Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Oct. 31, 2015 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | HORACE MANN EDUCATORS CORP /DE/ | |
Entity Central Index Key | 850,141 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Trading Symbol | HMN | |
Entity Common Stock, Shares Outstanding | 40,700,671 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 | |
Investments | |||
Fixed maturities, available for sale, at fair value (amortized cost 2015, $6,676,545; 2014, $6,375,237) | $ 7,078,742 | $ 6,893,090 | |
Equity securities, available for sale, at fair value (cost 2015, $95,071; 2014, $99,904) | 96,065 | 110,655 | |
Short-term and other investments | 366,385 | 399,722 | |
Total investments | 7,541,192 | 7,403,467 | |
Cash | 49,915 | 11,675 | |
Deferred policy acquisition costs | 237,414 | 215,082 | |
Goodwill | 47,396 | 47,396 | |
Other assets | 285,605 | 277,350 | |
Separate Account (variable annuity) assets | [1] | 1,741,977 | 1,813,557 |
Total assets | 9,903,499 | 9,768,527 | |
Policy liabilities | |||
Fixed annuity contract liabilities | 4,016,360 | 3,774,457 | |
Interest-sensitive life contract liabilities | 801,180 | 792,039 | |
Unpaid claims and claim expenses | 324,422 | 325,784 | |
Future policy benefits | 247,248 | 235,775 | |
Unearned premiums | 234,474 | 223,413 | |
Total policy liabilities | 5,623,684 | 5,351,468 | |
Other policyholder funds | 612,650 | 606,738 | |
Other liabilities | 380,031 | 422,362 | |
Short-term debt | 113,000 | 38,000 | |
Long-term debt, current and noncurrent | 124,979 | 199,939 | |
Separate Account (variable annuity) liabilities | 1,741,977 | 1,813,557 | |
Total liabilities | 8,596,321 | 8,432,064 | |
Preferred stock, $0.001 par value, authorized 1,000,000 shares; none issued | 0 | 0 | |
Common stock, $0.001 par value, authorized 75,000,000 shares; issued, 2015, 64,525,999; 2014, 64,245,048 | 65 | 64 | |
Additional paid-in capital | 439,190 | 422,232 | |
Retained earnings | 1,105,785 | 1,065,318 | |
Accumulated other comprehensive income (loss), net of taxes: | |||
Net unrealized gains on fixed maturities and equity securities | [2],[3] | 226,618 | 297,554 |
Net funded status of pension and other postretirement benefit obligations | [2] | (12,953) | (12,953) |
Treasury stock, at cost, 2015, 23,784,928 shares; 2014, 23,308,430 shares | (451,527) | (435,752) | |
Total shareholders' equity | 1,307,178 | 1,336,463 | |
Total liabilities and shareholders' equity | $ 9,903,499 | $ 9,768,527 | |
[1] | Separate Account (variable annuity) liabilities are set equal to Separate Account (variable annuity) assets. | ||
[2] | All amounts are net of tax. | ||
[3] | The pretax amounts reclassified from accumulated other comprehensive income (loss), $1,545 and $9,165, are included in net realized investment gains and losses and the related tax expenses, $541 and $3,208, are included in income tax expense in the Consolidated Statements of Operations for the three and nine months ended September 30, 2015, respectively. |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Fixed maturities, available for sale, amortized cost | $ 6,676,545 | $ 6,375,237 |
Equity securities, available for sale, cost | $ 95,071 | $ 99,904 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common stock, shares issued | 64,525,999 | 64,245,048 |
Treasury stock, shares | 23,784,928 | 23,308,430 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Revenues | ||||
Insurance premiums and contract charges earned | $ 182,812 | $ 179,030 | $ 544,927 | $ 533,571 |
Net investment income | 81,016 | 82,591 | 248,324 | 247,040 |
Net realized investment gains | 1,308 | 3,511 | 8,789 | 8,673 |
Other income | 617 | 388 | 2,302 | 2,244 |
Total revenues | 265,753 | 265,520 | 804,342 | 791,528 |
Benefits, losses and expenses | ||||
Benefits, claims and settlement expenses | 121,181 | 117,443 | 368,139 | 356,589 |
Interest credited | 46,216 | 44,477 | 136,103 | 131,294 |
Policy acquisition expenses amortized | 25,709 | 24,477 | 73,400 | 70,027 |
Operating expenses | 39,647 | 39,875 | 115,611 | 119,033 |
Interest expense | 2,652 | 3,543 | 9,610 | 10,635 |
Total benefits, losses and expenses | 235,405 | 229,815 | 702,863 | 687,578 |
Income before income taxes | 30,348 | 35,705 | 101,479 | 103,950 |
Income tax expense | 8,364 | 10,348 | 29,037 | 29,775 |
Net income | $ 21,984 | $ 25,357 | $ 72,442 | $ 74,175 |
Net income per share | ||||
Basic | $ 0.53 | $ 0.61 | $ 1.73 | $ 1.79 |
Diluted | $ 0.52 | $ 0.60 | $ 1.71 | $ 1.76 |
Weighted average number of shares and equivalent shares (in thousands) | ||||
Basic | 41,852 | 41,514 | 41,965 | 41,353 |
Diluted | 42,305 | 42,319 | 42,362 | 42,155 |
Net realized investment gains (losses) | ||||
Total other-than-temporary impairment losses on securities | $ (3,602) | $ (185) | $ (20,860) | $ (637) |
Portion of losses recognized in other comprehensive income | 0 | 0 | (4,300) | 0 |
Net other-than-temporary impairment losses on securities recognized in earnings | (3,602) | (185) | (16,560) | (637) |
Realized gains, net | 4,910 | 3,696 | 25,349 | 9,310 |
Total | $ 1,308 | $ 3,511 | $ 8,789 | $ 8,673 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | ||||||
Comprehensive income | |||||||||
Net income | $ 21,984 | $ 25,357 | $ 72,442 | $ 74,175 | |||||
Other comprehensive income (loss), net of taxes: | |||||||||
Change in net unrealized gains and losses on fixed maturities and equity securities | [1] | 2,832 | [2] | (11,548) | [3] | (70,936) | [2] | 136,017 | [3] |
Change in net funded status of pension and other postretirement benefit obligations | [1] | 0 | 0 | 0 | 0 | ||||
Other comprehensive income (loss) | [1] | 2,832 | (11,548) | (70,936) | 136,017 | ||||
Total | $ 24,816 | $ 13,809 | $ 1,506 | $ 210,192 | |||||
[1] | All amounts are net of tax. | ||||||||
[2] | The pretax amounts reclassified from accumulated other comprehensive income (loss), $1,545 and $9,165, are included in net realized investment gains and losses and the related tax expenses, $541 and $3,208, are included in income tax expense in the Consolidated Statements of Operations for the three and nine months ended September 30, 2015, respectively. | ||||||||
[3] | The pretax amounts reclassified from accumulated other comprehensive income (loss), $3,512 and $8,652, are included in net realized investment gains and losses and the related tax expenses, $1,229 and $3,028, are included in income tax expense in the Consolidated Statements of Operations for the three and nine months ended September 30, 2014, respectively. |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands | Total | Common stock | Additional paid-in capital | Retained earnings | Accumulated other comprehensive income (loss), net of taxes | Treasury stock, at cost | |
Beginning balance at Dec. 31, 2013 | $ 64 | $ 407,056 | $ 1,000,312 | $ 122,214 | $ (430,341) | ||
Options exercised, 2015, 80,660 shares; 2014, 386,616 shares | 0 | ||||||
Conversion of common stock units, 2015, 8,293 shares; 2014, 10,834 shares | 0 | ||||||
Conversion of restricted stock units, 2015, 191,998 shares; 2014, 168,049 shares | 0 | ||||||
Options exercised and conversion of common stock units and restricted stock units | 12,711 | ||||||
Share-based compensation expense | 953 | ||||||
Net income | $ 74,175 | 74,175 | |||||
Cash dividends, 2015, $0.75 per share; 2014, $0.69 per share | (29,421) | ||||||
Change in net unrealized gains and losses on fixed maturities and equity securities | 136,017 | [1],[2] | 136,017 | ||||
Change in net funded status of pension and other postretirement benefit obligations | 0 | [1] | 0 | ||||
Acquisition of shares, 2015, 476,498 shares; 2014, 190,876 shares | (5,411) | ||||||
Ending balance at Sep. 30, 2014 | 1,288,329 | 64 | 420,720 | 1,045,066 | 258,231 | (435,752) | |
Beginning balance at Dec. 31, 2014 | 1,336,463 | 64 | 422,232 | 1,065,318 | 284,601 | (435,752) | |
Options exercised, 2015, 80,660 shares; 2014, 386,616 shares | 0 | ||||||
Conversion of common stock units, 2015, 8,293 shares; 2014, 10,834 shares | 0 | ||||||
Conversion of restricted stock units, 2015, 191,998 shares; 2014, 168,049 shares | 1 | ||||||
Options exercised and conversion of common stock units and restricted stock units | 11,926 | ||||||
Share-based compensation expense | 5,032 | ||||||
Net income | 72,442 | 72,442 | |||||
Cash dividends, 2015, $0.75 per share; 2014, $0.69 per share | (31,975) | ||||||
Change in net unrealized gains and losses on fixed maturities and equity securities | (70,936) | [1],[3] | (70,936) | ||||
Change in net funded status of pension and other postretirement benefit obligations | 0 | [1] | 0 | ||||
Acquisition of shares, 2015, 476,498 shares; 2014, 190,876 shares | (15,775) | ||||||
Ending balance at Sep. 30, 2015 | $ 1,307,178 | $ 65 | $ 439,190 | $ 1,105,785 | $ 213,665 | $ (451,527) | |
[1] | All amounts are net of tax. | ||||||
[2] | The pretax amounts reclassified from accumulated other comprehensive income (loss), $3,512 and $8,652, are included in net realized investment gains and losses and the related tax expenses, $1,229 and $3,028, are included in income tax expense in the Consolidated Statements of Operations for the three and nine months ended September 30, 2014, respectively. | ||||||
[3] | The pretax amounts reclassified from accumulated other comprehensive income (loss), $1,545 and $9,165, are included in net realized investment gains and losses and the related tax expenses, $541 and $3,208, are included in income tax expense in the Consolidated Statements of Operations for the three and nine months ended September 30, 2015, respectively. |
CONSOLIDATED STATEMENTS OF CHA7
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) (Parenthetical) - $ / shares | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Common stock, par value beginning balance | $ 0.001 | $ 0.001 |
Options exercised, shares | 80,660 | 386,616 |
Conversion of common stock units, shares | 8,293 | 10,834 |
Conversion of restricted stock units, shares | 191,998 | 168,049 |
Cash dividends, per share | $ 0.75 | $ 0.69 |
Treasury stock, beginning balance, shares | 23,308,430 | 23,117,554 |
Treasury stock, acquisition of shares | 476,498 | 190,876 |
Treasury stock, ending balance, shares | 23,784,928 | 23,308,430,000 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash flows - operating activities | ||
Premiums collected | $ 538,633 | $ 527,567 |
Policyholder benefits paid | (399,465) | (368,000) |
Policy acquisition and other operating expenses paid | (196,209) | (202,692) |
Federal income taxes paid | (20,327) | (17,392) |
Investment income collected | 246,042 | 240,119 |
Interest expense paid | (7,316) | (7,140) |
Other | (1,881) | (6,817) |
Net cash provided by operating activities | 159,477 | 165,645 |
Fixed maturities | ||
Purchases | (1,111,958) | (958,561) |
Sales | 327,641 | 198,191 |
Maturities, paydowns, calls and redemptions | 502,554 | 269,732 |
Purchase of other invested assets | (19,037) | (5,000) |
Net cash provided by short-term and other investments | 56,831 | 29,353 |
Net cash used in investing activities | (243,969) | (466,285) |
Cash flows - financing activities | ||
Dividends paid to shareholders | (31,975) | (29,421) |
Principal borrowings on Bank Credit Facility | 75,000 | 0 |
Maturity of Senior Notes due 2015 | (75,000) | 0 |
Acquisition of treasury stock | (15,775) | (5,411) |
Exercise of stock options | 1,518 | 7,324 |
Annuity contracts: variable, fixed and FHLB funding agreements | ||
Deposits | 422,195 | 611,721 |
Benefits, withdrawals and net transfers to Separate Account (variable annuity) assets | (258,076) | (237,016) |
Life policy accounts | ||
Deposits | 742 | 864 |
Withdrawals and surrenders | (3,050) | (3,662) |
Cash paid related to repurchase agreements | 0 | (25,848) |
Change in bank overdrafts | 7,153 | 5,092 |
Net cash provided by financing activities | 122,732 | 323,643 |
Net increase in cash | 38,240 | 23,003 |
Cash at beginning of period | 11,675 | 18,189 |
Cash at end of period | $ 49,915 | $ 41,192 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Note 1 - Basis of Presentation The accompanying unaudited consolidated financial statements of Horace Mann Educators Corporation (“HMEC”; and together with its subsidiaries, the “Company” or “Horace Mann”) have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) and with the rules and regulations of the Securities and Exchange Commission (“SEC”), specifically Regulation S-X and the instructions to Form 10-Q. Certain information and note disclosures which are normally included in annual financial statements prepared in accordance with GAAP but are not required for interim reporting purposes have been omitted. The Company believes that these consolidated financial statements contain all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to present fairly the Company’s consolidated financial position as of September 30, 2015, the consolidated results of operations and comprehensive income for the three and nine months ended September 30, 2015 and 2014, and the consolidated changes in shareholders’ equity and cash flows for the nine months ended September 30, 2015 and 2014. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (1) the reported amounts of assets and liabilities, (2) disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and (3) the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The subsidiaries of HMEC market and underwrite personal lines of property and casualty (primarily personal lines automobile and homeowners) insurance, retirement annuities (primarily tax-qualified products) and life insurance, primarily to K-12 teachers, administrators and other employees of public schools and their families. HMEC’s principal operating subsidiaries are Horace Mann Life Insurance Company, Horace Mann Insurance Company, Teachers Insurance Company, Horace Mann Property & Casualty Insurance Company and Horace Mann Lloyds. The Company has evaluated subsequent events through the date these consolidated financial statements were issued. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes to consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. The results of operations for the three and nine months ended September 30, 2015 are not necessarily indicative of the results to be expected for the full year. The Company has reclassified the presentation of certain prior period information to conform with the 2015 presentation. In the nine months ended September 30, 2015 (specifically, in the first quarter), the Company recorded a reduction in incentive compensation expense due to an immaterial out-of-period correction of an error related to the valuation of restricted stock units. The $3,012 after tax adjustment increased net income for each of the segments as follows: property and casualty, $2,056; annuity, $519; and life, $437. Accumulated Other Comprehensive Income (Loss) Accumulated other comprehensive income (loss) represents the accumulated change in shareholders’ equity from transactions and other events and circumstances from non-shareholder sources. For the Company, accumulated other comprehensive income (loss) includes the after tax change in net unrealized gains and losses on fixed maturities and equity securities and the after tax change in net funded status of pension and other postretirement benefit obligations for the period as shown in the Consolidated Statement of Changes in Shareholders’ Equity. The following tables reconcile these components. Unrealized Gains and Losses on Fixed Maturities and Equity Defined Securities (1)(2) Benefit Plans (1) Total (1) Beginning balance, July 1, 2015 $ 223,786 $ (12,953 ) $ 210,833 Other comprehensive income (loss) before reclassifications 3,836 - 3,836 Amounts reclassified from accumulated other comprehensive income (loss) (1,004 ) - (1,004 ) Net current period other comprehensive income (loss) 2,832 - 2,832 Ending balance, September 30, 2015 $ 226,618 $ (12,953 ) $ 213,665 Beginning balance, January 1, 2015 $ 297,554 $ (12,953 ) $ 284,601 Other comprehensive income (loss) before reclassifications (64,979 ) - (64,979 ) Amounts reclassified from accumulated other comprehensive income (loss) (5,957 ) - (5,957 ) Net current period other comprehensive income (loss) (70,936 ) - (70,936 ) Ending balance, September 30, 2015 $ 226,618 $ (12,953 ) $ 213,665 (1) All amounts are net of tax. (2) The pretax amounts reclassified from accumulated other comprehensive income (loss), $1,545 and $9,165, are included in net realized investment gains and losses and the related tax expenses, $541 and $3,208, are included in income tax expense in the Consolidated Statements of Operations for the three and nine months ended September 30, 2015, respectively. Unrealized Gains and Losses on Fixed Maturities and Equity Defined Securities (1)(2) Benefit Plans (1) Total (1) Beginning balance, July 1, 2014 $ 281,555 $ (11,776 ) $ 269,779 Other comprehensive income (loss) before reclassifications (9,265 ) - (9,265 ) Amounts reclassified from accumulated other comprehensive income (loss) (2,283 ) - (2,283 ) Net current period other comprehensive income (loss) (11,548 ) - (11,548 ) Ending balance, September 30, 2014 $ 270,007 $ (11,776 ) $ 258,231 Beginning balance, January 1, 2014 $ 133,990 $ (11,776 ) $ 122,214 Other comprehensive income (loss) before reclassifications 141,641 - 141,641 Amounts reclassified from accumulated other comprehensive income (loss) (5,624 ) - (5,624 ) Net current period other comprehensive income (loss) 136,017 - 136,017 Ending balance, September 30, 2014 $ 270,007 $ (11,776 ) $ 258,231 (1) All amounts are net of tax. (2) The pretax amounts reclassified from accumulated other comprehensive income (loss), $3,512 and $8,652, are included in net realized investment gains and losses and the related tax expenses, $1,229 and $3,028, are included in income tax expense in the Consolidated Statements of Operations for the three and nine months ended September 30, 2014, respectively. Comparative information for elements that are not required to be reclassified in their entirety to net income in the same reporting period is located in “Note 2 Investments Unrealized Gains and Losses on Fixed Maturities and Equity Securities”. |
Investments
Investments | 9 Months Ended |
Sep. 30, 2015 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Note 2 - Investments The Company’s investment portfolio includes free-standing derivative financial instruments (currently over the counter (“OTC”) index options contracts) to economically hedge risk associated with its fixed indexed annuity product’s contingent liabilities. The Company’s fixed indexed annuity product includes embedded derivative features that are discussed in “Note 1 Summary of Significant Accounting Policies Policy Liabilities for Fixed Indexed Annuities” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. The Company's investment portfolio includes no other free-standing derivative financial instruments (futures, forwards, swaps, option contracts or other financial instruments with similar characteristics), and there were no other embedded derivative features related to the Company’s insurance products during the nine months ended September 30, 2015 and 2014. Fixed Maturities and Equity Securities The Company’s investment portfolio is comprised primarily of fixed maturity securities (“fixed maturities”) and equity securities. The amortized cost or cost, unrealized investment gains and losses, fair values and other-than-temporary impairment (“OTTI”) included in accumulated other comprehensive income (loss) (“AOCI”) of all fixed maturities and equity securities in the portfolio were as follows: Amortized Unrealized Unrealized Fair OTTI in Cost/Cost Gains Losses Value AOCI (1) September 30, 2015 Fixed maturity securities U.S. Government and federally sponsored agency obligations (2): Mortgage-backed securities $ 471,128 $ 53,536 $ 984 $ 523,680 $ - Other, including U.S. Treasury securities 576,895 25,349 3,499 598,745 - Municipal bonds 1,557,503 166,315 11,409 1,712,409 (4,214 ) Foreign government bonds 59,481 7,016 54 66,443 - Corporate bonds 2,624,263 175,645 30,271 2,769,637 - Other mortgage-backed securities 1,387,275 26,158 5,605 1,407,828 1,470 Totals $ 6,676,545 $ 454,019 $ 51,822 $ 7,078,742 $ (2,744 ) Equity securities (3) $ 95,071 $ 6,351 $ 5,357 $ 96,065 $ - December 31, 2014 Fixed maturity securities U.S. Government and federally sponsored agency obligations (2): Mortgage-backed securities $ 484,561 $ 52,555 $ 1,390 $ 535,726 $ - Other, including U.S. Treasury securities 512,596 28,652 3,049 538,199 - Municipal bonds 1,462,717 189,533 4,428 1,647,822 - Foreign government bonds 52,552 6,984 - 59,536 - Corporate bonds 2,608,633 237,372 11,256 2,834,749 - Other mortgage-backed securities 1,254,178 28,772 5,892 1,277,058 2,879 Totals $ 6,375,237 $ 543,868 $ 26,015 $ 6,893,090 $ 2,879 Equity securities (3) $ 99,904 $ 14,159 $ 3,408 $ 110,655 $ - (1) Related to securities for which an unrealized loss was bifurcated to distinguish the credit related portion and the portion driven by other market factors. Represents the amount of other-than-temporary impairment losses in AOCI which was not included in earnings; amounts also include unrealized gains/(losses) on such impaired securities relating to changes in the fair value of those securities subsequent to the impairment measurement date. (2) Fair value includes securities issued by Federal National Mortgage Association (“FNMA”) of $254,810 and $302,222; Federal Home Loan Mortgage Corporation (“FHLMC”) of $406,845 and $432,432; and Government National Mortgage Association (“GNMA”) of $137,291 and $137,867 as of September 30, 2015 and December 31, 2014, respectively. (3) Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds. Compared to December 31, 2014, the decrease in net unrealized gains at September 30, 2015 was due to wider credit spreads across most asset classes, which resulted in a decrease in net unrealized gains for virtually all classes of the Company’s fixed maturity securities holdings. The following table presents the fair value and gross unrealized losses of fixed maturities and equity securities in an unrealized loss position at September 30, 2015 and December 31, 2014, respectively. The Company views the decrease in value of all of the securities with unrealized losses at September 30, 2015 which was driven largely by changes in interest rates, spread widening, financial market illiquidity and/or market volatility from the date of acquisition as temporary. For fixed maturity securities, management does not have the intent to sell the securities and it is not more likely than not the Company will be required to sell the securities before the anticipated recovery of the amortized cost bases, and the present value of future cash flows exceeds the amortized cost bases. In addition, management expects to recover the entire cost bases of the fixed maturity securities. For equity securities, the Company has the ability and intent to hold the securities for the recovery of cost and recovery of cost is expected within a reasonable period of time. Therefore, no impairment of these securities was recorded at September 30, 2015. 12 Months or Less More than 12 Months Total Gross Gross Gross Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses September 30, 2015 Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 24,742 $ 891 $ 1,616 $ 93 $ 26,358 $ 984 Other 223,729 3,399 1,899 100 225,628 3,499 Municipal bonds 158,166 5,887 21,189 5,522 179,355 11,409 Foreign government bonds 5,933 54 - - 5,933 54 Corporate bonds 542,329 24,073 40,187 6,198 582,516 30,271 Other mortgage-backed securities 497,157 4,689 110,542 916 607,699 5,605 Total fixed maturity securities 1,452,056 38,993 175,433 12,829 1,627,489 51,822 Equity securities (1) 46,500 4,498 6,616 859 53,116 5,357 Combined totals $ 1,498,556 $ 43,491 $ 182,049 $ 13,688 $ 1,680,605 $ 57,179 Number of positions with a gross unrealized loss 519 64 583 Fair value as a percentage of total fixed maturities and equity securities fair value 20.9 % 2.5 % 23.4 % December 31, 2014 Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 2 $ - $ 39,809 $ 1,390 $ 39,811 $ 1,390 Other 10,317 34 117,615 3,015 127,932 3,049 Municipal bonds 31,821 200 59,715 4,228 91,536 4,428 Foreign government bonds - - - - - - Corporate bonds 213,612 6,883 76,099 4,373 289,711 11,256 Other mortgage-backed securities 477,877 4,797 88,663 1,095 566,540 5,892 Total fixed maturity securities 733,629 11,914 381,901 14,101 1,115,530 26,015 Equity securities (1) 12,955 2,568 6,635 840 19,590 3,408 Combined totals $ 746,584 $ 14,482 $ 388,536 $ 14,941 $ 1,135,120 $ 29,423 Number of positions with a gross unrealized loss 234 112 346 Fair value as a percentage of total fixed maturities and equity securities fair value 10.7 % 5.5 % 16.2 % (1) Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds. Fixed maturities and equity securities with an investment grade rating represented 59% of the gross unrealized loss as of September 30, 2015. With respect to fixed income securities involving securitized financial assets, the underlying collateral cash flows were stress tested to determine there was no adverse change in the present value of cash flows below the amortized cost basis. Credit Losses The following table summarizes the cumulative amounts related to the Company’s credit loss component of the other-than-temporary impairment losses on fixed maturity securities held as of September 30, 2015 and 2014 that the Company did not intend to sell as of those dates, and it was not more likely than not that the Company would be required to sell the securities before the anticipated recovery of the amortized cost bases, for which the non-credit portions of the other-than-temporary impairment losses were recognized in other comprehensive income (loss): Nine Months Ended September 30, 2015 2014 Cumulative credit loss (1) Beginning of period $ 2,877 $ 4,097 New credit losses 5,162 280 Losses related to securities sold or paid down during the period - - End of period $ 8,039 $ 4,377 (1) The cumulative credit loss amounts exclude other-than-temporary impairment losses on securities held as of the periods indicated that the Company intended to sell or it was more likely than not that the Company would be required to sell the security before the recovery of the amortized cost basis. Maturities/Sales of Fixed Maturities and Equity Securities The following table presents the distribution of the Company's fixed maturity securities portfolio by estimated expected maturity. Estimated expected maturities differ from contractual maturities, reflecting assumptions regarding borrowers’ utilization of the right to call or prepay obligations with or without call or prepayment penalties. For structured securities, including mortgage-backed securities and other asset-backed securities, estimated expected maturities consider broker-dealer survey prepayment assumptions and are verified for consistency with the interest rate and economic environments. Percent of Total Fair Value September 30, 2015 September 30, December 31, Fair Amortized 2015 2014 Value Cost Estimated expected maturity: Due in 1 year or less 3.1 % 4.0 % $ 221,731 $ 209,133 Due after 1 year through 5 years 24.5 23.4 1,733,636 1,635,135 Due after 5 years through 10 years 39.0 40.1 2,756,711 2,600,082 Due after 10 years through 20 years 21.3 20.1 1,509,166 1,423,418 Due after 20 years 12.1 12.4 857,498 808,777 Total 100.0 % 100.0 % $ 7,078,742 $ 6,676,545 Average option-adjusted duration, in years 5.8 5.8 Proceeds received from sales of fixed maturities and equity securities, each determined using the specific identification method, and gross gains and gross losses realized as a result of those sales for each period were: Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Fixed maturity securities Proceeds received $ 81,120 $ 98,942 $ 327,641 $ 198,191 Gross gains realized 6,400 5,871 18,631 9,998 Gross losses realized (3,267 ) (4,421 ) (5,012 ) (5,399 ) Equity securities Proceeds received $ 5,633 $ 3,489 $ 26,442 $ 11,980 Gross gains realized 680 722 5,878 2,196 Gross losses realized (397 ) (86 ) (514 ) (267 ) Unrealized Gains and Losses on Fixed Maturities and Equity Securities Net unrealized gains and losses are computed as the difference between fair value and amortized cost for fixed maturities or cost for equity securities. The following table reconciles the net unrealized investment gains and losses, net of tax, included in accumulated other comprehensive income (loss), before the impact on deferred policy acquisition costs: Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Net unrealized investment gains (losses) on fixed maturity securities, net of tax Beginning of period $ 254,827 $ 317,791 $ 336,604 $ 146,489 Change in unrealized investment gains and losses 7,436 (10,189 ) (69,787 ) 163,613 Reclassification of net realized investment (gains) losses to net income (835 ) (1,824 ) (5,389 ) (4,324 ) End of period $ 261,428 $ 305,778 $ 261,428 $ 305,778 Net unrealized investment gains (losses) on equity securities, net of tax Beginning of period $ 3,399 $ 7,955 $ 6,988 $ 4,618 Change in unrealized investment gains and losses (2,584 ) (1,594 ) (5,774 ) 2,584 Reclassification of net realized investment (gains) losses to net income (169 ) (459 ) (568 ) (1,300 ) End of period $ 646 $ 5,902 $ 646 $ 5,902 Offsetting of Assets and Liabilities The Company’s derivative instruments (call options) are subject to enforceable master netting arrangements. Collateral support agreements associated with each master netting arrangement provide that the Company will receive or pledge financial collateral in the event minimum thresholds have been reached. The following table presents the instruments that were subject to a master netting arrangement for the Company. Net Amounts of Assets/ Gross Liabilities Gross Amounts Not Offset Amounts Presented in the Consolidated Offset in the in the Balance Sheet Consolidated Consolidated Cash Gross Balance Balance Financial Collateral Net Amounts Sheet Sheet Instruments Received Amount September 30, 2015 Asset derivatives: Free-standing derivatives $1,135 - $1,135 - $ 1,097 $ 38 December 31, 2014 Asset derivatives: Free-standing derivatives 2,458 - 2,458 - 1,955 503 Deposits At September 30, 2015 and December 31, 2014, securities with a fair value of $18,423 and $18,361, respectively, were on deposit with governmental agencies as required by law in various states in which the insurance subsidiaries of HMEC conduct business. In addition, at September 30, 2015 and December 31, 2014, securities with a fair value of $537,400 and $539,235, respectively, were on deposit with the Federal Home Loan Bank of Chicago (“FHLB”) as collateral for amounts subject to funding agreements which were equal to $500,000 at both of the respective dates. The deposited securities are included in fixed maturities on the Company’s Consolidated Balance Sheets. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Note 3 - Fair Value of Financial Instruments The Company is required under GAAP to disclose estimated fair values for certain financial and nonfinancial assets and liabilities. Fair values of the Company’s insurance contracts other than annuity contracts are not required to be disclosed. However, the estimated fair values of liabilities under all insurance contracts are taken into consideration in the Company’s overall management of interest rate risk through the matching of investment maturities with amounts due under insurance contracts. Information regarding the three-level hierarchy presented below and the valuation methodologies utilized by the Company to estimate fair values at a point in time is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, specifically in “Note 3 Fair Value of Financial Instruments”. Financial Instruments Measured and Carried at Fair Value The following table presents the Company’s fair value hierarchy for those assets and liabilities measured and carried at fair value on a recurring basis. At September 30, 2015, these Level 3 invested assets comprised 2.5% of the Company’s total investment portfolio fair value. Fair Value Measurements at Carrying Fair Reporting Date Using Amount Value Level 1 Level 2 Level 3 September 30, 2015 Financial Assets Investments Fixed maturities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 523,680 $ 523,680 $ - $ 523,680 $ - Other, including U.S. Treasury securities 598,745 598,745 14,829 583,916 - Municipal bonds 1,712,409 1,712,409 - 1,681,398 31,011 Foreign government bonds 66,443 66,443 - 66,443 - Corporate bonds 2,769,637 2,769,637 10,267 2,689,122 70,248 Other mortgage-backed securities 1,407,828 1,407,828 - 1,323,742 84,086 Total fixed maturities 7,078,742 7,078,742 25,096 6,868,301 185,345 Equity securities 96,065 96,065 82,404 13,655 6 Short-term investments 102,717 102,717 100,277 2,440 - Other investments 11,135 11,135 - 11,135 - Totals 7,288,659 7,288,659 207,777 6,895,531 185,351 Separate Account (variable annuity) assets (1) 1,741,977 1,741,977 1,741,977 - - Financial Liabilities Other policyholder funds, embedded derivatives 31,755 31,755 - - 31,755 December 31, 2014 Financial Assets Investments Fixed maturities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 535,726 $ 535,726 $ - $ 535,726 $ - Other, including U.S. Treasury securities 538,199 538,199 17,857 520,342 - Municipal bonds 1,647,822 1,647,822 - 1,634,194 13,628 Foreign government bonds 59,536 59,536 - 59,536 - Corporate bonds 2,834,749 2,834,749 10,524 2,749,508 74,717 Other mortgage-backed securities 1,277,058 1,277,058 - 1,194,109 82,949 Total fixed maturities 6,893,090 6,893,090 28,381 6,693,415 171,294 Equity securities 110,655 110,655 92,140 18,509 6 Short-term investments 142,039 142,039 142,039 - - Other investments 12,458 12,458 - 12,458 - Totals 7,158,242 7,158,242 262,560 6,724,382 171,300 Separate Account (variable annuity) assets (1) 1,813,557 1,813,557 1,813,557 - - Financial Liabilities Other policyholder funds, embedded derivatives 20,049 20,049 - - 20,049 (1) Separate Account (variable annuity) liabilities are set equal to Separate Account (variable annuity) assets. The Company did not have any transfers between Levels 1 and 2 during the nine months ended September 30, 2015. The following tables present reconciliations for the periods indicated for all Level 3 assets and liabilities measured at fair value on a recurring basis. Financial Financial Assets Liabilities(1) Municipal Bonds Corporate Bonds Other Mortgage- Backed Securities Total Fixed Maturities Equity Securities Total Beginning balance, July 1, 2015 $ 29,669 $ 72,724 $ 84,700 $ 187,093 $ 6 $ 187,099 $ 26,719 Transfers into Level 3 (2) - - 505 505 - 505 - Transfers out of Level 3 (2) - - - - - - - Total gains or losses Net realized gains (losses) included in net income related to financial assets - (164 ) - (164 ) 1 (163 ) - Net realized (gains) losses included in net income related to financial liabilities - - - - - - (1,328 ) Net unrealized gains (losses) included in other comprehensive income 1,464 326 167 1,957 - 1,957 - Purchases - - - - - - - Issuances - - - - - - 6,899 Sales - - - - (1 ) (1 ) - Settlements - - - - - - - Paydowns, maturities and distributions (122 ) (2,638 ) (1,286 ) (4,046 ) - (4,046 ) (535 ) Ending balance, September 30, 2015 $ 31,011 $ 70,248 $ 84,086 $ 185,345 $ 6 $ 185,351 $ 31,755 Beginning balance, January 1, 2015 $ 13,628 $ 74,717 $ 82,949 $ 171,294 $ 6 $ 171,300 $ 20,049 Transfers into Level 3 (2) 16,326 5,729 15,685 37,740 - 37,740 - Transfers out of Level 3 (2) - (1,350 ) (9,664 ) (11,014 ) - (11,014 ) - Total gains or losses Net realized gains (losses) included in net income related to financial assets - 1,087 - 1,087 1 1,088 - Net realized (gains) losses included in net income related to financial liabilities - - - - - - (1,795 ) Net unrealized gains (losses) included in other comprehensive income 1,359 (758 ) (268 ) 333 - 333 - Purchases - - - - - - - Issuances - - - - - - 14,811 Sales - (476 ) - (476 ) (1 ) (477 ) - Settlements - - - - - - - Paydowns, maturities and distributions (302 ) (8,701 ) (4,616 ) (13,619 ) - (13,619 ) (1,310 ) Ending balance, September 30, 2015 $ 31,011 $ 70,248 $ 84,086 $ 185,345 $ 6 $ 185,351 $ 31,755 (1) Represents embedded derivatives, all related to the Company’s fixed indexed annuity (“FIA”) products, reported in Other Policyholder Funds in the Company’s Consolidated Balance Sheets. ( 2) Transfers into and out of Level 3 during the three and nine months ended September 30, 2015 were attributable to changes in the availability of observable market information for individual fixed maturity securities. The Company’s policy is to recognize transfers into and transfers out of the levels as having occurred at the end of the reporting period in which the transfers were determined. Financial Financial Assets Liabilities(1) Municipal Bonds Corporate Bonds Other Mortgage- Backed Securities Total Fixed Maturities Equity Securities Total Beginning balance, July 1, 2014 $ 13,054 $ 73,926 $ 52,522 $ 139,502 $ 6 $ 139,508 $ 6,915 Transfers into Level 3 (2) - - 35,000 35,000 - 35,000 - Transfers out of Level 3 (2) - (3,510 ) - (3,510 ) - (3,510 ) - Total gains or losses Net realized gains (losses) included in net income related to financial assets - - - - - - - Net realized (gains) losses included in net income related to financial liabilities - - - - - - 70 Net unrealized gains (losses) included in other comprehensive income 212 (180 ) (137 ) (105 ) - (105 ) - Purchases - - - - - - - Issuances - - - - - - 6,179 Sales - - - - - - - Settlements - - - - - - - Paydowns, maturities and distributions (123 ) (4,580 ) (143 ) (4,846 ) - (4,846 ) (82 ) Ending balance, September 30, 2014 $ 13,143 $ 65,656 $ 87,242 $ 166,041 $ 6 $ 166,047 $ 13,082 Beginning balance, January 1, 2014 $ 2,694 $ 60,826 $ 46,009 $ 109,529 $ 6 $ 109,535 $ - Transfers into Level 3 (2) 10,056 12,452 42,109 64,617 - 64,617 - Transfers out of Level 3 (2) - (3,510 ) (519 ) (4,029 ) - (4,029 ) - Total gains or losses Net realized gains (losses) included in net income related to financial assets - - (26 ) (26 ) - (26 ) - Net realized (gains) losses included in net income related to financial liabilities - - - - - - 139 Net unrealized gains (losses) included in other comprehensive income 646 2,380 155 3,181 - 3,181 - Purchases - - - - - - - Issuances - - - - - - 13,035 Sales - - - - - - - Settlements - - - - - - - Paydowns, maturities and distributions (253 ) (6,492 ) (486 ) (7,231 ) - (7,231 ) (92 ) Ending balance, September 30, 2014 $ 13,143 $ 65,656 $ 87,242 $ 166,041 $ 6 $ 166,047 $ 13,082 (1) Represents embedded derivatives, all related to the Company’s FIA products, reported in Other Policyholder Funds in the Company’s Consolidated Balance Sheets. ( 2) Transfers into and out of Level 3 during the three and nine months ended September 30, 2014 were attributable to changes in the availability of observable market information for individual fixed maturity securities. The Company’s policy is to recognize transfers into and transfers out of the levels as having occurred at the end of the reporting period in which the transfers were determined. At September 30, 2015 and 2014, there were no realized gains or losses included in earnings that were attributable to changes in the fair value of Level 3 assets still held. For the three and nine months ended September 30, 2015, realized gains/(losses) of $1,328 and $1,795, respectively, were included in earnings that were attributable to the changes in the fair value of Level 3 liabilities (embedded derivatives) still held; for the three and nine months ended September 30, 2014, the respective amounts were $(70) and $(139). The valuation techniques and significant unobservable inputs used in the fair value measurement for financial assets classified as Level 3 are subject to the control processes as described in “Note 3 Fair Value of Financial Instruments Investments” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. Generally, valuation for fixed maturity securities include spread pricing, matrix pricing and discounted cash flow methodologies; include inputs such as quoted prices for identical or similar securities that are less liquid; and are based on lower levels of trading activity than securities classified as Level 2. The valuation techniques and significant unobservable inputs used in the fair value measurement for equity securities classified as Level 3 use similar valuation techniques and significant unobservable inputs as fixed maturities. The sensitivity of the estimated fair values to changes in the significant unobservable inputs for fixed maturities and equity securities included in Level 3 generally relate to interest rate spreads, illiquidity premiums and default rates. Significant spread widening in isolation will adversely impact the overall valuation, while significant spread tightening will lead to substantial valuation increases. Significant increases (decreases) in illiquidity premiums in isolation will result in substantially lower (higher) valuations. Significant increases (decreases) in expected default rates in isolation will result in substantially lower (higher) valuations. Financial Instruments Not Carried at Fair Value; Disclosure Required The Company has various other financial assets and financial liabilities used in the normal course of business that are not carried at fair value, but for which fair value disclosure is required. The following table presents the carrying value, fair value and fair value hierarchy of these financial assets and financial liabilities. Fair Value Measurements at Carrying Fair Reporting Date Using Amount Value Level 1 Level 2 Level 3 September 30, 2015 Financial Assets Investments Other investments $ 147,435 $ 151,866 $ - $ - $ 151,866 Financial Liabilities Fixed annuity contract liabilities 4,016,360 3,927,685 - - 3,927,685 Policyholder account balances on interest-sensitive life contracts 77,068 81,096 - - 81,096 Other policyholder funds 580,895 580,895 - 500,084 80,811 Short-term debt 113,000 113,000 - 113,000 - Long-term debt 124,979 128,718 128,718 - - December 31, 2014 Financial Assets Investments Other investments $ 145,409 $ 149,792 $ - $ - $ 149,792 Financial Liabilities Fixed annuity contract liabilities 3,774,457 3,691,123 - - 3,691,123 Policyholder account balances on interest-sensitive life contracts 77,415 81,461 - - 81,461 Other policyholder funds 586,689 586,689 - 500,080 86,609 Short-term debt 38,000 38,000 - 38,000 - Long-term debt 199,939 209,495 209,495 - - |
Debt
Debt | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Debt | Note 4 - Debt Indebtedness outstanding was as follows: September 30, December 31, 2015 2014 Short-term debt: Bank Credit Facility, expires July 30, 2019 $ 113,000 $ 38,000 Long-term debt, current and noncurrent (1): 6.05% Senior Notes, due June 15, 2015. Aggregate principal amount of $75,000 less unaccrued discount of $0 and $11 (6.1% imputed rate) - 74,989 6.85% Senior Notes, due April 15, 2016. Aggregate principal amount of $125,000 less unaccrued discount of $21 and $50 (6.9% imputed rate) 124,979 124,950 Total $ 237,979 $ 237,939 (1) The Company designates debt obligations as “long-term” based on maturity date at issuance. The Credit Agreement with Financial Institutions (“Bank Credit Facility”), 6.05% Senior Notes due 2015 (“Senior Notes due 2015”) and 6.85% Senior Notes due 2016 (“Senior Notes due 2016”) are described in “Notes to Consolidated Financial Statements Note 5 Debt” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. Maturity of Senior Notes due 2015 On June 15, 2015, the Senior Notes due 2015 matured and the Company repaid the $75,000 aggregate principal amount utilizing $75,000 of additional borrowing under the existing Bank Credit Facility. Debt Retirement Charges The repayment of the Senior Notes due 2015 resulted in no pretax charges to income for the three and nine months ended September 30, 2015. Universal Shelf Registration To provide additional capital management flexibility, the Company filed a “universal shelf” registration on Form S-3 with the SEC on March 12, 2015. The registration statement, which registered the offer and sale by the Company from time to time of an indeterminate amount of various securities, which may include debt securities, common stock, preferred stock, depositary shares, warrants, delayed delivery contracts and/or units that include any of these securities, was automatically effective on March 12, 2015. Unless withdrawn by the Company earlier, this registration statement will remain effective through March 12, 2018. No securities associated with the registration statement have been issued as of the date of this Quarterly Report on Form 10-Q. In addition to the Form S-3 entry to the capital markets, HMEC met the requirements of a “well-known seasoned issuer”, as defined by the SEC, as of December 31, 2014. |
Reinsurance
Reinsurance | 9 Months Ended |
Sep. 30, 2015 | |
Insurance [Abstract] | |
Reinsurance | Note 5 - Reinsurance The Company recognizes the cost of reinsurance premiums over the contract periods for such premiums in proportion to the insurance protection provided. Amounts recoverable from reinsurers for unpaid claims and claim settlement expenses, including estimated amounts for unsettled claims, claims incurred but not yet reported and policy benefits, are estimated in a manner consistent with the insurance liability associated with the policy. The effects of reinsurance on premiums written and contract deposits; premiums and contract charges earned; and benefits, claims and settlement expenses were as follows: Ceded to Assumed Gross Other from Other Net Amount Companies Companies Amount Three months ended September 30, 2015 Premiums written and contract deposits $ 331,223 $ 5,952 $ 927 $ 326,198 Premiums and contract charges earned 187,813 5,961 960 182,812 Benefits, claims and settlement expenses 123,061 3,034 1,154 121,181 Three months ended September 30, 2014 Premiums written and contract deposits $ 328,525 $ 6,668 $ 889 $ 322,746 Premiums and contract charges earned 184,770 6,677 937 179,030 Benefits, claims and settlement expenses 122,883 6,451 1,011 117,443 Nine months ended September 30, 2015 Premiums written and contract deposits $ 966,867 $ 18,260 $ 2,720 $ 951,327 Premiums and contract charges earned 560,818 18,608 2,717 544,927 Benefits, claims and settlement expenses 378,939 13,397 2,597 368,139 Nine months ended September 30, 2014 Premiums written and contract deposits $ 893,125 $ 20,011 $ 2,300 $ 875,414 Premiums and contract charges earned 551,672 20,463 2,362 533,571 Benefits, claims and settlement expenses 366,923 12,580 2,246 356,589 |
Commitments
Commitments | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments | Note 6 - Commitments Investment Commitments From time to time, the Company has outstanding commitments to purchase investments and/or commitments to lend funds under bridge loans. Unfunded commitments were as follows: September 30, December 31, 2015 2014 Outstanding commitments to: Purchase investments $ 70,313 $ 39,689 Lend funds under bridge loans 45,049 10,567 Total $ 115,362 $ 50,256 |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Segment Information | Note 7 - Segment Information The Company conducts and manages its business through four segments. The three operating segments, representing the major lines of insurance business, are: property and casualty insurance, primarily personal lines automobile and homeowners products; retirement annuity products, primarily tax-qualified fixed and variable deposits; and life insurance. The Company does not allocate the impact of corporate-level transactions to the insurance segments, consistent with the basis for management’s evaluation of the results of those segments, but classifies those items in the fourth segment, corporate and other. In addition to ongoing transactions such as corporate debt service, realized investment gains and losses and certain public company expenses, such items have also included corporate debt retirement costs/gains, when applicable. Summarized financial information for these segments is as follows: Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Insurance premiums and contract charges earned Property and casualty $ 149,210 $ 145,520 $ 443,616 $ 434,070 Annuity 6,541 6,654 19,280 19,031 Life 27,061 26,856 82,031 80,470 Total $ 182,812 $ 179,030 $ 544,927 $ 533,571 Net investment income Property and casualty $ 7,350 $ 8,877 $ 25,790 $ 27,617 Annuity 56,271 56,026 169,846 166,221 Life 17,612 17,915 53,342 53,891 Corporate and other 5 3 17 7 Intersegment eliminations (222 ) (230 ) (671 ) (696 ) Total $ 81,016 $ 82,591 $ 248,324 $ 247,040 Net income (loss) Property and casualty $ 11,253 $ 11,769 $ 32,120 $ 30,691 Annuity 8,716 10,264 32,973 34,076 Life 3,619 3,916 10,647 12,813 Corporate and other (1,604 ) (592 ) (3,298 ) (3,405 ) Total $ 21,984 $ 25,357 $ 72,442 $ 74,175 September 30, December 31, 2015 2014 Assets Property and casualty $ 1,103,258 $ 1,107,962 Annuity 6,778,398 6,683,473 Life 1,913,404 1,858,150 Corporate and other 141,723 155,678 Intersegment eliminations (33,284 ) (36,736 ) Total $ 9,903,499 $ 9,768,527 |
Derivative Instruments
Derivative Instruments | 9 Months Ended |
Sep. 30, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | NOTE 8 - Derivative Instruments In February 2014, the Company began offering fixed indexed annuity (“FIA”) products, which are deferred fixed annuities that guarantee the return of principal to the contractholder and credit interest based on a percentage of the gain in a specified market index. When fixed indexed annuity deposits are received, a portion of the deposit is used to purchase derivatives consisting of call options on the applicable market indices to fund the index credits due to fixed indexed annuity contractholders. For the Company, substantially all such call options are one-year options purchased to match the funding requirements of the underlying contracts. The call options are carried at fair value with the change in fair value included in Net Realized Investment Gains (Losses), a component of revenues, in the Consolidated Statements of Operations. The change in fair value of derivatives includes the gains or losses recognized at the expiration of the option term or early termination and the changes in fair value for open positions. On the respective anniversary dates of the indexed deposits, the index used to compute the annual index credit is reset and new one-year call options are purchased to fund the next annual index credit. The cost of these purchases is managed through the terms of the fixed indexed annuities, which permit changes to index return caps, participation rates and/or asset fees, subject to guaranteed minimums on each contract’s anniversary date. By adjusting the index return caps, participation rates or asset fees, crediting rates generally can be managed except in cases where the contractual features would prevent further modifications. The Company carries all derivative instruments as assets or liabilities in the Consolidated Balance Sheets at fair value. The Company elected to not use hedge accounting for derivative transactions related to the FIA products. As a result, the Company records the purchased call options and the embedded derivative related to the provision of a contingent return at fair value, with changes in the fair value of the derivatives recognized immediately in the Consolidated Statements of Operations. The fair values of derivative instruments, including derivative instruments embedded in fixed indexed annuity contracts, presented in the Consolidated Balance Sheets were as follows: September 30, December 31, 2015 2014 Assets Derivative instruments, included in Short-term and Other Investments $ 1,135 $ 2,458 Liabilities Fixed indexed annuities - embedded derivatives, included in Other Policyholder Funds 31,755 20,049 The changes in fair value of derivatives included in the Consolidated Statements of Operations were as follows: Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Change in fair value of derivatives (1): Revenues Net realized investment gains (losses) $ (1,564 ) $ 70 $ (2,171 ) $ 161 Change in fair value of embedded derivatives: Revenues Net realized investment gains (losses) 1,328 (70 ) 1,795 (139 ) (1) Includes the gains or losses recognized at the expiration of the option term or early termination and the changes in fair value for open options. The Company’s strategy attempts to mitigate any potential risk of loss under these agreements through a regular monitoring process, which evaluates the program's effectiveness. The Company is exposed to risk of loss in the event of nonperformance by the counterparties and, accordingly, option contracts are purchased from multiple counterparties, which are evaluated for creditworthiness prior to purchase of the contracts. All of these options have been purchased from nationally recognized financial institutions with a Standard and Poor's/Moody’s long-term credit rating of “BBB+”/“Baa1” or higher at the time of purchase and the maximum credit exposure to any single counterparty is subject to concentration limits. The Company also obtains credit support agreements that allow it to request the counterparty to provide collateral when the fair value of the exposure to the counterparty exceeds specified amounts. The notional amount and fair value of call options by counterparty and each counterparty's long-term credit ratings were as follows: September 30, 2015 December 31, 2014 Credit Rating (1) Notional Fair Notional Fair Counterparty S&P Moody’s Amount Value Amount Value Bank of America, N.A. A A1 $ 17,000 $ 6 $ 8,700 $ 439 Barclays Bank PLC A- A2 9,400 84 5,000 70 Citigroup Inc. A- Baa1 11,500 400 - - Credit Suisse International A A1 4,900 34 27,500 1,193 Societe Generale A A2 75,100 611 25,400 756 Total $ 117,900 $ 1,135 $ 66,600 $ 2,458 (1) As assigned by Standard & Poor’s Corporation (“S&P”) and Moody’s Investors Service, Inc. (“Moody’s”). As of September 30, 2015 and December 31, 2014, the Company held $1,097 and $1,955, respectively, of cash received from counterparties for derivative collateral, which is included in Other Liabilities on the Consolidated Balance Sheets. This derivative collateral limited the Company’s maximum amount of economic loss due to credit risk that would be incurred if parties to the call options failed completely to perform according to the terms of the contracts to $38 and $503 at September 30, 2015 and December 31, 2014, respectively. The future annual index credits on fixed indexed annuities are treated as a "series of embedded derivatives" over the expected life of the applicable contract. Call options are not purchased to fund the index liabilities which may arise after the next annuity deposit anniversary date. Call options and the related forward embedded options in the annuity contracts are carried at fair value. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) Accumulated other comprehensive income (loss) represents the accumulated change in shareholders’ equity from transactions and other events and circumstances from non-shareholder sources. For the Company, accumulated other comprehensive income (loss) includes the after tax change in net unrealized gains and losses on fixed maturities and equity securities and the after tax change in net funded status of pension and other postretirement benefit obligations for the period as shown in the Consolidated Statement of Changes in Shareholders’ Equity. The following tables reconcile these components. Unrealized Gains and Losses on Fixed Maturities and Equity Defined Securities (1)(2) Benefit Plans (1) Total (1) Beginning balance, July 1, 2015 $ 223,786 $ (12,953 ) $ 210,833 Other comprehensive income (loss) before reclassifications 3,836 - 3,836 Amounts reclassified from accumulated other comprehensive income (loss) (1,004 ) - (1,004 ) Net current period other comprehensive income (loss) 2,832 - 2,832 Ending balance, September 30, 2015 $ 226,618 $ (12,953 ) $ 213,665 Beginning balance, January 1, 2015 $ 297,554 $ (12,953 ) $ 284,601 Other comprehensive income (loss) before reclassifications (64,979 ) - (64,979 ) Amounts reclassified from accumulated other comprehensive income (loss) (5,957 ) - (5,957 ) Net current period other comprehensive income (loss) (70,936 ) - (70,936 ) Ending balance, September 30, 2015 $ 226,618 $ (12,953 ) $ 213,665 (1) All amounts are net of tax. (2) The pretax amounts reclassified from accumulated other comprehensive income (loss), $1,545 and $9,165, are included in net realized investment gains and losses and the related tax expenses, $541 and $3,208, are included in income tax expense in the Consolidated Statements of Operations for the three and nine months ended September 30, 2015, respectively. Unrealized Gains and Losses on Fixed Maturities and Equity Defined Securities (1)(2) Benefit Plans (1) Total (1) Beginning balance, July 1, 2014 $ 281,555 $ (11,776 ) $ 269,779 Other comprehensive income (loss) before reclassifications (9,265 ) - (9,265 ) Amounts reclassified from accumulated other comprehensive income (loss) (2,283 ) - (2,283 ) Net current period other comprehensive income (loss) (11,548 ) - (11,548 ) Ending balance, September 30, 2014 $ 270,007 $ (11,776 ) $ 258,231 Beginning balance, January 1, 2014 $ 133,990 $ (11,776 ) $ 122,214 Other comprehensive income (loss) before reclassifications 141,641 - 141,641 Amounts reclassified from accumulated other comprehensive income (loss) (5,624 ) - (5,624 ) Net current period other comprehensive income (loss) 136,017 - 136,017 Ending balance, September 30, 2014 $ 270,007 $ (11,776 ) $ 258,231 (1) All amounts are net of tax. (2) The pretax amounts reclassified from accumulated other comprehensive income (loss), $3,512 and $8,652, are included in net realized investment gains and losses and the related tax expenses, $1,229 and $3,028, are included in income tax expense in the Consolidated Statements of Operations for the three and nine months ended September 30, 2014, respectively. Comparative information for elements that are not required to be reclassified in their entirety to net income in the same reporting period is located in “Note 2 Investments Unrealized Gains and Losses on Fixed Maturities and Equity Securities”. |
Basis of Presentation (Tables)
Basis of Presentation (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) Accumulated other comprehensive income (loss) represents the accumulated change in shareholders’ equity from transactions and other events and circumstances from non-shareholder sources. For the Company, accumulated other comprehensive income (loss) includes the after tax change in net unrealized gains and losses on fixed maturities and equity securities and the after tax change in net funded status of pension and other postretirement benefit obligations for the period as shown in the Consolidated Statement of Changes in Shareholders’ Equity. The following tables reconcile these components. Unrealized Gains and Losses on Fixed Maturities and Equity Defined Securities (1)(2) Benefit Plans (1) Total (1) Beginning balance, July 1, 2015 $ 223,786 $ (12,953 ) $ 210,833 Other comprehensive income (loss) before reclassifications 3,836 - 3,836 Amounts reclassified from accumulated other comprehensive income (loss) (1,004 ) - (1,004 ) Net current period other comprehensive income (loss) 2,832 - 2,832 Ending balance, September 30, 2015 $ 226,618 $ (12,953 ) $ 213,665 Beginning balance, January 1, 2015 $ 297,554 $ (12,953 ) $ 284,601 Other comprehensive income (loss) before reclassifications (64,979 ) - (64,979 ) Amounts reclassified from accumulated other comprehensive income (loss) (5,957 ) - (5,957 ) Net current period other comprehensive income (loss) (70,936 ) - (70,936 ) Ending balance, September 30, 2015 $ 226,618 $ (12,953 ) $ 213,665 (1) All amounts are net of tax. (2) The pretax amounts reclassified from accumulated other comprehensive income (loss), $1,545 and $9,165, are included in net realized investment gains and losses and the related tax expenses, $541 and $3,208, are included in income tax expense in the Consolidated Statements of Operations for the three and nine months ended September 30, 2015, respectively. Unrealized Gains and Losses on Fixed Maturities and Equity Defined Securities (1)(2) Benefit Plans (1) Total (1) Beginning balance, July 1, 2014 $ 281,555 $ (11,776 ) $ 269,779 Other comprehensive income (loss) before reclassifications (9,265 ) - (9,265 ) Amounts reclassified from accumulated other comprehensive income (loss) (2,283 ) - (2,283 ) Net current period other comprehensive income (loss) (11,548 ) - (11,548 ) Ending balance, September 30, 2014 $ 270,007 $ (11,776 ) $ 258,231 Beginning balance, January 1, 2014 $ 133,990 $ (11,776 ) $ 122,214 Other comprehensive income (loss) before reclassifications 141,641 - 141,641 Amounts reclassified from accumulated other comprehensive income (loss) (5,624 ) - (5,624 ) Net current period other comprehensive income (loss) 136,017 - 136,017 Ending balance, September 30, 2014 $ 270,007 $ (11,776 ) $ 258,231 (1) All amounts are net of tax. (2) The pretax amounts reclassified from accumulated other comprehensive income (loss), $3,512 and $8,652, are included in net realized investment gains and losses and the related tax expenses, $1,229 and $3,028, are included in income tax expense in the Consolidated Statements of Operations for the three and nine months ended September 30, 2014, respectively. |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Investments, Debt and Equity Securities [Abstract] | |
Unrealized gains and losses on fixed maturities and equity securities | The amortized cost or cost, unrealized investment gains and losses, fair values and other-than-temporary impairment (“OTTI”) included in accumulated other comprehensive income (loss) (“AOCI”) of all fixed maturities and equity securities in the portfolio were as follows: Amortized Unrealized Unrealized Fair OTTI in Cost/Cost Gains Losses Value AOCI (1) September 30, 2015 Fixed maturity securities U.S. Government and federally sponsored agency obligations (2): Mortgage-backed securities $ 471,128 $ 53,536 $ 984 $ 523,680 $ - Other, including U.S. Treasury securities 576,895 25,349 3,499 598,745 - Municipal bonds 1,557,503 166,315 11,409 1,712,409 (4,214 ) Foreign government bonds 59,481 7,016 54 66,443 - Corporate bonds 2,624,263 175,645 30,271 2,769,637 - Other mortgage-backed securities 1,387,275 26,158 5,605 1,407,828 1,470 Totals $ 6,676,545 $ 454,019 $ 51,822 $ 7,078,742 $ (2,744 ) Equity securities (3) $ 95,071 $ 6,351 $ 5,357 $ 96,065 $ - December 31, 2014 Fixed maturity securities U.S. Government and federally sponsored agency obligations (2): Mortgage-backed securities $ 484,561 $ 52,555 $ 1,390 $ 535,726 $ - Other, including U.S. Treasury securities 512,596 28,652 3,049 538,199 - Municipal bonds 1,462,717 189,533 4,428 1,647,822 - Foreign government bonds 52,552 6,984 - 59,536 - Corporate bonds 2,608,633 237,372 11,256 2,834,749 - Other mortgage-backed securities 1,254,178 28,772 5,892 1,277,058 2,879 Totals $ 6,375,237 $ 543,868 $ 26,015 $ 6,893,090 $ 2,879 Equity securities (3) $ 99,904 $ 14,159 $ 3,408 $ 110,655 $ - (1) Related to securities for which an unrealized loss was bifurcated to distinguish the credit related portion and the portion driven by other market factors. Represents the amount of other-than-temporary impairment losses in AOCI which was not included in earnings; amounts also include unrealized gains/(losses) on such impaired securities relating to changes in the fair value of those securities subsequent to the impairment measurement date. (2) Fair value includes securities issued by Federal National Mortgage Association (“FNMA”) of $254,810 and $302,222; Federal Home Loan Mortgage Corporation (“FHLMC”) of $406,845 and $432,432; and Government National Mortgage Association (“GNMA”) of $137,291 and $137,867 as of September 30, 2015 and December 31, 2014, respectively. (3) Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds. |
Summary of fair value and gross unrealized losses of fixed maturity securities and equity securities in an unrealized loss position | For equity securities, the Company has the ability and intent to hold the securities for the recovery of cost and recovery of cost is expected within a reasonable period of time. Therefore, no impairment of these securities was recorded at September 30, 2015. 12 Months or Less More than 12 Months Total Gross Gross Gross Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses September 30, 2015 Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 24,742 $ 891 $ 1,616 $ 93 $ 26,358 $ 984 Other 223,729 3,399 1,899 100 225,628 3,499 Municipal bonds 158,166 5,887 21,189 5,522 179,355 11,409 Foreign government bonds 5,933 54 - - 5,933 54 Corporate bonds 542,329 24,073 40,187 6,198 582,516 30,271 Other mortgage-backed securities 497,157 4,689 110,542 916 607,699 5,605 Total fixed maturity securities 1,452,056 38,993 175,433 12,829 1,627,489 51,822 Equity securities (1) 46,500 4,498 6,616 859 53,116 5,357 Combined totals $ 1,498,556 $ 43,491 $ 182,049 $ 13,688 $ 1,680,605 $ 57,179 Number of positions with a gross unrealized loss 519 64 583 Fair value as a percentage of total fixed maturities and equity securities fair value 20.9 % 2.5 % 23.4 % December 31, 2014 Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 2 $ - $ 39,809 $ 1,390 $ 39,811 $ 1,390 Other 10,317 34 117,615 3,015 127,932 3,049 Municipal bonds 31,821 200 59,715 4,228 91,536 4,428 Foreign government bonds - - - - - - Corporate bonds 213,612 6,883 76,099 4,373 289,711 11,256 Other mortgage-backed securities 477,877 4,797 88,663 1,095 566,540 5,892 Total fixed maturity securities 733,629 11,914 381,901 14,101 1,115,530 26,015 Equity securities (1) 12,955 2,568 6,635 840 19,590 3,408 Combined totals $ 746,584 $ 14,482 $ 388,536 $ 14,941 $ 1,135,120 $ 29,423 Number of positions with a gross unrealized loss 234 112 346 Fair value as a percentage of total fixed maturities and equity securities fair value 10.7 % 5.5 % 16.2 % (1) Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds. |
Summary of cumulative credit losses | The following table summarizes the cumulative amounts related to the Company’s credit loss component of the other-than-temporary impairment losses on fixed maturity securities held as of September 30, 2015 and 2014 that the Company did not intend to sell as of those dates, and it was not more likely than not that the Company would be required to sell the securities before the anticipated recovery of the amortized cost bases, for which the non-credit portions of the other-than-temporary impairment losses were recognized in other comprehensive income (loss): Nine Months Ended September 30, 2015 2014 Cumulative credit loss (1) Beginning of period $ 2,877 $ 4,097 New credit losses 5,162 280 Losses related to securities sold or paid down during the period - - End of period $ 8,039 $ 4,377 (1) The cumulative credit loss amounts exclude other-than-temporary impairment losses on securities held as of the periods indicated that the Company intended to sell or it was more likely than not that the Company would be required to sell the security before the recovery of the amortized cost basis. |
Distribution of the Company's fixed maturity portfolio by estimated expected maturity | For structured securities, including mortgage-backed securities and other asset-backed securities, estimated expected maturities consider broker-dealer survey prepayment assumptions and are verified for consistency with the interest rate and economic environments. Percent of Total Fair Value September 30, 2015 September 30, December 31, Fair Amortized 2015 2014 Value Cost Estimated expected maturity: Due in 1 year or less 3.1 % 4.0 % $ 221,731 $ 209,133 Due after 1 year through 5 years 24.5 23.4 1,733,636 1,635,135 Due after 5 years through 10 years 39.0 40.1 2,756,711 2,600,082 Due after 10 years through 20 years 21.3 20.1 1,509,166 1,423,418 Due after 20 years 12.1 12.4 857,498 808,777 Total 100.0 % 100.0 % $ 7,078,742 $ 6,676,545 Average option-adjusted duration, in years 5.8 5.8 |
Proceeds received from sales of fixed maturities and equity securities | Proceeds received from sales of fixed maturities and equity securities, each determined using the specific identification method, and gross gains and gross losses realized as a result of those sales for each period were: Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Fixed maturity securities Proceeds received $ 81,120 $ 98,942 $ 327,641 $ 198,191 Gross gains realized 6,400 5,871 18,631 9,998 Gross losses realized (3,267 ) (4,421 ) (5,012 ) (5,399 ) Equity securities Proceeds received $ 5,633 $ 3,489 $ 26,442 $ 11,980 Gross gains realized 680 722 5,878 2,196 Gross losses realized (397 ) (86 ) (514 ) (267 ) |
Reconciliation of net unrealized investment gains (losses) on fixed maturity securities and equity securities | The following table reconciles the net unrealized investment gains and losses, net of tax, included in accumulated other comprehensive income (loss), before the impact on deferred policy acquisition costs: Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Net unrealized investment gains (losses) on fixed maturity securities, net of tax Beginning of period $ 254,827 $ 317,791 $ 336,604 $ 146,489 Change in unrealized investment gains and losses 7,436 (10,189 ) (69,787 ) 163,613 Reclassification of net realized investment (gains) losses to net income (835 ) (1,824 ) (5,389 ) (4,324 ) End of period $ 261,428 $ 305,778 $ 261,428 $ 305,778 Net unrealized investment gains (losses) on equity securities, net of tax Beginning of period $ 3,399 $ 7,955 $ 6,988 $ 4,618 Change in unrealized investment gains and losses (2,584 ) (1,594 ) (5,774 ) 2,584 Reclassification of net realized investment (gains) losses to net income (169 ) (459 ) (568 ) (1,300 ) End of period $ 646 $ 5,902 $ 646 $ 5,902 |
Offsetting assets and liability | The following table presents the instruments that were subject to a master netting arrangement for the Company. Net Amounts of Assets/ Gross Liabilities Gross Amounts Not Offset Amounts Presented in the Consolidated Offset in the in the Balance Sheet Consolidated Consolidated Cash Gross Balance Balance Financial Collateral Net Amounts Sheet Sheet Instruments Received Amount September 30, 2015 Asset derivatives: Free-standing derivatives $1,135 - $1,135 - $ 1,097 $ 38 December 31, 2014 Asset derivatives: Free-standing derivatives 2,458 - 2,458 - 1,955 503 |
Fair Value of Financial Instr20
Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Summary of Company's fair value hierarchy measured at recurring basis | At September 30, 2015, these Level 3 invested assets comprised 2.5% of the Company’s total investment portfolio fair value. Fair Value Measurements at Carrying Fair Reporting Date Using Amount Value Level 1 Level 2 Level 3 September 30, 2015 Financial Assets Investments Fixed maturities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 523,680 $ 523,680 $ - $ 523,680 $ - Other, including U.S. Treasury securities 598,745 598,745 14,829 583,916 - Municipal bonds 1,712,409 1,712,409 - 1,681,398 31,011 Foreign government bonds 66,443 66,443 - 66,443 - Corporate bonds 2,769,637 2,769,637 10,267 2,689,122 70,248 Other mortgage-backed securities 1,407,828 1,407,828 - 1,323,742 84,086 Total fixed maturities 7,078,742 7,078,742 25,096 6,868,301 185,345 Equity securities 96,065 96,065 82,404 13,655 6 Short-term investments 102,717 102,717 100,277 2,440 - Other investments 11,135 11,135 - 11,135 - Totals 7,288,659 7,288,659 207,777 6,895,531 185,351 Separate Account (variable annuity) assets (1) 1,741,977 1,741,977 1,741,977 - - Financial Liabilities Other policyholder funds, embedded derivatives 31,755 31,755 - - 31,755 December 31, 2014 Financial Assets Investments Fixed maturities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 535,726 $ 535,726 $ - $ 535,726 $ - Other, including U.S. Treasury securities 538,199 538,199 17,857 520,342 - Municipal bonds 1,647,822 1,647,822 - 1,634,194 13,628 Foreign government bonds 59,536 59,536 - 59,536 - Corporate bonds 2,834,749 2,834,749 10,524 2,749,508 74,717 Other mortgage-backed securities 1,277,058 1,277,058 - 1,194,109 82,949 Total fixed maturities 6,893,090 6,893,090 28,381 6,693,415 171,294 Equity securities 110,655 110,655 92,140 18,509 6 Short-term investments 142,039 142,039 142,039 - - Other investments 12,458 12,458 - 12,458 - Totals 7,158,242 7,158,242 262,560 6,724,382 171,300 Separate Account (variable annuity) assets (1) 1,813,557 1,813,557 1,813,557 - - Financial Liabilities Other policyholder funds, embedded derivatives 20,049 20,049 - - 20,049 (1) Separate Account (variable annuity) liabilities are set equal to Separate Account (variable annuity) assets. |
Table for reconciliations for all Level 3 assets measured at fair value on a recurring basis | The following tables present reconciliations for the periods indicated for all Level 3 assets and liabilities measured at fair value on a recurring basis. Financial Financial Assets Liabilities(1) Municipal Bonds Corporate Bonds Other Mortgage- Backed Securities Total Fixed Maturities Equity Securities Total Beginning balance, July 1, 2015 $ 29,669 $ 72,724 $ 84,700 $ 187,093 $ 6 $ 187,099 $ 26,719 Transfers into Level 3 (2) - - 505 505 - 505 - Transfers out of Level 3 (2) - - - - - - - Total gains or losses Net realized gains (losses) included in net income related to financial assets - (164 ) - (164 ) 1 (163 ) - Net realized (gains) losses included in net income related to financial liabilities - - - - - - (1,328 ) Net unrealized gains (losses) included in other comprehensive income 1,464 326 167 1,957 - 1,957 - Purchases - - - - - - - Issuances - - - - - - 6,899 Sales - - - - (1 ) (1 ) - Settlements - - - - - - - Paydowns, maturities and distributions (122 ) (2,638 ) (1,286 ) (4,046 ) - (4,046 ) (535 ) Ending balance, September 30, 2015 $ 31,011 $ 70,248 $ 84,086 $ 185,345 $ 6 $ 185,351 $ 31,755 Beginning balance, January 1, 2015 $ 13,628 $ 74,717 $ 82,949 $ 171,294 $ 6 $ 171,300 $ 20,049 Transfers into Level 3 (2) 16,326 5,729 15,685 37,740 - 37,740 - Transfers out of Level 3 (2) - (1,350 ) (9,664 ) (11,014 ) - (11,014 ) - Total gains or losses Net realized gains (losses) included in net income related to financial assets - 1,087 - 1,087 1 1,088 - Net realized (gains) losses included in net income related to financial liabilities - - - - - - (1,795 ) Net unrealized gains (losses) included in other comprehensive income 1,359 (758 ) (268 ) 333 - 333 - Purchases - - - - - - - Issuances - - - - - - 14,811 Sales - (476 ) - (476 ) (1 ) (477 ) - Settlements - - - - - - - Paydowns, maturities and distributions (302 ) (8,701 ) (4,616 ) (13,619 ) - (13,619 ) (1,310 ) Ending balance, September 30, 2015 $ 31,011 $ 70,248 $ 84,086 $ 185,345 $ 6 $ 185,351 $ 31,755 (1) Represents embedded derivatives, all related to the Company’s fixed indexed annuity (“FIA”) products, reported in Other Policyholder Funds in the Company’s Consolidated Balance Sheets. ( 2) Transfers into and out of Level 3 during the three and nine months ended September 30, 2015 were attributable to changes in the availability of observable market information for individual fixed maturity securities. The Company’s policy is to recognize transfers into and transfers out of the levels as having occurred at the end of the reporting period in which the transfers were determined. Financial Financial Assets Liabilities(1) Municipal Bonds Corporate Bonds Other Mortgage- Backed Securities Total Fixed Maturities Equity Securities Total Beginning balance, July 1, 2014 $ 13,054 $ 73,926 $ 52,522 $ 139,502 $ 6 $ 139,508 $ 6,915 Transfers into Level 3 (2) - - 35,000 35,000 - 35,000 - Transfers out of Level 3 (2) - (3,510 ) - (3,510 ) - (3,510 ) - Total gains or losses Net realized gains (losses) included in net income related to financial assets - - - - - - - Net realized (gains) losses included in net income related to financial liabilities - - - - - - 70 Net unrealized gains (losses) included in other comprehensive income 212 (180 ) (137 ) (105 ) - (105 ) - Purchases - - - - - - - Issuances - - - - - - 6,179 Sales - - - - - - - Settlements - - - - - - - Paydowns, maturities and distributions (123 ) (4,580 ) (143 ) (4,846 ) - (4,846 ) (82 ) Ending balance, September 30, 2014 $ 13,143 $ 65,656 $ 87,242 $ 166,041 $ 6 $ 166,047 $ 13,082 Beginning balance, January 1, 2014 $ 2,694 $ 60,826 $ 46,009 $ 109,529 $ 6 $ 109,535 $ - Transfers into Level 3 (2) 10,056 12,452 42,109 64,617 - 64,617 - Transfers out of Level 3 (2) - (3,510 ) (519 ) (4,029 ) - (4,029 ) - Total gains or losses Net realized gains (losses) included in net income related to financial assets - - (26 ) (26 ) - (26 ) - Net realized (gains) losses included in net income related to financial liabilities - - - - - - 139 Net unrealized gains (losses) included in other comprehensive income 646 2,380 155 3,181 - 3,181 - Purchases - - - - - - - Issuances - - - - - - 13,035 Sales - - - - - - - Settlements - - - - - - - Paydowns, maturities and distributions (253 ) (6,492 ) (486 ) (7,231 ) - (7,231 ) (92 ) Ending balance, September 30, 2014 $ 13,143 $ 65,656 $ 87,242 $ 166,041 $ 6 $ 166,047 $ 13,082 (1) Represents embedded derivatives, all related to the Company’s FIA products, reported in Other Policyholder Funds in the Company’s Consolidated Balance Sheets. ( 2) Transfers into and out of Level 3 during the three and nine months ended September 30, 2014 were attributable to changes in the availability of observable market information for individual fixed maturity securities. The Company’s policy is to recognize transfers into and transfers out of the levels as having occurred at the end of the reporting period in which the transfers were determined. |
Carrying value, fair value and fair value hierarchy of financial assets and financial liabilities | The following table presents the carrying value, fair value and fair value hierarchy of these financial assets and financial liabilities. Fair Value Measurements at Carrying Fair Reporting Date Using Amount Value Level 1 Level 2 Level 3 September 30, 2015 Financial Assets Investments Other investments $ 147,435 $ 151,866 $ - $ - $ 151,866 Financial Liabilities Fixed annuity contract liabilities 4,016,360 3,927,685 - - 3,927,685 Policyholder account balances on interest-sensitive life contracts 77,068 81,096 - - 81,096 Other policyholder funds 580,895 580,895 - 500,084 80,811 Short-term debt 113,000 113,000 - 113,000 - Long-term debt 124,979 128,718 128,718 - - December 31, 2014 Financial Assets Investments Other investments $ 145,409 $ 149,792 $ - $ - $ 149,792 Financial Liabilities Fixed annuity contract liabilities 3,774,457 3,691,123 - - 3,691,123 Policyholder account balances on interest-sensitive life contracts 77,415 81,461 - - 81,461 Other policyholder funds 586,689 586,689 - 500,080 86,609 Short-term debt 38,000 38,000 - 38,000 - Long-term debt 199,939 209,495 209,495 - - |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Summary of Indebtedness outstanding | Indebtedness outstanding was as follows: September 30, December 31, 2015 2014 Short-term debt: Bank Credit Facility, expires July 30, 2019 $ 113,000 $ 38,000 Long-term debt, current and noncurrent (1): 6.05% Senior Notes, due June 15, 2015. Aggregate principal amount of $75,000 less unaccrued discount of $0 and $11 (6.1% imputed rate) - 74,989 6.85% Senior Notes, due April 15, 2016. Aggregate principal amount of $125,000 less unaccrued discount of $21 and $50 (6.9% imputed rate) 124,979 124,950 Total $ 237,979 $ 237,939 (1) The Company designates debt obligations as “long-term” based on maturity date at issuance. |
Reinsurance (Tables)
Reinsurance (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Insurance [Abstract] | |
Effects of reinsurance on premiums and benefits | The effects of reinsurance on premiums written and contract deposits; premiums and contract charges earned; and benefits, claims and settlement expenses were as follows: Ceded to Assumed Gross Other from Other Net Amount Companies Companies Amount Three months ended September 30, 2015 Premiums written and contract deposits $ 331,223 $ 5,952 $ 927 $ 326,198 Premiums and contract charges earned 187,813 5,961 960 182,812 Benefits, claims and settlement expenses 123,061 3,034 1,154 121,181 Three months ended September 30, 2014 Premiums written and contract deposits $ 328,525 $ 6,668 $ 889 $ 322,746 Premiums and contract charges earned 184,770 6,677 937 179,030 Benefits, claims and settlement expenses 122,883 6,451 1,011 117,443 Nine months ended September 30, 2015 Premiums written and contract deposits $ 966,867 $ 18,260 $ 2,720 $ 951,327 Premiums and contract charges earned 560,818 18,608 2,717 544,927 Benefits, claims and settlement expenses 378,939 13,397 2,597 368,139 Nine months ended September 30, 2014 Premiums written and contract deposits $ 893,125 $ 20,011 $ 2,300 $ 875,414 Premiums and contract charges earned 551,672 20,463 2,362 533,571 Benefits, claims and settlement expenses 366,923 12,580 2,246 356,589 |
Commitments (Tables)
Commitments (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Investment Commitments | From time to time, the Company has outstanding commitments to purchase investments and/or commitments to lend funds under bridge loans. Unfunded commitments were as follows: September 30, December 31, 2015 2014 Outstanding commitments to: Purchase investments $ 70,313 $ 39,689 Lend funds under bridge loans 45,049 10,567 Total $ 115,362 $ 50,256 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Summarized financial information for these segments | Summarized financial information for these segments is as follows: Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Insurance premiums and contract charges earned Property and casualty $ 149,210 $ 145,520 $ 443,616 $ 434,070 Annuity 6,541 6,654 19,280 19,031 Life 27,061 26,856 82,031 80,470 Total $ 182,812 $ 179,030 $ 544,927 $ 533,571 Net investment income Property and casualty $ 7,350 $ 8,877 $ 25,790 $ 27,617 Annuity 56,271 56,026 169,846 166,221 Life 17,612 17,915 53,342 53,891 Corporate and other 5 3 17 7 Intersegment eliminations (222 ) (230 ) (671 ) (696 ) Total $ 81,016 $ 82,591 $ 248,324 $ 247,040 Net income (loss) Property and casualty $ 11,253 $ 11,769 $ 32,120 $ 30,691 Annuity 8,716 10,264 32,973 34,076 Life 3,619 3,916 10,647 12,813 Corporate and other (1,604 ) (592 ) (3,298 ) (3,405 ) Total $ 21,984 $ 25,357 $ 72,442 $ 74,175 September 30, December 31, 2015 2014 Assets Property and casualty $ 1,103,258 $ 1,107,962 Annuity 6,778,398 6,683,473 Life 1,913,404 1,858,150 Corporate and other 141,723 155,678 Intersegment eliminations (33,284 ) (36,736 ) Total $ 9,903,499 $ 9,768,527 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The fair values of derivative instruments, including derivative instruments embedded in fixed indexed annuity contracts, presented in the Consolidated Balance Sheets were as follows: September 30, December 31, 2015 2014 Assets Derivative instruments, included in Short-term and Other Investments $ 1,135 $ 2,458 Liabilities Fixed indexed annuities - embedded derivatives, included in Other Policyholder Funds 31,755 20,049 |
Derivative Instruments, Gain (Loss) | The changes in fair value of derivatives included in the Consolidated Statements of Operations were as follows: Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Change in fair value of derivatives (1): Revenues Net realized investment gains (losses) $ (1,564 ) $ 70 $ (2,171 ) $ 161 Change in fair value of embedded derivatives: Revenues Net realized investment gains (losses) 1,328 (70 ) 1,795 (139 ) (1) Includes the gains or losses recognized at the expiration of the option term or early termination and the changes in fair value for open options. |
Financing Receivable Credit Quality Indicators | The notional amount and fair value of call options by counterparty and each counterparty's long-term credit ratings were as follows: September 30, 2015 December 31, 2014 Credit Rating (1) Notional Fair Notional Fair Counterparty S&P Moody’s Amount Value Amount Value Bank of America, N.A. A A1 $ 17,000 $ 6 $ 8,700 $ 439 Barclays Bank PLC A- A2 9,400 84 5,000 70 Citigroup Inc. A- Baa1 11,500 400 - - Credit Suisse International A A1 4,900 34 27,500 1,193 Societe Generale A A2 75,100 611 25,400 756 Total $ 117,900 $ 1,135 $ 66,600 $ 2,458 (1) As assigned by Standard & Poor’s Corporation (“S&P”) and Moody’s Investors Service, Inc. (“Moody’s”). |
Basis of Presentation (Details)
Basis of Presentation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | ||||||
Unrealized Gains and Losses on Fixed Maturities and Equity Securities | |||||||||
Beginning balance | [1] | $ 223,786 | [2] | $ 281,555 | [3] | $ 297,554 | [2] | $ 133,990 | [3] |
Other comprehensive income (loss) before reclassifications | [1] | 3,836 | [2] | (9,265) | [3] | (64,979) | [2] | 141,641 | [3] |
Amounts reclassified from accumulated other comprehensive income (loss) | [1] | (1,004) | [2] | (2,283) | [3] | (5,957) | [2] | (5,624) | [3] |
Net current period other comprehensive income (loss) | [1] | 2,832 | [2] | (11,548) | [3] | (70,936) | [2] | 136,017 | [3] |
Ending balance | [1] | 226,618 | [2] | 270,007 | [3] | 226,618 | [2] | 270,007 | [3] |
Defined Benefit Plans | |||||||||
Beginning balance | [1] | (12,953) | (11,776) | (12,953) | (11,776) | ||||
Other comprehensive income (loss) before reclassifications | [1] | 0 | 0 | 0 | 0 | ||||
Amounts reclassified from accumulated other comprehensive income (loss) | [1] | 0 | 0 | 0 | 0 | ||||
Net current-period other comprehensive income (loss) | [1] | 0 | 0 | 0 | 0 | ||||
Ending balance | [1] | (12,953) | (11,776) | (12,953) | (11,776) | ||||
Beginning balance | [1] | 210,833 | 269,779 | 284,601 | 122,214 | ||||
Other comprehensive income (loss) before reclassifications | [1] | 3,836 | (9,265) | (64,979) | 141,641 | ||||
Amounts reclassified from accumulated other comprehensive income (loss) | [1] | (1,004) | (2,283) | (5,957) | (5,624) | ||||
Net current period other comprehensive income (loss) | [1] | 2,832 | (11,548) | (70,936) | 136,017 | ||||
Ending balance | [1] | $ 213,665 | $ 258,231 | $ 213,665 | $ 258,231 | ||||
[1] | All amounts are net of tax. | ||||||||
[2] | The pretax amounts reclassified from accumulated other comprehensive income (loss), $1,545 and $9,165, are included in net realized investment gains and losses and the related tax expenses, $541 and $3,208, are included in income tax expense in the Consolidated Statements of Operations for the three and nine months ended September 30, 2015, respectively. | ||||||||
[3] | The pretax amounts reclassified from accumulated other comprehensive income (loss), $3,512 and $8,652, are included in net realized investment gains and losses and the related tax expenses, $1,229 and $3,028, are included in income tax expense in the Consolidated Statements of Operations for the three and nine months ended September 30, 2014, respectively. |
Basis of Presentation (Details
Basis of Presentation (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI for Sale of Securities, before Tax | $ 1,545 | $ 3,512 | $ 9,165 | $ 8,652 |
Other Tax Expense (Benefit) | $ 541 | $ 1,229 | 3,208 | $ 3,028 |
Quantifying Misstatement in Current Year Financial Statements, Amount | 3,012 | |||
Property and casualty [Member] | ||||
Quantifying Misstatement in Current Year Financial Statements, Amount | 2,056 | |||
Annuity [Member] | ||||
Quantifying Misstatement in Current Year Financial Statements, Amount | 519 | |||
Life [Member] | ||||
Quantifying Misstatement in Current Year Financial Statements, Amount | $ 437 |
Investments (Details)
Investments (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | ||
Unrealized gains and losses on fixed maturities and equity securities | |||
Amortized Cost/Cost | $ 6,676,545 | $ 6,375,237 | |
Amortized Cost/Cost, Equity securities | 95,071 | 99,904 | |
Unrealized Gains | 454,019 | 543,868 | |
Unrealized Losses | 51,822 | 26,015 | |
Fair Value | 7,078,742 | 6,893,090 | |
Fair Value, Equity securities | 96,065 | 110,655 | |
OTTI in AOCI | [1] | (2,744) | 2,879 |
Mortgage-backed securities [Member] | |||
Unrealized gains and losses on fixed maturities and equity securities | |||
Amortized Cost/Cost | [2] | 471,128 | 484,561 |
Unrealized Gains | [2] | 53,536 | 52,555 |
Unrealized Losses | [2] | 984 | 1,390 |
Fair Value | [2] | 523,680 | 535,726 |
OTTI in AOCI | [1],[2] | 0 | 0 |
Other, including U.S. Treasury Securities [Member] | |||
Unrealized gains and losses on fixed maturities and equity securities | |||
Amortized Cost/Cost | [2] | 576,895 | 512,596 |
Unrealized Gains | [2] | 25,349 | 28,652 |
Unrealized Losses | [2] | 3,499 | 3,049 |
Fair Value | [2] | 598,745 | 538,199 |
OTTI in AOCI | [1],[2] | 0 | 0 |
Municipal bonds [Member] | |||
Unrealized gains and losses on fixed maturities and equity securities | |||
Amortized Cost/Cost | 1,557,503 | 1,462,717 | |
Unrealized Gains | 166,315 | 189,533 | |
Unrealized Losses | 11,409 | 4,428 | |
Fair Value | 1,712,409 | 1,647,822 | |
OTTI in AOCI | [1] | (4,214) | 0 |
Foreign government bonds [Member] | |||
Unrealized gains and losses on fixed maturities and equity securities | |||
Amortized Cost/Cost | 59,481 | 52,552 | |
Unrealized Gains | 7,016 | 6,984 | |
Unrealized Losses | 54 | 0 | |
Fair Value | 66,443 | 59,536 | |
OTTI in AOCI | [1] | 0 | 0 |
Corporate bonds [Member] | |||
Unrealized gains and losses on fixed maturities and equity securities | |||
Amortized Cost/Cost | 2,624,263 | 2,608,633 | |
Unrealized Gains | 175,645 | 237,372 | |
Unrealized Losses | 30,271 | 11,256 | |
Fair Value | 2,769,637 | 2,834,749 | |
OTTI in AOCI | [1] | 0 | 0 |
Other mortgage-backed securities [Member] | |||
Unrealized gains and losses on fixed maturities and equity securities | |||
Amortized Cost/Cost | 1,387,275 | 1,254,178 | |
Unrealized Gains | 26,158 | 28,772 | |
Unrealized Losses | 5,605 | 5,892 | |
Fair Value | 1,407,828 | 1,277,058 | |
OTTI in AOCI | [1] | 1,470 | 2,879 |
Equity securities [Member] | |||
Unrealized gains and losses on fixed maturities and equity securities | |||
Amortized Cost/Cost, Equity securities | [3] | 95,071 | 99,904 |
Unrealized Gains | [3] | 6,351 | 14,159 |
Unrealized Losses | [3] | 5,357 | 3,408 |
Fair Value, Equity securities | [3] | 96,065 | 110,655 |
OTTI in AOCI | [1],[3] | $ 0 | $ 0 |
[1] | Related to securities for which an unrealized loss was bifurcated to distinguish the credit related portion and the portion driven by other market factors. Represents the amount of other-than-temporary impairment losses in AOCI which was not included in earnings; amounts also include unrealized gains/(losses) on such impaired securities relating to changes in the fair value of those securities subsequent to the impairment measurement date. | ||
[2] | Fair value includes securities issued by Federal National Mortgage Association (“FNMA”) of $254,810 and $302,222; Federal Home Loan Mortgage Corporation (“FHLMC”) of $406,845 and $432,432; and Government National Mortgage Association (“GNMA”) of $137,291 and $137,867 as of September 30, 2015 and December 31, 2014, respectively. | ||
[3] | Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds. |
Investments (Details 1)
Investments (Details 1) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2015USD ($)Number | Dec. 31, 2014USD ($)Number | ||
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | $ 1,498,556 | $ 746,584 | |
Fixed maturity securities, Fair Value, More than 12 Months | 182,049 | 388,536 | |
Fixed maturity securities, Fair Value, Total | 1,680,605 | 1,135,120 | |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 43,491 | 14,482 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 13,688 | 14,941 | |
Fixed maturity securities, Gross Unrealized Losses, Total | $ 57,179 | $ 29,423 | |
Number of positions with a gross unrealized loss position, 12 Months or Less | Number | 519 | 234 | |
Number of position with a gross unrealized loss position, more than 12 months | Number | 64 | 112 | |
Number of position with a gross unrealized loss position, Total | Number | 583 | 346 | |
Fair value as a percentage of total fixed maturities and equity securities fair value, 12 Months or Less | 20.90% | 10.70% | |
Fair value as a percentage of total fixed maturities and equity securities fair value, more than 12 months | 2.50% | 5.50% | |
Fair value as a percentage of total fixed maturities and equity securities fair value, Total | 23.40% | 16.20% | |
Mortgage-backed securities [Member] | |||
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | $ 24,742 | $ 2 | |
Fixed maturity securities, Fair Value, More than 12 Months | 1,616 | 39,809 | |
Fixed maturity securities, Fair Value, Total | 26,358 | 39,811 | |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 891 | 0 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 93 | 1,390 | |
Fixed maturity securities, Gross Unrealized Losses, Total | 984 | 1,390 | |
Other [Member] | |||
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | 223,729 | 10,317 | |
Fixed maturity securities, Fair Value, More than 12 Months | 1,899 | 117,615 | |
Fixed maturity securities, Fair Value, Total | 225,628 | 127,932 | |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 3,399 | 34 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 100 | 3,015 | |
Fixed maturity securities, Gross Unrealized Losses, Total | 3,499 | 3,049 | |
Municipal bonds [Member] | |||
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | 158,166 | 31,821 | |
Fixed maturity securities, Fair Value, More than 12 Months | 21,189 | 59,715 | |
Fixed maturity securities, Fair Value, Total | 179,355 | 91,536 | |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 5,887 | 200 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 5,522 | 4,228 | |
Fixed maturity securities, Gross Unrealized Losses, Total | 11,409 | 4,428 | |
Foreign government bonds [Member] | |||
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | 5,933 | 0 | |
Fixed maturity securities, Fair Value, More than 12 Months | 0 | 0 | |
Fixed maturity securities, Fair Value, Total | 5,933 | 0 | |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 54 | 0 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 0 | 0 | |
Fixed maturity securities, Gross Unrealized Losses, Total | 54 | 0 | |
Corporate bonds [Member] | |||
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | 542,329 | 213,612 | |
Fixed maturity securities, Fair Value, More than 12 Months | 40,187 | 76,099 | |
Fixed maturity securities, Fair Value, Total | 582,516 | 289,711 | |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 24,073 | 6,883 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 6,198 | 4,373 | |
Fixed maturity securities, Gross Unrealized Losses, Total | 30,271 | 11,256 | |
Other mortgage-backed securities [Member] | |||
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | 497,157 | 477,877 | |
Fixed maturity securities, Fair Value, More than 12 Months | 110,542 | 88,663 | |
Fixed maturity securities, Fair Value, Total | 607,699 | 566,540 | |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 4,689 | 4,797 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 916 | 1,095 | |
Fixed maturity securities, Gross Unrealized Losses, Total | 5,605 | 5,892 | |
Total fixed maturity securities [Member] | |||
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | 1,452,056 | 733,629 | |
Fixed maturity securities, Fair Value, More than 12 Months | 175,433 | 381,901 | |
Fixed maturity securities, Fair Value, Total | 1,627,489 | 1,115,530 | |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 38,993 | 11,914 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 12,829 | 14,101 | |
Fixed maturity securities, Gross Unrealized Losses, Total | 51,822 | 26,015 | |
Equity securities [Member] | |||
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | [1] | 46,500 | 12,955 |
Fixed maturity securities, Fair Value, More than 12 Months | [1] | 6,616 | 6,635 |
Fixed maturity securities, Fair Value, Total | [1] | 53,116 | 19,590 |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | [1] | 4,498 | 2,568 |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | [1] | 859 | 840 |
Fixed maturity securities, Gross Unrealized Losses, Total | [1] | $ 5,357 | $ 3,408 |
[1] | Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds. |
Investments (Details 2)
Investments (Details 2) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | ||
Cumulative credit loss | |||
Beginning of period | [1] | $ 2,877 | $ 4,097 |
New credit losses | [1] | 5,162 | 280 |
Losses related to securities sold or paid down during the period | [1] | 0 | 0 |
End of period | [1] | $ 8,039 | $ 4,377 |
[1] | The cumulative credit loss amounts exclude other-than-temporary impairment losses on securities held as of the periods indicated that the Company intended to sell or it was more likely than not that the Company would be required to sell the security before the recovery of the amortized cost basis. |
Investments (Details 3)
Investments (Details 3) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | |
Estimated expected maturity: | ||
Due in 1 year or less, Percent of Total Fair Value | 3.10% | 4.00% |
Due in 1 year or less, Amortized Cost | $ 209,133 | |
Due in 1 year or less, Fair Value | $ 221,731 | |
Due after 1 year through 5 years, Percent of Total Fair Value | 24.50% | 23.40% |
Due after 1 year through 5 years, Amortized Cost | $ 1,635,135 | |
Due after 1 year through 5 years, Fair Value | $ 1,733,636 | |
Due after 5 years through 10 years, Percent of Total Fair Value | 39.00% | 40.10% |
Due after 5 years through 10 years, Amortized Cost | $ 2,600,082 | |
Due after 5 years through 10 years, Fair Value | $ 2,756,711 | |
Due after 10 years through 20 years, Percent of Total Fair Value | 21.30% | 20.10% |
Due after 10 years through 20 years, Amortized Cost | $ 1,423,418 | |
Due after 10 years through 20 years, Fair Value | $ 1,509,166 | |
Due after 20 years, Percent of Total Fair Value | 12.10% | 12.40% |
Due after 20 years, Amortized Cost | $ 808,777 | |
Due after 20 years, Fair Value | $ 857,498 | |
Total, Percent of Total Fair Value | 100.00% | 100.00% |
Total, Amortized Cost | $ 6,676,545 | $ 6,375,237 |
Fair Value | $ 7,078,742 | $ 6,893,090 |
Average option-adjusted duration, in years | 5 years 9 months 18 days | 5 years 9 months 18 days |
Investments (Details 4)
Investments (Details 4) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Proceeds received from sales of fixed maturities and equity securities | ||||
Proceeds received, Fixed maturity securities | $ 81,120 | $ 98,942 | $ 327,641 | $ 198,191 |
Proceeds received, Equity securities | 5,633 | 3,489 | 26,442 | 11,980 |
Fixed maturity securities [Member] | ||||
Proceeds received from sales of fixed maturities and equity securities | ||||
Gross gains realized | 6,400 | 5,871 | 18,631 | 9,998 |
Gross losses realized | (3,267) | (4,421) | (5,012) | (5,399) |
Equity securities [Member] | ||||
Proceeds received from sales of fixed maturities and equity securities | ||||
Gross gains realized | 680 | 722 | 5,878 | 2,196 |
Gross losses realized | $ (397) | $ (86) | $ (514) | $ (267) |
Investments (Details 5)
Investments (Details 5) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | ||||||
Net unrealized investment gains (losses) on fixed maturity securities, net of tax | |||||||||
Reclassification of net realized investment (gains) losses to net income | [1] | $ 1,004 | [2] | $ 2,283 | [3] | $ 5,957 | [2] | $ 5,624 | [3] |
Fixed Maturity Securities [Member] | |||||||||
Net unrealized investment gains (losses) on fixed maturity securities, net of tax | |||||||||
Beginning of period | 254,827 | 317,791 | 336,604 | 146,489 | |||||
Change in unrealized investment gains and losses | 7,436 | (10,189) | (69,787) | 163,613 | |||||
Reclassification of net realized investment (gains) losses to net income | (835) | (1,824) | (5,389) | (4,324) | |||||
End of period | 261,428 | 305,778 | 261,428 | 305,778 | |||||
Equity securities [Member] | |||||||||
Net unrealized investment gains (losses) on fixed maturity securities, net of tax | |||||||||
Beginning of period | 3,399 | 7,955 | 6,988 | 4,618 | |||||
Change in unrealized investment gains and losses | (2,584) | (1,594) | (5,774) | 2,584 | |||||
Reclassification of net realized investment (gains) losses to net income | (169) | (459) | (568) | (1,300) | |||||
End of period | $ 646 | $ 5,902 | $ 646 | $ 5,902 | |||||
[1] | All amounts are net of tax. | ||||||||
[2] | The pretax amounts reclassified from accumulated other comprehensive income (loss), $1,545 and $9,165, are included in net realized investment gains and losses and the related tax expenses, $541 and $3,208, are included in income tax expense in the Consolidated Statements of Operations for the three and nine months ended September 30, 2015, respectively. | ||||||||
[3] | The pretax amounts reclassified from accumulated other comprehensive income (loss), $3,512 and $8,652, are included in net realized investment gains and losses and the related tax expenses, $1,229 and $3,028, are included in income tax expense in the Consolidated Statements of Operations for the three and nine months ended September 30, 2014, respectively. |
Investments (Details 6)
Investments (Details 6) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Asset derivatives: | ||
Derivatives Asset, Net Amount | $ 1,135 | $ 2,458 |
Free-standing derivatives [Member] | ||
Asset derivatives: | ||
Derivatives Asset, Gross Amounts | 1,135 | 2,458 |
Derivatives Asset, Gross Amounts Offset in the Consolidated Balance Sheet | 0 | 0 |
Derivatives Asset, Net Amounts of Assets Presented in the Consolidated Balance Sheet | 1,135 | 2,458 |
Derivatives Asset, Gross Amounts Not Offset in the Consolidated Balance Sheet, Financial Instruments | 0 | 0 |
Derivatives Asset, Gross Amounts Not Offset in the Consolidated Balance Sheet, Cash Collateral Received | 1,097 | 1,955 |
Derivatives Asset, Net Amount | $ 38 | $ 503 |
Investments (Details Textual)
Investments (Details Textual) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Investments (Textual) [Abstract] | ||
Fair value of issued securities | $ 7,078,742 | $ 6,893,090 |
Investments (Additional Textual) [Abstract] | ||
Federal Home Loan Bank Funding Agreements | $ 500,000 | 500,000 |
Investment Grade Rate | 59.00% | |
Federal Home Loans Bank Of Chicago [Member] | ||
Investments (Textual) [Abstract] | ||
Fair value of issued securities | $ 537,400 | 539,235 |
Governmental Agencies as Required by Law in Various States [Member] | ||
Investments (Textual) [Abstract] | ||
Fair value of issued securities | 18,423 | 18,361 |
Federal National Mortgage Association Certificates and Obligations (FNMA) [Member] | ||
Investments (Textual) [Abstract] | ||
Fair value of issued securities | 254,810 | 302,222 |
Federal Home Loan Mortgage Corporation Certificates and Obligations (FHLMC) [Member] | ||
Investments (Textual) [Abstract] | ||
Fair value of issued securities | 406,845 | 432,432 |
Government National Mortgage Association Certificates and Obligations (GNMA) [Member] | ||
Investments (Textual) [Abstract] | ||
Fair value of issued securities | $ 137,291 | $ 137,867 |
Fair Value of Financial Instr36
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 | |
U.S. Government and federally sponsored agency obligations: | |||
Carrying Amount | $ 7,288,659 | $ 7,158,242 | |
Fair Value | 7,288,659 | 7,158,242 | |
Investments, Carrying Amount | 7,541,192 | 7,403,467 | |
Investments, Fair Value | 151,866 | 149,792 | |
Separate Account (variable annuity) assets | [1] | 1,741,977 | 1,813,557 |
Separate Account (variable annuity) assets, Fair Value | [1] | 1,741,977 | 1,813,557 |
Recurring [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Carrying Amount | 7,078,742 | 6,893,090 | |
Fair Value | 7,078,742 | 6,893,090 | |
Short-term investments [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Investments, Carrying Amount | 102,717 | 142,039 | |
Investments, Fair Value | 102,717 | 142,039 | |
Mortgage-backed securities [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Carrying Amount | 523,680 | 535,726 | |
Fair Value | 523,680 | 535,726 | |
Other, including U.S. Treasury Securities [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Carrying Amount | 598,745 | 538,199 | |
Fair Value | 598,745 | 538,199 | |
Municipal bonds [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Carrying Amount | 1,712,409 | 1,647,822 | |
Fair Value | 1,712,409 | 1,647,822 | |
Foreign government bonds [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Carrying Amount | 66,443 | 59,536 | |
Fair Value | 66,443 | 59,536 | |
Corporate bonds [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Carrying Amount | 2,769,637 | 2,834,749 | |
Fair Value | 2,769,637 | 2,834,749 | |
Other mortgage-backed securities [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Carrying Amount | 1,407,828 | 1,277,058 | |
Fair Value | 1,407,828 | 1,277,058 | |
Equity securities [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Carrying Amount | 96,065 | 110,655 | |
Fair Value | 96,065 | 110,655 | |
Other Investment [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Investments, Carrying Amount | 11,135 | 12,458 | |
Investments, Fair Value | 11,135 | 12,458 | |
Other Policyholders Funds, embedded derivatives [Member] | Recurring [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Financial Liabilities Other policyholders funds, embedded derivatives, Carrying Value | 31,755 | 20,049 | |
Financial Liabilities Other policyholders funds, embedded derivatives, Fair Value | 31,755 | 20,049 | |
Level 1 [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 207,777 | 262,560 | |
Investments, Fair Value | 0 | 0 | |
Separate Account (variable annuity) assets, Fair Value | [1] | 1,741,977 | 1,813,557 |
Level 1 [Member] | Recurring [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 25,096 | 28,381 | |
Level 1 [Member] | Short-term investments [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Investments, Fair Value | 100,277 | 142,039 | |
Level 1 [Member] | Mortgage-backed securities [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 0 | 0 | |
Level 1 [Member] | Other, including U.S. Treasury Securities [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 14,829 | 17,857 | |
Level 1 [Member] | Municipal bonds [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 0 | 0 | |
Level 1 [Member] | Foreign government bonds [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 0 | 0 | |
Level 1 [Member] | Corporate bonds [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 10,267 | 10,524 | |
Level 1 [Member] | Other mortgage-backed securities [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 0 | 0 | |
Level 1 [Member] | Equity securities [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 82,404 | 92,140 | |
Level 1 [Member] | Other Investment [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Investments, Fair Value | 0 | 0 | |
Level 1 [Member] | Other Policyholders Funds, embedded derivatives [Member] | Recurring [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Financial Liabilities Other policyholders funds, embedded derivatives, Fair Value | 0 | 0 | |
Level 2 [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 6,895,531 | 6,724,382 | |
Investments, Fair Value | 0 | 0 | |
Separate Account (variable annuity) assets, Fair Value | [1] | 0 | 0 |
Level 2 [Member] | Recurring [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 6,868,301 | 6,693,415 | |
Level 2 [Member] | Short-term investments [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Investments, Fair Value | 2,440 | 0 | |
Level 2 [Member] | Mortgage-backed securities [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 523,680 | 535,726 | |
Level 2 [Member] | Other, including U.S. Treasury Securities [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 583,916 | 520,342 | |
Level 2 [Member] | Municipal bonds [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 1,681,398 | 1,634,194 | |
Level 2 [Member] | Foreign government bonds [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 66,443 | 59,536 | |
Level 2 [Member] | Corporate bonds [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 2,689,122 | 2,749,508 | |
Level 2 [Member] | Other mortgage-backed securities [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 1,323,742 | 1,194,109 | |
Level 2 [Member] | Equity securities [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 13,655 | 18,509 | |
Level 2 [Member] | Other Investment [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Investments, Fair Value | 11,135 | 12,458 | |
Level 2 [Member] | Other Policyholders Funds, embedded derivatives [Member] | Recurring [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Financial Liabilities Other policyholders funds, embedded derivatives, Fair Value | 0 | 0 | |
Level 3 [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 185,351 | 171,300 | |
Investments, Fair Value | 151,866 | 149,792 | |
Separate Account (variable annuity) assets, Fair Value | [1] | 0 | 0 |
Level 3 [Member] | Recurring [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 185,345 | 171,294 | |
Level 3 [Member] | Short-term investments [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Investments, Fair Value | 0 | 0 | |
Level 3 [Member] | Mortgage-backed securities [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 0 | 0 | |
Level 3 [Member] | Other, including U.S. Treasury Securities [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 0 | 0 | |
Level 3 [Member] | Municipal bonds [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 31,011 | 13,628 | |
Level 3 [Member] | Foreign government bonds [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 0 | 0 | |
Level 3 [Member] | Corporate bonds [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 70,248 | 74,717 | |
Level 3 [Member] | Other mortgage-backed securities [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 84,086 | 82,949 | |
Level 3 [Member] | Equity securities [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Fair Value | 6 | 6 | |
Level 3 [Member] | Other Investment [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Investments, Fair Value | 0 | 0 | |
Level 3 [Member] | Other Policyholders Funds, embedded derivatives [Member] | Recurring [Member] | |||
U.S. Government and federally sponsored agency obligations: | |||
Financial Liabilities Other policyholders funds, embedded derivatives, Fair Value | $ 31,755 | $ 20,049 | |
[1] | Separate Account (variable annuity) liabilities are set equal to Separate Account (variable annuity) assets. |
Fair Value of Financial Instr37
Fair Value of Financial Instruments (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | ||||||
Financial Assets | |||||||||
Beginning balance | $ 187,099 | $ 139,508 | $ 171,300 | $ 109,535 | |||||
Transfers into Level 3 | 505 | [1] | 35,000 | [2] | 37,740 | [1] | 64,617 | [2] | |
Transfers out of Level 3 | 0 | [1] | (3,510) | [2] | (11,014) | [1] | (4,029) | [2] | |
Total gains or losses | |||||||||
Net realized gains (losses) included in net income related to financial assets | (163) | 0 | 1,088 | (26) | |||||
Net unrealized gains (losses) included in other comprehensive income | 1,957 | (105) | 333 | 3,181 | |||||
Purchases | 0 | 0 | 0 | 0 | |||||
Issuances | 0 | 0 | 0 | 0 | |||||
Sales | (1) | 0 | (477) | 0 | |||||
Settlements | 0 | 0 | 0 | 0 | |||||
Paydowns, maturities and distributions | (4,046) | (4,846) | (13,619) | (7,231) | |||||
Ending balance | 185,351 | 166,047 | 185,351 | 166,047 | |||||
Financial Liabilities | |||||||||
Beginning balance | [3] | 26,719 | 6,915 | 20,049 | 0 | ||||
Transfers into Level 3 | [3] | 0 | [1] | 0 | [2] | 0 | [1] | 0 | [2] |
Transfers out of Level 3 | [3] | 0 | [1] | 0 | [2] | 0 | [1] | 0 | [2] |
Gain Or Losses Net | |||||||||
Net realized (gains) losses included in net income related to financial liabilities | (1,328) | 70 | (1,795) | 139 | |||||
Net unrealized gains (losses) included in other comprehensive income | [3] | 0 | 0 | 0 | 0 | ||||
Purchases | [3] | 0 | 0 | 0 | 0 | ||||
Issuances | [3] | 6,899 | 6,179 | 14,811 | 13,035 | ||||
Sales | [3] | 0 | 0 | 0 | 0 | ||||
Settlements | [3] | 0 | 0 | 0 | 0 | ||||
Paydowns, maturities and distributions | [3] | (535) | (82) | (1,310) | (92) | ||||
Ending balance | [3] | 31,755 | 13,082 | 31,755 | 13,082 | ||||
Municipal bonds [Member] | |||||||||
Financial Assets | |||||||||
Beginning balance | 29,669 | 13,054 | 13,628 | 2,694 | |||||
Transfers into Level 3 | 0 | [1] | 0 | [2] | 16,326 | [1] | 10,056 | [2] | |
Transfers out of Level 3 | 0 | [1] | 0 | [2] | 0 | [1] | 0 | [2] | |
Total gains or losses | |||||||||
Net realized gains (losses) included in net income related to financial assets | 0 | 0 | 0 | 0 | |||||
Net unrealized gains (losses) included in other comprehensive income | 1,464 | 212 | 1,359 | 646 | |||||
Purchases | 0 | 0 | 0 | 0 | |||||
Issuances | 0 | 0 | 0 | 0 | |||||
Sales | 0 | 0 | 0 | 0 | |||||
Settlements | 0 | 0 | 0 | 0 | |||||
Paydowns, maturities and distributions | (122) | (123) | (302) | (253) | |||||
Ending balance | 31,011 | 13,143 | 31,011 | 13,143 | |||||
Corporate bonds [Member] | |||||||||
Financial Assets | |||||||||
Beginning balance | 72,724 | 73,926 | 74,717 | 60,826 | |||||
Transfers into Level 3 | 0 | [1] | 0 | [2] | 5,729 | [1] | 12,452 | [2] | |
Transfers out of Level 3 | 0 | [1] | (3,510) | [2] | (1,350) | [1] | (3,510) | [2] | |
Total gains or losses | |||||||||
Net realized gains (losses) included in net income related to financial assets | (164) | 0 | 1,087 | 0 | |||||
Net unrealized gains (losses) included in other comprehensive income | 326 | (180) | (758) | 2,380 | |||||
Purchases | 0 | 0 | 0 | 0 | |||||
Issuances | 0 | 0 | 0 | 0 | |||||
Sales | 0 | 0 | (476) | 0 | |||||
Settlements | 0 | 0 | 0 | 0 | |||||
Paydowns, maturities and distributions | (2,638) | (4,580) | (8,701) | (6,492) | |||||
Ending balance | 70,248 | 65,656 | 70,248 | 65,656 | |||||
Other mortgage-backed securities [Member] | |||||||||
Financial Assets | |||||||||
Beginning balance | 84,700 | 52,522 | 82,949 | 46,009 | |||||
Transfers into Level 3 | 505 | [1] | 35,000 | [2] | 15,685 | [1] | 42,109 | [2] | |
Transfers out of Level 3 | 0 | [1] | 0 | [2] | (9,664) | [1] | (519) | [2] | |
Total gains or losses | |||||||||
Net realized gains (losses) included in net income related to financial assets | 0 | 0 | 0 | (26) | |||||
Net unrealized gains (losses) included in other comprehensive income | 167 | (137) | (268) | 155 | |||||
Purchases | 0 | 0 | 0 | 0 | |||||
Issuances | 0 | 0 | 0 | 0 | |||||
Sales | 0 | 0 | 0 | 0 | |||||
Settlements | 0 | 0 | 0 | 0 | |||||
Paydowns, maturities and distributions | (1,286) | (143) | (4,616) | (486) | |||||
Ending balance | 84,086 | 87,242 | 84,086 | 87,242 | |||||
Total Fixed Maturities [Member] | |||||||||
Financial Assets | |||||||||
Beginning balance | 187,093 | 139,502 | 171,294 | 109,529 | |||||
Transfers into Level 3 | 505 | [1] | 35,000 | [2] | 37,740 | [1] | 64,617 | [2] | |
Transfers out of Level 3 | 0 | [1] | (3,510) | [2] | (11,014) | [1] | (4,029) | [2] | |
Total gains or losses | |||||||||
Net realized gains (losses) included in net income related to financial assets | (164) | 0 | 1,087 | (26) | |||||
Net unrealized gains (losses) included in other comprehensive income | 1,957 | (105) | 333 | 3,181 | |||||
Purchases | 0 | 0 | 0 | 0 | |||||
Issuances | 0 | 0 | 0 | 0 | |||||
Sales | 0 | 0 | (476) | 0 | |||||
Settlements | 0 | 0 | 0 | 0 | |||||
Paydowns, maturities and distributions | (4,046) | (4,846) | (13,619) | (7,231) | |||||
Ending balance | 185,345 | 166,041 | 185,345 | 166,041 | |||||
Equity securities [Member] | |||||||||
Financial Assets | |||||||||
Beginning balance | 6 | 6 | 6 | 6 | |||||
Transfers into Level 3 | 0 | [1] | 0 | [2] | 0 | [1] | 0 | [2] | |
Transfers out of Level 3 | 0 | [1] | 0 | [2] | 0 | [1] | 0 | [2] | |
Total gains or losses | |||||||||
Net realized gains (losses) included in net income related to financial assets | 1 | 0 | 1 | 0 | |||||
Net unrealized gains (losses) included in other comprehensive income | 0 | 0 | 0 | 0 | |||||
Purchases | 0 | 0 | 0 | 0 | |||||
Issuances | 0 | 0 | 0 | 0 | |||||
Sales | (1) | 0 | (1) | 0 | |||||
Settlements | 0 | 0 | 0 | 0 | |||||
Paydowns, maturities and distributions | 0 | 0 | 0 | 0 | |||||
Ending balance | $ 6 | $ 6 | $ 6 | $ 6 | |||||
[1] | Transfers into and out of Level 3 during the three and nine months ended September 30, 2015 were attributable to changes in the availability of observable market information for individual fixed maturity securities. The Company’s policy is to recognize transfers into and transfers out of the levels as having occurred at the end of the reporting period in which the transfers were determined. | ||||||||
[2] | Transfers into and out of Level 3 during the three and nine months ended September 30, 2014 were attributable to changes in the availability of observable market information for individual fixed maturity securities. The Company’s policy is to recognize transfers into and transfers out of the levels as having occurred at the end of the reporting period in which the transfers were determined. | ||||||||
[3] | Represents embedded derivatives, all related to the Company’s fixed indexed annuity (“FIA”) products, reported in Other Policyholder Funds in the Company’s Consolidated Balance Sheets. |
Fair Value of Financial Instr38
Fair Value of Financial Instruments (Details 2) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Investments | ||
Other investments, Carrying Amount | $ 147,435 | $ 145,409 |
Other investments, Fair Value | 151,866 | 149,792 |
Financial Liabilities | ||
Fixed annuity contract liabilities, Carrying Amount | 4,016,360 | 3,774,457 |
Fixed annuity contract liabilities, Fair value | 3,927,685 | 3,691,123 |
Policyholder account balances on interest-sensitive life contracts, Carrying Amount | 77,068 | 77,415 |
Policyholder account balances on interest-sensitive life contracts, Fair value | 81,096 | 81,461 |
Other policyholder funds, Carrying Amount | 580,895 | 586,689 |
Other policyholder funds, Fair Value | 580,895 | 586,689 |
Short-term debt, Carrying Amount | 113,000 | 38,000 |
Short-term debt, Fair Value | 113,000 | 38,000 |
Long-term debt, Carrying Amount | 124,979 | 199,939 |
Long-term debt, Fair Value | 128,718 | 209,495 |
Level 1 [Member] | ||
Investments | ||
Other investments, Fair Value | 0 | 0 |
Financial Liabilities | ||
Fixed annuity contract liabilities, Fair value | 0 | 0 |
Policyholder account balances on interest-sensitive life contracts, Fair value | 0 | 0 |
Other policyholder funds, Fair Value | 0 | 0 |
Short-term debt, Fair Value | 0 | 0 |
Long-term debt, Fair Value | 128,718 | 209,495 |
Level 2 [Member] | ||
Investments | ||
Other investments, Fair Value | 0 | 0 |
Financial Liabilities | ||
Fixed annuity contract liabilities, Fair value | 0 | 0 |
Policyholder account balances on interest-sensitive life contracts, Fair value | 0 | 0 |
Other policyholder funds, Fair Value | 500,084 | 500,080 |
Short-term debt, Fair Value | 113,000 | 38,000 |
Long-term debt, Fair Value | 0 | 0 |
Level 3 [Member] | ||
Investments | ||
Other investments, Fair Value | 151,866 | 149,792 |
Financial Liabilities | ||
Fixed annuity contract liabilities, Fair value | 3,927,685 | 3,691,123 |
Policyholder account balances on interest-sensitive life contracts, Fair value | 81,096 | 81,461 |
Other policyholder funds, Fair Value | 80,811 | 86,609 |
Short-term debt, Fair Value | 0 | 0 |
Long-term debt, Fair Value | $ 0 | $ 0 |
Fair Value of Financial Instr39
Fair Value of Financial Instruments (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Fair Value of Financial Instruments (Textual) [Abstract] | ||||
Embedded Derivative, Gain (Loss) on Embedded Derivative Total | $ 1,328 | $ (70) | $ 1,795 | $ (139) |
Level 3 [Member] | ||||
Fair Value of Financial Instruments (Textual) [Abstract] | ||||
Embedded Derivative, Gain (Loss) on Embedded Derivative Total | $ 1,328 | $ 1,795 | ||
Percentage Of Invested Assets In Total Investment Portfolio Level3 Recurring | 2.50% | 2.50% |
Debt (Details)
Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 | |
Short-term debt: | |||
Bank Credit Facility | $ 113,000 | $ 38,000 | |
Long-term debt, current and noncurrent: | |||
Long-term debt | 124,979 | 199,939 | |
Total | [1] | 237,979 | 237,939 |
Senior Notes 2015 [Member] | Senior Note 6.05 % [Member] | |||
Long-term debt, current and noncurrent: | |||
Long-term debt | [1] | 0 | 74,989 |
Senior Notes 2016 [Member] | Senior Note 6.85 % [Member] | |||
Long-term debt, current and noncurrent: | |||
Long-term debt | [1] | $ 124,979 | $ 124,950 |
[1] | The Company designates debt obligations as "long-term” based on maturity date at issuance. |
Debt (Details Textual)
Debt (Details Textual) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | 12 Months Ended |
Jun. 15, 2015 | Sep. 30, 2015 | Dec. 31, 2014 | |
Current Unsecured Bank Credit Facility [Member] | |||
Debt | |||
Line of Credit Facility, Expiration Date | Jul. 30, 2019 | ||
Debt Instrument, Increase (Decrease), Other, Net | $ 75,000 | ||
Senior Notes 2015 [Member] | |||
Debt | |||
Debt Instrument, Increase (Decrease), Other, Net | $ (75,000) | ||
Senior Note 6.05 % [Member] | Senior Notes 2015 [Member] | |||
Debt | |||
Unaccrued discount | $ 0 | $ 11 | |
Senior Notes | 6.05% | ||
Aggregate principal amount | $ 75,000 | $ 75,000 | |
Imputed rate | 6.10% | 6.10% | |
Debt Instrument, Maturity Date | Jun. 15, 2015 | Jun. 15, 2015 | |
Senior Note 6.85 % [Member] | Senior Notes 2016 [Member] | |||
Debt | |||
Unaccrued discount | $ 21 | $ 50 | |
Senior Notes | 6.85% | ||
Aggregate principal amount | $ 125,000 | $ 125,000 | |
Imputed rate | 6.90% | 6.90% | |
Debt Instrument, Maturity Date | Apr. 15, 2016 | Apr. 15, 2016 |
Reinsurance (Details)
Reinsurance (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Effects of reinsurance on premiums and benefits | ||||
Premiums written and contract deposits, Gross Amount | $ 331,223 | $ 328,525 | $ 966,867 | $ 893,125 |
Premiums written and contract deposits, Ceded to Other Companies | 5,952 | 6,668 | 18,260 | 20,011 |
Premiums written and contract deposits, Assumed from Other Companies | 927 | 889 | 2,720 | 2,300 |
Premiums written and contract deposits, Net Amount | 326,198 | 322,746 | 951,327 | 875,414 |
Premiums and contract charges earned, Gross Amount | 187,813 | 184,770 | 560,818 | 551,672 |
Premiums and contract charges earned, Ceded to Other Companies | 5,961 | 6,677 | 18,608 | 20,463 |
Premiums and contract charges earned, Assumed from Other Companies | 960 | 937 | 2,717 | 2,362 |
Premiums and contract charges earned, Net Amount | 182,812 | 179,030 | 544,927 | 533,571 |
Benefits, claims and settlement expenses, Gross Amount | 123,061 | 122,883 | 378,939 | 366,923 |
Benefits, claims and settlement expenses, Ceded to Other Companies | 3,034 | 6,451 | 13,397 | 12,580 |
Benefits, claims and settlement expenses, Assumed from Other Companies | 1,154 | 1,011 | 2,597 | 2,246 |
Benefits, claims and settlement expenses, Net Amount | $ 121,181 | $ 117,443 | $ 368,139 | $ 356,589 |
Commitments (Details)
Commitments (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Outstanding commitments to: | ||
Purchase investments | $ 70,313 | $ 39,689 |
Lend funds under bridge loans | 45,049 | 10,567 |
Total | $ 115,362 | $ 50,256 |
Segment Information (Details)
Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Summarized financial information for these segments | |||||
Insurance premiums and contract charges earned | $ 182,812 | $ 179,030 | $ 544,927 | $ 533,571 | |
Net investment income | 81,016 | 82,591 | 248,324 | 247,040 | |
Net income (loss) | 21,984 | 25,357 | 72,442 | 74,175 | |
Assets | 9,903,499 | 9,903,499 | $ 9,768,527 | ||
Property and casualty [Member] | |||||
Summarized financial information for these segments | |||||
Insurance premiums and contract charges earned | 149,210 | 145,520 | 443,616 | 434,070 | |
Net investment income | 7,350 | 8,877 | 25,790 | 27,617 | |
Net income (loss) | 11,253 | 11,769 | 32,120 | 30,691 | |
Assets | 1,103,258 | 1,103,258 | 1,107,962 | ||
Annuity [Member] | |||||
Summarized financial information for these segments | |||||
Insurance premiums and contract charges earned | 6,541 | 6,654 | 19,280 | 19,031 | |
Net investment income | 56,271 | 56,026 | 169,846 | 166,221 | |
Net income (loss) | 8,716 | 10,264 | 32,973 | 34,076 | |
Assets | 6,778,398 | 6,778,398 | 6,683,473 | ||
Life [Member] | |||||
Summarized financial information for these segments | |||||
Insurance premiums and contract charges earned | 27,061 | 26,856 | 82,031 | 80,470 | |
Net investment income | 17,612 | 17,915 | 53,342 | 53,891 | |
Net income (loss) | 3,619 | 3,916 | 10,647 | 12,813 | |
Assets | 1,913,404 | 1,913,404 | 1,858,150 | ||
Corporate and other [Member] | |||||
Summarized financial information for these segments | |||||
Net investment income | 5 | 3 | 17 | 7 | |
Net income (loss) | (1,604) | (592) | (3,298) | (3,405) | |
Assets | 141,723 | 141,723 | 155,678 | ||
Intersegment eliminations [Member] | |||||
Summarized financial information for these segments | |||||
Net investment income | (222) | $ (230) | (671) | $ (696) | |
Assets | $ (33,284) | $ (33,284) | $ (36,736) |
Derivative Instruments (Details
Derivative Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Assets | ||
Derivative instruments, included in Short-term and Other Investments | $ 1,135 | $ 2,458 |
Liabilities | ||
Fixed indexed annuities - embedded derivatives, included in Other Policyholder Funds | $ 31,755 | $ 20,049 |
Derivative Instruments (Detai46
Derivative Instruments (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | ||
Change in fair value of derivatives: | |||||
Net realized investment gains (losses) | [1] | $ (1,564) | $ 70 | $ (2,171) | $ 161 |
Change in fair value of embedded derivatives: | |||||
Net realized investment gains (losses) | $ 1,328 | $ (70) | $ 1,795 | $ (139) | |
[1] | Includes the gains or losses recognized at the expiration of the option term or early termination and the changes in fair value for open options. |
Derivative Instruments (Detai47
Derivative Instruments (Details 2) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2015 | Dec. 31, 2014 | ||
Derivative [Line Items] | |||
Notional Amount | $ 117,900 | $ 66,600 | |
Fair Value | 1,135 | 2,458 | |
Bank of America, N.A. [Member] | |||
Derivative [Line Items] | |||
Notional Amount | 17,000 | 8,700 | |
Fair Value | 6 | 439 | |
Credit Suisse International [Member] | |||
Derivative [Line Items] | |||
Notional Amount | 4,900 | 27,500 | |
Fair Value | 34 | 1,193 | |
Societe Generale [Member] | |||
Derivative [Line Items] | |||
Notional Amount | 75,100 | 25,400 | |
Fair Value | 611 | 756 | |
Barclays Bank PLC [Member] | |||
Derivative [Line Items] | |||
Notional Amount | 9,400 | 5,000 | |
Fair Value | 84 | 70 | |
Citigroup Inc [Member] | |||
Derivative [Line Items] | |||
Notional Amount | 11,500 | 0 | |
Fair Value | $ 400 | $ 0 | |
Moody's [Member] | Bank of America, N.A. [Member] | |||
Derivative [Line Items] | |||
Credit Rating | [1] | A1 | |
Moody's [Member] | Societe Generale [Member] | |||
Derivative [Line Items] | |||
Credit Rating | [1] | A2 | |
Moody's [Member] | Barclays Bank PLC [Member] | |||
Derivative [Line Items] | |||
Credit Rating | [1] | A2 | |
Moody's [Member] | Credit Suisse International [Member] | |||
Derivative [Line Items] | |||
Credit Rating | [1] | A1 | |
Moody's [Member] | Citigroup Inc [Member] | |||
Derivative [Line Items] | |||
Credit Rating | [1] | Baa1 | |
Standard & Poor's [Member] | Bank of America, N.A. [Member] | |||
Derivative [Line Items] | |||
Credit Rating | [1] | A | |
Standard & Poor's [Member] | Credit Suisse International [Member] | |||
Derivative [Line Items] | |||
Credit Rating | [1] | A | |
Standard & Poor's [Member] | Societe Generale [Member] | |||
Derivative [Line Items] | |||
Credit Rating | [1] | A | |
Standard & Poor's [Member] | Barclays Bank PLC [Member] | |||
Derivative [Line Items] | |||
Credit Rating | [1] | A- | |
Standard & Poor's [Member] | Citigroup Inc [Member] | |||
Derivative [Line Items] | |||
Credit Rating | [1] | A- | |
[1] | As assigned by Standard & Poor’s Corporation (“S&P”) and Moody’s Investors Service, Inc. (“Moody’s”). |
Derivative Instruments (Detai48
Derivative Instruments (Details Textual) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | |
Derivatives, Fair Value [Line Items] | ||
Concentration Risk, Credit Risk, Financial Instrument, Maximum Exposure | $ 38 | $ 503 |
Other Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Asset, Fair Value of Collateral | $ 1,097 | $ 1,955 |