Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2020 | Oct. 31, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 1-10890 | |
Entity Registrant Name | HORACE MANN EDUCATORS CORPORATION | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 37-0911756 | |
Entity Address, Address Line One | 1 Horace Mann Plaza | |
Entity Address, City or Town | Springfield | |
Entity Address, State or Province | IL | |
Entity Address, Postal Zip Code | 62715-0001 | |
City Area Code | 217 | |
Local Phone Number | 789-2500 | |
Title of 12(b) Security | Common Stock, $0.001 par value | |
Trading Symbol | HMN | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 41,412,903 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0000850141 | |
Current Fiscal Year End Date | --12-31 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Investments | ||
Fixed maturity securities, available for sale, at fair value (amortized cost 2020, $5,672,315; 2019, $5,456,980) | $ 6,168,558 | $ 5,791,676 |
Equity securities at fair value | 102,303 | 101,864 |
Limited partnership interests | 418,187 | 383,717 |
Short-term and other investments | 453,037 | 361,976 |
Total investments | 7,142,085 | 6,639,233 |
Cash | 65,475 | 25,508 |
Deferred policy acquisition costs | 241,981 | 276,668 |
Deposit asset on reinsurance | 2,402,539 | 2,346,166 |
Intangible assets, net | 166,287 | 177,217 |
Goodwill | 49,079 | 49,079 |
Other assets | 447,414 | 474,364 |
Separate Account (variable annuity) assets | 2,488,528 | 2,490,469 |
Total assets | 13,003,388 | 12,478,704 |
Policy liabilities | ||
Investment contract and policy reserves | 6,402,471 | 6,234,452 |
Unpaid claims and claim expenses | 454,516 | 442,854 |
Unearned premiums | 272,660 | 279,163 |
Total policy liabilities | 7,129,647 | 6,956,469 |
Other policyholder funds | 744,494 | 647,283 |
Other liabilities | 487,794 | 384,173 |
Short-term debt | 135,000 | 135,000 |
Long-term debt | 302,247 | 298,025 |
Separate Account (variable annuity) liabilities | 2,488,528 | 2,490,469 |
Total liabilities | 11,287,710 | 10,911,419 |
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, 2020, 66,298,901; 2019, 66,088,808 | 66 | 66 |
Additional paid-in capital | 486,763 | 480,962 |
Retained earnings | 1,399,527 | 1,352,539 |
Accumulated other comprehensive income (loss), net of tax: | ||
Net unrealized investment gains on fixed maturity securities | 328,197 | 230,448 |
Net funded status of benefit plans | (10,767) | (10,767) |
Treasury stock, at cost, 2020, 24,902,579 shares; 2019, 24,850,484 shares | (488,108) | (485,963) |
Total shareholders’ equity | 1,715,678 | 1,567,285 |
Total liabilities and shareholders’ equity | $ 13,003,388 | $ 12,478,704 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Fixed maturities, available for sale, amortized cost | $ 5,672,315 | $ 5,456,980 |
Preferred stock, par value (in usd per share) | $ 0.001 | |
Preferred stock, shares authorized (in shares) | 1,000,000 | |
Preferred stock, shares issued (in shares) | 0 | |
Common stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 75,000,000 | 75,000,000 |
Common stock, shares issued (in shares) | 66,298,901 | 66,088,808 |
Treasury stock (in shares) | 24,902,579 | 24,850,484 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenues | ||||
Insurance premiums and contract charges earned | $ 235,353 | $ 239,681 | $ 697,049 | $ 657,562 |
Net investment income | 93,718 | 93,071 | 256,403 | 279,329 |
Net investment gains (losses) | 2,469 | (2,156) | (12,833) | 151,594 |
Other income | 5,540 | 6,040 | 17,478 | 16,941 |
Total revenues | 337,080 | 336,636 | 958,097 | 1,105,426 |
Benefits, losses and expenses | ||||
Benefits, claims and settlement expenses | 151,425 | 154,191 | 433,095 | 446,267 |
Interest credited | 51,030 | 53,576 | 153,249 | 160,092 |
Operating expenses | 57,837 | 63,632 | 173,117 | 175,954 |
DAC unlocking and amortization expense | 24,561 | 26,344 | 74,962 | 82,965 |
Intangible asset amortization expense | 3,558 | 3,781 | 10,930 | 4,863 |
Interest expense | 3,553 | 4,608 | 11,722 | 11,223 |
Other expense - goodwill impairment | 0 | 0 | 0 | 28,025 |
Total benefits, losses and expenses | 291,964 | 306,132 | 857,075 | 909,389 |
Income before income taxes | 45,116 | 30,504 | 101,022 | 196,037 |
Income tax expense | 8,642 | 5,050 | 15,498 | 44,595 |
Net income | $ 36,474 | $ 25,454 | $ 85,524 | $ 151,442 |
Net income per share | ||||
Basic (in usd per share) | $ 0.87 | $ 0.61 | $ 2.04 | $ 3.63 |
Diluted (in usd per share) | $ 0.87 | $ 0.60 | $ 2.03 | $ 3.61 |
Weighted average number of shares and equivalent shares | ||||
Basic (in shares) | 41,916 | 41,785 | 41,865 | 41,715 |
Diluted (in shares) | 42,058 | 42,030 | 42,013 | 41,911 |
Net investment gains (losses) | ||||
Total other-than-temporary impairment losses on securities | $ (1,057) | $ (5) | $ (5,272) | $ (276) |
Portion of losses recognized in other comprehensive income (loss) | 0 | 0 | 0 | 0 |
Net other-than-temporary impairment losses on securities recognized in net income | (1,057) | (5) | (5,272) | (276) |
Sales and other, net | 3,736 | 608 | 8,645 | 147,513 |
Change in fair value - equity securities | 2,242 | 1,081 | (5,644) | 8,029 |
Change in fair value and gains (losses) realized on settlements - derivatives | (2,452) | (3,840) | (10,562) | (3,672) |
Net investment gains (losses) | $ 2,469 | $ (2,156) | $ (12,833) | $ 151,594 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Comprehensive income (loss) | ||||
Net income | $ 36,474 | $ 25,454 | $ 85,524 | $ 151,442 |
Other comprehensive income (loss), net of tax: | ||||
Change in net unrealized investment gains (losses) on fixed maturity securities | 49,068 | 63,304 | 97,749 | 169,440 |
Change in net funded status of benefit plans | 0 | 0 | 0 | 0 |
Other comprehensive income (loss) | 49,068 | 63,304 | 97,749 | 169,440 |
Total | $ 85,542 | $ 88,758 | $ 183,273 | $ 320,882 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands | Total | Common stock | Additional paid-in capital | Retained earnings | Accumulated other comprehensive income (loss), net of tax | Treasury stock, at cost | Cumulative Effect, Period of Adoption, AdjustmentRetained earnings |
Beginning balance at Dec. 31, 2018 | $ 66 | $ 475,109 | $ 1,216,582 | $ 84,756 | $ (485,963) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Options exercised and conversion of common stock units and restricted stock units | (1,314) | ||||||
Share-based compensation expense | 4,855 | ||||||
Net income | $ 151,442 | 151,442 | |||||
Dividends, 2020, $0.30, $0.90 per share; 2019, $0.2875, $0.8625 per share | (36,361) | ||||||
Change in net unrealized investment gains (losses) on fixed maturity securities | 169,440 | ||||||
Ending balance at Sep. 30, 2019 | 1,578,612 | 66 | 478,650 | 1,331,663 | 254,196 | (485,963) | |
Beginning balance at Jun. 30, 2019 | 66 | 476,353 | 1,318,329 | 190,892 | (485,963) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Options exercised and conversion of common stock units and restricted stock units | 447 | ||||||
Share-based compensation expense | 1,850 | ||||||
Net income | 25,454 | 25,454 | |||||
Dividends, 2020, $0.30, $0.90 per share; 2019, $0.2875, $0.8625 per share | (12,120) | ||||||
Change in net unrealized investment gains (losses) on fixed maturity securities | 63,304 | ||||||
Ending balance at Sep. 30, 2019 | 1,578,612 | 66 | 478,650 | 1,331,663 | 254,196 | (485,963) | |
Beginning balance at Dec. 31, 2019 | 1,567,285 | 66 | 480,962 | 1,352,539 | 219,681 | (488,108) | $ (509) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Options exercised and conversion of common stock units and restricted stock units | 1,587 | ||||||
Share-based compensation expense | 4,214 | ||||||
Net income | 85,524 | 85,524 | |||||
Dividends, 2020, $0.30, $0.90 per share; 2019, $0.2875, $0.8625 per share | (38,027) | ||||||
Change in net unrealized investment gains (losses) on fixed maturity securities | 97,749 | ||||||
Acquisition of shares | (2,145) | ||||||
Ending balance at Sep. 30, 2020 | 1,715,678 | 66 | 486,763 | 1,399,527 | 317,430 | (488,108) | |
Beginning balance at Jun. 30, 2020 | 66 | 483,754 | 1,375,737 | 268,362 | (485,963) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Options exercised and conversion of common stock units and restricted stock units | 1,319 | ||||||
Share-based compensation expense | 1,690 | ||||||
Net income | 36,474 | 36,474 | |||||
Dividends, 2020, $0.30, $0.90 per share; 2019, $0.2875, $0.8625 per share | (12,684) | ||||||
Change in net unrealized investment gains (losses) on fixed maturity securities | 49,068 | ||||||
Ending balance at Sep. 30, 2020 | $ 1,715,678 | $ 66 | $ 486,763 | $ 1,399,527 | $ 317,430 | $ (488,108) |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) (Parenthetical) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Statement of Stockholders' Equity [Abstract] | ||||
Common stock, par value (in usd per share) | $ 0.001 | $ 0.001 | ||
Cash dividends (in usd per share) | $ 0.30 | $ 0.2875 | $ 0.90 | $ 0.8625 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows - operating activities | ||
Net income | $ 85,524 | $ 151,442 |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Net investment (gains) losses | 12,833 | (151,594) |
Amortization of premiums and accretion of discounts on fixed maturity securities, net | 4,904 | 1,023 |
Depreciation and intangible asset amortization | 17,547 | 9,751 |
Share-based compensation expense | 4,578 | 5,666 |
Other expense - goodwill impairment | 0 | 28,025 |
Changes in: | ||
Accrued investment income | (5,476) | 41,994 |
Insurance liabilities | 97,952 | 40,180 |
Premium receivables | 4,068 | (9,671) |
Deferred policy acquisitions | (2,546) | 501 |
Reinsurance recoverables | 3,265 | 11,837 |
Income tax liabilities | (3,419) | 34,845 |
Other operating assets and liabilities | 44,282 | 56,194 |
Other | 4,312 | (12,957) |
Net cash provided by operating activities | 267,824 | 207,236 |
Fixed maturity securities | ||
Purchases | (1,093,888) | (845,967) |
Sales | 352,766 | 651,058 |
Maturities, paydowns, calls and redemptions | 525,310 | 645,946 |
Equity securities | ||
Purchases | (23,170) | (10,510) |
Sales and repayments | 12,368 | 20,989 |
Limited partnership interests | ||
Purchases | (59,958) | (42,388) |
Sales | 14,594 | 36,108 |
Change in short-term and other investments, net | (96,890) | (99,702) |
Acquisition of businesses, net of cash acquired | 0 | (421,174) |
Net cash used in investing activities | (368,868) | (65,640) |
Cash flows - financing activities | ||
Dividends paid to shareholders | (37,196) | (35,477) |
Principal borrowings on Bank Credit Facility | 0 | 135,000 |
FHLB borrowings | 4,000 | 0 |
Acquisition of treasury stock | (2,145) | 0 |
Proceeds from exercise of stock options | 2,402 | 1,105 |
Withholding tax payments on RSUs tendered | (1,954) | (3,560) |
Annuity contracts: variable, fixed and FHLB funding agreements | ||
Deposits | 462,207 | 519,636 |
Benefits, withdrawals and net transfers to Separate Account (variable annuity) assets | (284,439) | (313,653) |
Principal repayment on FHLB funding agreements | 0 | (275,000) |
Life policy accounts | ||
Deposits | 6,775 | 7,143 |
Withdrawals and surrenders | (2,912) | (2,682) |
Change in deposit asset on reinsurance | (14,797) | (130,740) |
Change in book overdrafts | 9,070 | (15,925) |
Net cash provided by (used in) financing activities | 141,011 | (114,153) |
Net increase in cash | 39,967 | 27,443 |
Cash at beginning of period | 25,508 | 11,906 |
Cash at end of period | $ 65,475 | $ 39,349 |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Significant Accounting Policies | Business Horace Mann Educators Corporation is a holding company for insurance subsidiaries that market and underwrite personal lines of property and casualty insurance products (primarily personal lines of automobile and property insurance), supplemental insurance products (primarily heart, cancer, accident and limited short-term supplemental disability coverages), retirement products (primarily tax-qualified fixed and variable annuities) and life insurance products, primarily to K-12 teachers, administrators and other employees of public schools and their families (collectively, HMEC, the Company or Horace Mann). On July 1, 2019, the Company acquired NTA Life Enterprises, LLC (NTA). As a result, the Company’s reporting segments were changed effective in the third quarter of 2019. A newly created Supplemental segment was added to report on the personal lines of supplemental insurance products that are marketed and underwritten by NTA. Basis of Presentation The accompanying Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) and with the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and disclosures normally included in annual financial statements prepared in conformity with GAAP, but are not required for interim reporting purposes, have been omitted. These Consolidated Financial Statements and Notes should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in Part II - Item 8 of the Company's Annual Report on Form 10-K for the year ended December 31, 2019. The results of operations for the three and nine months ended September 30, 2020 are not necessarily indicative of the results to be expected for the full year. The accompanying Consolidated Financial Statements and Notes are unaudited. These financial statements reflect all adjustments (generally consisting only of normal recurring accruals) which are, in the opinion of management, necessary for the fair presentation of the consolidated financial position, results of operations and cash flows for the interim periods. The Company's significant accounting policies are summarized in Part II - Item 8, Note 1 of the Company's Annual Report on Form 10-K for the year ended December 31, 2019. Effective for the year ended December 31, 2019, the Company decided to change the approach it uses for presentation in its Consolidated Statements of Cash Flows from the direct method to the indirect method as management considers presentation under the indirect method as more comparable to the method used by others in the insurance industry. Accordingly, the Company has recast all prior periods presented in the Consolidated Statements of Cash Flows to conform to the current year’s presentation. The Company has reclassified the presentation of certain prior period information to conform to the current year's presentation. Consolidation All intercompany transactions and balances between HMEC and its subsidiaries and affiliates have been eliminated. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The most significant critical accounting estimates include valuation of hard-to-value fixed maturity securities (including evaluation of other-than-temporary impairments), evaluation of goodwill and intangible assets for impairment, valuation of supplemental, annuity and life deferred policy acquisition costs, valuation of liabilities for property and casualty unpaid claims and claim expenses, valuation of certain investment contracts and policy reserves and valuation of assets acquired and liabilities assumed under purchase accounting. Adoption of New Accounting Standards Measurement of Credit Losses on Financial Instruments In June 2016, the Financial Accounting Standards Board (FASB) issued guidance which revised the credit loss recognition criteria for certain financial assets measured at amortized cost, including reinsurance recoverables. The guidance replaced the previous incurred loss recognition model with an expected loss recognition model. The objective of the expected credit loss model is for a reporting entity to recognize its estimate of expected credit losses for affected financial assets in a valuation allowance that when deducted from the amortized cost basis of the related financial assets results in a net carrying value at the amount expected to be collected. A reporting entity must consider all relevant information available when estimating expected credit losses, including details about past events, current conditions, and reasonable and supportable forecasts over the life of an asset. Financial assets may be evaluated individually or on a pooled basis when they share similar risk characteristics. The measurement of credit losses for available for sale debt securities measured at fair value is not affected except that credit losses recognized are limited to the amount by which fair value is below amortized cost and the carrying value adjustment is recognized through a valuation allowance which may change over time but once recorded cannot subsequently be reduced to an amount below zero. The guidance is effective for reporting periods beginning after December 15, 2019, and for most affected instruments must be adopted using a modified retrospective approach, with a cumulative effect adjustment recorded to beginning retained earnings. The Company’s implementation activities are complete and the impacts relate to the Company’s commercial mortgage loan portfolio, agent advances, reinsurance recoverables and off-balance-sheet credit exposures for unfunded commercial mortgage loan commitments. The Company adopted the new guidance on January 1, 2020 and recognized a cumulative effect adjustment that decreased retained earnings by $0.5 million. Future Adoption of New Accounting Standards Accounting for Long-Duration Insurance Contracts In August 2018, the FASB issued accounting and disclosure guidance that contains targeted improvements to the accounting for long-duration insurance contracts. Under the new guidance, the cash flow assumptions used to measure the liability for future policy benefits for traditional insurance contracts will be required to be updated at least annually with changes recognized as a benefit expense (i.e., assumptions will no longer be locked-in). Insurance entities will be required to use a standard discount rate to measure the liabilities that will be equivalent to the yield from a high-quality bond. The new guidance also changes the amortization of deferred acquisition costs (DAC) to be on a constant-level basis over the expected term of the related contracts with no interest accruing on the DAC balance. The new guidance also introduces a new category of contract features associated with deposit type contracts referred to as market risk benefits (MRBs). Contract features meeting the definition of a MRB will be measured at fair value. New disclosures will be required for long-duration insurance contracts in order to provide better transparency into the exposure of insurance entities and the drivers of their results. For public business entities, the guidance is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those years. With regards to the liability for future policy benefits and DAC, the guidance applies to contracts in force as of the beginning of the earliest period presented and may be applied retrospectively. With regards to MRBs, the guidance is to be applied retrospectively at the beginning of the earliest period presented. Early adoption is permitted. Management is currently evaluating the impact this guidance will have on the results of operations and financial position of the Company. Accounting Policies The following accounting policy has been updated to reflect the Company's adoption of Measurement of Credit Losses on Financial Instruments as described above. The Company conducts a periodic review to identify and evaluate invested assets that may have credit impairments. Credit Impairments of Fixed Maturity Securities Some of the factors considered in assessing impairment of fixed maturity securities due to credit-related factors include: (1) the extent to which the fair value has been less than amortized cost; (2) the financial condition, near-term and long-term prospects for the issuer, including the relevant industry conditions and trends, and implications of rating agency actions and offering prices; (3) the likelihood of the recoverability of principal and interest; and (4) whether it is more likely than not that the Company will be required to sell the investment prior to an anticipated recovery in value. Beginning on January 1, 2020, credit losses are recognized through an allowance account. See Note 1 - Adoption of New Accounting Standards - Measurement of Credit Losses on Financial Instruments for additional information. For fixed maturity securities that the Company does not intend to sell or for which it is more likely than not that the Company would not be required to sell before an anticipated recovery in value, the Company separates the credit loss component of the impairment from the amount related to all other factors and reports the credit loss component in net investment gains (losses). The impairment related to all other factors (non-credit factors) is reported in other comprehensive income (OCI). The allowance is adjusted for any additional credit losses and subsequent recoveries. Upon recognizing a credit loss, the cost basis is not adjusted. For fixed maturity securities where the Company records a credit loss, a determination is made as to the cause of the impairment and whether the Company expects a recovery in value. For fixed maturity securities where the Company expects a recovery in value, the constant effective yield method is utilized, and the investment is amortized to par. For fixed maturity securities the Company intends to sell or for which it is more likely than not that the Company will be required to sell before an anticipated recovery in value, the full amount of the impairment is included in net investment gains (losses). The new cost basis of the investment is the previous amortized cost basis less the impairment recognized in net investment gains (losses). The new cost basis is not adjusted for any subsequent recoveries in fair value. The Company reports investment income accrued separately from fixed maturity securities, available for sale, and has elected not to measure an allowance for credit losses for investment income accrued. Investment income accrued is written off through net investment gains (losses) at the time the issuer of the fixed maturity security defaults or is expected to default on payments. Uncollectible available for sale fixed maturity securities are written off when the Company determines that no additional payments of principal or interest will be received. |
Investments
Investments | 9 Months Ended |
Sep. 30, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Net Investment Income The components of net investment income for the following periods were as follows: ($ in thousands) Three Months Ended Nine Months Ended 2020 2019 2020 2019 Fixed maturity securities $ 56,420 $ 59,319 $ 174,727 $ 227,196 Equity securities 1,130 1,107 3,520 3,697 Limited partnership interests 11,046 6,859 4,862 22,759 Short-term and other investments 2,774 4,207 8,415 (13,856) Investment expenses (2,151) (2,179) (7,262) (7,420) Net investment income - investment portfolio 69,219 69,313 184,262 232,376 Investment income - deposit asset on reinsurance 24,499 23,758 72,141 46,953 Total net investment income $ 93,718 $ 93,071 $ 256,403 $ 279,329 Net Investment Gains (Losses) Net investment gains (losses) for the following periods were as follows: ($ in thousands) Three Months Ended Nine Months Ended 2020 2019 2020 2019 Fixed maturity securities $ 2,656 $ 206 $ 3,116 $ 141,955 Equity securities 3,982 1,478 (3,670) 13,311 Short-term investments and other (4,169) (3,840) (12,279) (3,672) Net investment gains (losses) $ 2,469 $ (2,156) $ (12,833) $ 151,594 The Company, from time to time, sells invested assets subsequent to the reporting date that were considered temporarily impaired at such reporting date. Such sales are due to issuer specific events occurring subsequent to the reporting date that result in a change in the Company's intent or ability to hold an invested asset. The types of events that may result in a sale include significant changes in the economic facts and circumstances related to the invested asset, significant unforeseen changes in liquidity needs, or changes in the Company's investment strategy. Net Investment Gains (Losses) by Transaction Type The following table reconciles net investment gains (losses) pretax by transaction type: ($ in thousands) Three Months Ended Nine Months Ended 2020 2019 2020 2019 Credit impairment write-downs $ — $ — $ — $ — Change in intent write-downs (1,057) (5) (5,272) (276) Net other-than-temporary impairment losses on securities recognized in net income (1,057) (5) (5,272) (276) Sales and other, net 3,736 608 8,645 147,513 Change in fair value - equity securities 2,242 1,081 (5,644) 8,029 Change in fair value and gains (losses) realized on settlements - derivatives (2,452) (3,840) (10,562) (3,672) Net investment gains (losses) $ 2,469 $ (2,156) $ (12,833) $ 151,594 Fixed Maturity Securities The Company's investment portfolio is comprised primarily of fixed maturity securities. Amortized cost, net unrealized investment gains (losses) and fair values of all fixed maturity securities in the portfolio were as follows: ($ in thousands) Amortized Unrealized Unrealized Fair September 30, 2020 Fixed maturity securities U.S. Government and federally sponsored agency obligations: (1) Mortgage-backed securities $ 617,856 $ 85,219 $ 213 $ 702,862 Other, including U.S. Treasury securities 341,771 42,683 317 384,137 Municipal bonds 1,621,308 196,317 1,124 1,816,501 Foreign government bonds 40,143 4,644 — 44,787 Corporate bonds 1,802,423 189,986 8,926 1,983,483 Other asset-backed securities 1,248,814 22,353 34,379 1,236,788 Totals $ 5,672,315 $ 541,202 $ 44,959 $ 6,168,558 December 31, 2019 Fixed maturity securities U.S. Government and federally sponsored agency obligations: (1) Mortgage-backed securities $ 684,543 $ 41,263 $ 1,487 $ 724,319 Other, including U.S. Treasury securities 436,665 22,824 621 458,868 Municipal bonds 1,545,787 141,996 1,580 1,686,203 Foreign government bonds 42,801 2,569 — 45,370 Corporate bonds 1,464,444 118,775 1,795 1,581,424 Other asset-backed securities 1,282,740 20,883 8,131 1,295,492 Totals $ 5,456,980 $ 348,310 $ 13,614 $ 5,791,676 (1) Fair value includes securities issued by Federal National Mortgage Association (FNMA) of $390.7 million and $405.1 million; Federal Home Loan Mortgage Corporation (FHLMC) of $322.4 million and $283.1 million; and Government National Mortgage Association (GNMA) of $137.4 million and $147.4 million as of September 30, 2020 and December 31, 2019, respectively. The following table presents the fair value and gross unrealized losses for fixed maturity securities in an unrealized loss position at September 30, 2020 and December 31, 2019, respectively. The Company views the decrease in fair value of all of the fixed maturity securities with unrealized losses at September 30, 2020 — which was driven largely by increasing interest rates, spread widening, financial market illiquidity and/or market volatility from the date of acquisition — as temporary. As of September 30, 2020, the Company has not made the decision to sell and it is not more likely than not the Company will be required to sell the fixed maturity securities with unrealized losses before an anticipated recovery in value. Therefore, it was determined that the unrealized losses on the fixed maturity securities presented in the table below were not other-than-temporarily impaired as of September 30, 2020. ($ in thousands) 12 Months or Less More than 12 Months Total Fair Value Gross Fair Value Gross Fair Value Gross September 30, 2020 Fixed maturity securities U.S. Government and federally Mortgage-backed securities $ 8,519 $ 134 $ 1,246 $ 79 $ 9,765 $ 213 Other 31,797 317 — — 31,797 317 Municipal bonds 47,067 1,124 — — 47,067 1,124 Foreign government bonds — — — — — — Corporate bonds 203,521 8,444 9,873 482 213,394 8,926 Other asset-backed securities 397,424 24,376 413,159 10,003 810,583 34,379 Total $ 688,328 $ 34,395 $ 424,278 $ 10,564 $ 1,112,606 $ 44,959 Number of positions with a gross unrealized loss 475 124 599 Fair value as a percentage of total fixed maturity securities at fair value 11.2 % 6.9 % 18.1 % December 31, 2019 Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 72,422 $ 1,282 $ 2,620 $ 205 $ 75,042 $ 1,487 Other 38,341 619 1,527 2 39,868 621 Municipal bonds 91,195 977 9,160 603 100,355 1,580 Foreign government bonds — — — — — — Corporate bonds 58,198 886 16,622 909 74,820 1,795 Other asset-backed securities 218,710 1,970 442,791 6,161 661,501 8,131 Total $ 478,866 $ 5,734 $ 472,720 $ 7,880 $ 951,586 $ 13,614 Number of positions with a gross unrealized loss 330 137 467 Fair value as a percentage of total fixed maturity securities at fair value 8.3 % 8.2 % 16.5 % Fixed maturity securities with an investment grade rating represented 80.8% of the gross unrealized losses as of September 30, 2020. 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 other-than-temporary impairment (OTTI) losses on fixed maturity securities held as of September 30, 2020 and 2019 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 an anticipated recovery in value, for which the non-credit portions of OTTI losses were recognized in OCI: ($ in thousands) Nine Months Ended 2020 2019 Cumulative credit loss (1) Beginning of period $ 1,529 $ 1,529 New credit losses 184 — Increases to previously recognized credit losses — — Losses related to securities sold or paid down during the period (103) — End of period $ 1,610 $ 1,529 (1) The cumulative credit loss amounts exclude OTTI losses on fixed maturity 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 an anticipated recovery in value. For the three and nine months ended September 30, 2020, there was no allowance recognized for current expected credit losses with respect to fixed maturity securities classified as available for sale. Maturities 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, 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 September 30, 2020 September 30, 2020 December 31, 2019 Fair Amortized Estimated expected maturity: Due in 1 year or less 4.2 % 3.6 % $ 261,323 $ 258,244 Due after 1 year through 5 years 28.1 % 27.4 % 1,734,450 1,676,356 Due after 5 years through 10 years 28.9 % 29.6 % 1,782,261 1,628,583 Due after 10 years through 20 years 24.3 % 26.1 % 1,496,331 1,309,759 Due after 20 years 14.5 % 13.3 % 894,193 799,373 Total 100.0 % 100.0 % $ 6,168,558 $ 5,672,315 Average option-adjusted duration, in years 6.3 6.0 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 as follows: ($ in thousands) Three Months Ended Nine Months Ended 2020 2019 2020 2019 (1) Fixed maturity securities Proceeds received $ 58,604 $ 149,319 $ 352,766 $ 651,058 Gross gains realized 3,744 1,258 14,029 149,574 Gross losses realized (31) (1,047) (5,924) (7,128) Equity securities Proceeds received $ 309 $ 1,367 $ 12,368 $ 18,489 Gross gains realized 79 428 2,119 5,562 Gross losses realized (38) (32) (1,843) (542) (1) Gross gains realized presented above include a $135.3 million realized investment gain associated with a transfer of investments to a reinsurer as consideration paid during the second quarter of 2019 in connection with the reinsurance of a $2.9 billion block of in force fixed and variable annuity business. See Note 5 for further information. Net Unrealized Investment Gains (Losses) on Fixed Maturity Securities The following table reconciles net unrealized investment gains (losses) on fixed maturity securities, net of tax, included in accumulated other comprehensive income (AOCI), before the impact of DAC: ($ in thousands) Three Months Ended Nine Months Ended 2020 2019 2020 2019 Net unrealized investment gains (losses) Beginning of period $ 329,887 $ 231,087 $ 264,410 $ 111,712 Change in net unrealized investment gains 56,901 75,283 128,060 315,988 Reclassification of net investment (gains) losses 5,244 (1,330) (438) (122,660) End of period $ 392,032 $ 305,040 $ 392,032 $ 305,040 Limited Partnership Interests As of September 30, 2020 and December 31, 2019, the carrying value of equity method limited partnership interests totaled $418.2 million and $383.7 million, respectively. Principal factors influencing carrying value appreciation or decline include operating performance, comparable public company earnings multiples, capitalization rates and the economic environment. The Company recognizes an impairment loss for equity method limited partnership interests when evidence demonstrates that the loss is other than temporary. Evidence of a loss in value that is other than temporary may include the absence of an ability to recover the carrying amount of the investment or the inability of the investee to sustain a level of earnings that would justify the carrying amount of the investment. Offsetting of Assets and Liabilities The Company's derivatives are subject to enforceable master netting arrangements. Collateral support agreements associated with each master netting arrangement provide that the Company will receive or pledge financial collateral in the event minimum thresholds have been reached. The following table presents instruments that were subject to a master netting arrangement for the Company. ($ in thousands) Gross Net Amounts Gross Amounts Not Offset Gross Financial Cash Net September 30, 2020 Asset derivatives: Free-standing derivatives $ 10,793 $ — $ 10,793 $ 7,952 $ 1,960 $ 881 December 31, 2019 Asset derivatives: Free-standing derivatives 13,239 — 13,239 7,687 6,640 (1,088) Deposits At September 30, 2020 and December 31, 2019, fixed maturity securities with a fair value of $26.9 million and $26.0 million, respectively, were on deposit with governmental agencies as required by law in various states for which the insurance subsidiaries of HMEC conduct business. In addition, at September 30, 2020 and December 31, 2019, fixed maturity securities with a fair value of $697.1 million and $594.2 million, 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 $644.5 million at September 30, 2020 and $545.0 million at December 31, 2019. The deposited securities are included in Fixed maturity securities on the Company’s Consolidated Balance Sheets. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | The Company is required to disclose estimated fair values for certain financial and nonfinancial assets and liabilities. Fair values of the Company’s insurance contracts other than annuity contracts (which are investment contracts) are not required to be disclosed. However, the estimated fair values of liabilities under all insurance contracts are taken into consideration in the Company’s overall management of interest rate risk through the matching of investment maturities with amounts due under insurance contracts. Information regarding the three-level hierarchy presented below and the valuation methodologies utilized by the Company to estimate fair values at each reporting date is included in Part II - Item 8, Note 4 of the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Financial Instruments Measured and Carried at Fair Value on a Recurring Basis The following table presents the Company's fair value hierarchy for those assets and liabilities measured and carried at fair value on a recurring basis. During the nine months ended September 30, 2020 and 2019, there were no transfers between Level 1 and Level 2. At September 30, 2020, Level 3 invested assets comprised 5.0% of the Company’s total investment portfolio at fair value. ($ in thousands) Fair Value Measurements at Carrying Fair Reporting Date Using Amount Value Level 1 Level 2 Level 3 September 30, 2020 Financial Assets Investments Fixed maturity securities U.S. Government and federally Mortgage-backed securities $ 702,862 $ 702,862 $ — $ 690,663 $ 12,199 Other, including U.S. Treasury securities 384,137 384,137 18,446 365,691 — Municipal bonds 1,816,501 1,816,501 — 1,750,830 65,671 Foreign government bonds 44,787 44,787 — 44,787 — Corporate bonds 1,983,483 1,983,483 14,076 1,848,222 121,185 Other asset-backed securities 1,236,788 1,236,788 — 1,108,189 128,599 Total fixed maturity securities 6,168,558 6,168,558 32,522 5,808,382 327,654 Equity securities 102,303 102,303 36,274 65,941 88 Short-term investments 254,309 254,309 250,206 4,103 — Other investments 30,245 30,245 — 30,245 — Totals $ 6,555,415 $ 6,555,415 $ 319,002 $ 5,908,671 $ 327,742 Separate Account (variable annuity) assets (1) $ 2,488,528 $ 2,488,528 $ 2,488,528 $ — $ — Financial Liabilities Investment contract and policy reserves, embedded derivatives $ 1,703 $ 1,703 $ — $ 1,703 $ — Other policyholder funds, embedded derivatives $ 98,070 $ 98,070 $ — $ — $ 98,070 December 31, 2019 Financial Assets Investments Fixed maturity securities U.S. Government and federally Mortgage-backed securities $ 724,319 $ 724,319 $ — $ 711,004 $ 13,315 Other, including U.S. Treasury securities 458,868 458,868 17,699 441,169 — Municipal bonds 1,686,203 1,686,203 — 1,641,912 44,291 Foreign government bonds 45,370 45,370 — 45,370 — Corporate bonds 1,581,424 1,581,424 14,470 1,463,002 103,952 Other asset-backed securities 1,295,492 1,295,492 — 1,161,979 133,513 Total fixed maturity securities 5,791,676 5,791,676 32,169 5,464,436 295,071 Equity securities 101,864 101,864 49,834 51,923 107 Short-term investments 172,667 172,667 172,667 — — Other investments 25,997 25,997 — 25,997 — Totals $ 6,092,204 $ 6,092,204 $ 254,670 $ 5,542,356 $ 295,178 Separate Account (variable annuity) assets (1) $ 2,490,469 $ 2,490,469 $ 2,490,469 $ — $ — Financial Liabilities Investment contract and policy reserves, embedded derivatives $ 1,314 $ 1,314 $ — $ 1,314 $ — Other policyholder funds, embedded derivatives $ 93,733 $ 93,733 $ — $ — $ 93,733 (1) Separate Account (variable annuity) liabilities are equal to the estimated fair value of the Separate Account (variable annuity) assets. Changes in Level 3 Fair Value Measurements The reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) was as follows: ($ in thousands) Financial Assets Financial Liabilities (1) Municipal Corporate Other Mortgage- Backed Securities (2) Total Equity Total Beginning balance, July 1, 2020 $ 73,171 $ 126,292 $ 200,146 $ 399,609 $ 115 $ 399,724 $ 93,619 Transfers into Level 3 (3) 6,209 6,798 8,663 21,670 — 21,670 — Transfers out of Level 3 (3) (16,708) (12,511) (70,950) (100,169) — (100,169) — Total gains or losses Net investment gains (losses) included in net income related to financial assets — — (238) (238) (27) (265) — Net investment (gains) losses included in net income related to financial liabilities — — — — — — 4,406 Net unrealized investment gains (losses) included in OCI 3,150 551 6,321 10,022 — 10,022 — Purchases — — — — — — — Issuances — — — — — — 1,951 Sales — — — — — — — Settlements — — — — — — — Paydowns, maturities and distributions (151) 55 (3,144) (3,240) — (3,240) (1,906) Ending balance, September 30, 2020 $ 65,671 $ 121,185 $ 140,798 $ 327,654 $ 88 $ 327,742 $ 98,070 Beginning balance, January 1, 2020 $ 44,291 $ 103,952 $ 146,828 $ 295,071 $ 107 $ 295,178 $ 93,733 Transfers into Level 3 (3) 80,686 39,601 95,377 215,664 — 215,664 — Transfers out of Level 3 (3) (62,625) (26,699) (77,335) (166,659) — (166,659) — Total gains or losses Net investment gains (losses) included in net income related to financial assets — — (238) (238) (19) (257) — Net investment (gains) losses included in net income related to financial liabilities — — — — — — 5,330 Net unrealized investment gains (losses) included in OCI 3,962 378 (14,780) (10,440) — (10,440) — Purchases — 6,875 1,890 8,765 — 8,765 — Issuances — — — — — — 5,818 Sales — — — — — — — Settlements — — — — — — — Paydowns, maturities and distributions (643) (2,922) (10,944) (14,509) — (14,509) (6,811) Ending balance, September 30, 2020 $ 65,671 $ 121,185 $ 140,798 $ 327,654 $ 88 $ 327,742 $ 98,070 (1) Represents embedded derivatives, all related to the Company's fixed indexed annuity products, reported in Other policyholder funds in the Company's Consolidated Balance Sheets. (2) Includes U.S. Government and federally sponsored agency obligations for mortgage-backed securities and other mortgage-backed securities. (3) Transfers into and out of Level 3 during the three and nine months ended September 30, 2020 were attributable to changes in the availability of observable market information for individual fixed maturity securities. The Company's policy is to recognize transfers into and out of the levels as having occurred at the end of the reporting period in which the transfers were determined. ($ in thousands) Financial Assets Financial (1) Municipal Corporate Other Mortgage- (2) Total Equity Total Beginning balance, July 1, 2019 $ 46,984 $ 79,222 $ 128,438 $ 254,644 $ 69 $ 254,713 $ 85,961 Transfers into Level 3 (3) — 18,916 21,004 39,920 1 39,921 — Transfers out of Level 3 (3) — (2,822) (449) (3,271) — (3,271) — Total gains or losses Net investment gains (losses) included in net income related to financial assets — — — — 46 46 — Net investment (gains) losses included in net income related to financial liabilities — — — — — — 3,661 Net unrealized investment gains (losses) included in OCI 842 1,744 397 2,983 — 2,983 — Purchases — — — — — — — Issuances — — — — — — 2,033 Sales — — — — — — — Settlements — — — — — — — Paydowns, maturities and distributions (121) (387) (2,685) (3,193) — (3,193) (2,557) Ending balance, September 30, 2019 $ 47,705 $ 96,673 $ 146,705 $ 291,083 $ 116 $ 291,199 $ 89,098 Beginning balance, January 1, 2019 $ 47,531 $ 80,742 $ 120,211 $ 248,484 $ 5 $ 248,489 $ 78,700 Transfers into Level 3 (3) — 24,798 42,938 67,736 65 67,801 — Transfers out of Level 3 (3) — (7,698) (449) (8,147) — (8,147) — Total gains or losses Net investment gains (losses) included in net income related to financial assets — — — — 46 46 — Net investment (gains) losses included in net income related to financial liabilities — — — — — — 8,366 Net unrealized investment gains (losses) included in OCI 649 6,254 3,052 9,955 — 9,955 — Purchases — 1,566 — 1,566 — 1,566 — Issuances — — — — — — 7,482 Sales — — (607) (607) — (607) — Settlements — — — — — — — Paydowns, maturities and distributions (475) (8,989) (18,440) (27,904) — (27,904) (5,450) Ending balance, September 30, 2019 $ 47,705 $ 96,673 $ 146,705 $ 291,083 $ 116 $ 291,199 $ 89,098 (1) Represents embedded derivatives, all related to the Company's fixed indexed annuity products, reported in Other policyholder funds in the Company's Consolidated Balance Sheets. (2) Includes U.S. Government and federally sponsored agency obligations for mortgage-backed securities and other mortgage-backed securities. (3) Transfers into and out of Level 3 during the three and nine months ended September 30, 2019 were attributable to changes in the availability of observable market information for individual fixed maturity securities. The Company's policy is to recognize transfers into and out of the levels as having occurred at the end of the reporting period in which the transfers were determined. For the nine months ended September 30, 2020 and September 30, 2019, the Company had $0.3 million and no net investment losses on Level 3 financial assets, respectively. For the three and nine months ended September 30, 2020, net investment losses of $4.4 million and $5.3 million were included in net income that were attributable to changes in the fair value of Level 3 financial liabilities; for the three and nine months ended September 30, 2019, the respective net investment losses were $3.7 million and $8.4 million. Quantitative Information about Level 3 Fair Value Measurements The following table provides quantitative information about the significant unobservable inputs for recurring fair value measurements categorized within Level 3. ($ in thousands) Financial Fair Value at Valuation Technique(s) Unobservable Inputs Range (Weighted Average) and Single Point Best Estimate (1) Municipal bonds $ 65,671 discounted cash flow I spread (2) 578 bps Corporate bonds 121,185 discounted cash flow N spread (3) 320 - 818 bps market comparable option adjusted spread 12.54% Other asset-backed securities 128,599 vendor price haircut 3.00% - 5.00% discounted cash flow constant prepayment rate 20.00% discounted cash flow T spread (4) 235 - 800 bps discounted cash flow PDI interest margin (5) 7.13% discounted cash flow SBL interest margin (6) 4.50% Government mortgage-backed securities 12,199 vendor price haircut 3.00% - 5.00% Equity securities 88 Black Scholes equity value low - $43.27; high - $44.53 ($ in thousands) Financial Fair Value at Valuation Technique(s) Unobservable Inputs Range (Weighted Average) and Single Point Best Estimate (1) Derivatives $ 98,070 discounted cash flow lapse rate 5.25% mortality multiplier (7) 61.00% option budget 1.00% - 2.50% non-performance adjustment (8) 5.00% (1) When a range of unobservable inputs is not readily available, the Company uses a single point best estimate. (2) "I spread" is the interpolated weighted average life point on the "on the run" (OTR) point of the curve. (3) "N spread" is the interpolated weighted average life point on the swap curve. (4) "T spread" is a specific point on the OTR curve. (5) "PDI" stands for private debt investment. (6) "SBL" stands for broadly syndicated loans. (7) Mortality multiplier is applied to the Annuity 2000 table. (8) Determined as a percentage of a risk-free rate. 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 Part II - Item 8, Note 4 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. 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 include: benchmark yield, liquidity premium, estimated cash flows, prepayment and default speeds, spreads, weighted average life, and credit rating. Significant spread widening in isolation will adversely impact the overall valuation, while significant 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. These financial assets and financial liabilities are further described in Part II - Item 8, Note 4 in the Company's Annual Report on Form 10-K for the year ended December 31, 2019. 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 September 30, 2020 Financial Assets Investments Other investments $ 168,500 $ 172,303 $ — $ — $ 172,303 Deposit asset on reinsurance 2,402,539 2,925,672 — — 2,925,672 Financial Liabilities Investment contract and policy reserves, fixed annuity contracts 4,812,911 4,720,941 — — 4,720,941 Investment contract and policy reserves, account values on life contracts 97,522 102,290 — — 102,290 Other policyholder funds 646,424 646,424 — 590,687 55,737 Short-term debt 135,000 135,000 — — 135,000 Long-term debt 302,247 331,829 — 331,829 — December 31, 2019 Financial Assets Investments Other investments $ 163,312 $ 167,185 $ — $ — $ 167,185 Deposit asset on reinsurance 2,346,166 2,634,012 — — 2,634,012 Financial Liabilities Investment contract and policy reserves, fixed annuity contracts 4,675,774 4,609,880 — — 4,609,880 Investment contract and policy reserves, account values on life contracts 93,465 98,332 — — 98,332 Other policyholder funds 553,550 553,550 — 495,812 57,738 Short-term debt 135,000 135,000 — — 135,000 Long-term debt 298,025 322,678 — 322,678 — |
Derivatives
Derivatives | 9 Months Ended |
Sep. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | The Company offers fixed indexed annuity (FIA) products, which are deferred fixed annuities that guarantee the return of principal to the contractholder and credit interest based on a percentage of the gain in a specified market index. The Company also offers indexed universal life (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 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 (losses) 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 determine 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 are accounted for as a "series of embedded derivatives" over the expected life of the applicable contract with a corresponding reserve recorded. For IUL, the embedded derivative represents a single year liability for the index return. The Company carries all derivatives 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 recognized immediately as Net investment gains (losses) in the Consolidated Statements of Operations. The fair values of derivatives, including derivatives embedded in FIA and IUL contracts, are presented in the Consolidated Balance Sheets as follows: ($ in thousands) September 30, 2020 December 31, 2019 Assets Derivatives, included in Short-term and other investments $ 10,793 $ 13,239 Liabilities FIA - embedded derivatives, included in Other policyholder funds 98,070 93,733 IUL - embedded derivatives, included in 1,703 1,314 In general, the change in the fair value of the embedded derivatives related to FIA 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 for FIA and IUL included in the Consolidated Statements of Operations were as follows: ($ in thousands) Three Months Ended Nine Months Ended 2020 2019 2020 2019 Change in fair value of derivatives: (1) Net investment gains (losses) $ 2,666 $ (149) $ (5,124) $ 5,280 Change in fair value of embedded derivatives: Net investment gains (losses) (5,118) (3,691) (5,438) (8,952) (1) Includes 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 Global Inc. (S&P)/Moody's Investors Service, Inc. (Moody's) long-term credit rating of "BBB+/A3" 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) September 30, 2020 December 31, 2019 Credit Rating Notional Fair Notional Fair Counterparty S&P Moody's Amount Value Amount Value Bank of America, N.A. A+ Aa2 $ 198,100 $ 9,135 $ 174,900 $ 8,523 Barclays Bank PLC A A1 98,900 1,658 115,300 3,347 Citigroup Inc. BBB+ A3 — — — — Credit Suisse International A+ A1 — — — — Societe Generale A A1 — — 27,800 1,369 Total $ 297,000 $ 10,793 $ 318,000 $ 13,239 As of September 30, 2020 and December 31, 2019, the Company held $9.9 million and $14.3 million, respectively, of cash and financial instruments 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 $0.3 million per counterparty. |
Deposit Asset on Reinsurance
Deposit Asset on Reinsurance | 9 Months Ended |
Sep. 30, 2020 | |
Reinsurance Disclosures [Abstract] | |
Deposit Asset on Reinsurance | In the second quarter of 2019, the Company reinsured a $2.9 billion block of in force fixed and variable annuity business with a minimum crediting rate of 4.5%. This represented approximately 50% of the Company’s in force fixed annuity account balances. The arrangement contains investment guidelines and a trust to help meet the Company’s risk management objectives. The annuity reinsurance transaction was effective April 1, 2019. Under the agreement, approximately $2.2 billion of fixed annuity reserves were reinsured on a coinsurance basis for consideration of approximately $2.3 billion which resulted in recognition of an after tax realized investment gain of $106.9 million. The separate account assets and liabilities of approximately $0.7 billion were reinsured on a modified coinsurance basis and thus, remain on the Company's consolidated financial statements, but the related results of operations are fully reinsured. The Company determined that the reinsurance agreement does not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk. Therefore, the Company recognizes the reinsurance agreement using the deposit method of accounting. The assets transferred to the reinsurer as consideration paid is reported as a Deposit asset on reinsurance. As amounts are received or paid, consistent with the underlying reinsured contracts, the Deposit asset on reinsurance is adjusted. The Deposit asset on reinsurance is accreted to the estimated ultimate cash flows using the interest method and the adjustment is reported as Net investment income in the Consolidated Statements of Operations. |
Goodwill and Intangible Assets,
Goodwill and Intangible Assets, net | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets, net | The Company conducts impairment testing for goodwill and intangible assets at least annually, or more often if events, changes or circumstances indicate that the carrying amount may not be recoverable. See Part II - Item 8, Note 1 in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 for further description of impairment testing. There were no changes in the carrying amount of goodwill by reporting unit for the nine months ended September 30, 2020. The carrying amount of goodwill by reporting unit as of September 30, 2020 was as follows: ($ in thousands) September 30, 2020 Property and Casualty $ 9,460 Supplemental 19,621 Retirement 10,087 Life 9,911 Total $ 49,079 As of September 30, 2020, the outstanding amounts of definite-lived intangible assets subject to amortization are attributable to the acquisitions of Benefit Consultants Group, Inc. (BCG) and NTA during 2019. The acquisition of BCG resulted in initial recognition of definite-lived intangible assets subject to amortization in the amount of $14.1 million and the acquisition of NTA resulted in initial recognition of definite-lived intangible assets subject to amortization in the amount of $160.4 million. As of September 30, 2020 the outstanding amounts of definite-lived intangible assets subject to amortization were as follows: ($ in thousands) Weighted Average Useful Life (in Years) At inception: Value of business acquired 30 $ 94,419 Value of distribution acquired 17 53,996 Value of agency relationships 14 16,981 Value of customer relationships 10 9,080 Total 23 174,476 Accumulated amortization: Value of business acquired (9,113) Value of distribution acquired (4,355) Value of agency relationships (3,417) Value of customer relationships (2,835) Total (19,720) Net intangible assets subject to amortization: $ 154,756 In regards to the definite-lived intangible assets in the table above, the value of business acquired intangible asset represents the present value of the expected underwriting profit within policies that were in force on the date of acquisition. The value of distribution acquired intangible asset represents the present value of future business to be written by the existing agency force. The value of agency relationships intangible asset represents the present value of the commission overrides retained by NTA. The value of customer relationships intangible asset represents the present value of the expected profits from existing BCG customers in force at the date of acquisition. All of the aforementioned definite-lived intangible assets were valued using the income approach. Estimated future amortization of the Company's definite-lived intangible assets were as follows: ($ in thousands) Year Ending December 31, 2020 (excluding the nine months ended September 30, 2020) $ 3,558 2021 13,411 2022 12,433 2023 11,577 2024 10,805 Thereafter 102,972 Total $ 154,756 The value of business acquired intangible asset is being amortized by product based on the present value of future premiums to be received. The value of distribution acquired intangible asset is being amortized on a straight-line basis. The value of agency relationships intangible asset is being amortized based on the present value of future premiums to be received. The value of customer relationships intangible asset is being amortized based on the present value of future profits to be received. Indefinite-lived intangible assets (not subject to amortization) as of September 30, 2020 were as follows: ($ in thousands) Trade names $ 8,645 State licenses 2,886 Total $ 11,531 The trade names intangible asset represents the present value of future savings accruing to NTA and BCG by virtue of not having to pay royalties for the use of the trade names, valued using the relief from royalty method. The state licenses intangible asset represents the regulatory licenses held by NTA that were valued using the cost approach. |
Unpaid Claims and Claim Expense
Unpaid Claims and Claim Expenses | 9 Months Ended |
Sep. 30, 2020 | |
Insurance Loss Reserves [Abstract] | |
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 a gross and net (after reinsurance) basis. 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 Nine Months Ended 2020 2019 2020 2019 Property and Casualty Beginning gross reserves (1) $ 388,491 $ 367,862 $ 386,976 $ 367,180 Less: reinsurance recoverables 116,083 77,345 120,506 89,725 Net reserves, beginning of period (2) 272,408 290,517 266,470 277,455 Incurred claims and claim expenses: Claims occurring in the current period 125,622 122,470 340,243 375,648 Decrease in estimated reserves for claims occurring in prior periods (3) (7,200) (3,500) (9,200) (7,500) Total claims and claim expenses incurred (4) 118,422 118,970 331,043 368,148 Claims and claim expense payments for claims occurring during: Current period 91,008 101,499 195,891 230,968 Prior periods 19,280 29,747 121,080 136,394 Total claims and claim expense payments 110,288 131,246 316,971 367,362 Net reserves, end of period (2) 280,542 278,241 280,542 278,241 Plus: reinsurance recoverables 114,773 76,526 114,773 76,526 Ending gross reserves (1) $ 395,315 $ 354,767 $ 395,315 $ 354,767 (1) Unpaid claims and claim expenses as reported in the Consolidated Balance Sheets also include reserves for Supplemental, Life and Retirement of $59.2 million and $57.5 million as of September 30, 2020 and 2019, 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 Supplemental, Life and Retirement of $33.0 million and $102.1 million for the three and nine months ended September 30, 2020, respectively, in addition to Property and Casualty amounts. Benefits, claims and settlement expenses for Supplemental, Life and Retirement were $35.2 million and $78.1 million for the three and nine months ended September 30, 2019, respectively. Net favorable development of total reserves for Property and Casualty claims occurring in prior years was $9.2 million and $7.5 million for the nine months ended September 30, 2020 and 2019, respectively. The favorable development for the nine months ended September 30, 2020 was the result of favorable loss trends in automobile and homeowners loss emergence of $4.0 million for accident years 2019 and prior and $5.2 million of subrogation received largely related to the 2018 Camp Fire in California. The favorable development for the nine months ended September 30, 2019 was the result of favorable loss trends in automobile and homeowners loss emergence for accident years 2018 and prior. |
Reinsurance
Reinsurance | 9 Months Ended |
Sep. 30, 2020 | |
Insurance [Abstract] | |
Reinsurance | The Company recognizes the cost of reinsurance premiums over the contract periods for such premiums in proportion to the insurance protection provided. Amounts recoverable from reinsurers for unpaid claims and claim settlement expenses, including estimated amounts for unsettled claims, claims incurred but not yet reported and policy benefits, are estimated in a manner consistent with the insurance liability associated with the policy. The effects of reinsurance on premiums written and contract deposits; premiums and contract charges earned; and benefits, claims and settlement expenses were as follows: ($ in thousands) Gross Ceded to Other Companies (1) Assumed Net Three months ended September 30, 2020 Premiums written and contract deposits (2) $ 368,577 $ 2,146 $ 2,422 $ 368,853 Premiums and contract charges earned 237,193 4,261 2,421 235,353 Benefits, claims and settlement expenses 59,401 (90,161) 1,863 151,425 Three months ended September 30, 2019 Premiums written and contract deposits (2) $ 374,598 $ 5,968 $ 2,586 $ 371,216 Premiums and contract charges earned 245,200 8,181 2,662 239,681 Benefits, claims and settlement expenses 154,718 2,310 1,783 154,191 Nine months ended September 30, 2020 Premiums written and contract deposits (2) $ 1,034,687 $ 14,835 $ 6,928 $ 1,026,780 Premiums and contract charges earned 710,998 20,945 6,996 697,049 Benefits, claims and settlement expenses 342,218 (85,770) 5,107 433,095 Nine months ended September 30, 2019 Premiums written and contract deposits (2) $ 988,588 $ 17,844 $ 7,557 $ 978,301 Premiums and contract charges earned 671,871 22,158 7,849 657,562 Benefits, claims and settlement expenses 450,206 9,399 5,460 446,267 (1) Excludes the annuity reinsurance transaction accounted for using the deposit method that is discussed in Note 5. (2) This measure is not based on accounting principles generally accepted in the United States of America (non-GAAP). An explanation of this non-GAAP measure is contained in the Glossary of Selected Terms included as an exhibit in the Company's reports filed with the SEC. |
Commitments
Commitments | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments | Investment Commitments From time to time, the Company has outstanding commitments to fund investments in limited partnership interests, commercial mortgage loans and bank loans. Such unfunded commitments were $484.9 million and $306.2 million at September 30, 2020 and December 31, 2019, respectively. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Segment Information | The Company conducts and manages its business through five segments. See Note 1 for a description of the Company's reporting segments that changed effective in the third quarter of 2019. The four operating segments, representing the major lines of insurance business, are: Property and Casualty (primarily personal lines automobile and property insurance products), the newly created Supplemental (primarily heart, cancer, accident and limited short-term supplemental disability insurance coverages), Retirement (primarily tax-qualified fixed and variable annuities) and Life (life insurance). The Company does not allocate the impact of corporate-level transactions to these operating segments, consistent with the basis for management's evaluation of the results of those segments, but classifies those items in the fifth segment, Corporate and Other. In addition to ongoing transactions such as corporate debt service, net investment gains (losses) and certain public company expenses, such items also have included corporate debt retirement costs, when applicable. Summarized financial information for these segments is as follows: ($ in thousands) Three Months Ended Nine Months Ended 2020 2019 2020 2019 Insurance premiums and contract charges earned Property and Casualty $ 166,070 $ 170,483 $ 488,756 $ 512,626 Supplemental (1) 32,480 32,921 98,772 32,921 Retirement 7,389 6,624 21,486 22,133 Life 29,414 29,653 88,035 89,882 Total $ 235,353 $ 239,681 $ 697,049 $ 657,562 Net investment income Property and Casualty $ 13,632 $ 10,726 $ 30,250 $ 33,587 Supplemental (1) 4,321 3,691 11,876 3,691 Retirement 58,115 60,770 166,684 188,193 Life 18,244 18,453 49,432 54,829 Corporate and Other (30) — (142) (37) Intersegment eliminations (564) (569) (1,697) (934) Total $ 93,718 $ 93,071 $ 256,403 $ 279,329 Net income (loss) Property and Casualty $ 15,810 $ 14,194 $ 53,669 $ 34,347 Supplemental (1) 10,546 6,943 30,562 6,943 Retirement 7,792 5,915 16,578 (6,979) Life 4,306 5,101 6,869 13,617 Corporate and Other (1,980) (6,699) (22,154) 103,514 Total $ 36,474 $ 25,454 $ 85,524 $ 151,442 ($ in thousands) September 30, 2020 December 31, 2019 Assets Property and Casualty $ 1,354,685 $ 1,327,099 Supplemental 828,760 747,602 Retirement 8,609,262 8,330,127 Life 2,108,067 1,964,993 Corporate and Other 167,697 172,955 Intersegment eliminations (65,083) (64,072) Total $ 13,003,388 $ 12,478,704 (1) Acquired on July 1, 2019. The nine month comparison is not meaningful. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
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 (losses) on fixed maturity securities and the after tax change in net funded status of benefit plans for the periods as shown in the Consolidated Statements of Changes in Shareholders’ Equity. The following table reconciles these components. ($ in thousands) Net Unrealized Investment Gains (Losses) on Securities (1)(2) Net Funded Status of Benefit Plans (1) Total (1) Beginning balance, July 1, 2020 $ 279,129 $ (10,767) $ 268,362 Other comprehensive income (loss) before reclassifications 54,312 — 54,312 Amounts reclassified from AOCI (5,244) — (5,244) Net current period other comprehensive income (loss) 49,068 — 49,068 Ending balance, September 30, 2020 $ 328,197 $ (10,767) $ 317,430 Beginning balance, January 1, 2020 $ 230,448 $ (10,767) $ 219,681 Other comprehensive income (loss) before reclassifications 97,311 — 97,311 Amounts reclassified from AOCI 438 — 438 Net current period other comprehensive income (loss) 97,749 — 97,749 Ending balance, September 30, 2020 $ 328,197 $ (10,767) $ 317,430 (1) All amounts are net of tax. (2) The pretax amounts reclassified from AOCI, $6.6 million and $(0.6) million, are included in Net investment gains (losses) and the related income tax expenses, $1.4 million and $(0.1) million, are included in income tax expense in the Consolidated Statements of Operations for the three and nine month periods ended September 30, 2020, respectively. ($ in thousands) Net Unrealized Investment Securities (1)(2) Net Funded Status of (1) Total (1) Beginning balance, July 1, 2019 $ 203,077 $ (12,185) $ 190,892 Other comprehensive income (loss) before reclassifications 64,577 — 64,577 Amounts reclassified from AOCI (1,273) — (1,273) Net current period other comprehensive income (loss) 63,304 — 63,304 Ending balance, September 30, 2019 $ 266,381 $ (12,185) $ 254,196 Beginning balance, January 1, 2019 $ 96,941 $ (12,185) $ 84,756 Other comprehensive income (loss) before reclassifications 292,043 — 292,043 Amounts reclassified from AOCI (122,603) — (122,603) Net current period other comprehensive income (loss) 169,440 — 169,440 Ending balance, September 30, 2019 $ 266,381 $ (12,185) $ 254,196 (1) All amounts are net of tax. (2) The pretax amounts reclassified from AOCI, $1.6 million and $155.2 million, are included in Net investment gains (losses) and the related income tax expenses, $0.3 million and $32.6 million, are included in Income tax expense in the Consolidated Statements of Operations for the three and nine month periods ended September 30, 2019, respectively. Comparative information for elements that are not required to be reclassified in their entirety to net income in the same reporting period is disclosed in Note 2. |
Supplemental Consolidated Cash
Supplemental Consolidated Cash and Cash Flow Information | 9 Months Ended |
Sep. 30, 2020 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Consolidated Cash and Cash Flow Information | ($ in thousands) September 30, December 31, 2020 2019 Cash $ 64,778 $ 25,206 Restricted cash 697 302 Total cash and restricted cash shown in the Consolidated Balance Sheets $ 65,475 $ 25,508 ($ in thousands) Nine Months Ended 2020 2019 Cash paid during the nine months for: Interest $ 9,258 $ 6,948 Income taxes 18,456 12,696 Non-cash investing activities include $2.1 billion of investments transferred to a reinsurer as consideration paid during the second quarter of 2019 in connection with the Company's reinsurance of a $2.9 billion block of in force fixed and variable annuity business. See Note 5 for further information. Non-cash investing activities in respect to modifications or exchanges of fixed maturity securities as well as paid-in-kind activity for policy loans were insignificant for the three and nine months ended September 30, 2020 and 2019, respectively. |
Basis of Presentation and Sig_2
Basis of Presentation and Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) and with the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and disclosures normally included in annual financial statements prepared in conformity with GAAP, but are not required for interim reporting purposes, have been omitted. These Consolidated Financial Statements and Notes should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in Part II - Item 8 of the Company's Annual Report on Form 10-K for the year ended December 31, 2019. The results of operations for the three and nine months ended September 30, 2020 are not necessarily indicative of the results to be expected for the full year. The accompanying Consolidated Financial Statements and Notes are unaudited. These financial statements reflect all adjustments (generally consisting only of normal recurring accruals) which are, in the opinion of management, necessary for the fair presentation of the consolidated financial position, results of operations and cash flows for the interim periods. The Company's significant accounting policies are summarized in Part II - Item 8, Note 1 of the Company's Annual Report on Form 10-K for the year ended December 31, 2019. Effective for the year ended December 31, 2019, the Company decided to change the approach it uses for presentation in its Consolidated Statements of Cash Flows from the direct method to the indirect method as management considers presentation under the indirect method as more comparable to the method used by others in the insurance industry. Accordingly, the Company has recast all prior periods presented in the Consolidated Statements of Cash Flows to conform to the current year’s presentation. The Company has reclassified the presentation of certain prior period information to conform to the current year's presentation. |
Consolidation | Consolidation All intercompany transactions and balances between HMEC and its subsidiaries and affiliates have been eliminated. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. |
Adoption of New Accounting Standards and Future Adoption of New Accounting Standards | Adoption of New Accounting Standards Measurement of Credit Losses on Financial Instruments In June 2016, the Financial Accounting Standards Board (FASB) issued guidance which revised the credit loss recognition criteria for certain financial assets measured at amortized cost, including reinsurance recoverables. The guidance replaced the previous incurred loss recognition model with an expected loss recognition model. The objective of the expected credit loss model is for a reporting entity to recognize its estimate of expected credit losses for affected financial assets in a valuation allowance that when deducted from the amortized cost basis of the related financial assets results in a net carrying value at the amount expected to be collected. A reporting entity must consider all relevant information available when estimating expected credit losses, including details about past events, current conditions, and reasonable and supportable forecasts over the life of an asset. Financial assets may be evaluated individually or on a pooled basis when they share similar risk characteristics. The measurement of credit losses for available for sale debt securities measured at fair value is not affected except that credit losses recognized are limited to the amount by which fair value is below amortized cost and the carrying value adjustment is recognized through a valuation allowance which may change over time but once recorded cannot subsequently be reduced to an amount below zero. The guidance is effective for reporting periods beginning after December 15, 2019, and for most affected instruments must be adopted using a modified retrospective approach, with a cumulative effect adjustment recorded to beginning retained earnings. The Company’s implementation activities are complete and the impacts relate to the Company’s commercial mortgage loan portfolio, agent advances, reinsurance recoverables and off-balance-sheet credit exposures for unfunded commercial mortgage loan commitments. The Company adopted the new guidance on January 1, 2020 and recognized a cumulative effect adjustment that decreased retained earnings by $0.5 million. Future Adoption of New Accounting Standards Accounting for Long-Duration Insurance Contracts In August 2018, the FASB issued accounting and disclosure guidance that contains targeted improvements to the accounting for long-duration insurance contracts. Under the new guidance, the cash flow assumptions used to measure the liability for future policy benefits for traditional insurance contracts will be required to be updated at least annually with changes recognized as a benefit expense (i.e., assumptions will no longer be locked-in). Insurance entities will be required to use a standard discount rate to measure the liabilities that will be equivalent to the yield from a high-quality bond. The new guidance also changes the amortization of deferred acquisition costs (DAC) to be on a constant-level basis over the expected term of the related contracts with no interest accruing on the DAC balance. The new guidance also introduces a new category of contract features associated with deposit type contracts referred to as market risk benefits (MRBs). Contract features meeting the definition of a MRB will be measured at fair value. New disclosures will be required for long-duration insurance contracts in order to provide better transparency into the exposure of insurance entities and the drivers of their results. For public business entities, the guidance is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those years. With regards to the liability for future policy benefits and DAC, the guidance applies to contracts in force as of the beginning of the earliest period presented and may be applied retrospectively. With regards to MRBs, the guidance is to be applied retrospectively at the beginning of the earliest period presented. Early adoption is permitted. Management is currently evaluating the impact this guidance will have on the results of operations and financial position of the Company. |
Credit Losses | The Company conducts a periodic review to identify and evaluate invested assets that may have credit impairments. Credit Impairments of Fixed Maturity Securities Some of the factors considered in assessing impairment of fixed maturity securities due to credit-related factors include: (1) the extent to which the fair value has been less than amortized cost; (2) the financial condition, near-term and long-term prospects for the issuer, including the relevant industry conditions and trends, and implications of rating agency actions and offering prices; (3) the likelihood of the recoverability of principal and interest; and (4) whether it is more likely than not that the Company will be required to sell the investment prior to an anticipated recovery in value. Beginning on January 1, 2020, credit losses are recognized through an allowance account. See Note 1 - Adoption of New Accounting Standards - Measurement of Credit Losses on Financial Instruments for additional information. For fixed maturity securities that the Company does not intend to sell or for which it is more likely than not that the Company would not be required to sell before an anticipated recovery in value, the Company separates the credit loss component of the impairment from the amount related to all other factors and reports the credit loss component in net investment gains (losses). The impairment related to all other factors (non-credit factors) is reported in other comprehensive income (OCI). The allowance is adjusted for any additional credit losses and subsequent recoveries. Upon recognizing a credit loss, the cost basis is not adjusted. For fixed maturity securities where the Company records a credit loss, a determination is made as to the cause of the impairment and whether the Company expects a recovery in value. For fixed maturity securities where the Company expects a recovery in value, the constant effective yield method is utilized, and the investment is amortized to par. For fixed maturity securities the Company intends to sell or for which it is more likely than not that the Company will be required to sell before an anticipated recovery in value, the full amount of the impairment is included in net investment gains (losses). The new cost basis of the investment is the previous amortized cost basis less the impairment recognized in net investment gains (losses). The new cost basis is not adjusted for any subsequent recoveries in fair value. The Company reports investment income accrued separately from fixed maturity securities, available for sale, and has elected not to measure an allowance for credit losses for investment income accrued. Investment income accrued is written off through net investment gains (losses) at the time the issuer of the fixed maturity security defaults or is expected to default on payments. Uncollectible available for sale fixed maturity securities are written off when the Company determines that no additional payments of principal or interest will be received. |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Components of net investment income | The components of net investment income for the following periods were as follows: ($ in thousands) Three Months Ended Nine Months Ended 2020 2019 2020 2019 Fixed maturity securities $ 56,420 $ 59,319 $ 174,727 $ 227,196 Equity securities 1,130 1,107 3,520 3,697 Limited partnership interests 11,046 6,859 4,862 22,759 Short-term and other investments 2,774 4,207 8,415 (13,856) Investment expenses (2,151) (2,179) (7,262) (7,420) Net investment income - investment portfolio 69,219 69,313 184,262 232,376 Investment income - deposit asset on reinsurance 24,499 23,758 72,141 46,953 Total net investment income $ 93,718 $ 93,071 $ 256,403 $ 279,329 |
Schedule of net investment gains (losses) | Net investment gains (losses) for the following periods were as follows: ($ in thousands) Three Months Ended Nine Months Ended 2020 2019 2020 2019 Fixed maturity securities $ 2,656 $ 206 $ 3,116 $ 141,955 Equity securities 3,982 1,478 (3,670) 13,311 Short-term investments and other (4,169) (3,840) (12,279) (3,672) Net investment gains (losses) $ 2,469 $ (2,156) $ (12,833) $ 151,594 The following table reconciles net investment gains (losses) pretax by transaction type: ($ in thousands) Three Months Ended Nine Months Ended 2020 2019 2020 2019 Credit impairment write-downs $ — $ — $ — $ — Change in intent write-downs (1,057) (5) (5,272) (276) Net other-than-temporary impairment losses on securities recognized in net income (1,057) (5) (5,272) (276) Sales and other, net 3,736 608 8,645 147,513 Change in fair value - equity securities 2,242 1,081 (5,644) 8,029 Change in fair value and gains (losses) realized on settlements - derivatives (2,452) (3,840) (10,562) (3,672) Net investment gains (losses) $ 2,469 $ (2,156) $ (12,833) $ 151,594 |
Unrealized gains and losses on fixed maturities and equity securities | Amortized cost, net unrealized investment gains (losses) and fair values of all fixed maturity securities in the portfolio were as follows: ($ in thousands) Amortized Unrealized Unrealized Fair September 30, 2020 Fixed maturity securities U.S. Government and federally sponsored agency obligations: (1) Mortgage-backed securities $ 617,856 $ 85,219 $ 213 $ 702,862 Other, including U.S. Treasury securities 341,771 42,683 317 384,137 Municipal bonds 1,621,308 196,317 1,124 1,816,501 Foreign government bonds 40,143 4,644 — 44,787 Corporate bonds 1,802,423 189,986 8,926 1,983,483 Other asset-backed securities 1,248,814 22,353 34,379 1,236,788 Totals $ 5,672,315 $ 541,202 $ 44,959 $ 6,168,558 December 31, 2019 Fixed maturity securities U.S. Government and federally sponsored agency obligations: (1) Mortgage-backed securities $ 684,543 $ 41,263 $ 1,487 $ 724,319 Other, including U.S. Treasury securities 436,665 22,824 621 458,868 Municipal bonds 1,545,787 141,996 1,580 1,686,203 Foreign government bonds 42,801 2,569 — 45,370 Corporate bonds 1,464,444 118,775 1,795 1,581,424 Other asset-backed securities 1,282,740 20,883 8,131 1,295,492 Totals $ 5,456,980 $ 348,310 $ 13,614 $ 5,791,676 (1) Fair value includes securities issued by Federal National Mortgage Association (FNMA) of $390.7 million and $405.1 million; Federal Home Loan Mortgage Corporation (FHLMC) of $322.4 million and $283.1 million; and Government National Mortgage Association (GNMA) of $137.4 million and $147.4 million as of September 30, 2020 and December 31, 2019, respectively. |
Summary of fair value and gross unrealized losses of fixed maturity securities and equity securities in an unrealized loss position | The following table presents the fair value and gross unrealized losses for fixed maturity securities in an unrealized loss position at September 30, 2020 and December 31, 2019, respectively. The Company views the decrease in fair value of all of the fixed maturity securities with unrealized losses at September 30, 2020 — which was driven largely by increasing interest rates, spread widening, financial market illiquidity and/or market volatility from the date of acquisition — as temporary. As of September 30, 2020, the Company has not made the decision to sell and it is not more likely than not the Company will be required to sell the fixed maturity securities with unrealized losses before an anticipated recovery in value. Therefore, it was determined that the unrealized losses on the fixed maturity securities presented in the table below were not other-than-temporarily impaired as of September 30, 2020. ($ in thousands) 12 Months or Less More than 12 Months Total Fair Value Gross Fair Value Gross Fair Value Gross September 30, 2020 Fixed maturity securities U.S. Government and federally Mortgage-backed securities $ 8,519 $ 134 $ 1,246 $ 79 $ 9,765 $ 213 Other 31,797 317 — — 31,797 317 Municipal bonds 47,067 1,124 — — 47,067 1,124 Foreign government bonds — — — — — — Corporate bonds 203,521 8,444 9,873 482 213,394 8,926 Other asset-backed securities 397,424 24,376 413,159 10,003 810,583 34,379 Total $ 688,328 $ 34,395 $ 424,278 $ 10,564 $ 1,112,606 $ 44,959 Number of positions with a gross unrealized loss 475 124 599 Fair value as a percentage of total fixed maturity securities at fair value 11.2 % 6.9 % 18.1 % December 31, 2019 Fixed maturity securities U.S. Government and federally sponsored agency obligations: Mortgage-backed securities $ 72,422 $ 1,282 $ 2,620 $ 205 $ 75,042 $ 1,487 Other 38,341 619 1,527 2 39,868 621 Municipal bonds 91,195 977 9,160 603 100,355 1,580 Foreign government bonds — — — — — — Corporate bonds 58,198 886 16,622 909 74,820 1,795 Other asset-backed securities 218,710 1,970 442,791 6,161 661,501 8,131 Total $ 478,866 $ 5,734 $ 472,720 $ 7,880 $ 951,586 $ 13,614 Number of positions with a gross unrealized loss 330 137 467 Fair value as a percentage of total fixed maturity securities at fair value 8.3 % 8.2 % 16.5 % |
Summary of cumulative credit losses | The following table summarizes the cumulative amounts related to the Company's credit loss component of other-than-temporary impairment (OTTI) losses on fixed maturity securities held as of September 30, 2020 and 2019 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 an anticipated recovery in value, for which the non-credit portions of OTTI losses were recognized in OCI: ($ in thousands) Nine Months Ended 2020 2019 Cumulative credit loss (1) Beginning of period $ 1,529 $ 1,529 New credit losses 184 — Increases to previously recognized credit losses — — Losses related to securities sold or paid down during the period (103) — End of period $ 1,610 $ 1,529 (1) The cumulative credit loss amounts exclude OTTI losses on fixed maturity 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 an anticipated recovery in value. |
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, 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 September 30, 2020 September 30, 2020 December 31, 2019 Fair Amortized Estimated expected maturity: Due in 1 year or less 4.2 % 3.6 % $ 261,323 $ 258,244 Due after 1 year through 5 years 28.1 % 27.4 % 1,734,450 1,676,356 Due after 5 years through 10 years 28.9 % 29.6 % 1,782,261 1,628,583 Due after 10 years through 20 years 24.3 % 26.1 % 1,496,331 1,309,759 Due after 20 years 14.5 % 13.3 % 894,193 799,373 Total 100.0 % 100.0 % $ 6,168,558 $ 5,672,315 Average option-adjusted duration, in years 6.3 6.0 |
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 as follows: ($ in thousands) Three Months Ended Nine Months Ended 2020 2019 2020 2019 (1) Fixed maturity securities Proceeds received $ 58,604 $ 149,319 $ 352,766 $ 651,058 Gross gains realized 3,744 1,258 14,029 149,574 Gross losses realized (31) (1,047) (5,924) (7,128) Equity securities Proceeds received $ 309 $ 1,367 $ 12,368 $ 18,489 Gross gains realized 79 428 2,119 5,562 Gross losses realized (38) (32) (1,843) (542) (1) Gross gains realized presented above include a $135.3 million realized investment gain associated with a transfer of investments to a reinsurer as consideration paid during the second quarter of 2019 in connection with the reinsurance of a $2.9 billion block of in force fixed and variable annuity business. See Note 5 for further information. |
Reconciliation of net unrealized investment gains (losses) on fixed maturity securities and equity securities | The following table reconciles net unrealized investment gains (losses) on fixed maturity securities, net of tax, included in accumulated other comprehensive income (AOCI), before the impact of DAC: ($ in thousands) Three Months Ended Nine Months Ended 2020 2019 2020 2019 Net unrealized investment gains (losses) Beginning of period $ 329,887 $ 231,087 $ 264,410 $ 111,712 Change in net unrealized investment gains 56,901 75,283 128,060 315,988 Reclassification of net investment (gains) losses 5,244 (1,330) (438) (122,660) End of period $ 392,032 $ 305,040 $ 392,032 $ 305,040 |
Offsetting assets and liability | The following table presents instruments that were subject to a master netting arrangement for the Company. ($ in thousands) Gross Net Amounts Gross Amounts Not Offset Gross Financial Cash Net September 30, 2020 Asset derivatives: Free-standing derivatives $ 10,793 $ — $ 10,793 $ 7,952 $ 1,960 $ 881 December 31, 2019 Asset derivatives: Free-standing derivatives 13,239 — 13,239 7,687 6,640 (1,088) |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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. During the nine months ended September 30, 2020 and 2019, there were no transfers between Level 1 and Level 2. At September 30, 2020, Level 3 invested assets comprised 5.0% 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 September 30, 2020 Financial Assets Investments Fixed maturity securities U.S. Government and federally Mortgage-backed securities $ 702,862 $ 702,862 $ — $ 690,663 $ 12,199 Other, including U.S. Treasury securities 384,137 384,137 18,446 365,691 — Municipal bonds 1,816,501 1,816,501 — 1,750,830 65,671 Foreign government bonds 44,787 44,787 — 44,787 — Corporate bonds 1,983,483 1,983,483 14,076 1,848,222 121,185 Other asset-backed securities 1,236,788 1,236,788 — 1,108,189 128,599 Total fixed maturity securities 6,168,558 6,168,558 32,522 5,808,382 327,654 Equity securities 102,303 102,303 36,274 65,941 88 Short-term investments 254,309 254,309 250,206 4,103 — Other investments 30,245 30,245 — 30,245 — Totals $ 6,555,415 $ 6,555,415 $ 319,002 $ 5,908,671 $ 327,742 Separate Account (variable annuity) assets (1) $ 2,488,528 $ 2,488,528 $ 2,488,528 $ — $ — Financial Liabilities Investment contract and policy reserves, embedded derivatives $ 1,703 $ 1,703 $ — $ 1,703 $ — Other policyholder funds, embedded derivatives $ 98,070 $ 98,070 $ — $ — $ 98,070 December 31, 2019 Financial Assets Investments Fixed maturity securities U.S. Government and federally Mortgage-backed securities $ 724,319 $ 724,319 $ — $ 711,004 $ 13,315 Other, including U.S. Treasury securities 458,868 458,868 17,699 441,169 — Municipal bonds 1,686,203 1,686,203 — 1,641,912 44,291 Foreign government bonds 45,370 45,370 — 45,370 — Corporate bonds 1,581,424 1,581,424 14,470 1,463,002 103,952 Other asset-backed securities 1,295,492 1,295,492 — 1,161,979 133,513 Total fixed maturity securities 5,791,676 5,791,676 32,169 5,464,436 295,071 Equity securities 101,864 101,864 49,834 51,923 107 Short-term investments 172,667 172,667 172,667 — — Other investments 25,997 25,997 — 25,997 — Totals $ 6,092,204 $ 6,092,204 $ 254,670 $ 5,542,356 $ 295,178 Separate Account (variable annuity) assets (1) $ 2,490,469 $ 2,490,469 $ 2,490,469 $ — $ — Financial Liabilities Investment contract and policy reserves, embedded derivatives $ 1,314 $ 1,314 $ — $ 1,314 $ — Other policyholder funds, embedded derivatives $ 93,733 $ 93,733 $ — $ — $ 93,733 (1) Separate Account (variable annuity) liabilities are equal to the estimated fair value of the Separate Account (variable annuity) assets. |
Table for reconciliations for all Level 3 assets measured at fair value on a recurring basis | The reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) was as follows: ($ in thousands) Financial Assets Financial Liabilities (1) Municipal Corporate Other Mortgage- Backed Securities (2) Total Equity Total Beginning balance, July 1, 2020 $ 73,171 $ 126,292 $ 200,146 $ 399,609 $ 115 $ 399,724 $ 93,619 Transfers into Level 3 (3) 6,209 6,798 8,663 21,670 — 21,670 — Transfers out of Level 3 (3) (16,708) (12,511) (70,950) (100,169) — (100,169) — Total gains or losses Net investment gains (losses) included in net income related to financial assets — — (238) (238) (27) (265) — Net investment (gains) losses included in net income related to financial liabilities — — — — — — 4,406 Net unrealized investment gains (losses) included in OCI 3,150 551 6,321 10,022 — 10,022 — Purchases — — — — — — — Issuances — — — — — — 1,951 Sales — — — — — — — Settlements — — — — — — — Paydowns, maturities and distributions (151) 55 (3,144) (3,240) — (3,240) (1,906) Ending balance, September 30, 2020 $ 65,671 $ 121,185 $ 140,798 $ 327,654 $ 88 $ 327,742 $ 98,070 Beginning balance, January 1, 2020 $ 44,291 $ 103,952 $ 146,828 $ 295,071 $ 107 $ 295,178 $ 93,733 Transfers into Level 3 (3) 80,686 39,601 95,377 215,664 — 215,664 — Transfers out of Level 3 (3) (62,625) (26,699) (77,335) (166,659) — (166,659) — Total gains or losses Net investment gains (losses) included in net income related to financial assets — — (238) (238) (19) (257) — Net investment (gains) losses included in net income related to financial liabilities — — — — — — 5,330 Net unrealized investment gains (losses) included in OCI 3,962 378 (14,780) (10,440) — (10,440) — Purchases — 6,875 1,890 8,765 — 8,765 — Issuances — — — — — — 5,818 Sales — — — — — — — Settlements — — — — — — — Paydowns, maturities and distributions (643) (2,922) (10,944) (14,509) — (14,509) (6,811) Ending balance, September 30, 2020 $ 65,671 $ 121,185 $ 140,798 $ 327,654 $ 88 $ 327,742 $ 98,070 (1) Represents embedded derivatives, all related to the Company's fixed indexed annuity products, reported in Other policyholder funds in the Company's Consolidated Balance Sheets. (2) Includes U.S. Government and federally sponsored agency obligations for mortgage-backed securities and other mortgage-backed securities. (3) Transfers into and out of Level 3 during the three and nine months ended September 30, 2020 were attributable to changes in the availability of observable market information for individual fixed maturity securities. The Company's policy is to recognize transfers into and out of the levels as having occurred at the end of the reporting period in which the transfers were determined. ($ in thousands) Financial Assets Financial (1) Municipal Corporate Other Mortgage- (2) Total Equity Total Beginning balance, July 1, 2019 $ 46,984 $ 79,222 $ 128,438 $ 254,644 $ 69 $ 254,713 $ 85,961 Transfers into Level 3 (3) — 18,916 21,004 39,920 1 39,921 — Transfers out of Level 3 (3) — (2,822) (449) (3,271) — (3,271) — Total gains or losses Net investment gains (losses) included in net income related to financial assets — — — — 46 46 — Net investment (gains) losses included in net income related to financial liabilities — — — — — — 3,661 Net unrealized investment gains (losses) included in OCI 842 1,744 397 2,983 — 2,983 — Purchases — — — — — — — Issuances — — — — — — 2,033 Sales — — — — — — — Settlements — — — — — — — Paydowns, maturities and distributions (121) (387) (2,685) (3,193) — (3,193) (2,557) Ending balance, September 30, 2019 $ 47,705 $ 96,673 $ 146,705 $ 291,083 $ 116 $ 291,199 $ 89,098 Beginning balance, January 1, 2019 $ 47,531 $ 80,742 $ 120,211 $ 248,484 $ 5 $ 248,489 $ 78,700 Transfers into Level 3 (3) — 24,798 42,938 67,736 65 67,801 — Transfers out of Level 3 (3) — (7,698) (449) (8,147) — (8,147) — Total gains or losses Net investment gains (losses) included in net income related to financial assets — — — — 46 46 — Net investment (gains) losses included in net income related to financial liabilities — — — — — — 8,366 Net unrealized investment gains (losses) included in OCI 649 6,254 3,052 9,955 — 9,955 — Purchases — 1,566 — 1,566 — 1,566 — Issuances — — — — — — 7,482 Sales — — (607) (607) — (607) — Settlements — — — — — — — Paydowns, maturities and distributions (475) (8,989) (18,440) (27,904) — (27,904) (5,450) Ending balance, September 30, 2019 $ 47,705 $ 96,673 $ 146,705 $ 291,083 $ 116 $ 291,199 $ 89,098 (1) Represents embedded derivatives, all related to the Company's fixed indexed annuity products, reported in Other policyholder funds in the Company's Consolidated Balance Sheets. (2) Includes U.S. Government and federally sponsored agency obligations for mortgage-backed securities and other mortgage-backed securities. (3) Transfers into and out of Level 3 during the three and nine months ended September 30, 2019 were attributable to changes in the availability of observable market information for individual fixed maturity securities. The Company's policy is to recognize transfers into and out of the levels as having occurred at the end of the reporting period in which the transfers were determined. |
Quantitative Information about Level 3 Fair Value Measurements | The following table provides quantitative information about the significant unobservable inputs for recurring fair value measurements categorized within Level 3. ($ in thousands) Financial Fair Value at Valuation Technique(s) Unobservable Inputs Range (Weighted Average) and Single Point Best Estimate (1) Municipal bonds $ 65,671 discounted cash flow I spread (2) 578 bps Corporate bonds 121,185 discounted cash flow N spread (3) 320 - 818 bps market comparable option adjusted spread 12.54% Other asset-backed securities 128,599 vendor price haircut 3.00% - 5.00% discounted cash flow constant prepayment rate 20.00% discounted cash flow T spread (4) 235 - 800 bps discounted cash flow PDI interest margin (5) 7.13% discounted cash flow SBL interest margin (6) 4.50% Government mortgage-backed securities 12,199 vendor price haircut 3.00% - 5.00% Equity securities 88 Black Scholes equity value low - $43.27; high - $44.53 ($ in thousands) Financial Fair Value at Valuation Technique(s) Unobservable Inputs Range (Weighted Average) and Single Point Best Estimate (1) Derivatives $ 98,070 discounted cash flow lapse rate 5.25% mortality multiplier (7) 61.00% option budget 1.00% - 2.50% non-performance adjustment (8) 5.00% (1) When a range of unobservable inputs is not readily available, the Company uses a single point best estimate. (2) "I spread" is the interpolated weighted average life point on the "on the run" (OTR) point of the curve. (3) "N spread" is the interpolated weighted average life point on the swap curve. (4) "T spread" is a specific point on the OTR curve. (5) "PDI" stands for private debt investment. (6) "SBL" stands for broadly syndicated loans. (7) Mortality multiplier is applied to the Annuity 2000 table. (8) Determined as a percentage of a risk-free rate. |
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. These financial assets and financial liabilities are further described in Part II - Item 8, Note 4 in the Company's Annual Report on Form 10-K for the year ended December 31, 2019. 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 September 30, 2020 Financial Assets Investments Other investments $ 168,500 $ 172,303 $ — $ — $ 172,303 Deposit asset on reinsurance 2,402,539 2,925,672 — — 2,925,672 Financial Liabilities Investment contract and policy reserves, fixed annuity contracts 4,812,911 4,720,941 — — 4,720,941 Investment contract and policy reserves, account values on life contracts 97,522 102,290 — — 102,290 Other policyholder funds 646,424 646,424 — 590,687 55,737 Short-term debt 135,000 135,000 — — 135,000 Long-term debt 302,247 331,829 — 331,829 — December 31, 2019 Financial Assets Investments Other investments $ 163,312 $ 167,185 $ — $ — $ 167,185 Deposit asset on reinsurance 2,346,166 2,634,012 — — 2,634,012 Financial Liabilities Investment contract and policy reserves, fixed annuity contracts 4,675,774 4,609,880 — — 4,609,880 Investment contract and policy reserves, account values on life contracts 93,465 98,332 — — 98,332 Other policyholder funds 553,550 553,550 — 495,812 57,738 Short-term debt 135,000 135,000 — — 135,000 Long-term debt 298,025 322,678 — 322,678 — |
Derivatives (Tables)
Derivatives (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of derivative instruments embedded in FIA and IUL | The fair values of derivatives, including derivatives embedded in FIA and IUL contracts, are presented in the Consolidated Balance Sheets as follows: ($ in thousands) September 30, 2020 December 31, 2019 Assets Derivatives, included in Short-term and other investments $ 10,793 $ 13,239 Liabilities FIA - embedded derivatives, included in Other policyholder funds 98,070 93,733 IUL - embedded derivatives, included in 1,703 1,314 |
Schedule of fair value of derivatives | The changes in fair value of derivatives for FIA and IUL included in the Consolidated Statements of Operations were as follows: ($ in thousands) Three Months Ended Nine Months Ended 2020 2019 2020 2019 Change in fair value of derivatives: (1) Net investment gains (losses) $ 2,666 $ (149) $ (5,124) $ 5,280 Change in fair value of embedded derivatives: Net investment gains (losses) (5,118) (3,691) (5,438) (8,952) (1) Includes gains or losses recognized at the expiration of the option term or early termination and the changes in fair value for open options. |
Schedule of counterparty's long-term credit ratings | The notional amount and fair value of call options by counterparty and each counterparty's long-term credit ratings were as follows: ($ in thousands) September 30, 2020 December 31, 2019 Credit Rating Notional Fair Notional Fair Counterparty S&P Moody's Amount Value Amount Value Bank of America, N.A. A+ Aa2 $ 198,100 $ 9,135 $ 174,900 $ 8,523 Barclays Bank PLC A A1 98,900 1,658 115,300 3,347 Citigroup Inc. BBB+ A3 — — — — Credit Suisse International A+ A1 — — — — Societe Generale A A1 — — 27,800 1,369 Total $ 297,000 $ 10,793 $ 318,000 $ 13,239 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets, net (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill | The carrying amount of goodwill by reporting unit as of September 30, 2020 was as follows: ($ in thousands) September 30, 2020 Property and Casualty $ 9,460 Supplemental 19,621 Retirement 10,087 Life 9,911 Total $ 49,079 |
Summary of finite-lived intangible assets | As of September 30, 2020 the outstanding amounts of definite-lived intangible assets subject to amortization were as follows: ($ in thousands) Weighted Average Useful Life (in Years) At inception: Value of business acquired 30 $ 94,419 Value of distribution acquired 17 53,996 Value of agency relationships 14 16,981 Value of customer relationships 10 9,080 Total 23 174,476 Accumulated amortization: Value of business acquired (9,113) Value of distribution acquired (4,355) Value of agency relationships (3,417) Value of customer relationships (2,835) Total (19,720) Net intangible assets subject to amortization: $ 154,756 |
Future amortization expense | Estimated future amortization of the Company's definite-lived intangible assets were as follows: ($ in thousands) Year Ending December 31, 2020 (excluding the nine months ended September 30, 2020) $ 3,558 2021 13,411 2022 12,433 2023 11,577 2024 10,805 Thereafter 102,972 Total $ 154,756 |
Summary of indefinite-lived intangible assets | Indefinite-lived intangible assets (not subject to amortization) as of September 30, 2020 were as follows: ($ in thousands) Trade names $ 8,645 State licenses 2,886 Total $ 11,531 |
Unpaid Claims and Claim Expen_2
Unpaid Claims and Claim Expenses (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Insurance Loss Reserves [Abstract] | |
Reconciliation of property and casualty unpaid claims and claim expense | 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 a gross and net (after reinsurance) basis. 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 Nine Months Ended 2020 2019 2020 2019 Property and Casualty Beginning gross reserves (1) $ 388,491 $ 367,862 $ 386,976 $ 367,180 Less: reinsurance recoverables 116,083 77,345 120,506 89,725 Net reserves, beginning of period (2) 272,408 290,517 266,470 277,455 Incurred claims and claim expenses: Claims occurring in the current period 125,622 122,470 340,243 375,648 Decrease in estimated reserves for claims occurring in prior periods (3) (7,200) (3,500) (9,200) (7,500) Total claims and claim expenses incurred (4) 118,422 118,970 331,043 368,148 Claims and claim expense payments for claims occurring during: Current period 91,008 101,499 195,891 230,968 Prior periods 19,280 29,747 121,080 136,394 Total claims and claim expense payments 110,288 131,246 316,971 367,362 Net reserves, end of period (2) 280,542 278,241 280,542 278,241 Plus: reinsurance recoverables 114,773 76,526 114,773 76,526 Ending gross reserves (1) $ 395,315 $ 354,767 $ 395,315 $ 354,767 (1) Unpaid claims and claim expenses as reported in the Consolidated Balance Sheets also include reserves for Supplemental, Life and Retirement of $59.2 million and $57.5 million as of September 30, 2020 and 2019, 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 Supplemental, Life and Retirement of $33.0 million and $102.1 million for the three and nine months ended September 30, 2020, respectively, in addition to Property and Casualty amounts. Benefits, claims and settlement expenses for Supplemental, Life and Retirement were $35.2 million and $78.1 million for the three and nine months ended September 30, 2019, respectively. |
Reinsurance (Tables)
Reinsurance (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Insurance [Abstract] | |
Effects of reinsurance on premiums and benefits | The effects of reinsurance on premiums written and contract deposits; premiums and contract charges earned; and benefits, claims and settlement expenses were as follows: ($ in thousands) Gross Ceded to Other Companies (1) Assumed Net Three months ended September 30, 2020 Premiums written and contract deposits (2) $ 368,577 $ 2,146 $ 2,422 $ 368,853 Premiums and contract charges earned 237,193 4,261 2,421 235,353 Benefits, claims and settlement expenses 59,401 (90,161) 1,863 151,425 Three months ended September 30, 2019 Premiums written and contract deposits (2) $ 374,598 $ 5,968 $ 2,586 $ 371,216 Premiums and contract charges earned 245,200 8,181 2,662 239,681 Benefits, claims and settlement expenses 154,718 2,310 1,783 154,191 Nine months ended September 30, 2020 Premiums written and contract deposits (2) $ 1,034,687 $ 14,835 $ 6,928 $ 1,026,780 Premiums and contract charges earned 710,998 20,945 6,996 697,049 Benefits, claims and settlement expenses 342,218 (85,770) 5,107 433,095 Nine months ended September 30, 2019 Premiums written and contract deposits (2) $ 988,588 $ 17,844 $ 7,557 $ 978,301 Premiums and contract charges earned 671,871 22,158 7,849 657,562 Benefits, claims and settlement expenses 450,206 9,399 5,460 446,267 (1) Excludes the annuity reinsurance transaction accounted for using the deposit method that is discussed in Note 5. (2) This measure is not based on accounting principles generally accepted in the United States of America (non-GAAP). An explanation of this non-GAAP measure is contained in the Glossary of Selected Terms included as an exhibit in the Company's reports filed with the SEC. |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Summarized financial information for these segments | Summarized financial information for these segments is as follows: ($ in thousands) Three Months Ended Nine Months Ended 2020 2019 2020 2019 Insurance premiums and contract charges earned Property and Casualty $ 166,070 $ 170,483 $ 488,756 $ 512,626 Supplemental (1) 32,480 32,921 98,772 32,921 Retirement 7,389 6,624 21,486 22,133 Life 29,414 29,653 88,035 89,882 Total $ 235,353 $ 239,681 $ 697,049 $ 657,562 Net investment income Property and Casualty $ 13,632 $ 10,726 $ 30,250 $ 33,587 Supplemental (1) 4,321 3,691 11,876 3,691 Retirement 58,115 60,770 166,684 188,193 Life 18,244 18,453 49,432 54,829 Corporate and Other (30) — (142) (37) Intersegment eliminations (564) (569) (1,697) (934) Total $ 93,718 $ 93,071 $ 256,403 $ 279,329 Net income (loss) Property and Casualty $ 15,810 $ 14,194 $ 53,669 $ 34,347 Supplemental (1) 10,546 6,943 30,562 6,943 Retirement 7,792 5,915 16,578 (6,979) Life 4,306 5,101 6,869 13,617 Corporate and Other (1,980) (6,699) (22,154) 103,514 Total $ 36,474 $ 25,454 $ 85,524 $ 151,442 ($ in thousands) September 30, 2020 December 31, 2019 Assets Property and Casualty $ 1,354,685 $ 1,327,099 Supplemental 828,760 747,602 Retirement 8,609,262 8,330,127 Life 2,108,067 1,964,993 Corporate and Other 167,697 172,955 Intersegment eliminations (65,083) (64,072) Total $ 13,003,388 $ 12,478,704 (1) Acquired on July 1, 2019. The nine month comparison is not meaningful. |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Schedule of accumulated other comprehensive income (loss) | The following table reconciles these components. ($ in thousands) Net Unrealized Investment Gains (Losses) on Securities (1)(2) Net Funded Status of Benefit Plans (1) Total (1) Beginning balance, July 1, 2020 $ 279,129 $ (10,767) $ 268,362 Other comprehensive income (loss) before reclassifications 54,312 — 54,312 Amounts reclassified from AOCI (5,244) — (5,244) Net current period other comprehensive income (loss) 49,068 — 49,068 Ending balance, September 30, 2020 $ 328,197 $ (10,767) $ 317,430 Beginning balance, January 1, 2020 $ 230,448 $ (10,767) $ 219,681 Other comprehensive income (loss) before reclassifications 97,311 — 97,311 Amounts reclassified from AOCI 438 — 438 Net current period other comprehensive income (loss) 97,749 — 97,749 Ending balance, September 30, 2020 $ 328,197 $ (10,767) $ 317,430 (1) All amounts are net of tax. (2) The pretax amounts reclassified from AOCI, $6.6 million and $(0.6) million, are included in Net investment gains (losses) and the related income tax expenses, $1.4 million and $(0.1) million, are included in income tax expense in the Consolidated Statements of Operations for the three and nine month periods ended September 30, 2020, respectively. ($ in thousands) Net Unrealized Investment Securities (1)(2) Net Funded Status of (1) Total (1) Beginning balance, July 1, 2019 $ 203,077 $ (12,185) $ 190,892 Other comprehensive income (loss) before reclassifications 64,577 — 64,577 Amounts reclassified from AOCI (1,273) — (1,273) Net current period other comprehensive income (loss) 63,304 — 63,304 Ending balance, September 30, 2019 $ 266,381 $ (12,185) $ 254,196 Beginning balance, January 1, 2019 $ 96,941 $ (12,185) $ 84,756 Other comprehensive income (loss) before reclassifications 292,043 — 292,043 Amounts reclassified from AOCI (122,603) — (122,603) Net current period other comprehensive income (loss) 169,440 — 169,440 Ending balance, September 30, 2019 $ 266,381 $ (12,185) $ 254,196 (1) All amounts are net of tax. (2) The pretax amounts reclassified from AOCI, $1.6 million and $155.2 million, are included in Net investment gains (losses) and the related income tax expenses, $0.3 million and $32.6 million, are included in Income tax expense in the Consolidated Statements of Operations for the three and nine month periods ended September 30, 2019, respectively. |
Supplemental Consolidated Cas_2
Supplemental Consolidated Cash and Cash Flow Information (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Supplemental Cash Flow Elements [Abstract] | |
Summary of cash and restricted cash | ($ in thousands) September 30, December 31, 2020 2019 Cash $ 64,778 $ 25,206 Restricted cash 697 302 Total cash and restricted cash shown in the Consolidated Balance Sheets $ 65,475 $ 25,508 ($ in thousands) Nine Months Ended 2020 2019 Cash paid during the nine months for: Interest $ 9,258 $ 6,948 Income taxes 18,456 12,696 |
Basis of Presentation and Sig_3
Basis of Presentation and Significant Accounting Policies (Details) $ in Millions | Jan. 01, 2020USD ($) |
Cumulative Effect, Period of Adoption, Adjustment | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |
Cumulative effect adjustment to reduce retained earnings | $ 0.5 |
Investments - Net Investment In
Investments - Net Investment Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Net Investment Income [Line Items] | ||||
Investment expenses | $ (2,151) | $ (2,179) | $ (7,262) | $ (7,420) |
Total net investment income | 93,718 | 93,071 | 256,403 | 279,329 |
Investment Portfolio | ||||
Net Investment Income [Line Items] | ||||
Total net investment income | 69,219 | 69,313 | 184,262 | 232,376 |
Deposit asset on reinsurance | ||||
Net Investment Income [Line Items] | ||||
Total net investment income | 24,499 | 23,758 | 72,141 | 46,953 |
Fixed maturity securities | ||||
Net Investment Income [Line Items] | ||||
Net investment income - investment portfolio | 56,420 | 59,319 | 174,727 | 227,196 |
Equity securities | ||||
Net Investment Income [Line Items] | ||||
Net investment income - investment portfolio | 1,130 | 1,107 | 3,520 | 3,697 |
Limited partnership interests | ||||
Net Investment Income [Line Items] | ||||
Net investment income - investment portfolio | 11,046 | 6,859 | 4,862 | 22,759 |
Short-term and other investments | ||||
Net Investment Income [Line Items] | ||||
Net investment income - investment portfolio | $ 2,774 | $ 4,207 | $ 8,415 | $ (13,856) |
Investments - Realized Investme
Investments - Realized Investment Gains (Losses) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Gain (Loss) on Securities [Line Items] | ||||
Net investment gains (losses) | $ 2,469 | $ (2,156) | $ (12,833) | $ 151,594 |
Fixed maturity securities | ||||
Gain (Loss) on Securities [Line Items] | ||||
Net investment gains (losses) | 2,656 | 206 | 3,116 | 141,955 |
Equity securities | ||||
Gain (Loss) on Securities [Line Items] | ||||
Net investment gains (losses) | 3,982 | 1,478 | (3,670) | 13,311 |
Short-term investments and other | ||||
Gain (Loss) on Securities [Line Items] | ||||
Net investment gains (losses) | $ (4,169) | $ (3,840) | $ (12,279) | $ (3,672) |
Investments - Net Investment Ga
Investments - Net Investment Gains (Losses) By Transaction Type (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Investments, Debt and Equity Securities [Abstract] | ||||
Credit impairment write-downs | $ 0 | $ 0 | $ 0 | $ 0 |
Change in intent write-downs | (1,057) | (5) | (5,272) | (276) |
Net other-than-temporary impairment losses on securities recognized in net income | (1,057) | (5) | (5,272) | (276) |
Sales and other, net | 3,736 | 608 | 8,645 | 147,513 |
Change in fair value - equity securities | 2,242 | 1,081 | (5,644) | 8,029 |
Change in fair value and gains (losses) realized on settlements - derivatives | (2,452) | (3,840) | (10,562) | (3,672) |
Net investment gains (losses) | $ 2,469 | $ (2,156) | $ (12,833) | $ 151,594 |
Investments - Summary of Fair V
Investments - Summary of Fair Value and Amortized Costs (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Unrealized gains and losses on fixed maturities and equity securities | ||
Amortized Cost | $ 5,672,315 | $ 5,456,980 |
Fair Value | 6,168,558 | 5,791,676 |
FNMA | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Fair Value | 390,700 | 405,100 |
FHLMC | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Fair Value | 322,400 | 283,100 |
GNMA | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Fair Value | 137,400 | 147,400 |
Total Fixed Maturity Securities | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Amortized Cost | 5,672,315 | 5,456,980 |
Unrealized Gains | 541,202 | 348,310 |
Unrealized Losses | 44,959 | 13,614 |
Fair Value | 6,168,558 | 5,791,676 |
Mortgage-backed securities | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Amortized Cost | 617,856 | 684,543 |
Unrealized Gains | 85,219 | 41,263 |
Unrealized Losses | 213 | 1,487 |
Fair Value | 702,862 | 724,319 |
Other, including U.S. Treasury securities | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Amortized Cost | 341,771 | 436,665 |
Unrealized Gains | 42,683 | 22,824 |
Unrealized Losses | 317 | 621 |
Fair Value | 384,137 | 458,868 |
Municipal bonds | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Amortized Cost | 1,621,308 | 1,545,787 |
Unrealized Gains | 196,317 | 141,996 |
Unrealized Losses | 1,124 | 1,580 |
Fair Value | 1,816,501 | 1,686,203 |
Foreign government bonds | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Amortized Cost | 40,143 | 42,801 |
Unrealized Gains | 4,644 | 2,569 |
Unrealized Losses | 0 | 0 |
Fair Value | 44,787 | 45,370 |
Corporate bonds | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Amortized Cost | 1,802,423 | 1,464,444 |
Unrealized Gains | 189,986 | 118,775 |
Unrealized Losses | 8,926 | 1,795 |
Fair Value | 1,983,483 | 1,581,424 |
Other asset-backed securities | ||
Unrealized gains and losses on fixed maturities and equity securities | ||
Amortized Cost | 1,248,814 | 1,282,740 |
Unrealized Gains | 22,353 | 20,883 |
Unrealized Losses | 34,379 | 8,131 |
Fair Value | $ 1,236,788 | $ 1,295,492 |
Investments - Fair Value and Gr
Investments - Fair Value and Gross Unrealized Losses (Details) $ in Thousands | Sep. 30, 2020USD ($)security | Dec. 31, 2019USD ($)security |
Fixed maturity securities, Fair Value | ||
Number of positions with a gross unrealized loss, 12 Months or Less | security | 475 | 330 |
Number of position with a gross unrealized loss, more than 12 months | security | 124 | 137 |
Number of position with a gross unrealized loss, Total | security | 599 | 467 |
Fair value as a percentage of total fixed maturities and equity securities fair value, 12 Months or Less | 11.20% | 8.30% |
Fair value as a percentage of total fixed maturities and equity securities fair value, more than 12 months | 6.90% | 8.20% |
Fair value as a percentage of total fixed maturities and equity securities fair value, Total | 18.10% | 16.50% |
Mortgage-backed securities | ||
Fixed maturity securities, Fair Value | ||
Fixed maturity securities, Fair Value, 12 Months or Less | $ 8,519 | $ 72,422 |
Fixed maturity securities, Fair Value, More than 12 Months | 1,246 | 2,620 |
Fixed maturity securities, Fair Value, Total | 9,765 | 75,042 |
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 134 | 1,282 |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 79 | 205 |
Fixed maturity securities, Gross Unrealized Losses, Total | 213 | 1,487 |
Other | ||
Fixed maturity securities, Fair Value | ||
Fixed maturity securities, Fair Value, 12 Months or Less | 31,797 | 38,341 |
Fixed maturity securities, Fair Value, More than 12 Months | 0 | 1,527 |
Fixed maturity securities, Fair Value, Total | 31,797 | 39,868 |
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 317 | 619 |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 0 | 2 |
Fixed maturity securities, Gross Unrealized Losses, Total | 317 | 621 |
Municipal bonds | ||
Fixed maturity securities, Fair Value | ||
Fixed maturity securities, Fair Value, 12 Months or Less | 47,067 | 91,195 |
Fixed maturity securities, Fair Value, More than 12 Months | 0 | 9,160 |
Fixed maturity securities, Fair Value, Total | 47,067 | 100,355 |
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 1,124 | 977 |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 0 | 603 |
Fixed maturity securities, Gross Unrealized Losses, Total | 1,124 | 1,580 |
Foreign government bonds | ||
Fixed maturity securities, Fair Value | ||
Fixed maturity securities, Fair Value, 12 Months or Less | 0 | 0 |
Fixed maturity securities, Fair Value, More than 12 Months | 0 | 0 |
Fixed maturity securities, Fair Value, Total | 0 | 0 |
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 0 | 0 |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 0 | 0 |
Fixed maturity securities, Gross Unrealized Losses, Total | 0 | 0 |
Corporate bonds | ||
Fixed maturity securities, Fair Value | ||
Fixed maturity securities, Fair Value, 12 Months or Less | 203,521 | 58,198 |
Fixed maturity securities, Fair Value, More than 12 Months | 9,873 | 16,622 |
Fixed maturity securities, Fair Value, Total | 213,394 | 74,820 |
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 8,444 | 886 |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 482 | 909 |
Fixed maturity securities, Gross Unrealized Losses, Total | 8,926 | 1,795 |
Other asset-backed securities | ||
Fixed maturity securities, Fair Value | ||
Fixed maturity securities, Fair Value, 12 Months or Less | 397,424 | 218,710 |
Fixed maturity securities, Fair Value, More than 12 Months | 413,159 | 442,791 |
Fixed maturity securities, Fair Value, Total | 810,583 | 661,501 |
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 24,376 | 1,970 |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 10,003 | 6,161 |
Fixed maturity securities, Gross Unrealized Losses, Total | 34,379 | 8,131 |
Total Fixed Maturity Securities | ||
Fixed maturity securities, Fair Value | ||
Fixed maturity securities, Fair Value, 12 Months or Less | 688,328 | 478,866 |
Fixed maturity securities, Fair Value, More than 12 Months | 424,278 | 472,720 |
Fixed maturity securities, Fair Value, Total | 1,112,606 | 951,586 |
Fixed maturity securities, Gross Unrealized Losses, 12 Months or Less | 34,395 | 5,734 |
Fixed maturity securities, Gross Unrealized Losses, More than 12 Months | 10,564 | 7,880 |
Fixed maturity securities, Gross Unrealized Losses, Total | $ 44,959 | $ 13,614 |
Investments - Rollforward of OT
Investments - Rollforward of OTTI Losses (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cumulative credit loss | ||
Beginning of period | $ 1,529 | $ 1,529 |
New credit losses | 184 | 0 |
Increases to previously recognized credit losses | 0 | 0 |
Losses related to securities sold or paid down during the period | (103) | 0 |
End of period | $ 1,610 | $ 1,529 |
Investments - Distribution of F
Investments - Distribution of Fixed Maturity Securities by Expected Maturity (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Percent of Total Fair Value | ||
Due in 1 year or less | 4.20% | 3.60% |
Due after 1 year through 5 years | 28.10% | 27.40% |
Due after 5 years through 10 years | 28.90% | 29.60% |
Due after 10 years through 20 years | 24.30% | 26.10% |
Due after 20 years | 14.50% | 13.30% |
Total | 100.00% | 100.00% |
Fair Value | ||
Due in 1 year or less | $ 261,323 | |
Due after 1 year through 5 years | 1,734,450 | |
Due after 5 years through 10 years | 1,782,261 | |
Due after 10 years through 20 years | 1,496,331 | |
Due after 20 years | 894,193 | |
Total | 6,168,558 | $ 5,791,676 |
Amortized Cost | ||
Due in 1 year or less | 258,244 | |
Due after 1 year through 5 years | 1,676,356 | |
Due after 5 years through 10 years | 1,628,583 | |
Due after 10 years through 20 years | 1,309,759 | |
Due after 20 years | 799,373 | |
Amortized Cost | $ 5,672,315 | $ 5,456,980 |
Average option-adjusted duration, in years | 6 years 3 months 18 days | 6 years |
Investments - Summary of Procee
Investments - Summary of Proceeds and Gains (Losses) Realized on Securities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Fixed maturity securities | ||||
Proceeds received | $ 58,604 | $ 149,319 | $ 352,766 | $ 651,058 |
Gross gains realized | 3,744 | 1,258 | 14,029 | 149,574 |
Gross losses realized | (31) | (1,047) | (5,924) | (7,128) |
Equity Securities, FV-NI, Realized Gain (Loss) [Abstract] | ||||
Proceeds received | 309 | 1,367 | 12,368 | 18,489 |
Gross gains realized | 79 | 428 | 2,119 | 5,562 |
Gross losses realized | $ (38) | (32) | (1,843) | (542) |
Investment gain realized on transfer | $ 135,300 | |||
Reinsurance block of in-force fixed and variable annuity business | $ 2,900,000 | $ 2,900,000 |
Investments - Reconciliation of
Investments - Reconciliation of Net Unrealized Investment Gains (Losses) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | $ 1,567,285 | |||
Ending balance | $ 1,715,678 | $ 1,578,612 | 1,715,678 | $ 1,578,612 |
Net unrealized investment gains (losses) on securities | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | 279,129 | 203,077 | 230,448 | 96,941 |
Ending balance | 328,197 | 266,381 | 328,197 | 266,381 |
Net unrealized investment gains (losses) on securities | Fixed maturity securities | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | 329,887 | 231,087 | 264,410 | 111,712 |
Change in net unrealized investment gains (losses) on fixed maturity securities | 56,901 | 75,283 | 128,060 | 315,988 |
Reclassification of net investment (gains) losses on securities to net income | 5,244 | (1,330) | (438) | (122,660) |
Ending balance | $ 392,032 | $ 305,040 | $ 392,032 | $ 305,040 |
Investments - Offsetting of Ass
Investments - Offsetting of Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Asset derivatives: | ||
Net Amounts of Assets/ Liabilities Presented in the Consolidated Balance Sheets | $ 10,793 | $ 13,239 |
Free-standing derivatives | ||
Asset derivatives: | ||
Gross Amounts | 10,793 | 13,239 |
Gross Amounts Offset in the Consolidated Balance Sheets | 0 | 0 |
Net Amounts of Assets/ Liabilities Presented in the Consolidated Balance Sheets | 10,793 | 13,239 |
Gross Amounts Not Offset in the Consolidated Balance Sheets, Financial Instruments | 7,952 | 7,687 |
Gross Amounts Not Offset in the Consolidated Balance Sheets, Cash Collateral Received | 1,960 | 6,640 |
Net Amount | $ 881 | $ (1,088) |
Investments - Narrative (Detail
Investments - Narrative (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Investment Holdings [Line Items] | ||
Investment grade rating | 80.80% | |
Limited partnership interests | $ 418,187 | $ 383,717 |
Debt securities, available-for-sale | 6,168,558 | 5,791,676 |
FHLB funding agreements | 644,500 | 545,000 |
FHLB of Chicago | ||
Investment Holdings [Line Items] | ||
Debt securities, available-for-sale | 697,100 | 594,200 |
Governmental Agencies as Required by Law in Various States | ||
Investment Holdings [Line Items] | ||
Debt securities, available-for-sale | $ 26,900 | $ 26,000 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Percentage of level 3 invested assets in total investment portfolio | 5.00% | 5.00% | ||
Net investment gains (losses) included in net income related to financial assets | $ 265,000 | $ (46,000) | $ 257,000 | $ (46,000) |
Level 3 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Net investment gains (losses) included in net income related to financial assets | 300,000 | 0 | ||
Net realized investment losses | $ 4,400,000 | $ 3,700,000 | $ 5,300,000 | $ 8,400,000 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Financial Instruments Measured and Carried at Fair Value (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Jun. 30, 2020 | Dec. 31, 2019 |
Financial Assets | |||
Debt securities, available-for-sale | $ 6,168,558 | $ 5,791,676 | |
Equity securities | 102,303 | 101,864 | |
Mortgage-backed securities | |||
Financial Assets | |||
Debt securities, available-for-sale | 702,862 | 724,319 | |
Other, including U.S. Treasury securities | |||
Financial Assets | |||
Debt securities, available-for-sale | 384,137 | 458,868 | |
Municipal bonds | |||
Financial Assets | |||
Debt securities, available-for-sale | 1,816,501 | 1,686,203 | |
Foreign government bonds | |||
Financial Assets | |||
Debt securities, available-for-sale | 44,787 | 45,370 | |
Corporate bonds | |||
Financial Assets | |||
Debt securities, available-for-sale | 1,983,483 | 1,581,424 | |
Other asset-backed securities | |||
Financial Assets | |||
Debt securities, available-for-sale | 1,236,788 | 1,295,492 | |
Level 3 | |||
Financial Assets | |||
Equity securities | $ 88 | ||
Level 3 | Mortgage-backed securities | |||
Financial Assets | |||
Debt securities, available-for-sale | 12,199 | ||
Level 3 | Municipal bonds | |||
Financial Assets | |||
Debt securities, available-for-sale | 65,671 | ||
Level 3 | Corporate bonds | |||
Financial Assets | |||
Debt securities, available-for-sale | 121,185 | ||
Level 3 | Other asset-backed securities | |||
Financial Assets | |||
Debt securities, available-for-sale | $ 128,599 | ||
Carrying Amount | |||
Financial Assets | |||
Equity securities | 102,303 | 101,864 | |
Short-term investments | 254,309 | 172,667 | |
Other investments | 30,245 | 25,997 | |
Totals | 6,555,415 | 6,092,204 | |
Separate Account (variable annuity) assets | 2,488,528 | 2,490,469 | |
Financial Liabilities | |||
Investment contract and policy reserves, embedded derivatives | 1,703 | 1,314 | |
Other policyholder funds, embedded derivatives | 98,070 | 93,733 | |
Carrying Amount | Recurring | |||
Financial Assets | |||
Debt securities, available-for-sale | 6,168,558 | 5,791,676 | |
Carrying Amount | Mortgage-backed securities | |||
Financial Assets | |||
Debt securities, available-for-sale | 702,862 | 724,319 | |
Carrying Amount | Other, including U.S. Treasury securities | |||
Financial Assets | |||
Debt securities, available-for-sale | 384,137 | 458,868 | |
Carrying Amount | Municipal bonds | |||
Financial Assets | |||
Debt securities, available-for-sale | 1,816,501 | 1,686,203 | |
Carrying Amount | Foreign government bonds | |||
Financial Assets | |||
Debt securities, available-for-sale | 44,787 | 45,370 | |
Carrying Amount | Corporate bonds | |||
Financial Assets | |||
Debt securities, available-for-sale | 1,983,483 | 1,581,424 | |
Carrying Amount | Other asset-backed securities | |||
Financial Assets | |||
Debt securities, available-for-sale | 1,236,788 | 1,295,492 | |
Fair Value | |||
Financial Assets | |||
Equity securities | 102,303 | 101,864 | |
Short-term investments | 254,309 | 172,667 | |
Other investments | 30,245 | 25,997 | |
Totals | 6,555,415 | 6,092,204 | |
Separate Account (variable annuity) assets | 2,488,528 | 2,490,469 | |
Financial Liabilities | |||
Investment contract and policy reserves, embedded derivatives | 1,703 | 1,314 | |
Other policyholder funds, embedded derivatives | 98,070 | 93,733 | |
Fair Value | Recurring | |||
Financial Assets | |||
Debt securities, available-for-sale | 6,168,558 | 5,791,676 | |
Fair Value | Mortgage-backed securities | |||
Financial Assets | |||
Debt securities, available-for-sale | 702,862 | 724,319 | |
Fair Value | Other, including U.S. Treasury securities | |||
Financial Assets | |||
Debt securities, available-for-sale | 384,137 | 458,868 | |
Fair Value | Municipal bonds | |||
Financial Assets | |||
Debt securities, available-for-sale | 1,816,501 | 1,686,203 | |
Fair Value | Foreign government bonds | |||
Financial Assets | |||
Debt securities, available-for-sale | 44,787 | 45,370 | |
Fair Value | Corporate bonds | |||
Financial Assets | |||
Debt securities, available-for-sale | 1,983,483 | 1,581,424 | |
Fair Value | Other asset-backed securities | |||
Financial Assets | |||
Debt securities, available-for-sale | 1,236,788 | 1,295,492 | |
Fair Value | Level 1 | |||
Financial Assets | |||
Equity securities | 36,274 | 49,834 | |
Short-term investments | 250,206 | 172,667 | |
Other investments | 0 | 0 | |
Totals | 319,002 | 254,670 | |
Separate Account (variable annuity) assets | 2,488,528 | 2,490,469 | |
Financial Liabilities | |||
Investment contract and policy reserves, embedded derivatives | 0 | 0 | |
Other policyholder funds, embedded derivatives | 0 | 0 | |
Fair Value | Level 1 | Recurring | |||
Financial Assets | |||
Debt securities, available-for-sale | 32,522 | 32,169 | |
Fair Value | Level 1 | Mortgage-backed securities | |||
Financial Assets | |||
Debt securities, available-for-sale | 0 | 0 | |
Fair Value | Level 1 | Other, including U.S. Treasury securities | |||
Financial Assets | |||
Debt securities, available-for-sale | 18,446 | 17,699 | |
Fair Value | Level 1 | Municipal bonds | |||
Financial Assets | |||
Debt securities, available-for-sale | 0 | 0 | |
Fair Value | Level 1 | Foreign government bonds | |||
Financial Assets | |||
Debt securities, available-for-sale | 0 | 0 | |
Fair Value | Level 1 | Corporate bonds | |||
Financial Assets | |||
Debt securities, available-for-sale | 14,076 | 14,470 | |
Fair Value | Level 1 | Other asset-backed securities | |||
Financial Assets | |||
Debt securities, available-for-sale | 0 | 0 | |
Fair Value | Level 2 | |||
Financial Assets | |||
Equity securities | 65,941 | 51,923 | |
Short-term investments | 4,103 | 0 | |
Other investments | 30,245 | 25,997 | |
Totals | 5,908,671 | 5,542,356 | |
Separate Account (variable annuity) assets | 0 | 0 | |
Financial Liabilities | |||
Investment contract and policy reserves, embedded derivatives | 1,703 | 1,314 | |
Other policyholder funds, embedded derivatives | 0 | 0 | |
Fair Value | Level 2 | Recurring | |||
Financial Assets | |||
Debt securities, available-for-sale | 5,808,382 | 5,464,436 | |
Fair Value | Level 2 | Mortgage-backed securities | |||
Financial Assets | |||
Debt securities, available-for-sale | 690,663 | 711,004 | |
Fair Value | Level 2 | Other, including U.S. Treasury securities | |||
Financial Assets | |||
Debt securities, available-for-sale | 365,691 | 441,169 | |
Fair Value | Level 2 | Municipal bonds | |||
Financial Assets | |||
Debt securities, available-for-sale | 1,750,830 | 1,641,912 | |
Fair Value | Level 2 | Foreign government bonds | |||
Financial Assets | |||
Debt securities, available-for-sale | 44,787 | 45,370 | |
Fair Value | Level 2 | Corporate bonds | |||
Financial Assets | |||
Debt securities, available-for-sale | 1,848,222 | 1,463,002 | |
Fair Value | Level 2 | Other asset-backed securities | |||
Financial Assets | |||
Debt securities, available-for-sale | 1,108,189 | 1,161,979 | |
Fair Value | Level 3 | |||
Financial Assets | |||
Equity securities | 88 | 107 | |
Short-term investments | 0 | 0 | |
Other investments | 0 | 0 | |
Totals | 327,742 | 295,178 | |
Separate Account (variable annuity) assets | 0 | 0 | |
Financial Liabilities | |||
Investment contract and policy reserves, embedded derivatives | 0 | 0 | |
Other policyholder funds, embedded derivatives | 98,070 | 93,733 | |
Fair Value | Level 3 | Recurring | |||
Financial Assets | |||
Debt securities, available-for-sale | 327,654 | 295,071 | |
Fair Value | Level 3 | Mortgage-backed securities | |||
Financial Assets | |||
Debt securities, available-for-sale | 12,199 | 13,315 | |
Fair Value | Level 3 | Other, including U.S. Treasury securities | |||
Financial Assets | |||
Debt securities, available-for-sale | 0 | 0 | |
Fair Value | Level 3 | Municipal bonds | |||
Financial Assets | |||
Debt securities, available-for-sale | 65,671 | 44,291 | |
Fair Value | Level 3 | Foreign government bonds | |||
Financial Assets | |||
Debt securities, available-for-sale | 0 | 0 | |
Fair Value | Level 3 | Corporate bonds | |||
Financial Assets | |||
Debt securities, available-for-sale | 121,185 | 103,952 | |
Fair Value | Level 3 | Other asset-backed securities | |||
Financial Assets | |||
Debt securities, available-for-sale | $ 128,599 | $ 133,513 |
Fair Value of Financial Instr_5
Fair Value of Financial Instruments - Rollforward of Instruments Measured on Recurring Basis (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Financial Assets | ||||
Beginning balance | $ 399,724 | $ 254,713 | $ 295,178 | $ 248,489 |
Transfers into Level 3 | 21,670 | 39,921 | 215,664 | 67,801 |
Transfers out of Level 3 | (100,169) | (3,271) | (166,659) | (8,147) |
Total gains or losses | ||||
Net investment gains (losses) included in net income related to financial assets | (265) | 46 | (257) | 46 |
Net unrealized investment gains (losses) included in OCI | 10,022 | 2,983 | (10,440) | 9,955 |
Purchases | 0 | 0 | 8,765 | 1,566 |
Issuances | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | (607) |
Settlements | 0 | 0 | 0 | 0 |
Paydowns, maturities and distributions | (3,240) | (3,193) | (14,509) | (27,904) |
Ending balance | 327,742 | 291,199 | 327,742 | 291,199 |
Financial Liabilities | ||||
Beginning balance | 93,619 | 85,961 | 93,733 | 78,700 |
Transfers into Level 3 | 0 | 0 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 | 0 | 0 |
Total gains or losses | ||||
Net investment (gains) losses included in net income related to financial liabilities | 4,406 | 3,661 | 5,330 | 8,366 |
Net unrealized investment gains (losses) included in OCI | 0 | 0 | 0 | 0 |
Purchases | 0 | 0 | 0 | 0 |
Issuances | 1,951 | 2,033 | 5,818 | 7,482 |
Sales | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Paydowns, maturities and distributions | (1,906) | (2,557) | (6,811) | (5,450) |
Ending balance | 98,070 | 89,098 | 98,070 | 89,098 |
Municipal bonds | ||||
Financial Assets | ||||
Beginning balance | 73,171 | 46,984 | 44,291 | 47,531 |
Transfers into Level 3 | 6,209 | 0 | 80,686 | 0 |
Transfers out of Level 3 | (16,708) | 0 | (62,625) | 0 |
Total gains or losses | ||||
Net investment gains (losses) included in net income related to financial assets | 0 | 0 | 0 | 0 |
Net unrealized investment gains (losses) included in OCI | 3,150 | 842 | 3,962 | 649 |
Purchases | 0 | 0 | 0 | 0 |
Issuances | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Paydowns, maturities and distributions | (151) | (121) | (643) | (475) |
Ending balance | 65,671 | 47,705 | 65,671 | 47,705 |
Corporate bonds | ||||
Financial Assets | ||||
Beginning balance | 126,292 | 79,222 | 103,952 | 80,742 |
Transfers into Level 3 | 6,798 | 18,916 | 39,601 | 24,798 |
Transfers out of Level 3 | (12,511) | (2,822) | (26,699) | (7,698) |
Total gains or losses | ||||
Net investment gains (losses) included in net income related to financial assets | 0 | 0 | 0 | 0 |
Net unrealized investment gains (losses) included in OCI | 551 | 1,744 | 378 | 6,254 |
Purchases | 0 | 0 | 6,875 | 1,566 |
Issuances | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Paydowns, maturities and distributions | 55 | (387) | (2,922) | (8,989) |
Ending balance | 121,185 | 96,673 | 121,185 | 96,673 |
Mortgage-Backed Securities | ||||
Financial Assets | ||||
Beginning balance | 200,146 | 128,438 | 146,828 | 120,211 |
Transfers into Level 3 | 8,663 | 21,004 | 95,377 | 42,938 |
Transfers out of Level 3 | (70,950) | (449) | (77,335) | (449) |
Total gains or losses | ||||
Net investment gains (losses) included in net income related to financial assets | (238) | 0 | (238) | 0 |
Net unrealized investment gains (losses) included in OCI | 6,321 | 397 | (14,780) | 3,052 |
Purchases | 0 | 0 | 1,890 | 0 |
Issuances | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | (607) |
Settlements | 0 | 0 | 0 | 0 |
Paydowns, maturities and distributions | (3,144) | (2,685) | (10,944) | (18,440) |
Ending balance | 140,798 | 146,705 | 140,798 | 146,705 |
Total Fixed Maturity Securities | ||||
Financial Assets | ||||
Beginning balance | 399,609 | 254,644 | 295,071 | 248,484 |
Transfers into Level 3 | 21,670 | 39,920 | 215,664 | 67,736 |
Transfers out of Level 3 | (100,169) | (3,271) | (166,659) | (8,147) |
Total gains or losses | ||||
Net investment gains (losses) included in net income related to financial assets | (238) | 0 | (238) | 0 |
Net unrealized investment gains (losses) included in OCI | 10,022 | 2,983 | (10,440) | 9,955 |
Purchases | 0 | 0 | 8,765 | 1,566 |
Issuances | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | (607) |
Settlements | 0 | 0 | 0 | 0 |
Paydowns, maturities and distributions | (3,240) | (3,193) | (14,509) | (27,904) |
Ending balance | 327,654 | 291,083 | 327,654 | 291,083 |
Equity securities | ||||
Financial Assets | ||||
Beginning balance | 115 | 69 | 107 | 5 |
Transfers into Level 3 | 0 | 1 | 0 | 65 |
Transfers out of Level 3 | 0 | 0 | 0 | 0 |
Total gains or losses | ||||
Net investment gains (losses) included in net income related to financial assets | (27) | 46 | (19) | 46 |
Net unrealized investment gains (losses) included in OCI | 0 | 0 | 0 | 0 |
Purchases | 0 | 0 | 0 | 0 |
Issuances | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Paydowns, maturities and distributions | 0 | 0 | 0 | 0 |
Ending balance | $ 88 | $ 116 | $ 88 | $ 116 |
Fair Value of Financial Instr_6
Fair Value of Financial Instruments - Quantitative Information about Level 3 Fair Value Measurements (Details) $ in Thousands | Sep. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Dec. 31, 2019USD ($) |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Debt securities, available-for-sale | $ 6,168,558 | $ 5,791,676 | |
Equity securities at fair value | 102,303 | 101,864 | |
Municipal bonds | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Debt securities, available-for-sale | 1,816,501 | 1,686,203 | |
Corporate bonds | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Debt securities, available-for-sale | 1,983,483 | 1,581,424 | |
Other asset-backed securities | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Debt securities, available-for-sale | 1,236,788 | 1,295,492 | |
Government mortgage-backed securities | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Debt securities, available-for-sale | $ 702,862 | $ 724,319 | |
Level 3 | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Equity securities at fair value | $ 88 | ||
Derivatives embedded in fixed indexed annuity products | $ 98,070 | ||
Level 3 | discounted cash flow | lapse rate | Weighted Average | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Derivatives embedded in fixed indexed annuity products, measurement input | 0.0525 | ||
Level 3 | discounted cash flow | mortality multiplier | Weighted Average | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Derivatives embedded in fixed indexed annuity products, measurement input | 0.6100 | ||
Level 3 | discounted cash flow | option budget | Minimum | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Derivatives embedded in fixed indexed annuity products, measurement input | 0.0100 | ||
Level 3 | discounted cash flow | option budget | Maximum | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Derivatives embedded in fixed indexed annuity products, measurement input | 0.0250 | ||
Level 3 | discounted cash flow | Non-Performance Adjustment | Weighted Average | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Derivatives embedded in fixed indexed annuity products, measurement input | 0.0500 | ||
Level 3 | Black Scholes | equity value | Minimum | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Equity securities, measurement input | 43.27 | ||
Level 3 | Black Scholes | equity value | Maximum | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Equity securities, measurement input | 44.53 | ||
Level 3 | Municipal bonds | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Debt securities, available-for-sale | $ 65,671 | ||
Level 3 | Municipal bonds | discounted cash flow | I Spread | Weighted Average | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Debt securities, measurement input | 0.0578 | ||
Level 3 | Corporate bonds | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Debt securities, available-for-sale | 121,185 | ||
Level 3 | Corporate bonds | discounted cash flow | N Spread | Minimum | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Debt securities, measurement input | 0.0320 | ||
Level 3 | Corporate bonds | discounted cash flow | N Spread | Maximum | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Debt securities, measurement input | 0.0818 | ||
Level 3 | Corporate bonds | market comparable | option adjusted spread | Weighted Average | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Debt securities, measurement input | 0.1254 | ||
Level 3 | Other asset-backed securities | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Debt securities, available-for-sale | $ 128,599 | ||
Level 3 | Other asset-backed securities | discounted cash flow | T spread | Minimum | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Debt securities, measurement input | 0.0235 | ||
Level 3 | Other asset-backed securities | discounted cash flow | T spread | Maximum | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Debt securities, measurement input | 0.0800 | ||
Level 3 | Other asset-backed securities | discounted cash flow | constant prepayment rate | Weighted Average | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Debt securities, measurement input | 0.2000 | ||
Level 3 | Other asset-backed securities | discounted cash flow | PDI Interest Margin | Weighted Average | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Debt securities, measurement input | 0.0713 | ||
Level 3 | Other asset-backed securities | discounted cash flow | SBL Interest Margin | Weighted Average | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Debt securities, measurement input | 0.0450 | ||
Level 3 | Other asset-backed securities | vendor price | haircut | Minimum | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Debt securities, measurement input | 0.0300 | ||
Level 3 | Other asset-backed securities | vendor price | haircut | Maximum | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Debt securities, measurement input | 0.0500 | ||
Level 3 | Government mortgage-backed securities | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Debt securities, available-for-sale | $ 12,199 | ||
Level 3 | Government mortgage-backed securities | vendor price | haircut | Minimum | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Debt securities, measurement input | 0.0300 | ||
Level 3 | Government mortgage-backed securities | vendor price | haircut | Maximum | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Debt securities, measurement input | 0.0500 |
Fair Value of Financial Instr_7
Fair Value of Financial Instruments - Financial Instrument Not Carried at Fair Value (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Level 1 | ||
Investments | ||
Other investments | $ 0 | $ 0 |
Deposit asset on reinsurance | 0 | 0 |
Financial Liabilities | ||
Investment contract and policy reserves, fixed annuity contracts | 0 | 0 |
Investment contract and policy reserves, account values on life contracts | 0 | 0 |
Other policyholder funds | 0 | 0 |
Short-term debt | 0 | 0 |
Long-term debt | 0 | 0 |
Level 2 | ||
Investments | ||
Other investments | 0 | 0 |
Deposit asset on reinsurance | 0 | 0 |
Financial Liabilities | ||
Investment contract and policy reserves, fixed annuity contracts | 0 | 0 |
Investment contract and policy reserves, account values on life contracts | 0 | 0 |
Other policyholder funds | 590,687 | 495,812 |
Short-term debt | 0 | 0 |
Long-term debt | 331,829 | 322,678 |
Level 3 | ||
Investments | ||
Other investments | 172,303 | 167,185 |
Deposit asset on reinsurance | 2,925,672 | 2,634,012 |
Financial Liabilities | ||
Investment contract and policy reserves, fixed annuity contracts | 4,720,941 | 4,609,880 |
Investment contract and policy reserves, account values on life contracts | 102,290 | 98,332 |
Other policyholder funds | 55,737 | 57,738 |
Short-term debt | 135,000 | 135,000 |
Long-term debt | 0 | 0 |
Carrying Amount | ||
Investments | ||
Other investments | 168,500 | 163,312 |
Deposit asset on reinsurance | 2,402,539 | 2,346,166 |
Financial Liabilities | ||
Investment contract and policy reserves, fixed annuity contracts | 4,812,911 | 4,675,774 |
Investment contract and policy reserves, account values on life contracts | 97,522 | 93,465 |
Other policyholder funds | 646,424 | 553,550 |
Short-term debt | 135,000 | 135,000 |
Long-term debt | 302,247 | 298,025 |
Fair Value | ||
Investments | ||
Other investments | 172,303 | 167,185 |
Deposit asset on reinsurance | 2,925,672 | 2,634,012 |
Financial Liabilities | ||
Investment contract and policy reserves, fixed annuity contracts | 4,720,941 | 4,609,880 |
Investment contract and policy reserves, account values on life contracts | 102,290 | 98,332 |
Other policyholder funds | 646,424 | 553,550 |
Short-term debt | 135,000 | 135,000 |
Long-term debt | $ 331,829 | $ 322,678 |
Derivatives - Narrative (Detail
Derivatives - Narrative (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Derivatives, Fair Value [Line Items] | ||
Expected contract term | 10 years | |
Maximum exposure | $ 0.3 | |
Call options | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, Term of Contract | 1 year | |
Other Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of collateral | $ 9.9 | $ 14.3 |
Derivatives - Fair Value of Der
Derivatives - Fair Value of Derivatives in Consolidated Balance Sheets (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Assets | ||
Derivatives, included in Short-term and other investments | $ 10,793 | $ 13,239 |
Short-term and other investments | ||
Assets | ||
Derivatives, included in Short-term and other investments | 10,793 | 13,239 |
Other policyholder funds | ||
Liabilities | ||
FIA - embedded derivatives, included in Other policyholder funds | 98,070 | 93,733 |
Investment contract and life policy reserves | ||
Liabilities | ||
IUL - embedded derivatives, included in Investment contract and policy reserves | $ 1,703 | $ 1,314 |
Derivatives - Fair Value of D_2
Derivatives - Fair Value of Derivatives Included in Consolidated Statements of Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Change in fair value of derivatives: | ||||
Net investment gains (losses) | $ 2,666 | $ (149) | $ (5,124) | $ 5,280 |
Change in fair value of embedded derivatives: | ||||
Net investment gains (losses) | $ (5,118) | $ (3,691) | $ (5,438) | $ (8,952) |
Derivatives - Notional and Fair
Derivatives - Notional and Fair Value Amounts of Derivative Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Derivative [Line Items] | ||
Notional Amount | $ 297,000 | $ 318,000 |
Fair Value | 10,793 | 13,239 |
Bank of America, N.A. | ||
Derivative [Line Items] | ||
Notional Amount | 198,100 | 174,900 |
Fair Value | 9,135 | 8,523 |
Barclays Bank PLC | ||
Derivative [Line Items] | ||
Notional Amount | 98,900 | 115,300 |
Fair Value | 1,658 | 3,347 |
Citigroup Inc. | ||
Derivative [Line Items] | ||
Notional Amount | 0 | 0 |
Fair Value | 0 | 0 |
Credit Suisse International | ||
Derivative [Line Items] | ||
Notional Amount | 0 | 0 |
Fair Value | 0 | 0 |
Societe Generale | ||
Derivative [Line Items] | ||
Notional Amount | 0 | 27,800 |
Fair Value | $ 0 | $ 1,369 |
Deposit Asset on Reinsurance -
Deposit Asset on Reinsurance - Narrative (Details) - USD ($) $ in Thousands | Apr. 01, 2019 | Sep. 30, 2019 | Sep. 30, 2020 | Dec. 31, 2019 |
Effects of Reinsurance [Line Items] | ||||
Reinsurance block of in-force fixed and variable annuity business | $ 2,900,000 | |||
Fixed annuity reserves reinsured on a coinsurance basis | $ 2,200,000 | |||
Deposit asset on reinsurance | 2,300,000 | $ 2,402,539 | $ 2,346,166 | |
Investment gain realized, net of tax | $ 106,900 | |||
Separate account asset | 2,488,528 | 2,490,469 | ||
Separate account liability | 2,488,528 | $ 2,490,469 | ||
Reinsurance Contract Modified Coinsurance Basis | ||||
Effects of Reinsurance [Line Items] | ||||
Separate account asset | 700,000 | |||
Separate account liability | $ 700,000 | |||
Reinsurance Deposit Receivable | Third Party Reinsurer Risk | ||||
Effects of Reinsurance [Line Items] | ||||
Concentration risk, percent | 50.00% | |||
Minimum | ||||
Effects of Reinsurance [Line Items] | ||||
Minimum crediting rating | 4.50% |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets, net - Goodwill (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Goodwill [Line Items] | ||
Goodwill | $ 49,079 | $ 49,079 |
Property and Casualty | ||
Goodwill [Line Items] | ||
Goodwill | 9,460 | |
Supplemental | ||
Goodwill [Line Items] | ||
Goodwill | 19,621 | |
Retirement | ||
Goodwill [Line Items] | ||
Goodwill | 10,087 | |
Life | ||
Goodwill [Line Items] | ||
Goodwill | $ 9,911 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets, net - Narrative (Details) $ in Millions | Sep. 30, 2020USD ($) |
Benefit Consultants Group Inc. | |
Goodwill [Line Items] | |
Acquired finite-lived intangible assets | $ 14.1 |
NTA | |
Goodwill [Line Items] | |
Acquired finite-lived intangible assets | $ 160.4 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets, net - Summary of Finite-Lived Intangible Assets (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Finite-Lived Intangible Assets [Line Items] | |
At inception | $ 174,476 |
Accumulated amortization | (19,720) |
Total | $ 154,756 |
Weighted Average useful Life (in Years) | 23 years |
Business acquired | |
Finite-Lived Intangible Assets [Line Items] | |
At inception | $ 94,419 |
Accumulated amortization | $ (9,113) |
Weighted Average useful Life (in Years) | 30 years |
Distribution acquired | |
Finite-Lived Intangible Assets [Line Items] | |
At inception | $ 53,996 |
Accumulated amortization | $ (4,355) |
Weighted Average useful Life (in Years) | 17 years |
Agency relationships | |
Finite-Lived Intangible Assets [Line Items] | |
At inception | $ 16,981 |
Accumulated amortization | $ (3,417) |
Weighted Average useful Life (in Years) | 14 years |
Customer relationships | |
Finite-Lived Intangible Assets [Line Items] | |
At inception | $ 9,080 |
Accumulated amortization | $ (2,835) |
Weighted Average useful Life (in Years) | 10 years |
Goodwill and Intangible Asset_6
Goodwill and Intangible Assets, net - Estimated Future Amortization (Details) $ in Thousands | Sep. 30, 2020USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2020 (excluding the nine months ended September 30, 2020) | $ 3,558 |
2021 | 13,411 |
2022 | 12,433 |
2023 | 11,577 |
2024 | 10,805 |
Thereafter | 102,972 |
Total | $ 154,756 |
Goodwill and Intangible Asset_7
Goodwill and Intangible Assets, net - Summary of Indefinite-Lived Intangibles (Details) $ in Thousands | Sep. 30, 2020USD ($) |
Indefinite-lived Intangible Assets [Line Items] | |
Indefinite-lived intangible assets | $ 11,531 |
Trade names | |
Indefinite-lived Intangible Assets [Line Items] | |
Indefinite-lived intangible assets | 8,645 |
State licenses | |
Indefinite-lived Intangible Assets [Line Items] | |
Indefinite-lived intangible assets | $ 2,886 |
Unpaid Claims and Claim Expen_3
Unpaid Claims and Claim Expenses - Summary of Reinsurance Reserve Balances (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Segment Reporting Information [Line Items] | ||||
Beginning gross reserves | $ 442,854 | |||
Claims and claim expense payments for claims occurring during: | ||||
Ending gross reserves | $ 454,516 | 454,516 | ||
Benefits, claims and settlement expenses | 151,425 | $ 154,191 | 433,095 | $ 446,267 |
Property and Casualty | ||||
Segment Reporting Information [Line Items] | ||||
Beginning gross reserves | 388,491 | 367,862 | 386,976 | 367,180 |
Less: reinsurance recoverables | 116,083 | 77,345 | 120,506 | 89,725 |
Net reserves, beginning of period | 272,408 | 290,517 | 266,470 | 277,455 |
Incurred claims and claim expenses: | ||||
Claims occurring in the current period | 125,622 | 122,470 | 340,243 | 375,648 |
Decrease in estimated reserves for claims occurring in prior periods | (7,200) | (3,500) | (9,200) | (7,500) |
Total claims and claim expenses incurred | 118,422 | 118,970 | 331,043 | 368,148 |
Claims and claim expense payments for claims occurring during: | ||||
Current period | 91,008 | 101,499 | 195,891 | 230,968 |
Prior periods | 19,280 | 29,747 | 121,080 | 136,394 |
Total claims and claim expense payments | 110,288 | 131,246 | 316,971 | 367,362 |
Ending gross reserves | 395,315 | 354,767 | 395,315 | 354,767 |
Plus: reinsurance recoverables | 114,773 | 76,526 | 114,773 | 76,526 |
Net reserves, end of period | 280,542 | 278,241 | 280,542 | 278,241 |
Life and Annuity Segments | ||||
Claims and claim expense payments for claims occurring during: | ||||
Net reserves, end of period | 59,200 | 57,500 | 59,200 | 57,500 |
Benefits, claims and settlement expenses | $ 33,000 | $ 35,200 | $ 102,100 | $ 78,100 |
Unpaid Claims and Claim Expen_4
Unpaid Claims and Claim Expenses - Narrative (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Liability for Catastrophe Claims [Line Items] | ||
Favorable development of total reserves for property and casualty claims occurring in prior years | $ 9.2 | $ 7.5 |
Automobile and homeowners loss | ||
Liability for Catastrophe Claims [Line Items] | ||
Favorable development of total reserves for property and casualty claims occurring in prior years | 4 | |
2018 Camp Fire in California | ||
Liability for Catastrophe Claims [Line Items] | ||
Favorable development of total reserves for property and casualty claims occurring in prior years | $ 5.2 |
Reinsurance - Summary of Reinsu
Reinsurance - Summary of Reinsurance Activity (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Gross Amount | ||||
Premiums written and contract deposits, Gross Amount | $ 368,577 | $ 374,598 | $ 1,034,687 | $ 988,588 |
Premiums and contract charges earned, Gross Amount | 237,193 | 245,200 | 710,998 | 671,871 |
Benefits, claims and settlement expenses, Gross Amount | 59,401 | 154,718 | 342,218 | 450,206 |
Ceded to Other Companies | ||||
Premiums written and contract deposits, Ceded to Other Companies | 2,146 | 5,968 | 14,835 | 17,844 |
Premiums and contract charges earned, Ceded to Other Companies | 4,261 | 8,181 | 20,945 | 22,158 |
Benefits, claims and settlement expenses, Ceded to Other Companies | (90,161) | 2,310 | (85,770) | 9,399 |
Assumed from Other Companies | ||||
Premiums written and contract deposits, Assumed from Other Companies | 2,422 | 2,586 | 6,928 | 7,557 |
Premiums and contract charges earned, Assumed from Other Companies | 2,421 | 2,662 | 6,996 | 7,849 |
Benefits, claims and settlement expenses, Assumed from Other Companies | 1,863 | 1,783 | 5,107 | 5,460 |
Net Amount | ||||
Premiums written and contract deposits, Net Amount | 368,853 | 371,216 | 1,026,780 | 978,301 |
Premiums and contract charges earned, Net Amount | 235,353 | 239,681 | 697,049 | 657,562 |
Benefits, claims and settlement expenses, Net Amount | $ 151,425 | $ 154,191 | $ 433,095 | $ 446,267 |
Commitments (Details)
Commitments (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Commitments and Contingencies Disclosure [Abstract] | ||
Unfunded commitments to purchase investments | $ 484.9 | $ 306.2 |
Segment Information - Summary o
Segment Information - Summary of Segment Activity (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)segment | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | |
Segment Reporting Information [Line Items] | |||||
Number of reportable segments | segment | 5 | ||||
Number of operating segments | segment | 4 | ||||
Summarized financial information for these segments | |||||
Insurance premiums and contract charges earned | $ 235,353 | $ 239,681 | $ 697,049 | $ 657,562 | |
Net investment income | 93,718 | 93,071 | 256,403 | 279,329 | |
Net income (loss) | 36,474 | 25,454 | 85,524 | 151,442 | |
Assets | 13,003,388 | 13,003,388 | $ 12,478,704 | ||
Intersegment eliminations | |||||
Summarized financial information for these segments | |||||
Net investment income | (564) | (569) | (1,697) | (934) | |
Assets | (65,083) | (65,083) | (64,072) | ||
Property and Casualty | |||||
Summarized financial information for these segments | |||||
Insurance premiums and contract charges earned | 166,070 | 170,483 | 488,756 | 512,626 | |
Property and Casualty | Operating segments | |||||
Summarized financial information for these segments | |||||
Net investment income | 13,632 | 10,726 | 30,250 | 33,587 | |
Net income (loss) | 15,810 | 14,194 | 53,669 | 34,347 | |
Assets | 1,354,685 | 1,354,685 | 1,327,099 | ||
Supplemental | |||||
Summarized financial information for these segments | |||||
Insurance premiums and contract charges earned | 32,480 | 32,921 | 98,772 | 32,921 | |
Assets | 828,760 | 828,760 | 747,602 | ||
Supplemental | Operating segments | |||||
Summarized financial information for these segments | |||||
Net investment income | 4,321 | 3,691 | 11,876 | 3,691 | |
Net income (loss) | 10,546 | 6,943 | 30,562 | 6,943 | |
Retirement | |||||
Summarized financial information for these segments | |||||
Insurance premiums and contract charges earned | 7,389 | 6,624 | 21,486 | 22,133 | |
Retirement | Operating segments | |||||
Summarized financial information for these segments | |||||
Net investment income | 58,115 | 60,770 | 166,684 | 188,193 | |
Net income (loss) | 7,792 | 5,915 | 16,578 | (6,979) | |
Assets | 8,609,262 | 8,609,262 | 8,330,127 | ||
Life | |||||
Summarized financial information for these segments | |||||
Insurance premiums and contract charges earned | 29,414 | 29,653 | 88,035 | 89,882 | |
Life | Operating segments | |||||
Summarized financial information for these segments | |||||
Net investment income | 18,244 | 18,453 | 49,432 | 54,829 | |
Net income (loss) | 4,306 | 5,101 | 6,869 | 13,617 | |
Assets | 2,108,067 | 2,108,067 | 1,964,993 | ||
Corporate and Other | |||||
Summarized financial information for these segments | |||||
Net investment income | (30) | 0 | (142) | (37) | |
Net income (loss) | (1,980) | $ (6,699) | (22,154) | $ 103,514 | |
Assets | $ 167,697 | $ 167,697 | $ 172,955 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | $ 1,567,285 | |||
Other comprehensive income (loss) before reclassifications | $ 54,312 | $ 64,577 | 97,311 | $ 292,043 |
Amounts reclassified from AOCI | (5,244) | (1,273) | 438 | (122,603) |
Other comprehensive income (loss) | 49,068 | 63,304 | 97,749 | 169,440 |
Ending balance | 1,715,678 | 1,578,612 | 1,715,678 | 1,578,612 |
Pretax reclassification amounts from AOCI, tax | 1,400 | 300 | (100) | 32,600 |
Net Unrealized Investment Gains (Losses) on Securities | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | 279,129 | 203,077 | 230,448 | 96,941 |
Other comprehensive income (loss) before reclassifications | 54,312 | 64,577 | 97,311 | 292,043 |
Amounts reclassified from AOCI | (5,244) | (1,273) | 438 | (122,603) |
Other comprehensive income (loss) | 49,068 | 63,304 | 97,749 | 169,440 |
Ending balance | 328,197 | 266,381 | 328,197 | 266,381 |
Pretax reclassification amounts from accumulated other comprehensive income (loss) | 6,600 | 1,600 | (600) | 155,200 |
Net Funded Status of Benefit Plans | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | (10,767) | (12,185) | (10,767) | (12,185) |
Other comprehensive income (loss) before reclassifications | 0 | 0 | 0 | 0 |
Amounts reclassified from AOCI | 0 | 0 | 0 | 0 |
Other comprehensive income (loss) | 0 | 0 | 0 | 0 |
Ending balance | (10,767) | (12,185) | (10,767) | (12,185) |
Total | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | 268,362 | 190,892 | 219,681 | 84,756 |
Ending balance | $ 317,430 | $ 254,196 | $ 317,430 | $ 254,196 |
Supplemental Consolidated Cas_3
Supplemental Consolidated Cash and Cash Flow Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Supplemental Cash Flow Elements [Abstract] | |||||
Cash | $ 64,778 | $ 25,206 | |||
Restricted cash | 697 | 302 | |||
Total cash and restricted cash shown in the Consolidated Balance Sheets | $ 39,349 | 65,475 | $ 39,349 | $ 25,508 | $ 11,906 |
Interest | 9,258 | 6,948 | |||
Income taxes | $ 18,456 | 12,696 | |||
Transfer of investments and policy loans | 2,100,000 | ||||
Reinsurance block of in-force fixed and variable annuity business | $ 2,900,000 | $ 2,900,000 |