of reinsurance ceded | 168,950 | 499,928 | 978,745 | ||
Net investment income | 164,605 | 525,576 | 1,039,613 | ||
Realized investment gains (losses): | |||||
Derivative financial instruments | 22,031 | (36,620) | (76,194) | ||
All other investments | 81,153 | 80,466 | 152,612 | ||
Other-than-temporary impairment losses | (636) | (461) | (884) | ||
Portion recognized in other comprehensive income (before taxes) | 155 | (999) | (2,167) | ||
Net impairment losses recognized in earnings | (481) | (1,460) | (3,051) | ||
Other income | 23,388 | 71,296 | 136,810 | ||
Total revenues | 459,646 | 1,139,186 | 2,228,535 | ||
Benefits and expenses | |||||
Benefits and settlement expenses, net of reinsurance ceded: (2015 Successor - $303,055 and $419,941); (2015 Predecessor - $87,830; 2014 Predecessor - three months: $327,836; six months: $631,972) | 266,575 | 746,641 | 1,474,069 | ||
Amortization of deferred policy acquisition costs and value of business acquired | 4,817 | 60,173 | 126,055 | ||
Other operating expenses, net of reinsurance ceded: (2015 Successor - $51,146 and $86,839); (2015 Predecessor - $17,700; 2014 Predecessor - three months: $47,201; six months: $91,593) | 55,407 | 159,757 | 304,185 | ||
Total benefits and expenses | 326,799 | 966,571 | 1,904,309 | ||
Total before tax | 132,847 | 172,615 | 324,226 | ||
Income tax (benefit) expense | 44,325 | 56,572 | 105,634 | ||
Net income | $ 88,522 | $ 116,043 | $ 218,592 |
CONSOLIDATED CONDENSED STATEME3
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Parenthetical) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 5 Months Ended | 6 Months Ended | |
Jan. 31, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Benefits and settlement expenses, reinsurance ceded | $ 303,055 | $ 419,941 | |||
Other operating expenses, reinsurance ceded | $ 51,146 | $ 86,839 | |||
Predecessor | |||||
Benefits and settlement expenses, reinsurance ceded | $ 87,830 | $ 327,836 | $ 631,972 | ||
Other operating expenses, reinsurance ceded | $ 17,700 | $ 47,201 | $ 91,593 |
CONSOLIDATED CONDENSED STATEME4
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 5 Months Ended | 6 Months Ended | |
Jan. 31, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Net income (loss) | $ (25,576) | $ (9,156) | |||
Other comprehensive income (loss): | |||||
Change in net unrealized gains (losses) on investments, net of income tax:(2015 Successor - $(324,134) and $(481,511)); (2015 Predecessor - $259,616; 2014 Predecessor - three months: $216,327; six months: $475,730) | (601,964) | (894,238) | |||
Reclassification adjustment for investment amounts included in net income, net of income tax: (2015 Successor - $834 and $703); (2015 Predecessor -$(2,244); 2014 Predecessor - three months: $(6,558); six months - $(8,581)) | 1,550 | 1,308 | |||
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: (2015 Successor - $(2,458) and $(2,458)); 2015 Predecessor - $(131); 2014 Predecessor - three months: $(571); six months: $1,858) | (4,566) | (4,566) | |||
Change in accumulated (loss) gain - derivatives, net of income tax: (2015 Successor - $12 and $0); 2015 Predecessor - $5; 2014 Predecessor - three months: $(325); six months: $(9)) | 23 | ||||
Reclassification adjustment for derivative amounts included in net income, net of income tax: (2015 Successor - $(31) and $0); 2015 Predecessor - $13; 2014 Predecessor - three months: $214; six months: $449) | (59) | ||||
Net current-period other comprehensive income (loss) | (605,016) | (897,496) | |||
Total comprehensive income (loss) | $ (630,592) | $ (906,652) | |||
Predecessor | |||||
Net income (loss) | $ 88,522 | $ 116,043 | $ 218,592 | ||
Other comprehensive income (loss): | |||||
Change in net unrealized gains (losses) on investments, net of income tax:(2015 Successor - $(324,134) and $(481,511)); (2015 Predecessor - $259,616; 2014 Predecessor - three months: $216,327; six months: $475,730) | 482,143 | 401,752 | 883,499 | ||
Reclassification adjustment for investment amounts included in net income, net of income tax: (2015 Successor - $834 and $703); (2015 Predecessor -$(2,244); 2014 Predecessor - three months: $(6,558); six months - $(8,581)) | (4,166) | (12,180) | (15,936) | ||
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: (2015 Successor - $(2,458) and $(2,458)); 2015 Predecessor - $(131); 2014 Predecessor - three months: $(571); six months: $1,858) | (243) | (1,061) | 3,450 | ||
Change in accumulated (loss) gain - derivatives, net of income tax: (2015 Successor - $12 and $0); 2015 Predecessor - $5; 2014 Predecessor - three months: $(325); six months: $(9)) | 9 | (604) | (17) | ||
Reclassification adjustment for derivative amounts included in net income, net of income tax: (2015 Successor - $(31) and $0); 2015 Predecessor - $13; 2014 Predecessor - three months: $214; six months: $449) | 23 | 399 | 835 | ||
Net current-period other comprehensive income (loss) | 477,766 | 388,306 | 871,831 | ||
Total comprehensive income (loss) | $ 566,288 | $ 504,349 | $ 1,090,423 |
CONSOLIDATED CONDENSED STATEME5
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 5 Months Ended | 6 Months Ended | |
Jan. 31, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Change in net unrealized gains (losses) on investments, income tax | $ (324,134) | $ (481,511) | |||
Reclassification adjustment for investment amounts included in net income, income tax | 834 | 703 | |||
Change in net unrealized gains relating to other-than-temporary impaired investments for which a portion has been recognized in earnings, income tax | (2,458) | (2,458) | |||
Change in accumulated gain - derivatives, income tax | 12 | 0 | |||
Reclassification adjustment for derivative amounts included in net income, income tax | $ (31) | $ 0 | |||
Predecessor | |||||
Change in net unrealized gains (losses) on investments, income tax | $ 259,616 | $ 216,327 | $ 475,730 | ||
Reclassification adjustment for investment amounts included in net income, income tax | (2,244) | (6,558) | (8,581) | ||
Change in net unrealized gains relating to other-than-temporary impaired investments for which a portion has been recognized in earnings, income tax | (131) | (571) | 1,858 | ||
Change in accumulated gain - derivatives, income tax | 5 | (325) | (9) | ||
Reclassification adjustment for derivative amounts included in net income, income tax | $ 13 | $ 214 | $ 449 |
CONSOLIDATED CONDENSED BALANCE
CONSOLIDATED CONDENSED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Assets | ||
Fixed maturities, at fair value (amortized cost: 2015 Successor - $33,863,554; 2014 Predecessor - $33,716,848) | $ 35,735,760 | |
Fixed maturities, at amortized cost (fair value: 2015 Successor - $489,950; 2014 Predecessor - $485,422) | 565,334 | |
Equity securities, at fair value (cost: 2015 Successor - $694,273; 2014 Predecessor - $735,297) | 682,677 | |
Mortgage loans (related to securitizations: 2015 Successor - $423,702; 2014 Predecessor - $455,250) | 5,677,667 | |
Investment real estate, net of accumulated depreciation (2015 Successor - $52; 2014 Predecessor - $246) | 7,404 | |
Policy loans | 1,719,864 | |
Other long-term investments | 631,821 | |
Short-term investments | 200,749 | |
Total investments | 45,221,276 | |
Cash | 400,577 | |
Accrued investment income | 472,055 | |
Accounts and premiums receivable | 87,400 | |
Reinsurance receivables | 5,400,355 | |
Deferred policy acquisition costs and value of business acquired | 1,396,467 | |
Goodwill | 735,712 | |
Other intangibles, net of accumulated amortization (2015 Successor - $17,212) | 665,787 | |
Property and equipment, net of accumulated depreciation (2015 Successor - $3,490; 2014 Predecessor - $116,688) | 101,638 | |
Other assets | 244,016 | |
Assets related to separate accounts | ||
Variable annuity | 13,313,000 | |
Variable universal life | 859,114 | |
Total assets | 68,897,397 | |
Liabilities | ||
Future policy benefits and claims | 29,720,609 | |
Unearned premiums | 649,048 | |
Total policy liabilities and accruals | 30,369,657 | |
Stable value product account balances | 1,861,280 | |
Annuity account balances | 10,792,560 | |
Other policyholders' funds | 1,121,465 | |
Other liabilities | 1,266,538 | |
Income tax payable | 96,459 | |
Deferred income taxes | 1,315,988 | |
Non-recourse funding obligations | 1,926,562 | |
Repurchase program borrowings | 602,213 | |
Liabilities related to separate accounts | ||
Variable annuity | 13,313,000 | |
Variable universal life | 859,114 | |
Total liabilities | $ 63,524,836 | |
Commitments and contingencies - Note 10 | ||
Shareowner's equity | ||
Preferred Stock; $1 par value, shares authorized: 2,000; Liquidation preference: $2,000 | $ 2 | |
Common Stock, $1 par value, shares authorized and issued: 2015 and 2014 - 5,000,000 | 5,000 | |
Additional paid-in-capital | 6,274,211 | |
Retained earnings (deficit) | (9,156) | |
Accumulated other comprehensive income (loss): | ||
Net unrealized gains (losses) on investments, net of income tax: (2015 Successor - $(480,808); 2014 Predecessor - $796,488) | (892,930) | |
Net unrealized gains relating to other-than-temporary impaired investments for which a portion has been recognized in earnings, net of income tax: (2015 Successor -$(2,458); 2014 Predecessor -$2,208) | (4,566) | |
Total shareowner's equity | 5,372,561 | |
Total liabilities and shareowner's equity | $ 68,897,397 | |
Predecessor | ||
Assets | ||
Fixed maturities, at fair value (amortized cost: 2015 Successor - $33,863,554; 2014 Predecessor - $33,716,848) | $ 36,756,240 | |
Fixed maturities, at amortized cost (fair value: 2015 Successor - $489,950; 2014 Predecessor - $485,422) | 435,000 | |
Equity securities, at fair value (cost: 2015 Successor - $694,273; 2014 Predecessor - $735,297) | 756,790 | |
Mortgage loans (related to securitizations: 2015 Successor - $423,702; 2014 Predecessor - $455,250) | 5,133,780 | |
Investment real estate, net of accumulated depreciation (2015 Successor - $52; 2014 Predecessor - $246) | 5,918 | |
Policy loans | 1,758,237 | |
Other long-term investments | 491,282 | |
Short-term investments | 246,717 | |
Total investments | 45,583,964 | |
Cash | 268,286 | |
Accrued investment income | 474,095 | |
Accounts and premiums receivable | 81,137 | |
Reinsurance receivables | 5,907,662 | |
Deferred policy acquisition costs and value of business acquired | 3,155,046 | |
Goodwill | 77,577 | |
Property and equipment, net of accumulated depreciation (2015 Successor - $3,490; 2014 Predecessor - $116,688) | 51,760 | |
Other assets | 398,574 | |
Income tax receivable | 1,648 | |
Assets related to separate accounts | ||
Variable annuity | 13,157,429 | |
Variable universal life | 834,940 | |
Total assets | 69,992,118 | |
Liabilities | ||
Future policy benefits and claims | 29,944,477 | |
Unearned premiums | 1,515,001 | |
Total policy liabilities and accruals | 31,459,478 | |
Stable value product account balances | 1,959,488 | |
Annuity account balances | 10,950,729 | |
Other policyholders' funds | 1,430,325 | |
Other liabilities | 1,178,962 | |
Deferred income taxes | 1,611,864 | |
Non-recourse funding obligations | 1,527,752 | |
Repurchase program borrowings | 50,000 | |
Liabilities related to separate accounts | ||
Variable annuity | 13,157,429 | |
Variable universal life | 834,940 | |
Total liabilities | $ 64,160,967 | |
Commitments and contingencies - Note 10 | ||
Shareowner's equity | ||
Preferred Stock; $1 par value, shares authorized: 2,000; Liquidation preference: $2,000 | $ 2 | |
Common Stock, $1 par value, shares authorized and issued: 2015 and 2014 - 5,000,000 | 5,000 | |
Additional paid-in-capital | 1,437,787 | |
Retained earnings (deficit) | 2,905,151 | |
Accumulated other comprehensive income (loss): | ||
Net unrealized gains (losses) on investments, net of income tax: (2015 Successor - $(480,808); 2014 Predecessor - $796,488) | 1,479,192 | |
Net unrealized gains relating to other-than-temporary impaired investments for which a portion has been recognized in earnings, net of income tax: (2015 Successor -$(2,458); 2014 Predecessor -$2,208) | 4,101 | |
Accumulated loss - derivatives, net of income tax: (2015 Successor - $0; 2014 Predecessor - $(45)) | (82) | |
Total shareowner's equity | 5,831,151 | |
Total liabilities and shareowner's equity | $ 69,992,118 |
CONSOLIDATED CONDENSED BALANCE7
CONSOLIDATED CONDENSED BALANCE SHEETS (Parenthetical) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Fixed maturities, amortized cost | $ 37,863,554,000 | |
Fixed maturities, fair value | 489,950,000 | |
Equity securities, cost | 694,273,000 | |
Mortgage loans, securitizations | 423,702,000 | |
Investment real estate, accumulated depreciation | 52,000 | |
Other intangibles, accumulated amortization | 17,212,000 | |
Property and equipment, accumulated depreciation | $ 3,490,000 | |
Preferred Stock, par value (in dollars per share) | $ 1 | |
Preferred Stock, shares authorized (in shares) | 2,000 | |
Preferred Stock, Liquidation preference | $ 2,000 | |
Common Stock, par value (in dollars per share) | $ 1 | |
Common Stock, shares authorized (in shares) | 5,000,000 | |
Common Stock, shares issued (in shares) | 5,000,000 | |
Net unrealized gains on investments, income tax | $ (480,808,000) | |
Net unrealized gains relating to other-than-temporary impaired investments for which a portion has been recognized in earnings, income tax | (2,458,000) | |
Accumulated loss - derivatives, income tax | $ 0 | |
Predecessor | ||
Fixed maturities, amortized cost | $ 33,716,848,000 | |
Fixed maturities, fair value | 485,422,000 | |
Equity securities, cost | 735,297,000 | |
Mortgage loans, securitizations | 455,250,000 | |
Investment real estate, accumulated depreciation | 246,000 | |
Property and equipment, accumulated depreciation | $ 116,688,000 | |
Preferred Stock, par value (in dollars per share) | $ 1 | |
Preferred Stock, shares authorized (in shares) | 2,000 | |
Preferred Stock, Liquidation preference | $ 2,000 | |
Common Stock, par value (in dollars per share) | $ 1 | |
Common Stock, shares authorized (in shares) | 5,000,000 | |
Common Stock, shares issued (in shares) | 5,000,000 | |
Net unrealized gains on investments, income tax | $ 796,488,000 | |
Net unrealized gains relating to other-than-temporary impaired investments for which a portion has been recognized in earnings, income tax | 2,208,000 | |
Accumulated loss - derivatives, income tax | $ (45,000) |
CONSOLIDATED CONDENSED STATEME8
CONSOLIDATED CONDENSED STATEMENTS OF SHAREOWNER'S EQUITY - USD ($) $ in Thousands | Preferred stocks | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss). | Total |
Balance (Predecessor) at Dec. 31, 2014 | $ 2 | $ 5,000 | $ 1,437,787 | $ 2,905,151 | $ 1,483,211 | $ 5,831,151 |
Increase (decrease) in shareowner's equity | ||||||
Net income (loss) | Predecessor | 88,522 | 88,522 | ||||
Other comprehensive income | Predecessor | 477,766 | 477,766 | ||||
Total comprehensive income (loss) | Predecessor | 566,288 | |||||
Balance (Predecessor) at Jan. 31, 2015 | 2 | 5,000 | 1,437,787 | 2,993,673 | 1,960,977 | 6,397,439 |
Balance at Jan. 31, 2015 | 2 | 5,000 | 6,504,211 | 6,509,213 | ||
Increase (decrease) in shareowner's equity | ||||||
Net income (loss) | (9,156) | (9,156) | ||||
Other comprehensive income | (897,496) | (897,496) | ||||
Total comprehensive income (loss) | (906,652) | |||||
Return of capital | (230,000) | (230,000) | ||||
Balance at Jun. 30, 2015 | $ 2 | $ 5,000 | $ 6,274,211 | $ (9,156) | $ (897,496) | $ 5,372,561 |
CONSOLIDATED CONDENSED STATEME9
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 1 Months Ended | 5 Months Ended | 6 Months Ended |
Jan. 31, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | |
Cash flows from operating activities | |||
Net income (loss) | $ (9,156) | ||
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Realized investment losses (gains) | 137,519 | ||
Amortization of deferred policy acquisition costs and value of business acquired | 68,384 | ||
Capitalization of deferred policy acquisition costs | (132,103) | ||
Depreciation, Depletion and Amortization | 20,754 | ||
Deferred income tax | (62,353) | ||
Accrued income tax | 146,576 | ||
Interest credited to universal life and investment products | 422,093 | ||
Policy fees assessed on universal life and investment products | (491,769) | ||
Change in reinsurance receivables | 138,282 | ||
Change in accrued investment income and other receivables | (8,398) | ||
Change in policy liabilities and other policyholders' funds of traditional life and health products | (158,210) | ||
Trading securities: | |||
Maturities and principal reductions of investments | 40,104 | ||
Sale of investments | 78,302 | ||
Cost of investments acquired | (135,770) | ||
Other net change in trading securities | 83,770 | ||
Amortization of premiums and accretion of discounts on investments and mortgage loans | 170,248 | ||
Change in other liabilities | 9,179 | ||
Other, net | (25,256) | ||
Net cash provided by operating activities | 292,196 | ||
Cash flows from investing activities | |||
Maturities and principal reductions of investments, available-for-sale | 202,190 | ||
Sale of investments, available-for-sale | 2,057,339 | ||
Cost of investments acquired, available-for-sale | (2,584,927) | ||
Change in investments, held-to-maturity | (35,000) | ||
Mortgage loans: | |||
New lendings | (637,908) | ||
Repayments | 510,580 | ||
Change in investment real estate, net | 52 | ||
Change in policy loans, net | 32,008 | ||
Change in other long-term investments, net | (154,647) | ||
Change in short-term investments, net | 33,933 | ||
Net unsettled security transactions | (46,266) | ||
Purchase of property and equipment | (2,444) | ||
Net cash (used in) provided by investing activities | (625,090) | ||
Cash flows from financing activities | |||
Issuance (repayment) of non-recourse funding obligations | 35,000 | ||
Repurchase program borrowings | 552,213 | ||
Dividends/Return of capital to parent company | (230,000) | ||
Investment product deposits and change in universal life deposits | 1,222,581 | ||
Investment product withdrawals | (1,225,576) | ||
Other financing activities, net | 350 | ||
Net cash provided by (used in) financing activities | 354,568 | ||
Change in cash | 21,674 | ||
Cash at beginning of period | 378,903 | ||
Cash at end of period | $ 378,903 | 400,577 | |
Predecessor | |||
Cash flows from operating activities | |||
Net income (loss) | 88,522 | $ 218,592 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Realized investment losses (gains) | (102,703) | (73,367) | |
Amortization of deferred policy acquisition costs and value of business acquired | 4,817 | 126,055 | |
Capitalization of deferred policy acquisition costs | (22,799) | (139,022) | |
Depreciation, Depletion and Amortization | 796 | 3,607 | |
Deferred income tax | 91,709 | (12,359) | |
Accrued income tax | (48,469) | 86,739 | |
Interest credited to universal life and investment products | 79,088 | 422,306 | |
Policy fees assessed on universal life and investment products | (90,288) | (481,402) | |
Change in reinsurance receivables | (98,148) | 55,549 | |
Change in accrued investment income and other receivables | (1,285) | (11,271) | |
Change in policy liabilities and other policyholders' funds of traditional life and health products | 176,119 | 79,518 | |
Trading securities: | |||
Maturities and principal reductions of investments | 17,946 | 47,888 | |
Sale of investments | 26,422 | 112,473 | |
Cost of investments acquired | (27,289) | (75,742) | |
Other net change in trading securities | (26,901) | (52,325) | |
Amortization of premiums and accretion of discounts on investments and mortgage loans | 3,420 | 33,732 | |
Change in other liabilities | 211,031 | 147,324 | |
Other income - gains on repurchase of non-recourse funding obligations | (1,500) | ||
Other, net | (133,928) | (111,028) | |
Net cash provided by operating activities | 148,060 | 375,767 | |
Cash flows from investing activities | |||
Maturities and principal reductions of investments, available-for-sale | 59,028 | 656,492 | |
Sale of investments, available-for-sale | 200,716 | 791,811 | |
Cost of investments acquired, available-for-sale | (150,030) | (2,072,191) | |
Change in investments, held-to-maturity | (35,000) | ||
Mortgage loans: | |||
New lendings | (100,530) | (351,505) | |
Repayments | 45,741 | 547,698 | |
Change in investment real estate, net | 7 | 156 | |
Change in policy loans, net | 6,365 | 37,365 | |
Change in other long-term investments, net | (25,372) | (73,334) | |
Change in short-term investments, net | (39,312) | (35,842) | |
Net unsettled security transactions | 37,510 | 47,933 | |
Purchase of property and equipment | (648) | (4,712) | |
Payments for business acquisitions | (906) | ||
Net cash (used in) provided by investing activities | 33,475 | (492,035) | |
Cash flows from financing activities | |||
Issuance (repayment) of non-recourse funding obligations | 28,978 | ||
Repurchase program borrowings | 70,490 | ||
Dividends/Return of capital to parent company | (150,000) | ||
Investment product deposits and change in universal life deposits | 169,233 | 1,304,549 | |
Investment product withdrawals | (240,147) | (1,232,428) | |
Other financing activities, net | (4) | ||
Net cash provided by (used in) financing activities | (70,918) | 21,589 | |
Change in cash | 110,617 | (94,679) | |
Cash at beginning of period | 268,286 | $ 378,903 | 345,579 |
Cash at end of period | $ 378,903 | $ 250,900 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2015 | |
BASIS OF PRESENTATION | |
BASIS OF PRESENTATION | 1. 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 (“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, and for the periods reported as “predecessor”, PLC’s stock was publicly traded on the New York Stock Exchange and subsequent to the Merger date, PLC and the Company remain as SEC registrants within the United States. PLC is a holding company with subsidiaries that provide financial services through the production, distribution, and administration of insurance and investment products. The Merger was accounted for by PLC under the acquisition method of accounting under ASC Topic 805 Business Combinations. In accordance with ASC Topic 805-20-30, all identifiable assets acquired and liabilities assumed were measured at fair value as of the acquisition date. PLC elected to apply “pushdown” accounting by applying the guidance allowed by ASC Topic 805, Business Combinations, including the initial recognition of most of PLC’s assets and liabilities at fair value as of the acquisition date, and similarly recognizing goodwill calculated based on the terms of the transaction and the fair value of the new basis of net assets of PLC. The new basis of accounting will be the basis of the accounting records in the preparation of future financial statements and related disclosures after the Merger date. Goodwill of $735.7 million represents the cost in excess of the fair value of PLC’s net assets acquired (including identifiable intangibles) in the Merger, and reflects the Company’s assembled workforce, future growth potential and other sources of value not associated with identifiable assets. The Merger was accounted for by the Company in a manner consistent with that utilized by PLC. In accordance with ASC Topic 805-20-30, all identifiable assets acquired and liabilities assumed were measured at fair value as of the acquisition date. In conjunction with PLC’s and the Company’s election to apply “pushdown” accounting to reflect the impact of the transaction and the new basis of net assets recorded as of February 1, 2015, the entire amount of goodwill and other identifiable intangible assets recognized by PLC were allocated to the Company. This was supported by the fact that the Company is the primary operating subsidiary of PLC and the workforce, distribution and sales organization, current and future policy and portfolio cash flows, and other items for which the transaction was primarily based are consistent between PLC and Company. As such, the entire balance of goodwill of $735.7 million is included in the new basis of net assets of the Company. The new basis of accounting will be the basis of the accounting records in the preparation of future financial statements and related disclosures after the Merger date. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Such accounting principles differ from statutory reporting practices used by insurance companies in reporting to state regulatory authorities. Accordingly, they do not include all of the disclosures required by GAAP for complete financial statements. 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 months ended June 30, 2015 (Successor Company), the period of February 1, 2015 to June 30, 2015 (Successor Company) and the period of January 1, 2015 to January 31, 2015 (Predecessor Company) are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2015 (Successor Company). 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, 2014 (Predecessor Company). 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. Reclassifications Certain reclassifications have been made in the previously reported financial statements and accompanying notes to make the prior year amounts comparable to those of the current year. Such reclassifications had no effect on previously reported net income or shareowner’s equity. During the second quarter of 2015, the Company recorded an adjustment related to certain shadow adjustments to the Company’s unrealized investment losses and future policy benefits and claims liability for the previous interim period (period February 1, 2015 to March 31, 2015). Had this adjustment been recorded by the Company prior to March 31, 2015, the recording of this amount within that interim period would have resulted in an increase to other comprehensive income of $66.7 million, net of income taxes, with offsetting adjustments to the future policy benefits and claims liability and deferred income tax liability on the interim balance sheet. The Company concluded that this adjustment was not determined to be quantitatively or qualitatively material to the interim periods and that the previously issued interim financial statements as of and for the period ended March 31, 2015 were not materially affected. This adjustment was recorded by the Company within the presented interim consolidated condensed financial statements for the quarter ended June 30, 2015. Entities Included The consolidated condensed financial statements for the predecessor and successor periods presented 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 | 6 Months Ended |
Jun. 30, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. 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, 2014 (Predecessor Company). Other than the accounting matters resulting from the application of pushdown accounting in connection with ASC Topic 805, the Company did not make significant changes to accounting policies during the period of February 1, 2015 to June 30, 2015 (Successor Company) except as noted below. Intangible Assets Intangible assets with definite lives are amortized over the estimated useful life of the asset. Amortizable intangible assets primarily consist of distribution relationships, trade names, and technology. Intangible assets with indefinite lives, primarily insurance licenses, are not amortized. Value of Business Acquired In conjunction with the Merger, a portion of the purchase price was allocated to the right to receive future gross profits from cash flows and earnings of the Company’s insurance policies and investment contracts as of the date of the Merger. This intangible asset, called value of business acquired (“VOBA”), is based on the actuarially estimated present value of future cash flows from the Company’s insurance policies and investment contracts in-force on the date of the Merger. The estimated present value of future cash flows used in the calculation of the VOBA is based on certain assumptions, including mortality, persistency, expenses, and interest rates that the Company expects to experience in future years. The Company amortizes VOBA in proportion to gross premiums for traditional life products, or estimated gross margins (“EGMs”) for participating traditional life products within the MONY block. For interest sensitive products, the Company uses various amortization bases including expected gross profits (“EGPs”), revenues, or insurance in-force. Goodwill Goodwill of $735.7 million was recognized in conjunction with the Merger as the excess of the purchase considerations over the fair value of PLC’s identifiable assets acquired and liabilities assumed. 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. Property and Equipment In conjunction with the Merger, property and equipment was recorded at fair value and will be depreciated from this basis in future periods based on the respective estimated useful lives. Real estate assets were recorded at appraised values as of the acquisition date. The Company has estimated the remaining useful life of the home office building to be 25 years. Land is not depreciated. The carrying amounts of the Company’s fixed assets are as follows: Successor Predecessor Company Company As of As of June 30, 2015 December 31, 2014 (Dollars In Thousands) (Dollars In Thousands) Home office building $ $ Land — Data processing equipment Other, principally furniture and equipment Accumulated depreciation Total property and equipment $ $ Guaranteed Minimum Withdrawal Benefits The Company also establishes reserves for guaranteed minimum withdrawal benefits (“GMWB”) on its variable annuity (“VA”) products. The GMWB is valued in accordance with FASB guidance under the ASC Derivatives and Hedging Topic which utilizes the valuation technique prescribed by the ASC Fair Value Measurements and Disclosures Topic, which requires the embedded derivative to be recorded at fair value using current implied volatilities for the equity indices. The fair value of the GMWB is impacted by equity market conditions and can result in the GMWB embedded derivative being in an overall net asset or net liability position. In times of favorable equity market conditions the likelihood and severity of claims is reduced and expected fee income increases. Since claims are generally expected later than fees these favorable equity market conditions can result in the present value of fees being greater than the present value of claims which results in a net GMWB embedded derivative asset. In times of unfavorable equity market conditions the likelihood and severity of claims is increased and expected fee income decreases and can result in the present value of claims exceeding the present value of fees resulting in a net GMWB embedded derivative liability. The methods used to estimate the embedded derivatives employ assumptions about mortality, lapses, policyholder behavior, equity market returns, interest rates, and market volatility. The Company assumes age-based mortality from the National Association of Insurance Commissioners 1994 Variable Annuity MGDB Mortality Table for company experience. Differences between the actual experience and the assumptions used result in variances in profit and could result in losses. In conjunction with the merger the Company updated the fair value of the GMWB reserves to reflect current assumptions as of February 1, 2015 (Successor Company). As a result of the application of ASC Topic 805, the Company reset the hedge premium rates utilized in the valuation for all policies to be equal to the present value of future claims with the reset hedge premium rates being capped at the actual charges to the policyholder. This update resulted in a decrease in the net liability of approximately $69.4 million on the Merger date. The Company reinsures certain risks associated with the GMWB to Shades Creek Captive Insurance Company (“Shades Creek”), a direct wholly owned subsidiary of PLC. As of June 30, 2015 (Successor Company), the net GMWB asset held, including the impact of reinsurance was approximately $56.8 million. Policyholder Liabilities Insurance Liabilities and Reserves In conjunction with the Merger and in accordance with ASC 805, insurance liabilities and reserves are recorded at fair value and the underlying contracts are considered to be new contracts, for measurement and reporting purposes as of the acquisition date. Estimating liabilities for future policy benefits on life and health insurance products requires the use of assumptions relative to future investment yields, mortality, morbidity, persistency, and other assumptions based on the Company’s historical experience, modified as necessary to reflect anticipated trends and to include provisions for possible adverse deviation. Determining liabilities for the Company’s property and casualty insurance products also requires the use of assumptions, including the projected levels of used vehicle prices, the frequency and severity of claims, and the effectiveness of internal processes designed to reduce the level of claims. The Company’s results depend significantly upon the extent to which its actual claims experience is consistent with the assumptions the Company used in determining its reserves and pricing its products. The Company’s reserve assumptions and estimates require significant judgment and, therefore, are inherently uncertain. The Company cannot determine with precision the ultimate amounts that it will pay for actual claims or the timing of those payments. As such, at the acquisition date, the Company updated the assumptions described above to reflect current best estimates and reserves were calculated in accordance with the methodology described below. VOBA was recorded to reflect the difference between the fair value of the contractual insurance liability and the reserve established. Traditional Life, Health, and Credit Insurance Products Traditional life insurance products consist principally of those products with fixed and guaranteed premiums and benefits, and they include whole life insurance policies, term and term-like life insurance policies, limited payment life insurance policies, and certain annuities with life contingencies. In accordance with ASC 805, the liabilities for future policy benefits on traditional life insurance products, when combined with the associated VOBA, have been recorded at fair value. These values were computed using assumptions that includes interest rates, mortality, lapse rates, expenses estimates, and other assumptions based on the Company’s experience, modified as necessary to reflect anticipated trends and to include provisions for possible adverse deviation. The liability for future policy benefits and claims on traditional life, health, and credit insurance products includes estimated unpaid claims that have been reported to us and claims incurred but not yet reported. Universal Life and Investment Products Universal life and investment products include universal life insurance, guaranteed investment contracts, guaranteed funding agreements, deferred annuities, and annuities without life contingencies. Benefit reserves for universal life and investment products represent policy account balances before applicable surrender charges plus certain deferred policy initiation fees that are recognized in income over the term of the policies. Policy benefits and claims that are charged to expense include benefit claims incurred in the period in excess of related policy account balances and interest credited to policy account balances. The Company establishes liabilities for fixed indexed annuity (“FIA”) products. These products are deferred fixed annuities with a guaranteed minimum interest rate plus a contingent return based on equity market performance. The FIA product is considered a hybrid financial instrument under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC” or “Codification”) Topic 815— Derivatives and Hedging which allows the Company to make the election to value the liabilities of these FIA products at fair value. This election was made for the FIA products issued prior to 2010 as the policies were issued. These products are no longer being marketed. The future changes in the fair value of the liability for these FIA products will be recorded in Benefit and settlement expenses with the liability being recorded in Annuity account balances . For more information regarding the determination of fair value of annuity account balances please refer to Note 14, Fair Value of Financial Instruments . Premiums and policy fees for these FIA products consist of fees that have been assessed against the policy account balances for surrenders. Such fees are recognized when assessed and earned. The Company currently markets a deferred fixed annuity with a guaranteed minimum interest rate plus a contingent return based on equity market performance and the products are considered hybrid financial instruments under the FASB’s ASC Topic 815— Derivatives and Hedging . The Company did not elect to value these FIA products at fair value prior to the Merger date. As a result the Company accounts for the provision that provides for a contingent return based on equity market performance as an embedded derivative. The embedded derivative is bifurcated from the host contract and recorded at fair value in Other liabilities . The host contract is accounted for as a debt instrument in accordance with ASC Topic 944— Financial Services—Insurance and is recorded in Annuity account balances with any discount to the minimum account value being accreted using the effective yield method. Benefits and settlement expenses include accreted interest and benefit claims incurred during the period. The Company markets universal life products with a guaranteed minimum interest rate plus a contingent return based on equity market performance and are considered hybrid financial instruments under the FASB’s ASC Topic 815— Derivatives and Hedging . The Company did not elect to value these IUL products at fair value prior to the Merger date. As a result the Company accounts for the provision that provides for a contingent return based on equity market performance as an embedded derivative. The embedded derivative is bifurcated from the host contract and recorded at fair value in Other liabilities . Changes in the fair value of the embedded derivative are recorded in Realized investment gains (losses)—Derivative financial instruments . For more information regarding the determination of fair value of the IUL embedded derivative refer to Note 14, Fair Value of Financial Instruments . The host contract is accounted for as a debt instrument in accordance with ASC Topic 944— Financial Services—Insurance and is recorded in Future policy benefits and claims with any discount to the minimum account value being accreted using the effective yield method. Benefits and settlement expenses include accreted interest and benefit claims incurred during the period. The Company’s accounting policies with respect to variable universal life (“VUL”) and VA are identical except that policy account balances (excluding account balances that earn a fixed rate) are valued at fair value and reported as components of assets and liabilities related to separate accounts. The Company establishes liabilities for guaranteed minimum death benefits (“GMDB”) on its VA products. The methods used to estimate the liabilities employ assumptions about mortality and the performance of equity markets. The Company assumes age-based mortality from the National Association of Insurance Commissioners 1994 Variable Annuity MGDB Mortality Table for company experience. Future declines in the equity market would increase the Company’s GMDB liability. Differences between the actual experience and the assumptions used result in variances in profit and could result in losses. Our GMDB as of June 30, 2015 (Successor Company), are subject to a dollar-for-dollar reduction upon withdrawal of related annuity deposits on contracts issued prior to January 1, 2003. The Company reinsures certain risks associated with the GMDB to Shades Creek. As of June 30, 2015 (Successor Company), the GMDB reserve, including the impact of reinsurance was $26.9 million. Property and Casualty Insurance Products Property and casualty insurance products include service contract business, surety bonds, and guaranteed asset protection (“GAP”). 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. Reinsurance The Company uses reinsurance extensively in certain of its segments and accounts for reinsurance and the recognition of the impact of reinsurance costs in accordance with the ASC Financial Services — Insurance Topic. The following summarizes some of the key aspects of the Company’s accounting policies for reinsurance. Reinsurance Assets and Liabilities —Claim liabilities and policy benefits are calculated consistently for all policies, regardless of whether or not the policy is reinsured. Once the claim liabilities and policy benefits for the underlying policies are estimated, the amounts recoverable from the reinsurers are estimated based on a number of factors including the terms of the reinsurance contracts, historical payment patterns of reinsurance partners, and the financial strength and credit worthiness of reinsurance partners and recorded as Reinsurance receivables on the balance sheet. The reinsurance receivables were recorded in the balance sheet using current accounting policies and the most current assumptions as of the merger date. As of the merger date, the Company also calculated the ceded VOBA associated with the reinsured policies. The reinsurance receivables combined with the associated ceded VOBA represent the fair value of the reinsurance assets. Liabilities for unpaid reinsurance claims are produced from claims and reinsurance system records, which contain the relevant terms of the individual reinsurance contracts. The Company monitors claims due from reinsurers to ensure that balances are settled on a timely basis. Incurred but not reported claims are reviewed by the Company’s actuarial staff to ensure that appropriate amounts are ceded. The Company analyzes and monitors the credit worthiness of each of its reinsurance partners to minimize collection issues. For newly executed reinsurance contracts with reinsurance companies that do not meet predetermined standards, the Company requires collateral such as assets held in trusts or letters of credit. Accounting Pronouncements Recently Adopted Accounting Standards Update (“ASU”) No. 2014-08—Reporting Discontinued Operations and Disclosure of Disposals of Components of an Entity. This Update changes the requirements for reporting discontinued operations and related disclosures. The Update limits the definition of a discontinued operation to disposals that represent “strategic shifts” that will have a major effect on an entity’s operation and financial results. Additionally, the Update requires enhanced disclosures about the components of discontinued operations and the financial effects of the disposal. The amendments in this Update are effective for annual and interim periods beginning after December 15, 2014. The Company has reviewed the additional disclosures required by the Update, and will apply the revised guidance to any disposals occurring after the effective date. ASU No. 2014-11—Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. This Update changes the requirements for classification of certain repurchase agreements, and will expand the use of secured borrowing accounting for repurchase-to-maturity transactions. In addition, the Update requires additional disclosures for repurchase agreements accounted for both as sales and as secured borrowings. The amendments in this Update are effective for annual and interim periods beginning after December 15, 2014. The Update did not impact the Company’s financial position or results of operations. The Company has updated its policies and processes to ensure compliance with the additional disclosure requirements in this Update. ASU No. 2014-17—Business Combinations (Topic 805). This Update relates to “pushdown accounting”, which refers to pushing down the acquirer’s accounting and reporting basis (which is recognized in conjunction with its accounting for a business combination) to the acquiree’s standalone financial statements. The new guidance makes pushdown accounting optional for an acquiree that is a business or nonprofit activity when there is a change-in- control event (e.g., the acquirer in a business combination obtains control over the acquiree). In addition, the staff of the SEC released Staff Accounting Bulletin (“SAB”) No. 115, which rescinds SAB Topic 5J, “New Basis of Accounting Required in Certain Circumstances” (the SEC staff’s pre-existing guidance on pushdown accounting) and conforms SEC guidance on pushdown accounting to the FASB’s new guidance. Revised SEC guidance was codified in ASU No. 2015-08, issued in May 2015. The new pushdown accounting guidance became effective upon its issuance on November 18, 2014. Although now optional, the Company has applied pushdown accounting to its standalone financial statements effective with the Company becoming a wholly owned subsidiary of Dai-ichi Life on February 1, 2015. The presentation within this report for predecessor and successor periods is consistent with this Update. Accounting Pronouncements Not Yet 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, 2017. However, in July 2015, the FASB voted to defer the effective date of ASU No. 2014-09 by one year to December 15, 2018. Early adoption will be allowed, but not before the original effective date. The Company is reviewing its policies and processes to ensure compliance with the requirements in this Update, upon adoption. The Company is currently assessing the impact this standard will have on its non-insurance operations. ASU No. 2014-15—Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. This Update will require management to assess an entity’s ability to continue as a going concern, and will require footnote disclosures in certain circumstances. Under the updated guidance, management should consider relevant conditions and evaluate whether it is probable that the entity will be unable to meet its obligations within one year after the issuance date of the financial statements. The Update is effective for annual periods ending December 31, 2016 and interim periods thereafter, with early adoption is permitted. The amendments in this Update will not impact the Company’s financial position or results of operations. However, the new guidance will require a formal assessment of going concern by management based on criteria prescribed in the new guidance. The Company is reviewing its policies and processes to ensure compliance with the new guidance. ASU No. 2015-02—Consolidation—Amendments to the Consolidation Analysis. This Update makes several targeted changes to generally accepted accounting principles, including a) eliminating the presumption that a general partner should consolidate a limited partnership and b) eliminating the consolidation model specific to limited partnerships. The amendments also clarify when fees and related party relationships should be considered in the consolidation of variable interest entities. The amendments in this Update are effective for annual and interim periods beginning after December 15, 2015. The Company is reviewing its policies and processes to ensure compliance with the requirements in this Update, upon adoption. ASU No. 2015-03—Interest—Imputation of Interest . The objective of this Update is to eliminate diversity in practice related to the presentation of debt issuance costs. The amendments in this Update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this Update. The Update is effective for fiscal years beginning after December 15, 2015, and requires revised presentation of debt issuance costs in all periods presented in the financial statements. The Company is reviewing its processes to ensure compliance with the revised guidance. ASU No. 2015-05 — Intangibles — Goodwill and Other — Internal-Use Software. The amendments in this Update provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The guidance will not change GAAP for a customer’s accounting for service contracts. The Update is effect for annual and interim periods beginning after December 15, 2015. The Company is reviewing its policies and processes to ensure compliance with the revised guidance. ASU No. 2015-09 — Financial Services—Insurance (Topic 944): Disclosures about Short-Duration Contracts. The amendments in this Update require additional disclosures for short-duration contracts issued by insurance entities. The additional disclosures focus on the liability for unpaid claims and claim adjustment expenses and include incurred and paid claims development information by accident year in tabular form, along with a reconciliation of this information to the statement of financial position. For accident years included in the development tables, the amendments also require disclosure of the total incurred-but-not-reported liabilities and expected development on reported claims, along with claims frequency information unless impracticable. Finally, the amendments require disclosure of the historical average annual percentage payout of incurred claims. With the exception of the current reporting period, claims development information may be presented as supplementary information. The Update is effective for annual periods beginning after December 15, 2015 and interim periods beginning after December 15, 2016. The Company is reviewing its products to determine the applicability and potential impact of the new disclosures. |
DAI-ICHI MERGER
DAI-ICHI MERGER | 6 Months Ended |
Jun. 30, 2015 | |
DAI-ICHI MERGER | |
DAI-ICHI MERGER | 3. DAI-ICHI MERGER On February 1, 2015 PLC, subsequent to required approvals from PLC’s shareholders and relevant regulatory authorities, became a wholly owned subsidiary of Dai-ichi Life as contemplated by the Agreement and Plan of Merger (the “Merger Agreement”) with Dai-ichi Life and DL Investment (Delaware), Inc., a Delaware corporation and wholly owned subsidiary of Dai-ichi Life, which provided for the Merger of DL Investment (Delaware), Inc. with and into PLC, with PLC surviving the Merger as a wholly owned subsidiary of Dai-ichi Life. On February 1, 2015 each share of PLC’s common stock outstanding was converted into the right to receive $70 per share, without interest (the “Per Share Merger Consideration”). The aggregate cash consideration paid in connection with the Merger for the outstanding shares of common stock was approximately $5.6 billion and paid directly to the shareowners of record by Dai-ichi Life. According to public statements by both companies, the Merger will provide Dai-ichi Life with a platform for growth in the United States, where it did not previously have a significant presence. In connection with the completion of the Merger, PLC’s previously publicly traded equity was delisted from the NYSE, although PLC and the Company remain SEC registrants for financial reporting purposes in the United States. The Merger was accounted for under the acquisition method of accounting under ASC Topic 805. In accordance with ASC Topic 805-20-30, all identifiable assets acquired and liabilities assumed were measured at fair value as of the acquisition date. Goodwill of $735.7 million represents the cost in excess of the fair value of PLC’s net assets acquired (including identifiable intangibles) in the Merger, and reflects the Company’s assembled workforce, future growth potential and other sources of value not associated with identifiable assets. None of the goodwill is tax deductible. The following table summarizes the fair value of assets acquired and liabilities assumed at the acquisition date: Fair Value As of February 1, 2015 (Dollars In Thousands) Assets Fixed maturities $ Equity securities Mortgage loans Investment real estate Policy loans Other long-term investments Short-term investments Total investments Cash Accrued investment income Accounts and premiums receivable Reinsurance receivables Value of business acquired Goodwill Other intangibles Property and equipment Other assets Income tax receivable Assets related to separate accounts Variable annuity Variable universal life Total assets $ Liabilities Future policy and benefit claims $ Unearned premiums Total policy liabilities and accruals Stable value product account balances Annuity account balances Other policyholders’ funds Other liabilities Deferred income taxes Non-recourse funding obligations Repurchase program borrowings Liabilities related to separate accounts Variable annuity Variable universal life Total liabilities Net assets acquired $ As of the acquisition date, all contractual cash flows related to the Company’s historical and acquired receivables (as presented within this consolidated balance sheet) are expected to be collected. Intangible assets recognized by the Company included the following (excluding goodwill): Estimated Fair Value on Estimated Acquisition Date Useful Life (Dollars In Thousands) (In Years) Distribution relationships $ 14-22 Trade names 13-17 Technology 7-14 Total intangible assets subject to amortization Insurance licenses Indefinite Total intangible assets $ Identified intangible assets were valued using the excess earnings method, relief from royalty method or cost approach, as appropriate. Amortizable intangible assets will be amortized straight line over their assigned useful lives. The following is a schedule of estimated aggregate amortization expense: Year Amount (Dollars In Thousands) 2015 $ 2016 2017 2018 2019 All tangible and intangible assets of the Company were allocated to applicable operating segments in connection with the recording of pushdown accounting. The purchase price was also allocated to each operating segment in accordance with the determined fair value of the operating segments, such that the total reconciled with the total consideration paid in the merger. Subtraction of the fair value of the tangible and intangible assets for each operating segment from the allocated purchase price of that operating segment resulted in the goodwill allocated to each operating segment. The amount of goodwill allocated to each operating segment is reflected in Note 17 , Operating Segments . Treatment of Benefit Plans At or immediately prior to the Merger, each stock appreciation right with respect to shares of PLC’s Common Stock granted under any Stock Plan (each, a “SAR”) that were outstanding and unexercised immediately prior to the Merger and that had a base price per share of Common Stock underlying such SAR (the “Base Price”) that was less than the Per Share Merger Consideration (each such SAR, an “In-the-Money SAR”), whether or not exercisable or vested, was cancelled and converted into the right to receive an amount in cash less any applicable withholding taxes, determined by multiplying (i) the excess of the Per Share Merger Consideration over the Base Price of such In-the-Money SAR by (ii) the number of shares of Common Stock subject to such In-the-Money SAR (such amount, the “SAR Consideration”). At or immediately prior to the effective time of the Merger, each restricted stock unit with respect to a share of PLC Common Stock granted under any Stock Plan (each, a “RSU”) that was outstanding immediately prior to the Merger, whether or not vested, was cancelled and converted into the right to receive an amount in cash, without interest, less any applicable withholding taxes, determined by multiplying (i) the Per Share Merger Consideration by (ii) the number of RSUs. The number of performance shares earned for each award of performance shares granted under any Stock Plan was calculated by determining the number of performance shares that would have been paid if the subject award period had ended on the December 31 immediately preceding the Merger (based on the conditions set for payment of performance share awards for the subject award period), provided that the number of performance shares earned for each award were not less than the aggregate number of performance shares at the target performance level. Each performance share earned that was outstanding immediately prior to the Merger, whether or not vested, was cancelled and converted into the right to receive an amount in cash, without interest, less any applicable withholding taxes, determined by multiplying (i) the Per Share Merger Consideration by (ii) the number of Performance Shares. |
MONY CLOSED BLOCK OF BUSINESS
MONY CLOSED BLOCK OF BUSINESS | 6 Months Ended |
Jun. 30, 2015 | |
MONY CLOSED BLOCK OF BUSINESS | |
MONY CLOSED BLOCK OF BUSINESS | 4. 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 Insurance Department (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 accumulated other comprehensive income (loss) (“AOCI”)) at the merger date 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 PLC by Dai-ichi Life, this actuarial calculation of the expected timing of MONY’s Closed Block earnings was recalculated and reset as of 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 June 30, 2015 (Successor Company) and December 31, 2014 (Predecessor Company) is as follows : Successor Predecessor Company Company As of As of June 30, 2015 December 31, 2014 (Dollars In Thousands) (Dollars In Thousands) Closed block liabilities Future policy benefits, policyholders’ account balances and other policyholder liabilities $ $ Policyholder dividend obligation Other liabilities Total closed block liabilities Closed block assets Fixed maturities, available-for-sale, at fair value $ $ Equity securities, available-for-sale, at fair value — Mortgage loans on real estate Policy loans Cash and other invested assets Other assets Total closed block assets Excess of reported closed block liabilities over closed block assets Portion of above representing accumulated other comprehensive income: Net unrealized investment gains (losses) net of deferred tax benefit of $0 (Successor) and $0 (Predecessor); net of policyholder dividend obligation of $166,434 (Successor) and $106,886 (Predecessor) — — Future earnings to be recognized from closed block assets and closed block liabilities $ $ Reconciliation of the policyholder dividend obligation is as follows: Successor Predecessor Company Company February 1, 2015 January 1, 2015 For The Six to to Months Ended June 30, 2015 January 31, 2015 June 30, 2014 (Dollars In Thousands) (Dollars In Thousands) Policyholder dividend obligation, beginning of period $ $ $ Applicable to net revenue (losses) ) ) ) Change in net unrealized investment gains (losses) allocated to the policyholder dividend obligation ) Policyholder dividend obligation, end of period $ $ $ Closed Block revenues and expenses were as follows: Successor Predecessor Company Company For The Three February 1, 2015 January 1, 2015 For The Three For The Six Months Ended to to Months Ended Months Ended June 30, 2015 June 30, 2015 January 31, 2015 June 30, 2014 June 30, 2014 (Dollars In Thousands) (Dollars In Thousands) Revenues Premiums and other income $ $ $ $ $ Net investment income (loss) Net investment gains (losses) Total revenues Benefits and other deductions Benefits and settlement expenses Other operating expenses — Total benefits and other deductions Net revenues before income taxes Income tax expense Net revenues $ $ $ $ $ |
INVESTMENT OPERATIONS
INVESTMENT OPERATIONS | 6 Months Ended |
Jun. 30, 2015 | |
INVESTMENT OPERATIONS | |
INVESTMENT OPERATIONS | 5. INVESTMENT OPERATIONS Net realized gains (losses) for all other investments are summarized as follows: Successor Predecessor Company Company For The Three February 1, 2015 January 1, 2015 For The Three For The Six Months Ended to to Months Ended Months Ended June 30, 2015 June 30, 2015 January 31, 2015 June 30, 2014 June 30, 2014 (Dollars In Thousands) (Dollars In Thousands) Fixed maturities $ $ $ $ $ Equity securities — — — Impairments on fixed maturity securities ) ) ) ) ) Impairments on equity securities — — — — — Modco trading portfolio ) ) Other investments ) ) Total realized gains (losses) - investments $ ) $ ) $ $ $ For the three months ended June 30, 2015 (Successor Company) and the period of February 1, 2015 to June 30, 2015 (Successor Company), gross realized gains on investments available-for-sale (fixed maturities, equity securities, and short-term investments) were $5.4 million and $6.9 million and gross realized losses were $7.8 million and $8.9 million, respectively, including $5.7 million and $5.7 million of impairment losses, respectively. For the period of January 1, 2015 to January 31, 2015 (Predecessor Company), gross realized gains on investments available-for-sale (fixed maturities, equity securities, and short-term investments) were $6.9 million and gross realized losses were $0.5 million, including $0.4 million of impairment losses. For the three and six months ended June 30, 2014 (Predecessor Company), gross realized gains on investments available-for-sale (fixed maturities, equity securities, and short-term investments) were $20.4 million and $28.1 million and gross realized losses were $1.6 million and $3.4 million, including $1.4 million and $2.9 million of impairment losses, respectively. For the three months ended June 30, 2015 (Successor Company) and for the period of February 1, 2015 to June 30, 2015 (Successor Company), the Company sold securities in an unrealized gain position with a fair value (proceeds) of $430.1 million and $712.9 million, respectively. The gains realized on the sale of these securities was $5.4 million and $6.9 million, respectively. For the period of January 1, 2015 to January 31, 2015 (Predecessor Company), the Company sold securities in an unrealized gain position with a fair value (proceeds) of $172.6 million. The gain realized on the sale of these securities was $6.9 million. For the three and six months ended June 30, 2014 (Predecessor Company), the Company sold securities in an unrealized gain position with a fair value (proceeds) of $306.3 million and $571.0 million, respectively. The gains realized on the sale of these securities was $20.4 million and $28.1 million, respectively. For the three months ended June 30, 2015 (Successor Company) and for the period of February 1, 2015 to June 30, 2015 (Successor Company), the Company sold securities in an unrealized loss position with a fair value (proceeds) of $28.6 million and $49.3 million, respectively. The loss realized on the sale of these securities was $2.1 million and $3.2 million, respectively. The Company made the decision to exit these holdings in conjunction with our overall asset liability management process. For the period of January 1, 2015 to January 31, 2015 (Predecessor Company), the Company sold securities in an unrealized loss position with a fair value (proceeds) of $0.4 million. The loss realized on the sale of these securities were immaterial to the Company. The Company made the decision to exit these holdings in conjunction with our overall asset liability management process. For the three and six months ended June 30, 2014 (Predecessor Company), the Company sold securities in an unrealized loss position with a fair value (proceeds) of $1.6 million and $4.4 million, respectively. The losses realized on the sale of these securities were $0.2 million and $0.5 million, respectively. The Company made the decision to exit these holdings in conjunction with our overall asset liability management process. The amortized cost and fair value of the Company’s investments classified as available-for-sale as of June 30, 2015 (Successor Company) and December 31, 2014 (Predecessor Company), are as follows: Gross Gross Total OTTI Successor Company Amortized Unrealized Unrealized Fair Recognized As of June 30, 2015 Cost Gains Losses Value in OCI (1) (Dollars In Thousands) Fixed maturities: Residential mortgage-backed securities $ $ $ ) $ $ — Commercial mortgage-backed securities ) — Other asset-backed securities ) — U.S. government-related securities ) — Other government-related securities — ) — States, municipals, and political subdivisions ) — Corporate securities ) ) Preferred stock — ) — ) ) Equity securities ) — Short-term investments — — — $ $ $ ) $ $ ) Predecessor Company As of December 31, 2014 Fixed maturities: Residential mortgage-backed securities $ $ $ ) $ $ Commercial mortgage-backed securities ) — Other asset-backed securities ) ) U.S. government-related securities ) — Other government-related securities — — States, municipals, and political subdivisions ) — Corporate securities ) — ) Equity securities ) — Short-term investments — — — $ $ $ ) $ $ (1) These amounts are included in the gross unrealized gains and gross unrealized losses columns above. The preferred stock shown above as of June 30, 2015 (Successor Company) is included in the equity securities total as of December 31, 2014 (Predecessor Company). The amortized cost and fair value of the Company’s investments classified as held-to-maturity as of June 30, 2015 (Successor Company) and December 31, 2014 (Predecessor Company), are as follows: Successor Company Amortized Unrealized Unrealized Fair Recognized As of June 30, 2015 Cost Gains Losses Value in OCI (Dollars In Thousands) Fixed maturities: Other $ $ — $ ) $ $ — $ $ — $ ) $ $ — Predecessor Company As of December 31, 2014 Fixed maturities: Other $ $ $ — $ $ — $ $ $ — $ $ — During the period of February 1, 2015 to June 30, 2015 (Successor Company), the period of January 1, 2015 to January 31, 2015 (Predecessor Company), and for the six months ended June 30, 2014 (Predecessor Company), the Company did not record any other-than-temporary impairments on held-to-maturity securities. The Company’s held-to-maturity securities had $75.4 million of gross unrecognized holding losses as of June 30, 2015 (Successor Company). 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, financial health of the issuer, continued access of the issuer to capital markets and other pertinent information. The Company’s held-to-maturity securities had no gross unrecognized holding losses as of December 31, 2014 (Predecessor Company). As of June 30, 2015 (Successor Company) and December 31, 2014 (Predecessor Company), the Company had an additional $2.7 billion and $2.8 billion of fixed maturities, $8.3 million and $21.5 million of equity securities, and $43.8 million and $95.1 million of short-term investments classified as trading securities, respectively. The amortized cost and fair value of available-for-sale and held-to-maturity fixed maturities as of June 30, 2015 (Successor Company), 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. Successor Company Available-for-sale Held-to-maturity Amortized Fair Amortized Fair Cost Value Cost Value (Dollars In Thousands) (Dollars In Thousands) Due in one year or less $ $ $ — $ — Due after one year through five years — — Due after five years through ten years — — Due after ten years $ $ $ $ During the three months ended June 30, 2015 (Successor Company) and the period of February 1, 2015 to June 30, 2015 (Successor Company), the Company recorded pre-tax other-than-temporary impairments of investments of $13.4 million and $13.4 million, respectively. Of the $13.4 million of impairments for the three months ended June 30, 2015 (Successor Company) and the period of February 1, 2015 to June 30, 2015 (Successor Company) $5.7 million was recorded in earnings and $7.7 million was recorded in other comprehensive income (loss). 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 months ended June 30, 2015 (Successor Company) and for the period of February 1, 2015 to June 30, 2015 (Successor Company). During the period of January 1, 2015 to January 31, 2015 (Predecessor Company), the Company recorded pre-tax other-than-temporary impairments of investments of $0.6 million, all of which related to fixed maturities. Credit impairments recorded in earnings during the period were $0.5 million. During the period of January 1, 2015 to January 31, 2015 (Predecessor Company), $0.1 million of non-credit losses previously recorded in other comprehensive income (loss) were recorded in earnings as credit losses. 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 period of January 1, 2015 to January 31, 2015 (Predecessor Company). During the three and six months ended June 30, 2014 (Predecessor Company), the Company recorded pre-tax other-than-temporary impairments of investments of $0.5 million and $0.9 million, respectively, all of which related to fixed maturities. Credit impairments recorded in earnings during the three and six months ended June 30, 2014 (Predecessor Company) were $1.5 million and $3.1 million, respectively. During the three and six months ended June 30, 2014 (Predecessor Company), $1.0 million and $2.2 million, respectively, of non-credit losses previously recorded in other comprehensive income (loss) were recorded in earnings as credit losses. 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 six months ended June 30, 2014 (Predecessor Company). 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): Successor Predecessor Company Company For The Three February 1, 2015 January 1, 2015 For The Three For The Six Months Ended to to Months Ended Months Ended June 30, 2015 June 30, 2015 January 31, 2015 June 30, 2014 June 30, 2014 (Dollars In Thousands) (Dollars In Thousands) Beginning balance $ — $ — $ $ $ Additions for newly impaired securities — — — Additions for previously impaired securities — — Reductions for previously impaired securities due to a change in expected cash flows — — — ) ) Reductions for previously impaired securities that were sold in the current period — — — — — Ending balance $ $ $ $ $ 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 June 30, 2015 (Successor Company): Less Than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized Value Loss Value Loss Value Loss (Dollars In Thousands) Residential mortgage-backed securities $ $ ) $ — $ — $ $ ) Commercial mortgage-backed securities ) — — ) Other asset-backed securities ) — — ) U.S. government-related securities ) — — ) Other government-related securities ) — — ) States, municipalities, and political subdivisions ) — — ) Corporate securities ) — — ) Preferred stock ) — — ) Equities ) — — ) $ $ ) $ — $ — $ $ ) The preferred stock shown above as of June 30, 2015 (Successor Company) is included in the equity securities total as of December 31, 2014 (Predecessor Company). The book value of the Company’s investment portfolio was marked to fair value as of February 1, 2015 (Successor Company), in conjunction with the Dai-ichi Merger which resulted in the elimination of previously unrealized gains and losses from accumulated other comprehensive income. The level of interest rates as of February 1, 2015 (Successor Company) resulted in an increase in the fair value of the Company’s investments. Since February 1, 2015 (Successor Company) interest rates have increased resulting in net unrealized losses in the Company’s investment portfolio. The Company does not consider these unrealized loss positions to be other-than-temporary, 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 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, 2014 (Predecessor Company): Less Than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized Value Loss Value Loss Value Loss (Dollars In Thousands) Residential mortgage-backed securities $ $ ) $ $ ) $ $ ) Commercial mortgage-backed securities ) ) ) Other asset-backed securities ) ) ) U.S. government-related securities ) ) ) Other government-related securities — — — — — — States, municipalities, and political subdivisions ) ) ) Corporate securities ) ) ) Equities ) ) ) $ $ ) $ $ ) $ $ ) RMBS had a gross unrealized loss greater than twelve months of $2.7 million as of December 31, 2014 (Predecessor Company). 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. CMBS had a gross unrealized loss greater than twelve months of $2.0 million as of December 31, 2014 (Predecessor Company). 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 $29.5 million as of December 31, 2014 (Predecessor Company). This category predominately includes student-loan backed auction rate securities, the underlying collateral, of which is at least 97% guaranteed by the Federal Family Education Loan Program (“FFELP”). These unrealized losses have occurred within the Company’s auction rate securities (“ARS”) portfolio since the market collapse during 2008. 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 category had gross unrealized losses greater than twelve months of $5.4 million as of December 31, 2014 (Predecessor Company). These declines were entirely related to changes in interest rates. The corporate securities category had gross unrealized losses greater than twelve months of $62.7 million as of December 31, 2014 (Predecessor Company). 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 equities category had a gross unrealized loss greater than twelve months of $14.0 million as of December 31, 2014 (Predecessor Company). The aggregate decline in market value of these securities was deemed temporary due to factors supporting the recoverability of the respective investments. Positive factors include credit ratings, the financial health of the issuer, the continued access of the issuer to the capital markets, and other pertinent information. As of June 30, 2015, the Company had a total of 2,435 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. As of June 30, 2015 (Successor Company), the Company had securities in its available-for-sale portfolio which were rated below investment grade of $1.6 billion and had an amortized cost of $1.6 billion. In addition, included in the Company’s trading portfolio, the Company held $308.8 million of securities which were rated below investment grade. Approximately $403.3 million of the below investment grade securities were not publicly traded. The change in unrealized gains (losses), net of income tax, on fixed maturity and equity securities, classified as available-for-sale is summarized as follows: Successor Predecessor Company Company For The Three February 1, 2015 January 1, 2015 For The Three For The Six Months Ended to to Months Ended Months Ended June 30, 2015 June 30, 2015 January 31, 2015 June 30, 2014 June 30, 2014 (Dollars In Thousands) (Dollars In Thousands) Fixed maturities $ ) $ ) $ $ $ Equity securities ) ) Variable Interest Entities 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 Variable Interest Entity (“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”), that was determined to be a VIE as of June 30, 2015 (Successor Company) and December 31, 2014 (Predecessor Company). 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. For details of this transaction, see Note 9, Debt and Other Obligations . 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 the VIE’s payment obligation for the credit enhancement fee to the unrelated third party provider. As of June 30, 2015 (Successor Company), no payments have been made or required related to this guarantee. |
MORTGAGE LOANS
MORTGAGE LOANS | 6 Months Ended |
Jun. 30, 2015 | |
MORTGAGE LOANS | |
MORTGAGE LOANS | 6. MORTGAGE LOANS Mortgage Loans The Company invests a portion of its investment portfolio in commercial mortgage loans. As of June 30, 2015 (Successor Company), the Company’s mortgage loan holdings were approximately $5.7 billion. The Company has specialized in making loans on either credit-oriented commercial properties or credit-anchored strip shopping centers 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 and funded 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. As of February 1, 2015 all mortgage loans were measured at fair value. Each mortgage loan was individually analyzed to determine the fair value. Each loan was either analyzed and assigned a discount rate or given an impairment, based on whether facts and circumstances which, as of the acquisition date, indicated less than full projected collections of contractual principal and interest payments. Various market factors were considered in determining the net present value of the expected cash flow stream or underlying real estate collateral, including the characteristics of the borrower, the underlying collateral, underlying credit worthiness of the tenants, and tenant payment history. Known events and risks, such as refinancing risks, were also considered in the fair value determination. In certain cases, fair value was based on the NPV of the expected cash flow stream or the underlying value of the real estate collateral. Certain of the mortgage loans have call options between 3 and 10 years. However, if interest rates were to significantly increase, we may be unable to exercise the call options on our existing mortgage loans commensurate with the significantly increased market rates. Assuming the loans are called at their next call dates, approximately $121.1 million would become due for the remainder of 2015, $953.0 million in 2016 through 2020, $377.9 million in 2021 through 2025, and $118.3 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 June 30, 2015 (Successor Company) and December 31, 2014 (Predecessor Company), approximately $548.4 million and $553.6 million, respectively, of the Company’s mortgage loans have this participation feature. Cash flows received as a result of this participation feature are recorded as interest income. During the three months ended June 30, 2015 (Successor Company), the period of February 1, 2015 to June 30, 2015 (Successor Company), January 1, 2015 to January 31, 2015 (Predecessor Company), and for the three and six months ended June 30, 2014 (Predecessor Company), the Company recognized $3.3 million, $5.1 million, $0.1 million, $2.8 million, and $5.8 million, respectively, of participating mortgage loan income. As of June 30, 2015 (Successor Company), approximately $4.2 million, or 0.01%, of invested assets consisted of nonperforming mortgage loans, restructured mortgage loans, and/or mortgage loans that were foreclosed and were converted to real estate properties. The Company does not expect these investments to adversely affect its liquidity or ability to maintain proper matching of assets and liabilities. During the period of February 1, 2015 to June 30, 2015 (Successor Company) and the period of January 1, 2015 to January 31, 2015 (Predecessor Company), the Company entered into certain mortgage loan transactions that were accounted for as troubled debt restructurings under Topic 310 of the FASB ASC. For all mortgage loans, the impact of troubled debt restructurings is generally reflected in the Company’s investment balance and in the allowance for mortgage loan credit losses. Transactions accounted for as troubled debt restructurings during the period of February 1, 2015 to June 30, 2015 (Successor Company) and the period of January 1, 2015 to January 31, 2015 (Predecessor Company) included either the acceptance of assets in satisfaction of principal during the respective periods or at a future date, and were the result of agreements between the creditor and the debtor. During the period of February 1, 2015 to June 30, 2015 (Successor Company), the Company accepted or agreed to accept assets of $1.5 million in satisfaction of $2.0 million of principal and for the period of January 1, 2015 to January 31, 2015 (Predecessor Company), the Company accepted or agreed to accept assets of $11.3 million in satisfaction of $13.8 million of principal. These transactions resulted in no material realized losses in the Company’s investment in mortgage loans net of existing discounts recorded for mortgage loans losses for the period of February 1, 2015 to June 30, 2015 (Successor Company). 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 June 30, 2015 (Successor Company), $4.2 million of mortgage loans not subject to a pooling and servicing agreement were nonperforming mortgage loans, restructured mortgage loans, and/or mortgage loans that were foreclosed and were converted to real estate properties. None of the restructured loans were nonperforming during the periods of February 1, 2015 to June 30, 2015 (Successor Company) and January 1, 2015 to January 31, 2015 (Predecessor Company). The Company did not foreclose on any nonperforming loans not subject to a pooling and servicing agreement during the periods of February 1, 2015 to June 30, 2015 (Successor Company) and January 1, 2015 to January 31, 2015 (Predecessor Company). As of June 30, 2015 (Successor Company), none of the loans subject to a pooling and servicing agreement were nonperforming or restructured. The Company did not foreclose on any nonperforming loans subject to pooling and servicing agreement during the periods of February 1, 2015 to June 30, 2015 (Successor Company) and January 1, 2015 to January 31, 2015 (Predecessor Company). As of June 30, 2015 (Successor Company) and December 31, 2014 (Predecessor Company), the Company had an allowance for mortgage loan credit losses of $0.5 million and $5.7 million, respectively. 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: Successor Predecessor Company Company February 1, 2015 January 1, 2015 to to As of June 30, 2015 January 31, 2015 December 31, 2014 (Dollars In Thousands) (Dollars In Thousands) Beginning balance $ — $ $ Charge offs — ) ) Recoveries ) ) ) Provision — Ending balance $ $ $ 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 Successor Company 30-59 Days 60-89 Days than 90 Days Total As of June 30, 2015 Delinquent Delinquent Delinquent Delinquent (Dollars In Thousands) Commercial mortgage loans $ $ $ $ Number of delinquent commercial mortgage loans Predecessor Company As of December 31, 2014 Commercial mortgage loans $ $ — $ $ Number of delinquent commercial mortgage loans — 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. For information regarding impaired loans, please refer to the following chart : Unpaid Average Interest Cash Basis Successor Company Recorded Principal Related Recorded Income Interest As of June 30, 2015 Investment Balance Allowance Investment Recognized Income (Dollars In Thousands) Commercial mortgage loans: With no related allowance recorded $ $ $ — $ $ $ With an allowance recorded Predecessor Company As of December 31, 2014 Commercial mortgage loans: With no related allowance recorded $ — $ — $ — $ — $ — $ — With an allowance recorded Mortgage loans that were modified in a troubled debt restructuring were as follows: Pre-Modification Post-Modification Outstanding Outstanding Successor Company Number of Recorded Recorded As of June 30, 2015 Contracts Investment Investment (Dollars In Thousands) Troubled debt restructuring: Commercial mortgage loans $ $ Predecessor Company As of December 31, 2014 Troubled debt restructuring: Commercial mortgage loans $ $ |
DEFERRED POLICY ACQUISITION COS
DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED | 6 Months Ended |
Jun. 30, 2015 | |
DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED. | |
DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED | 7. DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED Deferred policy acquisition costs The balances and changes in DAC are as follows: Successor Predecessor Company Company February 1, 2015 January 1, 2015 to to As of June 30, 2015 January 31, 2015 December 31, 2014 (Dollars In Thousands) (Dollars In Thousands) Balance, beginning of period $ — $ $ Capitalization of commissions, sales, and issue expenses Amortization ) ) Change in unrealized investment gains and losses ) ) Balance, end of period $ $ $ Value of business acquired The balances and changes in VOBA are as follows: Successor Predecessor Company Company February 1, 2015 January 1, 2015 to to As of June 30, 2015 January 31, 2015 December 31, 2014 (Dollars In Thousands) (Dollars In Thousands) Balance, beginning of period Amortization ) ) ) Change in unrealized gains and losses ) ) Balance, end of period $ $ $ As of February 1, 2015, the existing deferred acquisition costs (“DAC”) and VOBA balance was written off in conjunction with the merger previously disclosed in Note 3, Dai-ichi Merger and in accordance with ASC Topic 805 — Business Combinations. Concurrently, a VOBA asset was created representing the actuarial estimated present value of future cash flows from the Company’s insurance policies and investment contracts in-force on the date of the Merger. The expected amortization of VOBA for the next five years is as follows: Expected Years Amortization (Dollars In Thousands) 2015 $ 2016 2017 2018 2019 |
GOODWILL
GOODWILL | 6 Months Ended |
Jun. 30, 2015 | |
GOODWILL | |
GOODWILL | 8. GOODWILL During the period of January 1, 2015 to January 31, 2015 (Predecessor Company), the Company decreased its goodwill balance by approximately $0.3 million. The decrease for the period of the Predecessor Company was due to an adjustment in the Acquisitions segment related to tax benefits realized during the period on the portion of tax goodwill in excess of GAAP basis goodwill. The goodwill balances associated with the Predecessor Company were replaced with newly established goodwill balances in conjunction with the Dai-ichi Merger, in accordance with ASC Topic 850, as described below. As permitted by ASC Topic 805, Business Combinations , the Company measured its assets and liabilities at fair value on the date of the merger, February 1, 2015. The purchase price in excess of the fair value of PLC’s assets and liabilities resulted in the establishment of goodwill as of the date of the merger. As of February 1, 2015 (Successor Company), the Company was allocated an aggregate goodwill balance of $735.7 million. Refer to Note 3, Dai-ichi Merger , for more information related to the Successor Company goodwill. There has been no change in the goodwill during the period of February 1, 2015 to June 30, 2015 (Successor Company). 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 measurement 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. Additionally, the discount rate used is based on the Company’s judgment of the appropriate rate for each reporting unit based on the relative risk associated with the projected cash flows. As of June 30, 2015 (Successor Company) and for the period of February 1, 2015 through June 30, 2015 (Successor Company), 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. Accordingly, no impairment to the Company’s goodwill balances has been recorded. |
DEBT AND OTHER OBLIGATIONS
DEBT AND OTHER OBLIGATIONS | 6 Months Ended |
Jun. 30, 2015 | |
DEBT AND OTHER OBLIGATIONS | |
DEBT AND OTHER OBLIGATIONS | 9. DEBT AND OTHER OBLIGATIONS In conjunction with the Merger and in accordance with ASC Topic 805, the Company adjusted the carrying value of its non-recourse funding obligations to fair value as of the date of the Merger, February 1, 2015. This resulted in the Company establishing premiums and discounts on its non-recourse funding obligations. The fair value of the Company’s non-recourse funding obligations associated with Golden Gate, Golden Gate II, and MONY Life Insurance Company, were determined using market prices as of February 1, 2015. The fair value of the Golden Gate V non-recourse funding obligation was determined using a discounted cash flow model with inputs derived from comparable financial instruments. The premiums and discounts established as of February 1, 2015 are amortized over the expected life of the instruments using the effective interest method. The amortization of premiums and discounts are recorded as a component of interest expense and are recorded in “Other operating expenses” on the Company’s Consolidated Condensed Statements of Income (Loss). Under a revolving line of credit arrangement that was in effect until February 2, 2015 (the “Credit Facility”), the Company and PLC had the ability to borrow on an unsecured basis up to an aggregate principal amount of $750 million. The Company had the right in certain circumstances to request that the commitment under the Credit Facility be increased up to a maximum principal amount of $1.0 billion. Balances outstanding under the 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 the Company’s senior unsecured long-term debt (“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 Federal Funds rate, or (z) the one-month LIBOR plus 1.00% and (B) a spread based on the ratings of our Senior Debt. The Credit Facility also provided for a facility fee at a rate, 0.175%, that could vary with the ratings of the Company’s Senior Debt and that was calculated on the aggregate amount of commitments under the Credit Facility, whether used or unused. The Credit Facility provided that PLC was 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 was July 17, 2017. The Company was not aware of any non-compliance with the financial debt covenants of the Credit Facility as of December 31, 2014 (Predecessor Company). PLC had an outstanding balance of $450.0 million bearing interest at a rate of LIBOR plus 1.20% under the Credit Facility as of December 31, 2014 (Predecessor Company). As of December 31, 2014 (Predecessor Company), the Company had used $55.0 million of borrowing capacity by executing a Letter of Credit under the Credit Facility for the benefit of an affiliated captive reinsurance subsidiary of the Company. This Letter of Credit had not been drawn upon as of December 31, 2014 (Predecessor Company). On February 2, 2015, the Company and PLC amended and restated the Credit Facility (the “2015 Credit Facility”). Under the 2015 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 2015 Credit Facility be increased up to a maximum principal amount of $1.25 billion. Balances outstanding under the 2015 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 Federal 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 initial facility fee rate was 0.15% on February 2, 2015, and was adjusted to 0.125% upon PLC’s subsequent ratings upgrade on February 2, 2015. 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 2015 Credit Facility. The maturity date of the 2015 Credit Facility is February 2, 2020. The Company is not aware of any non-compliance with the financial debt covenants of the Credit Facility as of February 2, 2015 or the 2015 Credit Facility as of June 30, 2015 (Successor Company). PLC had an outstanding balance of $545.0 million bearing interest at a rate of LIBOR plus 1.00% as June 30, 2015 (Successor Company). As of June 30, 2015 (Successor Company), the $55.0 million Letter of Credit executed by the Company was no longer issued and outstanding. Non- Recourse Funding Obligations Golden Gate Captive Insurance Company Golden Gate Captive Insurance Company (“Golden Gate”), a South Carolina special purpose financial captive insurance company and wholly owned subsidiary, had three series of non-recourse funding obligations with a total outstanding balance of $800 million as of June 30, 2015 (Successor Company). PLC holds the entire outstanding balance of non-recourse funding obligations. The Series A1 non-recourse funding obligations have a balance of $400 million and accrue interest at 7.375%, the Series A2 non-recourse funding obligations have a balance of $100 million and accrue interest at 8.00%, and the Series A3 non-recourse funding obligations have a balance of $300 million and accrue interest at 8.45%. Golden Gate II Captive Insurance Company Golden Gate II Captive Insurance Company (“Golden Gate II”), a South Carolina special purpose financial captive insurance company and wholly owned subsidiary, had $575 million of outstanding non-recourse funding obligations as of June 30, 2015 (Successor Company). These outstanding non-recourse funding obligations were issued to special purpose trusts, which in turn issued securities to third parties. Certain of our affiliates own a portion of these securities. As of June 30, 2015 (Successor Company), securities related to $144.9 million of the outstanding balance of the non-recourse funding obligations were held by external parties, securities related to $145.3 million of the non-recourse funding obligations were held by nonconsolidated affiliates, and $284.8 million were held by consolidated subsidiaries of the Company. PLC has entered into certain support agreements with Golden Gate II obligating it to make capital contributions or provide support related to certain of Golden Gate II’s expenses and in certain circumstances, to collateralize certain of PLC’s obligations to Golden Gate II. These support agreements provide that amounts would become payable by PLC to Golden Gate II if its annual general corporate expenses were higher than modeled amounts or if Golden Gate II’s investment income on certain investments or premium income was below certain actuarially determined amounts. As of June 30, 2015 (Successor Company), no payments have been made under these agreements; however, certain support agreement obligations to Golden Gate II of approximately $1.9 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 agreements. There are no support agreements between the Company and Golden Gate II. Golden Gate V Vermont Captive Insurance Company On October 10, 2012, Golden Gate V Vermont Captive Insurance Company (“Golden Gate V”), a Vermont special purpose financial insurance company and Red Mountain, LLC (“Red Mountain”), both wholly owned subsidiaries, entered into a 20-year transaction to finance up to $945 million of “AXXX” reserves related to a block of universal life insurance policies with secondary guarantees issued by the Company and its subsidiary, West Coast Life Insurance Company (“WCL”). Golden Gate V issued non-recourse funding obligations to Red Mountain, and Red Mountain issued a note with an initial principal amount of $275 million, increasing to a maximum of $945 million in 2027, to Golden Gate V for deposit to a reinsurance trust supporting Golden Gate V’s obligations under a reinsurance agreement with WCL, pursuant to which WCL cedes liabilities relating to the policies of WCL and retrocedes liabilities relating to the policies of the Company. Through the structure, Hannover Life Reassurance Company of America (“Hannover Re”), the ultimate risk taker in the transaction, provides credit enhancement to the Red Mountain note for the 20-year term in exchange for a fee. The transaction is “non-recourse” to Golden Gate V, Red Mountain, WCL, PLC, and the Company, meaning that none of these companies are liable for the reimbursement of any credit enhancement payments required to be made. As of June 30, 2015 (Successor Company), the principal balance of the Red Mountain note was $470 million. Future scheduled capital contributions to prefund credit enhancement fees amount to approximately $139.6 million and will be paid in annual installments through 2031. In connection with the transaction, PLC has entered into certain support agreements under which PLC guarantees or otherwise supports certain obligations of Golden Gate V or Red Mountain. The support agreements provide that amounts would become payable by PLC if Golden Gate V’s annual general corporate expenses were higher than modeled amounts or in the event write-downs due to other-than-temporary impairments on assets held in certain accounts exceed defined threshold levels. Additionally, PLC has entered into separate agreements to indemnify Golden Gate V with respect to material adverse changes in non-guaranteed elements of insurance policies reinsured by Golden Gate V, and to guarantee payment of certain fee amounts in connection with the credit enhancement of the Red Mountain note. As of June 30, 2015 (Successor Company), no payments have been made under these agreements. In connection with the transaction outlined above, Golden Gate V had a $470 million outstanding non-recourse funding obligation as of June 30, 2015 (Successor Company). This non-recourse funding obligation matures in 2037, has scheduled increases in principal to a maximum of $945 million, and accrues interest at a fixed annual rate of 6.25%. Non-recourse funding obligations outstanding as of June 30, 2015 (Successor Company), on a consolidated basis, are shown in the following table: Year-to-Date Maturity Weighted-Avg Issuer Balance Year Interest Rate (Dollars In Thousands) Golden Gate Captive Insurance Company (1) $ 2037 % Golden Gate II Captive Insurance Company 2052 % Golden Gate V Vermont Captive Insurance Company (1) 2037 % MONY Life Insurance Company (1) 2024 % Total $ (1) Fixed rate obligations During the period of February 1, 2015 to June 30, 2015 (Successor Company) and the period of January 1, 2015 to January 31, 2015 (Predecessor Company), the Company did not repurchase any of its outstanding non-recourse funding obligations. For the six months ended June 30, 2014 (Predecessor Company), the Company repurchased $6.0 million of its outstanding non-recourse funding obligations, at a discount. The repurchase resulted in a $1.5 million pre-tax gain for the Company. These gains are recorded in other income in the consolidated condensed statements of income. Letters of Credit Golden Gate III Vermont Captive Insurance Company (“Golden Gate III”), a Vermont special purpose financial insurance company and wholly owned subsidiary, is party to a Reimbursement Agreement (the “Reimbursement Agreement”) with UBS AG, Stamford Branch (“UBS”), as issuing lender. Under the original Reimbursement Agreement, dated April 23, 2010, UBS issued a letter of credit (the “LOC”) in the initial amount of $505 million to a trust for the benefit of WCL. The Reimbursement Agreement was subsequently amended and restated effective November 21, 2011 (the “First Amended and Restated Reimbursement Agreement”), to replace the existing LOC with one or more letters of credit from UBS, and to extend the maturity date from April 1, 2018, to April 1, 2022. On August 7, 2013, Golden Gate III entered into a Second Amended and Restated Reimbursement Agreement with UBS (the “Second Amended and Restated Reimbursement Agreement”), which amended and restated the First Amended and Restated Reimbursement Agreement. Under the Second and Amended and Restated Reimbursement Agreement a new LOC in an initial amount of $710 million was issued by UBS in replacement of the existing LOC issued under the First Amended and Restated Reimbursement Agreement. The term of the LOC was extended from April 1, 2022 to October 1, 2023, subject to certain conditions being satisfied including scheduled capital contributions being made to Golden Gate III by one of its affiliates. The maximum stated amount of the LOC was increased from $610 million to $720 million in 2015 if certain conditions had been met. On June 25, 2014, Golden Gate III entered into a Third Amended and Restated Reimbursement Agreement with UBS (the “Third Amended and Restated Reimbursement Agreement”), which amended and restated the Second Amended and Restated Reimbursement Agreement. Under the Third Amended and Restated Reimbursement Agreement, a new LOC in an initial amount of $915 million was issued by UBS in replacement of the existing LOC issued under the Second Amended and Restated Reimbursement Agreement. The term of the LOC was extended from October 1, 2023 to April 1, 2025, subject to certain conditions being satisfied including scheduled capital contributions being made to Golden Gate III by one of its affiliates. The maximum stated amount of the LOC was increased from $720 million to $935 million in 2015 if certain conditions are met. The LOC is held in trust for the benefit of WCL, and supports certain obligations of Golden Gate III to WCL under an indemnity reinsurance agreement originally effective April 1, 2010, as amended and restated on November 21, 2011, and as further amended and restated on August 7, 2013 and on June 25, 2014 to include additional blocks of policies, and pursuant to which WCL cedes liabilities relating to the policies of WCL and retrocedes liabilities relating to the policies of the Company. The LOC balance was $935 million as of June 30, 2015 (Successor Company). The term of the LOC is expected to be approximately 15 years from the original issuance date. This transaction is “non-recourse” to WCL, PLC, and the Company, meaning that none of these companies other than Golden Gate III are liable for reimbursement on a draw of the LOC. PLC has entered into certain support agreements with Golden Gate III obligating PLC to make capital contributions or provide support related to certain of Golden Gate III’s expenses and in certain circumstances, to collateralize certain of PLC’s obligations to Golden Gate III. Future scheduled capital contributions amount to approximately $122.5 million and will be paid in three installments with the last payment occurring in 2021, and these contributions may be subject to potential offset against dividend payments as permitted under the terms of the Third Amended and Restated Reimbursement Agreement. The support agreements provide that amounts would become payable by PLC to Golden Gate III if Golden Gate III’s annual general corporate expenses were higher than modeled amounts or if specified catastrophic losses occur during defined time periods with respect to the policies reinsured by Golden Gate III. Pursuant to the terms of an amended and restated letter agreement with UBS, PLC has continued to guarantee the payment of fees to UBS as specified in the Third Amended and Restated Reimbursement Agreement. As of June 30, 2015 (Successor Company), no payments have been made under these agreements. Golden Gate IV Vermont Captive Insurance Company (“Golden Gate IV”), a Vermont special purpose financial insurance company and wholly owned subsidiary, is party to a Reimbursement Agreement with UBS AG, Stamford Branch, as issuing lender. Under the Reimbursement Agreement, dated December 10, 2010, UBS issued an LOC in the initial amount of $270 million to a trust for the benefit of WCL. The LOC balance has increased, in accordance with the terms of the Reimbursement Agreement, during each quarter of 2015 and was $770 million as of June 30, 2015 (Successor Company). Subject to certain conditions, the amount of the LOC will be periodically increased up to a maximum of $790 million in 2016. The term of the LOC is expected to be 12 years from the original issuance date (stated maturity of December 30, 2022). The LOC was issued to support certain obligations of Golden Gate IV to WCL under an indemnity reinsurance agreement, pursuant to which WCL cedes liabilities relating to the policies of WCL and retrocedes liabilities relating to the policies of the Company. This transaction is “non-recourse” to WCL, PLC, and the Company, meaning that none of these companies other than Golden Gate IV are liable for reimbursement on a draw of the LOC. PLC has entered into certain support agreements with Golden Gate IV obligating PLC to make capital contributions or provide support related to certain of Golden Gate IV’s expenses and in certain circumstances, to collateralize certain of PLC’s obligations to Golden Gate IV. The support agreements provide that amounts would become payable by PLC to Golden Gate IV if Golden Gate IV’s annual general corporate expenses were higher than modeled amounts or if specified catastrophic losses occur during defined time periods with respect to the policies reinsured by Golden Gate IV. PLC has also entered into a separate agreement to guarantee the payments of LOC fees under the terms of the Reimbursement Agreement. As of June 30, 2015 (Successor Company), no payments have been made under these agreements. 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 maturity securities, and the agreements provided for net settlement in the event of default or on termination of the agreements. As of June 30, 2015 (Successor Company), the fair value of securities pledged under the repurchase program was $657.4 million and the repurchase obligation of $602.2 million was included in the Company’s consolidated condensed balance sheets (at an average borrowing rate of 21 basis points). During the period of February 1, 2015 to June 30, 2015 (Successor Company) and the period of January 1, 2015 to January 31, 2015 (Predecessor Company), the maximum balance outstanding at any one point in time related to these programs was $646.7 million and $175.0 million, respectively. The average daily balance was $507.2 million and $77.4 million (at an average borrowing rate of 17 and 16 basis points, respectively) during the period of February 1, 2015 to June 30, 2015 (Successor Company) and the period of January 1, 2015 to January 31, 2015 (Predecessor Company), respectively. As of December 31, 2014 (Predecessor Company), the Company had a $50.0 million outstanding balance related to such borrowings. During 2014, the maximum balance outstanding at any one point in time related to these programs was $633.7 million. The average daily balance was $470.4 million (at an average borrowing rate of 11 basis points) during the year ended December 31, 2014 (Predecessor Company). The following table provides the amount of collateral pledged for repurchase agreements, grouped by asset class, as of June 30, 2015 (Successor Company): Repurchase Agreements, Securities Lending Transactions, and Repurchase-to-Maturity Transactions Accounted for as Secured Borrowings Remaining Contractual Maturity of the Agreements As of June 30, 2015 (Successor Company) (Dollars In Thousands) Overnight and Greater Than Continuous Up to 30 days 30-90 days 90 days Total Repurchase agreements and repurchase-to-maturity transactions U.S. Treasury and agency securities $ $ — $ — $ — $ State and municipal securities — — — — — Other asset-backed securities — — — — — Corporate securities — — — Equity securities — — — — — Non-U.S. sovereign debt — — — — — Mortgage loans — — — Other asset-backed securities — — — — — Total borrowings $ $ $ — $ — $ |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2015 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 10. COMMITMENTS AND CONTINGENCIES Under 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. In addition, from time to time, companies may be asked to contribute amounts beyond prescribed limits. Most insurance guaranty fund laws provide that an assessment may be excused or deferred if it would threaten an insurer’s own financial strength. The Company does not believe its insurance guaranty fund assessments will be materially different from amounts already provided for in the financial statements. 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 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. Publicly held companies in general and 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. Although the Company cannot predict the outcome of any litigation or regulatory action, the Company does not believe that any such outcome will have an impact, either individually or in the aggregate, on its financial condition or results of operations that differs materially from the Company’s established liabilities. Given the inherent difficulty in predicting the outcome of such matters, however, it is possible that an adverse outcome in certain such matters could be material to the Company’s financial condition or results of operations for any particular reporting period. The Company was audited by the IRS and the IRS proposed favorable and unfavorable adjustments to the Company’s 2003 through 2007 reported taxable income. The Company protested certain unfavorable adjustments and sought resolution at the IRS’ Appeals Division. The case has followed normal procedure and is now under review at Congress’ Joint Committee on Taxation. The Company believes the matter will conclude within the next twelve months. If the IRS prevails on every issue that it identified in this audit, and the Company does not litigate these issues, then the Company will make an immaterial income tax payment. However, this payment, if it were to occur, would not materially impact the Company or its effective tax rate. Through the acquisition of MONY by the Company certain income tax credit carryforwards, which arose in MONY’s pre-acquisition tax years, transferred to the Company. This transfer was in accordance with the applicable rules of the Internal Revenue Code and the related Regulations. In spite of this transfer, AXA, the former parent of the consolidated income tax return group in which MONY was a member, retains the right to utilize these credits in the future to offset future increases in its 2010 through 2013 tax liabilities. The Company had determined that, based on all information known as of the acquisition date and through the March 31, 2014 reporting date, it was probable that a loss of the utilization of these carryforwards had been incurred. Due to indemnification received from AXA during the quarter ending June 30, 2014, the probability of loss of these carryforwards has been eliminated. Accordingly, in the table summarizing the fair value of net assets acquired from the Acquisition, the amount of the deferred tax asset from the credit carryforwards is no longer offset by a liability. Certain of the Company’s 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, with respect to one block of life insurance policies that is co-insured by a subsidiary of the Company, uncertainty as to whether the Company or other companies are responsible for the liabilities, if any, arising in connection with such policies. The Company will continue to monitor the matter for any developments that would make the loss contingency associated with the audits probable or reasonably estimable. Certain of the Company’s 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, and escheating the benefits and interest as well as penalties to the state if the beneficiary could not be found. 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 it is reasonably possible 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 estimates the range of such fees to be from $0 to $3.5 million. |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 6 Months Ended |
Jun. 30, 2015 | |
EMPLOYEE BENEFIT PLANS | |
EMPLOYEE BENEFIT PLANS | 11. EMPLOYEE BENEFIT PLANS Due to the Dai-ichi Life transaction, PLC re-measured all materially impacted benefit plans as of January 31, 2015 (Predecessor Company). Financial re-measurement was performed for the defined benefit pension plan, the unfunded excess benefit plan, and the postretirement life insurance plan as of January 31, 2015 (Predecessor Company). The January results for the retiree life plan were not material, and therefore, re-measurement was not deemed necessary for this plan. The Company has disclosed relevant financial information related to the January 31, 2015 (Predecessor Company) re-measurement, as follows. The following table presents the benefit obligation, fair value of plan assets, and the funded status of the PLC’s defined benefit pension plan and unfunded excess benefit plan of January 31, 2015 (Predecessor Company) and December 31, 2014 (Predecessor Company). This table also includes the amounts not yet recognized as components of net periodic pension costs as of January 31, 2015 (Predecessor Company) and December 31, 2014 (Predecessor Company). Predecessor Company Defined Benefit Unfunded Excess Pension Plan Benefits Plan As of As of As of As of January 31, 2015 December 31, 2014 January 31, 2015 December 31, 2014 (Dollars In Thousands) Accumulated benefit obligation, end of period $ $ $ $ Change in projected benefit obligation: Projected benefit obligation at beginning of period $ $ $ $ Service cost Interest cost Amendments — — — — Actuarial (gain) or loss Benefits paid ) ) ) ) Projected benefit obligation at end of period Change in plan assets: Fair value of plan assets at beginning of period — — Actual return on plan assets ) — — Employer contributions (1) Benefits paid ) ) ) ) Fair value of plan assets at end of period — — After reflecting FASB guidance Funded status ) ) ) ) Amounts recognized in the balance sheet: Other liabilities ) ) ) ) Amounts recognized in accumulated other comprehensive income: Net actuarial loss Prior service cost/(credit) ) ) Total amounts recognized in AOCI $ $ $ $ (1) Employer contributions disclosed are based on the Company’s fiscal filing year. As of January 31, 2015 (Predecessor Company) and December 31, 2014 (Predecessor Company), the projected benefit obligation associated with the postretirement life insurance plan was $9.8 million and $9.3 million, respectively. As a result of the Merger on February 1, 2015, all unrecognized prior service costs or credits, actuarial gains or losses, and any remaining transition assets or obligations were not carried forward on the acquisition date. Therefore, the amounts presented in the “Amounts recognized in accumulated other comprehensive income” in the chart above were set to zero on the Merger date. The benefit obligations as of January 31, 2015 (Predecessor Company) were determined based on the assumptions used in the 2014 year-end disclosures with the following exception: Defined Benefit Unfunded Excess Postretirement Pension Plan Benefit Plan Life Insurance Plan Discount rate % % % Components of the net periodic benefit cost for the three months ended June 30, 2015 (Successor Company), the period of February 1, 2015 to June 30, 2015 (Successor Company), the period of January 1, 2015 to January 31, 2015 (Predecessor Company), and for the three and six months ended June 30, 2014 (Predecessor Company) are as follows: Successor Predecessor Company Company For The Three February 1, 2015 January 1, 2015 For The Three For The Six Months Ended to to Months Ended Months Ended June 30, 2015 June 30, 2015 January 31, 2015 June 30, 2014 June 30, 2014 Defined Unfunded Defined Unfunded Defined Unfunded Defined Unfunded Defined Unfunded Benefit Excess Benefit Excess Benefit Excess Benefit Excess Benefit Excess Pension Benefit Pension Benefit Pension Benefit Pension Benefit Pension Benefit Plan Plan Plan Plan Plan Plan Plan Plan Plan Plan (Dollars In Thousands) (Dollars In Thousands) Service cost — benefits earned during the period $ $ $ $ $ $ $ $ $ $ Interest cost on projected benefit obligation Expected return on plan assets ) — ) — ) — ) — ) — Amortization of prior service cost — — — — ) ) ) Amortization of actuarial losses — — — — Total net periodic benefit cost $ $ $ $ $ $ $ $ $ $ During the period of January 1, 2015 to January 31, 2015 (Predecessor Company), PLC contributed $2.2 million to its defined benefit pension plan which was applied for the 2014 plan year. PLC did not contribute to the defined benefit pension plan during the period of February 1, 2015 to June 30, 2015 (Successor Company). PLC will continue to make contributions in future periods as necessary to at least satisfy minimum funding requirements. PLC may also make additional contributions in future periods to maintain an adjusted funding target attainment percentage (“AFTAP”) of at least 80% and to avoid certain Pension Benefit Guaranty Corporation (“PBGC”) reporting triggers. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 6 Months Ended |
Jun. 30, 2015 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 12. 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 June 30, 2015 (Successor Company), January 31, 2015 (Predecessor Company), and December 31, 2014 (Predecessor Company). Changes in Accumulated Other Comprehensive Income (Loss) by Component Total Accumulated Unrealized Accumulated Other Gains and Losses Gain and Loss Comprehensive on Investments (2) Derivatives Income (Loss) (Dollars In Thousands, Net of Tax) Successor Company Beginning Balance, February 1, 2015 $ — $ — $ — Other comprehensive income (loss) before reclassifications ) ) ) Other comprehensive income relating to other- than-temporary impaired investments for which a portion has been recognized in earnings ) — ) Amounts reclassified from accumulated other comprehensive income (loss) (1) Net current-period other comprehensive income (loss) ) — ) Ending Balance, June 30, 2015 $ ) $ — $ ) (1) See Reclassification table below for details. (2) As of June 30, 2015 net unrealized losses reported in AOCI were offset by $493.0 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 Total Accumulated Unrealized Accumulated Other Gains and Losses Gain and Loss Comprehensive on Investments (2) Derivatives Income (Loss) (Dollars In Thousands, Net of Tax) Predecessor Company Beginning Balance, December 31, 2014 $ $ ) $ Other comprehensive income (loss) before reclassifications Other comprehensive income relating to other- than-temporary impaired investments for which a portion has been recognized in earnings ) — ) Amounts reclassified from accumulated other comprehensive income (loss) (1) ) ) Net current-period other comprehensive income (loss) Ending Balance, January 31, 2015 $ $ ) $ (1) See Reclassification table below for details. (2) As of January 31, 2015 and December 31, 2014 net unrealized losses reported in AOCI were offset by $(492.6) million and $(504.4) 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 Total Accumulated Unrealized Accumulated Other Gains and Losses Gain and Loss Comprehensive on Investments (2) Derivatives Income (Loss) (Dollars In Thousands, Net of Tax) Predecessor Company Beginning Balance, December 31, 2013 $ $ ) $ Other comprehensive income (loss) before reclassifications ) Other comprehensive income relating to other- than-temporary impaired investments for which a portion has been recognized in earnings — Amounts reclassified from accumulated other comprehensive income (loss) (1) ) ) Net current-period other comprehensive income (loss) Ending Balance, December 31, 2014 $ $ ) $ (1) See Reclassification table below for details. (2) As of December 31, 2014 and 2013 net unrealized losses reported in AOCI were offset by $(504.4) million and $(189.8) 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. The following tables summarize the reclassifications amounts out of AOCI for the three months ended June 30, 2015 (Successor Company), the period of February 1, 2015 to June 30, 2015 (Successor Company), the period of January 1, 2015 to January 31, 2015 (Predecessor Company), and for the three and six months ended June 30, 2014 (Predecessor Company). Reclassifications Out of Accumulated Other Comprehensive Income (Loss) Amount Reclassified from Accumulated Other Comprehensive Affected Line Item in the Income (Loss) Consolidated Condensed Statements of Income (Dollars In Thousands) Successor Company For The Three Months Ended June 30, 2015 Gains and losses on derivative instruments Net settlement (expense)/benefit (1) $ ) Benefits and settlement expenses, net of reinsurance ceded ) Total before tax Tax (expense) or benefit $ ) Net of tax Unrealized gains and losses on available-for-sale securities Net investment gains (losses) $ Realized investment gains (losses): All other investments Impairments recognized in earnings ) Net impairment losses recognized in earnings ) Total before tax Tax (expense) or benefit $ ) Net of tax (1) See Note 15, Derivative Financial Instruments for additional information. Reclassifications Out of Accumulated Other Comprehensive Income (Loss) Amount Reclassified from Accumulated Other Comprehensive Affected Line Item in the Income (Loss) Consolidated Condensed Statements of Income (Dollars In Thousands) Successor Company February 1, 2015 to June 30, 2015 Gains and losses on derivative instruments Net settlement (expense)/benefit (1) $ ) Benefits and settlement expenses, net of reinsurance ceded ) Total before tax Tax (expense) or benefit $ ) Net of tax Unrealized gains and losses on available-for-sale securities Net investment gains (losses) $ Realized investment gains (losses): All other investments Impairments recognized in earnings ) Net impairment losses recognized in earnings ) Total before tax Tax (expense) or benefit $ ) Net of tax (1) See Note 15, Derivative Financial Instruments for additional information. Reclassifications Out of Accumulated Other Comprehensive Income (Loss) Amount Reclassified from Accumulated Other Comprehensive Affected Line Item in the Income (Loss) Consolidated Condensed Statements of Income (Dollars In Thousands) Predecessor Company January 1, 2015 to January 31, 2015 Gains and losses on derivative instruments Net settlement (expense)/benefit (1) $ ) Benefits and settlement expenses, net of reinsurance ceded ) Total before tax Tax (expense) or benefit $ ) Net of tax Unrealized gains and losses on available-for-sale securities Net investment gains (losses) $ Realized investment gains (losses): All other investments Impairments recognized in earnings ) Net impairment losses recognized in earnings Total before tax ) Tax (expense) or benefit $ Net of tax (1) See Note 15, Derivative Financial Instruments for additional information. Reclassifications Out of Accumulated Other Comprehensive Income (Loss) Amount Reclassified from Accumulated Other Comprehensive Affected Line Item in the Income (Loss) Consolidated Condensed Statements of Income (Dollars In Thousands) Predecessor Company For The Three Months Ended June 30, 2014 Gains and losses on derivative instruments Net settlement (expense)/benefit (1) $ ) Benefits and settlement expenses, net of reinsurance ceded ) Total before tax Tax (expense) or benefit $ ) Net of tax Unrealized gains and losses on available-for-sale securities Net investment gains (losses) $ Realized investment gains (losses): All other investments Impairments recognized in earnings ) Net impairment losses recognized in earnings Total before tax ) Tax (expense) or benefit $ Net of tax (1) See Note 15, Derivative Financial Instruments for additional information. Reclassifications Out of Accumulated Other Comprehensive Income (Loss) Amount Reclassified from Accumulated Other Comprehensive Affected Line Item in the Income (Loss) Consolidated Condensed Statements of Income (Dollars In Thousands) Predecessor Company For The Six Months Ended June 30, 2014 Gains and losses on derivative instruments Net settlement (expense)/benefit (1) $ ) Benefits and settlement expenses, net of reinsurance ceded ) Total before tax Tax (expense) or benefit $ ) Net of tax Unrealized gains and losses on available-for-sale securities Net investment gains (losses) $ Realized investment gains (losses): All other investments Impairments recognized in earnings ) Net impairment losses recognized in earnings Total before tax ) Tax (expense) or benefit $ Net of tax (1) See Note 15, Derivative Financial Instruments for additional information. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2015 | |
INCOME TAXES | |
INCOME TAXES | 13. INCOME TAXES In the IRS audit that concluded in 2012, the IRS proposed favorable and unfavorable adjustments to the Company’s 2003 through 2007 reported taxable incomes. The Company protested certain unfavorable adjustments and is seeking resolution at the IRS’ Appeals Division. If the IRS prevails at Appeals, and the Company does not litigate these issues, an acceleration of tax payments will occur. However, such payments, if they were to occur, would not materially impact the Company or its effective tax rate. In conjunction with the Merger and as a result of the adjustments to the Company’s assets and liabilities which were discussed in Note 2, Summary of Significant Accounting Policies , the Company’s deferred tax assets and liabilities were remeasured as of the date of the Merger. The components of the Company’s net deferred income tax liability are as follows: Successor Predecessor Company Company As of As of June 30, 2015 December 31, 2014 (Dollars In Thousands) (Dollars In Thousands) Deferred income tax assets: Loss and credit carryforwards $ $ Premium receivables and policy liabilities — Deferred compensation Invested assets (other than unrealized gains) — Deferred policy acquisition costs — Net unrealized loss on investments — Valuation allowance ) ) Deferred income tax liabilities: VOBA and other intangibles — Premium receivables and policy liabilities — DAC and VOBA Invested assets (other than unrealized gains) — Net unrealized gains on investments — Other Net deferred income tax liability $ ) $ ) A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: Successor Predecessor Company Company February 1, 2015 January 1, 2015 to to As of June 30, 2015 January 31, 2015 December 31, 2014 (Dollars In Thousands) (Dollars In Thousands) Balance, beginning of period $ $ $ Additions for tax positions of the current year ) Additions for tax positions of prior years — Reductions of tax positions of prior years: Changes in judgment ) ) ) Settlements during the period — — — Lapses of applicable statute of limitations — — — Balance, end of period $ $ $ The Company believes that it is possible that in the next 12 months approximately 142.5 million of these unrecognized tax benefits will be reduced as the Company anticipates receiving the revenue agent’s report for the examination of the 2008 through 2011 tax years. During the period of February 1, 2015 to June 30, 2015 (Successor Company), the period of January 1, 2015 to January 31, 2015 (Predecessor Company), and the twelve months ended December 31, 2014 (Predecessor Company), ongoing discussions with the IRS related to the examination that is in progress for tax years ending December 31, 2008 through December 31, 2011 prompted the Company to revise its measurement of unrecognized tax benefits. These revisions included increasing prior determinations of amounts accrued for earlier years as well as reducing some previously accrued amounts. These changes were almost entirely related to timing issues. Therefore, aside from the cost of interest, such changes did not result in any impact on the Company’s effective tax rate. The Company used its estimate of its annual 2015 and 2014 income in computing its effective income tax rates for the three months ended June 30, 2015 (Successor Company), the period of February 1, 2015 to June 30, 2015 (Successor Company), the period of January 1, 2015 to January 31, 2015 (Predecessor Company), and for the three and six months ended June 30, 2014 (Predecessor Company). The effective tax rates for the three months ended June 30, 2015 (Successor Company), the period of February 1, 2015 to June 30, 2015 (Successor Company), the period of January 1, 2015 to January 31, 2015 (Predecessor Company), and for the three and six months ended June 30, 2014 (Predecessor Company) were 28.1%, 17.0%, 32.8%, 32.8%, and 32.6%, respectively. The recorded tax benefit for the period of January 1, 2015 to January 31, 2015 (Predecessor Company) includes the benefit associated with the re-measurement of the unrecognized tax benefits discussed in the preceding paragraph. In general, the Company is no longer subject to U.S. federal, state, and local income tax examinations by taxing authorities for tax years that began before 2003. 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 June 30, 2015 (Successor Company). |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 6 Months Ended |
Jun. 30, 2015 | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | 14. 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 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 assumptions 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 June 30, 2015 (Successor Company): Level 1 Level 2 Level 3 Total (Dollars In Thousands) Assets: Fixed maturity securities - available-for-sale Residential mortgage-backed securities $ — $ $ $ Commercial mortgage-backed securities — — Other asset-backed securities — U.S. government-related securities — State, municipalities, and political subdivisions — — Other government-related securities — — Corporate securities Preferred stocks — — Total fixed maturity securities - available-for-sale Fixed maturity securities - trading Residential mortgage-backed securities — — Commercial mortgage-backed securities — — Other asset-backed securities — U.S. government-related securities — State, municipalities, and political subdivisions — — Other government-related securities — — Corporate securities — Preferred stocks — — Total fixed maturity securities - trading Total fixed maturity securities Equity securities Other long-term investments (1) Short-term investments — Total investments Cash — — Assets related to separate accounts Variable annuity — — Variable universal life — — Total assets measured at fair value on a recurring basis $ $ $ $ Liabilities: Annuity account balances (2) $ — $ — $ $ Other liabilities (1) Total liabilities measured at fair value on a recurring basis $ $ $ $ (1) Includes certain freestanding and embedded derivatives. (2) Represents liabilities related to fixed indexed annuities. 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, 2014 (Predecessor Company): Level 1 Level 2 Level 3 Total (Dollars In Thousands) Assets: Fixed maturity securities - available-for-sale Residential mortgage-backed securities $ — $ $ $ Commercial mortgage-backed securities — — Other asset-backed securities — U.S. government-related securities — State, municipalities, and political subdivisions — Other government-related securities — — Corporate securities Total fixed maturity securities - available-for-sale Fixed maturity securities - trading Residential mortgage-backed securities — — Commercial mortgage-backed securities — — Other asset-backed securities — U.S. government-related securities — State, municipalities, and political subdivisions — — Other government-related securities — — Corporate securities — Total fixed maturity securities - trading Total fixed maturity securities Equity securities Other long-term investments (1) Short-term investments — Total investments Cash — — Other assets — — — — Assets related to separate accounts Variable annuity — — Variable universal life — — Total assets measured at fair value on a recurring basis $ $ $ $ Liabilities: Annuity account balances (2) $ — $ — $ $ Other liabilities (1) Total liabilities measured at fair value on a recurring basis $ $ $ $ (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 90% 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 period of February 1, 2015 to June 30, 2015 (Successor Company) and the period of January 1, 2015 to January 31, 2015 (Predecessor Company). 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 June 30, 2015 (Successor Company), the Company held $3.5 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 June 30, 2015 (Successor Company), the Company held $751.5 million of Level 3 ABS, which included $590.9 million of other asset-backed securities classified as available-for-sale and $160.6 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. As a result of the ARS market collapse during 2008, 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. Corporate Securities, U.S. Government-Related Securities, States, Municipals, and Political Subdivisions, and Other Government Related Securities As of June 30, 2015 (Successor Company), the Company classified approximately $28.9 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 June 30, 2015 (Successor Company), the Company classified approximately $1.1 billion 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 June 30, 2015 (Successor Company), the Company held approximately $77.8 million of equity securities classified as Level 2 and Level 3. Of this total, $65.7 million represents Federal Home Loan Bank (“FHLB”) stock. The Company believes that the cost of the FHLB stock approximates fair value. The remainder of these equity securities is primarily investments in preferred stock. 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 15, 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 June 30, 2015 (Successor Company), 83.4% 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 predominantly utilize observable market data inputs. 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 interest rate and inflation swaps, options, and swaptions. 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 15, Derivative Financial Instruments for more information related to each embedded derivatives gains and losses. The fair value of the GMWB 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 National Association of Insurance Commissioners 1994 Variable Annuity MGDB Mortality Table for company experience, with attained age factors varying from 44.5% - 100%. 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 GMWB embedded derivative is categorized as Level 3. These assumptions are reviewed on a quarterly 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 1994 Variable Annuity MGDB mortality table modified for company experience, with attained age factors varying from 49% - 80%. 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 2014 VBT Primary Tables modified for company experience, with attained age factors varying from 44% - 137%. 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. The fair value of the embedded derivative is the difference between the statutory policy liabilities (net of policy loans) of $2.5 billion and the fair value of the trading securities of $2.7 billion. 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. Certain of the Company’s 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 June 30, 2015 (Successor Company) was $18.8 million and is included in Other long-term investments. For information regarding realized gains on these derivatives please refer to Note 15, Derivative Financial Instruments . The Interest Support Agreement provides that PLC will make payments to 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 $16.6 million as of June 30, 2015 (Successor Company), however, interest support agreement obligations to Golden Gate II of approximately $1.9 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. As of June 30, 2015 (Successor Company), no payments have been triggered under this agreement. The YRT Premium support agreement provides that PLC will make payments to Golden Gate II in the event that YRT premium rates increase. The derivative is 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 this derivative as of June 30, 2015 (Successor Company) was $2.2 million. As of June 30, 2015 (Successor Company), no payments have been triggered under this agreement. The portfolio maintenance agreements provide that PLC will make payments to Golden Gate V and 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 June 30, 2015 (Successor Company), was zero. As of June 30, 2015 (Successor Company), no payments have been triggered under this agreement. 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 June 30, 2015 (Successor Company) was a liability of $97.0 million. Annuity account balances The Company records certain of its FIA reserves at fair value. The fair value is considered a Level 3 valuation. The FIA valuation model calculates the present value of future benefit cash flows less the projected future profits to quantify the net liability that is held as a reserve. This calculation is done using multiple risk neutral stochastic equity scenarios. The cash flows are discounted using LIBOR plus a credit spread. Best estimate assumptions are used for partial withdrawals, lapses, expenses and asset earned rate with a risk margin applied to each. These assumptions are reviewed at least annually as a part of the formal unlocking process. If an event were to occur within a quarter that would make the assumptions unreasonable, the assumptions would be reviewed within the quarter. The discount rate for the fixed indexed annuities is based on an upward sloping rate curve which is updated each quarter. The discount rates for June 30, 2015 (Successor Company), ranged from a one month rate of 0.35%, a 5 year rate of 2.47%, and a 30 year rate of 3.98%. A credit spread component is also included in the calculation to accommodate non-performance risk. 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: Successor Company Fair Value As of Valuation Unobservable Range June 30, 2015 Technique Input (Weighted Average) (Dollars In Thousands) Assets: Other asset-backed securities $ Discounted cash flow Liquidity premium 0.55% - 1.50% (1.03%) Paydown rate 9.95% - 14.69% (12.57%) Corporate securities Discounted cash flow Spread over treasury 0.58% - 12.00% (2.25%) Embedded derivatives - GMWB (1) Actuarial cash flow model Mortality 1994 MGDB table with company experience Lapse 0.29% - 17%, depending on product/duration/funded status of guarantee Utilization 99%. 10% of policies have a one-time over-utilization of 400% Nonperformance risk 0.16% - 1.04% Liabilities: Annuity account balances (2) $ Actuarial cash flow model Asset earned rate 3.71% - 5.77% Expenses $80 per policy Withdrawal rate 2.20% Mortality 1994 MGDB table with company experience Lapse 2.2% - 33.0%, depending on duration/surrender charge period Return on assets 1.50% - 1.85% depending on surrender charge period Nonperformance risk 0.16% - 1.04% Embedded derivative - FIA Actuarial cash flow model Expenses $80 per policy Withdrawal rate 1.1% - 4.5% depending on duration and tax qualification Mortality 1994 MGDB table with company experience Lapse 2.5% - 40.0%, depending on on duration/surrender charge period Nonperformance risk 0.16% - 1.04% Embedded derivative - IUL Actuarial cash flow model Mortality 44% - 137% of 2014 VBT Primary Tables Lapse 0.5% - 10.0%, depending on duration/distribution channel and smoking class Nonperformance risk 0.16% - 1.04% (1) The fair value for the GMWB embedded derivative is presented as a net asset. Excludes modified coinsurance arrangements. (2) Represents liabilities related to fixed indexed annuities. The chart above excludes Level 3 financial instruments that are valued using broker quotes and those which book value approximates fair value. The Company has considered all reasonably available quantitative inputs as of June 30, 2015 (Successor Company), but the valuation techniques and inputs used by some brokers in pricing certain financial instruments are not shared with the Company. This resulted in $206.4 million of financial instruments being classified as Level 3 as of June 30, 2015 (Successor Company). Of the $206.4 million, $160.6 million are other asset-backed securities and $45.8 million are corporate bonds. In certain cases the Company has determined that book value materially approximates fair value. As of June 30, 2015 (Successor Company), the Company held $66.5 million of financial instruments where book value approximates fair value. Of the $66.5 million, the entirety of this balance represents equity securities, which are 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: Predecessor Company Fair Value As of Valuation Unobservable Range December 31, 2014 Technique Input (Weighted Average) (Dollars In Thousands) Assets: Other asset-backed securities $ Discounted cash flow Liquidity premium 0.39% - 1.49% (0.69%) Paydown rate 9.70% - 15.80% (12.08%) Corporate securities Discounted cash flow Spread over 0.33% - 7.50% (2.19%) treasury Liabilities: Embedded derivatives - GMWB (1) $ Actuarial cash flow model Mortality 44.5% to 100% of 1994 MGDB table Lapse 0.25% - 17%, depending on product/duration/funded status of guarantee Utilization 97% - 101% Nonperformance risk 0.12% - 0.96% Annuity account balances (2) Actuarial cash flow model Asset earned rate 3.86% - 5.92% Expenses $88 - $102 per policy Withdrawal rate 2.20% Mortality 49% to 80% of 1994 MGDB table Lapse 2.2% - 33.0%, depending on duration/surrender charge period Return on assets 1.50% - 1.85% depending on surrender charge period Nonperformance risk |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 6 Months Ended |
Jun. 30, 2015 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
DERIVATIVE FINANCIAL INSTRUMENTS | 15. 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, inflation 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 risk by entering into transactions with highly rated counterparties. The Company manages the market risk by establishing and monitoring limits as to the types and degrees of risk that may be undertaken. The Company monitors its use of derivatives 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. The Company’s inflation risk management strategy involves the use of swaps that requires the Company to pay a fixed rate and receive a floating rate that is based on changes in the Consumer Price Index (“CPI”). 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, fixed indexed annuity, 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, a YRT premium support agreement, 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 GMWB 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 condensed 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 · In connection with the issuance of inflation-adjusted funding agreements, the Company has entered into swaps to essentially convert the floating CPI-linked interest rate on these agreements to a fixed rate. The Company pays a fixed rate on the swap and receives a floating rate primarily determined by the period’s change in the CPI. The amounts that are received on the swaps are almost equal to the amounts that are paid on the agreements. None of these positions were held as of June 30, 2015 (Successor Company) as these funding agreements and correlating swaps matured in June of 2015. 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, interest rate, currency, and volatility futures to mitigate the risk related to certain guaranteed minimum benefits, including GMWB, 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 uses equity options, variance swaps, and volatility options to mitigate the risk related to certain guaranteed minimum benefits, including GMWB, within its VA products. In general, the cost of such benefits varies with the level of equity markets and overall volatility. · The Company uses interest rate swaps and interest rate swaptions to mitigate the risk related to certain guaranteed minimum benefits, including GMWB, within its VA products. · The Company markets certain VA products with a GMWB rider. The GMWB 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 GMWB 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 and overall volatility. · The Company uses equity 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. · The Company markets certain fixed indexed annuity products. The FIA component is considered an embedded derivative, 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, not considered to be clearly and closely related to the host contract. Other Derivatives · The Company uses certain interest rate swaps to mitigate the price volatility of fixed maturities. None of these positions were held as of June 30, 2015 (Successor Company). · The Company and certain of its subsidiaries have an interest support agreement, YRT premium support agreement, and two portfolio maintenance agreements with PLC. The Company entered into two separate portfolio maintenance agreements in October 2012. · 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 Successor Predecessor Company Company For The Three February 1, 2015 January 1, 2015 For The Three For The Six Months Ended to to Months Ended Months Ended June 30, 2015 June 30, 2015 January 31, 2015 June 30, 2014 June 30, 2014 (Dollars In Thousands) (Dollars In Thousands) Derivatives related to VA contracts: Interest rate futures - VA $ ) $ ) $ $ $ Equity futures - VA ) ) ) ) Currency futures - VA ) ) ) ) Variance swaps - VA — — — ) ) Equity options - VA ) ) ) ) Interest rate swaptions - VA ) ) ) Interest rate swaps - VA ) ) Embedded derivative - GMWB ) ) ) Funds withheld derivative ) Total derivatives related to VA contracts ) ) Derivatives related to FIA contracts: Embedded derivative - FIA ) ) ) Equity futures - FIA ) Volatility futures - FIA — Equity options - FIA ) Total derivatives related to FIA contracts ) ) ) Derivatives related to IUL contracts: Embedded derivative - IUL ) ) ) Equity futures - IUL — — Equity options - IUL ) ) — — Total derivatives related to IUL contracts ) ) ) Embedded derivative - Modco reinsurance treaties ) ) ) Derivatives with PLC (1) ) ) Other derivatives ) ) ) Total realized gains (losses) - derivatives $ $ $ $ ) $ ) (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 sets forth realized investments gains and losses for the Modco trading portfolio that is included in realized investment gains (losses) — all other investments: Realized investment gains (losses) - all other investments Successor Predecessor Company Company For The Three February 1, 2015 January 1, 2015 For The Three For The Six Months Ended to to Months Ended Months Ended June 30, 2015 June 30, 2015 January 31, 2015 June 30, 2014 June 30, 2014 (Dollars In Thousands) (Dollars In Thousands) Modco trading portfolio (1) $ ) $ ) $ $ $ (1) The Company elected to include the use of alternate disclosures for trading activities. 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 and Location of Amount of Gains (Losses) Gains (Losses) Deferred in Reclassified from Amount and Location of Accumulated Other Accumulated Other (Losses) Recognized in Comprehensive Income Comprehensive Income Income (Loss) on (Loss) on Derivatives (Loss) into Income (Loss) Derivatives (Effective Portion) (Effective Portion) (Ineffective Portion) Benefits and settlement Realized investment expenses gains (losses) (Dollars In Thousands) Successor Company For The Three Months Ended June 30, 2015 Inflation $ ) $ ) $ Total $ ) $ ) $ Successor Company February 1, 2015 to June 30, 2015 Inflation $ ) $ ) $ Total $ ) $ ) $ Predecessor Company January 1, 2015 to January 31, 2015 Inflation $ $ ) $ ) Total $ $ ) $ ) Predecessor Company For The Three Months Ended June 30, 2014 Inflation $ ) $ ) $ ) Total $ ) $ ) $ ) Predecessor Company For The Six Months Ended June 30, 2014 Inflation $ ) $ ) $ ) Total $ ) $ ) $ ) The table below present 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: Successor Predecessor Company Company As of June 30, 2015 As of December 31, 2014 Notional Fair Notional Fair Amount Value Amount Value (Dollars In Thousands) (Dollars In Thousands) Other long-term investments Derivatives not designated as hedging instruments: Interest rate swaps $ $ $ $ Derivatives with PLC (1) Embedded derivative - Modco reinsurance treaties Embedded derivative - GMWB Interest rate futures Equity futures Currency futures Equity options Interest rate swaptions Other $ $ $ $ Other liabilities Cash flow hedges: Inflation $ — $ — $ $ Derivatives not designated as hedging instruments: Interest rate swaps Embedded derivative - Modco reinsurance treaties Funds withheld derivative Embedded derivative - GMWB Embedded derivative - FIA Embedded derivative - IUL Interest rate futures — — Equity futures Currency futures — — Equity options Other — — $ $ $ $ (1) These derivatives include the Interest, YRT premium support, and portfolio maintenance agreements between certain of the Company’s subsidiaries and PLC. The Company reclassified the remaining balance of its derivative financial instruments out of accumulated other comprehensive income (loss) into earnings during the three months ended June 30, 2015 (Successor Company) as these derivative financial instruments matured in June of 2015. |
OFFSETTING OF ASSETS AND LIABIL
OFFSETTING OF ASSETS AND LIABILITIES | 6 Months Ended |
Jun. 30, 2015 | |
OFFSETTING OF ASSETS AND LIABILITIES | |
OFFSETTING OF ASSETS AND LIABILITIES | 16. 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 9, Debt and Other Obligations for details of the Company’s repurchase agreement programs. The tables below present the derivative instruments by assets and liabilities for the Company as of June 30, 2015 (Successor Company). Net Amounts Gross of Assets Gross Amounts Not Offset Amounts Presented in in the Statement of Gross Offset in the the Financial Position Amounts of Statement of Statement of Cash Recognized Financial Financial Financial Collateral Assets Position Position Instruments Received Net Amount (Dollars In Thousands) Offsetting of Derivative Assets Derivatives: Free-Standing derivatives $ $ — $ $ $ $ Total derivatives, subject to a master netting arrangement or similar arrangement — Derivatives not subject to a master netting arrangement or similar arrangement Embedded derivative - Modco reinsurance treaties — — — Embedded derivative - GMWB — — — Derivatives with PLC — — — Other — — — Total derivatives, not subject to a master netting arrangement or similar arrangement — — — Total derivatives — Total Assets $ $ — $ $ $ $ Net Amounts Gross of Liabilities Gross Amounts Not Offset Amounts Presented in in the Statement of Gross Offset in the the Financial Position Amounts of Statement of Statement of Cash Recognized Financial Financial Financial Collateral Liabilities Position Position Instruments Paid Net Amount (Dollars In Thousands) Offsetting of Derivative Liabilities Derivatives: Free-Standing derivatives $ $ — $ $ $ $ — Total derivatives, subject to a master netting arrangement or similar arrangement — — Derivatives, not subject to a master netting arrangement or similar arrangement Embedded derivative - Modco reinsurance treaties — — — Funds withheld derivative — Embedded derivative - GMWB — — — Embedded derivative - FIA — — — Embedded derivative - IUL — — — Total derivatives, not subject to a master netting arrangement or similar arrangement — — — Total derivatives — Repurchase agreements (1) — — — Total Liabilities $ $ — $ $ $ $ (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, 2014 (Predecessor Company). Net Amounts Gross of Assets Gross Amounts Not Offset Amounts Presented in in the Statement of Gross Offset in the the Financial Position Amounts of Statement of Statement of Cash Recognized Financial Financial Financial Collateral Assets Position Position Instruments Received Net Amount (Dollars In Thousands) Offsetting of Derivative Assets Derivatives: Free-Standing derivatives $ $ — $ $ $ $ Total derivatives, subject to a master netting arrangement or similar arrangement — Derivatives not subject to a master netting arrangement or similar arrangement Embedded derivative - Modco reinsurance treaties — — — Embedded derivative - GMWB — — — Derivatives with PLC — — — Other — — — Total derivatives, not subject to a master netting arrangement or similar arrangement — — — Total derivatives — Total Assets $ $ — $ $ $ $ Net Amounts Gross of Liabilities Gross Amounts Not Offset Amounts Presented in in the Statement of Gross Offset in the the Financial Position Amounts of Statement of Statement of Cash Recognized Financial Financial Financial Collateral Liabilities Position Position Instruments Paid Net Amount (Dollars In Thousands) Offsetting of Derivative Liabilities Derivatives: Free-Standing derivatives $ $ — $ $ $ $ Total derivatives, subject to a master netting arrangement or similar arrangement — Derivatives not subject to a master netting arrangement or similar arrangement Embedded derivative - Modco reinsurance treaties — — — Funds withheld derivative — — — Embedded derivative - GMWB — — — Embedded derivative - FIA — — — Embedded derivative - IUL — — — Total derivatives, not subject to a master netting arrangement or similar arrangement — — — Total derivatives — Repurchase agreements (1) — — — Total Liabilities $ $ — $ $ $ $ (1) Borrowings under repurchase agreements are for a term less than 90 days. |
OPERATING SEGMENTS
OPERATING SEGMENTS | 6 Months Ended |
Jun. 30, 2015 | |
OPERATING SEGMENTS | |
OPERATING SEGMENTS | 17. 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, as prescribed in the ASC Segment Reporting Topic, and makes adjustments to its segment reporting as needed. There were no changes to the Company’s operating segments made or required to be made as a result of the Merger on February 1, 2015. A brief description of each segment follows. · The Life Marketing segment markets fixed universal life (“UL”), indexed universal life, 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, and independent marketing organizations. · The Acquisitions segment focuses on acquiring, converting, and servicing policies 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. The segment also issues funding agreements to the FHLB, and markets guaranteed investment contracts (“GICs”) to 401(k) and other qualified retirement savings plans. Additionally, the Company has contracts outstanding pursuant to a funding agreement-backed notes program registered with the United States Securities and Exchange Commission (the “SEC”) which offered notes to both institutional and retail investors. · The Asset Protection segment markets extended service contracts and credit life and disability insurance to protect consumers’ investments in automobiles and recreational vehicles. In addition, the segment markets a guaranteed asset protection (“GAP”) product. GAP coverage covers the difference between the loan pay-off amount and an asset’s actual cash value in the case of a total loss. · The Corporate and Other segment primarily consists of net investment income not assigned to the segments above (including the impact of carrying liquidity) and expenses not attributable to the segments above. This segment includes earnings from several non-strategic or runoff lines of business, various investment-related transactions, the operations of several small subsidiaries, and the repurchase of non-recourse funding obligations. The Company uses the same accounting policies and procedures to measure segment operating income (loss) and assets as it uses to measure consolidated net income and assets. Segment operating income (loss) is income before income tax, excluding realized gains and losses on investments and derivatives net of the amortization related to DAC, VOBA, and benefits and settlement expenses. Operating earnings exclude changes in the GMWB embedded derivatives (excluding the portion attributed to economic cost), actual GMWB incurred claims and the related amortization of DAC/VOBA attributed to each of these items. Segment operating income (loss) represents the basis on which the performance of the Company’s business is internally assessed by management. Premiums and policy fees, other income, benefits and settlement expenses, and amortization of DAC/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. The goodwill as of June 30, 2015 (Successor Company) was the result of the Dai-ichi Merger. The purchase price was allocated to the segments in proportion to the segment’s respective fair value. The allocated purchase price in excess of the fair value of assets and liabilities of each segment resulted in the establishment of that segment’s goodwill as of the date of the Merger. There were no significant intersegment transactions during the three months ended June 30, 2015 (Successor Company), the period of February 1, 2015 to June 30, 2015 (Successor Company), the period of January 1, 2015 to January 31, 2015 (Predecessor Company) and for the three and six months ended June 30, 2014 (Predecessor Company). The following tables summarize financial information for the Company’s segments (Predecessor and Successor periods are not comparable): Successor Predecessor Company Company For The Three February 1, 2015 January 1, 2015 For The Three For The Six Months Ended to to Months Ended Months Ended June 30, 2015 June 30, 2015 January 31, 2015 June 30, 2014 June 30, 2014 (Dollars In Thousands) (Dollars In Thousands) Revenues Life Marketing $ $ $ $ $ Acquisitions Annuities Stable Value Products Asset Protection Corporate and Other Total revenues $ $ $ $ $ Segment Operating Income (Loss) Life Marketing $ $ $ ) $ $ Acquisitions Annuities Stable Value Products Asset Protection Corporate and Other ) ) ) ) ) Total segment operating income Realized investment (losses) gains - investments (1) ) ) Realized investment (losses) gains - derivatives ) ) Income tax benefit (expense) ) ) ) Net income (loss) $ ) $ ) $ $ $ (2) Investment gains (losses) $ ) $ ) $ $ $ Less: amortization related to DAC/VOBA and benefits and settlement expenses ) Realized investment gains (losses) - investments $ ) $ ) $ $ $ (3) Derivative gains (losses) $ $ $ $ ) $ ) Less: VA GMWB economic cost ) ) ) ) ) Realized investment gains (losses) - derivatives $ $ $ $ ) $ ) (1) Includes credit related other-than-temporary impairments of $5.7 million and $5.7 million for the three months ended June 30, 2015 (Successor Company) and for the period of February 1, 2015 to June 30, 2015 (Successor Company), respectively. Includes credit related other-than-temporary impairments of $0.5 million, $1.5 million, and $3.1 million for the period of January 1, 2015 to January 31, 2015 (Predecessor Company) and for the three and six months ended June 30, 2014 (Predecessor Company), respectively. (2) Includes realized investment gains (losses) before related amortization. (3) Includes realized gains (losses) on derivatives before the VA GMWB economic cost. Operating Segment Assets As of June 30, 2015 (Successor Company) (Dollars In Thousands) Life Stable Value Marketing Acquisitions Annuities Products Investments and other assets $ $ $ $ Deferred policy acquisition costs and value of business acquired ) — Other intangibles Goodwill Total assets $ $ $ $ Asset Corporate Total Protection and Other Adjustments Consolidated Investments and other assets $ $ $ $ Deferred policy acquisition costs and value of business acquired — — Other intangibles Goodwill — — Total assets $ $ $ $ Operating Segment Assets As of December 31, 2014 (Predecessor Company) (Dollars In Thousands) Life Stable Value Marketing Acquisitions Annuities Products Investments and other assets $ $ $ $ Deferred policy acquisition costs and value of business acquired Goodwill — — — Total assets $ $ $ $ Asset Corporate Total Protection and Other Adjustments Consolidated Investments and other assets $ $ $ $ Deferred policy acquisition costs and value of business acquired — Goodwill — — Total assets $ $ $ $ |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2015 | |
SUBSEQUENT EVENTS. | |
SUBSEQUENT EVENTS | 18. SUBSEQUENT EVENTS The Company has evaluated the effects of events subsequent to June 30, 2015 (Successor Company), 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 ACCOUN28
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Intangible assets | Intangible Assets Intangible assets with definite lives are amortized over the estimated useful life of the asset. Amortizable intangible assets primarily consist of distribution relationships, trade names, and technology. Intangible assets with indefinite lives, primarily insurance licenses, are not amortized. |
Value of Businesses Acquired | Value of Business Acquired In conjunction with the Merger, a portion of the purchase price was allocated to the right to receive future gross profits from cash flows and earnings of the Company’s insurance policies and investment contracts as of the date of the Merger. This intangible asset, called value of business acquired (“VOBA”), is based on the actuarially estimated present value of future cash flows from the Company’s insurance policies and investment contracts in-force on the date of the Merger. The estimated present value of future cash flows used in the calculation of the VOBA is based on certain assumptions, including mortality, persistency, expenses, and interest rates that the Company expects to experience in future years. The Company amortizes VOBA in proportion to gross premiums for traditional life products, or estimated gross margins (“EGMs”) for participating traditional life products within the MONY block. For interest sensitive products, the Company uses various amortization bases including expected gross profits (“EGPs”), revenues, or insurance in-force. |
Goodwill | Goodwill Goodwill of $735.7 million was recognized in conjunction with the Merger as the excess of the purchase considerations over the fair value of PLC’s identifiable assets acquired and liabilities assumed. 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. |
Property and Equipment | Property and Equipment In conjunction with the Merger, property and equipment was recorded at fair value and will be depreciated from this basis in future periods based on the respective estimated useful lives. Real estate assets were recorded at appraised values as of the acquisition date. The Company has estimated the remaining useful life of the home office building to be 25 years. Land is not depreciated. The carrying amounts of the Company’s fixed assets are as follows: Successor Predecessor Company Company As of As of June 30, 2015 December 31, 2014 (Dollars In Thousands) (Dollars In Thousands) Home office building $ $ Land — Data processing equipment Other, principally furniture and equipment Accumulated depreciation Total property and equipment $ $ |
Guaranteed Minimum Withdrawal Benefits | Guaranteed Minimum Withdrawal Benefits The Company also establishes reserves for guaranteed minimum withdrawal benefits (“GMWB”) on its variable annuity (“VA”) products. The GMWB is valued in accordance with FASB guidance under the ASC Derivatives and Hedging Topic which utilizes the valuation technique prescribed by the ASC Fair Value Measurements and Disclosures Topic, which requires the embedded derivative to be recorded at fair value using current implied volatilities for the equity indices. The fair value of the GMWB is impacted by equity market conditions and can result in the GMWB embedded derivative being in an overall net asset or net liability position. In times of favorable equity market conditions the likelihood and severity of claims is reduced and expected fee income increases. Since claims are generally expected later than fees these favorable equity market conditions can result in the present value of fees being greater than the present value of claims which results in a net GMWB embedded derivative asset. In times of unfavorable equity market conditions the likelihood and severity of claims is increased and expected fee income decreases and can result in the present value of claims exceeding the present value of fees resulting in a net GMWB embedded derivative liability. The methods used to estimate the embedded derivatives employ assumptions about mortality, lapses, policyholder behavior, equity market returns, interest rates, and market volatility. The Company assumes age-based mortality from the National Association of Insurance Commissioners 1994 Variable Annuity MGDB Mortality Table for company experience. Differences between the actual experience and the assumptions used result in variances in profit and could result in losses. In conjunction with the merger the Company updated the fair value of the GMWB reserves to reflect current assumptions as of February 1, 2015 (Successor Company). As a result of the application of ASC Topic 805, the Company reset the hedge premium rates utilized in the valuation for all policies to be equal to the present value of future claims with the reset hedge premium rates being capped at the actual charges to the policyholder. This update resulted in a decrease in the net liability of approximately $69.4 million on the Merger date. The Company reinsures certain risks associated with the GMWB to Shades Creek Captive Insurance Company (“Shades Creek”), a direct wholly owned subsidiary of PLC. As of June 30, 2015 (Successor Company), the net GMWB asset held, including the impact of reinsurance was approximately $56.8 million. |
Policyholder Liabilities | Policyholder Liabilities Insurance Liabilities and Reserves In conjunction with the Merger and in accordance with ASC 805, insurance liabilities and reserves are recorded at fair value and the underlying contracts are considered to be new contracts, for measurement and reporting purposes as of the acquisition date. Estimating liabilities for future policy benefits on life and health insurance products requires the use of assumptions relative to future investment yields, mortality, morbidity, persistency, and other assumptions based on the Company’s historical experience, modified as necessary to reflect anticipated trends and to include provisions for possible adverse deviation. Determining liabilities for the Company’s property and casualty insurance products also requires the use of assumptions, including the projected levels of used vehicle prices, the frequency and severity of claims, and the effectiveness of internal processes designed to reduce the level of claims. The Company’s results depend significantly upon the extent to which its actual claims experience is consistent with the assumptions the Company used in determining its reserves and pricing its products. The Company’s reserve assumptions and estimates require significant judgment and, therefore, are inherently uncertain. The Company cannot determine with precision the ultimate amounts that it will pay for actual claims or the timing of those payments. As such, at the acquisition date, the Company updated the assumptions described above to reflect current best estimates and reserves were calculated in accordance with the methodology described below. VOBA was recorded to reflect the difference between the fair value of the contractual insurance liability and the reserve established. Traditional Life, Health, and Credit Insurance Products Traditional life insurance products consist principally of those products with fixed and guaranteed premiums and benefits, and they include whole life insurance policies, term and term-like life insurance policies, limited payment life insurance policies, and certain annuities with life contingencies. In accordance with ASC 805, the liabilities for future policy benefits on traditional life insurance products, when combined with the associated VOBA, have been recorded at fair value. These values were computed using assumptions that includes interest rates, mortality, lapse rates, expenses estimates, and other assumptions based on the Company’s experience, modified as necessary to reflect anticipated trends and to include provisions for possible adverse deviation. The liability for future policy benefits and claims on traditional life, health, and credit insurance products includes estimated unpaid claims that have been reported to us and claims incurred but not yet reported. Universal Life and Investment Products Universal life and investment products include universal life insurance, guaranteed investment contracts, guaranteed funding agreements, deferred annuities, and annuities without life contingencies. Benefit reserves for universal life and investment products represent policy account balances before applicable surrender charges plus certain deferred policy initiation fees that are recognized in income over the term of the policies. Policy benefits and claims that are charged to expense include benefit claims incurred in the period in excess of related policy account balances and interest credited to policy account balances. The Company establishes liabilities for fixed indexed annuity (“FIA”) products. These products are deferred fixed annuities with a guaranteed minimum interest rate plus a contingent return based on equity market performance. The FIA product is considered a hybrid financial instrument under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC” or “Codification”) Topic 815— Derivatives and Hedging which allows the Company to make the election to value the liabilities of these FIA products at fair value. This election was made for the FIA products issued prior to 2010 as the policies were issued. These products are no longer being marketed. The future changes in the fair value of the liability for these FIA products will be recorded in Benefit and settlement expenses with the liability being recorded in Annuity account balances . For more information regarding the determination of fair value of annuity account balances please refer to Note 14, Fair Value of Financial Instruments . Premiums and policy fees for these FIA products consist of fees that have been assessed against the policy account balances for surrenders. Such fees are recognized when assessed and earned. The Company currently markets a deferred fixed annuity with a guaranteed minimum interest rate plus a contingent return based on equity market performance and the products are considered hybrid financial instruments under the FASB’s ASC Topic 815— Derivatives and Hedging . The Company did not elect to value these FIA products at fair value prior to the Merger date. As a result the Company accounts for the provision that provides for a contingent return based on equity market performance as an embedded derivative. The embedded derivative is bifurcated from the host contract and recorded at fair value in Other liabilities . The host contract is accounted for as a debt instrument in accordance with ASC Topic 944— Financial Services—Insurance and is recorded in Annuity account balances with any discount to the minimum account value being accreted using the effective yield method. Benefits and settlement expenses include accreted interest and benefit claims incurred during the period. The Company markets universal life products with a guaranteed minimum interest rate plus a contingent return based on equity market performance and are considered hybrid financial instruments under the FASB’s ASC Topic 815— Derivatives and Hedging . The Company did not elect to value these IUL products at fair value prior to the Merger date. As a result the Company accounts for the provision that provides for a contingent return based on equity market performance as an embedded derivative. The embedded derivative is bifurcated from the host contract and recorded at fair value in Other liabilities . Changes in the fair value of the embedded derivative are recorded in Realized investment gains (losses)—Derivative financial instruments . For more information regarding the determination of fair value of the IUL embedded derivative refer to Note 14, Fair Value of Financial Instruments . The host contract is accounted for as a debt instrument in accordance with ASC Topic 944— Financial Services—Insurance and is recorded in Future policy benefits and claims with any discount to the minimum account value being accreted using the effective yield method. Benefits and settlement expenses include accreted interest and benefit claims incurred during the period. The Company’s accounting policies with respect to variable universal life (“VUL”) and VA are identical except that policy account balances (excluding account balances that earn a fixed rate) are valued at fair value and reported as components of assets and liabilities related to separate accounts. The Company establishes liabilities for guaranteed minimum death benefits (“GMDB”) on its VA products. The methods used to estimate the liabilities employ assumptions about mortality and the performance of equity markets. The Company assumes age-based mortality from the National Association of Insurance Commissioners 1994 Variable Annuity MGDB Mortality Table for company experience. Future declines in the equity market would increase the Company’s GMDB liability. Differences between the actual experience and the assumptions used result in variances in profit and could result in losses. Our GMDB as of June 30, 2015 (Successor Company), are subject to a dollar-for-dollar reduction upon withdrawal of related annuity deposits on contracts issued prior to January 1, 2003. The Company reinsures certain risks associated with the GMDB to Shades Creek. As of June 30, 2015 (Successor Company), the GMDB reserve, including the impact of reinsurance was $26.9 million. Property and Casualty Insurance Products Property and casualty insurance products include service contract business, surety bonds, and guaranteed asset protection (“GAP”). 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. |
Reinsurance | Reinsurance The Company uses reinsurance extensively in certain of its segments and accounts for reinsurance and the recognition of the impact of reinsurance costs in accordance with the ASC Financial Services — Insurance Topic. The following summarizes some of the key aspects of the Company’s accounting policies for reinsurance. Reinsurance Assets and Liabilities —Claim liabilities and policy benefits are calculated consistently for all policies, regardless of whether or not the policy is reinsured. Once the claim liabilities and policy benefits for the underlying policies are estimated, the amounts recoverable from the reinsurers are estimated based on a number of factors including the terms of the reinsurance contracts, historical payment patterns of reinsurance partners, and the financial strength and credit worthiness of reinsurance partners and recorded as Reinsurance receivables on the balance sheet. The reinsurance receivables were recorded in the balance sheet using current accounting policies and the most current assumptions as of the merger date. As of the merger date, the Company also calculated the ceded VOBA associated with the reinsured policies. The reinsurance receivables combined with the associated ceded VOBA represent the fair value of the reinsurance assets. Liabilities for unpaid reinsurance claims are produced from claims and reinsurance system records, which contain the relevant terms of the individual reinsurance contracts. The Company monitors claims due from reinsurers to ensure that balances are settled on a timely basis. Incurred but not reported claims are reviewed by the Company’s actuarial staff to ensure that appropriate amounts are ceded. The Company analyzes and monitors the credit worthiness of each of its reinsurance partners to minimize collection issues. For newly executed reinsurance contracts with reinsurance companies that do not meet predetermined standards, the Company requires collateral such as assets held in trusts or letters of credit. |
Accounting Pronouncements Recently Adopted | Accounting Pronouncements Recently Adopted Accounting Standards Update (“ASU”) No. 2014-08—Reporting Discontinued Operations and Disclosure of Disposals of Components of an Entity. This Update changes the requirements for reporting discontinued operations and related disclosures. The Update limits the definition of a discontinued operation to disposals that represent “strategic shifts” that will have a major effect on an entity’s operation and financial results. Additionally, the Update requires enhanced disclosures about the components of discontinued operations and the financial effects of the disposal. The amendments in this Update are effective for annual and interim periods beginning after December 15, 2014. The Company has reviewed the additional disclosures required by the Update, and will apply the revised guidance to any disposals occurring after the effective date. ASU No. 2014-11—Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. This Update changes the requirements for classification of certain repurchase agreements, and will expand the use of secured borrowing accounting for repurchase-to-maturity transactions. In addition, the Update requires additional disclosures for repurchase agreements accounted for both as sales and as secured borrowings. The amendments in this Update are effective for annual and interim periods beginning after December 15, 2014. The Update did not impact the Company’s financial position or results of operations. The Company has updated its policies and processes to ensure compliance with the additional disclosure requirements in this Update. ASU No. 2014-17—Business Combinations (Topic 805). This Update relates to “pushdown accounting”, which refers to pushing down the acquirer’s accounting and reporting basis (which is recognized in conjunction with its accounting for a business combination) to the acquiree’s standalone financial statements. The new guidance makes pushdown accounting optional for an acquiree that is a business or nonprofit activity when there is a change-in- control event (e.g., the acquirer in a business combination obtains control over the acquiree). In addition, the staff of the SEC released Staff Accounting Bulletin (“SAB”) No. 115, which rescinds SAB Topic 5J, “New Basis of Accounting Required in Certain Circumstances” (the SEC staff’s pre-existing guidance on pushdown accounting) and conforms SEC guidance on pushdown accounting to the FASB’s new guidance. Revised SEC guidance was codified in ASU No. 2015-08, issued in May 2015. The new pushdown accounting guidance became effective upon its issuance on November 18, 2014. Although now optional, the Company has applied pushdown accounting to its standalone financial statements effective with the Company becoming a wholly owned subsidiary of Dai-ichi Life on February 1, 2015. The presentation within this report for predecessor and successor periods is consistent with this Update. |
Accounting Pronouncements Not Yet Adopted | Accounting Pronouncements Not Yet 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, 2017. However, in July 2015, the FASB voted to defer the effective date of ASU No. 2014-09 by one year to December 15, 2018. Early adoption will be allowed, but not before the original effective date. The Company is reviewing its policies and processes to ensure compliance with the requirements in this Update, upon adoption. The Company is currently assessing the impact this standard will have on its non-insurance operations. ASU No. 2014-15—Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. This Update will require management to assess an entity’s ability to continue as a going concern, and will require footnote disclosures in certain circumstances. Under the updated guidance, management should consider relevant conditions and evaluate whether it is probable that the entity will be unable to meet its obligations within one year after the issuance date of the financial statements. The Update is effective for annual periods ending December 31, 2016 and interim periods thereafter, with early adoption is permitted. The amendments in this Update will not impact the Company’s financial position or results of operations. However, the new guidance will require a formal assessment of going concern by management based on criteria prescribed in the new guidance. The Company is reviewing its policies and processes to ensure compliance with the new guidance. ASU No. 2015-02—Consolidation—Amendments to the Consolidation Analysis. This Update makes several targeted changes to generally accepted accounting principles, including a) eliminating the presumption that a general partner should consolidate a limited partnership and b) eliminating the consolidation model specific to limited partnerships. The amendments also clarify when fees and related party relationships should be considered in the consolidation of variable interest entities. The amendments in this Update are effective for annual and interim periods beginning after December 15, 2015. The Company is reviewing its policies and processes to ensure compliance with the requirements in this Update, upon adoption. ASU No. 2015-03—Interest—Imputation of Interest . The objective of this Update is to eliminate diversity in practice related to the presentation of debt issuance costs. The amendments in this Update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this Update. The Update is effective for fiscal years beginning after December 15, 2015, and requires revised presentation of debt issuance costs in all periods presented in the financial statements. The Company is reviewing its processes to ensure compliance with the revised guidance. ASU No. 2015-05 — Intangibles — Goodwill and Other — Internal-Use Software. The amendments in this Update provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The guidance will not change GAAP for a customer’s accounting for service contracts. The Update is effect for annual and interim periods beginning after December 15, 2015. The Company is reviewing its policies and processes to ensure compliance with the revised guidance. ASU No. 2015-09 — Financial Services—Insurance (Topic 944): Disclosures about Short-Duration Contracts. The amendments in this Update require additional disclosures for short-duration contracts issued by insurance entities. The additional disclosures focus on the liability for unpaid claims and claim adjustment expenses and include incurred and paid claims development information by accident year in tabular form, along with a reconciliation of this information to the statement of financial position. For accident years included in the development tables, the amendments also require disclosure of the total incurred-but-not-reported liabilities and expected development on reported claims, along with claims frequency information unless impracticable. Finally, the amendments require disclosure of the historical average annual percentage payout of incurred claims. With the exception of the current reporting period, claims development information may be presented as supplementary information. The Update is effective for annual periods beginning after December 15, 2015 and interim periods beginning after December 15, 2016. The Company is reviewing its products to determine the applicability and potential impact of the new disclosures. |
SUMMARY OF SIGNIFICANT ACCOUN29
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of property and equipment | Successor Predecessor Company Company As of As of June 30, 2015 December 31, 2014 (Dollars In Thousands) (Dollars In Thousands) Home office building $ $ Land — Data processing equipment Other, principally furniture and equipment Accumulated depreciation Total property and equipment $ $ |
DAI-ICHI MERGER (Tables)
DAI-ICHI MERGER (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
DAI-ICHI MERGER | |
Summary of fair values of the net assets acquired | Fair Value As of February 1, 2015 (Dollars In Thousands) Assets Fixed maturities $ Equity securities Mortgage loans Investment real estate Policy loans Other long-term investments Short-term investments Total investments Cash Accrued investment income Accounts and premiums receivable Reinsurance receivables Value of business acquired Goodwill Other intangibles Property and equipment Other assets Income tax receivable Assets related to separate accounts Variable annuity Variable universal life Total assets $ Liabilities Future policy and benefit claims $ Unearned premiums Total policy liabilities and accruals Stable value product account balances Annuity account balances Other policyholders’ funds Other liabilities Deferred income taxes Non-recourse funding obligations Repurchase program borrowings Liabilities related to separate accounts Variable annuity Variable universal life Total liabilities Net assets acquired $ |
Schedule of intangible assets recognized | Estimated Fair Value on Estimated Acquisition Date Useful Life (Dollars In Thousands) (In Years) Distribution relationships $ 14-22 Trade names 13-17 Technology 7-14 Total intangible assets subject to amortization Insurance licenses Indefinite Total intangible assets $ |
Schedule of estimated aggregate amortization expense | Year Amount (Dollars In Thousands) 2015 $ 2016 2017 2018 2019 |
MONY CLOSED BLOCK OF BUSINESS (
MONY CLOSED BLOCK OF BUSINESS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
MONY CLOSED BLOCK OF BUSINESS | |
Summary of financial information for the Closed Block | Successor Predecessor Company Company As of As of June 30, 2015 December 31, 2014 (Dollars In Thousands) (Dollars In Thousands) Closed block liabilities Future policy benefits, policyholders’ account balances and other policyholder liabilities $ $ Policyholder dividend obligation Other liabilities Total closed block liabilities Closed block assets Fixed maturities, available-for-sale, at fair value $ $ Equity securities, available-for-sale, at fair value — Mortgage loans on real estate Policy loans Cash and other invested assets Other assets Total closed block assets Excess of reported closed block liabilities over closed block assets Portion of above representing accumulated other comprehensive income: Net unrealized investment gains (losses) net of deferred tax benefit of $0 (Successor) and $0 (Predecessor); net of policyholder dividend obligation of $166,434 (Successor) and $106,886 (Predecessor) — — Future earnings to be recognized from closed block assets and closed block liabilities $ $ |
Schedule of reconciliation of the policyholder dividend obligation | Successor Predecessor Company Company February 1, 2015 January 1, 2015 For The Six to to Months Ended June 30, 2015 January 31, 2015 June 30, 2014 (Dollars In Thousands) (Dollars In Thousands) Policyholder dividend obligation, beginning of period $ $ $ Applicable to net revenue (losses) ) ) ) Change in net unrealized investment gains (losses) allocated to the policyholder dividend obligation ) Policyholder dividend obligation, end of period $ $ $ |
Schedule of Closed Block revenues and expenses | Successor Predecessor Company Company For The Three February 1, 2015 January 1, 2015 For The Three For The Six Months Ended to to Months Ended Months Ended June 30, 2015 June 30, 2015 January 31, 2015 June 30, 2014 June 30, 2014 (Dollars In Thousands) (Dollars In Thousands) Revenues Premiums and other income $ $ $ $ $ Net investment income (loss) Net investment gains (losses) Total revenues Benefits and other deductions Benefits and settlement expenses Other operating expenses — Total benefits and other deductions Net revenues before income taxes Income tax expense Net revenues $ $ $ $ $ |
INVESTMENT OPERATIONS (Tables)
INVESTMENT OPERATIONS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
INVESTMENT OPERATIONS | |
Summary of net realized investment gains (losses) for all other investments | Successor Predecessor Company Company For The Three February 1, 2015 January 1, 2015 For The Three For The Six Months Ended to to Months Ended Months Ended June 30, 2015 June 30, 2015 January 31, 2015 June 30, 2014 June 30, 2014 (Dollars In Thousands) (Dollars In Thousands) Fixed maturities $ $ $ $ $ Equity securities — — — Impairments on fixed maturity securities ) ) ) ) ) Impairments on equity securities — — — — — Modco trading portfolio ) ) Other investments ) ) Total realized gains (losses) - investments $ ) $ ) $ $ $ |
Schedule of amortized cost and fair value of the Company's investments classified as available-for-sale | Gross Gross Total OTTI Successor Company Amortized Unrealized Unrealized Fair Recognized As of June 30, 2015 Cost Gains Losses Value in OCI (1) (Dollars In Thousands) Fixed maturities: Residential mortgage-backed securities $ $ $ ) $ $ — Commercial mortgage-backed securities ) — Other asset-backed securities ) — U.S. government-related securities ) — Other government-related securities — ) — States, municipals, and political subdivisions ) — Corporate securities ) ) Preferred stock — ) — ) ) Equity securities ) — Short-term investments — — — $ $ $ ) $ $ ) Predecessor Company As of December 31, 2014 Fixed maturities: Residential mortgage-backed securities $ $ $ ) $ $ Commercial mortgage-backed securities ) — Other asset-backed securities ) ) U.S. government-related securities ) — Other government-related securities — — States, municipals, and political subdivisions ) — Corporate securities ) — ) Equity securities ) — Short-term investments — — — $ $ $ ) $ $ (1) These amounts are included in the gross unrealized gains and gross unrealized losses columns above. |
Schedule of amortized cost and fair value of the Company's investments classified as held-to-maturity | Successor Company Amortized Unrealized Unrealized Fair Recognized As of June 30, 2015 Cost Gains Losses Value in OCI (Dollars In Thousands) Fixed maturities: Other $ $ — $ ) $ $ — $ $ — $ ) $ $ — Predecessor Company As of December 31, 2014 Fixed maturities: Other $ $ $ — $ $ — $ $ $ — $ $ — |
Schedule of amortized cost and fair value of available-for-sale and held-to-maturity fixed maturities, by expected maturity | Successor Company Available-for-sale Held-to-maturity Amortized Fair Amortized Fair Cost Value Cost Value (Dollars In Thousands) (Dollars In Thousands) Due in one year or less $ $ $ — $ — Due after one year through five years — — Due after five years through ten years — — Due after ten years $ $ $ $ |
Schedule 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 | Successor Predecessor Company Company For The Three February 1, 2015 January 1, 2015 For The Three For The Six Months Ended to to Months Ended Months Ended June 30, 2015 June 30, 2015 January 31, 2015 June 30, 2014 June 30, 2014 (Dollars In Thousands) (Dollars In Thousands) Beginning balance $ — $ — $ $ $ Additions for newly impaired securities — — — Additions for previously impaired securities — — Reductions for previously impaired securities due to a change in expected cash flows — — — ) ) Reductions for previously impaired securities that were sold in the current period — — — — — Ending balance $ $ $ $ $ |
Schedule of investments' 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 | 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 June 30, 2015 (Successor Company): Less Than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized Value Loss Value Loss Value Loss (Dollars In Thousands) Residential mortgage-backed securities $ $ ) $ — $ — $ $ ) Commercial mortgage-backed securities ) — — ) Other asset-backed securities ) — — ) U.S. government-related securities ) — — ) Other government-related securities ) — — ) States, municipalities, and political subdivisions ) — — ) Corporate securities ) — — ) Preferred stock ) — — ) Equities ) — — ) $ $ ) $ — $ — $ $ ) 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, 2014 (Predecessor Company): Less Than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized Value Loss Value Loss Value Loss (Dollars In Thousands) Residential mortgage-backed securities $ $ ) $ $ ) $ $ ) Commercial mortgage-backed securities ) ) ) Other asset-backed securities ) ) ) U.S. government-related securities ) ) ) Other government-related securities — — — — — — States, municipalities, and political subdivisions ) ) ) Corporate securities ) ) ) Equities ) ) ) $ $ ) $ $ ) $ $ ) |
Summary of change in unrealized gains (losses), net of income tax, on fixed maturity and equity securities, classified as available-for-sale | Successor Predecessor Company Company For The Three February 1, 2015 January 1, 2015 For The Three For The Six Months Ended to to Months Ended Months Ended June 30, 2015 June 30, 2015 January 31, 2015 June 30, 2014 June 30, 2014 (Dollars In Thousands) (Dollars In Thousands) Fixed maturities $ ) $ ) $ $ $ Equity securities ) ) |
MORTGAGE LOANS (Tables)
MORTGAGE LOANS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
MORTGAGE LOANS | |
Schedule of changes in the allowance for mortgage loan credit losses | Successor Predecessor Company Company February 1, 2015 January 1, 2015 to to As of June 30, 2015 January 31, 2015 December 31, 2014 (Dollars In Thousands) (Dollars In Thousands) Beginning balance $ — $ $ Charge offs — ) ) Recoveries ) ) ) Provision — Ending balance $ $ $ |
Schedule of an analysis of the delinquent loans | An analysis of the delinquent loans is shown in the following chart . Greater Successor Company 30-59 Days 60-89 Days than 90 Days Total As of June 30, 2015 Delinquent Delinquent Delinquent Delinquent (Dollars In Thousands) Commercial mortgage loans $ $ $ $ Number of delinquent commercial mortgage loans Predecessor Company As of December 31, 2014 Commercial mortgage loans $ $ — $ $ Number of delinquent commercial mortgage loans — |
Schedule of information regarding impaired loans | Unpaid Average Interest Cash Basis Successor Company Recorded Principal Related Recorded Income Interest As of June 30, 2015 Investment Balance Allowance Investment Recognized Income (Dollars In Thousands) Commercial mortgage loans: With no related allowance recorded $ $ $ — $ $ $ With an allowance recorded Predecessor Company As of December 31, 2014 Commercial mortgage loans: With no related allowance recorded $ — $ — $ — $ — $ — $ — With an allowance recorded |
Schedule of mortgage loans that were modified in a troubled debt restructuring | Pre-Modification Post-Modification Outstanding Outstanding Successor Company Number of Recorded Recorded As of June 30, 2015 Contracts Investment Investment (Dollars In Thousands) Troubled debt restructuring: Commercial mortgage loans $ $ Predecessor Company As of December 31, 2014 Troubled debt restructuring: Commercial mortgage loans $ $ |
DEFERRED POLICY ACQUISITION C34
DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED. | |
Schedule of balances and changes in DAC | Successor Predecessor Company Company February 1, 2015 January 1, 2015 to to As of June 30, 2015 January 31, 2015 December 31, 2014 (Dollars In Thousands) (Dollars In Thousands) Balance, beginning of period $ — $ $ Capitalization of commissions, sales, and issue expenses Amortization ) ) Change in unrealized investment gains and losses ) ) Balance, end of period $ $ $ |
Schedule of balances and changes in VOBA | Successor Predecessor Company Company February 1, 2015 January 1, 2015 to to As of June 30, 2015 January 31, 2015 December 31, 2014 (Dollars In Thousands) (Dollars In Thousands) Balance, beginning of period Amortization ) ) ) Change in unrealized gains and losses ) ) Balance, end of period $ $ $ |
Schedule of expected amortization of VOBA for the next five years | Expected Years Amortization (Dollars In Thousands) 2015 $ 2016 2017 2018 2019 |
DEBT AND OTHER OBLIGATIONS (Tab
DEBT AND OTHER OBLIGATIONS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
DEBT AND OTHER OBLIGATIONS | |
Non-recourse funding obligations outstanding | Year-to-Date Maturity Weighted-Avg Issuer Balance Year Interest Rate (Dollars In Thousands) Golden Gate Captive Insurance Company (1) $ 2037 % Golden Gate II Captive Insurance Company 2052 % Golden Gate V Vermont Captive Insurance Company (1) 2037 % MONY Life Insurance Company (1) 2024 % Total $ (1) Fixed rate obligations |
Schedule of collateral pledged for repurchase agreements | Remaining Contractual Maturity of the Agreements As of June 30, 2015 (Successor Company) (Dollars In Thousands) Overnight and Greater Than Continuous Up to 30 days 30-90 days 90 days Total Repurchase agreements and repurchase-to-maturity transactions U.S. Treasury and agency securities $ $ — $ — $ — $ State and municipal securities — — — — — Other asset-backed securities — — — — — Corporate securities — — — Equity securities — — — — — Non-U.S. sovereign debt — — — — — Mortgage loans — — — Other asset-backed securities — — — — — Total borrowings $ $ $ — $ — $ |
EMPLOYEE BENEFIT PLANS (Tables)
EMPLOYEE BENEFIT PLANS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
EMPLOYEE BENEFIT PLANS | |
Components of the net periodic benefit cost of the Company's defined benefit pension plan and unfunded excess benefit plan | Successor Predecessor Company Company For The Three February 1, 2015 January 1, 2015 For The Three For The Six Months Ended to to Months Ended Months Ended June 30, 2015 June 30, 2015 January 31, 2015 June 30, 2014 June 30, 2014 Defined Unfunded Defined Unfunded Defined Unfunded Defined Unfunded Defined Unfunded Benefit Excess Benefit Excess Benefit Excess Benefit Excess Benefit Excess Pension Benefit Pension Benefit Pension Benefit Pension Benefit Pension Benefit Plan Plan Plan Plan Plan Plan Plan Plan Plan Plan (Dollars In Thousands) (Dollars In Thousands) Service cost — benefits earned during the period $ $ $ $ $ $ $ $ $ $ Interest cost on projected benefit obligation Expected return on plan assets ) — ) — ) — ) — ) — Amortization of prior service cost — — — — ) ) ) Amortization of actuarial losses — — — — Total net periodic benefit cost $ $ $ $ $ $ $ $ $ $ |
Predecessor | |
EMPLOYEE BENEFIT PLANS | |
Schedule of benefit obligation, fair value of plan assets and the funded status of the Company's defined benefit pension plan and unfunded excess benefit plan | Predecessor Company Defined Benefit Unfunded Excess Pension Plan Benefits Plan As of As of As of As of January 31, 2015 December 31, 2014 January 31, 2015 December 31, 2014 (Dollars In Thousands) Accumulated benefit obligation, end of period $ $ $ $ Change in projected benefit obligation: Projected benefit obligation at beginning of period $ $ $ $ Service cost Interest cost Amendments — — — — Actuarial (gain) or loss Benefits paid ) ) ) ) Projected benefit obligation at end of period Change in plan assets: Fair value of plan assets at beginning of period — — Actual return on plan assets ) — — Employer contributions (1) Benefits paid ) ) ) ) Fair value of plan assets at end of period — — After reflecting FASB guidance Funded status ) ) ) ) Amounts recognized in the balance sheet: Other liabilities ) ) ) ) Amounts recognized in accumulated other comprehensive income: Net actuarial loss Prior service cost/(credit) ) ) Total amounts recognized in AOCI $ $ $ $ (1) Employer contributions disclosed are based on the Company’s fiscal filing year. |
Schedule of weighted-average assumptions used to determine benefit obligations | Defined Benefit Unfunded Excess Postretirement Pension Plan Benefit Plan Life Insurance Plan Discount rate % % % |
ACCUMULATED OTHER COMPREHENSI37
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | |
Summary of changes in the accumulated balances for each component of AOCI | Changes in Accumulated Other Comprehensive Income (Loss) by Component Total Accumulated Unrealized Accumulated Other Gains and Losses Gain and Loss Comprehensive on Investments (2) Derivatives Income (Loss) (Dollars In Thousands, Net of Tax) Successor Company Beginning Balance, February 1, 2015 $ — $ — $ — Other comprehensive income (loss) before reclassifications ) ) ) Other comprehensive income relating to other- than-temporary impaired investments for which a portion has been recognized in earnings ) — ) Amounts reclassified from accumulated other comprehensive income (loss) (1) Net current-period other comprehensive income (loss) ) — ) Ending Balance, June 30, 2015 $ ) $ — $ ) (1) See Reclassification table below for details. (2) As of June 30, 2015 net unrealized losses reported in AOCI were offset by $493.0 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 Total Accumulated Unrealized Accumulated Other Gains and Losses Gain and Loss Comprehensive on Investments (2) Derivatives Income (Loss) (Dollars In Thousands, Net of Tax) Predecessor Company Beginning Balance, December 31, 2014 $ $ ) $ Other comprehensive income (loss) before reclassifications Other comprehensive income relating to other- than-temporary impaired investments for which a portion has been recognized in earnings ) — ) Amounts reclassified from accumulated other comprehensive income (loss) (1) ) ) Net current-period other comprehensive income (loss) Ending Balance, January 31, 2015 $ $ ) $ (1) See Reclassification table below for details. (2) As of January 31, 2015 and December 31, 2014 net unrealized losses reported in AOCI were offset by $(492.6) million and $(504.4) 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 Total Accumulated Unrealized Accumulated Other Gains and Losses Gain and Loss Comprehensive on Investments (2) Derivatives Income (Loss) (Dollars In Thousands, Net of Tax) Predecessor Company Beginning Balance, December 31, 2013 $ $ ) $ Other comprehensive income (loss) before reclassifications ) Other comprehensive income relating to other- than-temporary impaired investments for which a portion has been recognized in earnings — Amounts reclassified from accumulated other comprehensive income (loss) (1) ) ) Net current-period other comprehensive income (loss) Ending Balance, December 31, 2014 $ $ ) $ (1) See Reclassification table below for details. (2) As of December 31, 2014 and 2013 net unrealized losses reported in AOCI were offset by $(504.4) million and $(189.8) 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. |
Schedule of reclassifications amounts out of AOCI | Reclassifications Out of Accumulated Other Comprehensive Income (Loss) Amount Reclassified from Accumulated Other Comprehensive Affected Line Item in the Income (Loss) Consolidated Condensed Statements of Income (Dollars In Thousands) Successor Company For The Three Months Ended June 30, 2015 Gains and losses on derivative instruments Net settlement (expense)/benefit (1) $ ) Benefits and settlement expenses, net of reinsurance ceded ) Total before tax Tax (expense) or benefit $ ) Net of tax Unrealized gains and losses on available-for-sale securities Net investment gains (losses) $ Realized investment gains (losses): All other investments Impairments recognized in earnings ) Net impairment losses recognized in earnings ) Total before tax Tax (expense) or benefit $ ) Net of tax (1) See Note 15, Derivative Financial Instruments for additional information. Reclassifications Out of Accumulated Other Comprehensive Income (Loss) Amount Reclassified from Accumulated Other Comprehensive Affected Line Item in the Income (Loss) Consolidated Condensed Statements of Income (Dollars In Thousands) Successor Company February 1, 2015 to June 30, 2015 Gains and losses on derivative instruments Net settlement (expense)/benefit (1) $ ) Benefits and settlement expenses, net of reinsurance ceded ) Total before tax Tax (expense) or benefit $ ) Net of tax Unrealized gains and losses on available-for-sale securities Net investment gains (losses) $ Realized investment gains (losses): All other investments Impairments recognized in earnings ) Net impairment losses recognized in earnings ) Total before tax Tax (expense) or benefit $ ) Net of tax (1) See Note 15, Derivative Financial Instruments for additional information. Reclassifications Out of Accumulated Other Comprehensive Income (Loss) Amount Reclassified from Accumulated Other Comprehensive Affected Line Item in the Income (Loss) Consolidated Condensed Statements of Income (Dollars In Thousands) Predecessor Company January 1, 2015 to January 31, 2015 Gains and losses on derivative instruments Net settlement (expense)/benefit (1) $ ) Benefits and settlement expenses, net of reinsurance ceded ) Total before tax Tax (expense) or benefit $ ) Net of tax Unrealized gains and losses on available-for-sale securities Net investment gains (losses) $ Realized investment gains (losses): All other investments Impairments recognized in earnings ) Net impairment losses recognized in earnings Total before tax ) Tax (expense) or benefit $ Net of tax (1) See Note 15, Derivative Financial Instruments for additional information. Reclassifications Out of Accumulated Other Comprehensive Income (Loss) Amount Reclassified from Accumulated Other Comprehensive Affected Line Item in the Income (Loss) Consolidated Condensed Statements of Income (Dollars In Thousands) Predecessor Company For The Three Months Ended June 30, 2014 Gains and losses on derivative instruments Net settlement (expense)/benefit (1) $ ) Benefits and settlement expenses, net of reinsurance ceded ) Total before tax Tax (expense) or benefit $ ) Net of tax Unrealized gains and losses on available-for-sale securities Net investment gains (losses) $ Realized investment gains (losses): All other investments Impairments recognized in earnings ) Net impairment losses recognized in earnings Total before tax ) Tax (expense) or benefit $ Net of tax (1) See Note 15, Derivative Financial Instruments for additional information. Reclassifications Out of Accumulated Other Comprehensive Income (Loss) Amount Reclassified from Accumulated Other Comprehensive Affected Line Item in the Income (Loss) Consolidated Condensed Statements of Income (Dollars In Thousands) Predecessor Company For The Six Months Ended June 30, 2014 Gains and losses on derivative instruments Net settlement (expense)/benefit (1) $ ) Benefits and settlement expenses, net of reinsurance ceded ) Total before tax Tax (expense) or benefit $ ) Net of tax Unrealized gains and losses on available-for-sale securities Net investment gains (losses) $ Realized investment gains (losses): All other investments Impairments recognized in earnings ) Net impairment losses recognized in earnings Total before tax ) Tax (expense) or benefit $ Net of tax (1) See Note 15, Derivative Financial Instruments for additional information. |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
INCOME TAXES | |
Schedule of components of the Company's net deferred income tax liability | Successor Predecessor Company Company As of As of June 30, 2015 December 31, 2014 (Dollars In Thousands) (Dollars In Thousands) Deferred income tax assets: Loss and credit carryforwards $ $ Premium receivables and policy liabilities — Deferred compensation Invested assets (other than unrealized gains) — Deferred policy acquisition costs — Net unrealized loss on investments — Valuation allowance ) ) Deferred income tax liabilities: VOBA and other intangibles — Premium receivables and policy liabilities — DAC and VOBA Invested assets (other than unrealized gains) — Net unrealized gains on investments — Other Net deferred income tax liability $ ) $ ) |
Schedule of reconciliation of the beginning and ending amount of unrecognized tax benefits | Successor Predecessor Company Company February 1, 2015 January 1, 2015 to to As of June 30, 2015 January 31, 2015 December 31, 2014 (Dollars In Thousands) (Dollars In Thousands) Balance, beginning of period $ $ $ Additions for tax positions of the current year ) Additions for tax positions of prior years — Reductions of tax positions of prior years: Changes in judgment ) ) ) Settlements during the period — — — Lapses of applicable statute of limitations — — — Balance, end of period $ $ $ |
FAIR VALUE OF FINANCIAL INSTR39
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | |
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 June 30, 2015 (Successor Company): Level 1 Level 2 Level 3 Total (Dollars In Thousands) Assets: Fixed maturity securities - available-for-sale Residential mortgage-backed securities $ — $ $ $ Commercial mortgage-backed securities — — Other asset-backed securities — U.S. government-related securities — State, municipalities, and political subdivisions — — Other government-related securities — — Corporate securities Preferred stocks — — Total fixed maturity securities - available-for-sale Fixed maturity securities - trading Residential mortgage-backed securities — — Commercial mortgage-backed securities — — Other asset-backed securities — U.S. government-related securities — State, municipalities, and political subdivisions — — Other government-related securities — — Corporate securities — Preferred stocks — — Total fixed maturity securities - trading Total fixed maturity securities Equity securities Other long-term investments (1) Short-term investments — Total investments Cash — — Assets related to separate accounts Variable annuity — — Variable universal life — — Total assets measured at fair value on a recurring basis $ $ $ $ Liabilities: Annuity account balances (2) $ — $ — $ $ Other liabilities (1) Total liabilities measured at fair value on a recurring basis $ $ $ $ (1) Includes certain freestanding and embedded derivatives. (2) Represents liabilities related to fixed indexed annuities. 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, 2014 (Predecessor Company): Level 1 Level 2 Level 3 Total (Dollars In Thousands) Assets: Fixed maturity securities - available-for-sale Residential mortgage-backed securities $ — $ $ $ Commercial mortgage-backed securities — — Other asset-backed securities — U.S. government-related securities — State, municipalities, and political subdivisions — Other government-related securities — — Corporate securities Total fixed maturity securities - available-for-sale Fixed maturity securities - trading Residential mortgage-backed securities — — Commercial mortgage-backed securities — — Other asset-backed securities — U.S. government-related securities — State, municipalities, and political subdivisions — — Other government-related securities — — Corporate securities — Total fixed maturity securities - trading Total fixed maturity securities Equity securities Other long-term investments (1) Short-term investments — Total investments Cash — — Other assets — — — — Assets related to separate accounts Variable annuity — — Variable universal life — — Total assets measured at fair value on a recurring basis $ $ $ $ Liabilities: Annuity account balances (2) $ — $ — $ $ Other liabilities (1) Total liabilities measured at fair value on a recurring basis $ $ $ $ (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 | Successor Company Fair Value As of Valuation Unobservable Range June 30, 2015 Technique Input (Weighted Average) (Dollars In Thousands) Assets: Other asset-backed securities $ Discounted cash flow Liquidity premium 0.55% - 1.50% (1.03%) Paydown rate 9.95% - 14.69% (12.57%) Corporate securities Discounted cash flow Spread over treasury 0.58% - 12.00% (2.25%) Embedded derivatives - GMWB (1) Actuarial cash flow model Mortality 1994 MGDB table with company experience Lapse 0.29% - 17%, depending on product/duration/funded status of guarantee Utilization 99%. 10% of policies have a one-time over-utilization of 400% Nonperformance risk 0.16% - 1.04% Liabilities: Annuity account balances (2) $ Actuarial cash flow model Asset earned rate 3.71% - 5.77% Expenses $80 per policy Withdrawal rate 2.20% Mortality 1994 MGDB table with company experience Lapse 2.2% - 33.0%, depending on duration/surrender charge period Return on assets 1.50% - 1.85% depending on surrender charge period Nonperformance risk 0.16% - 1.04% Embedded derivative - FIA Actuarial cash flow model Expenses $80 per policy Withdrawal rate 1.1% - 4.5% depending on duration and tax qualification Mortality 1994 MGDB table with company experience Lapse 2.5% - 40.0%, depending on on duration/surrender charge period Nonperformance risk 0.16% - 1.04% Embedded derivative - IUL Actuarial cash flow model Mortality 44% - 137% of 2014 VBT Primary Tables Lapse 0.5% - 10.0%, depending on duration/distribution channel and smoking class Nonperformance risk 0.16% - 1.04% (1) The fair value for the GMWB embedded derivative is presented as a net asset. Excludes modified coinsurance arrangements. (2) Represents liabilities related to fixed indexed annuities. Predecessor Company Fair Value As of Valuation Unobservable Range December 31, 2014 Technique Input (Weighted Average) (Dollars In Thousands) Assets: Other asset-backed securities $ Discounted cash flow Liquidity premium 0.39% - 1.49% (0.69%) Paydown rate 9.70% - 15.80% (12.08%) Corporate securities Discounted cash flow Spread over 0.33% - 7.50% (2.19%) treasury Liabilities: Embedded derivatives - GMWB (1) $ Actuarial cash flow model Mortality 44.5% to 100% of 1994 MGDB table Lapse 0.25% - 17%, depending on product/duration/funded status of guarantee Utilization 97% - 101% Nonperformance risk 0.12% - 0.96% Annuity account balances (2) Actuarial cash flow model Asset earned rate 3.86% - 5.92% Expenses $88 - $102 per policy Withdrawal rate 2.20% Mortality 49% to 80% of 1994 MGDB table Lapse 2.2% - 33.0%, depending on duration/surrender charge period Return on assets 1.50% - 1.85% depending on surrender charge period Nonperformance risk 0.12% - 0.96% Embedded derivative - FIA Actuarial cash flow model Expenses $83 - $97 per policy Withdrawal rate 1.1% - 4.5% depending on duration and tax qualification Mortality 49% to 80% of 1994 MGDB table Lapse 2.5% - 40.0%, depending on duration/surrender charge period Nonperformance risk 0.12% - 0.96% Embedded derivative - IUL Actuarial cash flow model Mortality 37% - 74% of 2008 VBT Primary Tables Lapse 0.5% - 10%, depending on duration/distribution channel and smoking class Nonperformance risk 0.12% - 0.96% (1) The fair value for the GMWB embedded derivative is presented as a net liability. Excludes modified coinsurance arrangements. (2) Represents liabilities related to fixed indexed annuities. |
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 three months ended June 30, 2015 (Successor Company), for which the Company has used significant unobservable inputs (Level 3): Total Gains (losses) included in Total Total Earnings Realized and Unrealized Realized and Unrealized related to Gains Losses Instruments Included in Included in still held at Included Other Included Other Transfers the Beginning in Comprehensive in Comprehensive in/out of Ending Reporting Balance Earnings Income Earnings Income Purchases Sales Issuances Settlements Level 3 Other Balance Date (Dollars In Thousands) Assets: Fixed maturity securities available-for-sale Residential mortgage-backed securities $ $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ $ — Commercial mortgage-backed securities — — — — — — — — — — — — — Other asset-backed securities — ) ) — ) — — — — U.S. government-related securities — — — — — — — — — — — — — States, municipals, and political subdivisions — — — — — — — — — — — — — Other government-related securities — — — — — — — — — — — — Corporate securities ) ) ) — — ) ) — Total fixed maturity securities - available-for-sale ) ) ) — — ) ) — Fixed maturity securities - trading Residential mortgage-backed securities — — — — — — — — — — — — — Commercial mortgage-backed securities — — — — — — — — — — — — — Other asset-backed securities — ) — — ) — — — ) U.S. government-related securities — — — — — — — — — — — — — States, municipals and political subdivisions — — — — — — — — — — — — — Other government-related securities — — — — — — — — — — — — — Corporate securities — ) — — ) — — — ) ) Total fixed maturity securities - trading — ) — — ) — — — ) Total fixed maturity securities ) ) ) — — ) ) ) Equity securities — — — — — ) — — — — — Other long-term investments (1) — ) — — — — — — — Short-term investments — — — — — — — — — — — — — Total investments ) ) ) — — ) ) Total assets measured at fair value on a recurring basis $ $ $ $ ) $ ) $ $ ) $ — $ — $ ) $ ) $ $ Liabilities: Annuity account balances (2) $ $ — $ — $ ) $ — $ — $ — $ $ — $ — $ $ — Other liabilities (1) — ) — — — — — — — Total liabilities measured at fair value on a recurring basis $ $ $ — $ ) $ — $ — $ — $ $ $ — $ — $ $ (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 period of February 1, 2015 to June 30, 2015 (Successor Company) for which the Company has used significant unobservable inputs (Level 3): Total Gains (losses) included in Total Total Earnings Realized and Unrealized Realized and Unrealized related to Gains Losses Instruments Included in Included in still held at Included Other Included Other Transfers the Beginning in Comprehensive in Comprehensive in/out of Ending Reporting Balance Earnings Income Earnings Income Purchases Sales Issuances Settlements Level 3 Other Balance Date (Dollars In Thousands) Assets: Fixed maturity securities available-for-sale Residential mortgage-backed securities $ $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ $ — Commercial mortgage-backed securities — — — — — — — — — — — — — Other asset-backed securities — ) ) — ) — — — — U.S. government-related securities — — — — — — — — — — — — — States, municipals, and political subdivisions — — — — — ) — — — — — — Other government-related securities — — — — — — — — — — — — — Corporate securities ) ) ) — — ) ) — Total fixed maturity securities - available-for-sale ) ) ) — — ) ) — Fixed maturity securities - trading Residential mortgage-backed securities — — — — — — — — — — — — — Commercial mortgage-backed securities — — — — — — — — — — — — — Other asset-backed securities — ) — — ) — — — ) U.S. government-related securities — — — — — — — — — — — — — States, municipals and political subdivisions — — — — — — — — — — — — — Other government-related securities — — — — — — — — — — — — — Corporate securities — ) — — ) — — — ) ) Total fixed maturity securities - trading — ) — — ) — — — ) Total fixed maturity securities ) ) ) — — ) ) ) Equity securities — — — — — ) — — — — — Other long-term investments (1) — ) — — — — — — — Short-term investments — — — — — — — — — — — — — Total investments ) ) ) — — ) ) Total assets measured at fair value on a recurring basis $ $ $ $ ) $ ) $ $ ) $ — $ — $ ) $ ) $ $ Liabilities: Annuity account balances (2) $ $ — $ — $ ) $ — $ — $ — $ $ $ — $ — $ $ — Other liabilities (1) — ) — — — — — — — Total liabilities measured at fair value on a recurring basis $ $ $ — $ ) $ — $ — $ — $ $ $ — $ — $ $ (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 period of January 1, 2015 to January 31, 2015 (Predecessor Company), for which the Company has used significant unobservable inputs (Level 3): Total Gains (losses) included in Total Total Earnings Realized and Unrealized Realized and Unrealized related to Gains Losses Instruments Included in Included in still held at Included Other Included Other Transfers the Beginning in Comprehensive in Comprehensive in/out of Ending Reporting Balance Earnings Income Earnings Income Purchases Sales Issuances Settlements Level 3 Other Balance Date (Dollars In Thousands) Assets: Fixed maturity securities available-for-sale Residential mortgage-backed securities $ $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ $ — Commercial mortgage-backed securities — — — — — — — — — — — — — Other asset-backed securities — — — ) — ) — — — U.S. government-related securities — — — — — — — — — — — — — States, municipals, and political subdivisions — — — — — — — — — — — Other government-related securities — — — — — — — — — — — — — Corporate securities — — ) — ) — — — ) — Total fixed maturity securities - available-for-sale — — ) — ) — — ) — Fixed maturity securities - trading Residential mortgage-backed securities — — — — — — — — — — — — — Commercial mortgage-backed securities — — — — — — — — — — — — — Other asset-backed securities — ) — — ) — — — U.S. government-related securities — — — — — — — — — — — — — States, municipals and political subdivisions — — — — — — — — — — — — — Other government-related securities — — — — — — — — — — — — — Corporate securities — ) — — ) — — — — Total fixed maturity securities - trading — ) — — ) — — — Total fixed maturity securities ) ) — ) — — ) Equity securities — — — — — — — — — — — Other long-term investments (1) — ) — — — — — — — Short-term investments — — — — — — — — — — — — — Total investments ) ) — ) — — ) Total assets measured at fair value on a recurring basis $ $ $ $ ) $ ) $ — $ ) $ — $ — $ $ ) $ $ Liabilities: Annuity account balances (2) $ $ — $ — $ ) $ — $ — $ — $ $ $ — $ — $ $ — Other liabilities (1) — ) — — — — — — — ) Total liabilities measured at fair value on a recurring basis $ $ $ — $ ) $ — $ — $ — $ $ $ — $ — $ $ ) (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 June 30, 2014 (Predecessor Company), for which the Company has used significant unobservable inputs (Level 3): Total Gains (losses) included in Total Total Earnings Realized and Unrealized Realized and Unrealized related to Gains Losses Instruments Included in Included in still held at Included Other Included Other Transfers the Beginning in Comprehensive in Comprehensive in/out of Ending Reporting Balance Earnings Income Earnings Income Purchases Sales Issuances Settlements Level 3 Other Balance Date (Dollars In Thousands) Assets: Fixed maturity securities available-for-sale Residential mortgage-backed securities $ $ — $ — $ — $ — $ — $ ) $ — $ — $ — $ ) $ $ — Commercial mortgage-backed securities — — — — — — — — — — — — — Other asset-backed securities — — ) — ) — — — ) — U.S. government-related securities — — — — — — — — — — — — — States, municipals, and political subdivisions — — — — — — — — — — — Other government-related securities — — — — — — — — — — — — — Corporate securities — ) ) — — ) ) — Total fixed maturity securities - available-for-sale — ) ) — — ) ) — Fixed maturity securities - trading Residential mortgage-backed securities — — — — — — — — — — — Commercial mortgage-backed securities — — — — — — — — — — — — — Other asset-backed securities — ) — — ) — — — U.S. government-related securities — — — — — — — — — — — — — States, municipals and political subdivisions — — — — — — — — — — — — — Other government-related securities — — — — — — — — — — — — — Corporate securities — ) — ) — — Total fixed maturity securities - trading — ) — ) — — Total fixed maturity securities ) ) ) — — ) ) Equity securities — — — — ) — — — — — Other long-term investments (1) — ) — — — — — — — ) Short-term investments — — — — — — — — — — — — — Total investments ) ) ) — — ) ) ) Total assets measured at fair value on a recurring basis $ $ $ $ ) $ ) $ $ ) $ — $ — $ ) $ ) $ $ ) Liabilities: Annuity account balances (2) $ $ — $ — $ ) $ — $ — $ — $ $ $ — $ — $ $ — Other liabilities (1) — ) — — — — — — — ) Total liabilities measured at fair value on a recurring basis $ $ $ — $ ) $ — $ — $ — $ $ $ — $ — $ $ ) (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 six months ended June 30, 2014 (Predecessor Company), for which the Company has used significant unobservable inputs (Level 3): Total Gains (losses) included in Total Total Earnings Realized and Unrealized Realized and Unrealized related to Gains Losses Instruments Included in Included in still held at Included Other Included Other Transfers the Beginning in Comprehensive in Comprehensive in/out of Ending Reporting Balance Earnings Income Earnings Income Purchases Sales Issuances Settlements Level 3 Other Balance Date (Dollars In Thousands) Assets: Fixed maturity securities available-for-sale Residential mortgage-backed securities $ $ — $ — $ — $ — $ $ ) $ — $ — $ — $ ) $ $ — Commercial mortgage-backed securities — — — — — — — — — — — — Other asset-backed securities — — ) — ) — — — ) — U.S. government-related securities — — — — — — — — — — — — — States, municipals, and political subdivisions — — — — — — — — — — — Other government-related securities — — — — — — — — — — — — — Corporate securities — ) ) — — ) ) — Total fixed maturity securities - available-for-sale — ) ) — — ) ) — Fixed maturity securities - trading Residential mortgage-backed securities — — — — — — — — — — — Commercial mortgage-backed securities — — — — — — — — — — — — — Other asset-backed securities — ) — — ) — — — U.S. government-related securities — — — — — — — — — — — — — States, municipals and political subdivisions — — — — — — — — — — — — — Other government-related securities — — — — — — — — — — — — — Corporate securities — ) — ) — — — Total fixed maturity securities - trading — ) — ) — — Total fixed maturity securities ) ) ) — — ) ) Equity securities — — ) ) — — — — — Other long-term investments (1) — ) — — — — — — — ) Short-term investments — — — — — — — — — — — — — Total investments ) ) ) — — ) ) ) Total assets measured at fair value on a recurring basis $ $ $ $ ) $ ) $ $ ) $ — $ — $ ) $ ) $ $ ) Liabilities: Annuity account balances (2) $ $ — $ — $ ) $ — $ — $ — $ $ $ — $ — $ $ — Other liabilities (1) — ) — — — — — — — ) Total liabilities measured at fair value on a recurring basis $ $ $ — $ ) $ — $ — $ — $ $ $ — $ — $ $ ) (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 | Successor Predecessor Company Company As of As of June 30, 2015 December 31, 2014 Fair Value Carrying Carrying Level Amounts Fair Values Amounts Fair Values (Dollars In Thousands) (Dollars In Thousands) Assets: Mortgage loans on real estate 3 $ $ $ $ Policy loans 3 Fixed maturities, held-to-maturity (1) 3 Liabilities: Stable value product account balances 3 $ $ $ $ Annuity account balances 3 Debt: Non-recourse funding obligations (2) 3 $ $ $ $ Except as noted below, fair values were estimated using quoted market prices. (1) Security purchased from unconsolidated subsidiary, Red Mountain LLC. (2) Of this carrying amount, $470.0 million, fair value of $469.7 million, as of June 30, 2015 (Successor Company), and $435.0 million, fair value of $461.4 million, as of December 31, 2014 (Predecessor Company), relates to non-recourse funding obligations issued by Golden Gate V. |
DERIVATIVE FINANCIAL INSTRUME40
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
Schedule of realized investment gains (losses) | Successor Predecessor Company Company For The Three February 1, 2015 January 1, 2015 For The Three For The Six Months Ended to to Months Ended Months Ended June 30, 2015 June 30, 2015 January 31, 2015 June 30, 2014 June 30, 2014 (Dollars In Thousands) (Dollars In Thousands) Derivatives related to VA contracts: Interest rate futures - VA $ ) $ ) $ $ $ Equity futures - VA ) ) ) ) Currency futures - VA ) ) ) ) Variance swaps - VA — — — ) ) Equity options - VA ) ) ) ) Interest rate swaptions - VA ) ) ) Interest rate swaps - VA ) ) Embedded derivative - GMWB ) ) ) Funds withheld derivative ) Total derivatives related to VA contracts ) ) Derivatives related to FIA contracts: Embedded derivative - FIA ) ) ) Equity futures - FIA ) Volatility futures - FIA — Equity options - FIA ) Total derivatives related to FIA contracts ) ) ) Derivatives related to IUL contracts: Embedded derivative - IUL ) ) ) Equity futures - IUL — — Equity options - IUL ) ) — — Total derivatives related to IUL contracts ) ) ) Embedded derivative - Modco reinsurance treaties ) ) ) Derivatives with PLC (1) ) ) Other derivatives ) ) ) Total realized gains (losses) - derivatives $ $ $ $ ) $ ) (1) These derivatives include the Interest, YRT premium support, and portfolio maintenance agreements between certain of the Company’s subsidiaries and PLC. |
Schedule of realized investments gains and losses for Modco trading portfolio that is included in realized investment gains (losses) - all other investments | Successor Predecessor Company Company For The Three February 1, 2015 January 1, 2015 For The Three For The Six Months Ended to to Months Ended Months Ended June 30, 2015 June 30, 2015 January 31, 2015 June 30, 2014 June 30, 2014 (Dollars In Thousands) (Dollars In Thousands) Modco trading portfolio (1) $ ) $ ) $ $ $ (1) The Company elected to include the use of alternate disclosures for trading activities. |
Schedule of components of the gains or losses on derivatives that qualify as a cash flow hedging relationship | Amount and Location of Amount of Gains (Losses) Gains (Losses) Deferred in Reclassified from Amount and Location of Accumulated Other Accumulated Other (Losses) Recognized in Comprehensive Income Comprehensive Income Income (Loss) on (Loss) on Derivatives (Loss) into Income (Loss) Derivatives (Effective Portion) (Effective Portion) (Ineffective Portion) Benefits and settlement Realized investment expenses gains (losses) (Dollars In Thousands) Successor Company For The Three Months Ended June 30, 2015 Inflation $ ) $ ) $ Total $ ) $ ) $ Successor Company February 1, 2015 to June 30, 2015 Inflation $ ) $ ) $ Total $ ) $ ) $ Predecessor Company January 1, 2015 to January 31, 2015 Inflation $ $ ) $ ) Total $ $ ) $ ) Predecessor Company For The Three Months Ended June 30, 2014 Inflation $ ) $ ) $ ) Total $ ) $ ) $ ) Predecessor Company For The Six Months Ended June 30, 2014 Inflation $ ) $ ) $ ) Total $ ) $ ) $ ) |
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 | Successor Predecessor Company Company As of June 30, 2015 As of December 31, 2014 Notional Fair Notional Fair Amount Value Amount Value (Dollars In Thousands) (Dollars In Thousands) Other long-term investments Derivatives not designated as hedging instruments: Interest rate swaps $ $ $ $ Derivatives with PLC (1) Embedded derivative - Modco reinsurance treaties Embedded derivative - GMWB Interest rate futures Equity futures Currency futures Equity options Interest rate swaptions Other $ $ $ $ Other liabilities Cash flow hedges: Inflation $ — $ — $ $ Derivatives not designated as hedging instruments: Interest rate swaps Embedded derivative - Modco reinsurance treaties Funds withheld derivative Embedded derivative - GMWB Embedded derivative - FIA Embedded derivative - IUL Interest rate futures — — Equity futures Currency futures — — Equity options Other — — $ $ $ $ (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 LIAB41
OFFSETTING OF ASSETS AND LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
OFFSETTING OF ASSETS AND LIABILITIES | |
Schedule of derivative assets | The tables below present the derivative instruments by assets and liabilities for the Company as of June 30, 2015 (Successor Company). Net Amounts Gross of Assets Gross Amounts Not Offset Amounts Presented in in the Statement of Gross Offset in the the Financial Position Amounts of Statement of Statement of Cash Recognized Financial Financial Financial Collateral Assets Position Position Instruments Received Net Amount (Dollars In Thousands) Offsetting of Derivative Assets Derivatives: Free-Standing derivatives $ $ — $ $ $ $ Total derivatives, subject to a master netting arrangement or similar arrangement — Derivatives not subject to a master netting arrangement or similar arrangement Embedded derivative - Modco reinsurance treaties — — — Embedded derivative - GMWB — — — Derivatives with PLC — — — Other — — — Total derivatives, not subject to a master netting arrangement or similar arrangement — — — Total derivatives — Total Assets $ $ — $ $ $ $ The tables below present the derivative instruments by assets and liabilities for the Company as of December 31, 2014 (Predecessor Company). Net Amounts Gross of Assets Gross Amounts Not Offset Amounts Presented in in the Statement of Gross Offset in the the Financial Position Amounts of Statement of Statement of Cash Recognized Financial Financial Financial Collateral Assets Position Position Instruments Received Net Amount (Dollars In Thousands) Offsetting of Derivative Assets Derivatives: Free-Standing derivatives $ $ — $ $ $ $ Total derivatives, subject to a master netting arrangement or similar arrangement — Derivatives not subject to a master netting arrangement or similar arrangement Embedded derivative - Modco reinsurance treaties — — — Embedded derivative - GMWB — — — Derivatives with PLC — — — Other — — — Total derivatives, not subject to a master netting arrangement or similar arrangement — — — Total derivatives — Total Assets $ $ — $ $ $ $ |
Schedule of derivative liabilities | Net Amounts Gross of Liabilities Gross Amounts Not Offset Amounts Presented in in the Statement of Gross Offset in the the Financial Position Amounts of Statement of Statement of Cash Recognized Financial Financial Financial Collateral Liabilities Position Position Instruments Paid Net Amount (Dollars In Thousands) Offsetting of Derivative Liabilities Derivatives: Free-Standing derivatives $ $ — $ $ $ $ — Total derivatives, subject to a master netting arrangement or similar arrangement — — Derivatives, not subject to a master netting arrangement or similar arrangement Embedded derivative - Modco reinsurance treaties — — — Funds withheld derivative — Embedded derivative - GMWB — — — Embedded derivative - FIA — — — Embedded derivative - IUL — — — Total derivatives, not subject to a master netting arrangement or similar arrangement — — — Total derivatives — Repurchase agreements (1) — — — Total Liabilities $ $ — $ $ $ $ (1) Borrowings under repurchase agreements are for a term less than 90 days. Net Amounts Gross of Liabilities Gross Amounts Not Offset Amounts Presented in in the Statement of Gross Offset in the the Financial Position Amounts of Statement of Statement of Cash Recognized Financial Financial Financial Collateral Liabilities Position Position Instruments Paid Net Amount (Dollars In Thousands) Offsetting of Derivative Liabilities Derivatives: Free-Standing derivatives $ $ — $ $ $ $ Total derivatives, subject to a master netting arrangement or similar arrangement — Derivatives not subject to a master netting arrangement or similar arrangement Embedded derivative - Modco reinsurance treaties — — — Funds withheld derivative — — — Embedded derivative - GMWB — — — Embedded derivative - FIA — — — Embedded derivative - IUL — — — Total derivatives, not subject to a master netting arrangement or similar arrangement — — — Total derivatives — Repurchase agreements (1) — — — Total Liabilities $ $ — $ $ $ $ (1) Borrowings under repurchase agreements are for a term less than 90 days. |
OPERATING SEGMENTS (Tables)
OPERATING SEGMENTS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
OPERATING SEGMENTS | |
Summary of financial information for the Company's segments | Successor Predecessor Company Company For The Three February 1, 2015 January 1, 2015 For The Three For The Six Months Ended to to Months Ended Months Ended June 30, 2015 June 30, 2015 January 31, 2015 June 30, 2014 June 30, 2014 (Dollars In Thousands) (Dollars In Thousands) Revenues Life Marketing $ $ $ $ $ Acquisitions Annuities Stable Value Products Asset Protection Corporate and Other Total revenues $ $ $ $ $ Segment Operating Income (Loss) Life Marketing $ $ $ ) $ $ Acquisitions Annuities Stable Value Products Asset Protection Corporate and Other ) ) ) ) ) Total segment operating income Realized investment (losses) gains - investments (1) ) ) Realized investment (losses) gains - derivatives ) ) Income tax benefit (expense) ) ) ) Net income (loss) $ ) $ ) $ $ $ (2) Investment gains (losses) $ ) $ ) $ $ $ Less: amortization related to DAC/VOBA and benefits and settlement expenses ) Realized investment gains (losses) - investments $ ) $ ) $ $ $ (3) Derivative gains (losses) $ $ $ $ ) $ ) Less: VA GMWB economic cost ) ) ) ) ) Realized investment gains (losses) - derivatives $ $ $ $ ) $ ) (1) Includes credit related other-than-temporary impairments of $5.7 million and $5.7 million for the three months ended June 30, 2015 (Successor Company) and for the period of February 1, 2015 to June 30, 2015 (Successor Company), respectively. Includes credit related other-than-temporary impairments of $0.5 million, $1.5 million, and $3.1 million for the period of January 1, 2015 to January 31, 2015 (Predecessor Company) and for the three and six months ended June 30, 2014 (Predecessor Company), respectively. (2) Includes realized investment gains (losses) before related amortization. (3) Includes realized gains (losses) on derivatives before the VA GMWB economic cost. Operating Segment Assets As of June 30, 2015 (Successor Company) (Dollars In Thousands) Life Stable Value Marketing Acquisitions Annuities Products Investments and other assets $ $ $ $ Deferred policy acquisition costs and value of business acquired ) — Other intangibles Goodwill Total assets $ $ $ $ Asset Corporate Total Protection and Other Adjustments Consolidated Investments and other assets $ $ $ $ Deferred policy acquisition costs and value of business acquired — — Other intangibles Goodwill — — Total assets $ $ $ $ Operating Segment Assets As of December 31, 2014 (Predecessor Company) (Dollars In Thousands) Life Stable Value Marketing Acquisitions Annuities Products Investments and other assets $ $ $ $ Deferred policy acquisition costs and value of business acquired Goodwill — — — Total assets $ $ $ $ Asset Corporate Total Protection and Other Adjustments Consolidated Investments and other assets $ $ $ $ Deferred policy acquisition costs and value of business acquired — Goodwill — — Total assets $ $ $ $ |
BASIS OF PRESENTATION (Details)
BASIS OF PRESENTATION (Details) - USD ($) $ in Thousands | 2 Months Ended | 3 Months Ended | 5 Months Ended | |
Mar. 31, 2015 | Jun. 30, 2015 | Jun. 30, 2015 | Feb. 01, 2015 | |
BASIS OF PRESENTATION | ||||
Goodwill. | $ 735,712 | $ 735,712 | $ 735,700 | |
Prior period pro forma effect of adjustment | ||||
Other comprehensive income | $ (605,016) | $ (897,496) | ||
Shadow Adjustments to Unrealized Investment Losses | Effect | ||||
Prior period pro forma effect of adjustment | ||||
Other comprehensive income | $ 66,700 |
SUMMARY OF SIGNIFICANT ACCOUN44
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2015 | Feb. 01, 2015 | Dec. 31, 2014 | |
Property and Equipment | |||
Goodwill. | $ 735,712 | $ 735,700 | |
Property and equipment | |||
Total property and equipment, gross | 105,128 | ||
Accumulated depreciation | 3,490 | ||
Total property and equipment | $ 101,638 | ||
Predecessor | |||
Property and Equipment | |||
Goodwill. | $ 77,577 | ||
Property and equipment | |||
Total property and equipment, gross | 168,448 | ||
Accumulated depreciation | 116,688 | ||
Total property and equipment | 51,760 | ||
Home office building | |||
Property and equipment | |||
Useful life | 25 years | ||
Total property and equipment, gross | $ 65,127 | ||
Home office building | Predecessor | |||
Property and equipment | |||
Total property and equipment, gross | 75,109 | ||
Land | |||
Property and equipment | |||
Total property and equipment, gross | 24,920 | ||
Data processing equipment | |||
Property and equipment | |||
Total property and equipment, gross | 11,815 | ||
Data processing equipment | Predecessor | |||
Property and equipment | |||
Total property and equipment, gross | 40,568 | ||
Other, principally furniture and equipment | |||
Property and equipment | |||
Total property and equipment, gross | $ 3,266 | ||
Other, principally furniture and equipment | Predecessor | |||
Property and equipment | |||
Total property and equipment, gross | $ 52,771 |
SUMMARY OF SIGNIFICANT ACCOUN45
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - Annuity account $ in Millions | Jun. 30, 2015USD ($) |
Guaranteed minimum withdrawal benefits (GMWB) | |
Guaranteed Minimum Withdrawal Benefits | |
Decrease in net liability | $ 69.4 |
Guaranteed benefit asset, net | (56.8) |
Guaranteed minimum death benefits (GMDB) | |
Guaranteed Minimum Withdrawal Benefits | |
GMDB reserve | $ 26.9 |
DAI-ICHI MERGER (Details)
DAI-ICHI MERGER (Details) - USD ($) $ / shares in Units, $ in Thousands | Feb. 01, 2015 | Jun. 30, 2015 |
Assets | ||
Goodwill | $ 735,700 | $ 735,712 |
PLICO | Dai-ichi Life | ||
SIGNIFICANT ACQUISITIONS | ||
Expected tax deductible goodwill | 0 | |
Assets | ||
Fixed maturities | 38,342,948 | |
Equity securities | 699,081 | |
Mortgage loans | 5,580,229 | |
Investment real estate | 7,456 | |
Policy loans | 1,751,872 | |
Other long-term investments | 657,346 | |
Short-term investments | 311,236 | |
Total investments | 47,350,168 | |
Cash | 378,903 | |
Accrued investment income | 483,691 | |
Accounts and premiums receivable | 104,260 | |
Reinsurance receivables | 5,538,637 | |
Value of business acquired | 1,278,064 | |
Goodwill | 735,712 | |
Other intangibles | 683,000 | |
Property and equipment | 102,736 | |
Other assets | 224,555 | |
Income tax receivable | 50,117 | |
Assets related to separate accounts | ||
Variable annuity | 12,970,587 | |
Variable universal life | 819,188 | |
Total assets | 70,719,618 | |
Liabilities | ||
Future policy benefits and claims | 30,195,397 | |
Unearned premiums | 622,278 | |
Total policy liabilities and accruals | 30,817,675 | |
Stable value product account balances | 1,932,277 | |
Annuity account balances | 10,941,661 | |
Other policyholders' funds | 1,388,083 | |
Other liabilities | 1,533,666 | |
Deferred income taxes | 1,861,632 | |
Non-recourse funding obligations | 1,895,636 | |
Repurchase program borrowings | 50,000 | |
Liabilities related to separate accounts | ||
Variable annuity | 12,970,587 | |
Variable universal life | 819,188 | |
Total liabilities | 64,210,405 | |
Net assets acquired | $ 6,509,213 | |
PLC | Dai-ichi Life | ||
SIGNIFICANT ACQUISITIONS | ||
Per share merger consideration (in dollars per share) | $ 70 | |
Aggregate cash consideration | $ 5,600,000 |
DAI-ICHI-MERGER (Details 2)
DAI-ICHI-MERGER (Details 2) - USD ($) $ in Thousands | Feb. 01, 2015 | Jun. 30, 2015 |
Estimated amortization expense | ||
2,015 | $ 20,657 | |
2,016 | 41,313 | |
2,017 | 41,313 | |
2,018 | 41,313 | |
2,019 | $ 41,313 | |
PLICO | Dai-ichi Life | ||
Intangible assets recognized | ||
Total intangible assets subject to amortization | $ 651,000 | |
Total intangible assets | 683,000 | |
PLICO | Dai-ichi Life | Insurance licenses | ||
Intangible assets recognized | ||
Total intangible assets indefinite | 32,000 | |
PLICO | Dai-ichi Life | Distribution relationships | ||
Intangible assets recognized | ||
Total intangible assets subject to amortization | $ 405,000 | |
PLICO | Dai-ichi Life | Distribution relationships | Minimum | ||
Intangible assets recognized | ||
Estimated useful life | 14 years | |
PLICO | Dai-ichi Life | Distribution relationships | Maximum | ||
Intangible assets recognized | ||
Estimated useful life | 22 years | |
PLICO | Dai-ichi Life | Trade names | ||
Intangible assets recognized | ||
Total intangible assets subject to amortization | $ 103,000 | |
PLICO | Dai-ichi Life | Trade names | Minimum | ||
Intangible assets recognized | ||
Estimated useful life | 13 years | |
PLICO | Dai-ichi Life | Trade names | Maximum | ||
Intangible assets recognized | ||
Estimated useful life | 17 years | |
PLICO | Dai-ichi Life | Technology | ||
Intangible assets recognized | ||
Total intangible assets subject to amortization | $ 143,000 | |
PLICO | Dai-ichi Life | Technology | Minimum | ||
Intangible assets recognized | ||
Estimated useful life | 7 years | |
PLICO | Dai-ichi Life | Technology | Maximum | ||
Intangible assets recognized | ||
Estimated useful life | 14 years |
MONY CLOSED BLOCK OF BUSINESS48
MONY CLOSED BLOCK OF BUSINESS (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 5 Months Ended | 6 Months Ended | ||
Jan. 31, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Closed block liabilities | ||||||
Minimum amount an existing dividend policyholder obligation can be reduced to | $ 0 | |||||
Future policy benefits, policyholders' account balances and other | 6,062,552 | |||||
Policyholder dividend obligation | $ 323,432 | 52,283 | $ 323,432 | |||
Other liabilities | 18,885 | |||||
Total closed block liabilities | 6,133,720 | |||||
Closed block assets | ||||||
Fixed maturities, available-for-sale, at fair value | 4,424,934 | |||||
Mortgage loans on real estate | 345,678 | |||||
Policy loans | 755,692 | |||||
Cash and other invested assets | 34,511 | |||||
Other assets | 154,346 | |||||
Total closed block assets | 5,715,161 | |||||
Excess of reported closed block liabilities over closed block assets | 418,559 | |||||
Portion of above representing accumulated other comprehensive income: | ||||||
Future earnings to be recognized from closed block assets and closed block liabilities | 418,559 | |||||
Deferred tax benefit | 0 | |||||
Policyholder dividend obligation | 166,434 | |||||
Reconciliation of the policyholder dividend obligation | ||||||
Policyholder dividend obligation, at acquisition date | 323,432 | |||||
Applicable to net revenue (losses) | (15,096) | |||||
Change in net unrealized investment gains (losses) allocated to policyholder dividend obligations | (256,053) | |||||
Policyholder dividend obligation, end of period | 323,432 | 52,283 | 52,283 | |||
Revenues | ||||||
Premiums and other income | 49,998 | 81,669 | ||||
Net investment income (loss) | 54,833 | 87,681 | ||||
Net investment gains (losses) | 2,216 | 2,850 | ||||
Total revenues | 107,047 | 172,200 | ||||
Benefits and other deductions | ||||||
Benefits and settlement expenses | 98,975 | 154,746 | ||||
Other operating expense | 263 | 474 | ||||
Total benefits and other deductions | 99,238 | 155,220 | ||||
Net revenues before income taxes | 7,809 | 16,980 | ||||
Income tax expense | 2,733 | 5,943 | ||||
Net revenues | $ 5,076 | 11,037 | ||||
Predecessor | ||||||
Closed block liabilities | ||||||
Future policy benefits, policyholders' account balances and other | $ 6,138,505 | |||||
Policyholder dividend obligation | 366,745 | $ 328,872 | 500,453 | $ 190,494 | 366,745 | |
Other liabilities | 53,838 | |||||
Total closed block liabilities | 6,559,088 | |||||
Closed block assets | ||||||
Fixed maturities, available-for-sale, at fair value | 4,524,037 | |||||
Equity securities, available-for-sale, at fair value | 5,387 | |||||
Mortgage loans on real estate | 448,855 | |||||
Policy loans | 771,120 | |||||
Cash and other invested assets | 30,984 | |||||
Other assets | 221,270 | |||||
Total closed block assets | 6,001,653 | |||||
Excess of reported closed block liabilities over closed block assets | 557,435 | |||||
Portion of above representing accumulated other comprehensive income: | ||||||
Future earnings to be recognized from closed block assets and closed block liabilities | 557,435 | |||||
Deferred tax benefit | 0 | |||||
Policyholder dividend obligation | $ 106,886 | |||||
Reconciliation of the policyholder dividend obligation | ||||||
Policyholder dividend obligation, at acquisition date | 366,745 | $ 500,453 | 190,494 | |||
Applicable to net revenue (losses) | (1,369) | (6,951) | ||||
Change in net unrealized investment gains (losses) allocated to policyholder dividend obligations | 135,077 | 145,329 | ||||
Policyholder dividend obligation, end of period | 500,453 | 328,872 | 328,872 | |||
Revenues | ||||||
Premiums and other income | 15,065 | 53,073 | 102,846 | |||
Net investment income (loss) | 19,107 | 60,416 | 112,623 | |||
Net investment gains (losses) | 568 | 1,086 | 6,105 | |||
Total revenues | 34,740 | 114,575 | 221,574 | |||
Benefits and other deductions | ||||||
Benefits and settlement expenses | 31,152 | 103,209 | 199,535 | |||
Other operating expense | 383 | 90 | ||||
Total benefits and other deductions | 31,152 | 103,592 | 199,625 | |||
Net revenues before income taxes | 3,588 | 10,983 | 21,949 | |||
Income tax expense | 1,256 | 3,844 | 7,682 | |||
Net revenues | $ 2,332 | $ 7,139 | $ 14,267 |
INVESTMENT OPERATIONS (Details)
INVESTMENT OPERATIONS (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 5 Months Ended | 6 Months Ended | |
Jan. 31, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Net realized gains (losses) for all other investments | |||||
Fixed maturities | $ 3,329 | $ 3,702 | |||
Equity securities | 21 | 21 | |||
Impairments on fixed maturity securities | (5,734) | (5,734) | |||
Modco trading portfolio | (108,741) | (141,901) | |||
Other investments | 3,044 | 775 | |||
Total realized gains (losses) - investments | (108,081) | (143,137) | |||
Gross realized gains on investments available-for-sale (fixed maturities, equity securities, and short-term investments) | 5,400 | 6,900 | |||
Gross realized losses | 7,800 | 8,900 | |||
Impairment losses on investments available-for-sale | 5,700 | 5,700 | |||
Fair value (proceeds) of securities in an unrealized gain position sold | 430,100 | 712,900 | |||
Gain realized on the sale of securities in an unrealized gain position | 5,400 | 6,900 | |||
Fair value (proceeds) of securities sold in an unrealized loss position | 28,600 | 49,300 | |||
Loss realized on the sale of securities in an unrealized loss position | $ 2,100 | $ 3,200 | |||
Predecessor | |||||
Net realized gains (losses) for all other investments | |||||
Fixed maturities | $ 6,891 | $ 20,198 | $ 27,568 | ||
Impairments on fixed maturity securities | (481) | (1,460) | (3,051) | ||
Modco trading portfolio | 73,062 | 60,989 | 127,292 | ||
Other investments | 1,200 | (721) | (2,248) | ||
Total realized gains (losses) - investments | 80,672 | 79,006 | 149,561 | ||
Gross realized gains on investments available-for-sale (fixed maturities, equity securities, and short-term investments) | 6,900 | 20,400 | 28,100 | ||
Gross realized losses | 500 | 1,600 | 3,400 | ||
Impairment losses on investments available-for-sale | 400 | 1,400 | 2,900 | ||
Fair value (proceeds) of securities in an unrealized gain position sold | 172,600 | 306,300 | 571,000 | ||
Gain realized on the sale of securities in an unrealized gain position | 6,900 | 20,400 | 28,100 | ||
Fair value (proceeds) of securities sold in an unrealized loss position | $ 400 | 1,600 | 4,400 | ||
Loss realized on the sale of securities in an unrealized loss position | $ 200 | $ 500 |
INVESTMENT OPERATIONS (Details
INVESTMENT OPERATIONS (Details 2) - USD ($) $ in Thousands | 5 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Amortized cost and fair value of the Company's investments classified as available-for-sale | ||
Amortized Cost | $ 35,959,726 | |
Gross Unrealized Gains | 61,068 | |
Gross Unrealized Losses | (2,200,457) | |
Fair Value | 33,820,337 | |
Total OTTI Recognized in OCI | (7,024) | |
Amortized cost and fair value of the Company's investments classified as held-to-maturity | ||
Fair Value | 489,950 | |
Amortized Cost, Held-to-maturity | ||
Total | 565,334 | |
Fair Value, Held-to-maturity | ||
Fair Value | 489,950 | |
Fixed maturities: | ||
Amortized cost and fair value of the Company's investments classified as available-for-sale | ||
Amortized Cost | 35,116,822 | |
Gross Unrealized Gains | 60,165 | |
Gross Unrealized Losses | (2,187,959) | |
Fair Value | 32,989,028 | |
Total OTTI Recognized in OCI | (7,024) | |
Amortized cost and fair value of the Company's investments classified as held-to-maturity | ||
Amortized Cost | 565,334 | |
Gross Unrealized Losses | (75,384) | |
Fair Value | 489,950 | |
Trading securities | 2,700,000 | |
Amortized Cost, Available-for-sale | ||
Due in one year or less | 849,305 | |
Due after one year through five years | 5,165,216 | |
Due after five years through ten years | 8,490,229 | |
Due after ten years | 20,612,072 | |
Total | 35,116,822 | |
Fair Value, Available-for-sale | ||
Due in one year or less | 849,114 | |
Due after one year through five years | 5,134,165 | |
Due after five years through ten years | 8,275,719 | |
Due after ten years | 18,730,030 | |
Total | 32,989,028 | |
Amortized Cost, Held-to-maturity | ||
Due after ten years | 565,334 | |
Total | 565,334 | |
Fair Value, Held-to-maturity | ||
Due after ten years | 489,950 | |
Fair Value | 489,950 | |
Residential mortgage-backed securities | ||
Amortized cost and fair value of the Company's investments classified as available-for-sale | ||
Amortized Cost | 1,594,167 | |
Gross Unrealized Gains | 6,244 | |
Gross Unrealized Losses | (23,585) | |
Fair Value | 1,576,826 | |
Commercial mortgage-backed securities | ||
Amortized cost and fair value of the Company's investments classified as available-for-sale | ||
Amortized Cost | 1,236,987 | |
Gross Unrealized Gains | 271 | |
Gross Unrealized Losses | (34,102) | |
Fair Value | 1,203,156 | |
Other asset-backed securities | ||
Amortized cost and fair value of the Company's investments classified as available-for-sale | ||
Amortized Cost | 820,349 | |
Gross Unrealized Gains | 2,062 | |
Gross Unrealized Losses | (22,940) | |
Fair Value | 799,471 | |
U.S. government-related securities | ||
Amortized cost and fair value of the Company's investments classified as available-for-sale | ||
Amortized Cost | 1,644,086 | |
Gross Unrealized Gains | 427 | |
Gross Unrealized Losses | (42,983) | |
Fair Value | 1,601,530 | |
Other government-related securities | ||
Amortized cost and fair value of the Company's investments classified as available-for-sale | ||
Amortized Cost | 19,578 | |
Gross Unrealized Losses | (796) | |
Fair Value | 18,782 | |
States, municipals, and political subdivisions | ||
Amortized cost and fair value of the Company's investments classified as available-for-sale | ||
Amortized Cost | 1,720,059 | |
Gross Unrealized Gains | 59 | |
Gross Unrealized Losses | (135,050) | |
Fair Value | 1,585,068 | |
Corporate securities | ||
Amortized cost and fair value of the Company's investments classified as available-for-sale | ||
Amortized Cost | 28,017,234 | |
Gross Unrealized Gains | 51,102 | |
Gross Unrealized Losses | (1,925,808) | |
Fair Value | 26,142,528 | |
Total OTTI Recognized in OCI | (7,024) | |
Preferred stocks | ||
Amortized cost and fair value of the Company's investments classified as available-for-sale | ||
Amortized Cost | 64,362 | |
Gross Unrealized Losses | (2,695) | |
Fair Value | 61,667 | |
Other. | ||
Amortized cost and fair value of the Company's investments classified as held-to-maturity | ||
Amortized Cost | 565,334 | |
Gross Unrealized Losses | (75,384) | |
Fair Value | 489,950 | |
Fair Value, Held-to-maturity | ||
Fair Value | 489,950 | |
Equity securities | ||
Amortized cost and fair value of the Company's investments classified as available-for-sale | ||
Amortized Cost | 685,967 | |
Gross Unrealized Gains | 903 | |
Gross Unrealized Losses | (12,498) | |
Fair Value | 674,372 | |
Amortized cost and fair value of the Company's investments classified as held-to-maturity | ||
Trading securities | 8,300 | |
Short-term investments | ||
Amortized cost and fair value of the Company's investments classified as available-for-sale | ||
Amortized Cost | 156,937 | |
Fair Value | 156,937 | |
Amortized cost and fair value of the Company's investments classified as held-to-maturity | ||
Trading securities | $ 43,800 | |
Predecessor | ||
Amortized cost and fair value of the Company's investments classified as available-for-sale | ||
Amortized Cost | $ 31,763,413 | |
Gross Unrealized Gains | 3,274,304 | |
Gross Unrealized Losses | (213,419) | |
Fair Value | 34,824,298 | |
Total OTTI Recognized in OCI | 6,309 | |
Amortized cost and fair value of the Company's investments classified as held-to-maturity | ||
Gross Unrealized Losses | 0 | |
Fair Value | 485,422 | |
Amortized Cost, Held-to-maturity | ||
Total | 435,000 | |
Fair Value, Held-to-maturity | ||
Fair Value | 485,422 | |
Predecessor | Fixed maturities: | ||
Amortized cost and fair value of the Company's investments classified as available-for-sale | ||
Amortized Cost | 30,898,028 | |
Gross Unrealized Gains | 3,238,658 | |
Gross Unrealized Losses | (199,266) | |
Fair Value | 33,937,420 | |
Total OTTI Recognized in OCI | 6,309 | |
Amortized cost and fair value of the Company's investments classified as held-to-maturity | ||
Amortized Cost | 435,000 | |
Gross Unrealized Gains | 50,422 | |
Fair Value | 485,422 | |
Trading securities | 2,800,000 | |
Fair Value, Held-to-maturity | ||
Fair Value | 485,422 | |
Predecessor | Residential mortgage-backed securities | ||
Amortized cost and fair value of the Company's investments classified as available-for-sale | ||
Amortized Cost | 1,374,141 | |
Gross Unrealized Gains | 56,381 | |
Gross Unrealized Losses | (12,264) | |
Fair Value | 1,418,258 | |
Total OTTI Recognized in OCI | 6,404 | |
Predecessor | Commercial mortgage-backed securities | ||
Amortized cost and fair value of the Company's investments classified as available-for-sale | ||
Amortized Cost | 1,119,979 | |
Gross Unrealized Gains | 59,637 | |
Gross Unrealized Losses | (2,364) | |
Fair Value | 1,177,252 | |
Predecessor | Other asset-backed securities | ||
Amortized cost and fair value of the Company's investments classified as available-for-sale | ||
Amortized Cost | 857,365 | |
Gross Unrealized Gains | 17,961 | |
Gross Unrealized Losses | (35,950) | |
Fair Value | 839,376 | |
Total OTTI Recognized in OCI | (95) | |
Predecessor | U.S. government-related securities | ||
Amortized cost and fair value of the Company's investments classified as available-for-sale | ||
Amortized Cost | 1,394,028 | |
Gross Unrealized Gains | 44,149 | |
Gross Unrealized Losses | (9,282) | |
Fair Value | 1,428,895 | |
Predecessor | Other government-related securities | ||
Amortized cost and fair value of the Company's investments classified as available-for-sale | ||
Amortized Cost | 16,939 | |
Gross Unrealized Gains | 3,233 | |
Fair Value | 20,172 | |
Predecessor | States, municipals, and political subdivisions | ||
Amortized cost and fair value of the Company's investments classified as available-for-sale | ||
Amortized Cost | 1,391,526 | |
Gross Unrealized Gains | 296,594 | |
Gross Unrealized Losses | (431) | |
Fair Value | 1,687,689 | |
Predecessor | Corporate securities | ||
Amortized cost and fair value of the Company's investments classified as available-for-sale | ||
Amortized Cost | 24,744,050 | |
Gross Unrealized Gains | 2,760,703 | |
Gross Unrealized Losses | (138,975) | |
Fair Value | 27,365,778 | |
Predecessor | Other. | ||
Amortized cost and fair value of the Company's investments classified as held-to-maturity | ||
Amortized Cost | 435,000 | |
Gross Unrealized Gains | 50,422 | |
Fair Value | 485,422 | |
Fair Value, Held-to-maturity | ||
Fair Value | 485,422 | |
Predecessor | Equity securities | ||
Amortized cost and fair value of the Company's investments classified as available-for-sale | ||
Amortized Cost | 713,813 | |
Gross Unrealized Gains | 35,646 | |
Gross Unrealized Losses | (14,153) | |
Fair Value | 735,306 | |
Amortized cost and fair value of the Company's investments classified as held-to-maturity | ||
Trading securities | 21,500 | |
Predecessor | Short-term investments | ||
Amortized cost and fair value of the Company's investments classified as available-for-sale | ||
Amortized Cost | 151,572 | |
Fair Value | 151,572 | |
Amortized cost and fair value of the Company's investments classified as held-to-maturity | ||
Trading securities | $ 95,100 |
INVESTMENT OPERATIONS (Detail51
INVESTMENT OPERATIONS (Details 3) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 5 Months Ended | 6 Months Ended | |
Jan. 31, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
INVESTMENT OPERATIONS | |||||
Other-than-temporary impairments of investments recorded | $ 13,395 | $ 13,395 | |||
Other-than-temporary impairments of investments recorded in earnings | 5,734 | 5,734 | |||
Other-than-temporary impairments of investments recorded in other comprehensive income (loss) | 7,661 | 7,661 | |||
Fixed maturities | |||||
INVESTMENT OPERATIONS | |||||
Other-than-temporary impairments related to fixed maturities or equity securities that the entity intended to sell or expected to be required to sell | 0 | 0 | |||
Credit losses on debt securities | |||||
Additions for newly impaired securities | 4,472 | 4,472 | |||
Ending balance | 4,472 | 4,472 | |||
Equity securities | |||||
INVESTMENT OPERATIONS | |||||
Other-than-temporary impairments related to fixed maturities or equity securities that the entity intended to sell or expected to be required to sell | $ 0 | 0 | |||
Predecessor | |||||
INVESTMENT OPERATIONS | |||||
Other-than-temporary impairments of investments recorded | $ 636 | $ 461 | $ 884 | ||
Other-than-temporary impairments of investments recorded in earnings | 481 | 1,460 | 3,051 | ||
Other-than-temporary impairments of investments recorded in other comprehensive income (loss) | 155 | (999) | (2,167) | ||
Additional non-credit losses | 100 | 1,000 | 2,200 | ||
Predecessor | Fixed maturities | |||||
INVESTMENT OPERATIONS | |||||
Other-than-temporary impairments of investments recorded | 600 | 500 | 900 | ||
Other-than-temporary impairments related to fixed maturities or equity securities that the entity intended to sell or expected to be required to sell | 0 | 0 | 0 | ||
Credit losses on debt securities | |||||
Beginning balance | 15,463 | 20,792 | $ 15,684 | 41,674 | |
Additions for previously impaired securities | 221 | 553 | 1,027 | ||
Reductions for previously impaired securities due to a change in expected cash flows | (3,407) | (24,763) | |||
Ending balance | 15,684 | 17,938 | 17,938 | ||
Predecessor | Equity securities | |||||
INVESTMENT OPERATIONS | |||||
Other-than-temporary impairments of investments recorded | 1,500 | 3,100 | |||
Other-than-temporary impairments related to fixed maturities or equity securities that the entity intended to sell or expected to be required to sell | $ 0 | $ 0 | $ 0 |
INVESTMENT OPERATIONS (Detail52
INVESTMENT OPERATIONS (Details 4) $ in Thousands | 1 Months Ended | 3 Months Ended | 5 Months Ended | 6 Months Ended | 12 Months Ended | |
Jan. 31, 2015USD ($) | Jun. 30, 2015USD ($)position | Jun. 30, 2014USD ($) | Jun. 30, 2015USD ($)position | Jun. 30, 2014USD ($) | Dec. 31, 2014USD ($) | |
Fair Value | ||||||
Less Than 12 Months | $ 30,315,915 | $ 30,315,915 | ||||
Total | 30,315,915 | 30,315,915 | ||||
Unrealized Loss | ||||||
Less Than 12 Months | (2,200,457) | (2,200,457) | ||||
Total | $ (2,200,457) | $ (2,200,457) | ||||
Total positions that were in an unrealized loss position | position | 2,435 | 2,435 | ||||
Available-for-sale securities, fair value | $ 33,820,337 | $ 33,820,337 | ||||
Available-for-sale securities, amortized cost | 35,959,726 | 35,959,726 | ||||
Below investment grade | ||||||
Unrealized Loss | ||||||
Available-for-sale securities, fair value | 1,600,000 | 1,600,000 | ||||
Available-for-sale securities, amortized cost | 1,600,000 | 1,600,000 | ||||
Securities in trading portfolio | 308,800 | 308,800 | ||||
Securities not publicly traded | 403,300 | 403,300 | ||||
Fixed maturities: | ||||||
Unrealized Loss | ||||||
Available-for-sale securities, fair value | 32,989,028 | 32,989,028 | ||||
Available-for-sale securities, amortized cost | 35,116,822 | 35,116,822 | ||||
Securities in trading portfolio | 2,700,000 | 2,700,000 | ||||
Change in unrealized gains (losses), net of income tax | (1,039,827) | (1,383,066) | ||||
Residential mortgage-backed securities | ||||||
Fair Value | ||||||
Less Than 12 Months | 1,043,439 | 1,043,439 | ||||
Total | 1,043,439 | 1,043,439 | ||||
Unrealized Loss | ||||||
Less Than 12 Months | (23,585) | (23,585) | ||||
Total | (23,585) | (23,585) | ||||
Available-for-sale securities, fair value | 1,576,826 | 1,576,826 | ||||
Available-for-sale securities, amortized cost | 1,594,167 | 1,594,167 | ||||
Commercial mortgage-backed securities | ||||||
Fair Value | ||||||
Less Than 12 Months | 1,125,342 | 1,125,342 | ||||
Total | 1,125,342 | 1,125,342 | ||||
Unrealized Loss | ||||||
Less Than 12 Months | (34,102) | (34,102) | ||||
Total | (34,102) | (34,102) | ||||
Available-for-sale securities, fair value | 1,203,156 | 1,203,156 | ||||
Available-for-sale securities, amortized cost | 1,236,987 | 1,236,987 | ||||
Other asset-backed securities | ||||||
Fair Value | ||||||
Less Than 12 Months | 723,695 | 723,695 | ||||
Total | 723,695 | 723,695 | ||||
Unrealized Loss | ||||||
Less Than 12 Months | (22,940) | (22,940) | ||||
Total | (22,940) | (22,940) | ||||
Percentage of underlying collateral including student-loan backed auction rate securities guaranteed by the Federal Family Education Loan Program ("FFELP"), minimum | 97.00% | |||||
Available-for-sale securities, fair value | 799,471 | 799,471 | ||||
Available-for-sale securities, amortized cost | 820,349 | 820,349 | ||||
U.S. government-related securities | ||||||
Fair Value | ||||||
Less Than 12 Months | 1,569,203 | 1,569,203 | ||||
Total | 1,569,203 | 1,569,203 | ||||
Unrealized Loss | ||||||
Less Than 12 Months | (42,983) | (42,983) | ||||
Total | (42,983) | (42,983) | ||||
Available-for-sale securities, fair value | 1,601,530 | 1,601,530 | ||||
Available-for-sale securities, amortized cost | 1,644,086 | 1,644,086 | ||||
Other government-related securities | ||||||
Fair Value | ||||||
Less Than 12 Months | 18,782 | 18,782 | ||||
Total | 18,782 | 18,782 | ||||
Unrealized Loss | ||||||
Less Than 12 Months | (796) | (796) | ||||
Total | (796) | (796) | ||||
Available-for-sale securities, fair value | 18,782 | 18,782 | ||||
Available-for-sale securities, amortized cost | 19,578 | 19,578 | ||||
States, municipals, and political subdivisions | ||||||
Fair Value | ||||||
Less Than 12 Months | 1,583,913 | 1,583,913 | ||||
Total | 1,583,913 | 1,583,913 | ||||
Unrealized Loss | ||||||
Less Than 12 Months | (135,050) | (135,050) | ||||
Total | (135,050) | (135,050) | ||||
Available-for-sale securities, fair value | 1,585,068 | 1,585,068 | ||||
Available-for-sale securities, amortized cost | 1,720,059 | 1,720,059 | ||||
Corporate securities | ||||||
Fair Value | ||||||
Less Than 12 Months | 23,693,311 | 23,693,311 | ||||
Total | 23,693,311 | 23,693,311 | ||||
Unrealized Loss | ||||||
Less Than 12 Months | (1,925,808) | (1,925,808) | ||||
Total | (1,925,808) | (1,925,808) | ||||
Available-for-sale securities, fair value | 26,142,528 | 26,142,528 | ||||
Available-for-sale securities, amortized cost | 28,017,234 | 28,017,234 | ||||
Preferred stocks | ||||||
Fair Value | ||||||
Less Than 12 Months | 61,667 | 61,667 | ||||
Total | 61,667 | 61,667 | ||||
Unrealized Loss | ||||||
Less Than 12 Months | (2,695) | (2,695) | ||||
Total | (2,695) | (2,695) | ||||
Available-for-sale securities, fair value | 61,667 | 61,667 | ||||
Available-for-sale securities, amortized cost | 64,362 | 64,362 | ||||
Equity securities | ||||||
Fair Value | ||||||
Less Than 12 Months | 496,563 | 496,563 | ||||
Total | 496,563 | 496,563 | ||||
Unrealized Loss | ||||||
Less Than 12 Months | (12,498) | (12,498) | ||||
Total | (12,498) | (12,498) | ||||
Available-for-sale securities, fair value | 674,372 | 674,372 | ||||
Available-for-sale securities, amortized cost | 685,967 | 685,967 | ||||
Securities in trading portfolio | 8,300 | 8,300 | ||||
Change in unrealized gains (losses), net of income tax | $ (9,048) | $ (7,537) | ||||
Predecessor | ||||||
Fair Value | ||||||
Less Than 12 Months | $ 2,232,805 | |||||
12 Months or More | 1,904,974 | |||||
Total | 4,137,779 | |||||
Unrealized Loss | ||||||
Less Than 12 Months | (96,859) | |||||
12 Months or More | (116,560) | |||||
Total | (213,419) | |||||
Available-for-sale securities, fair value | 34,824,298 | |||||
Available-for-sale securities, amortized cost | 31,763,413 | |||||
Predecessor | Fixed maturities: | ||||||
Unrealized Loss | ||||||
Available-for-sale securities, fair value | 33,937,420 | |||||
Available-for-sale securities, amortized cost | 30,898,028 | |||||
Securities in trading portfolio | 2,800,000 | |||||
Change in unrealized gains (losses), net of income tax | $ 669,160 | $ 519,488 | $ 1,147,761 | |||
Predecessor | Residential mortgage-backed securities | ||||||
Fair Value | ||||||
Less Than 12 Months | 165,877 | |||||
12 Months or More | 67,301 | |||||
Total | 233,178 | |||||
Unrealized Loss | ||||||
Less Than 12 Months | (9,547) | |||||
12 Months or More | (2,717) | |||||
Total | (12,264) | |||||
Available-for-sale securities, fair value | 1,418,258 | |||||
Available-for-sale securities, amortized cost | 1,374,141 | |||||
Predecessor | Commercial mortgage-backed securities | ||||||
Fair Value | ||||||
Less Than 12 Months | 49,908 | |||||
12 Months or More | 102,529 | |||||
Total | 152,437 | |||||
Unrealized Loss | ||||||
Less Than 12 Months | (334) | |||||
12 Months or More | (2,030) | |||||
Total | (2,364) | |||||
Available-for-sale securities, fair value | 1,177,252 | |||||
Available-for-sale securities, amortized cost | 1,119,979 | |||||
Predecessor | Other asset-backed securities | ||||||
Fair Value | ||||||
Less Than 12 Months | 108,665 | |||||
12 Months or More | 537,488 | |||||
Total | 646,153 | |||||
Unrealized Loss | ||||||
Less Than 12 Months | (6,473) | |||||
12 Months or More | (29,477) | |||||
Total | (35,950) | |||||
Available-for-sale securities, fair value | 839,376 | |||||
Available-for-sale securities, amortized cost | 857,365 | |||||
Predecessor | U.S. government-related securities | ||||||
Fair Value | ||||||
Less Than 12 Months | 231,917 | |||||
12 Months or More | 280,803 | |||||
Total | 512,720 | |||||
Unrealized Loss | ||||||
Less Than 12 Months | (3,868) | |||||
12 Months or More | (5,414) | |||||
Total | (9,282) | |||||
Available-for-sale securities, fair value | 1,428,895 | |||||
Available-for-sale securities, amortized cost | 1,394,028 | |||||
Predecessor | Other government-related securities | ||||||
Unrealized Loss | ||||||
Available-for-sale securities, fair value | 20,172 | |||||
Available-for-sale securities, amortized cost | 16,939 | |||||
Predecessor | States, municipals, and political subdivisions | ||||||
Fair Value | ||||||
Less Than 12 Months | 1,905 | |||||
12 Months or More | 10,481 | |||||
Total | 12,386 | |||||
Unrealized Loss | ||||||
Less Than 12 Months | (134) | |||||
12 Months or More | (297) | |||||
Total | (431) | |||||
Available-for-sale securities, fair value | 1,687,689 | |||||
Available-for-sale securities, amortized cost | 1,391,526 | |||||
Predecessor | Corporate securities | ||||||
Fair Value | ||||||
Less Than 12 Months | 1,657,103 | |||||
12 Months or More | 776,863 | |||||
Total | 2,433,966 | |||||
Unrealized Loss | ||||||
Less Than 12 Months | (76,285) | |||||
12 Months or More | (62,690) | |||||
Total | (138,975) | |||||
Available-for-sale securities, fair value | 27,365,778 | |||||
Available-for-sale securities, amortized cost | 24,744,050 | |||||
Predecessor | Equity securities | ||||||
Fair Value | ||||||
Less Than 12 Months | 17,430 | |||||
12 Months or More | 129,509 | |||||
Total | 146,939 | |||||
Unrealized Loss | ||||||
Less Than 12 Months | (218) | |||||
12 Months or More | (13,935) | |||||
Total | (14,153) | |||||
Available-for-sale securities, fair value | 735,306 | |||||
Available-for-sale securities, amortized cost | 713,813 | |||||
Securities in trading portfolio | $ 21,500 | |||||
Change in unrealized gains (losses), net of income tax | $ 12,172 | $ 14,591 | $ 33,004 |
INVESTMENT OPERATIONS (Detail53
INVESTMENT OPERATIONS (Details 5) - Red Mountain | 5 Months Ended | |
Jun. 30, 2015USD ($)item | Dec. 31, 2014item | |
Variable Interest Entities | ||
Number of wholly owned subsidiaries that were determined to be VIEs | 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 | |
Payments made to guarantee | $ | $ 0 | |
Predecessor | ||
Variable Interest Entities | ||
Number of wholly owned subsidiaries that were determined to be VIEs | 1 |
MORTGAGE LOANS (Details)
MORTGAGE LOANS (Details) - Jun. 30, 2015 - USD ($) $ in Thousands | Total |
Mortgage loans | |
Mortgage loan holdings | $ 5,677,667 |
Amount that would become due in remainder of 2015, if loans are called at their next call dates | 121,100 |
Amount that would become due in 2016 through 2020, if loans are called at their next call dates | 953,000 |
Amount that would become due in 2021 through 2025, if loans are called at their next call dates | 377,900 |
Amount that would become due after 2025, if loans are called at their next call dates | 118,300 |
Commercial mortgage loans | |
Mortgage loans | |
Mortgage loan holdings | $ 5,700,000 |
Minimum | |
Mortgage loans | |
Period for exercise of call options or interest rate reset options | 3 years |
Maximum | |
Mortgage loans | |
Period for exercise of call options or interest rate reset options | 10 years |
MORTGAGE LOANS (Details 2)
MORTGAGE LOANS (Details 2) - Commercial mortgage loans $ in Thousands | 1 Months Ended | 3 Months Ended | 5 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jan. 31, 2015USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2014USD ($) | Jun. 30, 2015USD ($)item | Jun. 30, 2015USD ($)item | Jun. 30, 2014USD ($) | Dec. 31, 2014USD ($) | |
Mortgage loans | |||||||
Mortgage loans having participation feature | $ 548,400 | $ 548,400 | $ 548,400 | ||||
Income recognized on participating mortgage loans | 3,300 | 5,100 | |||||
Nonperforming mortgage loans, foreclosed properties and restructured loans pursuant to pooling and servicing agreement | $ 4,200 | $ 4,200 | $ 4,200 | ||||
Nonperforming mortgage loans, foreclosed properties and restructured loans to invested assets (as a percent) | 0.01% | 0.01% | 0.01% | ||||
Assets accepted or agreed to be accepted on mortgage loans accounted for as troubled debt restructurings | $ 1,500 | ||||||
Principal amount of loans accounted for as troubled debt restructurings satisfied by acceptance of assets | 2,000 | ||||||
Number of loan categories | item | 2 | ||||||
Loans not subject to a pooling and servicing agreement which are either nonperforming, restructured, and/or foreclosed | $ 4,200 | 4,200 | $ 4,200 | ||||
Loans subject to a pooling and servicing agreement which are either nonperforming or restructured | 0 | $ 0 | 0 | ||||
Number of nonperforming loans which have been restructured | item | 0 | ||||||
Change in the allowance for credit losses | |||||||
Recoveries | $ (638) | ||||||
Provision | 1,173 | ||||||
Ending balance | $ 535 | $ 535 | $ 535 | ||||
Maximum | |||||||
Mortgage loans | |||||||
Loan-to-value ratio with participating interest (as a percent) | 85.00% | 85.00% | 85.00% | ||||
Predecessor | |||||||
Mortgage loans | |||||||
Mortgage loans having participation feature | $ 553,600 | ||||||
Income recognized on participating mortgage loans | $ 100 | $ 2,800 | $ 5,800 | ||||
Assets accepted or agreed to be accepted on mortgage loans accounted for as troubled debt restructurings | 11,300 | ||||||
Principal amount of loans accounted for as troubled debt restructurings satisfied by acceptance of assets | 13,800 | ||||||
Change in the allowance for credit losses | |||||||
Beginning balance | 5,720 | $ 2,500 | $ 5,720 | $ 3,130 | 3,130 | ||
Charge offs | (861) | (675) | |||||
Recoveries | (2,359) | (2,600) | |||||
Provision | 5,865 | ||||||
Ending balance | $ 2,500 | $ 5,720 |
MORTGAGE LOANS (Details 3)
MORTGAGE LOANS (Details 3) - Commercial mortgage loans $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015USD ($)loan | Dec. 31, 2014USD ($)loan | |
Delinquent loans | ||
Past due period at which to cease carrying accrued interest on delinquent loans | 90 days | |
Past due period at which to initiate foreclosure proceedings | 90 days | |
30-59 Days Delinquent | $ | $ 8,045 | |
60-89 Days Delinquent | $ | 2,370 | |
Greater than 90 Days Delinquent | $ | 296 | |
Total Delinquent | $ | $ 10,711 | |
Number of loans, 30-59 Days Delinquent | 5 | |
Number of loans, 60-89 Days Delinquent | 2 | |
Number of loans, Greater than 90 Days Delinquent | 1 | |
Number of loans, Total Delinquent | 8 | |
Predecessor | ||
Delinquent loans | ||
30-59 Days Delinquent | $ | $ 8,972 | |
Greater than 90 Days Delinquent | $ | 1,484 | |
Total Delinquent | $ | $ 10,456 | |
Number of loans, 30-59 Days Delinquent | 4 | |
Number of loans, Greater than 90 Days Delinquent | 1 | |
Number of loans, Total Delinquent | 5 |
MORTGAGE LOANS (Details 4)
MORTGAGE LOANS (Details 4) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Commercial mortgage loans: | ||
Maximum number of days accrued interest on impaired loans | 90 days | |
Commercial mortgage loans | ||
With no related allowance recorded | ||
Recorded Investment | $ 9,022 | |
Unpaid Principal Balance | 12,243 | |
Average Recorded Investment | 1,504 | |
Interest Income Recognized | 199 | |
Cash Basis Interest Income | 168 | |
With an allowance recorded | ||
Recorded Investment | 1,500 | |
Unpaid Principal Balance | 2,035 | |
Related Allowance | 535 | |
Average Recorded Investment | 1,500 | |
Interest Income Recognized | 31 | |
Cash Basis Interest Income | $ 31 | |
Predecessor | Commercial mortgage loans | ||
With an allowance recorded | ||
Recorded Investment | $ 19,632 | |
Unpaid Principal Balance | 20,603 | |
Related Allowance | 5,720 | |
Average Recorded Investment | 3,272 | |
Interest Income Recognized | 1,224 | |
Cash Basis Interest Income | $ 1,280 |
MORTGAGE LOANS (Details 5)
MORTGAGE LOANS (Details 5) - Commercial mortgage loans $ in Thousands | 5 Months Ended | 12 Months Ended |
Jun. 30, 2015USD ($)loan | Dec. 31, 2014USD ($)loan | |
Troubled debt restructuring: | ||
Number of Contracts | loan | 1 | |
Pre-Modification Outstanding Recorded Investment | $ 2,035 | |
Post-Modification Outstanding Recorded Investment | $ 1,500 | |
Predecessor | ||
Troubled debt restructuring: | ||
Number of Contracts | loan | 6 | |
Pre-Modification Outstanding Recorded Investment | $ 28,648 | |
Post-Modification Outstanding Recorded Investment | $ 19,593 |
DEFERRED POLICY ACQUISITION C59
DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED (Details) - USD ($) $ in Thousands | 1 Months Ended | 5 Months Ended | 12 Months Ended |
Jan. 31, 2015 | Jun. 30, 2015 | Dec. 31, 2014 | |
Balances and changes in DAC | |||
Capitalization of commissions, sales and issue expenses | $ 132,103 | ||
Amortization | (7,916) | ||
Change in unrealized investment gains and losses | 4,073 | ||
Balance, end of period | 128,260 | ||
Balances and changes in VOBA | |||
Balance, beginning of period | 1,278,063 | ||
Amortization | (60,468) | ||
Change in unrealized gains and losses | 50,612 | ||
Balance, end of period | $ 1,278,063 | 1,268,207 | |
Expected amortization of VOBA for the next five years | |||
2,015 | 74,707 | ||
2,016 | 141,689 | ||
2,017 | 131,556 | ||
2,018 | 116,248 | ||
2,019 | 97,335 | ||
Predecessor | |||
Balances and changes in DAC | |||
Balance, beginning of period | 2,653,065 | 2,580,135 | $ 2,720,604 |
Capitalization of commissions, sales and issue expenses | 22,820 | 293,672 | |
Amortization | 1,080 | (194,517) | |
Change in unrealized investment gains and losses | (96,830) | (166,694) | |
Balance, end of period | 2,580,135 | 2,653,065 | |
Balances and changes in VOBA | |||
Balance, beginning of period | 501,981 | $ 416,669 | 756,018 |
Amortization | (5,895) | (113,803) | |
Change in unrealized gains and losses | (79,417) | (140,234) | |
Balance, end of period | $ 416,669 | $ 501,981 |
GOODWILL (Details)
GOODWILL (Details) - Segments [Domain] - USD ($) $ in Thousands | 1 Months Ended | 5 Months Ended | ||
Jan. 31, 2015 | Jun. 30, 2015 | Feb. 01, 2015 | Dec. 31, 2014 | |
Changes in the carrying amount of goodwill | ||||
Decrease in goodwill balance | $ 0 | |||
Goodwill | 735,712 | $ 735,700 | ||
Goodwill impairment | $ 0 | |||
Predecessor | ||||
Changes in the carrying amount of goodwill | ||||
Decrease in goodwill balance | $ 300 | |||
Goodwill | $ 77,577 |
DEBT AND OTHER OBLIGATIONS (Det
DEBT AND OTHER OBLIGATIONS (Details) $ in Thousands | Feb. 03, 2015 | Feb. 02, 2015USD ($) | Feb. 01, 2015USD ($) | Oct. 10, 2012USD ($) | Jan. 31, 2015USD ($) | Jun. 30, 2015USD ($)item | Jun. 30, 2014USD ($) | Dec. 31, 2014USD ($) | Jun. 25, 2014USD ($) | Aug. 07, 2013USD ($) | Dec. 10, 2010USD ($) | Apr. 23, 2010USD ($) |
DEBT AND OTHER OBLIGATIONS | ||||||||||||
Non-recourse funding obligations | $ 1,926,562 | |||||||||||
Repurchase Program Borrowings | ||||||||||||
Repurchase obligation | 602,213 | |||||||||||
Collateral pledged for repurchase agreements | 657,372 | |||||||||||
U.S. government-related securities. | ||||||||||||
Repurchase Program Borrowings | ||||||||||||
Collateral pledged for repurchase agreements | 98,345 | |||||||||||
Corporate securities | ||||||||||||
Repurchase Program Borrowings | ||||||||||||
Collateral pledged for repurchase agreements | 107,781 | |||||||||||
Loans | ||||||||||||
Repurchase Program Borrowings | ||||||||||||
Collateral pledged for repurchase agreements | 451,246 | |||||||||||
Overnight and Continuous | ||||||||||||
Repurchase Program Borrowings | ||||||||||||
Collateral pledged for repurchase agreements | 549,591 | |||||||||||
Overnight and Continuous | U.S. government-related securities. | ||||||||||||
Repurchase Program Borrowings | ||||||||||||
Collateral pledged for repurchase agreements | 98,345 | |||||||||||
Overnight and Continuous | Loans | ||||||||||||
Repurchase Program Borrowings | ||||||||||||
Collateral pledged for repurchase agreements | 451,246 | |||||||||||
Up to 30 days | ||||||||||||
Repurchase Program Borrowings | ||||||||||||
Collateral pledged for repurchase agreements | 107,781 | |||||||||||
Up to 30 days | Corporate securities | ||||||||||||
Repurchase Program Borrowings | ||||||||||||
Collateral pledged for repurchase agreements | 107,781 | |||||||||||
Repurchase Program Borrowings | ||||||||||||
Repurchase Program Borrowings | ||||||||||||
Fair value of securities pledged under the repurchase program | 657,400 | |||||||||||
Repurchase obligation | $ 602,200 | |||||||||||
Average borrowing rate (as a percent) | 0.21% | |||||||||||
Maximum outstanding balance | $ 646,700 | |||||||||||
Average daily balance | $ 507,200 | |||||||||||
Average daily borrowing rate (as a percent) | 0.17% | |||||||||||
Repurchase Program Borrowings | Maximum | ||||||||||||
Repurchase Program Borrowings | ||||||||||||
Term of debt | 90 days | |||||||||||
Credit Facility | ||||||||||||
DEBT AND OTHER OBLIGATIONS | ||||||||||||
Line of credit, maximum borrowing capacity | $ 750,000 | |||||||||||
Base of floating rate interest payments | LIBOR | |||||||||||
Facility fee percentage | 0.175% | |||||||||||
Line of credit, maximum borrowing capacity to be granted upon entity's request | $ 1,000,000 | |||||||||||
Credit Facility | Prime rate | ||||||||||||
DEBT AND OTHER OBLIGATIONS | ||||||||||||
Base of floating rate interest payments | prime rate | |||||||||||
Credit Facility | Federal funds rate | ||||||||||||
DEBT AND OTHER OBLIGATIONS | ||||||||||||
Base of floating rate interest payments | Federal Funds rate | |||||||||||
Interest rate added to the base rate (as a percent) | 0.50% | |||||||||||
Credit Facility | LIBOR One-Month Rate | ||||||||||||
DEBT AND OTHER OBLIGATIONS | ||||||||||||
Base of floating rate interest payments | one-month LIBOR | |||||||||||
Interest rate added to the base rate (as a percent) | 1.00% | |||||||||||
2015 Credit Facility | ||||||||||||
DEBT AND OTHER OBLIGATIONS | ||||||||||||
Line of credit, maximum borrowing capacity | $ 1,000,000 | |||||||||||
Base of floating rate interest payments | LIBOR | |||||||||||
Facility fee percentage | 0.125% | 0.15% | ||||||||||
Line of credit, maximum borrowing capacity to be granted upon entity's request | $ 1,250,000 | |||||||||||
2015 Credit Facility | Prime rate | ||||||||||||
DEBT AND OTHER OBLIGATIONS | ||||||||||||
Base of floating rate interest payments | prime rate | |||||||||||
2015 Credit Facility | Federal funds rate | ||||||||||||
DEBT AND OTHER OBLIGATIONS | ||||||||||||
Base of floating rate interest payments | Federal Funds rate | |||||||||||
Interest rate added to the base rate (as a percent) | 0.50% | |||||||||||
2015 Credit Facility | LIBOR One-Month Rate | ||||||||||||
DEBT AND OTHER OBLIGATIONS | ||||||||||||
Base of floating rate interest payments | one-month LIBOR | |||||||||||
Interest rate added to the base rate (as a percent) | 1.00% | |||||||||||
Letter of Credit | ||||||||||||
DEBT AND OTHER OBLIGATIONS | ||||||||||||
Previously executed Letter of Credit no longer issued and outstanding | $ 55,000 | |||||||||||
Golden Gate | ||||||||||||
DEBT AND OTHER OBLIGATIONS | ||||||||||||
Non-recourse funding obligations | $ 1,152,839 | |||||||||||
Year-to-date weighted-average interest rate of non-recourse funding obligations (as a percent) | 4.66% | |||||||||||
Golden Gate | Non-recourse Funding Obligations Series | ||||||||||||
DEBT AND OTHER OBLIGATIONS | ||||||||||||
Number of series of Surplus Notes | item | 3 | |||||||||||
Outstanding Surplus Notes | $ 800,000 | |||||||||||
Golden Gate | Series A1 Non-recourse Funding Obligation | ||||||||||||
DEBT AND OTHER OBLIGATIONS | ||||||||||||
Outstanding Surplus Notes | $ 400,000 | |||||||||||
Fixed interest rate (as a percent) | 7.375% | |||||||||||
Golden Gate | Series A2 Non-recourse Funding Obligation | ||||||||||||
DEBT AND OTHER OBLIGATIONS | ||||||||||||
Outstanding Surplus Notes | $ 100,000 | |||||||||||
Fixed interest rate (as a percent) | 8.00% | |||||||||||
Golden Gate | Series A3 Non-recourse Funding Obligation | ||||||||||||
DEBT AND OTHER OBLIGATIONS | ||||||||||||
Outstanding Surplus Notes | $ 300,000 | |||||||||||
Fixed interest rate (as a percent) | 8.45% | |||||||||||
Golden Gate II | ||||||||||||
DEBT AND OTHER OBLIGATIONS | ||||||||||||
Outstanding non-recourse funding obligations | $ 575,000 | |||||||||||
Non-recourse funding obligations held by external parties | 144,900 | |||||||||||
Non-recourse funding obligations held by nonconsolidated affiliates | 145,300 | |||||||||||
Non-recourse funding obligations held by consolidated subsidiaries of the Company | 284,800 | |||||||||||
Payments made under the agreements | 0 | |||||||||||
Non-recourse funding obligations | $ 235,698 | |||||||||||
Year-to-date weighted-average interest rate of non-recourse funding obligations (as a percent) | 1.21% | |||||||||||
Repurchase Program Borrowings | ||||||||||||
Amount of collateralized support agreement obligations by PLC | $ 1,900 | |||||||||||
PLC | 2015 Credit Facility | ||||||||||||
DEBT AND OTHER OBLIGATIONS | ||||||||||||
Line of credit, amount outstanding | $ 545,000 | |||||||||||
Base of floating rate interest payments | LIBOR | |||||||||||
Interest rate added to the base rate (as a percent) | 1.00% | |||||||||||
Golden Gate V and Red Mountain | ||||||||||||
DEBT AND OTHER OBLIGATIONS | ||||||||||||
Transaction period of financing for reserves related to a block of universal life insurance policies with secondary guarantees | 20 years | |||||||||||
Maximum amount to be financed for reserves related to a block of universal life insurance policies with secondary guarantees | $ 945,000 | |||||||||||
Red Mountain | ||||||||||||
DEBT AND OTHER OBLIGATIONS | ||||||||||||
Initial principal amount of note for deposit to a reinsurance trust | 275,000 | |||||||||||
Maximum principal amount of note for deposit to a reinsurance trust | $ 945,000 | |||||||||||
Credit enhancement period for Red Mountain note | 20 years | |||||||||||
Principal balance of note | $ 470,000 | |||||||||||
Golden Gate V | ||||||||||||
DEBT AND OTHER OBLIGATIONS | ||||||||||||
Fixed interest rate (as a percent) | 6.25% | |||||||||||
Outstanding non-recourse funding obligations | $ 470,000 | |||||||||||
Future scheduled capital contributions to prefund credit enhancements fees amount | 139,600 | |||||||||||
Payments made under the agreements | 0 | |||||||||||
Maximum principal amount of non-recourse funding obligation | 945,000 | |||||||||||
Non-recourse funding obligations | $ 535,474 | |||||||||||
Year-to-date weighted-average interest rate of non-recourse funding obligations (as a percent) | 5.12% | |||||||||||
Golden Gate III | ||||||||||||
DEBT AND OTHER OBLIGATIONS | ||||||||||||
Outstanding letters of credit (LOC) | $ 935,000 | |||||||||||
Payments made under the agreements | $ 0 | |||||||||||
Maximum LOC borrowing capacity | $ 915,000 | $ 710,000 | $ 505,000 | |||||||||
Maximum stated amount up to which LOC may be increased | $ 935,000 | $ 720,000 | $ 610,000 | |||||||||
Letter of credit term | 15 years | |||||||||||
Future scheduled capital contributions amount | $ 122,500 | |||||||||||
Number of installments for payment of capital contributions amount | item | 3 | |||||||||||
Golden Gate IV | ||||||||||||
DEBT AND OTHER OBLIGATIONS | ||||||||||||
Payments made under the agreements | $ 0 | |||||||||||
Maximum LOC borrowing capacity | 770,000 | $ 270,000 | ||||||||||
Maximum stated amount up to which LOC may be increased | $ 790,000 | |||||||||||
Letter of credit term | 12 years | |||||||||||
MONY | ||||||||||||
DEBT AND OTHER OBLIGATIONS | ||||||||||||
Non-recourse funding obligations | $ 2,551 | |||||||||||
Year-to-date weighted-average interest rate of non-recourse funding obligations (as a percent) | 6.19% | |||||||||||
Predecessor | ||||||||||||
DEBT AND OTHER OBLIGATIONS | ||||||||||||
Non-recourse funding obligations | $ 1,527,752 | |||||||||||
Repurchase of outstanding non-recourse funding obligations | $ 6,000 | |||||||||||
Pre-tax gain on repurchase of debt | $ 1,500 | |||||||||||
Repurchase Program Borrowings | ||||||||||||
Repurchase obligation | 50,000 | |||||||||||
Predecessor | Repurchase Program Borrowings | ||||||||||||
Repurchase Program Borrowings | ||||||||||||
Repurchase obligation | 50,000 | |||||||||||
Maximum outstanding balance | $ 175,000 | 633,700 | ||||||||||
Average daily balance | $ 77,400 | $ 470,400 | ||||||||||
Average daily borrowing rate (as a percent) | 0.16% | 0.11% | ||||||||||
Predecessor | Letter of Credit | ||||||||||||
DEBT AND OTHER OBLIGATIONS | ||||||||||||
Outstanding letters of credit (LOC) | $ 55,000 | |||||||||||
Predecessor | PLC | Credit Facility | ||||||||||||
DEBT AND OTHER OBLIGATIONS | ||||||||||||
Line of credit, amount outstanding | $ 450,000 | |||||||||||
Predecessor | PLC | Credit Facility | LIBOR | ||||||||||||
DEBT AND OTHER OBLIGATIONS | ||||||||||||
Base of floating rate interest payments | LIBOR | |||||||||||
Interest rate added to the base rate (as a percent) | 1.20% |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - Targeted multi-state examination $ in Millions | Jun. 30, 2015USD ($) |
Commitment and contingency | |
Administrative and/or examination fees which the insurance regulators could demand, minimum | $ 0 |
Administrative and/or examination fees which the insurance regulators could demand, maximum | $ 3.5 |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 5 Months Ended | 6 Months Ended | 12 Months Ended | |
Jan. 31, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Defined Benefit Pension Plan | ||||||
Change in projected benefit obligation: | ||||||
Service cost | $ 2,973 | $ 4,955 | ||||
Interest cost | 2,433 | 4,055 | ||||
Unfunded Excess Benefits Plan | ||||||
Change in projected benefit obligation: | ||||||
Service cost | 333 | 555 | ||||
Interest cost | $ 408 | 680 | ||||
Predecessor | Defined Benefit Pension Plan | ||||||
EMPLOYEE BENEFIT PLANS | ||||||
Accumulated benefit obligation, end of year | $ 262,290 | $ 249,453 | ||||
Change in projected benefit obligation: | ||||||
Projected benefit obligation at beginning of period | 267,331 | 281,099 | $ 219,152 | 219,152 | ||
Service cost | 974 | $ 2,227 | 4,454 | 9,411 | ||
Interest cost | 1,002 | 2,587 | 5,174 | 10,493 | ||
Actuarial (gain) or loss | 12,384 | 38,110 | ||||
Benefits paid | (592) | (9,835) | ||||
Projected benefit obligation at end of period | 281,099 | 267,331 | ||||
Change in plan assets: | ||||||
Fair value of plan assets at beginning of period | 203,772 | 201,820 | 180,173 | 180,173 | ||
Actual return on plan assets | (3,525) | 17,921 | ||||
Employer contributions | 2,165 | 15,513 | ||||
Benefits paid | (592) | (9,835) | ||||
Fair value of plan assets at end of period | 201,820 | 203,772 | ||||
After reflecting FASB guidance: | ||||||
Funded status | (79,279) | (63,559) | ||||
Amounts recognized in the balance sheet: | ||||||
Other liabilities | (79,279) | (63,559) | ||||
Amounts recognized in accumulated other comprehensive income: | ||||||
Net actuarial loss | 96,965 | 80,430 | ||||
Prior service cost/(credit) | (1,001) | (1,033) | ||||
Total amounts recognized in AOCI | 95,964 | 79,397 | ||||
Predecessor | Unfunded Excess Benefits Plan | ||||||
EMPLOYEE BENEFIT PLANS | ||||||
Accumulated benefit obligation, end of year | 49,251 | 47,368 | ||||
Change in projected benefit obligation: | ||||||
Projected benefit obligation at beginning of period | 49,575 | 51,243 | 39,679 | 39,679 | ||
Service cost | 95 | 226 | 452 | 954 | ||
Interest cost | 140 | $ 406 | $ 812 | 1,696 | ||
Actuarial (gain) or loss | 1,555 | 9,153 | ||||
Benefits paid | (122) | (1,907) | ||||
Projected benefit obligation at end of period | 51,243 | 49,575 | ||||
Change in plan assets: | ||||||
Employer contributions | 122 | 1,907 | ||||
Benefits paid | (122) | (1,907) | ||||
After reflecting FASB guidance: | ||||||
Funded status | (51,243) | (49,575) | ||||
Amounts recognized in the balance sheet: | ||||||
Other liabilities | (51,243) | (49,575) | ||||
Amounts recognized in accumulated other comprehensive income: | ||||||
Net actuarial loss | 22,401 | 20,983 | ||||
Prior service cost/(credit) | 23 | 24 | ||||
Total amounts recognized in AOCI | 22,424 | 21,007 | ||||
Predecessor | Group life insurance plan | ||||||
Change in projected benefit obligation: | ||||||
Projected benefit obligation at beginning of period | 9,300 | $ 9,800 | ||||
Projected benefit obligation at end of period | 9,800 | $ 9,300 | ||||
Predecessor | PLC | Defined Benefit Pension Plan | ||||||
Change in plan assets: | ||||||
Employer contributions | $ 2,200 |
EMPLOYEE BENEFIT PLANS (Detai64
EMPLOYEE BENEFIT PLANS (Details 2) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 5 Months Ended | 6 Months Ended | 12 Months Ended | |
Jan. 31, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Defined Benefit Pension Plan | ||||||
EMPLOYEE BENEFIT PLANS | ||||||
Service cost - benefits earned during the period | $ 2,973 | $ 4,955 | ||||
Interest cost on projected benefit obligation | 2,433 | 4,055 | ||||
Expected return on plan assets | (3,642) | (6,070) | ||||
Total net periodic benefit cost | 1,764 | 2,940 | ||||
Unfunded Excess Benefits Plan | ||||||
EMPLOYEE BENEFIT PLANS | ||||||
Service cost - benefits earned during the period | 333 | 555 | ||||
Interest cost on projected benefit obligation | 408 | 680 | ||||
Total net periodic benefit cost | $ 741 | $ 1,235 | ||||
PLC | Defined Benefit Pension Plan | ||||||
EMPLOYEE BENEFIT PLANS | ||||||
Adjusted funding target percentage to be maintained, minimum | 80.00% | |||||
Predecessor | Defined Benefit Pension Plan | ||||||
EMPLOYEE BENEFIT PLANS | ||||||
Service cost - benefits earned during the period | $ 974 | $ 2,227 | $ 4,454 | $ 9,411 | ||
Interest cost on projected benefit obligation | 1,002 | 2,587 | 5,174 | 10,493 | ||
Expected return on plan assets | (1,293) | (3,065) | (6,130) | |||
Amortization of prior service cost | (33) | (98) | (196) | |||
Amortization of actuarial losses | 668 | 1,576 | 3,152 | |||
Total net periodic benefit cost | 1,318 | 3,227 | 6,454 | |||
Contribution made by the company to its defined benefit pension plan | $ 2,165 | 15,513 | ||||
Weighted-average assumptions used to determine benefit obligations | ||||||
Discount rate (as a percent) | 3.55% | |||||
Predecessor | Unfunded Excess Benefits Plan | ||||||
EMPLOYEE BENEFIT PLANS | ||||||
Service cost - benefits earned during the period | $ 95 | 226 | 452 | 954 | ||
Interest cost on projected benefit obligation | 140 | 406 | 812 | 1,696 | ||
Amortization of prior service cost | 1 | 3 | 6 | |||
Amortization of actuarial losses | 138 | 321 | 642 | |||
Total net periodic benefit cost | 374 | $ 956 | $ 1,912 | |||
Contribution made by the company to its defined benefit pension plan | $ 122 | $ 1,907 | ||||
Weighted-average assumptions used to determine benefit obligations | ||||||
Discount rate (as a percent) | 3.26% | |||||
Predecessor | Group life insurance plan | ||||||
Weighted-average assumptions used to determine benefit obligations | ||||||
Discount rate (as a percent) | 3.79% | |||||
Predecessor | PLC | Defined Benefit Pension Plan | ||||||
EMPLOYEE BENEFIT PLANS | ||||||
Contribution made by the company to its defined benefit pension plan | $ 2,200 |
ACCUMULATED OTHER COMPREHENSI65
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 5 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jan. 31, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | |
Changes in Accumulated Other Comprehensive Income (Loss) by Component | |||||||
Other comprehensive income (loss) before reclassifications | $ (894,324) | ||||||
Other comprehensive income relating to other-than-temporary impaired investments for which a portion has been recognized in earnings | $ (4,566) | (4,566) | |||||
Amounts reclassified from accumulated other comprehensive income (loss) | 1,394 | ||||||
Net current-period other comprehensive income (loss) | (605,016) | (897,496) | |||||
Ending Balance | (897,496) | (897,496) | |||||
Unrealized gains and losses on available-for-sale securities | |||||||
Changes in Accumulated Other Comprehensive Income (Loss) by Component | |||||||
Other comprehensive income (loss) before reclassifications | (894,238) | ||||||
Other comprehensive income relating to other-than-temporary impaired investments for which a portion has been recognized in earnings | (4,566) | ||||||
Amounts reclassified from accumulated other comprehensive income (loss) | 1,308 | ||||||
Net current-period other comprehensive income (loss) | (897,496) | ||||||
Ending Balance | (897,496) | (897,496) | |||||
Impact of DAC and VOBA | $ 493,000 | 493,000 | |||||
Gains and losses on derivative instruments | |||||||
Changes in Accumulated Other Comprehensive Income (Loss) by Component | |||||||
Other comprehensive income (loss) before reclassifications | (86) | ||||||
Amounts reclassified from accumulated other comprehensive income (loss) | 86 | ||||||
Predecessor | |||||||
Changes in Accumulated Other Comprehensive Income (Loss) by Component | |||||||
Beginning Balance | $ 1,483,211 | 1,960,977 | $ 538,966 | $ 538,966 | |||
Other comprehensive income (loss) before reclassifications | 482,152 | 983,983 | |||||
Other comprehensive income relating to other-than-temporary impaired investments for which a portion has been recognized in earnings | (243) | $ (1,061) | 3,450 | 3,498 | |||
Amounts reclassified from accumulated other comprehensive income (loss) | (4,143) | (43,236) | |||||
Net current-period other comprehensive income (loss) | 477,766 | $ 388,306 | 871,831 | 944,245 | |||
Ending Balance | 1,960,977 | 1,483,211 | |||||
Predecessor | Unrealized gains and losses on available-for-sale securities | |||||||
Changes in Accumulated Other Comprehensive Income (Loss) by Component | |||||||
Beginning Balance | 1,483,293 | 1,961,027 | 540,201 | 540,201 | |||
Other comprehensive income (loss) before reclassifications | 482,143 | 983,985 | |||||
Other comprehensive income relating to other-than-temporary impaired investments for which a portion has been recognized in earnings | (243) | 3,498 | |||||
Amounts reclassified from accumulated other comprehensive income (loss) | (4,166) | (44,391) | |||||
Net current-period other comprehensive income (loss) | 477,734 | 943,092 | |||||
Ending Balance | 1,961,027 | 1,483,293 | |||||
Impact of DAC and VOBA | (492,600) | (504,400) | $ (189,800) | ||||
Predecessor | Gains and losses on derivative instruments | |||||||
Changes in Accumulated Other Comprehensive Income (Loss) by Component | |||||||
Beginning Balance | (82) | $ (50) | $ (1,235) | (1,235) | |||
Other comprehensive income (loss) before reclassifications | 9 | (2) | |||||
Amounts reclassified from accumulated other comprehensive income (loss) | 23 | 1,155 | |||||
Net current-period other comprehensive income (loss) | 32 | 1,153 | |||||
Ending Balance | $ (50) | $ (82) |
ACCUMULATED OTHER COMPREHENSI66
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details 2) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 5 Months Ended | 6 Months Ended | |
Jan. 31, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) | |||||
Benefits and settlement expenses, net of reinsurance ceded | $ (693,392) | $ (1,178,816) | |||
Realized investment gains (losses): All other investments | (102,347) | (137,403) | |||
Net impairment losses recognized in earnings | (5,734) | (5,734) | |||
Total before tax | (35,567) | (11,031) | |||
Tax (expense) or benefit | 9,991 | 1,875 | |||
Gains and losses on derivative instruments | Amount Reclassified from Accumulated Other Comprehensive Income (Loss) | |||||
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) | |||||
Benefits and settlement expenses, net of reinsurance ceded | (41) | (131) | |||
Total before tax | (41) | (131) | |||
Tax (expense) or benefit | 14 | 45 | |||
Net of tax | (27) | (86) | |||
Unrealized gains and losses on available-for-sale securities | Amount Reclassified from Accumulated Other Comprehensive Income (Loss) | |||||
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) | |||||
Realized investment gains (losses): All other investments | 3,350 | 3,723 | |||
Net impairment losses recognized in earnings | (5,734) | (5,734) | |||
Total before tax | (2,384) | (2,011) | |||
Tax (expense) or benefit | 834 | 703 | |||
Net of tax | $ (1,550) | $ (1,308) | |||
Predecessor | |||||
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) | |||||
Benefits and settlement expenses, net of reinsurance ceded | $ (266,575) | $ (746,641) | $ (1,474,069) | ||
Realized investment gains (losses): All other investments | 81,153 | 80,466 | 152,612 | ||
Net impairment losses recognized in earnings | (481) | (1,460) | (3,051) | ||
Total before tax | 132,847 | 172,615 | 324,226 | ||
Tax (expense) or benefit | (44,325) | (56,572) | (105,634) | ||
Predecessor | Gains and losses on derivative instruments | Amount Reclassified from Accumulated Other Comprehensive Income (Loss) | |||||
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) | |||||
Benefits and settlement expenses, net of reinsurance ceded | (36) | (614) | (1,284) | ||
Total before tax | (36) | (614) | (1,284) | ||
Tax (expense) or benefit | 13 | 215 | 449 | ||
Net of tax | (23) | (399) | (835) | ||
Predecessor | Unrealized gains and losses on available-for-sale securities | Amount Reclassified from Accumulated Other Comprehensive Income (Loss) | |||||
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) | |||||
Realized investment gains (losses): All other investments | 6,891 | 20,198 | 27,568 | ||
Net impairment losses recognized in earnings | (481) | (1,460) | (3,051) | ||
Total before tax | 6,410 | 18,738 | 24,517 | ||
Tax (expense) or benefit | (2,244) | (6,558) | (8,581) | ||
Net of tax | $ 4,166 | $ 12,180 | $ 15,936 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Deferred income tax assets: | ||
Loss and credit carryforwards | $ 72,116 | |
Deferred compensation | 103,209 | |
Deferred policy acquisition costs | 381,204 | |
Net unrealized loss on investments | 483,291 | |
Valuation allowance | (790) | |
Deferred income tax assets | 1,039,030 | |
Deferred income tax liabilities: | ||
VOBA and other intangibles | 672,112 | |
Premium receivables and policy liabilities | 45,267 | |
Invested assets (other than realized gains) | 1,619,100 | |
Other | 18,539 | |
Deferred income tax liabilities | 2,355,018 | |
Net deferred income tax liability | $ (1,315,988) | |
Predecessor | ||
Deferred income tax assets: | ||
Loss and credit carryforwards | $ 35,642 | |
Premium receivables and policy liabilities | 154,720 | |
Deferred compensation | 104,117 | |
Invested assets (other than unrealized gains) | 2,960 | |
Valuation allowance | (791) | |
Deferred income tax assets | 296,648 | |
Deferred income tax liabilities: | ||
DAC and VOBA | 1,073,499 | |
Net unrealized gains on investments | 798,529 | |
Other | 36,484 | |
Deferred income tax liabilities | 1,908,512 | |
Net deferred income tax liability | $ (1,611,864) |
INCOME TAXES (Details 2)
INCOME TAXES (Details 2) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 5 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jan. 31, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Reconciliation of the beginning and ending amount of unrecognized tax benefits | |||||||
Balance, beginning of period | $ 105,850 | ||||||
Additions for tax positions of the current year | 59,042 | ||||||
Reductions of tax positions of prior years: | |||||||
Changes in judgment | (899) | ||||||
Balance, end of period | $ 105,850 | $ 163,993 | $ 163,993 | $ 163,993 | |||
Estimated period to conclude appeals process for protesting certain unfavorable adjustments in IRS audit | 12 months | ||||||
Possible reduction in unrecognized tax benefits due to expected closure of appeals process | $ 142,500 | ||||||
Effective income tax rate (as a percent) | 28.10% | 17.00% | |||||
Predecessor | |||||||
Reconciliation of the beginning and ending amount of unrecognized tax benefits | |||||||
Balance, beginning of period | 168,076 | $ 105,850 | $ 168,076 | $ 85,846 | $ 85,846 | ||
Additions for tax positions of the current year | (5,010) | 57,392 | |||||
Additions for tax positions of prior years | 1,149 | 34,371 | |||||
Reductions of tax positions of prior years: | |||||||
Changes in judgment | (58,365) | (9,533) | |||||
Balance, end of period | $ 105,850 | $ 168,076 | |||||
Effective income tax rate (as a percent) | 32.80% | 32.80% | 32.60% |
FAIR VALUE OF FINANCIAL INSTR69
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Assets: | ||
Available-for-sale securities | $ 33,820,337 | |
Total fixed maturity securities | 35,735,760 | |
Equity securities | 682,677 | |
Other long-term investments | 325,870 | |
Short-term investments | 200,749 | |
Assets related to separate accounts | ||
Variable annuity | 13,313,000 | |
Variable universal life | 859,114 | |
Liabilities: | ||
Other liabilities | 530,750 | |
Fixed maturities: | ||
Assets: | ||
Available-for-sale securities | 32,989,028 | |
Trading securities | 2,700,000 | |
Residential mortgage-backed securities | ||
Assets: | ||
Available-for-sale securities | 1,576,826 | |
Commercial mortgage-backed securities | ||
Assets: | ||
Available-for-sale securities | 1,203,156 | |
Other asset-backed securities | ||
Assets: | ||
Available-for-sale securities | 799,471 | |
U.S. government-related securities | ||
Assets: | ||
Available-for-sale securities | 1,601,530 | |
States, municipals, and political subdivisions | ||
Assets: | ||
Available-for-sale securities | 1,585,068 | |
Other government-related securities | ||
Assets: | ||
Available-for-sale securities | 18,782 | |
Corporate securities | ||
Assets: | ||
Available-for-sale securities | 26,142,528 | |
Preferred stocks | ||
Assets: | ||
Available-for-sale securities | 61,667 | |
Level 3 | Other asset-backed securities | ||
Assets related to separate accounts | ||
Total assets measured at fair value on a recurring basis | 590,885 | |
Measured at fair value on a recurring basis | Level 1 | ||
Assets: | ||
Total fixed maturity securities | 1,397,279 | |
Equity securities | 604,909 | |
Other long-term investments | 109,761 | |
Short-term investments | 190,971 | |
Total investments | 2,302,920 | |
Cash | 400,577 | |
Assets related to separate accounts | ||
Variable annuity | 13,313,000 | |
Variable universal life | 859,114 | |
Total assets measured at fair value on a recurring basis | 16,875,611 | |
Liabilities: | ||
Other liabilities | 71,454 | |
Total liabilities measured at fair value on a recurring basis | 71,454 | |
Measured at fair value on a recurring basis | Level 1 | Fixed maturities: | ||
Assets: | ||
Available-for-sale securities | 1,153,279 | |
Trading securities | 244,000 | |
Measured at fair value on a recurring basis | Level 1 | U.S. government-related securities | ||
Assets: | ||
Available-for-sale securities | 1,091,530 | |
Trading securities | 236,424 | |
Measured at fair value on a recurring basis | Level 1 | Corporate securities | ||
Assets: | ||
Available-for-sale securities | 82 | |
Measured at fair value on a recurring basis | Level 1 | Preferred stocks | ||
Assets: | ||
Available-for-sale securities | 61,667 | |
Trading securities | 7,576 | |
Measured at fair value on a recurring basis | Level 2 | ||
Assets: | ||
Total fixed maturity securities | 32,456,252 | |
Equity securities | 11,308 | |
Other long-term investments | 115,590 | |
Short-term investments | 9,778 | |
Total investments | 32,592,928 | |
Assets related to separate accounts | ||
Total assets measured at fair value on a recurring basis | 32,592,928 | |
Liabilities: | ||
Other liabilities | 116,351 | |
Total liabilities measured at fair value on a recurring basis | 116,351 | |
Measured at fair value on a recurring basis | Level 2 | Fixed maturities: | ||
Assets: | ||
Available-for-sale securities | 30,133,430 | |
Trading securities | 2,322,822 | |
Measured at fair value on a recurring basis | Level 2 | Residential mortgage-backed securities | ||
Assets: | ||
Available-for-sale securities | 1,576,823 | |
Trading securities | 298,138 | |
Measured at fair value on a recurring basis | Level 2 | Commercial mortgage-backed securities | ||
Assets: | ||
Available-for-sale securities | 1,203,156 | |
Trading securities | 146,314 | |
Measured at fair value on a recurring basis | Level 2 | Other asset-backed securities | ||
Assets: | ||
Available-for-sale securities | 208,586 | |
Trading securities | 108,837 | |
Measured at fair value on a recurring basis | Level 2 | U.S. government-related securities | ||
Assets: | ||
Available-for-sale securities | 510,000 | |
Trading securities | 4,840 | |
Measured at fair value on a recurring basis | Level 2 | States, municipals, and political subdivisions | ||
Assets: | ||
Available-for-sale securities | 1,585,068 | |
Trading securities | 307,411 | |
Measured at fair value on a recurring basis | Level 2 | Other government-related securities | ||
Assets: | ||
Available-for-sale securities | 18,782 | |
Trading securities | 58,090 | |
Measured at fair value on a recurring basis | Level 2 | Corporate securities | ||
Assets: | ||
Available-for-sale securities | 25,031,015 | |
Trading securities | 1,399,192 | |
Measured at fair value on a recurring basis | Level 3 | ||
Assets: | ||
Total fixed maturity securities | 1,882,229 | |
Equity securities | 66,460 | |
Other long-term investments | 100,519 | |
Total investments | 2,049,208 | |
Assets related to separate accounts | ||
Total assets measured at fair value on a recurring basis | 2,049,208 | |
Liabilities: | ||
Annuity account balances | 95,178 | |
Other liabilities | 342,945 | |
Total liabilities measured at fair value on a recurring basis | 438,123 | |
Measured at fair value on a recurring basis | Level 3 | Fixed maturities: | ||
Assets: | ||
Available-for-sale securities | 1,702,319 | |
Trading securities | 179,910 | |
Measured at fair value on a recurring basis | Level 3 | Residential mortgage-backed securities | ||
Assets: | ||
Available-for-sale securities | 3 | |
Measured at fair value on a recurring basis | Level 3 | Other asset-backed securities | ||
Assets: | ||
Available-for-sale securities | 590,885 | |
Trading securities | 160,594 | |
Measured at fair value on a recurring basis | Level 3 | Corporate securities | ||
Assets: | ||
Available-for-sale securities | 1,111,431 | |
Trading securities | 19,316 | |
Measured at fair value on a recurring basis | Fair Values | ||
Assets: | ||
Total fixed maturity securities | 35,735,760 | |
Equity securities | 682,677 | |
Other long-term investments | 325,870 | |
Short-term investments | 200,749 | |
Total investments | 36,945,056 | |
Cash | 400,577 | |
Assets related to separate accounts | ||
Variable annuity | 13,313,000 | |
Variable universal life | 859,114 | |
Total assets measured at fair value on a recurring basis | 51,517,747 | |
Liabilities: | ||
Annuity account balances | 95,178 | |
Other liabilities | 530,750 | |
Total liabilities measured at fair value on a recurring basis | 625,928 | |
Measured at fair value on a recurring basis | Fair Values | Fixed maturities: | ||
Assets: | ||
Available-for-sale securities | 32,989,028 | |
Trading securities | 2,746,732 | |
Measured at fair value on a recurring basis | Fair Values | Residential mortgage-backed securities | ||
Assets: | ||
Available-for-sale securities | 1,576,826 | |
Trading securities | 298,138 | |
Measured at fair value on a recurring basis | Fair Values | Commercial mortgage-backed securities | ||
Assets: | ||
Available-for-sale securities | 1,203,156 | |
Trading securities | 146,314 | |
Measured at fair value on a recurring basis | Fair Values | Other asset-backed securities | ||
Assets: | ||
Available-for-sale securities | 799,471 | |
Trading securities | 269,431 | |
Measured at fair value on a recurring basis | Fair Values | U.S. government-related securities | ||
Assets: | ||
Available-for-sale securities | 1,601,530 | |
Trading securities | 241,264 | |
Measured at fair value on a recurring basis | Fair Values | States, municipals, and political subdivisions | ||
Assets: | ||
Available-for-sale securities | 1,585,068 | |
Trading securities | 307,411 | |
Measured at fair value on a recurring basis | Fair Values | Other government-related securities | ||
Assets: | ||
Available-for-sale securities | 18,782 | |
Trading securities | 58,090 | |
Measured at fair value on a recurring basis | Fair Values | Corporate securities | ||
Assets: | ||
Available-for-sale securities | 26,142,528 | |
Trading securities | 1,418,508 | |
Measured at fair value on a recurring basis | Fair Values | Preferred stocks | ||
Assets: | ||
Available-for-sale securities | 61,667 | |
Trading securities | $ 7,576 | |
Predecessor | ||
Assets: | ||
Available-for-sale securities | $ 34,824,298 | |
Total fixed maturity securities | 36,756,240 | |
Equity securities | 756,790 | |
Other long-term investments | 270,701 | |
Short-term investments | 246,717 | |
Assets related to separate accounts | ||
Variable annuity | 13,157,429 | |
Variable universal life | 834,940 | |
Liabilities: | ||
Other liabilities | 629,535 | |
Predecessor | Fixed maturities: | ||
Assets: | ||
Available-for-sale securities | 33,937,420 | |
Trading securities | 2,800,000 | |
Predecessor | Residential mortgage-backed securities | ||
Assets: | ||
Available-for-sale securities | 1,418,258 | |
Predecessor | Commercial mortgage-backed securities | ||
Assets: | ||
Available-for-sale securities | 1,177,252 | |
Predecessor | Other asset-backed securities | ||
Assets: | ||
Available-for-sale securities | 839,376 | |
Predecessor | U.S. government-related securities | ||
Assets: | ||
Available-for-sale securities | 1,428,895 | |
Predecessor | States, municipals, and political subdivisions | ||
Assets: | ||
Available-for-sale securities | 1,687,689 | |
Predecessor | Other government-related securities | ||
Assets: | ||
Available-for-sale securities | 20,172 | |
Predecessor | Corporate securities | ||
Assets: | ||
Available-for-sale securities | 27,365,778 | |
Predecessor | Level 3 | Other asset-backed securities | ||
Assets related to separate accounts | ||
Total assets measured at fair value on a recurring basis | 563,752 | |
Predecessor | Measured at fair value on a recurring basis | Level 1 | ||
Assets: | ||
Total fixed maturity securities | 1,410,883 | |
Equity securities | 590,832 | |
Other long-term investments | 119,997 | |
Short-term investments | 243,436 | |
Total investments | 2,365,148 | |
Cash | 268,286 | |
Assets related to separate accounts | ||
Variable annuity | 13,157,429 | |
Variable universal life | 834,940 | |
Total assets measured at fair value on a recurring basis | 16,625,803 | |
Liabilities: | ||
Other liabilities | 62,146 | |
Total liabilities measured at fair value on a recurring basis | 62,146 | |
Predecessor | Measured at fair value on a recurring basis | Level 1 | Fixed maturities: | ||
Assets: | ||
Available-for-sale securities | 1,165,320 | |
Trading securities | 245,563 | |
Predecessor | Measured at fair value on a recurring basis | Level 1 | U.S. government-related securities | ||
Assets: | ||
Available-for-sale securities | 1,165,188 | |
Trading securities | 245,563 | |
Predecessor | Measured at fair value on a recurring basis | Level 1 | Corporate securities | ||
Assets: | ||
Available-for-sale securities | 132 | |
Predecessor | Measured at fair value on a recurring basis | Level 2 | ||
Assets: | ||
Total fixed maturity securities | 33,257,830 | |
Equity securities | 99,267 | |
Other long-term investments | 106,079 | |
Short-term investments | 3,281 | |
Total investments | 33,466,457 | |
Assets related to separate accounts | ||
Total assets measured at fair value on a recurring basis | 33,466,457 | |
Liabilities: | ||
Other liabilities | 61,046 | |
Total liabilities measured at fair value on a recurring basis | 61,046 | |
Predecessor | Measured at fair value on a recurring basis | Level 2 | Fixed maturities: | ||
Assets: | ||
Available-for-sale securities | 30,878,778 | |
Trading securities | 2,379,052 | |
Predecessor | Measured at fair value on a recurring basis | Level 2 | Residential mortgage-backed securities | ||
Assets: | ||
Available-for-sale securities | 1,418,255 | |
Trading securities | 288,114 | |
Predecessor | Measured at fair value on a recurring basis | Level 2 | Commercial mortgage-backed securities | ||
Assets: | ||
Available-for-sale securities | 1,177,252 | |
Trading securities | 151,111 | |
Predecessor | Measured at fair value on a recurring basis | Level 2 | Other asset-backed securities | ||
Assets: | ||
Available-for-sale securities | 275,415 | |
Trading securities | 105,118 | |
Predecessor | Measured at fair value on a recurring basis | Level 2 | U.S. government-related securities | ||
Assets: | ||
Available-for-sale securities | 263,707 | |
Trading securities | 4,898 | |
Predecessor | Measured at fair value on a recurring basis | Level 2 | States, municipals, and political subdivisions | ||
Assets: | ||
Available-for-sale securities | 1,684,014 | |
Trading securities | 325,446 | |
Predecessor | Measured at fair value on a recurring basis | Level 2 | Other government-related securities | ||
Assets: | ||
Available-for-sale securities | 20,172 | |
Trading securities | 57,032 | |
Predecessor | Measured at fair value on a recurring basis | Level 2 | Corporate securities | ||
Assets: | ||
Available-for-sale securities | 26,039,963 | |
Trading securities | 1,447,333 | |
Predecessor | Measured at fair value on a recurring basis | Level 3 | ||
Assets: | ||
Total fixed maturity securities | 2,087,527 | |
Equity securities | 66,691 | |
Other long-term investments | 44,625 | |
Total investments | 2,198,843 | |
Assets related to separate accounts | ||
Total assets measured at fair value on a recurring basis | 2,198,843 | |
Liabilities: | ||
Annuity account balances | 97,825 | |
Other liabilities | 506,343 | |
Total liabilities measured at fair value on a recurring basis | 604,168 | |
Predecessor | Measured at fair value on a recurring basis | Level 3 | Fixed maturities: | ||
Assets: | ||
Available-for-sale securities | 1,893,322 | |
Trading securities | 194,205 | |
Predecessor | Measured at fair value on a recurring basis | Level 3 | Residential mortgage-backed securities | ||
Assets: | ||
Available-for-sale securities | 3 | |
Predecessor | Measured at fair value on a recurring basis | Level 3 | Other asset-backed securities | ||
Assets: | ||
Available-for-sale securities | 563,961 | |
Trading securities | 169,461 | |
Predecessor | Measured at fair value on a recurring basis | Level 3 | States, municipals, and political subdivisions | ||
Assets: | ||
Available-for-sale securities | 3,675 | |
Predecessor | Measured at fair value on a recurring basis | Level 3 | Corporate securities | ||
Assets: | ||
Available-for-sale securities | 1,325,683 | |
Trading securities | 24,744 | |
Predecessor | Measured at fair value on a recurring basis | Fair Values | ||
Assets: | ||
Total fixed maturity securities | 36,756,240 | |
Equity securities | 756,790 | |
Other long-term investments | 270,701 | |
Short-term investments | 246,717 | |
Total investments | 38,030,448 | |
Cash | 268,286 | |
Assets related to separate accounts | ||
Variable annuity | 13,157,429 | |
Variable universal life | 834,940 | |
Total assets measured at fair value on a recurring basis | 52,291,103 | |
Liabilities: | ||
Annuity account balances | 97,825 | |
Other liabilities | 629,535 | |
Total liabilities measured at fair value on a recurring basis | 727,360 | |
Predecessor | Measured at fair value on a recurring basis | Fair Values | Fixed maturities: | ||
Assets: | ||
Available-for-sale securities | 33,937,420 | |
Trading securities | 2,818,820 | |
Predecessor | Measured at fair value on a recurring basis | Fair Values | Residential mortgage-backed securities | ||
Assets: | ||
Available-for-sale securities | 1,418,258 | |
Trading securities | 288,114 | |
Predecessor | Measured at fair value on a recurring basis | Fair Values | Commercial mortgage-backed securities | ||
Assets: | ||
Available-for-sale securities | 1,177,252 | |
Trading securities | 151,111 | |
Predecessor | Measured at fair value on a recurring basis | Fair Values | Other asset-backed securities | ||
Assets: | ||
Available-for-sale securities | 839,376 | |
Trading securities | 274,579 | |
Predecessor | Measured at fair value on a recurring basis | Fair Values | U.S. government-related securities | ||
Assets: | ||
Available-for-sale securities | 1,428,895 | |
Trading securities | 250,461 | |
Predecessor | Measured at fair value on a recurring basis | Fair Values | States, municipals, and political subdivisions | ||
Assets: | ||
Available-for-sale securities | 1,687,689 | |
Trading securities | 325,446 | |
Predecessor | Measured at fair value on a recurring basis | Fair Values | Other government-related securities | ||
Assets: | ||
Available-for-sale securities | 20,172 | |
Trading securities | 57,032 | |
Predecessor | Measured at fair value on a recurring basis | Fair Values | Corporate securities | ||
Assets: | ||
Available-for-sale securities | 27,365,778 | |
Trading securities | $ 1,472,077 |
FAIR VALUE OF FINANCIAL INSTR70
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 2) - Jun. 30, 2015 | USD ($)item |
Determination of fair values | |
Number of primary sources of information used for determining fair value | item | 1 |
Total number of primary sources of information available for determining fair value | item | 3 |
Minimum percentage of the Company's fixed maturity securities priced by third party pricing services | 90.00% |
Number of independent non-binding broker quotes obtained per security | item | 1 |
Percentage of derivatives excluding embedded derivatives that were priced using exchange prices or independent broker quotations | 83.40% |
Other long-term investments | $ 325,870,000 |
Fair value, derivative liability | $ 530,750,000 |
Annuity account balances | |
Fixed indexed annuities, discount rate for one month (as a percent) | 0.35% |
Fixed indexed annuities, discount rate for five years (as a percent) | 2.47% |
Fixed indexed annuities, discount rate for thirty years (as a percent) | 3.98% |
Interest support, YRT premium support and portfolio maintenance agreement | |
Determination of fair values | |
Other long-term investments | $ 18,800,000 |
Golden Gate II | |
Determination of fair values | |
Amount of collateralized support agreement obligations by PLC | 1,900,000 |
Golden Gate II | Interest Support Agreement | |
Determination of fair values | |
Other long-term investments | 16,600,000 |
Payments triggered under agreement | 0 |
Golden Gate II | YRT premium support agreement | |
Determination of fair values | |
Other long-term investments | 2,200,000 |
Payments triggered under agreement | 0 |
Golden Gate V and West Coast Life | Portfolio maintenance agreements | |
Determination of fair values | |
Other long-term investments | 0 |
Payments triggered under agreement | 0 |
Asset-Backed Securities | Level 2 | |
Determination of fair values | |
Fair Value | 3,500,000,000 |
Asset-Backed Securities | Level 3 | |
Determination of fair values | |
Fair Value | 751,500,000 |
Asset-Backed Securities | Level 3 | Available-for-sale securities. | |
Determination of fair values | |
Fair Value | 590,900,000 |
Asset-Backed Securities | Level 3 | Trading Securities. | |
Determination of fair values | |
Fair Value | $ 160,600,000 |
Percentage of underlying collateral of student-loan backed auction rate securities guaranteed by the Federal Family Education Loan Program ("FFELP"), minimum | 97.00% |
Corporate Bonds, U.S. Government-Related Securities, States, Municipals, and Political Subdivisions, and Other Government Related Securities | Level 2 | |
Determination of fair values | |
Fair Value | $ 28,900,000,000 |
Corporate Bonds, U.S. Government-Related Securities, States, Municipals, and Political Subdivisions, and Other Government Related Securities | Level 3 | |
Determination of fair values | |
Fair Value | 1,100,000,000 |
Equity securities | Level 2 and Level 3 | |
Determination of fair values | |
Fair Value | 77,800,000 |
Federal Home Loan Bank stock | $ 65,700,000 |
Embedded derivative - GMWB | |
Annuity account balances | |
Discount rate curve, base rate | LIBOR |
Embedded derivative - GMWB | Level 3 | Minimum | |
Determination of fair values | |
Mortality (as a percent) | 44.50% |
Embedded derivative - GMWB | Level 3 | Maximum | |
Determination of fair values | |
Mortality (as a percent) | 100.00% |
Embedded derivative - FIA | |
Annuity account balances | |
Discount rate curve, base rate | LIBOR |
Embedded derivative - FIA | Level 3 | Minimum | |
Determination of fair values | |
Mortality (as a percent) | 49.00% |
Embedded derivative - FIA | Level 3 | Maximum | |
Determination of fair values | |
Mortality (as a percent) | 80.00% |
Embedded derivative - IUL | |
Annuity account balances | |
Discount rate curve, base rate | LIBOR |
Embedded derivative - IUL | Level 3 | Minimum | |
Determination of fair values | |
Mortality (as a percent) | 44.00% |
Embedded derivative - IUL | Level 3 | Maximum | |
Determination of fair values | |
Mortality (as a percent) | 137.00% |
Embedded derivative - Modified coinsurance agreements | |
Determination of fair values | |
Statutory policy liabilities (net of policy loans) | $ 2,500,000,000 |
Embedded derivative - Modified coinsurance agreements | Trading Securities. | |
Determination of fair values | |
Fair Value | 2,700,000,000 |
Funds withheld derivative | Level 2 | |
Determination of fair values | |
Fair value, derivative liability | $ 97,000,000 |
FAIR VALUE OF FINANCIAL INSTR71
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 3) - Level 3 - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Unobservable Input | ||
Financial instruments that are valued using broker quotes | $ 206,400,000 | |
Financial instruments with book value approximating to fair value | 66,500,000 | |
Other asset-backed securities | ||
Valuation of Level 3 Financial Instruments | ||
Fair Value of Assets | 590,885,000 | |
Unobservable Input | ||
Financial instruments that are valued using broker quotes | 160,600,000 | |
Equity securities | ||
Unobservable Input | ||
Financial instruments with book value approximating to fair value | $ 66,500,000 | |
Discounted cash flow | Other asset-backed securities | Minimum | ||
Unobservable Input | ||
Liquidity premium (as a percent) | 0.55% | |
Paydown rate (as a percent) | 9.95% | |
Discounted cash flow | Other asset-backed securities | Maximum | ||
Unobservable Input | ||
Liquidity premium (as a percent) | 1.50% | |
Paydown rate (as a percent) | 14.69% | |
Discounted cash flow | Other asset-backed securities | Weighted Average | ||
Unobservable Input | ||
Liquidity premium (as a percent) | 1.03% | |
Paydown rate (as a percent) | 12.57% | |
Embedded derivative - GMWB | ||
Valuation of Level 3 Financial Instruments | ||
Fair Value of Assets | $ 56,810,000 | |
Annuity account | ||
Valuation of Level 3 Financial Instruments | ||
Fair Value of Liabilities | 95,178,000 | |
Annuity account | Actuarial cash flow model | ||
Unobservable Input | ||
Expenses per policy | $ 80 | |
Withdrawal rate (as a percent) | 2.20% | |
Annuity account | Actuarial cash flow model | Minimum | ||
Unobservable Input | ||
Lapse (as a percent) | 2.20% | |
Nonperformance risk (as a percent) | 0.16% | |
Asset earned rate (as a percent) | 3.71% | |
Return on assets (as a percent) | 1.50% | |
Annuity account | Actuarial cash flow model | Maximum | ||
Unobservable Input | ||
Lapse (as a percent) | 33.00% | |
Nonperformance risk (as a percent) | 1.04% | |
Asset earned rate (as a percent) | 5.77% | |
Return on assets (as a percent) | 1.85% | |
Embedded derivative - FIA | ||
Valuation of Level 3 Financial Instruments | ||
Fair Value of Liabilities | $ 85,129,000 | |
Embedded derivative - FIA | Actuarial cash flow model | ||
Unobservable Input | ||
Expenses per policy | $ 80 | |
Embedded derivative - FIA | Actuarial cash flow model | Minimum | ||
Unobservable Input | ||
Lapse (as a percent) | 2.50% | |
Nonperformance risk (as a percent) | 0.16% | |
Withdrawal rate (as a percent) | 1.10% | |
Embedded derivative - FIA | Actuarial cash flow model | Maximum | ||
Unobservable Input | ||
Lapse (as a percent) | 40.00% | |
Nonperformance risk (as a percent) | 1.04% | |
Withdrawal rate (as a percent) | 4.50% | |
Embedded derivative - IUL | ||
Valuation of Level 3 Financial Instruments | ||
Fair Value of Liabilities | $ 11,902,000 | |
Embedded derivative - IUL | Actuarial cash flow model | Minimum | ||
Unobservable Input | ||
Mortality (as a percent) | 44.00% | |
Lapse (as a percent) | 0.50% | |
Nonperformance risk (as a percent) | 0.16% | |
Embedded derivative - IUL | Actuarial cash flow model | Maximum | ||
Unobservable Input | ||
Mortality (as a percent) | 137.00% | |
Lapse (as a percent) | 10.00% | |
Nonperformance risk (as a percent) | 1.04% | |
Corporate securities | ||
Valuation of Level 3 Financial Instruments | ||
Fair Value of Assets | $ 1,084,954,000 | |
Unobservable Input | ||
Financial instruments that are valued using broker quotes | $ 45,800,000 | |
Corporate securities | Discounted cash flow | Minimum | ||
Unobservable Input | ||
Spread over treasury (as a percent) | 0.58% | |
Corporate securities | Discounted cash flow | Maximum | ||
Unobservable Input | ||
Spread over treasury (as a percent) | 12.00% | |
Corporate securities | Discounted cash flow | Weighted Average | ||
Unobservable Input | ||
Spread over treasury (as a percent) | 2.25% | |
Embedded derivative - GMWB | Actuarial cash flow model | ||
Unobservable Input | ||
Utilization (as a percent) | 99.00% | |
Policies that have a one-time over-utilization rate of a specified amount (as a percent) | 10.00% | |
Specified level of one-time over-utilization (as a percent) | 400.00% | |
Embedded derivative - GMWB | Actuarial cash flow model | Minimum | ||
Unobservable Input | ||
Lapse (as a percent) | 0.29% | |
Nonperformance risk (as a percent) | 0.16% | |
Embedded derivative - GMWB | Actuarial cash flow model | Maximum | ||
Unobservable Input | ||
Lapse (as a percent) | 17.00% | |
Nonperformance risk (as a percent) | 1.04% | |
Predecessor | ||
Unobservable Input | ||
Financial instruments that are valued using broker quotes | $ 237,200,000 | |
Financial instruments with book value approximating to fair value | 70,400,000 | |
Predecessor | Other asset-backed securities | ||
Valuation of Level 3 Financial Instruments | ||
Fair Value of Assets | 563,752,000 | |
Unobservable Input | ||
Financial instruments that are valued using broker quotes | 169,700,000 | |
Predecessor | Equity securities | ||
Unobservable Input | ||
Financial instruments with book value approximating to fair value | 66,700,000 | |
Predecessor | Fixed maturities | ||
Unobservable Input | ||
Financial instruments with book value approximating to fair value | $ 3,700,000 | |
Predecessor | Discounted cash flow | Other asset-backed securities | Minimum | ||
Unobservable Input | ||
Liquidity premium (as a percent) | 0.39% | |
Paydown rate (as a percent) | 9.70% | |
Predecessor | Discounted cash flow | Other asset-backed securities | Maximum | ||
Unobservable Input | ||
Liquidity premium (as a percent) | 1.49% | |
Paydown rate (as a percent) | 15.80% | |
Predecessor | Discounted cash flow | Other asset-backed securities | Weighted Average | ||
Unobservable Input | ||
Liquidity premium (as a percent) | 0.69% | |
Paydown rate (as a percent) | 12.08% | |
Predecessor | Embedded derivative - GMWB | ||
Valuation of Level 3 Financial Instruments | ||
Fair Value of Liabilities | $ 25,927,000 | |
Predecessor | Embedded derivative - GMWB | Actuarial cash flow model | Minimum | ||
Unobservable Input | ||
Mortality (as a percent) | 44.50% | |
Lapse (as a percent) | 0.25% | |
Utilization (as a percent) | 97.00% | |
Nonperformance risk (as a percent) | 0.12% | |
Predecessor | Embedded derivative - GMWB | Actuarial cash flow model | Maximum | ||
Unobservable Input | ||
Mortality (as a percent) | 100.00% | |
Lapse (as a percent) | 17.00% | |
Utilization (as a percent) | 101.00% | |
Nonperformance risk (as a percent) | 0.96% | |
Predecessor | Annuity account | ||
Valuation of Level 3 Financial Instruments | ||
Fair Value of Liabilities | $ 97,825,000 | |
Predecessor | Annuity account | Actuarial cash flow model | ||
Unobservable Input | ||
Withdrawal rate (as a percent) | 2.20% | |
Predecessor | Annuity account | Actuarial cash flow model | Minimum | ||
Unobservable Input | ||
Mortality (as a percent) | 49.00% | |
Lapse (as a percent) | 2.20% | |
Nonperformance risk (as a percent) | 0.12% | |
Asset earned rate (as a percent) | 3.86% | |
Expenses per policy | $ 88 | |
Return on assets (as a percent) | 1.50% | |
Predecessor | Annuity account | Actuarial cash flow model | Maximum | ||
Unobservable Input | ||
Mortality (as a percent) | 80.00% | |
Lapse (as a percent) | 33.00% | |
Nonperformance risk (as a percent) | 0.96% | |
Asset earned rate (as a percent) | 5.92% | |
Expenses per policy | $ 102 | |
Return on assets (as a percent) | 1.85% | |
Predecessor | Embedded derivative - FIA | ||
Valuation of Level 3 Financial Instruments | ||
Fair Value of Liabilities | $ 124,465,000 | |
Predecessor | Embedded derivative - FIA | Actuarial cash flow model | Minimum | ||
Unobservable Input | ||
Mortality (as a percent) | 49.00% | |
Lapse (as a percent) | 2.50% | |
Nonperformance risk (as a percent) | 0.12% | |
Expenses per policy | $ 83 | |
Withdrawal rate (as a percent) | 1.10% | |
Predecessor | Embedded derivative - FIA | Actuarial cash flow model | Maximum | ||
Unobservable Input | ||
Mortality (as a percent) | 80.00% | |
Lapse (as a percent) | 40.00% | |
Nonperformance risk (as a percent) | 0.96% | |
Expenses per policy | $ 97 | |
Withdrawal rate (as a percent) | 4.50% | |
Predecessor | Embedded derivative - IUL | ||
Valuation of Level 3 Financial Instruments | ||
Fair Value of Liabilities | $ 6,691,000 | |
Predecessor | Embedded derivative - IUL | Actuarial cash flow model | Minimum | ||
Unobservable Input | ||
Mortality (as a percent) | 37.00% | |
Lapse (as a percent) | 0.50% | |
Nonperformance risk (as a percent) | 0.12% | |
Predecessor | Embedded derivative - IUL | Actuarial cash flow model | Maximum | ||
Unobservable Input | ||
Mortality (as a percent) | 74.00% | |
Lapse (as a percent) | 10.00% | |
Nonperformance risk (as a percent) | 0.96% | |
Predecessor | Corporate securities | ||
Valuation of Level 3 Financial Instruments | ||
Fair Value of Assets | $ 1,282,864,000 | |
Unobservable Input | ||
Financial instruments that are valued using broker quotes | $ 67,500,000 | |
Predecessor | Corporate securities | Discounted cash flow | Minimum | ||
Unobservable Input | ||
Spread over treasury (as a percent) | 0.33% | |
Predecessor | Corporate securities | Discounted cash flow | Maximum | ||
Unobservable Input | ||
Spread over treasury (as a percent) | 7.50% | |
Predecessor | Corporate securities | Discounted cash flow | Weighted Average | ||
Unobservable Input | ||
Spread over treasury (as a percent) | 2.19% |
FAIR VALUE OF FINANCIAL INSTR72
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 4) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 5 Months Ended | 6 Months Ended | |
Jan. 31, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Transfers | |||||
Securities transferred into Level 3 | $ 0 | $ 0 | |||
Securities transferred into Level 2 from Level 3 | 21,800 | 41,900 | |||
Securities transferred from Level 2 to Level 1 | 0 | 90,400 | |||
Securities transferred out of Level 1 | 0 | 0 | |||
Predecessor | |||||
Transfers | |||||
Securities transferred into Level 3 | $ 43,200 | $ 1,300 | $ 31,000 | ||
Securities transferred into Level 2 from Level 3 | 67,500 | 83,800 | |||
Securities transferred from Level 2 to Level 1 | 0 | 0 | 0 | ||
Securities transferred out of Level 1 | 0 | 0 | 0 | ||
Level 3 | |||||
Assets: | |||||
Beginning Balance | 2,219,304 | 2,240,077 | |||
Total Realized and Unrealized Gains Included in Earnings | 29,367 | 48,446 | |||
Total Realized and Unrealized Gains Included in Other Comprehensive Income | 4,166 | 15,784 | |||
Total Realized and Unrealized Losses Included in Earnings | (9,870) | (9,964) | |||
Total Realized and Unrealized Losses Included in Other Comprehensive Income | (33,570) | (37,138) | |||
Purchases | 89,929 | 111,929 | |||
Sales | (225,095) | (272,428) | |||
Transfers in and/or out of Level 3 | (21,803) | (41,853) | |||
Other | (3,220) | (5,645) | |||
Ending Balance | 2,240,077 | 2,049,208 | 2,049,208 | ||
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | 16,617 | 29,310 | |||
Liabilities: | |||||
Beginning Balance | 574,837 | 628,397 | |||
Total Realized and Unrealized Gains Included in Earnings | 147,963 | 212,854 | |||
Total Realized and Unrealized Losses Included in Earnings | (14,090) | (27,225) | |||
Issuances | 72 | 86 | |||
Settlements | 2,913 | 4,731 | |||
Ending Balance | 628,397 | 438,123 | 438,123 | ||
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | 134,784 | (187,173) | |||
Level 3 | Annuity account | |||||
Liabilities: | |||||
Beginning Balance | 97,108 | 98,279 | |||
Total Realized and Unrealized Losses Included in Earnings | (911) | (1,544) | |||
Issuances | 72 | 86 | |||
Settlements | 2,913 | 4,731 | |||
Ending Balance | 98,279 | 95,178 | 95,178 | ||
Level 3 | Other liabilities. | |||||
Liabilities: | |||||
Beginning Balance | 477,729 | 530,118 | |||
Total Realized and Unrealized Gains Included in Earnings | 147,963 | 212,854 | |||
Total Realized and Unrealized Losses Included in Earnings | (13,179) | (25,681) | |||
Ending Balance | 530,118 | 342,945 | 342,945 | ||
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | 134,784 | 187,173 | |||
Level 3 | Total investments | |||||
Assets: | |||||
Beginning Balance | 2,219,304 | 2,240,077 | |||
Total Realized and Unrealized Gains Included in Earnings | 29,367 | 48,446 | |||
Total Realized and Unrealized Gains Included in Other Comprehensive Income | 4,166 | 15,784 | |||
Total Realized and Unrealized Losses Included in Earnings | (9,870) | (9,964) | |||
Total Realized and Unrealized Losses Included in Other Comprehensive Income | (33,570) | (37,138) | |||
Purchases | 89,929 | 111,929 | |||
Sales | (225,095) | (272,428) | |||
Transfers in and/or out of Level 3 | (21,803) | (41,853) | |||
Other | (3,220) | (5,645) | |||
Ending Balance | 2,240,077 | 2,049,208 | 2,049,208 | ||
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | 16,617 | 29,310 | |||
Level 3 | Fixed maturities: | |||||
Assets: | |||||
Beginning Balance | 2,073,391 | 2,109,186 | |||
Total Realized and Unrealized Gains Included in Earnings | 4,385 | 8,414 | |||
Total Realized and Unrealized Gains Included in Other Comprehensive Income | 4,166 | 15,784 | |||
Total Realized and Unrealized Losses Included in Earnings | (6,185) | (6,251) | |||
Total Realized and Unrealized Losses Included in Other Comprehensive Income | (33,570) | (37,138) | |||
Purchases | 89,929 | 111,929 | |||
Sales | (224,864) | (272,197) | |||
Transfers in and/or out of Level 3 | (21,803) | (41,853) | |||
Other | (3,220) | (5,645) | |||
Ending Balance | 2,109,186 | 1,882,229 | 1,882,229 | ||
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | (4,680) | (7,009) | |||
Level 3 | Fixed maturities: | Available-for-sale securities. | |||||
Assets: | |||||
Beginning Balance | 1,883,277 | 1,914,583 | |||
Total Realized and Unrealized Gains Included in Earnings | 3,656 | 4,291 | |||
Total Realized and Unrealized Gains Included in Other Comprehensive Income | 4,166 | 15,784 | |||
Total Realized and Unrealized Losses Included in Earnings | (779) | (779) | |||
Total Realized and Unrealized Losses Included in Other Comprehensive Income | (33,570) | (37,138) | |||
Purchases | 89,929 | 111,929 | |||
Sales | (219,235) | (258,737) | |||
Transfers in and/or out of Level 3 | (21,803) | (41,853) | |||
Other | (3,322) | (5,761) | |||
Ending Balance | 1,914,583 | 1,702,319 | 1,702,319 | ||
Level 3 | Fixed maturities: | Trading Securities. | |||||
Assets: | |||||
Beginning Balance | 190,114 | 194,603 | |||
Total Realized and Unrealized Gains Included in Earnings | 729 | 4,123 | |||
Total Realized and Unrealized Losses Included in Earnings | (5,406) | (5,472) | |||
Sales | (5,629) | (13,460) | |||
Other | 102 | 116 | |||
Ending Balance | 194,603 | 179,910 | 179,910 | ||
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | (4,680) | (7,009) | |||
Level 3 | Residential mortgage-backed securities | Available-for-sale securities. | |||||
Assets: | |||||
Beginning Balance | 3 | 3 | |||
Ending Balance | 3 | 3 | 3 | ||
Level 3 | Other asset-backed securities | Available-for-sale securities. | |||||
Assets: | |||||
Beginning Balance | 600,132 | 603,646 | |||
Total Realized and Unrealized Gains Included in Other Comprehensive Income | 165 | 165 | |||
Total Realized and Unrealized Losses Included in Earnings | (92) | (92) | |||
Total Realized and Unrealized Losses Included in Other Comprehensive Income | (9,323) | (12,891) | |||
Sales | (87) | (127) | |||
Other | 90 | 184 | |||
Ending Balance | 603,646 | 590,885 | 590,885 | ||
Level 3 | Other asset-backed securities | Trading Securities. | |||||
Assets: | |||||
Beginning Balance | 170,500 | 169,473 | |||
Total Realized and Unrealized Gains Included in Earnings | 589 | 3,949 | |||
Total Realized and Unrealized Losses Included in Earnings | (5,173) | (5,173) | |||
Sales | (5,468) | (7,876) | |||
Other | 146 | 221 | |||
Ending Balance | 169,473 | 160,594 | 160,594 | ||
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | (4,587) | (5,829) | |||
Level 3 | States, municipals, and political subdivisions | Available-for-sale securities. | |||||
Assets: | |||||
Beginning Balance | 3,675 | ||||
Sales | (3,675) | ||||
Ending Balance | 3,675 | ||||
Level 3 | Corporate securities | Available-for-sale securities. | |||||
Assets: | |||||
Beginning Balance | 1,283,142 | 1,307,259 | |||
Total Realized and Unrealized Gains Included in Earnings | 3,656 | 4,291 | |||
Total Realized and Unrealized Gains Included in Other Comprehensive Income | 4,001 | 15,619 | |||
Total Realized and Unrealized Losses Included in Earnings | (687) | (687) | |||
Total Realized and Unrealized Losses Included in Other Comprehensive Income | (24,247) | (24,247) | |||
Purchases | 89,929 | 111,929 | |||
Sales | (219,148) | (254,935) | |||
Transfers in and/or out of Level 3 | (21,803) | (41,853) | |||
Other | (3,412) | (5,945) | |||
Ending Balance | 1,307,259 | 1,111,431 | 1,111,431 | ||
Level 3 | Corporate securities | Trading Securities. | |||||
Assets: | |||||
Beginning Balance | 19,614 | 25,130 | |||
Total Realized and Unrealized Gains Included in Earnings | 140 | 174 | |||
Total Realized and Unrealized Losses Included in Earnings | (233) | (299) | |||
Sales | (161) | (5,584) | |||
Other | (44) | (105) | |||
Ending Balance | 25,130 | 19,316 | 19,316 | ||
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | (93) | (1,180) | |||
Level 3 | Equity securities | |||||
Assets: | |||||
Beginning Balance | 66,691 | 66,691 | |||
Sales | (231) | (231) | |||
Ending Balance | 66,691 | 66,460 | 66,460 | ||
Level 3 | Other long-term investments. | |||||
Assets: | |||||
Beginning Balance | 79,222 | 64,200 | |||
Total Realized and Unrealized Gains Included in Earnings | 24,982 | 40,032 | |||
Total Realized and Unrealized Losses Included in Earnings | (3,685) | (3,713) | |||
Ending Balance | 64,200 | 100,519 | 100,519 | ||
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | $ 21,297 | 36,319 | |||
Level 3 | Predecessor | |||||
Assets: | |||||
Beginning Balance | 2,198,843 | 2,505,121 | 2,221,953 | 2,490,492 | |
Total Realized and Unrealized Gains Included in Earnings | 17,805 | 6,852 | 9,123 | ||
Total Realized and Unrealized Gains Included in Other Comprehensive Income | 12,282 | 58,165 | 89,546 | ||
Total Realized and Unrealized Losses Included in Earnings | (15,501) | (11,531) | (35,256) | ||
Total Realized and Unrealized Losses Included in Other Comprehensive Income | (26,896) | (2,354) | (8,664) | ||
Purchases | 65,746 | 104,685 | |||
Sales | (7,586) | (102,316) | (141,329) | ||
Transfers in and/or out of Level 3 | 43,205 | (66,228) | (52,771) | ||
Other | (199) | (3,524) | (5,895) | ||
Ending Balance | 2,221,953 | 2,449,931 | 2,449,931 | ||
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | 2,304 | (7,689) | (31,010) | ||
Liabilities: | |||||
Beginning Balance | 604,168 | 414,142 | 730,226 | 340,738 | |
Total Realized and Unrealized Gains Included in Earnings | 61 | 13 | 25 | ||
Total Realized and Unrealized Losses Included in Earnings | (126,531) | (92,847) | (169,079) | ||
Issuances | 7 | 63 | 175 | ||
Settlements | 419 | 4,914 | 7,842 | ||
Ending Balance | 730,226 | 502,125 | 502,125 | ||
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | (125,934) | (91,120) | (165,931) | ||
Level 3 | Predecessor | Annuity account | |||||
Liabilities: | |||||
Beginning Balance | 97,825 | 105,593 | 97,949 | 107,000 | |
Total Realized and Unrealized Losses Included in Earnings | (536) | (1,714) | (3,123) | ||
Issuances | 7 | 63 | 175 | ||
Settlements | 419 | 4,914 | 7,842 | ||
Ending Balance | 97,949 | 102,456 | 102,456 | ||
Level 3 | Predecessor | Other liabilities. | |||||
Liabilities: | |||||
Beginning Balance | 506,343 | 308,549 | 632,277 | 233,738 | |
Total Realized and Unrealized Gains Included in Earnings | 61 | 13 | 25 | ||
Total Realized and Unrealized Losses Included in Earnings | (125,995) | (91,133) | (165,956) | ||
Ending Balance | 632,277 | 399,669 | 399,669 | ||
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | (125,934) | (91,120) | (165,931) | ||
Level 3 | Predecessor | Total investments | |||||
Assets: | |||||
Beginning Balance | 2,198,843 | 2,505,121 | 2,221,953 | 2,490,492 | |
Total Realized and Unrealized Gains Included in Earnings | 17,805 | 6,852 | 9,123 | ||
Total Realized and Unrealized Gains Included in Other Comprehensive Income | 12,282 | 58,165 | 89,546 | ||
Total Realized and Unrealized Losses Included in Earnings | (15,501) | (11,531) | (35,256) | ||
Total Realized and Unrealized Losses Included in Other Comprehensive Income | (26,896) | (2,354) | (8,664) | ||
Purchases | 65,746 | 104,685 | |||
Sales | (7,586) | (102,316) | (141,329) | ||
Transfers in and/or out of Level 3 | 43,205 | (66,228) | (52,771) | ||
Other | (199) | (3,524) | (5,895) | ||
Ending Balance | 2,221,953 | 2,449,931 | 2,449,931 | ||
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | 2,304 | (7,689) | (31,010) | ||
Level 3 | Predecessor | Fixed maturities: | |||||
Assets: | |||||
Beginning Balance | 2,087,527 | 2,351,817 | 2,109,186 | 2,323,627 | |
Total Realized and Unrealized Gains Included in Earnings | 1,188 | 6,538 | 8,698 | ||
Total Realized and Unrealized Gains Included in Other Comprehensive Income | 12,282 | 57,200 | 88,354 | ||
Total Realized and Unrealized Losses Included in Earnings | (335) | (2,726) | (3,167) | ||
Total Realized and Unrealized Losses Included in Other Comprehensive Income | (26,896) | (2,354) | (8,498) | ||
Purchases | 65,746 | 95,134 | |||
Sales | (7,586) | (101,642) | (140,655) | ||
Transfers in and/or out of Level 3 | 43,205 | (66,228) | (52,771) | ||
Other | (199) | (3,524) | (5,895) | ||
Ending Balance | 2,109,186 | 2,304,827 | 2,304,827 | ||
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | 853 | 802 | 654 | ||
Level 3 | Predecessor | Fixed maturities: | Available-for-sale securities. | |||||
Assets: | |||||
Beginning Balance | 1,893,322 | 2,126,207 | 1,914,583 | 2,099,451 | |
Total Realized and Unrealized Gains Included in Earnings | 74 | 969 | |||
Total Realized and Unrealized Gains Included in Other Comprehensive Income | 12,282 | 57,200 | 88,354 | ||
Total Realized and Unrealized Losses Included in Other Comprehensive Income | (26,896) | (2,354) | (8,498) | ||
Purchases | 60,845 | 90,233 | |||
Sales | (7,094) | (74,712) | (112,850) | ||
Transfers in and/or out of Level 3 | 43,205 | (67,478) | (55,293) | ||
Other | (236) | (3,703) | (6,287) | ||
Ending Balance | 1,914,583 | 2,096,079 | 2,096,079 | ||
Level 3 | Predecessor | Fixed maturities: | Trading Securities. | |||||
Assets: | |||||
Beginning Balance | 194,205 | 225,610 | 194,603 | 224,176 | |
Total Realized and Unrealized Gains Included in Earnings | 1,188 | 6,464 | 7,729 | ||
Total Realized and Unrealized Losses Included in Earnings | (335) | (2,726) | (3,167) | ||
Purchases | 4,901 | 4,901 | |||
Sales | (492) | (26,930) | (27,805) | ||
Transfers in and/or out of Level 3 | 1,250 | 2,522 | |||
Other | 37 | 179 | 392 | ||
Ending Balance | 194,603 | 208,748 | 208,748 | ||
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | 853 | 802 | 654 | ||
Level 3 | Predecessor | Residential mortgage-backed securities | Available-for-sale securities. | |||||
Assets: | |||||
Beginning Balance | 3 | 17 | 3 | 28 | |
Purchases | 1 | ||||
Sales | (6) | (17) | |||
Other | (1) | (2) | |||
Ending Balance | 3 | 10 | 10 | ||
Level 3 | Predecessor | Residential mortgage-backed securities | Trading Securities. | |||||
Assets: | |||||
Purchases | 842 | 842 | |||
Ending Balance | 842 | 842 | |||
Level 3 | Predecessor | Other asset-backed securities | Available-for-sale securities. | |||||
Assets: | |||||
Beginning Balance | 563,961 | 548,805 | 603,646 | 545,808 | |
Total Realized and Unrealized Gains Included in Other Comprehensive Income | 29,929 | 34,066 | |||
Total Realized and Unrealized Losses Included in Other Comprehensive Income | (3,867) | (104) | (1,233) | ||
Sales | (32) | (9,534) | (9,794) | ||
Transfers in and/or out of Level 3 | 43,205 | ||||
Other | 379 | (999) | (750) | ||
Ending Balance | 603,646 | 568,097 | 568,097 | ||
Level 3 | Predecessor | Other asset-backed securities | Trading Securities. | |||||
Assets: | |||||
Beginning Balance | 169,461 | 194,664 | 169,473 | 194,977 | |
Total Realized and Unrealized Gains Included in Earnings | 586 | 6,124 | 6,851 | ||
Total Realized and Unrealized Losses Included in Earnings | (139) | (2,686) | (3,114) | ||
Sales | (472) | (21,883) | (22,695) | ||
Other | 37 | 167 | 367 | ||
Ending Balance | 169,473 | 176,386 | 176,386 | ||
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | 447 | 522 | 654 | ||
Level 3 | Predecessor | States, municipals, and political subdivisions | Available-for-sale securities. | |||||
Assets: | |||||
Beginning Balance | 3,675 | 3,675 | 3,675 | 3,675 | |
Ending Balance | 3,675 | 3,675 | 3,675 | ||
Level 3 | Predecessor | Corporate securities | Available-for-sale securities. | |||||
Assets: | |||||
Beginning Balance | 1,325,683 | 1,573,710 | 1,307,259 | 1,549,940 | |
Total Realized and Unrealized Gains Included in Earnings | 74 | 969 | |||
Total Realized and Unrealized Gains Included in Other Comprehensive Income | 12,282 | 27,271 | 54,288 | ||
Total Realized and Unrealized Losses Included in Other Comprehensive Income | (23,029) | (2,250) | (7,265) | ||
Purchases | 60,845 | 90,232 | |||
Sales | (7,062) | (65,172) | (103,039) | ||
Transfers in and/or out of Level 3 | (67,478) | (55,293) | |||
Other | (615) | (2,703) | (5,535) | ||
Ending Balance | 1,307,259 | 1,524,297 | 1,524,297 | ||
Level 3 | Predecessor | Corporate securities | Trading Securities. | |||||
Assets: | |||||
Beginning Balance | 24,744 | 30,946 | 25,130 | 29,199 | |
Total Realized and Unrealized Gains Included in Earnings | 602 | 340 | 878 | ||
Total Realized and Unrealized Losses Included in Earnings | (196) | (40) | (53) | ||
Purchases | 4,059 | 4,059 | |||
Sales | (20) | (5,047) | (5,110) | ||
Transfers in and/or out of Level 3 | 1,250 | 2,522 | |||
Other | 12 | 25 | |||
Ending Balance | 25,130 | 31,520 | 31,520 | ||
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | 406 | 280 | |||
Level 3 | Predecessor | Equity securities | |||||
Assets: | |||||
Beginning Balance | 66,691 | 77,591 | 66,691 | 67,979 | |
Total Realized and Unrealized Gains Included in Other Comprehensive Income | 965 | 1,192 | |||
Total Realized and Unrealized Losses Included in Other Comprehensive Income | (166) | ||||
Purchases | 9,551 | ||||
Sales | (674) | (674) | |||
Ending Balance | 66,691 | 77,882 | 77,882 | ||
Level 3 | Predecessor | Other long-term investments. | |||||
Assets: | |||||
Beginning Balance | 44,625 | 75,713 | $ 46,076 | 98,886 | |
Total Realized and Unrealized Gains Included in Earnings | 16,617 | 314 | 425 | ||
Total Realized and Unrealized Losses Included in Earnings | (15,166) | (8,805) | (32,089) | ||
Ending Balance | 46,076 | 67,222 | 67,222 | ||
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | $ 1,451 | $ (8,491) | $ (31,664) |
FAIR VALUE OF FINANCIAL INSTR73
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 5) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Assets: | ||
Mortgage loan holdings | $ 5,677,667 | |
Policy loans | 1,719,864 | |
Fixed maturities, held-to-maturity | 565,334 | |
Liabilities: | ||
Stable value product account balances | 1,861,280 | |
Annuity account balances | 10,792,560 | |
Debt | ||
Non-recourse funding obligations | 1,926,562 | |
Golden Gate V | ||
Debt | ||
Non-recourse funding obligations | 535,474 | |
Carrying Amounts | ||
Assets: | ||
Mortgage loan holdings | 5,677,667 | |
Policy loans | 1,719,864 | |
Fixed maturities, held-to-maturity | 565,334 | |
Liabilities: | ||
Stable value product account balances | 1,861,280 | |
Annuity account balances | 10,792,560 | |
Debt | ||
Non-recourse funding obligations | 1,926,562 | |
Carrying Amounts | Golden Gate V | ||
Debt | ||
Non-recourse funding obligations | 470,000 | |
Fair Values | Golden Gate V | ||
Debt | ||
Non-recourse funding obligations | 469,700 | |
Fair Values | Level 3 | ||
Assets: | ||
Mortgage loan holdings | 5,542,878 | |
Policy loans | 1,719,864 | |
Fixed maturities, held-to-maturity | 489,950 | |
Liabilities: | ||
Stable value product account balances | 1,859,409 | |
Annuity account balances | 10,260,654 | |
Debt | ||
Non-recourse funding obligations | $ 1,632,528 | |
Predecessor | ||
Assets: | ||
Mortgage loan holdings | $ 5,133,780 | |
Policy loans | 1,758,237 | |
Fixed maturities, held-to-maturity | 435,000 | |
Liabilities: | ||
Stable value product account balances | 1,959,488 | |
Annuity account balances | 10,950,729 | |
Debt | ||
Non-recourse funding obligations | 1,527,752 | |
Predecessor | Carrying Amounts | ||
Assets: | ||
Mortgage loan holdings | 5,133,780 | |
Policy loans | 1,758,237 | |
Fixed maturities, held-to-maturity | 435,000 | |
Liabilities: | ||
Stable value product account balances | 1,959,488 | |
Annuity account balances | 10,950,729 | |
Debt | ||
Non-recourse funding obligations | 1,527,752 | |
Predecessor | Carrying Amounts | Golden Gate V | ||
Debt | ||
Non-recourse funding obligations | 435,000 | |
Predecessor | Fair Values | Golden Gate V | ||
Debt | ||
Non-recourse funding obligations | 461,400 | |
Predecessor | Fair Values | Level 3 | ||
Assets: | ||
Mortgage loan holdings | 5,524,059 | |
Policy loans | 1,758,237 | |
Fixed maturities, held-to-maturity | 458,422 | |
Liabilities: | ||
Stable value product account balances | 1,973,624 | |
Annuity account balances | 10,491,775 | |
Debt | ||
Non-recourse funding obligations | $ 1,753,183 |
DERIVATIVE FINANCIAL INSTRUME74
DERIVATIVE FINANCIAL INSTRUMENTS (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 5 Months Ended | 6 Months Ended | |||
Jan. 31, 2015USD ($) | Jun. 30, 2015USD ($)positionitem | Jun. 30, 2014USD ($) | Jun. 30, 2015USD ($)positionitem | Jun. 30, 2014USD ($) | Dec. 31, 2014USD ($) | Oct. 31, 2012item | |
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | $ 10,566 | $ 5,618 | |||||
Notional Amount, Other long-term investments | 8,918,831 | 8,918,831 | |||||
Fair Value, Other long-term investments | 325,870 | 325,870 | |||||
Notional Amount, Other liabilities | 8,740,783 | 8,740,783 | |||||
Fair Value, Other liabilities | $ 530,750 | $ 530,750 | |||||
PLC | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Number of portfolio maintenance agreements | item | 2 | 2 | |||||
Derivatives not designated as hedging instruments | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | $ 10,566 | $ 5,618 | |||||
Derivatives not designated as hedging instruments | Annuity account | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | (98,025) | (138,192) | |||||
Derivatives not designated as hedging instruments | FIA | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | 1,664 | 3,644 | |||||
Derivatives not designated as hedging instruments | IUL | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | 1,469 | 1,880 | |||||
Derivatives not designated as hedging instruments | Interest rate futures | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Notional Amount, Other long-term investments | 445,008 | 445,008 | |||||
Fair Value, Other long-term investments | 795 | 795 | |||||
Notional Amount, Other liabilities | 334,067 | 334,067 | |||||
Fair Value, Other liabilities | 3,453 | 3,453 | |||||
Derivatives not designated as hedging instruments | Interest rate futures | Annuity account | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | (14,183) | (14,231) | |||||
Derivatives not designated as hedging instruments | Equity futures | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Notional Amount, Other long-term investments | 646,935 | 646,935 | |||||
Fair Value, Other long-term investments | 7,906 | 7,906 | |||||
Notional Amount, Other liabilities | 10,289 | 10,289 | |||||
Fair Value, Other liabilities | 47 | 47 | |||||
Derivatives not designated as hedging instruments | Equity futures | Annuity account | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | (5,267) | (37,736) | |||||
Derivatives not designated as hedging instruments | Equity futures | FIA | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | 123 | 307 | |||||
Derivatives not designated as hedging instruments | Equity futures | IUL | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | 9 | 23 | |||||
Derivatives not designated as hedging instruments | Currency futures | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Notional Amount, Other long-term investments | 111,856 | 111,856 | |||||
Fair Value, Other long-term investments | 1,412 | 1,412 | |||||
Notional Amount, Other liabilities | 137,101 | 137,101 | |||||
Fair Value, Other liabilities | 2,021 | 2,021 | |||||
Derivatives not designated as hedging instruments | Currency futures | Annuity account | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | (8,709) | (2,572) | |||||
Derivatives not designated as hedging instruments | Volatility futures | FIA | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | 25 | 29 | |||||
Derivatives not designated as hedging instruments | Equity options | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Notional Amount, Other long-term investments | 2,695,658 | 2,695,658 | |||||
Fair Value, Other long-term investments | 186,051 | 186,051 | |||||
Notional Amount, Other liabilities | 1,255,872 | 1,255,872 | |||||
Fair Value, Other liabilities | 36,100 | 36,100 | |||||
Derivatives not designated as hedging instruments | Equity options | Annuity account | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | (3,550) | (25,324) | |||||
Derivatives not designated as hedging instruments | Equity options | FIA | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | 1,226 | 5,601 | |||||
Derivatives not designated as hedging instruments | Equity options | IUL | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | (78) | 62 | |||||
Derivatives not designated as hedging instruments | Interest rate swaptions | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Notional Amount, Other long-term investments | 225,000 | 225,000 | |||||
Fair Value, Other long-term investments | 8,237 | 8,237 | |||||
Derivatives not designated as hedging instruments | Interest rate swaptions | Annuity account | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | $ 2,547 | $ (8,781) | |||||
Derivatives not designated as hedging instruments | Interest rate swaps | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Positions held | position | 0 | 0 | |||||
Notional Amount, Other long-term investments | $ 750,000 | $ 750,000 | |||||
Fair Value, Other long-term investments | 20,606 | 20,606 | |||||
Notional Amount, Other liabilities | 1,225,000 | 1,225,000 | |||||
Fair Value, Other liabilities | 49,179 | 49,179 | |||||
Derivatives not designated as hedging instruments | Interest rate swaps | Annuity account | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | (121,167) | (175,958) | |||||
Derivatives not designated as hedging instruments | Embedded derivative - GMWB | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Notional Amount, Other long-term investments | 2,416,882 | 2,416,882 | |||||
Fair Value, Other long-term investments | 79,376 | 79,376 | |||||
Notional Amount, Other liabilities | 869,041 | 869,041 | |||||
Fair Value, Other liabilities | 22,573 | 22,573 | |||||
Derivatives not designated as hedging instruments | Embedded derivative - GMWB | Annuity account | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | 45,969 | 81,839 | |||||
Derivatives not designated as hedging instruments | Funds withheld derivative | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Notional Amount, Other liabilities | 1,529,607 | 1,529,607 | |||||
Fair Value, Other liabilities | 96,999 | 96,999 | |||||
Derivatives not designated as hedging instruments | Funds withheld derivative | Annuity account | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | 6,335 | 44,571 | |||||
Derivatives not designated as hedging instruments | Embedded derivative - FIA | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Notional Amount, Other liabilities | 854,986 | 854,986 | |||||
Fair Value, Other liabilities | 85,129 | 85,129 | |||||
Derivatives not designated as hedging instruments | Embedded derivative - FIA | FIA | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | 290 | (2,293) | |||||
Derivatives not designated as hedging instruments | Embedded derivative - IUL | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Notional Amount, Other long-term investments | 28,270 | 28,270 | |||||
Fair Value, Other long-term investments | 11,902 | 11,902 | |||||
Derivatives not designated as hedging instruments | Embedded derivative - IUL | IUL | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | 1,538 | 1,795 | |||||
Derivatives not designated as hedging instruments | Embedded derivative - Modco reinsurance treaties | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | 109,131 | 141,322 | |||||
Notional Amount, Other long-term investments | 65,242 | 65,242 | |||||
Fair Value, Other long-term investments | 2,321 | 2,321 | |||||
Notional Amount, Other liabilities | 2,496,000 | 2,496,000 | |||||
Fair Value, Other liabilities | 223,342 | 223,342 | |||||
Derivatives not designated as hedging instruments | Derivatives with PLC | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | (3,684) | (3,119) | |||||
Notional Amount, Other long-term investments | 1,561,459 | 1,561,459 | |||||
Fair Value, Other long-term investments | 18,822 | 18,822 | |||||
Derivatives not designated as hedging instruments | Other derivatives | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | 11 | 83 | |||||
Notional Amount, Other long-term investments | 791 | 791 | |||||
Fair Value, Other long-term investments | 344 | 344 | |||||
Notional Amount, Other liabilities | 550 | 550 | |||||
Fair Value, Other liabilities | $ 5 | $ 5 | |||||
Cash flow hedges. | Interest rate swaps | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Positions held | position | 0 | 0 | |||||
Predecessor | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Number of portfolio maintenance agreements | item | 2 | ||||||
Realized investment gains (losses) - derivatives, gross | $ 22,031 | $ (36,620) | $ (76,194) | ||||
Notional Amount, Other long-term investments | $ 7,174,182 | ||||||
Fair Value, Other long-term investments | 270,701 | ||||||
Notional Amount, Other liabilities | 7,661,143 | ||||||
Fair Value, Other liabilities | 629,535 | ||||||
Predecessor | Derivatives not designated as hedging instruments | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | 22,031 | (36,620) | (76,194) | ||||
Predecessor | Derivatives not designated as hedging instruments | Annuity account | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | 75,861 | 20,685 | 38,164 | ||||
Predecessor | Derivatives not designated as hedging instruments | FIA | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | (1,032) | (4,710) | (1,638) | ||||
Predecessor | Derivatives not designated as hedging instruments | IUL | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | (598) | (285) | (285) | ||||
Predecessor | Derivatives not designated as hedging instruments | Interest rate futures | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Notional Amount, Other long-term investments | 27,977 | ||||||
Fair Value, Other long-term investments | 938 | ||||||
Predecessor | Derivatives not designated as hedging instruments | Interest rate futures | Annuity account | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | 1,413 | 6,548 | 10,798 | ||||
Predecessor | Derivatives not designated as hedging instruments | Equity futures | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Notional Amount, Other long-term investments | 26,483 | ||||||
Fair Value, Other long-term investments | 427 | ||||||
Notional Amount, Other liabilities | 385,256 | ||||||
Fair Value, Other liabilities | 15,069 | ||||||
Predecessor | Derivatives not designated as hedging instruments | Equity futures | Annuity account | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | 9,221 | (7,259) | (9,910) | ||||
Predecessor | Derivatives not designated as hedging instruments | Equity futures | FIA | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | (184) | 605 | 950 | ||||
Predecessor | Derivatives not designated as hedging instruments | Equity futures | IUL | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | 3 | ||||||
Predecessor | Derivatives not designated as hedging instruments | Currency futures | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Notional Amount, Other long-term investments | 197,648 | ||||||
Fair Value, Other long-term investments | 2,384 | ||||||
Predecessor | Derivatives not designated as hedging instruments | Currency futures | Annuity account | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | 7,778 | (2,887) | (4,165) | ||||
Predecessor | Derivatives not designated as hedging instruments | Volatility futures | FIA | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | 8 | 8 | |||||
Predecessor | Derivatives not designated as hedging instruments | Variance swaps | Annuity account | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | (823) | (2,673) | |||||
Predecessor | Derivatives not designated as hedging instruments | Equity options | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Notional Amount, Other long-term investments | 1,921,167 | ||||||
Fair Value, Other long-term investments | 163,212 | ||||||
Notional Amount, Other liabilities | 699,295 | ||||||
Fair Value, Other liabilities | 47,077 | ||||||
Predecessor | Derivatives not designated as hedging instruments | Equity options | Annuity account | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | 3,047 | (20,949) | (33,290) | ||||
Predecessor | Derivatives not designated as hedging instruments | Equity options | FIA | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | (2,617) | 2,984 | 3,978 | ||||
Predecessor | Derivatives not designated as hedging instruments | Equity options | IUL | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | (115) | ||||||
Predecessor | Derivatives not designated as hedging instruments | Interest rate swaptions | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Notional Amount, Other long-term investments | 625,000 | ||||||
Fair Value, Other long-term investments | 8,012 | ||||||
Predecessor | Derivatives not designated as hedging instruments | Interest rate swaptions | Annuity account | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | 9,268 | (4,998) | (14,401) | ||||
Predecessor | Derivatives not designated as hedging instruments | Interest rate swaps | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Notional Amount, Other long-term investments | 1,550,000 | ||||||
Fair Value, Other long-term investments | 50,743 | ||||||
Notional Amount, Other liabilities | 275,000 | ||||||
Fair Value, Other liabilities | 3,599 | ||||||
Predecessor | Derivatives not designated as hedging instruments | Interest rate swaps | Annuity account | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | 122,710 | 45,169 | 102,537 | ||||
Predecessor | Derivatives not designated as hedging instruments | Embedded derivative - GMWB | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Notional Amount, Other long-term investments | 1,302,895 | ||||||
Fair Value, Other long-term investments | 37,497 | ||||||
Notional Amount, Other liabilities | 1,702,899 | ||||||
Fair Value, Other liabilities | 63,460 | ||||||
Predecessor | Derivatives not designated as hedging instruments | Embedded derivative - GMWB | Annuity account | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | (68,503) | (13,147) | (40,462) | ||||
Predecessor | Derivatives not designated as hedging instruments | Funds withheld derivative | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Notional Amount, Other liabilities | 1,233,424 | ||||||
Fair Value, Other liabilities | 57,305 | ||||||
Predecessor | Derivatives not designated as hedging instruments | Funds withheld derivative | Annuity account | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | (9,073) | 19,031 | 29,730 | ||||
Predecessor | Derivatives not designated as hedging instruments | Embedded derivative - FIA | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Notional Amount, Other liabilities | 749,933 | ||||||
Fair Value, Other liabilities | 124,465 | ||||||
Predecessor | Derivatives not designated as hedging instruments | Embedded derivative - FIA | FIA | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | 1,769 | (8,307) | (6,574) | ||||
Predecessor | Derivatives not designated as hedging instruments | Embedded derivative - IUL | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Notional Amount, Other long-term investments | 12,019 | ||||||
Fair Value, Other long-term investments | 6,691 | ||||||
Predecessor | Derivatives not designated as hedging instruments | Embedded derivative - IUL | IUL | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | (486) | (285) | (285) | ||||
Predecessor | Derivatives not designated as hedging instruments | Embedded derivative - Modco reinsurance treaties | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | (68,026) | (52,202) | (112,371) | ||||
Notional Amount, Other long-term investments | 25,760 | ||||||
Fair Value, Other long-term investments | 1,051 | ||||||
Notional Amount, Other liabilities | 2,562,848 | ||||||
Fair Value, Other liabilities | 311,727 | ||||||
Predecessor | Derivatives not designated as hedging instruments | Derivatives with PLC | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | 15,863 | 33 | 138 | ||||
Notional Amount, Other long-term investments | 1,497,010 | ||||||
Fair Value, Other long-term investments | 6,077 | ||||||
Predecessor | Derivatives not designated as hedging instruments | Other derivatives | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Realized investment gains (losses) - derivatives, gross | $ (37) | $ (141) | $ (202) | ||||
Notional Amount, Other long-term investments | 242 | ||||||
Fair Value, Other long-term investments | 360 | ||||||
Predecessor | Cash flow hedges. | Inflation | |||||||
Notional amount and fair value of the entity's derivative financial instruments | |||||||
Notional Amount, Other liabilities | 40,469 | ||||||
Fair Value, Other liabilities | $ 142 |
DERIVATIVE FINANCIAL INSTRUME75
DERIVATIVE FINANCIAL INSTRUMENTS (Details 2) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 5 Months Ended | 6 Months Ended | |
Jan. 31, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Realized investment gains (losses) - all other investments | |||||
Modco trading portfolio | $ (108,741) | $ (141,901) | |||
Predecessor | |||||
Realized investment gains (losses) - all other investments | |||||
Modco trading portfolio | $ 73,062 | $ 60,989 | $ 127,292 |
DERIVATIVE FINANCIAL INSTRUME76
DERIVATIVE FINANCIAL INSTRUMENTS (Details 3) - Cash flow hedges - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 5 Months Ended | 6 Months Ended | |
Jan. 31, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Gain (Loss) on Derivatives in Cash Flow Hedging Relationship | |||||
Amount of Gains (Losses) Deferred in Accumulated Other Comprehensive Income (Loss) on Derivatives (Effective Portion) | $ (95) | $ (131) | |||
Amount and Location of Gains (Losses) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (Loss) (Effective Portion) | (41) | (131) | |||
Amount and Location of (Losses) Recognized in Income (Loss) on Derivatives (Ineffective Portion) | 77 | 73 | |||
Inflation | |||||
Gain (Loss) on Derivatives in Cash Flow Hedging Relationship | |||||
Amount of Gains (Losses) Deferred in Accumulated Other Comprehensive Income (Loss) on Derivatives (Effective Portion) | (95) | (131) | |||
Amount and Location of Gains (Losses) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (Loss) (Effective Portion) | (41) | (131) | |||
Amount and Location of (Losses) Recognized in Income (Loss) on Derivatives (Ineffective Portion) | $ 77 | $ 73 | |||
Predecessor | |||||
Gain (Loss) on Derivatives in Cash Flow Hedging Relationship | |||||
Amount of Gains (Losses) Deferred in Accumulated Other Comprehensive Income (Loss) on Derivatives (Effective Portion) | $ 13 | $ (929) | $ (26) | ||
Amount and Location of Gains (Losses) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (Loss) (Effective Portion) | (36) | (614) | (1,284) | ||
Amount and Location of (Losses) Recognized in Income (Loss) on Derivatives (Ineffective Portion) | (7) | (165) | (126) | ||
Predecessor | Inflation | |||||
Gain (Loss) on Derivatives in Cash Flow Hedging Relationship | |||||
Amount of Gains (Losses) Deferred in Accumulated Other Comprehensive Income (Loss) on Derivatives (Effective Portion) | 13 | (929) | (26) | ||
Amount and Location of Gains (Losses) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (Loss) (Effective Portion) | (36) | (614) | (1,284) | ||
Amount and Location of (Losses) Recognized in Income (Loss) on Derivatives (Ineffective Portion) | $ (7) | $ (165) | $ (126) |
OFFSETTING OF ASSETS AND LIAB77
OFFSETTING OF ASSETS AND LIABILITIES (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Total derivatives, subject to a master netting arrangement or similar arrangement | ||
Gross Amounts of Recognized Assets | $ 225,011 | |
Net Amounts of Assets Presented in the Statement of Financial Position | 225,011 | |
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments | 53,905 | |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received | 77,148 | |
Total derivatives, subject to a master netting arrangement or similar arrangement, Net Amount | 93,958 | |
Total derivatives, not subject to a master netting arrangement or similar arrangement | ||
Total derivatives, not subject to a master netting arrangement or similar arrangement | 100,859 | |
Total derivatives | ||
Gross Amounts of Recognized Assets | 325,870 | |
Net Amounts of Assets Presented in the Statement of Financial Position | 325,870 | |
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments | 53,905 | |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received | 77,148 | |
Total derivatives, Net Amount | 194,817 | |
Free-Standing derivatives | ||
Total derivatives, subject to a master netting arrangement or similar arrangement | ||
Gross Amounts of Recognized Assets | 225,011 | |
Net Amounts of Assets Presented in the Statement of Financial Position | 225,011 | |
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments | 53,905 | |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received | 77,148 | |
Total derivatives, subject to a master netting arrangement or similar arrangement, Net Amount | 93,958 | |
Embedded derivative - Modco reinsurance treaties | ||
Total derivatives, subject to a master netting arrangement or similar arrangement | ||
Gross Amounts of Recognized Assets | 2,321 | |
Net Amounts of Assets Presented in the Statement of Financial Position | 2,321 | |
Total derivatives, subject to a master netting arrangement or similar arrangement, Net Amount | 2,321 | |
Embedded derivative - GMWB | ||
Total derivatives, subject to a master netting arrangement or similar arrangement | ||
Gross Amounts of Recognized Assets | 79,376 | |
Net Amounts of Assets Presented in the Statement of Financial Position | 79,376 | |
Total derivatives, subject to a master netting arrangement or similar arrangement, Net Amount | 79,376 | |
Derivatives with PLC | ||
Total derivatives, subject to a master netting arrangement or similar arrangement | ||
Gross Amounts of Recognized Assets | 18,822 | |
Net Amounts of Assets Presented in the Statement of Financial Position | 18,822 | |
Total derivatives, subject to a master netting arrangement or similar arrangement, Net Amount | 18,822 | |
Other | ||
Total derivatives, subject to a master netting arrangement or similar arrangement | ||
Gross Amounts of Recognized Assets | 340 | |
Net Amounts of Assets Presented in the Statement of Financial Position | 340 | |
Total derivatives, subject to a master netting arrangement or similar arrangement, Net Amount | $ 340 | |
Predecessor | ||
Total derivatives, subject to a master netting arrangement or similar arrangement | ||
Gross Amounts of Recognized Assets | $ 225,716 | |
Net Amounts of Assets Presented in the Statement of Financial Position | 225,716 | |
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments | 53,612 | |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received | 73,935 | |
Total derivatives, subject to a master netting arrangement or similar arrangement, Net Amount | 98,169 | |
Total derivatives, not subject to a master netting arrangement or similar arrangement | ||
Total derivatives, not subject to a master netting arrangement or similar arrangement | 44,985 | |
Total derivatives | ||
Gross Amounts of Recognized Assets | 270,701 | |
Net Amounts of Assets Presented in the Statement of Financial Position | 270,701 | |
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments | 53,612 | |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received | 73,935 | |
Total derivatives, Net Amount | 143,154 | |
Predecessor | Free-Standing derivatives | ||
Total derivatives, subject to a master netting arrangement or similar arrangement | ||
Gross Amounts of Recognized Assets | 225,716 | |
Net Amounts of Assets Presented in the Statement of Financial Position | 225,716 | |
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments | 53,612 | |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received | 73,935 | |
Total derivatives, subject to a master netting arrangement or similar arrangement, Net Amount | 98,169 | |
Predecessor | Embedded derivative - Modco reinsurance treaties | ||
Total derivatives, subject to a master netting arrangement or similar arrangement | ||
Gross Amounts of Recognized Assets | 1,051 | |
Net Amounts of Assets Presented in the Statement of Financial Position | 1,051 | |
Total derivatives, subject to a master netting arrangement or similar arrangement, Net Amount | 1,051 | |
Predecessor | Embedded derivative - GMWB | ||
Total derivatives, subject to a master netting arrangement or similar arrangement | ||
Gross Amounts of Recognized Assets | 37,497 | |
Net Amounts of Assets Presented in the Statement of Financial Position | 37,497 | |
Total derivatives, subject to a master netting arrangement or similar arrangement, Net Amount | 37,497 | |
Predecessor | Derivatives with PLC | ||
Total derivatives, subject to a master netting arrangement or similar arrangement | ||
Gross Amounts of Recognized Assets | 6,077 | |
Net Amounts of Assets Presented in the Statement of Financial Position | 6,077 | |
Total derivatives, subject to a master netting arrangement or similar arrangement, Net Amount | 6,077 | |
Predecessor | Other | ||
Total derivatives, subject to a master netting arrangement or similar arrangement | ||
Gross Amounts of Recognized Assets | 360 | |
Net Amounts of Assets Presented in the Statement of Financial Position | 360 | |
Total derivatives, subject to a master netting arrangement or similar arrangement, Net Amount | $ 360 |
OFFSETTING OF ASSETS AND LIAB78
OFFSETTING OF ASSETS AND LIABILITIES (Details 2) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Total derivatives, subject to a master netting arrangement or similar arrangement | ||
Gross Amounts of Recognized Liabilities | $ 90,805 | |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 90,805 | |
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments | 53,905 | |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Paid | 36,900 | |
Total derivatives, not subject to a master netting arrangement or similar arrangement | ||
Total derivatives, not subject to a master netting arrangement or similar arrangement | 439,945 | |
Total derivatives | ||
Gross Amounts of Recognized Liabilities | 530,750 | |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 530,750 | |
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments | 53,905 | |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Paid | 36,900 | |
Total derivatives, Net Amount | 439,945 | |
Repurchase agreements | ||
Repurchase agreements | 602,213 | |
Total Liabilities | ||
Gross Amounts of Recognized Liabilities | 1,132,963 | |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 1,132,963 | |
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments | 53,905 | |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Paid | 36,900 | |
Net Amount | 1,042,158 | |
Free-Standing derivatives | ||
Total derivatives, subject to a master netting arrangement or similar arrangement | ||
Gross Amounts of Recognized Liabilities | 90,805 | |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 90,805 | |
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments | 53,905 | |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Paid | 36,900 | |
Embedded derivative - Modco reinsurance treaties | ||
Total derivatives, subject to a master netting arrangement or similar arrangement | ||
Gross Amounts of Recognized Liabilities | 223,342 | |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 223,342 | |
Total derivatives, subject to a master netting arrangement or similar arrangement, Net Amount | 223,342 | |
Funds withheld derivative | ||
Total derivatives, subject to a master netting arrangement or similar arrangement | ||
Gross Amounts of Recognized Liabilities | 96,999 | |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 96,999 | |
Total derivatives, subject to a master netting arrangement or similar arrangement, Net Amount | 96,999 | |
Embedded derivative - GMWB | ||
Total derivatives, subject to a master netting arrangement or similar arrangement | ||
Gross Amounts of Recognized Liabilities | 22,573 | |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 22,573 | |
Total derivatives, subject to a master netting arrangement or similar arrangement, Net Amount | 22,573 | |
Embedded derivative - FIA | ||
Total derivatives, subject to a master netting arrangement or similar arrangement | ||
Gross Amounts of Recognized Liabilities | 85,129 | |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 85,129 | |
Total derivatives, subject to a master netting arrangement or similar arrangement, Net Amount | 85,129 | |
Embedded derivative - IUL | ||
Total derivatives, subject to a master netting arrangement or similar arrangement | ||
Gross Amounts of Recognized Liabilities | 11,902 | |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 11,902 | |
Total derivatives, subject to a master netting arrangement or similar arrangement, Net Amount | $ 11,902 | |
Predecessor | ||
Total derivatives, subject to a master netting arrangement or similar arrangement | ||
Gross Amounts of Recognized Liabilities | $ 65,887 | |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 65,887 | |
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments | 53,612 | |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Paid | 12,258 | |
Total derivatives, subject to a master netting arrangement or similar arrangement, Net Amount | 17 | |
Total derivatives, not subject to a master netting arrangement or similar arrangement | ||
Total derivatives, not subject to a master netting arrangement or similar arrangement | 563,648 | |
Total derivatives | ||
Gross Amounts of Recognized Liabilities | 629,535 | |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 629,535 | |
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments | 53,612 | |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Paid | 12,258 | |
Total derivatives, Net Amount | 563,665 | |
Repurchase agreements | ||
Repurchase agreements | 50,000 | |
Total Liabilities | ||
Gross Amounts of Recognized Liabilities | 679,535 | |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 679,535 | |
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments | 53,612 | |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Paid | 12,258 | |
Net Amount | 613,665 | |
Predecessor | Free-Standing derivatives | ||
Total derivatives, subject to a master netting arrangement or similar arrangement | ||
Gross Amounts of Recognized Liabilities | 65,887 | |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 65,887 | |
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments | 53,612 | |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Paid | 12,258 | |
Total derivatives, subject to a master netting arrangement or similar arrangement, Net Amount | 17 | |
Predecessor | Embedded derivative - Modco reinsurance treaties | ||
Total derivatives, subject to a master netting arrangement or similar arrangement | ||
Gross Amounts of Recognized Liabilities | 311,727 | |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 311,727 | |
Total derivatives, subject to a master netting arrangement or similar arrangement, Net Amount | 311,727 | |
Predecessor | Funds withheld derivative | ||
Total derivatives, subject to a master netting arrangement or similar arrangement | ||
Gross Amounts of Recognized Liabilities | 57,305 | |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 57,305 | |
Total derivatives, subject to a master netting arrangement or similar arrangement, Net Amount | 57,305 | |
Predecessor | Embedded derivative - GMWB | ||
Total derivatives, subject to a master netting arrangement or similar arrangement | ||
Gross Amounts of Recognized Liabilities | 63,460 | |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 63,460 | |
Total derivatives, subject to a master netting arrangement or similar arrangement, Net Amount | 63,460 | |
Predecessor | Embedded derivative - FIA | ||
Total derivatives, subject to a master netting arrangement or similar arrangement | ||
Gross Amounts of Recognized Liabilities | 124,465 | |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 124,465 | |
Total derivatives, subject to a master netting arrangement or similar arrangement, Net Amount | 124,465 | |
Predecessor | Embedded derivative - IUL | ||
Total derivatives, subject to a master netting arrangement or similar arrangement | ||
Gross Amounts of Recognized Liabilities | 6,691 | |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 6,691 | |
Total derivatives, subject to a master netting arrangement or similar arrangement, Net Amount | $ 6,691 |
OPERATING SEGMENTS (Details)
OPERATING SEGMENTS (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 5 Months Ended | 6 Months Ended | |||
Jan. 31, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Feb. 01, 2015 | Dec. 31, 2014 | |
Summarized financial information for the company's segments | |||||||
Revenues | $ 862,953 | $ 1,503,914 | |||||
Segment Operating Income (Loss) | 61,916 | 129,441 | |||||
Realized investment (losses) gains - investments | (115,716) | (158,649) | |||||
Realized investment (losses) gains - derivatives | 18,233 | 18,177 | |||||
Income tax expense | 9,991 | 1,875 | |||||
Net income | (25,576) | (9,156) | |||||
Realized gain (losses) on investments | |||||||
Investment gains (losses) | (108,081) | (143,137) | |||||
Less: amortization related to DAC/VOBA and benefits and settlement expenses | 7,635 | 15,512 | |||||
Realized investment gains (losses) - investments | (115,716) | (158,649) | |||||
Realized gain (losses) on derivatives | |||||||
Realized investment gains (losses) - derivatives, gross | 10,566 | 5,618 | |||||
Less: VA GMWB economic cost | (7,667) | (12,559) | |||||
Realized investment gains (losses) - derivatives | 18,233 | 18,177 | |||||
Other-than-temporary impairments | 5,734 | 5,734 | |||||
Operating Segment Assets | |||||||
Investments and other assets | 66,099,431 | 66,099,431 | |||||
Deferred policy acquisition costs and value of business acquired | 1,396,467 | 1,396,467 | |||||
Other intangibles | 665,787 | 665,787 | |||||
Goodwill | 735,712 | 735,712 | $ 735,700 | ||||
Total assets | 68,897,397 | 68,897,397 | |||||
Operating | Life Marketing | |||||||
Summarized financial information for the company's segments | |||||||
Revenues | 347,691 | 602,613 | |||||
Segment Operating Income (Loss) | 5,672 | 9,953 | |||||
Operating Segment Assets | |||||||
Investments and other assets | 13,170,634 | 13,170,634 | |||||
Deferred policy acquisition costs and value of business acquired | 1,051,702 | 1,051,702 | |||||
Other intangibles | 329,102 | 329,102 | |||||
Goodwill | 203,543 | 203,543 | |||||
Total assets | 14,754,981 | 14,754,981 | |||||
Operating | Acquisitions | |||||||
Summarized financial information for the company's segments | |||||||
Revenues | 363,985 | 622,774 | |||||
Segment Operating Income (Loss) | 37,876 | 73,946 | |||||
Operating Segment Assets | |||||||
Investments and other assets | 20,223,282 | 20,223,282 | |||||
Deferred policy acquisition costs and value of business acquired | (190,193) | (190,193) | |||||
Other intangibles | 40,936 | 40,936 | |||||
Goodwill | 14,524 | 14,524 | |||||
Total assets | 20,088,549 | 20,088,549 | |||||
Operating | Annuities | |||||||
Summarized financial information for the company's segments | |||||||
Revenues | 43,468 | 92,812 | |||||
Segment Operating Income (Loss) | 40,513 | 71,886 | |||||
Operating Segment Assets | |||||||
Investments and other assets | 20,186,183 | 20,186,183 | |||||
Deferred policy acquisition costs and value of business acquired | 490,973 | 490,973 | |||||
Other intangibles | 203,446 | 203,446 | |||||
Goodwill | 336,677 | 336,677 | |||||
Total assets | 21,217,279 | 21,217,279 | |||||
Operating | Stable Value Products | |||||||
Summarized financial information for the company's segments | |||||||
Revenues | 16,656 | 26,998 | |||||
Segment Operating Income (Loss) | 9,349 | 15,464 | |||||
Operating Segment Assets | |||||||
Investments and other assets | 1,737,745 | 1,737,745 | |||||
Other intangibles | 9,722 | 9,722 | |||||
Goodwill | 113,813 | 113,813 | |||||
Total assets | 1,861,280 | 1,861,280 | |||||
Operating | Asset Protection | |||||||
Summarized financial information for the company's segments | |||||||
Revenues | 77,625 | 126,921 | |||||
Segment Operating Income (Loss) | 4,880 | 8,523 | |||||
Operating Segment Assets | |||||||
Investments and other assets | 751,376 | 751,376 | |||||
Deferred policy acquisition costs and value of business acquired | 43,985 | 43,985 | |||||
Other intangibles | 82,581 | 82,581 | |||||
Goodwill | 67,155 | 67,155 | |||||
Total assets | 945,097 | 945,097 | |||||
Operating | Corporate and Other | |||||||
Summarized financial information for the company's segments | |||||||
Revenues | 13,528 | 31,796 | |||||
Segment Operating Income (Loss) | (36,374) | (50,331) | |||||
Operating Segment Assets | |||||||
Investments and other assets | 10,019,177 | 10,019,177 | |||||
Total assets | 10,019,177 | 10,019,177 | |||||
Adjustments | |||||||
Operating Segment Assets | |||||||
Investments and other assets | 11,034 | 11,034 | |||||
Total assets | $ 11,034 | $ 11,034 | |||||
Predecessor | |||||||
Summarized financial information for the company's segments | |||||||
Revenues | $ 459,646 | $ 1,139,186 | $ 2,228,535 | ||||
Segment Operating Income (Loss) | 19,000 | 136,243 | 263,589 | ||||
Realized investment (losses) gains - investments | 89,414 | 66,742 | 124,672 | ||||
Realized investment (losses) gains - derivatives | 24,433 | (30,370) | (64,035) | ||||
Income tax expense | (44,325) | (56,572) | (105,634) | ||||
Net income | 88,522 | 116,043 | 218,592 | ||||
Realized gain (losses) on investments | |||||||
Investment gains (losses) | 80,672 | 79,006 | 149,561 | ||||
Less: amortization related to DAC/VOBA and benefits and settlement expenses | (8,742) | 12,264 | 24,889 | ||||
Realized investment gains (losses) - investments | 89,414 | 66,742 | 124,672 | ||||
Realized gain (losses) on derivatives | |||||||
Realized investment gains (losses) - derivatives, gross | 22,031 | (36,620) | (76,194) | ||||
Less: VA GMWB economic cost | (2,402) | (6,250) | (12,159) | ||||
Realized investment gains (losses) - derivatives | 24,433 | (30,370) | (64,035) | ||||
Other-than-temporary impairments | 481 | 1,460 | 3,051 | ||||
Operating Segment Assets | |||||||
Investments and other assets | $ 66,759,495 | ||||||
Deferred policy acquisition costs and value of business acquired | 3,155,046 | ||||||
Goodwill | 77,577 | ||||||
Total assets | 69,992,118 | ||||||
Predecessor | Operating | Life Marketing | |||||||
Summarized financial information for the company's segments | |||||||
Revenues | 133,361 | 376,713 | 729,536 | ||||
Segment Operating Income (Loss) | (2,271) | 25,403 | 47,900 | ||||
Operating Segment Assets | |||||||
Investments and other assets | 13,858,491 | ||||||
Deferred policy acquisition costs and value of business acquired | 1,973,156 | ||||||
Total assets | 15,831,647 | ||||||
Predecessor | Operating | Acquisitions | |||||||
Summarized financial information for the company's segments | |||||||
Revenues | 139,761 | 438,244 | 865,192 | ||||
Segment Operating Income (Loss) | 20,134 | 64,882 | 125,878 | ||||
Operating Segment Assets | |||||||
Investments and other assets | 19,858,284 | ||||||
Deferred policy acquisition costs and value of business acquired | 600,482 | ||||||
Goodwill | 29,419 | ||||||
Total assets | 20,488,185 | ||||||
Predecessor | Operating | Annuities | |||||||
Summarized financial information for the company's segments | |||||||
Revenues | 130,918 | 190,304 | 382,279 | ||||
Segment Operating Income (Loss) | 11,363 | 48,603 | 93,931 | ||||
Operating Segment Assets | |||||||
Investments and other assets | 20,678,948 | ||||||
Deferred policy acquisition costs and value of business acquired | 539,965 | ||||||
Total assets | 21,218,913 | ||||||
Predecessor | Operating | Stable Value Products | |||||||
Summarized financial information for the company's segments | |||||||
Revenues | 8,181 | 27,125 | 54,975 | ||||
Segment Operating Income (Loss) | 4,529 | 17,287 | 34,684 | ||||
Operating Segment Assets | |||||||
Investments and other assets | 1,958,867 | ||||||
Deferred policy acquisition costs and value of business acquired | 621 | ||||||
Total assets | 1,959,488 | ||||||
Predecessor | Operating | Asset Protection | |||||||
Summarized financial information for the company's segments | |||||||
Revenues | 24,566 | 77,122 | 149,969 | ||||
Segment Operating Income (Loss) | 1,907 | 6,764 | 11,573 | ||||
Operating Segment Assets | |||||||
Investments and other assets | 832,887 | ||||||
Deferred policy acquisition costs and value of business acquired | 40,503 | ||||||
Goodwill | 48,158 | ||||||
Total assets | 921,548 | ||||||
Predecessor | Operating | Corporate and Other | |||||||
Summarized financial information for the company's segments | |||||||
Revenues | 22,859 | 29,678 | 46,584 | ||||
Segment Operating Income (Loss) | $ (16,662) | $ (26,696) | $ (50,377) | ||||
Operating Segment Assets | |||||||
Investments and other assets | 9,557,226 | ||||||
Deferred policy acquisition costs and value of business acquired | 319 | ||||||
Total assets | 9,557,545 | ||||||
Predecessor | Adjustments | |||||||
Operating Segment Assets | |||||||
Investments and other assets | 14,792 | ||||||
Total assets | $ 14,792 |