Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | Apr. 30, 2017 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
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 | 40,542,562 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | |
Investments | |||
Fixed maturity securities, available for sale, at fair value (amortized cost 2017, $7,173,235; 2016, $7,152,127) | $ 7,510,750 | $ 7,456,708 | |
Equity securities, available for sale, at fair value (cost 2017, $143,203; 2016, $134,013) | 156,975 | 141,649 | |
Short-term and other investments | 456,560 | 401,015 | |
Total investments | 8,124,285 | 7,999,372 | |
Cash | 6,593 | 16,670 | |
Deferred policy acquisition costs | 265,612 | 267,580 | |
Goodwill | 47,396 | 47,396 | |
Other assets | 324,155 | 321,874 | |
Separate Account (variable annuity) assets | 2,011,464 | 1,923,932 | |
Total assets | 10,779,505 | 10,576,824 | |
Policy liabilities | |||
Investment contract and life policy reserves | 5,502,992 | 5,447,969 | |
Unpaid claims and claim expenses | 340,033 | 329,888 | |
Unearned premiums | 240,816 | 246,274 | |
Total policy liabilities | 6,083,841 | 6,024,131 | |
Other policyholder funds | 711,395 | 708,950 | |
Other liabilities | 403,714 | 378,620 | |
Long-term debt | 247,273 | 247,209 | |
Separate Account (variable annuity) liabilities | 2,011,464 | 1,923,932 | |
Total liabilities | 9,457,687 | 9,282,842 | |
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, 2017, 65,215,048; 2016, 64,917,683 | 65 | 65 | |
Additional paid-in capital | 454,982 | 453,479 | |
Retained earnings | 1,159,532 | 1,155,732 | |
Accumulated other comprehensive income (loss), net of taxes: | |||
Net unrealized investment gains on fixed maturity and equity securities | [1],[2] | 198,271 | 175,738 |
Net funded status of benefit plans | [1] | (11,817) | (11,817) |
Treasury stock, at cost, 2017, 24,672,932 shares; 2016, 24,672,932 shares | (479,215) | (479,215) | |
Total shareholders’ equity | 1,321,818 | 1,293,982 | |
Total liabilities and shareholders’ equity | $ 10,779,505 | $ 10,576,824 | |
[1] | All amounts are net of tax. | ||
[2] | The pretax amounts reclassified from accumulated other comprehensive income (loss), $(313) and $740, are included in net realized investment gains and losses and the related income tax expenses, $(110) and $259, are included in income tax expense in the Consolidated Statements of Operations for the three months ended March 31, 2017 and 2016, respectively. |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Fixed maturities, available for sale, amortized cost | $ 7,173,235 | $ 7,152,127 |
Equity securities, available for sale, cost | $ 143,203 | $ 134,013 |
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 | 65,215,048 | 64,917,683 |
Treasury stock, shares | 24,672,932 | 24,672,932 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Revenues | ||
Insurance premiums and contract charges earned | $ 195,722 | $ 185,450 |
Net investment income | 90,711 | 84,659 |
Net realized investment losses | (242) | (154) |
Other income | 1,113 | 1,348 |
Total revenues | 287,304 | 271,303 |
Benefits, losses and expenses | ||
Benefits, claims and settlement expenses | 144,096 | 119,513 |
Interest credited | 48,774 | 46,690 |
Policy acquisition expenses amortized | 24,886 | 24,052 |
Operating expenses | 48,756 | 42,796 |
Interest expense | 2,956 | 2,935 |
Total benefits, losses and expenses | 269,468 | 235,986 |
Income before income taxes | 17,836 | 35,317 |
Income tax expense | 2,518 | 10,164 |
Net income | $ 15,318 | $ 25,153 |
Net income per share | ||
Basic | $ 0.37 | $ 0.61 |
Diluted | $ 0.37 | $ 0.61 |
Weighted average number of shares and equivalent shares (in thousands) | ||
Basic | 41,135 | 41,297 |
Diluted | 41,342 | 41,492 |
Net realized investment gains (losses) | ||
Total other-than-temporary impairment losses on securities | $ (2,797) | $ (3,673) |
Portion of losses recognized in other comprehensive income | 0 | 0 |
Net other-than-temporary impairment losses on securities recognized in earnings | (2,797) | (3,673) |
Realized gains, net | 2,555 | 3,519 |
Total | $ (242) | $ (154) |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | ||
Comprehensive income | |||
Net income | $ 15,318 | $ 25,153 | |
Other comprehensive income, net of taxes: | |||
Change in net unrealized investment gains and losses on fixed maturity and equity securities | [1],[2] | 22,533 | 69,490 |
Change in net funded status of benefit plans | [1] | 0 | 0 |
Other comprehensive income | [1] | 22,533 | 69,490 |
Total | $ 37,851 | $ 94,643 | |
[1] | All amounts are net of tax. | ||
[2] | The pretax amounts reclassified from accumulated other comprehensive income (loss), $(313) and $740, are included in net realized investment gains and losses and the related income tax expenses, $(110) and $259, are included in income tax expense in the Consolidated Statements of Operations for the three months ended March 31, 2017 and 2016, respectively. |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ 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, 2015 | $ 65 | $ 442,648 | $ 1,116,277 | $ 163,373 | $ (457,702) | ||
Options exercised, 2017, 33,764 shares; 2016, 84,850 shares | 0 | ||||||
Conversion of common stock units,2017, 15,981 shares; 2016, 8,538 shares | 0 | ||||||
Conversion of restricted stock units,2017, 247,620 shares; 2016, 165,794 shares | 0 | ||||||
Options exercised and conversion of common stock units and restricted stock units | 353 | ||||||
Share-based compensation expense | 1,910 | ||||||
Net income | $ 25,153 | 25,153 | |||||
Cash dividends, 2017, $0.275 per share;2016, $0.265 per share | (11,114) | ||||||
Change in net unrealized investment gains and losses on fixed maturity and equity securities | 69,490 | [1],[2] | 69,490 | ||||
Change in net funded status of benefit plans | 0 | [1] | 0 | ||||
Acquisition of shares, 2017, 0 shares;2016, 474,277 shares | (14,466) | ||||||
Ending balance at Mar. 31, 2016 | 1,335,987 | 65 | 444,911 | 1,130,316 | 232,863 | (472,168) | |
Beginning balance at Dec. 31, 2016 | 1,293,982 | 65 | 453,479 | 1,155,732 | 163,921 | (479,215) | |
Options exercised, 2017, 33,764 shares; 2016, 84,850 shares | 0 | ||||||
Conversion of common stock units,2017, 15,981 shares; 2016, 8,538 shares | 0 | ||||||
Conversion of restricted stock units,2017, 247,620 shares; 2016, 165,794 shares | 0 | ||||||
Options exercised and conversion of common stock units and restricted stock units | (750) | ||||||
Share-based compensation expense | 2,253 | ||||||
Net income | 15,318 | 15,318 | |||||
Cash dividends, 2017, $0.275 per share;2016, $0.265 per share | (11,518) | ||||||
Change in net unrealized investment gains and losses on fixed maturity and equity securities | 22,533 | [1],[2] | 22,533 | ||||
Change in net funded status of benefit plans | 0 | [1] | 0 | ||||
Acquisition of shares, 2017, 0 shares;2016, 474,277 shares | 0 | ||||||
Ending balance at Mar. 31, 2017 | $ 1,321,818 | $ 65 | $ 454,982 | $ 1,159,532 | $ 186,454 | $ (479,215) | |
[1] | All amounts are net of tax. | ||||||
[2] | The pretax amounts reclassified from accumulated other comprehensive income (loss), $(313) and $740, are included in net realized investment gains and losses and the related income tax expenses, $(110) and $259, are included in income tax expense in the Consolidated Statements of Operations for the three months ended March 31, 2017 and 2016, respectively. |
CONSOLIDATED STATEMENTS OF CHA7
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Common stock, par value beginning balance | $ 0.001 | $ 0.001 |
Options exercised, shares | 33,764 | 84,850 |
Conversion of common stock units, shares | 15,981 | 8,538 |
Conversion of restricted stock units, shares | 247,620 | 165,794 |
Cash dividends, per share | $ 0.275 | $ 0.265 |
Treasury stock, beginning balance, shares | 24,672,932 | 23,971,522 |
Treasury stock, acquisition of shares | 0 | 474,277 |
Treasury stock, ending balance, shares | 24,672,932 | 24,445,799 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Cash flows - operating activities | ||
Premiums collected | $ 172,588 | $ 177,535 |
Policyholder benefits paid | (127,823) | (116,941) |
Policy acquisition and other operating expenses paid | (74,763) | (71,024) |
Federal income taxes recovered | 11 | 0 |
Investment income collected | 91,840 | 82,586 |
Interest expense paid | (63) | (57) |
Other | 11,008 | 8,258 |
Net cash provided by operating activities | 72,798 | 80,357 |
Fixed maturities | ||
Purchases | (318,629) | (317,878) |
Sales | 110,872 | 82,090 |
Maturities, paydowns, calls and redemptions | 190,068 | 241,233 |
Purchase of other invested assets | (24,177) | (10,260) |
Net cash provided by (used in) short-term and other investments | (42,419) | (41,403) |
Net cash used in investing activities | (84,285) | (46,218) |
Cash flows - financing activities | ||
Dividends paid to shareholders | (11,518) | (11,114) |
Acquisition of treasury stock | 0 | (14,466) |
Proceeds from exercise of stock options | 723 | 1,727 |
Withholding tax payments on RSUs tendered | (2,532) | (3,231) |
Annuity contracts: variable, fixed and FHLB funding agreements | ||
Deposits | 117,311 | 112,564 |
Benefits, withdrawals and net transfers to Separate Account (variable annuity) assets | (99,757) | (85,411) |
Life policy accounts | ||
Deposits | 1,183 | 489 |
Withdrawals and surrenders | (1,066) | (926) |
Change in bank overdrafts | (2,934) | 1,174 |
Net cash provided by financing activities | 1,410 | 806 |
Net (decrease) increase in cash | (10,077) | 34,945 |
Cash at beginning of period | 16,670 | 15,509 |
Cash at end of period | $ 6,593 | $ 50,454 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Significant Accounting Policies | Note 1 - Basis of Presentation 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, 2016. The results of operations for the three months ended March 31, 2017 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 to the 2017 presentation. See “Adopted Accounting Standards”. This table summarizes the Company’s investment contract and life policy reserves. March 31, December 31, 2017 2016 Investment contract reserves $ 4,408,288 $ 4,360,456 Life policy reserves 1,094,704 1,087,513 Total $ 5,502,992 $ 5,447,969 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 investment gains and losses on fixed maturity and equity securities and the after tax change in net funded status of benefit plans for the period as shown in the Consolidated Statement of Changes in Shareholders’ Equity. The following tables reconcile these components. Net Unrealized Investment Gains and Losses on Fixed Maturity and Equity Securities (1)(2) Benefit Plans (1) Total (1) Beginning balance, January 1, 2017 $ 175,738 $ (11,817 ) $ 163,921 Other comprehensive income (loss) 22,330 - 22,330 Amounts reclassified from accumulated 203 - 203 Net current period other 22,533 - 22,533 Ending balance, March 31, 2017 $ 198,271 $ (11,817 ) $ 186,454 Beginning balance, January 1, 2016 $ 175,167 $ (11,794 ) $ 163,373 Other comprehensive income (loss) 69,971 - 69,971 Amounts reclassified from accumulated (481 ) - (481 ) Net current period other 69,490 - 69,490 Ending balance, March 31, 2016 $ 244,657 $ (11,794 ) $ 232,863 (1) All amounts are net of tax. (2) The pretax amounts reclassified from accumulated other comprehensive income (loss), $(313) and $740, are included in net realized investment gains and losses and the related income tax expenses, $(110) and $259, are included in income tax expense in the Consolidated Statements of Operations for the three months ended March 31, 2017 and 2016, 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 -- Net Unrealized Investment Gains and Losses on Fixed Maturity and Equity Securities”. Adopted Accounting Standards Employee Share-based Payment Accounting Effective January 1, 2017, the Company adopted new accounting guidance for employee share-based payments which simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The recognition and classification of the excess tax benefit provisions were applied prospectively in the results of operations. This adoption resulted in additional excess tax benefits of $2,450 which reduced the current provision for income taxes in the results of operations. The statutory tax withholding classification, which are cash payments made to taxing authorities for withheld taxes funded through tendered shares, were applied retrospectively and the Company reclassified the statutory tax withholding requirements in the statement of cash flows from Other in operating activities to Withholding tax payments on RSUs tendered in financing activities. This statutory withholding reclassification resulted in $2,532 and $3,231 being included in financing activities for the three months ended March 31, 2017 and 2016, respectively. There were no cumulative effect adjustments upon adoption of the new accounting guidance. Pending Accounting Standards Revenue Recognition In May 2014, the Financial Accounting Standards Board (“FASB”) issued accounting guidance to provide a single comprehensive model in accounting for revenue arising from contracts with customers. The guidance applies to all contracts with customers; however, insurance contracts are specifically excluded from this updated guidance. The guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those years. Early adoption is permitted only for annual reporting periods beginning after December 15, 2016. The Company plans to adopt the guidance as of January 1, 2018. Management believes the adoption of this accounting guidance will not have a material effect on the results of operations or financial position, and related disclosures, of the Company. Recognition and Measurement of Financial Assets and Liabilities In January 2016, the FASB issued accounting guidance to improve certain aspects of the recognition, measurement, presentation and disclosure of financial instruments. Among other things, this guidance requires public entities to measure equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) at fair value with changes in fair value recognized in net income and to perform a qualitative assessment to identify impairment for equity investments without readily determinable fair values. Companies are required to apply this guidance by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the year of adoption and, for the guidance related to equity securities without readily determinable fair values, companies are required to apply a prospective approach to equity investments that exist as of the date of adoption. The guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those years. Early application is permitted. The guidance will not have an impact on the Company’s financial position and management is evaluating the impact that this guidance will have on the Company’s results of operations. Statement of Cash Flows -- Classification In August 2016, the FASB issued guidance to reduce diversity in practice in the statement of cash flows between operating, investing and financing activities related to the classification of cash receipts and cash payments for eight specific issues. The FASB acknowledged that current GAAP either is unclear or does not include specific guidance on these eight cash flow classification issues: (1) debt prepayment or extinguishment costs; (2) settlement of zero-coupon bonds (pertains to issuers); (3) contingent consideration payments made after a business combination; (4) proceeds from the settlement of insurance claims (pertains to claimants); (5) proceeds from the settlement of corporate-owned life insurance policies; (6) distributions received from equity method investees; (7) beneficial interests in securitization transactions (pertains to transferors) and (8) separately identifiable cash flows and application of the predominance principle. For public business entities, the guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those years, using a retrospective approach. The guidance allows prospective adoption for individual issues if it is impracticable to apply the amendments retrospectively for those issues. Early application is permitted. Management believes the adoption of this accounting guidance will not have a material effect on the classifications in the Company’s consolidated statement of cash flows. The adoption of this accounting guidance will not have any effect on the results of operations or financial position of the Company. Accounting for Leases In February 2016, the FASB issued accounting and disclosure guidance to improve financial reporting and comparability among organizations about leasing transactions. Under the new guidance, for leases with lease terms of more than 12 months, a lessee will be required to recognize assets and liabilities on the balance sheet for the rights and obligations created by those leases. Consistent with current accounting guidance, the recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or an operating lease. However, while current guidance requires only capital leases to be recognized on the balance sheet, the new guidance will require both operating and capital leases to be recognized on the balance sheet. In transition to the new guidance, companies are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those years. Early application is permitted. Management is evaluating the impact this guidance will have on the results of operations and financial position of the Company. Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued guidance to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments, including reinsurance receivables, held by companies. The new guidance replaces the incurred loss impairment methodology and requires an organization to measure and recognize all current expected credit losses (“CECL”) for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Companies will need to utilize forward-looking information to better inform their credit loss estimates. Companies will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. Credit losses related to available for sale debt securities -- which represent over 90% of Horace Mann’s total investment portfolio -- will be recorded through an allowance for credit losses with this allowance having a limit equal to the amount by which fair value is below amortized cost. The guidance also requires enhanced qualitative and quantitative disclosures to provide additional information about the amounts recorded in the financial statements. For public business entities that are SEC filers, the guidance is effective for annual reporting periods beginning after December 15, 2019, including interim periods within those years, using a modified-retrospective approach. Early application is permitted for annual reporting periods, and interim periods within those years, beginning after December 15, 2018. Management is evaluating the impact this guidance will have on the results of operations and financial position of the Company. Simplifying the Test for Goodwill Impairment In January 2017, the FASB issued guidance to simplify the accounting for goodwill impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance will remain largely unchanged. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The same one-step impairment test will be applied to goodwill at all reporting units, even those with zero or negative carrying amounts. Entities will be required to disclose the amount of goodwill for reporting units with zero or negative carrying amounts. Public business entities should adopt the guidance prospectively for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early application is permitted. Management believes the adoption of this accounting guidance will not have a material effect on how it tests goodwill for impairment. |
Investments
Investments | 3 Months Ended |
Mar. 31, 2017 | |
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 (“FIA”) and indexed universal life (“IUL”) products’ contingent liabilities. The Company’s FIA and IUL products include embedded derivative features that are discussed in “Note 1 -- Summary of Significant Accounting Policies -- Investment Contract and Life Policy Reserves -- Reserves 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, 2016. 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 investment or insurance products during the three months ended March 31, 2017 and 2016. Fixed Maturity and Equity Securities The Company’s investment portfolio is comprised primarily of fixed maturity securities and also includes equity securities. The amortized cost or cost, unrealized investment gains and losses, fair values and other-than-temporary impairment (“OTTI”) included in accumulated other comprehensive income (“AOCI”) of all fixed maturity and equity securities in the portfolio were as follows: Unrealized Unrealized Amortized Investment Investment Fair OTTI in Cost or Cost Gains Losses Value AOCI (1) March 31, 2017 Fixed maturity securities U.S. Government and federally sponsored agency obligations (2): Mortgage-backed securities $ 581,346 $ 33,904 $ 5,443 $ 609,807 $ - Other, including U.S. Treasury securities 520,718 19,809 9,219 531,308 - Municipal bonds 1,647,314 148,319 18,206 1,777,427 - Foreign government bonds 93,845 5,897 56 99,686 - Corporate bonds 2,683,746 162,602 9,175 2,837,173 - Other mortgage-backed securities 1,646,266 21,755 12,672 1,655,349 1,538 Totals $ 7,173,235 $ 392,286 $ 54,771 $ 7,510,750 $ 1,538 Equity securities (3) $ 143,203 $ 15,743 $ 1,971 $ 156,975 $ - December 31, 2016 Fixed maturity securities U.S. Government and federally sponsored agency obligations (2): Mortgage-backed securities $ 587,355 $ 34,256 $ 6,720 $ 614,891 $ - Other, including U.S. Treasury securities 458,745 18,518 10,120 467,143 - Municipal bonds 1,648,252 143,733 22,588 1,769,397 - Foreign government bonds 93,864 5,102 297 98,669 - Corporate bonds 2,672,818 152,229 14,826 2,810,221 - Other mortgage-backed securities 1,691,093 21,153 15,859 1,696,387 1,618 Totals $ 7,152,127 $ 374,991 $ 70,410 $ 7,456,708 $ 1,618 Equity securities (3) $ 134,013 $ 13,210 $ 5,574 $ 141,649 $ - (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 OTTI losses in AOCI which was not included in earnings; amounts also include net unrealized investment gains and 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 $283,039 and $272,668; Federal Home Loan Mortgage Corporation (“FHLMC”) of $373,017 and $378,683; and Government National Mortgage Association (“GNMA”) of $112,065 and $115,627 as of March 31, 2017 and December 31, 2016, 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 maturity and equity securities in an unrealized loss position at March 31, 2017 and December 31, 2016, respectively. The Company views the decrease in value of all of the securities with unrealized losses at March 31, 2017 -- 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. 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 March 31, 2017 Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 169,786 $ 5,035 $ 3,381 $ 408 $ 173,167 $ 5,443 Other 262,517 9,219 - - 262,517 9,219 Municipal bonds 325,610 14,754 10,082 3,452 335,692 18,206 Foreign government bonds 1,444 56 - - 1,444 56 Corporate bonds 285,724 6,492 37,490 2,683 323,214 9,175 Other mortgage-backed securities 444,102 9,060 188,904 3,612 633,006 12,672 Total fixed maturity securities 1,489,183 44,616 239,857 10,155 1,729,040 54,771 Equity securities (1) 37,554 1,013 8,068 958 45,622 1,971 Combined totals $ 1,526,737 $ 45,629 $ 247,925 $ 11,113 $ 1,774,662 $ 56,742 Number of positions with a gross unrealized loss 560 91 651 Fair value as a percentage of total fixed maturity and equity securities fair value 19.9 % 3.2 % 23.1 % December 31, 2016 Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 186,439 $ 6,176 $ 3,235 $ 544 $ 189,674 $ 6,720 Other 219,372 10,120 - - 219,372 10,120 Municipal bonds 408,163 19,006 9,928 3,582 418,091 22,588 Foreign government bonds 24,182 297 - - 24,182 297 Corporate bonds 459,402 11,056 57,261 3,770 516,663 14,826 Other mortgage-backed securities 640,691 10,470 229,106 5,389 869,797 15,859 Total fixed maturity securities 1,938,249 57,125 299,530 13,285 2,237,779 70,410 Equity securities (1) 56,676 4,567 7,956 1,007 64,632 5,574 Combined totals $ 1,994,925 $ 61,692 $ 307,486 $ 14,292 $ 2,302,411 $ 75,984 Number of positions with a gross unrealized loss 629 102 731 Fair value as a percentage of total fixed maturity and equity securities fair value 26.3 % 4.0 % 30.3 % (1) Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds. Fixed maturity and equity securities with an investment grade rating represented 90% of the gross unrealized losses as of March 31, 2017. 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 The following table summarizes the cumulative amounts related to the Company’s credit loss component of OTTI losses on fixed maturity securities held as of March 31, 2017 and 2016 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 OTTI losses were recognized in other comprehensive income: Three Months Ended March 31, 2017 2016 Cumulative credit loss (1) Beginning of period $ 13,703 $ 7,844 New credit losses - 1,824 Increases to previously recognized credit losses 726 - Gains related to securities sold or paid down during the period (2 ) - End of period $ 14,427 $ 9,668 (1) The cumulative credit loss amounts exclude OTTI 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 Maturity and Equity Securities The following table presents the distribution of the Company’s fixed maturity securities portfolio by estimated expected maturity. Estimated expected maturities differ from contractual maturities, reflecting assumptions regarding borrowers’ utilization of the right to call or prepay obligations with or without call or prepayment penalties. For structured securities, including mortgage-backed securities and other asset-backed securities, estimated expected maturities consider broker-dealer survey prepayment assumptions and are verified for consistency with the interest rate and economic environments. Percent of Total Fair Value March 31, 2017 March 31, December 31, Fair Amortized 2017 2016 Value Cost Estimated expected maturity: Due in 1 year or less 3.8 % 3.9 % $ 284,164 $ 271,394 Due after 1 year through 5 years 28.1 28.7 2,109,683 2,014,879 Due after 5 years through 10 years 34.1 35.2 2,562,229 2,447,089 Due after 10 years through 20 years 21.1 19.5 1,582,732 1,511,608 Due after 20 years 12.9 12.7 971,942 928,265 Total 100.0 % 100.0 % $ 7,510,750 $ 7,173,235 Average option-adjusted duration, in years 6.0 5.9 Proceeds received from sales of fixed maturity 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 March 31, 2017 2016 Fixed maturity securities Proceeds received $ 110,872 $ 82,090 Gross gains realized 2,489 2,476 Gross losses realized (881 ) (492 ) Equity securities Proceeds received $ 5,489 $ 6,147 Gross gains realized 1,048 520 Gross losses realized (192 ) (646 ) Net Unrealized Investment Gains and Losses on Fixed Maturity and Equity Securities Net unrealized investment gains and losses are computed as the difference between fair value and amortized cost for fixed maturity securities 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 March 31, 2017 2016 Net unrealized investment gains and losses on fixed maturity securities, net of tax Beginning of period $ 197,978 $ 198,714 Change in net unrealized investment gains and losses 21,891 78,341 Reclassification of net realized investment gains to net income (484 ) (674 ) End of period $ 219,385 $ 276,381 Net unrealized investment gains and losses on equity securities, net of tax Beginning of period $ 4,963 $ 2,649 Change in net unrealized investment gains and losses 3,302 2,188 Reclassification of net realized investment losses to net income 687 193 End of period $ 8,952 $ 5,030 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 March 31, 2017 Asset derivatives: Free-standing derivatives $ 9,932 $ - $ 9,932 $ - $ 10,449 $ (517 ) December 31, 2016 Asset derivatives: Free-standing derivatives 8,694 - 8,694 - 8,824 (130 ) Deposits At March 31, 2017 and December 31, 2016, fixed maturity securities with a fair value of $18,089 and $18,119, 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 March 31, 2017 and December 31, 2016, fixed maturity securities with a fair value of $621,544 and $620,489, 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 maturity securities on the Company’s Consolidated Balance Sheets. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2017 | |
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, 2016, 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 March 31, 2017, Level 3 invested assets comprised 3.1% 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 March 31, 2017 Financial Assets Investments Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 609,807 $ 609,807 $ - $ 605,863 $ 3,944 Other, including U.S. Treasury securities 531,308 531,308 13,619 517,689 - Municipal bonds 1,777,427 1,777,427 - 1,723,965 53,462 Foreign government bonds 99,686 99,686 - 99,686 - Corporate bonds 2,837,173 2,837,173 14,173 2,740,505 82,495 Other mortgage-backed securities 1,655,349 1,655,349 - 1,546,499 108,850 Total fixed maturity securities 7,510,750 7,510,750 27,792 7,234,207 248,751 Equity securities 156,975 156,975 102,573 54,396 6 Short-term investments 81,064 81,064 79,859 1,205 - Other investments 21,432 21,432 - 21,432 - Totals $ 7,770,221 $ 7,770,221 $ 210,224 $ 7,311,240 $ 248,757 Financial Liabilities Investment contract and life policy reserves, embedded derivatives $ 236 $ 236 $ - $ 236 $ - Other policyholder funds, embedded derivatives 64,261 64,261 - - 64,261 December 31, 2016 Financial Assets Investments Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 614,891 $ 614,891 $ - $ 611,476 $ 3,415 Other, including U.S. Treasury securities 467,143 467,143 13,631 453,512 - Municipal bonds 1,769,397 1,769,397 - 1,722,900 46,497 Foreign government bonds 98,669 98,669 - 98,669 - Corporate bonds 2,810,221 2,810,221 13,532 2,736,498 60,191 Other mortgage-backed securities 1,696,387 1,696,387 - 1,595,143 101,244 Total fixed maturity securities 7,456,708 7,456,708 27,163 7,218,198 211,347 Equity securities 141,649 141,649 98,632 43,011 6 Short-term investments 44,918 44,918 44,167 - 751 Other investments 20,194 20,194 - 20,194 - Totals $ 7,663,469 $ 7,663,469 $ 169,962 $ 7,281,403 $ 212,104 Financial Liabilities Investment contract and life policy reserves, embedded derivatives $ 158 $ 158 $ - $ 158 $ - Other policyholder funds, embedded derivatives 59,393 59,393 - - 59,393 During the three months ended March 31, 2017, an equity security was transferred into Level 1 from Level 2 as a result of increased liquidity in the market and a sustained increase in the market activity for this asset. The following table presents reconciliations for the periods indicated for all Level 3 assets and liabilities measured at fair value on a recurring basis. Financial Financial Assets Liabilities(1) Municipal Bonds Corporate Bonds Other Mortgage- Backed Securities (2) Total Fixed Maturity Equity Securities Short-term Investments Total Beginning balance, January 1, 2017 $ 46,497 $ 60,191 $ 104,659 $ 211,347 $ 6 $ 751 $ 212,104 $ 59,393 Transfers into Level 3 (3) 5,214 29,918 15,039 50,171 - - 50,171 - Transfers out of Level 3 (3) - (6,110 ) - (6,110 ) - (751 ) (6,861 ) - Total gains or losses Net realized investment gains (losses) included in net income related to financial assets - - - - - - - - Net realized (gains) losses included in net income related to financial liabilities - - - - - - - 2,308 Net unrealized investment gains (losses) included in other comprehensive income 1,871 96 (771 ) 1,196 - - 1,196 - Purchases - - - - - - - - Issuances - - - - - - - 3,389 Sales - - - - - - - - Settlements - - - - - - - - Paydowns, maturities and distributions (120 ) (1,600 ) (6,133 ) (7,853 ) - - (7,853 ) (829 ) Ending balance, March 31, 2017 $ 53,462 $ 82,495 $ 112,794 $ 248,751 $ 6 $ - $ 248,757 $ 64,261 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 6,059 11,642 32,452 - - 32,452 - Transfers out of Level 3 (3) - - - - - - - - Total gains or losses Net realized investment gains (losses) included in net income related to financial assets - - - - - - - - Net realized (gains) losses included in net income related to financial liabilities - - - - - - - 674 Net unrealized investment gains (losses) included in other comprehensive income 1,484 388 (7 ) 1,865 - - 1,865 - Purchases - - - - - - - - Issuances - - - - - - - 3,491 Sales - - - - - - - - Settlements - - - - - - - - Paydowns, maturities and distributions (121 ) (3,951 ) (3,280 ) (7,352 ) - - (7,352 ) (1,101 ) Ending balance, March 31, 2016 $ 46,493 $ 70,071 $ 83,821 $ 200,385 $ 6 $ - $ 200,391 $ 42,085 (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) 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 months ended March 31, 2017 and 2016 were attributable to changes in the availability of observable market information for individual fixed maturity securities and short-term investments. 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 March 31, 2017 and 2016, there were no net realized investment gains or losses included in earnings that were attributable to changes in the fair value of Level 3 assets still held. For the three months ended March 31, 2017 and 2016, net realized losses of $2,308 and $674, respectively, were included in earnings that were attributable to the changes in the fair value of Level 3 liabilities (embedded derivatives) still held. 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, 2016. 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 maturity securities. The sensitivity of the estimated fair values to changes in the significant unobservable inputs for fixed maturity 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. The following table presents the carrying value, fair value and fair value hierarchy of these financial assets and financial liabilities. Fair Value Measurements at Carrying Fair Reporting Date Using Amount Value Level 1 Level 2 Level 3 March 31, 2017 Financial Assets Investments Other investments $ 151,537 $ 156,089 $ - $ - $ 156,089 Financial Liabilities Investment contract and life policy reserves, fixed annuity contracts 4,408,288 4,317,991 - - 4,317,991 Investment contract and life policy reserves, account values on life contracts 80,484 85,945 - - 85,945 Other policyholder funds 647,134 647,134 - 575,342 71,792 Long-term debt 247,273 259,698 259,698 - - December 31, 2016 Financial Assets Investments Other investments $ 151,965 $ 156,536 $ - $ - $ 156,536 Financial Liabilities Investment contract and life policy reserves, fixed annuity contracts 4,360,456 4,280,528 - - 4,280,528 Investment contract and life policy reserves, account values on life contracts 79,591 85,066 - - 85,066 Other policyholder funds 649,557 649,557 - 575,253 74,304 Long-term debt 247,209 248,191 248,191 - - |
Derivative Instruments
Derivative Instruments | 3 Months Ended |
Mar. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | Note 4 - Derivative Instruments In February 2014, the Company began offering FIA products, which are deferred fixed annuities that guarantee the return of principal to the contractholder and credit interest based on a percentage of the gain in a specified market index. In October 2015, the Company began offering IUL products, 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 OTC call options on the applicable market indices to fund the index credits due to FIA and IUL policyholders. For the Company, substantially all of 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 changes in fair value included in Net realized investment gains and 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 FIA contracts are treated as a “series of embedded derivatives” over the expected life of the applicable contract with a corresponding reserve recorded. For the IUL 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. March 31, December 31, 2017 2016 Assets Derivative instruments, included in Short-term and other investments $ 9,932 $ 8,694 Liabilities FIA - embedded derivatives, included in Other policyholder funds 64,261 59,393 IUL - embedded derivatives, included in Investment contract and life policy reserves 236 158 In general, the change in the fair value of the embedded derivatives related to FIA contracts 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 FIA contracts are expected to be in force, which typically exceeds 10 years. Three Months Ended March 31, 2017 2016 Change in fair value of derivatives (1): Revenues Net realized investment gains (losses) $ 2,437 $ (218 ) Change in fair value of embedded derivatives: Revenues Net realized investment losses (2,366 ) (676 ) (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. March 31, 2017 December 31, 2016 Credit Rating (1) Notional Fair Notional Fair Counterparty S&P Moody’s Amount Value Amount Value Bank of America, N.A. A+ A1 $ 25,200 $ 601 $ 38,500 $ 1,934 Barclays Bank PLC A- A1 80,900 2,332 66,800 1,543 Citigroup Inc. BBB+ Baa1 - - - - Credit Suisse International A A1 57,700 5,164 65,200 4,281 Societe Generale A A2 40,200 1,835 15,600 936 Total $ 204,000 $ 9,932 $ 186,100 $ 8,694 (1) As assigned by Standard & Poor’s Corporation (“S&P”) and Moody’s Investors Service, Inc. (“Moody’s”). As of March 31, 2017 and December 31, 2016, the Company held $10,449 and $8,824, 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. |
Property and Casualty Unpaid Cl
Property and Casualty Unpaid Claims and Claim Expenses | 3 Months Ended |
Mar. 31, 2017 | |
Insurance Loss Reserves [Abstract] | |
Property and Casualty Unpaid Claims and Claim Expenses | Note 5 - Property and Casualty Unpaid Claims and Claim Expenses The following table is a summary reconciliation of the beginning and ending Property and Casualty unpaid claims and claim expense reserves for the periods indicated. The table presents reserves on both gross and net (after reinsurance) bases. The total net Property and Casualty insurance claims and claim expense incurred amounts are reflected in the Consolidated Statements of Operations. The end of the period gross reserve (before reinsurance) balances and the reinsurance recoverable balances are reflected on a gross basis in the Consolidated Balance Sheets. March 31, March 31, 2017 2016 Property and Casualty segment Gross reserves, beginning of year (1) $ 307,757 $ 301,569 Less: reinsurance recoverables 61,199 50,332 Net reserves, beginning of year (2) 246,558 251,237 Incurred claims and claim expenses: Claims occurring in the current year 123,204 103,206 Decrease in estimated reserves for claims occurring in prior years (3) (1,000 ) (2,000 ) Total claims and claim expenses incurred (4) 122,204 101,206 Claims and claim expense payments for claims occurring during: Current year 52,380 39,081 Prior years 62,013 54,515 Total claims and claim expense payments 114,393 93,596 Net reserves, end of year (2) 254,369 258,847 Plus: reinsurance recoverables 61,804 60,429 Gross reserves, end of year (1) $ 316,173 $ 319,276 (1) Unpaid claims and claim expenses as reported in the Consolidated Balance Sheets also include reserves for the Life and Retirement segments of $23,860 and $24,993 as of March 31, 2017 and 2016, respectively, in addition to Property and Casualty segment reserves. (2) Reserves net of anticipated reinsurance recoverables. (3) Shows the amounts by which the Company decreased its reserves in each of the periods indicated for claims occurring in previous periods to reflect subsequent information on such claims and changes in their projected final settlement costs. (4) Benefits, claims and settlement expenses as reported in the Consolidated Statements of Operations also include amounts for the Life and Retirement segments of $21,892 and $18,307 as of March 31, 2017 and 2016, respectively, in addition to the Property and Casualty segment amounts. Net favorable development of total reserves for Property and Casualty claims occurring in prior years was $1,000 and $2,000 for the three month periods ended March 31, 2017 and 2016, respectively. The favorable development for both of the three month periods ended March 31, 2017 and 2016 was predominantly the result of favorable severity trends in homeowners loss emergence for accident years 2014 and prior. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Debt | Note 6 - Debt Indebtedness outstanding was as follows: March 31, December 31, 2017 2016 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 $589 and $603 (4.5% imputed rate) and unamortized debt issuance costs of $2,138 and $2,188 247,273 247,209 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, 2016. |
Reinsurance
Reinsurance | 3 Months Ended |
Mar. 31, 2017 | |
Insurance [Abstract] | |
Reinsurance and Catastrophes | Note 7 - 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 March 31, 2017 Premiums written and contract deposits $ 301,512 $ 5,510 $ 730 $ 296,732 Premiums and contract charges earned 200,455 5,534 801 195,722 Benefits, claims and settlement expenses 147,271 3,883 708 144,096 Three months ended March 31, 2016 Premiums written and contract deposits $ 287,992 $ 5,768 $ 945 $ 283,169 Premiums and contract charges earned 190,233 5,769 986 185,450 Benefits, claims and settlement expenses 131,240 12,662 935 119,513 |
Commitments
Commitments | 3 Months Ended |
Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments | Note 8 - 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 $140,516 and $135,054 at March 31, 2017 and December 31, 2016, respectively. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
Segment Information | Note 9 - Segment Information The Company conducts and manages its business through four segments. The three operating segments, representing the major lines of insurance business, are: Property and Casualty segment, primarily personal lines automobile and homeowners products; Retirement segment, primarily tax-qualified fixed and variable annuities; and Life segment, life insurance. The Company does not allocate the impact of corporate-level transactions to these operating 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, net realized investment gains and losses and certain public company expenses, such items also have included corporate debt retirement costs/gains, when applicable. Three Months Ended March 31, 2017 2016 Insurance premiums and contract charges earned Property and Casualty $ 158,318 $ 152,120 Retirement 6,601 6,068 Life 30,803 27,262 Total $ 195,722 $ 185,450 Net investment income Property and Casualty $ 9,177 $ 8,828 Retirement 63,442 58,049 Life 18,288 17,984 Corporate and Other 12 15 Intersegment eliminations (208 ) (217 ) Total $ 90,711 $ 84,659 Net income (loss) Property and Casualty $ 2,735 $ 13,795 Retirement 11,530 10,553 Life 3,885 3,867 Corporate and Other (2,832 ) (3,062 ) Total $ 15,318 $ 25,153 March 31, December 31, 2017 2016 Assets Property and Casualty $ 1,117,764 $ 1,110,958 Retirement 7,622,077 7,449,777 Life 1,941,372 1,912,771 Corporate and Other 126,745 140,104 Intersegment eliminations (28,453 ) (36,786 ) Total $ 10,779,505 $ 10,576,824 |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
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 March 31, 2017, the consolidated results of operations, comprehensive income, changes in shareholders’ equity and cash flows for the three months ended March 31, 2017 and 2016. 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, 2016. The results of operations for the three months ended March 31, 2017 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 to the 2017 presentation. See “Adopted Accounting Standards”. |
Future Policy Benefits, Interest-sensitive Life Contract Liabilities and Annuity Contract Liabilities | Investment Contract and Life Policy Reserves This table summarizes the Company’s investment contract and life policy reserves. March 31, December 31, 2017 2016 Investment contract reserves $ 4,408,288 $ 4,360,456 Life policy reserves 1,094,704 1,087,513 Total $ 5,502,992 $ 5,447,969 |
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 investment gains and losses on fixed maturity and equity securities and the after tax change in net funded status of benefit plans for the period as shown in the Consolidated Statement of Changes in Shareholders’ Equity. The following tables reconcile these components. Net Unrealized Investment Gains and Losses on Fixed Maturity and Equity Securities (1)(2) Benefit Plans (1) Total (1) Beginning balance, January 1, 2017 $ 175,738 $ (11,817 ) $ 163,921 Other comprehensive income (loss) 22,330 - 22,330 Amounts reclassified from accumulated 203 - 203 Net current period other 22,533 - 22,533 Ending balance, March 31, 2017 $ 198,271 $ (11,817 ) $ 186,454 Beginning balance, January 1, 2016 $ 175,167 $ (11,794 ) $ 163,373 Other comprehensive income (loss) 69,971 - 69,971 Amounts reclassified from accumulated (481 ) - (481 ) Net current period other 69,490 - 69,490 Ending balance, March 31, 2016 $ 244,657 $ (11,794 ) $ 232,863 (1) All amounts are net of tax. (2) The pretax amounts reclassified from accumulated other comprehensive income (loss), $(313) and $740, are included in net realized investment gains and losses and the related income tax expenses, $(110) and $259, are included in income tax expense in the Consolidated Statements of Operations for the three months ended March 31, 2017 and 2016, 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 -- Net Unrealized Investment Gains and Losses on Fixed Maturity and Equity Securities”. |
Adopted Accounting Standards Policy | Adopted Accounting Standards Employee Share-based Payment Accounting Effective January 1, 2017, the Company adopted new accounting guidance for employee share-based payments which simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The recognition and classification of the excess tax benefit provisions were applied prospectively in the results of operations. This adoption resulted in additional excess tax benefits of $2,450 which reduced the current provision for income taxes in the results of operations. The statutory tax withholding classification, which are cash payments made to taxing authorities for withheld taxes funded through tendered shares, were applied retrospectively and the Company reclassified the statutory tax withholding requirements in the statement of cash flows from Other in operating activities to Withholding tax payments on RSUs tendered in financing activities. This statutory withholding reclassification resulted in $2,532 and $3,231 being included in financing activities for the three months ended March 31, 2017 and 2016, respectively. There were no cumulative effect adjustments upon adoption of the new accounting guidance. |
Reclassification | Pending Accounting Standards Revenue Recognition In May 2014, the Financial Accounting Standards Board (“FASB”) issued accounting guidance to provide a single comprehensive model in accounting for revenue arising from contracts with customers. The guidance applies to all contracts with customers; however, insurance contracts are specifically excluded from this updated guidance. The guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those years. Early adoption is permitted only for annual reporting periods beginning after December 15, 2016. The Company plans to adopt the guidance as of January 1, 2018. Management believes the adoption of this accounting guidance will not have a material effect on the results of operations or financial position, and related disclosures, of the Company. Recognition and Measurement of Financial Assets and Liabilities In January 2016, the FASB issued accounting guidance to improve certain aspects of the recognition, measurement, presentation and disclosure of financial instruments. Among other things, this guidance requires public entities to measure equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) at fair value with changes in fair value recognized in net income and to perform a qualitative assessment to identify impairment for equity investments without readily determinable fair values. Companies are required to apply this guidance by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the year of adoption and, for the guidance related to equity securities without readily determinable fair values, companies are required to apply a prospective approach to equity investments that exist as of the date of adoption. The guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those years. Early application is permitted. The guidance will not have an impact on the Company’s financial position and management is evaluating the impact that this guidance will have on the Company’s results of operations. Statement of Cash Flows -- Classification In August 2016, the FASB issued guidance to reduce diversity in practice in the statement of cash flows between operating, investing and financing activities related to the classification of cash receipts and cash payments for eight specific issues. The FASB acknowledged that current GAAP either is unclear or does not include specific guidance on these eight cash flow classification issues: (1) debt prepayment or extinguishment costs; (2) settlement of zero-coupon bonds (pertains to issuers); (3) contingent consideration payments made after a business combination; (4) proceeds from the settlement of insurance claims (pertains to claimants); (5) proceeds from the settlement of corporate-owned life insurance policies; (6) distributions received from equity method investees; (7) beneficial interests in securitization transactions (pertains to transferors) and (8) separately identifiable cash flows and application of the predominance principle. For public business entities, the guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those years, using a retrospective approach. The guidance allows prospective adoption for individual issues if it is impracticable to apply the amendments retrospectively for those issues. Early application is permitted. Management believes the adoption of this accounting guidance will not have a material effect on the classifications in the Company’s consolidated statement of cash flows. The adoption of this accounting guidance will not have any effect on the results of operations or financial position of the Company. Accounting for Leases In February 2016, the FASB issued accounting and disclosure guidance to improve financial reporting and comparability among organizations about leasing transactions. Under the new guidance, for leases with lease terms of more than 12 months, a lessee will be required to recognize assets and liabilities on the balance sheet for the rights and obligations created by those leases. Consistent with current accounting guidance, the recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or an operating lease. However, while current guidance requires only capital leases to be recognized on the balance sheet, the new guidance will require both operating and capital leases to be recognized on the balance sheet. In transition to the new guidance, companies are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those years. Early application is permitted. Management is evaluating the impact this guidance will have on the results of operations and financial position of the Company. Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued guidance to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments, including reinsurance receivables, held by companies. The new guidance replaces the incurred loss impairment methodology and requires an organization to measure and recognize all current expected credit losses (“CECL”) for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Companies will need to utilize forward-looking information to better inform their credit loss estimates. Companies will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. Credit losses related to available for sale debt securities -- which represent over 90% of Horace Mann’s total investment portfolio -- will be recorded through an allowance for credit losses with this allowance having a limit equal to the amount by which fair value is below amortized cost. The guidance also requires enhanced qualitative and quantitative disclosures to provide additional information about the amounts recorded in the financial statements. For public business entities that are SEC filers, the guidance is effective for annual reporting periods beginning after December 15, 2019, including interim periods within those years, using a modified-retrospective approach. Early application is permitted for annual reporting periods, and interim periods within those years, beginning after December 15, 2018. Management is evaluating the impact this guidance will have on the results of operations and financial position of the Company. Simplifying the Test for Goodwill Impairment In January 2017, the FASB issued guidance to simplify the accounting for goodwill impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance will remain largely unchanged. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The same one-step impairment test will be applied to goodwill at all reporting units, even those with zero or negative carrying amounts. Entities will be required to disclose the amount of goodwill for reporting units with zero or negative carrying amounts. Public business entities should adopt the guidance prospectively for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early application is permitted. Management believes the adoption of this accounting guidance will not have a material effect on how it tests goodwill for impairment. |
Basis of Presentation (Tables)
Basis of Presentation (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
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. March 31, December 31, 2017 2016 Investment contract reserves $ 4,408,288 $ 4,360,456 Life policy reserves 1,094,704 1,087,513 Total $ 5,502,992 $ 5,447,969 |
Accumulated Other Comprehensive Income (Loss) | The following tables reconcile these components. Net Unrealized Investment Gains and Losses on Fixed Maturity and Equity Securities (1)(2) Benefit Plans (1) Total (1) Beginning balance, January 1, 2017 $ 175,738 $ (11,817 ) $ 163,921 Other comprehensive income (loss) 22,330 - 22,330 Amounts reclassified from accumulated 203 - 203 Net current period other 22,533 - 22,533 Ending balance, March 31, 2017 $ 198,271 $ (11,817 ) $ 186,454 Beginning balance, January 1, 2016 $ 175,167 $ (11,794 ) $ 163,373 Other comprehensive income (loss) 69,971 - 69,971 Amounts reclassified from accumulated (481 ) - (481 ) Net current period other 69,490 - 69,490 Ending balance, March 31, 2016 $ 244,657 $ (11,794 ) $ 232,863 (1) All amounts are net of tax. (2) The pretax amounts reclassified from accumulated other comprehensive income (loss), $(313) and $740, are included in net realized investment gains and losses and the related income tax expenses, $(110) and $259, are included in income tax expense in the Consolidated Statements of Operations for the three months ended March 31, 2017 and 2016, respectively. |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Unrealized gains and losses on fixed maturities and equity securities | The amortized cost or cost, unrealized investment gains and losses, fair values and other-than-temporary impairment (“OTTI”) included in accumulated other comprehensive income (“AOCI”) of all fixed maturity and equity securities in the portfolio were as follows: Unrealized Unrealized Amortized Investment Investment Fair OTTI in Cost or Cost Gains Losses Value AOCI (1) March 31, 2017 Fixed maturity securities U.S. Government and federally sponsored agency obligations (2): Mortgage-backed securities $ 581,346 $ 33,904 $ 5,443 $ 609,807 $ - Other, including U.S. Treasury securities 520,718 19,809 9,219 531,308 - Municipal bonds 1,647,314 148,319 18,206 1,777,427 - Foreign government bonds 93,845 5,897 56 99,686 - Corporate bonds 2,683,746 162,602 9,175 2,837,173 - Other mortgage-backed securities 1,646,266 21,755 12,672 1,655,349 1,538 Totals $ 7,173,235 $ 392,286 $ 54,771 $ 7,510,750 $ 1,538 Equity securities (3) $ 143,203 $ 15,743 $ 1,971 $ 156,975 $ - December 31, 2016 Fixed maturity securities U.S. Government and federally sponsored agency obligations (2): Mortgage-backed securities $ 587,355 $ 34,256 $ 6,720 $ 614,891 $ - Other, including U.S. Treasury securities 458,745 18,518 10,120 467,143 - Municipal bonds 1,648,252 143,733 22,588 1,769,397 - Foreign government bonds 93,864 5,102 297 98,669 - Corporate bonds 2,672,818 152,229 14,826 2,810,221 - Other mortgage-backed securities 1,691,093 21,153 15,859 1,696,387 1,618 Totals $ 7,152,127 $ 374,991 $ 70,410 $ 7,456,708 $ 1,618 Equity securities (3) $ 134,013 $ 13,210 $ 5,574 $ 141,649 $ - (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 OTTI losses in AOCI which was not included in earnings; amounts also include net unrealized investment gains and 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 $283,039 and $272,668; Federal Home Loan Mortgage Corporation (“FHLMC”) of $373,017 and $378,683; and Government National Mortgage Association (“GNMA”) of $112,065 and $115,627 as of March 31, 2017 and December 31, 2016, 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 March 31, 2017 Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 169,786 $ 5,035 $ 3,381 $ 408 $ 173,167 $ 5,443 Other 262,517 9,219 - - 262,517 9,219 Municipal bonds 325,610 14,754 10,082 3,452 335,692 18,206 Foreign government bonds 1,444 56 - - 1,444 56 Corporate bonds 285,724 6,492 37,490 2,683 323,214 9,175 Other mortgage-backed securities 444,102 9,060 188,904 3,612 633,006 12,672 Total fixed maturity securities 1,489,183 44,616 239,857 10,155 1,729,040 54,771 Equity securities (1) 37,554 1,013 8,068 958 45,622 1,971 Combined totals $ 1,526,737 $ 45,629 $ 247,925 $ 11,113 $ 1,774,662 $ 56,742 Number of positions with a gross unrealized loss 560 91 651 Fair value as a percentage of total fixed maturity and equity securities fair value 19.9 % 3.2 % 23.1 % December 31, 2016 Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 186,439 $ 6,176 $ 3,235 $ 544 $ 189,674 $ 6,720 Other 219,372 10,120 - - 219,372 10,120 Municipal bonds 408,163 19,006 9,928 3,582 418,091 22,588 Foreign government bonds 24,182 297 - - 24,182 297 Corporate bonds 459,402 11,056 57,261 3,770 516,663 14,826 Other mortgage-backed securities 640,691 10,470 229,106 5,389 869,797 15,859 Total fixed maturity securities 1,938,249 57,125 299,530 13,285 2,237,779 70,410 Equity securities (1) 56,676 4,567 7,956 1,007 64,632 5,574 Combined totals $ 1,994,925 $ 61,692 $ 307,486 $ 14,292 $ 2,302,411 $ 75,984 Number of positions with a gross unrealized loss 629 102 731 Fair value as a percentage of total fixed maturity and equity securities fair value 26.3 % 4.0 % 30.3 % (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 OTTI losses on fixed maturity securities held as of March 31, 2017 and 2016 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 OTTI losses were recognized in other comprehensive income: Three Months Ended March 31, 2017 2016 Cumulative credit loss (1) Beginning of period $ 13,703 $ 7,844 New credit losses - 1,824 Increases to previously recognized credit losses 726 - Gains related to securities sold or paid down during the period (2 ) - End of period $ 14,427 $ 9,668 (1) The cumulative credit loss amounts exclude OTTI 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 | The following table presents the distribution of the Company’s fixed maturity securities portfolio by estimated expected maturity. Estimated expected maturities differ from contractual maturities, reflecting assumptions regarding borrowers’ utilization of the right to call or prepay obligations with or without call or prepayment penalties. For structured securities, including mortgage-backed securities and other asset-backed securities, estimated expected maturities consider broker-dealer survey prepayment assumptions and are verified for consistency with the interest rate and economic environments. Percent of Total Fair Value March 31, 2017 March 31, December 31, Fair Amortized 2017 2016 Value Cost Estimated expected maturity: Due in 1 year or less 3.8 % 3.9 % $ 284,164 $ 271,394 Due after 1 year through 5 years 28.1 28.7 2,109,683 2,014,879 Due after 5 years through 10 years 34.1 35.2 2,562,229 2,447,089 Due after 10 years through 20 years 21.1 19.5 1,582,732 1,511,608 Due after 20 years 12.9 12.7 971,942 928,265 Total 100.0 % 100.0 % $ 7,510,750 $ 7,173,235 Average option-adjusted duration, in years 6.0 5.9 |
Proceeds received from sales of fixed maturities and equity securities | Proceeds received from sales of fixed maturity 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 March 31, 2017 2016 Fixed maturity securities Proceeds received $ 110,872 $ 82,090 Gross gains realized 2,489 2,476 Gross losses realized (881 ) (492 ) Equity securities Proceeds received $ 5,489 $ 6,147 Gross gains realized 1,048 520 Gross losses realized (192 ) (646 ) |
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 March 31, 2017 2016 Net unrealized investment gains and losses on fixed maturity securities, net of tax Beginning of period $ 197,978 $ 198,714 Change in net unrealized investment gains and losses 21,891 78,341 Reclassification of net realized investment gains to net income (484 ) (674 ) End of period $ 219,385 $ 276,381 Net unrealized investment gains and losses on equity securities, net of tax Beginning of period $ 4,963 $ 2,649 Change in net unrealized investment gains and losses 3,302 2,188 Reclassification of net realized investment losses to net income 687 193 End of period $ 8,952 $ 5,030 |
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 March 31, 2017 Asset derivatives: Free-standing derivatives $ 9,932 $ - $ 9,932 $ - $ 10,449 $ (517 ) December 31, 2016 Asset derivatives: Free-standing derivatives 8,694 - 8,694 - 8,824 (130 ) |
Fair Value of Financial Instr21
Fair Value of Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
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 March 31, 2017, Level 3 invested assets comprised 3.1% 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 March 31, 2017 Financial Assets Investments Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 609,807 $ 609,807 $ - $ 605,863 $ 3,944 Other, including U.S. Treasury securities 531,308 531,308 13,619 517,689 - Municipal bonds 1,777,427 1,777,427 - 1,723,965 53,462 Foreign government bonds 99,686 99,686 - 99,686 - Corporate bonds 2,837,173 2,837,173 14,173 2,740,505 82,495 Other mortgage-backed securities 1,655,349 1,655,349 - 1,546,499 108,850 Total fixed maturity securities 7,510,750 7,510,750 27,792 7,234,207 248,751 Equity securities 156,975 156,975 102,573 54,396 6 Short-term investments 81,064 81,064 79,859 1,205 - Other investments 21,432 21,432 - 21,432 - Totals $ 7,770,221 $ 7,770,221 $ 210,224 $ 7,311,240 $ 248,757 Financial Liabilities Investment contract and life policy reserves, embedded derivatives $ 236 $ 236 $ - $ 236 $ - Other policyholder funds, embedded derivatives 64,261 64,261 - - 64,261 December 31, 2016 Financial Assets Investments Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 614,891 $ 614,891 $ - $ 611,476 $ 3,415 Other, including U.S. Treasury securities 467,143 467,143 13,631 453,512 - Municipal bonds 1,769,397 1,769,397 - 1,722,900 46,497 Foreign government bonds 98,669 98,669 - 98,669 - Corporate bonds 2,810,221 2,810,221 13,532 2,736,498 60,191 Other mortgage-backed securities 1,696,387 1,696,387 - 1,595,143 101,244 Total fixed maturity securities 7,456,708 7,456,708 27,163 7,218,198 211,347 Equity securities 141,649 141,649 98,632 43,011 6 Short-term investments 44,918 44,918 44,167 - 751 Other investments 20,194 20,194 - 20,194 - Totals $ 7,663,469 $ 7,663,469 $ 169,962 $ 7,281,403 $ 212,104 Financial Liabilities Investment contract and life policy reserves, embedded derivatives $ 158 $ 158 $ - $ 158 $ - Other policyholder funds, embedded derivatives 59,393 59,393 - - 59,393 |
Table for reconciliations for all Level 3 assets measured at fair value on a recurring basis | The following table presents reconciliations for the periods indicated for all Level 3 assets and liabilities measured at fair value on a recurring basis. Financial Financial Assets Liabilities(1) Municipal Bonds Corporate Bonds Other Mortgage- Backed Securities (2) Total Fixed Maturity Equity Securities Short-term Investments Total Beginning balance, January 1, 2017 $ 46,497 $ 60,191 $ 104,659 $ 211,347 $ 6 $ 751 $ 212,104 $ 59,393 Transfers into Level 3 (3) 5,214 29,918 15,039 50,171 - - 50,171 - Transfers out of Level 3 (3) - (6,110 ) - (6,110 ) - (751 ) (6,861 ) - Total gains or losses Net realized investment gains (losses) included in net income related to financial assets - - - - - - - - Net realized (gains) losses included in net income related to financial liabilities - - - - - - - 2,308 Net unrealized investment gains (losses) included in other comprehensive income 1,871 96 (771 ) 1,196 - - 1,196 - Purchases - - - - - - - - Issuances - - - - - - - 3,389 Sales - - - - - - - - Settlements - - - - - - - - Paydowns, maturities and distributions (120 ) (1,600 ) (6,133 ) (7,853 ) - - (7,853 ) (829 ) Ending balance, March 31, 2017 $ 53,462 $ 82,495 $ 112,794 $ 248,751 $ 6 $ - $ 248,757 $ 64,261 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 6,059 11,642 32,452 - - 32,452 - Transfers out of Level 3 (3) - - - - - - - - Total gains or losses Net realized investment gains (losses) included in net income related to financial assets - - - - - - - - Net realized (gains) losses included in net income related to financial liabilities - - - - - - - 674 Net unrealized investment gains (losses) included in other comprehensive income 1,484 388 (7 ) 1,865 - - 1,865 - Purchases - - - - - - - - Issuances - - - - - - - 3,491 Sales - - - - - - - - Settlements - - - - - - - - Paydowns, maturities and distributions (121 ) (3,951 ) (3,280 ) (7,352 ) - - (7,352 ) (1,101 ) Ending balance, March 31, 2016 $ 46,493 $ 70,071 $ 83,821 $ 200,385 $ 6 $ - $ 200,391 $ 42,085 (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) 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 months ended March 31, 2017 and 2016 were attributable to changes in the availability of observable market information for individual fixed maturity securities and short-term investments. 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 | The Company has various other financial assets and financial liabilities used in the normal course of business that are not carried at fair value, but for which fair value disclosure is required. The following table presents the carrying value, fair value and fair value hierarchy of these financial assets and financial liabilities. Fair Value Measurements at Carrying Fair Reporting Date Using Amount Value Level 1 Level 2 Level 3 March 31, 2017 Financial Assets Investments Other investments $ 151,537 $ 156,089 $ - $ - $ 156,089 Financial Liabilities Investment contract and life policy reserves, fixed annuity contracts 4,408,288 4,317,991 - - 4,317,991 Investment contract and life policy reserves, account values on life contracts 80,484 85,945 - - 85,945 Other policyholder funds 647,134 647,134 - 575,342 71,792 Long-term debt 247,273 259,698 259,698 - - December 31, 2016 Financial Assets Investments Other investments $ 151,965 $ 156,536 $ - $ - $ 156,536 Financial Liabilities Investment contract and life policy reserves, fixed annuity contracts 4,360,456 4,280,528 - - 4,280,528 Investment contract and life policy reserves, account values on life contracts 79,591 85,066 - - 85,066 Other policyholder funds 649,557 649,557 - 575,253 74,304 Long-term debt 247,209 248,191 248,191 - - |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
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: March 31, December 31, 2017 2016 Assets Derivative instruments, included in Short-term and other investments $ 9,932 $ 8,694 Liabilities FIA - embedded derivatives, included in Other policyholder funds 64,261 59,393 IUL - embedded derivatives, included in Investment contract and life policy reserves 236 158 |
Derivative Instruments, Gain (Loss) | The changes in fair value of derivatives included in the Consolidated Statements of Operations were as follows: Three Months Ended March 31, 2017 2016 Change in fair value of derivatives (1): Revenues Net realized investment gains (losses) $ 2,437 $ (218 ) Change in fair value of embedded derivatives: Revenues Net realized investment losses (2,366 ) (676 ) (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: March 31, 2017 December 31, 2016 Credit Rating (1) Notional Fair Notional Fair Counterparty S&P Moody’s Amount Value Amount Value Bank of America, N.A. A+ A1 $ 25,200 $ 601 $ 38,500 $ 1,934 Barclays Bank PLC A- A1 80,900 2,332 66,800 1,543 Citigroup Inc. BBB+ Baa1 - - - - Credit Suisse International A A1 57,700 5,164 65,200 4,281 Societe Generale A A2 40,200 1,835 15,600 936 Total $ 204,000 $ 9,932 $ 186,100 $ 8,694 (1) As assigned by Standard & Poor’s Corporation (“S&P”) and Moody’s Investors Service, Inc. (“Moody’s”). |
Property and Casualty Unpaid 23
Property and Casualty Unpaid Claims and Claim Expenses (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Insurance Loss Reserves [Abstract] | |
Reconciliation of property and casualty unpaid claims and claim expenses | The end of the period gross reserve (before reinsurance) balances and the reinsurance recoverable balances are reflected on a gross basis in the Consolidated Balance Sheets. March 31, March 31, 2017 2016 Property and Casualty segment Gross reserves, beginning of year (1) $ 307,757 $ 301,569 Less: reinsurance recoverables 61,199 50,332 Net reserves, beginning of year (2) 246,558 251,237 Incurred claims and claim expenses: Claims occurring in the current year 123,204 103,206 Decrease in estimated reserves for claims occurring in prior years (3) (1,000 ) (2,000 ) Total claims and claim expenses incurred (4) 122,204 101,206 Claims and claim expense payments for claims occurring during: Current year 52,380 39,081 Prior years 62,013 54,515 Total claims and claim expense payments 114,393 93,596 Net reserves, end of year (2) 254,369 258,847 Plus: reinsurance recoverables 61,804 60,429 Gross reserves, end of year (1) $ 316,173 $ 319,276 (1) Unpaid claims and claim expenses as reported in the Consolidated Balance Sheets also include reserves for the Life and Retirement segments of $23,860 and $24,993 as of March 31, 2017 and 2016, respectively, in addition to Property and Casualty segment reserves. (2) Reserves net of anticipated reinsurance recoverables. (3) Shows the amounts by which the Company decreased its reserves in each of the periods indicated for claims occurring in previous periods to reflect subsequent information on such claims and changes in their projected final settlement costs. (4) Benefits, claims and settlement expenses as reported in the Consolidated Statements of Operations also include amounts for the Life and Retirement segments of $21,892 and $18,307 as of March 31, 2017 and 2016, respectively, in addition to the Property and Casualty segment amounts. |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Summary of Indebtedness outstanding | Indebtedness outstanding was as follows: March 31, December 31, 2017 2016 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 $589 and $603 (4.5% imputed rate) and unamortized debt issuance costs of $2,138 and $2,188 247,273 247,209 |
Reinsurance (Tables)
Reinsurance (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
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 March 31, 2017 Premiums written and contract deposits $ 301,512 $ 5,510 $ 730 $ 296,732 Premiums and contract charges earned 200,455 5,534 801 195,722 Benefits, claims and settlement expenses 147,271 3,883 708 144,096 Three months ended March 31, 2016 Premiums written and contract deposits $ 287,992 $ 5,768 $ 945 $ 283,169 Premiums and contract charges earned 190,233 5,769 986 185,450 Benefits, claims and settlement expenses 131,240 12,662 935 119,513 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
Summarized financial information for these segments | Summarized financial information for these segments is as follows: Three Months Ended March 31, 2017 2016 Insurance premiums and contract charges earned Property and Casualty $ 158,318 $ 152,120 Retirement 6,601 6,068 Life 30,803 27,262 Total $ 195,722 $ 185,450 Net investment income Property and Casualty $ 9,177 $ 8,828 Retirement 63,442 58,049 Life 18,288 17,984 Corporate and Other 12 15 Intersegment eliminations (208 ) (217 ) Total $ 90,711 $ 84,659 Net income (loss) Property and Casualty $ 2,735 $ 13,795 Retirement 11,530 10,553 Life 3,885 3,867 Corporate and Other (2,832 ) (3,062 ) Total $ 15,318 $ 25,153 March 31, December 31, 2017 2016 Assets Property and Casualty $ 1,117,764 $ 1,110,958 Retirement 7,622,077 7,449,777 Life 1,941,372 1,912,771 Corporate and Other 126,745 140,104 Intersegment eliminations (28,453 ) (36,786 ) Total $ 10,779,505 $ 10,576,824 |
Basis of Presentation (Details)
Basis of Presentation (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Investment contract reserves | $ 4,408,288 | $ 4,360,456 |
Life policy reserves | 1,094,704 | 1,087,513 |
Total | $ 5,502,992 | $ 5,447,969 |
Basis of Presentation (Details
Basis of Presentation (Details 1) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | ||
Net Unrealized Investment Gains and Losses on Fixed Maturity and Equity Securities | |||
Beginning balance | [1],[2] | $ 175,738 | $ 175,167 |
Other comprehensive income (loss) before reclassifications | [1],[2] | 22,330 | 69,971 |
Amounts reclassified from accumulated other comprehensive income (loss) | [1],[2] | 203 | (481) |
Net current period other comprehensive income (loss) | [1],[2] | 22,533 | 69,490 |
Ending balance | [1],[2] | 198,271 | 244,657 |
Defined Benefit Plans | |||
Beginning balance | [1] | (11,817) | (11,794) |
Other comprehensive income (loss) before reclassifications | [1] | 0 | 0 |
Amounts reclassified from accumulated other comprehensive income (loss) | [1] | 0 | 0 |
Net current period other comprehensive income | [1] | 0 | 0 |
Ending balance | [1] | (11,817) | (11,794) |
Beginning balance | [1] | 163,921 | 163,373 |
Other comprehensive income (loss) before reclassifications | [1] | 22,330 | 69,971 |
Amounts reclassified from accumulated other comprehensive income (loss) | [1] | 203 | (481) |
Other comprehensive income | [1] | 22,533 | 69,490 |
Ending balance | [1] | $ 186,454 | $ 232,863 |
[1] | All amounts are net of tax. | ||
[2] | The pretax amounts reclassified from accumulated other comprehensive income (loss), $(313) and $740, are included in net realized investment gains and losses and the related income tax expenses, $(110) and $259, are included in income tax expense in the Consolidated Statements of Operations for the three months ended March 31, 2017 and 2016, respectively. |
Basis of Presentation (Detail29
Basis of Presentation (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI for Sale of Securities, before Tax | $ (313) | $ 740 |
Other Tax Expense (Benefit) | $ (110) | 259 |
Percentage Of Credit Losses On Available For Sale Debt Securities To Total Investment Portfolio | 90.00% | |
Additional excess tax benefits | $ 2,518 | 10,164 |
Payments Related to Tax Withholding for Share-based Compensation | 2,532 | $ 3,231 |
Federal income taxes [Member] | ||
Additional excess tax benefits | $ (2,450) |
Investments (Details)
Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | ||
Unrealized gains and losses on fixed maturities and equity securities | |||
Amortized Cost or Cost | $ 7,173,235 | $ 7,152,127 | |
Amortized Cost or Cost, Equity securities | 143,203 | 134,013 | |
Unrealized Investment Gains | 392,286 | 374,991 | |
Unrealized Investment Losses | 54,771 | 70,410 | |
Fair Value and Fair Value, Equity | 7,510,750 | 7,456,708 | |
Investment Fair Value, Equity securities | 156,975 | 141,649 | |
OTTI in AOCI | [1] | 1,538 | 1,618 |
Mortgage-backed securities [Member] | |||
Unrealized gains and losses on fixed maturities and equity securities | |||
Amortized Cost or Cost | [2] | 581,346 | 587,355 |
Unrealized Investment Gains | [2] | 33,904 | 34,256 |
Unrealized Investment Losses | [2] | 5,443 | 6,720 |
Fair Value and Fair Value, Equity | [2] | 609,807 | 614,891 |
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 or Cost | [2] | 520,718 | 458,745 |
Unrealized Investment Gains | [2] | 19,809 | 18,518 |
Unrealized Investment Losses | [2] | 9,219 | 10,120 |
Fair Value and Fair Value, Equity | [2] | 531,308 | 467,143 |
OTTI in AOCI | [1],[2] | 0 | 0 |
Municipal bonds [Member] | |||
Unrealized gains and losses on fixed maturities and equity securities | |||
Amortized Cost or Cost | 1,647,314 | 1,648,252 | |
Unrealized Investment Gains | 148,319 | 143,733 | |
Unrealized Investment Losses | 18,206 | 22,588 | |
Fair Value and Fair Value, Equity | 1,777,427 | 1,769,397 | |
OTTI in AOCI | [1] | 0 | 0 |
Foreign government bonds [Member] | |||
Unrealized gains and losses on fixed maturities and equity securities | |||
Amortized Cost or Cost | 93,845 | 93,864 | |
Unrealized Investment Gains | 5,897 | 5,102 | |
Unrealized Investment Losses | 56 | 297 | |
Fair Value and Fair Value, Equity | 99,686 | 98,669 | |
OTTI in AOCI | [1] | 0 | 0 |
Corporate bonds [Member] | |||
Unrealized gains and losses on fixed maturities and equity securities | |||
Amortized Cost or Cost | 2,683,746 | 2,672,818 | |
Unrealized Investment Gains | 162,602 | 152,229 | |
Unrealized Investment Losses | 9,175 | 14,826 | |
Fair Value and Fair Value, Equity | 2,837,173 | 2,810,221 | |
OTTI in AOCI | [1] | 0 | 0 |
Other mortgage-backed securities [Member] | |||
Unrealized gains and losses on fixed maturities and equity securities | |||
Amortized Cost or Cost | 1,646,266 | 1,691,093 | |
Unrealized Investment Gains | 21,755 | 21,153 | |
Unrealized Investment Losses | 12,672 | 15,859 | |
Fair Value and Fair Value, Equity | 1,655,349 | 1,696,387 | |
OTTI in AOCI | [1] | 1,538 | 1,618 |
Equity securities [Member] | |||
Unrealized gains and losses on fixed maturities and equity securities | |||
Amortized Cost or Cost, Equity securities | [3] | 143,203 | 134,013 |
Unrealized Investment Gains | [3] | 15,743 | 13,210 |
Unrealized Investment Losses | [3] | 1,971 | 5,574 |
Investment Fair Value, Equity securities | [3] | 156,975 | 141,649 |
OTTI in AOCI | [1],[3] | $ 0 | $ 0 |
[1] | Related to securities for which an unrealized loss was bifurcated to distinguish the credit-related portion and the portion driven by other market factors. Represents the amount of OTTI losses in AOCI which was not included in earnings; amounts also include net unrealized investment gains and 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 $283,039 and $272,668; Federal Home Loan Mortgage Corporation (“FHLMC”) of $373,017 and $378,683; and Government National Mortgage Association (“GNMA”) of $112,065 and $115,627 as of March 31, 2017 and December 31, 2016, respectively. | ||
[3] | Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds. |
Investments (Details 1)
Investments (Details 1) $ in Thousands | Mar. 31, 2017USD ($)Number | Dec. 31, 2016USD ($)Number | |
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | $ 1,526,737 | $ 1,994,925 | |
Fixed maturity securities, Fair Value, More than 12 Months | 247,925 | 307,486 | |
Fixed maturity securities, Fair Value, Total | 1,774,662 | 2,302,411 | |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 45,629 | 61,692 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 11,113 | 14,292 | |
Fixed maturity securities, Gross Unrealized Losses, Total | $ 56,742 | $ 75,984 | |
Number of positions with a gross unrealized loss, 12 Months or Less | Number | 560 | 629 | |
Number of position with a gross unrealized loss, more than 12 months | Number | 91 | 102 | |
Number of position with a gross unrealized loss, Total | Number | 651 | 731 | |
Fair value as a percentage of total fixed maturities and equity securities fair value, 12 Months or Less | 19.90% | 26.30% | |
Fair value as a percentage of total fixed maturities and equity securities fair value, more than 12 months | 3.20% | 4.00% | |
Fair value as a percentage of total fixed maturities and equity securities fair value, Total | 23.10% | 30.30% | |
Mortgage-backed securities [Member] | |||
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | $ 169,786 | $ 186,439 | |
Fixed maturity securities, Fair Value, More than 12 Months | 3,381 | 3,235 | |
Fixed maturity securities, Fair Value, Total | 173,167 | 189,674 | |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 5,035 | 6,176 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 408 | 544 | |
Fixed maturity securities, Gross Unrealized Losses, Total | 5,443 | 6,720 | |
Other [Member] | |||
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | 262,517 | 219,372 | |
Fixed maturity securities, Fair Value, More than 12 Months | 0 | 0 | |
Fixed maturity securities, Fair Value, Total | 262,517 | 219,372 | |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 9,219 | 10,120 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 0 | 0 | |
Fixed maturity securities, Gross Unrealized Losses, Total | 9,219 | 10,120 | |
Municipal bonds [Member] | |||
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | 325,610 | 408,163 | |
Fixed maturity securities, Fair Value, More than 12 Months | 10,082 | 9,928 | |
Fixed maturity securities, Fair Value, Total | 335,692 | 418,091 | |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 14,754 | 19,006 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 3,452 | 3,582 | |
Fixed maturity securities, Gross Unrealized Losses, Total | 18,206 | 22,588 | |
Foreign government bonds [Member] | |||
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | 1,444 | 24,182 | |
Fixed maturity securities, Fair Value, More than 12 Months | 0 | 0 | |
Fixed maturity securities, Fair Value, Total | 1,444 | 24,182 | |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 56 | 297 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 0 | 0 | |
Fixed maturity securities, Gross Unrealized Losses, Total | 56 | 297 | |
Corporate bonds [Member] | |||
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | 285,724 | 459,402 | |
Fixed maturity securities, Fair Value, More than 12 Months | 37,490 | 57,261 | |
Fixed maturity securities, Fair Value, Total | 323,214 | 516,663 | |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 6,492 | 11,056 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 2,683 | 3,770 | |
Fixed maturity securities, Gross Unrealized Losses, Total | 9,175 | 14,826 | |
Other mortgage-backed securities [Member] | |||
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | 444,102 | 640,691 | |
Fixed maturity securities, Fair Value, More than 12 Months | 188,904 | 229,106 | |
Fixed maturity securities, Fair Value, Total | 633,006 | 869,797 | |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 9,060 | 10,470 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 3,612 | 5,389 | |
Fixed maturity securities, Gross Unrealized Losses, Total | 12,672 | 15,859 | |
Total fixed maturity securities [Member] | |||
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | 1,489,183 | 1,938,249 | |
Fixed maturity securities, Fair Value, More than 12 Months | 239,857 | 299,530 | |
Fixed maturity securities, Fair Value, Total | 1,729,040 | 2,237,779 | |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 44,616 | 57,125 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 10,155 | 13,285 | |
Fixed maturity securities, Gross Unrealized Losses, Total | 54,771 | 70,410 | |
Equity securities [Member] | |||
Fixed maturity securities, Fair Value | |||
Fixed maturity securities, Fair Value, 12 Months or Less | [1] | 37,554 | 56,676 |
Fixed maturity securities, Fair Value, More than 12 Months | [1] | 8,068 | 7,956 |
Fixed maturity securities, Fair Value, Total | [1] | 45,622 | 64,632 |
Fixed maturity securities, Gross Unrealized Losses | |||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | [1] | 1,013 | 4,567 |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | [1] | 958 | 1,007 |
Fixed maturity securities, Gross Unrealized Losses, Total | [1] | $ 1,971 | $ 5,574 |
[1] | Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds. |
Investments (Details 2)
Investments (Details 2) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | ||
Cumulative credit loss | |||
Beginning of period | [1] | $ 13,703 | $ 7,844 |
New credit losses | [1] | 0 | 1,824 |
Increases to previously recognized credit losses | [1] | 726 | 0 |
Gains related to securities sold or paid down during the period | [1] | (2) | 0 |
End of period | [1] | $ 14,427 | $ 9,668 |
[1] | The cumulative credit loss amounts exclude OTTI 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 | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Estimated expected maturity: | ||
Due in 1 year or less, Percent of Total Fair Value | 3.80% | 3.90% |
Due in 1 year or less, Fair Value | $ 284,164 | |
Due in 1 year or less, Amortized Cost | $ 271,394 | |
Due after 1 year through 5 years, Percent of Total Fair Value | 28.10% | 28.70% |
Due after 1 year through 5 years, Fair Value | $ 2,109,683 | |
Due after 1 year through 5 years, Amortized Cost | $ 2,014,879 | |
Due after 5 years through 10 years, Percent of Total Fair Value | 34.10% | 35.20% |
Due after 5 years through 10 years, Fair Value | $ 2,562,229 | |
Due after 5 years through 10 years, Amortized Cost | $ 2,447,089 | |
Due after 10 years through 20 years, Percent of Total Fair Value | 21.10% | 19.50% |
Due after 10 years through 20 years, Fair Value | $ 1,582,732 | |
Due after 10 years through 20 years, Amortized Cost | $ 1,511,608 | |
Due after 20 years, Percent of Total Fair Value | 12.90% | 12.70% |
Due after 20 years, Fair Value | $ 971,942 | |
Due after 20 years, Amortized Cost | $ 928,265 | |
Total, Percent of Total Fair Value | 100.00% | 100.00% |
Total, Fair Value | $ 7,510,750 | $ 7,456,708 |
Total, Amortized Cost | $ 7,173,235 | $ 7,152,127 |
Average option-adjusted duration, in years | 6 years | 5 years 10 months 24 days |
Investments (Details 4)
Investments (Details 4) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Proceeds received from sales of fixed maturities and equity securities | ||
Proceeds received, Fixed maturity securities | $ 110,872 | $ 82,090 |
Proceeds received, Equity securities | 5,489 | 6,147 |
Fixed maturity securities [Member] | ||
Proceeds received from sales of fixed maturities and equity securities | ||
Gross gains realized | 2,489 | 2,476 |
Gross losses realized | (881) | (492) |
Equity securities [Member] | ||
Proceeds received from sales of fixed maturities and equity securities | ||
Gross gains realized | 1,048 | 520 |
Gross losses realized | $ (192) | $ (646) |
Investments (Details 5)
Investments (Details 5) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | ||
Net unrealized investment gains and losses | |||
Reclassification of net realized investment (gains) losses to net income | [1],[2] | $ 203 | $ (481) |
Fixed Maturity Securities [Member] | |||
Net unrealized investment gains and losses | |||
Beginning of period | 197,978 | 198,714 | |
Change in net unrealized investment gains and losses | 21,891 | 78,341 | |
Reclassification of net realized investment (gains) losses to net income | (484) | (674) | |
End of period | 219,385 | 276,381 | |
Equity securities [Member] | |||
Net unrealized investment gains and losses | |||
Beginning of period | 4,963 | 2,649 | |
Change in net unrealized investment gains and losses | 3,302 | 2,188 | |
Reclassification of net realized investment (gains) losses to net income | 687 | 193 | |
End of period | $ 8,952 | $ 5,030 | |
[1] | All amounts are net of tax. | ||
[2] | The pretax amounts reclassified from accumulated other comprehensive income (loss), $(313) and $740, are included in net realized investment gains and losses and the related income tax expenses, $(110) and $259, are included in income tax expense in the Consolidated Statements of Operations for the three months ended March 31, 2017 and 2016, respectively. |
Investments (Details 6)
Investments (Details 6) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Asset derivatives: | ||
Derivatives Asset, Net Amount | $ 9,932 | $ 8,694 |
Free-standing derivatives [Member] | ||
Asset derivatives: | ||
Derivatives Asset, Gross Amounts | 9,932 | 8,694 |
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 | 9,932 | 8,694 |
Derivatives Asset, Gross Amounts Not Offset in the Consolidated Balance Sheet, Financial Instruments | 0 | 0 |
Derivatives Asset, Gross Amounts Not Offset in the Consolidated Balance Sheet, Cash Collateral Received | 10,449 | 8,824 |
Derivatives Asset, Net Amount | $ (517) | $ (130) |
Investments (Details Textual)
Investments (Details Textual) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | |
Investments (Textual) [Abstract] | |||
Fair value of issued securities | $ 7,510,750 | $ 7,456,708 | |
Investments (Additional Textual) [Abstract] | |||
Federal Home Loan Bank Funding Agreements | $ 575,000 | 575,000 | |
Investment Grade Rate | [1] | 90.00% | |
Federal Home Loans Bank Of Chicago [Member] | |||
Investments (Textual) [Abstract] | |||
Fair value of issued securities | $ 621,544 | 620,489 | |
Governmental Agencies as Required by Law in Various States [Member] | |||
Investments (Textual) [Abstract] | |||
Fair value of issued securities | 18,089 | 18,119 | |
Federal National Mortgage Association Certificates and Obligations (FNMA) [Member] | |||
Investments (Textual) [Abstract] | |||
Fair value of issued securities | 283,039 | 272,668 | |
Federal Home Loan Mortgage Corporation Certificates and Obligations (FHLMC) [Member] | |||
Investments (Textual) [Abstract] | |||
Fair value of issued securities | 373,017 | 378,683 | |
Government National Mortgage Association Certificates and Obligations (GNMA) [Member] | |||
Investments (Textual) [Abstract] | |||
Fair value of issued securities | $ 112,065 | $ 115,627 | |
[1] | Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds. |
Fair Value of Financial Instr38
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
U.S. Government and federally sponsored agency obligations: | ||
Carrying Amount | $ 7,770,221 | $ 7,663,469 |
Fair Value | 7,770,221 | 7,663,469 |
Investment contract and life policy reserves, embedded derivatives, Carrying Amount | 236 | 158 |
Investment contract and life policy reserves, embedded derivatives, Fair Value Disclosure | 236 | 158 |
Other policyholder funds, embedded derivatives, Carrying Amount | 64,261 | 59,393 |
Other policyholder funds, embedded derivatives, Fair Value Disclosure | 64,261 | 59,393 |
Recurring [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Carrying Amount | 7,510,750 | 7,456,708 |
Fair Value | 7,510,750 | 7,456,708 |
Short-term investments [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Carrying Amount | 81,064 | 44,918 |
Fair Value | 81,064 | 44,918 |
Mortgage-backed securities [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Carrying Amount | 609,807 | 614,891 |
Fair Value | 609,807 | 614,891 |
Other, including U.S. Treasury Securities [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Carrying Amount | 531,308 | 467,143 |
Fair Value | 531,308 | 467,143 |
Municipal bonds [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Carrying Amount | 1,777,427 | 1,769,397 |
Fair Value | 1,777,427 | 1,769,397 |
Foreign government bonds [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Carrying Amount | 99,686 | 98,669 |
Fair Value | 99,686 | 98,669 |
Corporate bonds [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Carrying Amount | 2,837,173 | 2,810,221 |
Fair Value | 2,837,173 | 2,810,221 |
Other mortgage-backed securities [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Carrying Amount | 1,655,349 | 1,696,387 |
Fair Value | 1,655,349 | 1,696,387 |
Equity securities [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Carrying Amount | 156,975 | 141,649 |
Fair Value | 156,975 | 141,649 |
Other Investment [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Carrying Amount | 21,432 | 20,194 |
Fair Value | 21,432 | 20,194 |
Level 1 [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 210,224 | 169,962 |
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 | 27,792 | 27,163 |
Level 1 [Member] | Short-term investments [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 79,859 | 44,167 |
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 | 13,619 | 13,631 |
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 | 14,173 | 13,532 |
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 | 102,573 | 98,632 |
Level 1 [Member] | Other Investment [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 | 7,311,240 | 7,281,403 |
Investment contract and life policy reserves, embedded derivatives, Fair Value Disclosure | 236 | 158 |
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 | 7,234,207 | 7,218,198 |
Level 2 [Member] | Short-term investments [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 1,205 | 0 |
Level 2 [Member] | Mortgage-backed securities [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 605,863 | 611,476 |
Level 2 [Member] | Other, including U.S. Treasury Securities [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 517,689 | 453,512 |
Level 2 [Member] | Municipal bonds [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 1,723,965 | 1,722,900 |
Level 2 [Member] | Foreign government bonds [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 99,686 | 98,669 |
Level 2 [Member] | Corporate bonds [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 2,740,505 | 2,736,498 |
Level 2 [Member] | Other mortgage-backed securities [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 1,546,499 | 1,595,143 |
Level 2 [Member] | Equity securities [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 54,396 | 43,011 |
Level 2 [Member] | Other Investment [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 21,432 | 20,194 |
Level 3 [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 248,757 | 212,104 |
Investment contract and life policy reserves, embedded derivatives, Fair Value Disclosure | 0 | 0 |
Other policyholder funds, embedded derivatives, Fair Value Disclosure | 64,261 | 59,393 |
Level 3 [Member] | Recurring [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 248,751 | 211,347 |
Level 3 [Member] | Short-term investments [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 0 | 751 |
Level 3 [Member] | Mortgage-backed securities [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 3,944 | 3,415 |
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 | 53,462 | 46,497 |
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 | 82,495 | 60,191 |
Level 3 [Member] | Other mortgage-backed securities [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 108,850 | 101,244 |
Level 3 [Member] | Equity securities [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | 6 | 6 |
Level 3 [Member] | Other Investment [Member] | ||
U.S. Government and federally sponsored agency obligations: | ||
Fair Value | $ 0 | $ 0 |
Fair Value of Financial Instr39
Fair Value of Financial Instruments (Details 1) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2017 | Mar. 31, 2016 | |||
Financial Assets | ||||
Beginning balance | $ 212,104 | $ 173,426 | ||
Transfers into Level 3 | [1] | 50,171 | 32,452 | |
Transfers out of Level 3 | [1] | (6,861) | 0 | |
Total gains or losses | ||||
Net realized investment gains (losses) included in net income related to financial assets | 0 | 0 | ||
Net unrealized investment gains (losses) included in other comprehensive income | 1,196 | 1,865 | ||
Purchases | 0 | 0 | ||
Issuances | 0 | 0 | ||
Sales | 0 | 0 | ||
Settlements | 0 | 0 | ||
Paydowns, maturities and distributions | (7,853) | (7,352) | ||
Ending balance | 248,757 | 200,391 | ||
Financial Liabilities | ||||
Beginning balance | [2] | 59,393 | 39,021 | |
Transfers into Level 3 | [1],[2] | 0 | 0 | |
Transfers out of Level 3 | [1],[2] | 0 | 0 | |
Total gains or losses | ||||
Net realized gains (losses) included in net income related to financial liabilities | [2] | 2,308 | 674 | |
Net unrealized investment gains (losses) included in other comprehensive income | [2] | 0 | 0 | |
Purchases | [2] | 0 | 0 | |
Issuances | [2] | 3,389 | 3,491 | |
Sales | [2] | 0 | 0 | |
Settlements | [2] | 0 | 0 | |
Paydowns, maturities and distributions | [2] | (829) | (1,101) | |
Ending balance | [2] | 64,261 | 42,085 | |
Short-term Investments [Member] | ||||
Financial Assets | ||||
Beginning balance | 751 | 0 | ||
Transfers into Level 3 | [1] | 0 | 0 | |
Transfers out of Level 3 | [1] | (751) | 0 | |
Total gains or losses | ||||
Net realized investment gains (losses) included in net income related to financial assets | 0 | 0 | ||
Net unrealized investment gains (losses) included in other comprehensive income | 0 | 0 | ||
Purchases | 0 | 0 | ||
Issuances | 0 | 0 | ||
Sales | 0 | 0 | ||
Settlements | 0 | 0 | ||
Paydowns, maturities and distributions | 0 | 0 | ||
Ending balance | 0 | 0 | ||
Municipal bonds [Member] | ||||
Financial Assets | ||||
Beginning balance | 46,497 | 30,379 | ||
Transfers into Level 3 | [1] | 5,214 | 14,751 | |
Transfers out of Level 3 | [1] | 0 | 0 | |
Total gains or losses | ||||
Net realized investment gains (losses) included in net income related to financial assets | 0 | 0 | ||
Net unrealized investment gains (losses) included in other comprehensive income | 1,871 | 1,484 | ||
Purchases | 0 | 0 | ||
Issuances | 0 | 0 | ||
Sales | 0 | 0 | ||
Settlements | 0 | 0 | ||
Paydowns, maturities and distributions | (120) | (121) | ||
Ending balance | 53,462 | 46,493 | ||
Corporate bonds [Member] | ||||
Financial Assets | ||||
Beginning balance | 60,191 | 67,575 | ||
Transfers into Level 3 | [1] | 29,918 | 6,059 | |
Transfers out of Level 3 | [1] | (6,110) | 0 | |
Total gains or losses | ||||
Net realized investment gains (losses) included in net income related to financial assets | 0 | 0 | ||
Net unrealized investment gains (losses) included in other comprehensive income | 96 | 388 | ||
Purchases | 0 | 0 | ||
Issuances | 0 | 0 | ||
Sales | 0 | 0 | ||
Settlements | 0 | 0 | ||
Paydowns, maturities and distributions | (1,600) | (3,951) | ||
Ending balance | 82,495 | 70,071 | ||
Other mortgage-backed securities [Member] | ||||
Financial Assets | ||||
Beginning balance | 104,659 | 75,466 | [3] | |
Transfers into Level 3 | [1],[3] | 15,039 | 11,642 | |
Transfers out of Level 3 | [1],[3] | 0 | 0 | |
Total gains or losses | ||||
Net realized investment gains (losses) included in net income related to financial assets | 0 | 0 | ||
Net unrealized investment gains (losses) included in other comprehensive income | [3] | (771) | (7) | |
Purchases | [3] | 0 | 0 | |
Issuances | [3] | 0 | 0 | |
Sales | [3] | 0 | 0 | |
Settlements | [3] | 0 | 0 | |
Paydowns, maturities and distributions | [3] | (6,133) | (3,280) | |
Ending balance | 112,794 | 83,821 | ||
Total Fixed Maturity Securities [Member] | ||||
Financial Assets | ||||
Beginning balance | 211,347 | 173,420 | ||
Transfers into Level 3 | [1] | 50,171 | 32,452 | |
Transfers out of Level 3 | [1] | (6,110) | 0 | |
Total gains or losses | ||||
Net realized investment gains (losses) included in net income related to financial assets | 0 | 0 | ||
Net unrealized investment gains (losses) included in other comprehensive income | 1,196 | 1,865 | ||
Purchases | 0 | 0 | ||
Issuances | 0 | 0 | ||
Sales | 0 | 0 | ||
Settlements | 0 | 0 | ||
Paydowns, maturities and distributions | (7,853) | (7,352) | ||
Ending balance | 248,751 | 200,385 | ||
Equity securities [Member] | ||||
Financial Assets | ||||
Beginning balance | 6 | 6 | ||
Transfers into Level 3 | [1] | 0 | 0 | |
Transfers out of Level 3 | [1] | 0 | 0 | |
Total gains or losses | ||||
Net realized investment gains (losses) included in net income related to financial assets | 0 | 0 | ||
Net unrealized investment gains (losses) included in other comprehensive income | 0 | 0 | ||
Purchases | 0 | 0 | ||
Issuances | 0 | 0 | ||
Sales | 0 | 0 | ||
Settlements | 0 | 0 | ||
Paydowns, maturities and distributions | 0 | 0 | ||
Ending balance | $ 6 | $ 6 | ||
[1] | Transfers into and out of Level 3 during the three months ended March 31, 2017 and, 2016 were attributable to changes in the availability of observable market information for individual fixed maturity securities and short-term investments. 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] | Represents embedded derivatives, all related to the Company’s FIA products, reported in Other policyholder funds in the Company’s Consolidated Balance Sheets. | |||
[3] | Includes U.S. Government and federally sponsored agency obligations for mortgage-backed securities and other mortgage-backed securities. |
Fair Value of Financial Instr40
Fair Value of Financial Instruments (Details 2) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Investments | ||
Other investments, Carrying Amount | $ 151,537 | $ 151,965 |
Other investments, Fair Value | 156,089 | 156,536 |
Financial Liabilities | ||
Investment contract and life policy reserves, fixed annuity contracts, Carrying Amount | 4,408,288 | 4,360,456 |
Investment contract and life policy reserves, fixed annuity contracts, Fair value | 4,317,991 | 4,280,528 |
Investment contract and life policy reserves, account values on life contracts, Carrying Amount | 80,484 | 79,591 |
Investment contract and life policy reserves, account values on life contracts, Fair value | 85,945 | 85,066 |
Other policyholder funds, Carrying Amount | 647,134 | 649,557 |
Other policyholder funds, Fair Value | 647,134 | 649,557 |
Long-term debt, Carrying Amount | 247,273 | 247,209 |
Long-term debt, Fair Value | 259,698 | 248,191 |
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 | 259,698 | 248,191 |
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 | 575,342 | 575,253 |
Long-term debt, Fair Value | 0 | 0 |
Level 3 [Member] | ||
Investments | ||
Other investments, Fair Value | 156,089 | 156,536 |
Financial Liabilities | ||
Investment contract and life policy reserves, fixed annuity contracts, Fair value | 4,317,991 | 4,280,528 |
Investment contract and life policy reserves, account values on life contracts, Fair value | 85,945 | 85,066 |
Other policyholder funds, Fair Value | 71,792 | 74,304 |
Long-term debt, Fair Value | $ 0 | $ 0 |
Fair Value of Financial Instr41
Fair Value of Financial Instruments (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Fair Value of Financial Instruments (Textual) [Abstract] | ||
Embedded Derivative, Gain (Loss) on Embedded Derivative Total | $ (2,366) | $ (676) |
Level 3 [Member] | ||
Fair Value of Financial Instruments (Textual) [Abstract] | ||
Embedded Derivative, Gain (Loss) on Embedded Derivative Total | $ (2,308) | $ (674) |
Percentage Of Invested Assets In Total Investment Portfolio Level3 Recurring | 3.10% |
Derivative Instruments (Details
Derivative Instruments (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Assets | ||
Derivative instruments, included in Short-term and other investments | $ 9,932 | $ 8,694 |
Liabilities | ||
FIA - embedded derivatives, included in Other policyholder funds | 64,261 | 59,393 |
IUL - embedded derivatives, included in Investment contract and life policy reserves | $ 236 | $ 158 |
Derivative Instruments (Detai43
Derivative Instruments (Details 1) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | ||
Change in fair value of derivatives: | |||
Net realized investment gains (losses) | [1] | $ 2,437 | $ (218) |
Change in fair value of embedded derivatives: | |||
Net realized investment losses | $ (2,366) | $ (676) | |
[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 (Detai44
Derivative Instruments (Details 2) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Dec. 31, 2016 | ||
Derivative [Line Items] | |||
Notional Amount | $ 204,000 | $ 186,100 | |
Fair Value | 9,932 | 8,694 | |
Bank of America, N.A. [Member] | |||
Derivative [Line Items] | |||
Notional Amount | 25,200 | 38,500 | |
Fair Value | 601 | 1,934 | |
Credit Suisse International [Member] | |||
Derivative [Line Items] | |||
Notional Amount | 57,700 | 65,200 | |
Fair Value | 5,164 | 4,281 | |
Societe Generale [Member] | |||
Derivative [Line Items] | |||
Notional Amount | 40,200 | 15,600 | |
Fair Value | 1,835 | 936 | |
Barclays Bank PLC [Member] | |||
Derivative [Line Items] | |||
Notional Amount | 80,900 | 66,800 | |
Fair Value | 2,332 | 1,543 | |
Citigroup Inc [Member] | |||
Derivative [Line Items] | |||
Notional Amount | 0 | 0 | |
Fair Value | $ 0 | $ 0 | |
Moody's [Member] | Bank of America, N.A. [Member] | |||
Derivative [Line Items] | |||
Credit Rating | [1] | A1 | |
Moody's [Member] | Societe Generale [Member] | |||
Derivative [Line Items] | |||
Credit Rating | [1] | A2 | |
Moody's [Member] | Barclays Bank PLC [Member] | |||
Derivative [Line Items] | |||
Credit Rating | [1] | A1 | |
Moody's [Member] | Credit Suisse International [Member] | |||
Derivative [Line Items] | |||
Credit Rating | [1] | A1 | |
Moody's [Member] | Citigroup Inc [Member] | |||
Derivative [Line Items] | |||
Credit Rating | [1] | Baa1 | |
Standard & Poor's [Member] | Bank of America, N.A. [Member] | |||
Derivative [Line Items] | |||
Credit Rating | [1] | A+ | |
Standard & Poor's [Member] | Credit Suisse International [Member] | |||
Derivative [Line Items] | |||
Credit Rating | [1] | A | |
Standard & Poor's [Member] | Societe Generale [Member] | |||
Derivative [Line Items] | |||
Credit Rating | [1] | A | |
Standard & Poor's [Member] | Barclays Bank PLC [Member] | |||
Derivative [Line Items] | |||
Credit Rating | [1] | A- | |
Standard & Poor's [Member] | Citigroup Inc [Member] | |||
Derivative [Line Items] | |||
Credit Rating | [1] | BBB+ | |
[1] | As assigned by Standard & Poor’s Corporation (“S&P”) and Moody’s Investors Service, Inc. (“Moody’s”). |
Derivative Instruments (Detai45
Derivative Instruments (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | |
Derivatives, Fair Value [Line Items] | ||
Concentration Risk, Credit Risk, Financial Instrument, Maximum Exposure | $ 250 | |
Fixed Indexed Annuities Term Minimum | 10 years | |
Other Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Asset, Fair Value of Collateral | $ 10,449 | $ 8,824 |
Property and Casualty Unpaid 46
Property and Casualty Unpaid Claims and Claim Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | ||
Gross reserves, beginning of year | $ 329,888 | ||
Claims and claim expense payments for claims occurring during: | |||
Gross reserves, end of year | 340,033 | ||
Property, Liability and Casualty Insurance Product Line [Member] | |||
Gross reserves, beginning of year | [1] | 307,757 | $ 301,569 |
Less: reinsurance recoverables | 61,199 | 50,332 | |
Net reserves, beginning of year | [2] | 246,558 | 251,237 |
Incurred claims and claim expenses: | |||
Claims occurring in the current year | 123,204 | 103,206 | |
Decrease in estimated reserves for claims occurring in prior years | [3] | (1,000) | (2,000) |
Total claims and claim expenses incurred | [4] | 122,204 | 101,206 |
Claims and claim expense payments for claims occurring during: | |||
Current year | 52,380 | 39,081 | |
Prior years | 62,013 | 54,515 | |
Total claims and claim expense payments | 114,393 | 93,596 | |
Net reserves, end of year | [2] | 254,369 | 258,847 |
Plus: reinsurance recoverables | 61,804 | 60,429 | |
Gross reserves, end of year | [1] | $ 316,173 | $ 319,276 |
[1] | Unpaid claims and claim expenses as reported in the Consolidated Balance Sheets also include reserves for the Life and Retirement segments of $23,860 and $24,993 as of March 31, 2017 and 2016, respectively, in addition to Property and Casualty segment reserves. | ||
[2] | Reserves net of anticipated reinsurance recoverables. | ||
[3] | Shows the amounts by which the Company decreased its reserves in each of the periods indicated for claims occurring in previous periods to reflect subsequent information on such claims and changes in their projected final settlement costs. | ||
[4] | Benefits, claims and settlement expenses as reported in the Consolidated Statements of Operations also include amounts for the Life and Retirement segments of $21,892 and $18,307 as of March 31, 2017 and 2016, respectively, in addition to the Property and Casualty segment amounts. |
Property and Casualty Unpaid 47
Property and Casualty Unpaid Claims and Claim Expenses (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Favorable development of total reserves for property and casualty claims occurring in prior years | $ 1,000 | $ 2,000 |
Policyholder Benefits and Claims Incurred, Net | 144,096 | 119,513 |
Life and Annuity Segments Combined [Member] | ||
Liability for Unpaid Claims and Claims Adjustment Expense, Net | 23,860 | 24,993 |
Policyholder Benefits and Claims Incurred, Net | $ 21,892 | $ 18,307 |
Debt (Details)
Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Short-term debt: | ||
Bank Credit Facility, expires July 30, 2019 | $ 0 | $ 0 |
Long-term debt, current and noncurrent: | ||
Long-term debt | 247,273 | 247,209 |
4.50% Senior Notes [Member] | ||
Long-term debt, current and noncurrent: | ||
Long-term debt | $ 247,273 | $ 247,209 |
Debt (Details Textual)
Debt (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | |
Debt | ||
Line of Credit Facility, Expiration Date | Jul. 30, 2019 | |
4.50% Senior Notes [Member] | Senior Notes 2015 [Member] | ||
Debt | ||
Debt Instrument, Interest Rate, Stated Percentage | 4.50% | |
4.50% Senior Notes [Member] | Senior Notes 2025 [Member] | ||
Debt | ||
Debt Instrument, Unamortized Discount | $ 589 | $ 603 |
Debt Instrument, Interest Rate, Stated Percentage | 4.50% | |
Debt Instrument, Face Amount | $ 250,000 | |
Debt Instrument, Maturity Date | Dec. 1, 2025 | |
Unamortized Debt Issuance Expense | $ 2,138 | $ 2,188 |
Reinsurance (Details)
Reinsurance (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Effects of reinsurance on premiums and benefits | ||
Premiums written and contract deposits, Gross Amount | $ 301,512 | $ 287,992 |
Premiums written and contract deposits, Ceded to Other Companies | 5,510 | 5,768 |
Premiums written and contract deposits, Assumed from Other Companies | 730 | 945 |
Premiums written and contract deposits, Net Amount | 296,732 | 283,169 |
Premiums and contract charges earned, Gross Amount | 200,455 | 190,233 |
Premiums and contract charges earned, Ceded to Other Companies | 5,534 | 5,769 |
Premiums and contract charges earned, Assumed from Other Companies | 801 | 986 |
Premiums and contract charges earned, Net Amount | 195,722 | 185,450 |
Benefits, claims and settlement expenses, Gross Amount | 147,271 | 131,240 |
Benefits, claims and settlement expenses, Ceded to Other Companies | 3,883 | 12,662 |
Benefits, claims and settlement expenses, Assumed from Other Companies | 708 | 935 |
Benefits, claims and settlement expenses, Net Amount | $ 144,096 | $ 119,513 |
Commitments (Details Textual)
Commitments (Details Textual) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Commitments And Contingencies Disclosure [Line Items] | ||
Purchase Commitment, Remaining Minimum Amount Committed | $ 140,516 | $ 135,054 |
Segment Information (Details)
Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Summarized financial information for these segments | |||
Insurance premiums and contract charges earned | $ 195,722 | $ 185,450 | |
Net investment income | 90,711 | 84,659 | |
Net income (loss) | 15,318 | 25,153 | |
Assets | 10,779,505 | $ 10,576,824 | |
Intersegment eliminations [Member] | |||
Summarized financial information for these segments | |||
Net investment income | (208) | (217) | |
Assets | (28,453) | (36,786) | |
Property and casualty [Member] | |||
Summarized financial information for these segments | |||
Insurance premiums and contract charges earned | 158,318 | 152,120 | |
Net investment income | 9,177 | 8,828 | |
Net income (loss) | 2,735 | 13,795 | |
Assets | 1,117,764 | 1,110,958 | |
Retirement [Member] | |||
Summarized financial information for these segments | |||
Insurance premiums and contract charges earned | 6,601 | 6,068 | |
Net investment income | 63,442 | 58,049 | |
Net income (loss) | 11,530 | 10,553 | |
Assets | 7,622,077 | 7,449,777 | |
Life [Member] | |||
Summarized financial information for these segments | |||
Insurance premiums and contract charges earned | 30,803 | 27,262 | |
Net investment income | 18,288 | 17,984 | |
Net income (loss) | 3,885 | 3,867 | |
Assets | 1,941,372 | 1,912,771 | |
Corporate and Other [Member] | |||
Summarized financial information for these segments | |||
Net investment income | 12 | 15 | |
Net income (loss) | (2,832) | $ (3,062) | |
Assets | $ 126,745 | $ 140,104 |