Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | Apr. 30, 2018 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2,018 | |
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 | 40,893,687 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Investments | ||
Fixed maturity securities, available for sale, at fair value (amortized cost 2018, $7,373,552; 2017, $7,302,950) | $ 7,634,682 | $ 7,724,075 |
Equity securities, at fair value (cost 2017, $116,320) | 131,023 | 135,466 |
Short-term and other investments | 458,957 | 492,807 |
Total investments | 8,224,662 | 8,352,348 |
Cash | 23,951 | 7,627 |
Deferred policy acquisition costs | 280,165 | 257,826 |
Goodwill | 47,396 | 47,396 |
Other assets | 352,804 | 381,182 |
Separate Account (variable annuity) assets | 2,139,564 | 2,151,961 |
Total assets | 11,068,542 | 11,198,340 |
Policy liabilities | ||
Investment contract and life policy reserves | 5,598,678 | 5,573,735 |
Unpaid claims and claim expenses | 358,317 | 347,749 |
Unearned premiums | 254,401 | 260,539 |
Total policy liabilities | 6,211,396 | 6,182,023 |
Other policyholder funds | 720,521 | 724,261 |
Other liabilities | 294,846 | 341,053 |
Long-term debt | 297,536 | 297,469 |
Separate Account (variable annuity) liabilities | 2,139,564 | 2,151,961 |
Total liabilities | 9,663,863 | 9,696,767 |
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, 2018, 65,610,067; 2017, 65,439,245 | 66 | 65 |
Additional paid-in capital | 466,277 | 464,246 |
Retained earnings | 1,254,394 | 1,231,177 |
Accumulated other comprehensive income (loss), net of taxes: | ||
Net unrealized investment gains on securities | 178,040 | 300,177 |
Net funded status of benefit plans | (13,217) | (13,217) |
Treasury stock, at cost, 2018, 24,721,533 shares; 2017, 24,721,372 shares | (480,881) | (480,875) |
Total shareholders’ equity | 1,404,679 | 1,501,573 |
Total liabilities and shareholders’ equity | $ 11,068,542 | $ 11,198,340 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Fixed maturities, available for sale, amortized cost (in usd) | $ 7,373,552 | $ 7,302,950 |
Equity securities, available for sale, cost (in usd) | $ 116,320 | |
Preferred stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common stock, shares issued | 65,610,067 | 65,439,245 |
Treasury stock (in shares) | 24,721,533 | 24,721,372 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Revenues | ||
Insurance premiums and contract charges earned | $ 202,998 | $ 195,722 |
Net investment income | 91,864 | 90,711 |
Net investment losses | (1,654) | (242) |
Other income | 2,281 | 1,113 |
Total revenues | 295,489 | 287,304 |
Benefits, losses and expenses | ||
Benefits, claims and settlement expenses | 143,562 | 144,096 |
Interest credited | 50,035 | 48,774 |
DAC amortization expense | 26,705 | 24,886 |
Operating expenses | 48,169 | 48,756 |
Interest expense | 3,172 | 2,956 |
Total benefits, losses and expenses | 271,643 | 269,468 |
Income before income taxes | 23,846 | 17,836 |
Income tax expense | 3,691 | 2,518 |
Net income | $ 20,155 | $ 15,318 |
Net income per share | ||
Basic (in usd per share) | $ 0.49 | $ 0.37 |
Diluted (in usd per share) | $ 0.48 | $ 0.37 |
Weighted average number of shares and equivalent shares | ||
Basic (in shares) | 41,497 | 41,135 |
Diluted (in shares) | 41,653 | 41,342 |
Net investment losses | ||
Total other-than-temporary impairment losses on securities | $ (110) | $ (2,797) |
Portion of losses recognized in other comprehensive income | 0 | 0 |
Net other-than-temporary impairment losses on securities recognized in earnings | 0 | (1,777) |
Net other-than-temporary impairment losses on securities recognized in earnings | (110) | (2,797) |
Sales and other | 2,203 | 2,484 |
Change in fair value - equity securities (1) | (5,186) | 0 |
Change in fair value and gains (losses) realized on settlements - derivative instruments | 1,439 | 71 |
Net investment losses | $ (1,654) | $ (242) |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Comprehensive income | ||
Net income | $ 20,155 | $ 15,318 |
Other comprehensive income, net of tax: | ||
Change in net unrealized investment gains (losses) on securities | (107,096) | 22,533 |
Change in net funded status of benefit plans | 0 | 0 |
Cumulative effect of change in accounting principle | (15,041) | 0 |
Other comprehensive income (loss) | (122,137) | 22,533 |
Total | $ (101,982) | $ 37,851 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands | Total | Common stock | Additional paid-in capital | Retained earnings | Accumulated other comprehensive income, net of tax | Treasury stock, at cost |
Beginning balance at Dec. 31, 2016 | $ 65 | $ 453,479 | $ 1,155,732 | $ 163,921 | $ (479,215) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Options exercised, 2018, 56,614 shares; 2017, 33,764 shares | 0 | |||||
Conversion of common stock units, 2018, 11,804 shares; 2017, 15,981 shares | 0 | |||||
Conversion of restricted stock units, 2018, 105,116 shares; 2017, 247,620 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 | ||||
Dividends, 2018, $0.285 per share; 2017, $0.275 per share | (11,518) | |||||
Change in net unrealized investment gains (losses) on securities | 22,533 | 22,533 | ||||
Change in net funded status of benefit plans | 0 | 0 | ||||
Cumulative effect of change in accounting principle | 0 | 0 | 0 | |||
Acquisition of shares, 2018, 161 shares; 2017, 0 shares | 0 | |||||
Ending balance at Mar. 31, 2017 | 1,321,818 | 65 | 454,982 | 1,159,532 | 186,454 | (479,215) |
Beginning balance at Dec. 31, 2017 | 1,501,573 | 65 | 464,246 | 1,231,177 | 286,960 | (480,875) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Options exercised, 2018, 56,614 shares; 2017, 33,764 shares | 0 | |||||
Conversion of common stock units, 2018, 11,804 shares; 2017, 15,981 shares | 0 | |||||
Conversion of restricted stock units, 2018, 105,116 shares; 2017, 247,620 shares | 1 | |||||
Options exercised and conversion of common stock units and restricted stock units | (125) | |||||
Share-based compensation expense | 2,156 | |||||
Net income | 20,155 | 20,155 | ||||
Dividends, 2018, $0.285 per share; 2017, $0.275 per share | (11,979) | |||||
Change in net unrealized investment gains (losses) on securities | (107,096) | (107,096) | ||||
Change in net funded status of benefit plans | 0 | 0 | ||||
Cumulative effect of change in accounting principle | (15,041) | 15,041 | (15,041) | |||
Acquisition of shares, 2018, 161 shares; 2017, 0 shares | (6) | |||||
Ending balance at Mar. 31, 2018 | $ 1,404,679 | $ 66 | $ 466,277 | $ 1,254,394 | $ 164,823 | $ (480,881) |
CONSOLIDATED STATEMENTS OF CHA7
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) (Parenthetical) - $ / shares | 3 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Common stock, par value (in usd per share) | $ 0.001 | $ 0.001 | ||
Treasury stock (in shares) | 24,721,533 | 24,721,372 | ||
Common stock | ||||
Common stock, par value (in usd per share) | $ 0.001 | $ 0.001 | ||
Options exercised (in shares) | 56,614 | 33,764 | ||
Conversion of common stock units (in shares) | 11,804 | 15,981 | ||
Conversion of restricted stock units (in shares) | 105,116 | 247,620 | ||
Retained earnings | ||||
Cash dividends (in usd per share) | $ 0.285 | $ 0.275 | ||
Treasury stock, at cost | ||||
Treasury stock (in shares) | 24,721,533 | 24,672,932 | 24,721,372 | 24,672,932 |
Treasury stock, acquisitions (in shares) | 161 | 0 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows - operating activities | ||
Premiums collected | $ 179,456 | $ 172,588 |
Policyholder benefits paid | (131,090) | (127,823) |
Policy acquisition and other operating expenses paid | (72,592) | (74,763) |
Income taxes paid | 690 | 11 |
Investment income collected | 93,426 | 91,840 |
Interest expense paid | (256) | (63) |
Other | 2,492 | 11,008 |
Net cash provided by operating activities | 72,126 | 72,798 |
Fixed maturity securities | ||
Purchases | (308,450) | (318,629) |
Sales | 89,894 | 110,872 |
Maturities, paydowns, calls and redemptions | 151,722 | 190,068 |
Purchases | (2,208) | (15,502) |
Sales and repayments | 2,048 | 5,489 |
Purchase of other invested assets | (13,856) | (24,177) |
Net cash provided by (used in) short-term and other investments | 47,146 | (32,406) |
Net cash used in investing activities | (33,704) | (84,285) |
Cash flows - financing activities | ||
Dividends paid to shareholders | (11,638) | (11,518) |
Acquisition of treasury stock | (6) | 0 |
Proceeds from exercise of stock options | 1,136 | 723 |
Withholding tax payments on RSUs tendered | (2,061) | (2,532) |
Annuity contracts: variable, fixed and FHLB funding agreements | ||
Deposits | 98,837 | 117,311 |
Benefits, withdrawals and net transfers to Separate Account (variable annuity) assets | (112,272) | (99,757) |
Life policy accounts | ||
Deposits | 1,111 | 1,183 |
Withdrawals and surrenders | (1,329) | (1,066) |
Change in bank overdrafts | 4,124 | (2,934) |
Net cash (used in) provided by financing activities | (22,098) | 1,410 |
Net increase (decrease) in cash | 16,324 | (10,077) |
Cash at beginning of period | 7,627 | 16,670 |
Cash at end of period | $ 23,951 | $ 6,593 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2018 | |
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 disclosures 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, 2018 , the consolidated results of operations, comprehensive income, changes in shareholders’ equity and cash flows for the three month periods ended March 31, 2018 and 2017 . 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 insurance products (primarily personal lines of automobile and property insurance), retirement products (primarily tax-qualified annuities) 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, 2017 . The results of operations for the three month period ended March 31, 2018 are not necessarily indicative of the results to be expected for the full year. Investment Contract and Life Policy Reserves This table summarizes the Company’s investment contract and life policy reserves. ($ in thousands) March 31, 2018 December 31, 2017 Investment contract reserves $ 4,471,733 $ 4,452,972 Life policy reserves 1,126,945 1,120,763 Total $ 5,598,678 $ 5,573,735 Accumulated Other Comprehensive Income (Loss) Accumulated other comprehensive income (loss) (AOCI) represents the accumulated change in shareholders’ equity from transactions and other events and circumstances from non-shareholder sources. For the Company, AOCI includes the after tax change in net unrealized investment gains and losses on securities and the after tax change in net funded status of defined benefit plans for the periods as shown in the Consolidated Statement of Changes in Shareholders’ Equity. The following tables reconcile these components. ($ in thousands) Net Unrealized Investment Gains and Losses on Securities (1)(2) Defined Benefit Plans (1) Total (1) Beginning balance, January 1, 2018 $ 300,177 $ (13,217 ) $ 286,960 Other comprehensive income (loss) before reclassifications (109,539 ) — (109,539 ) Amounts reclassified from accumulated other comprehensive income (loss) 2,443 — 2,443 Cumulative effect of change in accounting principle (3) (15,041 ) — (15,041 ) Net current period other comprehensive income (loss) (122,137 ) — (122,137 ) Ending balance, March 31, 2018 $ 178,040 $ (13,217 ) $ 164,823 Beginning balance, January 1, 2017 $ 175,738 $ (11,817 ) $ 163,921 Other comprehensive income (loss) before reclassifications 22,330 — 22,330 Amounts reclassified from accumulated other comprehensive income (loss) 203 — 203 Net current period other comprehensive income (loss) 22,533 — 22,533 Ending balance, March 31, 2017 $ 198,271 $ (11,817 ) $ 186,454 ________________ (1) All amounts are net of tax. (2) The pretax amounts reclassified from accumulated other comprehensive income (loss), $(3,092) thousand and $(313) thousand , are included in net investment gains and losses and the related income tax expenses, $(649) thousand and $(110) thousand , are included in income tax expense in the Consolidated Statements of Operations for the three month periods ended March 31, 2018 and 2017 , respectively. (3) The Company adopted guidance on January 1, 2018 that resulted in reclassifying $15,041 thousand of after tax unrealized gains on equity securities from AOCI to Retained earnings. 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 Securities. Adopted Accounting Standards Revenue Recognition In May 2014, the 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, certain insurance contracts are specifically excluded from this updated guidance. The Company adopted the guidance on January 1, 2018, using the modified retrospective transition method. The guidance did not have an impact on the Company’s consolidated financial position, results of operations, cash flows, or disclosures. 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, the guidance revises the accounting related to the classification and measurement of investments in equity securities and the presentation of certain fair value changes for financial liabilities measured at fair value. The Company adopted the guidance on January 1, 2018 using the modified retrospective approach that resulted in reclassifying $15,041 thousand of after tax unrealized gains on equity securities from AOCI to Retained earnings. The Company's Consolidated Statements of Operations were impacted as changes in fair value of equity securities are now being reported in Net investment gains and losses instead of reported in other comprehensive income (loss) (OCI). 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. The Company adopted the guidance on January 1, 2018 using a retrospective approach which had no impact to the prior year amounts reported in the Consolidated Statement of Cash Flows. Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income On February 14, 2018, the FASB issued accounting guidance that permits recognition of a reclassification adjustment between AOCI and Retained earnings for stranded tax amounts related to the reduced corporate tax rate enacted under the Tax Act. As permitted under its provisions, the Company early adopted the accounting guidance effective for the quarterly period that ended December 31, 2017 and elected to reclassify the stranded tax amounts. The impact from early adoption resulted in an increase to AOCI and a reduction to Retained earnings of approximately $47,900 thousand ; representing the stranded deferred tax liabilities of $50,034 thousand and $(2,134) thousand for Net unrealized investment gains and losses on securities and Defined benefit plans, respectively. Pending Accounting Standards 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. While the Company is in the process of evaluating the impact of the guidance, it does not expect the guidance to have a material impact on its consolidated financial statements, except for recognizing lease assets and lease liabilities for its operating leases. The Company's lease obligations under various non-cancellable operating lease agreements amounted to approximately $9,093 thousand at March 31, 2018. 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. Any credit losses related to available for sale debt securities 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 |
Investments
Investments | 3 Months Ended |
Mar. 31, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | The Company’s investment portfolio includes free-standing derivative financial instruments (currently over the counter 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, 2017 . 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 month periods ended March 31, 2018 and 2017 . Fixed Maturity Securities The Company’s investment portfolio is comprised primarily of fixed maturity securities. The amortized cost, net unrealized investment gains and losses, fair values and other-than-temporary impairment (OTTI) included in AOCI of all fixed maturity securities in the portfolio were as follows: ($ in thousands) Amortized Cost/Cost Unrealized Investment Gains Unrealized Investment Losses Fair Value OTTI in AOCI (2) March 31, 2018 (1) Fixed maturity securities U.S. Government and federally sponsored agency obligations (3): Mortgage-backed securities $ 699,629 $ 22,930 $ 11,601 $ 710,958 $ — Other, including U.S. Treasury securities 760,390 18,797 17,220 761,967 — Municipal bonds 1,721,046 149,774 9,516 1,861,304 — Foreign government bonds 94,870 4,307 136 99,041 — Corporate bonds 2,383,394 112,451 14,575 2,481,270 — Other mortgage-backed securities 1,714,223 16,621 10,702 1,720,142 — Totals $ 7,373,552 $ 324,880 $ 63,750 $ 7,634,682 $ — December 31, 2017 Fixed maturity securities U.S. Government and federally sponsored agency obligations (3): Mortgage-backed securities $ 669,297 $ 30,460 $ 3,032 $ 696,725 $ — Other, including U.S. Treasury securities 714,613 26,311 5,516 735,408 — Municipal bonds 1,711,581 184,107 2,435 1,893,253 — Foreign government bonds 96,780 5,958 — 102,738 — Corporate bonds 2,409,426 173,862 4,334 2,578,954 — Other mortgage-backed securities 1,701,253 22,935 7,191 1,716,997 — Totals $ 7,302,950 $ 443,633 $ 22,508 $ 7,724,075 $ — Equity securities (4) $ 116,320 $ 19,425 $ 279 $ 135,466 $ — ________________ (1) Effective January 1, 2018, with the adoption of new accounting guidance for recognition and measurement of financial instruments, available for sale equity securities were reclassified to equity securities at fair value and are excluded from the table above as of March 31, 2018. (2) 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. (3) Fair value includes securities issued by Federal National Mortgage Association (FNMA) of $386,398 thousand and $361,955 thousand ; Federal Home Loan Mortgage Corporation (FHLMC) of $396,957 thousand and $400,001 thousand ; and Government National Mortgage Association (GNMA) of $98,056 thousand and $104,168 thousand as of March 31, 2018 and December 31, 2017 , respectively. (4) Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds. The following table presents the fair value and gross unrealized losses of securities in an unrealized loss position at March 31, 2018 and December 31, 2017 , respectively. The Company views the decrease in value of all of the securities with unrealized losses at March 31, 2018 -- which was driven largely by changes in interest rates, spread widening, financial market illiquidity and/or market volatility from the date of acquisition -- as temporary. For fixed maturity securities, management does not have the intent to sell the securities and it is not more likely than not the Company will be required to sell the securities before the anticipated recovery of the amortized cost bases, and management expects to recover the entire amortized cost bases of the fixed maturity securities. Therefore, no impairment of fixed maturity securities was recorded at March 31, 2018 . ($ in thousands) 12 Months or Less More than 12 Months Total Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses March 31, 2018 (1) Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 301,927 $ 8,346 $ 39,339 $ 3,255 $ 341,266 $ 11,601 Other 393,555 9,415 118,166 7,805 511,721 17,220 Municipal bonds 224,400 4,614 76,577 4,902 300,977 9,516 Foreign government bonds 6,390 136 — — 6,390 136 Corporate bonds 450,467 11,923 37,572 2,652 488,039 14,575 Other mortgage-backed securities 607,571 6,298 146,659 4,404 754,230 10,702 Total $ 1,984,310 $ 40,732 $ 418,313 $ 23,018 $ 2,402,623 $ 63,750 Number of positions with a gross unrealized loss 837 153 990 Fair value as a percentage of total fixed maturity securities fair value 25.6 % 5.4 % 31.0 % December 31, 2017 Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 134,032 $ 1,053 $ 40,606 $ 1,979 $ 174,638 $ 3,032 Other 168,634 1,849 122,753 3,667 291,387 5,516 Municipal bonds 29,437 100 79,140 2,335 108,577 2,435 Foreign government bonds — — — — — — Corporate bonds 115,113 2,701 36,081 1,633 151,194 4,334 Other mortgage-backed securities 457,166 2,791 168,972 4,400 626,138 7,191 Total fixed maturity securities 904,382 8,494 447,552 14,014 1,351,934 22,508 Equity securities (2) 6,027 249 1,277 30 7,304 279 Combined totals $ 910,409 $ 8,743 $ 448,829 $ 14,044 $ 1,359,238 $ 22,787 Number of positions with a gross unrealized loss 354 158 512 Fair value as a percentage of total fixed maturity and equity securities fair value 11.6 % 5.7 % 17.3 % ________________ (1) Effective January 1, 2018, with the adoption of new accounting guidance for recognition and measurement of financial instruments, available for sale equity securities were reclassified to equity securities at fair value and are excluded from the table above as of March 31, 2018. (2) Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds. Fixed maturity securities with an investment grade rating represented 95.3% of the gross unrealized losses as of March 31, 2018 . 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, 2018 and 2017 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 OCI: ($ in thousands) Three Months Ended March 31, 2018 2017 Cumulative credit loss (1) Beginning of period $ 3,825 $ 13,703 New credit losses — — Increases to previously recognized credit losses — 726 Gains (losses) related to securities sold or paid down during the period — (2 ) End of period $ 3,825 $ 14,427 ________________ (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 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. ($ in thousands) Percent of Total Fair Value March 31, 2018 March 31, 2018 December 31, 2017 Fair Value Amortized Cost Estimated expected maturity: Due in 1 year or less 4.0 % 3.2 % $ 303,914 $ 299,275 Due after 1 year through 5 years 25.4 26.7 1,936,362 1,887,648 Due after 5 years through 10 years 32.7 32.6 2,498,529 2,457,018 Due after 10 years through 20 years 24.7 24.2 1,884,116 1,800,969 Due after 20 years 13.2 13.3 1,011,761 928,642 Total 100.0 % 100.0 % $ 7,634,682 $ 7,373,552 Average option-adjusted duration, in years 6.0 5.9 Sales of Fixed Maturity 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: ($ in thousands) Three Months Ended March 31, 2018 2017 Fixed maturity securities Proceeds received $ 89,894 $ 110,872 Gross gains realized 1,670 2,489 Gross losses realized (53 ) (881 ) Equity securities Proceeds received $ 2,048 $ 5,489 Gross gains realized 616 1,048 Gross losses realized (34 ) (192 ) Net Investment Gains (Losses) The following table reconciles the net investment gains and losses (pretax) by transaction type: ($ in thousands) Three Months Ended March 31, 2018 2017 Impairment write-downs $ — $ (1,777 ) Change in intent write-downs (110 ) (1,020 ) Net other-than-temporary impairment losses recognized in earnings (110 ) — (2,797 ) Sales and other 2,203 2,484 Change in fair value - equity securities (1) (5,186 ) — Change in fair value and gains (losses) realized on settlements - derivative instruments 1,439 71 Net investment gains (losses) $ (1,654 ) — $ (242 ) ________________ (1) Effective January 1, 2018, with the adoption of new accounting guidance for recognition and measurement of financial instruments, equity securities are reported at fair value with change in fair value recognized in Net investment gains (losses) and are no longer included in impairment write-downs or change in intent write-downs. Net Unrealized Investment Gains and Losses on Securities The following table reconciles the net unrealized investment gains and losses, net of tax, included in AOCI, before the impact of deferred policy acquisition costs (DAC): ($ in thousands) Three Months Ended March 31, 2018 2017 Net unrealized investment gains and losses on securities, net of tax Beginning of period $ 286,176 $ 202,941 Change in net unrealized investment gains and losses (67,285 ) 25,193 Reclassification of net investments (gains) losses to net income 2,443 203 Reclassification of unrealized gains on equity securities, net of tax, to Retained earnings (1) (15,041 ) — End of period $ 206,293 $ 228,337 ________________ (1) Effective January 1, 2018, with the adoption of new accounting guidance for recognition and measurement of financial instruments, available for sale equity securities were reclassified to equity securities at fair value and the related unrealized gains were reclassified from AOCI to Retained earnings. Offsetting of Assets and Liabilities The Company’s derivative instruments (call options) are subject to enforceable master netting arrangements. Collateral support agreements associated with each master netting arrangement provide that the Company will receive or pledge financial collateral in the event minimum thresholds have been reached. The following table presents the instruments that were subject to a master netting arrangement for the Company. ($ in thousands) Gross Amounts Offset in the Net Amounts of Assets/ Liabilities Presented in the Gross Amounts Not Offset in the Consolidated Balance Sheets Gross Amounts Consolidated Balance Sheets Consolidated Balance Sheets Financial Instruments Cash Collateral Received Net Amount March 31, 2018 Asset derivatives: Free-standing derivatives $ 12,630 $ — $ 12,630 $ — $ 13,174 $ (544 ) December 31, 2017 Asset derivatives: Free-standing derivatives $ 15,550 $ — $ 15,550 $ — $ 15,584 $ (34 ) Deposits At March 31, 2018 and December 31, 2017 , fixed maturity securities with a fair value of $17,848 thousand and $17,985 thousand , 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, 2018 and December 31, 2017 , fixed maturity securities with a fair value of $686,387 thousand and $686,790 thousand , respectively, were on deposit with the Federal Home Loan Bank of Chicago (FHLB) as collateral for amounts subject to funding agreements, advances and borrowings which were equal to $625,000 thousand |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | The Company is required under GAAP to disclose estimated fair values for certain financial and nonfinancial assets and liabilities. Fair values of the Company’s insurance contracts other than annuity contracts are not required to be disclosed. However, the estimated fair values of liabilities under all insurance contracts are taken into consideration in the Company’s overall management of interest rate risk through the matching of investment maturities with amounts due under insurance contracts. Information regarding the three-level hierarchy presented below and the valuation methodologies utilized by the Company to estimate fair values at a point in time is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 , specifically in Note 3 -- Fair Value of Financial Instruments. Financial Instruments Measured and Carried at Fair Value The following table presents the Company’s fair value hierarchy for those assets and liabilities measured and carried at fair value on a recurring basis. At March 31, 2018 , Level 3 invested assets comprised 3.0% of the Company’s total investment portfolio at fair value. ($ in thousands) Fair Value Measurements at Carrying Fair Reporting Date Using Amount Value Level 1 Level 2 Level 3 March 31, 2018 Financial Assets Investments Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 710,958 $ 710,958 $ — $ 707,842 $ 3,116 Other, including U.S. Treasury securities 761,967 761,967 13,249 748,718 — Municipal bonds 1,861,304 1,861,304 — 1,811,556 49,748 Foreign government bonds 99,041 99,041 — 99,041 — Corporate bonds 2,481,270 2,481,270 13,733 2,388,757 78,780 Other mortgage-backed securities 1,720,142 1,720,142 — 1,607,924 112,218 Total fixed maturity securities 7,634,682 7,634,682 26,982 7,363,838 243,862 Equity securities 131,023 131,023 79,870 — 51,147 — 6 Short-term investments 22,194 22,194 22,194 — — Other investments 25,130 25,130 — 25,130 — Totals $ 7,813,029 $ 7,813,029 $ 129,046 $ 7,440,115 $ 243,868 Financial Liabilities Investment contract and life policy reserves, embedded derivatives $ 518 $ 518 $ — $ 518 $ — Other policyholder funds, embedded derivatives 78,486 78,486 — — 78,486 December 31, 2017 Financial Assets Investments Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 696,725 $ 696,725 $ — $ 693,375 $ 3,350 Other, including U.S. Treasury securities 735,408 735,408 13,393 722,015 — Municipal bonds 1,893,253 1,893,253 — 1,843,925 49,328 Foreign government bonds 102,738 102,738 — 102,738 — Corporate bonds 2,578,954 2,578,954 14,345 2,491,630 72,979 Other mortgage-backed securities 1,716,997 1,716,997 — 1,612,403 104,594 Total fixed maturity securities 7,724,075 7,724,075 27,738 7,466,086 230,251 Equity securities 135,466 135,466 82,208 53,252 6 Short-term investments 62,593 62,593 62,593 — — Other investments 28,050 28,050 — 28,050 — Totals $ 7,950,184 $ 7,950,184 $ 172,539 $ 7,547,388 $ 230,257 Financial Liabilities Investment contract and life policy reserves, embedded derivatives $ 594 $ 594 $ — $ 594 $ — Other policyholder funds, embedded derivatives 80,733 80,733 — — 80,733 During the three month period ended March 31, 2018 , there were no transfers between Level 1 and Level 2. During the three month period 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. ($ in thousands) Financial Assets Financial Liabilities(1) Municipal Bonds Corporate Bonds Other Mortgage- Backed Securities (2) Total Fixed Maturity Securities Equity Securities Short-term Investments Total Beginning balance, January 1, 2018 $ 49,328 $ 72,979 $ 107,944 $ 230,251 $ 6 $ — $ 230,257 $ 80,733 Transfers into Level 3 (3) — 10,778 14,822 25,600 — — 25,600 — Transfers out of Level 3 (3) — — — — — — — — Total gains or losses Net investment gains (losses) included in net income related to financial assets — — — — 3 — 3 — Net (gains) losses included in net income related to financial liabilities — — — — — — — (2,222 ) Net unrealized investment gains (losses) included in OCI 443 (887 ) (1,022 ) (1,466 ) — — (1,466 ) Purchases — — — — — — — Issuances — — — — — — — 1,332 Sales — — — — (3 ) — (3 ) Settlements — — — — — — — Paydowns, maturities and distributions (23 ) (4,090 ) (6,410 ) (10,523 ) — — (10,523 ) (1,357 ) Ending balance, March 31, 2018 $ 49,748 $ 78,780 $ 115,334 $ 243,862 $ 6 $ — $ 243,868 $ 78,486 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 investment gains (losses) included in net income related to financial assets — — — — — — — — Net (gains) losses included in net income related to financial liabilities — — — — — — — 2,308 Net unrealized investment gains (losses) included in OCI 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 ________________ (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 month periods ended March 31, 2018 and 2017 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, 2018 , the Company realized a gain of $3 thousand on one Level 3 security. At March 31, 2017 , there were no net 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 month periods ended March 31, 2018 and 2017 , a net investment gain of $2,222 thousand and a net investment loss of $2,308 thousand , 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 and liabilities 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, 2017 . 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 relate to interest rate spreads, illiquidity premiums and default rates. Significant spread widening in isolation will adversely impact the overall valuation, while significant spread tightening will lead to substantial valuation increases. Significant increases (decreases) in illiquidity premiums in isolation will result in substantially lower (higher) valuations. Significant increases (decreases) in expected default rates in isolation will result in substantially lower (higher) valuations. Financial Instruments Not Carried at Fair Value; Disclosure Required The Company has various other financial assets and financial liabilities used in the normal course of business that are not carried at fair value, but for which fair value disclosure is required. The following table presents the carrying value, fair value and fair value hierarchy of these financial assets and financial liabilities. ($ in thousands) Fair Value Measurements at Carrying Fair Reporting Date Using Amount Value Level 1 Level 2 Level 3 March 31, 2018 Financial Assets Investments Other investments $ 154,211 $ 158,891 $ — $ — $ 158,891 Financial Liabilities Investment contract and life policy reserves, fixed annuity contracts 4,471,733 4,373,529 — — 4,373,529 Investment contract and life policy reserves, account values on life contracts 83,319 88,968 — — 88,968 Other policyholder funds 642,035 642,035 — 575,784 66,251 Long-term debt 297,536 306,247 — 306,247 — December 31, 2017 Financial Assets Investments Other investments $ 154,898 $ 159,575 $ — $ — $ 159,575 Financial Liabilities Investment contract and life policy reserves, fixed annuity contracts 4,452,972 4,366,334 — — 4,366,334 Investment contract and life policy reserves, 82,911 88,620 — — 88,620 Other policyholder funds 643,528 643,528 — 575,622 67,906 Long-term debt 297,469 311,315 — 311,315 — |
Derivative Instruments
Derivative Instruments | 3 Months Ended |
Mar. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | The Company offers 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. The Company also offers IUL products which credit interest based on a percentage of the gain in a specified market index. When deposits are received for FIA and IUL contracts, a portion is used to purchase derivatives consisting of call options on the applicable market indices to fund the index credits due to FIA and IUL policyholders. For the Company, substantially all 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 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, the embedded derivative represents a single year liability for the index return. The Company carries all derivative instruments at fair value in the Consolidated Balance Sheets. The Company elected to not use hedge accounting for derivative transactions related to the FIA and IUL products. As a result, the Company recognizes 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 as Net investment gains (losses) in the Consolidated Statements of Operations. The fair values of derivative instruments, including derivative instruments embedded in FIA and IUL contracts, are presented in the Consolidated Balance Sheets as follows: ($ in thousands) March 31, 2018 December 31, 2017 Assets Derivative instruments, included in Short-term and other investments $ 12,630 $ 15,550 Liabilities FIA - embedded derivatives, included in Other policyholder funds $ 78,486 $ 80,733 IUL - embedded derivatives, included in Investment contract and life policy reserves 518 594 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 the 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. The changes in fair value of derivatives included in the Consolidated Statements of Operations were as follows: ($ in thousands) Three Months Ended March 31, 2018 2017 Change in fair value of derivatives (1): Revenues Net investment gains (losses) $ (849 ) $ 2,437 Change in fair value of embedded derivatives: Revenues Net investment gains (losses) $ 2,288 $ (2,366 ) ________________ (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 Financial Services LLC (S&P) and/or Moody's Investors Service (Moody's) long-term credit rating of "BBB+" or higher at the time of purchase and the maximum credit exposure to any single counterparty is subject to concentration limits. The Company also obtains credit support agreements that allow it to request the counterparty to provide collateral when the fair value of the exposure to the counterparty exceeds specified amounts. The notional amount and fair value of call options by counterparty and each counterparty’s long-term credit ratings were as follows: ($ in thousands) March 31, 2018 December 31, 2017 Credit Rating Notional Fair Notional Fair Counterparty S&P Moody's Amount Value Amount Value Bank of America, N.A. A+ Aa3 $ 93,800 $ 6,017 $ 85,100 $ 6,320 Barclays Bank PLC A A2 48,600 902 48,900 1,828 Citigroup Inc. BBB+ — — — — Credit Suisse International A A1 21,100 1,469 21,100 1,444 Societe Generale A 92,400 4,242 91,700 5,958 Total $ 255,900 $ 12,630 $ 246,800 $ 15,550 As of March 31, 2018 and December 31, 2017 , the Company held $13,174 thousand and $15,584 thousand , 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 $250 thousand |
Property and Casualty Unpaid Cl
Property and Casualty Unpaid Claims and Claim Expenses | 3 Months Ended |
Mar. 31, 2018 | |
Insurance Loss Reserves [Abstract] | |
Property and Casualty Unpaid Claims and Claim Expenses | The following table is a summary reconciliation of the beginning and ending Property and Casualty unpaid claims and claim expense reserves for the periods indicated. The table presents reserves on both gross and net (after reinsurance) bases. The total net Property and Casualty insurance claims and claim expense incurred amounts are reflected in the Consolidated Statements of Operations. The end of the period gross reserve (before reinsurance) balances and the reinsurance recoverable balances are reflected on a gross basis in the Consolidated Balance Sheets. ($ in thousands) Three Months Ended March 31, 2018 2017 Property and Casualty Beginning gross reserves (1) $ 319,182 $ 307,757 Less: reinsurance recoverables 57,409 61,199 Net reserves, beginning of period (2) 261,773 246,558 Incurred claims and claim expenses: Claims occurring in the current period 120,988 123,204 Decrease in estimated reserves for claims occurring in prior periods (3) (300 ) (1,000 ) Total claims and claim expenses incurred (4) 120,688 122,204 Claims and claim expense payments for claims occurring during: Current period 47,048 52,380 Prior periods 67,075 62,013 Total claims and claim expense payments 114,123 114,393 Net reserves, end of period (2) 268,338 254,369 Plus: reinsurance recoverables 62,917 61,804 Ending gross reserves (1) $ 331,255 $ 316,173 ________________ (1) Unpaid claims and claim expenses as reported in the Consolidated Balance Sheets also include reserves for Life and Retirement of $27,062 thousand and $23,860 thousand as of March 31, 2018 and 2017 , respectively, in addition to Property and Casualty 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 Life and Retirement of $22,874 thousand and $21,892 thousand for the three month periods ended March 31, 2018 and 2017 , respectively, in addition to Property and Casualty amounts. Net favorable development of total reserves for Property and Casualty claims occurring in prior years was $300 thousand and $1,000 thousand for the three month periods ended March 31, 2018 and 2017 , respectively. The favorable development for both of the three month periods ended March 31, 2018 and 2017 |
Debt
Debt | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Debt | Indebtedness outstanding was as follows: ($ in thousands) March 31, 2018 December 31, 2017 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 thousand less unaccrued discount of $532 thousand and $547 thousand (4.5% imputed rate) and unamortized debt issuance costs of $1,932 thousand and $1,984 thousand 247,536 247,469 Federal Home Loan Bank borrowing 50,000 50,000 Total $ 297,536 $ 297,469 The Credit Agreement with certain financial institutions (Bank Credit Facility), 4.50% Senior Notes due 2025 (Senior Notes due 2025) and FHLB borrowing 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, 2017 |
Reinsurance
Reinsurance | 3 Months Ended |
Mar. 31, 2018 | |
Insurance [Abstract] | |
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: ($ in thousands) Gross Amount Ceded to Other Companies Assumed from Other Companies Net Amount Three months ended March 31, 2018 Premiums written and contract deposits (1) $ 288,816 $ 5,514 $ 706 $ 284,008 Premiums and contract charges earned 207,737 5,528 789 202,998 Benefits, claims and settlement expenses 151,968 9,014 608 143,562 Three months ended March 31, 2017 Premiums written and contract deposits (1) $ 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 ________________ (1) |
Commitments
Commitments | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
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 $170,102 thousand and $106,381 thousand at March 31, 2018 and December 31, 2017 |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Segment Information | The Company conducts and manages its business through four segments. The three operating segments, representing the major lines of insurance business, are: Property and Casualty, primarily personal lines automobile and property insurance products; Retirement, primarily tax-qualified fixed and variable annuities; and Life, life insurance. The Company does not allocate the impact of corporate-level transactions to these operating segments, consistent with the basis for management’s evaluation of the results of those segments, but classifies those items in the fourth segment, Corporate and Other. In addition to ongoing transactions such as corporate debt service, net investment gains and losses and certain public company expenses, such items also have included corporate debt retirement costs, when applicable. Summarized financial information for these segments is as follows: ($ in thousands) Three Months Ended March 31, 2018 2017 Insurance premiums and contract charges earned Property and Casualty $ 165,458 $ 158,318 Retirement 8,068 6,601 Life 29,472 30,803 Total $ 202,998 $ 195,722 Net investment income Property and Casualty $ 9,516 $ 9,177 Retirement 64,169 63,442 Life 18,340 18,288 Corporate and Other 36 12 Intersegment eliminations (197 ) (208 ) Total $ 91,864 $ 90,711 Net income (loss) Property and Casualty $ 9,722 $ 2,735 Retirement 11,421 11,530 Life 3,787 3,885 Corporate and Other (4,775 ) (2,832 ) Total $ 20,155 $ 15,318 ($ in thousands) March 31, 2018 December 31, 2017 Assets Property and Casualty $ 1,202,791 $ 1,217,394 Retirement 7,969,848 8,063,912 Life 1,785,912 1,815,732 Corporate and Other 140,526 143,784 Intersegment eliminations (30,535 ) (42,482 ) Total $ 11,068,542 $ 11,198,340 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | On December 22, 2017, comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the Tax Act) was enacted by the U.S. government. The Tax Act is generally effective January 1, 2018, and among other changes, reduced the federal corporate income tax rate from 35% to 21%, eliminated the corporate Alternative Minimum Tax, modified numerous insurance-specific provisions, and further limited deductions for executive compensation. The Tax Act reduced the Company’s effective tax rate by 9.5% |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
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 disclosures 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, 2018 , the consolidated results of operations, comprehensive income, changes in shareholders’ equity and cash flows for the three month periods ended March 31, 2018 and 2017 . 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 insurance products (primarily personal lines of automobile and property insurance), retirement products (primarily tax-qualified annuities) 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, 2017 . The results of operations for the three month period ended March 31, 2018 are not necessarily indicative of the results to be expected for the full year. |
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) |
Adopted and Pending Accounting Standards | Adopted Accounting Standards Revenue Recognition In May 2014, the 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, certain insurance contracts are specifically excluded from this updated guidance. The Company adopted the guidance on January 1, 2018, using the modified retrospective transition method. The guidance did not have an impact on the Company’s consolidated financial position, results of operations, cash flows, or disclosures. 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, the guidance revises the accounting related to the classification and measurement of investments in equity securities and the presentation of certain fair value changes for financial liabilities measured at fair value. The Company adopted the guidance on January 1, 2018 using the modified retrospective approach that resulted in reclassifying $15,041 thousand of after tax unrealized gains on equity securities from AOCI to Retained earnings. The Company's Consolidated Statements of Operations were impacted as changes in fair value of equity securities are now being reported in Net investment gains and losses instead of reported in other comprehensive income (loss) (OCI). 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. The Company adopted the guidance on January 1, 2018 using a retrospective approach which had no impact to the prior year amounts reported in the Consolidated Statement of Cash Flows. Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income On February 14, 2018, the FASB issued accounting guidance that permits recognition of a reclassification adjustment between AOCI and Retained earnings for stranded tax amounts related to the reduced corporate tax rate enacted under the Tax Act. As permitted under its provisions, the Company early adopted the accounting guidance effective for the quarterly period that ended December 31, 2017 and elected to reclassify the stranded tax amounts. The impact from early adoption resulted in an increase to AOCI and a reduction to Retained earnings of approximately $47,900 thousand ; representing the stranded deferred tax liabilities of $50,034 thousand and $(2,134) thousand for Net unrealized investment gains and losses on securities and Defined benefit plans, respectively. Pending Accounting Standards 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. While the Company is in the process of evaluating the impact of the guidance, it does not expect the guidance to have a material impact on its consolidated financial statements, except for recognizing lease assets and lease liabilities for its operating leases. The Company's lease obligations under various non-cancellable operating lease agreements amounted to approximately $9,093 thousand at March 31, 2018. 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. Any credit losses related to available for sale debt securities 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 |
Basis of Presentation (Tables)
Basis of Presentation (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
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. ($ in thousands) March 31, 2018 December 31, 2017 Investment contract reserves $ 4,471,733 $ 4,452,972 Life policy reserves 1,126,945 1,120,763 Total $ 5,598,678 $ 5,573,735 |
Accumulated Other Comprehensive Income (Loss) | The following tables reconcile these components. ($ in thousands) Net Unrealized Investment Gains and Losses on Securities (1)(2) Defined Benefit Plans (1) Total (1) Beginning balance, January 1, 2018 $ 300,177 $ (13,217 ) $ 286,960 Other comprehensive income (loss) before reclassifications (109,539 ) — (109,539 ) Amounts reclassified from accumulated other comprehensive income (loss) 2,443 — 2,443 Cumulative effect of change in accounting principle (3) (15,041 ) — (15,041 ) Net current period other comprehensive income (loss) (122,137 ) — (122,137 ) Ending balance, March 31, 2018 $ 178,040 $ (13,217 ) $ 164,823 Beginning balance, January 1, 2017 $ 175,738 $ (11,817 ) $ 163,921 Other comprehensive income (loss) before reclassifications 22,330 — 22,330 Amounts reclassified from accumulated other comprehensive income (loss) 203 — 203 Net current period other comprehensive income (loss) 22,533 — 22,533 Ending balance, March 31, 2017 $ 198,271 $ (11,817 ) $ 186,454 ________________ (1) All amounts are net of tax. (2) The pretax amounts reclassified from accumulated other comprehensive income (loss), $(3,092) thousand and $(313) thousand , are included in net investment gains and losses and the related income tax expenses, $(649) thousand and $(110) thousand , are included in income tax expense in the Consolidated Statements of Operations for the three month periods ended March 31, 2018 and 2017 , respectively. (3) The Company adopted guidance on January 1, 2018 that resulted in reclassifying $15,041 thousand |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Unrealized gains and losses on fixed maturities and equity securities | The amortized cost, net unrealized investment gains and losses, fair values and other-than-temporary impairment (OTTI) included in AOCI of all fixed maturity securities in the portfolio were as follows: ($ in thousands) Amortized Cost/Cost Unrealized Investment Gains Unrealized Investment Losses Fair Value OTTI in AOCI (2) March 31, 2018 (1) Fixed maturity securities U.S. Government and federally sponsored agency obligations (3): Mortgage-backed securities $ 699,629 $ 22,930 $ 11,601 $ 710,958 $ — Other, including U.S. Treasury securities 760,390 18,797 17,220 761,967 — Municipal bonds 1,721,046 149,774 9,516 1,861,304 — Foreign government bonds 94,870 4,307 136 99,041 — Corporate bonds 2,383,394 112,451 14,575 2,481,270 — Other mortgage-backed securities 1,714,223 16,621 10,702 1,720,142 — Totals $ 7,373,552 $ 324,880 $ 63,750 $ 7,634,682 $ — December 31, 2017 Fixed maturity securities U.S. Government and federally sponsored agency obligations (3): Mortgage-backed securities $ 669,297 $ 30,460 $ 3,032 $ 696,725 $ — Other, including U.S. Treasury securities 714,613 26,311 5,516 735,408 — Municipal bonds 1,711,581 184,107 2,435 1,893,253 — Foreign government bonds 96,780 5,958 — 102,738 — Corporate bonds 2,409,426 173,862 4,334 2,578,954 — Other mortgage-backed securities 1,701,253 22,935 7,191 1,716,997 — Totals $ 7,302,950 $ 443,633 $ 22,508 $ 7,724,075 $ — Equity securities (4) $ 116,320 $ 19,425 $ 279 $ 135,466 $ — ________________ (1) Effective January 1, 2018, with the adoption of new accounting guidance for recognition and measurement of financial instruments, available for sale equity securities were reclassified to equity securities at fair value and are excluded from the table above as of March 31, 2018. (2) 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. (3) Fair value includes securities issued by Federal National Mortgage Association (FNMA) of $386,398 thousand and $361,955 thousand ; Federal Home Loan Mortgage Corporation (FHLMC) of $396,957 thousand and $400,001 thousand ; and Government National Mortgage Association (GNMA) of $98,056 thousand and $104,168 thousand as of March 31, 2018 and December 31, 2017 , respectively. (4) Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds. |
Summary of fair value and gross unrealized losses of fixed maturity securities and equity securities in an unrealized loss position | The following table presents the fair value and gross unrealized losses of securities in an unrealized loss position at March 31, 2018 and December 31, 2017 , respectively. The Company views the decrease in value of all of the securities with unrealized losses at March 31, 2018 -- which was driven largely by changes in interest rates, spread widening, financial market illiquidity and/or market volatility from the date of acquisition -- as temporary. For fixed maturity securities, management does not have the intent to sell the securities and it is not more likely than not the Company will be required to sell the securities before the anticipated recovery of the amortized cost bases, and management expects to recover the entire amortized cost bases of the fixed maturity securities. Therefore, no impairment of fixed maturity securities was recorded at March 31, 2018 . ($ in thousands) 12 Months or Less More than 12 Months Total Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses March 31, 2018 (1) Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 301,927 $ 8,346 $ 39,339 $ 3,255 $ 341,266 $ 11,601 Other 393,555 9,415 118,166 7,805 511,721 17,220 Municipal bonds 224,400 4,614 76,577 4,902 300,977 9,516 Foreign government bonds 6,390 136 — — 6,390 136 Corporate bonds 450,467 11,923 37,572 2,652 488,039 14,575 Other mortgage-backed securities 607,571 6,298 146,659 4,404 754,230 10,702 Total $ 1,984,310 $ 40,732 $ 418,313 $ 23,018 $ 2,402,623 $ 63,750 Number of positions with a gross unrealized loss 837 153 990 Fair value as a percentage of total fixed maturity securities fair value 25.6 % 5.4 % 31.0 % December 31, 2017 Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 134,032 $ 1,053 $ 40,606 $ 1,979 $ 174,638 $ 3,032 Other 168,634 1,849 122,753 3,667 291,387 5,516 Municipal bonds 29,437 100 79,140 2,335 108,577 2,435 Foreign government bonds — — — — — — Corporate bonds 115,113 2,701 36,081 1,633 151,194 4,334 Other mortgage-backed securities 457,166 2,791 168,972 4,400 626,138 7,191 Total fixed maturity securities 904,382 8,494 447,552 14,014 1,351,934 22,508 Equity securities (2) 6,027 249 1,277 30 7,304 279 Combined totals $ 910,409 $ 8,743 $ 448,829 $ 14,044 $ 1,359,238 $ 22,787 Number of positions with a gross unrealized loss 354 158 512 Fair value as a percentage of total fixed maturity and equity securities fair value 11.6 % 5.7 % 17.3 % ________________ (1) Effective January 1, 2018, with the adoption of new accounting guidance for recognition and measurement of financial instruments, available for sale equity securities were reclassified to equity securities at fair value and are excluded from the table above as of March 31, 2018. (2) 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, 2018 and 2017 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 OCI: ($ in thousands) Three Months Ended March 31, 2018 2017 Cumulative credit loss (1) Beginning of period $ 3,825 $ 13,703 New credit losses — — Increases to previously recognized credit losses — 726 Gains (losses) related to securities sold or paid down during the period — (2 ) End of period $ 3,825 $ 14,427 ________________ (1) |
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. ($ in thousands) Percent of Total Fair Value March 31, 2018 March 31, 2018 December 31, 2017 Fair Value Amortized Cost Estimated expected maturity: Due in 1 year or less 4.0 % 3.2 % $ 303,914 $ 299,275 Due after 1 year through 5 years 25.4 26.7 1,936,362 1,887,648 Due after 5 years through 10 years 32.7 32.6 2,498,529 2,457,018 Due after 10 years through 20 years 24.7 24.2 1,884,116 1,800,969 Due after 20 years 13.2 13.3 1,011,761 928,642 Total 100.0 % 100.0 % $ 7,634,682 $ 7,373,552 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: ($ in thousands) Three Months Ended March 31, 2018 2017 Fixed maturity securities Proceeds received $ 89,894 $ 110,872 Gross gains realized 1,670 2,489 Gross losses realized (53 ) (881 ) Equity securities Proceeds received $ 2,048 $ 5,489 Gross gains realized 616 1,048 Gross losses realized (34 ) (192 ) |
Net Realized Investment Gains (Losses) | The following table reconciles the net investment gains and losses (pretax) by transaction type: ($ in thousands) Three Months Ended March 31, 2018 2017 Impairment write-downs $ — $ (1,777 ) Change in intent write-downs (110 ) (1,020 ) Net other-than-temporary impairment losses recognized in earnings (110 ) — (2,797 ) Sales and other 2,203 2,484 Change in fair value - equity securities (1) (5,186 ) — Change in fair value and gains (losses) realized on settlements - derivative instruments 1,439 71 Net investment gains (losses) $ (1,654 ) — $ (242 ) ________________ (1) |
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 AOCI, before the impact of deferred policy acquisition costs (DAC): ($ in thousands) Three Months Ended March 31, 2018 2017 Net unrealized investment gains and losses on securities, net of tax Beginning of period $ 286,176 $ 202,941 Change in net unrealized investment gains and losses (67,285 ) 25,193 Reclassification of net investments (gains) losses to net income 2,443 203 Reclassification of unrealized gains on equity securities, net of tax, to Retained earnings (1) (15,041 ) — End of period $ 206,293 $ 228,337 ________________ (1) |
Offsetting assets and liability | The following table presents the instruments that were subject to a master netting arrangement for the Company. ($ in thousands) Gross Amounts Offset in the Net Amounts of Assets/ Liabilities Presented in the Gross Amounts Not Offset in the Consolidated Balance Sheets Gross Amounts Consolidated Balance Sheets Consolidated Balance Sheets Financial Instruments Cash Collateral Received Net Amount March 31, 2018 Asset derivatives: Free-standing derivatives $ 12,630 $ — $ 12,630 $ — $ 13,174 $ (544 ) December 31, 2017 Asset derivatives: Free-standing derivatives $ 15,550 $ — $ 15,550 $ — $ 15,584 $ (34 ) |
Fair Value of Financial Instr22
Fair Value of Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
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, 2018 , Level 3 invested assets comprised 3.0% of the Company’s total investment portfolio at fair value. ($ in thousands) Fair Value Measurements at Carrying Fair Reporting Date Using Amount Value Level 1 Level 2 Level 3 March 31, 2018 Financial Assets Investments Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 710,958 $ 710,958 $ — $ 707,842 $ 3,116 Other, including U.S. Treasury securities 761,967 761,967 13,249 748,718 — Municipal bonds 1,861,304 1,861,304 — 1,811,556 49,748 Foreign government bonds 99,041 99,041 — 99,041 — Corporate bonds 2,481,270 2,481,270 13,733 2,388,757 78,780 Other mortgage-backed securities 1,720,142 1,720,142 — 1,607,924 112,218 Total fixed maturity securities 7,634,682 7,634,682 26,982 7,363,838 243,862 Equity securities 131,023 131,023 79,870 — 51,147 — 6 Short-term investments 22,194 22,194 22,194 — — Other investments 25,130 25,130 — 25,130 — Totals $ 7,813,029 $ 7,813,029 $ 129,046 $ 7,440,115 $ 243,868 Financial Liabilities Investment contract and life policy reserves, embedded derivatives $ 518 $ 518 $ — $ 518 $ — Other policyholder funds, embedded derivatives 78,486 78,486 — — 78,486 December 31, 2017 Financial Assets Investments Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 696,725 $ 696,725 $ — $ 693,375 $ 3,350 Other, including U.S. Treasury securities 735,408 735,408 13,393 722,015 — Municipal bonds 1,893,253 1,893,253 — 1,843,925 49,328 Foreign government bonds 102,738 102,738 — 102,738 — Corporate bonds 2,578,954 2,578,954 14,345 2,491,630 72,979 Other mortgage-backed securities 1,716,997 1,716,997 — 1,612,403 104,594 Total fixed maturity securities 7,724,075 7,724,075 27,738 7,466,086 230,251 Equity securities 135,466 135,466 82,208 53,252 6 Short-term investments 62,593 62,593 62,593 — — Other investments 28,050 28,050 — 28,050 — Totals $ 7,950,184 $ 7,950,184 $ 172,539 $ 7,547,388 $ 230,257 Financial Liabilities Investment contract and life policy reserves, embedded derivatives $ 594 $ 594 $ — $ 594 $ — Other policyholder funds, embedded derivatives 80,733 80,733 — — 80,733 |
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. ($ in thousands) Financial Assets Financial Liabilities(1) Municipal Bonds Corporate Bonds Other Mortgage- Backed Securities (2) Total Fixed Maturity Securities Equity Securities Short-term Investments Total Beginning balance, January 1, 2018 $ 49,328 $ 72,979 $ 107,944 $ 230,251 $ 6 $ — $ 230,257 $ 80,733 Transfers into Level 3 (3) — 10,778 14,822 25,600 — — 25,600 — Transfers out of Level 3 (3) — — — — — — — — Total gains or losses Net investment gains (losses) included in net income related to financial assets — — — — 3 — 3 — Net (gains) losses included in net income related to financial liabilities — — — — — — — (2,222 ) Net unrealized investment gains (losses) included in OCI 443 (887 ) (1,022 ) (1,466 ) — — (1,466 ) Purchases — — — — — — — Issuances — — — — — — — 1,332 Sales — — — — (3 ) — (3 ) Settlements — — — — — — — Paydowns, maturities and distributions (23 ) (4,090 ) (6,410 ) (10,523 ) — — (10,523 ) (1,357 ) Ending balance, March 31, 2018 $ 49,748 $ 78,780 $ 115,334 $ 243,862 $ 6 $ — $ 243,868 $ 78,486 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 investment gains (losses) included in net income related to financial assets — — — — — — — — Net (gains) losses included in net income related to financial liabilities — — — — — — — 2,308 Net unrealized investment gains (losses) included in OCI 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 ________________ (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 month periods ended March 31, 2018 and 2017 |
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. ($ in thousands) Fair Value Measurements at Carrying Fair Reporting Date Using Amount Value Level 1 Level 2 Level 3 March 31, 2018 Financial Assets Investments Other investments $ 154,211 $ 158,891 $ — $ — $ 158,891 Financial Liabilities Investment contract and life policy reserves, fixed annuity contracts 4,471,733 4,373,529 — — 4,373,529 Investment contract and life policy reserves, account values on life contracts 83,319 88,968 — — 88,968 Other policyholder funds 642,035 642,035 — 575,784 66,251 Long-term debt 297,536 306,247 — 306,247 — December 31, 2017 Financial Assets Investments Other investments $ 154,898 $ 159,575 $ — $ — $ 159,575 Financial Liabilities Investment contract and life policy reserves, fixed annuity contracts 4,452,972 4,366,334 — — 4,366,334 Investment contract and life policy reserves, 82,911 88,620 — — 88,620 Other policyholder funds 643,528 643,528 — 575,622 67,906 Long-term debt 297,469 311,315 — 311,315 — |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
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, are presented in the Consolidated Balance Sheets as follows: ($ in thousands) March 31, 2018 December 31, 2017 Assets Derivative instruments, included in Short-term and other investments $ 12,630 $ 15,550 Liabilities FIA - embedded derivatives, included in Other policyholder funds $ 78,486 $ 80,733 IUL - embedded derivatives, included in Investment contract and life policy reserves 518 594 |
Derivative Instruments, Gain (Loss) | The changes in fair value of derivatives included in the Consolidated Statements of Operations were as follows: ($ in thousands) Three Months Ended March 31, 2018 2017 Change in fair value of derivatives (1): Revenues Net investment gains (losses) $ (849 ) $ 2,437 Change in fair value of embedded derivatives: Revenues Net investment gains (losses) $ 2,288 $ (2,366 ) ________________ (1) |
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: ($ in thousands) March 31, 2018 December 31, 2017 Credit Rating Notional Fair Notional Fair Counterparty S&P Moody's Amount Value Amount Value Bank of America, N.A. A+ Aa3 $ 93,800 $ 6,017 $ 85,100 $ 6,320 Barclays Bank PLC A A2 48,600 902 48,900 1,828 Citigroup Inc. BBB+ — — — — Credit Suisse International A A1 21,100 1,469 21,100 1,444 Societe Generale A 92,400 4,242 91,700 5,958 Total $ 255,900 $ 12,630 $ 246,800 $ 15,550 |
Property and Casualty Unpaid 24
Property and Casualty Unpaid Claims and Claim Expenses (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
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. ($ in thousands) Three Months Ended March 31, 2018 2017 Property and Casualty Beginning gross reserves (1) $ 319,182 $ 307,757 Less: reinsurance recoverables 57,409 61,199 Net reserves, beginning of period (2) 261,773 246,558 Incurred claims and claim expenses: Claims occurring in the current period 120,988 123,204 Decrease in estimated reserves for claims occurring in prior periods (3) (300 ) (1,000 ) Total claims and claim expenses incurred (4) 120,688 122,204 Claims and claim expense payments for claims occurring during: Current period 47,048 52,380 Prior periods 67,075 62,013 Total claims and claim expense payments 114,123 114,393 Net reserves, end of period (2) 268,338 254,369 Plus: reinsurance recoverables 62,917 61,804 Ending gross reserves (1) $ 331,255 $ 316,173 ________________ (1) Unpaid claims and claim expenses as reported in the Consolidated Balance Sheets also include reserves for Life and Retirement of $27,062 thousand and $23,860 thousand as of March 31, 2018 and 2017 , respectively, in addition to Property and Casualty 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 Life and Retirement of $22,874 thousand and $21,892 thousand for the three month periods ended March 31, 2018 and 2017 , respectively, in addition to Property and Casualty amounts. |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Summary of Indebtedness outstanding | Indebtedness outstanding was as follows: ($ in thousands) March 31, 2018 December 31, 2017 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 thousand less unaccrued discount of $532 thousand and $547 thousand (4.5% imputed rate) and unamortized debt issuance costs of $1,932 thousand and $1,984 thousand 247,536 247,469 Federal Home Loan Bank borrowing 50,000 50,000 Total $ 297,536 $ 297,469 |
Reinsurance (Tables)
Reinsurance (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
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: ($ in thousands) Gross Amount Ceded to Other Companies Assumed from Other Companies Net Amount Three months ended March 31, 2018 Premiums written and contract deposits (1) $ 288,816 $ 5,514 $ 706 $ 284,008 Premiums and contract charges earned 207,737 5,528 789 202,998 Benefits, claims and settlement expenses 151,968 9,014 608 143,562 Three months ended March 31, 2017 Premiums written and contract deposits (1) $ 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 ________________ (1) |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Summarized financial information for these segments | Summarized financial information for these segments is as follows: ($ in thousands) Three Months Ended March 31, 2018 2017 Insurance premiums and contract charges earned Property and Casualty $ 165,458 $ 158,318 Retirement 8,068 6,601 Life 29,472 30,803 Total $ 202,998 $ 195,722 Net investment income Property and Casualty $ 9,516 $ 9,177 Retirement 64,169 63,442 Life 18,340 18,288 Corporate and Other 36 12 Intersegment eliminations (197 ) (208 ) Total $ 91,864 $ 90,711 Net income (loss) Property and Casualty $ 9,722 $ 2,735 Retirement 11,421 11,530 Life 3,787 3,885 Corporate and Other (4,775 ) (2,832 ) Total $ 20,155 $ 15,318 ($ in thousands) March 31, 2018 December 31, 2017 Assets Property and Casualty $ 1,202,791 $ 1,217,394 Retirement 7,969,848 8,063,912 Life 1,785,912 1,815,732 Corporate and Other 140,526 143,784 Intersegment eliminations (30,535 ) (42,482 ) Total $ 11,068,542 $ 11,198,340 |
Basis of Presentation - Investm
Basis of Presentation - Investment Contract and Life Policy Reserves (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Investment contract reserves | $ 4,471,733 | $ 4,452,972 |
Life policy reserves | 1,126,945 | 1,120,763 |
Total | $ 5,598,678 | $ 5,573,735 |
Basis of Presentation - Accumul
Basis of Presentation - Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | $ 1,501,573 | |
Other comprehensive income (loss) before reclassifications | (109,539) | $ 22,330 |
Amounts reclassified from accumulated other comprehensive income (loss) | 2,443 | 203 |
Cumulative effect of change in accounting principle (3) | (15,041) | 0 |
Other comprehensive income (loss) | (122,137) | 22,533 |
Ending balance | 1,404,679 | 1,321,818 |
Other income tax expense (benefit) | (649) | (110) |
Reclassification of unrealized gains on equity securities, net of tax | 15,041 | 0 |
Total | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | 286,960 | 163,921 |
Cumulative effect of change in accounting principle (3) | (15,041) | 0 |
Ending balance | 164,823 | 186,454 |
Net Unrealized Investment Gains and Losses on Fixed Maturity and Equity Securities | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | 300,177 | 175,738 |
Other comprehensive income (loss) before reclassifications | (109,539) | 22,330 |
Amounts reclassified from accumulated other comprehensive income (loss) | 2,443 | 203 |
Cumulative effect of change in accounting principle (3) | (15,041) | |
Other comprehensive income (loss) | (122,137) | 22,533 |
Ending balance | 178,040 | 198,271 |
Pretax reclassification amounts from accumulated other comprehensive income (loss) | (3,092) | (313) |
Benefit Plans | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | (13,217) | (11,817) |
Other comprehensive income (loss) before reclassifications | 0 | 0 |
Amounts reclassified from accumulated other comprehensive income (loss) | 0 | 0 |
Cumulative effect of change in accounting principle (3) | 0 | |
Other comprehensive income (loss) | 0 | 0 |
Ending balance | $ (13,217) | $ (11,817) |
Basis of Presentation - Narrati
Basis of Presentation - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Basis of Presentation [Line Items] | |||
Cumulative effect of change in accounting principle (3) | $ (15,041) | $ 0 | |
Future lease commitments | $ 9,093 | ||
Retained earnings | |||
Basis of Presentation [Line Items] | |||
Cumulative effect of change in accounting principle (3) | 15,041 | 0 | |
Accumulated other comprehensive income, net of tax | |||
Basis of Presentation [Line Items] | |||
Cumulative effect of change in accounting principle (3) | (15,041) | $ 0 | |
Stranded Tax Amounts Reclassified | 47,900 | ||
Net Unrealized Investment Gains and Losses on Fixed Maturity and Equity Securities | |||
Basis of Presentation [Line Items] | |||
Cumulative effect of change in accounting principle (3) | (15,041) | ||
Stranded Tax Amounts Reclassified | 50,034 | ||
Benefit Plans | |||
Basis of Presentation [Line Items] | |||
Cumulative effect of change in accounting principle (3) | 0 | ||
Stranded Tax Amounts Reclassified | $ (2,134) |
Investments - Summary of Fair V
Investments - Summary of Fair Value and Amortized Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Unrealized gains and losses on fixed maturities and equity securities | ||
Amortized Cost/Cost | $ 7,373,552 | $ 7,302,950 |
Amortized Cost/Cost | 116,320 | |
Fair Value | 7,634,682 | 7,724,075 |
Fair Value | 131,023 | 135,466 |
Federal National Mortgage Association Certificates and Obligations (FNMA) | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Fair Value | 386,398 | 361,955 |
Federal Home Loan Mortgage Corporation Certificates and Obligations (FHLMC) | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Fair Value | 396,957 | 400,001 |
Government National Mortgage Association Certificates and Obligations (GNMA) | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Fair Value | 98,056 | 104,168 |
Total Fixed Maturity Securities | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Amortized Cost/Cost | 7,373,552 | 7,302,950 |
Unrealized Investment Gains | 324,880 | 443,633 |
Unrealized Investment Losses | 63,750 | 22,508 |
Fair Value | 7,634,682 | 7,724,075 |
OTTI in AOCI | 0 | 0 |
Mortgage-backed securities | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Amortized Cost/Cost | 699,629 | 669,297 |
Unrealized Investment Gains | 22,930 | 30,460 |
Unrealized Investment Losses | 11,601 | 3,032 |
Fair Value | 710,958 | 696,725 |
OTTI in AOCI | 0 | 0 |
Other, including U.S. Treasury securities | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Amortized Cost/Cost | 760,390 | 714,613 |
Unrealized Investment Gains | 18,797 | 26,311 |
Unrealized Investment Losses | 17,220 | 5,516 |
Fair Value | 761,967 | 735,408 |
OTTI in AOCI | 0 | 0 |
Municipal bonds | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Amortized Cost/Cost | 1,721,046 | 1,711,581 |
Unrealized Investment Gains | 149,774 | 184,107 |
Unrealized Investment Losses | 9,516 | 2,435 |
Fair Value | 1,861,304 | 1,893,253 |
OTTI in AOCI | 0 | 0 |
Foreign government bonds | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Amortized Cost/Cost | 94,870 | 96,780 |
Unrealized Investment Gains | 4,307 | 5,958 |
Unrealized Investment Losses | 136 | 0 |
Fair Value | 99,041 | 102,738 |
OTTI in AOCI | 0 | 0 |
Corporate bonds | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Amortized Cost/Cost | 2,383,394 | 2,409,426 |
Unrealized Investment Gains | 112,451 | 173,862 |
Unrealized Investment Losses | 14,575 | 4,334 |
Fair Value | 2,481,270 | 2,578,954 |
OTTI in AOCI | 0 | 0 |
Other mortgage-backed securities | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Amortized Cost/Cost | 1,714,223 | 1,701,253 |
Unrealized Investment Gains | 16,621 | 22,935 |
Unrealized Investment Losses | 10,702 | 7,191 |
Fair Value | 1,720,142 | 1,716,997 |
OTTI in AOCI | $ 0 | 0 |
Equity securities | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Amortized Cost/Cost | 116,320 | |
Unrealized Investment Gains | 19,425 | |
Unrealized Investment Losses | 279 | |
Fair Value | 135,466 | |
OTTI in AOCI | $ 0 |
Investments - Fair Value and Gr
Investments - Fair Value and Gross Unrealized Losses (Details) $ in Thousands | Mar. 31, 2018USD ($)security | Dec. 31, 2017USD ($)security |
Fixed maturity securities, Fair Value | ||
Fixed maturity securities, Fair Value, 12 Months or Less | $ 1,984,310 | $ 910,409 |
Fixed maturity securities, Fair Value, More than 12 Months | 418,313 | 448,829 |
Fixed maturity securities, Fair Value, Total | 2,402,623 | 1,359,238 |
Fixed maturity securities, Gross Unrealized Losses | ||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 40,732 | 8,743 |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 23,018 | 14,044 |
Fixed maturity securities, Gross Unrealized Losses, Total | $ 63,750 | $ 22,787 |
Number of positions with a gross unrealized loss, 12 Months or Less | security | 837 | 354 |
Number of position with a gross unrealized loss, more than 12 months | security | 153 | 158 |
Number of position with a gross unrealized loss, Total | security | 990 | 512 |
Fair value as a percentage of total fixed maturities and equity securities fair value, 12 Months or Less | 25.60% | 11.60% |
Fair value as a percentage of total fixed maturities and equity securities fair value, more than 12 months | 5.40% | 5.70% |
Fair value as a percentage of total fixed maturities and equity securities fair value, Total | 31.00% | 17.30% |
Mortgage-backed securities | ||
Fixed maturity securities, Fair Value | ||
Fixed maturity securities, Fair Value, 12 Months or Less | $ 301,927 | $ 134,032 |
Fixed maturity securities, Fair Value, More than 12 Months | 39,339 | 40,606 |
Fixed maturity securities, Fair Value, Total | 341,266 | 174,638 |
Fixed maturity securities, Gross Unrealized Losses | ||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 8,346 | 1,053 |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 3,255 | 1,979 |
Fixed maturity securities, Gross Unrealized Losses, Total | 11,601 | 3,032 |
Other | ||
Fixed maturity securities, Fair Value | ||
Fixed maturity securities, Fair Value, 12 Months or Less | 393,555 | 168,634 |
Fixed maturity securities, Fair Value, More than 12 Months | 118,166 | 122,753 |
Fixed maturity securities, Fair Value, Total | 511,721 | 291,387 |
Fixed maturity securities, Gross Unrealized Losses | ||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 9,415 | 1,849 |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 7,805 | 3,667 |
Fixed maturity securities, Gross Unrealized Losses, Total | 17,220 | 5,516 |
Municipal bonds | ||
Fixed maturity securities, Fair Value | ||
Fixed maturity securities, Fair Value, 12 Months or Less | 224,400 | 29,437 |
Fixed maturity securities, Fair Value, More than 12 Months | 76,577 | 79,140 |
Fixed maturity securities, Fair Value, Total | 300,977 | 108,577 |
Fixed maturity securities, Gross Unrealized Losses | ||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 4,614 | 100 |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 4,902 | 2,335 |
Fixed maturity securities, Gross Unrealized Losses, Total | 9,516 | 2,435 |
Foreign government bonds | ||
Fixed maturity securities, Fair Value | ||
Fixed maturity securities, Fair Value, 12 Months or Less | 6,390 | 0 |
Fixed maturity securities, Fair Value, More than 12 Months | 0 | 0 |
Fixed maturity securities, Fair Value, Total | 6,390 | 0 |
Fixed maturity securities, Gross Unrealized Losses | ||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 136 | 0 |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 0 | 0 |
Fixed maturity securities, Gross Unrealized Losses, Total | 136 | 0 |
Corporate bonds | ||
Fixed maturity securities, Fair Value | ||
Fixed maturity securities, Fair Value, 12 Months or Less | 450,467 | 115,113 |
Fixed maturity securities, Fair Value, More than 12 Months | 37,572 | 36,081 |
Fixed maturity securities, Fair Value, Total | 488,039 | 151,194 |
Fixed maturity securities, Gross Unrealized Losses | ||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 11,923 | 2,701 |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 2,652 | 1,633 |
Fixed maturity securities, Gross Unrealized Losses, Total | 14,575 | 4,334 |
Other mortgage-backed securities | ||
Fixed maturity securities, Fair Value | ||
Fixed maturity securities, Fair Value, 12 Months or Less | 607,571 | 457,166 |
Fixed maturity securities, Fair Value, More than 12 Months | 146,659 | 168,972 |
Fixed maturity securities, Fair Value, Total | 754,230 | 626,138 |
Fixed maturity securities, Gross Unrealized Losses | ||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 6,298 | 2,791 |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 4,404 | 4,400 |
Fixed maturity securities, Gross Unrealized Losses, Total | $ 10,702 | 7,191 |
Total Fixed Maturity Securities | ||
Fixed maturity securities, Fair Value | ||
Fixed maturity securities, Fair Value, 12 Months or Less | 904,382 | |
Fixed maturity securities, Fair Value, More than 12 Months | 447,552 | |
Fixed maturity securities, Fair Value, Total | 1,351,934 | |
Fixed maturity securities, Gross Unrealized Losses | ||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 8,494 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 14,014 | |
Fixed maturity securities, Gross Unrealized Losses, Total | 22,508 | |
Equity securities | ||
Fixed maturity securities, Fair Value | ||
Fixed maturity securities, Fair Value, 12 Months or Less | 6,027 | |
Fixed maturity securities, Fair Value, More than 12 Months | 1,277 | |
Fixed maturity securities, Fair Value, Total | 7,304 | |
Fixed maturity securities, Gross Unrealized Losses | ||
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 249 | |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 30 | |
Fixed maturity securities, Gross Unrealized Losses, Total | $ 279 |
Investments - Rollforward of OT
Investments - Rollforward of OTTI Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cumulative credit loss | ||
Beginning of period | $ 3,825 | $ 13,703 |
New credit losses | 0 | 0 |
Increases to previously recognized credit losses | 0 | 726 |
Gains (losses) related to securities sold or paid down during the period | 0 | (2) |
End of period | $ 3,825 | $ 14,427 |
Investments - Distribution of F
Investments - Distribution of Fixed Maturity Securities by Expected Maturity (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Percent of Total Fair Value | ||
Due in 1 year or less, Percent of Total Fair Value | 4.00% | 3.20% |
Due after 1 year through 5 years, Percent of Total Fair Value | 25.40% | 26.70% |
Due after 5 years through 10 years, Percent of Total Fair Value | 32.70% | 32.60% |
Due after 10 years through 20 years, Percent of Total Fair Value | 24.70% | 24.20% |
Due after 20 years, Percent of Total Fair Value | 13.20% | 13.30% |
Total, Percent of Total Fair Value | 100.00% | 100.00% |
Fair Value | ||
Due in 1 year or less, Fair Value | $ 303,914 | |
Due after 1 year through 5 years, Fair Value | 1,936,362 | |
Due after 5 years through 10 years, Fair Value | 2,498,529 | |
Due after 10 years through 20 years, Fair Value | 1,884,116 | |
Due after 20 years, Fair Value | 1,011,761 | |
Total, Fair Value | 7,634,682 | $ 7,724,075 |
Amortized Cost | ||
Due in 1 year or less, Amortized Cost | 299,275 | |
Due after 1 year through 5 years, Amortized Cost | 1,887,648 | |
Due after 5 years through 10 years, Amortized Cost | 2,457,018 | |
Due after 10 years through 20 years, Amortized Cost | 1,800,969 | |
Due after 20 years, Amortized Cost | 928,642 | |
Total, Amortized Cost | $ 7,373,552 | $ 7,302,950 |
Average option-adjusted duration, in years | 6 years | 5 years 10 months 24 days |
Investments - Summary of Procee
Investments - Summary of Proceeds and Gains (Losses) Realized on Securities (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Proceeds received from sales of fixed maturities and equity securities | ||
Proceeds received, Fixed maturity securities | $ 89,894 | $ 110,872 |
Proceeds received, Equity securities | 2,048 | 5,489 |
Fixed maturity securities | ||
Proceeds received from sales of fixed maturities and equity securities | ||
Gross gains realized | 1,670 | 2,489 |
Gross losses realized | (53) | (881) |
Equity securities | ||
Proceeds received from sales of fixed maturities and equity securities | ||
Gross gains realized | 616 | 1,048 |
Gross losses realized | $ (34) | $ (192) |
Investments - Reconciliation of
Investments - Reconciliation of Net Unrealized Investment Gains (Losses) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | $ 1,501,573 | |
Cumulative effect of change in accounting principle | (15,041) | $ 0 |
Ending balance | 1,404,679 | 1,321,818 |
Net Unrealized Investment Gains and Losses on Fixed Maturity and Equity Securities | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | 300,177 | 175,738 |
Cumulative effect of change in accounting principle | (15,041) | |
Ending balance | 178,040 | 198,271 |
Net Unrealized Investment Gains and Losses on Fixed Maturity and Equity Securities | Fixed maturity securities | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | 286,176 | 202,941 |
Change in net unrealized investment gains and losses | (67,285) | 25,193 |
Reclassification of net investments (gains) losses to net income | 2,443 | 203 |
Ending balance | $ 206,293 | $ 228,337 |
Investments - Offsetting of Ass
Investments - Offsetting of Assets and Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Asset derivatives: | ||
Net Amounts of Assets/Liabilities Presented in the Consolidated Balance Sheets | $ 12,630 | $ 15,550 |
Free-standing derivatives | ||
Asset derivatives: | ||
Gross Amounts | 12,630 | 15,550 |
Gross Amounts Offset in the Consolidated Balance Sheets | 0 | 0 |
Net Amounts of Assets/Liabilities Presented in the Consolidated Balance Sheets | 12,630 | 15,550 |
Gross Amounts Not Offset in the Consolidated Balance Sheets, Financial Instruments | 0 | 0 |
Gross Amounts Not Offset in the Consolidated Balance Sheets, Cash Collateral Received | 13,174 | 15,584 |
Net Amount | $ (544) | $ (34) |
Investments - Narrative (Detail
Investments - Narrative (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Investment Holdings [Line Items] | ||
Investment Grade Rate | 95.30% | |
Fair value of issued securities | $ 7,634,682 | $ 7,724,075 |
Federal Home Loan Bank Funding Agreements | 625,000 | 625,000 |
Federal Home Loans Bank Of Chicago | ||
Investment Holdings [Line Items] | ||
Fair value of issued securities | 686,387 | 686,790 |
Governmental Agencies as Required by Law in Various States | ||
Investment Holdings [Line Items] | ||
Fair value of issued securities | $ 17,848 | $ 17,985 |
Investments - Net Realized Gain
Investments - Net Realized Gain (Losses) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Investments, Debt and Equity Securities [Abstract] | ||
Impairment write-downs | $ 0 | $ (1,777) |
Change in intent write-downs | (110) | (1,020) |
Net other-than-temporary impairment losses recognized in earnings | (110) | (2,797) |
Sales and other | 2,203 | 2,484 |
Change in fair value - equity securities (1) | (5,186) | 0 |
Change in fair value and gains (losses) realized on settlements - derivative instruments | 1,439 | 71 |
Net investment losses | $ (1,654) | $ (242) |
Fair Value of Financial Instr40
Fair Value of Financial Instruments - Financial Instruments Measured and Carried at Fair Value (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Other Comprehensive Income (Loss) | $ (1,466) | $ 1,196 | ||
Net unrealized investment gains (losses) included in other comprehensive income | 0 | |||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases | 0 | 0 | ||
Purchases | 0 | |||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Issuances | 0 | 0 | ||
Issuances | 1,332 | 3,389 | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Value | 243,868 | 248,757 | $ 230,257 | $ 212,104 |
Fair Value, Measurement with Unobservable Inputs Reconciliations, Recurring Basis, Liability Value | 78,486 | 64,261 | 80,733 | 59,393 |
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Transfers Into Level 3 | 25,600 | 50,171 | ||
Transfers into Level 3 | 0 | 0 | ||
Net realized investment gains (losses) included in net income related to financial assets | 3 | 0 | ||
Net realized gains (losses) included in net income related to financial liabilities | (2,222) | 2,308 | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers out of Level 3 | 0 | 6,861 | ||
Transfers out of Level 3 | 0 | 0 | ||
Financial Liabilities | ||||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Sales | 3 | 0 | ||
Sales | 0 | |||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Settlements | 0 | 0 | ||
Settlements | 0 | |||
FairValueMeasurementWithUnobservableInputsReconciliationRecurringBasisLiabilityPaydownsAndMaturities | 1,357 | 829 | ||
Paydowns, maturities and distributions | 10,523 | 7,853 | ||
Short-term investments | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Other Comprehensive Income (Loss) | 0 | 0 | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases | 0 | 0 | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Issuances | 0 | 0 | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Value | 0 | 0 | 0 | 751 |
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Transfers Into Level 3 | 0 | 0 | ||
Net realized investment gains (losses) included in net income related to financial assets | 0 | 0 | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers out of Level 3 | 0 | 751 | ||
Financial Liabilities | ||||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Sales | 0 | 0 | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Settlements | 0 | 0 | ||
Paydowns, maturities and distributions | 0 | 0 | ||
Municipal bonds | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Other Comprehensive Income (Loss) | 443 | 1,871 | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases | 0 | 0 | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Issuances | 0 | 0 | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Value | 49,748 | 53,462 | 49,328 | 46,497 |
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Transfers Into Level 3 | 0 | 5,214 | ||
Net realized investment gains (losses) included in net income related to financial assets | 0 | 0 | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers out of Level 3 | 0 | 0 | ||
Financial Liabilities | ||||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Sales | 0 | 0 | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Settlements | 0 | 0 | ||
Paydowns, maturities and distributions | 23 | 120 | ||
Corporate bonds | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Other Comprehensive Income (Loss) | (887) | 96 | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases | 0 | 0 | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Issuances | 0 | 0 | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Value | 78,780 | 82,495 | 72,979 | 60,191 |
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Transfers Into Level 3 | 10,778 | 29,918 | ||
Net realized investment gains (losses) included in net income related to financial assets | 0 | 0 | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers out of Level 3 | 0 | 6,110 | ||
Financial Liabilities | ||||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Sales | 0 | 0 | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Settlements | 0 | 0 | ||
Paydowns, maturities and distributions | 4,090 | 1,600 | ||
Equity securities | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Other Comprehensive Income (Loss) | 0 | 0 | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases | 0 | 0 | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Issuances | 0 | 0 | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Value | 6 | 6 | 6 | $ 6 |
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Transfers Into Level 3 | 0 | 0 | ||
Net realized investment gains (losses) included in net income related to financial assets | 3 | 0 | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers out of Level 3 | 0 | 0 | ||
Financial Liabilities | ||||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Sales | 3 | 0 | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Settlements | 0 | 0 | ||
Paydowns, maturities and distributions | 0 | $ 0 | ||
Carrying Amount | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 7,813,029 | 7,950,184 | ||
Financial Liabilities | ||||
Investment contract and life policy reserves, embedded derivatives | 518 | 594 | ||
Other policyholder funds, embedded derivatives | 78,486 | 80,733 | ||
Carrying Amount | Recurring | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 7,634,682 | 7,724,075 | ||
Carrying Amount | Short-term investments | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 22,194 | 62,593 | ||
Carrying Amount | Mortgage-backed securities | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 710,958 | 696,725 | ||
Carrying Amount | Other, including U.S. Treasury securities | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 761,967 | 735,408 | ||
Carrying Amount | Municipal bonds | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 1,861,304 | 1,893,253 | ||
Carrying Amount | Foreign government bonds | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 99,041 | 102,738 | ||
Carrying Amount | Corporate bonds | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 2,481,270 | 2,578,954 | ||
Carrying Amount | Other mortgage-backed securities | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 1,720,142 | 1,716,997 | ||
Carrying Amount | Equity securities | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 131,023 | 135,466 | ||
Carrying Amount | Other investments | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 25,130 | 28,050 | ||
Fair Value | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 7,813,029 | 7,950,184 | ||
Financial Liabilities | ||||
Investment contract and life policy reserves, embedded derivatives | 518 | 594 | ||
Other policyholder funds, embedded derivatives | 78,486 | 80,733 | ||
Fair Value | Recurring | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 7,634,682 | 7,724,075 | ||
Fair Value | Short-term investments | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 22,194 | 62,593 | ||
Fair Value | Mortgage-backed securities | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 710,958 | 696,725 | ||
Fair Value | Other, including U.S. Treasury securities | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 761,967 | 735,408 | ||
Fair Value | Municipal bonds | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 1,861,304 | 1,893,253 | ||
Fair Value | Foreign government bonds | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 99,041 | 102,738 | ||
Fair Value | Corporate bonds | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 2,481,270 | 2,578,954 | ||
Fair Value | Other mortgage-backed securities | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 1,720,142 | 1,716,997 | ||
Fair Value | Equity securities | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 131,023 | 135,466 | ||
Fair Value | Other investments | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 25,130 | 28,050 | ||
Fair Value | Level 1 | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 129,046 | 172,539 | ||
Financial Liabilities | ||||
Investment contract and life policy reserves, embedded derivatives | 0 | 0 | ||
Other policyholder funds, embedded derivatives | 0 | 0 | ||
Fair Value | Level 1 | Recurring | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 26,982 | 27,738 | ||
Fair Value | Level 1 | Short-term investments | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 22,194 | 62,593 | ||
Fair Value | Level 1 | Mortgage-backed securities | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 0 | 0 | ||
Fair Value | Level 1 | Other, including U.S. Treasury securities | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 13,249 | 13,393 | ||
Fair Value | Level 1 | Municipal bonds | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 0 | 0 | ||
Fair Value | Level 1 | Foreign government bonds | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 0 | 0 | ||
Fair Value | Level 1 | Corporate bonds | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 13,733 | 14,345 | ||
Fair Value | Level 1 | Other mortgage-backed securities | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 0 | 0 | ||
Fair Value | Level 1 | Equity securities | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 79,870 | 82,208 | ||
Fair Value | Level 1 | Other investments | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 0 | 0 | ||
Fair Value | Level 2 | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 7,440,115 | 7,547,388 | ||
Financial Liabilities | ||||
Investment contract and life policy reserves, embedded derivatives | 518 | 594 | ||
Other policyholder funds, embedded derivatives | 0 | 0 | ||
Fair Value | Level 2 | Recurring | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 7,363,838 | 7,466,086 | ||
Fair Value | Level 2 | Short-term investments | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 0 | 0 | ||
Fair Value | Level 2 | Mortgage-backed securities | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 707,842 | 693,375 | ||
Fair Value | Level 2 | Other, including U.S. Treasury securities | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 748,718 | 722,015 | ||
Fair Value | Level 2 | Municipal bonds | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 1,811,556 | 1,843,925 | ||
Fair Value | Level 2 | Foreign government bonds | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 99,041 | 102,738 | ||
Fair Value | Level 2 | Corporate bonds | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 2,388,757 | 2,491,630 | ||
Fair Value | Level 2 | Other mortgage-backed securities | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 1,607,924 | 1,612,403 | ||
Fair Value | Level 2 | Equity securities | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 51,147 | 53,252 | ||
Fair Value | Level 2 | Other investments | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 25,130 | 28,050 | ||
Fair Value | Level 3 | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 243,868 | 230,257 | ||
Financial Liabilities | ||||
Investment contract and life policy reserves, embedded derivatives | 0 | 0 | ||
Other policyholder funds, embedded derivatives | 78,486 | 80,733 | ||
Fair Value | Level 3 | Recurring | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 243,862 | 230,251 | ||
Fair Value | Level 3 | Short-term investments | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 0 | 0 | ||
Fair Value | Level 3 | Mortgage-backed securities | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 3,116 | 3,350 | ||
Fair Value | Level 3 | Other, including U.S. Treasury securities | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 0 | 0 | ||
Fair Value | Level 3 | Municipal bonds | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 49,748 | 49,328 | ||
Fair Value | Level 3 | Foreign government bonds | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 0 | 0 | ||
Fair Value | Level 3 | Corporate bonds | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 78,780 | 72,979 | ||
Fair Value | Level 3 | Other mortgage-backed securities | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 112,218 | 104,594 | ||
Fair Value | Level 3 | Equity securities | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | 6 | 6 | ||
Fair Value | Level 3 | Other investments | ||||
U.S. Government and federally sponsored agency obligations: | ||||
Investments | $ 0 | $ 0 |
Fair Value of Financial Instr41
Fair Value of Financial Instruments - Rollforward of Instruments Measured on Recurring Basis (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Financial Assets | ||
Beginning balance | $ 230,257 | $ 212,104 |
Transfers into Level 3 | 25,600 | 50,171 |
Transfers out of Level 3 | 0 | (6,861) |
Total gains or losses | ||
Net realized investment gains (losses) included in net income related to financial assets | 3 | 0 |
Net unrealized investment gains (losses) included in other comprehensive income | (1,466) | 1,196 |
Purchases | 0 | 0 |
Issuances | 0 | 0 |
Sales | (3) | 0 |
Settlements | 0 | 0 |
Paydowns, maturities and distributions | (10,523) | (7,853) |
Ending balance | 243,868 | 248,757 |
Financial Liabilities | ||
Beginning balance | 80,733 | 59,393 |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 |
Total gains or losses | ||
Net realized gains (losses) included in net income related to financial liabilities | (2,222) | 2,308 |
Net unrealized investment gains (losses) included in other comprehensive income | 0 | |
Purchases | 0 | |
Issuances | 1,332 | 3,389 |
Sales | 0 | |
Settlements | 0 | |
Paydowns, maturities and distributions | (1,357) | (829) |
Ending balance | 78,486 | 64,261 |
Short-term Investments | ||
Financial Assets | ||
Beginning balance | 0 | 751 |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | 0 | (751) |
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 | ||
Financial Assets | ||
Beginning balance | 49,328 | 46,497 |
Transfers into Level 3 | 0 | 5,214 |
Transfers out of Level 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 | 443 | 1,871 |
Purchases | 0 | 0 |
Issuances | 0 | 0 |
Sales | 0 | 0 |
Settlements | 0 | 0 |
Paydowns, maturities and distributions | (23) | (120) |
Ending balance | 49,748 | 53,462 |
Corporate bonds | ||
Financial Assets | ||
Beginning balance | 72,979 | 60,191 |
Transfers into Level 3 | 10,778 | 29,918 |
Transfers out of Level 3 | 0 | (6,110) |
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 | (887) | 96 |
Purchases | 0 | 0 |
Issuances | 0 | 0 |
Sales | 0 | 0 |
Settlements | 0 | 0 |
Paydowns, maturities and distributions | (4,090) | (1,600) |
Ending balance | 78,780 | 82,495 |
Mortgage-Backed Securities | ||
Financial Assets | ||
Beginning balance | 107,944 | 104,659 |
Transfers into Level 3 | 14,822 | 15,039 |
Transfers out of Level 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 | (1,022) | (771) |
Purchases | 0 | 0 |
Issuances | 0 | 0 |
Sales | 0 | 0 |
Settlements | 0 | 0 |
Paydowns, maturities and distributions | (6,410) | (6,133) |
Ending balance | 115,334 | 112,794 |
Total Fixed Maturity Securities | ||
Financial Assets | ||
Beginning balance | 230,251 | 211,347 |
Transfers into Level 3 | 25,600 | 50,171 |
Transfers out of Level 3 | 0 | (6,110) |
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 | (1,466) | 1,196 |
Purchases | 0 | 0 |
Issuances | 0 | 0 |
Sales | 0 | 0 |
Settlements | 0 | 0 |
Paydowns, maturities and distributions | (10,523) | (7,853) |
Ending balance | 243,862 | 248,751 |
Equity securities | ||
Financial Assets | ||
Beginning balance | 6 | 6 |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 |
Total gains or losses | ||
Net realized investment gains (losses) included in net income related to financial assets | 3 | 0 |
Net unrealized investment gains (losses) included in other comprehensive income | 0 | 0 |
Purchases | 0 | 0 |
Issuances | 0 | 0 |
Sales | (3) | 0 |
Settlements | 0 | 0 |
Paydowns, maturities and distributions | 0 | 0 |
Ending balance | $ 6 | $ 6 |
Fair Value of Financial Instr42
Fair Value of Financial Instruments - Financial Instrument Not Carried at Fair Value (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Level 1 | ||
Investments | ||
Other investments | $ 0 | $ 0 |
Financial Liabilities | ||
Investment contract and life policy reserves, fixed annuity contracts | 0 | 0 |
Investment contract and life policy reserves, account values on life contracts | 0 | 0 |
Other policyholder funds | 0 | 0 |
Long-term debt | 0 | 0 |
Level 2 | ||
Investments | ||
Other investments | 0 | 0 |
Financial Liabilities | ||
Investment contract and life policy reserves, fixed annuity contracts | 0 | 0 |
Investment contract and life policy reserves, account values on life contracts | 0 | 0 |
Other policyholder funds | 575,784 | 575,622 |
Long-term debt | 306,247 | 311,315 |
Level 3 | ||
Investments | ||
Other investments | 158,891 | 159,575 |
Financial Liabilities | ||
Investment contract and life policy reserves, fixed annuity contracts | 4,373,529 | 4,366,334 |
Investment contract and life policy reserves, account values on life contracts | 88,968 | 88,620 |
Other policyholder funds | 66,251 | 67,906 |
Long-term debt | 0 | 0 |
Carrying Amount | ||
Investments | ||
Other investments | 154,211 | 154,898 |
Financial Liabilities | ||
Investment contract and life policy reserves, fixed annuity contracts | 4,471,733 | 4,452,972 |
Investment contract and life policy reserves, account values on life contracts | 83,319 | 82,911 |
Other policyholder funds | 642,035 | 643,528 |
Long-term debt | 297,536 | 297,469 |
Fair Value | ||
Investments | ||
Other investments | 158,891 | 159,575 |
Financial Liabilities | ||
Investment contract and life policy reserves, fixed annuity contracts | 4,373,529 | 4,366,334 |
Investment contract and life policy reserves, account values on life contracts | 88,968 | 88,620 |
Other policyholder funds | 642,035 | 643,528 |
Long-term debt | $ 306,247 | $ 311,315 |
Fair Value of Financial Instr43
Fair Value of Financial Instruments - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Fair Value of Financial Instruments (Textual) [Abstract] | ||
Net realized investment gains (losses) included in net income related to financial assets | $ 3 | $ 0 |
Level 3 | ||
Fair Value of Financial Instruments (Textual) [Abstract] | ||
Percentage of invested assets in total investment portfolio Level 3 recurring | 3.00% | |
Net realized investment losses | $ (2,222) | $ (2,308) |
Derivative Instruments - Fair V
Derivative Instruments - Fair Value of Derivatives in Consolidated Balance Sheets (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Assets | ||
Derivative instruments, included in Short-term and other investments | $ 12,630 | $ 15,550 |
Short-term and other investments | ||
Assets | ||
Derivative instruments, included in Short-term and other investments | 12,630 | 15,550 |
Other policyholder funds | ||
Liabilities | ||
FIA - embedded derivatives, included in Other policyholder funds | 78,486 | 80,733 |
Investment contract and life policy reserves | ||
Liabilities | ||
IUL - embedded derivatives, included in Investment contract and life policy reserves | $ 518 | $ 594 |
Derivative Instruments - Fair45
Derivative Instruments - Fair Value of Derivatives Included in Consolidated Statements of Operations (Details) - Revenues - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Change in fair value of derivatives: | ||
Net investment gains (losses) | $ (849) | $ 2,437 |
Change in fair value of embedded derivatives: | ||
Net investment gains (losses) | $ 2,288 | $ (2,366) |
Derivative Instruments - Notion
Derivative Instruments - Notional and Fair Value Amounts of Derivative Instruments (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Derivative [Line Items] | ||
Notional Amount | $ 255,900 | $ 246,800 |
Fair Value | 12,630 | 15,550 |
Bank of America, N.A. | ||
Derivative [Line Items] | ||
Notional Amount | 93,800 | 85,100 |
Fair Value | 6,017 | 6,320 |
Barclays Bank PLC | ||
Derivative [Line Items] | ||
Notional Amount | 48,600 | 48,900 |
Fair Value | 902 | 1,828 |
Citigroup Inc. | ||
Derivative [Line Items] | ||
Notional Amount | 0 | 0 |
Fair Value | 0 | 0 |
Credit Suisse International | ||
Derivative [Line Items] | ||
Notional Amount | 21,100 | 21,100 |
Fair Value | 1,469 | 1,444 |
Societe Generale | ||
Derivative [Line Items] | ||
Notional Amount | 92,400 | 91,700 |
Fair Value | $ 4,242 | $ 5,958 |
Derivative Instruments - Narrat
Derivative Instruments - Narrative (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Derivatives, Fair Value [Line Items] | ||
Expected contract term | 10 years | |
Maximum exposure | $ 250,000 | |
Other liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of collateral | $ 13,174,000 | $ 15,584,000 |
Property and Casualty Unpaid 48
Property and Casualty Unpaid Claims and Claim Expenses - Summary of Reinsurance Reserve Balances (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Sep. 30, 2017 | Mar. 31, 2017 | |
Segment Reporting Information [Line Items] | |||
Beginning Gross reserves | $ 347,749 | ||
Claims and claim expense payments for claims occurring during: | |||
Ending Gross reserves | 358,317 | ||
Benefits, claims and settlement expenses | 143,562 | $ 144,096 | |
Property and Casualty | |||
Segment Reporting Information [Line Items] | |||
Beginning Gross reserves | 319,182 | 307,757 | |
Less: reinsurance recoverables | 57,409 | 61,199 | |
Net reserves, beginning of year | 261,773 | 246,558 | |
Incurred claims and claim expenses: | |||
Claims occurring in the current period | 120,988 | 123,204 | |
Decrease in estimated reserves for claims occurring in prior years | (300) | (1,000) | |
Total claims and claim expenses incurred | 120,688 | 122,204 | |
Claims and claim expense payments for claims occurring during: | |||
Current period | 47,048 | 52,380 | |
Prior periods | 67,075 | 62,013 | |
Total claims and claim expense payments | 114,123 | 114,393 | |
Net reserves, end of year | 268,338 | 254,369 | |
Plus: reinsurance recoverables | 62,917 | 61,804 | |
Ending Gross reserves | 331,255 | 316,173 | |
Life and Annuity segments | |||
Claims and claim expense payments for claims occurring during: | |||
Net reserves, end of year | 27,062 | $ 23,860 | |
Benefits, claims and settlement expenses | $ 21,892 | $ 22,874 |
Property and Casualty Unpaid 49
Property and Casualty Unpaid Claims and Claim Expenses - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Insurance Loss Reserves [Abstract] | ||
Favorable development of total reserves for property and casualty claims occurring in prior years | $ 300 | $ 1,000 |
Debt - Summary of Indebtedness
Debt - Summary of Indebtedness (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Short-term debt: | ||
Bank Credit Facility, expires July 30, 2019 | $ 0 | $ 0 |
Long-term debt: | ||
Long-term debt | 297,536,000 | 297,469,000 |
Debt and Capital Lease Obligations | 297,536,000 | 297,469,000 |
Senior Notes 4.50% [Member] | ||
Long-term debt: | ||
Long-term debt | 247,536,000 | 247,469,000 |
Unamortized discount | $ 532,000 | 547,000 |
Stated rate | 4.50% | |
Face amount | $ 250,000,000 | |
Unamortized debt issuance costs | 1,932,000 | 1,984,000 |
Federal Home Loan Bank Advances [Member] | ||
Long-term debt: | ||
Long-term debt | $ 50,000,000 | $ 50,000,000 |
Debt - Narrative (Details)
Debt - Narrative (Details) | Mar. 31, 2018 |
Senior Notes 4.50% [Member] | |
Debt Instrument [Line Items] | |
Stated rate | 4.50% |
Reinsurance - Summary of Reinsu
Reinsurance - Summary of Reinsurance Activity (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Gross Amount | ||
Premiums written and contract deposits, Gross Amount | $ 288,816 | $ 301,512 |
Premiums and contract charges earned, Gross Amount | 207,737 | 200,455 |
Benefits, claims and settlement expenses, Gross Amount | 151,968 | 147,271 |
Ceded to Other Companies | ||
Premiums written and contract deposits, Ceded to Other Companies | 5,514 | 5,510 |
Premiums and contract charges earned, Ceded to Other Companies | 5,528 | 5,534 |
Benefits, claims and settlement expenses, Ceded to Other Companies | 9,014 | 3,883 |
Assumed from Other Companies | ||
Premiums written and contract deposits, Assumed from Other Companies | 706 | 730 |
Premiums and contract charges earned, Assumed from Other Companies | 789 | 801 |
Benefits, claims and settlement expenses, Assumed from Other Companies | 608 | 708 |
Net Amount | ||
Premiums written and contract deposits, Net Amount | 284,008 | 296,732 |
Premiums and contract charges earned, Net Amount | 202,998 | 195,722 |
Benefits, claims and settlement expenses, Net Amount | $ 143,562 | $ 144,096 |
Commitments - Narrative (Detail
Commitments - Narrative (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Commitments and Contingencies Disclosure [Abstract] | ||
Unfunded commitments to purchase investments | $ 170,102 | $ 106,381 |
Segment Information - Summary o
Segment Information - Summary of Segment Activity (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018USD ($)segment | Mar. 31, 2017USD ($) | Dec. 31, 2017USD ($) | |
Segment Reporting Information [Line Items] | |||
Reportable segments | segment | 4 | ||
Operating segments | segment | 3 | ||
Summarized financial information for these segments | |||
Insurance premiums and contract charges earned | $ 202,998 | $ 195,722 | |
Net investment income | 91,864 | 90,711 | |
Net income (loss) | 20,155 | 15,318 | |
Assets | 11,068,542 | $ 11,198,340 | |
Intersegment eliminations | |||
Summarized financial information for these segments | |||
Net investment income | (197) | (208) | |
Assets | (30,535) | (42,482) | |
Property and Casualty | |||
Summarized financial information for these segments | |||
Insurance premiums and contract charges earned | 165,458 | 158,318 | |
Property and Casualty | Operating segments | |||
Summarized financial information for these segments | |||
Net investment income | 9,516 | 9,177 | |
Net income (loss) | 9,722 | 2,735 | |
Assets | 1,202,791 | 1,217,394 | |
Retirement | |||
Summarized financial information for these segments | |||
Insurance premiums and contract charges earned | 8,068 | 6,601 | |
Retirement | Operating segments | |||
Summarized financial information for these segments | |||
Net investment income | 64,169 | 63,442 | |
Net income (loss) | 11,421 | 11,530 | |
Assets | 7,969,848 | 8,063,912 | |
Life | |||
Summarized financial information for these segments | |||
Insurance premiums and contract charges earned | 29,472 | 30,803 | |
Life | Operating segments | |||
Summarized financial information for these segments | |||
Net investment income | 18,340 | 18,288 | |
Net income (loss) | 3,787 | 3,885 | |
Assets | 1,785,912 | 1,815,732 | |
Corporate and Other | |||
Summarized financial information for these segments | |||
Net investment income | 36 | 12 | |
Net income (loss) | (4,775) | $ (2,832) | |
Assets | $ 140,526 | $ 143,784 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
TCJA effect on tax rate | 9.50% |