Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended |
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2014 |
Document And Entity [Line Items] | |
Document Type | 10-K |
Amendment Flag | FALSE |
Document Period End Date | 31-Dec-14 |
Document Fiscal Year Focus | 2014 |
Document Fiscal Period Focus | Q4 |
Entity Registrant Name | PRUDENTIAL ANNUITIES LIFE ASSURANCE CORP/CT |
Entity Central Index Key | 881453 |
Current Fiscal Year End Date | -19 |
Entity Filer Category | Non-accelerated Filer |
Entity Common Stock, Shares Outstanding | 25,000 |
Entity Well-known Seasoned Issuer | Yes |
Entity Voluntary Filers | No |
Entity Public Float | $0 |
Entity Current Reporting Status | Yes |
Statements_of_Financial_Positi
Statements of Financial Position (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | |
In Thousands, unless otherwise specified | |||
ASSETS | |||
Fixed maturities, available for sale, at fair value | $2,800,593 | $3,264,216 | [1] |
Equity securites, available for sale, at fair value | 17 | 208 | [1] |
Trading account assets, at fair value | 6,131 | 6,677 | |
Policy loans | 13,355 | 12,454 | |
Short-term investments | 57,185 | 118,188 | |
Commercial mortgage and other loans, net of valuation allowance | 422,563 | 398,991 | |
Other long-term investments | 162,783 | 60,585 | |
Total investments | 3,462,627 | 3,861,319 | |
Cash and cash equivalents | 594 | 1,417 | |
Deferred policy acquisition costs | 1,114,431 | 1,345,504 | |
Accrued investment income | 25,008 | 32,169 | |
Receivables from parents and affiliates | 60,490 | 44,643 | |
Deferred sales inducements | 665,207 | 809,247 | |
Valuation of business acquired | 39,738 | 43,500 | |
Other assets | 6,193 | 16,994 | |
Separate account assets | 44,101,699 | 46,626,828 | |
Reinsurance recoverables | 2,996,845 | 748,690 | |
TOTAL ASSETS | 52,472,832 | 53,530,311 | |
LIABILITIES | |||
Policyholders' account balances | 2,633,085 | 3,191,215 | |
Future policy benefits and other policyholder liabilities | 3,539,521 | 1,127,342 | |
Cash collateral for loaned securities | 5,285 | 47,896 | |
Income taxes payable | 299,084 | 358,818 | |
Short-term debt | 54,354 | 205,000 | |
Payables to parent and affiliates | 71,675 | 120,452 | |
Other liabilities | 105,972 | 113,125 | |
Separate account liabilities | 44,101,699 | 46,626,828 | |
TOTAL LIABILITIES | 50,810,675 | 51,790,676 | |
EQUITY | |||
Common stock, ($100 par value; 25,000 shares authorized, issued and outstanding) | 2,500 | 2,500 | |
Additional paid-in capital | 901,422 | 901,422 | |
Retained earnings (accumulated deficit) | 673,613 | 764,846 | |
Accumulated other comprehensive income (loss) | 84,622 | 70,867 | |
TOTAL EQUITY | 1,662,157 | 1,739,635 | |
TOTAL LIABILITIES AND EQUITY | $52,472,832 | $53,530,311 | |
[1] | Prior period’s amounts are presented on a basis consistent with the current period presentation. |
Statements_of_Financial_Positi1
Statements of Financial Position (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | |
In Thousands, except Share data, unless otherwise specified | |||
Fixed maturities, available-for-sale, amortized cost | $2,609,253 | $3,079,002 | [1] |
Available-for-sale equity securities amortized cost basis | $14 | $206 | [1] |
Common stock, par value | $100 | $100 | |
Common stock, shares authorized | 25,000 | 25,000 | |
Common stock, shares issued | 25,000 | 25,000 | |
Common stock, shares outstanding | 25,000 | 25,000 | |
[1] | Prior period’s amounts are presented on a basis consistent with the current period presentation. |
Statement_of_Operations
Statement of Operations (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
REVENUES | |||
Premiums | $34,903 | $28,019 | $21,824 |
Policy charges and fee income | 806,327 | 809,242 | 796,995 |
Net investment income | 164,011 | 217,883 | 277,651 |
Asset management fees and other income | 227,619 | 239,489 | 266,321 |
Realized investment gains (losses), net: | |||
Other-than-temporary impairments on fixed maturity securities | -10 | 0 | -6,852 |
Other-than-temporary impairments on fixed maturity securities transferred to Other Comprehensive Income | 10 | 0 | 6,594 |
Other realized investment gains (losses), net | 7,368 | -184,351 | -82,972 |
Total realized investment gains (losses), net | 7,368 | -184,351 | -83,230 |
TOTAL REVENUES | 1,240,228 | 1,110,282 | 1,279,561 |
BENEFITS AND EXPENSES | |||
Policyholders' benefits | 137,135 | 29,727 | 124,316 |
Interest credited to policyholders' account balances | 211,058 | -117,027 | 60,830 |
Amortization of deferred policy acquisition costs | 238,416 | -385,561 | -188,042 |
General, administrative and other expenses | 394,248 | 402,679 | 424,764 |
TOTAL BENEFITS AND EXPENSES | 980,857 | -70,182 | 421,868 |
INCOME FROM OPERATIONS BEFORE INCOME TAXES | 259,371 | 1,180,464 | 857,693 |
IncomeTaxExpenseBenefitAbstract | |||
Current Income Tax Expense (Benefit) | -8,499 | 36,759 | 26,637 |
Deferred Income Tax Expense (Benefit) | 17,103 | 295,613 | 196,997 |
Income tax expense (benefit) | 8,604 | 332,372 | 223,634 |
NET INCOME | 250,767 | 848,092 | 634,059 |
Other Comprehensive Income (Loss), before Tax [Abstract] | |||
Foreign currency translation adjustments | -63 | 5 | 10 |
Unrealized investment gains (losses) for the period | 35,931 | -108,769 | 2,734 |
Reclassification adjustment for (gains) losses included in net income | -14,706 | -8,805 | -23,387 |
Net unrealized investment gains (losses) | 21,225 | -117,574 | -20,653 |
Other comprehensive income (loss), before tax | 21,162 | -117,569 | -20,643 |
Other Comprehensive Income (Loss), Tax [Abstract] | |||
Other Comprehensive Income Loss Foreign Currency Translation Adjustment Tax | -23 | 2 | 4 |
Other Comprehensive Income Loss Available For Sale Securities Tax | 7,430 | -41,151 | -7,222 |
Other Comprehensive Income (Loss), Tax, Total | 7,407 | -41,149 | -7,218 |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||
Other comprehensive income (loss) | 13,755 | -76,420 | -13,425 |
COMPREHENSIVE INCOME | $264,522 | $771,672 | $620,634 |
Statements_of_Equity
Statements of Equity (USD $) | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income (loss) [Member] | Total Equity |
In Thousands, unless otherwise specified | ||||||
Balance at Dec. 31, 2011 | $2,500 | $882,670 | ($25,305) | $160,712 | $1,020,577 | |
Affiliated asset transfers | 0 | 10,666 | 0 | 0 | 10,666 | |
Distribution to parent | 408,000 | 0 | 0 | -408,000 | 0 | -408,000 |
Comprehensive income: | ||||||
Net income | 634,059 | 0 | 0 | 634,059 | 0 | 634,059 |
Other comprehensive income (loss), net of tax | -13,425 | 0 | 0 | 0 | -13,425 | -13,425 |
Total comprehensive income (loss) | 620,634 | |||||
Balance at Dec. 31, 2012 | 2,500 | 893,336 | 200,754 | 147,287 | 1,243,877 | |
Affiliated asset transfers | 0 | 8,086 | 0 | 0 | 8,086 | |
Distribution to parent | 284,000 | 0 | 0 | -284,000 | 0 | -284,000 |
Comprehensive income: | ||||||
Net income | 848,092 | 0 | 0 | 848,092 | 0 | 848,092 |
Other comprehensive income (loss), net of tax | -76,420 | 0 | 0 | 0 | -76,420 | -76,420 |
Total comprehensive income (loss) | 771,672 | |||||
Balance at Dec. 31, 2013 | 2,500 | 901,422 | 764,846 | 70,867 | 1,739,635 | |
Distribution to parent | 342,000 | 0 | 0 | -342,000 | 0 | -342,000 |
Comprehensive income: | ||||||
Net income | 250,767 | 0 | 0 | 250,767 | 0 | 250,767 |
Other comprehensive income (loss), net of tax | 13,755 | 0 | 0 | 0 | 13,755 | 13,755 |
Total comprehensive income (loss) | 264,522 | |||||
Balance at Dec. 31, 2014 | $2,500 | $901,422 | $673,613 | $84,622 | $1,662,157 |
Statements_of_Cash_Flows
Statements of Cash Flows (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net income | $250,767 | $848,092 | $634,059 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Policy charges and fee income | 3,491 | 10,678 | 13,324 |
Interest credited to policyholders' account balances | 211,058 | -117,027 | 60,830 |
Realized investment (gains) losses, net | -7,368 | 184,351 | 83,230 |
Amortization and depreciation | 1,402 | 11,032 | -7,481 |
Change in: | |||
Future policy benefit reserves | 324,284 | 218,861 | 300,246 |
Reinsurance recoverables | -273,480 | -275,321 | -268,576 |
Accrued investment income | 7,161 | 12,487 | 14,377 |
Receivables from parents and affiliates | 43,958 | ||
Payables to parent and affiliates | -26,936 | -40,051 | |
Deferred policy acquisition costs | 235,612 | -389,611 | -213,122 |
Income taxes payable | -67,163 | 330,049 | 169,736 |
Deferred sales inducements | -11,515 | -31,370 | -59,269 |
Persistency bonus reserve | -115,700 | -27,593 | -13,318 |
Other, net | -2,219 | -55,281 | -19,523 |
Cash flows from (used in) operating activities | 529,394 | 679,296 | 738,471 |
Proceeds from the sale/maturity/prepayment of: | |||
Fixed maturities, available-for-sale | 996,083 | 1,484,339 | 1,365,513 |
Short-term investments | 2,637,788 | 3,220,082 | 3,513,151 |
Policy loans | 753 | 752 | 3,501 |
Commercial mortgage and other loans | 20,988 | 109,242 | 71,216 |
Trading account assets | 4,900 | 7,690 | 36,063 |
Other long-term investments | -1,650 | 1,973 | 4,120 |
Payments for the purchase/origination of: | |||
Fixed maturities, available-for-sale | -494,947 | -743,854 | -352,285 |
Short-term investments | -2,576,786 | -3,234,508 | -3,379,308 |
Policy loans | -943 | -538 | -472 |
Commercial mortgage and other loans | -43,859 | -80,319 | -47,795 |
Trading account assets | -4,312 | -5,469 | -4,931 |
Other long-term investments | -14,691 | -12,969 | -28,894 |
Notes receivable from parent and affiliates, net | -12,524 | -2,224 | 2,125 |
Other, net | 8 | -190 | 2,544 |
Cash flows used in investing activities | 510,808 | 744,007 | 1,184,548 |
CASH FLOWS USED IN FINANCING ACTIVITIES | |||
Distribution to parent | -342,000 | -284,000 | -408,000 |
Policyholders' account deposits | 1,375,761 | 1,102,020 | 1,013,638 |
Policyholders' account withdrawals | -1,875,118 | -2,068,108 | -2,241,367 |
Net change in securities sold under agreements to repurchase and cash collateral for loaned securities | -42,612 | 8,920 | -86,908 |
Net increase in short-term borrowing | 49,354 | 5,000 | -27,803 |
Drafts outstanding | -6,410 | 1,577 | 2,430 |
RepaymentsOfOtherDebt | 200,000 | 200,000 | 200,000 |
Cash flows from (used in) financing activities | -1,041,025 | -1,422,152 | -1,931,614 |
contributed | 0 | 12,439 | 16,396 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | -823 | 1,151 | -8,595 |
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 1,417 | 266 | 8,861 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 594 | 1,417 | 266 |
IncomeTaxesPaidNet | 75,745 | 2,325 | 53,901 |
InterestPaid | $8,657 | $16,955 | $27,114 |
Business_and_Basis_of_Presenta
Significant Accounting Policies and Pronouncements | 12 Months Ended |
Dec. 31, 2014 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies and Pronouncements | 2. SIGNIFICANT ACCOUNTING POLICIES AND PRONOUNCEMENTS |
Investments and Investment Related Liabilities | |
The Company's principal investments are fixed maturities, equity securities, commercial mortgage and other loans, policy loans, other long-term investments, including joint ventures (other than operating joint ventures), limited partnerships, and real estate, and short-term investments. Investments and investment-related liabilities also include securities repurchase and resale agreements and securities lending transactions. The accounting policies related to each are as follows: | |
Fixed maturities, available-for-sale, at fair value are comprised of bonds, notes and redeemable preferred stock. Fixed maturities classified as “available-for-sale” are carried at fair value. See Note 10 for additional information regarding the determination of fair value. Interest income, as well as the related amortization of premium and accretion of discount is included in “Net investment income” under the effective yield method. For mortgage-backed and asset-backed securities, the effective yield is based on estimated cash flows, including interest rate and prepayment assumptions based on data from widely accepted third-party data sources or internal estimates. In addition to interest rate and prepayment assumptions, cash flow estimates also vary based on other assumptions regarding the underlying collateral including default rates and changes in value. These assumptions can significantly impact income recognition and the amount of other-than-temporary impairments recognized in earnings and other comprehensive income. For high credit quality mortgage-backed and asset-backed securities (those rated AA or above), cash flows are provided quarterly, and the amortized cost and effective yield of the security are adjusted as necessary to reflect historical prepayment experience and changes in estimated future prepayments. The adjustments to amortized cost are recorded as a charge or credit to net investment income in accordance with the retrospective method. For mortgage-backed and asset-backed securities rated below AA or those for which an other than temporary impairment has been recorded, the effective yield is adjusted prospectively for any changes in estimated cash flows. See the discussion below on realized investment gains and losses for a description of the accounting for impairments. Unrealized gains and losses on fixed maturities classified as “available-for-sale,” net of tax, and the effect on deferred policy acquisition costs (“DAC”), value of business acquired (“VOBA”), deferred sales inducements (“DSI”), and future policy benefits that would result from the realization of unrealized gains and losses, are included in “Accumulated other comprehensive income (loss)” (“AOCI”). | |
Trading account assets, at fair value, represents equity securities and other fixed maturity securities carried at fair value. Realized and unrealized gains and losses for these investments are reported in “Asset administration fees and other income.” Interest and dividend income from these investments is reported in “Net investment income.” | |
Equity securities, available-for-sale, at fair value, are comprised of mutual fund shares and are carried at fair value. The associated unrealized gains and losses, net of tax, and the effect on DAC, VOBA, DSI, and future policy benefits that would result from the realization of unrealized gains and losses, are included in AOCI. The cost of equity securities is written down to fair value when a decline in value is considered to be other-than-temporary. See the discussion below on realized investment gains and losses for a description of the accounting for impairments. Dividends from these investments are recognized in “Net investment income” when earned. | |
Commercial mortgage and other loans consist of commercial mortgage loans, agricultural loans and uncollateralized loans. Commercial mortgage and other loans held for investment are generally carried at unpaid principal balance, net of unamortized deferred loan origination fees and expenses and net of an allowance for losses. Commercial mortgage and other loans acquired, including those related to the acquisition of a business, are recorded at fair value when purchased, reflecting any premiums or discounts to unpaid principal balances. | |
Interest income, as well as prepayment fees and the amortization of the related premiums or discounts, related to commercial mortgage and other loans, are included in “Net investment income.” | |
Impaired loans include those loans for which it is probable that amounts due will not all be collected according to the contractual terms of the loan agreement. The Company defines “past due” as principal or interest not collected at least 30 days past the scheduled contractual due date. Interest received on loans that are past due, including impaired and non-impaired loans, as well as, loans that were previously modified in a troubled debt restructuring, is either applied against the principal or reported as net investment income based on the Company's assessment as to the collectability of the principal. See Note 3 for additional information about the Company's past due loans. | |
The Company discontinues accruing interest on loans after the loans become 90 days delinquent as to principal or interest payments, or earlier when the Company has doubts about collectability. When the Company discontinues accruing interest on a loan, any accrued but uncollectible interest on the loan and other loans backed by the same collateral, if any, is charged to interest income in the same period. Generally, a loan is restored to accrual status only after all delinquent interest and principal are brought current and, in the case of loans where the payment of interest has been interrupted for a substantial period, or the loan has been modified, a regular payment performance has been established. | |
The Company reviews the performance and credit quality of the commercial mortgage and other loan portfolio on an on-going basis. Loans are placed on watch list status based on a predefined set of criteria and are assigned one of three categories. Loans are placed on “early warning” status in cases where, based on the Company's analysis of the loan's collateral, the financial situation of the borrower or tenants or other market factors, it is believed a loss of principal or interest could occur. Loans are classified as “closely monitored” when it is determined that there is a collateral deficiency or other credit events that may lead to a potential loss of principal or interest. Loans “not in good standing” are those loans where the Company has concluded that there is a high probability of loss of principal, such as when the loan is delinquent or in the process of foreclosure. As described below, in determining the allowance for losses, the Company evaluates each loan on the watch list to determine if it is probable that amounts due will not be collected according to the contractual terms of the loan agreement. | |
Loan-to-value and debt service coverage ratios are measures commonly used to assess the quality of commercial mortgage loans. The loan-to-value ratio compares the amount of the loan to the fair value of the underlying property collateralizing the loan, and is commonly expressed as a percentage. Loan-to-value ratios greater than 100% indicate that the loan amount exceeds the collateral value. A smaller loan-to-value ratio indicates a greater excess of collateral value over the loan amount. The debt service coverage ratio compares a property's net operating income to its debt service payments. Debt service coverage ratios less than 1.0 times indicate that property operations do not generate enough income to cover the loan's current debt payments. A larger debt service coverage ratio indicates a greater excess of net operating income over the debt service payments. The values utilized in calculating these ratios are developed as part of the Company's periodic review of the commercial mortgage loan and agricultural loan portfolio, which includes an internal appraisal of the underlying collateral value. The Company's periodic review also includes a quality re-rating process, whereby the internal quality rating originally assigned at underwriting is updated based on current loan, property and market information using a proprietary quality rating system. The loan-to-value ratio is the most significant of several inputs used to establish the internal credit rating of a loan which in turn drives the allowance for losses. Other key factors considered in determining the internal credit rating include debt service coverage ratios, amortization, loan term, estimated market value growth rate and volatility for the property type and region. See Note 3 for additional information related to the loan-to-value ratios and debt service coverage ratios related to the Company's commercial mortgage and agricultural loan portfolios. | |
The allowance for losses includes a loan specific reserve for each impaired loan that has a specifically identified loss and a portfolio reserve for probable incurred but not specifically identified losses. For impaired commercial mortgage and other loans the allowances for losses are determined based on the present value of expected future cash flows discounted at the loan's effective interest rate, or based upon the fair value of the collateral if the loan is collateral dependent. The portfolio reserves for probable incurred but not specifically identified losses in the commercial mortgage and agricultural loan portfolios considers the current credit composition of the portfolio based on an internal quality rating, (as described above). The portfolio reserves are determined using past loan experience, including historical credit migration, loss probability and loss severity factors by property type. These factors are reviewed each quarter and updated as appropriate. | |
The allowance for losses on commercial mortgage and other loans can increase or decrease from period to period based on the factors noted above. “Realized investment gains (losses), net” includes changes in the allowance for losses. “Realized investment gains (losses), net” also includes gains and losses on sales, certain restructurings, and foreclosures. | |
When a commercial mortgage or other loan is deemed to be uncollectible, any specific valuation allowance associated with the loan is reversed and a direct write down to the carrying amount of the loan is made. The carrying amount of the loan is not adjusted for subsequent recoveries in value. | |
In situations where a loan has been restructured in a troubled debt restructuring and the loan has subsequently defaulted, this factor is considered when evaluating the loan for a specific allowance for losses in accordance with the credit review process noted above. | |
See Note 3 for additional information about commercial mortgage and other loans that have been restructured in a troubled debt restructuring. | |
Policy loans are carried at unpaid principal balances. Interest income on policy loans is recognized in “Net investment income” at the contract interest rate when earned. Policy loans are fully collateralized by the cash surrender value of the associated insurance policies. | |
Securities repurchase and resale agreements and securities loaned transactions are used primarily to earn spread income, to borrow funds, or to facilitate trading activity. As part of securities repurchase agreements or securities loaned transactions, the Company transfers U.S. and foreign debt and equity securities, as well as U.S. government and government agency securities and receives cash as collateral. As part of securities resale agreements, the Company invests cash and receives as collateral U.S. government securities or other debt securities. For securities repurchase agreements and securities loaned transactions used to earn spread income, the cash received is typically invested in cash equivalents, short-term investments or fixed maturities. | |
Securities loaned transactions are treated as financing arrangements and are recorded at the amount of cash received. The Company obtains collateral in an amount equal to 102% and 105% of the fair value of the domestic and foreign securities, respectively. The Company monitors the market value of the securities loaned on a daily basis with additional collateral obtained as necessary. Substantially all of the Company's securities loaned transactions are with large brokerage firms. Income and expenses associated with securities loaned transactions used to earn spread income are reported as “Net investment income;” however, for securities loaned transactions used for funding purposes the associated rebate is reported as interest expense (included in “General, administrative and other expenses”). | |
Other long-term investments consist of the Company's non-coupon investments in joint ventures and limited partnerships, other than operating joint ventures, as well as wholly-owned investment real estate and other investments. Joint venture and partnership interests are either accounted for using the equity method of accounting or under the cost method when the Company's partnership interest is so minor (generally less than 3%) that it exercises virtually no influence over operating and financial policies. The Company's income from investments in joint ventures and partnerships accounted for using the equity method or the cost method, other than the Company's investment in operating joint ventures, is included in “Net investment income.” The carrying value of these investments is written down, or impaired, to fair value when a decline in value is considered to be other-than-temporary. In applying the equity method or the cost method (including assessment for other-than-temporary impairment), the Company uses financial information provided by the investee, generally on a one to three month lag. | |
Short-term investments primarily consist of highly liquid debt instruments with a maturity of twelve months or less and greater than three months when purchased. These investments are generally carried at fair value and include certain money market investments, short-term debt securities issued by government sponsored entities and other highly liquid debt instruments. | |
Realized investment gains (losses) are computed using the specific identification method. Realized investment gains and losses are generated from numerous sources, including the sale of fixed maturity securities, equity securities, investments in joint ventures and limited partnerships and other types of investments, as well as adjustments to the cost basis of investments for net other-than-temporary impairments recognized in earnings. Realized investment gains and losses are also generated from prepayment premiums received on private fixed maturity securities, allowance for losses on commercial mortgage and other loans, and fair value changes on embedded derivatives and free-standing derivatives that do not qualify for hedge accounting treatment. See “Derivative Financial Instruments” below for additional information regarding the accounting for derivatives. | |
The Company's available-for-sale securities with unrealized losses are reviewed quarterly to identify other-than-temporary impairments in value. In evaluating whether a decline in value is other-than-temporary, the Company considers several factors including, but not limited to the following: (1) the extent and the duration of the decline; (2) the reasons for the decline in value (credit event, currency or interest-rate related, including general credit spread widening); and (3) the financial condition of and near-term prospects of the issuer. With regard to available-for-sale equity securities, the Company also considers the ability and intent to hold the investment for a period of time to allow for a recovery of value. When it is determined that a decline in value of an equity security is other-than-temporary, the carrying value of the equity security is reduced to its fair value, with a corresponding charge to earnings. | |
An other-than-temporary impairment is recognized in earnings for a debt security in an unrealized loss position when the Company either (a) has the intent to sell the debt security or (b) more likely than not will be required to sell the debt security before its anticipated recovery. For all debt securities in unrealized loss positions that do not meet either of these two criteria, the Company analyzes its ability to recover the amortized cost by comparing the net present value of projected future cash flows with the amortized cost of the security. The net present value is calculated by discounting the Company's best estimate of projected future cash flows at the effective interest rate implicit in the debt security prior to impairment. The Company may use the estimated fair value of collateral as a proxy for the net present value if it believes that the security is dependent on the liquidation of collateral for recovery of its investment. If the net present value is less than the amortized cost of the investment an other-than-temporary impairment is recognized. | |
When an other-than-temporary impairment of a debt security has occurred, the amount of the other-than-temporary impairment recognized in earnings depends on whether the Company intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis. If the debt security meets either of these two criteria, the other-than-temporary impairment recognized in earnings is equal to the entire difference between the security's amortized cost basis and its fair value at the impairment measurement date. For other-than-temporary impairments of debt securities that do not meet these criteria, the net amount recognized in earnings is equal to the difference between the amortized cost of the debt security and its net present value calculated as described above. Any difference between the fair value and the net present value of the debt security at the impairment measurement date is recorded in “Other comprehensive income (loss)” (“OCI”). Unrealized gains or losses on securities for which an other-than-temporary impairment has been recognized in earnings is tracked as a separate component of AOCI. | |
For debt securities, the split between the amount of an other-than-temporary impairment recognized in other comprehensive income and the net amount recognized in earnings is driven principally by assumptions regarding the amount and timing of projected cash flows. For mortgage-backed and asset-backed securities, cash flow estimates consider the payment terms of the underlying assets backing a particular security, including interest rate and prepayment assumptions, based on data from widely accepted third-party data sources or internal estimates. In addition to interest rate and prepayment assumptions, cash flow estimates also include other assumptions regarding the underlying collateral including default rates and recoveries, which vary based on the asset type and geographic location, as well as the vintage year of the security. For structured securities, the payment priority within the tranche structure is also considered. For all other debt securities, cash flow estimates are driven by assumptions regarding probability of default and estimates regarding timing and amount of recoveries associated with a default. The Company has developed these estimates using information based on its historical experience as well as using market observable data, such as industry analyst reports and forecasts, sector credit ratings and other data relevant to the collectability of a security, such as the general payment terms of the security and the security's position within the capital structure of the issuer. | |
The new cost basis of an impaired security is not adjusted for subsequent increases in estimated fair value. In periods subsequent to the recognition of an other-than-temporary impairment, the impaired security is accounted for as if it had been purchased on the measurement date of the impairment. For debt securities, the discount (or reduced premium) based on the new cost basis may be accreted into net investment income in future periods, including increases in cash flow on a prospective basis. In certain cases where there are decreased cash flow expectations, the security is reviewed for further cash flow impairments. | |
Unrealized investment gains and losses are also considered in determining certain other balances, including DAC, VOBA, DSI, certain future policy benefits and deferred tax assets or liabilities. These balances are adjusted, as applicable, for the impact of unrealized gains or losses on investments as if these gains or losses had been realized, with corresponding credits or charges included in AOCI. Each of these balances is discussed in greater detail below. | |
Cash and Cash Equivalents | |
Cash and cash equivalents include cash on hand, amounts due from banks, certain money market investments and other debt instruments with maturities of three months or less when purchased, other than cash equivalents that are included in “Trading account assets, at fair value.” The Company also engages in overnight borrowing and lending of funds with Prudential Financial and affiliates which are considered cash and cash equivalents. | |
Deferred Policy Acquisition Costs | |
Costs that are related directly to the successful acquisition of new and renewal insurance and annuity business are deferred to the extent such costs are deemed recoverable from future profits. Such DAC primarily include commissions, costs of policy issuance and underwriting, and certain other expenses that are directly related to successfully negotiated contracts. In each reporting period, capitalized DAC is amortized to “Amortization of deferred policy acquisition costs,” net of the accrual of imputed interest on DAC balances. DAC is subject to periodic recoverability testing. DAC, for applicable products, is adjusted for the impact of unrealized gains or losses on investments as if these gains or losses had been realized, with corresponding credits or charges included in AOCI. | |
DAC related to fixed and variable deferred annuity products are generally deferred and amortized over the expected life of the contracts in proportion to gross profits arising principally from investment margins, mortality and expense margins, and surrender charges, based on historical and anticipated future experience, which is updated periodically. The Company uses a reversion to the mean approach for equities to derive future equity return assumptions. | |
However, if the projected equity return calculated using this approach is greater than the maximum equity return assumption, the maximum equity return is utilized. Gross profits also include impacts from the embedded derivatives associated with certain of the optional living benefit features of the Company's variable annuity contracts and related hedging activities. In calculating gross profits, profits and losses related to contracts issued by the Company that are reported in affiliated legal entities other than the Company as a result of, for example, reinsurance agreements with those affiliated entities, are also included. The Company is an indirect subsidiary of Prudential Financial (an SEC registrant) and has extensive transactions and relationships with other subsidiaries of Prudential Financial, including reinsurance agreements, as described in Note 13. Incorporating all product-related profits and losses in gross profits, including those that are reported in affiliated legal entities, produces a DAC amortization pattern representative of the total economics of the products. The effect of changes to total gross profits on unamortized DAC is reflected in the period such total gross profits are revised. | |
For some products, policyholders can elect to modify product benefits, features, rights or coverages by amendment, endorsement, or rider to a contract, or by the election of a feature or coverage within a contract. These transactions are known as internal replacements. For internal replacement transactions, except those that involve the addition of a nonintegrated contract feature that does not change the existing base contract, the unamortized DAC is immediately charged to expense if the terms of the new policies are not substantially similar to those of the former policies. If the new terms are substantially similar to those of the earlier policies, the DAC is retained with respect to the new policies and amortized over the expected life of the new policies. | |
Deferred Sales Inducements | |
The Company offered various types of sales inducements to contractholders related to fixed and variable deferred annuity contracts. The Company defers sales inducements and amortizes them over the anticipated life of the policy using the same methodology and assumptions used to amortize DAC. Sales inducements balances are subject to periodic recoverability testing. The Company records amortization of DSI in “Interest credited to policyholders' account balances.” DSI for applicable products is adjusted for the impact of unrealized gains or losses on investments as if these gains or losses had been realized, with corresponding credits or charges included in AOCI. See Note 7 for additional information regarding sales inducements. | |
Value of Business Acquired | |
As a result of certain acquisitions and the application of purchase accounting, the Company reports a financial asset representing VOBA. VOBA includes an explicit adjustment to reflect the cost of capital attributable to the acquired insurance contracts. VOBA represents an adjustment to the stated value of inforce insurance contract liabilities to present them at fair value, determined as of the acquisition date. VOBA balances are subject to recoverability testing, in the manner in which it was acquired. The Company has established a VOBA asset primarily for its acquisition of American Skandia Life Assurance Corporation. For acquired annuity contracts, VOBA is amortized in proportion to gross profits arising principally from investment margins, mortality and expense margins, and surrender charges, based on historical and anticipated future experience, which is updated periodically. See Note 5 for additional information regarding VOBA. | |
Reinsurance recoverables | |
Reinsurance recoverables include corresponding receivables associated with reinsurance arrangements with affiliates. For additional information about these arrangements see Note 13. | |
Separate Account Assets and Liabilities | |
Separate account assets are reported at fair value and represent segregated funds that are invested for certain contractholders. “Separate account assets” are predominantly shares in Advanced Series Trust co-managed by AST Investment Services, Incorporated (“ASISI”) and Prudential Investments LLC, which utilizes various fund managers as sub-advisors. The remaining assets are shares in other mutual funds, which are managed by independent investment firms. The contractholder has the option of directing funds to a wide variety of investment options, most of which invest in mutual funds. The investment risk on the variable portion of a contract is borne by the contractholder, except to the extent of minimum guarantees by the Company, which are not separate account liabilities. See Note 7 to the Financial Statements for additional information regarding separate account arrangements with contractual guarantees. The assets of each account are legally segregated and are not subject to claims that arise out of any other business of the Company. Separate account liabilities primarily represent the contractholders' account balance in separate account assets and to a lesser extent borrowings of the separate account, and will be equal and offsetting to total separate account assets. The investment income and realized investment gains or losses from separate accounts generally accrue to the contractholders and are not included in the Company's results of operations. Mortality, policy administration and surrender charges assessed against the accounts are included in “Policy charges and fee income”. Asset administration fees charged to the accounts are included in “Asset administration fees and other income.” | |
Other Assets and Other Liabilities | |
“Other assets” consist primarily of accruals for asset administration fees. “Other assets” also consist of state insurance licenses. Licenses to do business in all states have been capitalized. Based on changes in facts and circumstances, effective September 30, 2012, the capitalized state insurance licenses were considered to have a finite life and are amortized over their useful life, which was estimated to be 8 years. Amortization is recorded through “General, administrative and other expenses.” | |
“Other liabilities” consist primarily of accrued expenses and technical overdrafts. Other liabilities may also include derivative instruments for which fair values are determined as described above under “Derivative Financial Instruments”. | |
Future Policy Benefits and Other Policyholder Liabilities | |
The Company's liability for future policy benefits is primarily comprised of liabilities for guarantee benefits related to certain nontraditional long-duration life and annuity contracts, which are discussed more fully in Note 7. These reserves represent reserves for the guaranteed minimum death and optional living benefit features on the Company's variable annuity products. The optional living benefits are primarily accounted for as embedded derivatives, with fair values calculated as the present value of future expected benefit payments to customers less the present value of assessed rider fees attributable to the embedded derivative feature. For additional information regarding the valuation of these optional living benefit features, see Note 10. | |
The Company's liability for future policy benefits also includes reserves based on the present value of estimated future payments to or on behalf of policyholders, where the timing and amount of payment depends on policyholder mortality. Expected mortality is generally based on Company experience, industry data, and/or other factors. Interest rate assumptions are based on factors such as market conditions and expected investment returns. Although mortality and interest rate assumptions are “locked-in” upon the issuance of new insurance or annuity business with fixed and guaranteed terms, significant changes in experience or assumptions may require the Company to provide for expected future losses on a product by establishing premium deficiency reserves. Premium deficiency reserves are established, if necessary, when the liability for future policy benefits plus the present value of expected future gross premiums are determined to be insufficient to provide for expected future policy benefits and expenses. Premium deficiency reserves do not include a provision for the risk of adverse deviation. Any adjustments to future policy benefit reserves related to net unrealized gains on securities classified as available-for-sale are included in AOCI. See Note 7 for additional information regarding future policy benefits. | |
Policyholders' Account Balances | |
The Company's liability for policyholders' account balances represents the contract value that has accrued to the benefit of the policyholder as of the balance sheet date. This liability is primarily associated with the accumulated account deposits, plus interest credited, less policyholder withdrawals and other charges assessed against the account balance. These policyholders' account balances also include provision for benefits under non-life contingent payout annuities and certain unearned revenues. | |
Contingent Liabilities | |
Amounts related to contingent liabilities are accrued if it is probable that a liability has been incurred and an amount is reasonably estimable. Management evaluates whether there are incremental legal or other costs directly associated with the ultimate resolution of the matter that are reasonably estimable and, if so, they are included in the accrual. These items are recorded within “Other liabilities.” | |
Insurance Revenue and Expense Recognition | |
Revenues for variable deferred annuity contracts consist of charges against contractholder account values or separate accounts for mortality and expense risks, administration fees, surrender charges and an annual maintenance fee per contract. Revenues for mortality and expense risk charges and administration fees are recognized as assessed against the contractholder. Surrender charge revenue is recognized when the surrender charge is assessed against the contractholder at the time of surrender. Liabilities for the variable investment options on annuity contracts represent the account value of the contracts and are included in “Separate account liabilities.” | |
Revenues for variable immediate annuity and supplementary contracts with life contingencies consist of certain charges against contractholder account values including mortality and expense risks and administration fees. These charges and fees are recognized as revenue when assessed against the contractholder. Liabilities for variable immediate annuity contracts represent the account value of the contracts and are included in “Separate account liabilities.” | |
Revenues for fixed immediate annuity and fixed supplementary contracts with and without life contingencies consist of net investment income. In addition, revenues for fixed immediate annuity contracts with life contingencies also consist of single premium payments recognized as annuity considerations when received. Liabilities for these contracts are based on applicable U.S. GAAP standards with assumed interest rates that vary by contract year. Reserves for contracts without life contingencies are included in “Policyholders' account balances” while reserves for contracts with life contingencies are included in “future policy benefits and other policyholder liabilities.” Assumed interest rates ranged from 0.00% to 8.25% at December 31, 2014, and from 0.00% to 8.25% at December 31, 2013. | |
Revenues for variable life insurance contracts consist of charges against contractholder account values or separate accounts for expense charges, administration fees, cost of insurance charges and surrender charges. Certain contracts also include charges against premium to pay state premium taxes. All of these charges are recognized as revenue when assessed against the contractholder. Liabilities for variable life insurance contracts represent the account value of the contracts and are included in “Separate account liabilities.” | |
Certain individual annuity contracts provide the contractholder a guarantee that the benefit received upon death or annuitization will be no less than a minimum prescribed amount. These benefits are accounted for as insurance contracts and are discussed in further detail in Note 7. The Company also provides contracts with certain living benefits which are considered embedded derivatives. These contracts are discussed in further detail in Note 7. | |
Premiums, benefits and expenses are stated net of reinsurance ceded to other companies. | |
Asset Administration Fees | |
The Company receives asset administration fee income on contractholders' account balances invested in the Advanced Series Trust Funds or “AST” (see Note 13), which are a portfolio of mutual fund investments related to the Company's separate account products. In addition, the Company receives fees on contractholders' account balances invested in funds managed by companies other than affiliates of Prudential Insurance. Asset administration fees are recognized as income when earned. | |
Derivative Financial Instruments | |
Derivatives are financial instruments whose values are derived from interest rates, foreign exchange rates, financial indices, values of securities or commodities, credit spreads, market volatility, expected returns, and liquidity. Values can also be affected by changes in estimates and assumptions, including those related to counterparty behavior and non-performance risk used in valuation models. Derivative financial instruments generally used by the Company include swaps, futures, forwards and options and may be exchange-traded or contracted in the OTC market. Derivative positions are carried at fair value, generally by obtaining quoted market prices or through the use of valuation models. | |
Derivatives are used to manage the interest rate and currency characteristics of assets or liabilities. Additionally, derivatives may be used to seek to reduce exposure to interest rate, credit, foreign currency and equity risks associated with assets held or expected to be purchased or sold, and liabilities incurred or expected to be incurred. As discussed in detail below and in Note 11, all realized and unrealized changes in fair value of derivatives are recorded in current earnings, with the exception of the effective portion of cash flow hedges. Cash flows from derivatives are reported in the operating, investing, or financing activities sections in the Statements of Cash Flows based on the nature and purpose of the derivative. | |
Derivatives are recorded either as assets, within “Trading account assets, at fair value” or “Other long-term investments,” or as liabilities, within “Other liabilities,” except for embedded derivatives which are recorded with the associated host contract. The Company nets the fair value of all derivative financial instruments with counterparties for which a master netting arrangement has been executed. | |
The Company designates derivatives as either (1) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow” hedge); or (2) a derivative that does not qualify for hedge accounting. | |
To qualify for hedge accounting treatment, a derivative must be highly effective in mitigating the designated risk of the hedged item. Effectiveness of the hedge is formally assessed at inception and throughout the life of the hedging relationship. Even if a derivative qualifies for hedge accounting treatment, there may be an element of ineffectiveness of the hedge. Under such circumstances, the ineffective portion is recorded in “Realized investment gains (losses), net.” | |
The Company formally documents at inception all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives designated as cash flow hedges to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. | |
When a derivative is designated as a cash flow hedge and is determined to be highly effective, changes in its fair value are recorded in AOCI until earnings are affected by the variability of cash flows being hedged (e.g., when periodic settlements on a variable-rate asset or liability are recorded in earnings). At that time, the related portion of deferred gains or losses on the derivative instrument is reclassified and reported in the income statement line item associated with the hedged item. | |
If it is determined that a derivative no longer qualifies as an effective cash flow hedge or management removes the hedge designation, the derivative will continue to be carried on the balance sheet at its fair value, with changes in fair value recognized currently in “Realized investment gains (losses), net.” The component of AOCI related to discontinued cash flow hedges is reclassified to the income statement line associated with the hedged cash flows consistent with the earnings impact of the original hedged cash flows. | |
When hedge accounting is discontinued because the hedged item no longer meets the definition of a firm commitment, or because it is probable that the forecasted transaction will not occur by the end of the specified time period, the derivative will continue to be carried on the balance sheet at its fair value, with changes in fair value recognized currently in “Realized investment gains (losses), net.” Any asset or liability that was recorded pursuant to recognition of the firm commitment is removed from the balance sheet and recognized currently in “Realized investment gains (losses), net.” Gains and losses that were in AOCI pursuant to the hedge of a forecasted transaction are recognized immediately in “Realized investment gains (losses), net.” | |
If a derivative does not qualify for hedge accounting, all changes in its fair value, including net receipts and payments, are included in “Realized investment gains (losses), net” without considering changes in the fair value of the economically associated assets or liabilities. | |
The Company is a party to financial instruments that contain derivative instruments that are “embedded” in the financial instruments. At inception, the Company assesses whether the economic characteristics of the embedded instrument are clearly and closely related to the economic characteristics of the remaining component of the financial instrument (i.e., the host contract) and whether a separate instrument with the same terms as the embedded instrument would meet the definition of a derivative instrument. When it is determined that (1) the embedded instrument possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract, and (2) a separate instrument with the same terms would qualify as a derivative instrument, the embedded instrument qualifies as an embedded derivative that is separated from the host contract, carried at fair value, and changes in its fair value are included in “Realized investment gains (losses), net.” For certain financial instruments that contain an embedded derivative that otherwise would need to be bifurcated and reported at fair value, the Company may elect to classify the entire instrument as a trading account asset and report it within “Trading account assets, at fair value.” | |
The Company sold variable annuity contracts that include optional living benefit features that may be treated from an accounting perspective as embedded derivatives. The Company has reinsurance agreements to transfer the risk related to certain of these benefit features to an affiliate, Pruco Re. The embedded derivatives related to the living benefit features and the related reinsurance agreements are carried at fair value and included in “Future policy benefits and other policyholder liabilities” and “Reinsurance recoverables,” respectively. Changes in the fair value are determined using valuation models as described in Note 10, and are recorded in “Realized investment gains (losses), net.” | |
Short-Term and Long-Term Debt | |
Liabilities for short-term and long-term debt are primarily carried at an amount equal to unpaid principal balance, net of unamortized discount or premium. Original-issue discount or premium and debt-issue costs are recognized as a component of interest expense over the period the debt is expected to be outstanding, using the interest method of amortization. Short-term debt is debt coming due in the next twelve months, including that portion of debt otherwise classified as long-term. The short-term debt caption may exclude short-term debt items the Company intends to refinance on a long-term basis in the near term. See Note 13 for additional information regarding short-term and long-term debt. | |
Income Taxes | |
The Company is a member of the federal income tax return of Prudential Financial and primarily files separate company state and local tax returns. Pursuant to the tax allocation arrangement with Prudential Financial, total federal income tax expense is determined on a separate company basis. Members with losses record tax benefits to the extent such losses are recognized in the consolidated federal tax provision. | |
Deferred income taxes are recognized, based on enacted rates, when assets and liabilities have different values for financial statement and tax reporting purposes. A valuation allowance is recorded to reduce a deferred tax asset to the amount expected to be realized. | |
Items required by tax regulations to be included in the tax return may differ from the items reflected in the financial statements. As a result, the effective tax rate reflected in the financial statements may be different than the actual rate applied on the tax return. Some of these differences are permanent such as expenses that are not deductible in the Company's tax return, and some differences are temporary, reversing over time, such as valuation of insurance reserves. Temporary differences create deferred tax assets and liabilities. Deferred tax assets generally represent items that can be used as a tax deduction or credit in future years for which the Company has already recorded the tax benefit in the Company's income statement. Deferred tax liabilities generally represent tax expense recognized in the Company's financial statements for which payment has been deferred, or expenditures for which the Company has already taken a deduction in the Company's tax return but have not yet been recognized in the Company's financial statements. | |
The application of U.S. GAAP requires the Company to evaluate the recoverability of the Company's deferred tax assets and establish a valuation allowance if necessary to reduce the Company's deferred tax assets to an amount that is more likely than not to be realized. Considerable judgment is required in determining whether a valuation allowance is necessary, and if so, the amount of such valuation allowance. In evaluating the need for a valuation allowance the Company may consider many factors, including: (1) the nature of the deferred tax assets and liabilities; (2) whether they are ordinary or capital; (3) in which tax jurisdictions they were generated and the timing of their reversal; (4) taxable income in prior carryback years as well as projected taxable earnings exclusive of reversing temporary differences and carryforwards; (5) the length of time that carryovers can be utilized in the various taxing jurisdictions; (6) any unique tax rules that would impact the utilization of the deferred tax assets; and (7) any tax planning strategies that the Company would employ to avoid a tax benefit from expiring unused. Although realization is not assured, management believes it is more likely than not that the deferred tax assets, net of valuation allowances, will be realized. | |
U.S. GAAP prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that a company has taken or expects to take on tax returns. The application of this guidance is a two-step process, the first step being recognition. The Company determines whether it is more likely than not, based on the technical merits, that the tax position will be sustained upon examination. If a tax position does not meet the more likely than not recognition threshold, the benefit of that position is not recognized in the financial statements. The second step is measurement. The Company measures the tax position as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate resolution with a taxing authority that has full knowledge of all relevant information. This measurement considers the amounts and probabilities of the outcomes that could be realized upon ultimate settlement using the facts, circumstances, and information available at the reporting date. | |
The Company's liability for income taxes includes the liability for unrecognized tax benefits, interest and penalties which relate to tax years still subject to review by the Internal Revenue Service (“IRS”) or other taxing jurisdictions. Audit periods remain open for review until the statute of limitations has passed. Generally, for tax years which produce net operating losses, capital losses or tax credit carryforwards (“tax attributes”), the statute of limitations does not close, to the extent of these tax attributes, until the expiration of the statute of limitations for the tax year in which they are fully utilized. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the liability for income taxes. The Company classifies all interest and penalties related to tax uncertainties as income tax expense. | |
See Note 9 for additional information regarding income taxes. | |
Adoption of New Accounting Pronouncements | |
In December 2013, the Financial Accounting Standards Board (“FASB”) issued updated guidance establishing a single definition of a public entity for use in financial accounting and reporting guidance. This new guidance is effective for all current and future reporting periods and did not have a significant effect on the Company's financial position, results of operations or financial statement disclosures. | |
In July 2013, the FASB issued new guidance regarding derivatives. The guidance permits the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) to be used as a U.S. benchmark interest rate for hedge accounting, in addition to the United States Treasury rate and London Inter-Bank Offered Rate (“LIBOR”). The guidance also removes the restriction on using different benchmark rates for similar hedges. The guidance is effective for qualifying new or redesignated hedging relationships entered into on or after July 17, 2013, and was applied prospectively. Adoption of the guidance did not have a significant effect on the Company's financial position, results of operations or financial statement disclosures. | |
In July 2013, the FASB issued updated guidance regarding the presentation of unrecognized tax benefits when net operating loss carryforwards, similar tax losses, or tax credit carryforwards exist. This new guidance became effective for interim or annual reporting periods that began after December 15, 2013, and was applied prospectively. Adoption of the guidance did not have a significant effect on the Company's financial position, results of operations or financial statement disclosures. | |
In February 2013, the FASB issued updated guidance regarding the presentation of comprehensive income. Under the guidance, an entity is required to separately present information about significant items reclassified out of accumulated other comprehensive income (“AOCI”) by component as well as changes in AOCI balances by component in either the financial statements or the notes to the financial statements. The guidance does not change the items that are reported in other comprehensive income, does not change when an item of other comprehensive income must be reclassified to net income, and does not amend any existing requirements for reporting net income or other comprehensive income. The guidance became effective for interim or annual reporting periods that began after December 15, 2012 and was applied prospectively. The disclosures required by this guidance are included in Note 3. | |
In December 2011 and January 2013, the FASB issued updated guidance regarding the disclosure of recognized derivative instruments (including bifurcated embedded derivatives), repurchase agreements and securities borrowing/lending transactions that are offset in the statement of financial position or are subject to an enforceable master netting arrangement or similar agreement (irrespective of whether they are offset in the statement of financial position). This new guidance requires an entity to disclose information on both a gross and net basis about instruments and transactions within the scope of this guidance. This new guidance became effective for interim or annual reporting periods that began on or after January 1, 2013, and was applied retrospectively for all comparative periods presented. The disclosures required by this guidance are included in Note 11. | |
Future Adoption of New Accounting Pronouncements | |
In January 2014, the FASB issued updated guidance for troubled debt restructurings clarifying when an in substance repossession or foreclosure occurs, and when a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan. The new guidance is effective for annual periods and interim periods within those annual periods, beginning after December 15, 2014. This guidance can be elected for prospective adoption or by using a modified retrospective transition method. This guidance is not expected to have a significant effect on the Company's financial position, results of operations or financial statement disclosures. | |
In May 2014, the FASB issued updated guidance on accounting for revenue recognition. The guidance is based on the core principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The guidance also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from cost incurred to obtain or fulfill a contract. Revenue recognition for insurance contracts is explicitly scoped out of the guidance. The new guidance is effective for annual periods and interim periods within those annual periods, beginning after December 15, 2016, and must be applied using one of two retrospective application methods. Early adoption is not permitted. The Company is currently assessing the impact of the guidance on the Company's financial position, results of operations and financial statement disclosures. | |
In August 2014, the FASB issued updated guidance for measuring the financial assets and the financial liabilities of a consolidated collateralized financing entity. Under the guidance, an entity within scope is permitted to measure both the financial assets and financial liabilities of a consolidated collateralized financing entity based on either the fair value of the financial assets or the financial liabilities, whichever is more observable. If elected, the guidance will eliminate the measurement difference that exists when both are measured at fair value. The new guidance is effective for annual periods and interim reporting periods within those annual periods, beginning after December 15, 2015. Early adoption will be permitted. This guidance can be elected for modified retrospective or full retrospective adoption. The Company is currently assessing the impact of the guidance on the Company's financial position, results of operations and financial statement disclosures. | |
In August 2014, the FASB issued guidance requiring that mortgage loans be derecognized and that a separate other receivable be recognized upon foreclosure if certain conditions are met. Upon foreclosure, the separate other receivable should be measured based on the amount of the loan balance (principal and interest) expected to be recovered from the guarantor. The new guidance is effective for annual periods and interim periods within those annual periods, beginning after December 15, 2014, with early adoption permitted. This guidance can be adopted using either a prospective transition method or a modified retrospective transition method. This guidance is not expected to have a significant impact on the Company's financial position, results of operations or financial statement disclosures. |
Significant_Accounting_Policie
Significant Accounting Policies and Pronouncements | 12 Months Ended |
Dec. 31, 2014 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies and Pronouncements | 2. SIGNIFICANT ACCOUNTING POLICIES AND PRONOUNCEMENTS |
Investments and Investment Related Liabilities | |
The Company's principal investments are fixed maturities, equity securities, commercial mortgage and other loans, policy loans, other long-term investments, including joint ventures (other than operating joint ventures), limited partnerships, and real estate, and short-term investments. Investments and investment-related liabilities also include securities repurchase and resale agreements and securities lending transactions. The accounting policies related to each are as follows: | |
Fixed maturities, available-for-sale, at fair value are comprised of bonds, notes and redeemable preferred stock. Fixed maturities classified as “available-for-sale” are carried at fair value. See Note 10 for additional information regarding the determination of fair value. Interest income, as well as the related amortization of premium and accretion of discount is included in “Net investment income” under the effective yield method. For mortgage-backed and asset-backed securities, the effective yield is based on estimated cash flows, including interest rate and prepayment assumptions based on data from widely accepted third-party data sources or internal estimates. In addition to interest rate and prepayment assumptions, cash flow estimates also vary based on other assumptions regarding the underlying collateral including default rates and changes in value. These assumptions can significantly impact income recognition and the amount of other-than-temporary impairments recognized in earnings and other comprehensive income. For high credit quality mortgage-backed and asset-backed securities (those rated AA or above), cash flows are provided quarterly, and the amortized cost and effective yield of the security are adjusted as necessary to reflect historical prepayment experience and changes in estimated future prepayments. The adjustments to amortized cost are recorded as a charge or credit to net investment income in accordance with the retrospective method. For mortgage-backed and asset-backed securities rated below AA or those for which an other than temporary impairment has been recorded, the effective yield is adjusted prospectively for any changes in estimated cash flows. See the discussion below on realized investment gains and losses for a description of the accounting for impairments. Unrealized gains and losses on fixed maturities classified as “available-for-sale,” net of tax, and the effect on deferred policy acquisition costs (“DAC”), value of business acquired (“VOBA”), deferred sales inducements (“DSI”), and future policy benefits that would result from the realization of unrealized gains and losses, are included in “Accumulated other comprehensive income (loss)” (“AOCI”). | |
Trading account assets, at fair value, represents equity securities and other fixed maturity securities carried at fair value. Realized and unrealized gains and losses for these investments are reported in “Asset administration fees and other income.” Interest and dividend income from these investments is reported in “Net investment income.” | |
Equity securities, available-for-sale, at fair value, are comprised of mutual fund shares and are carried at fair value. The associated unrealized gains and losses, net of tax, and the effect on DAC, VOBA, DSI, and future policy benefits that would result from the realization of unrealized gains and losses, are included in AOCI. The cost of equity securities is written down to fair value when a decline in value is considered to be other-than-temporary. See the discussion below on realized investment gains and losses for a description of the accounting for impairments. Dividends from these investments are recognized in “Net investment income” when earned. | |
Commercial mortgage and other loans consist of commercial mortgage loans, agricultural loans and uncollateralized loans. Commercial mortgage and other loans held for investment are generally carried at unpaid principal balance, net of unamortized deferred loan origination fees and expenses and net of an allowance for losses. Commercial mortgage and other loans acquired, including those related to the acquisition of a business, are recorded at fair value when purchased, reflecting any premiums or discounts to unpaid principal balances. | |
Interest income, as well as prepayment fees and the amortization of the related premiums or discounts, related to commercial mortgage and other loans, are included in “Net investment income.” | |
Impaired loans include those loans for which it is probable that amounts due will not all be collected according to the contractual terms of the loan agreement. The Company defines “past due” as principal or interest not collected at least 30 days past the scheduled contractual due date. Interest received on loans that are past due, including impaired and non-impaired loans, as well as, loans that were previously modified in a troubled debt restructuring, is either applied against the principal or reported as net investment income based on the Company's assessment as to the collectability of the principal. See Note 3 for additional information about the Company's past due loans. | |
The Company discontinues accruing interest on loans after the loans become 90 days delinquent as to principal or interest payments, or earlier when the Company has doubts about collectability. When the Company discontinues accruing interest on a loan, any accrued but uncollectible interest on the loan and other loans backed by the same collateral, if any, is charged to interest income in the same period. Generally, a loan is restored to accrual status only after all delinquent interest and principal are brought current and, in the case of loans where the payment of interest has been interrupted for a substantial period, or the loan has been modified, a regular payment performance has been established. | |
The Company reviews the performance and credit quality of the commercial mortgage and other loan portfolio on an on-going basis. Loans are placed on watch list status based on a predefined set of criteria and are assigned one of three categories. Loans are placed on “early warning” status in cases where, based on the Company's analysis of the loan's collateral, the financial situation of the borrower or tenants or other market factors, it is believed a loss of principal or interest could occur. Loans are classified as “closely monitored” when it is determined that there is a collateral deficiency or other credit events that may lead to a potential loss of principal or interest. Loans “not in good standing” are those loans where the Company has concluded that there is a high probability of loss of principal, such as when the loan is delinquent or in the process of foreclosure. As described below, in determining the allowance for losses, the Company evaluates each loan on the watch list to determine if it is probable that amounts due will not be collected according to the contractual terms of the loan agreement. | |
Loan-to-value and debt service coverage ratios are measures commonly used to assess the quality of commercial mortgage loans. The loan-to-value ratio compares the amount of the loan to the fair value of the underlying property collateralizing the loan, and is commonly expressed as a percentage. Loan-to-value ratios greater than 100% indicate that the loan amount exceeds the collateral value. A smaller loan-to-value ratio indicates a greater excess of collateral value over the loan amount. The debt service coverage ratio compares a property's net operating income to its debt service payments. Debt service coverage ratios less than 1.0 times indicate that property operations do not generate enough income to cover the loan's current debt payments. A larger debt service coverage ratio indicates a greater excess of net operating income over the debt service payments. The values utilized in calculating these ratios are developed as part of the Company's periodic review of the commercial mortgage loan and agricultural loan portfolio, which includes an internal appraisal of the underlying collateral value. The Company's periodic review also includes a quality re-rating process, whereby the internal quality rating originally assigned at underwriting is updated based on current loan, property and market information using a proprietary quality rating system. The loan-to-value ratio is the most significant of several inputs used to establish the internal credit rating of a loan which in turn drives the allowance for losses. Other key factors considered in determining the internal credit rating include debt service coverage ratios, amortization, loan term, estimated market value growth rate and volatility for the property type and region. See Note 3 for additional information related to the loan-to-value ratios and debt service coverage ratios related to the Company's commercial mortgage and agricultural loan portfolios. | |
The allowance for losses includes a loan specific reserve for each impaired loan that has a specifically identified loss and a portfolio reserve for probable incurred but not specifically identified losses. For impaired commercial mortgage and other loans the allowances for losses are determined based on the present value of expected future cash flows discounted at the loan's effective interest rate, or based upon the fair value of the collateral if the loan is collateral dependent. The portfolio reserves for probable incurred but not specifically identified losses in the commercial mortgage and agricultural loan portfolios considers the current credit composition of the portfolio based on an internal quality rating, (as described above). The portfolio reserves are determined using past loan experience, including historical credit migration, loss probability and loss severity factors by property type. These factors are reviewed each quarter and updated as appropriate. | |
The allowance for losses on commercial mortgage and other loans can increase or decrease from period to period based on the factors noted above. “Realized investment gains (losses), net” includes changes in the allowance for losses. “Realized investment gains (losses), net” also includes gains and losses on sales, certain restructurings, and foreclosures. | |
When a commercial mortgage or other loan is deemed to be uncollectible, any specific valuation allowance associated with the loan is reversed and a direct write down to the carrying amount of the loan is made. The carrying amount of the loan is not adjusted for subsequent recoveries in value. | |
In situations where a loan has been restructured in a troubled debt restructuring and the loan has subsequently defaulted, this factor is considered when evaluating the loan for a specific allowance for losses in accordance with the credit review process noted above. | |
See Note 3 for additional information about commercial mortgage and other loans that have been restructured in a troubled debt restructuring. | |
Policy loans are carried at unpaid principal balances. Interest income on policy loans is recognized in “Net investment income” at the contract interest rate when earned. Policy loans are fully collateralized by the cash surrender value of the associated insurance policies. | |
Securities repurchase and resale agreements and securities loaned transactions are used primarily to earn spread income, to borrow funds, or to facilitate trading activity. As part of securities repurchase agreements or securities loaned transactions, the Company transfers U.S. and foreign debt and equity securities, as well as U.S. government and government agency securities and receives cash as collateral. As part of securities resale agreements, the Company invests cash and receives as collateral U.S. government securities or other debt securities. For securities repurchase agreements and securities loaned transactions used to earn spread income, the cash received is typically invested in cash equivalents, short-term investments or fixed maturities. | |
Securities loaned transactions are treated as financing arrangements and are recorded at the amount of cash received. The Company obtains collateral in an amount equal to 102% and 105% of the fair value of the domestic and foreign securities, respectively. The Company monitors the market value of the securities loaned on a daily basis with additional collateral obtained as necessary. Substantially all of the Company's securities loaned transactions are with large brokerage firms. Income and expenses associated with securities loaned transactions used to earn spread income are reported as “Net investment income;” however, for securities loaned transactions used for funding purposes the associated rebate is reported as interest expense (included in “General, administrative and other expenses”). | |
Other long-term investments consist of the Company's non-coupon investments in joint ventures and limited partnerships, other than operating joint ventures, as well as wholly-owned investment real estate and other investments. Joint venture and partnership interests are either accounted for using the equity method of accounting or under the cost method when the Company's partnership interest is so minor (generally less than 3%) that it exercises virtually no influence over operating and financial policies. The Company's income from investments in joint ventures and partnerships accounted for using the equity method or the cost method, other than the Company's investment in operating joint ventures, is included in “Net investment income.” The carrying value of these investments is written down, or impaired, to fair value when a decline in value is considered to be other-than-temporary. In applying the equity method or the cost method (including assessment for other-than-temporary impairment), the Company uses financial information provided by the investee, generally on a one to three month lag. | |
Short-term investments primarily consist of highly liquid debt instruments with a maturity of twelve months or less and greater than three months when purchased. These investments are generally carried at fair value and include certain money market investments, short-term debt securities issued by government sponsored entities and other highly liquid debt instruments. | |
Realized investment gains (losses) are computed using the specific identification method. Realized investment gains and losses are generated from numerous sources, including the sale of fixed maturity securities, equity securities, investments in joint ventures and limited partnerships and other types of investments, as well as adjustments to the cost basis of investments for net other-than-temporary impairments recognized in earnings. Realized investment gains and losses are also generated from prepayment premiums received on private fixed maturity securities, allowance for losses on commercial mortgage and other loans, and fair value changes on embedded derivatives and free-standing derivatives that do not qualify for hedge accounting treatment. See “Derivative Financial Instruments” below for additional information regarding the accounting for derivatives. | |
The Company's available-for-sale securities with unrealized losses are reviewed quarterly to identify other-than-temporary impairments in value. In evaluating whether a decline in value is other-than-temporary, the Company considers several factors including, but not limited to the following: (1) the extent and the duration of the decline; (2) the reasons for the decline in value (credit event, currency or interest-rate related, including general credit spread widening); and (3) the financial condition of and near-term prospects of the issuer. With regard to available-for-sale equity securities, the Company also considers the ability and intent to hold the investment for a period of time to allow for a recovery of value. When it is determined that a decline in value of an equity security is other-than-temporary, the carrying value of the equity security is reduced to its fair value, with a corresponding charge to earnings. | |
An other-than-temporary impairment is recognized in earnings for a debt security in an unrealized loss position when the Company either (a) has the intent to sell the debt security or (b) more likely than not will be required to sell the debt security before its anticipated recovery. For all debt securities in unrealized loss positions that do not meet either of these two criteria, the Company analyzes its ability to recover the amortized cost by comparing the net present value of projected future cash flows with the amortized cost of the security. The net present value is calculated by discounting the Company's best estimate of projected future cash flows at the effective interest rate implicit in the debt security prior to impairment. The Company may use the estimated fair value of collateral as a proxy for the net present value if it believes that the security is dependent on the liquidation of collateral for recovery of its investment. If the net present value is less than the amortized cost of the investment an other-than-temporary impairment is recognized. | |
When an other-than-temporary impairment of a debt security has occurred, the amount of the other-than-temporary impairment recognized in earnings depends on whether the Company intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis. If the debt security meets either of these two criteria, the other-than-temporary impairment recognized in earnings is equal to the entire difference between the security's amortized cost basis and its fair value at the impairment measurement date. For other-than-temporary impairments of debt securities that do not meet these criteria, the net amount recognized in earnings is equal to the difference between the amortized cost of the debt security and its net present value calculated as described above. Any difference between the fair value and the net present value of the debt security at the impairment measurement date is recorded in “Other comprehensive income (loss)” (“OCI”). Unrealized gains or losses on securities for which an other-than-temporary impairment has been recognized in earnings is tracked as a separate component of AOCI. | |
For debt securities, the split between the amount of an other-than-temporary impairment recognized in other comprehensive income and the net amount recognized in earnings is driven principally by assumptions regarding the amount and timing of projected cash flows. For mortgage-backed and asset-backed securities, cash flow estimates consider the payment terms of the underlying assets backing a particular security, including interest rate and prepayment assumptions, based on data from widely accepted third-party data sources or internal estimates. In addition to interest rate and prepayment assumptions, cash flow estimates also include other assumptions regarding the underlying collateral including default rates and recoveries, which vary based on the asset type and geographic location, as well as the vintage year of the security. For structured securities, the payment priority within the tranche structure is also considered. For all other debt securities, cash flow estimates are driven by assumptions regarding probability of default and estimates regarding timing and amount of recoveries associated with a default. The Company has developed these estimates using information based on its historical experience as well as using market observable data, such as industry analyst reports and forecasts, sector credit ratings and other data relevant to the collectability of a security, such as the general payment terms of the security and the security's position within the capital structure of the issuer. | |
The new cost basis of an impaired security is not adjusted for subsequent increases in estimated fair value. In periods subsequent to the recognition of an other-than-temporary impairment, the impaired security is accounted for as if it had been purchased on the measurement date of the impairment. For debt securities, the discount (or reduced premium) based on the new cost basis may be accreted into net investment income in future periods, including increases in cash flow on a prospective basis. In certain cases where there are decreased cash flow expectations, the security is reviewed for further cash flow impairments. | |
Unrealized investment gains and losses are also considered in determining certain other balances, including DAC, VOBA, DSI, certain future policy benefits and deferred tax assets or liabilities. These balances are adjusted, as applicable, for the impact of unrealized gains or losses on investments as if these gains or losses had been realized, with corresponding credits or charges included in AOCI. Each of these balances is discussed in greater detail below. | |
Cash and Cash Equivalents | |
Cash and cash equivalents include cash on hand, amounts due from banks, certain money market investments and other debt instruments with maturities of three months or less when purchased, other than cash equivalents that are included in “Trading account assets, at fair value.” The Company also engages in overnight borrowing and lending of funds with Prudential Financial and affiliates which are considered cash and cash equivalents. | |
Deferred Policy Acquisition Costs | |
Costs that are related directly to the successful acquisition of new and renewal insurance and annuity business are deferred to the extent such costs are deemed recoverable from future profits. Such DAC primarily include commissions, costs of policy issuance and underwriting, and certain other expenses that are directly related to successfully negotiated contracts. In each reporting period, capitalized DAC is amortized to “Amortization of deferred policy acquisition costs,” net of the accrual of imputed interest on DAC balances. DAC is subject to periodic recoverability testing. DAC, for applicable products, is adjusted for the impact of unrealized gains or losses on investments as if these gains or losses had been realized, with corresponding credits or charges included in AOCI. | |
DAC related to fixed and variable deferred annuity products are generally deferred and amortized over the expected life of the contracts in proportion to gross profits arising principally from investment margins, mortality and expense margins, and surrender charges, based on historical and anticipated future experience, which is updated periodically. The Company uses a reversion to the mean approach for equities to derive future equity return assumptions. | |
However, if the projected equity return calculated using this approach is greater than the maximum equity return assumption, the maximum equity return is utilized. Gross profits also include impacts from the embedded derivatives associated with certain of the optional living benefit features of the Company's variable annuity contracts and related hedging activities. In calculating gross profits, profits and losses related to contracts issued by the Company that are reported in affiliated legal entities other than the Company as a result of, for example, reinsurance agreements with those affiliated entities, are also included. The Company is an indirect subsidiary of Prudential Financial (an SEC registrant) and has extensive transactions and relationships with other subsidiaries of Prudential Financial, including reinsurance agreements, as described in Note 13. Incorporating all product-related profits and losses in gross profits, including those that are reported in affiliated legal entities, produces a DAC amortization pattern representative of the total economics of the products. The effect of changes to total gross profits on unamortized DAC is reflected in the period such total gross profits are revised. | |
For some products, policyholders can elect to modify product benefits, features, rights or coverages by amendment, endorsement, or rider to a contract, or by the election of a feature or coverage within a contract. These transactions are known as internal replacements. For internal replacement transactions, except those that involve the addition of a nonintegrated contract feature that does not change the existing base contract, the unamortized DAC is immediately charged to expense if the terms of the new policies are not substantially similar to those of the former policies. If the new terms are substantially similar to those of the earlier policies, the DAC is retained with respect to the new policies and amortized over the expected life of the new policies. | |
Deferred Sales Inducements | |
The Company offered various types of sales inducements to contractholders related to fixed and variable deferred annuity contracts. The Company defers sales inducements and amortizes them over the anticipated life of the policy using the same methodology and assumptions used to amortize DAC. Sales inducements balances are subject to periodic recoverability testing. The Company records amortization of DSI in “Interest credited to policyholders' account balances.” DSI for applicable products is adjusted for the impact of unrealized gains or losses on investments as if these gains or losses had been realized, with corresponding credits or charges included in AOCI. See Note 7 for additional information regarding sales inducements. | |
Value of Business Acquired | |
As a result of certain acquisitions and the application of purchase accounting, the Company reports a financial asset representing VOBA. VOBA includes an explicit adjustment to reflect the cost of capital attributable to the acquired insurance contracts. VOBA represents an adjustment to the stated value of inforce insurance contract liabilities to present them at fair value, determined as of the acquisition date. VOBA balances are subject to recoverability testing, in the manner in which it was acquired. The Company has established a VOBA asset primarily for its acquisition of American Skandia Life Assurance Corporation. For acquired annuity contracts, VOBA is amortized in proportion to gross profits arising principally from investment margins, mortality and expense margins, and surrender charges, based on historical and anticipated future experience, which is updated periodically. See Note 5 for additional information regarding VOBA. | |
Reinsurance recoverables | |
Reinsurance recoverables include corresponding receivables associated with reinsurance arrangements with affiliates. For additional information about these arrangements see Note 13. | |
Separate Account Assets and Liabilities | |
Separate account assets are reported at fair value and represent segregated funds that are invested for certain contractholders. “Separate account assets” are predominantly shares in Advanced Series Trust co-managed by AST Investment Services, Incorporated (“ASISI”) and Prudential Investments LLC, which utilizes various fund managers as sub-advisors. The remaining assets are shares in other mutual funds, which are managed by independent investment firms. The contractholder has the option of directing funds to a wide variety of investment options, most of which invest in mutual funds. The investment risk on the variable portion of a contract is borne by the contractholder, except to the extent of minimum guarantees by the Company, which are not separate account liabilities. See Note 7 to the Financial Statements for additional information regarding separate account arrangements with contractual guarantees. The assets of each account are legally segregated and are not subject to claims that arise out of any other business of the Company. Separate account liabilities primarily represent the contractholders' account balance in separate account assets and to a lesser extent borrowings of the separate account, and will be equal and offsetting to total separate account assets. The investment income and realized investment gains or losses from separate accounts generally accrue to the contractholders and are not included in the Company's results of operations. Mortality, policy administration and surrender charges assessed against the accounts are included in “Policy charges and fee income”. Asset administration fees charged to the accounts are included in “Asset administration fees and other income.” | |
Other Assets and Other Liabilities | |
“Other assets” consist primarily of accruals for asset administration fees. “Other assets” also consist of state insurance licenses. Licenses to do business in all states have been capitalized. Based on changes in facts and circumstances, effective September 30, 2012, the capitalized state insurance licenses were considered to have a finite life and are amortized over their useful life, which was estimated to be 8 years. Amortization is recorded through “General, administrative and other expenses.” | |
“Other liabilities” consist primarily of accrued expenses and technical overdrafts. Other liabilities may also include derivative instruments for which fair values are determined as described above under “Derivative Financial Instruments”. | |
Future Policy Benefits and Other Policyholder Liabilities | |
The Company's liability for future policy benefits is primarily comprised of liabilities for guarantee benefits related to certain nontraditional long-duration life and annuity contracts, which are discussed more fully in Note 7. These reserves represent reserves for the guaranteed minimum death and optional living benefit features on the Company's variable annuity products. The optional living benefits are primarily accounted for as embedded derivatives, with fair values calculated as the present value of future expected benefit payments to customers less the present value of assessed rider fees attributable to the embedded derivative feature. For additional information regarding the valuation of these optional living benefit features, see Note 10. | |
The Company's liability for future policy benefits also includes reserves based on the present value of estimated future payments to or on behalf of policyholders, where the timing and amount of payment depends on policyholder mortality. Expected mortality is generally based on Company experience, industry data, and/or other factors. Interest rate assumptions are based on factors such as market conditions and expected investment returns. Although mortality and interest rate assumptions are “locked-in” upon the issuance of new insurance or annuity business with fixed and guaranteed terms, significant changes in experience or assumptions may require the Company to provide for expected future losses on a product by establishing premium deficiency reserves. Premium deficiency reserves are established, if necessary, when the liability for future policy benefits plus the present value of expected future gross premiums are determined to be insufficient to provide for expected future policy benefits and expenses. Premium deficiency reserves do not include a provision for the risk of adverse deviation. Any adjustments to future policy benefit reserves related to net unrealized gains on securities classified as available-for-sale are included in AOCI. See Note 7 for additional information regarding future policy benefits. | |
Policyholders' Account Balances | |
The Company's liability for policyholders' account balances represents the contract value that has accrued to the benefit of the policyholder as of the balance sheet date. This liability is primarily associated with the accumulated account deposits, plus interest credited, less policyholder withdrawals and other charges assessed against the account balance. These policyholders' account balances also include provision for benefits under non-life contingent payout annuities and certain unearned revenues. | |
Contingent Liabilities | |
Amounts related to contingent liabilities are accrued if it is probable that a liability has been incurred and an amount is reasonably estimable. Management evaluates whether there are incremental legal or other costs directly associated with the ultimate resolution of the matter that are reasonably estimable and, if so, they are included in the accrual. These items are recorded within “Other liabilities.” | |
Insurance Revenue and Expense Recognition | |
Revenues for variable deferred annuity contracts consist of charges against contractholder account values or separate accounts for mortality and expense risks, administration fees, surrender charges and an annual maintenance fee per contract. Revenues for mortality and expense risk charges and administration fees are recognized as assessed against the contractholder. Surrender charge revenue is recognized when the surrender charge is assessed against the contractholder at the time of surrender. Liabilities for the variable investment options on annuity contracts represent the account value of the contracts and are included in “Separate account liabilities.” | |
Revenues for variable immediate annuity and supplementary contracts with life contingencies consist of certain charges against contractholder account values including mortality and expense risks and administration fees. These charges and fees are recognized as revenue when assessed against the contractholder. Liabilities for variable immediate annuity contracts represent the account value of the contracts and are included in “Separate account liabilities.” | |
Revenues for fixed immediate annuity and fixed supplementary contracts with and without life contingencies consist of net investment income. In addition, revenues for fixed immediate annuity contracts with life contingencies also consist of single premium payments recognized as annuity considerations when received. Liabilities for these contracts are based on applicable U.S. GAAP standards with assumed interest rates that vary by contract year. Reserves for contracts without life contingencies are included in “Policyholders' account balances” while reserves for contracts with life contingencies are included in “future policy benefits and other policyholder liabilities.” Assumed interest rates ranged from 0.00% to 8.25% at December 31, 2014, and from 0.00% to 8.25% at December 31, 2013. | |
Revenues for variable life insurance contracts consist of charges against contractholder account values or separate accounts for expense charges, administration fees, cost of insurance charges and surrender charges. Certain contracts also include charges against premium to pay state premium taxes. All of these charges are recognized as revenue when assessed against the contractholder. Liabilities for variable life insurance contracts represent the account value of the contracts and are included in “Separate account liabilities.” | |
Certain individual annuity contracts provide the contractholder a guarantee that the benefit received upon death or annuitization will be no less than a minimum prescribed amount. These benefits are accounted for as insurance contracts and are discussed in further detail in Note 7. The Company also provides contracts with certain living benefits which are considered embedded derivatives. These contracts are discussed in further detail in Note 7. | |
Premiums, benefits and expenses are stated net of reinsurance ceded to other companies. | |
Asset Administration Fees | |
The Company receives asset administration fee income on contractholders' account balances invested in the Advanced Series Trust Funds or “AST” (see Note 13), which are a portfolio of mutual fund investments related to the Company's separate account products. In addition, the Company receives fees on contractholders' account balances invested in funds managed by companies other than affiliates of Prudential Insurance. Asset administration fees are recognized as income when earned. | |
Derivative Financial Instruments | |
Derivatives are financial instruments whose values are derived from interest rates, foreign exchange rates, financial indices, values of securities or commodities, credit spreads, market volatility, expected returns, and liquidity. Values can also be affected by changes in estimates and assumptions, including those related to counterparty behavior and non-performance risk used in valuation models. Derivative financial instruments generally used by the Company include swaps, futures, forwards and options and may be exchange-traded or contracted in the OTC market. Derivative positions are carried at fair value, generally by obtaining quoted market prices or through the use of valuation models. | |
Derivatives are used to manage the interest rate and currency characteristics of assets or liabilities. Additionally, derivatives may be used to seek to reduce exposure to interest rate, credit, foreign currency and equity risks associated with assets held or expected to be purchased or sold, and liabilities incurred or expected to be incurred. As discussed in detail below and in Note 11, all realized and unrealized changes in fair value of derivatives are recorded in current earnings, with the exception of the effective portion of cash flow hedges. Cash flows from derivatives are reported in the operating, investing, or financing activities sections in the Statements of Cash Flows based on the nature and purpose of the derivative. | |
Derivatives are recorded either as assets, within “Trading account assets, at fair value” or “Other long-term investments,” or as liabilities, within “Other liabilities,” except for embedded derivatives which are recorded with the associated host contract. The Company nets the fair value of all derivative financial instruments with counterparties for which a master netting arrangement has been executed. | |
The Company designates derivatives as either (1) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow” hedge); or (2) a derivative that does not qualify for hedge accounting. | |
To qualify for hedge accounting treatment, a derivative must be highly effective in mitigating the designated risk of the hedged item. Effectiveness of the hedge is formally assessed at inception and throughout the life of the hedging relationship. Even if a derivative qualifies for hedge accounting treatment, there may be an element of ineffectiveness of the hedge. Under such circumstances, the ineffective portion is recorded in “Realized investment gains (losses), net.” | |
The Company formally documents at inception all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives designated as cash flow hedges to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. | |
When a derivative is designated as a cash flow hedge and is determined to be highly effective, changes in its fair value are recorded in AOCI until earnings are affected by the variability of cash flows being hedged (e.g., when periodic settlements on a variable-rate asset or liability are recorded in earnings). At that time, the related portion of deferred gains or losses on the derivative instrument is reclassified and reported in the income statement line item associated with the hedged item. | |
If it is determined that a derivative no longer qualifies as an effective cash flow hedge or management removes the hedge designation, the derivative will continue to be carried on the balance sheet at its fair value, with changes in fair value recognized currently in “Realized investment gains (losses), net.” The component of AOCI related to discontinued cash flow hedges is reclassified to the income statement line associated with the hedged cash flows consistent with the earnings impact of the original hedged cash flows. | |
When hedge accounting is discontinued because the hedged item no longer meets the definition of a firm commitment, or because it is probable that the forecasted transaction will not occur by the end of the specified time period, the derivative will continue to be carried on the balance sheet at its fair value, with changes in fair value recognized currently in “Realized investment gains (losses), net.” Any asset or liability that was recorded pursuant to recognition of the firm commitment is removed from the balance sheet and recognized currently in “Realized investment gains (losses), net.” Gains and losses that were in AOCI pursuant to the hedge of a forecasted transaction are recognized immediately in “Realized investment gains (losses), net.” | |
If a derivative does not qualify for hedge accounting, all changes in its fair value, including net receipts and payments, are included in “Realized investment gains (losses), net” without considering changes in the fair value of the economically associated assets or liabilities. | |
The Company is a party to financial instruments that contain derivative instruments that are “embedded” in the financial instruments. At inception, the Company assesses whether the economic characteristics of the embedded instrument are clearly and closely related to the economic characteristics of the remaining component of the financial instrument (i.e., the host contract) and whether a separate instrument with the same terms as the embedded instrument would meet the definition of a derivative instrument. When it is determined that (1) the embedded instrument possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract, and (2) a separate instrument with the same terms would qualify as a derivative instrument, the embedded instrument qualifies as an embedded derivative that is separated from the host contract, carried at fair value, and changes in its fair value are included in “Realized investment gains (losses), net.” For certain financial instruments that contain an embedded derivative that otherwise would need to be bifurcated and reported at fair value, the Company may elect to classify the entire instrument as a trading account asset and report it within “Trading account assets, at fair value.” | |
The Company sold variable annuity contracts that include optional living benefit features that may be treated from an accounting perspective as embedded derivatives. The Company has reinsurance agreements to transfer the risk related to certain of these benefit features to an affiliate, Pruco Re. The embedded derivatives related to the living benefit features and the related reinsurance agreements are carried at fair value and included in “Future policy benefits and other policyholder liabilities” and “Reinsurance recoverables,” respectively. Changes in the fair value are determined using valuation models as described in Note 10, and are recorded in “Realized investment gains (losses), net.” | |
Short-Term and Long-Term Debt | |
Liabilities for short-term and long-term debt are primarily carried at an amount equal to unpaid principal balance, net of unamortized discount or premium. Original-issue discount or premium and debt-issue costs are recognized as a component of interest expense over the period the debt is expected to be outstanding, using the interest method of amortization. Short-term debt is debt coming due in the next twelve months, including that portion of debt otherwise classified as long-term. The short-term debt caption may exclude short-term debt items the Company intends to refinance on a long-term basis in the near term. See Note 13 for additional information regarding short-term and long-term debt. | |
Income Taxes | |
The Company is a member of the federal income tax return of Prudential Financial and primarily files separate company state and local tax returns. Pursuant to the tax allocation arrangement with Prudential Financial, total federal income tax expense is determined on a separate company basis. Members with losses record tax benefits to the extent such losses are recognized in the consolidated federal tax provision. | |
Deferred income taxes are recognized, based on enacted rates, when assets and liabilities have different values for financial statement and tax reporting purposes. A valuation allowance is recorded to reduce a deferred tax asset to the amount expected to be realized. | |
Items required by tax regulations to be included in the tax return may differ from the items reflected in the financial statements. As a result, the effective tax rate reflected in the financial statements may be different than the actual rate applied on the tax return. Some of these differences are permanent such as expenses that are not deductible in the Company's tax return, and some differences are temporary, reversing over time, such as valuation of insurance reserves. Temporary differences create deferred tax assets and liabilities. Deferred tax assets generally represent items that can be used as a tax deduction or credit in future years for which the Company has already recorded the tax benefit in the Company's income statement. Deferred tax liabilities generally represent tax expense recognized in the Company's financial statements for which payment has been deferred, or expenditures for which the Company has already taken a deduction in the Company's tax return but have not yet been recognized in the Company's financial statements. | |
The application of U.S. GAAP requires the Company to evaluate the recoverability of the Company's deferred tax assets and establish a valuation allowance if necessary to reduce the Company's deferred tax assets to an amount that is more likely than not to be realized. Considerable judgment is required in determining whether a valuation allowance is necessary, and if so, the amount of such valuation allowance. In evaluating the need for a valuation allowance the Company may consider many factors, including: (1) the nature of the deferred tax assets and liabilities; (2) whether they are ordinary or capital; (3) in which tax jurisdictions they were generated and the timing of their reversal; (4) taxable income in prior carryback years as well as projected taxable earnings exclusive of reversing temporary differences and carryforwards; (5) the length of time that carryovers can be utilized in the various taxing jurisdictions; (6) any unique tax rules that would impact the utilization of the deferred tax assets; and (7) any tax planning strategies that the Company would employ to avoid a tax benefit from expiring unused. Although realization is not assured, management believes it is more likely than not that the deferred tax assets, net of valuation allowances, will be realized. | |
U.S. GAAP prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that a company has taken or expects to take on tax returns. The application of this guidance is a two-step process, the first step being recognition. The Company determines whether it is more likely than not, based on the technical merits, that the tax position will be sustained upon examination. If a tax position does not meet the more likely than not recognition threshold, the benefit of that position is not recognized in the financial statements. The second step is measurement. The Company measures the tax position as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate resolution with a taxing authority that has full knowledge of all relevant information. This measurement considers the amounts and probabilities of the outcomes that could be realized upon ultimate settlement using the facts, circumstances, and information available at the reporting date. | |
The Company's liability for income taxes includes the liability for unrecognized tax benefits, interest and penalties which relate to tax years still subject to review by the Internal Revenue Service (“IRS”) or other taxing jurisdictions. Audit periods remain open for review until the statute of limitations has passed. Generally, for tax years which produce net operating losses, capital losses or tax credit carryforwards (“tax attributes”), the statute of limitations does not close, to the extent of these tax attributes, until the expiration of the statute of limitations for the tax year in which they are fully utilized. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the liability for income taxes. The Company classifies all interest and penalties related to tax uncertainties as income tax expense. | |
See Note 9 for additional information regarding income taxes. | |
Adoption of New Accounting Pronouncements | |
In December 2013, the Financial Accounting Standards Board (“FASB”) issued updated guidance establishing a single definition of a public entity for use in financial accounting and reporting guidance. This new guidance is effective for all current and future reporting periods and did not have a significant effect on the Company's financial position, results of operations or financial statement disclosures. | |
In July 2013, the FASB issued new guidance regarding derivatives. The guidance permits the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) to be used as a U.S. benchmark interest rate for hedge accounting, in addition to the United States Treasury rate and London Inter-Bank Offered Rate (“LIBOR”). The guidance also removes the restriction on using different benchmark rates for similar hedges. The guidance is effective for qualifying new or redesignated hedging relationships entered into on or after July 17, 2013, and was applied prospectively. Adoption of the guidance did not have a significant effect on the Company's financial position, results of operations or financial statement disclosures. | |
In July 2013, the FASB issued updated guidance regarding the presentation of unrecognized tax benefits when net operating loss carryforwards, similar tax losses, or tax credit carryforwards exist. This new guidance became effective for interim or annual reporting periods that began after December 15, 2013, and was applied prospectively. Adoption of the guidance did not have a significant effect on the Company's financial position, results of operations or financial statement disclosures. | |
In February 2013, the FASB issued updated guidance regarding the presentation of comprehensive income. Under the guidance, an entity is required to separately present information about significant items reclassified out of accumulated other comprehensive income (“AOCI”) by component as well as changes in AOCI balances by component in either the financial statements or the notes to the financial statements. The guidance does not change the items that are reported in other comprehensive income, does not change when an item of other comprehensive income must be reclassified to net income, and does not amend any existing requirements for reporting net income or other comprehensive income. The guidance became effective for interim or annual reporting periods that began after December 15, 2012 and was applied prospectively. The disclosures required by this guidance are included in Note 3. | |
In December 2011 and January 2013, the FASB issued updated guidance regarding the disclosure of recognized derivative instruments (including bifurcated embedded derivatives), repurchase agreements and securities borrowing/lending transactions that are offset in the statement of financial position or are subject to an enforceable master netting arrangement or similar agreement (irrespective of whether they are offset in the statement of financial position). This new guidance requires an entity to disclose information on both a gross and net basis about instruments and transactions within the scope of this guidance. This new guidance became effective for interim or annual reporting periods that began on or after January 1, 2013, and was applied retrospectively for all comparative periods presented. The disclosures required by this guidance are included in Note 11. | |
Future Adoption of New Accounting Pronouncements | |
In January 2014, the FASB issued updated guidance for troubled debt restructurings clarifying when an in substance repossession or foreclosure occurs, and when a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan. The new guidance is effective for annual periods and interim periods within those annual periods, beginning after December 15, 2014. This guidance can be elected for prospective adoption or by using a modified retrospective transition method. This guidance is not expected to have a significant effect on the Company's financial position, results of operations or financial statement disclosures. | |
In May 2014, the FASB issued updated guidance on accounting for revenue recognition. The guidance is based on the core principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The guidance also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from cost incurred to obtain or fulfill a contract. Revenue recognition for insurance contracts is explicitly scoped out of the guidance. The new guidance is effective for annual periods and interim periods within those annual periods, beginning after December 15, 2016, and must be applied using one of two retrospective application methods. Early adoption is not permitted. The Company is currently assessing the impact of the guidance on the Company's financial position, results of operations and financial statement disclosures. | |
In August 2014, the FASB issued updated guidance for measuring the financial assets and the financial liabilities of a consolidated collateralized financing entity. Under the guidance, an entity within scope is permitted to measure both the financial assets and financial liabilities of a consolidated collateralized financing entity based on either the fair value of the financial assets or the financial liabilities, whichever is more observable. If elected, the guidance will eliminate the measurement difference that exists when both are measured at fair value. The new guidance is effective for annual periods and interim reporting periods within those annual periods, beginning after December 15, 2015. Early adoption will be permitted. This guidance can be elected for modified retrospective or full retrospective adoption. The Company is currently assessing the impact of the guidance on the Company's financial position, results of operations and financial statement disclosures. | |
In August 2014, the FASB issued guidance requiring that mortgage loans be derecognized and that a separate other receivable be recognized upon foreclosure if certain conditions are met. Upon foreclosure, the separate other receivable should be measured based on the amount of the loan balance (principal and interest) expected to be recovered from the guarantor. The new guidance is effective for annual periods and interim periods within those annual periods, beginning after December 15, 2014, with early adoption permitted. This guidance can be adopted using either a prospective transition method or a modified retrospective transition method. This guidance is not expected to have a significant impact on the Company's financial position, results of operations or financial statement disclosures. |
Investments
Investments | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Investments [Abstract] | |||||||||||||||||||||
Investments | 3. INVESTMENTS | ||||||||||||||||||||
Fixed Maturities and Equity Securities | |||||||||||||||||||||
The following tables provide information relating to fixed maturities and equity securities (excluding investments classified as trading) as of the dates indicated: | |||||||||||||||||||||
31-Dec-14 | |||||||||||||||||||||
Other-than- | |||||||||||||||||||||
Gross | Gross | temporary | |||||||||||||||||||
Amortized | Unrealized | Unrealized | Fair | Impairments | |||||||||||||||||
Cost | Gains | Losses | Value | in AOCI (3) | |||||||||||||||||
(in thousands) | |||||||||||||||||||||
Fixed maturities, available-for-sale | |||||||||||||||||||||
U.S. Treasury securities and obligations of U.S. | |||||||||||||||||||||
government authorities and agencies | $ | 6,324 | $ | 22 | $ | 10 | $ | 6,336 | $ | - | |||||||||||
Obligations of U.S. states and their political | |||||||||||||||||||||
subdivisions | 69,486 | 1,323 | 20 | 70,789 | - | ||||||||||||||||
Foreign government bonds | 29,738 | 7,621 | 4 | 37,355 | - | ||||||||||||||||
Public utilities | 198,277 | 19,909 | 1,593 | 216,593 | - | ||||||||||||||||
All other corporate securities | 1,743,110 | 146,872 | 4,891 | 1,885,091 | - | ||||||||||||||||
Asset-backed securities (1) | 144,324 | 5,078 | 391 | 149,011 | -39 | ||||||||||||||||
Commercial mortgage-backed securities | 291,868 | 10,523 | 206 | 302,185 | -10 | ||||||||||||||||
Residential mortgage-backed securities (2) | 126,126 | 7,113 | 6 | 133,233 | -36 | ||||||||||||||||
Total fixed maturities, available-for-sale | $ | 2,609,253 | $ | 198,461 | $ | 7,121 | $ | 2,800,593 | $ | -85 | |||||||||||
Equity securities, available-for-sale | |||||||||||||||||||||
Common Stocks: | |||||||||||||||||||||
Public utilities | $ | - | $ | - | $ | - | $ | - | |||||||||||||
Mutual funds | 14 | 3 | - | 17 | |||||||||||||||||
Total equity securities, available-for-sale | $ | 14 | $ | 3 | $ | - | $ | 17 | |||||||||||||
_____________ | |||||||||||||||||||||
Includes credit-tranched securities collateralized by sub-prime mortgages, auto loans, credit cards, education loans, and other asset types. | |||||||||||||||||||||
Includes publicly-traded agency pass-through securities and collateralized mortgage obligations. | |||||||||||||||||||||
Represents the amount of other-than-temporary impairment losses in AOCI, which were not included in earnings. Amount excludes $0.1 million of net unrealized gains on impaired available-for-sale securities relating to changes in the value of such securities subsequent to the impairment measurement date. | |||||||||||||||||||||
December 31, 2013(4) | |||||||||||||||||||||
Other-than- | |||||||||||||||||||||
Gross | Gross | temporary | |||||||||||||||||||
Amortized | Unrealized | Unrealized | Fair | Impairments | |||||||||||||||||
Cost | Gains | Losses | Value | in AOCI (3) | |||||||||||||||||
(in thousands) | |||||||||||||||||||||
Fixed maturities, available-for-sale | |||||||||||||||||||||
U.S. Treasury securities and obligations of U.S. | |||||||||||||||||||||
government authorities and agencies | $ | 6,382 | $ | 36 | $ | 34 | $ | 6,384 | $ | - | |||||||||||
Obligations of U.S. states and their political | |||||||||||||||||||||
subdivisions | 67,225 | 2,911 | 1,570 | 68,566 | - | ||||||||||||||||
Foreign government bonds | 25,437 | 5,717 | - | 31,154 | - | ||||||||||||||||
Public utilities | 197,718 | 12,628 | 3,141 | 207,205 | - | ||||||||||||||||
All other corporate securities | 2,061,809 | 162,780 | 9,152 | 2,215,437 | - | ||||||||||||||||
Asset-backed securities (1) | 182,888 | 6,513 | 1,509 | 187,892 | -1,351 | ||||||||||||||||
Commercial mortgage-backed securities | 384,764 | 11,387 | 5,518 | 390,633 | - | ||||||||||||||||
Residential mortgage-backed securities (2) | 152,779 | 5,138 | 972 | 156,945 | -40 | ||||||||||||||||
Total fixed maturities, available-for-sale | $ | 3,079,002 | $ | 207,110 | $ | 21,896 | $ | 3,264,216 | $ | -1,391 | |||||||||||
Equity securities, available-for-sale | |||||||||||||||||||||
Common Stocks: | |||||||||||||||||||||
Public utilities | $ | 192 | $ | - | $ | - | $ | 192 | |||||||||||||
Mutual funds | 14 | 2 | - | 16 | |||||||||||||||||
Total equity securities, available-for-sale | $ | 206 | $ | 2 | $ | - | $ | 208 | |||||||||||||
_____________ | |||||||||||||||||||||
Includes credit-tranched securities collateralized by sub-prime mortgages, auto loans, credit cards, education loans, and other asset types. | |||||||||||||||||||||
Includes publicly-traded agency pass-through securities and collateralized mortgage obligations. | |||||||||||||||||||||
Represents the amount of other-than-temporary impairment losses in AOCI, which were not included in earnings. Amount excludes $1.7 million of net unrealized gains on impaired available-for-sale securities relating to changes in the value of such securities subsequent to the impairment measurement date. | |||||||||||||||||||||
Prior period's amounts are presented on a basis consistent with the current period presentation. | |||||||||||||||||||||
The amortized cost and fair value of fixed maturities by contractual maturities at December 31, 2014, are as follows: | |||||||||||||||||||||
Available-for-Sale | |||||||||||||||||||||
Amortized | Fair | ||||||||||||||||||||
Cost | Value | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Due in one year or less | $ | 171,429 | $ | 173,444 | |||||||||||||||||
Due after one year through five years | 888,464 | 938,289 | |||||||||||||||||||
Due after five years through ten years | 556,948 | 606,353 | |||||||||||||||||||
Due after ten years | 430,094 | 498,078 | |||||||||||||||||||
Asset-backed securities | 144,324 | 149,011 | |||||||||||||||||||
Commercial mortgage-backed securities | 291,868 | 302,185 | |||||||||||||||||||
Residential mortgage-backed securities | 126,126 | 133,233 | |||||||||||||||||||
Total | $ | 2,609,253 | $ | 2,800,593 | |||||||||||||||||
Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Asset-backed, commercial mortgage-backed, and residential mortgage-backed securities are shown separately in the table above, as they are not due at a single maturity date. | |||||||||||||||||||||
The following table depicts the sources of fixed maturity proceeds and related investment gains (losses), as well as losses on impairments of both fixed maturities and equity securities: | |||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Fixed maturities, available-for-sale | |||||||||||||||||||||
Proceeds from sales | $ | 308,458 | $ | 314,415 | $ | 504,001 | |||||||||||||||
Proceeds from maturities/repayments | 681,426 | 1,175,680 | 861,512 | ||||||||||||||||||
Gross investment gains from sales, prepayments, and maturities | 18,110 | 18,619 | 23,077 | ||||||||||||||||||
Gross investment losses from sales and maturities | -3,404 | -9,824 | -134 | ||||||||||||||||||
Equity securities, available-for-sale | |||||||||||||||||||||
Proceeds from sales | $ | 192 | $ | 14 | $ | 3,201 | |||||||||||||||
Gross investment gains from sales | 1 | 10 | 703 | ||||||||||||||||||
Fixed maturity and equity security impairments | |||||||||||||||||||||
Net writedowns for other-than-temporary impairment losses | |||||||||||||||||||||
on fixed maturities recognized in earnings (1) | $ | - | $ | - | $ | -258 | |||||||||||||||
As discussed in Note 2, a portion of certain OTTI losses on fixed maturity securities is recognized in “Other comprehensive income (loss) (“OCI”)”. For these securities, the net amount recognized in earnings (“credit loss impairments”) represents the difference between the amortized cost of the security and the net present value of its projected future cash flows discounted at the effective interest rate implicit in the debt security prior to impairment. Any remaining difference between the fair value and amortized cost is recognized in OCI. The following tables set forth the amount of pre-tax credit loss impairments on fixed maturity securities held by the Company as of the dates indicated, for which a portion of the OTTI loss was recognized in OCI, and the corresponding changes in such amounts. | |||||||||||||||||||||
Year Ended December 31, | |||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Balance, beginning of period | $ | 1,800 | $ | 3,382 | |||||||||||||||||
Credit loss impairments previously recognized on securities which matured, paid | |||||||||||||||||||||
down, prepaid or were sold during the period | -1,682 | -1,628 | |||||||||||||||||||
Increases due to the passage of time on previously recorded credit losses | - | 114 | |||||||||||||||||||
Accretion of credit loss impairments previously recognized due to an increase in | |||||||||||||||||||||
cash flows expected to be collected | -25 | -68 | |||||||||||||||||||
Balance, end of period | $ | 93 | $ | 1,800 | |||||||||||||||||
Trading Account Assets | |||||||||||||||||||||
The following table sets forth the composition of “Trading account assets” as of the dates indicated: | |||||||||||||||||||||
31-Dec-14 | 31-Dec-13 | ||||||||||||||||||||
Fair | Fair | ||||||||||||||||||||
Cost | Value | Cost | Value | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Total trading account assets - Equity securities | $ | 5,471 | $ | 6,131 | $ | 5,164 | $ | 6,677 | |||||||||||||
The net change in unrealized gains (losses) from trading account assets still held at period end, recorded within “Asset management fees and other income” was $(0.9) million, $0.8 million, and $(0.4) million during the years ended December 31, 2014, 2013, and 2012, respectively. | |||||||||||||||||||||
Commercial Mortgage and Other Loans | |||||||||||||||||||||
The Company's commercial mortgage and other loans are comprised as follows, as of the dates indicated: | |||||||||||||||||||||
31-Dec-14 | 31-Dec-13 | ||||||||||||||||||||
Amount | % of | Amount | % of | ||||||||||||||||||
(in thousands) | Total | (in thousands) | Total | ||||||||||||||||||
Commercial and agricultural mortgage loans by property type: | |||||||||||||||||||||
Apartments/Multi-Family | $ | 143,057 | 34 | % | $ | 125,045 | 31.5 | % | |||||||||||||
Industrial | 87,088 | 20.7 | 88,009 | 22.1 | |||||||||||||||||
Retail | 72,226 | 17.2 | 72,325 | 18.2 | |||||||||||||||||
Office | 44,621 | 10.6 | 40,976 | 10.3 | |||||||||||||||||
Other | 14,119 | 3.4 | 13,796 | 3.5 | |||||||||||||||||
Hospitality | 5,081 | 1.2 | 5,133 | 1.3 | |||||||||||||||||
Total commercial mortgage loans | 366,192 | 87.1 | 345,284 | 86.9 | |||||||||||||||||
Agricultural property loans | 54,113 | 12.9 | 52,223 | 13.1 | |||||||||||||||||
Total commercial and agricultural mortgage loans by property | |||||||||||||||||||||
type | 420,305 | 100 | % | 397,507 | 100 | % | |||||||||||||||
Valuation allowance | -482 | -1,256 | |||||||||||||||||||
Total net commercial and agricultural mortgage loans by property | |||||||||||||||||||||
type | 419,823 | 396,251 | |||||||||||||||||||
Other Loans | |||||||||||||||||||||
Uncollateralized loans | 2,740 | 2,740 | |||||||||||||||||||
Valuation allowance | - | - | |||||||||||||||||||
Total net other loans | 2,740 | 2,740 | |||||||||||||||||||
Total commercial mortgage and other loans | $ | 422,563 | $ | 398,991 | |||||||||||||||||
The commercial mortgage and agricultural property loans are geographically dispersed throughout the United States with the largest concentrations in California (17%) and Texas (12%) at December 31, 2014. | |||||||||||||||||||||
Activity in the allowance for credit losses for all commercial mortgage and other loans, as of the dates indicated, is as follows: | |||||||||||||||||||||
31-Dec-14 | 31-Dec-13 | 31-Dec-12 | |||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Allowance for credit losses, beginning of year | $ | 1,256 | $ | 2,177 | $ | 1,501 | |||||||||||||||
Addition to / (release of) allowance for losses | -774 | -921 | 676 | ||||||||||||||||||
Total ending balance (1) | $ | 482 | $ | 1,256 | $ | 2,177 | |||||||||||||||
_____________ | |||||||||||||||||||||
Agricultural loans represent less than $0.1 million of the ending allowance at both December 31, 2014 and 2013 and $0.2 million of the ending allowance at December 31, 2012. | |||||||||||||||||||||
The following tables set forth the allowance for credit losses and the recorded investment in commercial mortgage and other loans as of the dates indicated: | |||||||||||||||||||||
31-Dec-14 | 31-Dec-13 | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Allowance for Credit Losses: | |||||||||||||||||||||
Individually evaluated for impairment (1) | $ | - | $ | - | |||||||||||||||||
Collectively evaluated for impairment (2) | 482 | 1,256 | |||||||||||||||||||
Total ending balance | $ | 482 | $ | 1,256 | |||||||||||||||||
Recorded Investment (3): | |||||||||||||||||||||
Gross of reserves: individually evaluated for impairment (1) | $ | - | $ | - | |||||||||||||||||
Gross of reserves: collectively evaluated for impairment (2) | 423,045 | 400,247 | |||||||||||||||||||
Total ending balance, gross of reserves | $ | 423,045 | $ | 400,247 | |||||||||||||||||
_____________ | |||||||||||||||||||||
There were no loans individually evaluated for impairments at both December 31, 2014 and 2013. | |||||||||||||||||||||
Agricultural loans collectively evaluated for impairment had a recorded investment of $54 million and $52 million for the periods ending December 31, 2014 and 2013, respectively, and a related allowance of less than $0.1 million for both periods. Uncollateralized loans collectively evaluated for impairment had a recorded investment of $3 million at both December 31, 2014 and 2013 and no related allowance for both periods. | |||||||||||||||||||||
Recorded investment reflects the balance sheet carrying value gross of related allowance. | |||||||||||||||||||||
Impaired loans include those loans for which it is probable that all amounts due will not be collected according to the contractual terms of the loan agreement. There were no impaired commercial mortgage and other loans identified in management's specific review of probable loan losses and no related allowance for losses at both December 31, 2014 and 2013. There were no recorded investments in impaired loans with an allowance recorded, before the allowance for losses, at both December 31, 2014 and 2013. | |||||||||||||||||||||
Impaired commercial mortgage and other loans with no allowance for losses are loans in which the fair value of the collateral or the net present value of the loans' expected future cash flows equals or exceeds the recorded investment. The Company had no such loans at both December 31, 2014 and 2013. See Note 2 for information regarding the Company's accounting policies for non-performing loans. | |||||||||||||||||||||
The following table sets forth certain key credit quality indicators as of December 31, 2014, based upon the recorded investment gross of allowance for credit losses. | |||||||||||||||||||||
Total commercial and agricultural mortgage loans | |||||||||||||||||||||
Debt Service Coverage Ratio - December 31, 2014 | |||||||||||||||||||||
Greater than 1.2X | 1.0X to <1.2X | Less than 1.0X | Total | ||||||||||||||||||
Loan-to-Value Ratio | (in thousands) | ||||||||||||||||||||
0%-59.99% | $ | 262,853 | $ | 4,295 | $ | 10,489 | $ | 277,637 | |||||||||||||
60%-69.99% | 115,708 | 468 | - | 116,176 | |||||||||||||||||
70%-79.99% | 25,034 | 1,458 | - | 26,492 | |||||||||||||||||
Greater than 80% | - | - | - | - | |||||||||||||||||
Total commercial and agricultural mortgage loans | $ | 403,595 | $ | 6,221 | $ | 10,489 | $ | 420,305 | |||||||||||||
The following table sets forth certain key credit quality indicators as of December 31, 2013, based upon the recorded investment gross of allowance for credit losses. | |||||||||||||||||||||
Total commercial and agricultural mortgage loans | |||||||||||||||||||||
Debt Service Coverage Ratio - December 31, 2013 | |||||||||||||||||||||
Greater than 1.2X | 1.0X to <1.2X | Less than 1.0X | Total | ||||||||||||||||||
Loan-to-Value Ratio | (in thousands) | ||||||||||||||||||||
0%-59.99% | $ | 251,278 | $ | 7,650 | $ | 1,865 | $ | 260,793 | |||||||||||||
60%-69.99% | 102,755 | - | - | 102,755 | |||||||||||||||||
70%-79.99% | 31,712 | 2,247 | - | 33,959 | |||||||||||||||||
Greater than 80% | - | - | - | - | |||||||||||||||||
Total commercial and agricultural mortgage loans | $ | 385,745 | $ | 9,897 | $ | 1,865 | $ | 397,507 | |||||||||||||
As of both December 31, 2014 and 2013, all commercial mortgage and other loans were in current status. The Company defines current in its aging of past due commercial mortgage and other loans as less than 30 days past due. | |||||||||||||||||||||
There were no commercial mortgage and other loans in nonaccrual status as of both December 31, 2014 and 2013. Nonaccrual loans are those on which the accrual of interest has been suspended after the loans become 90 days delinquent as to principal or interest payments, or earlier when the Company has doubts about collectability and loans for which a loan-specific reserve has been established. See Note 2, for further discussion regarding nonaccrual status loans. | |||||||||||||||||||||
For the years ended December 31, 2014 and 2013, there were no commercial mortgage and other loans acquired, other than those through direct origination, or sold. | |||||||||||||||||||||
The Company's commercial mortgage and other loans may occasionally be involved in a troubled debt restructuring. As of both December 31, 2014 and 2013, the Company had no significant commitments to fund to borrowers that have been involved in a troubled debt restructuring. For the years ended December 31, 2014 and 2013, there were no troubled debt restructurings related to commercial mortgage and other loans, and no payment defaults on commercial mortgage and other loans that were modified as a troubled debt restructuring within the 12 months preceding each respective period. | |||||||||||||||||||||
Other Long-Term Investments | |||||||||||||||||||||
The following table sets forth the composition of “Other long-term investments” at December 31 for the years indicated. | |||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Joint ventures and limited partnerships | $ | 68,225 | $ | 60,585 | |||||||||||||||||
Derivatives | 94,558 | - | |||||||||||||||||||
Total other long-term investments | $ | 162,783 | $ | 60,585 | |||||||||||||||||
Net Investment Income | |||||||||||||||||||||
Net investment income for the years ended December 31, was from the following sources: | |||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Fixed maturities, available-for-sale | $ | 140,114 | $ | 191,043 | $ | 246,479 | |||||||||||||||
Equity securities, available-for-sale | - | - | 7 | ||||||||||||||||||
Trading account assets | 325 | 342 | 923 | ||||||||||||||||||
Commercial mortgage and other loans | 21,802 | 28,463 | 28,449 | ||||||||||||||||||
Policy loans | 739 | 675 | 845 | ||||||||||||||||||
Short-term investments | 281 | 323 | 620 | ||||||||||||||||||
Other long-term investments | 6,492 | 3,601 | 8,302 | ||||||||||||||||||
Gross investment income | 169,753 | 224,447 | 285,625 | ||||||||||||||||||
Less: investment expenses | -5,742 | -6,564 | -7,974 | ||||||||||||||||||
Net investment income | $ | 164,011 | $ | 217,883 | $ | 277,651 | |||||||||||||||
Carrying value for non-income producing assets included $1 million in fixed maturities as of December 31, 2014. Non-income producing assets represent investments that have not produced income for the preceding twelve months. | |||||||||||||||||||||
Realized Investment Gains (Losses), Net | |||||||||||||||||||||
Realized investment gains (losses), net, for the years ended December 31, were from the following sources: | |||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Fixed maturities | $ | 14,706 | $ | 8,795 | $ | 22,684 | |||||||||||||||
Equity securities | 1 | 10 | 703 | ||||||||||||||||||
Commercial mortgage and other loans | 774 | 933 | 1,043 | ||||||||||||||||||
Derivatives | -8,113 | -194,055 | -107,663 | ||||||||||||||||||
Other | - | -34 | 3 | ||||||||||||||||||
Realized investment gains (losses), net | $ | 7,368 | $ | -184,351 | $ | -83,230 | |||||||||||||||
Accumulated Other Comprehensive Income (Loss) | |||||||||||||||||||||
The balance of and changes in each component of “Accumulated other comprehensive income (loss)” for the | |||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | |||||||||||||||||||||
Foreign Currency Translation Adjustment | Net Unrealized Investment Gains (Losses) (1) | Total Accumulated Other Comprehensive Income (Loss) | |||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Balance, December 31, 2011 | $ | - | 160,711 | 160,711 | |||||||||||||||||
Change in component during period (2) | 7 | -13,431 | -13,424 | ||||||||||||||||||
Balance, December 31, 2012 | $ | 7 | 147,280 | 147,287 | |||||||||||||||||
Change in component during period (2) | 3 | -76,423 | -76,420 | ||||||||||||||||||
Balance, December 31, 2013 | $ | 10 | $ | 70,857 | $ | 70,867 | |||||||||||||||
Change in other comprehensive income | |||||||||||||||||||||
before reclassifications | -63 | 35,931 | 35,868 | ||||||||||||||||||
Amounts reclassified from AOCI | - | -14,706 | -14,706 | ||||||||||||||||||
Income tax benefit (expense) | 23 | -7,430 | -7,407 | ||||||||||||||||||
Balance, December 31, 2014 | $ | -30 | $ | 84,652 | $ | 84,622 | |||||||||||||||
_____________ | |||||||||||||||||||||
Includes cash flow hedges of $5.0 million, $(4.0) million, and $(3.0) million as of December 31, 2014, 2013, and 2012, respectively. | |||||||||||||||||||||
Net of taxes. | |||||||||||||||||||||
Reclassifications out of Accumulated Other Comprehensive Income (Loss) | |||||||||||||||||||||
Year Ended | Year Ended | Year Ended | |||||||||||||||||||
31-Dec-14 | 31-Dec-13 | 31-Dec-12 | |||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Amounts reclassified from AOCI (1)(2): | |||||||||||||||||||||
Net unrealized investment gains (losses): | |||||||||||||||||||||
Cash flow hedges - Currency/Interest rate (3) | $ | 148 | $ | -95 | -101 | ||||||||||||||||
Net unrealized investment gains (losses) on available-for-sale securities | 14,558 | 8,900 | 23,488 | ||||||||||||||||||
Total net unrealized investment gains (losses) (4) | 14,706 | 8,805 | 23,387 | ||||||||||||||||||
Total reclassifications for the period | $ | 14,706 | $ | 8,805 | 23,387 | ||||||||||||||||
_____________ | |||||||||||||||||||||
All amounts are shown before tax. | |||||||||||||||||||||
Positive amounts indicate gains/benefits reclassified out of AOCI. Negative amounts indicate losses/costs reclassified out of AOCI. | |||||||||||||||||||||
See Note 11 for additional information on cash flow hedges. | |||||||||||||||||||||
See table below for additional information on unrealized investment gains (losses), including the impact on deferred policy acquisition and other costs and future policy benefits. | |||||||||||||||||||||
Net Unrealized Investment Gains (Losses) | |||||||||||||||||||||
Net unrealized investment gains and losses on securities classified as available-for-sale and certain other long-term investments and other assets are included in the Company's Statements of Financial Position as a component of AOCI. Changes in these amounts include reclassification adjustments to exclude from “Other comprehensive income (loss)” those items that are included as part of “Net income” for a period that had been part of “Other comprehensive income (loss)” in earlier periods. The amounts for the periods indicated below, split between amounts related to fixed maturity securities on which an OTTI loss has been recognized, and all other net unrealized investment gains and losses, are as follows: | |||||||||||||||||||||
Net Unrealized Investment Gains and Losses on Fixed Maturity Securities on which an OTTI loss has been recognized | |||||||||||||||||||||
Net Unrealized Gains (Losses) on Investments (1) | Deferred Policy Acquisition Costs and Other Costs | Future Policy Benefits | Deferred Income Tax (Liability) Benefit | Accumulated Other Comprehensive Income (Loss) Related to Net Unrealized Investment Gains (Losses) | |||||||||||||||||
(in thousands) | |||||||||||||||||||||
Balance, December 31, 2011 | $ | -1,740 | 692 | - | 382 | -666 | |||||||||||||||
Net investment gains (losses) on investments | |||||||||||||||||||||
arising during the period | 3,067 | - | - | -1,073 | 1,994 | ||||||||||||||||
Reclassification adjustment for (gains) losses | |||||||||||||||||||||
included in net income | -782 | - | - | 274 | -508 | ||||||||||||||||
Impact of net unrealized investment (gains) losses on | |||||||||||||||||||||
deferred policy acquisition costs | |||||||||||||||||||||
and other costs | - | -906 | - | 317 | -589 | ||||||||||||||||
Impact of net unrealized investment (gains) losses on | |||||||||||||||||||||
future policy benefits | - | - | - | - | - | ||||||||||||||||
Balance, December 31, 2012 | $ | 545 | $ | -214 | $ | - | $ | -100 | $ | 231 | |||||||||||
Net investment gains (losses) on investments | |||||||||||||||||||||
arising during the period | 483 | - | - | -168 | 315 | ||||||||||||||||
Reclassification adjustment for (gains) losses | |||||||||||||||||||||
included in net income | -705 | - | - | 247 | -458 | ||||||||||||||||
Impact of net unrealized investment (gains) losses on | |||||||||||||||||||||
deferred policy acquisition costs | |||||||||||||||||||||
and other costs | - | 98 | - | -35 | 63 | ||||||||||||||||
Impact of net unrealized investment (gains) losses on | |||||||||||||||||||||
future policy benefits | - | - | -14 | 5 | -9 | ||||||||||||||||
Balance, December 31, 2013 | $ | 323 | $ | -116 | $ | -14 | $ | -51 | $ | 142 | |||||||||||
Net investment gains (losses) on investments | |||||||||||||||||||||
arising during the period | -11 | - | - | 4 | -7 | ||||||||||||||||
Reclassification adjustment for (gains) losses | |||||||||||||||||||||
included in net income | -311 | - | - | 109 | -202 | ||||||||||||||||
Impact of net unrealized investment (gains) losses on | |||||||||||||||||||||
deferred policy acquisition costs | |||||||||||||||||||||
and other costs | - | 116 | - | -41 | 75 | ||||||||||||||||
Impact of net unrealized investment (gains) losses on | |||||||||||||||||||||
future policy benefits | - | - | 14 | -5 | 9 | ||||||||||||||||
Balance, December 31, 2014 | $ | 1 | $ | - | $ | - | $ | 16 | $ | 17 | |||||||||||
_____________ | |||||||||||||||||||||
Includes cash flow hedges. See Note 11 for information on cash flow hedges. | |||||||||||||||||||||
Accumulated Other | |||||||||||||||||||||
Comprehensive | |||||||||||||||||||||
Deferred | Income (Loss) Related | ||||||||||||||||||||
Net Unrealized | Deferred Policy | Future | Income Tax | To Net Unrealized | |||||||||||||||||
Gains (Losses) on | Acquisition Costs | Policy | (Liability) | Investment | |||||||||||||||||
Investments (1) | and Other Costs | Benefits | Benefit | Gains (Losses) | |||||||||||||||||
(in thousands) | |||||||||||||||||||||
Balance, December 31, 2011 | $ | 441,677 | $ | -192,119 | $ | - | $ | -88,181 | $ | 161,377 | |||||||||||
Net investment gains (losses) on investments | |||||||||||||||||||||
arising during the period | -42,295 | - | - | 14,804 | -27,491 | ||||||||||||||||
Reclassification adjustment for (gains) losses | |||||||||||||||||||||
included in net income | -22,605 | - | - | 7,912 | -14,693 | ||||||||||||||||
Reclassification adjustment for OTTI losses excluded | |||||||||||||||||||||
Impact of net unrealized investment (gains) | |||||||||||||||||||||
losses on deferred policy acquisition costs | |||||||||||||||||||||
costs, deferred sales inducements and | |||||||||||||||||||||
and other costs | - | 45,030 | - | -15,760 | 29,270 | ||||||||||||||||
Impact of net unrealized investment (gains) | |||||||||||||||||||||
losses on future policy benefits | - | - | -2,164 | 757 | -1,407 | ||||||||||||||||
Balance, December 31, 2012 | $ | 376,777 | $ | -147,089 | $ | -2,164 | $ | -80,468 | $ | 147,056 | |||||||||||
Net investment gains (losses) on investments | |||||||||||||||||||||
arising during the period | -183,950 | - | - | 64,383 | -119,567 | ||||||||||||||||
Reclassification adjustment for (gains) losses | |||||||||||||||||||||
included in net income | -8,100 | - | - | 2,835 | -5,265 | ||||||||||||||||
Reclassification adjustment for OTTI losses excluded | |||||||||||||||||||||
Impact of net unrealized investment (gains) | |||||||||||||||||||||
losses on deferred policy acquisition costs | |||||||||||||||||||||
costs, deferred sales inducements and | |||||||||||||||||||||
and other costs | - | 80,637 | - | -28,222 | 52,415 | ||||||||||||||||
Impact of net unrealized investment (gains) | |||||||||||||||||||||
losses on future policy benefits | - | - | -6,023 | 2,109 | -3,914 | ||||||||||||||||
Balance, December 31, 2013 | $ | 184,727 | $ | -66,452 | $ | -8,187 | $ | -39,363 | $ | 70,725 | |||||||||||
Net investment gains (losses) on investments | |||||||||||||||||||||
arising during the period | 28,590 | - | - | -10,013 | 18,577 | ||||||||||||||||
Reclassification adjustment for (gains) losses | |||||||||||||||||||||
included in net income | -14,395 | - | - | 5,036 | -9,359 | ||||||||||||||||
Impact of net unrealized investment (gains) | |||||||||||||||||||||
losses on deferred policy acquisition costs | |||||||||||||||||||||
and other costs | - | 7,407 | - | -2,594 | 4,813 | ||||||||||||||||
Impact of net unrealized investment (gains) | |||||||||||||||||||||
losses on future policy benefits | - | - | -185 | 64 | -121 | ||||||||||||||||
Balance, December 31, 2014 | $ | 198,922 | $ | -59,045 | $ | -8,372 | $ | -46,870 | $ | 84,635 | |||||||||||
_____________ | |||||||||||||||||||||
Includes cash flow hedges. See Note 11 for information on cash flow hedges. | |||||||||||||||||||||
Net Unrealized Gains (Losses) on Investments by Asset Class | |||||||||||||||||||||
The table below presents net unrealized gains (losses) on investments by asset class as of the dates indicated: | |||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Fixed maturity securities on which an OTTI loss has been recognized | $ | 1 | $ | 323 | $ | 545 | |||||||||||||||
Fixed maturity securities, available-for-sale - all other | 191,339 | 184,891 | 375,409 | ||||||||||||||||||
Equity securities, available-for-sale | 3 | 2 | 4 | ||||||||||||||||||
Affiliated notes | 2,351 | 3,113 | 4,386 | ||||||||||||||||||
Derivatives designated as cash flow hedges (1) | 4,839 | -3,653 | -3,068 | ||||||||||||||||||
Other investments | 390 | 374 | 46 | ||||||||||||||||||
Net unrealized gains (losses) on investments | $ | 198,923 | $ | 185,050 | $ | 377,322 | |||||||||||||||
_____________ | |||||||||||||||||||||
See Note 11 for more information on cash flow hedges. | |||||||||||||||||||||
Duration of Gross Unrealized Loss Positions for Fixed Maturities and Equity Securities | |||||||||||||||||||||
The following table shows the fair value and gross unrealized losses aggregated by investment category and length of time that individual fixed maturity securities and equity securities have been in a continuous unrealized loss position, at December 31 for the years indicated: | |||||||||||||||||||||
2014 | |||||||||||||||||||||
Less than twelve months | Twelve months or more | Total | |||||||||||||||||||
Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | ||||||||||||||||
(in thousands) | |||||||||||||||||||||
Fixed maturities, available-for-sale | |||||||||||||||||||||
U.S. Treasury securities and obligations of | |||||||||||||||||||||
U.S. government authorities and agencies | $ | 2,676 | $ | 10 | $ | - | $ | - | $ | 2,676 | $ | 10 | |||||||||
Obligations of U.S. States and their | |||||||||||||||||||||
political subdivisions | - | - | 7,305 | 20 | 7,305 | 20 | |||||||||||||||
Foreign government bonds | 4,632 | 4 | - | - | 4,632 | 4 | |||||||||||||||
Public utilities | 18,222 | 1,321 | 2,174 | 272 | 20,396 | 1,593 | |||||||||||||||
All other corporate securities | 260,414 | 4,462 | 9,403 | 429 | 269,817 | 4,891 | |||||||||||||||
Asset-backed securities | 31,756 | 58 | 32,732 | 333 | 64,488 | 391 | |||||||||||||||
Commercial mortgage-backed securities | 4,309 | 108 | 7,377 | 98 | 11,686 | 206 | |||||||||||||||
Residential mortgage-backed securities | 342 | 6 | - | - | 342 | 6 | |||||||||||||||
Total | $ | 322,351 | $ | 5,969 | $ | 58,991 | $ | 1,152 | $ | 381,342 | $ | 7,121 | |||||||||
Equity securities, available-for-sale | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||
2013(1) | |||||||||||||||||||||
Less than twelve months | Twelve months or more | Total | |||||||||||||||||||
Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | ||||||||||||||||
(in thousands) | |||||||||||||||||||||
Fixed maturities, available-for-sale | |||||||||||||||||||||
U.S. Treasury securities and obligations of | |||||||||||||||||||||
U.S. government authorities and agencies | $ | 3,347 | $ | 34 | $ | - | $ | - | $ | 3,347 | $ | 34 | |||||||||
Obligations of U.S. States and their | |||||||||||||||||||||
political subdivisions | 5,420 | 588 | 6,402 | 982 | 11,822 | 1,570 | |||||||||||||||
Public utilities | 59,312 | 3,141 | - | - | 59,312 | 3,141 | |||||||||||||||
All other corporate securities | 291,994 | 8,782 | 2,704 | 370 | 294,698 | 9,152 | |||||||||||||||
Asset-backed securities | 97,575 | 1,509 | - | - | 97,575 | 1,509 | |||||||||||||||
Commercial mortgage-backed securities | 86,132 | 5,249 | 2,941 | 269 | 89,073 | 5,518 | |||||||||||||||
Residential mortgage-backed securities | 100,150 | 972 | - | - | 100,150 | 972 | |||||||||||||||
Total | $ | 643,930 | $ | 20,275 | $ | 12,047 | $ | 1,621 | $ | 655,977 | $ | 21,896 | |||||||||
Equity securities, available-for-sale | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||
_____________ | |||||||||||||||||||||
Prior period's amounts are presented on a basis consistent with the current period presentation. | |||||||||||||||||||||
Securities Pledged and Special Deposits | |||||||||||||||||||||
The Company pledges as collateral investment securities it owns to unaffiliated parties through certain transactions, including securities lending, securities sold under agreements to repurchase, collateralized borrowings and postings of collateral with derivative counterparties. At December 31, the carrying value of investments pledged to third parties as reported in the Statements of Financial Position included the following: | |||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Fixed maturity securities, available-for-sale | $ | 5,098 | $ | 46,156 | |||||||||||||||||
Trading account assets | - | 287 | |||||||||||||||||||
Total securities pledged | $ | 5,098 | $ | 46,443 | |||||||||||||||||
As of December 31, 2014 and 2013, the carrying amount of the associated liabilities supported by the pledged collateral was $5 million and $48 million, respectively, which was “Cash collateral for loaned securities”. | |||||||||||||||||||||
Fixed maturities of $7 million and $8 million at December 31, 2014 and 2013, respectively, were on deposit with governmental authorities or trustees as required by certain insurance laws. | |||||||||||||||||||||
Deferred_Policy_Acquisition_Co
Deferred Policy Acquisition Costs | 12 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
DeferredPolicyAcquisitionCostsDisclosuresAbstract | ||||||||||
DeferredPolicyAcquisitionCostsTextBlock | 4. DEFERRED POLICY ACQUISITION COSTS | |||||||||
The balances of and changes in DAC as of and for the years ended December 31, are as follows: | ||||||||||
2014 | 2013 | 2012 | ||||||||
(in thousands) | ||||||||||
Balance, beginning of year | $ | 1,345,504 | $ | 906,814 | $ | 666,764 | ||||
Capitalization of commissions, sales and issue expenses | 2,804 | 4,050 | 25,081 | |||||||
Amortization - Impact of Assumption and experience unlocking and true-ups | 91,895 | 31,666 | 274,503 | |||||||
Amortization - All Other | -330,311 | 353,895 | -86,461 | |||||||
Changes in unrealized investment gains and losses | 4,539 | 49,079 | 26,927 | |||||||
Balance, end of year | $ | 1,114,431 | $ | 1,345,504 | $ | 906,814 |
Value_Of_Business_Acquired
Value Of Business Acquired | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
PresentValueOfFutureInsuranceProfitsAbstract | |||||||||||
PresentValueOfFutureInsuranceProfitsTextBlock | 5. VALUE OF BUSINESS ACQUIRED | ||||||||||
Details of VOBA and related interest and gross amortization for the years ended December 31, are as follows: | |||||||||||
2014 | 2013 | 2012 | |||||||||
(in thousands) | |||||||||||
Balance, beginning of period | $ | 43,500 | $ | 43,090 | $ | 29,010 | |||||
Amortization - Impact of assumption and experience unlocking and true-ups (1) | 5,412 | 6,376 | 21,931 | ||||||||
Amortization - All other (1) | -11,181 | -11,593 | -13,871 | ||||||||
Interest (2) | 2,615 | 2,762 | 2,077 | ||||||||
Change in unrealized gains/losses | -608 | 2,865 | 3,943 | ||||||||
Balance, end of year | $ | 39,738 | $ | 43,500 | $ | 43,090 | |||||
(1) The weighted average remaining expected life of VOBA was approximately 5.26 years from the date of acquisition. | |||||||||||
(2) The interest accrual rate for the VOBA related to the businesses acquired was 6.10%, 6.14% and 6.18% for years ended December 31, 2014, 2013 and 2012. | |||||||||||
The following table provides estimated future amortization, net of interest, for the periods indicated (in thousands): | |||||||||||
2015 | 2016 | 2017 | 2018 | 2019 | |||||||
(in thousands) | |||||||||||
Estimated future VOBA amortization | $ | 6,571 | $ | 5,276 | $ | 4,446 | $ | 3,804 | $ | 3,134 |
Reinsurance
Reinsurance | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
ReinsuranceDisclosuresAbstract | ||||||||||||
ReinsuranceTextBlock | 6. REINSURANCE | |||||||||||
The Company utilizes both affiliated and unaffiliated reinsurance arrangements. On its unaffiliated arrangements, the Company uses primarily modified coinsurance reinsurance arrangements whereby the reinsurer shares in the experience of a specified book of business. These reinsurance transactions result in the Company receiving from the reinsurer an upfront ceding commission on the book of business ceded in exchange for the reinsurer receiving in the future, a percentage of the future fees and benefits generated from that book of business. Such transfer does not relieve the Company of its primary liability and, as such, failure of reinsurers to honor their obligation could result in losses to the Company. The Company reduces this risk by evaluating the financial condition and credit worthiness of reinsurers. | ||||||||||||
On its affiliated arrangements, the Company uses automatic coinsurance reinsurance arrangements. These agreements cover all significant risks under features of the policies reinsured. The Company is not relieved of its primary obligation to the policyholder as a result of these reinsurance transactions. These affiliated agreements include the reinsurance of the Company's GMWB, GMIWB and GMAB features. These features are accounted for as embedded derivatives, and changes in the fair value of the embedded derivative are recognized through “Realized investment gains (losses), net.” Please see Note 13 for further details around the affiliated reinsurance agreements. | ||||||||||||
The effect of reinsurance for the years ended December 31, 2014, 2013 and 2012, was as follows (in thousands): | ||||||||||||
Gross | Unaffiliated Ceded | Affiliated Ceded | Net | |||||||||
2014 | ||||||||||||
Policy charges and fee income - Life (1) | $ | 3,522 | $ | -856 | $ | - | $ | 2,666 | ||||
Policy charges and fee income - Annuity | 805,550 | -1,889 | - | 803,661 | ||||||||
Realized investment gains (losses), net | -1,967,588 | - | 1,974,956 | 7,368 | ||||||||
Policyholders' benefits | 137,502 | -367 | - | 137,135 | ||||||||
General, administrative and other expenses | $ | 398,960 | $ | -838 | $ | -3,874 | $ | 394,248 | ||||
2013 | ||||||||||||
Policy charges and fee income - Life (1) | $ | 3,472 | $ | -1,231 | $ | - | $ | 2,241 | ||||
Policy charges and fee income - Annuity | 809,549 | -2,548 | - | 807,001 | ||||||||
Realized investment gains (losses), net | 1,076,184 | - | -1,260,535 | -184,351 | ||||||||
Policyholders' benefits | 29,874 | -147 | - | 29,727 | ||||||||
General, administrative and other expenses | $ | 407,365 | $ | -776 | $ | -3,910 | $ | 402,679 | ||||
2012 | ||||||||||||
Policy charges and fee income - Life (1) | $ | 3,522 | $ | -1,099 | $ | - | $ | 2,423 | ||||
Policy charges and fee income - Annuity | 796,711 | -2,139 | - | 794,572 | ||||||||
Realized investment gains (losses), net | 202,568 | - | -285,798 | -83,230 | ||||||||
Policyholders' benefits | 124,517 | -201 | - | 124,316 | ||||||||
General, administrative and other expenses | $ | 429,383 | $ | -784 | $ | -3,835 | $ | 424,764 | ||||
Life insurance inforce face amounts at December 31, 2014, 2013 and 2012 was $ 121 million, $ 128 million and $ 132 million, respectively. | ||||||||||||
The Company's Statements of Financial Position also included reinsurance recoverables from Pruco Re and Prudential Insurance Company of America (“Prudential Insurance”) of $ 2,997 million and $ 749 million at December 31, 2014 and 2013, respectively. | ||||||||||||
Certain_Nontraditional_LongDur
Certain Nontraditional Long-Duration Contracts | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
DisclosureTextBlockAbstract | ||||||||||||||
LongDurationInsuranceContractsDisclosureTextBlock | 7. CERTAIN NONTRADITIONAL LONG-DURATION CONTRACTS | |||||||||||||
The Company has issued traditional variable annuity contracts through its separate accounts for which investment income and investment gains and losses accrue directly to, and investment risk is borne by, the contractholder. The Company has also issued variable annuity contracts with general and separate account options where the Company contractually guarantees to the contractholder a return of no less than (1) total deposits made to the contract less any partial withdrawals (“return of net deposits”), (2) total deposits made to the contract less any partial withdrawals plus a minimum return (“minimum return”), or (3) the highest contract value on a specified date adjusted for any withdrawals (“contract value”). These guarantees include benefits that are payable in the event of death, annuitization or at specified dates during the accumulation period and withdrawal and income benefits payable during specified periods. The Company has issued annuity contracts with market value adjusted investment options (“MVAs”), which provide for a return of principal plus a fixed-rate of return if held to maturity, or, alternatively, a “market adjusted value” if surrendered prior to maturity or if funds are allocated to other investment options. The market value adjustment may result in a gain or loss to the Company, depending on crediting rates or an indexed rate at surrender, as applicable. The Company issued fixed deferred annuity contracts without MVA that have a guaranteed credited rate and annuity benefit. | ||||||||||||||
The assets supporting the variable portion of both traditional variable annuities and certain variable contracts with guarantees are carried at fair value and reported as “Separate account assets” with an equivalent amount reported as “Separate account liabilities.” Amounts assessed against the contractholders for mortality, administration, and other services are included within revenue in “Policy charges and fee income” and changes in liabilities for minimum guarantees are generally included in “Policyholders' benefits”. | ||||||||||||||
For those guarantees of benefits that are payable in the event of death, the net amount at risk is generally defined as the current guaranteed minimum death benefit in excess of the current account balance at the balance sheet date. The Company's primary risk exposures for these contracts relates to actual deviations from, or changes to, the assumptions used in the original pricing of these products, including fixed income and equity market returns, contract lapses and contractholder mortality. | ||||||||||||||
For guarantees of benefits that are payable at annuitization, the net amount at risk is generally defined as the present value of the minimum guaranteed annuity payments available to the contractholder determined in accordance with the terms of the contract in excess of the current account balance. The Company's primary risk exposures for these contracts relates to actual deviations from, or changes to, the assumptions used in the original pricing of these products, including fixed income and equity market returns, timing of annuitization, contract lapses and contractholder mortality. | ||||||||||||||
For guarantees of benefits that are payable at withdrawal, the net amount at risk is generally defined as the present value of the minimum guaranteed withdrawal payments available to the contractholder determined in accordance with the terms of the contract in excess of the current account balance. For guarantees of accumulation balances, the net amount at risk is generally defined as the guaranteed minimum accumulation balance minus the current account balance. The Company's primary risk exposures for these contracts relates to actual deviations from, or changes to, the assumptions used in the original pricing of these products, including equity market returns, interest rates, market volatility or contractholder behavior. | ||||||||||||||
The Company's contracts with guarantees may offer more than one type of guarantee in each contract; therefore, the amounts listed may not be mutually exclusive. The liabilities related to the net amount at risk are reflected within “Future policy benefits and other policyholder liabilities.” As of December 31, 2014 and 2013, the Company had the following guarantees associated with its contracts, by product and guarantee type: | ||||||||||||||
31-Dec-14 | 31-Dec-13 | |||||||||||||
In the Event of Death | At Annuitization/ Accumulation (1) | In the Event of Death | At Annuitization/ Accumulation (1) | |||||||||||
Variable Annuity Contracts | (in thousands) | |||||||||||||
Return of net deposits | ||||||||||||||
Account value | $38,410,155 | N/A | $40,828,166 | N/A | ||||||||||
Net amount at risk | $353,902 | N/A | $407,488 | N/A | ||||||||||
Average attained age of contractholders | 65 | years | N/A | 64 | years | N/A | ||||||||
Minimum return or contract value | ||||||||||||||
Account value | $7,886,833 | $38,471,465 | $8,446,938 | $40,678,507 | ||||||||||
Net amount at risk | $916,016 | $1,358,023 | $916,094 | $1,272,641 | ||||||||||
Average attained age of contractholders | 67 | years | 64 | years | 66 | years | 64 | years | ||||||
Average period remaining until expected annuitization | N/A | 0.1 | years | N/A | 0.2 | year | ||||||||
Includes income and withdrawal benefits described herein. | ||||||||||||||
31-Dec-14 | 31-Dec-13 | |||||||||||||
Unadjusted Value | Adjusted Value | Unadjusted Value | Adjusted Value | |||||||||||
Variable Annuity Contracts | (in thousands) | |||||||||||||
Market value adjusted annuities | ||||||||||||||
Account value | $ | 1,244,131 | $ | 1,251,084 | $ | 1,554,743 | $ | 1,580,487 | ||||||
Account balances of variable annuity contracts with guarantees were invested in separate account investment options as follows: | ||||||||||||||
31-Dec-14 | 31-Dec-13 | |||||||||||||
(in thousands) | ||||||||||||||
Equity funds | $ | 28,191,315 | $ | 28,992,157 | ||||||||||
Bond funds | 12,844,788 | 14,924,698 | ||||||||||||
Money market funds | 2,783,023 | 2,430,792 | ||||||||||||
Total | $ | 43,819,126 | $ | 46,347,647 | ||||||||||
In addition to the above mentioned amounts invested in separate account investment options, $2.5 billion and $2.9 billion of account balances of variable annuity contracts with guarantees, inclusive of contracts with MVA features, were invested in general account investment options as of December 31, 2014 and 2013, respectively. For the years ended December 31, 2014, 2013 and 2012, there were no transfers of assets, other than cash, from the general account to any separate account, and accordingly no gains or losses recorded. | ||||||||||||||
Liabilities for Guarantee Benefits | ||||||||||||||
The table below summarizes the changes in general account liabilities for guarantees. The liabilities for guaranteed minimum death benefits (“GMDB”) and guaranteed minimum income benefits (“GMIB”) are included in “Future policy benefits and other policyholder liabilities” and the related changes in the liabilities are included in “Policyholders' benefits.” Guaranteed minimum accumulation benefits (“GMAB”), guaranteed minimum withdrawal benefits (“GMWB”) and guaranteed minimum income and withdrawal benefits (“GMIWB”) features are accounted for as bifurcated embedded derivatives and are recorded at fair value. Changes in the fair value of these derivatives, including changes in the Company's own risk of non-performance, along with any fees attributed or payments made relating to the derivative are recorded in “Realized investment gains (losses), net.” See Note 10 for additional information regarding the methodology used in determining the fair value of these embedded derivatives. The liabilities for GMAB, GMWB and GMIWB are included in “Future policy benefits and other policyholder liabilities.” As discussed below, the Company and a reinsurance affiliate maintain a portfolio of derivative investments that serve as a partial hedge of the risks associated with these products, for which the changes in fair value are also recorded in “Realized investment gains (losses), net.” This portfolio of derivative investments does not qualify for hedge accounting treatment under U.S. GAAP. | ||||||||||||||
GMDB | GMAB/GMWB/GMIWB | GMIB | Totals | |||||||||||
Variable Annuity | ||||||||||||||
(in thousands) | ||||||||||||||
Beginning Balance as of December 31, 2011 | $ | 177,718 | $ | 1,783,594 | $ | 14,377 | $ | 1,975,689 | ||||||
Incurred guarantee benefits (1) | 76,240 | 9,541 | 9,821 | 95,602 | ||||||||||
Paid guarantee benefits | -31,431 | - | -682 | -32,113 | ||||||||||
Beginning Balance as of December 31, 2012 | 222,527 | 1,793,135 | 23,516 | 2,039,178 | ||||||||||
Incurred guarantee benefits (1) | -3,191 | -1,014,909 | -11,650 | -1,029,750 | ||||||||||
Paid guarantee benefits | -27,507 | - | -747 | -28,254 | ||||||||||
Changes in unrealized investment gains and losses | 8,041 | - | 160 | 8,201 | ||||||||||
Beginning Balance as of December 31, 2013 | 199,870 | 778,226 | 11,279 | 989,375 | ||||||||||
Incurred guarantee benefits (1) | 81,524 | 2,334,185 | 8,506 | 2,424,215 | ||||||||||
Paid guarantee benefits | -25,909 | - | -724 | -26,633 | ||||||||||
Changes in unrealized investment gains and losses | 128 | - | 43 | 171 | ||||||||||
Balance as of December 31, 2014 | $ | 255,613 | $ | 3,112,411 | $ | 19,104 | $ | 3,387,128 | ||||||
Incurred guarantee benefits include the portion of assessments established as additions to reserve as well as changes in estimates affecting the reserves. Also includes changes in the fair value of features accounted for as derivatives. | ||||||||||||||
The GMDB liability is determined each period end by estimating the accumulated value of a portion of the total assessments to date less the accumulated value of the death benefits in excess of the account balance. The GMIB liability associated with variable annuities is determined each period by estimating the accumulated value of a portion of the total assessments to date less the accumulated value of the projected income benefits in excess of the account balance. The portion of assessments used is chosen such that, at issue the present value of expected death benefits or expected income benefits in excess of the projected account balance and the portion of the present value of total expected assessments over the lifetime of the contracts are equal. The Company regularly evaluates the estimates used and adjusts the GMDB and GMIB liability balances with an associated charge or credit to earnings, if actual experience or other evidence suggests that earlier estimates should be revised. | ||||||||||||||
The GMAB features provide the contractholder with a guaranteed return of initial account value or an enhanced value if applicable. The most significant of the Company's GMAB features are the guaranteed return option (“GRO”) features, which include an asset transfer feature that reduces the Company's exposure to these guarantees. The GMAB liability is calculated as the present value of future expected payments to customers less the present value of assessed rider fees attributable to the embedded derivative feature. | ||||||||||||||
The GMWB features provide the contractholder with access to a guaranteed remaining balance if the account value is reduced to zero through a combination of market declines and withdrawals. The guaranteed remaining balance is generally equal to the protected value under the contract, which is initially established as the greater of the account value or cumulative deposits when withdrawals commence, less cumulative withdrawals. The contractholder also has the option, after a specified time period, to reset the guaranteed remaining balance to the then-current account value, if greater. The contractholder accesses the guaranteed remaining balance through payments over time, subject to maximum annual limits. The GMWB liability is calculated as the present value of future expected payments to customers less the present value of assessed rider fees attributable to the embedded derivative feature. | ||||||||||||||
The GMIWB features, taken collectively, provide a contractholder two optional methods to receive guaranteed minimum payments over time, a “withdrawal” option or an “income” option. The withdrawal option (which was available under only one of the GMIWBs and is no longer offered) guarantees that a contractholder can withdraw an amount each year until the cumulative withdrawals reach a total guaranteed balance. The income option (which varies among the Company's GMIWBs) in general guarantees the contractholder the ability to withdraw an amount each year for life (or for joint lives, in the case of any spousal version of the benefit) where such amount is equal to a percentage of a protected value under the benefit. The contractholder also has the potential to increase this annual amount, based on certain subsequent increases in account value that may occur. The GMIWB can be elected by the contract holder upon issuance of an appropriate deferred variable annuity contract or at any time following contract issue prior to annuitization. Certain GMIWB features include an asset transfer feature that reduces the Company's exposure to these guarantees. The GMIWB liability is calculated as the present value of future expected payments to customers less the present value of assessed rider fees attributable to the embedded derivative feature. | ||||||||||||||
As part of its risk management strategy, the Company limits its exposure to these risks through a combination of product design elements, such as an asset transfer feature and affiliated reinsurance agreements. The asset transfer feature, included in the design of certain optional living benefits, transfers assets between certain variable investments selected by the annuity contractholder and, depending on the benefit feature, a fixed rate account in the general account or a bond portfolio within the separate accounts. The transfers are based on the static mathematical formula, used with the particular optional benefit, which considers a number of factors, including, but not limited to, the impact of investment performance of the contractholder total account value. In general, but not always, negative investment performance may result in transfers to a fixed-rate account in the general account or a bond portfolio within the separate accounts, and positive investment performance may result in transfers back to contractholder-selected variable investments. Other product design elements utilized for certain products to manage these risks include asset allocation restrictions and minimum issuance age requirements. For risk management purposes the Company segregates the variable annuity living benefit features into those that include the asset transfer feature including certain GMIWB riders and certain GMAB riders that feature the GRO policyholder benefits; and those that do not include the asset transfer feature, including certain legacy GMIWB, GMWB, GMAB and GMIB riders. Living benefit riders that include the asset transfer feature also include GMDB riders, and as such the GMDB risk in these riders also benefits from this feature. | ||||||||||||||
Sales Inducements | ||||||||||||||
The Company defers sales inducements and amortizes them over the life of the policy using the same methodology and assumptions used to amortize DAC. These deferred sales inducements are included in “Deferred sales inducements” in the Company's Statements of Financial Position. The Company offered various types of sales inducements. These inducements include: (1) a bonus whereby the policyholder's initial account balance is increased by an amount equal to a specified percentage of the customer's initial deposit and (2) additional credits after a certain number of years a contract is held. Changes in DSI, reported as “Interest credited to policyholders' account balances”, are as follows: | ||||||||||||||
Sales Inducements | ||||||||||||||
(in thousands) | ||||||||||||||
Balance as of December 31, 2011 | $ | 445,841 | ||||||||||||
Capitalization | 59,269 | |||||||||||||
Amortization - Impact of assumption and experience unlocking and true-ups | 133,214 | |||||||||||||
Amortization - All other | -94,752 | |||||||||||||
Change in unrealized gains/losses | 13,258 | |||||||||||||
Balance as of December 31, 2012 | 556,830 | |||||||||||||
Capitalization | 31,370 | |||||||||||||
Amortization - Impact of assumption and experience unlocking and true-ups | 13,038 | |||||||||||||
Amortization - All other | 179,219 | |||||||||||||
Change in unrealized gains/losses | 28,790 | |||||||||||||
Balance as of December 31, 2013 | 809,247 | |||||||||||||
Capitalization | 11,515 | |||||||||||||
Amortization - Impact of assumption and experience unlocking and true-ups | 45,417 | |||||||||||||
Amortization - All other | -204,563 | |||||||||||||
Change in unrealized gains/losses | 3,591 | |||||||||||||
Balance as of December 31, 2014 | $ | 665,207 |
Statutory_Net_Income_and_Surpl
Statutory Net Income and Surplus and Dividend Restrictions (text) | 12 Months Ended |
Dec. 31, 2014 | |
StatutoryDisclosure[Abstract] | |
StatutoryDisclosureTextBlock | 8. STATUTORY NET INCOME AND SURPLUS AND DIVIDEND RESTRICTIONS |
The Company is required to prepare statutory financial statements in accordance with accounting practices prescribed or permitted by the State of Arizona Insurance Department. Prescribed statutory accounting practices include publications of the NAIC, as well as state laws, regulations and general administrative rules. Statutory accounting practices primarily differ from U.S. GAAP by charging policy acquisition costs to expense as incurred, establishing future policy benefit liabilities using different actuarial assumptions and valuing investments, deferred taxes and certain assets on a different basis. | |
Statutory net income of the Company amounted to $393 million, $406 million and $217 million, for the years ended December 31, 2014, 2013 and 2012, respectively. Statutory surplus of the Company amounted to $606 million and $443 million at December 31, 2014 and 2013, respectively. | |
The Company is subject to Arizona law which limits the amount of dividends that insurance companies can pay to its stockholder. The maximum dividend, which may be paid in any twelve month period without notification or approval, is limited to the lesser of 10% of statutory surplus as of December 31 of the preceding year or the net gain from operations of the preceding calendar year. Cash dividends may only be paid out of surplus derived from realized net profits. Based on these limitations, there is a capacity to pay a dividend of $61 million after December 19, 2015, without prior approval. | |
On December 19, 2014 and June 27, 2014, the Company paid dividends of $75 million and $267 million, respectively, to its parent, Prudential Annuities, Inc. On December 16, 2013 and June 26, 2013, the Company paid dividends of $100 million and $184 million, respectively, to Prudential Annuities, Inc. On December 11, 2012 and June 29, 2012, the Company paid dividends of $160 million and $248 million, respectively, to Prudential Annuities, Inc. | |
Income_Taxes
Income Taxes | 12 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
IncomeTaxDisclosureAbstract | ||||||||||
IncomeTaxDisclosureTextBlock | 9. INCOME TAXES | |||||||||
The components of income tax expense (benefit) for the years ended December 31, were as follows: | ||||||||||
2014 | 2013 | 2012 | ||||||||
(in thousands) | ||||||||||
Current tax expense: | ||||||||||
U.S. | $ | -8,499 | $ | 36,759 | $ | 26,637 | ||||
State and local | - | - | - | |||||||
Total | $ | -8,499 | $ | 36,759 | $ | 26,637 | ||||
Deferred tax expense: | ||||||||||
U.S. | 17,103 | 295,613 | 196,997 | |||||||
State and local | - | - | - | |||||||
Total | $ | 17,103 | $ | 295,613 | $ | 196,997 | ||||
Total income tax expense (benefit) on income from continuing operations | 8,604 | 332,372 | 223,634 | |||||||
Income tax expense (benefit) reported in equity related to: | ||||||||||
Other comprehensive income (loss) | 7,407 | -41,149 | -7,218 | |||||||
Additional paid-in capital | - | 4,354 | 5,730 | |||||||
Total income tax expense (benefit) | $ | 16,011 | $ | 295,577 | $ | 222,146 | ||||
In July 2014, the Internal Revenue Service (“IRS”) issued guidance relating to the hedging of variable annuity guaranteed minimum benefits (“Hedging IDD”). The Hedging IDD provides an elective safe harbor tax accounting method for certain contracts which permits the current deduction of losses and the deferral of gains for hedging activities that can be applied to open years under IRS examination beginning with the earliest open year. The Company will apply this tax accounting method for hedging gains and losses covered by the Hedging IDD beginning with 2013. As a result of applying such accounting method in 2014 the Company's U.S. current tax benefit includes an additional tax benefit of $59 million and a corresponding reduction of deferred tax assets. | ||||||||||
The Company's actual income tax expense on continuing operations for the years ended December 31 differs from the expected amount computed by applying the statutory federal income tax rate of 35% to income from continuing operations before income taxes for the following reasons: | ||||||||||
2014 | 2013 | 2012 | ||||||||
(in thousands) | ||||||||||
Expected federal income tax expense (benefit) | $ | 90,780 | $ | 413,162 | $ | 300,192 | ||||
Non taxable investment income | -69,122 | -69,665 | -66,895 | |||||||
Tax credits | -13,080 | -10,595 | -10,279 | |||||||
Other | 26 | -529 | 616 | |||||||
Total income tax expense (benefit) | $ | 8,604 | $ | 332,372 | $ | 223,634 | ||||
The dividends received deduction (“DRD”) reduces the amount of dividend income subject to U.S. tax and is the primary component of the non-taxable investment income shown in the table above, and, as such, is a significant component of the difference between the Company's effective tax rate and the federal statutory tax rate of 35%. The DRD for the current period was estimated using information from 2013 and current year results, and was adjusted to take into account the current year's equity market performance. The actual current year DRD can vary from the estimate based on factors such as, but not limited to, changes in the amount of dividends received that are eligible for the DRD, changes in the amount of distributions received from mutual fund investments, changes in the account balances of variable life and annuity contracts, and the Company's taxable income before the DRD. | ||||||||||
In August 2007, the IRS released Revenue Ruling 2007-54, which included, among other items, guidance on the methodology to be followed in calculating the DRD related to variable life insurance and annuity contracts. In September 2007, the IRS released Revenue Ruling 2007-61. Revenue Ruling 2007-61 suspended Revenue Ruling 2007-54 and informed taxpayers that the U.S. Treasury Department and the IRS intend to address through new guidance the issues considered in Revenue Ruling 2007-54, including the methodology to be followed in determining the DRD related to variable life insurance and annuity contracts. In May 2010, the IRS issued an Industry Director Directive (“IDD”) confirming that the methodology for calculating the DRD set forth in Revenue Ruling 2007-54 should not be followed. The IDD also confirmed that the IRS guidance issued before Revenue Ruling 2007-54, which guidance the Company relied upon in calculating its DRD, should be used to determine the DRD. In February 2014, the IRS released Revenue Ruling 2014-7, which modified and superseded Revenue Ruling 2007-54, by removing the provisions of Revenue Ruling 2007-54 related to the methodology to be followed in calculating the DRD and obsoleting Revenue Ruling 2007-61. These activities had no impact on the Company's 2012, 2013 or 2014 results. However, there remains the possibility that the IRS and the U.S. Treasury will address, through subsequent guidance, the issues related to the calculation of the DRD. For the last several years, the revenue proposals included in the Obama Administration's budgets included a proposal that would change the method used to determine the amount of the DRD. A change in the DRD, including the possible retroactive or prospective elimination of this deduction through guidance or legislation, could increase actual tax expense and reduce the Company's net income. | ||||||||||
Deferred tax assets and liabilities at December 31, resulted from the items listed in the following table: | ||||||||||
2014 | 2013 | |||||||||
(in thousands) | ||||||||||
Deferred tax assets | ||||||||||
Insurance reserves | $ | 267,536 | $ | 292,815 | ||||||
Investments | 13,270 | 124,489 | ||||||||
Compensation reserves | 1,760 | 1,860 | ||||||||
Other | - | - | ||||||||
Deferred tax assets | 282,566 | 419,165 | ||||||||
Deferred tax liabilities | ||||||||||
VOBA and deferred policy acquisition cost | 370,548 | 435,775 | ||||||||
Deferred sales inducements | 232,822 | 283,236 | ||||||||
Net unrealized gain on securities | 68,819 | 66,046 | ||||||||
Other | 1,239 | 464 | ||||||||
Deferred tax liabilities | 673,428 | 785,521 | ||||||||
Net deferred tax asset (liability) | $ | -390,863 | $ | -366,356 | ||||||
The application of U.S. GAAP requires the Company to evaluate the recoverability of deferred tax assets and establish a valuation allowance if necessary to reduce the deferred tax asset to an amount that is more likely than not expected to be realized. Considerable judgment is required in determining whether a valuation allowance is necessary, and if so, the amount of such valuation allowance. In evaluating the need for a valuation allowance the Company considers many factors, including: (1) the nature of the deferred tax assets and liabilities; (2) whether they are ordinary or capital; (3) in which tax jurisdictions they were generated and the timing of their reversal; (4) taxable income in prior carryback years as well as projected taxable earnings exclusive of reversing temporary differences and carryforwards; (5) the length of time that carryovers can be utilized in the various taxing jurisdictions; (6) any unique tax rules that would impact the utilization of the deferred tax assets; and (7) any tax planning strategies that the Company would employ to avoid a tax benefit from expiring unused. Although realization is not assured, management believes it is more likely than not that the deferred tax assets, net of valuation allowances, will be realized. The Company had no valuation allowance as of December 31, 2014, and 2013. | ||||||||||
Management believes that based on its historical pattern of taxable income, the Company will produce sufficient income in the future to realize its deferred tax assets. Adjustments to the valuation allowance will be made if there is a change in management's assessment of the amount of deferred tax asset that is realizable. | ||||||||||
The Company's income (loss) from continuing operations before income taxes includes income (loss) from domestic operations of $259 million, $1,180 million and $858 million, and no income from foreign operations for the years ended December 31, 2014, 2013 and 2012, respectively. | ||||||||||
The Company's liability for income taxes includes the liability for unrecognized tax benefits and interest that relate to tax years still subject to review by the IRS or other taxing authorities. The completion of review or the expiration of the Federal statute of limitations for a given audit period could result in an adjustment to the liability for income taxes. | ||||||||||
The Company classifies all interest and penalties related to tax uncertainties as income tax expense (benefit). In December 31, 2014 and 2013, the Company recognized nothing in the statement of operations and recognized no liabilities in the statement of financial position for tax-related interest and penalties. The Company had zero unrecognized tax benefits as of December 31, 2014 and 2013. The Company does not anticipate any significant changes within the next 12 months to its total unrecognized tax benefits related to tax years for which the statute of limitations has not expired. | ||||||||||
At December 31, 2014, the Company remains subject to examination in the U.S. for tax years 2009 through 2014. | ||||||||||
In 2009, the Company joined in filing the federal tax return with its ultimate parent, Prudential Financial, Inc. For tax years 2009 through 2015, the Company is participating in the IRS's Compliance Assurance Program (“CAP”). Under CAP, the IRS assigns an examination team to review completed transactions as they occur in order to reach agreement with the Company on how they should be reported in the relevant tax returns. If disagreements arise, accelerated resolutions programs are available to resolve the disagreements in a timely manner before the tax returns are filed. |
Fair_Value_of_Assets_and_Liabi
Fair Value of Assets and Liabilities | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Fair Value of Assets and Liabilities [Abstract] | |||||||||||||||||||||
Fair Value of Assets and Liabilities | 10. FAIR VALUE OF ASSETS AND LIABILITIES | ||||||||||||||||||||
Fair Value Measurement – Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative fair value guidance establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows: | |||||||||||||||||||||
Level 1 - Fair value is based on unadjusted quoted prices in active markets that are accessible to the Company for identical assets or liabilities. The Company's Level 1 assets and liabilities primarily include short term investments and equity securities that trade on an active exchange market. | |||||||||||||||||||||
Level 2 - Fair value is based on significant inputs, other than quoted prices included in Level 1, that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability through corroboration with observable market data. Level 2 inputs include quoted market prices in active markets for similar assets and liabilities, quoted market prices in markets that are not active for identical or similar assets or liabilities, and other market observable inputs. The Company's Level 2 assets and liabilities include: fixed maturities (corporate public and private bonds, most government securities, certain asset-backed and mortgage-backed securities, etc.), certain equity securities (mutual funds, which do not actively trade and are priced based on a net asset value), and certain over-the-counter derivatives. | |||||||||||||||||||||
Level 3 - Fair value is based on at least one or more significant unobservable inputs for the asset or liability. The assets and liabilities in this category may require significant judgment or estimation in determining the fair value. The Company's Level 3 assets and liabilities primarily include: certain private fixed maturities and equity securities, certain manually priced public equity securities and fixed maturities, certain highly structured over-the-counter derivative contracts, and embedded derivatives resulting from certain products with guaranteed benefits. | |||||||||||||||||||||
Assets and Liabilities by Hierarchy Level -The tables below present the balances of assets and liabilities reported at fair value on a recurring basis, as of the dates indicated. | |||||||||||||||||||||
As of December 31, 2014 | |||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Netting (1) | Total | |||||||||||||||||
(in thousands) | |||||||||||||||||||||
Fixed maturities, available-for-sale: | |||||||||||||||||||||
U.S Treasury securities and obligations of U.S. government authorities and agencies | $ | - | $ | 6,336 | $ | - | $ | - | $ | 6,336 | |||||||||||
Obligations of U.S. states and their political subdivisions | - | 70,789 | - | - | 70,789 | ||||||||||||||||
Foreign government bonds | - | 37,355 | - | - | 37,355 | ||||||||||||||||
Corporate securities | - | 1,985,614 | 116,070 | - | 2,101,684 | ||||||||||||||||
Asset-backed securities | - | 108,487 | 40,524 | - | 149,011 | ||||||||||||||||
Commercial mortgage-backed securities | - | 302,185 | - | - | 302,185 | ||||||||||||||||
Residential mortgage-backed securities | - | 133,233 | - | - | 133,233 | ||||||||||||||||
Sub-total | - | 2,643,999 | 156,594 | - | 2,800,593 | ||||||||||||||||
Trading account assets: | |||||||||||||||||||||
Equity securities | 6,131 | - | - | - | 6,131 | ||||||||||||||||
Sub-total | 6,131 | - | - | - | 6,131 | ||||||||||||||||
Equity securities, available-for-sale | - | 17 | - | - | 17 | ||||||||||||||||
Short-term investments | 57,185 | - | - | - | 57,185 | ||||||||||||||||
Cash equivalents | - | - | 225 | - | 225 | ||||||||||||||||
Other long-term investments | - | 118,846 | 633 | -24,288 | 95,191 | ||||||||||||||||
Reinsurance recoverables | - | - | 2,996,154 | - | 2,996,154 | ||||||||||||||||
Receivables from parent and affiliates | - | 18,748 | 22,320 | - | 41,068 | ||||||||||||||||
Sub-total excluding separate account assets | 63,316 | 2,781,610 | 3,175,926 | -24,288 | 5,996,564 | ||||||||||||||||
Separate account assets (2) | - | 44,101,699 | - | - | 44,101,699 | ||||||||||||||||
Total assets | $ | 63,316 | $ | 46,883,309 | $ | 3,175,926 | $ | -24,288 | $ | 50,098,263 | |||||||||||
Future policy benefits (3) | $ | - | $ | - | $ | 3,112,411 | $ | - | $ | 3,112,411 | |||||||||||
Payables to parent and affiliates | - | 21,249 | - | -21,249 | - | ||||||||||||||||
Total liabilities | $ | - | $ | 21,249 | $ | 3,112,411 | $ | -21,249 | $ | 3,112,411 | |||||||||||
As of December 31, 2013 | |||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Netting (1) | Total | |||||||||||||||||
(in thousands) | |||||||||||||||||||||
Fixed maturities, available-for-sale: | |||||||||||||||||||||
U.S Treasury securities and obligations of U.S. government authorities and agencies | $ | - | $ | 6,384 | $ | - | $ | - | $ | 6,384 | |||||||||||
Obligations of U.S. states and their political subdivisions | - | 68,566 | - | - | 68,566 | ||||||||||||||||
Foreign government securities | - | 31,154 | - | - | 31,154 | ||||||||||||||||
Corporate securities | - | 2,325,846 | 96,796 | - | 2,422,642 | ||||||||||||||||
Asset-backed securities | - | 124,103 | 63,789 | - | 187,892 | ||||||||||||||||
Commercial mortgage-backed securities | - | 390,633 | - | - | 390,633 | ||||||||||||||||
Residential mortgage-backed securities | - | 156,945 | - | - | 156,945 | ||||||||||||||||
Sub-total | - | 3,103,631 | 160,585 | - | 3,264,216 | ||||||||||||||||
Trading account assets: | |||||||||||||||||||||
Equity securities | 6,364 | - | 313 | - | 6,677 | ||||||||||||||||
Sub-total | 6,364 | - | 313 | - | 6,677 | ||||||||||||||||
Equity securities, available-for-sale | - | 16 | 192 | - | 208 | ||||||||||||||||
Short-term investments | 118,188 | - | - | - | 118,188 | ||||||||||||||||
Other long-term investments | - | 73,535 | 486 | -73,535 | 486 | ||||||||||||||||
Reinsurance recoverables | - | - | 748,005 | - | 748,005 | ||||||||||||||||
Receivables from parent and affiliates | - | 19,071 | 6,347 | - | 25,418 | ||||||||||||||||
Sub-total excluding separate account assets | 124,552 | 3,196,253 | 915,928 | -73,535 | 4,163,198 | ||||||||||||||||
Separate account assets (2) | 1,190,903 | 45,435,925 | - | - | 46,626,828 | ||||||||||||||||
Total assets | $ | 1,315,455 | $ | 48,632,178 | $ | 915,928 | $ | -73,535 | $ | 50,790,026 | |||||||||||
Future policy benefits (3) | $ | - | $ | - | $ | 778,226 | $ | - | $ | 778,226 | |||||||||||
Payables to parent and affiliates | - | 94,580 | - | -72,822 | 21,758 | ||||||||||||||||
Total liabilities | $ | - | $ | 94,580 | $ | 778,226 | $ | -72,822 | $ | 799,984 | |||||||||||
“Netting” amounts represent cash collateral of $3.0 million and $0.7 million as of December 31, 2014 and December 31, 2013, respectively, and the impact of offsetting asset and liability positions held with the same counterparty, subject to master netting arrangements. | |||||||||||||||||||||
Separate account assets represent segregated funds that are invested for certain customers. Investment risks associated with market value changes are borne by the customers, except to the extent of minimum guarantees made by the Company with respect to certain accounts. Separate account liabilities are not included in the above table as they are reported at contract value and not fair value in the Company's Statement of Financial Position. | |||||||||||||||||||||
As of December 31, 2014, the net embedded derivative liability position of $3,112 million includes $55 million of embedded derivatives in an asset position and $3,167 million of embedded derivatives in a liability position. As of December 31, 2013, the net embedded derivative liability position of $778 million includes $245 million of embedded derivatives in an asset position and $1,023 million of embedded derivatives in a liability position. | |||||||||||||||||||||
The methods and assumptions the Company uses to estimate the fair value of assets and liabilities measured at fair value on a recurring basis are summarized below. | |||||||||||||||||||||
Fixed Maturity Securities - The fair values of the Company's public fixed maturity securities are generally based on prices obtained from independent pricing services. Prices for each security are generally sourced from multiple pricing vendors, and a vendor hierarchy is maintained by asset type based on historical pricing experience and vendor expertise. The Company ultimately uses the price from the pricing service highest in the vendor hierarchy based on the respective asset type. The pricing hierarchy is updated for new financial products and recent pricing experience with various vendors. Consistent with the fair value hierarchy described above, securities with validated quotes from pricing services are generally reflected within Level 2, as they are primarily based on observable pricing for similar assets and/or other market observable inputs. Typical inputs used by these pricing services include but are not limited to reported trades, benchmark yields, issuer spreads, bids, offers, and/or estimated cash flow, prepayment speeds, and default rates. If the pricing information received from third party pricing services is deemed not reflective of market activity or other inputs observable in the market, the Company may challenge the price through a formal process with the pricing service or classify the security as Level 3. If the pricing service updates the price to be more consistent with the presented market observations, the security remains within Level 2. | |||||||||||||||||||||
Internally-developed valuations or indicative broker quotes are also used to determine fair value in circumstances where vendor pricing is not available, or where the Company ultimately concludes that pricing information received from independent pricing services is not reflective of market activity. If the Company concludes the values from both pricing services and brokers are not reflective of market activity, it may override the information with an internally developed valuation. As of December 31, 2014 and 2013 overrides on a net basis were not material. Pricing service overrides, internally-developed valuations and indicative broker quotes are generally included in Level 3 in the fair value hierarchy. | |||||||||||||||||||||
The Company conducts several specific price monitoring activities. Daily analyses identify price changes over pre-determined thresholds defined at the financial instrument level. Various pricing integrity reports are reviewed on a daily and monthly basis to determine if pricing is reflective of market activity or if it would warrant any adjustments. Other procedures performed include, but are not limited to, reviews of third-party pricing services methodologies, reviews of pricing trends, and back testing. | |||||||||||||||||||||
The fair value of private fixed maturities, which are comprised of investments in private placement securities, originated by internal private asset managers, are primarily determined using discounted cash flow models. These models primarily use observable inputs that include Treasury or similar base rates plus estimated credit spreads to value each security. The credit spreads are obtained through a survey of private market intermediaries who are active in both primary and secondary transactions, and consider, among other factors, the credit quality and industry sector of the issuer and the reduced liquidity associated with private placements. Since most private placements are valued using standard market observable inputs and inputs derived from, or corroborated by, market observable data including observed prices and spreads for similar publicly traded or privately traded issues, they have been reflected within Level 2. For certain private fixed maturities, the discounted cash flow model may incorporate significant unobservable inputs, which reflect the Company's own assumptions about the inputs that market participants would use in pricing the asset. To the extent management determines that such unobservable inputs are significant to the price of a security, a Level 3 classification is made. | |||||||||||||||||||||
Trading Account Assets – Trading account assets consist primarily of equity securities whose fair values are determined consistent with similar instruments described below under “Equity Securities.” | |||||||||||||||||||||
Equity Securities - Equity securities consist principally of investments in common stock of publicly traded companies, perpetual preferred stock, privately traded securities, as well as mutual fund shares. The fair values of most publicly traded equity securities are based on quoted market prices in active markets for identical assets and are classified within Level 1 in the fair value hierarchy. Estimated fair values for most privately traded equity securities are determined using discounted cash flow, earnings multiple and other valuation models that require a substantial level of judgment around inputs and therefore are classified within Level 3. The fair values of mutual fund shares that transact regularly (but do not trade in active markets because they are not publicly available) are based on transaction prices of identical fund shares and are classified within Level 2 in the fair value hierarchy. The fair values of perpetual preferred stock are based on inputs obtained from independent pricing services that are primarily based on indicative broker quotes. As a result, the fair values of perpetual preferred stock are classified as Level 3. | |||||||||||||||||||||
Derivative Instruments - Derivatives are recorded at fair value either as assets, within “Other long-term investments,” or as liabilities, within “Payables to parent and affiliates,” except for embedded derivatives which are recorded with the associated host contract. The fair values of derivative contracts can be affected by changes in interest rates, foreign exchange rates, credit spreads, market volatility, expected returns, non-performance risk (“NPR”), liquidity and other factors. | |||||||||||||||||||||
The majority of the Company's derivative positions are traded in the OTC derivative market and are classified within Level 2 in the fair value hierarchy. OTC derivatives classified within Level 2 are valued using models that utilize actively quoted or observable market input values from external market data providers, third-party pricing vendors and/or recent trading activity. The Company's policy is to use mid-market pricing in determining its best estimate of fair value. The fair values of most OTC derivatives, including interest rate and cross currency swaps and single name credit default swaps are determined using discounted cash flow models. The fair values of European style option contracts are determined using Black-Scholes option pricing models. These models' key inputs include the contractual terms of the respective contract, along with significant observable inputs, including interest rates, currency rates, credit spreads, equity prices, index dividend yields, NPR, volatility, and other factors. | |||||||||||||||||||||
The Company's cleared interest rate swaps and credit derivatives linked to an index are valued using models that utilize actively quoted or observable market inputs, including Overnight Indexed Swap discount rates, obtained from external market data providers, third-party pricing vendors, and/or recent trading activity. These derivatives are classified as Level 2 in the fair value hierarchy. | |||||||||||||||||||||
To reflect the market's perception of its own and the counterparty's NPR, the Company incorporates additional spreads over LIBOR into the discount rate used in determining the fair value of OTC derivative assets and liabilities that are not otherwise collateralized. | |||||||||||||||||||||
Derivatives classified as Level 3 include structured products. These derivatives are valued based upon models, such as Monte Carlo simulation models and other techniques, that utilize significant unobservable inputs. Level 3 methodologies are validated through periodic comparison of the Company's fair values to external broker-dealer values. As of December 31, 2014 and 2013, there were no internally valued derivatives with the fair value classified within Level 3, and all derivatives were classified within Level 2. See Note 11 for more details on the fair value of derivative instruments by primary underlying. | |||||||||||||||||||||
Short-Term Investments - Short-term investments include money market instruments and other highly liquid debt instruments. Certain money market instruments are valued using unadjusted quoted prices in active markets that are accessible for identical assets and are primarily classified as Level 1. | |||||||||||||||||||||
Separate Account Assets – Separate account assets include fixed maturity securities, treasuries, equity securities, and mutual funds for which values are determined consistent with similar instruments described above under "Fixed Maturity Securities” and “Equity Securities.” | |||||||||||||||||||||
Receivables from Parent and Affiliates - Receivables from Parent and Affiliates carried at fair value include affiliated bonds within the Company's legal entity whose fair value are determined consistent with similar securities described above under “Fixed Maturity Securities” managed by affiliated asset managers. | |||||||||||||||||||||
Reinsurance Recoverables – Reinsurance recoverables carried at fair value include the reinsurance of the Company's living benefit guarantees on certain of its variable annuity contracts. These guarantees are accounted for as embedded derivatives and are described below in "Future Policy Benefits." The reinsurance agreements covering these guarantees are derivatives with fair value determined in the same manner as the living benefit guarantees. | |||||||||||||||||||||
Future Policy Benefits - The liability for future policy benefits is related to guarantees primarily associated with the optional living benefit features of certain variable-annuity contracts offered by the Company, including GMABs, GMWBs, and GMIWBs, accounted for as embedded derivatives. The fair values of the GMAB, GMWB, and GMIWB liabilities are calculated as the present value of future expected benefit payments to contractholders less the present value of assessed rider fees attributable to the optional living benefit feature. This methodology could result in either a liability or contra-liability balance, given changing capital market conditions and various actuarial assumptions. Since there is no observable active market for the transfer of these obligations, the valuations are calculated using internally developed models with option pricing techniques. The models are based on a risk neutral valuation framework and incorporate premiums for risks inherent in valuation techniques, inputs, and the general uncertainty around the timing and amount of future cash flows. The determination of these risk premiums requires the use of management judgment. | |||||||||||||||||||||
The significant inputs to the valuation models for these embedded derivatives include capital market assumptions, such as interest rate levels and volatility assumptions, the Company's market-perceived NPR, as well as actuarially determined assumptions, including contractholder behavior, such as lapse rates, benefit utilization rates, withdrawal rates, and mortality rates. Since many of these assumptions are unobservable and are considered to be significant inputs to the liability valuation, the liability included in future policy benefits has been reflected within Level 3 in the fair value hierarchy. | |||||||||||||||||||||
Capital market inputs and actual policyholders' account values are updated each quarter based on capital market conditions as of the end of the quarter, including interest rates, equity markets, and volatility. In the risk neutral valuation, the initial swap curve drives the total return used to grow the policyholders' account value. The Company's discount rate assumption is based on the LIBOR swap curve, adjusted for an additional spread relative to LIBOR to reflect NPR. | |||||||||||||||||||||
Actuarial assumptions, including contractholder behavior and mortality, are reviewed at least annually, and updated based upon emerging experience, future expectations, and other data, including any observable market data. These assumptions are generally updated annually unless a material change that the Company feels is indicative of a long term trend is observed in an interim period. | |||||||||||||||||||||
Transfers between Levels 1 and 2 – Overall, transfers between levels are made to reflect changes in observability of inputs and market activity. Transfers into or out of any level are assumed to occur at beginning of the quarter in which the transfers occur. Periodically there are transfers between Level 1 and Level 2 for assets held in the Company's Separate Account. During the year ended December 31, 2014, $963 million was transferred from Level 1 to Level 2. During the year ended December 31, 2013, $933 million was transferred from Level 2 to Level 1. | |||||||||||||||||||||
Level 3 Assets and Liabilities by Price Source – The tables below present the balances of Level 3 assets and liabilities measured at fair value with their corresponding pricing sources. | |||||||||||||||||||||
As of December 31, 2014 | |||||||||||||||||||||
Internal(1) | External(2) | Total | |||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Corporate securities | $ | 99,209 | $ | 16,861 | $ | 116,070 | |||||||||||||||
Asset-backed securities | - | 40,524 | 40,524 | ||||||||||||||||||
Cash equivalents | 225 | - | 225 | ||||||||||||||||||
Other long-term investments | - | 633 | 633 | ||||||||||||||||||
Reinsurance recoverables | 2,996,154 | - | 2,996,154 | ||||||||||||||||||
Receivables from parent and affiliates | - | 22,320 | 22,320 | ||||||||||||||||||
Total assets | $ | 3,095,588 | $ | 80,338 | $ | 3,175,926 | |||||||||||||||
Future policy benefits | 3,112,411 | - | 3,112,411 | ||||||||||||||||||
Total liabilities | $ | 3,112,411 | $ | - | $ | 3,112,411 | |||||||||||||||
As of December 31, 2013 | |||||||||||||||||||||
Internal(1) | External(2) | Total | |||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Corporate securities | $ | 94,730 | $ | 2,066 | $ | 96,796 | |||||||||||||||
Asset-backed securities | - | 63,789 | 63,789 | ||||||||||||||||||
Equity securities | 192 | 313 | 505 | ||||||||||||||||||
Other long-term investments | - | 486 | 486 | ||||||||||||||||||
Reinsurance recoverables | 748,005 | - | 748,005 | ||||||||||||||||||
Receivables from parent and affiliates | - | 6,347 | 6,347 | ||||||||||||||||||
Total assets | $ | 842,927 | $ | 73,001 | $ | 915,928 | |||||||||||||||
Future policy benefits | 778,226 | - | 778,226 | ||||||||||||||||||
Total liabilities | $ | 778,226 | $ | - | $ | 778,226 | |||||||||||||||
Represents valuations reflecting both internally-derived and market inputs. See below for additional information related to internally-developed valuation for significant items in the above table. | |||||||||||||||||||||
Represents unadjusted prices from independent pricing-services and independent indicative broker quotes where pricing inputs are not readily available. | |||||||||||||||||||||
Quantitative Information Regarding Internally Priced Level 3 Assets and Liabilities – The tables below present quantitative information on significant internally-priced Level 3 assets and liabilities (see narrative below for quantitative information for separate account assets). | |||||||||||||||||||||
As of December 31, 2014 | |||||||||||||||||||||
Fair Value | Primary Valuation Techniques | Unobservable Inputs | Minimum | Maximum | Weighted Average | Impact of Increase in Input on Fair Value (1) | |||||||||||||||
(in thousands) | |||||||||||||||||||||
Assets: | |||||||||||||||||||||
Corporate securities | $ | 99,209 | Discounted cash flow | Discount rate | 3.55% | 11.75% | 3.96% | Decrease | |||||||||||||
Reinsurance recoverables | $ | 2,996,154 | Fair values are determined in the same manner as future policy benefits | ||||||||||||||||||
Liabilities: | |||||||||||||||||||||
Future policy benefits (2) | $ | 3,112,411 | Discounted cash flow | Lapse rate (3) | 0% | 14% | Decrease | ||||||||||||||
NPR spread (4) | 0.00% | 1.30% | Decrease | ||||||||||||||||||
Utilization rate (5) | 63% | 95% | Increase | ||||||||||||||||||
Withdrawal rate (6) | 74% | 100% | Increase | ||||||||||||||||||
Mortality rate (7) | 0% | 14% | Decrease | ||||||||||||||||||
Equity Volatility curve | 17% | 28% | Increase | ||||||||||||||||||
As of December 31, 2013 | |||||||||||||||||||||
Fair Value | Primary Valuation Techniques | Unobservable Inputs | Minimum | Maximum | Weighted Average | Impact of Increase in Input on Fair Value (1) | |||||||||||||||
(in thousands) | |||||||||||||||||||||
Assets: | |||||||||||||||||||||
Corporate securities | $ | 94,730 | Discounted cash flow | Discount rate | 3.73% | 12.06% | 3.90% | Decrease | |||||||||||||
Reinsurance recoverables | $ | 748,005 | Fair values are determined in the same manner as future policy benefits | ||||||||||||||||||
Liabilities: | |||||||||||||||||||||
Future policy benefits (2) | $ | 778,226 | Discounted cash flow | Lapse rate (3) | 0% | 11% | Decrease | ||||||||||||||
NPR spread (4) | 0.08% | 1.09% | Decrease | ||||||||||||||||||
Utilization rate (5) | 70% | 94% | Increase | ||||||||||||||||||
Withdrawal rate (6) | 86% | 100% | Increase | ||||||||||||||||||
Mortality rate (7) | 0% | 13% | Decrease | ||||||||||||||||||
Equity Volatility curve | 15% | 28% | Increase | ||||||||||||||||||
Conversely, the impact of a decrease in input would have the opposite impact for the fair value as that presented in the table. | |||||||||||||||||||||
Future policy benefits primarily represent general account liabilities for the optional living benefit features of the Company's variable annuity contracts which are accounted for as embedded derivatives. Since the valuation methodology for these liabilities uses a range of inputs that vary at the contract level over the cash flow projection period, presenting a range, rather than weighted average, is a more meaningful representation of the unobservable inputs used in the valuation. | |||||||||||||||||||||
Lapse rates are adjusted at the contract level based on a the in-the-moneyness of the living benefit, and reflect other factors, such as the applicability of any surrender charges. Lapse rates are reduced when contracts are more in-the-money. Lapse rates are also generally assumed to be lower for the period where surrender charges apply. | |||||||||||||||||||||
To reflect NPR, the Company incorporates an additional spread over LIBOR into the discount rate used in the valuation of individual living benefit contracts in a liability position and generally not to those in a contra-liability position. The NPR spread reflects the financial strength ratings of the Company and its affiliates, as these are insurance liabilities and senior to debt. The additional spread over LIBOR is determined by utilizing the credit spreads associated with issuing funding agreements adjusted for any illiquidity risk premium. | |||||||||||||||||||||
The utilization rate assumption estimates the percentage of contracts that will utilize the benefit during the contract duration, and begin lifetime withdrawals at various time intervals from contract inception. The remaining contractholders are assumed to either begin lifetime withdrawals immediately or never utilize the benefit. Utilization assumptions may vary by product type, tax status, and age. The impact of changes in these assumptions is highly dependent on the product type, the age of the contractholder at the time of the sale, and the timing of the first lifetime income withdrawal. | |||||||||||||||||||||
The withdrawal rate assumption estimates the magnitude of annual contractholder withdrawals relative to the maximum allowable amount under the contract. These assumptions may vary based on the product type, contractholder, age, tax status, and withdrawal timing. The fair value of the liability will generally increase the closer the withdrawal rate is to 100%. | |||||||||||||||||||||
Range reflects the mortality rate for the vast majority of business with living benefits, with policyholders ranging from 35 to 90 years old. While the majority of living benefits have a minimum age requirement, certain benefits do not have an age restriction. This results in contractholders for certain benefits with mortality rates approaching 0%. Based on historical experience, the Company applies a set of age and duration specific mortality rate adjustments compared to standard industry tables. A mortality improvement assumption is also incorporated into the overall mortality table. | |||||||||||||||||||||
Interrelationships Between Unobservable Inputs—In addition to the sensitivities of fair value measurements to changes in each unobservable input in isolation, as reflected in the table above, interrelationships between these inputs may also exist, such that a change in one unobservable input may give rise to a change in another, or multiple, inputs. Examples of such interrelationships for significant internally-priced Level 3 assets and liabilities are as follows: | |||||||||||||||||||||
Corporate Securities— The rate used to discount future cash flows reflects current risk-free rates plus credit and liquidity spread requirements that market participants would use to value an asset. The discount rate may be influenced by many factors, including market cycles, expectations of default, collateral, term, and asset complexity. Each of these factors can influence discount rates, either in isolation, or in response to other factors. | |||||||||||||||||||||
Future Policy Benefits— The Company expects efficient benefit utilization and withdrawal rates to generally be correlated with lapse rates. However, behavior is generally highly dependent on the facts and circumstances surrounding the individual contractholder, such as their liquidity needs or tax situation, which could drive lapse behavior independent of other contractholder behavior assumptions. To the extent more efficient contractholder behavior results in greater in-the-moneyness at the contract level, lapse rates may decline for those contracts. Similarly, to the extent that increases in equity volatility are correlated with overall declines in the capital markets, lapse rates may decline as contracts become more in-the-money. | |||||||||||||||||||||
Valuation Process for Fair Value Measurements Categorized within Level 3 - The Company has established an internal control infrastructure over the valuation of financial instruments that requires ongoing oversight by its various Business Groups. These management control functions are segregated from the trading and investing functions. For invested assets, the Company has established oversight teams, often in the form of Pricing Committees within each asset management group. The teams, which typically include representation from investment, accounting, operations, legal and other disciplines are responsible for overseeing and monitoring the pricing of the Company's investments and performing periodic due diligence reviews of independent pricing services. An actuarial valuation team oversees the valuation of optional living benefit features of the Company's variable annuity contracts. | |||||||||||||||||||||
The Company has also established policies and guidelines that require the establishment of valuation methodologies and consistent application of such methodologies. These policies and guidelines govern the use of inputs and price source hierarchies and provide controls around the valuation processes. These controls include appropriate review and analysis of investment prices against market activity or indicators of reasonableness, analysis of portfolio returns to corresponding benchmark returns, back-testing, review of bid/ask spreads to assess activity, approval of price source changes, price overrides, methodology changes and classification of fair value hierarchy levels. For optional living benefit features of the Company's variable annuity products, the actuarial valuation unit periodically performs baseline testing of contract input data and actuarial assumptions are reviewed at least annually, and updated based upon emerging experience, future expectations and other data, including any observable market data. The valuation policies and guidelines are reviewed and updated as appropriate. | |||||||||||||||||||||
Within the trading and investing functions, the Company has established policies and procedures that relate to the approval of all new transaction types, transaction pricing sources and fair value hierarchy coding within the financial reporting system. For variable annuity product changes or new launches of optional living benefit features, the actuarial valuation unit validates input logic and new product features and agrees new input data directly to source documents. | |||||||||||||||||||||
Changes in Level 3 assets and liabilities - The following tables provide summaries of the changes in fair values of Level 3 assets and liabilities as of the dates indicated, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets and liabilities still held at the end of their respective periods. | |||||||||||||||||||||
Year Ended December 31, 2014 | |||||||||||||||||||||
Fixed Maturities Available-For-Sale | Trading Account Assets - Equity Securities | Equity Securities Available-for -Sale | |||||||||||||||||||
Corporate Securities | Asset- Backed Securities | Commercial Mortgage-Backed Securities | |||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Fair Value, beginning of period assets/(liabilities) | $ | 96,796 | $ | 63,789 | $ | - | $ | 313 | $ | 192 | |||||||||||
Total gains (losses) (realized/unrealized): | |||||||||||||||||||||
Included in earnings: | |||||||||||||||||||||
Realized investment gains (losses), net | 1,592 | - | - | - | - | ||||||||||||||||
Asset management fees and other income | - | - | - | 15 | - | ||||||||||||||||
Included in other comprehensive income (loss) | -846 | 196 | -83 | - | - | ||||||||||||||||
Net investment income | 5,024 | 120 | - | - | - | ||||||||||||||||
Purchases | 20,720 | 14,933 | 52,518 | - | - | ||||||||||||||||
Sales | -202 | - | - | - | -192 | ||||||||||||||||
Issuances | - | - | - | - | - | ||||||||||||||||
Settlements | -7,014 | -40,337 | - | -328 | - | ||||||||||||||||
Transfers into Level 3 (1) | - | 28,152 | - | - | - | ||||||||||||||||
Transfers out of Level 3 (1) | - | -26,329 | -52,435 | - | - | ||||||||||||||||
Fair Value, end of period assets/(liabilities) | $ | 116,070 | $ | 40,524 | $ | - | $ | - | $ | - | |||||||||||
Unrealized gains (losses) for the period relating to those | |||||||||||||||||||||
Level 3 assets that were still held at the end of the period (2): | |||||||||||||||||||||
Included in earnings: | |||||||||||||||||||||
Realized investment gains (losses), net | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||
Asset management fees and other income | $ | - | $ | - | $ | - | $ | 15 | $ | - | |||||||||||
Year Ended December 31, 2014 | |||||||||||||||||||||
Cash Equivalents | Other Long-term Investments | Reinsurance Recoverables | Receivables from parent and affiliates | Future Policy Benefits | |||||||||||||||||
(in thousands) | |||||||||||||||||||||
Fair Value, beginning of period assets/(liabilities) | $ | - | $ | 486 | $ | 748,005 | $ | 6,347 | -778,226 | ||||||||||||
Total gains (losses) (realized/unrealized): | |||||||||||||||||||||
Included in earnings: | |||||||||||||||||||||
Realized investment gains (losses), net | - | - | 2,013,931 | - | -2,088,505 | ||||||||||||||||
Asset management fees and other income | - | -14 | - | - | - | ||||||||||||||||
Included in other comprehensive income (loss) | - | - | - | -420 | - | ||||||||||||||||
Net investment income | - | - | - | - | - | ||||||||||||||||
Purchases | 400 | 166 | 234,218 | 19,351 | - | ||||||||||||||||
Sales | -175 | - | - | - | - | ||||||||||||||||
Issuances | - | - | - | - | -245,680 | ||||||||||||||||
Settlements | - | -5 | - | - | - | ||||||||||||||||
Transfers into Level 3 (1) | - | - | - | 1,985 | - | ||||||||||||||||
Transfers out of Level 3 (1) | - | - | - | -4,943 | - | ||||||||||||||||
Fair Value, end of period assets/(liabilities) | $ | 225 | $ | 633 | $ | 2,996,154 | $ | 22,320 | -3,112,411 | ||||||||||||
. | . | . | |||||||||||||||||||
Unrealized gains (losses) for the period relating to those | |||||||||||||||||||||
Level 3 assets that were still held at the end of the period (2): | |||||||||||||||||||||
Included in earnings: | |||||||||||||||||||||
Realized investment gains (losses), net | $ | - | $ | - | $ | 2,040,048 | $ | - | -2,115,680 | ||||||||||||
Asset management fees and other income | $ | - | $ | -14 | $ | - | $ | - | - | ||||||||||||
Year Ended December 31, 2013 | |||||||||||||||||||||
Fixed Maturities Available-For-Sale | Trading Account Assets - Equity Securities | Equity Securities Available-for -Sale | |||||||||||||||||||
Corporate Securities | Asset- Backed Securities | Commercial Mortgage-Backed | |||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Fair Value, beginning of period assets/(liabilities) | $ | 95,555 | $ | 69,298 | $ | - | $ | 207 | $ | - | |||||||||||
Total gains (losses) (realized/unrealized): | |||||||||||||||||||||
Included in earnings: | |||||||||||||||||||||
Realized investment gains (losses), net | 49 | - | - | - | - | ||||||||||||||||
Asset management fees and other income | - | - | - | 106 | - | ||||||||||||||||
Included in other comprehensive income (loss) | -4,179 | -470 | 18 | - | - | ||||||||||||||||
Net investment income | 4,729 | 454 | - | - | - | ||||||||||||||||
Purchases | 4,817 | 40,868 | 17,169 | - | 192 | ||||||||||||||||
Sales | - | - | - | - | - | ||||||||||||||||
Issuances | - | - | - | - | - | ||||||||||||||||
Settlements | -4,629 | -13,924 | - | - | - | ||||||||||||||||
Transfers into Level 3 (1) | 4,976 | - | - | - | - | ||||||||||||||||
Transfers out of Level 3 (1) | -4,522 | -29,441 | -17,187 | - | - | ||||||||||||||||
Other (3) | - | -2,996 | - | - | - | ||||||||||||||||
Fair Value, end of period assets/(liabilities) | $ | 96,796 | $ | 63,789 | $ | - | $ | 313 | $ | 192 | |||||||||||
Unrealized gains (losses) for the period relating to those | |||||||||||||||||||||
Level 3 assets that were still held at the end of the period (2): | |||||||||||||||||||||
Included in earnings: | |||||||||||||||||||||
Realized investment gains (losses), net | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||
Asset management fees and other income | $ | - | $ | - | $ | - | $ | 107 | $ | - | |||||||||||
Year Ended December 31, 2013 | |||||||||||||||||||||
Other Long-term Investments | Reinsurance Recoverables | Receivables from parent and affiliates | Future Policy Benefits | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Fair Value, beginning of period assets/(liabilities) | $ | 1,054 | $ | 1,732,094 | $ | 1,995 | $ | -1,793,137 | |||||||||||||
Total gains (losses) (realized/unrealized): | |||||||||||||||||||||
Included in earnings: | |||||||||||||||||||||
Realized investment gains (losses), net | -739 | -1,220,073 | - | 1,262,310 | |||||||||||||||||
Asset management fees and other income | 60 | - | - | - | |||||||||||||||||
Included in other comprehensive income (loss) | - | - | 99 | - | |||||||||||||||||
Net investment income | - | - | - | - | |||||||||||||||||
Purchases | 111 | 235,984 | 6,250 | - | |||||||||||||||||
Sales | - | - | -2,996 | - | |||||||||||||||||
Issuances | - | - | - | -247,399 | |||||||||||||||||
Settlements | - | - | - | - | |||||||||||||||||
Transfers into Level 3 (1) | - | - | - | - | |||||||||||||||||
Transfers out of Level 3 (1) | - | - | -1,997 | - | |||||||||||||||||
Other (3) | - | - | 2,996 | - | |||||||||||||||||
Fair Value, end of period assets/(liabilities) | $ | 486 | $ | 748,005 | $ | 6,347 | $ | -778,226 | |||||||||||||
. | . | ||||||||||||||||||||
Unrealized gains (losses) for the period relating to those | |||||||||||||||||||||
Level 3 assets that were still held at the end of the period (2): | |||||||||||||||||||||
Included in earnings: | |||||||||||||||||||||
Realized investment gains (losses), net | $ | - | $ | -1,166,676 | $ | - | $ | 1,207,600 | |||||||||||||
Asset management fees and other income | $ | 51 | $ | - | $ | - | $ | - | |||||||||||||
Year Ended December 31, 2012 | |||||||||||||||||||||
Fixed Maturities Available-For-Sale | |||||||||||||||||||||
Corporate Securities | Asset Backed Securities | Trading Account Assets - Equity | Other Long-term Investments | Reinsurance Recoverables | |||||||||||||||||
(in thousands) | |||||||||||||||||||||
Fair Value, beginning of period assets/(liabilities) | $ | 89,658 | $ | 48,563 | $ | 203 | $ | 1,213 | $ | 1,747,757 | |||||||||||
Total gains or (losses) (realized/unrealized): | |||||||||||||||||||||
Included in earnings: | |||||||||||||||||||||
Realized investment gains (losses), net | 1,606 | - | - | -2,326 | -244,519 | ||||||||||||||||
Asset management fees and other income | - | - | 4 | -3 | - | ||||||||||||||||
Included in other comprehensive income (loss) | 2,271 | 1,109 | - | - | - | ||||||||||||||||
Net investment income | 4,634 | 649 | - | - | - | ||||||||||||||||
Purchases | 5,400 | 30,311 | - | 2,166 | 228,856 | ||||||||||||||||
Sales | -29 | - | - | - | - | ||||||||||||||||
Issuances | - | - | - | - | - | ||||||||||||||||
Settlements | -8,286 | -11,334 | - | 4 | - | ||||||||||||||||
Transfers into Level 3 (1) | 11,992 | - | - | - | - | ||||||||||||||||
Transfers out of Level 3 (1) | -11,691 | - | - | - | - | ||||||||||||||||
Fair Value, end of period assets/(liabilities) | $ | 95,555 | $ | 69,298 | $ | 207 | $ | 1,054 | $ | 1,732,094 | |||||||||||
Unrealized gains (losses) for the period relating to | |||||||||||||||||||||
those Level 3 assets that were still held | |||||||||||||||||||||
at the end of the period (2): | |||||||||||||||||||||
Included in earnings: | |||||||||||||||||||||
Realized investment gains (losses), net | $ | - | $ | - | $ | - | $ | -1,349 | $ | -194,274 | |||||||||||
Asset management fees and other income | $ | - | $ | - | $ | 4 | $ | -3 | $ | - | |||||||||||
Year Ended December 31, 2012 | |||||||||||||||||||||
Receivables from parent and affiliates | Future Policy Benefits | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Fair Value, beginning of period assets/(liabilities) | $ | - | $ | -1,783,595 | |||||||||||||||||
Total gains or (losses) (realized/unrealized): | |||||||||||||||||||||
Included in earnings: | |||||||||||||||||||||
Realized investment gains (losses), net | - | 230,349 | |||||||||||||||||||
Asset management fees and other income | - | - | |||||||||||||||||||
Included in other comprehensive income (loss) | -5 | - | |||||||||||||||||||
Net investment income | - | - | |||||||||||||||||||
Purchases | 2,000 | - | |||||||||||||||||||
Sales | - | - | |||||||||||||||||||
Issuances | - | -239,891 | |||||||||||||||||||
Settlements | - | - | |||||||||||||||||||
Transfers into Level 3 (1) | - | - | |||||||||||||||||||
Transfers out of Level 3 (1) | - | - | |||||||||||||||||||
Fair Value, end of period assets/(liabilities) | $ | 1,995 | $ | -1,793,137 | |||||||||||||||||
Unrealized gains (losses) for the period relating to | |||||||||||||||||||||
those Level 3 assets that were still held | |||||||||||||||||||||
at the end of the period (2): | |||||||||||||||||||||
Included in earnings: | |||||||||||||||||||||
Realized investment gains (losses), net | $ | - | $ | 179,477 | |||||||||||||||||
Asset management fees and other income | $ | - | $ | - | |||||||||||||||||
(1) Transfers into or out of Level 3 are reported as the value as of the beginning of the quarter in which the transfer occurs. | |||||||||||||||||||||
(2) Unrealized gains or losses related to assets still held at the end of the period do not include amortization or accretion of premiums and discounts. | |||||||||||||||||||||
(3) Other primarily represents reclassifications of certain assets between reporting categories. | |||||||||||||||||||||
Transfers – Transfers into Level 3 are generally the result of unobservable inputs utilized within valuation methodologies and the use of indicative broker quotes for assets that were previously valued using observable inputs. Transfers out of Level 3 are generally due to the use of observable inputs in valuation methodologies as well as the availability of pricing service information for certain assets that the Company is able to validate | |||||||||||||||||||||
Fair Value of Financial Instruments | |||||||||||||||||||||
The table below presents the carrying amount and fair value by fair value hierarchy level of certain financial instruments that are not reported at fair value. The financial instruments presented below are reported at carrying value on the Company's Statements of Financial Position; however, in some cases, as described below, the carrying amount equals or approximates fair value. | |||||||||||||||||||||
31-Dec-14 | |||||||||||||||||||||
Fair Value | Carrying Amount (1) | ||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Total | |||||||||||||||||
(in thousands) | |||||||||||||||||||||
Assets: | |||||||||||||||||||||
Commercial mortgage and other loans | $ | - | $ | 2,779 | $ | 447,157 | $ | 449,936 | $ | 422,563 | |||||||||||
Policy loans | - | - | 13,355 | 13,355 | 13,355 | ||||||||||||||||
Other long term investments | - | - | 2,639 | 2,639 | 2,238 | ||||||||||||||||
Cash and cash equivalents | 369 | - | - | 369 | 369 | ||||||||||||||||
Accrued investment income | - | 25,008 | - | 25,008 | 25,008 | ||||||||||||||||
Receivables from parent and affiliates | - | 10,367 | - | 10,367 | 10,367 | ||||||||||||||||
Other assets | - | 1,009 | - | 1,009 | 1,009 | ||||||||||||||||
Total assets | $ | 369 | $ | 39,163 | $ | 463,151 | $ | 502,683 | $ | 474,909 | |||||||||||
Liabilities: | |||||||||||||||||||||
Policyholders' account balances - investment contracts | $ | - | $ | - | $ | 91,217 | $ | 91,217 | $ | 92,663 | |||||||||||
Cash collateral for loaned securities | - | 5,285 | - | 5,285 | 5,285 | ||||||||||||||||
Short-term debt | - | 54,354 | - | 54,354 | 54,354 | ||||||||||||||||
Payables to parent and affiliates | - | 37,415 | - | 37,415 | 37,415 | ||||||||||||||||
Other liabilities | - | 89,956 | - | 89,956 | 89,956 | ||||||||||||||||
Separate account liabilities - investment contracts | - | 487 | - | 487 | 487 | ||||||||||||||||
Total liabilities | $ | - | $ | 187,497 | $ | 91,217 | $ | 278,714 | $ | 280,160 | |||||||||||
31-Dec-13 | |||||||||||||||||||||
Fair Value | Carrying Amount (1) | ||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Total | |||||||||||||||||
(in thousands) | |||||||||||||||||||||
Assets: | |||||||||||||||||||||
Commercial mortgage and other loans | $ | - | $ | - | $ | 422,584 | $ | 422,584 | $ | 398,991 | |||||||||||
Policy loans | - | - | 12,454 | 12,454 | 12,454 | ||||||||||||||||
Other long term investments | - | - | 1,623 | 1,623 | 1,440 | ||||||||||||||||
Cash and cash equivalents | 1,417 | - | - | 1,417 | 1,417 | ||||||||||||||||
Accrued investment income | - | 32,169 | - | 32,169 | 32,169 | ||||||||||||||||
Receivables from parent and affiliates | - | 10,177 | - | 10,177 | 10,177 | ||||||||||||||||
Other assets | - | 11,190 | - | 11,190 | 11,190 | ||||||||||||||||
Total assets | $ | 1,417 | $ | 53,536 | $ | 436,661 | $ | 491,614 | $ | 467,838 | |||||||||||
Liabilities: | |||||||||||||||||||||
Policyholders' account balances - investment contracts | $ | - | $ | - | $ | 84,153 | $ | 84,153 | $ | 85,672 | |||||||||||
Cash collateral for loaned securities | - | 47,896 | - | 47,896 | 47,896 | ||||||||||||||||
Short-term debt | - | 218,488 | - | 218,488 | 205,000 | ||||||||||||||||
Payables to parent and affiliates | - | 85,204 | - | 85,204 | 85,204 | ||||||||||||||||
Other liabilities | - | 101,656 | - | 101,656 | 101,656 | ||||||||||||||||
Separate account liabilities - investment contracts | - | 796 | - | 796 | 796 | ||||||||||||||||
Total liabilities | $ | - | $ | 454,040 | $ | 84,153 | $ | 538,193 | $ | 526,224 | |||||||||||
Carrying values presented herein differ from those in the Company's Statement of Financial Position because certain items within the respective financial statement captions are not considered financial instruments or out of scope under authoritative guidance relating to disclosures of the fair value of financial instruments. Financial statement captions excluded from the above table are not considered financial instruments. | |||||||||||||||||||||
The fair values presented above have been determined by using available market information and by applying market valuation methodologies, as described in more detail below. | |||||||||||||||||||||
Commercial Mortgage and Other Loans | |||||||||||||||||||||
The fair value of most commercial mortgage loans is based upon the present value of the expected future cash flows discounted at the appropriate U.S. Treasury rate plus an appropriate credit spread for similar quality loans. The quality ratings for these loans, a primary determinant of the credit spreads and a significant component of the pricing process, are based on an internally-developed methodology. | |||||||||||||||||||||
Policy Loans | |||||||||||||||||||||
Policy loans carrying value approximates fair value. | |||||||||||||||||||||
Other Long-term Investments | |||||||||||||||||||||
Other long-term investments include investments in joint ventures and limited partnerships. The estimated fair values of these cost method investments are generally based on the Company's share of the net asset value (“NAV”) as provided in the financial statements of the investees. In certain circumstances, management may adjust the NAV by a premium or discount when it has sufficient evidence to support applying such adjustments. No such adjustments were made as of December 31, 2014 and 2013. | |||||||||||||||||||||
Cash and Cash Equivalents, Accrued Investment Income, Receivables from Parent and Affiliates, and Other Assets | |||||||||||||||||||||
The Company believes that due to the short-term nature of certain assets, the carrying value approximates fair value. These assets include: cash and cash equivalents, accrued investment income, and other assets that meet the definition of financial instruments, including receivables such as unsettled trades and accounts receivable. | |||||||||||||||||||||
Policyholders' Account Balances – Investment Contracts | |||||||||||||||||||||
Only the portion of policyholders' account balances related to products that are investment contracts (those without significant mortality or morbidity risk) are reflected in the table above. For fixed deferred annuities and payout annuities and other similar contracts without life contingencies, fair values are derived using discounted projected cash flows based on interest rates that are representative of the Company's financial strength ratings, and hence reflect the Company's own NPR. For those balances that can be withdrawn by the customer at any time without prior notice or penalty, the fair value is the amount estimated to be payable to the customer as of the reporting date, which is generally the carrying value. | |||||||||||||||||||||
Cash Collateral for Loaned Securities | |||||||||||||||||||||
Cash collateral for loaned securities represents the collateral received or paid in connection with loaning or borrowing securities. For these transactions, the carrying value of the related asset/liability approximates fair value as they equal the amount of cash collateral received or paid. | |||||||||||||||||||||
Debt | |||||||||||||||||||||
The fair value of short-term debt is generally determined by either prices obtained from independent pricing services, which are validated by the Company, or discounted cash flow models. These fair values consider the Company's own NPR. Discounted cash flow models predominately use market observable inputs such as the borrowing rates currently available to the Company for debt and financial instruments with similar terms and remaining maturities. For debt with a maturity of less than 90 days, the carrying value approximates fair value. | |||||||||||||||||||||
Other Liabilities and Payables to Parent and Affiliates | |||||||||||||||||||||
Other liabilities and Payables to Parent and Affiliates are primarily payables, such as unsettled trades, drafts, escrow deposits and accrued expense payables. Due to the short term until settlement of most of these liabilities, the Company believes that carrying value approximates fair value. | |||||||||||||||||||||
Separate Account Liabilities – Investment Contracts | |||||||||||||||||||||
Only the portion of separate account liabilities related to products that are investment contracts are reflected in the table above. Separate account liabilities are recorded at the amount credited to the contractholder, which reflects the change in fair value of the corresponding separate account assets including contractholder deposits less withdrawals and fees; therefore, carrying value approximates fair value. |
Derivative_Instruments
Derivative Instruments | 12 Months Ended | |||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||
Derivative Instruments | ||||||||||||||||||||||
Derivative Instruments | 11. DERIVATIVE INSTRUMENTS | |||||||||||||||||||||
Types of Derivative Instruments and Derivative Strategies | ||||||||||||||||||||||
Interest Rate Contracts | ||||||||||||||||||||||
Interest rate swaps are used by the Company to reduce risks from changes in interest rates, manage interest rate exposures arising from mismatches between assets and liabilities (including duration mismatches) and to hedge against changes in the value of assets it owns or anticipates acquiring or selling. Swaps may be attributed to specific assets or liabilities or may be used on a portfolio basis. Under interest rate swaps, the Company agrees with counterparties to exchange, at specified intervals, the difference between fixed-rate and floating-rate interest amounts calculated by reference to an agreed upon notional principal amount. Generally, no cash is exchanged at the outset of the contract and no principal payments are made by either party. These transactions are entered into pursuant to master agreements that provide for a single net payment to be made by one counterparty at each due date. | ||||||||||||||||||||||
Equity Contracts | ||||||||||||||||||||||
Equity index options are contracts which will settle in cash based on differentials in the underlying indices at the time of exercise and the strike price. The Company uses combinations of purchases and sales of equity index options to hedge the effects of adverse changes in equity indices within a predetermined range. | ||||||||||||||||||||||
Total return swaps are contracts whereby the Company agrees with counterparties to exchange, at specified intervals, the difference between the return on an asset (or market index) and LIBOR based on a notional amount. The Company generally uses total return swaps to hedge the effect of adverse changes in equity indices. | ||||||||||||||||||||||
Foreign Exchange Contracts | ||||||||||||||||||||||
Currency derivatives, including currency swaps, are used by the Company to reduce risks from changes in currency exchange rates with respect to investments denominated in foreign currencies that the Company either holds or intends to acquire or sell. | ||||||||||||||||||||||
Under currency swaps, the Company agrees with counterparties to exchange, at specified intervals, the difference between one currency and another at an exchange rate and calculated by reference to an agreed principal amount. Generally, the principal amount of each currency is exchanged at the beginning and termination of the currency swap by each party. These transactions are entered into pursuant to master agreements that provide for a single net payment to be made by one counterparty for payments made in the same currency at each due date. | ||||||||||||||||||||||
Credit Contracts | ||||||||||||||||||||||
Credit derivatives are used by the Company to enhance the return on the Company's investment portfolio by creating credit exposure similar to an investment in public fixed maturity cash instruments. With credit derivatives the Company sells credit protection on an identified name, and in return receives a quarterly premium. With credit default derivatives, this premium or credit spread generally corresponds to the difference between the yield on the referenced name's public fixed maturity cash instruments and swap rates, at the time the agreement is executed. If there is an event of default by the referenced name, as defined by the agreement, then the Company is obligated to pay the counterparty the referenced amount of the contract and receive in return the referenced defaulted security or similar security or pay the referenced amount less the auction recovery rate. See credit derivatives section for discussion of guarantees related to credit derivatives written. In addition to selling credit protection, the Company has purchased credit protection using credit derivatives in order to hedge specific credit exposures in the Company's investment portfolio. | ||||||||||||||||||||||
Embedded Derivatives | ||||||||||||||||||||||
The Company sells variable annuity products, which may include guaranteed benefit features that are accounted for as embedded derivatives. The Company has reinsurance agreements to transfer the risk related to certain of these benefit features to affiliates, Pruco Re and The Prudential Insurance Company of America (“Prudential Insurance”). The embedded derivatives related to the living benefit features and the related reinsurance agreements are carried at fair value. These embedded derivatives are marked to market through “Realized investment gains (losses), net” based on the change in value of the underlying contractual guarantees, which are determined using valuation models, as described in Note 10. | ||||||||||||||||||||||
The table below provides a summary of the gross notional amount and fair value of derivatives contracts by the primary underlying, excluding embedded derivatives which are recorded with the associated host. Many derivative instruments contain multiple underlyings. The fair value amounts below represent the gross fair value of derivative contracts prior to taking into account the netting effects of master netting agreements, cash collateral held with the same counterparty, and non-performance risk. | ||||||||||||||||||||||
31-Dec-14 | 31-Dec-13 | |||||||||||||||||||||
Gross Fair Value | Gross Fair Value | |||||||||||||||||||||
Primary Underlying | Notional | Assets | Liabilities | Notional | Assets | Liabilities | ||||||||||||||||
(in thousands) | ||||||||||||||||||||||
Derivatives Designated as Hedge Accounting Instruments: | ||||||||||||||||||||||
Currency/Interest Rate | ||||||||||||||||||||||
Currency/Interest Rate | $ | 83,412 | $ | 5,555 | $ | -654 | $ | 72,747 | $ | 940 | $ | -4,635 | ||||||||||
Total Qualifying Hedges | $ | 83,412 | $ | 5,555 | $ | -654 | $ | 72,747 | $ | 940 | $ | -4,635 | ||||||||||
Derivatives Not Qualifying as Hedge Accounting Instruments: | ||||||||||||||||||||||
Interest Rate | ||||||||||||||||||||||
Interest Rate Swaps | $ | 1,902,750 | $ | 92,507 | $ | -18,480 | $ | 1,533,750 | $ | 59,872 | $ | -80,601 | ||||||||||
Interest Rate Options | 100,000 | 10,736 | - | 100,000 | 6,534 | - | ||||||||||||||||
Currency/Interest Rate | ||||||||||||||||||||||
Foreign Currency Swaps | 57,011 | 4,363 | -5 | 55,919 | 19 | -1,349 | ||||||||||||||||
Credit | ||||||||||||||||||||||
Credit Default Swaps | 1,200 | - | -43 | 6,050 | - | -115 | ||||||||||||||||
Equity | ||||||||||||||||||||||
Total Return Swaps | 220,986 | 1,937 | - | 219,896 | - | -4,712 | ||||||||||||||||
Equity Options | 6,842,242 | 3,748 | -2,067 | 13,170,805 | 6,170 | -3,168 | ||||||||||||||||
Total Non-Qualifying Hedges | $ | 9,124,189 | $ | 113,291 | $ | -20,595 | $ | 15,086,420 | $ | 72,595 | $ | -89,945 | ||||||||||
Total Derivatives (1) | $ | 9,207,601 | $ | 118,846 | $ | -21,249 | $ | 15,158,667 | $ | 73,535 | $ | -94,580 | ||||||||||
(1) Excludes embedded derivatives which contain multiple underlyings. The fair value of the embedded derivatives related to the living benefit feature was a liability of $3,112 million and $778 million as of December 31, 2014 and December 31, 2013, respectively, included in “Future policy benefits.” The fair value of the embedded derivatives related to the reinsurance of certain of these benefits to Pruco Re and Prudential Insurance included in "Reinsurance recoverables" was an asset of $2,996 million and $748 million as of December 31, 2014 and December 31, 2013, respectively. | ||||||||||||||||||||||
Offsetting Assets and Liabilities | ||||||||||||||||||||||
The following table presents recognized derivative instruments (including bifurcated embedded derivatives) that are offset in the balance sheet, and/or are subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset in the balance sheet. | ||||||||||||||||||||||
31-Dec-14 | ||||||||||||||||||||||
Gross | Net | |||||||||||||||||||||
Gross | Amounts | Amounts | ||||||||||||||||||||
Amounts of | Offset in the | Presented in | ||||||||||||||||||||
Recognized | Statement of | the Statement | Financial | |||||||||||||||||||
Financial | Financial | of Financial | Instruments/ | Net | ||||||||||||||||||
Instruments | Position | Position | Collateral(1) | Amount | ||||||||||||||||||
(in thousands) | ||||||||||||||||||||||
Offsetting of Financial Assets: | ||||||||||||||||||||||
Derivatives | $ | 118,846 | $ | -24,288 | $ | 94,558 | $ | -82,602 | $ | 11,956 | ||||||||||||
Offsetting of Financial Liabilities: | ||||||||||||||||||||||
Derivatives | $ | 21,249 | $ | -21,249 | $ | - | $ | - | $ | - | ||||||||||||
31-Dec-13 | ||||||||||||||||||||||
Gross | Net | |||||||||||||||||||||
Gross | Amounts | Amounts | ||||||||||||||||||||
Amounts of | Offset in the | Presented in | ||||||||||||||||||||
Recognized | Statement of | the Statement | Financial | |||||||||||||||||||
Financial | Financial | of Financial | Instruments/ | Net | ||||||||||||||||||
Instruments | Position | Position | Collateral(1) | Amount | ||||||||||||||||||
(in thousands) | ||||||||||||||||||||||
Offsetting of Financial Assets: | ||||||||||||||||||||||
Derivatives | $ | 73,535 | $ | -73,535 | $ | - | $ | - | $ | - | ||||||||||||
Offsetting of Financial Liabilities: | ||||||||||||||||||||||
Derivatives | $ | 94,580 | $ | -72,822 | $ | 21,758 | $ | -21,758 | $ | - | ||||||||||||
(1) Amounts exclude the excess of collateral received/pledged from/to the counterparty. Prior period has been revised to conform to current period presentation. | ||||||||||||||||||||||
For information regarding the rights of offset associated with the derivative assets and liabilities in the table above see “Credit Risk” below. | ||||||||||||||||||||||
Cash Flow Hedges | ||||||||||||||||||||||
The primary derivative instruments used by the Company in its cash flow hedge accounting relationships are currency swaps. These instruments are only designated for hedge accounting in instances where the appropriate criteria are met. The Company does not use futures, options, credit, equity or embedded derivatives in any of its cash flow hedge accounting relationships. | ||||||||||||||||||||||
The following tables provide the financial statement classification and impact of derivatives used in qualifying and non-qualifying hedge relationships, excluding the offset of the hedged item in an effective hedge relationship: | ||||||||||||||||||||||
Year Ended December 31, 2014 | ||||||||||||||||||||||
Realized Investment Gains (Losses) | Net Investment Income | Other Income | Accumulated Other Comprehensive Income (Loss)(1) | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||
Derivatives Designated as Hedging Instruments: | ||||||||||||||||||||||
Cash flow hedges | ||||||||||||||||||||||
Currency/Interest Rate | $ | - | $ | 14 | $ | 134 | $ | 8,492 | ||||||||||||||
Total cash flow hedges | - | 14 | 134 | 8,492 | ||||||||||||||||||
Derivatives Not Qualifying as Hedging Instruments: | ||||||||||||||||||||||
Interest Rate | 123,327 | - | - | - | ||||||||||||||||||
Currency/Interest Rate | 5,934 | - | 143 | - | ||||||||||||||||||
Credit | -14 | - | - | - | ||||||||||||||||||
Equity | -23,811 | - | - | - | ||||||||||||||||||
Embedded Derivatives | -113,549 | - | - | - | ||||||||||||||||||
Total non-qualifying hedges | -8,113 | - | 143 | - | ||||||||||||||||||
Total | $ | -8,113 | $ | 14 | $ | 277 | $ | 8,492 | ||||||||||||||
Year Ended December 31, 2013 | ||||||||||||||||||||||
Realized Investment Gains (Losses) | Net Investment Income | Other Income | Accumulated Other Comprehensive Income (Loss)(1) | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||
Derivatives Designated as Hedging Instruments: | ||||||||||||||||||||||
Cash flow hedges | ||||||||||||||||||||||
Currency/Interest Rate | $ | - | $ | -89 | $ | -7 | $ | -585 | ||||||||||||||
Total cash flow hedges | - | -89 | -7 | -585 | ||||||||||||||||||
Derivatives Not Qualifying as Hedging Instruments: | ||||||||||||||||||||||
Interest Rate | -116,025 | - | - | - | ||||||||||||||||||
Currency/Interest Rate | -204 | - | 24 | - | ||||||||||||||||||
Credit | -103 | - | - | - | ||||||||||||||||||
Equity | -79,498 | - | - | - | ||||||||||||||||||
Embedded Derivatives | 1,775 | - | - | - | ||||||||||||||||||
Total non-qualifying hedges | -194,055 | - | 24 | - | ||||||||||||||||||
Total | $ | -194,055 | $ | -89 | $ | 17 | $ | -585 | ||||||||||||||
Year Ended December 31, 2012 | ||||||||||||||||||||||
Realized Investment Gains (Losses) | Net Investment Income | Other Income | Accumulated Other Comprehensive Income (Loss)(1) | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||
Derivatives Designated as Hedging Instruments: | ||||||||||||||||||||||
Cash flow hedges | ||||||||||||||||||||||
Currency/Interest Rate | $ | - | $ | -116 | $ | 14 | $ | -2,106 | ||||||||||||||
Total cash flow hedges | - | -116 | 14 | -2,106 | ||||||||||||||||||
Derivatives Not Qualifying as Hedging Instruments: | ||||||||||||||||||||||
Interest Rate | 5,030 | - | - | - | ||||||||||||||||||
Currency | -15 | - | - | - | ||||||||||||||||||
Currency/Interest Rate | -1,368 | - | -17 | - | ||||||||||||||||||
Credit | 143 | - | - | - | ||||||||||||||||||
Equity | -56,158 | - | - | - | ||||||||||||||||||
Embedded Derivatives | -55,295 | - | - | - | ||||||||||||||||||
Total non-qualifying hedges | -107,663 | - | -17 | - | ||||||||||||||||||
Total | $ | -107,663 | $ | -116 | $ | -3 | $ | -2,106 | ||||||||||||||
(1) Amounts deferred in “Accumulated other comprehensive income (loss).” | ||||||||||||||||||||||
For the years ended December 31, 2014, 2013 and 2012, the ineffective portion of derivatives accounted for using hedge accounting was not material to the Company's results of operations. Also, there were no material amounts reclassified into earnings relating to instances in which the Company discontinued cash flow hedge accounting because the forecasted transaction did not occur by the anticipated date or within the additional time period permitted by the authoritative guidance for the accounting for derivatives and hedging. | ||||||||||||||||||||||
Presented below is a rollforward of current period cash flow hedges in “Accumulated other comprehensive income (loss)” before taxes: | ||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||
Balance, December 31, 2011 | $ | -962 | ||||||||||||||||||||
Net deferred gains (losses) on cash flow hedges from January 1 to December 31, 2012 | -2,207 | |||||||||||||||||||||
Amount reclassified into current period earnings | 101 | |||||||||||||||||||||
Balance, December 31, 2012 | -3,068 | |||||||||||||||||||||
Net deferred gains (losses) on cash flow hedges from January 1 to December 31, 2013 | -680 | |||||||||||||||||||||
Amount reclassified into current period earnings | 95 | |||||||||||||||||||||
Balance, December 31, 2013 | -3,653 | |||||||||||||||||||||
Net deferred gains (losses) on cash flow hedges from January 1 to December 31, 2014 | 8,640 | |||||||||||||||||||||
Amount reclassified into current period earnings | -148 | |||||||||||||||||||||
Balance, December 31, 2014 | $ | 4,839 | ||||||||||||||||||||
As of December 31, 2014 and 2013, the Company did not have any qualifying cash flow hedges of forecasted transactions other than those related to the variability of the payment or receipt of interest or foreign currency amounts on existing financial instruments. The maximum length of time for which these variable cash flows are hedged is 19 years. Income amounts deferred in “Accumulated other comprehensive income (loss)” as a result of cash flow hedges are included in “Net unrealized investment gains (losses)” in the Statements of Equity. | ||||||||||||||||||||||
Credit Derivatives | ||||||||||||||||||||||
The Company no longer has exposure from credit derivatives where it has written credit protection as of December 31, 2014 and December 31, 2013. | ||||||||||||||||||||||
The Company has purchased credit protection using credit derivatives in order to hedge specific credit exposures in the Company's investment portfolio. As of December 31, 2014 and December 31, 2013, the Company had $1 million and $6 million of outstanding notional amounts, respectively, reported at fair value as a liability of less than $1 million for both periods. | ||||||||||||||||||||||
Credit Risk | ||||||||||||||||||||||
The Company is exposed to credit-related losses in the event of non-performance by its counterparty to financial derivative transactions. | ||||||||||||||||||||||
The Company has credit risk exposure to an affiliate, Prudential Global Funding, LLC (“PGF”), related to its OTC derivative transactions. PGF manages credit risk with external counterparties by entering into derivative transactions with highly rated major international financial institutions and other creditworthy counterparties, and by obtaining collateral, such as cash and securities, when appropriate. Additionally, limits are set on single party credit exposures which are subject to periodic management review. | ||||||||||||||||||||||
Under fair value measurements, the Company incorporates the market's perception of its own and the counterparty's non-performance risk in determining the fair value of the portion of its OTC derivative assets and liabilities that are uncollateralized. Credit spreads are applied to the derivative fair values on a net basis by counterparty. To reflect the Company's own credit spread a proxy based on relevant debt spreads is applied to OTC derivative net liability positions. Similarly, the Company's counterparty's credit spread is applied to OTC derivative net asset positions. | ||||||||||||||||||||||
Commitments_Contingent_Liabili
Commitments, Contingent Liabilities And Litigation And Regulatory Matters | 12 Months Ended |
Dec. 31, 2014 | |
Commitments And Guarantees And Contingent Liabilities [Abstract] | |
Contingent Liabilities and Litigation | 12. COMMITMENTS, CONTINGENT LIABILITIES AND LITIGATION AND REGULATORY MATTERS |
Commitments | |
The Company had made commitments to fund $1 million of commercial loans as of December 31, 2014. The Company also made commitments to purchase or fund investments, mostly private fixed maturities, of $22 million as of December 31, 2014. | |
Contingent Liabilities | |
On an ongoing basis, the Company's internal supervisory and control functions review the quality of sales, marketing and other customer interface procedures and practices and may recommend modifications or enhancements. From time to time, this review process results in the discovery of product administration, servicing or other errors, including errors relating to the timing or amount of payments or contract values due to customers. In certain cases, if appropriate, the Company may offer customers remediation and may incur charges, including the cost of such remediation, administrative costs and regulatory fines. | |
The Company is subject to the laws and regulations of states and other jurisdictions concerning the identification, reporting and escheatment of unclaimed or abandoned funds, and is subject to audit and examination for compliance with these requirements. For additional discussion of these matters, see “Litigation and Regulatory Matters” below. | |
It is possible that the results of operations or the cash flow of the Company in a particular quarterly or annual period could be materially affected as a result of payments in connection with the matters discussed above or other matters depending, in part, upon the results of operations or cash flow for such period. Management believes, however, that ultimate payments in connection with these matters, after consideration of applicable reserves and rights to indemnification, should not have a material adverse effect on the Company's financial position. | |
Litigation and Regulatory Matters | |
The Company is subject to legal and regulatory actions in the ordinary course of its business. Pending legal and regulatory actions include proceedings specific to the Company and proceedings generally applicable to business practices in the industry in which it operates. The Company is subject to class action lawsuits and other litigation involving a variety of issues and allegations involving sales practices, claims payments and procedures, premium charges, policy servicing and breach of fiduciary duty to customers. The Company is also subject to litigation arising out of its general business activities, such as its investments, contracts, leases and labor and employment relationships, including claims of discrimination and harassment, and could be exposed to claims or litigation concerning certain business or process patents. In addition, the Company, along with other participants in the businesses in which it engages, may be subject from time to time to investigations, examinations and inquiries, in some cases industry-wide, concerning issues or matters upon which such regulators have determined to focus. In some of the Company's pending legal and regulatory actions, parties are seeking large and/or indeterminate amounts, including punitive or exemplary damages. The outcome of litigation or a regulatory matter, and the amount or range of potential loss at any particular time, is often inherently uncertain. The following is a summary of certain pending proceedings. | |
The Company establishes accruals for litigation and regulatory matters when it is probable that a loss has been incurred and the amount of that loss can be reasonably estimated. For litigation and regulatory matters where a loss may be reasonably possible, but not probable, or is probable but not reasonably estimable, no accrual is established, but the matter, if material, is disclosed, including matters discussed below. The Company estimates that as of December 31, 2014, the aggregate range of reasonably possible losses in excess of accruals established for those litigation and regulatory matters for which such an estimate currently can be made is $0 to approximately $3 million. This estimate is not an indication of expected loss, if any, or the Company's maximum possible loss exposure on such matters. The Company reviews relevant information with respect to its litigation and regulatory matters on a quarterly and annual basis and updates its accruals, disclosures and estimates of reasonably possible loss based on such reviews. | |
In January 2013, a qui tam action on behalf of the State of Florida, Total Asset Recovery Services v. Met Life Inc., et al., Manulife Financial Corporation, et. al., Prudential Financial, Inc., The Prudential Insurance Company of America, and Prudential Insurance Agency, LLC , filed in the Circuit Court of Leon County, Florida, was served on Prudential Insurance. The complaint alleges that Prudential Insurance failed to escheat life insurance proceeds to the State of Florida in violation of the Florida False Claims Act and seeks injunctive relief, compensatory damages, civil penalties, treble damages, prejudgment interest, attorneys' fees and costs. In March 2013, the Company filed a motion to dismiss the complaint. In August 2013, the court dismissed the complaint with prejudice. In September 2013, plaintiff filed an appeal with Florida's Circuit Court of the Second Judicial Circuit in Leon County. In September 2014, the Florida District Court of Appeal First District affirmed the trial court's decision. | |
In January 2012, a Global Resolution Agreement entered into by the Company and a third party auditor became effective upon its acceptance by the unclaimed property departments of 20 states and jurisdictions. Under the terms of the Global Resolution Agreement, the third party auditor acting on behalf of the signatory states will compare expanded matching criteria to the Social Security Master Death File (“SSMDF”) to identify deceased insureds and contract holders where a valid claim has not been made. In February 2012, a Regulatory Settlement Agreement entered into by the Company to resolve a multi-state market conduct examination regarding its adherence to state claim settlement practices became effective upon its acceptance by the insurance departments of 20 states and jurisdictions. The Regulatory Settlement Agreement applies prospectively and requires the Company to adopt and implement additional procedures comparing its records to the SSMDF to identify unclaimed death benefits and prescribes procedures for identifying and locating beneficiaries once deaths are identified. Substantially all other jurisdictions that are not signatories to the Global Resolution Agreement or the Regulatory Settlement Agreement have entered into similar agreements with the Company. | |
The New York Attorney General has subpoenaed the Company, along with other companies, regarding its unclaimed property procedures and may ultimately seek remediation and other relief, including damages. Additionally, the New York Office of Unclaimed Funds is conducting an audit of the Company's compliance with New York's unclaimed property laws. | |
The Company's litigation and regulatory matters are subject to many uncertainties, and given their complexity and scope, their outcome cannot be predicted. It is possible that the Company's results of operations or cash flow in a particular quarterly or annual period could be materially affected by an ultimate unfavorable resolution of pending litigation and regulatory matters depending, in part, upon the results of operations or cash flow for such period. In light of the unpredictability of the Company's litigation and regulatory matters, it is also possible that in certain cases an ultimate unfavorable resolution of one or more pending litigation or regulatory matters could have a material adverse effect on the Company's financial position. Management believes, however, that, based on information currently known to it, the ultimate outcome of all pending litigation and regulatory matters, after consideration of applicable reserves and rights to indemnification, is not likely to have a material adverse effect on the Company's financial position. |
Related_Party
Related Party | 12 Months Ended | |||||
Dec. 31, 2014 | ||||||
Related Party Transactions [Abstract] | ||||||
Related Party Transactions Disclosure [Text Block] | 13. RELATED PARTY TRANSACTIONS | |||||
The Company has extensive transactions and relationships with Prudential Insurance and other affiliates. Although we seek to ensure that these transactions and relationships are fair and reasonable, it is possible that the terms of these transactions are not the same as those that would result from transactions among unrelated parties. | ||||||
Expense Charges and Allocations | ||||||
Many of the Company's expenses are allocations or charges from Prudential Insurance or other affiliates. | ||||||
The Company's general and administrative expenses are charged to the Company using allocation methodologies based on business production processes. Management believes that the methodology is reasonable and reflects costs incurred by Prudential Insurance to process transactions on behalf of the Company. The Company operates under service and lease agreements whereby services of officers and employees, supplies, use of equipment and office space are provided by Prudential Insurance. The Company reviews its allocation methodology periodically which it may adjust accordingly. General and administrative expenses also include allocations of stock compensation expenses related to a stock option program and a deferred compensation program issued by Prudential Financial. The expense charged to the Company for the stock option program and deferred compensation program was $1 million, $2 million and $2 million for the years ended December 31, 2014, 2013 and 2012, respectively. | ||||||
The Company is charged for its share of employee benefits expenses. These expenses include costs for funded and non-funded contributory and non-contributory defined benefit pension plans. Some of these benefits are based on earnings and length of service. Other benefits are based on an account balance, which takes into consideration age, service and earnings during career. The Company's share of net expense for the pension plans was $1 million, $3 million and $3 million for the years ended December 31, 2014, 2013 and 2012, respectively. | ||||||
Prudential Insurance sponsors voluntary savings plans for the Company's employees (“401(k) plans”). The 401(k) plans provide for salary reduction contributions by employees and matching contributions by the Company of up to 4% of annual salary. The expense charged to the Company for the matching contribution to the 401(k) plans was $1 million for the years ended December 31, 2014, 2013 and 2012, respectively. | ||||||
Affiliated Asset Administration Fee Income | ||||||
In accordance with a revenue sharing agreement with AST Investment Services, Inc. and Prudential Investments LLC, the Company receives fee income calculated on contractholder separate account balances invested in the Advanced Series Trust. Income received from AST Investment Services, Inc. and Prudential Investments LLC related to this agreement was $221 million, $227 million and $226 million for the years ended December 31, 2014, 2013 and 2012, respectively. These revenues are recorded as “Asset administration fees and other income” in the Statements of Operations and Comprehensive Income. | ||||||
Affiliated Investment Management Expenses | ||||||
In accordance with an agreement with Prudential Investment Management, Inc. (“PIMI”), the Company pays investment management expenses to PIMI who acts as investment manager to certain Company general account and separate account assets. Investment management expenses paid to PIMI related to this agreement were $6 million, $7 million and $8 million for the years ended December 31, 2014, 2013 and 2012, respectively. These expenses are recorded as “Net investment income” in the Statements of Operations and Comprehensive Income. | ||||||
Cost Allocation Agreements with Affiliates | ||||||
Certain operating costs (including rental of office space, furniture, and equipment) have been charged to the Company at cost by Prudential Annuities Information Services and Technology Corporation (“PAIST”), an affiliated company. PALAC signed a written service agreement with PAIST for these services executed and approved by the Connecticut Insurance Department in 1995. This agreement automatically continues in effect from year to year and may be terminated by either party upon 30 days written notice. | ||||||
Allocated lease expense was $4 million, $10 million and $4 million for the years ended December 31, 2014, 2013 and 2012, respectively. Allocated sub-lease rental income, recorded as a reduction to lease expense was $1 million, $4 million and $4 million for the years ended December 31, 2014, 2013 and 2012, respectively. Assuming that the written service agreement between PALAC and PAIST continues indefinitely, PALAC's allocated future minimum lease payments and sub-lease receipts per year and in aggregate as of December 31, 2014 are as follows: | ||||||
Lease | Sub-Lease | |||||
(in thousands) | ||||||
2015 | $ | 3,397 | $ | - | ||
2016 | 3,397 | - | ||||
2017 | 3,397 | - | ||||
2018 | 3,397 | - | ||||
2019 | 3,114 | - | ||||
2020 and thereafter | - | - | ||||
Total | $ | 16,702 | $ | - | ||
The Company pays commissions and certain other fees to PAD in consideration for PAD's marketing and underwriting of the Company's products. Commissions and fees are paid by PAD to broker-dealers who sold and service the Company's products. Commissions and fees paid by the Company to PAD were $177 million, $172 million and $186 million for the years ended December 31, 2014, 2013 and 2012, respectively. | ||||||
Debt Agreements | ||||||
Short-term and Long-term Debt | ||||||
The Company is authorized to borrow funds up to $2 billion from Prudential Financial and its affiliates to meet its capital and other funding needs. The Company had debt of $54 million and $5 million outstanding with Prudential Funding, LLC as of December 31, 2014 and December 31, 2013, respectively. Total interest expense on debt with Prudential Funding, LLC was less than $1 million for the years ended December 31, 2014, 2013 and 2012. | ||||||
The Company had debt of $0 million and $200 million outstanding with Prudential Financial as of December 31, 2014 and December 31, 2013, respectively. This loan had a fixed interest rate of 4.49% and matured on December 29, 2014. In December 2014 we paid off the remaining portion of debt with a payment of $200 million. Total interest expense on debt with Prudential Financial was $9 million, $17 million and $27 million for the years ended December 31, 2014, 2013 and 2012, respectively. | ||||||
Reinsurance Agreements | ||||||
The Company uses reinsurance as part of its risk management and capital management strategies for certain of its optional living benefit features. Fees ceded under these agreements are included in “Realized investment gains (losses), net” on the Statement of Operations and Comprehensive Income. The Company ceded fees of $274 million, $275 million and $269 million to Pruco Re for the years ended December 31, 2014, 2013 and 2012, respectively. The Company ceded fees of $1 million to Prudential Insurance for the years ended December 31, 2014, 2013 and 2012. The Company's reinsurance payables related to affiliated reinsurance were $25 million as of both December 31, 2014 and December 31, 2013. | ||||||
The Company's reinsurance recoverables related to affiliated reinsurance were $2,997 million and $748 million as of December 31, 2014 and December 31, 2013, respectively. The assets are reflected in “Reinsurance recoverables” in the Company's Statements of Financial Position. Realized gains (losses) were $1,975 million, $(1,260) million and $(286) million for the years ended December 31, 2014, 2013 and 2012, respectively. Changes in realized gains (losses) for the 2014 and 2013 periods were primarily due to changes in market conditions in each respective period. | ||||||
Derivative Trades | ||||||
In its ordinary course of business, the Company enters into OTC derivative contracts with an affiliate, PGF. For these OTC derivative contracts, PGF has a substantially equal and offsetting position with an external counterparty. | ||||||
Purchase/sale of fixed maturities from/to an affiliate | ||||||
During 2014, the Company sold fixed maturity securities to affiliated companies. These securities had an amortized cost of $36 million and a fair value of $44 million. The net difference between historic amortized cost and the fair value of $8 million was accounted for as a realized gain on the Company's Statement of Operations and Comprehensive Income. | ||||||
During 2014, the Company purchased commercial mortgage loans from an affiliated company. These securities had an amortized cost of $6 million, and were purchased at a cost of $6 million. The Company also purchased fixed maturity securities from an affiliated company. These securities had an amortized cost of $27 million, and were purchased at a cost of $30 million. The securities were recorded on the Company's Statement of Financial Position. | ||||||
During 2013, the Company sold fixed maturity securities to Prudential Financial. These securities had an amortized cost of $90 million and a fair value of $103 million. The net difference between historic amortized cost and the fair value was accounted for as an increase of $8 million to additional paid-in capital, net of taxes. The Company also sold commercial mortgage loans to an affiliated company. These securities had an amortized cost of $6 million and a fair value of $6 million. The net difference between historic amortized cost and the fair value was less than $1 million and was recorded as a realized investment gain on the Company's Statement of Operations and Comprehensive Income. |
Contract_Withdrawal_Provisions
Contract Withdrawal Provisions | 12 Months Ended |
Dec. 31, 2014 | |
ContractWithdrawalProvisions[Abstract] | |
ContractWithdrawalProvisionsDisclosureTextBlock | 14. CONTRACT WITHDRAWAL PROVISIONS |
Most of the Company's separate account liabilities are subject to discretionary withdrawal by contractholders at market value or with market value adjustment. Separate account assets, which are carried at fair value, are adequate to pay such withdrawals, which are generally subject to surrender charges ranging from 9% to 1% for contracts held less than 10 years. |
Quarterly_Results_of_Operation
Quarterly Results of Operations (Unaudited) | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
QuarterlyFinancialDataAbstract | ||||||||||||
QuarterlyFinancialInformationTextBlock | 15. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) | |||||||||||
The unaudited quarterly results of operations for the years ended December 31, 2014 and 2013 are summarized in the table below: | ||||||||||||
Three months ended | ||||||||||||
31-Mar | 30-Jun | 30-Sep | 31-Dec | |||||||||
2014 | (in thousands) | |||||||||||
Total revenues | $ | 311,249 | $ | 309,786 | $ | 308,006 | $ | 311,187 | ||||
Total benefits and expenses | 216,896 | 242,370 | 197,204 | 324,387 | ||||||||
Income (loss) from operations before income taxes and cumulative effect of accounting change | 94,353 | 67,416 | 110,802 | -13,200 | ||||||||
Net income | $ | 77,498 | $ | 57,431 | $ | 96,037 | $ | 19,801 | ||||
Three months ended | ||||||||||||
31-Mar | 30-Jun | 30-Sep | 31-Dec | |||||||||
(in thousands) | ||||||||||||
2013 | ||||||||||||
Total revenues | $ | 290,576 | $ | 283,524 | $ | 250,028 | $ | 286,154 | ||||
Total benefits and expenses | 93,190 | 96,720 | -332,523 | 72,431 | ||||||||
Income from operations before income taxes and cumulative effect of accounting change | 197,386 | 186,804 | 582,551 | 213,723 | ||||||||
Net income | $ | 147,388 | $ | 143,670 | $ | 400,296 | $ | 156,738 | ||||
Results for the fourth quarter of 2014 include a pre-tax expense of $8 million related to an out of period adjustment recorded by the Company primarily due to additional DAC amortization related to the overstatement of reinsured reserves in prior periods. Results for the fourth quarter of 2013 include a pre-tax expense of $22 million related to an out of period adjustment recorded by the Company primarily due to additional DAC amortization related to the overstatement of reinsured reserves in the third quarter of 2013. The overstatement resulted from the use of incorrect data inputs to calculate the impact of the market's perception of our own non-performance risk on the reserves for certain annuities with guaranteed benefits. This item impacted only the third and fourth quarters of 2013 and had no impact to full year 2013 reported results. Management has evaluated the impact of all out of period adjustments, both individually and in the aggregate, and concluded that they are not material to the current quarter or to any previously reported quarterly or annual financial statements. |
Business_and_Basis_of_Presenta1
Business and Basis of Presentation (Policy) | 12 Months Ended |
Dec. 31, 2014 | |
Business and Basis of Presentation [Abstract] | |
Basis of Presentation, Policy | Basis of Presentation |
The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). | |
Use of Estimates, Policy | Use of Estimates |
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |
The most significant estimates include those used in determining deferred policy acquisition costs and related amortization; value of business acquired and its amortization; amortization of deferred sales inducements; valuation of investments including derivatives and the recognition of other-than-temporary impairments (“OTTI”); future policy benefits including guarantees; reinsurance recoverables; provision for income taxes and valuation of deferred tax assets; and reserves for contingent liabilities, including reserves for losses in connection with unresolved legal matters. | |
Reclassifications, Policy | Reclassifications |
Certain amounts in prior periods have been reclassified to conform to the current period presentation. |
Significant_Accounting_Policie1
Significant Accounting Policies and Pronouncements (Policy) | 12 Months Ended |
Dec. 31, 2014 | |
Accounting Policies [Abstract] | |
Impact of Adoption of New Accounting Principles on Financial Statements | Investments and Investment Related Liabilities |
The Company's principal investments are fixed maturities, equity securities, commercial mortgage and other loans, policy loans, other long-term investments, including joint ventures (other than operating joint ventures), limited partnerships, and real estate, and short-term investments. Investments and investment-related liabilities also include securities repurchase and resale agreements and securities lending transactions. The accounting policies related to each are as follows: | |
Fixed maturities, available-for-sale, at fair value are comprised of bonds, notes and redeemable preferred stock. Fixed maturities classified as “available-for-sale” are carried at fair value. See Note 10 for additional information regarding the determination of fair value. Interest income, as well as the related amortization of premium and accretion of discount is included in “Net investment income” under the effective yield method. For mortgage-backed and asset-backed securities, the effective yield is based on estimated cash flows, including interest rate and prepayment assumptions based on data from widely accepted third-party data sources or internal estimates. In addition to interest rate and prepayment assumptions, cash flow estimates also vary based on other assumptions regarding the underlying collateral including default rates and changes in value. These assumptions can significantly impact income recognition and the amount of other-than-temporary impairments recognized in earnings and other comprehensive income. For high credit quality mortgage-backed and asset-backed securities (those rated AA or above), cash flows are provided quarterly, and the amortized cost and effective yield of the security are adjusted as necessary to reflect historical prepayment experience and changes in estimated future prepayments. The adjustments to amortized cost are recorded as a charge or credit to net investment income in accordance with the retrospective method. For mortgage-backed and asset-backed securities rated below AA or those for which an other than temporary impairment has been recorded, the effective yield is adjusted prospectively for any changes in estimated cash flows. See the discussion below on realized investment gains and losses for a description of the accounting for impairments. Unrealized gains and losses on fixed maturities classified as “available-for-sale,” net of tax, and the effect on deferred policy acquisition costs (“DAC”), value of business acquired (“VOBA”), deferred sales inducements (“DSI”), and future policy benefits that would result from the realization of unrealized gains and losses, are included in “Accumulated other comprehensive income (loss)” (“AOCI”). | |
Trading account assets, at fair value, represents equity securities and other fixed maturity securities carried at fair value. Realized and unrealized gains and losses for these investments are reported in “Asset administration fees and other income.” Interest and dividend income from these investments is reported in “Net investment income.” | |
Equity securities, available-for-sale, at fair value, are comprised of mutual fund shares and are carried at fair value. The associated unrealized gains and losses, net of tax, and the effect on DAC, VOBA, DSI, and future policy benefits that would result from the realization of unrealized gains and losses, are included in AOCI. The cost of equity securities is written down to fair value when a decline in value is considered to be other-than-temporary. See the discussion below on realized investment gains and losses for a description of the accounting for impairments. Dividends from these investments are recognized in “Net investment income” when earned. | |
Commercial mortgage and other loans consist of commercial mortgage loans, agricultural loans and uncollateralized loans. Commercial mortgage and other loans held for investment are generally carried at unpaid principal balance, net of unamortized deferred loan origination fees and expenses and net of an allowance for losses. Commercial mortgage and other loans acquired, including those related to the acquisition of a business, are recorded at fair value when purchased, reflecting any premiums or discounts to unpaid principal balances. | |
Interest income, as well as prepayment fees and the amortization of the related premiums or discounts, related to commercial mortgage and other loans, are included in “Net investment income.” | |
Impaired loans include those loans for which it is probable that amounts due will not all be collected according to the contractual terms of the loan agreement. The Company defines “past due” as principal or interest not collected at least 30 days past the scheduled contractual due date. Interest received on loans that are past due, including impaired and non-impaired loans, as well as, loans that were previously modified in a troubled debt restructuring, is either applied against the principal or reported as net investment income based on the Company's assessment as to the collectability of the principal. See Note 3 for additional information about the Company's past due loans. | |
The Company discontinues accruing interest on loans after the loans become 90 days delinquent as to principal or interest payments, or earlier when the Company has doubts about collectability. When the Company discontinues accruing interest on a loan, any accrued but uncollectible interest on the loan and other loans backed by the same collateral, if any, is charged to interest income in the same period. Generally, a loan is restored to accrual status only after all delinquent interest and principal are brought current and, in the case of loans where the payment of interest has been interrupted for a substantial period, or the loan has been modified, a regular payment performance has been established. | |
The Company reviews the performance and credit quality of the commercial mortgage and other loan portfolio on an on-going basis. Loans are placed on watch list status based on a predefined set of criteria and are assigned one of three categories. Loans are placed on “early warning” status in cases where, based on the Company's analysis of the loan's collateral, the financial situation of the borrower or tenants or other market factors, it is believed a loss of principal or interest could occur. Loans are classified as “closely monitored” when it is determined that there is a collateral deficiency or other credit events that may lead to a potential loss of principal or interest. Loans “not in good standing” are those loans where the Company has concluded that there is a high probability of loss of principal, such as when the loan is delinquent or in the process of foreclosure. As described below, in determining the allowance for losses, the Company evaluates each loan on the watch list to determine if it is probable that amounts due will not be collected according to the contractual terms of the loan agreement. | |
Loan-to-value and debt service coverage ratios are measures commonly used to assess the quality of commercial mortgage loans. The loan-to-value ratio compares the amount of the loan to the fair value of the underlying property collateralizing the loan, and is commonly expressed as a percentage. Loan-to-value ratios greater than 100% indicate that the loan amount exceeds the collateral value. A smaller loan-to-value ratio indicates a greater excess of collateral value over the loan amount. The debt service coverage ratio compares a property's net operating income to its debt service payments. Debt service coverage ratios less than 1.0 times indicate that property operations do not generate enough income to cover the loan's current debt payments. A larger debt service coverage ratio indicates a greater excess of net operating income over the debt service payments. The values utilized in calculating these ratios are developed as part of the Company's periodic review of the commercial mortgage loan and agricultural loan portfolio, which includes an internal appraisal of the underlying collateral value. The Company's periodic review also includes a quality re-rating process, whereby the internal quality rating originally assigned at underwriting is updated based on current loan, property and market information using a proprietary quality rating system. The loan-to-value ratio is the most significant of several inputs used to establish the internal credit rating of a loan which in turn drives the allowance for losses. Other key factors considered in determining the internal credit rating include debt service coverage ratios, amortization, loan term, estimated market value growth rate and volatility for the property type and region. See Note 3 for additional information related to the loan-to-value ratios and debt service coverage ratios related to the Company's commercial mortgage and agricultural loan portfolios. | |
The allowance for losses includes a loan specific reserve for each impaired loan that has a specifically identified loss and a portfolio reserve for probable incurred but not specifically identified losses. For impaired commercial mortgage and other loans the allowances for losses are determined based on the present value of expected future cash flows discounted at the loan's effective interest rate, or based upon the fair value of the collateral if the loan is collateral dependent. The portfolio reserves for probable incurred but not specifically identified losses in the commercial mortgage and agricultural loan portfolios considers the current credit composition of the portfolio based on an internal quality rating, (as described above). The portfolio reserves are determined using past loan experience, including historical credit migration, loss probability and loss severity factors by property type. These factors are reviewed each quarter and updated as appropriate. | |
The allowance for losses on commercial mortgage and other loans can increase or decrease from period to period based on the factors noted above. “Realized investment gains (losses), net” includes changes in the allowance for losses. “Realized investment gains (losses), net” also includes gains and losses on sales, certain restructurings, and foreclosures. | |
When a commercial mortgage or other loan is deemed to be uncollectible, any specific valuation allowance associated with the loan is reversed and a direct write down to the carrying amount of the loan is made. The carrying amount of the loan is not adjusted for subsequent recoveries in value. | |
In situations where a loan has been restructured in a troubled debt restructuring and the loan has subsequently defaulted, this factor is considered when evaluating the loan for a specific allowance for losses in accordance with the credit review process noted above. | |
See Note 3 for additional information about commercial mortgage and other loans that have been restructured in a troubled debt restructuring. | |
Policy loans are carried at unpaid principal balances. Interest income on policy loans is recognized in “Net investment income” at the contract interest rate when earned. Policy loans are fully collateralized by the cash surrender value of the associated insurance policies. | |
Securities repurchase and resale agreements and securities loaned transactions are used primarily to earn spread income, to borrow funds, or to facilitate trading activity. As part of securities repurchase agreements or securities loaned transactions, the Company transfers U.S. and foreign debt and equity securities, as well as U.S. government and government agency securities and receives cash as collateral. As part of securities resale agreements, the Company invests cash and receives as collateral U.S. government securities or other debt securities. For securities repurchase agreements and securities loaned transactions used to earn spread income, the cash received is typically invested in cash equivalents, short-term investments or fixed maturities. | |
Securities loaned transactions are treated as financing arrangements and are recorded at the amount of cash received. The Company obtains collateral in an amount equal to 102% and 105% of the fair value of the domestic and foreign securities, respectively. The Company monitors the market value of the securities loaned on a daily basis with additional collateral obtained as necessary. Substantially all of the Company's securities loaned transactions are with large brokerage firms. Income and expenses associated with securities loaned transactions used to earn spread income are reported as “Net investment income;” however, for securities loaned transactions used for funding purposes the associated rebate is reported as interest expense (included in “General, administrative and other expenses”). | |
Other long-term investments consist of the Company's non-coupon investments in joint ventures and limited partnerships, other than operating joint ventures, as well as wholly-owned investment real estate and other investments. Joint venture and partnership interests are either accounted for using the equity method of accounting or under the cost method when the Company's partnership interest is so minor (generally less than 3%) that it exercises virtually no influence over operating and financial policies. The Company's income from investments in joint ventures and partnerships accounted for using the equity method or the cost method, other than the Company's investment in operating joint ventures, is included in “Net investment income.” The carrying value of these investments is written down, or impaired, to fair value when a decline in value is considered to be other-than-temporary. In applying the equity method or the cost method (including assessment for other-than-temporary impairment), the Company uses financial information provided by the investee, generally on a one to three month lag. | |
Short-term investments primarily consist of highly liquid debt instruments with a maturity of twelve months or less and greater than three months when purchased. These investments are generally carried at fair value and include certain money market investments, short-term debt securities issued by government sponsored entities and other highly liquid debt instruments. | |
Realized investment gains (losses) are computed using the specific identification method. Realized investment gains and losses are generated from numerous sources, including the sale of fixed maturity securities, equity securities, investments in joint ventures and limited partnerships and other types of investments, as well as adjustments to the cost basis of investments for net other-than-temporary impairments recognized in earnings. Realized investment gains and losses are also generated from prepayment premiums received on private fixed maturity securities, allowance for losses on commercial mortgage and other loans, and fair value changes on embedded derivatives and free-standing derivatives that do not qualify for hedge accounting treatment. See “Derivative Financial Instruments” below for additional information regarding the accounting for derivatives. | |
The Company's available-for-sale securities with unrealized losses are reviewed quarterly to identify other-than-temporary impairments in value. In evaluating whether a decline in value is other-than-temporary, the Company considers several factors including, but not limited to the following: (1) the extent and the duration of the decline; (2) the reasons for the decline in value (credit event, currency or interest-rate related, including general credit spread widening); and (3) the financial condition of and near-term prospects of the issuer. With regard to available-for-sale equity securities, the Company also considers the ability and intent to hold the investment for a period of time to allow for a recovery of value. When it is determined that a decline in value of an equity security is other-than-temporary, the carrying value of the equity security is reduced to its fair value, with a corresponding charge to earnings. | |
An other-than-temporary impairment is recognized in earnings for a debt security in an unrealized loss position when the Company either (a) has the intent to sell the debt security or (b) more likely than not will be required to sell the debt security before its anticipated recovery. For all debt securities in unrealized loss positions that do not meet either of these two criteria, the Company analyzes its ability to recover the amortized cost by comparing the net present value of projected future cash flows with the amortized cost of the security. The net present value is calculated by discounting the Company's best estimate of projected future cash flows at the effective interest rate implicit in the debt security prior to impairment. The Company may use the estimated fair value of collateral as a proxy for the net present value if it believes that the security is dependent on the liquidation of collateral for recovery of its investment. If the net present value is less than the amortized cost of the investment an other-than-temporary impairment is recognized. | |
When an other-than-temporary impairment of a debt security has occurred, the amount of the other-than-temporary impairment recognized in earnings depends on whether the Company intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis. If the debt security meets either of these two criteria, the other-than-temporary impairment recognized in earnings is equal to the entire difference between the security's amortized cost basis and its fair value at the impairment measurement date. For other-than-temporary impairments of debt securities that do not meet these criteria, the net amount recognized in earnings is equal to the difference between the amortized cost of the debt security and its net present value calculated as described above. Any difference between the fair value and the net present value of the debt security at the impairment measurement date is recorded in “Other comprehensive income (loss)” (“OCI”). Unrealized gains or losses on securities for which an other-than-temporary impairment has been recognized in earnings is tracked as a separate component of AOCI. | |
For debt securities, the split between the amount of an other-than-temporary impairment recognized in other comprehensive income and the net amount recognized in earnings is driven principally by assumptions regarding the amount and timing of projected cash flows. For mortgage-backed and asset-backed securities, cash flow estimates consider the payment terms of the underlying assets backing a particular security, including interest rate and prepayment assumptions, based on data from widely accepted third-party data sources or internal estimates. In addition to interest rate and prepayment assumptions, cash flow estimates also include other assumptions regarding the underlying collateral including default rates and recoveries, which vary based on the asset type and geographic location, as well as the vintage year of the security. For structured securities, the payment priority within the tranche structure is also considered. For all other debt securities, cash flow estimates are driven by assumptions regarding probability of default and estimates regarding timing and amount of recoveries associated with a default. The Company has developed these estimates using information based on its historical experience as well as using market observable data, such as industry analyst reports and forecasts, sector credit ratings and other data relevant to the collectability of a security, such as the general payment terms of the security and the security's position within the capital structure of the issuer. | |
The new cost basis of an impaired security is not adjusted for subsequent increases in estimated fair value. In periods subsequent to the recognition of an other-than-temporary impairment, the impaired security is accounted for as if it had been purchased on the measurement date of the impairment. For debt securities, the discount (or reduced premium) based on the new cost basis may be accreted into net investment income in future periods, including increases in cash flow on a prospective basis. In certain cases where there are decreased cash flow expectations, the security is reviewed for further cash flow impairments. | |
Unrealized investment gains and losses are also considered in determining certain other balances, including DAC, VOBA, DSI, certain future policy benefits and deferred tax assets or liabilities. These balances are adjusted, as applicable, for the impact of unrealized gains or losses on investments as if these gains or losses had been realized, with corresponding credits or charges included in AOCI. Each of these balances is discussed in greater detail below. | |
Cash and Cash Equivalents | |
Cash and cash equivalents include cash on hand, amounts due from banks, certain money market investments and other debt instruments with maturities of three months or less when purchased, other than cash equivalents that are included in “Trading account assets, at fair value.” The Company also engages in overnight borrowing and lending of funds with Prudential Financial and affiliates which are considered cash and cash equivalents. | |
Deferred Policy Acquisition Costs | |
Costs that are related directly to the successful acquisition of new and renewal insurance and annuity business are deferred to the extent such costs are deemed recoverable from future profits. Such DAC primarily include commissions, costs of policy issuance and underwriting, and certain other expenses that are directly related to successfully negotiated contracts. In each reporting period, capitalized DAC is amortized to “Amortization of deferred policy acquisition costs,” net of the accrual of imputed interest on DAC balances. DAC is subject to periodic recoverability testing. DAC, for applicable products, is adjusted for the impact of unrealized gains or losses on investments as if these gains or losses had been realized, with corresponding credits or charges included in AOCI. | |
DAC related to fixed and variable deferred annuity products are generally deferred and amortized over the expected life of the contracts in proportion to gross profits arising principally from investment margins, mortality and expense margins, and surrender charges, based on historical and anticipated future experience, which is updated periodically. The Company uses a reversion to the mean approach for equities to derive future equity return assumptions. | |
However, if the projected equity return calculated using this approach is greater than the maximum equity return assumption, the maximum equity return is utilized. Gross profits also include impacts from the embedded derivatives associated with certain of the optional living benefit features of the Company's variable annuity contracts and related hedging activities. In calculating gross profits, profits and losses related to contracts issued by the Company that are reported in affiliated legal entities other than the Company as a result of, for example, reinsurance agreements with those affiliated entities, are also included. The Company is an indirect subsidiary of Prudential Financial (an SEC registrant) and has extensive transactions and relationships with other subsidiaries of Prudential Financial, including reinsurance agreements, as described in Note 13. Incorporating all product-related profits and losses in gross profits, including those that are reported in affiliated legal entities, produces a DAC amortization pattern representative of the total economics of the products. The effect of changes to total gross profits on unamortized DAC is reflected in the period such total gross profits are revised. | |
For some products, policyholders can elect to modify product benefits, features, rights or coverages by amendment, endorsement, or rider to a contract, or by the election of a feature or coverage within a contract. These transactions are known as internal replacements. For internal replacement transactions, except those that involve the addition of a nonintegrated contract feature that does not change the existing base contract, the unamortized DAC is immediately charged to expense if the terms of the new policies are not substantially similar to those of the former policies. If the new terms are substantially similar to those of the earlier policies, the DAC is retained with respect to the new policies and amortized over the expected life of the new policies. | |
Deferred Sales Inducements | |
The Company offered various types of sales inducements to contractholders related to fixed and variable deferred annuity contracts. The Company defers sales inducements and amortizes them over the anticipated life of the policy using the same methodology and assumptions used to amortize DAC. Sales inducements balances are subject to periodic recoverability testing. The Company records amortization of DSI in “Interest credited to policyholders' account balances.” DSI for applicable products is adjusted for the impact of unrealized gains or losses on investments as if these gains or losses had been realized, with corresponding credits or charges included in AOCI. See Note 7 for additional information regarding sales inducements. | |
Value of Business Acquired | |
As a result of certain acquisitions and the application of purchase accounting, the Company reports a financial asset representing VOBA. VOBA includes an explicit adjustment to reflect the cost of capital attributable to the acquired insurance contracts. VOBA represents an adjustment to the stated value of inforce insurance contract liabilities to present them at fair value, determined as of the acquisition date. VOBA balances are subject to recoverability testing, in the manner in which it was acquired. The Company has established a VOBA asset primarily for its acquisition of American Skandia Life Assurance Corporation. For acquired annuity contracts, VOBA is amortized in proportion to gross profits arising principally from investment margins, mortality and expense margins, and surrender charges, based on historical and anticipated future experience, which is updated periodically. See Note 5 for additional information regarding VOBA. | |
Reinsurance recoverables | |
Reinsurance recoverables include corresponding receivables associated with reinsurance arrangements with affiliates. For additional information about these arrangements see Note 13. | |
Separate Account Assets and Liabilities | |
Separate account assets are reported at fair value and represent segregated funds that are invested for certain contractholders. “Separate account assets” are predominantly shares in Advanced Series Trust co-managed by AST Investment Services, Incorporated (“ASISI”) and Prudential Investments LLC, which utilizes various fund managers as sub-advisors. The remaining assets are shares in other mutual funds, which are managed by independent investment firms. The contractholder has the option of directing funds to a wide variety of investment options, most of which invest in mutual funds. The investment risk on the variable portion of a contract is borne by the contractholder, except to the extent of minimum guarantees by the Company, which are not separate account liabilities. See Note 7 to the Financial Statements for additional information regarding separate account arrangements with contractual guarantees. The assets of each account are legally segregated and are not subject to claims that arise out of any other business of the Company. Separate account liabilities primarily represent the contractholders' account balance in separate account assets and to a lesser extent borrowings of the separate account, and will be equal and offsetting to total separate account assets. The investment income and realized investment gains or losses from separate accounts generally accrue to the contractholders and are not included in the Company's results of operations. Mortality, policy administration and surrender charges assessed against the accounts are included in “Policy charges and fee income”. Asset administration fees charged to the accounts are included in “Asset administration fees and other income.” | |
Other Assets and Other Liabilities | |
“Other assets” consist primarily of accruals for asset administration fees. “Other assets” also consist of state insurance licenses. Licenses to do business in all states have been capitalized. Based on changes in facts and circumstances, effective September 30, 2012, the capitalized state insurance licenses were considered to have a finite life and are amortized over their useful life, which was estimated to be 8 years. Amortization is recorded through “General, administrative and other expenses.” | |
“Other liabilities” consist primarily of accrued expenses and technical overdrafts. Other liabilities may also include derivative instruments for which fair values are determined as described above under “Derivative Financial Instruments”. | |
Future Policy Benefits and Other Policyholder Liabilities | |
The Company's liability for future policy benefits is primarily comprised of liabilities for guarantee benefits related to certain nontraditional long-duration life and annuity contracts, which are discussed more fully in Note 7. These reserves represent reserves for the guaranteed minimum death and optional living benefit features on the Company's variable annuity products. The optional living benefits are primarily accounted for as embedded derivatives, with fair values calculated as the present value of future expected benefit payments to customers less the present value of assessed rider fees attributable to the embedded derivative feature. For additional information regarding the valuation of these optional living benefit features, see Note 10. | |
The Company's liability for future policy benefits also includes reserves based on the present value of estimated future payments to or on behalf of policyholders, where the timing and amount of payment depends on policyholder mortality. Expected mortality is generally based on Company experience, industry data, and/or other factors. Interest rate assumptions are based on factors such as market conditions and expected investment returns. Although mortality and interest rate assumptions are “locked-in” upon the issuance of new insurance or annuity business with fixed and guaranteed terms, significant changes in experience or assumptions may require the Company to provide for expected future losses on a product by establishing premium deficiency reserves. Premium deficiency reserves are established, if necessary, when the liability for future policy benefits plus the present value of expected future gross premiums are determined to be insufficient to provide for expected future policy benefits and expenses. Premium deficiency reserves do not include a provision for the risk of adverse deviation. Any adjustments to future policy benefit reserves related to net unrealized gains on securities classified as available-for-sale are included in AOCI. See Note 7 for additional information regarding future policy benefits. | |
Policyholders' Account Balances | |
The Company's liability for policyholders' account balances represents the contract value that has accrued to the benefit of the policyholder as of the balance sheet date. This liability is primarily associated with the accumulated account deposits, plus interest credited, less policyholder withdrawals and other charges assessed against the account balance. These policyholders' account balances also include provision for benefits under non-life contingent payout annuities and certain unearned revenues. | |
Contingent Liabilities | |
Amounts related to contingent liabilities are accrued if it is probable that a liability has been incurred and an amount is reasonably estimable. Management evaluates whether there are incremental legal or other costs directly associated with the ultimate resolution of the matter that are reasonably estimable and, if so, they are included in the accrual. These items are recorded within “Other liabilities.” | |
Insurance Revenue and Expense Recognition | |
Revenues for variable deferred annuity contracts consist of charges against contractholder account values or separate accounts for mortality and expense risks, administration fees, surrender charges and an annual maintenance fee per contract. Revenues for mortality and expense risk charges and administration fees are recognized as assessed against the contractholder. Surrender charge revenue is recognized when the surrender charge is assessed against the contractholder at the time of surrender. Liabilities for the variable investment options on annuity contracts represent the account value of the contracts and are included in “Separate account liabilities.” | |
Revenues for variable immediate annuity and supplementary contracts with life contingencies consist of certain charges against contractholder account values including mortality and expense risks and administration fees. These charges and fees are recognized as revenue when assessed against the contractholder. Liabilities for variable immediate annuity contracts represent the account value of the contracts and are included in “Separate account liabilities.” | |
Revenues for fixed immediate annuity and fixed supplementary contracts with and without life contingencies consist of net investment income. In addition, revenues for fixed immediate annuity contracts with life contingencies also consist of single premium payments recognized as annuity considerations when received. Liabilities for these contracts are based on applicable U.S. GAAP standards with assumed interest rates that vary by contract year. Reserves for contracts without life contingencies are included in “Policyholders' account balances” while reserves for contracts with life contingencies are included in “future policy benefits and other policyholder liabilities.” Assumed interest rates ranged from 0.00% to 8.25% at December 31, 2014, and from 0.00% to 8.25% at December 31, 2013. | |
Revenues for variable life insurance contracts consist of charges against contractholder account values or separate accounts for expense charges, administration fees, cost of insurance charges and surrender charges. Certain contracts also include charges against premium to pay state premium taxes. All of these charges are recognized as revenue when assessed against the contractholder. Liabilities for variable life insurance contracts represent the account value of the contracts and are included in “Separate account liabilities.” | |
Certain individual annuity contracts provide the contractholder a guarantee that the benefit received upon death or annuitization will be no less than a minimum prescribed amount. These benefits are accounted for as insurance contracts and are discussed in further detail in Note 7. The Company also provides contracts with certain living benefits which are considered embedded derivatives. These contracts are discussed in further detail in Note 7. | |
Premiums, benefits and expenses are stated net of reinsurance ceded to other companies. | |
Asset Administration Fees | |
The Company receives asset administration fee income on contractholders' account balances invested in the Advanced Series Trust Funds or “AST” (see Note 13), which are a portfolio of mutual fund investments related to the Company's separate account products. In addition, the Company receives fees on contractholders' account balances invested in funds managed by companies other than affiliates of Prudential Insurance. Asset administration fees are recognized as income when earned. | |
Derivative Financial Instruments | |
Derivatives are financial instruments whose values are derived from interest rates, foreign exchange rates, financial indices, values of securities or commodities, credit spreads, market volatility, expected returns, and liquidity. Values can also be affected by changes in estimates and assumptions, including those related to counterparty behavior and non-performance risk used in valuation models. Derivative financial instruments generally used by the Company include swaps, futures, forwards and options and may be exchange-traded or contracted in the OTC market. Derivative positions are carried at fair value, generally by obtaining quoted market prices or through the use of valuation models. | |
Derivatives are used to manage the interest rate and currency characteristics of assets or liabilities. Additionally, derivatives may be used to seek to reduce exposure to interest rate, credit, foreign currency and equity risks associated with assets held or expected to be purchased or sold, and liabilities incurred or expected to be incurred. As discussed in detail below and in Note 11, all realized and unrealized changes in fair value of derivatives are recorded in current earnings, with the exception of the effective portion of cash flow hedges. Cash flows from derivatives are reported in the operating, investing, or financing activities sections in the Statements of Cash Flows based on the nature and purpose of the derivative. | |
Derivatives are recorded either as assets, within “Trading account assets, at fair value” or “Other long-term investments,” or as liabilities, within “Other liabilities,” except for embedded derivatives which are recorded with the associated host contract. The Company nets the fair value of all derivative financial instruments with counterparties for which a master netting arrangement has been executed. | |
The Company designates derivatives as either (1) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow” hedge); or (2) a derivative that does not qualify for hedge accounting. | |
To qualify for hedge accounting treatment, a derivative must be highly effective in mitigating the designated risk of the hedged item. Effectiveness of the hedge is formally assessed at inception and throughout the life of the hedging relationship. Even if a derivative qualifies for hedge accounting treatment, there may be an element of ineffectiveness of the hedge. Under such circumstances, the ineffective portion is recorded in “Realized investment gains (losses), net.” | |
The Company formally documents at inception all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives designated as cash flow hedges to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. | |
When a derivative is designated as a cash flow hedge and is determined to be highly effective, changes in its fair value are recorded in AOCI until earnings are affected by the variability of cash flows being hedged (e.g., when periodic settlements on a variable-rate asset or liability are recorded in earnings). At that time, the related portion of deferred gains or losses on the derivative instrument is reclassified and reported in the income statement line item associated with the hedged item. | |
If it is determined that a derivative no longer qualifies as an effective cash flow hedge or management removes the hedge designation, the derivative will continue to be carried on the balance sheet at its fair value, with changes in fair value recognized currently in “Realized investment gains (losses), net.” The component of AOCI related to discontinued cash flow hedges is reclassified to the income statement line associated with the hedged cash flows consistent with the earnings impact of the original hedged cash flows. | |
When hedge accounting is discontinued because the hedged item no longer meets the definition of a firm commitment, or because it is probable that the forecasted transaction will not occur by the end of the specified time period, the derivative will continue to be carried on the balance sheet at its fair value, with changes in fair value recognized currently in “Realized investment gains (losses), net.” Any asset or liability that was recorded pursuant to recognition of the firm commitment is removed from the balance sheet and recognized currently in “Realized investment gains (losses), net.” Gains and losses that were in AOCI pursuant to the hedge of a forecasted transaction are recognized immediately in “Realized investment gains (losses), net.” | |
If a derivative does not qualify for hedge accounting, all changes in its fair value, including net receipts and payments, are included in “Realized investment gains (losses), net” without considering changes in the fair value of the economically associated assets or liabilities. | |
The Company is a party to financial instruments that contain derivative instruments that are “embedded” in the financial instruments. At inception, the Company assesses whether the economic characteristics of the embedded instrument are clearly and closely related to the economic characteristics of the remaining component of the financial instrument (i.e., the host contract) and whether a separate instrument with the same terms as the embedded instrument would meet the definition of a derivative instrument. When it is determined that (1) the embedded instrument possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract, and (2) a separate instrument with the same terms would qualify as a derivative instrument, the embedded instrument qualifies as an embedded derivative that is separated from the host contract, carried at fair value, and changes in its fair value are included in “Realized investment gains (losses), net.” For certain financial instruments that contain an embedded derivative that otherwise would need to be bifurcated and reported at fair value, the Company may elect to classify the entire instrument as a trading account asset and report it within “Trading account assets, at fair value.” | |
The Company sold variable annuity contracts that include optional living benefit features that may be treated from an accounting perspective as embedded derivatives. The Company has reinsurance agreements to transfer the risk related to certain of these benefit features to an affiliate, Pruco Re. The embedded derivatives related to the living benefit features and the related reinsurance agreements are carried at fair value and included in “Future policy benefits and other policyholder liabilities” and “Reinsurance recoverables,” respectively. Changes in the fair value are determined using valuation models as described in Note 10, and are recorded in “Realized investment gains (losses), net.” | |
Short-Term and Long-Term Debt | |
Liabilities for short-term and long-term debt are primarily carried at an amount equal to unpaid principal balance, net of unamortized discount or premium. Original-issue discount or premium and debt-issue costs are recognized as a component of interest expense over the period the debt is expected to be outstanding, using the interest method of amortization. Short-term debt is debt coming due in the next twelve months, including that portion of debt otherwise classified as long-term. The short-term debt caption may exclude short-term debt items the Company intends to refinance on a long-term basis in the near term. See Note 13 for additional information regarding short-term and long-term debt. | |
Income Taxes | |
The Company is a member of the federal income tax return of Prudential Financial and primarily files separate company state and local tax returns. Pursuant to the tax allocation arrangement with Prudential Financial, total federal income tax expense is determined on a separate company basis. Members with losses record tax benefits to the extent such losses are recognized in the consolidated federal tax provision. | |
Deferred income taxes are recognized, based on enacted rates, when assets and liabilities have different values for financial statement and tax reporting purposes. A valuation allowance is recorded to reduce a deferred tax asset to the amount expected to be realized. | |
Items required by tax regulations to be included in the tax return may differ from the items reflected in the financial statements. As a result, the effective tax rate reflected in the financial statements may be different than the actual rate applied on the tax return. Some of these differences are permanent such as expenses that are not deductible in the Company's tax return, and some differences are temporary, reversing over time, such as valuation of insurance reserves. Temporary differences create deferred tax assets and liabilities. Deferred tax assets generally represent items that can be used as a tax deduction or credit in future years for which the Company has already recorded the tax benefit in the Company's income statement. Deferred tax liabilities generally represent tax expense recognized in the Company's financial statements for which payment has been deferred, or expenditures for which the Company has already taken a deduction in the Company's tax return but have not yet been recognized in the Company's financial statements. | |
The application of U.S. GAAP requires the Company to evaluate the recoverability of the Company's deferred tax assets and establish a valuation allowance if necessary to reduce the Company's deferred tax assets to an amount that is more likely than not to be realized. Considerable judgment is required in determining whether a valuation allowance is necessary, and if so, the amount of such valuation allowance. In evaluating the need for a valuation allowance the Company may consider many factors, including: (1) the nature of the deferred tax assets and liabilities; (2) whether they are ordinary or capital; (3) in which tax jurisdictions they were generated and the timing of their reversal; (4) taxable income in prior carryback years as well as projected taxable earnings exclusive of reversing temporary differences and carryforwards; (5) the length of time that carryovers can be utilized in the various taxing jurisdictions; (6) any unique tax rules that would impact the utilization of the deferred tax assets; and (7) any tax planning strategies that the Company would employ to avoid a tax benefit from expiring unused. Although realization is not assured, management believes it is more likely than not that the deferred tax assets, net of valuation allowances, will be realized. | |
U.S. GAAP prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that a company has taken or expects to take on tax returns. The application of this guidance is a two-step process, the first step being recognition. The Company determines whether it is more likely than not, based on the technical merits, that the tax position will be sustained upon examination. If a tax position does not meet the more likely than not recognition threshold, the benefit of that position is not recognized in the financial statements. The second step is measurement. The Company measures the tax position as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate resolution with a taxing authority that has full knowledge of all relevant information. This measurement considers the amounts and probabilities of the outcomes that could be realized upon ultimate settlement using the facts, circumstances, and information available at the reporting date. | |
The Company's liability for income taxes includes the liability for unrecognized tax benefits, interest and penalties which relate to tax years still subject to review by the Internal Revenue Service (“IRS”) or other taxing jurisdictions. Audit periods remain open for review until the statute of limitations has passed. Generally, for tax years which produce net operating losses, capital losses or tax credit carryforwards (“tax attributes”), the statute of limitations does not close, to the extent of these tax attributes, until the expiration of the statute of limitations for the tax year in which they are fully utilized. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the liability for income taxes. The Company classifies all interest and penalties related to tax uncertainties as income tax expense. | |
See Note 9 for additional information regarding income taxes. | |
Adoption of New Accounting Pronouncements | |
In December 2013, the Financial Accounting Standards Board (“FASB”) issued updated guidance establishing a single definition of a public entity for use in financial accounting and reporting guidance. This new guidance is effective for all current and future reporting periods and did not have a significant effect on the Company's financial position, results of operations or financial statement disclosures. | |
In July 2013, the FASB issued new guidance regarding derivatives. The guidance permits the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) to be used as a U.S. benchmark interest rate for hedge accounting, in addition to the United States Treasury rate and London Inter-Bank Offered Rate (“LIBOR”). The guidance also removes the restriction on using different benchmark rates for similar hedges. The guidance is effective for qualifying new or redesignated hedging relationships entered into on or after July 17, 2013, and was applied prospectively. Adoption of the guidance did not have a significant effect on the Company's financial position, results of operations or financial statement disclosures. | |
In July 2013, the FASB issued updated guidance regarding the presentation of unrecognized tax benefits when net operating loss carryforwards, similar tax losses, or tax credit carryforwards exist. This new guidance became effective for interim or annual reporting periods that began after December 15, 2013, and was applied prospectively. Adoption of the guidance did not have a significant effect on the Company's financial position, results of operations or financial statement disclosures. | |
In February 2013, the FASB issued updated guidance regarding the presentation of comprehensive income. Under the guidance, an entity is required to separately present information about significant items reclassified out of accumulated other comprehensive income (“AOCI”) by component as well as changes in AOCI balances by component in either the financial statements or the notes to the financial statements. The guidance does not change the items that are reported in other comprehensive income, does not change when an item of other comprehensive income must be reclassified to net income, and does not amend any existing requirements for reporting net income or other comprehensive income. The guidance became effective for interim or annual reporting periods that began after December 15, 2012 and was applied prospectively. The disclosures required by this guidance are included in Note 3. | |
In December 2011 and January 2013, the FASB issued updated guidance regarding the disclosure of recognized derivative instruments (including bifurcated embedded derivatives), repurchase agreements and securities borrowing/lending transactions that are offset in the statement of financial position or are subject to an enforceable master netting arrangement or similar agreement (irrespective of whether they are offset in the statement of financial position). This new guidance requires an entity to disclose information on both a gross and net basis about instruments and transactions within the scope of this guidance. This new guidance became effective for interim or annual reporting periods that began on or after January 1, 2013, and was applied retrospectively for all comparative periods presented. The disclosures required by this guidance are included in Note 11. | |
Future Adoption of New Accounting Pronouncements | Future Adoption of New Accounting Pronouncements |
In January 2014, the FASB issued updated guidance for troubled debt restructurings clarifying when an in substance repossession or foreclosure occurs, and when a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan. The new guidance is effective for annual periods and interim periods within those annual periods, beginning after December 15, 2014. This guidance can be elected for prospective adoption or by using a modified retrospective transition method. This guidance is not expected to have a significant effect on the Company's financial position, results of operations or financial statement disclosures. | |
In May 2014, the FASB issued updated guidance on accounting for revenue recognition. The guidance is based on the core principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The guidance also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from cost incurred to obtain or fulfill a contract. Revenue recognition for insurance contracts is explicitly scoped out of the guidance. The new guidance is effective for annual periods and interim periods within those annual periods, beginning after December 15, 2016, and must be applied using one of two retrospective application methods. Early adoption is not permitted. The Company is currently assessing the impact of the guidance on the Company's financial position, results of operations and financial statement disclosures. | |
In August 2014, the FASB issued updated guidance for measuring the financial assets and the financial liabilities of a consolidated collateralized financing entity. Under the guidance, an entity within scope is permitted to measure both the financial assets and financial liabilities of a consolidated collateralized financing entity based on either the fair value of the financial assets or the financial liabilities, whichever is more observable. If elected, the guidance will eliminate the measurement difference that exists when both are measured at fair value. The new guidance is effective for annual periods and interim reporting periods within those annual periods, beginning after December 15, 2015. Early adoption will be permitted. This guidance can be elected for modified retrospective or full retrospective adoption. The Company is currently assessing the impact of the guidance on the Company's financial position, results of operations and financial statement disclosures. | |
In August 2014, the FASB issued guidance requiring that mortgage loans be derecognized and that a separate other receivable be recognized upon foreclosure if certain conditions are met. Upon foreclosure, the separate other receivable should be measured based on the amount of the loan balance (principal and interest) expected to be recovered from the guarantor. The new guidance is effective for annual periods and interim periods within those annual periods, beginning after December 15, 2014, with early adoption permitted. This guidance can be adopted using either a prospective transition method or a modified retrospective transition method. This guidance is not expected to have a significant impact on the Company's financial position, results of operations or financial statement disclosures. |
Investments_Tables
Investments (Tables) | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Investments [Abstract] | |||||||||||||||||||||
Fixed Maturities and Equity Securities, Available-for-sale Securities | 31-Dec-14 | ||||||||||||||||||||
Other-than- | |||||||||||||||||||||
Gross | Gross | temporary | |||||||||||||||||||
Amortized | Unrealized | Unrealized | Fair | Impairments | |||||||||||||||||
Cost | Gains | Losses | Value | in AOCI (3) | |||||||||||||||||
(in thousands) | |||||||||||||||||||||
Fixed maturities, available-for-sale | |||||||||||||||||||||
U.S. Treasury securities and obligations of U.S. | |||||||||||||||||||||
government authorities and agencies | $ | 6,324 | $ | 22 | $ | 10 | $ | 6,336 | $ | - | |||||||||||
Obligations of U.S. states and their political | |||||||||||||||||||||
subdivisions | 69,486 | 1,323 | 20 | 70,789 | - | ||||||||||||||||
Foreign government bonds | 29,738 | 7,621 | 4 | 37,355 | - | ||||||||||||||||
Public utilities | 198,277 | 19,909 | 1,593 | 216,593 | - | ||||||||||||||||
All other corporate securities | 1,743,110 | 146,872 | 4,891 | 1,885,091 | - | ||||||||||||||||
Asset-backed securities (1) | 144,324 | 5,078 | 391 | 149,011 | -39 | ||||||||||||||||
Commercial mortgage-backed securities | 291,868 | 10,523 | 206 | 302,185 | -10 | ||||||||||||||||
Residential mortgage-backed securities (2) | 126,126 | 7,113 | 6 | 133,233 | -36 | ||||||||||||||||
Total fixed maturities, available-for-sale | $ | 2,609,253 | $ | 198,461 | $ | 7,121 | $ | 2,800,593 | $ | -85 | |||||||||||
Equity securities, available-for-sale | |||||||||||||||||||||
Common Stocks: | |||||||||||||||||||||
Public utilities | $ | - | $ | - | $ | - | $ | - | |||||||||||||
Mutual funds | 14 | 3 | - | 17 | |||||||||||||||||
Total equity securities, available-for-sale | $ | 14 | $ | 3 | $ | - | $ | 17 | |||||||||||||
_____________ | |||||||||||||||||||||
Includes credit-tranched securities collateralized by sub-prime mortgages, auto loans, credit cards, education loans, and other asset types. | |||||||||||||||||||||
Includes publicly-traded agency pass-through securities and collateralized mortgage obligations. | |||||||||||||||||||||
Represents the amount of other-than-temporary impairment losses in AOCI, which were not included in earnings. Amount excludes $0.1 million of net unrealized gains on impaired available-for-sale securities relating to changes in the value of such securities subsequent to the impairment measurement date. | |||||||||||||||||||||
December 31, 2013(4) | |||||||||||||||||||||
Other-than- | |||||||||||||||||||||
Gross | Gross | temporary | |||||||||||||||||||
Amortized | Unrealized | Unrealized | Fair | Impairments | |||||||||||||||||
Cost | Gains | Losses | Value | in AOCI (3) | |||||||||||||||||
(in thousands) | |||||||||||||||||||||
Fixed maturities, available-for-sale | |||||||||||||||||||||
U.S. Treasury securities and obligations of U.S. | |||||||||||||||||||||
government authorities and agencies | $ | 6,382 | $ | 36 | $ | 34 | $ | 6,384 | $ | - | |||||||||||
Obligations of U.S. states and their political | |||||||||||||||||||||
subdivisions | 67,225 | 2,911 | 1,570 | 68,566 | - | ||||||||||||||||
Foreign government bonds | 25,437 | 5,717 | - | 31,154 | - | ||||||||||||||||
Public utilities | 197,718 | 12,628 | 3,141 | 207,205 | - | ||||||||||||||||
All other corporate securities | 2,061,809 | 162,780 | 9,152 | 2,215,437 | - | ||||||||||||||||
Asset-backed securities (1) | 182,888 | 6,513 | 1,509 | 187,892 | -1,351 | ||||||||||||||||
Commercial mortgage-backed securities | 384,764 | 11,387 | 5,518 | 390,633 | - | ||||||||||||||||
Residential mortgage-backed securities (2) | 152,779 | 5,138 | 972 | 156,945 | -40 | ||||||||||||||||
Total fixed maturities, available-for-sale | $ | 3,079,002 | $ | 207,110 | $ | 21,896 | $ | 3,264,216 | $ | -1,391 | |||||||||||
Equity securities, available-for-sale | |||||||||||||||||||||
Common Stocks: | |||||||||||||||||||||
Public utilities | $ | 192 | $ | - | $ | - | $ | 192 | |||||||||||||
Mutual funds | 14 | 2 | - | 16 | |||||||||||||||||
Total equity securities, available-for-sale | $ | 206 | $ | 2 | $ | - | $ | 208 | |||||||||||||
_____________ | |||||||||||||||||||||
Includes credit-tranched securities collateralized by sub-prime mortgages, auto loans, credit cards, education loans, and other asset types. | |||||||||||||||||||||
Includes publicly-traded agency pass-through securities and collateralized mortgage obligations. | |||||||||||||||||||||
Represents the amount of other-than-temporary impairment losses in AOCI, which were not included in earnings. Amount excludes $1.7 million of net unrealized gains on impaired available-for-sale securities relating to changes in the value of such securities subsequent to the impairment measurement date. | |||||||||||||||||||||
Prior period's amounts are presented on a basis consistent with the current period presentation. | |||||||||||||||||||||
Investments Classified by Contractual Maturity Date | Available-for-Sale | ||||||||||||||||||||
Amortized | Fair | ||||||||||||||||||||
Cost | Value | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Due in one year or less | $ | 171,429 | $ | 173,444 | |||||||||||||||||
Due after one year through five years | 888,464 | 938,289 | |||||||||||||||||||
Due after five years through ten years | 556,948 | 606,353 | |||||||||||||||||||
Due after ten years | 430,094 | 498,078 | |||||||||||||||||||
Asset-backed securities | 144,324 | 149,011 | |||||||||||||||||||
Commercial mortgage-backed securities | 291,868 | 302,185 | |||||||||||||||||||
Residential mortgage-backed securities | 126,126 | 133,233 | |||||||||||||||||||
Total | $ | 2,609,253 | $ | 2,800,593 | |||||||||||||||||
Sources of Fixed Maturity Proceeds, Related Investment Gains (Losses), and Losses on Impairments of Fixed Maturities and Equity Securities | 2014 | 2013 | 2012 | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Fixed maturities, available-for-sale | |||||||||||||||||||||
Proceeds from sales | $ | 308,458 | $ | 314,415 | $ | 504,001 | |||||||||||||||
Proceeds from maturities/repayments | 681,426 | 1,175,680 | 861,512 | ||||||||||||||||||
Gross investment gains from sales, prepayments, and maturities | 18,110 | 18,619 | 23,077 | ||||||||||||||||||
Gross investment losses from sales and maturities | -3,404 | -9,824 | -134 | ||||||||||||||||||
Equity securities, available-for-sale | |||||||||||||||||||||
Proceeds from sales | $ | 192 | $ | 14 | $ | 3,201 | |||||||||||||||
Gross investment gains from sales | 1 | 10 | 703 | ||||||||||||||||||
Fixed maturity and equity security impairments | |||||||||||||||||||||
Net writedowns for other-than-temporary impairment losses | |||||||||||||||||||||
on fixed maturities recognized in earnings (1) | $ | - | $ | - | $ | -258 | |||||||||||||||
Credit Losses Recognized in Earnings on Fixed Maturity Securities Held by the Company for which a Portion of the OTTI Loss was Recognized in OCI | |||||||||||||||||||||
Year Ended December 31, | |||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Balance, beginning of period | $ | 1,800 | $ | 3,382 | |||||||||||||||||
Credit loss impairments previously recognized on securities which matured, paid | |||||||||||||||||||||
down, prepaid or were sold during the period | -1,682 | -1,628 | |||||||||||||||||||
Increases due to the passage of time on previously recorded credit losses | - | 114 | |||||||||||||||||||
Accretion of credit loss impairments previously recognized due to an increase in | |||||||||||||||||||||
cash flows expected to be collected | -25 | -68 | |||||||||||||||||||
Balance, end of period | $ | 93 | $ | 1,800 | |||||||||||||||||
Trading Account Assets Disclosure | 31-Dec-14 | 31-Dec-13 | |||||||||||||||||||
Fair | Fair | ||||||||||||||||||||
Cost | Value | Cost | Value | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Total trading account assets - Equity securities | $ | 5,471 | $ | 6,131 | $ | 5,164 | $ | 6,677 | |||||||||||||
Commercial Mortgage and Other Loans | 31-Dec-14 | 31-Dec-13 | |||||||||||||||||||
Amount | % of | Amount | % of | ||||||||||||||||||
(in thousands) | Total | (in thousands) | Total | ||||||||||||||||||
Commercial and agricultural mortgage loans by property type: | |||||||||||||||||||||
Apartments/Multi-Family | $ | 143,057 | 34 | % | $ | 125,045 | 31.5 | % | |||||||||||||
Industrial | 87,088 | 20.7 | 88,009 | 22.1 | |||||||||||||||||
Retail | 72,226 | 17.2 | 72,325 | 18.2 | |||||||||||||||||
Office | 44,621 | 10.6 | 40,976 | 10.3 | |||||||||||||||||
Other | 14,119 | 3.4 | 13,796 | 3.5 | |||||||||||||||||
Hospitality | 5,081 | 1.2 | 5,133 | 1.3 | |||||||||||||||||
Total commercial mortgage loans | 366,192 | 87.1 | 345,284 | 86.9 | |||||||||||||||||
Agricultural property loans | 54,113 | 12.9 | 52,223 | 13.1 | |||||||||||||||||
Total commercial and agricultural mortgage loans by property | |||||||||||||||||||||
type | 420,305 | 100 | % | 397,507 | 100 | % | |||||||||||||||
Valuation allowance | -482 | -1,256 | |||||||||||||||||||
Total net commercial and agricultural mortgage loans by property | |||||||||||||||||||||
type | 419,823 | 396,251 | |||||||||||||||||||
Other Loans | |||||||||||||||||||||
Uncollateralized loans | 2,740 | 2,740 | |||||||||||||||||||
Valuation allowance | - | - | |||||||||||||||||||
Total net other loans | 2,740 | 2,740 | |||||||||||||||||||
Total commercial mortgage and other loans | $ | 422,563 | $ | 398,991 | |||||||||||||||||
Allowance for Losses | 31-Dec-14 | 31-Dec-13 | 31-Dec-12 | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Allowance for credit losses, beginning of year | $ | 1,256 | $ | 2,177 | $ | 1,501 | |||||||||||||||
Addition to / (release of) allowance for losses | -774 | -921 | 676 | ||||||||||||||||||
Total ending balance (1) | $ | 482 | $ | 1,256 | $ | 2,177 | |||||||||||||||
_____________ | |||||||||||||||||||||
Agricultural loans represent less than $0.1 million of the ending allowance at both December 31, 2014 and 2013 and $0.2 million of the ending allowance at December 31, 2012. | |||||||||||||||||||||
Allowance for Credit Losses and Recorded Investment in Commercial Mortgage and Other Loans | 31-Dec-14 | 31-Dec-13 | |||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Allowance for Credit Losses: | |||||||||||||||||||||
Individually evaluated for impairment (1) | $ | - | $ | - | |||||||||||||||||
Collectively evaluated for impairment (2) | 482 | 1,256 | |||||||||||||||||||
Total ending balance | $ | 482 | $ | 1,256 | |||||||||||||||||
Recorded Investment (3): | |||||||||||||||||||||
Gross of reserves: individually evaluated for impairment (1) | $ | - | $ | - | |||||||||||||||||
Gross of reserves: collectively evaluated for impairment (2) | 423,045 | 400,247 | |||||||||||||||||||
Total ending balance, gross of reserves | $ | 423,045 | $ | 400,247 | |||||||||||||||||
_____________ | |||||||||||||||||||||
There were no loans individually evaluated for impairments at both December 31, 2014 and 2013. | |||||||||||||||||||||
Agricultural loans collectively evaluated for impairment had a recorded investment of $54 million and $52 million for the periods ending December 31, 2014 and 2013, respectively, and a related allowance of less than $0.1 million for both periods. Uncollateralized loans collectively evaluated for impairment had a recorded investment of $3 million at both December 31, 2014 and 2013 and no related allowance for both periods. | |||||||||||||||||||||
Recorded investment reflects the balance sheet carrying value gross of related allowance. | |||||||||||||||||||||
Schedule Of Other Long Term Investments [Text Block] | 2014 | 2013 | |||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Joint ventures and limited partnerships | $ | 68,225 | $ | 60,585 | |||||||||||||||||
Derivatives | 94,558 | - | |||||||||||||||||||
Total other long-term investments | $ | 162,783 | $ | 60,585 | |||||||||||||||||
Net Investment Income | 2014 | 2013 | 2012 | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Fixed maturities, available-for-sale | $ | 140,114 | $ | 191,043 | $ | 246,479 | |||||||||||||||
Equity securities, available-for-sale | - | - | 7 | ||||||||||||||||||
Trading account assets | 325 | 342 | 923 | ||||||||||||||||||
Commercial mortgage and other loans | 21,802 | 28,463 | 28,449 | ||||||||||||||||||
Policy loans | 739 | 675 | 845 | ||||||||||||||||||
Short-term investments | 281 | 323 | 620 | ||||||||||||||||||
Other long-term investments | 6,492 | 3,601 | 8,302 | ||||||||||||||||||
Gross investment income | 169,753 | 224,447 | 285,625 | ||||||||||||||||||
Less: investment expenses | -5,742 | -6,564 | -7,974 | ||||||||||||||||||
Net investment income | $ | 164,011 | $ | 217,883 | $ | 277,651 | |||||||||||||||
Realized Gain (Loss) on Investments | 2014 | 2013 | 2012 | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Fixed maturities | $ | 14,706 | $ | 8,795 | $ | 22,684 | |||||||||||||||
Equity securities | 1 | 10 | 703 | ||||||||||||||||||
Commercial mortgage and other loans | 774 | 933 | 1,043 | ||||||||||||||||||
Derivatives | -8,113 | -194,055 | -107,663 | ||||||||||||||||||
Other | - | -34 | 3 | ||||||||||||||||||
Realized investment gains (losses), net | $ | 7,368 | $ | -184,351 | $ | -83,230 | |||||||||||||||
Net Unrealized Investment Gain (Loss) AOCI Rollforward | Net Unrealized Gains (Losses) on Investments (1) | Deferred Policy Acquisition Costs and Other Costs | Future Policy Benefits | Deferred Income Tax (Liability) Benefit | Accumulated Other Comprehensive Income (Loss) Related to Net Unrealized Investment Gains (Losses) | ||||||||||||||||
(in thousands) | |||||||||||||||||||||
Balance, December 31, 2011 | $ | -1,740 | 692 | - | 382 | -666 | |||||||||||||||
Net investment gains (losses) on investments | |||||||||||||||||||||
arising during the period | 3,067 | - | - | -1,073 | 1,994 | ||||||||||||||||
Reclassification adjustment for (gains) losses | |||||||||||||||||||||
included in net income | -782 | - | - | 274 | -508 | ||||||||||||||||
Impact of net unrealized investment (gains) losses on | |||||||||||||||||||||
deferred policy acquisition costs | |||||||||||||||||||||
and other costs | - | -906 | - | 317 | -589 | ||||||||||||||||
Impact of net unrealized investment (gains) losses on | |||||||||||||||||||||
future policy benefits | - | - | - | - | - | ||||||||||||||||
Balance, December 31, 2012 | $ | 545 | $ | -214 | $ | - | $ | -100 | $ | 231 | |||||||||||
Net investment gains (losses) on investments | |||||||||||||||||||||
arising during the period | 483 | - | - | -168 | 315 | ||||||||||||||||
Reclassification adjustment for (gains) losses | |||||||||||||||||||||
included in net income | -705 | - | - | 247 | -458 | ||||||||||||||||
Impact of net unrealized investment (gains) losses on | |||||||||||||||||||||
deferred policy acquisition costs | |||||||||||||||||||||
and other costs | - | 98 | - | -35 | 63 | ||||||||||||||||
Impact of net unrealized investment (gains) losses on | |||||||||||||||||||||
future policy benefits | - | - | -14 | 5 | -9 | ||||||||||||||||
Balance, December 31, 2013 | $ | 323 | $ | -116 | $ | -14 | $ | -51 | $ | 142 | |||||||||||
Net investment gains (losses) on investments | |||||||||||||||||||||
arising during the period | -11 | - | - | 4 | -7 | ||||||||||||||||
Reclassification adjustment for (gains) losses | |||||||||||||||||||||
included in net income | -311 | - | - | 109 | -202 | ||||||||||||||||
Impact of net unrealized investment (gains) losses on | |||||||||||||||||||||
deferred policy acquisition costs | |||||||||||||||||||||
and other costs | - | 116 | - | -41 | 75 | ||||||||||||||||
Impact of net unrealized investment (gains) losses on | |||||||||||||||||||||
future policy benefits | - | - | 14 | -5 | 9 | ||||||||||||||||
Balance, December 31, 2014 | $ | 1 | $ | - | $ | - | $ | 16 | $ | 17 | |||||||||||
_____________ | |||||||||||||||||||||
Includes cash flow hedges. See Note 11 for information on cash flow hedges. | |||||||||||||||||||||
All Other Net Unrealized Investment Gain (Loss) AOCI Rollforward | Accumulated Other | ||||||||||||||||||||
Comprehensive | |||||||||||||||||||||
Deferred | Income (Loss) Related | ||||||||||||||||||||
Net Unrealized | Deferred Policy | Future | Income Tax | To Net Unrealized | |||||||||||||||||
Gains (Losses) on | Acquisition Costs | Policy | (Liability) | Investment | |||||||||||||||||
Investments (1) | and Other Costs | Benefits | Benefit | Gains (Losses) | |||||||||||||||||
(in thousands) | |||||||||||||||||||||
Balance, December 31, 2011 | $ | 441,677 | $ | -192,119 | $ | - | $ | -88,181 | $ | 161,377 | |||||||||||
Net investment gains (losses) on investments | |||||||||||||||||||||
arising during the period | -42,295 | - | - | 14,804 | -27,491 | ||||||||||||||||
Reclassification adjustment for (gains) losses | |||||||||||||||||||||
included in net income | -22,605 | - | - | 7,912 | -14,693 | ||||||||||||||||
Reclassification adjustment for OTTI losses excluded | |||||||||||||||||||||
Impact of net unrealized investment (gains) | |||||||||||||||||||||
losses on deferred policy acquisition costs | |||||||||||||||||||||
costs, deferred sales inducements and | |||||||||||||||||||||
and other costs | - | 45,030 | - | -15,760 | 29,270 | ||||||||||||||||
Impact of net unrealized investment (gains) | |||||||||||||||||||||
losses on future policy benefits | - | - | -2,164 | 757 | -1,407 | ||||||||||||||||
Balance, December 31, 2012 | $ | 376,777 | $ | -147,089 | $ | -2,164 | $ | -80,468 | $ | 147,056 | |||||||||||
Net investment gains (losses) on investments | |||||||||||||||||||||
arising during the period | -183,950 | - | - | 64,383 | -119,567 | ||||||||||||||||
Reclassification adjustment for (gains) losses | |||||||||||||||||||||
included in net income | -8,100 | - | - | 2,835 | -5,265 | ||||||||||||||||
Reclassification adjustment for OTTI losses excluded | |||||||||||||||||||||
Impact of net unrealized investment (gains) | |||||||||||||||||||||
losses on deferred policy acquisition costs | |||||||||||||||||||||
costs, deferred sales inducements and | |||||||||||||||||||||
and other costs | - | 80,637 | - | -28,222 | 52,415 | ||||||||||||||||
Impact of net unrealized investment (gains) | |||||||||||||||||||||
losses on future policy benefits | - | - | -6,023 | 2,109 | -3,914 | ||||||||||||||||
Balance, December 31, 2013 | $ | 184,727 | $ | -66,452 | $ | -8,187 | $ | -39,363 | $ | 70,725 | |||||||||||
Net investment gains (losses) on investments | |||||||||||||||||||||
arising during the period | 28,590 | - | - | -10,013 | 18,577 | ||||||||||||||||
Reclassification adjustment for (gains) losses | |||||||||||||||||||||
included in net income | -14,395 | - | - | 5,036 | -9,359 | ||||||||||||||||
Impact of net unrealized investment (gains) | |||||||||||||||||||||
losses on deferred policy acquisition costs | |||||||||||||||||||||
and other costs | - | 7,407 | - | -2,594 | 4,813 | ||||||||||||||||
Impact of net unrealized investment (gains) | |||||||||||||||||||||
losses on future policy benefits | - | - | -185 | 64 | -121 | ||||||||||||||||
Balance, December 31, 2014 | $ | 198,922 | $ | -59,045 | $ | -8,372 | $ | -46,870 | $ | 84,635 | |||||||||||
Unrealized Gains and (Losses) on Investments | 2014 | 2013 | 2012 | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Fixed maturity securities on which an OTTI loss has been recognized | $ | 1 | $ | 323 | $ | 545 | |||||||||||||||
Fixed maturity securities, available-for-sale - all other | 191,339 | 184,891 | 375,409 | ||||||||||||||||||
Equity securities, available-for-sale | 3 | 2 | 4 | ||||||||||||||||||
Affiliated notes | 2,351 | 3,113 | 4,386 | ||||||||||||||||||
Derivatives designated as cash flow hedges (1) | 4,839 | -3,653 | -3,068 | ||||||||||||||||||
Other investments | 390 | 374 | 46 | ||||||||||||||||||
Net unrealized gains (losses) on investments | $ | 198,923 | $ | 185,050 | $ | 377,322 | |||||||||||||||
_____________ | |||||||||||||||||||||
See Note 11 for more information on cash flow hedges. | |||||||||||||||||||||
Duration Of Gross Unrealized Losses On Fixed Maturity Securities Disclosures | 2014 | ||||||||||||||||||||
Less than twelve months | Twelve months or more | Total | |||||||||||||||||||
Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | ||||||||||||||||
(in thousands) | |||||||||||||||||||||
Fixed maturities, available-for-sale | |||||||||||||||||||||
U.S. Treasury securities and obligations of | |||||||||||||||||||||
U.S. government authorities and agencies | $ | 2,676 | $ | 10 | $ | - | $ | - | $ | 2,676 | $ | 10 | |||||||||
Obligations of U.S. States and their | |||||||||||||||||||||
political subdivisions | - | - | 7,305 | 20 | 7,305 | 20 | |||||||||||||||
Foreign government bonds | 4,632 | 4 | - | - | 4,632 | 4 | |||||||||||||||
Public utilities | 18,222 | 1,321 | 2,174 | 272 | 20,396 | 1,593 | |||||||||||||||
All other corporate securities | 260,414 | 4,462 | 9,403 | 429 | 269,817 | 4,891 | |||||||||||||||
Asset-backed securities | 31,756 | 58 | 32,732 | 333 | 64,488 | 391 | |||||||||||||||
Commercial mortgage-backed securities | 4,309 | 108 | 7,377 | 98 | 11,686 | 206 | |||||||||||||||
Residential mortgage-backed securities | 342 | 6 | - | - | 342 | 6 | |||||||||||||||
Total | $ | 322,351 | $ | 5,969 | $ | 58,991 | $ | 1,152 | $ | 381,342 | $ | 7,121 | |||||||||
Equity securities, available-for-sale | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||
2013(1) | |||||||||||||||||||||
Less than twelve months | Twelve months or more | Total | |||||||||||||||||||
Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | ||||||||||||||||
(in thousands) | |||||||||||||||||||||
Fixed maturities, available-for-sale | |||||||||||||||||||||
U.S. Treasury securities and obligations of | |||||||||||||||||||||
U.S. government authorities and agencies | $ | 3,347 | $ | 34 | $ | - | $ | - | $ | 3,347 | $ | 34 | |||||||||
Obligations of U.S. States and their | |||||||||||||||||||||
political subdivisions | 5,420 | 588 | 6,402 | 982 | 11,822 | 1,570 | |||||||||||||||
Public utilities | 59,312 | 3,141 | - | - | 59,312 | 3,141 | |||||||||||||||
All other corporate securities | 291,994 | 8,782 | 2,704 | 370 | 294,698 | 9,152 | |||||||||||||||
Asset-backed securities | 97,575 | 1,509 | - | - | 97,575 | 1,509 | |||||||||||||||
Commercial mortgage-backed securities | 86,132 | 5,249 | 2,941 | 269 | 89,073 | 5,518 | |||||||||||||||
Residential mortgage-backed securities | 100,150 | 972 | - | - | 100,150 | 972 | |||||||||||||||
Total | $ | 643,930 | $ | 20,275 | $ | 12,047 | $ | 1,621 | $ | 655,977 | $ | 21,896 | |||||||||
Equity securities, available-for-sale | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||
_____________ | |||||||||||||||||||||
Prior period's amounts are presented on a basis consistent with the current period presentation. | |||||||||||||||||||||
Securities Pledged | 2014 | 2013 | |||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Fixed maturity securities, available-for-sale | $ | 5,098 | $ | 46,156 | |||||||||||||||||
Trading account assets | - | 287 | |||||||||||||||||||
Total securities pledged | $ | 5,098 | $ | 46,443 | |||||||||||||||||
Reclassifications Out Of Accumulated Other Comprehensive Income | Reclassifications out of Accumulated Other Comprehensive Income (Loss) | ||||||||||||||||||||
Year Ended | Year Ended | Year Ended | |||||||||||||||||||
31-Dec-14 | 31-Dec-13 | 31-Dec-12 | |||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Amounts reclassified from AOCI (1)(2): | |||||||||||||||||||||
Net unrealized investment gains (losses): | |||||||||||||||||||||
Cash flow hedges - Currency/Interest rate (3) | $ | 148 | $ | -95 | -101 | ||||||||||||||||
Net unrealized investment gains (losses) on available-for-sale securities | 14,558 | 8,900 | 23,488 | ||||||||||||||||||
Total net unrealized investment gains (losses) (4) | 14,706 | 8,805 | 23,387 | ||||||||||||||||||
Total reclassifications for the period | $ | 14,706 | $ | 8,805 | 23,387 | ||||||||||||||||
_____________ | |||||||||||||||||||||
All amounts are shown before tax. | |||||||||||||||||||||
Positive amounts indicate gains/benefits reclassified out of AOCI. Negative amounts indicate losses/costs reclassified out of AOCI. | |||||||||||||||||||||
See Note 11 for additional information on cash flow hedges. | |||||||||||||||||||||
See table below for additional information on unrealized investment gains (losses), including the impact on deferred policy acquisition and other costs and future policy benefits. | |||||||||||||||||||||
Accumulated Other Comprehensive Income Loss Table | Accumulated Other Comprehensive Income (Loss) | ||||||||||||||||||||
Foreign Currency Translation Adjustment | Net Unrealized Investment Gains (Losses) (1) | Total Accumulated Other Comprehensive Income (Loss) | |||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Balance, December 31, 2011 | $ | - | 160,711 | 160,711 | |||||||||||||||||
Change in component during period (2) | 7 | -13,431 | -13,424 | ||||||||||||||||||
Balance, December 31, 2012 | $ | 7 | 147,280 | 147,287 | |||||||||||||||||
Change in component during period (2) | 3 | -76,423 | -76,420 | ||||||||||||||||||
Balance, December 31, 2013 | $ | 10 | $ | 70,857 | $ | 70,867 | |||||||||||||||
Change in other comprehensive income | |||||||||||||||||||||
before reclassifications | -63 | 35,931 | 35,868 | ||||||||||||||||||
Amounts reclassified from AOCI | - | -14,706 | -14,706 | ||||||||||||||||||
Income tax benefit (expense) | 23 | -7,430 | -7,407 | ||||||||||||||||||
Balance, December 31, 2014 | $ | -30 | $ | 84,652 | $ | 84,622 | |||||||||||||||
Credity Quality Indicators [Text Block] | Debt Service Coverage Ratio - December 31, 2014 | ||||||||||||||||||||
Greater than 1.2X | 1.0X to <1.2X | Less than 1.0X | Total | ||||||||||||||||||
Loan-to-Value Ratio | (in thousands) | ||||||||||||||||||||
0%-59.99% | $ | 262,853 | $ | 4,295 | $ | 10,489 | $ | 277,637 | |||||||||||||
60%-69.99% | 115,708 | 468 | - | 116,176 | |||||||||||||||||
70%-79.99% | 25,034 | 1,458 | - | 26,492 | |||||||||||||||||
Greater than 80% | - | - | - | - | |||||||||||||||||
Total commercial and agricultural mortgage loans | $ | 403,595 | $ | 6,221 | $ | 10,489 | $ | 420,305 | |||||||||||||
Debt Service Coverage Ratio - December 31, 2013 | |||||||||||||||||||||
Greater than 1.2X | 1.0X to <1.2X | Less than 1.0X | Total | ||||||||||||||||||
Loan-to-Value Ratio | (in thousands) | ||||||||||||||||||||
0%-59.99% | $ | 251,278 | $ | 7,650 | $ | 1,865 | $ | 260,793 | |||||||||||||
60%-69.99% | 102,755 | - | - | 102,755 | |||||||||||||||||
70%-79.99% | 31,712 | 2,247 | - | 33,959 | |||||||||||||||||
Greater than 80% | - | - | - | - | |||||||||||||||||
Total commercial and agricultural mortgage loans | $ | 385,745 | $ | 9,897 | $ | 1,865 | $ | 397,507 |
Deferred_Policy_Acquisition_Co1
Deferred Policy Acquisition Costs (Tables) | 12 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
DeferredPolicyAcquisitionCostsDisclosuresAbstract | ||||||||||
Schedule Of Deferred Acquisition Costs Table | 2014 | 2013 | 2012 | |||||||
(in thousands) | ||||||||||
Balance, beginning of year | $ | 1,345,504 | $ | 906,814 | $ | 666,764 | ||||
Capitalization of commissions, sales and issue expenses | 2,804 | 4,050 | 25,081 | |||||||
Amortization - Impact of Assumption and experience unlocking and true-ups | 91,895 | 31,666 | 274,503 | |||||||
Amortization - All Other | -330,311 | 353,895 | -86,461 | |||||||
Changes in unrealized investment gains and losses | 4,539 | 49,079 | 26,927 | |||||||
Balance, end of year | $ | 1,114,431 | $ | 1,345,504 | $ | 906,814 |
Valuation_of_Business_Acquired
Valuation of Business Acquired (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
PresentValueOfFutureInsuranceProfitsAbstract | |||||||||||
VOBA and Gross Amortization Table | 2014 | 2013 | 2012 | ||||||||
(in thousands) | |||||||||||
Balance, beginning of period | $ | 43,500 | $ | 43,090 | $ | 29,010 | |||||
Amortization - Impact of assumption and experience unlocking and true-ups (1) | 5,412 | 6,376 | 21,931 | ||||||||
Amortization - All other (1) | -11,181 | -11,593 | -13,871 | ||||||||
Interest (2) | 2,615 | 2,762 | 2,077 | ||||||||
Change in unrealized gains/losses | -608 | 2,865 | 3,943 | ||||||||
Balance, end of year | $ | 39,738 | $ | 43,500 | $ | 43,090 | |||||
(1) The weighted average remaining expected life of VOBA was approximately 5.26 years from the date of acquisition. | |||||||||||
(2) The interest accrual rate for the VOBA related to the businesses acquired was 6.10%, 6.14% and 6.18% for years ended December 31, 2014, 2013 and 2012. | |||||||||||
Future Amortization Table | 2015 | 2016 | 2017 | 2018 | 2019 | ||||||
(in thousands) | |||||||||||
Estimated future VOBA amortization | $ | 6,571 | $ | 5,276 | $ | 4,446 | $ | 3,804 | $ | 3,134 |
Certain_Nontraditional_LongDur1
Certain Nontraditional Long-Duration Contracts (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
DisclosureTextBlockAbstract | ||||||||||||||
ScheduleOfMinimumGuaranteedBenefitLiabilitiesTextBlock | GMDB | GMAB/GMWB/GMIWB | GMIB | Totals | ||||||||||
Variable Annuity | ||||||||||||||
(in thousands) | ||||||||||||||
Beginning Balance as of December 31, 2011 | $ | 177,718 | $ | 1,783,594 | $ | 14,377 | $ | 1,975,689 | ||||||
Incurred guarantee benefits (1) | 76,240 | 9,541 | 9,821 | 95,602 | ||||||||||
Paid guarantee benefits | -31,431 | - | -682 | -32,113 | ||||||||||
Beginning Balance as of December 31, 2012 | 222,527 | 1,793,135 | 23,516 | 2,039,178 | ||||||||||
Incurred guarantee benefits (1) | -3,191 | -1,014,909 | -11,650 | -1,029,750 | ||||||||||
Paid guarantee benefits | -27,507 | - | -747 | -28,254 | ||||||||||
Changes in unrealized investment gains and losses | 8,041 | - | 160 | 8,201 | ||||||||||
Beginning Balance as of December 31, 2013 | 199,870 | 778,226 | 11,279 | 989,375 | ||||||||||
Incurred guarantee benefits (1) | 81,524 | 2,334,185 | 8,506 | 2,424,215 | ||||||||||
Paid guarantee benefits | -25,909 | - | -724 | -26,633 | ||||||||||
Changes in unrealized investment gains and losses | 128 | - | 43 | 171 | ||||||||||
Balance as of December 31, 2014 | $ | 255,613 | $ | 3,112,411 | $ | 19,104 | $ | 3,387,128 | ||||||
Incurred guarantee benefits include the portion of assessments established as additions to reserve as well as changes in estimates affecting the reserves. Also includes changes in the fair value of features accounted for as derivatives. | ||||||||||||||
ScheduleOfNetAmountOfRiskByProductAndGuaranteeTextBlock | 31-Dec-14 | 31-Dec-13 | ||||||||||||
In the Event of Death | At Annuitization/ Accumulation (1) | In the Event of Death | At Annuitization/ Accumulation (1) | |||||||||||
Variable Annuity Contracts | (in thousands) | |||||||||||||
Return of net deposits | ||||||||||||||
Account value | $38,410,155 | N/A | $40,828,166 | N/A | ||||||||||
Net amount at risk | $353,902 | N/A | $407,488 | N/A | ||||||||||
Average attained age of contractholders | 65 | years | N/A | 64 | years | N/A | ||||||||
Minimum return or contract value | ||||||||||||||
Account value | $7,886,833 | $38,471,465 | $8,446,938 | $40,678,507 | ||||||||||
Net amount at risk | $916,016 | $1,358,023 | $916,094 | $1,272,641 | ||||||||||
Average attained age of contractholders | 67 | years | 64 | years | 66 | years | 64 | years | ||||||
Average period remaining until expected annuitization | N/A | 0.1 | years | N/A | 0.2 | year | ||||||||
Includes income and withdrawal benefits described herein. | ||||||||||||||
scheduleOfFairValueOfSeparateAccountsByMajorCategoryOfInvestmentTextBlock | 31-Dec-14 | 31-Dec-13 | ||||||||||||
(in thousands) | ||||||||||||||
Equity funds | $ | 28,191,315 | $ | 28,992,157 | ||||||||||
Bond funds | 12,844,788 | 14,924,698 | ||||||||||||
Money market funds | 2,783,023 | 2,430,792 | ||||||||||||
Total | $ | 43,819,126 | $ | 46,347,647 | ||||||||||
Deferred Sales Inducements Table Text Block | Sales Inducements | |||||||||||||
(in thousands) | ||||||||||||||
Balance as of December 31, 2011 | $ | 445,841 | ||||||||||||
Capitalization | 59,269 | |||||||||||||
Amortization - Impact of assumption and experience unlocking and true-ups | 133,214 | |||||||||||||
Amortization - All other | -94,752 | |||||||||||||
Change in unrealized gains/losses | 13,258 | |||||||||||||
Balance as of December 31, 2012 | 556,830 | |||||||||||||
Capitalization | 31,370 | |||||||||||||
Amortization - Impact of assumption and experience unlocking and true-ups | 13,038 | |||||||||||||
Amortization - All other | 179,219 | |||||||||||||
Change in unrealized gains/losses | 28,790 | |||||||||||||
Balance as of December 31, 2013 | 809,247 | |||||||||||||
Capitalization | 11,515 | |||||||||||||
Amortization - Impact of assumption and experience unlocking and true-ups | 45,417 | |||||||||||||
Amortization - All other | -204,563 | |||||||||||||
Change in unrealized gains/losses | 3,591 | |||||||||||||
Balance as of December 31, 2014 | $ | 665,207 | ||||||||||||
Schedule of Account Value of Market Value Annuities Text Block | 31-Dec-14 | 31-Dec-13 | ||||||||||||
Unadjusted Value | Adjusted Value | Unadjusted Value | Adjusted Value | |||||||||||
Variable Annuity Contracts | (in thousands) | |||||||||||||
Market value adjusted annuities | ||||||||||||||
Account value | $ | 1,244,131 | $ | 1,251,084 | $ | 1,554,743 | $ | 1,580,487 |
Reinsurance_Tables
Reinsurance (Tables) | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
ReinsuranceDisclosuresAbstract | ||||||||||||
Reinsurance Information Table | Gross | Unaffiliated Ceded | Affiliated Ceded | Net | ||||||||
2014 | ||||||||||||
Policy charges and fee income - Life (1) | $ | 3,522 | $ | -856 | $ | - | $ | 2,666 | ||||
Policy charges and fee income - Annuity | 805,550 | -1,889 | - | 803,661 | ||||||||
Realized investment gains (losses), net | -1,967,588 | - | 1,974,956 | 7,368 | ||||||||
Policyholders' benefits | 137,502 | -367 | - | 137,135 | ||||||||
General, administrative and other expenses | $ | 398,960 | $ | -838 | $ | -3,874 | $ | 394,248 | ||||
2013 | ||||||||||||
Policy charges and fee income - Life (1) | $ | 3,472 | $ | -1,231 | $ | - | $ | 2,241 | ||||
Policy charges and fee income - Annuity | 809,549 | -2,548 | - | 807,001 | ||||||||
Realized investment gains (losses), net | 1,076,184 | - | -1,260,535 | -184,351 | ||||||||
Policyholders' benefits | 29,874 | -147 | - | 29,727 | ||||||||
General, administrative and other expenses | $ | 407,365 | $ | -776 | $ | -3,910 | $ | 402,679 | ||||
2012 | ||||||||||||
Policy charges and fee income - Life (1) | $ | 3,522 | $ | -1,099 | $ | - | $ | 2,423 | ||||
Policy charges and fee income - Annuity | 796,711 | -2,139 | - | 794,572 | ||||||||
Realized investment gains (losses), net | 202,568 | - | -285,798 | -83,230 | ||||||||
Policyholders' benefits | 124,517 | -201 | - | 124,316 | ||||||||
General, administrative and other expenses | $ | 429,383 | $ | -784 | $ | -3,835 | $ | 424,764 | ||||
Life insurance inforce face amounts at December 31, 2014, 2013 and 2012 was $ 121 million, $ 128 million and $ 132 million, respectively. | ||||||||||||
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
IncomeTaxDisclosureAbstract | ||||||||||
ScheduleOfComponentsOfIncomeTaxExpenseBenefitTableTextBlock | 2014 | 2013 | 2012 | |||||||
(in thousands) | ||||||||||
Current tax expense: | ||||||||||
U.S. | $ | -8,499 | $ | 36,759 | $ | 26,637 | ||||
State and local | - | - | - | |||||||
Total | $ | -8,499 | $ | 36,759 | $ | 26,637 | ||||
Deferred tax expense: | ||||||||||
U.S. | 17,103 | 295,613 | 196,997 | |||||||
State and local | - | - | - | |||||||
Total | $ | 17,103 | $ | 295,613 | $ | 196,997 | ||||
Total income tax expense (benefit) on income from continuing operations | 8,604 | 332,372 | 223,634 | |||||||
Income tax expense (benefit) reported in equity related to: | ||||||||||
Other comprehensive income (loss) | 7,407 | -41,149 | -7,218 | |||||||
Additional paid-in capital | - | 4,354 | 5,730 | |||||||
Total income tax expense (benefit) | $ | 16,011 | $ | 295,577 | $ | 222,146 | ||||
ScheduleOfIncomeBeforeIncomeTaxDomesticAndForeignTableTextBlock | 2014 | 2013 | 2012 | |||||||
(in thousands) | ||||||||||
Expected federal income tax expense (benefit) | $ | 90,780 | $ | 413,162 | $ | 300,192 | ||||
Non taxable investment income | -69,122 | -69,665 | -66,895 | |||||||
Tax credits | -13,080 | -10,595 | -10,279 | |||||||
Other | 26 | -529 | 616 | |||||||
Total income tax expense (benefit) | $ | 8,604 | $ | 332,372 | $ | 223,634 | ||||
ScheduleOfDeferredTaxAssetsAndLiabilitiesTableTextBlock | 2014 | 2013 | ||||||||
(in thousands) | ||||||||||
Deferred tax assets | ||||||||||
Insurance reserves | $ | 267,536 | $ | 292,815 | ||||||
Investments | 13,270 | 124,489 | ||||||||
Compensation reserves | 1,760 | 1,860 | ||||||||
Other | - | - | ||||||||
Deferred tax assets | 282,566 | 419,165 | ||||||||
Deferred tax liabilities | ||||||||||
VOBA and deferred policy acquisition cost | 370,548 | 435,775 | ||||||||
Deferred sales inducements | 232,822 | 283,236 | ||||||||
Net unrealized gain on securities | 68,819 | 66,046 | ||||||||
Other | 1,239 | 464 | ||||||||
Deferred tax liabilities | 673,428 | 785,521 | ||||||||
Net deferred tax asset (liability) | $ | -390,863 | $ | -366,356 |
Fair_Value_of_Assets_and_Liabi1
Fair Value of Assets and Liabilities (Tables) | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Fair Value of Assets and Liabilities [Abstract] | |||||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring Basis | As of December 31, 2014 | ||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Netting (1) | Total | |||||||||||||||||
(in thousands) | |||||||||||||||||||||
Fixed maturities, available-for-sale: | |||||||||||||||||||||
U.S Treasury securities and obligations of U.S. government authorities and agencies | $ | - | $ | 6,336 | $ | - | $ | - | $ | 6,336 | |||||||||||
Obligations of U.S. states and their political subdivisions | - | 70,789 | - | - | 70,789 | ||||||||||||||||
Foreign government bonds | - | 37,355 | - | - | 37,355 | ||||||||||||||||
Corporate securities | - | 1,985,614 | 116,070 | - | 2,101,684 | ||||||||||||||||
Asset-backed securities | - | 108,487 | 40,524 | - | 149,011 | ||||||||||||||||
Commercial mortgage-backed securities | - | 302,185 | - | - | 302,185 | ||||||||||||||||
Residential mortgage-backed securities | - | 133,233 | - | - | 133,233 | ||||||||||||||||
Sub-total | - | 2,643,999 | 156,594 | - | 2,800,593 | ||||||||||||||||
Trading account assets: | |||||||||||||||||||||
Equity securities | 6,131 | - | - | - | 6,131 | ||||||||||||||||
Sub-total | 6,131 | - | - | - | 6,131 | ||||||||||||||||
Equity securities, available-for-sale | - | 17 | - | - | 17 | ||||||||||||||||
Short-term investments | 57,185 | - | - | - | 57,185 | ||||||||||||||||
Cash equivalents | - | - | 225 | - | 225 | ||||||||||||||||
Other long-term investments | - | 118,846 | 633 | -24,288 | 95,191 | ||||||||||||||||
Reinsurance recoverables | - | - | 2,996,154 | - | 2,996,154 | ||||||||||||||||
Receivables from parent and affiliates | - | 18,748 | 22,320 | - | 41,068 | ||||||||||||||||
Sub-total excluding separate account assets | 63,316 | 2,781,610 | 3,175,926 | -24,288 | 5,996,564 | ||||||||||||||||
Separate account assets (2) | - | 44,101,699 | - | - | 44,101,699 | ||||||||||||||||
Total assets | $ | 63,316 | $ | 46,883,309 | $ | 3,175,926 | $ | -24,288 | $ | 50,098,263 | |||||||||||
Future policy benefits (3) | $ | - | $ | - | $ | 3,112,411 | $ | - | $ | 3,112,411 | |||||||||||
Payables to parent and affiliates | - | 21,249 | - | -21,249 | - | ||||||||||||||||
Total liabilities | $ | - | $ | 21,249 | $ | 3,112,411 | $ | -21,249 | $ | 3,112,411 | |||||||||||
As of December 31, 2013 | |||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Netting (1) | Total | |||||||||||||||||
(in thousands) | |||||||||||||||||||||
Fixed maturities, available-for-sale: | |||||||||||||||||||||
U.S Treasury securities and obligations of U.S. government authorities and agencies | $ | - | $ | 6,384 | $ | - | $ | - | $ | 6,384 | |||||||||||
Obligations of U.S. states and their political subdivisions | - | 68,566 | - | - | 68,566 | ||||||||||||||||
Foreign government securities | - | 31,154 | - | - | 31,154 | ||||||||||||||||
Corporate securities | - | 2,325,846 | 96,796 | - | 2,422,642 | ||||||||||||||||
Asset-backed securities | - | 124,103 | 63,789 | - | 187,892 | ||||||||||||||||
Commercial mortgage-backed securities | - | 390,633 | - | - | 390,633 | ||||||||||||||||
Residential mortgage-backed securities | - | 156,945 | - | - | 156,945 | ||||||||||||||||
Sub-total | - | 3,103,631 | 160,585 | - | 3,264,216 | ||||||||||||||||
Trading account assets: | |||||||||||||||||||||
Equity securities | 6,364 | - | 313 | - | 6,677 | ||||||||||||||||
Sub-total | 6,364 | - | 313 | - | 6,677 | ||||||||||||||||
Equity securities, available-for-sale | - | 16 | 192 | - | 208 | ||||||||||||||||
Short-term investments | 118,188 | - | - | - | 118,188 | ||||||||||||||||
Other long-term investments | - | 73,535 | 486 | -73,535 | 486 | ||||||||||||||||
Reinsurance recoverables | - | - | 748,005 | - | 748,005 | ||||||||||||||||
Receivables from parent and affiliates | - | 19,071 | 6,347 | - | 25,418 | ||||||||||||||||
Sub-total excluding separate account assets | 124,552 | 3,196,253 | 915,928 | -73,535 | 4,163,198 | ||||||||||||||||
Separate account assets (2) | 1,190,903 | 45,435,925 | - | - | 46,626,828 | ||||||||||||||||
Total assets | $ | 1,315,455 | $ | 48,632,178 | $ | 915,928 | $ | -73,535 | $ | 50,790,026 | |||||||||||
Future policy benefits (3) | $ | - | $ | - | $ | 778,226 | $ | - | $ | 778,226 | |||||||||||
Payables to parent and affiliates | - | 94,580 | - | -72,822 | 21,758 | ||||||||||||||||
Total liabilities | $ | - | $ | 94,580 | $ | 778,226 | $ | -72,822 | $ | 799,984 | |||||||||||
“Netting” amounts represent cash collateral of $3.0 million and $0.7 million as of December 31, 2014 and December 31, 2013, respectively, and the impact of offsetting asset and liability positions held with the same counterparty, subject to master netting arrangements. | |||||||||||||||||||||
Separate account assets represent segregated funds that are invested for certain customers. Investment risks associated with market value changes are borne by the customers, except to the extent of minimum guarantees made by the Company with respect to certain accounts. Separate account liabilities are not included in the above table as they are reported at contract value and not fair value in the Company's Statement of Financial Position. | |||||||||||||||||||||
As of December 31, 2014, the net embedded derivative liability position of $3,112 million includes $55 million of embedded derivatives in an asset position and $3,167 million of embedded derivatives in a liability position. As of December 31, 2013, the net embedded derivative liability position of $778 million includes $245 million of embedded derivatives in an asset position and $1,023 million of embedded derivatives in a liability position. | |||||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | Year Ended December 31, 2014 | ||||||||||||||||||||
Fixed Maturities Available-For-Sale | Trading Account Assets - Equity Securities | Equity Securities Available-for -Sale | |||||||||||||||||||
Corporate Securities | Asset- Backed Securities | Commercial Mortgage-Backed Securities | |||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Fair Value, beginning of period assets/(liabilities) | $ | 96,796 | $ | 63,789 | $ | - | $ | 313 | $ | 192 | |||||||||||
Total gains (losses) (realized/unrealized): | |||||||||||||||||||||
Included in earnings: | |||||||||||||||||||||
Realized investment gains (losses), net | 1,592 | - | - | - | - | ||||||||||||||||
Asset management fees and other income | - | - | - | 15 | - | ||||||||||||||||
Included in other comprehensive income (loss) | -846 | 196 | -83 | - | - | ||||||||||||||||
Net investment income | 5,024 | 120 | - | - | - | ||||||||||||||||
Purchases | 20,720 | 14,933 | 52,518 | - | - | ||||||||||||||||
Sales | -202 | - | - | - | -192 | ||||||||||||||||
Issuances | - | - | - | - | - | ||||||||||||||||
Settlements | -7,014 | -40,337 | - | -328 | - | ||||||||||||||||
Transfers into Level 3 (1) | - | 28,152 | - | - | - | ||||||||||||||||
Transfers out of Level 3 (1) | - | -26,329 | -52,435 | - | - | ||||||||||||||||
Fair Value, end of period assets/(liabilities) | $ | 116,070 | $ | 40,524 | $ | - | $ | - | $ | - | |||||||||||
Unrealized gains (losses) for the period relating to those | |||||||||||||||||||||
Level 3 assets that were still held at the end of the period (2): | |||||||||||||||||||||
Included in earnings: | |||||||||||||||||||||
Realized investment gains (losses), net | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||
Asset management fees and other income | $ | - | $ | - | $ | - | $ | 15 | $ | - | |||||||||||
Year Ended December 31, 2014 | |||||||||||||||||||||
Cash Equivalents | Other Long-term Investments | Reinsurance Recoverables | Receivables from parent and affiliates | Future Policy Benefits | |||||||||||||||||
(in thousands) | |||||||||||||||||||||
Fair Value, beginning of period assets/(liabilities) | $ | - | $ | 486 | $ | 748,005 | $ | 6,347 | -778,226 | ||||||||||||
Total gains (losses) (realized/unrealized): | |||||||||||||||||||||
Included in earnings: | |||||||||||||||||||||
Realized investment gains (losses), net | - | - | 2,013,931 | - | -2,088,505 | ||||||||||||||||
Asset management fees and other income | - | -14 | - | - | - | ||||||||||||||||
Included in other comprehensive income (loss) | - | - | - | -420 | - | ||||||||||||||||
Net investment income | - | - | - | - | - | ||||||||||||||||
Purchases | 400 | 166 | 234,218 | 19,351 | - | ||||||||||||||||
Sales | -175 | - | - | - | - | ||||||||||||||||
Issuances | - | - | - | - | -245,680 | ||||||||||||||||
Settlements | - | -5 | - | - | - | ||||||||||||||||
Transfers into Level 3 (1) | - | - | - | 1,985 | - | ||||||||||||||||
Transfers out of Level 3 (1) | - | - | - | -4,943 | - | ||||||||||||||||
Fair Value, end of period assets/(liabilities) | $ | 225 | $ | 633 | $ | 2,996,154 | $ | 22,320 | -3,112,411 | ||||||||||||
. | . | . | |||||||||||||||||||
Unrealized gains (losses) for the period relating to those | |||||||||||||||||||||
Level 3 assets that were still held at the end of the period (2): | |||||||||||||||||||||
Included in earnings: | |||||||||||||||||||||
Realized investment gains (losses), net | $ | - | $ | - | $ | 2,040,048 | $ | - | -2,115,680 | ||||||||||||
Asset management fees and other income | $ | - | $ | -14 | $ | - | $ | - | - | ||||||||||||
Year Ended December 31, 2013 | |||||||||||||||||||||
Fixed Maturities Available-For-Sale | Trading Account Assets - Equity Securities | Equity Securities Available-for -Sale | |||||||||||||||||||
Corporate Securities | Asset- Backed Securities | Commercial Mortgage-Backed | |||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Fair Value, beginning of period assets/(liabilities) | $ | 95,555 | $ | 69,298 | $ | - | $ | 207 | $ | - | |||||||||||
Total gains (losses) (realized/unrealized): | |||||||||||||||||||||
Included in earnings: | |||||||||||||||||||||
Realized investment gains (losses), net | 49 | - | - | - | - | ||||||||||||||||
Asset management fees and other income | - | - | - | 106 | - | ||||||||||||||||
Included in other comprehensive income (loss) | -4,179 | -470 | 18 | - | - | ||||||||||||||||
Net investment income | 4,729 | 454 | - | - | - | ||||||||||||||||
Purchases | 4,817 | 40,868 | 17,169 | - | 192 | ||||||||||||||||
Sales | - | - | - | - | - | ||||||||||||||||
Issuances | - | - | - | - | - | ||||||||||||||||
Settlements | -4,629 | -13,924 | - | - | - | ||||||||||||||||
Transfers into Level 3 (1) | 4,976 | - | - | - | - | ||||||||||||||||
Transfers out of Level 3 (1) | -4,522 | -29,441 | -17,187 | - | - | ||||||||||||||||
Other (3) | - | -2,996 | - | - | - | ||||||||||||||||
Fair Value, end of period assets/(liabilities) | $ | 96,796 | $ | 63,789 | $ | - | $ | 313 | $ | 192 | |||||||||||
Unrealized gains (losses) for the period relating to those | |||||||||||||||||||||
Level 3 assets that were still held at the end of the period (2): | |||||||||||||||||||||
Included in earnings: | |||||||||||||||||||||
Realized investment gains (losses), net | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||
Asset management fees and other income | $ | - | $ | - | $ | - | $ | 107 | $ | - | |||||||||||
Year Ended December 31, 2013 | |||||||||||||||||||||
Other Long-term Investments | Reinsurance Recoverables | Receivables from parent and affiliates | Future Policy Benefits | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Fair Value, beginning of period assets/(liabilities) | $ | 1,054 | $ | 1,732,094 | $ | 1,995 | $ | -1,793,137 | |||||||||||||
Total gains (losses) (realized/unrealized): | |||||||||||||||||||||
Included in earnings: | |||||||||||||||||||||
Realized investment gains (losses), net | -739 | -1,220,073 | - | 1,262,310 | |||||||||||||||||
Asset management fees and other income | 60 | - | - | - | |||||||||||||||||
Included in other comprehensive income (loss) | - | - | 99 | - | |||||||||||||||||
Net investment income | - | - | - | - | |||||||||||||||||
Purchases | 111 | 235,984 | 6,250 | - | |||||||||||||||||
Sales | - | - | -2,996 | - | |||||||||||||||||
Issuances | - | - | - | -247,399 | |||||||||||||||||
Settlements | - | - | - | - | |||||||||||||||||
Transfers into Level 3 (1) | - | - | - | - | |||||||||||||||||
Transfers out of Level 3 (1) | - | - | -1,997 | - | |||||||||||||||||
Other (3) | - | - | 2,996 | - | |||||||||||||||||
Fair Value, end of period assets/(liabilities) | $ | 486 | $ | 748,005 | $ | 6,347 | $ | -778,226 | |||||||||||||
. | . | ||||||||||||||||||||
Unrealized gains (losses) for the period relating to those | |||||||||||||||||||||
Level 3 assets that were still held at the end of the period (2): | |||||||||||||||||||||
Included in earnings: | |||||||||||||||||||||
Realized investment gains (losses), net | $ | - | $ | -1,166,676 | $ | - | $ | 1,207,600 | |||||||||||||
Asset management fees and other income | $ | 51 | $ | - | $ | - | $ | - | |||||||||||||
Year Ended December 31, 2012 | |||||||||||||||||||||
Fixed Maturities Available-For-Sale | |||||||||||||||||||||
Corporate Securities | Asset Backed Securities | Trading Account Assets - Equity | Other Long-term Investments | Reinsurance Recoverables | |||||||||||||||||
(in thousands) | |||||||||||||||||||||
Fair Value, beginning of period assets/(liabilities) | $ | 89,658 | $ | 48,563 | $ | 203 | $ | 1,213 | $ | 1,747,757 | |||||||||||
Total gains or (losses) (realized/unrealized): | |||||||||||||||||||||
Included in earnings: | |||||||||||||||||||||
Realized investment gains (losses), net | 1,606 | - | - | -2,326 | -244,519 | ||||||||||||||||
Asset management fees and other income | - | - | 4 | -3 | - | ||||||||||||||||
Included in other comprehensive income (loss) | 2,271 | 1,109 | - | - | - | ||||||||||||||||
Net investment income | 4,634 | 649 | - | - | - | ||||||||||||||||
Purchases | 5,400 | 30,311 | - | 2,166 | 228,856 | ||||||||||||||||
Sales | -29 | - | - | - | - | ||||||||||||||||
Issuances | - | - | - | - | - | ||||||||||||||||
Settlements | -8,286 | -11,334 | - | 4 | - | ||||||||||||||||
Transfers into Level 3 (1) | 11,992 | - | - | - | - | ||||||||||||||||
Transfers out of Level 3 (1) | -11,691 | - | - | - | - | ||||||||||||||||
Fair Value, end of period assets/(liabilities) | $ | 95,555 | $ | 69,298 | $ | 207 | $ | 1,054 | $ | 1,732,094 | |||||||||||
Unrealized gains (losses) for the period relating to | |||||||||||||||||||||
those Level 3 assets that were still held | |||||||||||||||||||||
at the end of the period (2): | |||||||||||||||||||||
Included in earnings: | |||||||||||||||||||||
Realized investment gains (losses), net | $ | - | $ | - | $ | - | $ | -1,349 | $ | -194,274 | |||||||||||
Asset management fees and other income | $ | - | $ | - | $ | 4 | $ | -3 | $ | - | |||||||||||
Year Ended December 31, 2012 | |||||||||||||||||||||
Receivables from parent and affiliates | Future Policy Benefits | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Fair Value, beginning of period assets/(liabilities) | $ | - | $ | -1,783,595 | |||||||||||||||||
Total gains or (losses) (realized/unrealized): | |||||||||||||||||||||
Included in earnings: | |||||||||||||||||||||
Realized investment gains (losses), net | - | 230,349 | |||||||||||||||||||
Asset management fees and other income | - | - | |||||||||||||||||||
Included in other comprehensive income (loss) | -5 | - | |||||||||||||||||||
Net investment income | - | - | |||||||||||||||||||
Purchases | 2,000 | - | |||||||||||||||||||
Sales | - | - | |||||||||||||||||||
Issuances | - | -239,891 | |||||||||||||||||||
Settlements | - | - | |||||||||||||||||||
Transfers into Level 3 (1) | - | - | |||||||||||||||||||
Transfers out of Level 3 (1) | - | - | |||||||||||||||||||
Fair Value, end of period assets/(liabilities) | $ | 1,995 | $ | -1,793,137 | |||||||||||||||||
Unrealized gains (losses) for the period relating to | |||||||||||||||||||||
those Level 3 assets that were still held | |||||||||||||||||||||
at the end of the period (2): | |||||||||||||||||||||
Included in earnings: | |||||||||||||||||||||
Realized investment gains (losses), net | $ | - | $ | 179,477 | |||||||||||||||||
Asset management fees and other income | $ | - | $ | - | |||||||||||||||||
(1) Transfers into or out of Level 3 are reported as the value as of the beginning of the quarter in which the transfer occurs. | |||||||||||||||||||||
(2) Unrealized gains or losses related to assets still held at the end of the period do not include amortization or accretion of premiums and discounts. | |||||||||||||||||||||
(3) Other primarily represents reclassifications of certain assets between reporting categories. | |||||||||||||||||||||
Fair Value Disclosure Financial Instruments Not Carried at Fair Value | 31-Dec-14 | ||||||||||||||||||||
Fair Value | Carrying Amount (1) | ||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Total | |||||||||||||||||
(in thousands) | |||||||||||||||||||||
Assets: | |||||||||||||||||||||
Commercial mortgage and other loans | $ | - | $ | 2,779 | $ | 447,157 | $ | 449,936 | $ | 422,563 | |||||||||||
Policy loans | - | - | 13,355 | 13,355 | 13,355 | ||||||||||||||||
Other long term investments | - | - | 2,639 | 2,639 | 2,238 | ||||||||||||||||
Cash and cash equivalents | 369 | - | - | 369 | 369 | ||||||||||||||||
Accrued investment income | - | 25,008 | - | 25,008 | 25,008 | ||||||||||||||||
Receivables from parent and affiliates | - | 10,367 | - | 10,367 | 10,367 | ||||||||||||||||
Other assets | - | 1,009 | - | 1,009 | 1,009 | ||||||||||||||||
Total assets | $ | 369 | $ | 39,163 | $ | 463,151 | $ | 502,683 | $ | 474,909 | |||||||||||
Liabilities: | |||||||||||||||||||||
Policyholders' account balances - investment contracts | $ | - | $ | - | $ | 91,217 | $ | 91,217 | $ | 92,663 | |||||||||||
Cash collateral for loaned securities | - | 5,285 | - | 5,285 | 5,285 | ||||||||||||||||
Short-term debt | - | 54,354 | - | 54,354 | 54,354 | ||||||||||||||||
Payables to parent and affiliates | - | 37,415 | - | 37,415 | 37,415 | ||||||||||||||||
Other liabilities | - | 89,956 | - | 89,956 | 89,956 | ||||||||||||||||
Separate account liabilities - investment contracts | - | 487 | - | 487 | 487 | ||||||||||||||||
Total liabilities | $ | - | $ | 187,497 | $ | 91,217 | $ | 278,714 | $ | 280,160 | |||||||||||
31-Dec-13 | |||||||||||||||||||||
Fair Value | Carrying Amount (1) | ||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Total | |||||||||||||||||
(in thousands) | |||||||||||||||||||||
Assets: | |||||||||||||||||||||
Commercial mortgage and other loans | $ | - | $ | - | $ | 422,584 | $ | 422,584 | $ | 398,991 | |||||||||||
Policy loans | - | - | 12,454 | 12,454 | 12,454 | ||||||||||||||||
Other long term investments | - | - | 1,623 | 1,623 | 1,440 | ||||||||||||||||
Cash and cash equivalents | 1,417 | - | - | 1,417 | 1,417 | ||||||||||||||||
Accrued investment income | - | 32,169 | - | 32,169 | 32,169 | ||||||||||||||||
Receivables from parent and affiliates | - | 10,177 | - | 10,177 | 10,177 | ||||||||||||||||
Other assets | - | 11,190 | - | 11,190 | 11,190 | ||||||||||||||||
Total assets | $ | 1,417 | $ | 53,536 | $ | 436,661 | $ | 491,614 | $ | 467,838 | |||||||||||
Liabilities: | |||||||||||||||||||||
Policyholders' account balances - investment contracts | $ | - | $ | - | $ | 84,153 | $ | 84,153 | $ | 85,672 | |||||||||||
Cash collateral for loaned securities | - | 47,896 | - | 47,896 | 47,896 | ||||||||||||||||
Short-term debt | - | 218,488 | - | 218,488 | 205,000 | ||||||||||||||||
Payables to parent and affiliates | - | 85,204 | - | 85,204 | 85,204 | ||||||||||||||||
Other liabilities | - | 101,656 | - | 101,656 | 101,656 | ||||||||||||||||
Separate account liabilities - investment contracts | - | 796 | - | 796 | 796 | ||||||||||||||||
Total liabilities | $ | - | $ | 454,040 | $ | 84,153 | $ | 538,193 | $ | 526,224 | |||||||||||
Carrying values presented herein differ from those in the Company's Statement of Financial Position because certain items within the respective financial statement captions are not considered financial instruments or out of scope under authoritative guidance relating to disclosures of the fair value of financial instruments. Financial statement captions excluded from the above table are not considered financial instruments. | |||||||||||||||||||||
Fair Value Inputs Quantitative Information [Table Text Block] | As of December 31, 2014 | ||||||||||||||||||||
Fair Value | Primary Valuation Techniques | Unobservable Inputs | Minimum | Maximum | Weighted Average | Impact of Increase in Input on Fair Value (1) | |||||||||||||||
(in thousands) | |||||||||||||||||||||
Assets: | |||||||||||||||||||||
Corporate securities | $ | 99,209 | Discounted cash flow | Discount rate | 3.55% | 11.75% | 3.96% | Decrease | |||||||||||||
Reinsurance recoverables | $ | 2,996,154 | Fair values are determined in the same manner as future policy benefits | ||||||||||||||||||
Liabilities: | |||||||||||||||||||||
Future policy benefits (2) | $ | 3,112,411 | Discounted cash flow | Lapse rate (3) | 0% | 14% | Decrease | ||||||||||||||
NPR spread (4) | 0.00% | 1.30% | Decrease | ||||||||||||||||||
Utilization rate (5) | 63% | 95% | Increase | ||||||||||||||||||
Withdrawal rate (6) | 74% | 100% | Increase | ||||||||||||||||||
Mortality rate (7) | 0% | 14% | Decrease | ||||||||||||||||||
Equity Volatility curve | 17% | 28% | Increase | ||||||||||||||||||
As of December 31, 2013 | |||||||||||||||||||||
Fair Value | Primary Valuation Techniques | Unobservable Inputs | Minimum | Maximum | Weighted Average | Impact of Increase in Input on Fair Value (1) | |||||||||||||||
(in thousands) | |||||||||||||||||||||
Assets: | |||||||||||||||||||||
Corporate securities | $ | 94,730 | Discounted cash flow | Discount rate | 3.73% | 12.06% | 3.90% | Decrease | |||||||||||||
Reinsurance recoverables | $ | 748,005 | Fair values are determined in the same manner as future policy benefits | ||||||||||||||||||
Liabilities: | |||||||||||||||||||||
Future policy benefits (2) | $ | 778,226 | Discounted cash flow | Lapse rate (3) | 0% | 11% | Decrease | ||||||||||||||
NPR spread (4) | 0.08% | 1.09% | Decrease | ||||||||||||||||||
Utilization rate (5) | 70% | 94% | Increase | ||||||||||||||||||
Withdrawal rate (6) | 86% | 100% | Increase | ||||||||||||||||||
Mortality rate (7) | 0% | 13% | Decrease | ||||||||||||||||||
Equity Volatility curve | 15% | 28% | Increase | ||||||||||||||||||
Conversely, the impact of a decrease in input would have the opposite impact for the fair value as that presented in the table. | |||||||||||||||||||||
Future policy benefits primarily represent general account liabilities for the optional living benefit features of the Company's variable annuity contracts which are accounted for as embedded derivatives. Since the valuation methodology for these liabilities uses a range of inputs that vary at the contract level over the cash flow projection period, presenting a range, rather than weighted average, is a more meaningful representation of the unobservable inputs used in the valuation. | |||||||||||||||||||||
Lapse rates are adjusted at the contract level based on a the in-the-moneyness of the living benefit, and reflect other factors, such as the applicability of any surrender charges. Lapse rates are reduced when contracts are more in-the-money. Lapse rates are also generally assumed to be lower for the period where surrender charges apply. | |||||||||||||||||||||
To reflect NPR, the Company incorporates an additional spread over LIBOR into the discount rate used in the valuation of individual living benefit contracts in a liability position and generally not to those in a contra-liability position. The NPR spread reflects the financial strength ratings of the Company and its affiliates, as these are insurance liabilities and senior to debt. The additional spread over LIBOR is determined by utilizing the credit spreads associated with issuing funding agreements adjusted for any illiquidity risk premium. | |||||||||||||||||||||
The utilization rate assumption estimates the percentage of contracts that will utilize the benefit during the contract duration, and begin lifetime withdrawals at various time intervals from contract inception. The remaining contractholders are assumed to either begin lifetime withdrawals immediately or never utilize the benefit. Utilization assumptions may vary by product type, tax status, and age. The impact of changes in these assumptions is highly dependent on the product type, the age of the contractholder at the time of the sale, and the timing of the first lifetime income withdrawal. | |||||||||||||||||||||
The withdrawal rate assumption estimates the magnitude of annual contractholder withdrawals relative to the maximum allowable amount under the contract. These assumptions may vary based on the product type, contractholder, age, tax status, and withdrawal timing. The fair value of the liability will generally increase the closer the withdrawal rate is to 100%. | |||||||||||||||||||||
Range reflects the mortality rate for the vast majority of business with living benefits, with policyholders ranging from 35 to 90 years old. While the majority of living benefits have a minimum age requirement, certain benefits do not have an age restriction. This results in contractholders for certain benefits with mortality rates approaching 0%. Based on historical experience, the Company applies a set of age and duration specific mortality rate adjustments compared to standard industry tables. A mortality improvement assumption is also incorporated into the overall mortality table. | |||||||||||||||||||||
Fair Value Level Three Amounts By Pricing Source [Table Text Block] | As of December 31, 2014 | ||||||||||||||||||||
Internal(1) | External(2) | Total | |||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Corporate securities | $ | 99,209 | $ | 16,861 | $ | 116,070 | |||||||||||||||
Asset-backed securities | - | 40,524 | 40,524 | ||||||||||||||||||
Cash equivalents | 225 | - | 225 | ||||||||||||||||||
Other long-term investments | - | 633 | 633 | ||||||||||||||||||
Reinsurance recoverables | 2,996,154 | - | 2,996,154 | ||||||||||||||||||
Receivables from parent and affiliates | - | 22,320 | 22,320 | ||||||||||||||||||
Total assets | $ | 3,095,588 | $ | 80,338 | $ | 3,175,926 | |||||||||||||||
Future policy benefits | 3,112,411 | - | 3,112,411 | ||||||||||||||||||
Total liabilities | $ | 3,112,411 | $ | - | $ | 3,112,411 | |||||||||||||||
As of December 31, 2013 | |||||||||||||||||||||
Internal(1) | External(2) | Total | |||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Corporate securities | $ | 94,730 | $ | 2,066 | $ | 96,796 | |||||||||||||||
Asset-backed securities | - | 63,789 | 63,789 | ||||||||||||||||||
Equity securities | 192 | 313 | 505 | ||||||||||||||||||
Other long-term investments | - | 486 | 486 | ||||||||||||||||||
Reinsurance recoverables | 748,005 | - | 748,005 | ||||||||||||||||||
Receivables from parent and affiliates | - | 6,347 | 6,347 | ||||||||||||||||||
Total assets | $ | 842,927 | $ | 73,001 | $ | 915,928 | |||||||||||||||
Future policy benefits | 778,226 | - | 778,226 | ||||||||||||||||||
Total liabilities | $ | 778,226 | $ | - | $ | 778,226 | |||||||||||||||
Represents valuations reflecting both internally-derived and market inputs. See below for additional information related to internally-developed valuation for significant items in the above table. | |||||||||||||||||||||
Represents unadjusted prices from independent pricing-services and independent indicative broker quotes where pricing inputs are not readily available. | |||||||||||||||||||||
Derivative_Instruments_Tables
Derivative Instruments (Tables) | 12 Months Ended | |||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||
Derivative Instruments | ||||||||||||||||||||||
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | 31-Dec-14 | 31-Dec-13 | ||||||||||||||||||||
Gross Fair Value | Gross Fair Value | |||||||||||||||||||||
Primary Underlying | Notional | Assets | Liabilities | Notional | Assets | Liabilities | ||||||||||||||||
(in thousands) | ||||||||||||||||||||||
Derivatives Designated as Hedge Accounting Instruments: | ||||||||||||||||||||||
Currency/Interest Rate | ||||||||||||||||||||||
Currency/Interest Rate | $ | 83,412 | $ | 5,555 | $ | -654 | $ | 72,747 | $ | 940 | $ | -4,635 | ||||||||||
Total Qualifying Hedges | $ | 83,412 | $ | 5,555 | $ | -654 | $ | 72,747 | $ | 940 | $ | -4,635 | ||||||||||
Derivatives Not Qualifying as Hedge Accounting Instruments: | ||||||||||||||||||||||
Interest Rate | ||||||||||||||||||||||
Interest Rate Swaps | $ | 1,902,750 | $ | 92,507 | $ | -18,480 | $ | 1,533,750 | $ | 59,872 | $ | -80,601 | ||||||||||
Interest Rate Options | 100,000 | 10,736 | - | 100,000 | 6,534 | - | ||||||||||||||||
Currency/Interest Rate | ||||||||||||||||||||||
Foreign Currency Swaps | 57,011 | 4,363 | -5 | 55,919 | 19 | -1,349 | ||||||||||||||||
Credit | ||||||||||||||||||||||
Credit Default Swaps | 1,200 | - | -43 | 6,050 | - | -115 | ||||||||||||||||
Equity | ||||||||||||||||||||||
Total Return Swaps | 220,986 | 1,937 | - | 219,896 | - | -4,712 | ||||||||||||||||
Equity Options | 6,842,242 | 3,748 | -2,067 | 13,170,805 | 6,170 | -3,168 | ||||||||||||||||
Total Non-Qualifying Hedges | $ | 9,124,189 | $ | 113,291 | $ | -20,595 | $ | 15,086,420 | $ | 72,595 | $ | -89,945 | ||||||||||
Total Derivatives (1) | $ | 9,207,601 | $ | 118,846 | $ | -21,249 | $ | 15,158,667 | $ | 73,535 | $ | -94,580 | ||||||||||
(1) Excludes embedded derivatives which contain multiple underlyings. The fair value of the embedded derivatives related to the living benefit feature was a liability of $3,112 million and $778 million as of December 31, 2014 and December 31, 2013, respectively, included in “Future policy benefits.” The fair value of the embedded derivatives related to the reinsurance of certain of these benefits to Pruco Re and Prudential Insurance included in "Reinsurance recoverables" was an asset of $2,996 million and $748 million as of December 31, 2014 and December 31, 2013, respectively. | ||||||||||||||||||||||
Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance | Year Ended December 31, 2014 | |||||||||||||||||||||
Realized Investment Gains (Losses) | Net Investment Income | Other Income | Accumulated Other Comprehensive Income (Loss)(1) | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||
Derivatives Designated as Hedging Instruments: | ||||||||||||||||||||||
Cash flow hedges | ||||||||||||||||||||||
Currency/Interest Rate | $ | - | $ | 14 | $ | 134 | $ | 8,492 | ||||||||||||||
Total cash flow hedges | - | 14 | 134 | 8,492 | ||||||||||||||||||
Derivatives Not Qualifying as Hedging Instruments: | ||||||||||||||||||||||
Interest Rate | 123,327 | - | - | - | ||||||||||||||||||
Currency/Interest Rate | 5,934 | - | 143 | - | ||||||||||||||||||
Credit | -14 | - | - | - | ||||||||||||||||||
Equity | -23,811 | - | - | - | ||||||||||||||||||
Embedded Derivatives | -113,549 | - | - | - | ||||||||||||||||||
Total non-qualifying hedges | -8,113 | - | 143 | - | ||||||||||||||||||
Total | $ | -8,113 | $ | 14 | $ | 277 | $ | 8,492 | ||||||||||||||
Year Ended December 31, 2013 | ||||||||||||||||||||||
Realized Investment Gains (Losses) | Net Investment Income | Other Income | Accumulated Other Comprehensive Income (Loss)(1) | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||
Derivatives Designated as Hedging Instruments: | ||||||||||||||||||||||
Cash flow hedges | ||||||||||||||||||||||
Currency/Interest Rate | $ | - | $ | -89 | $ | -7 | $ | -585 | ||||||||||||||
Total cash flow hedges | - | -89 | -7 | -585 | ||||||||||||||||||
Derivatives Not Qualifying as Hedging Instruments: | ||||||||||||||||||||||
Interest Rate | -116,025 | - | - | - | ||||||||||||||||||
Currency/Interest Rate | -204 | - | 24 | - | ||||||||||||||||||
Credit | -103 | - | - | - | ||||||||||||||||||
Equity | -79,498 | - | - | - | ||||||||||||||||||
Embedded Derivatives | 1,775 | - | - | - | ||||||||||||||||||
Total non-qualifying hedges | -194,055 | - | 24 | - | ||||||||||||||||||
Total | $ | -194,055 | $ | -89 | $ | 17 | $ | -585 | ||||||||||||||
Year Ended December 31, 2012 | ||||||||||||||||||||||
Realized Investment Gains (Losses) | Net Investment Income | Other Income | Accumulated Other Comprehensive Income (Loss)(1) | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||
Derivatives Designated as Hedging Instruments: | ||||||||||||||||||||||
Cash flow hedges | ||||||||||||||||||||||
Currency/Interest Rate | $ | - | $ | -116 | $ | 14 | $ | -2,106 | ||||||||||||||
Total cash flow hedges | - | -116 | 14 | -2,106 | ||||||||||||||||||
Derivatives Not Qualifying as Hedging Instruments: | ||||||||||||||||||||||
Interest Rate | 5,030 | - | - | - | ||||||||||||||||||
Currency | -15 | - | - | - | ||||||||||||||||||
Currency/Interest Rate | -1,368 | - | -17 | - | ||||||||||||||||||
Credit | 143 | - | - | - | ||||||||||||||||||
Equity | -56,158 | - | - | - | ||||||||||||||||||
Embedded Derivatives | -55,295 | - | - | - | ||||||||||||||||||
Total non-qualifying hedges | -107,663 | - | -17 | - | ||||||||||||||||||
Total | $ | -107,663 | $ | -116 | $ | -3 | $ | -2,106 | ||||||||||||||
(1) Amounts deferred in “Accumulated other comprehensive income (loss).” | ||||||||||||||||||||||
Schedule of Derivative Instruments Recognized in Accumulated Other Comprehensive Income(Loss) Before Taxes | (in thousands) | |||||||||||||||||||||
Balance, December 31, 2011 | $ | -962 | ||||||||||||||||||||
Net deferred gains (losses) on cash flow hedges from January 1 to December 31, 2012 | -2,207 | |||||||||||||||||||||
Amount reclassified into current period earnings | 101 | |||||||||||||||||||||
Balance, December 31, 2012 | -3,068 | |||||||||||||||||||||
Net deferred gains (losses) on cash flow hedges from January 1 to December 31, 2013 | -680 | |||||||||||||||||||||
Amount reclassified into current period earnings | 95 | |||||||||||||||||||||
Balance, December 31, 2013 | -3,653 | |||||||||||||||||||||
Net deferred gains (losses) on cash flow hedges from January 1 to December 31, 2014 | 8,640 | |||||||||||||||||||||
Amount reclassified into current period earnings | -148 | |||||||||||||||||||||
Balance, December 31, 2014 | $ | 4,839 | ||||||||||||||||||||
Offsetting of Financial Assets and Liabilities | 31-Dec-14 | |||||||||||||||||||||
Gross | Net | |||||||||||||||||||||
Gross | Amounts | Amounts | ||||||||||||||||||||
Amounts of | Offset in the | Presented in | ||||||||||||||||||||
Recognized | Statement of | the Statement | Financial | |||||||||||||||||||
Financial | Financial | of Financial | Instruments/ | Net | ||||||||||||||||||
Instruments | Position | Position | Collateral(1) | Amount | ||||||||||||||||||
(in thousands) | ||||||||||||||||||||||
Offsetting of Financial Assets: | ||||||||||||||||||||||
Derivatives | $ | 118,846 | $ | -24,288 | $ | 94,558 | $ | -82,602 | $ | 11,956 | ||||||||||||
Offsetting of Financial Liabilities: | ||||||||||||||||||||||
Derivatives | $ | 21,249 | $ | -21,249 | $ | - | $ | - | $ | - | ||||||||||||
31-Dec-13 | ||||||||||||||||||||||
Gross | Net | |||||||||||||||||||||
Gross | Amounts | Amounts | ||||||||||||||||||||
Amounts of | Offset in the | Presented in | ||||||||||||||||||||
Recognized | Statement of | the Statement | Financial | |||||||||||||||||||
Financial | Financial | of Financial | Instruments/ | Net | ||||||||||||||||||
Instruments | Position | Position | Collateral(1) | Amount | ||||||||||||||||||
(in thousands) | ||||||||||||||||||||||
Offsetting of Financial Assets: | ||||||||||||||||||||||
Derivatives | $ | 73,535 | $ | -73,535 | $ | - | $ | - | $ | - | ||||||||||||
Offsetting of Financial Liabilities: | ||||||||||||||||||||||
Derivatives | $ | 94,580 | $ | -72,822 | $ | 21,758 | $ | -21,758 | $ | - | ||||||||||||
(1) Amounts exclude the excess of collateral received/pledged from/to the counterparty. Prior period has been revised to conform to current period presentation. | ||||||||||||||||||||||
Related_Party_Tables
Related Party (Tables) | 12 Months Ended | |||||
Dec. 31, 2014 | ||||||
Related Party Transactions [Abstract] | ||||||
FutureMinimumLeasePaymentsrelatedpartytextblock | ||||||
Lease | Sub-Lease | |||||
(in thousands) | ||||||
2015 | $ | 3,397 | $ | - | ||
2016 | 3,397 | - | ||||
2017 | 3,397 | - | ||||
2018 | 3,397 | - | ||||
2019 | 3,114 | - | ||||
2020 and thereafter | - | - | ||||
Total | $ | 16,702 | $ | - |
Quarterly_Results_of_Operation1
Quarterly Results of Operations (Tables) | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
QuarterlyFinancialDataAbstract | ||||||||||||
ScheduleOfQuarterlyFinancialInformationTableTextBlock | Three months ended | |||||||||||
31-Mar | 30-Jun | 30-Sep | 31-Dec | |||||||||
2014 | (in thousands) | |||||||||||
Total revenues | $ | 311,249 | $ | 309,786 | $ | 308,006 | $ | 311,187 | ||||
Total benefits and expenses | 216,896 | 242,370 | 197,204 | 324,387 | ||||||||
Income (loss) from operations before income taxes and cumulative effect of accounting change | 94,353 | 67,416 | 110,802 | -13,200 | ||||||||
Net income | $ | 77,498 | $ | 57,431 | $ | 96,037 | $ | 19,801 | ||||
Three months ended | ||||||||||||
31-Mar | 30-Jun | 30-Sep | 31-Dec | |||||||||
(in thousands) | ||||||||||||
2013 | ||||||||||||
Total revenues | $ | 290,576 | $ | 283,524 | $ | 250,028 | $ | 286,154 | ||||
Total benefits and expenses | 93,190 | 96,720 | -332,523 | 72,431 | ||||||||
Income from operations before income taxes and cumulative effect of accounting change | 197,386 | 186,804 | 582,551 | 213,723 | ||||||||
Net income | $ | 147,388 | $ | 143,670 | $ | 400,296 | $ | 156,738 |
Significant_Accounting_Policie2
Significant Accounting Policies and Pronouncements (Details) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Significant Accounting Policies [Line Items] | ||
Assumed Interest Rate - Minimum | 0.00% | 0.00% |
Assumed Interest Rate - Maximum | 8.25% | 8.25% |
Intangible asset useful life | 8 years 0 months 0 days | |
Securities Loaned Transactions Collateral FairValue of Domestic Securities | 102.00% | |
Securities Loaned Transactions Collateral Fair Value of Foreign Securities | 105.00% |
Investments_Narrative_Details
Investments (Narrative) (Details) (USD $) | 12 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | ||
Net change in unrealized gains (losses) from other trading account assets | ($900,000) | $800,000 | ($400,000) | |
Net investment income | 164,011,000 | 217,883,000 | 277,651,000 | |
Gross unrealized losses related to high or highest quality securities | 4,000,000 | 20,400,000 | ||
Gross unrealized losses related to other than high or highest quality securities | 3,100,000 | 1,500,000 | ||
Twelve months or more Unrealized Losses | 1,152,000 | 1,621,000 | [1] | |
Non Income Producing Assets, Fixed Maturities | 1,000,000 | |||
Fixed Maturities [Member] | ||||
Assets Deposited With Governmental Authorities | $7,000,000 | $8,000,000 | ||
[1] | Prior period’s amounts are presented on a basis consistent with the current period presentation. |
Investments_Fixed_Maturities_a
Investments (Fixed Maturities and Equity Securities Excluding Investments Classified as Trading) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | ||
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items] | ||||
Fixed maturities, available-for-sale, amortized cost | $2,609,253,000 | $3,079,002,000 | [1] | |
Available-for-sale equity securities amortized cost basis | 14,000 | 206,000 | [1] | |
Fair Value, Fixed maturities, available for sale | 2,800,593,000 | 3,264,216,000 | [1] | |
Equity securities, available for sale | 17,000 | 208,000 | [1] | |
Net unrealized gains on impaired securities relating to changes in value of securities subsequent to the impairment measurement date | 100,000 | 1,700,000 | ||
Fixed Maturities [Member] | ||||
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items] | ||||
Fixed maturities, available-for-sale, amortized cost | 2,609,253,000 | 3,079,002,000 | [1] | |
Gross Unrealized Gains | 198,461,000 | 207,110,000 | [1] | |
Gross Unrealized Losses | 7,121,000 | 21,896,000 | [1] | |
Fair Value, Fixed maturities, available for sale | 2,800,593,000 | 3,264,216,000 | [1] | |
Other-than-temporary impairments in AOCI | 85,000 | [2] | 1,391,000 | [1],[2] |
Fixed Maturities [Member] | US Treasury And Government [Member] | ||||
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items] | ||||
Fixed maturities, available-for-sale, amortized cost | 6,324,000 | 6,382,000 | [1] | |
Gross Unrealized Gains | 22,000 | 36,000 | [1] | |
Gross Unrealized Losses | 10,000 | 34,000 | [1] | |
Fair Value, Fixed maturities, available for sale | 6,336,000 | 6,384,000 | [1] | |
Other-than-temporary impairments in AOCI | 0 | [2] | 0 | [1],[2] |
Fixed Maturities [Member] | Obligations of U.S. states and their political subdivisions [Member] | ||||
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items] | ||||
Fixed maturities, available-for-sale, amortized cost | 69,486,000 | 67,225,000 | [1] | |
Gross Unrealized Gains | 1,323,000 | 2,911,000 | [1] | |
Gross Unrealized Losses | 20,000 | 1,570,000 | [1] | |
Fair Value, Fixed maturities, available for sale | 70,789,000 | 68,566,000 | [1] | |
Other-than-temporary impairments in AOCI | 0 | [2] | 0 | [1],[2] |
Fixed Maturities [Member] | Foreign Government Debt Securities [Member] | ||||
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items] | ||||
Fixed maturities, available-for-sale, amortized cost | 29,738,000 | 25,437,000 | [1] | |
Gross Unrealized Gains | 7,621,000 | 5,717,000 | [1] | |
Gross Unrealized Losses | 4,000 | 0 | [1] | |
Fair Value, Fixed maturities, available for sale | 37,355,000 | 31,154,000 | [1] | |
Other-than-temporary impairments in AOCI | 0 | [2] | 0 | [1],[2] |
Fixed Maturities [Member] | Public Utilities [Member] | ||||
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items] | ||||
Fixed maturities, available-for-sale, amortized cost | 198,277,000 | 197,718,000 | [1] | |
Gross Unrealized Gains | 19,909,000 | 12,628,000 | [1] | |
Gross Unrealized Losses | 1,593,000 | 3,141,000 | [1] | |
Fair Value, Fixed maturities, available for sale | 216,593,000 | 207,205,000 | [1] | |
Other-than-temporary impairments in AOCI | 0 | [2] | 0 | [1],[2] |
Fixed Maturities [Member] | Corporate Debt Securities [Member] | ||||
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items] | ||||
Fixed maturities, available-for-sale, amortized cost | 1,743,110,000 | 2,061,809,000 | [1] | |
Gross Unrealized Gains | 146,872,000 | 162,780,000 | [1] | |
Gross Unrealized Losses | 4,891,000 | 9,152,000 | [1] | |
Fair Value, Fixed maturities, available for sale | 1,885,091,000 | 2,215,437,000 | [1] | |
Other-than-temporary impairments in AOCI | 0 | [2] | 0 | [1],[2] |
Fixed Maturities [Member] | Asset-backed Securities [Member] | ||||
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items] | ||||
Fixed maturities, available-for-sale, amortized cost | 144,324,000 | [3] | 182,888,000 | [1],[3] |
Gross Unrealized Gains | 5,078,000 | [3] | 6,513,000 | [1],[3] |
Gross Unrealized Losses | 391,000 | [3] | 1,509,000 | [1],[3] |
Fair Value, Fixed maturities, available for sale | 149,011,000 | [3] | 187,892,000 | [1],[3] |
Other-than-temporary impairments in AOCI | 39,000 | [2],[3] | 1,351,000 | [1],[2],[3] |
Fixed Maturities [Member] | Commercial Mortgage Backed Securities [Member] | ||||
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items] | ||||
Fixed maturities, available-for-sale, amortized cost | 291,868,000 | 384,764,000 | [1] | |
Gross Unrealized Gains | 10,523,000 | 11,387,000 | [1] | |
Gross Unrealized Losses | 206,000 | 5,518,000 | [1] | |
Fair Value, Fixed maturities, available for sale | 302,185,000 | 390,633,000 | [1] | |
Other-than-temporary impairments in AOCI | 10,000 | [2] | 0 | [1],[2] |
Fixed Maturities [Member] | Residential Mortgage Backed Securities [Member] | ||||
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items] | ||||
Fixed maturities, available-for-sale, amortized cost | 126,126,000 | [4] | 152,779,000 | [1],[4] |
Gross Unrealized Gains | 7,113,000 | [4] | 5,138,000 | [1],[4] |
Gross Unrealized Losses | 6,000 | [4] | 972,000 | [1],[4] |
Fair Value, Fixed maturities, available for sale | 133,233,000 | [4] | 156,945,000 | [1],[4] |
Other-than-temporary impairments in AOCI | 36,000 | [2],[4] | 40,000 | [1],[2],[4] |
Equity Securities Available For Sale [Member] | ||||
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items] | ||||
Available-for-sale equity securities amortized cost basis | 14,000 | 206,000 | [1] | |
Gross Unrealized Gains | 3,000 | 2,000 | [1] | |
Gross Unrealized Losses | 0 | 0 | [1] | |
Equity securities, available for sale | 17,000 | 208,000 | [1] | |
Equity Securities Available For Sale [Member] | Public Utilities [Member] | ||||
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items] | ||||
Available-for-sale equity securities amortized cost basis | 0 | 192,000 | [1] | |
Gross Unrealized Gains | 0 | 0 | [1] | |
Gross Unrealized Losses | 0 | 0 | [1] | |
Equity securities, available for sale | 0 | 192,000 | [1] | |
Equity Securities Available For Sale [Member] | Mutual Fund [Member] | ||||
Summary Of Investments Other Than Investments In Related Parties Reportable Data [Line Items] | ||||
Available-for-sale equity securities amortized cost basis | 14,000 | 14,000 | [1] | |
Gross Unrealized Gains | 3,000 | 2,000 | [1] | |
Gross Unrealized Losses | 0 | 0 | [1] | |
Equity securities, available for sale | $17,000 | $16,000 | [1] | |
[1] | Prior period’s amounts are presented on a basis consistent with the current period presentation. | |||
[2] | Represents the amount of other-than-temporary impairment losses in AOCI, which were not included in earnings. Amount excludes $0.1 million of net unrealized gains on impaired available-for-sale securities relating to changes in the value of such securities subsequent to the impairment measurement date. | |||
[3] | _____________ Includes credit-tranched securities collateralized by sub-prime mortgages, auto loans, credit cards, education loans, and other asset types. | |||
[4] | Includes publicly-traded agency pass-through securities and collateralized mortgage obligations. |
Investments_Amortized_Cost_and
Investments (Amortized Cost and Fair Value of Fixed Maturities by Contractual Maturities) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | |
In Thousands, unless otherwise specified | |||
Available for Sale Amortized Cost | |||
Due in one year or less | $171,429 | ||
Due after one year through five years | 888,464 | ||
Due after five years through ten years | 556,948 | ||
Due after ten years | 430,094 | ||
Total | 2,609,253 | 3,079,002 | [1] |
Available for Sale Securities Fair Value | |||
Due in one year or less | 173,444 | ||
Due after one year through five years | 938,289 | ||
Due after five years through ten years | 606,353 | ||
Due after ten years | 498,078 | ||
Total | 2,800,593 | 3,264,216 | [1] |
Residential Mortgage Backed Securities [Member] | |||
Available for Sale Amortized Cost | |||
Debt Maturities, without single maturity date | 126,126 | ||
Available for Sale Securities Fair Value | |||
Debt Maturities, without Single Maturity Date | 133,233 | ||
Commercial Mortgage Backed Securities [Member] | |||
Available for Sale Amortized Cost | |||
Debt Maturities, without single maturity date | 291,868 | ||
Available for Sale Securities Fair Value | |||
Debt Maturities, without Single Maturity Date | 302,185 | ||
Asset-backed Securities [Member] | |||
Available for Sale Amortized Cost | |||
Debt Maturities, without single maturity date | 144,324 | ||
Available for Sale Securities Fair Value | |||
Debt Maturities, without Single Maturity Date | $149,011 | ||
[1] | Prior period’s amounts are presented on a basis consistent with the current period presentation. |
Investments_Fixed_Maturities_P
Investments (Fixed Maturities Proceeds)(Details) (USD $) | 12 Months Ended | |||||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |||
Equity Securities [Member] | ||||||
Available For Sale | ||||||
Proceeds from sales | $192 | $14 | $3,201 | |||
Gross investment gains from sales | 1 | 10 | 703 | |||
Fixed Maturities, Available For Sale [Member] | ||||||
Available For Sale | ||||||
Proceeds from sales | 308,458 | 314,415 | 504,001 | |||
Proceeds from maturities/repayments | 681,426 | 1,175,680 | 861,512 | |||
Gross investment gains from sales | 18,110 | 18,619 | 23,077 | |||
Available-for-sale Securities, Gross Realized Losses | 3,404 | 9,824 | 134 | |||
Fixed maturity and equity security impairments | ||||||
Net writedowns for other-than-temporary impairment losses on fixed maturities recognized in earnings | $0 | [1] | $0 | [1] | ($258) | [1] |
[1] | Excludes the portion of other-than-temporary impairments recorded in “Other comprehensive income (loss),†representing any difference between the fair value of the impaired debt security and the net present value of its projected future cash flows at the time of the impairment. |
Investments_Credit_Losses_Reco
Investments (Credit Losses Recognized In Earnings on Fixed Maturity Securities Held by the Company) (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Credit losses recognized in earnings on fixed maturity securities | ||
Credit Losses Recognized In Earnings, BOP | $1,800 | $3,382 |
Credit loss impairments previously recognized on securities which matured, paid down, prepaid or were sold during the period | -1,682 | -1,628 |
Increases due to the passage of time on previously recorded credit losses | 0 | 114 |
Accretion of credit loss impairments previously recognized due to an increase in cash flows expected to be collected | -25 | -68 |
Credit Losses Recognized In Earnings, EOP | $93 | $1,800 |
Investments_Trading_Account_As
Investments (Trading Account Assets) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Amortized Cost | $5,471 | $5,164 |
Fair Value | $6,131 | $6,677 |
Investments_Commercial_Mortgag
Investments (Commercial Mortgage and Other Loans) (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Commercial mortgage loans | $366,192 | $345,284 |
Commercial mortgage loans, Percentage | 87.10% | 86.90% |
Valuation allowance | -482 | -1,256 |
Total net commercial and agricultural mortgage loans by property type | 419,823 | 396,251 |
Total commercial mortgage and other loans, net of valuation allowance | 422,563 | 398,991 |
Total Commercial Mortgage By Propterty Type | 420,305 | 397,507 |
Other Loans and Leases Receivable | 2,740 | 2,740 |
Valuation Allowance - Other | 0 | 0 |
Office buildings [Member] | ||
Commercial mortgage loans | 44,621 | 40,976 |
Commercial mortgage loans, Percentage | 10.60% | 10.30% |
Retail stores [Member] | ||
Commercial mortgage loans | 72,226 | 72,325 |
Commercial mortgage loans, Percentage | 17.20% | 18.20% |
Apartment Complexes [Member] | ||
Commercial mortgage loans | 143,057 | 125,045 |
Commercial mortgage loans, Percentage | 34.00% | 31.50% |
Industrial Buildings [Member] | ||
Commercial mortgage loans | 87,088 | 88,009 |
Commercial mortgage loans, Percentage | 20.70% | 22.10% |
Agricultural Properties [Member] | ||
Commercial mortgage loans | 54,113 | 52,223 |
Commercial mortgage loans, Percentage | 12.90% | 13.10% |
Hospitality [Member] | ||
Commercial mortgage loans | 5,081 | 5,133 |
Commercial mortgage loans, Percentage | 1.20% | 1.30% |
Other [Member] | ||
Commercial mortgage loans | 14,119 | 13,796 |
Commercial mortgage loans, Percentage | 3.40% | 3.50% |
California [Member] | ||
Commercial mortgage loans, Percentage | 17.00% | |
Total Percentage [Member] | ||
Commercial mortgage loans, Percentage | 100.00% | 100.00% |
Uncollateralized Loans [Member] | ||
Other Loans and Leases Receivable | $2,740 | $2,740 |
Texas [Member] | ||
Commercial mortgage loans, Percentage | 12.00% |
Investments_Allowance_for_Loss
Investments (Allowance for Losses) (Details) (USD $) | 12 Months Ended | ||||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | ||
Allowance For Losses On Commermcial Mortgage And Other Loans [Line Items] | |||||
Allowance for Losses, Beginning Balance | $1,256 | [1] | $2,177 | $1,501 | |
Addition To / (Release of) Allowance For Losses | -774 | -921 | 676 | ||
Allowance for Losses, Ending Balance | 482 | [1] | 1,256 | [1] | 2,177 |
Agricultural Property Loans [Member] | |||||
Allowance For Losses On Commermcial Mortgage And Other Loans [Line Items] | |||||
Allowance for Losses, Ending Balance | $100 | $100 | $200 | ||
[1] | Agricultural loans represent less than $0.1 million of the ending allowance at both December 31, 2014 and 2013 and $0.2 million of the ending allowance at December 31, 2012. |
Investments_Allowance_for_Cred
Investments (Allowance for Credit Losses and Recorded Investment in Commercial Mortgage and Other Loans) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | ||
In Thousands, unless otherwise specified | ||||
Allowance for Credit Losses: | ||||
Ending Balance: Individually evaluated for impairment | $0 | [1] | $0 | [1] |
Ending Balance: collectively evaluated for impairment | 482 | [2] | 1,256 | [2] |
Total | 482 | 1,256 | ||
Recorded Investment: | ||||
Ending balance gross of reserves: individually evaluated for impairment | 0 | [1],[3] | 0 | [1],[3] |
Ending balance gross of reserves: collectively evaluated for impairment | 423,045 | [2],[3] | 400,247 | [2],[3] |
Total | 423,045 | [3] | 400,247 | [3] |
Agricultural Property Loans [Member] | ||||
Allowance for Credit Losses: | ||||
Ending Balance: collectively evaluated for impairment | 100 | 100 | ||
Recorded Investment: | ||||
Ending balance gross of reserves: collectively evaluated for impairment | 54,000 | 52,000 | ||
Uncollateralized Loans [Member] | ||||
Recorded Investment: | ||||
Ending balance gross of reserves: collectively evaluated for impairment | $3,000 | $3,000 | ||
[1] | _____________ There were no loans individually evaluated for impairments at both December 31, 2014 and 2013. | |||
[2] | Agricultural loans collectively evaluated for impairment had a recorded investment of $54 million and $52 million for the periods ending December 31, 2014 and 2013, respectively, and a related allowance of less than $0.1 million for both periods. Uncollateralized loans collectively evaluated for impairment had a recorded investment of $3 million at both December 31, 2014 and 2013 and no related allowance for both periods. | |||
[3] | Recorded investment reflects the balance sheet carrying value gross of related allowance. |
Investments_Credit_Quality_Ind
Investments (Credit Quality Indicators) (Details) (Commercial Mortgage and Agricultural Loans [Member], USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Debt Service Coverage Ratio, Greater than One Point Two X [Member] | Loan To Value Ratio Less Than Fifty Nine Point Nine Nine Percent [Member] | ||
Financing Receivable | $262,853 | $251,278 |
Debt Service Coverage Ratio, Greater than One Point Two X [Member] | Loan To Value Ratio Sixty Percent To Sixty Nine Point Nine Nine Percent [Member] | ||
Financing Receivable | 115,708 | 102,755 |
Debt Service Coverage Ratio, Greater than One Point Two X [Member] | Loan-to-Value Ratio, Seventy Percent To Seventy Nine Point Nine Nine Percent [Member] | ||
Financing Receivable | 25,034 | 31,712 |
Debt Service Coverage Ratio, Greater than One Point Two X [Member] | Loan-to-Value Ratio Greater than Eighty Percent [Member] | ||
Financing Receivable | 0 | 0 |
Debt Service Coverage Ratio, Greater than One Point Two X [Member] | Loan To Value Ratio Total [Member] | ||
Financing Receivable | 403,595 | 385,745 |
Debt Service Coverage Ratio, One Point Zero X to Less Than One Point Two X [Member] | Loan To Value Ratio Less Than Fifty Nine Point Nine Nine Percent [Member] | ||
Financing Receivable | 4,295 | 7,650 |
Debt Service Coverage Ratio, One Point Zero X to Less Than One Point Two X [Member] | Loan To Value Ratio Sixty Percent To Sixty Nine Point Nine Nine Percent [Member] | ||
Financing Receivable | 468 | 0 |
Debt Service Coverage Ratio, One Point Zero X to Less Than One Point Two X [Member] | Loan-to-Value Ratio, Seventy Percent To Seventy Nine Point Nine Nine Percent [Member] | ||
Financing Receivable | 1,458 | 2,247 |
Debt Service Coverage Ratio, One Point Zero X to Less Than One Point Two X [Member] | Loan-to-Value Ratio Greater than Eighty Percent [Member] | ||
Financing Receivable | 0 | 0 |
Debt Service Coverage Ratio, One Point Zero X to Less Than One Point Two X [Member] | Loan To Value Ratio Total [Member] | ||
Financing Receivable | 6,221 | 9,897 |
Debt Service Coverage Ratio, Less Than One Point Zero X [Member] | Loan To Value Ratio Less Than Fifty Nine Point Nine Nine Percent [Member] | ||
Financing Receivable | 10,489 | 1,865 |
Debt Service Coverage Ratio, Less Than One Point Zero X [Member] | Loan To Value Ratio Sixty Percent To Sixty Nine Point Nine Nine Percent [Member] | ||
Financing Receivable | 0 | 0 |
Debt Service Coverage Ratio, Less Than One Point Zero X [Member] | Loan-to-Value Ratio, Seventy Percent To Seventy Nine Point Nine Nine Percent [Member] | ||
Financing Receivable | 0 | 0 |
Debt Service Coverage Ratio, Less Than One Point Zero X [Member] | Loan-to-Value Ratio Greater than Eighty Percent [Member] | ||
Financing Receivable | 0 | 0 |
Debt Service Coverage Ratio, Less Than One Point Zero X [Member] | Loan To Value Ratio Total [Member] | ||
Financing Receivable | 10,489 | 1,865 |
Debt Service Coverage Ratio Total [Member] | Loan To Value Ratio Less Than Fifty Nine Point Nine Nine Percent [Member] | ||
Financing Receivable | 277,637 | 260,793 |
Debt Service Coverage Ratio Total [Member] | Loan To Value Ratio Sixty Percent To Sixty Nine Point Nine Nine Percent [Member] | ||
Financing Receivable | 116,176 | 102,755 |
Debt Service Coverage Ratio Total [Member] | Loan-to-Value Ratio, Seventy Percent To Seventy Nine Point Nine Nine Percent [Member] | ||
Financing Receivable | 26,492 | 33,959 |
Debt Service Coverage Ratio Total [Member] | Loan-to-Value Ratio Greater than Eighty Percent [Member] | ||
Financing Receivable | 0 | 0 |
Debt Service Coverage Ratio Total [Member] | Loan To Value Ratio Total [Member] | ||
Financing Receivable | $420,305 | $397,507 |
Investments_Other_Long_Term_In
Investments (Other Long Term Investments) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Other Long-Term Investments | $162,783 | $60,585 |
Joint Ventures And Limited Partnerships [Member] | ||
Other Long-Term Investments | 68,225 | 60,585 |
Derivative [Member] | ||
Other Long-Term Investments | $94,558 | $0 |
Investments_Net_Investment_Inc
Investments (Net Investment Income) (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | |||
Gross investment income | $169,753 | $224,447 | $285,625 |
Less: investment expenses | -5,742 | -6,564 | -7,974 |
Net Investment Income, Total | 164,011 | 217,883 | 277,651 |
Available For Sale Fixed Maturities [Member] | |||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | |||
Gross investment income | 140,114 | 191,043 | 246,479 |
Equity Securities [Member] | |||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | |||
Gross investment income | 0 | 0 | 7 |
Trading Account Assets [Member] | |||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | |||
Gross investment income | 325 | 342 | 923 |
Commercial Mortgage Loans [Member] | |||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | |||
Gross investment income | 21,802 | 28,463 | 28,449 |
Policy Loans [Member] | |||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | |||
Gross investment income | 739 | 675 | 845 |
Short-term Investments [Member] | |||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | |||
Gross investment income | 281 | 323 | 620 |
Other Long-term Investments [Member] | |||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | |||
Gross investment income | $6,492 | $3,601 | $8,302 |
Investments_Realized_Investmen
Investments (Realized Investment Gains Losses Net) (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Schedule Of Gain Loss On Investments [Line Items] | |||
Realized investment gains (losses), net | $7,368 | ($184,351) | ($83,230) |
Fixed Maturities [Member] | |||
Schedule Of Gain Loss On Investments [Line Items] | |||
Realized investment gains (losses), net | 14,706 | 8,795 | 22,684 |
Equity Securities [Member] | |||
Schedule Of Gain Loss On Investments [Line Items] | |||
Realized investment gains (losses), net | 1 | 10 | 703 |
Commercial Mortgage Loans [Member] | |||
Schedule Of Gain Loss On Investments [Line Items] | |||
Realized investment gains (losses), net | 774 | 933 | 1,043 |
Derivative [Member] | |||
Schedule Of Gain Loss On Investments [Line Items] | |||
Realized investment gains (losses), net | -8,113 | -194,055 | -107,663 |
Other [Member] | |||
Schedule Of Gain Loss On Investments [Line Items] | |||
Realized investment gains (losses), net | $0 | ($34) | $3 |
Investments_Net_Unrealized_Inv
Investments (Net Unrealized Investment Gains and Losses on Fixed Maturity Securities on which an OTTI loss) (Details) (USD $) | 12 Months Ended | |||||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |||
Balance | $84,622 | $70,867 | ||||
Accumulated Net Unrealized Investment Gain (Loss) Pre Tax [Member] | Securities Related to Other Than Temporary Impairments [Member] | ||||||
Balance | 323 | [1] | 545 | [1] | -1,740 | [1] |
Net investment gains (losses) on investments arising during the period | -11 | [1] | 483 | [1] | 3,067 | [1] |
Reclassification adjustment for (gains) losses included in net income | -311 | [1] | -705 | [1] | -782 | [1] |
Impact of net unrealized investment (gains) losses on deferred policy acquisition costs | 0 | [1] | 0 | [1] | 0 | [1] |
Impact of net unrealized investment (gains) losses on policyholders' account balance | 0 | [1] | 0 | [1] | 0 | [1] |
Balance | 1 | [1] | 323 | [1] | 545 | [1] |
Deferred Costs Policy Acquisition And Sales Inducements And Valuation Of Business Acquired, Pre Tax [Member] | Securities Related to Other Than Temporary Impairments [Member] | ||||||
Balance | -116 | -214 | 692 | |||
Net investment gains (losses) on investments arising during the period | 0 | 0 | 0 | |||
Reclassification adjustment for (gains) losses included in net income | 0 | 0 | 0 | |||
Impact of net unrealized investment (gains) losses on deferred policy acquisition costs | 116 | 98 | -906 | |||
Impact of net unrealized investment (gains) losses on policyholders' account balance | 0 | 0 | 0 | |||
Balance | 0 | -116 | -214 | |||
Policyholders Account Balances Pre Tax [Member] | Securities Related to Other Than Temporary Impairments [Member] | ||||||
Balance | -14 | 0 | 0 | |||
Net investment gains (losses) on investments arising during the period | 0 | 0 | 0 | |||
Reclassification adjustment for (gains) losses included in net income | 0 | 0 | 0 | |||
Impact of net unrealized investment (gains) losses on deferred policy acquisition costs | 0 | 0 | 0 | |||
Impact of net unrealized investment (gains) losses on policyholders' account balance | 14 | -14 | 0 | |||
Balance | 0 | -14 | 0 | |||
Deferred Income Tax Liability Benefit [Member] | Securities Related to Other Than Temporary Impairments [Member] | ||||||
Balance | -51 | -100 | 382 | |||
Net investment gains (losses) on investments arising during the period | 4 | -168 | -1,073 | |||
Reclassification adjustment for (gains) losses included in net income | 109 | 247 | 274 | |||
Impact of net unrealized investment (gains) losses on deferred policy acquisition costs | -41 | -35 | 317 | |||
Impact of net unrealized investment (gains) losses on policyholders' account balance | -5 | 5 | 0 | |||
Balance | 16 | -51 | -100 | |||
Accumulated Net Unrealized Investment Gain (Loss) [Member] | Securities Related to Other Than Temporary Impairments [Member] | ||||||
Balance | 142 | 231 | -666 | |||
Net investment gains (losses) on investments arising during the period | -7 | 315 | 1,994 | |||
Reclassification adjustment for (gains) losses included in net income | -202 | -458 | -508 | |||
Impact of net unrealized investment (gains) losses on deferred policy acquisition costs | 75 | 63 | -589 | |||
Impact of net unrealized investment (gains) losses on policyholders' account balance | 9 | -9 | 0 | |||
Balance | $17 | $142 | $231 | |||
[1] | _____________ Includes cash flow hedges. See Note 11 for information on cash flow hedges. |
Investments_All_Other_Net_Unre
Investments (All Other Net Unrealized Investment Gains and Losses in AOCI) (Details) (USD $) | 12 Months Ended | ||||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | ||
Balance | $84,622 | $70,867 | |||
Other Net Unrealized Investment Gains and Losses [Member] | Accumulated Net Unrealized Investment Gain (Loss) Pre Tax [Member] | |||||
Balance | 184,727 | 376,777 | 441,677 | ||
Net investment gains (losses) on investments arising during the period | 28,590 | -183,950 | -42,295 | ||
Reclassification adjustment for (gains) losses included in net income | -14,395 | -8,100 | -22,605 | ||
Reclassification adjustment for OTTI losses excluded from net income | 0 | [1] | 0 | [1] | |
Impact of net unrealized investment (gains) losses on deferred policy acquisition costs | 0 | 0 | 0 | ||
Impact of net unrealized investment (gains) losses on policyholders' account balance | 0 | 0 | 0 | ||
Balance | 198,922 | 184,727 | 376,777 | ||
Other Net Unrealized Investment Gains and Losses [Member] | Deferred Costs Policy Acquisition And Sales Inducements And Valuation Of Business Acquired, Pre Tax [Member] | |||||
Balance | -66,452 | -147,089 | -192,119 | ||
Net investment gains (losses) on investments arising during the period | 0 | 0 | 0 | ||
Reclassification adjustment for (gains) losses included in net income | 0 | 0 | 0 | ||
Reclassification adjustment for OTTI losses excluded from net income | 0 | [1] | 0 | [1] | |
Impact of net unrealized investment (gains) losses on deferred policy acquisition costs | 7,407 | 80,637 | 45,030 | ||
Impact of net unrealized investment (gains) losses on policyholders' account balance | 0 | 0 | 0 | ||
Balance | -59,045 | -66,452 | -147,089 | ||
Other Net Unrealized Investment Gains and Losses [Member] | Policyholders Account Balances Pre Tax [Member] | |||||
Balance | -8,187 | -2,164 | 0 | ||
Net investment gains (losses) on investments arising during the period | 0 | 0 | 0 | ||
Reclassification adjustment for (gains) losses included in net income | 0 | 0 | 0 | ||
Reclassification adjustment for OTTI losses excluded from net income | 0 | [1] | 0 | [1] | |
Impact of net unrealized investment (gains) losses on deferred policy acquisition costs | 0 | 0 | 0 | ||
Impact of net unrealized investment (gains) losses on policyholders' account balance | -185 | -6,023 | -2,164 | ||
Balance | -8,372 | -8,187 | -2,164 | ||
Other Net Unrealized Investment Gains and Losses [Member] | Deferred Income Tax Liability Benefit [Member] | |||||
Balance | -39,363 | -80,468 | -88,181 | ||
Net investment gains (losses) on investments arising during the period | -10,013 | 64,383 | 14,804 | ||
Reclassification adjustment for (gains) losses included in net income | 5,036 | 2,835 | 7,912 | ||
Reclassification adjustment for OTTI losses excluded from net income | 0 | [1] | 0 | [1] | |
Impact of net unrealized investment (gains) losses on deferred policy acquisition costs | -2,594 | -28,222 | -15,760 | ||
Impact of net unrealized investment (gains) losses on policyholders' account balance | 64 | 2,109 | 757 | ||
Balance | -46,870 | -39,363 | -80,468 | ||
Other Net Unrealized Investment Gains and Losses [Member] | Accumulated Net Unrealized Investment Gain (Loss) [Member] | |||||
Balance | 70,725 | 147,056 | 161,377 | ||
Net investment gains (losses) on investments arising during the period | 18,577 | -119,567 | -27,491 | ||
Reclassification adjustment for (gains) losses included in net income | -9,359 | -5,265 | -14,693 | ||
Reclassification adjustment for OTTI losses excluded from net income | 0 | [1] | 0 | [1] | |
Impact of net unrealized investment (gains) losses on deferred policy acquisition costs | 4,813 | 52,415 | 29,270 | ||
Impact of net unrealized investment (gains) losses on policyholders' account balance | -121 | -3,914 | -1,407 | ||
Balance | $84,635 | $70,725 | $147,056 | ||
[1] | Includes cash flow hedges. See Note 11 for information on cash flow hedges. |
Investments_Net_Unrealized_Gai
Investments (Net Unrealized Gains Losses on Investments by Asset Class) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |||
In Thousands, unless otherwise specified | ||||||
Net unrealized gains (losses) on investments | $198,923 | $185,050 | $377,322 | |||
Fixed Maturities [Member] | ||||||
Net unrealized gains (losses) on investments | 191,339 | 184,891 | 375,409 | |||
Equity Securities [Member] | ||||||
Net unrealized gains (losses) on investments | 3 | 2 | 4 | |||
Other Long-term Investments [Member] | ||||||
Net unrealized gains (losses) on investments | 390 | 374 | 46 | |||
Affiliated Notes [Member] | ||||||
Net unrealized gains (losses) on investments | 2,351 | 3,113 | 4,386 | |||
Securities Related to Other Than Temporary Impairments [Member] | Fixed Maturities [Member] | ||||||
Net unrealized gains (losses) on investments | 1 | 323 | 545 | |||
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges [Member] | ||||||
Net unrealized gains (losses) on investments | $4,839 | [1] | ($3,653) | [1] | ($3,068) | [1] |
[1] | _____________ See Note 11 for more information on cash flow hedges. |
Investments_Fair_Value_and_Los
Investments (Fair Value and Losses by Investment Category and Length of Time in a Loss Position) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | |
In Thousands, unless otherwise specified | |||
Duration Of Unrealized Losses On Fixed Maturities Investments [Line Items] | |||
Less than twelve months Fair Value | $322,351 | $643,930 | [1] |
Less than 12 months Gross Unrealized Losses | 5,969 | 20,275 | [1] |
Twelve months or more Fair Value | 58,991 | 12,047 | [1] |
Twelve months or more Gross Unrealized Losses | 1,152 | 1,621 | [1] |
Total Fair Value | 381,342 | 655,977 | [1] |
Total Gross Unrealized Losses | 7,121 | 21,896 | [1] |
US Treasury And Government [Member] | |||
Duration Of Unrealized Losses On Fixed Maturities Investments [Line Items] | |||
Less than twelve months Fair Value | 2,676 | 3,347 | [1] |
Less than 12 months Gross Unrealized Losses | 10 | 34 | [1] |
Twelve months or more Fair Value | 0 | 0 | [1] |
Twelve months or more Gross Unrealized Losses | 0 | 0 | [1] |
Total Fair Value | 2,676 | 3,347 | [1] |
Total Gross Unrealized Losses | 10 | 34 | [1] |
Obligations of U.S. states and their political subdivisions [Member] | |||
Duration Of Unrealized Losses On Fixed Maturities Investments [Line Items] | |||
Less than twelve months Fair Value | 0 | 5,420 | [1] |
Less than 12 months Gross Unrealized Losses | 0 | 588 | [1] |
Twelve months or more Fair Value | 7,305 | 6,402 | [1] |
Twelve months or more Gross Unrealized Losses | 20 | 982 | [1] |
Total Fair Value | 7,305 | 11,822 | [1] |
Total Gross Unrealized Losses | 20 | 1,570 | [1] |
Foreign Government Debt Securities [Member] | |||
Duration Of Unrealized Losses On Fixed Maturities Investments [Line Items] | |||
Less than twelve months Fair Value | 4,632 | ||
Less than 12 months Gross Unrealized Losses | 4 | ||
Twelve months or more Fair Value | 0 | ||
Twelve months or more Gross Unrealized Losses | 0 | ||
Total Fair Value | 4,632 | ||
Total Gross Unrealized Losses | 4 | ||
Corporate Debt Securities [Member] | |||
Duration Of Unrealized Losses On Fixed Maturities Investments [Line Items] | |||
Less than twelve months Fair Value | 260,414 | 291,994 | [1] |
Less than 12 months Gross Unrealized Losses | 4,462 | 8,782 | [1] |
Twelve months or more Fair Value | 9,403 | 2,704 | [1] |
Twelve months or more Gross Unrealized Losses | 429 | 370 | [1] |
Total Fair Value | 269,817 | 294,698 | [1] |
Total Gross Unrealized Losses | 4,891 | 9,152 | [1] |
Asset-backed Securities [Member] | |||
Duration Of Unrealized Losses On Fixed Maturities Investments [Line Items] | |||
Less than twelve months Fair Value | 31,756 | 97,575 | [1] |
Less than 12 months Gross Unrealized Losses | 58 | 1,509 | [1] |
Twelve months or more Fair Value | 32,732 | 0 | [1] |
Twelve months or more Gross Unrealized Losses | 333 | 0 | [1] |
Total Fair Value | 64,488 | 97,575 | [1] |
Total Gross Unrealized Losses | 391 | 1,509 | [1] |
Commercial Mortgage Backed Securities [Member] | |||
Duration Of Unrealized Losses On Fixed Maturities Investments [Line Items] | |||
Less than twelve months Fair Value | 4,309 | 86,132 | [1] |
Less than 12 months Gross Unrealized Losses | 108 | 5,249 | [1] |
Twelve months or more Fair Value | 7,377 | 2,941 | [1] |
Twelve months or more Gross Unrealized Losses | 98 | 269 | [1] |
Total Fair Value | 11,686 | 89,073 | [1] |
Total Gross Unrealized Losses | 206 | 5,518 | [1] |
Residential Mortgage Backed Securities [Member] | |||
Duration Of Unrealized Losses On Fixed Maturities Investments [Line Items] | |||
Less than twelve months Fair Value | 342 | 100,150 | [1] |
Less than 12 months Gross Unrealized Losses | 6 | 972 | [1] |
Twelve months or more Fair Value | 0 | 0 | [1] |
Twelve months or more Gross Unrealized Losses | 0 | 0 | [1] |
Total Fair Value | 342 | 100,150 | [1] |
Total Gross Unrealized Losses | 6 | 972 | [1] |
PublicUtilityBondsMember | |||
Duration Of Unrealized Losses On Fixed Maturities Investments [Line Items] | |||
Less than twelve months Fair Value | 18,222 | 59,312 | [1] |
Less than 12 months Gross Unrealized Losses | 1,321 | 3,141 | [1] |
Twelve months or more Fair Value | 2,174 | 0 | [1] |
Twelve months or more Gross Unrealized Losses | 272 | 0 | [1] |
Total Fair Value | 20,396 | 59,312 | [1] |
Total Gross Unrealized Losses | $1,593 | $3,141 | [1] |
[1] | Prior period’s amounts are presented on a basis consistent with the current period presentation. |
Investments_Fair_Value_and_Los1
Investments (Fair Value and Losses by Length of Time in a Continuous Unrealized Loss Position) (Details) (Equity Securities [Member], USD $) | Dec. 31, 2014 | Dec. 31, 2013 | |
In Thousands, unless otherwise specified | |||
Equity Securities [Member] | |||
Duration Of Unrealized Losses On Equity Securities [Line Items] | |||
Less than twelve months Fair Value | $0 | $0 | [1] |
Less than twelve months Gross Unrealized Losses | 0 | 0 | [1] |
Twelve months or more Fair Value | 0 | 0 | [1] |
Twelve months or more Gross Unrealized Losses | 0 | 0 | [1] |
Total Fair Value | 0 | 0 | [1] |
Total Gross Unrealized Losses | $0 | $0 | [1] |
[1] | Prior period’s amounts are presented on a basis consistent with the current period presentation. |
Investments_Securities_Pledged
Investments (Securities Pledged) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Financial Instruments Owned and Pledged as Collateral [Line Items] | ||
Financial Instruments Owned and Pledged as Collateral | $5,098,000 | $46,443,000 |
Fixed Maturities, Available For Sale [Member] | ||
Financial Instruments Owned and Pledged as Collateral [Line Items] | ||
Financial Instruments Owned and Pledged as Collateral | 5,098,000 | 46,156,000 |
Other Trading Account Assets [Member] | ||
Financial Instruments Owned and Pledged as Collateral [Line Items] | ||
Financial Instruments Owned and Pledged as Collateral | 0 | 287,000 |
Cash Collateral For Loaned Securities [Member] | ||
Financial Instruments Owned and Pledged as Collateral [Line Items] | ||
Financial Instruments Owned and Pledged as Collateral, Associated Liabilities | $5,000,000 | $48,000,000 |
Investments_Balance_of_and_Cha
Investments (Balance of and Changes in AOCI Components) (USD $) | 12 Months Ended | |||||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |||||
Accumulated other comprehensive income | $84,622,000 | $70,867,000 | ||||||
AccumulatedTranslationAdjustmentMember | ||||||||
Accumulated other comprehensive income | -30,000 | 10,000 | 7,000 | 0 | ||||
Change in Other Comprehensive Income | -63,000 | 3,000 | [1] | 7,000 | [1] | |||
Amount Reclassified from AOCI | 0 | |||||||
Income Tax Benefit Expense | 23,000 | |||||||
Accumulated Net Unrealized Investment Gain (Loss) [Member] | ||||||||
Accumulated other comprehensive income | 84,652,000 | [2] | 70,857,000 | [2] | 147,280,000 | [2] | 160,711,000 | [2] |
Change in Other Comprehensive Income | 35,931,000 | [2] | -76,423,000 | [1],[2] | -13,431,000 | [1],[2] | ||
Amount Reclassified from AOCI | -14,706,000 | [2],[3],[4],[5] | -8,805,000 | [3],[4],[5] | -23,387,000 | [3],[4],[5] | ||
Income Tax Benefit Expense | -7,430,000 | [2] | ||||||
Cash Flow Hedge Gain Loss To AOCI | 5,000,000 | -4,000,000 | -3,000,000 | |||||
Accumulated Other Comprehensive Income (loss) [Member] | ||||||||
Accumulated other comprehensive income | 84,622,000 | 70,867,000 | 147,287,000 | 160,711,000 | ||||
Change in Other Comprehensive Income | 35,868,000 | -76,420,000 | [1] | -13,424,000 | [1] | |||
Amount Reclassified from AOCI | -14,706,000 | [3],[4] | -8,805,000 | [3],[4] | -23,387,000 | [3],[4] | ||
Income Tax Benefit Expense | ($7,407,000) | |||||||
[1] | Net of taxes. | |||||||
[2] | _____________ Includes cash flow hedges of $5.0 million, $(4.0) million, and $(3.0) million as of December 31, 2014, 2013, and 2012, respectively. | |||||||
[3] | _____________ All amounts are shown before tax. | |||||||
[4] | Positive amounts indicate gains/benefits reclassified out of AOCI. Negative amounts indicate losses/costs reclassified out of AOCI. | |||||||
[5] | See table below for additional information on unrealized investment gains (losses), including the impact on deferred policy acquisition and other costs and future policy benefits. |
Investments_Reclassifications_
Investments (Reclassifications of AOCI) (USD $) | 12 Months Ended | |||||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |||
OCI Unrealized Gain Loss On Cash Flow Hedges Net Of Tax | ||||||
Amount Reclassified from AOCI | $148 | [1],[2],[3] | ($95) | [1],[2],[3] | ($101) | [1],[2],[3] |
OCI Unrealized Gain Loss On Available For Sale Securities Arising During Period Net Of Tax | ||||||
Amount Reclassified from AOCI | 14,558 | [1],[2] | 8,900 | [1],[2] | 23,488 | [1],[2] |
Accumulated Net Unrealized Investment Gain (Loss) [Member] | ||||||
Amount Reclassified from AOCI | -14,706 | [1],[2],[4],[5] | -8,805 | [1],[2],[4] | -23,387 | [1],[2],[4] |
Accumulated Other Comprehensive Income (loss) [Member] | ||||||
Amount Reclassified from AOCI | ($14,706) | [1],[2] | ($8,805) | [1],[2] | ($23,387) | [1],[2] |
[1] | _____________ All amounts are shown before tax. | |||||
[2] | Positive amounts indicate gains/benefits reclassified out of AOCI. Negative amounts indicate losses/costs reclassified out of AOCI. | |||||
[3] | See Note 11 for additional information on cash flow hedges. | |||||
[4] | See table below for additional information on unrealized investment gains (losses), including the impact on deferred policy acquisition and other costs and future policy benefits. | |||||
[5] | _____________ Includes cash flow hedges of $5.0 million, $(4.0) million, and $(3.0) million as of December 31, 2014, 2013, and 2012, respectively. |
Deferred_Policy_Acquisition_Co2
Deferred Policy Acquisition Costs (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
DeferredPolicyAcquisitionCostsDisclosuresAbstract | |||
Balance, beginning of year | $1,345,504 | $906,814 | $666,764 |
DeferredPolicyAcquisitionCostsAdditions | 2,804 | 4,050 | 25,081 |
Amortization Impact Of Assumption And Experience Unlocking And True Ups | 91,895 | 31,666 | 274,503 |
Amortization - All Other | -330,311 | 353,895 | -86,461 |
DeferredPolicyAcquisitionCostAmortizationExpenseUnrealizedInvestmentGainsLosses | 4,539 | 49,079 | 26,927 |
Balance, end of year | $1,114,431 | $1,345,504 | $906,814 |
Valuation_of_Business_Acquired1
Valuation of Business Acquired (Balance of and Changes in VOBA) (Details) (USD $) | 12 Months Ended | |||||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |||
PresentValueOfFutureInsuranceProfitsAbstract | ||||||
Balance, beginning of year | $43,500 | $43,090 | $29,010 | |||
Amortization - Impact of assumption and experience Unlocking And Trueups | 5,412 | [1] | 6,376 | [1] | 21,931 | [1] |
Amortization- All Other | -11,181 | [1] | -11,593 | [1] | -13,871 | [1] |
Change in Unrealized Investment Gains Losses | -608 | 2,865 | 3,943 | |||
PresentValueOfFutureInsuranceProfitsInterestAccrued | 2,615 | [2] | 2,762 | [2] | 2,077 | [2] |
Balance, end of year | $39,738 | $43,500 | $43,090 | |||
Weighted Average Remaining Life VOBA | 5 years 3 months 0 days | |||||
Interest Accrual Rate VOBA | 6.10% | 6.14% | 6.18% | |||
[1] | The weighted average remaining expected life of VOBA was approximately 5.26 years from the date of acquisition. | |||||
[2] | The interest accrual rate for the VOBA related to the businesses acquired was 6.10%, 6.14% and 6.18% for years ended December 31, 2014, 2013 and 2012. |
Valuation_of_Business_Acquired2
Valuation of Business Acquired (Estimated Future Amortization, Net of Interest) (Details) (USD $) | 12 Months Ended | |||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
PresentValueOfFutureInsuranceProfitsAbstract | ||||
ExpectedAmortizationExpenseOfEndingPresentValueOfFutureInsuranceProfitsYearOne | $6,571 | |||
ExpectedAmortizationExpenseOfEndingPresentValueOfFutureInsuranceProfitsYearTwo | 5,276 | |||
ExpectedAmortizationExpenseOfEndingPresentValueOfFutureInsuranceProfitsYearThree | 4,446 | |||
ExpectedAmortizationExpenseOfEndingPresentValueOfFutureInsuranceProfitsYearFour | 3,804 | |||
ExpectedAmortizationExpenseOfEndingPresentValueOfFutureInsuranceProfitsYearFive | 3,134 | |||
PresentValueOfFutureInsuranceProfits | $39,738 | $43,500 | $43,090 | $29,010 |
Certain_Nontraditional_LongDur2
Certain Nontraditional Long-Duration Contracts (Guarantees Associated with Variable Annuity Contracts, by Guarantee Type) (Details) (variableannuity, USD $) | 12 Months Ended | |||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | ||
Net Amount At Risk By Product And Guarantee [Line Items] | ||||
Average Period Remaining Until Expected Annuitization At Annuitization Accumulation | 0 years 1 month 0 days | 0 years 2 months 0 days | ||
Return of net deposits | ||||
Net Amount At Risk By Product And Guarantee [Line Items] | ||||
Account value in the event of death | 38,410,155 | 40,828,166 | ||
NetAmountAtRiskByProductAndGuaranteeNetAmountAtRiskInEventOfDeath | 353,902 | 407,488 | ||
Average Attained Age of Contractholders In the Event of Death | 65 years 0 months 0 days | 64 years 0 months 0 days | ||
Minimum return or contract value | ||||
Net Amount At Risk By Product And Guarantee [Line Items] | ||||
Account value in the event of death | 7,886,833 | 8,446,938 | ||
NetAmountAtRiskByProductAndGuaranteeNetAmountAtRiskInEventOfDeath | 916,016 | 916,094 | ||
Account value at annuitization or accumulation | 38,471,465 | [1] | 40,678,507 | [1] |
NetAmountAtRiskByProductAndGuaranteeNetAmountAtRiskAtAnnuitization | 1,358,023 | [1] | 1,272,641 | [1] |
Average Attained Age of Contractholders In the Event of Death | 67 years 0 months 0 days | 66 years 0 months 0 days | ||
Average attained age of contractholders At Annuitization Accumulation | 64 years 0 months 0 days | 64 years 0 months 0 days | ||
[1] | Includes income and withdrawal benefits described herein. |
Certain_Nontraditional_LongDur3
Certain Nontraditional Long-Duration Contracts (Guarantees Associated with Variable Annuity Contracts, by guarantee, by Guarantee Type) (MVA Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Unadjusted Value | ||
Net Amount At Risk By Product And Guarantee [Line Items] | ||
MVA Account Value | $1,244,131 | $1,554,743 |
Adjusted Value | ||
Net Amount At Risk By Product And Guarantee [Line Items] | ||
MVA Account Value | $1,251,084 | $1,580,487 |
Certain_Nontraditional_LongDur4
Certain Nontraditional Long-Duration Contracts (Account Balances of Variable Annuity Contracts with Guarantees Invested in General and Separate Account Investment Options) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Net Amount At Risk By Product And Guarantee [Line Items] | ||
NetAmountAtRiskByProductAndGuaranteeSeparateAccountValue | $43,819,126,000 | $46,347,647,000 |
variableannuity | ||
Net Amount At Risk By Product And Guarantee [Line Items] | ||
netamountatriskbyproductandguaranteegeneralaccountvalue | 2,500,000,000 | 2,900,000,000 |
variableannuity | EquityFundsMember | ||
Net Amount At Risk By Product And Guarantee [Line Items] | ||
NetAmountAtRiskByProductAndGuaranteeSeparateAccountValue | 28,191,315,000 | 28,992,157,000 |
variableannuity | BondFundsMember [Member] | ||
Net Amount At Risk By Product And Guarantee [Line Items] | ||
NetAmountAtRiskByProductAndGuaranteeSeparateAccountValue | 12,844,788,000 | 14,924,698,000 |
variableannuity | MoneyMarketFundsMember | ||
Net Amount At Risk By Product And Guarantee [Line Items] | ||
NetAmountAtRiskByProductAndGuaranteeSeparateAccountValue | $2,783,023,000 | $2,430,792,000 |
Certain_Nontraditional_LongDur5
Certain Nontraditional Long-Duration Contracts (Summary of the Changes in General Account Liabilities for Guarantees on Variable Contracts) (Details) (variableannuity, USD $) | 12 Months Ended | |||||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |||
Net Amount At Risk By Product And Guarantee [Line Items] | ||||||
GuaranteedBenefitLiabilityGross, Beginning Balance | $989,375 | $2,039,178 | $1,975,689 | |||
Incurred guarantee benefits | 2,424,215 | [1] | -1,029,750 | [1] | 95,602 | [1] |
GuaranteedBenefitsPaid | -26,633 | -28,254 | -32,113 | |||
GuaranteedBenefitLiabilityGross, Ending Balance | 3,387,128 | 989,375 | 2,039,178 | |||
Changes in Unrealized Investment Gains and Losses | 171 | 8,201 | ||||
GuaranteedMinimumAccumulationWithdrawalIncomeAndWithdrawalBenefitsMember [Member] | ||||||
Net Amount At Risk By Product And Guarantee [Line Items] | ||||||
GuaranteedBenefitLiabilityGross, Beginning Balance | 778,226 | 1,793,135 | 1,783,594 | |||
Incurred guarantee benefits | 2,334,185 | [1] | -1,014,909 | [1] | 9,541 | [1] |
GuaranteedBenefitsPaid | 0 | 0 | 0 | |||
GuaranteedBenefitLiabilityGross, Ending Balance | 3,112,411 | 778,226 | 1,793,135 | |||
Changes in Unrealized Investment Gains and Losses | 0 | 0 | ||||
GuaranteedMinimumIncomeBenefitMember | ||||||
Net Amount At Risk By Product And Guarantee [Line Items] | ||||||
GuaranteedBenefitLiabilityGross, Beginning Balance | 11,279 | 23,516 | 14,377 | |||
Incurred guarantee benefits | 8,506 | [1] | -11,650 | [1] | 9,821 | [1] |
GuaranteedBenefitsPaid | -724 | -747 | -682 | |||
GuaranteedBenefitLiabilityGross, Ending Balance | 19,104 | 11,279 | 23,516 | |||
Changes in Unrealized Investment Gains and Losses | 43 | 160 | ||||
GuaranteedMinimumDeathBenefitMember | ||||||
Net Amount At Risk By Product And Guarantee [Line Items] | ||||||
GuaranteedBenefitLiabilityGross, Beginning Balance | 199,870 | 222,527 | 177,718 | |||
Incurred guarantee benefits | 81,524 | [1] | -3,191 | [1] | 76,240 | [1] |
GuaranteedBenefitsPaid | -25,909 | -27,507 | -31,431 | |||
GuaranteedBenefitLiabilityGross, Ending Balance | 255,613 | 199,870 | 222,527 | |||
Changes in Unrealized Investment Gains and Losses | $128 | $8,041 | ||||
[1] | Incurred guarantee benefits include the portion of assessments established as additions to reserve as well as changes in estimates affecting the reserves. Also includes changes in the fair value of features accounted for as derivatives. |
Certain_Nontraditional_LongDur6
Certain Nontraditional Long-Duration Contracts (Changes in Deferred Sales Inducements, Reported as "Interest credited to policyholders' account (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
deferredsalesinducements | |||
Deferred Sales Inducements, Beginning Balance | $809,247 | $556,830 | $445,841 |
deferredsalesinducementsadditions | 11,515 | 31,370 | 59,269 |
Amortization - Impact of assumption and experience unlocking and true-ups | 45,417 | 13,038 | 133,214 |
Amortization - All other | -204,563 | 179,219 | -94,752 |
Change in unrealized investment gains and losses | 3,591 | 28,790 | 13,258 |
Deferred Sales Inducements, Ending Balance | $665,207 | $809,247 | $556,830 |
Reinsurance_Reinsurance_Info_D
Reinsurance (Reinsurance Info) (Details) (USD $) | 12 Months Ended | |||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | ||||
EffectsOfReinsurance1[Abstract] | ||||||
Reinsurance Recoverable, Guarantee Benefits | $2,996,845,000 | $748,690,000 | ||||
LifeInsuranceInforce | 121,000,000 | 128,000,000 | 132,000,000 | |||
Statement [Line Items] | ||||||
Policy Charges Fee Income - Life | 2,666,000 | [1] | 2,241,000 | [1] | 2,423,000 | [1] |
Total realized investment gains (losses), net | 7,368,000 | -184,351,000 | -83,230,000 | |||
Policyholders' benefits | 137,135,000 | 29,727,000 | 124,316,000 | |||
Operating Expenses Other Than Amortization Of Deferred Policy Acquisition Costs | 394,248,000 | 402,679,000 | 424,764,000 | |||
Policy Charges and Fee Income Annuity | 803,661,000 | 807,001,000 | 794,572,000 | |||
Gross | ||||||
Statement [Line Items] | ||||||
Policy Charges Fee Income - Life | 3,522,000 | [1] | 3,472,000 | [1] | 3,522,000 | [1] |
Total realized investment gains (losses), net | -1,967,588,000 | 1,076,184,000 | 202,568,000 | |||
Policyholders' benefits | 137,502,000 | 29,874,000 | 124,517,000 | |||
Operating Expenses Other Than Amortization Of Deferred Policy Acquisition Costs | 398,960,000 | 407,365,000 | 429,383,000 | |||
Policy Charges and Fee Income Annuity | 805,550,000 | 809,549,000 | 796,711,000 | |||
Unaffiliated Ceded | ||||||
Statement [Line Items] | ||||||
Policy Charges Fee Income - Life | -856,000 | [1] | -1,231,000 | [1] | -1,099,000 | [1] |
Total realized investment gains (losses), net | 0 | 0 | 0 | |||
Policyholders' benefits | -367,000 | -147,000 | -201,000 | |||
Operating Expenses Other Than Amortization Of Deferred Policy Acquisition Costs | -838,000 | -776,000 | -784,000 | |||
Policy Charges and Fee Income Annuity | -1,889,000 | -2,548,000 | -2,139,000 | |||
Affiliated Ceded | ||||||
Statement [Line Items] | ||||||
Policy Charges Fee Income - Life | 0 | [1] | 0 | [1] | 0 | [1] |
Total realized investment gains (losses), net | 1,974,956,000 | -1,260,535,000 | -285,798,000 | |||
Policyholders' benefits | 0 | 0 | 0 | |||
Operating Expenses Other Than Amortization Of Deferred Policy Acquisition Costs | -3,874,000 | -3,910,000 | -3,835,000 | |||
Policy Charges and Fee Income Annuity | $0 | $0 | $0 | |||
[1] | Life insurance inforce face amounts at December 31, 2014, 2013 and 2012 was $ 121 million, $ 128 million and $ 132 million, respectively. |
Income_Taxes_Narrative_Details
Income Taxes (Narrative) (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Income Taxes [Line Items] | |||
IncomeLossFromContinuingOperationsBeforeIncomeTaxesDomestic | $259,372 | $1,180,464 | $857,693 |
Income_Taxes_Components_of_Inc
Income Taxes (Components of Income Tax Expense (Benefit)) (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
CurrentIncomeTaxExpenseBenefitContinuingOperationsAbstract | |||
CurrentFederalTaxExpenseBenefit | ($8,499) | $36,759 | $26,637 |
CurrentStateAndLocalTaxExpenseBenefit | 0 | 0 | 0 |
Current Income Tax Expense (Benefit) | -8,499 | 36,759 | 26,637 |
DeferredIncomeTaxExpenseBenefitContinuingOperationsAbstract | |||
DeferredFederalIncomeTaxExpenseBenefit | 17,103 | 295,613 | 196,997 |
DeferredStateAndLocalIncomeTaxExpenseBenefit | 0 | 0 | 0 |
Deferred Income Tax Expense (Benefit) | 17,103 | 295,613 | 196,997 |
Total income tax expense (benefit) on continuing operations | 8,604 | 332,372 | 223,634 |
IncomeTaxEffectsAllocatedDirectlyToEquityAbstract | |||
Other comprehensive income (loss) | 7,407 | -41,149 | -7,218 |
AdjustmentsToAdditionalPaidInCapitalTaxEffectFromShareBasedCompensation | 0 | 4,354 | 5,730 |
Total income taxes | $16,011 | $295,577 | $222,146 |
Income_Taxes_Foreign_Domestic_
Income Taxes (Foreign & Domestic Income) (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
IncomeTaxDisclosureAbstract | |||
IncomeLossFromContinuingOperationsBeforeIncomeTaxesDomestic | $259,372 | $1,180,464 | $857,693 |
Income_Taxes_Reconciliation_To
Income Taxes (Reconciliation To Effective Rate) (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
IncomeTaxExpenseBenefitContinuingOperationsIncomeTaxReconciliationAbstract | |||
IncomeTaxReconciliationIncomeTaxExpenseBenefitAtFederalStatutoryIncomeTaxRate | $90,780 | $413,162 | $300,192 |
IncomeTaxReconciliationTaxCreditsOther | 13,080 | 10,595 | 10,279 |
Non-taxable investment income | 69,122 | 69,665 | 66,895 |
IncomeTaxReconciliationOtherAdjustments | 26 | -529 | 616 |
Income Tax Expense (Benefit) | $8,604 | $332,372 | $223,634 |
Income_Taxes_Deferred_Tax_Asse
Income Taxes (Deferred Tax Assets and Liabilitites) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
DeferredTaxAssetsNetAbstract | ||
DeferredTaxAssetsInsuranceReserves | $267,536 | $292,815 |
DeferredTaxAssetsInvestments | 13,270 | 124,489 |
DeferredTaxAssetsOther | 0 | 0 |
DeferredTaxAssetsNet | 282,566 | 419,165 |
DeferredTaxAssetsCompensationReserves | 1,760 | 1,860 |
DeferredTaxLiabilitiesAbstract | ||
DeferredTaxLiabilitiesUnrealizedGainsOnTradingSecurities | 68,819 | 66,046 |
DeferredTaxLiabilities | 673,428 | 785,521 |
Deferred annuity bonus | 232,822 | 283,236 |
DAC and VOBA Deferred Tax Liability | 370,548 | 435,775 |
Deferred Tax Liabilities Other | 1,239 | 464 |
DeferredTaxAssetsLiabilitiesNet | ($390,863) | ($366,356) |
Fair_Value_of_Assets_and_Liabi2
Fair Value of Assets and Liabilities (Narrative) (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Separate Account assets transferred from Level 2 to Level 1 | $0 | $933,000,000 |
Total commercial mortgage and other loans, net of valuation allowance | 422,563,000 | 398,991,000 |
Other Long-Term Investments | 162,783,000 | 60,585,000 |
Other liabilities | 105,972,000 | 113,125,000 |
Embedded Derivative Fair Value of Embedded Derivative | 3,112,000,000 | 778,000,000 |
Embedded Derivative Gross Asset | 55,000,000 | 245,000,000 |
Embedded Derivative Gross Liability | 3,167,000,000 | 1,023,000,000 |
Fair Value of Level 3 Derivatives | 0 | 0 |
Separate Account assets transferred from Level 1 to Level 2 | 963,000,000 | 0 |
MarginDepositAssets | $3,000,000 | $700,000 |
Fair_Value_of_Assets_and_Liabi3
Fair Value of Assets and Liabilities (Balances of Assets and Liabilities Measured at Fair Value on a Recurring Basis) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | ||
In Thousands, unless otherwise specified | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Fixed maturities, available for sale, at fair value | $2,800,593 | $3,264,216 | [1] | |
Trading account assets, at fair value | 6,131 | 6,677 | ||
Equity securities, available for sale | 17 | 208 | [1] | |
Separate account assets | 44,101,699 | 46,626,828 | ||
Total liabilities | 3,112,411 | |||
Receivables from parents and affiliates | 60,490 | 44,643 | ||
Payables to parent and affiliates | 71,675 | 120,452 | ||
Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Fixed maturities, available for sale, at fair value | 2,800,593 | 3,264,216 | ||
Trading account assets, at fair value | 6,131 | 6,677 | ||
Equity securities, available for sale | 17 | 208 | ||
Short-term investments | 57,185 | 118,188 | ||
Cash equivalents | 225 | |||
Other long-term investments | 95,191 | 486 | ||
Reinsurance recoverable | 2,996,154 | 748,005 | ||
Subtotal excluding separate account assets | 5,996,564 | 4,163,198 | ||
Separate account assets | 44,101,699 | [2] | 46,626,828 | [2] |
Total assets | 50,098,263 | 50,790,026 | ||
Future policy benefits | 3,112,411 | [3] | 778,226 | [3] |
Total liabilities | 799,984 | |||
Receivables from parents and affiliates | 41,068 | 25,418 | ||
Payables to parent and affiliates | 0 | 21,758 | ||
DerivativeAssetFairValueGrossLiability | -21,249 | [4] | -72,822 | [4] |
DerivativeLiabilityFairValueGrossAsset | -24,288 | [4] | -73,535 | [4] |
Fair Value, Measurements, Recurring [Member] | Other Long-term Investments [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
DerivativeLiabilityFairValueGrossAsset | -24,288 | [4] | -73,535 | [4] |
Fair Value, Measurements, Recurring [Member] | Payables To Parent And Affiliates [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
DerivativeAssetFairValueGrossLiability | -21,249 | [4] | -72,822 | [4] |
US Treasury And Government [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Fixed maturities, available for sale, at fair value | 6,336 | 6,384 | ||
Obligations of U.S. states and their political subdivisions [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Fixed maturities, available for sale, at fair value | 70,789 | 68,566 | ||
Foreign Government Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Fixed maturities, available for sale, at fair value | 37,355 | 31,154 | ||
Corporate Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Fixed maturities, available for sale, at fair value | 2,101,684 | 2,422,642 | ||
Asset-backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Fixed maturities, available for sale, at fair value | 149,011 | 187,892 | ||
Commercial Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Fixed maturities, available for sale, at fair value | 302,185 | 390,633 | ||
Residential Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Fixed maturities, available for sale, at fair value | 133,233 | 156,945 | ||
Equity Securities [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Trading account assets, at fair value | 6,131 | 6,677 | ||
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Fixed maturities, available for sale, at fair value | 0 | 0 | ||
Trading account assets, at fair value | 6,131 | 6,364 | ||
Equity securities, available for sale | 0 | 0 | ||
Short-term investments | 57,185 | 118,188 | ||
Cash equivalents | 0 | |||
Other long-term investments | 0 | 0 | ||
Reinsurance recoverable | 0 | 0 | ||
Subtotal excluding separate account assets | 63,316 | 124,552 | ||
Separate account assets | 0 | [2] | 1,190,903 | [2] |
Total assets | 63,316 | 1,315,455 | ||
Future policy benefits | 0 | [3] | 0 | [3] |
Total liabilities | 0 | 0 | ||
Receivables from parents and affiliates | 0 | 0 | ||
Payables to parent and affiliates | 0 | 0 | ||
Fair Value, Inputs, Level 1 [Member] | US Treasury And Government [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Fixed maturities, available for sale, at fair value | 0 | 0 | ||
Fair Value, Inputs, Level 1 [Member] | Obligations of U.S. states and their political subdivisions [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Fixed maturities, available for sale, at fair value | 0 | 0 | ||
Fair Value, Inputs, Level 1 [Member] | Foreign Government Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Fixed maturities, available for sale, at fair value | 0 | 0 | ||
Fair Value, Inputs, Level 1 [Member] | Corporate Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Fixed maturities, available for sale, at fair value | 0 | 0 | ||
Fair Value, Inputs, Level 1 [Member] | Asset-backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Fixed maturities, available for sale, at fair value | 0 | 0 | ||
Fair Value, Inputs, Level 1 [Member] | Commercial Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Fixed maturities, available for sale, at fair value | 0 | 0 | ||
Fair Value, Inputs, Level 1 [Member] | Residential Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Fixed maturities, available for sale, at fair value | 0 | 0 | ||
Fair Value, Inputs, Level 1 [Member] | Equity Securities [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Trading account assets, at fair value | 6,131 | 6,364 | ||
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Fixed maturities, available for sale, at fair value | 2,643,999 | 3,103,631 | ||
Trading account assets, at fair value | 0 | 0 | ||
Equity securities, available for sale | 17 | 16 | ||
Short-term investments | 0 | 0 | ||
Cash equivalents | 0 | |||
Other long-term investments | 118,846 | 73,535 | ||
Reinsurance recoverable | 0 | 0 | ||
Subtotal excluding separate account assets | 2,781,610 | 3,196,253 | ||
Separate account assets | 44,101,699 | [2] | 45,435,925 | [2] |
Total assets | 46,883,309 | 48,632,178 | ||
Future policy benefits | 0 | [3] | 0 | [3] |
Total liabilities | 21,249 | 94,580 | ||
Receivables from parents and affiliates | 18,748 | 19,071 | ||
Payables to parent and affiliates | 21,249 | 94,580 | ||
Fair Value, Inputs, Level 2 [Member] | US Treasury And Government [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Fixed maturities, available for sale, at fair value | 6,336 | 6,384 | ||
Fair Value, Inputs, Level 2 [Member] | Obligations of U.S. states and their political subdivisions [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Fixed maturities, available for sale, at fair value | 70,789 | 68,566 | ||
Fair Value, Inputs, Level 2 [Member] | Foreign Government Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Fixed maturities, available for sale, at fair value | 37,355 | 31,154 | ||
Fair Value, Inputs, Level 2 [Member] | Corporate Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Fixed maturities, available for sale, at fair value | 1,985,614 | 2,325,846 | ||
Fair Value, Inputs, Level 2 [Member] | Asset-backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Fixed maturities, available for sale, at fair value | 108,487 | 124,103 | ||
Fair Value, Inputs, Level 2 [Member] | Commercial Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Fixed maturities, available for sale, at fair value | 302,185 | 390,633 | ||
Fair Value, Inputs, Level 2 [Member] | Residential Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Fixed maturities, available for sale, at fair value | 133,233 | 156,945 | ||
Fair Value, Inputs, Level 2 [Member] | Equity Securities [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Trading account assets, at fair value | 0 | 0 | ||
Fair Value, Inputs, Level 3 [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Cash equivalents | 225 | |||
Other long-term investments | 633 | 486 | ||
Reinsurance recoverable | 2,996,154 | 748,005 | ||
Total assets | 3,175,926 | 915,928 | ||
Future policy benefits | 3,112,411 | 778,226 | ||
Total liabilities | 3,112,411 | 778,226 | ||
Receivables from parents and affiliates | 22,320 | 6,347 | ||
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Fixed maturities, available for sale, at fair value | 156,594 | 160,585 | ||
Trading account assets, at fair value | 0 | 313 | ||
Equity securities, available for sale | 0 | 192 | ||
Short-term investments | 0 | 0 | ||
Cash equivalents | 225 | |||
Other long-term investments | 633 | 486 | ||
Reinsurance recoverable | 2,996,154 | 748,005 | ||
Subtotal excluding separate account assets | 3,175,926 | 915,928 | ||
Separate account assets | 0 | [2] | 0 | [2] |
Total assets | 3,175,926 | 915,928 | ||
Future policy benefits | 3,112,411 | [3] | 778,226 | [3] |
Total liabilities | 3,112,411 | 778,226 | ||
Receivables from parents and affiliates | 22,320 | 6,347 | ||
Payables to parent and affiliates | 0 | 0 | ||
Fair Value, Inputs, Level 3 [Member] | US Treasury And Government [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Fixed maturities, available for sale, at fair value | 0 | 0 | ||
Fair Value, Inputs, Level 3 [Member] | Obligations of U.S. states and their political subdivisions [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Fixed maturities, available for sale, at fair value | 0 | 0 | ||
Fair Value, Inputs, Level 3 [Member] | Foreign Government Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Fixed maturities, available for sale, at fair value | 0 | 0 | ||
Fair Value, Inputs, Level 3 [Member] | Corporate Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Fixed maturities, available for sale, at fair value | 116,070 | 96,796 | ||
Fair Value, Inputs, Level 3 [Member] | Asset-backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Fixed maturities, available for sale, at fair value | 40,524 | 63,789 | ||
Fair Value, Inputs, Level 3 [Member] | Commercial Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Fixed maturities, available for sale, at fair value | 0 | 0 | ||
Fair Value, Inputs, Level 3 [Member] | Residential Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Fixed maturities, available for sale, at fair value | 0 | 0 | ||
Fair Value, Inputs, Level 3 [Member] | Equity Securities [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Trading account assets, at fair value | $0 | $313 | ||
[1] | Prior period’s amounts are presented on a basis consistent with the current period presentation. | |||
[2] | Separate account assets represent segregated funds that are invested for certain customers. Investment risks associated with market value changes are borne by the customers, except to the extent of minimum guarantees made by the Company with respect to certain accounts. Separate account liabilities are not included in the above table as they are reported at contract value and not fair value in the Company’s Statement of Financial Position. | |||
[3] | As of December 31, 2014, the net embedded derivative liability position of $3,112 million includes $55 million of embedded derivatives in an asset position and $3,167 million of embedded derivatives in a liability position. As of December 31, 2013, the net embedded derivative liability position of $778 million includes $245 million of embedded derivatives in an asset position and $1,023 million of embedded derivatives in a liability position. | |||
[4] | “Netting†amounts represent cash collateral of $3.0 million and $0.7 million as of December 31, 2014 and December 31, 2013, respectively, and the impact of offsetting asset and liability positions held with the same counterparty, subject to master netting arrangements. |
Fair_Value_of_Assets_and_Liabi4
Fair Value of Assets and Liabilities (Changes in Level 3 Assets and Liabilities) (Details) (USD $) | 12 Months Ended | |||||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |||
Equity Securities [Member] | ||||||
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | ||||||
Fair Value, beginning of period (Assets) | $192 | $0 | ||||
Included In Earnings | ||||||
Realized investment gains (losses), net | 0 | 0 | ||||
Asset management fees and other income - Assets1 | 0 | 0 | ||||
Included in other comprehensive income (loss) | 0 | 0 | ||||
Net investment income1 | 0 | 0 | ||||
Purchases | 0 | 192 | ||||
Sales | -192 | 0 | ||||
Issuances | 0 | 0 | ||||
Settlements | 0 | 0 | ||||
Other | 0 | [1] | ||||
Transfers into Level 3 | 0 | [2] | 0 | [2] | ||
Transfers out of Level 3 | 0 | [2] | 0 | [2] | ||
Fair Value, end of period (Assets) | 0 | 192 | ||||
Included In Earnings | ||||||
Realized investment gains (losses), net | 0 | [3] | 0 | [4] | ||
Asset management fees and other income | 0 | [3] | 0 | [4] | ||
Debt Securities [Member] | Corporate Debt Securities [Member] | ||||||
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | ||||||
Fair Value, beginning of period (Assets) | 96,796 | 95,555 | 89,658 | |||
Included In Earnings | ||||||
Realized investment gains (losses), net | 1,592 | 49 | 1,606 | |||
Asset management fees and other income - Assets1 | 0 | 0 | 0 | |||
Included in other comprehensive income (loss) | -846 | -4,179 | 2,271 | |||
Net investment income1 | 5,024 | 4,729 | 4,634 | |||
Purchases | 20,720 | 4,817 | 5,400 | |||
Sales | -202 | 0 | -29 | |||
Issuances | 0 | 0 | 0 | |||
Settlements | -7,014 | -4,629 | -8,286 | |||
Other | 0 | [1] | ||||
Transfers into Level 3 | 0 | [2] | 4,976 | [2] | 11,992 | [2] |
Transfers out of Level 3 | 0 | [2] | -4,522 | [2] | -11,691 | [2] |
Fair Value, end of period (Assets) | 116,070 | 96,796 | 95,555 | |||
Included In Earnings | ||||||
Realized investment gains (losses), net | 0 | [3] | 0 | [4] | 0 | [4] |
Asset management fees and other income | 0 | [3] | 0 | [4] | 0 | [4] |
Debt Securities [Member] | Asset-backed Securities [Member] | ||||||
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | ||||||
Fair Value, beginning of period (Assets) | 63,789 | 69,298 | 48,563 | |||
Included In Earnings | ||||||
Realized investment gains (losses), net | 0 | 0 | 0 | |||
Asset management fees and other income - Assets1 | 0 | 0 | 0 | |||
Included in other comprehensive income (loss) | 196 | -470 | 1,109 | |||
Net investment income1 | 120 | 454 | 649 | |||
Purchases | 14,933 | 40,868 | 30,311 | |||
Sales | 0 | 0 | 0 | |||
Issuances | 0 | 0 | 0 | |||
Settlements | -40,337 | -13,924 | -11,334 | |||
Other | -2,996 | [1] | ||||
Transfers into Level 3 | 28,152 | [2] | 0 | [2] | 0 | [2] |
Transfers out of Level 3 | -26,329 | [2] | -29,441 | [2] | 0 | [2] |
Fair Value, end of period (Assets) | 40,524 | 63,789 | 69,298 | |||
Included In Earnings | ||||||
Realized investment gains (losses), net | 0 | [3] | 0 | [4] | 0 | [4] |
Asset management fees and other income | 0 | [3] | 0 | [4] | 0 | [4] |
Debt Securities [Member] | Commercial Mortgage Backed Securities [Member] | ||||||
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | ||||||
Fair Value, beginning of period (Assets) | 0 | 0 | ||||
Included In Earnings | ||||||
Realized investment gains (losses), net | 0 | 0 | ||||
Asset management fees and other income - Assets1 | 0 | 0 | ||||
Included in other comprehensive income (loss) | -83 | 18 | ||||
Net investment income1 | 0 | 0 | ||||
Purchases | 52,518 | 17,169 | ||||
Sales | 0 | 0 | ||||
Issuances | 0 | 0 | ||||
Settlements | 0 | 0 | ||||
Other | 0 | [1] | ||||
Transfers into Level 3 | 0 | [2] | 0 | [2] | ||
Transfers out of Level 3 | -52,435 | [2] | -17,187 | [2] | ||
Fair Value, end of period (Assets) | 0 | 0 | ||||
Included In Earnings | ||||||
Realized investment gains (losses), net | 0 | [3] | 0 | [4] | ||
Asset management fees and other income | 0 | [3] | 0 | [4] | ||
Other Long-term Investments [Member] | ||||||
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | ||||||
Fair Value, beginning of period (Assets) | 486 | 1,054 | 1,213 | |||
Included In Earnings | ||||||
Realized investment gains (losses), net | 0 | -739 | -2,326 | |||
Asset management fees and other income - Liabilities | -14 | -3 | ||||
Asset management fees and other income - Assets1 | 60 | |||||
Included in other comprehensive income (loss) | 0 | 0 | 0 | |||
Net investment income1 | 0 | 0 | 0 | |||
Purchases | 166 | 111 | 2,166 | |||
Sales | 0 | 0 | 0 | |||
Issuances | 0 | 0 | 0 | |||
Settlements | -5 | 0 | 4 | |||
Other | 0 | [1] | ||||
Transfers into Level 3 | 0 | [2] | 0 | [2] | 0 | [2] |
Transfers out of Level 3 | 0 | [2] | 0 | [2] | 0 | [2] |
Fair Value, end of period (Assets) | 633 | 486 | 1,054 | |||
Included In Earnings | ||||||
Realized investment gains (losses), net | 0 | [3] | 0 | [4] | -1,349 | [4] |
Asset management fees and other income | -14 | [3] | 51 | [4] | -3 | [4] |
Trading Asset [Member] | Equity Securities [Member] | ||||||
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | ||||||
Fair Value, beginning of period (Assets) | 313 | 207 | 203 | |||
Included In Earnings | ||||||
Realized investment gains (losses), net | 0 | 0 | 0 | |||
Asset management fees and other income - Assets1 | 15 | 106 | 4 | |||
Included in other comprehensive income (loss) | 0 | 0 | 0 | |||
Net investment income1 | 0 | 0 | 0 | |||
Purchases | 0 | 0 | 0 | |||
Sales | 0 | 0 | 0 | |||
Issuances | 0 | 0 | 0 | |||
Settlements | -328 | 0 | 0 | |||
Other | 0 | [1] | ||||
Transfers into Level 3 | 0 | [2] | 0 | [2] | 0 | [2] |
Transfers out of Level 3 | 0 | [2] | 0 | [2] | 0 | [2] |
Fair Value, end of period (Assets) | 0 | 313 | 207 | |||
Included In Earnings | ||||||
Realized investment gains (losses), net | 0 | [3] | 0 | [4] | 0 | [4] |
Asset management fees and other income | 15 | [3] | 107 | [4] | 4 | [4] |
Future Policy Benefits [Member] | ||||||
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | ||||||
Fair Value, Beginning of period (Liabilities) | 778,226 | 1,793,137 | 1,783,595 | |||
Included In Earnings | ||||||
Realized investment gains (losses), net | -2,088,505 | 1,262,310 | 230,349 | |||
Asset management fees and other income - Assets1 | 0 | 0 | 0 | |||
Included in other comprehensive income (loss) | 0 | 0 | 0 | |||
Net investment income1 | 0 | 0 | 0 | |||
Purchases | 0 | 0 | 0 | |||
Sales | 0 | 0 | 0 | |||
Issuances | -245,680 | -247,399 | -239,891 | |||
Settlements | 0 | 0 | 0 | |||
Other | 0 | [1] | ||||
Transfers into Level 3 | 0 | [2] | 0 | [2] | 0 | [2] |
Transfers out of Level 3 | 0 | [2] | 0 | [2] | 0 | [2] |
Fair Value, End of Period (Liabilities) | 3,112,411 | 778,226 | 1,793,137 | |||
Included In Earnings | ||||||
Realized investment gains (losses), net | -2,115,680 | [3] | 1,207,600 | [4] | 179,477 | [4] |
Asset management fees and other income | 0 | [3] | 0 | [4] | 0 | [4] |
Cash and Cash Equivalents [Member] | ||||||
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | ||||||
Fair Value, beginning of period (Assets) | 0 | |||||
Included In Earnings | ||||||
Realized investment gains (losses), net | 0 | |||||
Asset management fees and other income - Assets1 | 0 | |||||
Included in other comprehensive income (loss) | 0 | |||||
Net investment income1 | 0 | |||||
Purchases | 400 | |||||
Sales | -175 | |||||
Issuances | 0 | |||||
Settlements | 0 | |||||
Transfers into Level 3 | 0 | [2] | ||||
Transfers out of Level 3 | 0 | [2] | ||||
Fair Value, end of period (Assets) | 225 | |||||
Included In Earnings | ||||||
Realized investment gains (losses), net | 0 | [3] | ||||
Asset management fees and other income | 0 | [3] | ||||
Reinsurance Recoverable [Member] | ||||||
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | ||||||
Fair Value, beginning of period (Assets) | 748,005 | 1,732,094 | 1,747,757 | |||
Included In Earnings | ||||||
Realized investment gains (losses), net | 2,013,931 | -1,220,073 | -244,519 | |||
Asset management fees and other income - Assets1 | 0 | 0 | 0 | |||
Included in other comprehensive income (loss) | 0 | 0 | 0 | |||
Net investment income1 | 0 | 0 | 0 | |||
Purchases | 234,218 | 235,984 | 228,856 | |||
Sales | 0 | 0 | 0 | |||
Issuances | 0 | 0 | 0 | |||
Settlements | 0 | 0 | 0 | |||
Other | 0 | [1] | ||||
Transfers into Level 3 | 0 | [2] | 0 | [2] | 0 | [2] |
Transfers out of Level 3 | 0 | [2] | 0 | [2] | 0 | [2] |
Fair Value, end of period (Assets) | 2,996,154 | 748,005 | 1,732,094 | |||
Included In Earnings | ||||||
Realized investment gains (losses), net | 2,040,048 | [3] | -1,166,676 | [4] | -194,274 | [4] |
Asset management fees and other income | 0 | [3] | 0 | [4] | 0 | [4] |
Receivables From Parents And Affiliates [Member] | ||||||
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | ||||||
Fair Value, beginning of period (Assets) | 6,347 | 1,995 | 0 | |||
Included In Earnings | ||||||
Realized investment gains (losses), net | 0 | 0 | 0 | |||
Asset management fees and other income - Assets1 | 0 | 0 | 0 | |||
Included in other comprehensive income (loss) | -420 | 99 | -5 | |||
Net investment income1 | 0 | 0 | 0 | |||
Purchases | 19,351 | 6,250 | 2,000 | |||
Sales | 0 | -2,996 | 0 | |||
Issuances | 0 | 0 | 0 | |||
Settlements | 0 | 0 | 0 | |||
Other | 2,996 | [1] | ||||
Transfers into Level 3 | 1,985 | [2] | 0 | [2] | 0 | [2] |
Transfers out of Level 3 | -4,943 | [2] | -1,997 | [2] | 0 | [2] |
Fair Value, end of period (Assets) | 22,320 | 6,347 | 1,995 | |||
Included In Earnings | ||||||
Realized investment gains (losses), net | 0 | [3] | 0 | [4] | 0 | [4] |
Asset management fees and other income | $0 | [3] | $0 | [4] | $0 | [4] |
[1] | (3) Other primarily represents reclassifications of certain assets between reporting categories. | |||||
[2] | Â Â (1) Transfers into or out of Level 3 are reported as the value as of the beginning of the quarter in which the transfer occurs. | |||||
[3] | (2) Unrealized gains or losses related to assets still held at the end of the period do not include amortization or accretion of premiums and discounts. | |||||
[4] | Â Â (2) Unrealized gains or losses related to assets still held at the end of the period do not include amortization or accretion of premiums and discounts. (3) Other primarily represents reclassifications of certain assets between reporting categories. |
Fair_Value_of_Assets_and_Liabi5
Fair Value of Assets and Liabilities (Financial Instruments where Carrying Amounts and Fair Values May Differ) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | ||
In Thousands, unless otherwise specified | ||||
Assets: | ||||
Policy loans | $13,355 | $12,454 | ||
Accrued investment income | 25,008 | 32,169 | ||
Receivables from parents and affiliates | 60,490 | 44,643 | ||
Other Long-Term Investments | 162,783 | 60,585 | ||
Liabilities: | ||||
Cash collateral for loaned securities | 5,285 | 47,896 | ||
Short-term debt | 54,354 | 205,000 | ||
Payables To Parent And Affiliates | 71,675 | 120,452 | ||
Fair Value, Inputs, Level 3 [Member] | ||||
Assets: | ||||
Receivables from parents and affiliates | 22,320 | 6,347 | ||
Carrying (Reported) Amount, Fair Value Disclosure [Member] | ||||
Assets: | ||||
Commercial mortgage and other loans | 422,563 | [1] | 398,991 | [1] |
Policy loans | 13,355 | [1] | 12,454 | [1] |
Cash | 369 | [1] | 1,417 | [1] |
Accrued investment income | 25,008 | [1] | 32,169 | [1] |
Other assets | 1,009 | [1] | 11,190 | [1] |
Total Assets Financial Instruments Not Carried At Fair Value | 474,909 | [1] | 467,838 | [1] |
Receivables from parents and affiliates | 10,367 | [1] | 10,177 | [1] |
Other Long-Term Investments | 2,238 | [1] | 1,440 | [1] |
Liabilities: | ||||
Investment contracts- policyholders' account balances | 92,663 | [1] | 85,672 | [1] |
Cash collateral for loaned securities | 5,285 | [1] | 47,896 | [1] |
Short-term debt | 54,354 | [1] | 205,000 | [1] |
Other liabilities | 89,956 | [1] | 101,656 | [1] |
Separate account liabilities - investment contracts | 487 | [1] | 796 | [1] |
Total Financial Instrument Liabilities Not Carried At Fair Value | 280,160 | [1] | 526,224 | [1] |
Payables To Parent And Affiliates | 37,415 | [1] | 85,204 | [1] |
Estimate of Fair Value, Fair Value Disclosure [Member] | ||||
Assets: | ||||
Commercial mortgage and other loans | 449,936 | 422,584 | ||
Policy loans | 13,355 | 12,454 | ||
Cash | 369 | 1,417 | ||
Accrued investment income | 25,008 | 32,169 | ||
Other assets | 1,009 | 11,190 | ||
Total Assets Financial Instruments Not Carried At Fair Value | 502,683 | 491,614 | ||
Receivables from parents and affiliates | 10,367 | 10,177 | ||
Other Long-Term Investments | 2,639 | 1,623 | ||
Liabilities: | ||||
Investment contracts- policyholders' account balances | 91,217 | 84,153 | ||
Cash collateral for loaned securities | 5,285 | 47,896 | ||
Short-term debt | 54,354 | 218,488 | ||
Other liabilities | 89,956 | 101,656 | ||
Separate account liabilities - investment contracts | 487 | 796 | ||
Total Financial Instrument Liabilities Not Carried At Fair Value | 278,714 | 538,193 | ||
Payables To Parent And Affiliates | 37,415 | 85,204 | ||
Estimate of Fair Value, Fair Value Disclosure [Member] | Fair Value, Inputs, Level 1 [Member] | ||||
Assets: | ||||
Commercial mortgage and other loans | 0 | 0 | ||
Policy loans | 0 | 0 | ||
Cash | 369 | 1,417 | ||
Accrued investment income | 0 | 0 | ||
Other assets | 0 | 0 | ||
Total Assets Financial Instruments Not Carried At Fair Value | 369 | 1,417 | ||
Receivables from parents and affiliates | 0 | 0 | ||
Other Long-Term Investments | 0 | 0 | ||
Liabilities: | ||||
Investment contracts- policyholders' account balances | 0 | 0 | ||
Cash collateral for loaned securities | 0 | 0 | ||
Short-term debt | 0 | 0 | ||
Other liabilities | 0 | 0 | ||
Separate account liabilities - investment contracts | 0 | 0 | ||
Total Financial Instrument Liabilities Not Carried At Fair Value | 0 | 0 | ||
Payables To Parent And Affiliates | 0 | 0 | ||
Estimate of Fair Value, Fair Value Disclosure [Member] | Fair Value, Inputs, Level 2 [Member] | ||||
Assets: | ||||
Commercial mortgage and other loans | 2,779 | 0 | ||
Policy loans | 0 | 0 | ||
Cash | 0 | 0 | ||
Accrued investment income | 25,008 | 32,169 | ||
Other assets | 1,009 | 11,190 | ||
Total Assets Financial Instruments Not Carried At Fair Value | 39,163 | 53,536 | ||
Receivables from parents and affiliates | 10,367 | 10,177 | ||
Other Long-Term Investments | 0 | 0 | ||
Liabilities: | ||||
Investment contracts- policyholders' account balances | 0 | 0 | ||
Cash collateral for loaned securities | 5,285 | 47,896 | ||
Short-term debt | 54,354 | 218,488 | ||
Other liabilities | 89,956 | 101,656 | ||
Separate account liabilities - investment contracts | 487 | 796 | ||
Total Financial Instrument Liabilities Not Carried At Fair Value | 187,497 | 454,040 | ||
Payables To Parent And Affiliates | 37,415 | 85,204 | ||
Estimate of Fair Value, Fair Value Disclosure [Member] | Fair Value, Inputs, Level 3 [Member] | ||||
Assets: | ||||
Commercial mortgage and other loans | 447,157 | 422,584 | ||
Policy loans | 13,355 | 12,454 | ||
Cash | 0 | 0 | ||
Accrued investment income | 0 | 0 | ||
Other assets | 0 | 0 | ||
Total Assets Financial Instruments Not Carried At Fair Value | 463,151 | 436,661 | ||
Receivables from parents and affiliates | 0 | 0 | ||
Other Long-Term Investments | 2,639 | 1,623 | ||
Liabilities: | ||||
Investment contracts- policyholders' account balances | 91,217 | 84,153 | ||
Cash collateral for loaned securities | 0 | 0 | ||
Short-term debt | 0 | 0 | ||
Other liabilities | 0 | 0 | ||
Separate account liabilities - investment contracts | 0 | 0 | ||
Total Financial Instrument Liabilities Not Carried At Fair Value | 91,217 | 84,153 | ||
Payables To Parent And Affiliates | $0 | $0 | ||
[1] | Carrying values presented herein differ from those in the Company’s Statement of Financial Position because certain items within the respective financial statement captions are not considered financial instruments or out of scope under authoritative guidance relating to disclosures of the fair value of financial instruments. Financial statement captions excluded from the above table are not considered financial instruments. |
Fair_Value_of_Assets_and_Liabi6
Fair Value of Assets and Liabilities (Level 3 by Pricing Source) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | ||
In Thousands, unless otherwise specified | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Separate account assets | $44,101,699 | $46,626,828 | ||
Total liabilities | 3,112,411 | |||
Receivables from parents and affiliates | 60,490 | 44,643 | ||
Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Other long-term investments | 95,191 | 486 | ||
Reinsurance recoverable | 2,996,154 | 748,005 | ||
Subtotal excluding separate account assets | 5,996,564 | 4,163,198 | ||
Separate account assets | 44,101,699 | [1] | 46,626,828 | [1] |
Total assets | 50,098,263 | 50,790,026 | ||
Future policy benefits | 3,112,411 | [2] | 778,226 | [2] |
Total liabilities | 799,984 | |||
Receivables from parents and affiliates | 41,068 | 25,418 | ||
Cash equivalents | 225 | |||
Fair Value, Inputs, Level 3 [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Marketable Securities, Equity Securities | 0 | 505 | ||
Other long-term investments | 633 | 486 | ||
Reinsurance recoverable | 2,996,154 | 748,005 | ||
Total assets | 3,175,926 | 915,928 | ||
Future policy benefits | 3,112,411 | 778,226 | ||
Total liabilities | 3,112,411 | 778,226 | ||
Receivables from parents and affiliates | 22,320 | 6,347 | ||
Cash equivalents | 225 | |||
Fair Value, Inputs, Level 3 [Member] | Internal Pricing [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Marketable Securities, Equity Securities | 0 | [3] | 192 | [3] |
Other long-term investments | 0 | [3] | 0 | [3] |
Reinsurance recoverable | 2,996,154 | [3] | 748,005 | [3] |
Total assets | 3,095,588 | [3] | 842,927 | [3] |
Future policy benefits | 3,112,411 | [3] | 778,226 | [3] |
Total liabilities | 3,112,411 | [3] | 778,226 | [3] |
Receivables from parents and affiliates | 0 | [3] | 0 | [3] |
Cash equivalents | 225 | [3] | ||
Fair Value, Inputs, Level 3 [Member] | External Priced [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Marketable Securities, Equity Securities | 0 | [4] | 313 | [4] |
Other long-term investments | 633 | [4] | 486 | [4] |
Reinsurance recoverable | 0 | [4] | 0 | [4] |
Total assets | 80,338 | [4] | 73,001 | [4] |
Future policy benefits | 0 | [4] | 0 | [4] |
Total liabilities | 0 | [4] | 0 | [4] |
Receivables from parents and affiliates | 22,320 | [4] | 6,347 | [4] |
Cash equivalents | 0 | [4] | ||
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Other long-term investments | 633 | 486 | ||
Reinsurance recoverable | 2,996,154 | 748,005 | ||
Subtotal excluding separate account assets | 3,175,926 | 915,928 | ||
Separate account assets | 0 | [1] | 0 | [1] |
Total assets | 3,175,926 | 915,928 | ||
Future policy benefits | 3,112,411 | [2] | 778,226 | [2] |
Total liabilities | 3,112,411 | 778,226 | ||
Receivables from parents and affiliates | 22,320 | 6,347 | ||
Cash equivalents | 225 | |||
Fair Value, Inputs, Level 3 [Member] | Corporate Debt Securities [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Marketable Securities, Fixed Maturities | 116,070 | 96,796 | ||
Fair Value, Inputs, Level 3 [Member] | Corporate Debt Securities [Member] | Internal Pricing [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Marketable Securities, Fixed Maturities | 99,209 | [3] | 94,730 | [3] |
Fair Value, Inputs, Level 3 [Member] | Corporate Debt Securities [Member] | External Priced [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Marketable Securities, Fixed Maturities | 16,861 | [4] | 2,066 | [4] |
Fair Value, Inputs, Level 3 [Member] | Asset-backed Securities [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Marketable Securities, Fixed Maturities | 40,524 | 63,789 | ||
Fair Value, Inputs, Level 3 [Member] | Asset-backed Securities [Member] | Internal Pricing [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Marketable Securities, Fixed Maturities | 0 | [3] | 0 | [3] |
Fair Value, Inputs, Level 3 [Member] | Asset-backed Securities [Member] | External Priced [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Marketable Securities, Fixed Maturities | 40,524 | [4] | 63,789 | [4] |
Fair Value, Inputs, Level 3 [Member] | Commercial Mortgage Backed Securities [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Marketable Securities, Fixed Maturities | 0 | 0 | ||
Fair Value, Inputs, Level 3 [Member] | Commercial Mortgage Backed Securities [Member] | Internal Pricing [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Marketable Securities, Fixed Maturities | 0 | [3] | 0 | [3] |
Fair Value, Inputs, Level 3 [Member] | Commercial Mortgage Backed Securities [Member] | External Priced [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Marketable Securities, Fixed Maturities | $0 | [4] | $0 | [4] |
[1] | Separate account assets represent segregated funds that are invested for certain customers. Investment risks associated with market value changes are borne by the customers, except to the extent of minimum guarantees made by the Company with respect to certain accounts. Separate account liabilities are not included in the above table as they are reported at contract value and not fair value in the Company’s Statement of Financial Position. | |||
[2] | As of December 31, 2014, the net embedded derivative liability position of $3,112 million includes $55 million of embedded derivatives in an asset position and $3,167 million of embedded derivatives in a liability position. As of December 31, 2013, the net embedded derivative liability position of $778 million includes $245 million of embedded derivatives in an asset position and $1,023 million of embedded derivatives in a liability position. | |||
[3] | Represents valuations reflecting both internally-derived and market inputs. See below for additional information related to internally-developed valuation for significant items in the above table. | |||
[4] | Represents unadjusted prices from independent pricing-services and independent indicative broker quotes where pricing inputs are not readily available. |
Fair_Value_of_Assets_and_Liabi7
Fair Value of Assets and Liabilities (Quantiative Info for Level 3 Inputs) (Details) (USD $) | 12 Months Ended | |||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | ||
Fair Value Quantiative Information [Line Items] | ||||
Fixed maturities, available for sale, at fair value | 2,800,593 | 3,264,216 | [1] | |
Fair Value, Inputs, Level 3 [Member] | ||||
Fair Value Quantiative Information [Line Items] | ||||
Reinsurance Recoverables | 2,996,154 | 748,005 | ||
Future policy benefits | 3,112,411 | 778,226 | ||
Maximum [Member] | ||||
Fair Value Quantiative Information [Line Items] | ||||
Discount Rate | 11.75% | 12.06% | ||
Volatility Curve | 28.00% | 28.00% | ||
Lapse Rate | 14.00% | [2] | 11.00% | [2] |
NPR Spread | 1.30% | [3] | 1.09% | [3] |
Utilization Rate | 95.00% | [4] | 94.00% | [4] |
Withdrawal Rate | 100.00% | [5] | 100.00% | [5] |
Mortality Rate | 14.00% | [6] | 13.00% | [6] |
Minimum [Member] | ||||
Fair Value Quantiative Information [Line Items] | ||||
Discount Rate | 3.55% | 3.73% | ||
Volatility Curve | 17.00% | 15.00% | ||
Lapse Rate | 0.00% | [2] | 0.00% | [2] |
NPR Spread | 0.00% | [3] | 0.08% | [3] |
Utilization Rate | 63.00% | [4] | 70.00% | [4] |
Withdrawal Rate | 74.00% | [5] | 86.00% | [5] |
Mortality Rate | 0.00% | [6] | 0.00% | [6] |
Weighted Average[ Member] | ||||
Fair Value Quantiative Information [Line Items] | ||||
Discount Rate | 3.96% | 3.90% | ||
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member] | ||||
Fair Value Quantiative Information [Line Items] | ||||
Fixed maturities, available for sale, at fair value | 99,209 | 94,730 | ||
Future Policy Benefits [Member] | Fair Value, Inputs, Level 3 [Member] | ||||
Fair Value Quantiative Information [Line Items] | ||||
Future policy benefits | 3,112,411 | [7] | 778,226 | [7] |
[1] | Prior period’s amounts are presented on a basis consistent with the current period presentation. | |||
[2] | Lapse rates are adjusted at the contract level based on a the in-the-moneyness of the living benefit, and reflect other factors, such as the applicability of any surrender charges. Lapse rates are reduced when contracts are more in-the-money. Lapse rates are also generally assumed to be lower for the period where surrender charges apply. | |||
[3] | To reflect NPR, the Company incorporates an additional spread over LIBOR into the discount rate used in the valuation of individual living benefit contracts in a liability position and generally not to those in a contra-liability position. The NPR spread reflects the financial strength ratings of the Company and its affiliates, as these are insurance liabilities and senior to debt. The additional spread over LIBOR is determined by utilizing the credit spreads associated with issuing funding agreements adjusted for any illiquidity risk premium. | |||
[4] | The utilization rate assumption estimates the percentage of contracts that will utilize the benefit during the contract duration, and begin lifetime withdrawals at various time intervals from contract inception. The remaining contractholders are assumed to either begin lifetime withdrawals immediately or never utilize the benefit. Utilization assumptions may vary by product type, tax status, and age. The impact of changes in these assumptions is highly dependent on the product type, the age of the contractholder at the time of the sale, and the timing of the first lifetime income withdrawal. | |||
[5] | The withdrawal rate assumption estimates the magnitude of annual contractholder withdrawals relative to the maximum allowable amount under the contract. These assumptions may vary based on the product type, contractholder, age, tax status, and withdrawal timing. The fair value of the liability will generally increase the closer the withdrawal rate is to 100%. | |||
[6] | Range reflects the mortality rate for the vast majority of business with living benefits, with policyholders ranging from 35 to 90 years old. While the majority of living benefits have a minimum age requirement, certain benefits do not have an age restriction. This results in contractholders for certain benefits with mortality rates approaching 0%. Based on historical experience, the Company applies a set of age and duration specific mortality rate adjustments compared to standard industry tables. A mortality improvement assumption is also incorporated into the overall mortality table. | |||
[7] | Future policy benefits primarily represent general account liabilities for the optional living benefit features of the Company’s variable annuity contracts which are accounted for as embedded derivatives. Since the valuation methodology for these liabilities uses a range of inputs that vary at the contract level over the cash flow projection period, presenting a range, rather than weighted average, is a more meaningful representation of the unobservable inputs used in the valuation. |
Derivative_Instruments_Narrati
Derivative Instruments (Narrative) (Details) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Derivative Instruments | ||
Maximum length of time hedged in cash flow hedge (in years) | 19 years | |
Notional of credit derivative | $0 | $0 |
Fair value of credit derivative liability | 0 | 0 |
Maximum exposure to loss from externally-managed investments | 0 | 0 |
Pruco Re and Prudential Insurance FV of embedded derivatives related to reinsurance recoverables | 2,996 | 748 |
FV Of Embedded Derivatives Included In Future Policy Benefits | -3,112 | -778 |
FV Of Embedded Derivatives Included In Fixed Maturities AFS | 0 | 0 |
Credit protection purchased notional amounts | 1 | 6 |
Credit derivative protection purchased fair value | ($0.04) | ($0.11) |
Derivative_Instruments_Gross_N
Derivative Instruments (Gross Notional Amount and Fair Value of Derivatives Contracts) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | ||
In Thousands, unless otherwise specified | ||||
Notional Value | ||||
Total Derivatives | $9,207,601 | [1] | $15,158,667 | [1] |
Fair Value Asset | ||||
Total Derivatives | 118,846 | [1] | 73,535 | [1] |
Fair Value Liability | ||||
Total Derivatives | 21,249 | [1] | 94,580 | [1] |
Designated as Hedging Instrument [Member] | ||||
Notional Value | ||||
Qualifying Hedge Relationships | 83,412 | 72,747 | ||
Fair Value Asset | ||||
Derivative Fair Value Of Derivative Asset | 5,555 | 940 | ||
Fair Value Liability | ||||
Derivative Fair Value Of Derivative Liability | 654 | 4,635 | ||
Nondesignated [Member] | ||||
Notional Value | ||||
Qualifying Hedge Relationships | 9,124,189 | 15,086,420 | ||
Fair Value Asset | ||||
Derivative Fair Value Of Derivative Asset | 113,291 | 72,595 | ||
Fair Value Liability | ||||
Derivative Fair Value Of Derivative Liability | 20,595 | 89,945 | ||
Interest Rate Contract [Member] | Interest Rate Swap Member | Nondesignated [Member] | ||||
Notional Value | ||||
Qualifying Hedge Relationships | 1,902,750 | 1,533,750 | ||
Fair Value Asset | ||||
Derivative Fair Value Of Derivative Asset | 92,507 | 59,872 | ||
Fair Value Liability | ||||
Derivative Fair Value Of Derivative Liability | 18,480 | 80,601 | ||
Interest Rate Contract [Member] | InterestRateOption [Member] | Nondesignated [Member] | ||||
Notional Value | ||||
Qualifying Hedge Relationships | 100,000 | 100,000 | ||
Fair Value Asset | ||||
Derivative Fair Value Of Derivative Asset | 10,736 | 6,534 | ||
Fair Value Liability | ||||
Derivative Fair Value Of Derivative Liability | 0 | 0 | ||
Credit Risk Contract [Member] | Credit Default Swap Member | Nondesignated [Member] | ||||
Notional Value | ||||
Qualifying Hedge Relationships | 1,200 | 6,050 | ||
Fair Value Asset | ||||
Derivative Fair Value Of Derivative Asset | 0 | 0 | ||
Fair Value Liability | ||||
Derivative Fair Value Of Derivative Liability | 43 | 115 | ||
Cross Currency Interest Rate Contract [Member] | Designated as Hedging Instrument [Member] | ||||
Notional Value | ||||
Qualifying Hedge Relationships | 83,412 | 72,747 | ||
Fair Value Asset | ||||
Derivative Fair Value Of Derivative Asset | 5,555 | 940 | ||
Fair Value Liability | ||||
Derivative Fair Value Of Derivative Liability | 654 | 4,635 | ||
Cross Currency Interest Rate Contract [Member] | Currency Swap Member | Nondesignated [Member] | ||||
Notional Value | ||||
Qualifying Hedge Relationships | 57,011 | 55,919 | ||
Fair Value Asset | ||||
Derivative Fair Value Of Derivative Asset | 4,363 | 19 | ||
Fair Value Liability | ||||
Derivative Fair Value Of Derivative Liability | 5 | 1,349 | ||
Equity Contract [Member] | Equity Options [Member] | Nondesignated [Member] | ||||
Notional Value | ||||
Qualifying Hedge Relationships | 6,842,242 | 13,170,805 | ||
Fair Value Asset | ||||
Derivative Fair Value Of Derivative Asset | 3,748 | 6,170 | ||
Fair Value Liability | ||||
Derivative Fair Value Of Derivative Liability | 2,067 | 3,168 | ||
Equity Contract [Member] | Total Return Swap Member | Nondesignated [Member] | ||||
Notional Value | ||||
Qualifying Hedge Relationships | 220,986 | 219,896 | ||
Fair Value Asset | ||||
Derivative Fair Value Of Derivative Asset | 1,937 | 0 | ||
Fair Value Liability | ||||
Derivative Fair Value Of Derivative Liability | $0 | $4,712 | ||
[1] | (1) Excludes embedded derivatives which contain multiple underlyings. The fair value of the embedded derivatives related to the living benefit feature was a liability of $3,112 million and $778 million as of December 31, 2014 and December 31, 2013, respectively, included in “Future policy benefits.†The fair value of the embedded derivatives related to the reinsurance of certain of these benefits to Pruco Re and Prudential Insurance included in "Reinsurance recoverables" was an asset of $2,996 million and $748 million as of December 31, 2014 and December 31, 2013, respectively. |
Derivative_Instruments_Gross_N1
Derivative Instruments (Gross Notional Amount and Fair Value of Derivatives Contracts) (Parenthetical) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Derivative Instruments | ||
Net Embedded Derivative | ($3,112) | ($778) |
FV Of Embedded Derivatives Included In Future Policy Benefits | -3,112 | -778 |
Pruco Re and Prudential Insurance FV of embedded derivatives related to reinsurance recoverables | $2,996 | $748 |
Derivative_Instruments_Financi
Derivative Instruments (Financial Statement Classification and Impact of Derivatives Used in Qualifying and Non-qualifying Hedge Relationships) (Details) (USD $) | 12 Months Ended | |||||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income, Effective Portion, Net | $8,640 | ($680) | ($2,207) | |||
Net Realized Investments Gain Loss [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | -8,113 | -194,055 | -107,663 | |||
Net Investment Income [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | 14 | -89 | -116 | |||
Other Income [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | 277 | 17 | -3 | |||
Accumulated Other Comprehensive Income (loss) [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | 8,492 | [1] | -585 | [1] | -2,106 | [1] |
Cash Flow Hedging [Member] | Net Realized Investments Gain Loss [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | 0 | 0 | 0 | |||
Cash Flow Hedging [Member] | Net Investment Income [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | 14 | -89 | -116 | |||
Cash Flow Hedging [Member] | Other Income [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | 134 | -7 | 14 | |||
Cash Flow Hedging [Member] | Accumulated Other Comprehensive Income (loss) [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | 8,492 | [1] | -585 | [1] | -2,106 | [1] |
Cash Flow Hedging [Member] | Cross Currency Interest Rate Contract [Member] | Net Realized Investments Gain Loss [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | 0 | 0 | 0 | |||
Cash Flow Hedging [Member] | Cross Currency Interest Rate Contract [Member] | Net Investment Income [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | 14 | -89 | -116 | |||
Cash Flow Hedging [Member] | Cross Currency Interest Rate Contract [Member] | Other Income [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | 134 | -7 | 14 | |||
Cash Flow Hedging [Member] | Cross Currency Interest Rate Contract [Member] | Accumulated Other Comprehensive Income (loss) [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | 8,492 | [1] | -585 | [1] | -2,106 | [1] |
Nondesignated [Member] | Net Realized Investments Gain Loss [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | -8,113 | -194,055 | -107,663 | |||
Nondesignated [Member] | Net Investment Income [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | 0 | 0 | 0 | |||
Nondesignated [Member] | Other Income [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | 143 | 24 | -17 | |||
Nondesignated [Member] | Accumulated Other Comprehensive Income (loss) [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | 0 | [1] | 0 | [1] | 0 | [1] |
Nondesignated [Member] | Interest Rate Contract [Member] | Net Realized Investments Gain Loss [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | 123,327 | -116,025 | 5,030 | |||
Nondesignated [Member] | Interest Rate Contract [Member] | Net Investment Income [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | 0 | 0 | 0 | |||
Nondesignated [Member] | Interest Rate Contract [Member] | Other Income [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | 0 | 0 | 0 | |||
Nondesignated [Member] | Interest Rate Contract [Member] | Accumulated Other Comprehensive Income (loss) [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | 0 | [1] | 0 | [1] | 0 | [1] |
Nondesignated [Member] | Foreign Exchange Contract [Member] | Net Realized Investments Gain Loss [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | -15 | |||||
Nondesignated [Member] | Foreign Exchange Contract [Member] | Net Investment Income [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | 0 | |||||
Nondesignated [Member] | Foreign Exchange Contract [Member] | Other Income [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | 0 | |||||
Nondesignated [Member] | Foreign Exchange Contract [Member] | Accumulated Other Comprehensive Income (loss) [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | 0 | [1] | ||||
Nondesignated [Member] | Cross Currency Interest Rate Contract [Member] | Net Realized Investments Gain Loss [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | 5,934 | -204 | -1,368 | |||
Nondesignated [Member] | Cross Currency Interest Rate Contract [Member] | Net Investment Income [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | 0 | 0 | 0 | |||
Nondesignated [Member] | Cross Currency Interest Rate Contract [Member] | Other Income [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | 143 | 24 | -17 | |||
Nondesignated [Member] | Cross Currency Interest Rate Contract [Member] | Accumulated Other Comprehensive Income (loss) [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | 0 | [1] | 0 | [1] | 0 | [1] |
Nondesignated [Member] | Credit Risk Contract [Member] | Net Realized Investments Gain Loss [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | -14 | -103 | 143 | |||
Nondesignated [Member] | Credit Risk Contract [Member] | Net Investment Income [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | 0 | 0 | 0 | |||
Nondesignated [Member] | Credit Risk Contract [Member] | Other Income [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | 0 | 0 | 0 | |||
Nondesignated [Member] | Credit Risk Contract [Member] | Accumulated Other Comprehensive Income (loss) [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | 0 | [1] | 0 | [1] | 0 | [1] |
Nondesignated [Member] | Equity Contract [Member] | Net Realized Investments Gain Loss [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | -23,811 | -79,498 | -56,158 | |||
Nondesignated [Member] | Equity Contract [Member] | Net Investment Income [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | 0 | 0 | 0 | |||
Nondesignated [Member] | Equity Contract [Member] | Other Income [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | 0 | 0 | 0 | |||
Nondesignated [Member] | Equity Contract [Member] | Accumulated Other Comprehensive Income (loss) [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | 0 | [1] | 0 | [1] | 0 | [1] |
Nondesignated [Member] | Embedded Derivative [Member] | Net Realized Investments Gain Loss [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | -113,549 | 1,775 | -55,295 | |||
Nondesignated [Member] | Embedded Derivative [Member] | Net Investment Income [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | 0 | 0 | 0 | |||
Nondesignated [Member] | Embedded Derivative [Member] | Other Income [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | 0 | 0 | 0 | |||
Nondesignated [Member] | Embedded Derivative [Member] | Accumulated Other Comprehensive Income (loss) [Member] | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative Instruments Gain (Loss) Recognized In Income Net | $0 | [1] | $0 | [1] | $0 | [1] |
[1] | (1) Amounts deferred in “Accumulated other comprehensive income (loss).†|
Derivative_Instruments_Current
Derivative Instruments (Current Period Cash Flow Hedges in AOCI (loss) before Taxes) (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Derivative Instruments | |||
Beginning Balance | ($3,653) | ($3,068) | ($962) |
Net deferred losses on cash flow hedges for the period | 8,640 | -680 | -2,207 |
Amount reclassified into current period earnings | -148 | 95 | 101 |
Ending Balance | ($4,839) | ($3,653) | ($3,068) |
Derivative_Instruments_Offsett
Derivative Instruments Offsetting Balance Sheet (Details) (Derivative [Member], USD $) | Dec. 31, 2014 | Dec. 31, 2013 | ||
In Thousands, unless otherwise specified | ||||
Offsetting Assets [Member] | ||||
Offsetting of Financial Assets and Liabilities [Line Items] | ||||
Gross Amounts of Recognized Financial Instruments | $118,846 | $73,535 | ||
Gross Amounts Offset in Statement of Financial Position | -24,288 | -73,535 | ||
Net Amounts of Assets Presented in Statement of Financial Position | 94,558 | 0 | ||
Financial Instruments And Collateral | -82,602 | [1] | 0 | [1] |
Net Amount | 11,956 | 0 | ||
Offsetting Liabilities [Member] | ||||
Offsetting of Financial Assets and Liabilities [Line Items] | ||||
Gross Amounts of Recognized Financial Instruments | 21,249 | 94,580 | ||
Gross Amounts Offset in Statement of Financial Position | -21,249 | -72,822 | ||
Net Amounts of Assets Presented in Statement of Financial Position | 0 | 21,758 | ||
Financial Instruments And Collateral | 0 | [1] | -21,758 | [1] |
Net Amount | $0 | $0 | ||
[1] | Amounts exclude the excess of collateral received/pledged from/to the counterparty. Prior period has been revised to conform to current period presentation. |
Commitments_Contingent_Liabili1
Commitments, Contingent Liabilities And Litigation And Regulatory Matters (Narrative Excluding Litigation) (Details) (USD $) | Dec. 31, 2014 |
In Millions, unless otherwise specified | |
Commitments Guarantees Contingent Liabilities And Litigation [Line Items] | |
Commitments to fund commercial loans | $1 |
Commitments to fund investments | $22 |
Commitments_Contingent_Liabili2
Commitments, Contingent Liabilities And Litigation And Regulatory Matters (Litigation Narrative) (Details) (USD $) | Dec. 31, 2014 |
In Millions, unless otherwise specified | |
Minimum [Member] | |
Litigation [Line Items] | |
Estimate of possible losses in excess of accruals | $0 |
Maximum [Member] | |
Litigation [Line Items] | |
Estimate of possible losses in excess of accruals | $3 |
Quarterly_Results_of_Operation2
Quarterly Results of Operations (Narrative) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
QuarterlyFinancialDataAbstract | ||
Out of period adjustment | $8 | $22 |
Quarterly_Results_of_Operation3
Quarterly Results of Operations (Unaudited) (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
QuarterlyFinancialDataAbstract | |||||||||||
Total revenues | $311,187 | $308,006 | $309,786 | $311,249 | $286,154 | $250,028 | $283,524 | $290,576 | $1,240,228 | $1,110,282 | $1,279,561 |
Total benefits and expenses | 324,387 | 197,204 | 242,370 | 216,896 | 72,431 | -332,523 | 96,720 | 93,190 | 980,857 | -70,182 | 421,868 |
Income Loss From Continuing Operations Before Income Taxes And Operating Joint Ventures | -13,200 | 110,802 | 67,416 | 94,353 | 213,723 | 582,551 | 186,804 | 197,386 | 259,371 | 1,180,464 | 857,693 |
Net income | $19,801 | $96,037 | $57,431 | $77,498 | $156,738 | $400,296 | $143,670 | $147,388 | $250,767 | $848,092 | $634,059 |
Related_Party_Expense_Charges_
Related Party (Expense Charges and Allocations) (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Related Party Transactions [Abstract] | |||
Stock or Unit Option Plan Expense | $1 | $2 | $2 |
Pension Expense | 1 | 3 | 3 |
Defined Contribution Plan Employer Matching Contribution Percent | 4.00% | ||
Defined Contribution Plan, Cost Recognized | $1 | $1 | $1 |
Related_Party_Reinsurance_With
Related Party (Reinsurance With Affiliates Pruco Re) (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Ceded Rider Fees [Line Items] | |||
Total Fees Ceded to Pruco Reinsurance | $274 | $275 | $269 |
Total Fees Ceded to Prudential Insurance | $1 | $1 | $1 |
Related_Party_Reinsurance_With1
Related Party (Reinsurance With Affiliates Pruco Re Cont) (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Related Party Transactions [Abstract] | |||
Pruco Re Realized Gains Losses | $1,975 | ($1,260) | ($286) |
Related_Party_Reinsurance_With2
Related Party (Reinsurance With Affiliates) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Related Party Transactions [Abstract] | ||
Affiliated Reinsurance Recoverables | $2,997 | $748 |
Affiliated Reinsurance Payables | $25 | $25 |
Related_Party_Cost_Allocation_
Related Party (Cost Allocation Agreements with Affiliates) (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Related Party Transactions [Abstract] | |||
Allocated Lease Expense | $4 | $10 | $4 |
Allocated Sub-Lease Rental Income | -0.6 | 4 | 4 |
Commissions and Fees Paid to PAD | $177 | $172 | $186 |
Related_Party_Future_Minimum_L
Related Party (Future Minimum Lease Payments Related Party Table) (Details) (USD $) | Dec. 31, 2014 |
In Millions, unless otherwise specified | |
FutureMinimumLeasePayments[Abstract] | |
Lease Payments - One Year Out | $3,397 |
Sub-Lease Income - One Year Out | 0 |
Lease Payments - Two Years Out | 3,397 |
Lease Payments - Three Years Out | 3,397 |
Lease Payments - Four Years Out | 3,397 |
Lease Payments - Five Years Out | 3,114 |
Lease Payments - Six Years Out and After | 0 |
Sub-Lease Income - Two Years Out | 0 |
Sub-Lease Income - Three Years Out | 0 |
Sub-Lease Income - Four Years Out | 0 |
Sub-Lease Income - Five Years Out | 0 |
Sub-Lease Income - Six Years Out and after | 0 |
Total Future Min. Lease Payments | 16,702 |
Total Future Min. Sub-Lease Income | $0 |
Related_Party_Affiliated_Asset
Related Party (Affiliated Asset Administration Fee Income) (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Related Party Transactions [Abstract] | |||
AST Revenue Sharing Income | $221 | $227 | $226 |
Related_Party_Affiliated_Inves
Related Party (Affiliated Investment Management Expenses) (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Related Party Transactions [Abstract] | |||
Pim Management Expenses | $6 | $7 | $8 |
Related_Party_Affiliated_Asset1
Related Party (Affiliated Asset Transfers) (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended |
In Millions, unless otherwise specified | Mar. 31, 2013 | Sep. 30, 2013 | Dec. 31, 2014 |
Related Party Transactions [Line Items] | |||
Fixed maturity asset transfer amortized cost | $36 | ||
Fixed maturity asset transfer fair value | 44 | ||
Realized gain on fixed maturity asset transfer | 8 | ||
Commercial mortgage loans asset transfer amortized cost | 90 | 6 | 6 |
Commercial mortgage loans asset transfer fair value | 103 | 6 | 6 |
Realized gain on commerical mortgage loan asset transfer | 8 | 1 | |
Fixed maturity asset purchase amortized cost | 27 | ||
Fixed maturity asset purchase fair value | $30 |
Related_Party_Debt_Agreements_
Related Party (Debt Agreements) (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Related Party Transactions [Abstract] | |||
Line of Credit Facility, Maximum Borrowing Capacity | $2,000,000,000 | ||
Short-term Debt with Pru Funding | 54,000,000 | 5,000,000 | |
Interest Expense, Short-term Borrowings | 41,000 | 89,000 | 390,000 |
Prudential Financial Debt, Borrowing Amount | 0 | 200,000,000 | |
Prudential Financial Debt, Interest Rate | 4.49% | ||
Prudential Financial Debt, Repayment Amount | 200,000,000 | ||
Long-term debt interest expense | $9,000,000 | $17,000,000 | $27,000,000 |
Contract_Withdrawal_Provisions1
Contract Withdrawal Provisions (Details) | 12 Months Ended |
Dec. 31, 2014 | |
Surrender Charges [Line Items] | |
Surrender charge period in years | 10 years 0 months 0 days |
Maximum [Member] | |
Surrender Charges [Line Items] | |
Annuities surrender charge percentage | 9.00% |
Minimum [Member] | |
Surrender Charges [Line Items] | |
Annuities surrender charge percentage | 1.00% |
Statutory_Net_Income_and_Surpl1
Statutory Net Income and Surplus and Dividend Restrictions (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||
Dec. 31, 2014 | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2013 | Dec. 31, 2012 | Jun. 30, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
statutorydisclosures[LineItems] | |||||||||
statutoryaccountingpracticesstatutorynetincome | $393,000,000 | $406,000,000 | $217,000,000 | ||||||
Statutory Surplus Balance | 606,000,000 | 443,000,000 | 606,000,000 | 443,000,000 | |||||
StatutoryAccountingPracticesStatutoryAmountAvailableForDividendPayments | 61,000,000 | 61,000,000 | |||||||
Distribution to parent | $75,000,000 | $267,000,000 | $100,000,000 | $184,000,000 | $160,000,000 | $248,000,000 | $342,000,000 | $284,000,000 | $408,000,000 |