Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Jun. 30, 2016 | Jul. 31, 2016 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 | |
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 | 40,163,941 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 | |
Investments | |||
Fixed maturities, available for sale, at fair value (amortized cost 2016, $6,910,241; 2015, $6,785,626) | $ 7,481,712 | $ 7,091,340 | |
Equity securities, available for sale, at fair value (cost 2016, $110,573; 2015, $95,722) | 123,163 | 99,797 | |
Short-term and other investments | 466,083 | 456,893 | |
Total investments | 8,070,958 | 7,648,030 | |
Cash | 50,432 | 15,509 | |
Deferred policy acquisition costs | 223,028 | 253,176 | |
Goodwill | 47,396 | 47,396 | |
Other assets | 305,888 | 292,139 | |
Separate Account (variable annuity) assets | 1,768,600 | 1,800,722 | |
Total assets | 10,466,302 | 10,056,972 | |
Policy liabilities | |||
Investment contract and life policy reserves | 5,274,167 | 5,126,842 | |
Unpaid claims and claim expenses | 344,744 | 323,720 | |
Unearned premiums | 233,396 | 232,841 | |
Total policy liabilities | 5,852,307 | 5,683,403 | |
Other policyholder funds | 698,714 | 692,652 | |
Other liabilities | 482,263 | 368,559 | |
Long-term debt | 247,083 | 246,975 | |
Separate Account (variable annuity) liabilities | 1,768,600 | 1,800,722 | |
Total liabilities | 9,048,967 | 8,792,311 | |
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, 2016, 64,811,359; 2015, 64,537,554 | 65 | 65 | |
Additional paid-in capital | 447,504 | 442,648 | |
Retained earnings | 1,131,122 | 1,116,277 | |
Accumulated other comprehensive income (loss), net of taxes: | |||
Net unrealized gains on fixed maturities and equity securities | [1],[2] | 329,653 | 175,167 |
Net funded status of pension obligations | [1] | (11,794) | (11,794) |
Treasury stock, at cost, 2016, 24,672,932 shares; 2015, 23,971,522 shares | (479,215) | (457,702) | |
Total shareholders' equity | 1,417,335 | 1,264,661 | |
Total liabilities and shareholders’ equity | $ 10,466,302 | $ 10,056,972 | |
[1] | All amounts are net of tax. | ||
[2] | The pretax amounts reclassified from accumulated other comprehensive income (loss), $4,327 and $5,067, are included in net realized investment gains and losses and the related tax expenses, $1,514 and $1,773, are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2016, respectively. |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Fixed maturities, available for sale, amortized cost | $ 6,910,241 | $ 6,785,626 |
Equity securities, available for sale, cost | $ 110,573 | $ 95,722 |
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 | 64,811,359 | 64,537,554 |
Treasury stock, shares | 24,672,932 | 23,971,522 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Revenues | ||||
Insurance premiums and contract charges earned | $ 188,360 | $ 182,376 | $ 373,810 | $ 362,115 |
Net investment income | 91,179 | 83,995 | 175,838 | 167,308 |
Net realized investment gains | 3,080 | 1,413 | 2,926 | 7,481 |
Other income | 939 | 686 | 2,287 | 1,685 |
Total revenues | 283,558 | 268,470 | 554,861 | 538,589 |
Benefits, losses and expenses | ||||
Benefits, claims and settlement expenses | 148,408 | 132,939 | 267,921 | 246,958 |
Interest credited | 47,576 | 45,350 | 94,266 | 89,887 |
Policy acquisition expenses amortized | 24,587 | 24,007 | 48,639 | 47,691 |
Operating expenses | 43,345 | 40,036 | 86,141 | 75,964 |
Interest expense | 2,948 | 3,406 | 5,883 | 6,958 |
Total benefits, losses and expenses | 266,864 | 245,738 | 502,850 | 467,458 |
Income before income taxes | 16,694 | 22,732 | 52,011 | 71,131 |
Income tax expense | 4,828 | 6,549 | 14,992 | 20,673 |
Net income | $ 11,866 | $ 16,183 | $ 37,019 | $ 50,458 |
Net income per share | ||||
Basic | $ 0.29 | $ 0.39 | $ 0.90 | $ 1.2 |
Diluted | $ 0.29 | $ 0.38 | $ 0.89 | $ 1.19 |
Weighted average number of shares and equivalent shares (in thousands) | ||||
Basic | 41,082 | 41,990 | 41,200 | 42,001 |
Diluted | 41,314 | 42,425 | 41,416 | 42,366 |
Net realized investment gains (losses) | ||||
Total other-than-temporary impairment losses on securities | $ (3,853) | $ (14,969) | $ (7,526) | $ (17,258) |
Portion of losses recognized in other comprehensive income | (290) | (4,300) | (290) | (4,300) |
Net other-than-temporary impairment losses on securities recognized in earnings | (3,563) | (10,669) | (7,236) | (12,958) |
Realized gains, net | 6,643 | 12,082 | 10,162 | 20,439 |
Total | $ 3,080 | $ 1,413 | $ 2,926 | $ 7,481 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||||||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | ||||||
Comprehensive income (loss) | |||||||||
Net income | $ 11,866 | $ 16,183 | $ 37,019 | $ 50,458 | |||||
Other comprehensive income (loss), net of taxes: | |||||||||
Change in net unrealized gains and losses on fixed maturities and equity securities | [1] | 84,996 | [2] | (111,346) | [3] | 154,486 | [2] | (73,768) | [3] |
Change in net funded status of pension obligations | [1] | 0 | 0 | 0 | 0 | ||||
Other comprehensive income (loss) | [1] | 84,996 | (111,346) | 154,486 | (73,768) | ||||
Total | $ 96,862 | $ (95,163) | $ 191,505 | $ (23,310) | |||||
[1] | All amounts are net of tax. | ||||||||
[2] | The pretax amounts reclassified from accumulated other comprehensive income (loss), $4,327 and $5,067, are included in net realized investment gains and losses and the related tax expenses, $1,514 and $1,773, are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2016, respectively. | ||||||||
[3] | The pretax amounts reclassified from accumulated other comprehensive income (loss), $1,786 and $7,620, are included in net realized investment gains and losses and the related tax expenses, $625 and $2,667, are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2015, respectively. |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ 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, 2014 | $ 64 | $ 422,232 | $ 1,065,318 | $ 284,601 | $ (435,752) | ||
Options exercised, 2016, 94,225 shares; 2015, 74,233 shares | 0 | ||||||
Conversion of common stock units, 2016, 8,538 shares; 2015, 8,293 shares | 0 | ||||||
Conversion of restricted stock units, 2016, 171,042 shares; 2015, 182,888 shares | 1 | ||||||
Options exercised and conversion of common stock units and restricted stock units | 11,674 | ||||||
Share-based compensation expense | 3,931 | ||||||
Net income | $ 50,458 | 50,458 | |||||
Cash dividends, 2016, $0.53 per share; 2015, $0.50 per share | (21,371) | ||||||
Change in net unrealized gains and losses on fixed maturities and equity securities | (73,768) | [1],[2] | (73,768) | ||||
Change in net funded status of pension obligations | 0 | [1] | 0 | ||||
Acquisition of shares, 2016, 701,410 shares; 2015, 23,500 shares | (716) | ||||||
Ending balance at Jun. 30, 2015 | 1,306,672 | 65 | 437,837 | 1,094,405 | 210,833 | (436,468) | |
Beginning balance at Dec. 31, 2015 | 1,264,661 | 65 | 442,648 | 1,116,277 | 163,373 | (457,702) | |
Options exercised, 2016, 94,225 shares; 2015, 74,233 shares | 0 | ||||||
Conversion of common stock units, 2016, 8,538 shares; 2015, 8,293 shares | 0 | ||||||
Conversion of restricted stock units, 2016, 171,042 shares; 2015, 182,888 shares | 0 | ||||||
Options exercised and conversion of common stock units and restricted stock units | 939 | ||||||
Share-based compensation expense | 3,917 | ||||||
Net income | 37,019 | 37,019 | |||||
Cash dividends, 2016, $0.53 per share; 2015, $0.50 per share | (22,174) | ||||||
Change in net unrealized gains and losses on fixed maturities and equity securities | 154,486 | [1],[3] | 154,486 | ||||
Change in net funded status of pension obligations | 0 | [1] | 0 | ||||
Acquisition of shares, 2016, 701,410 shares; 2015, 23,500 shares | (21,513) | ||||||
Ending balance at Jun. 30, 2016 | $ 1,417,335 | $ 65 | $ 447,504 | $ 1,131,122 | $ 317,859 | $ (479,215) | |
[1] | All amounts are net of tax. | ||||||
[2] | The pretax amounts reclassified from accumulated other comprehensive income (loss), $1,786 and $7,620, are included in net realized investment gains and losses and the related tax expenses, $625 and $2,667, are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2015, respectively. | ||||||
[3] | The pretax amounts reclassified from accumulated other comprehensive income (loss), $4,327 and $5,067, are included in net realized investment gains and losses and the related tax expenses, $1,514 and $1,773, are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2016, respectively. |
CONSOLIDATED STATEMENTS OF CHA7
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Common stock, par value beginning balance | $ 0.001 | $ 0.001 |
Options exercised, shares | 94,225 | 74,233 |
Conversion of common stock units, shares | 8,538 | 8,293 |
Conversion of restricted stock units, shares | 171,042 | 182,888 |
Cash dividends, per share | $ 0.53 | $ 0.50 |
Treasury stock, beginning balance, shares | 23,971,522 | 23,308,430 |
Treasury stock, acquisition of shares | 701,410 | 23,500 |
Treasury stock, ending balance, shares | 24,672,932 | 23,331,930 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Cash flows - operating activities | ||
Premiums collected | $ 367,182 | $ 352,825 |
Policyholder benefits paid | (268,212) | (257,606) |
Policy acquisition and other operating expenses paid | (138,612) | (138,303) |
Federal income taxes paid | (15,094) | (18,143) |
Investment income collected | 175,541 | 167,738 |
Interest expense paid | (5,989) | (6,837) |
Other | (2,279) | (1,364) |
Net cash provided by operating activities | 112,537 | 98,310 |
Fixed maturities | ||
Purchases | (834,114) | (707,886) |
Sales | 257,033 | 246,521 |
Maturities, paydowns, calls and redemptions | 475,532 | 287,764 |
Purchase of other invested assets | (33,809) | (15,809) |
Net cash provided by short-term and other investments | 7,925 | 35,010 |
Net cash used in investing activities | (127,433) | (154,400) |
Cash flows - financing activities | ||
Dividends paid to shareholders | (22,174) | (21,371) |
Principal borrowings on Bank Credit Facility | 0 | 75,000 |
Maturity of Senior Notes due 2015 | 0 | (75,000) |
Acquisition of treasury stock | (21,513) | (716) |
Exercise of stock options | 1,926 | 1,557 |
Annuity contracts: variable, fixed and FHLB funding agreements | ||
Deposits | 237,265 | 282,897 |
Benefits, withdrawals and net transfers to Separate Account (variable annuity) assets | (162,575) | (178,557) |
Life policy accounts | ||
Deposits | 1,680 | 435 |
Withdrawals and surrenders | (1,995) | (1,995) |
Change in bank overdrafts | 17,205 | 8,178 |
Net cash provided by financing activities | 49,819 | 90,428 |
Net increase in cash | 34,923 | 34,338 |
Cash at beginning of period | 15,509 | 11,675 |
Cash at end of period | $ 50,432 | $ 46,013 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
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 June 30, 2016, the consolidated results of operations and comprehensive income (loss) for the three and six months ended June 30, 2016 and 2015, and the consolidated changes in shareholders’ equity and cash flows for the six months ended June 30, 2016 and 2015. 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. 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, 2015. The results of operations for the three and six months ended June 30, 2016 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 2016 presentation. See “Adopted Accounting Standards”. June 30, December 31, 2016 2015 Investment contract reserves $ 4,204,207 $ 4,072,102 Life policy reserves 1,069,960 1,054,740 Total $ 5,274,167 $ 5,126,842 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 obligations for the period as shown in the Consolidated Statement of Changes in Shareholders’ Equity. Unrealized Gains and Losses on Fixed Maturities and Equity Defined Securities (1)(2) Benefit Plans (1) Total (1) Beginning balance, April 1, 2016 $ 244,657 $ (11,794 ) $ 232,863 Other comprehensive income (loss) before reclassifications 87,809 - 87,809 Amounts reclassified from accumulated other comprehensive income (loss) (2,813 ) - (2,813 ) Net current period other comprehensive income (loss) 84,996 - 84,996 Ending balance, June 30, 2016 $ 329,653 $ (11,794 ) $ 317,859 Beginning balance, January 1, 2016 $ 175,167 $ (11,794 ) $ 163,373 Other comprehensive income (loss) before reclassifications 157,780 - 157,780 Amounts reclassified from accumulated other comprehensive income (loss) (3,294 ) - (3,294 ) Net current period other comprehensive income (loss) 154,486 - 154,486 Ending balance, June 30, 2016 $ 329,653 $ (11,794 ) $ 317,859 (1) All amounts are net of tax. (2) The pretax amounts reclassified from accumulated other comprehensive income (loss), $4,327 and $5,067, are included in net realized investment gains and losses and the related tax expenses, $1,514 and $1,773, are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2016, respectively. Unrealized Gains and Losses on Fixed Maturities and Equity Defined Securities (1)(2) Benefit Plans (1) Total (1) Beginning balance, April 1, 2015 $ 335,132 $ (12,953 ) $ 322,179 Other comprehensive income (loss) before reclassifications (110,185 ) - (110,185 ) Amounts reclassified from accumulated other comprehensive income (loss) (1,161 ) - (1,161 ) Net current period other comprehensive income (loss) (111,346 ) - (111,346 ) Ending balance, June 30, 2015 $ 223,786 $ (12,953 ) $ 210,833 Beginning balance, January 1, 2015 $ 297,554 $ (12,953 ) $ 284,601 Other comprehensive income (loss) before reclassifications (68,815 ) - (68,815 ) Amounts reclassified from accumulated other comprehensive income (loss) (4,953 ) - (4,953 ) Net current period other comprehensive income (loss) (73,768 ) - (73,768 ) Ending balance, June 30, 2015 $ 223,786 $ (12,953 ) $ 210,833 (1) All amounts are net of tax. (2) The pretax amounts reclassified from accumulated other comprehensive income (loss), $1,786 and $7,620, are included in net realized investment gains and losses and the related tax expenses, $625 and $2,667, are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2015, 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”. Presentation of Debt Issuance Costs Effective January 1, 2016, the Company adopted accounting guidance which was issued to simplify the presentation of costs incurred to issue debt securities. The guidance requires debt issuance costs associated with specific debt securities to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. Costs incurred related to line of credit arrangements continue to be presented as an asset in the consolidated balance sheet. Also, the guidance does not affect the recognition and measurement of debt issuance costs. The guidance required retrospective application. As a result of this adoption, the following items in the Company’s December 31, 2015 Consolidated Balance Sheet were each reduced by $2,371: Other Assets, Total Assets, Long-term Debt, Total Liabilities and Total Liabilities and Shareholders’ Equity. Net income per share (basic and diluted) did not change as a result of the adopted accounting change. |
Investments
Investments | 6 Months Ended |
Jun. 30, 2016 | |
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 call option contracts) to economically hedge risk associated with its fixed indexed annuity and indexed universal life products’ contingent liabilities. The Company’s fixed indexed annuity and indexed universal life products include embedded derivative features that are discussed in “Note 1 Summary of Significant Accounting Policies Investment Contract and Life Policy Reserves Policy Liabilities for Fixed Indexed Annuities and Indexed Universal Life Policies” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. The Company’s investment portfolio included 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 six months ended June 30, 2016 and 2015. Fixed Maturities and Equity Securities The Company’s investment portfolio is comprised primarily of fixed maturity securities (“fixed maturities”) and also includes equity securities. Amortized Unrealized Unrealized Fair OTTI in Cost/Cost Gains Losses Value AOCI (1) June 30, 2016 Fixed maturity securities U.S. Government and federally sponsored agency obligations (2): Mortgage-backed securities $ 451,983 $ 58,547 $ 226 $ 510,304 $ - Other, including U.S. Treasury securities 506,240 42,328 56 548,512 - Municipal bonds 1,509,321 241,327 4,884 1,745,764 (1,988 ) Foreign government bonds 71,421 7,673 - 79,094 - Corporate bonds 2,672,912 225,571 11,297 2,887,186 (290 ) Other mortgage-backed securities 1,698,364 31,510 19,022 1,710,852 1,771 Totals $ 6,910,241 $ 606,956 $ 35,485 $ 7,481,712 $ (507 ) Equity securities (3) $ 110,573 $ 14,009 $ 1,419 $ 123,163 $ - December 31, 2015 Fixed maturity securities U.S. Government and federally sponsored agency obligations (2): Mortgage-backed securities $ 461,862 $ 44,413 $ 1,861 $ 504,414 $ - Other, including U.S. Treasury securities 532,373 21,153 7,415 546,111 - Municipal bonds 1,553,603 165,680 10,340 1,708,943 (4,140 ) Foreign government bonds 67,441 6,288 112 73,617 - Corporate bonds 2,687,376 140,873 48,834 2,779,415 - Other mortgage-backed securities 1,482,971 16,830 20,961 1,478,840 1,382 Totals $ 6,785,626 $ 395,237 $ 89,523 $ 7,091,340 $ (2,758 ) Equity securities (3) $ 95,722 $ 8,405 $ 4,330 $ 99,797 $ - (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 $241,889 and $231,294; Federal Home Loan Mortgage Corporation (“FHLMC”) of $331,300 and $363,957; and Government National Mortgage Association (“GNMA”) of $127,804 and $130,940 as of June 30, 2016 and December 31, 2015, respectively. (3) Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds. The following table presents the fair value and gross unrealized losses of fixed maturities and equity securities in an unrealized loss position at June 30, 2016 and December 31, 2015, respectively. The Company views the decrease in value of all of the securities with unrealized losses at June 30, 2016 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 management expects to recover the entire amortized cost bases of the fixed maturity securities. 12 Months or Less More than 12 Months Total Gross Gross Gross Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses June 30, 2016 Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 455 $ 12 $ 3,212 $ 214 $ 3,667 $ 226 Other 8,944 56 - - 8,944 56 Municipal bonds 8,862 82 25,788 4,802 34,650 4,884 Foreign government bonds - - - - - - Corporate bonds 106,822 3,314 106,679 7,983 213,501 11,297 Other mortgage-backed securities 596,827 12,447 280,231 6,575 877,058 19,022 Total fixed maturity securities 721,910 15,911 415,910 19,574 1,137,820 35,485 Equity securities (1) 7,270 502 8,030 917 15,300 1,419 Combined totals $ 729,180 $ 16,413 $ 423,940 $ 20,491 $ 1,153,120 $ 36,904 Number of positions with a gross unrealized loss 245 142 387 Fair value as a percentage of total fixed maturities and equity securities fair value 9.6 % 5.6 % 15.2 % December 31, 2015 Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 48,097 $ 1,748 $ 1,595 $ 113 $ 49,692 $ 1,861 Other 248,478 7,338 1,921 77 250,399 7,415 Municipal bonds 168,939 5,382 21,717 4,958 190,656 10,340 Foreign government bonds 11,867 112 - - 11,867 112 Corporate bonds 858,647 37,244 50,340 11,590 908,987 48,834 Other mortgage-backed securities 929,268 19,165 140,561 1,796 1,069,829 20,961 Total fixed maturity securities 2,265,296 70,989 216,134 18,534 2,481,430 89,523 Equity securities (1) 38,764 3,022 8,379 1,308 47,143 4,330 Combined totals $ 2,304,060 $ 74,011 $ 224,513 $ 19,842 $ 2,528,573 $ 93,853 Number of positions with a gross unrealized loss 684 78 762 Fair value as a percentage of total fixed maturities and equity securities fair value 32.0 % 3.1 % 35.1 % (1) Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds. Fixed maturities and equity securities with an investment grade rating represented 67% of the gross unrealized loss as of June 30, 2016. With respect to fixed maturity 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 Six Months Ended June 30, 2016 2015 Cumulative credit loss (1) Beginning of period $ 7,844 $ 2,877 New credit losses 300 4,998 Increases to previously recognized credit losses 2,480 - Losses related to securities sold or paid down during the period - - End of period $ 10,624 $ 7,875 (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 Percent of Total Fair Value June 30, 2016 June 30, December 31, Fair Amortized 2016 2015 Value Cost Estimated expected maturity: Due in 1 year or less 3.6 % 3.1 % $ 269,865 $ 251,555 Due after 1 year through 5 years 26.3 24.2 1,970,758 1,885,946 Due after 5 years through 10 years 37.9 39.6 2,828,911 2,609,256 Due after 10 years through 20 years 20.4 20.9 1,529,037 1,346,414 Due after 20 years 11.8 12.2 883,141 817,070 Total 100.0 % 100.0 % $ 7,481,712 $ 6,910,241 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 Six Months Ended June 30, June 30, 2016 2015 2016 2015 Fixed maturity securities Proceeds received $ 174,944 $ 165,201 $ 257,033 $ 246,521 Gross gains realized 8,382 10,577 10,858 12,231 Gross losses realized (948 ) (1,282 ) (1,440 ) (1,745 ) Equity securities Proceeds received $ 6,474 $ 6,840 $ 12,622 $ 20,809 Gross gains realized 650 596 1,170 5,198 Gross losses realized (195 ) (107 ) (841 ) (117 ) Unrealized Gains and Losses on Fixed Maturities and Equity Securities Net unrealized investment 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 Six Months Ended June 30, June 30, 2016 2015 2016 2015 Net unrealized investment gains (losses) on fixed maturity securities, net of tax Beginning of period $ 276,381 $ 381,244 $ 198,714 $ 336,604 Change in unrealized investment gains and losses 89,744 (122,709 ) 168,085 (77,223 ) Reclassification of net realized investment (gains) losses to net income 5,331 (3,708 ) 4,657 (4,554 ) End of period $ 371,456 $ 254,827 $ 371,456 $ 254,827 Net unrealized investment gains (losses) on equity securities, net of tax Beginning of period $ 5,030 $ 3,384 $ 2,649 $ 6,988 Change in unrealized investment gains and losses 4,710 (2,532 ) 6,898 (3,190 ) Reclassification of net realized investment (gains) losses to net income (1,557 ) 2,547 (1,364 ) (399 ) End of period $ 8,183 $ 3,399 $ 8,183 $ 3,399 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 are 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 Sheets Consolidated Consolidated Cash Gross Balance Balance Financial Collateral Net Amounts Sheets Sheets Instruments Received Amount June 30, 2016 Asset derivatives: Free-standing derivatives $ 4,325 - $ 4,325 - $ 3,081 $ 1,244 December 31, 2015 Asset derivatives: Free-standing derivatives 2,501 - 2,501 - 2,617 (116 ) Deposits At June 30, 2016 and December 31, 2015, fixed maturity securities with a fair value of $18,423 and $18,312, 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 June 30, 2016 and December 31, 2015, fixed maturity securities with a fair value of $621,352 and $621,077, 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 $575,000 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 | 6 Months Ended |
Jun. 30, 2016 | |
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, 2015, 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 June 30, 2016, these Level 3 invested assets comprised 2.7% 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 June 30, 2016 Financial Assets Investments Fixed maturities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 510,304 $ 510,304 $ - $ 506,474 $ 3,830 Other, including U.S. Treasury securities 548,512 548,512 13,985 534,527 - Municipal bonds 1,745,764 1,745,764 - 1,698,117 47,647 Foreign government bonds 79,094 79,094 - 79,094 - Corporate bonds 2,887,186 2,887,186 8,873 2,804,905 73,408 Other mortgage-backed securities 1,710,852 1,710,852 - 1,618,101 92,751 Total fixed maturities 7,481,712 7,481,712 22,858 7,241,218 217,636 Equity securities 123,163 123,163 109,339 13,818 6 Short-term investments 153,328 153,328 152,830 498 - Other investments 15,825 15,825 - 15,825 - Totals 7,774,028 7,774,028 285,027 7,271,359 217,642 Financial Liabilities Investment contract and life policy reserves, embedded derivatives 50 50 - 50 - Other policyholder funds, embedded derivatives 47,706 47,706 - - 47,706 December 31, 2015 Financial Assets Investments Fixed maturities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 504,414 $ 504,414 $ - $ 504,414 $ - Other, including U.S. Treasury securities 546,111 546,111 14,258 531,853 - Municipal bonds 1,708,943 1,708,943 - 1,678,564 30,379 Foreign government bonds 73,617 73,617 - 73,617 - Corporate bonds 2,779,415 2,779,415 10,195 2,701,645 67,575 Other mortgage-backed securities 1,478,840 1,478,840 - 1,403,374 75,466 Total fixed maturities 7,091,340 7,091,340 24,453 6,893,467 173,420 Equity securities 99,797 99,797 86,088 13,703 6 Short-term investments 174,152 174,152 169,764 4,388 - Other investments 14,001 14,001 - 14,001 - Totals 7,379,290 7,379,290 280,305 6,925,559 173,426 Financial Liabilities Investment contract and life policy reserves, embedded derivatives 14 14 - 14 - Other policyholder funds, embedded derivatives 39,021 39,021 - - 39,021 Financial Financial Assets Liabilities(1) Municipal Bonds Corporate Bonds Mortgage- Backed Securities(2) Total Fixed Maturities Equity Securities Total Beginning balance, April 1, 2016 $ 46,493 $ 70,071 $ 83,821 $ 200,385 $ 6 $ 200,391 $ 42,085 Transfers into Level 3 (3) - 5,017 12,984 18,001 - 18,001 - Transfers out of Level 3 (3) - - - - - - - Total gains or losses Net realized gains (losses) included in net income related to financial assets - (657 ) - (657 ) - (657 ) - Net realized (gains) losses included in net income related to financial liabilities - - - - - - 1,324 Net unrealized gains (losses) included in other comprehensive income 1,297 1,393 229 2,919 - 2,919 - Purchases - - - - - - - Issuances - - - - - - 4,993 Sales - - - - - - - Settlements - - - - - - - Paydowns, maturities and distributions (143 ) (2,416 ) (453 ) (3,012 ) - (3,012 ) (696 ) Ending balance, June 30, 2016 $ 47,647 $ 73,408 $ 96,581 $ 217,636 $ 6 $ 217,642 $ 47,706 Beginning balance, January 1, 2016 $ 30,379 $ 67,575 $ 75,466 $ 173,420 $ 6 $ 173,426 $ 39,021 Transfers into Level 3 (3) 14,751 11,076 24,626 50,453 - 50,453 - Transfers out of Level 3 (3) - - - - - - - Total gains or losses Net realized gains (losses) included in net income related to financial assets - (657 ) - (657 ) - (657 ) - Net realized (gains) losses included in net income related to financial liabilities - - - - - - 1,998 Net unrealized gains (losses) included in other comprehensive income 2,781 1,781 222 4,784 - 4,784 - Purchases - - - - - - - Issuances - - - - - - 8,484 Sales - - - - - - - Settlements - - - - - - - Paydowns, maturities and distributions (264 ) (6,367 ) (3,733 ) (10,364 ) - (10,364 ) (1,797 ) Ending balance, June 30, 2016 $ 47,647 $ 73,408 $ 96,581 $ 217,636 $ 6 $ 217,642 $ 47,706 (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) Includes U.S. Government and federally sponsored agency obligations for mortgage-backed securities and other mortgage-backed securities. (3) Transfers into and out of Level 3 during the three and six months ended June 30, 2016 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, April 1, 2015 $ 13,885 $ 72,278 $ 72,594 $ 158,757 $ 6 $ 158,763 $ 22,040 Transfers into Level 3 (2) 16,326 3,834 14,719 34,879 - 34,879 - Transfers out of Level 3 (2) - (1,350 ) - (1,350 ) - (1,350 ) - 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 - - - - - - (28 ) Net unrealized gains (losses) included in other comprehensive income (485 ) (1,436 ) (438 ) (2,359 ) - (2,359 ) - Purchases - - - - - - - Issuances - - - - - - 4,948 Sales - (476 ) - (476 ) - (476 ) - Settlements - - - - - - - Paydowns, maturities and distributions (57 ) (126 ) (2,175 ) (2,358 ) - (2,358 ) (241 ) Ending balance, June 30, 2015 $ 29,669 $ 72,724 $ 84,700 $ 187,093 $ 6 $ 187,099 $ 26,719 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 15,180 37,235 - 37,235 - 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 - - - - - - - Net realized (gains) losses included in net income related to financial liabilities - - - - - - (467 ) Net unrealized gains (losses) included in other comprehensive income (105 ) (1,084 ) (435 ) (1,624 ) - (1,624 ) - Purchases - - - - - - - Issuances - - - - - - 7,912 Sales - (476 ) - (476 ) - (476 ) - Settlements - - - - - - - Paydowns, maturities and distributions (180 ) (4,812 ) (3,330 ) (8,322 ) - (8,322 ) (775 ) Ending balance, June 30, 2015 $ 29,669 $ 72,724 $ 84,700 $ 187,093 $ 6 $ 187,099 $ 26,719 (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 six months ended June 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. At June 30, 2016 and 2015, 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 six months ended June 30, 2016, realized losses of ($1,324) and ($1,998), 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 six months ended June 30, 2015, the respective amounts were $28 and $467. 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, 2015. Generally, valuation techniques 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 those used for 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 relates 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. Fair Value Measurements at Carrying Fair Reporting Date Using Amount Value Level 1 Level 2 Level 3 June 30, 2016 Financial Assets Investments Other investments $ 149,784 $ 154,287 $ - $ - $ 154,287 Financial Liabilities Investment contract and life policy reserves, fixed annuity contracts 4,204,207 4,078,236 - - 4,078,236 Investment contract and life policy reserves, account values on life contracts 78,194 82,109 - - 82,109 Other policyholder funds 651,008 651,008 - 575,233 75,775 Long-term debt 247,083 262,723 262,723 - - December 31, 2015 Financial Assets Investments Other investments $ 148,759 $ 153,228 $ - $ - $ 153,228 Financial Liabilities Investment contract and life policy reserves, fixed annuity contracts 4,072,102 4,049,840 - - 4,049,840 Investment contract and life policy reserves, account values on life contracts 77,429 81,360 - - 81,360 Other policyholder funds 653,631 653,631 - 575,104 78,527 Long-term debt 246,975 252,700 252,700 - - |
Derivative Instruments
Derivative Instruments | 6 Months Ended |
Jun. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | NOTE 4 - Derivative Instruments In February 2014, the Company began offering fixed indexed annuity products (“FIA”), 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. In October 2015, the Company began offering indexed universal life products (“IUL”), which also credit interest based on a percentage of the gain in a specified market index. When deposits are received for FIA and IUL contracts, a portion is used to purchase derivatives consisting of call options on the applicable market indices to fund the index credits due to FIA and IUL policyholders. 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. Call options are not purchased to fund the index liabilities which may arise after the next deposit anniversary date. 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 FIA and IUL contracts, 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 future annual index credits on fixed indexed annuities are treated as a “series of embedded derivatives” over the expected life of the applicable contract with a corresponding reserve recorded. For the indexed universal life contracts, the embedded derivative represents a single year liability for the index return. 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 and IUL products. As a result, the Company records the purchased call options and the embedded derivatives 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 FIA and IUL contracts, presented in the Consolidated Balance Sheets were as follows: June 30, December 31, 2016 2015 Assets Derivative instruments, included in Short-term and Other Investments $ 4,325 $ 2,501 Liabilities Fixed indexed annuities - embedded derivatives, included in Other Policyholder Funds 47,706 39,021 Indexed universal life - embedded derivatives, included in Investment Contract and Life Policy Reserves 50 14 In general, the change in the fair value of the embedded derivatives related to the fixed indexed annuities will not correspond to the change in fair value of the purchased call options because the purchased call options are one-year options while the options valued in those embedded derivatives represent the rights of the policyholder to receive index credits over the entire period the fixed indexed annuities are expected to be in force, which typically exceeds 10 years. The changes in fair value of derivatives included in the Consolidated Statements of Operations were as follows: Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Change in fair value of derivatives (1): Revenues Net realized investment gains (losses) $ 78 $ (402 ) $ (140 ) $ (607 ) Change in fair value of embedded derivatives: Revenues Net realized investment gains (losses) (1,325 ) 28 (2,001 ) 467 (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 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: June 30, 2016 December 31, 2015 Credit Rating (1) Notional Fair Notional Fair Counterparty S&P Moody’s Amount Value Amount Value Bank of America, N.A. A A1 $ 38,500 $ 1,341 $ 17,000 $ 5 Barclays Bank PLC A- A2 18,100 369 7,600 137 Citigroup Inc. BBB+ Baa1 13,100 699 17,300 845 Credit Suisse International A A2 31,600 617 12,000 167 Societe Generale A A2 56,100 1,299 80,800 1,347 Total $ 157,400 $ 4,325 $ 134,700 $ 2,501 (1) As assigned by Standard & Poor’s Corporation (“S&P”) and Moody’s Investors Service, Inc. (“Moody’s”). As of June 30, 2016 and December 31, 2015, the Company held $3,081 and $2,617, respectively, of cash received from counterparties for derivative collateral, which is included in Other Liabilities on the Consolidated Balance Sheets. This derivative collateral limits 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 $250 per counterparty. |
Debt
Debt | 6 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
Debt | Note 5 - Debt Indebtedness outstanding was as follows: June 30, December 31, 2016 2015 Short-term debt: Bank Credit Facility, expires July 30, 2019 $ - $ - Long-term debt: 4.50% Senior Notes, due December 1, 2025. Aggregate principal amount of $250,000 less unaccrued discount of $631 and $654 (4.5% imputed rate) and unamortized debt issuance costs of $2,286 and $2,371 247,083 246,975 The Credit Agreement with Financial Institutions (“Bank Credit Facility”) and 4.50% Senior Notes due 2025 (“Senior Notes due 2025”) are described in “Notes to Consolidated Financial Statements Note 7 Debt” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. |
Reinsurance
Reinsurance | 6 Months Ended |
Jun. 30, 2016 | |
Insurance [Abstract] | |
Reinsurance | Note 6 - 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 June 30, 2016 Premiums written and contract deposits $ 316,798 $ 5,921 $ 1,002 $ 311,879 Premiums and contract charges earned 193,396 5,952 916 188,360 Benefits, claims and settlement expenses 151,998 4,444 854 148,408 Three months ended June 30, 2015 Premiums written and contract deposits $ 324,597 $ 6,184 $ 981 $ 319,394 Premiums and contract charges earned 187,809 6,332 899 182,376 Benefits, claims and settlement expenses 140,038 7,793 694 132,939 Six months ended June 30, 2016 Premiums written and contract deposits $ 604,790 $ 11,689 $ 1,947 $ 595,048 Premiums and contract charges earned 383,629 11,721 1,902 373,810 Benefits, claims and settlement expenses 283,238 17,106 1,789 267,921 Six months ended June 30, 2015 Premiums written and contract deposits $ 635,644 $ 12,308 $ 1,793 $ 625,129 Premiums and contract charges earned 373,005 12,647 1,757 362,115 Benefits, claims and settlement expenses 255,878 10,363 1,443 246,958 |
Commitments
Commitments | 6 Months Ended |
Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments | Note 7 - 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 to purchase investments were $177,952 and $147,139 at June 30, 2016 and December 31, 2015, respectively. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2016 | |
Segment Reporting [Abstract] | |
Segment Information | Note 8 - Segment Information The Company conducts and manages its business through four segments. The three operating segments, representing the major lines of insurance business, are: (1) property and casualty insurance, primarily personal lines automobile and homeowners products; (2) retirement annuity products, primarily tax-qualified fixed and variable deposits; and (3) 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 also have included corporate debt retirement costs/gains, when applicable. Summarized financial information for these segments is as follows: Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Insurance premiums and contract charges earned Property and casualty $ 153,673 $ 147,657 $ 305,793 $ 294,406 Annuity 6,098 6,516 12,166 12,739 Life 28,589 28,203 55,851 54,970 Total $ 188,360 $ 182,376 $ 373,810 $ 362,115 Net investment income Property and casualty $ 10,151 $ 9,007 $ 18,979 $ 18,440 Annuity 62,727 57,183 120,776 113,575 Life 18,502 18,022 36,486 35,730 Corporate and other 14 6 29 12 Intersegment eliminations (215 ) (223 ) (432 ) (449 ) Total $ 91,179 $ 83,995 $ 175,838 $ 167,308 Net income (loss) Property and casualty $ (4,463 ) $ 3,244 $ 9,332 $ 20,867 Annuity 13,063 11,747 23,616 24,257 Life 4,622 3,643 8,489 7,028 Corporate and other (1,356 ) (2,451 ) (4,418 ) (1,694 ) Total $ 11,866 $ 16,183 $ 37,019 $ 50,458 June 30, December 31, 2016 2015 Assets Property and casualty $ 1,137,533 $ 1,098,415 Annuity 7,256,608 7,001,411 Life 1,970,433 1,862,719 Corporate and other 133,248 131,635 Intersegment eliminations (31,520 ) (37,208 ) Total $ 10,466,302 $ 10,056,972 |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Future Policy Benefits, Interest-sensitive Life Contract Liabilities and Annuity Contract Liabilities | Investment Contract and Life Policy Reserves June 30, December 31, 2016 2015 Investment contract reserves $ 4,204,207 $ 4,072,102 Life policy reserves 1,069,960 1,054,740 Total $ 5,274,167 $ 5,126,842 |
Comprehensive Income (Loss) and 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 obligations for the period as shown in the Consolidated Statement of Changes in Shareholders’ Equity. Unrealized Gains and Losses on Fixed Maturities and Equity Defined Securities (1)(2) Benefit Plans (1) Total (1) Beginning balance, April 1, 2016 $ 244,657 $ (11,794 ) $ 232,863 Other comprehensive income (loss) before reclassifications 87,809 - 87,809 Amounts reclassified from accumulated other comprehensive income (loss) (2,813 ) - (2,813 ) Net current period other comprehensive income (loss) 84,996 - 84,996 Ending balance, June 30, 2016 $ 329,653 $ (11,794 ) $ 317,859 Beginning balance, January 1, 2016 $ 175,167 $ (11,794 ) $ 163,373 Other comprehensive income (loss) before reclassifications 157,780 - 157,780 Amounts reclassified from accumulated other comprehensive income (loss) (3,294 ) - (3,294 ) Net current period other comprehensive income (loss) 154,486 - 154,486 Ending balance, June 30, 2016 $ 329,653 $ (11,794 ) $ 317,859 (1) All amounts are net of tax. (2) The pretax amounts reclassified from accumulated other comprehensive income (loss), $4,327 and $5,067, are included in net realized investment gains and losses and the related tax expenses, $1,514 and $1,773, are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2016, respectively. Unrealized Gains and Losses on Fixed Maturities and Equity Defined Securities (1)(2) Benefit Plans (1) Total (1) Beginning balance, April 1, 2015 $ 335,132 $ (12,953 ) $ 322,179 Other comprehensive income (loss) before reclassifications (110,185 ) - (110,185 ) Amounts reclassified from accumulated other comprehensive income (loss) (1,161 ) - (1,161 ) Net current period other comprehensive income (loss) (111,346 ) - (111,346 ) Ending balance, June 30, 2015 $ 223,786 $ (12,953 ) $ 210,833 Beginning balance, January 1, 2015 $ 297,554 $ (12,953 ) $ 284,601 Other comprehensive income (loss) before reclassifications (68,815 ) - (68,815 ) Amounts reclassified from accumulated other comprehensive income (loss) (4,953 ) - (4,953 ) Net current period other comprehensive income (loss) (73,768 ) - (73,768 ) Ending balance, June 30, 2015 $ 223,786 $ (12,953 ) $ 210,833 (1) All amounts are net of tax. (2) The pretax amounts reclassified from accumulated other comprehensive income (loss), $1,786 and $7,620, are included in net realized investment gains and losses and the related tax expenses, $625 and $2,667, are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2015, 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”. |
Adopted Accounting Standards | Adopted Accounting Standards Presentation of Debt Issuance Costs Effective January 1, 2016, the Company adopted accounting guidance which was issued to simplify the presentation of costs incurred to issue debt securities. The guidance requires debt issuance costs associated with specific debt securities to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. Costs incurred related to line of credit arrangements continue to be presented as an asset in the consolidated balance sheet. Also, the guidance does not affect the recognition and measurement of debt issuance costs. The guidance required retrospective application. As a result of this adoption, the following items in the Company’s December 31, 2015 Consolidated Balance Sheet were each reduced by $2,371: Other Assets, Total Assets, Long-term Debt, Total Liabilities and Total Liabilities and Shareholders’ Equity. Net income per share (basic and diluted) did not change as a result of the adopted accounting change. |
Basis of Presentation (Tables)
Basis of Presentation (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Investment Contract And Life Policy Reserves | This table summarizes the Company’s investment contract and life policy reserves. June 30, December 31, 2016 2015 Investment contract reserves $ 4,204,207 $ 4,072,102 Life policy reserves 1,069,960 1,054,740 Total $ 5,274,167 $ 5,126,842 |
Accumulated Other Comprehensive Income (Loss) | 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, April 1, 2016 $ 244,657 $ (11,794 ) $ 232,863 Other comprehensive income (loss) before reclassifications 87,809 - 87,809 Amounts reclassified from accumulated other comprehensive income (loss) (2,813 ) - (2,813 ) Net current period other comprehensive income (loss) 84,996 - 84,996 Ending balance, June 30, 2016 $ 329,653 $ (11,794 ) $ 317,859 Beginning balance, January 1, 2016 $ 175,167 $ (11,794 ) $ 163,373 Other comprehensive income (loss) before reclassifications 157,780 - 157,780 Amounts reclassified from accumulated other comprehensive income (loss) (3,294 ) - (3,294 ) Net current period other comprehensive income (loss) 154,486 - 154,486 Ending balance, June 30, 2016 $ 329,653 $ (11,794 ) $ 317,859 (1) All amounts are net of tax. (2) The pretax amounts reclassified from accumulated other comprehensive income (loss), $4,327 and $5,067, are included in net realized investment gains and losses and the related tax expenses, $1,514 and $1,773, are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2016, respectively. Unrealized Gains and Losses on Fixed Maturities and Equity Defined Securities (1)(2) Benefit Plans (1) Total (1) Beginning balance, April 1, 2015 $ 335,132 $ (12,953 ) $ 322,179 Other comprehensive income (loss) before reclassifications (110,185 ) - (110,185 ) Amounts reclassified from accumulated other comprehensive income (loss) (1,161 ) - (1,161 ) Net current period other comprehensive income (loss) (111,346 ) - (111,346 ) Ending balance, June 30, 2015 $ 223,786 $ (12,953 ) $ 210,833 Beginning balance, January 1, 2015 $ 297,554 $ (12,953 ) $ 284,601 Other comprehensive income (loss) before reclassifications (68,815 ) - (68,815 ) Amounts reclassified from accumulated other comprehensive income (loss) (4,953 ) - (4,953 ) Net current period other comprehensive income (loss) (73,768 ) - (73,768 ) Ending balance, June 30, 2015 $ 223,786 $ (12,953 ) $ 210,833 (1) All amounts are net of tax. (2) The pretax amounts reclassified from accumulated other comprehensive income (loss), $1,786 and $7,620, are included in net realized investment gains and losses and the related tax expenses, $625 and $2,667, are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2015, respectively. |
Investments (Tables)
Investments (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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 impairments (“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) June 30, 2016 Fixed maturity securities U.S. Government and federally sponsored agency obligations (2): Mortgage-backed securities $ 451,983 $ 58,547 $ 226 $ 510,304 $ - Other, including U.S. Treasury securities 506,240 42,328 56 548,512 - Municipal bonds 1,509,321 241,327 4,884 1,745,764 (1,988 ) Foreign government bonds 71,421 7,673 - 79,094 - Corporate bonds 2,672,912 225,571 11,297 2,887,186 (290 ) Other mortgage-backed securities 1,698,364 31,510 19,022 1,710,852 1,771 Totals $ 6,910,241 $ 606,956 $ 35,485 $ 7,481,712 $ (507 ) Equity securities (3) $ 110,573 $ 14,009 $ 1,419 $ 123,163 $ - December 31, 2015 Fixed maturity securities U.S. Government and federally sponsored agency obligations (2): Mortgage-backed securities $ 461,862 $ 44,413 $ 1,861 $ 504,414 $ - Other, including U.S. Treasury securities 532,373 21,153 7,415 546,111 - Municipal bonds 1,553,603 165,680 10,340 1,708,943 (4,140 ) Foreign government bonds 67,441 6,288 112 73,617 - Corporate bonds 2,687,376 140,873 48,834 2,779,415 - Other mortgage-backed securities 1,482,971 16,830 20,961 1,478,840 1,382 Totals $ 6,785,626 $ 395,237 $ 89,523 $ 7,091,340 $ (2,758 ) Equity securities (3) $ 95,722 $ 8,405 $ 4,330 $ 99,797 $ - (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 $241,889 and $231,294; Federal Home Loan Mortgage Corporation (“FHLMC”) of $331,300 and $363,957; and Government National Mortgage Association (“GNMA”) of $127,804 and $130,940 as of June 30, 2016 and December 31, 2015, 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. 12 Months or Less More than 12 Months Total Gross Gross Gross Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses June 30, 2016 Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 455 $ 12 $ 3,212 $ 214 $ 3,667 $ 226 Other 8,944 56 - - 8,944 56 Municipal bonds 8,862 82 25,788 4,802 34,650 4,884 Foreign government bonds - - - - - - Corporate bonds 106,822 3,314 106,679 7,983 213,501 11,297 Other mortgage-backed securities 596,827 12,447 280,231 6,575 877,058 19,022 Total fixed maturity securities 721,910 15,911 415,910 19,574 1,137,820 35,485 Equity securities (1) 7,270 502 8,030 917 15,300 1,419 Combined totals $ 729,180 $ 16,413 $ 423,940 $ 20,491 $ 1,153,120 $ 36,904 Number of positions with a gross unrealized loss 245 142 387 Fair value as a percentage of total fixed maturities and equity securities fair value 9.6 % 5.6 % 15.2 % December 31, 2015 Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 48,097 $ 1,748 $ 1,595 $ 113 $ 49,692 $ 1,861 Other 248,478 7,338 1,921 77 250,399 7,415 Municipal bonds 168,939 5,382 21,717 4,958 190,656 10,340 Foreign government bonds 11,867 112 - - 11,867 112 Corporate bonds 858,647 37,244 50,340 11,590 908,987 48,834 Other mortgage-backed securities 929,268 19,165 140,561 1,796 1,069,829 20,961 Total fixed maturity securities 2,265,296 70,989 216,134 18,534 2,481,430 89,523 Equity securities (1) 38,764 3,022 8,379 1,308 47,143 4,330 Combined totals $ 2,304,060 $ 74,011 $ 224,513 $ 19,842 $ 2,528,573 $ 93,853 Number of positions with a gross unrealized loss 684 78 762 Fair value as a percentage of total fixed maturities and equity securities fair value 32.0 % 3.1 % 35.1 % (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 June 30, 2016 and 2015 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): Six Months Ended June 30, 2016 2015 Cumulative credit loss (1) Beginning of period $ 7,844 $ 2,877 New credit losses 300 4,998 Increases to previously recognized credit losses 2,480 - Losses related to securities sold or paid down during the period - - End of period $ 10,624 $ 7,875 (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 | Percent of Total Fair Value June 30, 2016 June 30, December 31, Fair Amortized 2016 2015 Value Cost Estimated expected maturity: Due in 1 year or less 3.6 % 3.1 % $ 269,865 $ 251,555 Due after 1 year through 5 years 26.3 24.2 1,970,758 1,885,946 Due after 5 years through 10 years 37.9 39.6 2,828,911 2,609,256 Due after 10 years through 20 years 20.4 20.9 1,529,037 1,346,414 Due after 20 years 11.8 12.2 883,141 817,070 Total 100.0 % 100.0 % $ 7,481,712 $ 6,910,241 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 Six Months Ended June 30, June 30, 2016 2015 2016 2015 Fixed maturity securities Proceeds received $ 174,944 $ 165,201 $ 257,033 $ 246,521 Gross gains realized 8,382 10,577 10,858 12,231 Gross losses realized (948 ) (1,282 ) (1,440 ) (1,745 ) Equity securities Proceeds received $ 6,474 $ 6,840 $ 12,622 $ 20,809 Gross gains realized 650 596 1,170 5,198 Gross losses realized (195 ) (107 ) (841 ) (117 ) |
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 Six Months Ended June 30, June 30, 2016 2015 2016 2015 Net unrealized investment gains (losses) on fixed maturity securities, net of tax Beginning of period $ 276,381 $ 381,244 $ 198,714 $ 336,604 Change in unrealized investment gains and losses 89,744 (122,709 ) 168,085 (77,223 ) Reclassification of net realized investment (gains) losses to net income 5,331 (3,708 ) 4,657 (4,554 ) End of period $ 371,456 $ 254,827 $ 371,456 $ 254,827 Net unrealized investment gains (losses) on equity securities, net of tax Beginning of period $ 5,030 $ 3,384 $ 2,649 $ 6,988 Change in unrealized investment gains and losses 4,710 (2,532 ) 6,898 (3,190 ) Reclassification of net realized investment (gains) losses to net income (1,557 ) 2,547 (1,364 ) (399 ) End of period $ 8,183 $ 3,399 $ 8,183 $ 3,399 |
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 Sheets Consolidated Consolidated Cash Gross Balance Balance Financial Collateral Net Amounts Sheets Sheets Instruments Received Amount June 30, 2016 Asset derivatives: Free-standing derivatives $ 4,325 - $ 4,325 - $ 3,081 $ 1,244 December 31, 2015 Asset derivatives: Free-standing derivatives 2,501 - 2,501 - 2,617 (116 ) |
Fair Value of Financial Instr20
Fair Value of Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Summary of Company's fair value hierarchy measured at recurring basis | 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 June 30, 2016, these Level 3 invested assets comprised 2.7% 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 June 30, 2016 Financial Assets Investments Fixed maturities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 510,304 $ 510,304 $ - $ 506,474 $ 3,830 Other, including U.S. Treasury securities 548,512 548,512 13,985 534,527 - Municipal bonds 1,745,764 1,745,764 - 1,698,117 47,647 Foreign government bonds 79,094 79,094 - 79,094 - Corporate bonds 2,887,186 2,887,186 8,873 2,804,905 73,408 Other mortgage-backed securities 1,710,852 1,710,852 - 1,618,101 92,751 Total fixed maturities 7,481,712 7,481,712 22,858 7,241,218 217,636 Equity securities 123,163 123,163 109,339 13,818 6 Short-term investments 153,328 153,328 152,830 498 - Other investments 15,825 15,825 - 15,825 - Totals 7,774,028 7,774,028 285,027 7,271,359 217,642 Financial Liabilities Investment contract and life policy reserves, embedded derivatives 50 50 - 50 - Other policyholder funds, embedded derivatives 47,706 47,706 - - 47,706 December 31, 2015 Financial Assets Investments Fixed maturities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 504,414 $ 504,414 $ - $ 504,414 $ - Other, including U.S. Treasury securities 546,111 546,111 14,258 531,853 - Municipal bonds 1,708,943 1,708,943 - 1,678,564 30,379 Foreign government bonds 73,617 73,617 - 73,617 - Corporate bonds 2,779,415 2,779,415 10,195 2,701,645 67,575 Other mortgage-backed securities 1,478,840 1,478,840 - 1,403,374 75,466 Total fixed maturities 7,091,340 7,091,340 24,453 6,893,467 173,420 Equity securities 99,797 99,797 86,088 13,703 6 Short-term investments 174,152 174,152 169,764 4,388 - Other investments 14,001 14,001 - 14,001 - Totals 7,379,290 7,379,290 280,305 6,925,559 173,426 Financial Liabilities Investment contract and life policy reserves, embedded derivatives 14 14 - 14 - Other policyholder funds, embedded derivatives 39,021 39,021 - - 39,021 |
Table for reconciliations for all Level 3 assets measured at fair value on a recurring basis | Financial Financial Assets Liabilities(1) Municipal Bonds Corporate Bonds Mortgage- Backed Securities(2) Total Fixed Maturities Equity Securities Total Beginning balance, April 1, 2016 $ 46,493 $ 70,071 $ 83,821 $ 200,385 $ 6 $ 200,391 $ 42,085 Transfers into Level 3 (3) - 5,017 12,984 18,001 - 18,001 - Transfers out of Level 3 (3) - - - - - - - Total gains or losses Net realized gains (losses) included in net income related to financial assets - (657 ) - (657 ) - (657 ) - Net realized (gains) losses included in net income related to financial liabilities - - - - - - 1,324 Net unrealized gains (losses) included in other comprehensive income 1,297 1,393 229 2,919 - 2,919 - Purchases - - - - - - - Issuances - - - - - - 4,993 Sales - - - - - - - Settlements - - - - - - - Paydowns, maturities and distributions (143 ) (2,416 ) (453 ) (3,012 ) - (3,012 ) (696 ) Ending balance, June 30, 2016 $ 47,647 $ 73,408 $ 96,581 $ 217,636 $ 6 $ 217,642 $ 47,706 Beginning balance, January 1, 2016 $ 30,379 $ 67,575 $ 75,466 $ 173,420 $ 6 $ 173,426 $ 39,021 Transfers into Level 3 (3) 14,751 11,076 24,626 50,453 - 50,453 - Transfers out of Level 3 (3) - - - - - - - Total gains or losses Net realized gains (losses) included in net income related to financial assets - (657 ) - (657 ) - (657 ) - Net realized (gains) losses included in net income related to financial liabilities - - - - - - 1,998 Net unrealized gains (losses) included in other comprehensive income 2,781 1,781 222 4,784 - 4,784 - Purchases - - - - - - - Issuances - - - - - - 8,484 Sales - - - - - - - Settlements - - - - - - - Paydowns, maturities and distributions (264 ) (6,367 ) (3,733 ) (10,364 ) - (10,364 ) (1,797 ) Ending balance, June 30, 2016 $ 47,647 $ 73,408 $ 96,581 $ 217,636 $ 6 $ 217,642 $ 47,706 (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) Includes U.S. Government and federally sponsored agency obligations for mortgage-backed securities and other mortgage-backed securities. (3) Transfers into and out of Level 3 during the three and six months ended June 30, 2016 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, April 1, 2015 $ 13,885 $ 72,278 $ 72,594 $ 158,757 $ 6 $ 158,763 $ 22,040 Transfers into Level 3 (2) 16,326 3,834 14,719 34,879 - 34,879 - Transfers out of Level 3 (2) - (1,350 ) - (1,350 ) - (1,350 ) - 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 - - - - - - (28 ) Net unrealized gains (losses) included in other comprehensive income (485 ) (1,436 ) (438 ) (2,359 ) - (2,359 ) - Purchases - - - - - - - Issuances - - - - - - 4,948 Sales - (476 ) - (476 ) - (476 ) - Settlements - - - - - - - Paydowns, maturities and distributions (57 ) (126 ) (2,175 ) (2,358 ) - (2,358 ) (241 ) Ending balance, June 30, 2015 $ 29,669 $ 72,724 $ 84,700 $ 187,093 $ 6 $ 187,099 $ 26,719 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 15,180 37,235 - 37,235 - 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 - - - - - - - Net realized (gains) losses included in net income related to financial liabilities - - - - - - (467 ) Net unrealized gains (losses) included in other comprehensive income (105 ) (1,084 ) (435 ) (1,624 ) - (1,624 ) - Purchases - - - - - - - Issuances - - - - - - 7,912 Sales - (476 ) - (476 ) - (476 ) - Settlements - - - - - - - Paydowns, maturities and distributions (180 ) (4,812 ) (3,330 ) (8,322 ) - (8,322 ) (775 ) Ending balance, June 30, 2015 $ 29,669 $ 72,724 $ 84,700 $ 187,093 $ 6 $ 187,099 $ 26,719 (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 six months ended June 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. |
Summary of fair value assets and liabilities measured on nonrecurring basis | Fair Value Measurements at Carrying Fair Reporting Date Using Amount Value Level 1 Level 2 Level 3 June 30, 2016 Financial Assets Investments Other investments $ 149,784 $ 154,287 $ - $ - $ 154,287 Financial Liabilities Investment contract and life policy reserves, fixed annuity contracts 4,204,207 4,078,236 - - 4,078,236 Investment contract and life policy reserves, account values on life contracts 78,194 82,109 - - 82,109 Other policyholder funds 651,008 651,008 - 575,233 75,775 Long-term debt 247,083 262,723 262,723 - - December 31, 2015 Financial Assets Investments Other investments $ 148,759 $ 153,228 $ - $ - $ 153,228 Financial Liabilities Investment contract and life policy reserves, fixed annuity contracts 4,072,102 4,049,840 - - 4,049,840 Investment contract and life policy reserves, account values on life contracts 77,429 81,360 - - 81,360 Other policyholder funds 653,631 653,631 - 575,104 78,527 Long-term debt 246,975 252,700 252,700 - - |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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 FIA and IUL contracts, presented in the Consolidated Balance Sheets were as follows: June 30, December 31, 2016 2015 Assets Derivative instruments, included in Short-term and Other Investments $ 4,325 $ 2,501 Liabilities Fixed indexed annuities - embedded derivatives, included in Other Policyholder Funds 47,706 39,021 Indexed universal life - embedded derivatives, included in Investment Contract and Life Policy Reserves 50 14 |
Derivative Instruments, Gain (Loss) | The changes in fair value of derivatives included in the Consolidated Statements of Operations were as follows: Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Change in fair value of derivatives (1): Revenues Net realized investment gains (losses) $ 78 $ (402 ) $ (140 ) $ (607 ) Change in fair value of embedded derivatives: Revenues Net realized investment gains (losses) (1,325 ) 28 (2,001 ) 467 (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: June 30, 2016 December 31, 2015 Credit Rating (1) Notional Fair Notional Fair Counterparty S&P Moody’s Amount Value Amount Value Bank of America, N.A. A A1 $ 38,500 $ 1,341 $ 17,000 $ 5 Barclays Bank PLC A- A2 18,100 369 7,600 137 Citigroup Inc. BBB+ Baa1 13,100 699 17,300 845 Credit Suisse International A A2 31,600 617 12,000 167 Societe Generale A A2 56,100 1,299 80,800 1,347 Total $ 157,400 $ 4,325 $ 134,700 $ 2,501 (1) As assigned by Standard & Poor’s Corporation (“S&P”) and Moody’s Investors Service, Inc. (“Moody’s”). |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
Summary of Indebtedness outstanding | Indebtedness outstanding was as follows: June 30, December 31, 2016 2015 Short-term debt: Bank Credit Facility, expires July 30, 2019 $ - $ - Long-term debt: 4.50% Senior Notes, due December 1, 2025. Aggregate principal amount of $250,000 less unaccrued discount of $631 and $654 (4.5% imputed rate) and unamortized debt issuance costs of $2,286 and $2,371 247,083 246,975 |
Reinsurance (Tables)
Reinsurance (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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 June 30, 2016 Premiums written and contract deposits $ 316,798 $ 5,921 $ 1,002 $ 311,879 Premiums and contract charges earned 193,396 5,952 916 188,360 Benefits, claims and settlement expenses 151,998 4,444 854 148,408 Three months ended June 30, 2015 Premiums written and contract deposits $ 324,597 $ 6,184 $ 981 $ 319,394 Premiums and contract charges earned 187,809 6,332 899 182,376 Benefits, claims and settlement expenses 140,038 7,793 694 132,939 Six months ended June 30, 2016 Premiums written and contract deposits $ 604,790 $ 11,689 $ 1,947 $ 595,048 Premiums and contract charges earned 383,629 11,721 1,902 373,810 Benefits, claims and settlement expenses 283,238 17,106 1,789 267,921 Six months ended June 30, 2015 Premiums written and contract deposits $ 635,644 $ 12,308 $ 1,793 $ 625,129 Premiums and contract charges earned 373,005 12,647 1,757 362,115 Benefits, claims and settlement expenses 255,878 10,363 1,443 246,958 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Segment Reporting [Abstract] | |
Summarized financial information for these segments | Summarized financial information for these segments is as follows: Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Insurance premiums and contract charges earned Property and casualty $ 153,673 $ 147,657 $ 305,793 $ 294,406 Annuity 6,098 6,516 12,166 12,739 Life 28,589 28,203 55,851 54,970 Total $ 188,360 $ 182,376 $ 373,810 $ 362,115 Net investment income Property and casualty $ 10,151 $ 9,007 $ 18,979 $ 18,440 Annuity 62,727 57,183 120,776 113,575 Life 18,502 18,022 36,486 35,730 Corporate and other 14 6 29 12 Intersegment eliminations (215 ) (223 ) (432 ) (449 ) Total $ 91,179 $ 83,995 $ 175,838 $ 167,308 Net income (loss) Property and casualty $ (4,463 ) $ 3,244 $ 9,332 $ 20,867 Annuity 13,063 11,747 23,616 24,257 Life 4,622 3,643 8,489 7,028 Corporate and other (1,356 ) (2,451 ) (4,418 ) (1,694 ) Total $ 11,866 $ 16,183 $ 37,019 $ 50,458 June 30, December 31, 2016 2015 Assets Property and casualty $ 1,137,533 $ 1,098,415 Annuity 7,256,608 7,001,411 Life 1,970,433 1,862,719 Corporate and other 133,248 131,635 Intersegment eliminations (31,520 ) (37,208 ) Total $ 10,466,302 $ 10,056,972 |
Basis of Presentation (Details)
Basis of Presentation (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Investment contract reserves | $ 4,204,207 | $ 4,072,102 |
Life policy reserves | 1,069,960 | 1,054,740 |
Total | $ 5,274,167 | $ 5,126,842 |
Basis of Presentation (Details
Basis of Presentation (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||||||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | ||||||
Unrealized Gains and Losses on Fixed Maturities and Equity Securities | |||||||||
Beginning balance | [1] | $ 244,657 | [2] | $ 335,132 | [3] | $ 175,167 | [2] | $ 297,554 | [3] |
Other comprehensive income (loss) before reclassifications | [1] | 87,809 | [2] | (110,185) | [3] | 157,780 | [2] | (68,815) | [3] |
Amounts reclassified from accumulated other comprehensive income (loss) | [1] | (2,813) | [2] | (1,161) | [3] | (3,294) | [2] | (4,953) | [3] |
Net current period other comprehensive income (loss) | [1] | 84,996 | [2] | (111,346) | [3] | 154,486 | [2] | (73,768) | [3] |
Ending balance | [1] | 329,653 | [2] | 223,786 | [3] | 329,653 | [2] | 223,786 | [3] |
Defined Benefit Plans | |||||||||
Beginning balance | [1] | (11,794) | (12,953) | (11,794) | (12,953) | ||||
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] | (11,794) | (12,953) | (11,794) | (12,953) | ||||
Beginning balance | [1] | 232,863 | 322,179 | 163,373 | 284,601 | ||||
Other comprehensive income (loss) before reclassifications | [1] | 87,809 | (110,185) | 157,780 | (68,815) | ||||
Amounts reclassified from accumulated other comprehensive income (loss) | [1] | (2,813) | (1,161) | (3,294) | (4,953) | ||||
Other comprehensive income (loss) | [1] | 84,996 | (111,346) | 154,486 | (73,768) | ||||
Ending balance | [1] | $ 317,859 | $ 210,833 | $ 317,859 | $ 210,833 | ||||
[1] | All amounts are net of tax. | ||||||||
[2] | The pretax amounts reclassified from accumulated other comprehensive income (loss), $4,327 and $5,067, are included in net realized investment gains and losses and the related tax expenses, $1,514 and $1,773, are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2016, respectively. | ||||||||
[3] | The pretax amounts reclassified from accumulated other comprehensive income (loss), $1,786 and $7,620, are included in net realized investment gains and losses and the related tax expenses, $625 and $2,667, are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2015, respectively. |
Basis of Presentation (Detail27
Basis of Presentation (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI for Sale of Securities, before Tax | $ 4,327 | $ 1,786 | $ 5,067 | $ 7,620 | |
Other Tax Expense (Benefit) | 1,514 | $ 625 | 1,773 | $ 2,667 | |
Other Assets | 305,888 | 305,888 | $ 292,139 | ||
Assets, Total | 10,466,302 | 10,466,302 | 10,056,972 | ||
Long-term debt | 247,083 | 247,083 | 246,975 | ||
Liabilities, Total | 9,048,967 | 9,048,967 | 8,792,311 | ||
Liabilities and Equity, Total | $ 10,466,302 | $ 10,466,302 | 10,056,972 | ||
Effect of Change [Member] | |||||
Other Assets | (2,371) | ||||
Assets, Total | (2,371) | ||||
Long-term debt | (2,371) | ||||
Liabilities, Total | (2,371) | ||||
Liabilities and Equity, Total | $ (2,371) |
Investments (Details)
Investments (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2016 | Dec. 31, 2015 | ||
Unrealized gains and losses on fixed maturities and equity securities | |||
Amortized Cost/Cost | $ 6,910,241 | $ 6,785,626 | |
Unrealized Gains | 606,956 | 395,237 | |
Unrealized Losses | 35,485 | 89,523 | |
Fair Value | 7,481,712 | 7,091,340 | |
OTTI in AOCI | [1] | (507) | (2,758) |
Amortized Cost/Cost, Equity securities | 110,573 | 95,722 | |
Fair Value, Equity securities | 123,163 | 99,797 | |
Mortgage-backed securities [Member] | |||
Unrealized gains and losses on fixed maturities and equity securities | |||
Amortized Cost/Cost | [2] | 451,983 | 461,862 |
Unrealized Gains | [2] | 58,547 | 44,413 |
Unrealized Losses | [2] | 226 | 1,861 |
Fair Value | [2] | 510,304 | 504,414 |
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] | 506,240 | 532,373 |
Unrealized Gains | [2] | 42,328 | 21,153 |
Unrealized Losses | [2] | 56 | 7,415 |
Fair Value | [2] | 548,512 | 546,111 |
OTTI in AOCI | [1],[2] | 0 | 0 |
Municipal bonds [Member] | |||
Unrealized gains and losses on fixed maturities and equity securities | |||
Amortized Cost/Cost | 1,509,321 | 1,553,603 | |
Unrealized Gains | 241,327 | 165,680 | |
Unrealized Losses | 4,884 | 10,340 | |
Fair Value | 1,745,764 | 1,708,943 | |
OTTI in AOCI | [1] | (1,988) | (4,140) |
Foreign government bonds [Member] | |||
Unrealized gains and losses on fixed maturities and equity securities | |||
Amortized Cost/Cost | 71,421 | 67,441 | |
Unrealized Gains | 7,673 | 6,288 | |
Unrealized Losses | 0 | 112 | |
Fair Value | 79,094 | 73,617 | |
OTTI in AOCI | [1] | 0 | 0 |
Corporate bonds [Member] | |||
Unrealized gains and losses on fixed maturities and equity securities | |||
Amortized Cost/Cost | 2,672,912 | 2,687,376 | |
Unrealized Gains | 225,571 | 140,873 | |
Unrealized Losses | 11,297 | 48,834 | |
Fair Value | 2,887,186 | 2,779,415 | |
OTTI in AOCI | [1] | (290) | 0 |
Other mortgage-backed securities [Member] | |||
Unrealized gains and losses on fixed maturities and equity securities | |||
Amortized Cost/Cost | 1,698,364 | 1,482,971 | |
Unrealized Gains | 31,510 | 16,830 | |
Unrealized Losses | 19,022 | 20,961 | |
Fair Value | 1,710,852 | 1,478,840 | |
OTTI in AOCI | [1] | 1,771 | 1,382 |
Equity securities [Member] | |||
Unrealized gains and losses on fixed maturities and equity securities | |||
OTTI in AOCI | [1],[3] | 0 | 0 |
Amortized Cost/Cost, Equity securities | [3] | 110,573 | 95,722 |
Unrealized Gains, Equity securities | [3] | 14,009 | 8,405 |
Unrealized Losses, Equity securities | [3] | 1,419 | 4,330 |
Fair Value, Equity securities | [3] | $ 123,163 | $ 99,797 |
[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 $241,889 and $231,294; Federal Home Loan Mortgage Corporation (“FHLMC”) of $331,300 and $363,957; and Government National Mortgage Association (“GNMA”) of $127,804 and $130,940 as of June 30, 2016 and December 31, 2015, respectively. | ||
[3] | Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds. |
Investments (Details 1)
Investments (Details 1) $ in Thousands | Jun. 30, 2016USD ($)Number | Dec. 31, 2015USD ($)Number | |
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | $ 729,180 | $ 2,304,060 | |
Fixed maturity securities, Fair Value, More than 12 Months | 423,940 | 224,513 | |
Fixed maturity securities, Fair Value, Total | 1,153,120 | 2,528,573 | |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 16,413 | 74,011 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 20,491 | 19,842 | |
Fixed maturity securities, Gross Unrealized Losses, Total | $ 36,904 | $ 93,853 | |
Number of positions with a gross unrealized loss position, 12 Months or Less | Number | 245 | 684 | |
Number of position with a gross unrealized loss position, more than 12 months | Number | 142 | 78 | |
Number of position with a gross unrealized loss position, Total | Number | 387 | 762 | |
Fair value as a percentage of total fixed maturities and equity securities fair value, 12 Months or Less | 9.60% | 32.00% | |
Fair value as a percentage of total fixed maturities and equity securities fair value, more than 12 months | 5.60% | 3.10% | |
Fair value as a percentage of total fixed maturities and equity securities fair value, Total | 15.20% | 35.10% | |
Mortgage-backed securities [Member] | |||
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | $ 455 | $ 48,097 | |
Fixed maturity securities, Fair Value, More than 12 Months | 3,212 | 1,595 | |
Fixed maturity securities, Fair Value, Total | 3,667 | 49,692 | |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 12 | 1,748 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 214 | 113 | |
Fixed maturity securities, Gross Unrealized Losses, Total | 226 | 1,861 | |
Other [Member] | |||
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | 8,944 | 248,478 | |
Fixed maturity securities, Fair Value, More than 12 Months | 0 | 1,921 | |
Fixed maturity securities, Fair Value, Total | 8,944 | 250,399 | |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 56 | 7,338 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 0 | 77 | |
Fixed maturity securities, Gross Unrealized Losses, Total | 56 | 7,415 | |
Municipal bonds [Member] | |||
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | 8,862 | 168,939 | |
Fixed maturity securities, Fair Value, More than 12 Months | 25,788 | 21,717 | |
Fixed maturity securities, Fair Value, Total | 34,650 | 190,656 | |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 82 | 5,382 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 4,802 | 4,958 | |
Fixed maturity securities, Gross Unrealized Losses, Total | 4,884 | 10,340 | |
Foreign government bonds [Member] | |||
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | 0 | 11,867 | |
Fixed maturity securities, Fair Value, More than 12 Months | 0 | 0 | |
Fixed maturity securities, Fair Value, Total | 0 | 11,867 | |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 0 | 112 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 0 | 0 | |
Fixed maturity securities, Gross Unrealized Losses, Total | 0 | 112 | |
Corporate bonds [Member] | |||
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | 106,822 | 858,647 | |
Fixed maturity securities, Fair Value, More than 12 Months | 106,679 | 50,340 | |
Fixed maturity securities, Fair Value, Total | 213,501 | 908,987 | |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 3,314 | 37,244 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 7,983 | 11,590 | |
Fixed maturity securities, Gross Unrealized Losses, Total | 11,297 | 48,834 | |
Other mortgage-backed securities [Member] | |||
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | 596,827 | 929,268 | |
Fixed maturity securities, Fair Value, More than 12 Months | 280,231 | 140,561 | |
Fixed maturity securities, Fair Value, Total | 877,058 | 1,069,829 | |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 12,447 | 19,165 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 6,575 | 1,796 | |
Fixed maturity securities, Gross Unrealized Losses, Total | 19,022 | 20,961 | |
Total fixed maturity securities [Member] | |||
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | 721,910 | 2,265,296 | |
Fixed maturity securities, Fair Value, More than 12 Months | 415,910 | 216,134 | |
Fixed maturity securities, Fair Value, Total | 1,137,820 | 2,481,430 | |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 15,911 | 70,989 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 19,574 | 18,534 | |
Fixed maturity securities, Gross Unrealized Losses, Total | 35,485 | 89,523 | |
Equity securities [Member] | |||
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | [1] | 7,270 | 38,764 |
Fixed maturity securities, Fair Value, More than 12 Months | [1] | 8,030 | 8,379 |
Fixed maturity securities, Fair Value, Total | [1] | 15,300 | 47,143 |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | [1] | 502 | 3,022 |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | [1] | 917 | 1,308 |
Fixed maturity securities, Gross Unrealized Losses, Total | [1] | $ 1,419 | $ 4,330 |
[1] | Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds. |
Investments (Details 2)
Investments (Details 2) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | ||
Cumulative credit loss | |||
Beginning of period | [1] | $ 7,844 | $ 2,877 |
New credit losses | [1] | 300 | 4,998 |
Increases to previously recognized credit losses | [1] | 2,480 | 0 |
Losses related to securities sold or paid down during the period | [1] | 0 | 0 |
End of period | [1] | $ 10,624 | $ 7,875 |
[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 | 6 Months Ended | 12 Months Ended |
Jun. 30, 2016 | Dec. 31, 2015 | |
Estimated expected maturity: | ||
Due in 1 year or less, Percent of Total Fair Value | 3.60% | 3.10% |
Due in 1 year or less, Amortized Cost | $ 251,555 | |
Due in 1 year or less, Fair Value | $ 269,865 | |
Due after 1 year through 5 years, Percent of Total Fair Value | 26.30% | 24.20% |
Due after 1 year through 5 years, Amortized Cost | $ 1,885,946 | |
Due after 1 year through 5 years, Fair Value | $ 1,970,758 | |
Due after 5 years through 10 years, Percent of Total Fair Value | 37.90% | 39.60% |
Due after 5 years through 10 years, Amortized Cost | $ 2,609,256 | |
Due after 5 years through 10 years, Fair Value | $ 2,828,911 | |
Due after 10 years through 20 years, Percent of Total Fair Value | 20.40% | 20.90% |
Due after 10 years through 20 years, Amortized Cost | $ 1,346,414 | |
Due after 10 years through 20 years, Fair Value | $ 1,529,037 | |
Due after 20 years, Percent of Total Fair Value | 11.80% | 12.20% |
Due after 20 years, Amortized Cost | $ 817,070 | |
Due after 20 years, Fair Value | $ 883,141 | |
Total, Percent of Total Fair Value | 100.00% | 100.00% |
Total, Amortized Cost | $ 6,910,241 | $ 6,785,626 |
Fair Value | $ 7,481,712 | $ 7,091,340 |
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 | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Proceeds received from sales of fixed maturities and equity securities | ||||
Proceeds received, Fixed maturity securities | $ 174,944 | $ 165,201 | $ 257,033 | $ 246,521 |
Proceeds received, Equity securities | 6,474 | 6,840 | 12,622 | 20,809 |
Fixed maturity securities [Member] | ||||
Proceeds received from sales of fixed maturities and equity securities | ||||
Gross gains realized | 8,382 | 10,577 | 10,858 | 12,231 |
Gross losses realized | (948) | (1,282) | (1,440) | (1,745) |
Equity securities [Member] | ||||
Proceeds received from sales of fixed maturities and equity securities | ||||
Gross gains realized | 650 | 596 | 1,170 | 5,198 |
Gross losses realized | $ (195) | $ (107) | $ (841) | $ (117) |
Investments (Details 5)
Investments (Details 5) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||||||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | ||||||
Net unrealized investment gains (losses) on fixed maturity securities, net of tax | |||||||||
Reclassification of net realized investment (gains) losses to net income | [1] | $ (2,813) | [2] | $ (1,161) | [3] | $ (3,294) | [2] | $ (4,953) | [3] |
Fixed Maturity Securities [Member] | |||||||||
Net unrealized investment gains (losses) on fixed maturity securities, net of tax | |||||||||
Beginning of period | 276,381 | 381,244 | 198,714 | 336,604 | |||||
Change in unrealized investment gains and losses | 89,744 | (122,709) | 168,085 | (77,223) | |||||
Reclassification of net realized investment (gains) losses to net income | 5,331 | (3,708) | 4,657 | (4,554) | |||||
End of period | 371,456 | 254,827 | 371,456 | 254,827 | |||||
Equity securities [Member] | |||||||||
Net unrealized investment gains (losses) on fixed maturity securities, net of tax | |||||||||
Beginning of period | 5,030 | 3,384 | 2,649 | 6,988 | |||||
Change in unrealized investment gains and losses | 4,710 | (2,532) | 6,898 | (3,190) | |||||
Reclassification of net realized investment (gains) losses to net income | (1,557) | 2,547 | (1,364) | (399) | |||||
End of period | $ 8,183 | $ 3,399 | $ 8,183 | $ 3,399 | |||||
[1] | All amounts are net of tax. | ||||||||
[2] | The pretax amounts reclassified from accumulated other comprehensive income (loss), $4,327 and $5,067, are included in net realized investment gains and losses and the related tax expenses, $1,514 and $1,773, are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2016, respectively. | ||||||||
[3] | The pretax amounts reclassified from accumulated other comprehensive income (loss), $1,786 and $7,620, are included in net realized investment gains and losses and the related tax expenses, $625 and $2,667, are included in income tax expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2015, respectively. |
Investments (Details 6)
Investments (Details 6) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Asset derivatives: | ||
Derivatives Asset, Net Amount | $ 4,325 | $ 2,501 |
Free-standing derivatives [Member] | ||
Asset derivatives: | ||
Derivatives Asset, Gross Amounts | 4,325 | 2,501 |
Derivatives Asset, Gross Amounts Offset in the Consolidated Balance Sheets | 0 | 0 |
Derivatives Asset, Net Amounts of Assets/Liabilities Presented in the Consolidated Balance Sheets | 4,325 | 2,501 |
Derivatives Asset, Gross Amounts Not Offset in the Consolidated Balance Sheets, Financial Instruments | 0 | 0 |
Derivatives Asset, Gross Amounts Not Offset in the Consolidated Balance Sheets, Cash Collateral Received | 3,081 | 2,617 |
Derivatives Asset, Net Amount | $ 1,244 | $ (116) |
Investments (Details Textual)
Investments (Details Textual) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Investments (Textual) [Abstract] | ||
Fair value of issued securities | $ 7,481,712 | $ 7,091,340 |
Investments (Additional Textual) [Abstract] | ||
Federal Home Loan Bank Funding Agreements | $ 575,000 | 575,000 |
Investment Grade Rate | 67.00% | |
Federal Home Loans Bank Of Chicago [Member] | ||
Investments (Textual) [Abstract] | ||
Fair value of issued securities | $ 621,352 | 621,077 |
Governmental Agencies as Required by Law in Various States [Member] | ||
Investments (Textual) [Abstract] | ||
Fair value of issued securities | 18,423 | 18,312 |
Federal National Mortgage Association Certificates and Obligations (FNMA) [Member] | ||
Investments (Textual) [Abstract] | ||
Fair value of issued securities | 241,889 | 231,294 |
Federal Home Loan Mortgage Corporation Certificates and Obligations (FHLMC) [Member] | ||
Investments (Textual) [Abstract] | ||
Fair value of issued securities | 331,300 | 363,957 |
Government National Mortgage Association Certificates and Obligations (GNMA) [Member] | ||
Investments (Textual) [Abstract] | ||
Fair value of issued securities | $ 127,804 | $ 130,940 |
Fair Value of Financial Instr36
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
U.S. Government and federally sponsored agency obligations: | ||
Carrying Amount | $ 7,774,028 | $ 7,379,290 |
Fair Value | 7,774,028 | 7,379,290 |
Investment contract and life policy reserves, embedded derivatives, Carrying Amount | 50 | 14 |
Investment contract and life policy reserves, embedded derivatives, Fair Value Disclosure | 50 | 14 |
Other policyholder funds, embedded derivatives, Carrying Amount | 47,706 | 39,021 |
Other policyholder funds, embedded derivatives, Fair Value Disclosure | 47,706 | 39,021 |
Recurring [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Carrying Amount | 7,481,712 | 7,091,340 |
Fair Value | 7,481,712 | 7,091,340 |
Short-term investments [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Carrying Amount | 153,328 | 174,152 |
Fair Value | 153,328 | 174,152 |
Mortgage-backed securities [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Carrying Amount | 510,304 | 504,414 |
Fair Value | 510,304 | 504,414 |
Other, including U.S. Treasury Securities [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Carrying Amount | 548,512 | 546,111 |
Fair Value | 548,512 | 546,111 |
Municipal bonds [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Carrying Amount | 1,745,764 | 1,708,943 |
Fair Value | 1,745,764 | 1,708,943 |
Foreign government bonds [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Carrying Amount | 79,094 | 73,617 |
Fair Value | 79,094 | 73,617 |
Corporate bonds [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Carrying Amount | 2,887,186 | 2,779,415 |
Fair Value | 2,887,186 | 2,779,415 |
Other mortgage-backed securities [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Carrying Amount | 1,710,852 | 1,478,840 |
Fair Value | 1,710,852 | 1,478,840 |
Equity securities [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Carrying Amount | 123,163 | 99,797 |
Fair Value | 123,163 | 99,797 |
Other investments [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Carrying Amount | 15,825 | 14,001 |
Fair Value | 15,825 | 14,001 |
Level 1 [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 285,027 | 280,305 |
Investment contract and life policy reserves, embedded derivatives, Fair Value Disclosure | 0 | 0 |
Other policyholder funds, embedded derivatives, Fair Value Disclosure | 0 | 0 |
Level 1 [Member] | Recurring [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 22,858 | 24,453 |
Level 1 [Member] | Short-term investments [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 152,830 | 169,764 |
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 | 13,985 | 14,258 |
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 | 8,873 | 10,195 |
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 | 109,339 | 86,088 |
Level 1 [Member] | Other investments [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 0 | 0 |
Level 2 [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 7,271,359 | 6,925,559 |
Investment contract and life policy reserves, embedded derivatives, Fair Value Disclosure | 50 | 14 |
Other policyholder funds, embedded derivatives, Fair Value Disclosure | 0 | 0 |
Level 2 [Member] | Recurring [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 7,241,218 | 6,893,467 |
Level 2 [Member] | Short-term investments [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 498 | 4,388 |
Level 2 [Member] | Mortgage-backed securities [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 506,474 | 504,414 |
Level 2 [Member] | Other, including U.S. Treasury Securities [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 534,527 | 531,853 |
Level 2 [Member] | Municipal bonds [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 1,698,117 | 1,678,564 |
Level 2 [Member] | Foreign government bonds [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 79,094 | 73,617 |
Level 2 [Member] | Corporate bonds [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 2,804,905 | 2,701,645 |
Level 2 [Member] | Other mortgage-backed securities [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 1,618,101 | 1,403,374 |
Level 2 [Member] | Equity securities [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 13,818 | 13,703 |
Level 2 [Member] | Other investments [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 15,825 | 14,001 |
Level 3 [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 217,642 | 173,426 |
Investment contract and life policy reserves, embedded derivatives, Fair Value Disclosure | 0 | 0 |
Other policyholder funds, embedded derivatives, Fair Value Disclosure | 47,706 | 39,021 |
Level 3 [Member] | Recurring [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 217,636 | 173,420 |
Level 3 [Member] | Short-term investments [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 0 | 0 |
Level 3 [Member] | Mortgage-backed securities [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 3,830 | 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 | 47,647 | 30,379 |
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 | 73,408 | 67,575 |
Level 3 [Member] | Other mortgage-backed securities [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 92,751 | 75,466 |
Level 3 [Member] | Equity securities [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 6 | 6 |
Level 3 [Member] | Other investments [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | $ 0 | $ 0 |
Fair Value of Financial Instr37
Fair Value of Financial Instruments (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||||||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | ||||||
Financial Assets | |||||||||
Beginning balance | $ 200,391 | $ 158,763 | $ 173,426 | $ 171,300 | |||||
Transfers into Level 3 | 18,001 | [1] | 34,879 | [2] | 50,453 | [1] | 37,235 | [2] | |
Transfers out of Level 3 | 0 | [1] | (1,350) | [2] | 0 | [1] | (11,014) | [2] | |
Total gains or losses | |||||||||
Net realized gains (losses) included in net income related to financial assets | (657) | 0 | (657) | 0 | |||||
Net unrealized gains (losses) included in other comprehensive income | 2,919 | (2,359) | 4,784 | (1,624) | |||||
Purchases | 0 | 0 | 0 | 0 | |||||
Issuances | 0 | 0 | 0 | 0 | |||||
Sales | 0 | (476) | 0 | (476) | |||||
Settlements | 0 | 0 | 0 | 0 | |||||
Paydowns, maturities and distributions | (3,012) | (2,358) | (10,364) | (8,322) | |||||
Ending balance | 217,642 | 187,099 | 217,642 | 187,099 | |||||
Financial Liabilities | |||||||||
Beginning balance | [3] | 42,085 | 22,040 | 39,021 | 20,049 | ||||
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] |
Total gains or losses | |||||||||
Net realized (gains) losses included in net income related to financial liabilities | [3] | 1,324 | (28) | 1,998 | (467) | ||||
Purchases | [3] | 0 | 0 | 0 | 0 | ||||
Issuances | [3] | 4,993 | 4,948 | 8,484 | 7,912 | ||||
Sales | [3] | 0 | 0 | 0 | 0 | ||||
Settlements | [3] | 0 | 0 | 0 | 0 | ||||
Paydowns, maturities and distributions | [3] | (696) | (241) | (1,797) | (775) | ||||
Ending balance | [3] | 47,706 | 26,719 | 47,706 | 26,719 | ||||
Municipal bonds [Member] | |||||||||
Financial Assets | |||||||||
Beginning balance | 46,493 | 13,885 | 30,379 | 13,628 | |||||
Transfers into Level 3 | 0 | [1] | 16,326 | [2] | 14,751 | [1] | 16,326 | [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 | 1,297 | (485) | 2,781 | (105) | |||||
Purchases | 0 | 0 | 0 | 0 | |||||
Issuances | 0 | 0 | 0 | 0 | |||||
Sales | 0 | 0 | 0 | 0 | |||||
Settlements | 0 | 0 | 0 | 0 | |||||
Paydowns, maturities and distributions | (143) | (57) | (264) | (180) | |||||
Ending balance | 47,647 | 29,669 | 47,647 | 29,669 | |||||
Corporate bonds [Member] | |||||||||
Financial Assets | |||||||||
Beginning balance | 70,071 | 72,278 | 67,575 | 74,717 | |||||
Transfers into Level 3 | 5,017 | [1] | 3,834 | [2] | 11,076 | [1] | 5,729 | [2] | |
Transfers out of Level 3 | 0 | [1] | (1,350) | [2] | 0 | [1] | (1,350) | [2] | |
Total gains or losses | |||||||||
Net realized gains (losses) included in net income related to financial assets | (657) | 0 | (657) | 0 | |||||
Net unrealized gains (losses) included in other comprehensive income | 1,393 | (1,436) | 1,781 | (1,084) | |||||
Purchases | 0 | 0 | 0 | 0 | |||||
Issuances | 0 | 0 | 0 | 0 | |||||
Sales | 0 | (476) | 0 | (476) | |||||
Settlements | 0 | 0 | 0 | 0 | |||||
Paydowns, maturities and distributions | (2,416) | (126) | (6,367) | (4,812) | |||||
Ending balance | 73,408 | 72,724 | 73,408 | 72,724 | |||||
Mortgage-backed securities [Member] | |||||||||
Financial Assets | |||||||||
Beginning balance | 83,821 | [4] | 72,594 | 75,466 | [4] | 82,949 | |||
Transfers into Level 3 | 12,984 | [1],[4] | 14,719 | [2] | 24,626 | [1],[4] | 15,180 | [2] | |
Transfers out of Level 3 | 0 | [1],[4] | 0 | [2] | 0 | [1],[4] | (9,664) | [2] | |
Total gains or losses | |||||||||
Net realized gains (losses) included in net income related to financial assets | 0 | [4] | 0 | 0 | [4] | 0 | |||
Net unrealized gains (losses) included in other comprehensive income | 229 | [4] | (438) | 222 | [4] | (435) | |||
Purchases | 0 | [4] | 0 | 0 | [4] | 0 | |||
Issuances | 0 | [4] | 0 | 0 | [4] | 0 | |||
Sales | 0 | [4] | 0 | 0 | [4] | 0 | |||
Settlements | 0 | [4] | 0 | 0 | [4] | 0 | |||
Paydowns, maturities and distributions | (453) | [4] | (2,175) | (3,733) | [4] | (3,330) | |||
Ending balance | 96,581 | [4] | 84,700 | 96,581 | [4] | 84,700 | |||
Total Fixed Maturities [Member] | |||||||||
Financial Assets | |||||||||
Beginning balance | 200,385 | 158,757 | 173,420 | 171,294 | |||||
Transfers into Level 3 | 18,001 | [1] | 34,879 | [2] | 50,453 | [1] | 37,235 | [2] | |
Transfers out of Level 3 | 0 | [1] | (1,350) | [2] | 0 | [1] | (11,014) | [2] | |
Total gains or losses | |||||||||
Net realized gains (losses) included in net income related to financial assets | (657) | 0 | (657) | 0 | |||||
Net unrealized gains (losses) included in other comprehensive income | 2,919 | (2,359) | 4,784 | (1,624) | |||||
Purchases | 0 | 0 | 0 | 0 | |||||
Issuances | 0 | 0 | 0 | 0 | |||||
Sales | 0 | (476) | 0 | (476) | |||||
Settlements | 0 | 0 | 0 | 0 | |||||
Paydowns, maturities and distributions | (3,012) | (2,358) | (10,364) | (8,322) | |||||
Ending balance | 217,636 | 187,093 | 217,636 | 187,093 | |||||
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 | 0 | 0 | 0 | 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 | 0 | 0 | 0 | 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 six months ended June 30, 2016 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 six months ended June 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. | ||||||||
[3] | Represents embedded derivatives, all related to the Company’s FIA products, reported in Other Policyholder Funds in the Company’s Consolidated Balance Sheets. | ||||||||
[4] | Includes U.S. Government and federally sponsored agency obligations for mortgage-backed securities and other mortgage-backed securities. |
Fair Value of Financial Instr38
Fair Value of Financial Instruments (Details 2) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Investments | ||
Other investments, Carrying Amount | $ 149,784 | $ 148,759 |
Other investments, Fair Value | 154,287 | 153,228 |
Financial Liabilities | ||
Investment contract and life policy reserves, fixed annuity contracts, Carrying Amount | 4,204,207 | 4,072,102 |
Investment contract and life policy reserves, fixed annuity contracts, Fair value | 4,078,236 | 4,049,840 |
Investment contract and life policy reserves, account values on life contracts, Carrying Amount | 78,194 | 77,429 |
Investment contract and life policy reserves, account values on life contracts, Fair value | 82,109 | 81,360 |
Other policyholder funds, Carrying Amount | 651,008 | 653,631 |
Other policyholder funds, Fair Value | 651,008 | 653,631 |
Long-term debt, Carrying Amount | 247,083 | 246,975 |
Long-term debt, Fair Value | 262,723 | 252,700 |
Level 1 [Member] | ||
Investments | ||
Other investments, Fair Value | 0 | 0 |
Financial Liabilities | ||
Investment contract and life policy reserves, fixed annuity contracts, Fair value | 0 | 0 |
Investment contract and life policy reserves, account values on life contracts, Fair value | 0 | 0 |
Other policyholder funds, Fair Value | 0 | 0 |
Long-term debt, Fair Value | 262,723 | 252,700 |
Level 2 [Member] | ||
Investments | ||
Other investments, Fair Value | 0 | 0 |
Financial Liabilities | ||
Investment contract and life policy reserves, fixed annuity contracts, Fair value | 0 | 0 |
Investment contract and life policy reserves, account values on life contracts, Fair value | 0 | 0 |
Other policyholder funds, Fair Value | 575,233 | 575,104 |
Long-term debt, Fair Value | 0 | 0 |
Level 3 [Member] | ||
Investments | ||
Other investments, Fair Value | 154,287 | 153,228 |
Financial Liabilities | ||
Investment contract and life policy reserves, fixed annuity contracts, Fair value | 4,078,236 | 4,049,840 |
Investment contract and life policy reserves, account values on life contracts, Fair value | 82,109 | 81,360 |
Other policyholder funds, Fair Value | 75,775 | 78,527 |
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 | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Fair Value of Financial Instruments (Textual) [Abstract] | ||||
Embedded Derivative, Gain (Loss) on Embedded Derivative Total | $ (1,325) | $ 28 | $ (2,001) | $ 467 |
Level 3 [Member] | ||||
Fair Value of Financial Instruments (Textual) [Abstract] | ||||
Embedded Derivative, Gain (Loss) on Embedded Derivative Total | $ 1,324 | $ 28 | $ 1,998 | $ 467 |
Percentage Of Invested Assets In Total Investment Portfolio Level3 Recurring | 2.70% | 2.70% |
Derivative Instruments (Details
Derivative Instruments (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Assets | ||
Derivative instruments, included in Short-term and Other Investments | $ 4,325 | $ 2,501 |
Liabilities | ||
Fixed indexed annuities - embedded derivatives, included in Other Policyholder Funds | 47,706 | 39,021 |
Indexed universal life - embedded derivatives, included in Investment Contract and Life Policy Reserves | $ 50 | $ 14 |
Derivative Instruments (Detai41
Derivative Instruments (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | ||
Change in fair value of derivatives: | |||||
Net realized investment gains (losses) | [1] | $ 78 | $ (402) | $ (140) | $ (607) |
Change in fair value of embedded derivatives: | |||||
Net realized investment gains (losses) | $ (1,325) | $ 28 | $ (2,001) | $ 467 | |
[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 (Detai42
Derivative Instruments (Details 2) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2016 | Dec. 31, 2015 | ||
Derivative [Line Items] | |||
Notional Amount | $ 157,400 | $ 134,700 | |
Fair Value | 4,325 | 2,501 | |
Bank of America, N.A. [Member] | |||
Derivative [Line Items] | |||
Notional Amount | 38,500 | 17,000 | |
Fair Value | 1,341 | 5 | |
Credit Suisse International [Member] | |||
Derivative [Line Items] | |||
Notional Amount | 31,600 | 12,000 | |
Fair Value | 617 | 167 | |
Societe Generale [Member] | |||
Derivative [Line Items] | |||
Notional Amount | 56,100 | 80,800 | |
Fair Value | 1,299 | 1,347 | |
Barclays Bank PLC [Member] | |||
Derivative [Line Items] | |||
Notional Amount | 18,100 | 7,600 | |
Fair Value | 369 | 137 | |
Citigroup Inc [Member] | |||
Derivative [Line Items] | |||
Notional Amount | 13,100 | 17,300 | |
Fair Value | $ 699 | $ 845 | |
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] | A2 | |
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] | BBB+ | |
[1] | As assigned by Standard & Poor’s Corporation (“S&P”) and Moody’s Investors Service, Inc. (“Moody’s”). |
Derivative Instruments (Detai43
Derivative Instruments (Details Textual) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2016 | Dec. 31, 2015 | |
Derivatives, Fair Value [Line Items] | ||
Concentration Risk, Credit Risk, Financial Instrument, Maximum Exposure | $ 250 | $ 250 |
Fixed Indexed Annuities Term Minimum | 10 years | |
Other Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Asset, Fair Value of Collateral | $ 3,081 | $ 2,617 |
Debt (Details)
Debt (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Short-term debt: | ||
Bank Credit Facility | $ 0 | $ 0 |
Long-term debt, current and noncurrent: | ||
Long-term debt | $ 247,083 | $ 246,975 |
Debt (Details Textual)
Debt (Details Textual) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2016 | Dec. 31, 2015 | |
Current Unsecured Bank Credit Facility [Member] | ||
Debt | ||
Line of Credit Facility, Expiration Date | Jul. 30, 2019 | |
Senior Note 4.50 % [Member] | Senior Notes 2025 [Member] | ||
Debt | ||
Debt Instrument, Unamortized Discount | $ 631 | $ 654 |
Debt Instrument, Interest Rate, Stated Percentage | 4.50% | 4.50% |
Debt Instrument, Face Amount | $ 250,000 | |
Debt Instrument, Maturity Date | Dec. 1, 2025 | Dec. 1, 2025 |
Unamortized Debt Issuance Expense | $ 2,286 | $ 2,371 |
Reinsurance (Details)
Reinsurance (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Effects of reinsurance on premiums and benefits | ||||
Premiums written and contract deposits, Gross Amount | $ 316,798 | $ 324,597 | $ 604,790 | $ 635,644 |
Premiums written and contract deposits, Ceded to Other Companies | 5,921 | 6,184 | 11,689 | 12,308 |
Premiums written and contract deposits, Assumed from Other Companies | 1,002 | 981 | 1,947 | 1,793 |
Premiums written and contract deposits, Net Amount | 311,879 | 319,394 | 595,048 | 625,129 |
Premiums and contract charges earned, Gross Amount | 193,396 | 187,809 | 383,629 | 373,005 |
Premiums and contract charges earned, Ceded to Other Companies | 5,952 | 6,332 | 11,721 | 12,647 |
Premiums and contract charges earned, Assumed from Other Companies | 916 | 899 | 1,902 | 1,757 |
Premiums and contract charges earned, Net Amount | 188,360 | 182,376 | 373,810 | 362,115 |
Benefits, claims and settlement expenses, Gross Amount | 151,998 | 140,038 | 283,238 | 255,878 |
Benefits, claims and settlement expenses, Ceded to Other Companies | 4,444 | 7,793 | 17,106 | 10,363 |
Benefits, claims and settlement expenses, Assumed from Other Companies | 854 | 694 | 1,789 | 1,443 |
Benefits, claims and settlement expenses, Net Amount | $ 148,408 | $ 132,939 | $ 267,921 | $ 246,958 |
Commitments (Details Textual)
Commitments (Details Textual) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Commitments And Contingencies Disclosure [Line Items] | ||
Purchase Commitment, Remaining Minimum Amount Committed | $ 177,952 | $ 147,139 |
Segment Information (Details)
Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Summarized financial information for these segments | |||||
Insurance premiums and contract charges earned | $ 188,360 | $ 182,376 | $ 373,810 | $ 362,115 | |
Net investment income | 91,179 | 83,995 | 175,838 | 167,308 | |
Net income (loss) | 11,866 | 16,183 | 37,019 | 50,458 | |
Assets | 10,466,302 | 10,466,302 | $ 10,056,972 | ||
Intersegment Eliminations [Member] | |||||
Summarized financial information for these segments | |||||
Net investment income | (215) | (223) | (432) | (449) | |
Assets | (31,520) | (31,520) | (37,208) | ||
Property and casualty [Member] | |||||
Summarized financial information for these segments | |||||
Insurance premiums and contract charges earned | 153,673 | 147,657 | 305,793 | 294,406 | |
Net investment income | 10,151 | 9,007 | 18,979 | 18,440 | |
Net income (loss) | (4,463) | 3,244 | 9,332 | 20,867 | |
Assets | 1,137,533 | 1,137,533 | 1,098,415 | ||
Annuity [Member] | |||||
Summarized financial information for these segments | |||||
Insurance premiums and contract charges earned | 6,098 | 6,516 | 12,166 | 12,739 | |
Net investment income | 62,727 | 57,183 | 120,776 | 113,575 | |
Net income (loss) | 13,063 | 11,747 | 23,616 | 24,257 | |
Assets | 7,256,608 | 7,256,608 | 7,001,411 | ||
Life [Member] | |||||
Summarized financial information for these segments | |||||
Insurance premiums and contract charges earned | 28,589 | 28,203 | 55,851 | 54,970 | |
Net investment income | 18,502 | 18,022 | 36,486 | 35,730 | |
Net income (loss) | 4,622 | 3,643 | 8,489 | 7,028 | |
Assets | 1,970,433 | 1,970,433 | 1,862,719 | ||
Corporate and other [Member] | |||||
Summarized financial information for these segments | |||||
Net investment income | 14 | 6 | 29 | 12 | |
Net income (loss) | (1,356) | $ (2,451) | (4,418) | $ (1,694) | |
Assets | $ 133,248 | $ 133,248 | $ 131,635 |