Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2016 | |
Document Information [Line Items] | |
Document Type | S1 |
Amendment Flag | false |
Document Period End Date | Dec. 31, 2016 |
Entity Registrant Name | LINCOLN BENEFIT LIFE CO |
Entity Central Index Key | 910,739 |
Entity Filer Category | Non-accelerated Filer |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
ASSETS | ||
Fixed maturities, available-for-sale, at fair value (amortized cost $8,299,496 and $8,274,194) | $ 8,212,740 | $ 7,945,942 |
Common stocks | 5,100 | |
Commercial mortgage loans | 1,455,156 | 1,509,132 |
Policy loans | 178,890 | 186,827 |
Short-term investments | 129,660 | 184,820 |
Other invested assets | 19,406 | 18,412 |
Total Investments | 10,000,952 | 9,845,133 |
Cash | 3,388 | 49,121 |
Accrued investment income | 92,997 | 91,214 |
Reinsurance recoverables | 6,280,337 | 5,984,458 |
Valuation of business acquired | 186,701 | 247,702 |
Deposit receivable | 1,199,537 | 1,250,328 |
Other assets | 682,654 | 633,091 |
Current income tax | 2,051 | 1,472 |
Deferred tax asset, net | 3,686 | 65,040 |
Separate account assets | 1,342,220 | 1,395,141 |
Total Assets | 19,794,523 | 19,562,700 |
LIABILITIES | ||
Future policy benefits and other policyholder liabilities | 5,111,791 | 4,757,641 |
Policyholders' account balances | 10,935,372 | 11,120,565 |
Accrued expenses and other liabilities | 104,120 | 95,826 |
Modified coinsurance payable | 1,199,537 | 1,250,328 |
Other long-term debt - affiliate | 659,000 | 608,700 |
Separate account liabilities | 1,342,220 | 1,395,141 |
Total Liabilities | 19,352,040 | 19,228,201 |
SHAREHOLDER'S EQUITY | ||
Common stock, $100 par value, 30,000 shares authorized, 25,000 shares issued and outstanding | 2,500 | 2,500 |
Additional paid-in capital | 593,558 | 593,558 |
Accumulated other comprehensive income (loss) | (36,168) | (154,699) |
Retained earnings (deficit) | (117,407) | (106,860) |
Total Shareholder's Equity | 442,483 | 334,499 |
Total Liabilities and Shareholder's Equity | $ 19,794,523 | $ 19,562,700 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Fixed maturities, available-for-sale, amortized cost | $ 8,299,496 | $ 8,274,194 |
Common stock, par value | $ 100 | $ 100 |
Common stock, shares authorized | 30,000 | 30,000 |
Common stock, shares issued | 25,000 | 25,000 |
Common stock, shares outstanding | 25,000 | 25,000 |
Consolidated Statement of Opera
Consolidated Statement of Operations and Comprehensive Income (Loss) (Successor) and Statements of Operations and Comprehensive Income (Loss)(Predecessor) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues | ||||
Premiums earned | $ 20,384 | $ 16,592 | $ 8,841 | |
Fee income from policyholders | 259,169 | 346,027 | 353,932 | |
Net investment income | 288,571 | 397,083 | 398,931 | |
Realized investment gains, net | 46,092 | 73,720 | 113,538 | |
Total revenues | 614,216 | 833,422 | 875,242 | |
Expenses | ||||
Policyholders' benefits | 216,543 | 449,118 | 351,744 | |
Return credited to policyholders' account balances | 256,703 | 269,488 | 301,079 | |
Operating and acquisition expenses | 96,050 | 68,716 | 93,671 | |
Total expenses | 569,296 | 787,322 | 746,494 | |
Income before federal income tax | 44,920 | 46,100 | 128,748 | |
Federal income tax expense (benefit) | ||||
Current | 17,121 | 22,528 | ||
Deferred | 14,234 | (2,474) | 23,566 | |
Total income tax expense | 14,234 | 14,647 | 46,094 | |
NET INCOME | 30,686 | 31,453 | 82,654 | |
Net unrealized investment gains (losses): | ||||
Unrealized investment gains (losses) for the period | 131,433 | 100,439 | (290,511) | |
Reclassification adjustment for gains (losses) included in net income | (81,920) | 79,023 | ||
Net unrealized investment gains (losses) | 131,433 | 182,359 | (369,534) | |
Less: Income tax (benefit) related to: | ||||
Unrealized investment gains (losses) for the period | 45,935 | 35,156 | (101,679) | |
Reclassification adjustment for (gains) losses included in net income | 28,672 | (27,658) | ||
Net unrealized investment gains (losses) | 45,935 | 63,828 | (129,337) | |
Other comprehensive (loss) income | 85,498 | 118,531 | (240,197) | |
Comprehensive (loss) income | $ 116,184 | $ 149,984 | $ (157,543) | |
Predecessor | ||||
Revenues | ||||
Net investment income | $ 2,350 | |||
Realized investment gains, net | 285 | |||
Total revenues | 2,635 | |||
Expenses | ||||
Income before federal income tax | 2,635 | |||
Federal income tax expense (benefit) | ||||
Current | 914 | |||
Deferred | 8 | |||
Total income tax expense | 922 | |||
NET INCOME | 1,713 | |||
Net unrealized investment gains (losses): | ||||
Unrealized investment gains (losses) for the period | 2,364 | |||
Reclassification adjustment for gains (losses) included in net income | 285 | |||
Net unrealized investment gains (losses) | 2,079 | |||
Less: Income tax (benefit) related to: | ||||
Unrealized investment gains (losses) for the period | 828 | |||
Reclassification adjustment for (gains) losses included in net income | (100) | |||
Net unrealized investment gains (losses) | 728 | |||
Other comprehensive (loss) income | 1,351 | |||
Comprehensive (loss) income | $ 3,064 |
Consolidated Statements of Shar
Consolidated Statements of Shareholder's Equity (Successor) and Statements of Shareholder's Equity (Predecessor) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) |
Balance (Predecessor) at Dec. 31, 2013 | $ 343,695 | $ 2,500 | $ 180,000 | $ 157,325 | $ 3,870 |
Balance, shares (Predecessor) at Dec. 31, 2013 | 25,000 | ||||
Comprehensive income (loss) | |||||
Net income (loss) | Predecessor | 1,713 | 1,713 | |||
Other comprehensive income (loss), net of tax | Predecessor | 1,351 | 1,351 | |||
Total comprehensive income (loss) | Predecessor | 3,064 | ||||
Balance (Predecessor) at Mar. 31, 2014 | 346,759 | $ 2,500 | 180,000 | 159,038 | 5,221 |
Balance at Mar. 31, 2014 | 595,808 | $ 2,500 | 593,308 | ||
Balance, shares (Predecessor) at Mar. 31, 2014 | 25,000 | ||||
Balance, shares at Mar. 31, 2014 | 25,000 | ||||
Dividends to shareholder | (33,200) | (33,200) | |||
Capital contribution | 250 | 250 | |||
Comprehensive income (loss) | |||||
Net income (loss) | 30,686 | 30,686 | |||
Other comprehensive income (loss), net of tax | 85,498 | 85,498 | |||
Total comprehensive income (loss) | 116,184 | ||||
Balance at Dec. 31, 2014 | 679,042 | $ 2,500 | 593,558 | (2,514) | 85,498 |
Balance, shares at Dec. 31, 2014 | 25,000 | ||||
Dividends to shareholder | (187,000) | (187,000) | |||
Comprehensive income (loss) | |||||
Net income (loss) | 82,654 | 82,654 | |||
Other comprehensive income (loss), net of tax | (240,197) | (240,197) | |||
Total comprehensive income (loss) | (157,543) | ||||
Balance at Dec. 31, 2015 | $ 334,499 | $ 2,500 | 593,558 | (106,860) | (154,699) |
Balance, shares at Dec. 31, 2015 | 25,000 | 25,000 | |||
Dividends to shareholder | $ (42,000) | (42,000) | |||
Comprehensive income (loss) | |||||
Net income (loss) | 31,453 | 31,453 | |||
Other comprehensive income (loss), net of tax | 118,531 | 118,531 | |||
Total comprehensive income (loss) | 149,984 | ||||
Balance at Dec. 31, 2016 | $ 442,483 | $ 2,500 | $ 593,558 | $ (117,407) | $ (36,168) |
Balance, shares at Dec. 31, 2016 | 25,000 | 25,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Successor) and Statement of Cash Flows (Predecessor) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities: | ||||
Net income (loss) | $ 30,686 | $ 31,453 | $ 82,654 | |
Adjustments to reconcile net income (loss) to net cash: | ||||
Policy charges and fee income | (259,169) | (346,027) | (353,932) | |
Interest credited | 256,703 | 269,488 | 301,079 | |
Investment gains, net | (46,092) | (73,720) | (125,986) | |
Amortization/Accretion of bond premium, net | 44,112 | 59,337 | 44,701 | |
Amortization of VOBA | 38,987 | 30,054 | 40,880 | |
Changes in assets and liabilities: | ||||
Decrease (increase) in insurance related liabilities and policy-related balances | (21,964) | 52,316 | (24,884) | |
Deferred income tax expense (benefit) | 14,234 | (2,474) | 23,566 | |
Decrease (increase) in accrued investment income | 6,838 | (1,783) | 5,194 | |
Decrease (increase) in other assets and liabilities | 31,780 | (3,961) | (27,417) | |
Net cash provided by (used in) operating activities | 96,115 | 14,683 | (34,145) | |
Cash flows from investing activities: | ||||
Fixed maturities, available for sale Proceeds from sales and maturities | 1,844,344 | 3,806,768 | 4,739,792 | |
Fixed maturities, available for sale, Purchases | (1,898,874) | (3,823,450) | (3,703,237) | |
Commercial mortgage loans, proceeds from sales and paydowns | 150,849 | 265,414 | 164,658 | |
Commercial mortgage loans, originations and purchases | (208,580) | (559,110) | ||
Purchase of common stocks | (5,100) | |||
Net purchases, sales, maturities of derivatives | (8,636) | 2,642 | (1,379) | |
Net purchases, sales, maturities of other investments | 620,425 | 63,097 | 184,107 | |
Net cash provided by (used in) investing activities | 708,108 | 100,791 | 824,831 | |
Cash flows from financing activities: | ||||
Policyholders' account deposits | 340,128 | 763,748 | 356,916 | |
Policyholders' account withdrawals | (1,141,289) | (905,014) | (922,215) | |
Dividends paid to shareholder | (33,200) | (42,000) | (187,000) | |
Change in overdrafts | 39,089 | 22,059 | (38,996) | |
Capital contribution | 250 | |||
Net cash provided by (used in) financing activities | (795,022) | (161,207) | (791,295) | |
Net increase (decrease) in cash and cash equivalents | 9,201 | (45,733) | (609) | |
Cash and cash equivalents, beginning of period | 40,529 | 49,121 | 49,730 | |
Cash and cash equivalents, end of period | $ 40,529 | 49,730 | 3,388 | 49,121 |
Supplemental schedule of cash flow information: | ||||
Income taxes paid | 17,700 | 24,000 | ||
Interest paid | 4,585 | 7,328 | 6,671 | |
Noncash activities | ||||
Issuance of vehicle note | 513,000 | |||
Issuance of other long-term debt | 513,000 | |||
Interest income on vehicle note | 15,711 | 25,069 | 22,880 | |
Interest expense on other long-term debt | 15,711 | 25,069 | 22,880 | |
Increase in vehicle note and other long-term debt | 38,600 | 50,300 | 57,100 | |
Change in modified coinsurance payable and deposit receivable | 166,963 | 50,791 | $ 133,060 | |
Bond exchanges | $ 11,199 | |||
Predecessor | ||||
Cash flows from operating activities: | ||||
Net income (loss) | 1,713 | |||
Adjustments to reconcile net income (loss) to net cash: | ||||
Investment gains, net | (285) | |||
Amortization/Accretion of bond premium, net | 94 | |||
Changes in assets and liabilities: | ||||
Decrease (increase) in insurance related liabilities and policy-related balances | 6,402 | |||
Decrease (increase) in receivable from/payable to affiliate | 24,358 | |||
Deferred income tax expense (benefit) | 921 | |||
Decrease (increase) in other assets and liabilities | (23,192) | |||
Net cash provided by (used in) operating activities | 10,011 | |||
Cash flows from investing activities: | ||||
Fixed maturities, available for sale Proceeds from sales and maturities | 21,341 | |||
Net purchases, sales, maturities of other investments | 55,924 | |||
Net cash provided by (used in) investing activities | 77,265 | |||
Cash flows from financing activities: | ||||
Net increase (decrease) in cash and cash equivalents | 87,276 | |||
Cash and cash equivalents, beginning of period | 5,100 | $ 92,376 | ||
Cash and cash equivalents, end of period | 92,376 | |||
Supplemental schedule of cash flow information: | ||||
Invested assets transferred | 11,482,637 | |||
Predecessor | On April 1, 2014 | ||||
Cash flows from financing activities: | ||||
Net increase (decrease) in cash and cash equivalents | 143,348 | |||
Predecessor | Subsequent to April 1, 2014 | ||||
Cash flows from financing activities: | ||||
Net increase (decrease) in cash and cash equivalents | $ 5,946 |
General
General | 12 Months Ended |
Dec. 31, 2016 | |
General | 1. General Lincoln Benefit Life Company (the “Company” or “Lincoln Benefit”) is a stock insurance company domiciled in the State of Nebraska. It is a wholly owned subsidiary of Resolution Life, Inc. (“Resolution”), which in turn is a wholly owned subsidiary of Resolution Life Holdings, Inc. (“Holdings”). Resolution was formed on July 2, 2013 under the General Corporation Law of the State of Delaware. On April 1, 2014, Lancaster Re Captive Insurance Company (“Lancaster Re”), a Nebraska domiciled captive insurance company, became a wholly owned subsidiary of Lincoln Benefit when it was contributed to Lincoln Benefit by Resolution. The Company became a wholly owned subsidiary of Resolution on April 1, 2014 after receiving all required regulatory approvals. Prior to this date, it was a wholly owned subsidiary of Allstate Life Insurance Company (“ALIC”). On July 17, 2013, Holdings executed a Stock Purchase Agreement (the “Purchase Agreement”) to acquire 100% of the Company from ALIC (the “Acquisition”). In November 2013, Holdings assigned the right to acquire all of Lincoln Benefit’s outstanding capital stock to Resolution pursuant to an Assignment Agreement. The purchase price was $595.8 million. The Company is authorized to sell life insurance and retirement products in all states except New York, as well as in the District of Columbia, the U.S. Virgin Islands and Guam. Prior to July 18, 2013, the Company sold interest-sensitive, traditional and variable life insurance products through both exclusive agencies (“Allstate Financial Sales channel”) and independent master brokerage agencies. Effective July 17, 2013, sales through the independent master brokerage agencies ceased, and sales through the Allstate Financial Sales channel will continue for a period after the closing date of Acquisition. The Company operates as a single segment entity, based on the manner in which we use financial information to evaluate business performance and to determine the allocation of resources. On April 1, 2014, immediately prior to the Acquisition, the Company, pursuant to a Partial Commutation Agreement, recaptured all deferred annuity, long-term care, accident and health and life business sold through Lincoln Benefit’s independent master brokerage agencies, other than specified life business, previously reinsured by ALIC. The primary impacts of the Partial Commutation Agreement with ALIC were the receipt of investments, the reduction of the related reinsurance recoverable and the reestablishment of deferred acquisition costs. The Company’s assets and liabilities increased by $1.33 billion and $0.19 billion, respectively. Since the Partial Commutation Agreement occurred between entities under common control, the excess of assets received and liabilities assumed was recorded as a capital contribution through additional paid-in Additionally, Lincoln Benefit and ALIC entered into an Amended and Restated Reinsurance Agreement where ALIC continues to reinsure all life insurance business written by Lincoln Benefit through the Allstate Financial Sales channel, all immediate annuities written by Lincoln Benefit prior to closing of the Acquisition, and certain term life policies written by Lincoln Benefit. Lincoln Benefit’s variable annuity business will remain reinsured by ALIC under an existing reinsurance agreement between Lincoln Benefit and ALIC. This business will continue to be administered by ALIC under an existing administrative services agreement between Lincoln Benefit and ALIC. As part of the Acquisition, ALIC has agreed to indemnify the Company for certain liabilities related to pre-closing Under the acquisition method of accounting, the assets acquired and liabilities assumed are recorded at fair value at the date of acquisition. The following table summarizes the fair values of assets acquired and liabilities assumed as of April 1, 2014: ($ in thousands) Assets Fixed maturities $ 9,194,903 Commercial mortgage loans 1,263,902 Policy loans 196,451 Short-term investments 979,728 Other invested assets 1,104 Cash 40,529 Accrued investment income 103,246 Reinsurance recoverable 5,606,879 Value of business acquired 290,795 Deposit receivable 1,550,351 Intangibles 5,200 Other assets 554,176 Separate account assets 1,661,007 Total assets acquired 21,448,271 Liabilities Future policy benefits and other policyholder liabilities 6,682,833 Policyholders’ account balances 10,367,246 Accrued expenses and other liabilities 78,026 Modified coinsurance payable 1,550,351 Other long-term debt — affiliate 513,000 Separate account liabilities 1,661,007 Total liabilities assumed 20,852,463 Net assets acquired $ 595,808 Included in the assets acquired is the value of business acquired (“VOBA”), which reflects the estimated fair value of in-force 805-20-25 Basis of Presentation The Company’s financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The financial statements are presented for Successor and Predecessor Periods, which relate to the accounting periods after and before April 1, 2014, respectively, the date of the closing of the Acquisition. For periods after April 1, 2014, the accompanying financial statements comprise the consolidated financial statements of the Company, which include the accounts of the Company and its subsidiary. Due to the Acquisition and the application of push-down accounting, different bases of accounting have been used to prepare the Predecessor and Successor financial statements. A black line separates the Predecessor and Successor financial statements to highlight the lack of comparability between these two periods. Consolidation The accompanying consolidated financial statements of the Successor include the accounts of Lincoln Benefit and its subsidiary, Lancaster Re. All significant intercompany balances and transactions have been eliminated on consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2016 | |
Significant Accounting Policies | 2. Significant Accounting Policies Cash Cash includes cash on hand, amounts due from banks, money market securities, highly liquid overnight deposits, discount notes and commercial paper held in the ordinary course of business and other debt instruments with maturities of three months or less when purchased. Cash equivalents mainly consist of government guaranteed money market mutual funds (“MMFs”) carried at amortized cost which approximates fair value. Investments Fixed maturities include bonds, asset-backed securities (“ABS”) residential mortgage-backed securities (“RMBS”) and commercial mortgage-backed securities (“CMBS”). Fixed maturities, which may be sold prior to their contractual maturity, are designated as available-for-sale pay-downs Common stocks are comprised of Federal Home Loan Bank of Chicago (“FHLB”) stock, which is carried at cost. The Company recognizes other-than-temporary impairments (“OTTI”) for securities classified as AFS in accordance with ASC 320, Investments-Debt and Equity Securities If the Company intends to sell or if it is more likely than not that it will be required to sell an impaired security prior to recovery of its cost basis, then the Company recognizes a charge to earnings for the full amount of the impairment (the difference between the amortized cost and fair value of the security). For fixed maturity securities that are considered OTTI and that the Company does not intend to sell and will not be required to sell, the Company separates the impairment into two components: credit loss and noncredit loss. Credit losses are charged to net realized investment losses and noncredit losses are charged to other comprehensive income. The credit loss component is the difference between the security’s amortized cost and the present value of its expected future cash flows discounted at the current effective rate. The remaining difference between the security’s fair value and the present value of its expected future cash flows is the noncredit loss. For corporate bonds, historical default (by rating) data is used as a proxy for the probability of default, and loss given default (by issuer) projections are applied to the par amount of the bond. Potential losses incurred on structured securities are based on expected loss models rather than incurred loss models. Expected cash flows include assumptions about key systematic risks (e.g., unemployment rates, housing prices) and loan-specific information (e.g., delinquency rates, loan-to-value ratios). Estimating future cash flows is a quantitative and qualitative process that incorporates information received from third parties, along with assumptions and judgments about the future performance of the underlying collateral. Commercial mortgage loans (“CMLs”) acquired at fair value are carried at amortized cost using the effective interest rate method. CMLs held by the Company are diversified by property type and geographic area throughout the U.S. CMLs are considered impaired when it is probable that the Company will not collect amounts due according to the terms of the original loan agreement. The Company assesses the impairment of loans individually for all loans in the portfolio. The Company estimates the fair value of the underlying collateral using internal valuations generally based on discounted cash flow analyses. The Company estimates an allowance for loan and lease losses (“ALLL”) representing potential credit losses embedded in the CML portfolio. The estimate is based on a consistently applied analysis of the loan portfolio and takes into consideration all available information, including industry, geographical, economic and political factors. Policy loans represent loans the Company issues to policyholders. Policy loans are carried at unpaid principal balances. Interest income on such loans is recognized as earned using the contractually agreed upon interest rate and reflected in Net investment income in the Consolidated Statement of Operations and Comprehensive Income (Loss). Generally, interest is capitalized on the associated policy’s anniversary date. Short-term investments include securities and other investments with remaining maturities of one year or less, but greater than three months, at the time of purchase and are stated at estimated fair value or amortized cost, which approximates fair value. Derivatives As part of the Company’s overall risk management policy, the Company uses listed equity index options and futures and interest rate swaps to economically hedge its obligation under certain fixed indexed annuity and universal life contracts. Derivatives are carried in the Company’s Consolidated Balance Sheet either as assets within Other invested assets or as liabilities within Accrued expenses and other liabilities at estimated fair value. The Company offsets the fair value amounts recognized for derivatives executed with the same counterparty under the same master netting agreement. Accruals on derivatives are generally recorded in accrued investment income or within other liabilities. However, accruals that are not scheduled to settle within one year are included with the derivatives carrying value in other invested assets or other liabilities. If a derivative is not designated as an accounting hedge or its use in managing risk does not qualify for hedge accounting, changes in the estimated fair value of the derivative are reported in Realized investment gains, net in the Consolidated Statement of Operations and Comprehensive Income (Loss). The notional amounts specified in the contracts are used to calculate contractual payments under the agreements and are generally not representative of the potential for gain or loss on these contracts. Futures contracts are defined as commitments to buy or sell designated financial instruments based on specified prices, yields or indexes. Equity index futures contracts provide returns at specified or optional dates based upon a specified index or interest rate applied to a notional amount. The Company uses futures to hedge exposures in indexed annuity and life contracts. Daily cash settlement of variation margins is required for futures contracts and is based on the changes in daily prices. The final settlement of futures contracts is in cash. Index option contracts provide returns at specified or optional dates based on a specified equity index applied to the option’s notional amount. The Company purchases and writes (sells) option contracts primarily to reduce market risk associated with certain annuity and life contracts. When the Company purchases/sells option contracts at specific prices, it is required to pay/receive a premium to/from the counterparties. The amount of premium paid/received is based on the number of contracts purchased/sold, the specified price and the maturity date of the contract. The Company receives/pays cash equal to the premium of written/purchased options when the contract is established. Premiums paid are reported as a derivative asset and premiums received are reported as a derivative liability. If the option is exercised, the Company receives/pays cash equal to the product of the number of contracts and the specified price in the contract in exchange for the equity upon which the option is written/purchased. If the options are not exercised, then no additional cash is exchanged when the contract expires. Index option contracts are cash settled upon exercise and the gain or loss on the settlement is reported in Realized investment gains, net. If the option contract expires without being exercised, the premiums paid or received are reported as Realized investment gains, net and the corresponding asset or liability previously recorded is reversed. The change in the fair value of options contracts are reported in Realized investment gains, net, with an adjustment to a corresponding asset or liability. The Company employs interest rate swaps to reduce interest rate risk associated with specific investments supporting certain annuity contracts. An interest rate swap is an agreement between two counterparties in which one stream of future interest payments is exchanged for another. Interest rate swaps usually involve the exchange of a fixed interest rate for a floating rate, or vice versa, to reduce or increase exposure to fluctuations in interest rates, or to obtain a marginally lower interest rate. Swaps provide returns at the reset dates based on respective interest rates applied to the notional amount with the net difference in resulting interest payments settled between the counterparties. The change in the fair value of the swap is reported in Realized investment gains, net, with an adjustment to the corresponding asset or liability. Cash flows received/paid at the reset dates are reported in net investment income and consist of any differences in the amounts of contractual interest calculated due to the respective counterparties based on changes in interest rates. Swaps usually terminate upon expiration and the remaining book value is offset to Realized investment gains, net. If terminated through sale, the difference between consideration received or paid and the remaining book value is recorded to Realized investment gains, net. The Company has derivatives embedded in non-derivative Investment Income and Realized Gains and Losses Investment income primarily consists of interest and is recognized on an accrual basis using the effective yield method. Interest income for RMBS and CMBS is determined considering estimated pay-downs, non-accrual Realized investment gains and losses, net, include gains and losses on investment sales and write-downs in value due to other-than-temporary declines in fair value. Realized capital gains and losses on investment sales, including principal payments, are determined on a specific identification basis. Recognition of Premium Revenues and Fees, and Related Policyholders’ Benefits and Interest Credited Prior to April 1, 2014 (the “Predecessor Period”), the Company had reinsurance agreements whereby all premiums, fee income from policyholders and returns credited to policyholders, policyholder benefits and substantially all expenses were ceded to ALIC and other reinsurers. Amounts reflected in the Statements of Operations and Comprehensive Income (Loss) are presented net of reinsurance. Traditional life insurance products consist principally of products with fixed and guaranteed premiums and benefits, primarily term and whole life insurance products. Premiums from these products are recognized as revenue when due from policyholders. Surrenders on traditional life and death benefits are reflected in policyholder benefits. Immediate annuities with life contingencies provide insurance protection over a period that extends beyond the period during which premiums are collected. Premiums from these products are recognized as revenue when received at the inception of the contract. Benefits and expenses are recognized in relation to premiums. As of April 1, 2014, the Company has reinsurance agreements to transfer all the risk related to immediate annuities existing as of or prior to the Acquisition Date. Interest-sensitive life contracts, such as universal life and single premium life, are insurance contracts whose terms are not fixed and guaranteed. The terms that may be changed include premiums paid by the policyholder, interest credited to the policyholder account balance and contract charges assessed against the policyholder account balance. Premiums from these contracts are reported as policyholder account balances. Fee income from policyholders consist of fees assessed against the policyholder account balance for the cost of insurance (mortality risk), contract administration and surrender of the policy prior to contractually specified dates. These charges are recognized as revenue when assessed against the policyholder account balance. Policyholder benefits include life-contingent benefit payments in excess of the policyholder account balance. Contracts that do not subject the Company to significant risk arising from mortality or morbidity are referred to as investment contracts. Fixed annuities, including market value adjusted annuities, equity-indexed annuities and immediate annuities without life contingencies, are considered investment contracts. Consideration received for such contracts is reported as policyholder account balance deposits. Policy fees for investment contracts consist of fees assessed against the contractholder account balance for maintenance, administration and surrender of the contract prior to contractually specified dates, and are recognized when assessed against the policyholder account balance. Returns credited to policyholder funds represents interest accrued or paid on interest-sensitive life and investment contracts. Crediting rates for certain fixed annuities and interest-sensitive life contracts are adjusted periodically by the Company to reflect current market conditions subject to contractually guaranteed minimum rates. Crediting rates for indexed life and annuities are generally based on an equity index, such as the Standard & Poor’s (“S&P”) 500 Index. Policy charges for variable life and variable annuity products consist of fees assessed against the policyholder account balances for contract maintenance, administration, mortality, expense and surrender of the contract prior to contractually specified dates. Policy benefits incurred for variable life and variable annuity products include guaranteed minimum death, income, withdrawal and accumulation benefits. The Company incurs costs in connection with renewal insurance business. All acquisition-related costs, including commissions, as well as all indirect costs, are expensed as incurred and reported in Other expenses on the Consolidated Statement of Operations and Comprehensive Income (Loss) for the years ended December 31, 2016 and 2015 and for the period from April 1, 2014 through December 31, 2014 (the “Successor Period”). Reinsurance Reinsurance accounting is applied for ceded and assumed transactions when the risk transfer provisions of ASC 944-40, Accounting and Reporting for Reinsurance of Short-Duration and Long-Duration Contracts With respect to ceded reinsurance, the Company values reinsurance recoverables on reported claims at the time the underlying claim is recognized in accordance with contract terms. For future policy benefits, the Company estimates the amount of reinsurance recoverables based on the terms of the reinsurance contracts and historical reinsurance recovery information. The reinsurance recoverables are based on what the Company believes are reasonable estimates and the balance is reported as an asset in the Consolidated Balance Sheets (Successor). However, the ultimate amount of the reinsurance recoverable is not known until all claims are settled. Reinsurance contracts do not relieve the Company from its obligations to policyholders, and failure of reinsurers to honor their obligations could result in losses to the Company; consequently, allowances are established for amounts deemed uncollectible. Prior to April 1, 2014, the Company had reinsurance agreements whereby all insurance risks represented by premiums, fee income from policyholders, returns credited to policyholder account balances, policyholder benefits and substantially all expenses were ceded to ALIC and other reinsurers. Additionally, investment income earned on the assets that supported policyholder account balances and future policy benefits and other policyholder funds were not included in the Company’s financial statements, as those assets were owned and managed by ALIC and other reinsurers under the terms of the reinsurance agreements. Value of Business Acquired (“VOBA”) For interest-sensitive life and annuity products, VOBA is amortized over the life of the policies in relation to the emergence of estimated gross profits (“EGPs”) from margins on mortality, interest, expenses, and surrenders, all of which are net of reinsurance and include actual realized gains and losses on investments. For non-interest Separate Accounts Separate accounts assets are carried at fair value. The assets of the separate accounts are legally segregated and available only to settle separate account contract obligations. Separate accounts liabilities represent the contractholders’ claims to the related assets and are carried at an amount equal to the separate accounts assets. Investment income and realized capital gains and losses of the separate accounts accrue directly to the contractholders and therefore are not included in the Company’s Consolidated Statement of Operations and Comprehensive Income (Successor) or Statements of Operations and Comprehensive Income (Predecessor). Deposits to and surrenders and withdrawals from the separate accounts are reflected in separate accounts liabilities and are not included in cash flows. Absent any contract provision wherein the Company provides a guarantee, variable annuity and variable life insurance contractholders bear the investment risk that the separate accounts’ funds may not meet their stated investment objectives. Future Policy Benefits and Other Policyholder Liabilities Policy liabilities are established for future policy benefits on certain annuity, life, and long term care policies. Such liabilities are established in amounts adequate to meet the estimated future obligations of policies in-force. For ASC 944-20 Liabilities for outstanding claims and claims adjustment expenses are estimates of payments to be made on life and health insurance contracts for reported claims and claims adjustment expenses. A liability is also held for claims adjustment expenses incurred but not reported as of the balance sheet date. These liabilities are determined using case basis evaluations and statistical analyses and represent estimates of the ultimate cost of all claims incurred but not paid. These estimates are continually reviewed and adjusted as necessary. Such adjustments are reflected in current operations. Future policy benefit reserves for fixed indexed life and annuity policies with returns linked to the performance of a specified market index are equal to the excess of the sum of the fair value of the embedded derivatives and the host (or guaranteed) component over the policyholder account balance. The change in the fair value of the embedded derivative is linked to the performance of the equity option. The host value is established as of the date of acquisition and is equal to the account value, plus the value of the unexpired options at the date of acquisition, less the embedded derivative, and accreted over the policy’s life at a constant rate of interest. The Company holds additional liabilities for its no lapse guarantees (associated with universal life) and guaranteed minimum withdrawal benefits (associated with fixed indexed annuities). These are accounted for in accordance with ASC 944-20, Financial Services — Insurance Activities Policy liabilities and accruals are based on the various estimates discussed above. Although the adequacy of these amounts cannot be assured, the Company believes that policy liabilities and accruals will be sufficient to meet future obligations of policies in-force. Policyholders’ Account Balances Policyholder account balances represent interest-bearing liabilities arising from the sale of products such as interest-sensitive life insurance and fixed annuities. Policyholder funds primarily comprise cumulative deposits received and interest credited to the contractholder less cumulative contract benefits, surrenders, withdrawals and contract charges for mortality or administrative expenses. The Company holds additional liabilities for guaranteed minimum income benefits (“GMIB”) associated with variable annuities, which are accounted for in accordance with ASC 944-20, Financial Services — Insurance Activities Income Taxes — Successor Income taxes are provided for using the asset and liability method under which deferred tax assets and liabilities are recognized for temporary differences between the financial statement and income tax bases of assets and liabilities. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The realizability of deferred tax assets is assessed at each reporting date and a deferred tax asset valuation allowance is established when there is uncertainty that such assets will be realized. Tax positions are assessed under a two-step Income Taxes — Predecessor The income tax provision is calculated under the liability method. Deferred tax assets and liabilities are recorded based on the difference between the financial statement and tax bases of assets and liabilities at the enacted tax rates. The principal assets and liabilities giving rise to such differences are unrealized capital gains and losses, accrued expenses and reinsurance recoverables. A deferred tax asset valuation allowance is established when there is uncertainty that such assets will be realized. Other Long-Term Debt Effective April 1, 2014, and with Nebraska Department of Insurance (the “NE DOI” or the “Department of Insurance”) approval, Lancaster Re issued a variable funding Surplus Note (the “Surplus Note”) to its affiliate, Lanis, LLC. for $513.0 million and acquired from Lanis a Vehicle Note (the “Vehicle Note”) for $513.0 million. The Vehicle Note is held to support a portion of Lancaster Re’s reinsurance obligations and has been authorized as an acceptable form of reinsurance collateral pursuant to Nebraska Rev. Stat. §44-8216(8)(c)(i) pre-approval, pre-approval, Other Assets and Accrued Expenses and Other Liabilities Other assets consist primarily of premiums due, intangible assets, the Vehicle Note and receivables resulting from sales of securities that had not yet settled at the balance sheet date. Other liabilities consist primarily of accrued expenses, technical overdrafts, derivatives, and payables resulting from purchases of securities that had not yet been settled at the balance sheet date. Adoption of New Accounting Pronouncements In November 2016, the Financial Accounting Standards Board (“FASB”) issued new guidance related to restricted cash (ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash). The new guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The new guidance specifies that restricted cash and cash equivalents are to be included with cash and cash equivalents in the Statement of Cash Flows. The Company will provide these additional disclosures in the Consolidated Statements of Cash Flows upon adoption date as applicable. In June 2016, the FASB issued new guidance for recording credit losses (ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments). The new guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Current GAAP requires an “incurred loss” methodology for recognizing credit losses that delays recognition until it is probable a loss has been incurred. The amendments replace the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information. The revisions affect loans, debt securities, trade receivables, net investments in leases, off-balance-sheet available-for-sale In February 2016, the FASB issued a new leasing standard (ASU 2016-02, year-end right-of-use In January 2016, the FASB issued new guidance on the recognition and measurement of financial instruments (ASU 2016-01, 825-10); available-for-sale In May 2015, the FASB issued new guidance on short-duration insurance contracts (Accounting Standards Update (“ASU”) 2015-09, In May 2015, the FASB issued new guidance on fair value measurement (ASU 2015-07, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)), effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years and which should be applied retrospectively to all periods presented. Earlier application is permitted. The new amendments in this ASU remove the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value (“NAV”) per share practical expedient. In addition, the amendments remove the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the NAV per share practical expedient. The adoption of this guidance did not have a material impact to the Company’s consolidated financial statements. In April 2015, the FASB issued new guidance on accounting for fees paid in a cloud computing arrangement (ASU 2015-05, Internal-Use 350-40): Effective November 18, 2014, the Company adopted new guidance on when, if ever, the cost of acquiring an entity should be used to establish a new accounting basis (“pushdown”) in the acquired entity’s separate financial statements (ASU 2014-17, change-in-control change-in-control change-in-control In May 2014, the FASB issued a comprehensive new revenue recognition standard (ASU 2014-09, 2015-14) |
Investments
Investments | 12 Months Ended |
Dec. 31, 2016 | |
Investments | 3. Investments The amortized cost, gross unrealized gains and losses and fair value for fixed maturities as of December 31, 2016 and 2015 were as follows: December 31, 2016 — Successor ($ in thousands) Amortized Gross Gross Embedded (1) Fair Value Fixed maturities U.S. Treasury Securities and Obligations of U.S. Government Authority and Agencies, available for sale $ 508,635 $ 7,681 $ (14,979 ) $ — $ 501,337 U.S. Treasury Securities and Obligations of U.S. Government Authority and Agencies, at fair value option 15,348 — — (733 ) 14,615 Obligations of U.S. States and Political Subdivisions 702,415 15,936 (8,614 ) — 709,737 Foreign government 31,009 303 (3,257 ) — 28,055 All other corporate securities 5,963,354 74,854 (151,382 ) — 5,886,826 ABS 512,486 5,370 (10,093 ) — 507,763 CMBS 385,757 1,283 (5,778 ) — 381,262 RMBS 180,492 5,556 (2,903 ) — 183,145 Total fixed maturities $ 8,299,496 $ 110,983 $ (197,006 ) $ (733 ) $ 8,212,740 Equity securities 5,100 — — — 5,100 Total fixed maturities and equity securities investments $ 8,304,596 $ 110,983 $ (197,006 ) $ (733 ) $ 8,217,840 December 31, 2015 — Successor ($ in thousands) Amortized Gross Gross Embedded (1) Fair Value Fixed maturities U.S. Treasury Securities and Obligations of U.S. Government Authority and Agencies $ 163,096 $ 5,563 $ (81 ) $ — $ 168,578 Obligations of U.S. States and Political Subdivisions 712,948 14,827 (7,018 ) — 720,757 Foreign government 72,042 202 (10,601 ) — 61,643 All other corporate securities 6,060,561 31,263 (353,149 ) — 5,738,675 ABS 542,503 2,517 (8,229 ) — 536,791 CMBS 513,316 627 (7,244 ) — 506,699 RMBS 209,728 4,600 (1,529 ) — 212,799 Total fixed maturities $ 8,274,194 $ 59,599 $ (387,851 ) $ — $ 7,945,942 (1) Embedded derivatives within fixed maturity securities held at fair value option are reported with the host investment. The change in fair value of embedded derivatives are reported in Realized Investment Gains, net in the Consolidated Statement of Operations and Comprehensive Income (Loss). Scheduled Maturities The scheduled maturities for fixed maturities are as follows as of December 31, 2016: ($ in thousands) Amortized Fair Value Due in one year or less $ 89,822 $ 90,008 Due after one year through five years 1,095,001 1,111,271 Due after five years through ten years 1,443,613 1,469,357 Due after ten years 4,176,392 4,056,041 Total before asset and mortgage-backed securities $ 6,804,828 $ 6,726,677 Asset and mortgage-backed securities 1,494,668 1,486,063 Total fixed maturities $ 8,299,496 $ 8,212,740 Actual maturities may differ from those scheduled as a result of calls and make-whole payments by the issuers. Asset and mortgage-backed securities are shown separately because of the potential for prepayment of principal prior to contractual maturity dates. Commercial Mortgage Loans The Company diversifies its commercial mortgage loan portfolio by geographical region to reduce concentration risk. The following table presents the Company’s commercial mortgage loan portfolio by geographical region as of December 31, 2016 and 2015: ($ in thousands) December 31, December 31, Alabama $ 1,287 $ 1,508 Arizona 20,389 34,911 California 255,023 336,310 Colorado 57,269 57,207 Connecticut 25,317 25,374 Florida 123,194 86,698 Georgia 65,414 67,213 Hawaii 6,099 7,134 Illinois 114,549 92,813 Iowa 1,033 1,266 Kansas 9,200 9,200 Kentucky 7,154 7,696 Maine 3,686 3,905 Maryland 20,975 33,844 Massachusetts 77,772 90,897 Minnesota 132,395 148,346 Nevada 84,721 14,262 New Jersey 65,908 68,720 New York 66,502 94,985 North Carolina 55,851 58,078 Ohio 38,611 36,954 Oklahoma — 10,803 Pennsylvania 31,929 41,975 South Carolina 1,948 2,532 Tennessee 3,238 5,278 Texas 133,020 107,279 Utah 42,641 44,366 Virginia 1,676 2,353 Washington 3,681 11,550 Wisconsin 4,674 5,675 General allowance for loan loss — — Total commercial mortgage loans $ 1,455,156 $ 1,509,132 Credit Quality of Commercial Mortgage Loans The credit quality of commercial mortgage loans held-for-investment Recorded Investment Debt Service Coverage Ratios December 31, 2016 ($ in thousands) > 1.20x 1.00x - 1.20x < 1.00x Total % of Total Estimated Fair % of Total Loan-to-value Less than 65% $ 785,149 $ 36,743 $ 11,354 $ 833,246 57.3 % $ 848,702 57.9 % 65% to 75% 581,188 25,317 — 606,505 41.7 601,587 41.1 76% to 80% 10,493 — — 10,493 0.7 10,494 0.7 Greater than 80% 4,912 — — 4,912 0.3 4,330 0.3 Total $ 1,381,742 $ 62,060 $ 11,354 $ 1,455,156 100.0 % $ 1,465,113 100.0 % Recorded Investment Debt Service Coverage Ratios December 31, 2015 ($ in thousands) > 1.20x 1.00x - 1.20x < 1.00x Total % of Total Estimated Fair % of Total Loan-to-value Less than 65% $ 869,470 $ 85,869 $ 19,862 $ 975,201 64.6 % $ 1,000,948 65.1 % 65% to 75% 508,557 25,374 — 533,931 35.4 535,690 34.9 76% to 80% — — — — 0.0 — 0.0 Greater than 80% — — — — 0.0 — 0.0 Total $ 1,378,027 $ 111,243 $ 19,862 $ 1,509,132 100.0 % $ 1,536,638 100.0 % As of December 31, 2016 and 2015, the Company had no allowance for credit losses for commercial mortgage loans. As of December 31, 2016, $1,450.3 million of commercial mortgage and other loans were in current status and one commercial mortgage loan with book value of $4.9 million was between 90-179 Impaired loans include those loans for which it is probable that all amounts due will not be collected according to the contractual terms of the loan agreement. During 2016 and 2015, the Company did not record any impairments related to commercial mortgage loans. For 2016, the fair value of the collateral less costs to sell the past due loan, described above, exceeded book value. The Company’s commercial mortgages may occasionally be involved in a troubled debt restructuring. As of December 31, 2016 and 2015, the Company had no commitments to fund to borrowers that have been involved in a troubled debt restructuring. As of December 31, 2016 and 2015, the Company had no new troubled debt restructurings related to commercial mortgages and no payment defaults on commercial mortgages other than as described above. Other Invested Assets The following table sets forth the composition of “Other invested assets” as of December 31, 2016 and 2015: Amortized Cost ($ in thousands) December 31, December 31, Low income housing tax credit properties $ 457 $ 677 Derivatives 18,949 17,735 $ 19,406 $ 18,412 Net Investment Income Net investment income for Successor Periods for the years ended December 31, 2016 and 2015 and the period from April 1, 2014 through December 31, 2014 and the Predecessor Period from January 1, 2014 through March 31, 2014 were as follows: Successor Predecessor ($ in thousands) For the Year December 31, 2016 For the Year December 31, 2015 For the Period December 31, For the Period through March 31, Fixed maturities $ 330,707 $ 334,931 $ 231,972 $ 2,461 Commercial mortgage loans 69,360 63,028 49,417 — Cash, cash equivalents and short-term investments 1,007 511 4,786 16 Other investment income 8,845 9,543 7,353 — Gross investment income $ 409,919 $ 408,013 $ 293,528 $ 2,477 Investment expenses 12,836 9,082 4,957 127 Net investment income $ 397,083 $ 398,931 $ 288,571 $ 2,350 Realized Investment Gains and Losses Realized investment gains and losses for Successor Periods for the years ended December 31, 2016 and 2015 and the period from April 1, 2014 through December 31, 2014 and the Predecessor Period from January 1, 2014 through March 31, 2014 were as follows: Successor Predecessor ($ in thousands) For the Year December 31, 2016 For the Year December 31, For the Period from April 1, 2014 through December 31, For the Period through March 31, Realized investment gains, net Fixed maturities, available for sale $ 66,560 $ 120,421 $ 25,795 $ 285 Fixed maturities, at fair value option (1) (733 ) — — — Commercial mortgage loans 4,037 2,325 2,880 — Derivatives 3,856 (9,208 ) 17,417 — Net realized gains $ 73,720 $ 113,538 $ 46,092 $ 285 (1) Relates to embedded derivatives within fixed maturity securities that are held at fair value option. There were no other-than-temporary impairment losses recorded in the Successor Periods for the years ended December 31, 2016 and 2015 and for the period from April 1, 2014 through December 31, 2014. There were no other-than-temporary impairment losses recorded in the Predecessor Period from January 1, 2014 through March 31, 2014. No other-than-temporary impairment losses were included in accumulated other comprehensive income as of December 31, 2016 or 2015. Proceeds from sales of fixed maturities and gross realized investment gains and losses for Successor Periods for the years ended December 31, 2016 and 2015 and for the period from April 1, 2014 through December 31, 2014 and the Predecessor Period for the period from January 1, 2014 through March 31, 2014 were as follows: Successor Predecessor ($ in thousands) For the Year December 31, For the Year December 31, For the Period through December 31, For the Period through March 31, Fixed maturities, available-for-sale Proceeds from sales $ 3,027,998 $ 3,864,356 $ 1,427,135 $ 5,277 Gross investment gains from sales 109,282 142,534 27,224 317 Gross investment losses from sales (35,136 ) (16,348 ) (2,755 ) (32 ) Proceeds from sales excludes non-taxable Unrealized Investment Gains and Losses — Successor The following table summarizes the gross unrealized losses and fair value of fixed maturities by the length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2016 and 2015: Fixed Maturities Available for Sale in a Loss Position Less than 12 months Greater than 12 months December 31, 2016 ($ in thousands) Fair Value Gross Fair Value Gross Fair Value Gross U.S. Treasury Securities and Obligations of U.S. Government Authority and Agencies $ 276,025 $ (14,951 ) $ 1,059 $ (28 ) $ 277,084 $ (14,979 ) Obligations of U.S. States and Political Subdivisions 206,090 (8,314 ) 5,274 (300 ) 211,364 (8,614 ) Foreign government 769 (34 ) 14,632 (3,223 ) 15,401 (3,257 ) All other corporate securities 2,385,689 (94,085 ) 512,710 (57,297 ) 2,898,399 (151,382 ) ABS 204,555 (8,456 ) 39,450 (1,637 ) 244,005 (10,093 ) CMBS 228,303 (5,231 ) 43,903 (547 ) 272,206 (5,778 ) RMBS 61,058 (1,659 ) 40,454 (1,244 ) 101,512 (2,903 ) Total fixed maturities $ 3,362,489 $ (132,730 ) $ 657,482 $ (64,276 ) $ 4,019,971 $ (197,006 ) Less than 12 months Greater than 12 months December 31, 2015 ($ in thousands) Fair Value Gross Fair Value Gross Fair Value Gross U.S. Treasury Securities and Obligations of U.S. Government Authority and Agencies $ 18,639 $ (77 ) $ 98 $ (4 ) $ 18,737 $ (81 ) Obligations of U.S. States and Political Subdivisions 207,889 (6,983 ) 4,030 (35 ) 211,919 (7,018 ) Foreign government 41,507 (8,665 ) 5,965 (1,936 ) 47,472 (10,601 ) All other corporate securities 3,523,371 (293,131 ) 209,474 (60,018 ) 3,732,845 (353,149 ) ABS 397,884 (7,031 ) 15,040 (1,198 ) 412,924 (8,229 ) CMBS 437,244 (7,164 ) 8,419 (80 ) 445,663 (7,244 ) RMBS 65,470 (776 ) 29,659 (753 ) 95,129 (1,529 ) Total fixed maturities $ 4,692,004 $ (323,827 ) $ 272,685 $ (64,024 ) $ 4,964,689 $ (387,851 ) Portfolio Monitoring The Company has a comprehensive portfolio monitoring process to identify and evaluate each fixed maturity security whose carrying value may be other-than-temporarily impaired . For each fixed maturity security in an unrealized loss position, the Company assesses whether management with the appropriate authority has made the decision to sell or whether it is more likely than not the Company will be required to sell the security before recovery of the amortized cost basis for reasons such as liquidity, contractual or regulatory purposes. If a security meets either of these criteria, the security’s decline in fair value is considered other than temporary and is recorded in earnings. If the Company has not made the decision to sell the fixed maturity security and it is not more likely than not the Company will be required to sell the fixed maturity security before recovery of its amortized cost basis, the Company evaluates whether it expects to receive cash flows sufficient to recover the entire amortized cost basis of the security. The Company calculates the estimated recovery value by discounting the best estimate of future cash flows at the security’s original or current effective rate, as appropriate, and compares this to the amortized cost of the security. If the Company does not expect to receive cash flows sufficient to recover the entire amortized cost basis of the fixed maturity security, the credit loss component of the impairment is recorded in earnings, with the remaining amount of the unrealized loss related to other factors recognized in other comprehensive income. The Company’s portfolio monitoring process includes a quarterly review of all securities to identify instances where the fair value of a security compared to its amortized cost is below established thresholds. The process also includes the monitoring of other impairment indicators such as ratings, ratings downgrades and payment defaults. The securities identified, in addition to other securities for which the Company may have a concern, are evaluated for potential other-than-temporary impairment using all reasonably available information relevant to the collectability or recovery of the security. Inherent in the Company’s evaluation of other-than-temporary impairment for these fixed maturity securities are assumptions and estimates about the financial condition and future earnings potential of the issue or issuer. Some of the factors that may be considered in evaluating whether a decline in fair value is other than temporary are: 1) the financial condition, near-term and long-term prospects of the issue or issuer, including relevant industry specific market conditions and trends, geographic location and implications of rating agency actions and offering prices; 2) the specific reasons that a security is in an unrealized loss position, including overall market conditions which could affect liquidity; and 3) the length of time and extent to which the fair value has been less than amortized cost. Net Unrealized Investment Gains and Losses in AOCI ($ in thousands) Predecessor Net Unrealized VOBA Future Policy Deferred Accumulated Other Balance, December 31, 2013 $ 5,954 $ — $ — $ (2,084 ) $ 3,870 Net investment gains and losses on investments arising during the period 2,364 — — (828 ) 1,536 Reclassification adjustment for gains and losses included in net income 285 — — (100 ) 185 Balance, March 31, 2014 $ 8,033 $ — $ — $ (2,812 ) $ 5,221 Successor Balance, April 1, 2014 $ — $ — $ — $ — $ — Net investment gains and losses on investments arising during the period 159,261 — — (55,675 ) 103,586 Reclassification adjustment for gains and losses included in net income — — — — — Impact of net unrealized investment gains and losses on VOBA — (20,287 ) — 7,100 (13,187 ) Impact of net unrealized investment gains and losses on future policy benefits and policyholders’ account balances — — (7,541 ) 2,640 (4,901 ) Balance, December 31, 2014 $ 159,261 $ (20,287 ) $ (7,541 ) $ (45,935 ) $ 85,498 Net investment gains and losses on investments arising during the period (408,019 ) — — 142,807 (265,212 ) Reclassification adjustment for gains and losses included in net income 79,023 — — (27,658 ) 51,365 Impact of net unrealized investment gains and losses on VOBA — 57,061 — (19,971 ) 37,090 Impact of net unrealized investment gains and losses on future policy benefits and policyholders’ account balances — — 60,447 (21,157 ) 39,290 Balance, December 31, 2015 $ (327,781 ) $ 36,774 $ 52,906 $ 83,402 $ (154,699 ) Net investment gains and losses on investments arising during the period 160,311 — — (56,111 ) 104,200 Reclassification adjustment for gains and losses included in net income (81,920 ) — — 28,672 (53,248 ) Impact of net unrealized investment gains and losses on VOBA — (30,948 ) — 10,832 (20,116 ) Impact of net unrealized investment gains and losses on future policy benefits and policyholders’ account balances — — (28,924 ) 10,123 (18,801 ) Balance, December 31, 2016 $ (85,550 ) $ 5,826 $ 23,982 $ 19,574 $ (36,168 ) |
Derivative Financial Instrument
Derivative Financial Instruments | 12 Months Ended |
Dec. 31, 2016 | |
Derivative Financial Instruments | 4. Derivative Financial Instruments See Note 2 for a description of the Company’s accounting policies for derivatives and Note 5 for information about the fair value hierarchy for derivatives. The following table provides a summary of the notional and fair value positions of derivative financial instruments as of December 31, 2016 and 2015: ($ in thousands) December 31, 2016 December 31, 2015 Notional Gross Fair Value Notional Gross Fair Value Assets Liabilities Assets Liabilities Assets Liabilities Assets Liabilities Assets Equity Options $ 410,500 $ 419,225 $ 34,248 $ (15,158 ) $ 879,853 $ 839,994 $ 28,588 $ (10,961 ) Futures 16,913 — — (141 ) 15,373 — 108 — Liabilities Policyholders account balances Derivatives embedded in life and annuity contracts Equity-indexed annuity contracts (2) $ — $ 1,281,993 $ — $ (55,871 ) $ — $ 1,494,084 $ — $ (64,138 ) Equity-indexed life contracts — 460,261 — (23,803 ) — 401,511 — (11,701 ) Guaranteed accumulation benefits (1) — 77,212 — (6,724 ) — 95,752 — (7,499 ) Guaranteed withdrawal benefits (1) — 11,064 — (111 ) — 13,264 — (315 ) (1) As of April 1, 2014, these amounts were ceded in accordance with the Company’s reinsurance agreements (2) Notional amount represents account value of equity indexed contracts The standardized ISDA Master Agreement under which the Company’s derivative transactions are executed include provisions for payment netting. In the normal course of business activities, if there is more than one derivative transaction with a single counterparty, the Company will set-off The following table presents the amount and location of gains (losses) recognized in income, net of reinsurance, for derivatives that were not designated or qualifying as hedging instruments for the Successor Period for the years ended December 31, 2016 and 2015, and for the period from April 1, 2014 through December 31, 2014: For the Year Ended For the Year Ended For the Period from April 1, 2014 ($ in thousands) Realized Policyholder Realized Policyholder Realized Policyholder Assets Equity options $ 2,472 $ — $ (7,557 ) $ — $ 15,230 $ — Futures 884 — (1,651 ) — 2,187 — Interest rate swaps 500 — — — — — Liabilities Policyholders’ account balances Equity-indexed annuity contracts $ — $ 8,267 $ — $ (478 ) $ — $ (5,622 ) Equity-indexed life contracts — (121 ) — 956 — 90 The following table presents the amount and location of gains (losses) recognized in income for derivatives that were not designated or qualifying as hedging instruments for the Predecessor Period from January 1, 2014 through March 31, 2014: For the Period from January 1, ($ in thousands) Interest Credited (1) Policyholder (1) Liabilities Policyholders’ account balances Derivatives embedded in life and annuity contracts $ 16,427 $ 946 (1) Prior to April 1, 2014, these amounts were ceded in accordance with the Company’s reinsurance agreements. |
Fair Value
Fair Value | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value | 5. Fair Value Fair value is defined as 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 hierarchy for inputs used in determining fair value maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Assets and liabilities recorded on the Consolidated Balance Sheets (Successor) at fair value are categorized in the fair value hierarchy based on the observability of inputs to the valuation techniques as follows: Level 1 Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company can access. Level 2 Assets and liabilities whose values are based on the following: (a) Quoted prices for similar assets or liabilities in active markets; (b) Quoted prices for identical or similar assets or liabilities in markets that are not active; or (c) Valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability. Level 3 Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Unobservable inputs reflect the Company’s estimates of the assumptions that market participants would use in valuing the assets and liabilities. The availability of observable inputs varies by instrument. In situations where fair value is based on internally developed pricing models or inputs that are unobservable in the market, the determination of fair value requires more judgment. The degree of judgment exercised by the Company in determining fair value is typically greatest for instruments categorized in Level 3. In many instances, valuation inputs used to measure fair value fall into different levels of the fair value hierarchy. The category level in the fair value hierarchy is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company uses prices and inputs that are current as of the measurement date, including during periods of market disruption. In periods of market disruption, the ability to observe prices and inputs may be reduced for many instruments. The Company is responsible for the determination of fair value and the supporting assumptions and methodologies. The Company gains assurance that assets and liabilities are appropriately valued through the execution of various processes and controls designed to ensure the overall reasonableness and consistent application of valuation methodologies, including inputs and assumptions, and compliance with accounting standards. For fair values received from third parties or internally estimated, the Company’s processes and controls are designed to ensure that the valuation methodologies are appropriate and consistently applied, the inputs and assumptions are reasonable and consistent with the objective of determining fair value, and the fair values are accurately recorded. For example, on a continuing basis, the Company assesses the reasonableness of individual fair values that have stale security prices or that exceed certain thresholds as compared to previous fair values received from valuation service providers or brokers or derived from internal models. The Company performs procedures to understand and assess the methodologies, processes and controls of valuation service providers. In addition, the Company may validate the reasonableness of fair values by comparing information obtained from valuation service providers or brokers to other third party valuation sources for selected securities. The Company performs ongoing price validation procedures such as back-testing of actual sales, which corroborate the various inputs used in internal models to market observable data. When fair value determinations are expected to be more variable, the Company validates them through reviews by members of management who have relevant expertise and who are independent of those charged with executing investment transactions. Successor There are no assets or liabilities measured at fair value on a nonrecurring basis as of December 31, 2016 or 2015. The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2016 and 2015: December 31, 2016 Description for Each Class of Asset or Liability ($ in thousands) Level 1 Level 2 Level 3 Total Assets at fair value Fixed maturities U.S. Treasury Securities and Obligations of U.S. Government Authority and Agencies, available for sale $ 97,836 $ 396,928 $ 6,573 $ 501,337 U.S. Treasury Securities and Obligations of U.S. Government Authority and Agencies, at fair value option (1) — 14,615 — 14,615 Obligations of U.S. States and Political Subdivisions — 709,737 — 709,737 Foreign government — 28,055 — 28,055 All other corporate securities — 5,867,475 19,351 5,886,826 ABS — 481,628 26,135 507,763 CMBS — 381,262 — 381,262 RMBS — 183,145 — 183,145 Equity securities 5,100 — — 5,100 Short term investments 129,660 — — 129,660 Other invested assets Equity options 19,090 — — 19,090 Futures (141 ) — — (141 ) Separate accounts assets 1,342,220 — — 1,342,220 Total assets at fair value $ 1,593,765 $ 8,062,845 $ 52,059 $ 9,708,669 Liabilities at fair value Policyholders’ account balances Equity indexed annuity contracts $ — $ — $ (55,871 ) $ (55,871 ) Equity indexed life contracts — (23,803 ) — (23,803 ) Guaranteed minimum accumulation benefits — — (6,724 ) (6,724 ) Guaranteed minimum withdrawal benefits — — (111 ) (111 ) Separate accounts liabilities (1,342,220 ) — — (1,342,220 ) Total liabilities at fair value $ (1,342,220 ) $ (23,803 ) $ (62,706 ) $ (1,428,729 ) (1) Embedded derivatives within fixed maturity securities held at fair value option are reported with the host investment. The change in fair value of embedded derivatives are reported in Realized Investment Gains, net in the Consolidated Statement of Operations and Comprehensive Income (Loss). December 31, 2015 Description for Each Class of Asset or Liability ($ in thousands) Level 1 Level 2 Level 3 Total Assets at fair value Fixed maturities U.S. Treasury Securities and Obligations of U.S. Government Authority and Agencies $ 10,621 $ 157,957 $ — $ 168,578 Obligations of U.S. States and Political Subdivisions — 720,757 — 720,757 Foreign government — 61,643 — 61,643 All other corporate securities — 5,727,155 11,520 5,738,675 ABS — 522,531 14,260 536,791 CMBS — 506,699 — 506,699 RMBS — 212,799 — 212,799 Short term investments 166,358 18,462 — 184,820 Other invested assets Equity options 17,627 — — 17,627 Futures 108 — — 108 Separate accounts assets 1,395,141 — — 1,395,141 Total assets at fair value $ 1,589,855 $ 7,928,003 $ 25,780 $ 9,543,638 Liabilities at fair value Policyholders’ account balances Equity indexed annuity contracts $ — $ — $ (64,138 ) $ (64,138 ) Equity indexed life contracts — (11,701 ) — (11,701 ) Guaranteed minimum accumulation benefits — — (7,499 ) (7,499 ) Guaranteed minimum withdrawal benefits — — (315 ) (315 ) Separate accounts liabilities (1,395,141 ) — — (1,395,141 ) Total liabilities at fair value $ (1,395,141 ) $ (11,701 ) $ (71,952 ) $ (1,478,794 ) There were no transfers between Level 1 and Level 2 during 2016. In 2015, U.S. Treasury securities were transferred to Level 1 as those securities are traded in an active market. Summary of significant valuation techniques for assets and liabilities measured at fair value on a recurring basis Fixed Maturities 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. U.S. Treasury securities are included within Level 1 due to the market activity. 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 securities 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. 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. Pricing service overrides, internally-developed valuations and indicative broker quotes are generally included in Level 3 in the fair value hierarchy. The fair value of private fixed maturities, which are comprised of investments in private placement securities, 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. No private placement securities were classified as Level 3 as of December 31, 2016 or 2015. Short-term Investments Short-term investments include money market instruments, highly liquid debt instruments and certain other investments. 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. The remaining instruments in this category are generally fair valued based on market observable inputs and these investments have primarily been classified within Level 2. Short-term investments classified within Level 3 primarily consist of commercial mortgage loans. The fair value of the 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. No short-term investments were classified as Level 3 as of December 31, 2016 or 2015. Other Invested Assets The estimated fair value of derivatives is determined through the use of quoted market prices for exchange-traded derivatives. Separate Account Assets and Liabilities Separate account assets and liabilities consist principally of investments in mutual fund shares. The fair values are based on quoted market prices in active markets for identical assets and are classified within Level 1 in the fair value hierarchy. Policyholders’ Account Balances The liabilities for guarantees primarily associated with the optional living benefit features of certain variable annuity contracts and equity indexed annuity contracts 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, 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. 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. Level 3 Fair Value Measurements The following table summarizes quantitative information about the significant unobservable inputs used in Level 3 fair value measurements as of December 31, 2016 and 2015: December 31, 2016 ($ in thousands) Fair Valuation Unobservable Range Weighted Equity indexed annuity contracts $ (55,871 ) Option Pricing Technique Projected Option Cost 1.40% - 1.84% 1.45% December 31, 2015 ($ in thousands) Fair Valuation Unobservable Range Weighted Equity indexed annuity contracts $ (64,138 ) Option Pricing Technique Projected Option Cost 1.40% - 2.11% 1.70% Excluded from the table above at December 31, 2016 and 2015 are approximately $52 million and $26 million, respectively, Level 3 fair value measurements of investments for which the underlying quantitative inputs are not developed by the Company and are not reasonably available. These investments primarily consist of certain public debt securities with limited trading activity, including asset-backed instruments, and their fair values generally reflect unadjusted prices obtained from independent valuation service providers and indicative, non-binding The table above also excludes underlying quantitative inputs related to liabilities held for the Company’s guaranteed minimum accumulation benefits and guaranteed withdrawal benefits. These liabilities are not developed by the Company as they are 100% ceded to external reinsurers. The development of these liabilities generally involve actuarially determined models and could result in the Company reporting significantly higher or lower fair value measurements for these Level 3 investments. The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis for the years ended December 31, 2016 and 2015 and the period from April 1, 2014 through December 31, 2014: ($ in thousands) Balance, Net OCI Transfers Transfers Purchases Sales Issues Settlements Balance, Assets Fixed income maturities U.S Treasury Securities and Obligations of U.S. Government Authority and Agencies, available for sale $ — $ (491 ) $ 187 $ — $ — $ 6,877 $ — $ — $ — $ 6,573 All other corporate securities 11,520 (123 ) (246 ) 15,370 (4,483 ) — (955 ) — (1,732 ) 19,351 ABS 14,260 (53 ) 347 3,093 — 11,165 — — (2,677 ) 26,135 Liabilities Equity indexed annuity contracts (64,138 ) 8,267 — — — — — — — (55,871 ) Guaranteed minimum accumulation benefits and guaranteed minimum withdrawal benefits (1) (7,814 ) 979 — — — — — — — (6,835 ) ($ in thousands) Balance, Net OCI Transfers Transfers Purchases Sales Issues Settlements Balance, Assets Fixed income maturities All other corporate securities $ 7,336 $ (282 ) $ 30 $ 13,255 $ (2,386 ) $ — $ — $ — $ (6,433 ) $ 11,520 ABS 5,250 134 (2,338 ) 17,191 — — (5,000 ) — (977 ) 14,260 CMBS 2,693 23,506 314 — — — (20,192 ) — (6,321 ) — Short-term investments 23,713 14 — — — — — — (23,727 ) — Liabilities Equity indexed annuity contracts (63,660 ) (478 ) — — — — — — — (64,138 ) Guaranteed minimum accumulation benefits and guaranteed minimum withdrawal benefits (1) (6,733 ) (1,081 ) — — — — — — — (7,814 ) ($ in thousands) Balance, Net OCI Transfers Transfers Purchases Sales Issues Settlements Balance, Assets Fixed income maturities All other corporate securities $ 396,694 $ 4,514 $ (7,472 ) $ — $ (289,172 ) $ — $ (97,228 ) $ — $ — $ 7,336 ABS 436 — (55 ) — — 4,930 — — (61 ) 5,250 CMBS 3,397 2,179 (314 ) — — — — — (2,569 ) 2,693 Short-term investments 24,095 29 — — — — (411 ) — — 23,713 Liabilities Equity indexed annuity contracts (58,038 ) (5,622 ) — — — — — — — (63,660 ) Guaranteed minimum accumulation benefits and guaranteed minimum withdrawal benefits (1) (8,499 ) 1,766 — — — — — — — (6,733 ) (1) These amounts are 100% ceded in accordance with the Company’s reinsurance agreements. Transfers into Level 3 are generally the result of unobservable inputs utilized within the 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. The following table presents the fair value by fair value hierarchy level of certain financial instruments that are not reported at fair value. However, in some cases, as described below, the carrying amount equals or approximates fair value as of December 31, 2016 and 2015: December 31, 2016 ($ in thousands) Level 1 Level 2 Level 3 Total Assets Commercial mortgage loans $ — $ — $ 1,465,113 $ 1,465,113 Policy loans — — 178,890 178,890 Cash 648 — — 648 Vehicle note — — 684,855 684,855 Total assets at fair value $ 648 $ — $ 2,328,858 $ 2,329,506 Liabilities at fair value Policyholders’ account balances — investment contracts $ — $ — $ 5,418,188 $ 5,418,188 Other long-term debt — — 684,855 684,855 $ — $ — $ 6,103,043 $ 6,103,043 December 31, 2015 ($ in thousands) Level 1 Level 2 Level 3 Total Assets Commercial mortgage loans $ — $ — $ 1,536,638 $ 1,536,638 Policy loans — — 186,827 186,827 Cash 49,121 — — 49,121 Vehicle note — — 638,270 638,270 Total assets at fair value $ 49,121 $ — $ 2,361,735 $ 2,410,856 Liabilities at fair value Policyholders’ account balances — investment contracts $ — $ — $ 5,967,973 $ 5,967,973 Other long-term debt — — 638,270 638,270 $ — $ — $ 6,606,243 $ 6,606,243 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 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. Policy Loans The fair value of policy loans was determined by discounting expected cash flows at the current loan coupon rate. As a result, the carrying value of the policy loans approximates the fair value. Cash The Company believes that due to the short-term nature of certain assets, the carrying value approximates fair value. Vehicle Note and Other Long-Term Debt The fair value of the Vehicle note and Other long-term debt is based upon the present value of the expected future cash flows discounted at the appropriate U.S. Treasury rate. 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 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 nonperformance risk. 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. Predecessor Summary of significant valuation techniques for assets and liabilities measured at fair value on a recurring basis Level 1 Measurements • Fixed maturities: Comprise certain U.S. Treasuries. Valuation is based on unadjusted quoted prices for identical assets in active markets that the Company can access. • Short-term: Comprise actively traded money market funds that have daily quoted net asset values for identical assets that the Company can access. • Separate account assets: Comprise actively traded mutual funds that have daily quoted net asset values for identical assets that the Company can access. Net asset values for the actively traded mutual funds in which the separate account assets are invested and obtained daily from the fund managers. Level 2 Measurements • Fixed maturities U.S. government and agencies: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. Municipal: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. Corporate, including privately placed: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. Also included are privately placed securities valued using a discounted cash flow model that is widely accepted in the financial services industry and uses market observable inputs and inputs derived principally from, or corroborated by, observable market data. The primary inputs to the discounted cash flow model include an interest rate yield curve, as well as published credit spreads for similar assets in markets that are not active that incorporate the credit quality and industry sector of the issuer. Foreign government: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. RMBS: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, prepayment speeds, collateral performance and credit spreads. CMBS: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, collateral performance and credit spreads. • Short-term: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. For certain short-term investments, amortized cost is used as the best estimate of fair value. Level 3 Measurements • Policyholder account balances — Successor; contractholder funds Predecessor: Derivatives embedded in certain life and annuity contracts are valued internally using models widely accepted in the financial services industry that determine a single best estimate of fair value for the embedded derivatives within a block of contractholder liabilities. The models primarily use stochastically determined cash flows based on the contractual elements of embedded derivatives, projected option cost and applicable market data, such as interest rate yield curves and equity index volatility assumptions. These are categorized as Level 3 as a result of the significance of nonmarket observable inputs. The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the period from January 1, 2014 through March 31, 2014: ($ in thousands) Total gains (losses) included in: Balance as of January 1, Net income (1) OCI Transfers Level 3 Transfers out of Level 3 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (267,859 ) $ 18,525 $ — $ — $ — Total recurring Level 3 liabilities $ (267,859 ) $ 18,525 $ — $ — $ — Purchases Sales Issues Settlements Balance as Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (3,764 ) $ 2,612 $ (250,486 ) Total recurring Level 3 liabilities $ — $ — $ (3,764 ) $ 2,612 $ (250,486 ) (1) The amount attributable to derivatives embedded in life and annuity contracts was reported as follows: $17.6 million in interest credited to contractholder funds and $946 thousand in contract benefits. These amounts were ceded in accordance with the Company’s reinsurance agreements. Transfers between level categorizations may occur due to changes in the availability of market observable inputs, which generally are caused by changes in market conditions such as liquidity, trading volume or bid-ask There were no transfers between Level 1 and Level 2 during the period from January 1, 2014 through March 31, 2014. The following table provides the change in unrealized gains and losses included in net income for Level 3 assets and liabilities: ($ in thousands) Period from Liabilities Policyholders’ account balances: Derivatives embedded in life and annuity contracts $ 18,525 Total recurring Level 3 liabilities $ 18,525 The amounts in the table above represent the change in unrealized gains and losses included in net income for the period of time that the asset or liability was determined to be in Level 3. The amount attributable to derivatives embedded in life and annuity contracts is reported as follows: $17.6 million in interest credited to contractholder funds and $946 thousand in contract benefits in the period from January 1, 2014 through March 31, 2014. These amounts are ceded in accordance with the Company’s reinsurance agreements |
Reinsurance
Reinsurance | 12 Months Ended |
Dec. 31, 2016 | |
Reinsurance | 6. Reinsurance Successor The Company has agreements that provide for reinsurance of certain policy-related risks. Under the agreements, premiums, contract charges, interest credited to policyholder funds, policy benefits and substantially all expenses are reinsured. The Company purchases reinsurance to limit aggregate and single losses on large risks. The Company cedes a portion of the mortality risk on certain life and long-term care policies under coinsurance agreements and yearly renewable term agreements. As of December 31, 2016 and December 31, 2015, approximately 99.8% of the Company’s reinsurance recoverables are due from companies rated A- On April 1, 2014, the Company entered into an experience rated modified coinsurance and monthly renewal term reinsurance arrangement with an external reinsurer under which risk on certain universal life and fixed annuity products is transferred. No portion of the assets constituting the consideration has been transferred to the reinsurer. This agreement was structured to finance reserves on certain universal life and fixed annuity products, in exchange for a fee based on those reserves. The profit to the reinsurer expected on the modified coinsurance and monthly renewable term portions is returned through an experience refund. The Company has determined that this agreement does not fulfill the requirements of risk transfer under generally accepted accounting principles and is accounted for on a deposit method of accounting. As of December 31, 2016 and 2015, the Company had a deposit receivable and a modified coinsurance payable of $1,200 million and $1,250 million, respectively, related to this agreement. The effects of reinsurance on premiums earned and fee income from policyholders for the Successor Period for the years ended December 31, 2016 and 2015, and the period from April 1, 2014 through December 31, 2014 were as follows: ($ in thousands) For the Year For the Year For the Period from Direct $ 1,328,917 $ 1,463,472 $ 921,444 Assumed 4,749 5,939 5,258 Ceded (971,047 ) (1,106,638 ) (702,833 ) Premiums and fee income, net of reinsurance $ 362,619 $ 362,773 $ 223,869 The effects of reinsurance on return credited to policyholders’ account balances and policyholder benefits for the years ended December 31, 2016 and 2015, and the period from April 1, 2014 through December 31, 2014 were as follows: ($ in thousands) For the Year For the Year For the Period from Direct $ 1,643,710 $ 1,603,724 $ 1,104,420 Assumed 6,453 6,743 4,713 Ceded (931,557 ) (957,643 ) (635,887 ) Return credited to policyholders’ account balances and policyholders’ benefits, net of reinsurance $ 718,606 $ 652,824 $ 473,246 Predecessor Prior to April 1, 2014, the Company had reinsurance agreements under which it reinsured all of its business to ALIC, Lincoln Benefit Re (“LB Re”) or non-affiliated non-affiliated The effects of reinsurance on premiums and contract charges are as follows: ($ in thousands) Period from January 1, 2014 Direct $ 331,899 Assumed 1,581 Ceded: Affiliate (244,797 ) Non-affiliate (88,683 ) Premiums and fee income, net of reinsurance $ — The effects of reinsurance on return credited to policyholders’ account balances, policyholder benefits and other expenses are as follows: ($ in thousands) Period from January 1, 2014 Direct $ 450,041 Assumed 2,606 Ceded: Affiliate (336,122 ) Non-affiliate (116,525 ) Return credited to policyholders, contract benefits and expenses, net of reinsurance $ — |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes | 7. Income Taxes Successor In connection with the Acquisition as defined in Note 1, ALIC made an election under Treasury Regulation Section 1.1502-36(d) The Company is party to a federal income tax allocation agreement (the “Tax Allocation Agreement”) with Lancaster Re. The Company and Lancaster Re file a separate life consolidated federal income tax return under Internal Revenue Code Section 1504 (c)(1). Following the Acquisition, the Company exited The Allstate Corporation’s consolidated federal income tax return and is no longer a party to the tax allocation agreement with its former affiliates. Final tax settlements were agreed to with The Allstate Corporation and no future tax allocations are expected to occur with The Allstate Corporation. As part of the Acquisition, although the Company remains jointly and severally liable for consolidated tax liabilities, the Company is held harmless by ALIC in accordance with the Acquisition agreement and believes that the possibility of a tax liability for the pre-sale The components of the deferred income tax assets and liabilities as of December 31, 2016 and 2015 are as follows: ($ in thousands) December 31, 2016 December 31, 2015 Deferred tax assets Policyholder reserves $ 2,139,431 $ 2,058,446 Deferred acquisition costs 65,002 41,664 Deferred financing costs 6,311 8,707 Investments 29,721 120,893 Other assets 5,137 688 Total deferred tax assets $ 2,245,602 $ 2,230,398 Deferred tax liabilities Value of business acquired $ (65,345 ) $ (86,696 ) Amounts recoverable from reinsurers (2,172,500 ) (2,076,251 ) Intangibles (1,820 ) (1,820 ) Other liabilities (2,251 ) (591 ) Total deferred tax liabilities $ (2,241,916 ) $ (2,165,358 ) Net deferred tax asset (liability) $ 3,686 $ 65,040 The Company evaluates the recoverability of deferred tax assets and establishes 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 any tax attribute 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) prudent and feasible 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 will be realized. The Company had no valuation allowance as of December 31, 2016 or 2015. With respect to deferred tax assets associated with investments, the Company has the ability and intent to hold these securities until recovery. 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. At December 31, 2016 and 2015, the Company had no net operating loss carryforwards, no capital loss carryforwards, or tax credit carryforwards. A reconciliation of the statutory federal income tax rate to the effective income tax rate on income from operations for the years ended December 31, 2016 and 2015 and the period from April 1, 2014 through December 31, 2014 were as follows: ($ in thousands) For the Year Ended December 31, 2016 For the Year Ended December 31, 2015 For the Period from April 1, 2014 Through December 31, 2014 Expected federal income tax expense $ 16,135 $ 45,062 $ 15,722 Dividends received deduction (1,960 ) (2,443 ) (1,470 ) Other 472 3,475 (18 ) Total income tax expense $ 14,647 $ 46,094 $ 14,234 Other represents tax credits and the establishment of additional deferred tax assets and liabilities that existed at the time of Acquisition and identified during the completion of the 2015 and 2014 consolidated federal income tax returns. 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 Tax reform has been identified by both President Trump and congressional leadership as an important priority. Both President Trump’s tax plan and the House of Representatives Republican “blueprint” for tax reform (released in June 2016) include high level tax reform proposals, but do not yet provide detailed tax provisions. While the timing, substance, and effective date of any new tax rules are unknown, they could result in the elimination of some, or all, of the separate account DRD tax benefit the Company ultimately receives and impact the Company’s financial position and results from operations. Predecessor Prior to April 1, 2014, the Company joined The Allstate Corporation and its other subsidiaries (the “Allstate Group”) in the filing of a consolidated federal income tax return and was party to a federal income tax allocation agreement (the “Allstate Tax Sharing Agreement”). Under the Allstate Tax Sharing Agreement, the Company paid to or received from The Allstate Corporation the amount, if any, by which the Allstate Group’s federal income tax liability was affected by virtue of inclusion of the Company in the consolidated federal income tax return. The Company also had a supplemental tax sharing agreement with respect to reinsurance ceded to ALIC to allocate the tax benefits and costs related to such reinsurance. Effectively, these agreements resulted in the Company’s annual income tax provision being computed, with adjustments, as if the Company filed a separate return, adjusted for the reinsurance ceded to ALIC. The IRS is currently examining the Allstate Group’s 2013 and 2014 federal income tax returns. The Allstate Group’s tax years prior to 2013 have been examined by the IRS and the statute of limitations has expired on those years. Any adjustments that may result from IRS examinations of the Allstate Group’s tax returns are not expected to have a material effect on the results of operations, cash flows or financial position of the Company. The components of income tax expense are as follows: ($ in thousands) Period from January 1, 2014 through March 31, 2014 Current $ 914 Deferred 8 Total income tax expense $ 922 The Company paid no income taxes in the period from January 1, 2014 through March 31, 2014. A reconciliation of the statutory federal income tax rate to the effective income tax rate on income from operations is as follows: Period from January 1, 2014 through March 31, 2014 Statutory federal income tax rate 35.0 % Other — Effective income tax rate 35.0 % |
Future Policy Benefits and Othe
Future Policy Benefits and Other Policyholder Liabilities - Successor | 12 Months Ended |
Dec. 31, 2016 | |
Future Policy Benefits and Other Policyholder Liabilities - Successor | 8. Future Policy Benefits and Other Policyholder Liabilities — Successor Life insurance liabilities include reserves for death benefits and other policy benefits. As of December 31, 2016 and 2015, future policy benefits and other policyholder liabilities consisted of the following: ($ in thousands) December 31, 2016 December 31, 2015 Traditional life insurance $ 1,598,071 $ 1,567,388 Immediate fixed annuities 520,380 584,948 Accident and health insurance 1,693,598 1,580,809 Equity indexed annuities 40,298 38,739 Other 1,259,444 985,757 Total $ 5,111,791 $ 4,757,641 Future policy benefits are generally equal to the present value of future benefit payments and related expenses, less the present value of future net premiums. Assumptions as to mortality, morbidity and persistency are based on the Company’s experience, industry data, and/or other factors, when the basis of the reserve is established. Interest rates used in the determination of present values range from 2.5% to 6.0% for setting reserves. Accident and health insurance future policy benefit reserves include gross unpaid claim reserves of $218.0 million and $191.0 million as of December 31, 2016 and 2015, respectively. These amounts are fully reinsured as of December 31, 2016 and 2015. |
Policyholder Account Balances -
Policyholder Account Balances - Successor | 12 Months Ended |
Dec. 31, 2016 | |
Policyholder Account Balances - Successor | 9. Policyholder Account Balances — Successor As of December 31, 2016 and 2015, policyholders’ account balances consisted of the following: ($ in thousands) December 31, 2016 December 31, 2015 Interest-sensitive life contracts $ 5,370,563 $ 5,210,152 Individual annuities 5,298,452 5,896,019 Funding agreements 255,200 — Other 11,157 14,394 Total policyholders’ account balances $ 10,935,372 $ 11,120,565 Policyholders’ account balances represent an accumulation of account deposits plus credited interest less withdrawals, expenses and mortality charges, if applicable. These policyholders’ account balances also include provisions for benefits under non-life |
Certain Nontraditional Long-Dur
Certain Nontraditional Long-Duration Contracts - Successor | 12 Months Ended |
Dec. 31, 2016 | |
Certain Nontraditional Long-Duration Contracts - Successor | 10. Certain Nontraditional Long-Duration Contracts — Successor The Company offered 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 also offered variable annuity contracts with general and separate account options where the Company contractually guarantees to the contractholder a return of no less than total deposits made to the contract less any partial withdrawals (“return of net deposits”). In certain of these variable annuity contracts, the Company also contractually guarantees to the contractholder a return of no less than (1) total deposits made to the contract less any partial withdrawals plus a minimum return (“minimum return”); and/or (2) 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 also issued annuity contracts with and without 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. All of the risks associated with the Company’s variable annuity contracts are reinsured with external reinsurers. In addition, the Company issues certain variable life, variable universal life and universal life contracts where the Company contractually guarantees to the contractholder a death benefit even when there is insufficient value to cover monthly mortality and expense charges, whereas otherwise the contract would typically lapse (“no lapse guarantee”). Variable life and variable universal life contracts are offered with general and separate account options similar to variable annuities. 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 fee income from policyholders and changes in liabilities for minimum guarantees are generally included in policyholder benefits in the Consolidated Statement of Operations and Comprehensive Income (Loss) (Successor) and Statements of Operations and Comprehensive Income (Predecessor). 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, benefit utilization, 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 used in the original pricing of these products. 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 or Policyholders’ account balances. As of December 31, 2016 and 2015, the Company had the following guarantees associated with these contracts, by product and guarantee type : December 31, 2016 ($ in millions) In the Event of Death At Annuitization/ Accumulation For Cumulative Periodic Withdrawals Accumulation at Specified Dates Variable Annuity Contracts Separate account value $ 543.1 $ 116.5 $ 10.9 $ 75.8 Net amount at risk $ 57.5 $ 15.8 $ 0.1 $ 6.2 Average attained age of contractholders 61 years N/A N/A N/A Weighted average waiting period until guarantee date N/A None N/A 5 years Variable Life, Variable Universal Life and Universal Life Contracts No Lapse Guarantees Separate account value $ 348.0 General account value $ 3,684.1 Net amount at risk $ 77,609.0 Average attained age of contractholders 49 years December 31, 2015 ($ in millions) In the Event of Death At Annuitization/ Accumulation For Cumulative Periodic Withdrawals Accumulation at Specified Dates Variable Annuity Contracts Separate account value $ 608.8 $ 127.4 $ 12.8 $ 91.6 Net amount at risk $ 66.3 $ 16.9 $ 0.1 $ 7.4 Average attained age of contractholders 61 years N/A N/A N/A Weighted average waiting period until guarantee date N/A None N/A 5 years Variable Life, Variable Universal Life and Universal Life Contracts No Lapse Guarantees Separate account value $ 307.3 General account value $ 3,639.6 Net amount at risk $ 84,370.9 Average attained age of contractholders 48 years Liabilities for Guarantee Benefits The liabilities for guaranteed minimum death benefits (“GMDB”) and secondary guarantees on interest-sensitive life and fixed annuities are included in Future policy benefits and other policyholder liabilities on the Consolidated Balance Sheet (Successor) and the related changes in the liabilities are included in Policyholder benefits in the Consolidated Statements of Operations and Comprehensive Income (Loss) for the Successor Period for the years ended December 31, 2016 and 2015, for the period from April 1, 2014 through December 31, 2014, and for the Predecessor Period for the period from January 1, 2014 through March 31, 2014. Guaranteed minimum income benefits (“GMIB”), guaranteed minimum withdrawal benefits (“GMWB”) and guaranteed minimum accumulation benefits (“GMAB”) features are accounted for as bifurcated embedded derivatives and are recorded at fair value within Policyholders’ account balances on the Consolidated Balance Sheet (Successor). The table below summarizes the changes in general account liabilities for guarantees on variable contracts. GMDB GMIB GMWB/ Secondary ($ in thousands) Variable Variable Variable Interest- Total Predecessor Net balance as of December 31, 2013 — — — — — Plus reinsurance recoverable 8,444 8,743 9,444 281,771 308,402 Balance as of December 31, 2013 $ 8,444 $ 8,743 $ 9,444 $ 281,771 $ 308,402 Less: reinsurance recoverable 8,444 8,743 9,444 281,771 308,402 Net balance as of December 31, 2013 — — — — — Incurred guarantee benefits — — — — — Paid guarantee benefits — — — — — Net change — — — — — Net balance as of March 31, 2014 — — — — — Plus reinsurance recoverable 8,057 7,122 8,499 293,704 317,382 Balance as of March 31, 2014 $ 8,057 $ 7,122 $ 8,499 $ 293,704 $ 317,382 Successor Balance as of April 1, 2014 $ 8,057 $ 7,122 $ 8,499 $ 557,654 $ 581,332 Less: reinsurance recoverable 8,057 7,122 8,499 67,288 90,966 Net balance as of April 1, 2014 — — — 490,366 490,366 Incurred guarantee benefits — — — 159,314 159,314 Paid guarantee benefits — — — (108,252 ) (108,252 ) Net change — — — 51,062 51,062 Net balance as of December 31, 2014 — — — 541,428 541,428 Plus reinsurance recoverable 8,358 8,240 6,733 83,733 107,064 Balance as of December 31, 2014 $ 8,358 $ 8,240 $ 6,733 $ 625,161 $ 648,492 Less: reinsurance recoverable 8,358 8,240 6,733 83,733 107,064 Net balance as of April 1, 2014 — — — 541,428 541,428 Incurred guarantee benefits — — — 217,603 217,603 Paid guarantee benefits — — — (118,063 ) (118,063 ) Net change — — — 99,540 99,540 Net balance as of December 31, 2015 — — — 640,968 640,968 Plus reinsurance recoverable 8,844 5,663 7,814 100,317 122,638 Balance as of December 31, 2015 $ 8,844 $ 5,663 $ 7,814 $ 741,285 $ 763,606 Less: reinsurance recoverable 8,844 5,663 7,814 100,317 122,638 Net balance as of December 31, 2015 — — — 640,968 640,968 Incurred guarantee benefits — — — 316,344 316,344 Paid guarantee benefits — — — (156,067 ) (156,067 ) Net change — — — 160,277 160,277 Net balance as of December 31, 2016 — — — 801,245 801,245 Plus reinsurance recoverable 8,626 3,440 6,835 122,608 141,509 Balance as of December 31, 2016 $ 8,626 $ 3,440 $ 6,835 $ 923,853 $ 942,754 |
Value of Business Acquired
Value of Business Acquired | 12 Months Ended |
Dec. 31, 2016 | |
Value of Business Acquired | 11. Value of Business Acquired The following reflects the changes to the VOBA asset: ($ in thousands) For the Year Ended For the Year Ended December 31, 2015 For the Period from April 1, 2014 Through December 31, 2014 Balance at beginning of period $ 247,702 $ 231,521 $ 290,795 Business acquired — — — Amortized to expense during the year (1) (30,053 ) (40,880 ) (38,987 ) Adjustment for unrealized investment losses during the year (30,948 ) 57,061 (20,287 ) Balance at end of year $ 186,701 $ 247,702 $ 231,521 (1) Amount is included in Operating and acquisition expenses on the Consolidated Statements of Operations and Other Comprehensive Income (Loss) The following table provides estimated percentage of the VOBA balance to be amortized for the years indicated: VOBA 2017 14 % 2018 11 % 2019 9 % 2020 8 % 2021 and thereafter 58 % |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies | 12. Commitments and Contingencies Regulation and Compliance The Company is subject to changing social, economic and regulatory conditions. From time to time, regulatory authorities or legislative bodies seek to impose additional regulations regarding agent and broker compensation, regulate the nature of and amount of investments, and otherwise expand overall regulation of insurance products and the insurance industry. The Company has established procedures and policies to facilitate compliance with laws and regulations, to foster prudent business operations, and to support financial reporting. The Company routinely reviews its practices to validate compliance with laws and regulations and with internal procedures and policies. As a result of these reviews, from time to time the Company may decide to modify some of its procedures and policies. Such modifications, and the reviews that led to them, may be accompanied by payments being made and costs being incurred. The ultimate changes and eventual effects of these actions on the Company’s business, if any, are uncertain. The Company is currently being examined by certain states for compliance with unclaimed property laws, premium tax and market conduct compliance. It is possible that these examinations may result in additional payments to states and to changes in the Company’s practices and procedures, which could impact benefit payments, operating and acquisition expenses and reserves, among other consequences; however, it is not likely to have a material effect on the financial statements of the Company. The Company is assessed amounts by the state guaranty funds to cover losses to policyholders of insolvent or rehabilitated insurance companies. Those mandatory assessments may be partially recovered through a reduction in future premium taxes in certain states. At December 31, 2016, the Company accrued $3.6 million for guaranty fund assessments which is expected to be offset by estimated future premium tax deductions of $7.6 million. At December 31, 2015, the Company accrued $6.7 million for guaranty fund assessments. Litigation The Company is involved from time to time in judicial, regulatory and arbitration proceedings concerning matters arising in connection with the conduct of its business. Management believes, based on currently available information, that the results of such proceedings, in the aggregate, will not have a material adverse effect on the Company’s financial condition. Given the inherent difficulty of predicting the outcome of the Company’s litigation and regulatory matters, particularly in cases or proceedings in which substantial or indeterminate damages or fines are sought, the Company cannot estimate losses or ranges of losses for cases or proceedings where there is only a reasonable possibility that a loss may be incurred. However, the Company believes that at the present time there are no pending or threatened lawsuits that are reasonably likely to have a material adverse effect on the consolidated financial position or results of operations. In the normal course of its business, the Company has entered into agreements that include indemnities in favor of third parties, such as contracts with advisors and consultants, outsourcing agreements, information technology agreements and service agreements. The Company has also agreed to indemnify its directors, officers and employees in accordance with the Company’s by-laws. The Pledged or Restricted Assets The Company had the following restricted assets: • Certain bonds were on deposit with governmental authorities as required by law with market values of $8.8 million and $8.4 million at December 31, 2016 and 2015, respectively. • Derivative cash collateral received was reported as cash equivalents of $0.9 million and $0.8 million at December 31, 2016 and 2015, respectively. • Funds pledged on certain mortgage loans held in the investment portfolio to finance property improvements on underlying real estate totaling $14.2 million and $18.4 million at December 31, 2016 and 2015, respectively. • The Company is a member of the FHLB and is required to pledge collateral to back funding agreements issued to the FHLB. As of December 31, 2016, assets with a market value of approximately $339.9 million were pledged as collateral to the FHLB. |
Regulatory Capital and Dividend
Regulatory Capital and Dividends | 12 Months Ended |
Dec. 31, 2016 | |
Regulatory Capital and Dividends | 13. Regulatory Capital and Dividends The Company prepares its statutory-basis financial statements in conformity with accounting practices prescribed or permitted by the State of Nebraska. Prescribed statutory accounting practices include a variety of publications of the National Association of Insurance Commissioners (“NAIC”), as well as state laws, regulations and general administrative rules. Permitted statutory accounting practices encompass all accounting practices not so prescribed. The State of Nebraska requires insurance companies domiciled in its state to prepare statutory-basis financial statements in conformity with the NAIC Accounting Practices and Procedures Manual, subject to any deviations prescribed or permitted by the State of Nebraska Insurance Commissioner. Statutory accounting practices differ from GAAP primarily since they require establishing life insurance reserves based on different actuarial assumptions, and valuing certain investments at amortized cost. Statutory accounting practices do not give recognition to purchase accounting adjustments. Statutory net income was $52 million, $74 million and $226 million for the years ended December 31, 2016, December 31, 2015 and December 31, 2014, respectively. Statutory capital and surplus was $560 million and $555 million as of December 31, 2016 and December 31, 2015, respectively. Dividend Limitations The ability of the Company to pay dividends is dependent on business conditions, income, cash requirements and other relevant factors. The payment of shareholder dividends by the Company without the prior approval of the Department of Insurance is limited to formula amounts based on net income and capital and surplus, determined in conformity with statutory accounting practices, as well as, the timing and amount of dividends paid in the preceding twelve months. In connection with the Acquisition, prior approval of the Nebraska Director of Insurance is required for the Company for any dividend or distribution for five years subsequent to the Acquisition. The Company paid dividends of $42.0 million, $187.0 million and $33.2 million during the years ended December 31, 2016 and 2015, and the period from April 1, 2014 through December 31, 2014, respectively. Other Without the prior approval of the Nebraska Director of Insurance, the Company may not: 1. Acquire or enter into an agreement or understanding to acquire control of any insurer, assumptively acquire policies, or bulk reinsure business during the period of three years after the Acquisition. 2. Provide or propose to provide directly or indirectly any loans, advances, guarantees, pledges, or other financial assistance (excluding policy loans or investment portfolio transactions) during the period of three years after the Acquisition. 3. Engage in any material transaction during the period of three years after the Acquisition. “Material transaction” shall mean any transfer or encumbrance of assets that, together with all other transfers or encumbrances made within the preceding twelve months, exceeds in value the greater of five percent of Lincoln Benefit’s surplus as of the December 31st of the last preceding, or the net gain from operations of Lincoln Benefit for the twelve-month period ending the December 31st of the last preceding. For the purposes of this clause, “Material Transaction” shall exclude: (i) investment portfolio transactions; (ii) settlement of balances due to policyholders, agents or third party reinsurers under existing reinsurance agreements; or (iii) settlement of ordinary course payables including but not limited to taxes, third party administrators, suppliers or other ordinary course creditors, and intercompany payables arising under any approved intercompany services agreement. Under state insurance laws, insurance companies are required to maintain paid up capital of not less than the minimum capital requirement applicable to the types of insurance they are authorized to write. Insurance companies are also subject to risk-based capital (“RBC”) requirements adopted by state insurance regulators. A company’s “authorized control level RBC” is calculated using various factors applied to certain financial balances and activity. Companies that do not maintain statutory capital and surplus at a level in excess of the company action level RBC, which is two times authorized control level RBC, are required to take specified actions. Company action level RBC is significantly in excess of the minimum capital requirements. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2016 | |
Leases | 14. Leases In December 2014, the Company entered into a lease agreement, effective February 2015, to lease office space under a non-cancellable The minimum aggregate rental commitments as of December 31, 2016 were as follows: ($ in thousands) 2017 $ 194 2018 207 2019 212 2020 217 2021 222 All future years 1,489 Aggregate total $ 2,541 |
Related Parties
Related Parties | 12 Months Ended |
Dec. 31, 2016 | |
Related Parties | 15. Related Parties Successor On April 1, 2014, the Company entered into a management services agreement with Resolution. Under this agreement, Resolution and Lincoln Benefit provide services to each other including but not limited to compliance, legal, risk management, accounting and reporting, treasury, tax and other management related services. Services are provided at cost. Resolution provided $14.1 million, $13.9 million and $21.1 million in services to Lincoln Benefit for the years ended December 31, 2016 and 2015 and for the period from April 1, 2014 through December 31, 2014, respectively. Effective April 1, 2014, the Company entered into a Fee Letter (the “Fee Letter”) with Lanis LLC (“Lanis”) pursuant to which the Company will pay Lanis the risk spread due on the Vehicle Note issued by Lanis to Lancaster Re. The total expense related to this risk spread for the years ended December 31, 2016 and 2015 and the period from April 1, 2014 through December 31, 2014 was approximately $7.3 million, $6.7 million and $4.3 million, respectively. The Company reported the following receivables/ (payables) to affiliates as of December 31, 2016 and 2015 ($ in thousands): December 31, 2016 December 31, 2015 Resolution $ (2,795 ) $ (2,623 ) Lanis $ (1,898 ) $ (1,742 ) Intercompany receivable and payable balances are evaluated on an individual company basis. Intercompany balances are generally settled quarterly. The Company’s stock is pledged as collateral on Resolution’s term loan agreement with a syndicate of lenders (“Term Loan”). The maturity date of the Term Loan is June 15, 2018. The Term Loan was funded on April 1, 2014. On April 1, 2014, the Company and RLI entered into a Letter Agreement whereby from and after the fifth anniversary of the date of the agreement, if the Company makes any payment pursuant to the Fee Letter, within ten Business Days of such payment by the Company, RLI shall reimburse the Company in cash in an amount equal to such payment by the Company. Predecessor All intercompany balances were settled prior to the Acquisition. Business operations Prior to April 1, 2014, the Company used services performed by its affiliates, Allstate Insurance Company (“AIC”), ALIC and Allstate Investments LLC, and business facilities owned or leased and operated by AIC in conducting its business activities. In addition, the Company shared the services of employees with AIC. The Company reimbursed its affiliates for the operating expenses incurred on behalf of the Company. The Company was charged for the cost of these operating expenses based on the level of services provided. Operating expenses allocated to the Company were $50.1 million in the period from January 1, 2014 through March 31, 2014. Of these costs, the Company retained investment related expenses on the invested assets that were not transferred under the reinsurance agreements. All other costs were ceded to ALIC under the reinsurance agreements. Broker-Dealer agreements Prior to April 1, 2014, the Company had a service agreement with Allstate Distributors, L.L.C. (“ADLLC”), a broker-dealer company owned by ALIC, whereby ADLLC promoted and marketed products sold by the Company. In return for these services, the Company recorded expense of $12 thousand in the period from January 1, 2014 through March 31, 2014 that was ceded to ALIC under the terms of the reinsurance agreements. Prior to April 1, 2014, the Company received distribution services from Allstate Financial Services, LLC, an affiliated broker-dealer company, for certain annuity and variable life insurance contracts sold by Allstate exclusive agencies. For these services, the Company incurred commission and other distribution expenses of $2.2 million in the period from January 1, 2014 through March 31, 2014 that were ceded to ALIC under the terms of the reinsurance agreements. Reinsurance The following table summarizes amounts that were ceded to ALIC under reinsurance agreements and reported net in the Statements of Operations and Comprehensive Income: ($ in thousands) Period from January 1, 2014 through March 31, 2014 Premiums and contract charges $ 244,797 Interest credited to contractholder funds, contract benefits and expenses 336,122 In September 2012, the Company entered into a coinsurance reinsurance agreement with LB Re to cede certain interest-sensitive life insurance policies to LB Re. Income taxes Prior to April 1, 2014, the Company was a party to a federal income tax allocation agreement with The Allstate Corporation (see Note 7). Intercompany loan agreement Prior to April 1, 2014, the Company had an intercompany loan agreement with The Allstate Corporation. |
Consolidated Summary of Investm
Consolidated Summary of Investments Other Than Investments in Related Parties | 12 Months Ended |
Dec. 31, 2016 | |
Consolidated Summary of Investments Other Than Investments in Related Parties | Lincoln Benefit Life Company (A Wholly Owned Subsidiary of Resolution Life, Inc.) Schedule I Summary of Investments Other Than Investments in Related Parties December 31, 2016 ($ in thousands) Amortized Fair Value Amount at which shown in the Consolidated Balance Sheet Type of Investment Fixed maturities: Bonds: U.S. Treasury Securities and Obligations of U.S. Government Authority and Agencies, available for sale $ 508,635 $ 501,337 $ 501,337 U.S. Treasury Securities and Obligations of U.S. Government Authority and Agencies, at fair value option 15,348 14,615 14,615 Obligations of U.S. States and Political Subdivisions 702,415 709,737 709,737 Foreign government 31,009 28,055 28,055 All other corporate bonds 5,963,354 5,886,826 5,886,826 ABS 512,486 507,763 507,763 CMBS 385,757 381,262 381,262 RMBS 180,492 183,145 183,145 Total fixed maturities $ 8,299,496 $ 8,212,740 $ 8,212,740 Other securities: Equity securities $ 5,100 $ 5,100 $ 5,100 Commercial mortgage loans 1,455,156 1,455,156 Derivatives 15,581 18,949 18,949 Other long-term assets 457 457 Policy loans 178,890 178,890 Short-term investments 129,660 129,660 Total other securities $ 1,784,844 $ 24,049 $ 1,788,212 Total investments $ 10,084,340 $ 8,236,789 $ 10,000,952 |
Consolidated Reinsurance
Consolidated Reinsurance | 12 Months Ended |
Dec. 31, 2016 | |
Consolidated Reinsurance | (A Wholly-Owned Subsidiary of Resolution Life, Inc.) Schedule IV — Reinsurance ($ in thousands) Gross Amount Ceded to Other Assumed Net Amount Percentage of Amount Assumed to Net Successor Year Ended December 31, 2016 Life insurance in force $ 365,008,309 $ 359,316,014 $ 4,180,222 $ 9,872,517 42.3 % Premiums and contract charges: Life and annuities $ 1,270,770 $ (918,414 ) $ 4,749 $ 357,105 1.3 % Accident and health insurance 58,147 (52,633 ) — 5,514 0.0 % $ 1,328,917 $ (971,047 ) $ 4,749 $ 362,619 1.3 % Year Ended December 31, 2015 Life insurance in force $ 390,226,197 $ 384,704,438 $ 4,601,282 $ 10,123,041 45.5 % Premiums and contract charges: Life and annuities $ 1,405,005 $ (1,056,276 ) $ 5,939 $ 354,668 1.7 % Accident and health insurance 58,467 (50,362 ) — 8,105 0.0 % $ 1,463,472 $ (1,106,638 ) $ 5,939 $ 362,773 1.6 % Period from April 1, 2014 through December 31, 2014 Life insurance in force $ 395,385,878 $ 388,790,881 $ 5,106,566 $ 11,701,563 43.6 % Premiums and contract charges: Life and annuities $ 869,472 $ (669,382 ) $ 5,258 $ 205,348 2.6 % Accident and health insurance 51,972 (33,451 ) — 18,521 0.0 % $ 921,444 $ (702,833 ) $ 5,258 $ 223,869 2.4 % Predecessor Period from April 1, 2014 through December 31, 2014 Premiums and contract charges: Life and annuities $ 313,410 $ (314,991 ) $ 1,581 $ — 0.0 % Accident and health insurance 18,489 (18,489 ) — — 0.0 % $ 331,899 $ (333,480 ) $ 1,581 $ — 0.0 % No reinsurance or coinsurance income was netted against premiums ceded in the years ended December 31, 2016 and 2015, the period from April 1, 2014 through December 31, 2014, or the period from January 1, 2014 to March 31, 2014. |
General (Policies)
General (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Basis of Presentation | Basis of Presentation The Company’s financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The financial statements are presented for Successor and Predecessor Periods, which relate to the accounting periods after and before April 1, 2014, respectively, the date of the closing of the Acquisition. For periods after April 1, 2014, the accompanying financial statements comprise the consolidated financial statements of the Company, which include the accounts of the Company and its subsidiary. Due to the Acquisition and the application of push-down accounting, different bases of accounting have been used to prepare the Predecessor and Successor financial statements. A black line separates the Predecessor and Successor financial statements to highlight the lack of comparability between these two periods. |
Consolidation | Consolidation The accompanying consolidated financial statements of the Successor include the accounts of Lincoln Benefit and its subsidiary, Lancaster Re. All significant intercompany balances and transactions have been eliminated on consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. |
Cash | Cash Cash includes cash on hand, amounts due from banks, money market securities, highly liquid overnight deposits, discount notes and commercial paper held in the ordinary course of business and other debt instruments with maturities of three months or less when purchased. Cash equivalents mainly consist of government guaranteed money market mutual funds (“MMFs”) carried at amortized cost which approximates fair value. |
Investments | Investments Fixed maturities include bonds, asset-backed securities (“ABS”) residential mortgage-backed securities (“RMBS”) and commercial mortgage-backed securities (“CMBS”). Fixed maturities, which may be sold prior to their contractual maturity, are designated as available-for-sale pay-downs Common stocks are comprised of Federal Home Loan Bank of Chicago (“FHLB”) stock, which is carried at cost. The Company recognizes other-than-temporary impairments (“OTTI”) for securities classified as AFS in accordance with ASC 320, Investments-Debt and Equity Securities If the Company intends to sell or if it is more likely than not that it will be required to sell an impaired security prior to recovery of its cost basis, then the Company recognizes a charge to earnings for the full amount of the impairment (the difference between the amortized cost and fair value of the security). For fixed maturity securities that are considered OTTI and that the Company does not intend to sell and will not be required to sell, the Company separates the impairment into two components: credit loss and noncredit loss. Credit losses are charged to net realized investment losses and noncredit losses are charged to other comprehensive income. The credit loss component is the difference between the security’s amortized cost and the present value of its expected future cash flows discounted at the current effective rate. The remaining difference between the security’s fair value and the present value of its expected future cash flows is the noncredit loss. For corporate bonds, historical default (by rating) data is used as a proxy for the probability of default, and loss given default (by issuer) projections are applied to the par amount of the bond. Potential losses incurred on structured securities are based on expected loss models rather than incurred loss models. Expected cash flows include assumptions about key systematic risks (e.g., unemployment rates, housing prices) and loan-specific information (e.g., delinquency rates, loan-to-value ratios). Estimating future cash flows is a quantitative and qualitative process that incorporates information received from third parties, along with assumptions and judgments about the future performance of the underlying collateral. Commercial mortgage loans (“CMLs”) acquired at fair value are carried at amortized cost using the effective interest rate method. CMLs held by the Company are diversified by property type and geographic area throughout the U.S. CMLs are considered impaired when it is probable that the Company will not collect amounts due according to the terms of the original loan agreement. The Company assesses the impairment of loans individually for all loans in the portfolio. The Company estimates the fair value of the underlying collateral using internal valuations generally based on discounted cash flow analyses. The Company estimates an allowance for loan and lease losses (“ALLL”) representing potential credit losses embedded in the CML portfolio. The estimate is based on a consistently applied analysis of the loan portfolio and takes into consideration all available information, including industry, geographical, economic and political factors. Policy loans represent loans the Company issues to policyholders. Policy loans are carried at unpaid principal balances. Interest income on such loans is recognized as earned using the contractually agreed upon interest rate and reflected in Net investment income in the Consolidated Statement of Operations and Comprehensive Income (Loss). Generally, interest is capitalized on the associated policy’s anniversary date. Short-term investments include securities and other investments with remaining maturities of one year or less, but greater than three months, at the time of purchase and are stated at estimated fair value or amortized cost, which approximates fair value. |
Derivatives | Derivatives As part of the Company’s overall risk management policy, the Company uses listed equity index options and futures and interest rate swaps to economically hedge its obligation under certain fixed indexed annuity and universal life contracts. Derivatives are carried in the Company’s Consolidated Balance Sheet either as assets within Other invested assets or as liabilities within Accrued expenses and other liabilities at estimated fair value. The Company offsets the fair value amounts recognized for derivatives executed with the same counterparty under the same master netting agreement. Accruals on derivatives are generally recorded in accrued investment income or within other liabilities. However, accruals that are not scheduled to settle within one year are included with the derivatives carrying value in other invested assets or other liabilities. If a derivative is not designated as an accounting hedge or its use in managing risk does not qualify for hedge accounting, changes in the estimated fair value of the derivative are reported in Realized investment gains, net in the Consolidated Statement of Operations and Comprehensive Income (Loss). The notional amounts specified in the contracts are used to calculate contractual payments under the agreements and are generally not representative of the potential for gain or loss on these contracts. Futures contracts are defined as commitments to buy or sell designated financial instruments based on specified prices, yields or indexes. Equity index futures contracts provide returns at specified or optional dates based upon a specified index or interest rate applied to a notional amount. The Company uses futures to hedge exposures in indexed annuity and life contracts. Daily cash settlement of variation margins is required for futures contracts and is based on the changes in daily prices. The final settlement of futures contracts is in cash. Index option contracts provide returns at specified or optional dates based on a specified equity index applied to the option’s notional amount. The Company purchases and writes (sells) option contracts primarily to reduce market risk associated with certain annuity and life contracts. When the Company purchases/sells option contracts at specific prices, it is required to pay/receive a premium to/from the counterparties. The amount of premium paid/received is based on the number of contracts purchased/sold, the specified price and the maturity date of the contract. The Company receives/pays cash equal to the premium of written/purchased options when the contract is established. Premiums paid are reported as a derivative asset and premiums received are reported as a derivative liability. If the option is exercised, the Company receives/pays cash equal to the product of the number of contracts and the specified price in the contract in exchange for the equity upon which the option is written/purchased. If the options are not exercised, then no additional cash is exchanged when the contract expires. Index option contracts are cash settled upon exercise and the gain or loss on the settlement is reported in Realized investment gains, net. If the option contract expires without being exercised, the premiums paid or received are reported as Realized investment gains, net and the corresponding asset or liability previously recorded is reversed. The change in the fair value of options contracts are reported in Realized investment gains, net, with an adjustment to a corresponding asset or liability. The Company employs interest rate swaps to reduce interest rate risk associated with specific investments supporting certain annuity contracts. An interest rate swap is an agreement between two counterparties in which one stream of future interest payments is exchanged for another. Interest rate swaps usually involve the exchange of a fixed interest rate for a floating rate, or vice versa, to reduce or increase exposure to fluctuations in interest rates, or to obtain a marginally lower interest rate. Swaps provide returns at the reset dates based on respective interest rates applied to the notional amount with the net difference in resulting interest payments settled between the counterparties. The change in the fair value of the swap is reported in Realized investment gains, net, with an adjustment to the corresponding asset or liability. Cash flows received/paid at the reset dates are reported in net investment income and consist of any differences in the amounts of contractual interest calculated due to the respective counterparties based on changes in interest rates. Swaps usually terminate upon expiration and the remaining book value is offset to Realized investment gains, net. If terminated through sale, the difference between consideration received or paid and the remaining book value is recorded to Realized investment gains, net. The Company has derivatives embedded in non-derivative |
Investment Income and Realized Gains and Losses | Investment Income and Realized Gains and Losses Investment income primarily consists of interest and is recognized on an accrual basis using the effective yield method. Interest income for RMBS and CMBS is determined considering estimated pay-downs, non-accrual Realized investment gains and losses, net, include gains and losses on investment sales and write-downs in value due to other-than-temporary declines in fair value. Realized capital gains and losses on investment sales, including principal payments, are determined on a specific identification basis. |
Recognition of Premium Revenues and Fees, and Related Policyholders' Benefits and Interest Credited | Recognition of Premium Revenues and Fees, and Related Policyholders’ Benefits and Interest Credited Prior to April 1, 2014 (the “Predecessor Period”), the Company had reinsurance agreements whereby all premiums, fee income from policyholders and returns credited to policyholders, policyholder benefits and substantially all expenses were ceded to ALIC and other reinsurers. Amounts reflected in the Statements of Operations and Comprehensive Income (Loss) are presented net of reinsurance. Traditional life insurance products consist principally of products with fixed and guaranteed premiums and benefits, primarily term and whole life insurance products. Premiums from these products are recognized as revenue when due from policyholders. Surrenders on traditional life and death benefits are reflected in policyholder benefits. Immediate annuities with life contingencies provide insurance protection over a period that extends beyond the period during which premiums are collected. Premiums from these products are recognized as revenue when received at the inception of the contract. Benefits and expenses are recognized in relation to premiums. As of April 1, 2014, the Company has reinsurance agreements to transfer all the risk related to immediate annuities existing as of or prior to the Acquisition Date. Interest-sensitive life contracts, such as universal life and single premium life, are insurance contracts whose terms are not fixed and guaranteed. The terms that may be changed include premiums paid by the policyholder, interest credited to the policyholder account balance and contract charges assessed against the policyholder account balance. Premiums from these contracts are reported as policyholder account balances. Fee income from policyholders consist of fees assessed against the policyholder account balance for the cost of insurance (mortality risk), contract administration and surrender of the policy prior to contractually specified dates. These charges are recognized as revenue when assessed against the policyholder account balance. Policyholder benefits include life-contingent benefit payments in excess of the policyholder account balance. Contracts that do not subject the Company to significant risk arising from mortality or morbidity are referred to as investment contracts. Fixed annuities, including market value adjusted annuities, equity-indexed annuities and immediate annuities without life contingencies, are considered investment contracts. Consideration received for such contracts is reported as policyholder account balance deposits. Policy fees for investment contracts consist of fees assessed against the contractholder account balance for maintenance, administration and surrender of the contract prior to contractually specified dates, and are recognized when assessed against the policyholder account balance. Returns credited to policyholder funds represents interest accrued or paid on interest-sensitive life and investment contracts. Crediting rates for certain fixed annuities and interest-sensitive life contracts are adjusted periodically by the Company to reflect current market conditions subject to contractually guaranteed minimum rates. Crediting rates for indexed life and annuities are generally based on an equity index, such as the Standard & Poor’s (“S&P”) 500 Index. Policy charges for variable life and variable annuity products consist of fees assessed against the policyholder account balances for contract maintenance, administration, mortality, expense and surrender of the contract prior to contractually specified dates. Policy benefits incurred for variable life and variable annuity products include guaranteed minimum death, income, withdrawal and accumulation benefits. The Company incurs costs in connection with renewal insurance business. All acquisition-related costs, including commissions, as well as all indirect costs, are expensed as incurred and reported in Other expenses on the Consolidated Statement of Operations and Comprehensive Income (Loss) for the years ended December 31, 2016 and 2015 and for the period from April 1, 2014 through December 31, 2014 (the “Successor Period”). |
Reinsurance | Reinsurance Reinsurance accounting is applied for ceded and assumed transactions when the risk transfer provisions of ASC 944-40, Accounting and Reporting for Reinsurance of Short-Duration and Long-Duration Contracts With respect to ceded reinsurance, the Company values reinsurance recoverables on reported claims at the time the underlying claim is recognized in accordance with contract terms. For future policy benefits, the Company estimates the amount of reinsurance recoverables based on the terms of the reinsurance contracts and historical reinsurance recovery information. The reinsurance recoverables are based on what the Company believes are reasonable estimates and the balance is reported as an asset in the Consolidated Balance Sheets (Successor). However, the ultimate amount of the reinsurance recoverable is not known until all claims are settled. Reinsurance contracts do not relieve the Company from its obligations to policyholders, and failure of reinsurers to honor their obligations could result in losses to the Company; consequently, allowances are established for amounts deemed uncollectible. Prior to April 1, 2014, the Company had reinsurance agreements whereby all insurance risks represented by premiums, fee income from policyholders, returns credited to policyholder account balances, policyholder benefits and substantially all expenses were ceded to ALIC and other reinsurers. Additionally, investment income earned on the assets that supported policyholder account balances and future policy benefits and other policyholder funds were not included in the Company’s financial statements, as those assets were owned and managed by ALIC and other reinsurers under the terms of the reinsurance agreements. |
Value of Business Acquired ("VOBA") | Value of Business Acquired (“VOBA”) For interest-sensitive life and annuity products, VOBA is amortized over the life of the policies in relation to the emergence of estimated gross profits (“EGPs”) from margins on mortality, interest, expenses, and surrenders, all of which are net of reinsurance and include actual realized gains and losses on investments. For non-interest |
Separate Accounts | Separate Accounts Separate accounts assets are carried at fair value. The assets of the separate accounts are legally segregated and available only to settle separate account contract obligations. Separate accounts liabilities represent the contractholders’ claims to the related assets and are carried at an amount equal to the separate accounts assets. Investment income and realized capital gains and losses of the separate accounts accrue directly to the contractholders and therefore are not included in the Company’s Consolidated Statement of Operations and Comprehensive Income (Successor) or Statements of Operations and Comprehensive Income (Predecessor). Deposits to and surrenders and withdrawals from the separate accounts are reflected in separate accounts liabilities and are not included in cash flows. Absent any contract provision wherein the Company provides a guarantee, variable annuity and variable life insurance contractholders bear the investment risk that the separate accounts’ funds may not meet their stated investment objectives. |
Future Policy Benefits and Other Policyholder Liabilities | Future Policy Benefits and Other Policyholder Liabilities Policy liabilities are established for future policy benefits on certain annuity, life, and long term care policies. Such liabilities are established in amounts adequate to meet the estimated future obligations of policies in-force. For ASC 944-20 Liabilities for outstanding claims and claims adjustment expenses are estimates of payments to be made on life and health insurance contracts for reported claims and claims adjustment expenses. A liability is also held for claims adjustment expenses incurred but not reported as of the balance sheet date. These liabilities are determined using case basis evaluations and statistical analyses and represent estimates of the ultimate cost of all claims incurred but not paid. These estimates are continually reviewed and adjusted as necessary. Such adjustments are reflected in current operations. Future policy benefit reserves for fixed indexed life and annuity policies with returns linked to the performance of a specified market index are equal to the excess of the sum of the fair value of the embedded derivatives and the host (or guaranteed) component over the policyholder account balance. The change in the fair value of the embedded derivative is linked to the performance of the equity option. The host value is established as of the date of acquisition and is equal to the account value, plus the value of the unexpired options at the date of acquisition, less the embedded derivative, and accreted over the policy’s life at a constant rate of interest. The Company holds additional liabilities for its no lapse guarantees (associated with universal life) and guaranteed minimum withdrawal benefits (associated with fixed indexed annuities). These are accounted for in accordance with ASC 944-20, Financial Services — Insurance Activities Policy liabilities and accruals are based on the various estimates discussed above. Although the adequacy of these amounts cannot be assured, the Company believes that policy liabilities and accruals will be sufficient to meet future obligations of policies in-force. |
Policyholders' Account Balances | Policyholders’ Account Balances Policyholder account balances represent interest-bearing liabilities arising from the sale of products such as interest-sensitive life insurance and fixed annuities. Policyholder funds primarily comprise cumulative deposits received and interest credited to the contractholder less cumulative contract benefits, surrenders, withdrawals and contract charges for mortality or administrative expenses. The Company holds additional liabilities for guaranteed minimum income benefits (“GMIB”) associated with variable annuities, which are accounted for in accordance with ASC 944-20, Financial Services — Insurance Activities |
Income Taxes | Income Taxes — Successor Income taxes are provided for using the asset and liability method under which deferred tax assets and liabilities are recognized for temporary differences between the financial statement and income tax bases of assets and liabilities. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The realizability of deferred tax assets is assessed at each reporting date and a deferred tax asset valuation allowance is established when there is uncertainty that such assets will be realized. Tax positions are assessed under a two-step |
Other Long-Term Debt | Other Long-Term Debt Effective April 1, 2014, and with Nebraska Department of Insurance (the “NE DOI” or the “Department of Insurance”) approval, Lancaster Re issued a variable funding Surplus Note (the “Surplus Note”) to its affiliate, Lanis, LLC. for $513.0 million and acquired from Lanis a Vehicle Note (the “Vehicle Note”) for $513.0 million. The Vehicle Note is held to support a portion of Lancaster Re’s reinsurance obligations and has been authorized as an acceptable form of reinsurance collateral pursuant to Nebraska Rev. Stat. §44-8216(8)(c)(i) pre-approval, pre-approval, |
Other Assets and Accrued Expenses and Other Liabilities | Other Assets and Accrued Expenses and Other Liabilities Other assets consist primarily of premiums due, intangible assets, the Vehicle Note and receivables resulting from sales of securities that had not yet settled at the balance sheet date. Other liabilities consist primarily of accrued expenses, technical overdrafts, derivatives, and payables resulting from purchases of securities that had not yet been settled at the balance sheet date. |
Adoption of New Accounting Pronouncements | Adoption of New Accounting Pronouncements In November 2016, the Financial Accounting Standards Board (“FASB”) issued new guidance related to restricted cash (ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash). The new guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The new guidance specifies that restricted cash and cash equivalents are to be included with cash and cash equivalents in the Statement of Cash Flows. The Company will provide these additional disclosures in the Consolidated Statements of Cash Flows upon adoption date as applicable. In June 2016, the FASB issued new guidance for recording credit losses (ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments). The new guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Current GAAP requires an “incurred loss” methodology for recognizing credit losses that delays recognition until it is probable a loss has been incurred. The amendments replace the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information. The revisions affect loans, debt securities, trade receivables, net investments in leases, off-balance-sheet available-for-sale In February 2016, the FASB issued a new leasing standard (ASU 2016-02, year-end right-of-use In January 2016, the FASB issued new guidance on the recognition and measurement of financial instruments (ASU 2016-01, 825-10); available-for-sale In May 2015, the FASB issued new guidance on short-duration insurance contracts (Accounting Standards Update (“ASU”) 2015-09, In May 2015, the FASB issued new guidance on fair value measurement (ASU 2015-07, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)), effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years and which should be applied retrospectively to all periods presented. Earlier application is permitted. The new amendments in this ASU remove the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value (“NAV”) per share practical expedient. In addition, the amendments remove the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the NAV per share practical expedient. The adoption of this guidance did not have a material impact to the Company’s consolidated financial statements. In April 2015, the FASB issued new guidance on accounting for fees paid in a cloud computing arrangement (ASU 2015-05, Internal-Use 350-40): Effective November 18, 2014, the Company adopted new guidance on when, if ever, the cost of acquiring an entity should be used to establish a new accounting basis (“pushdown”) in the acquired entity’s separate financial statements (ASU 2014-17, change-in-control change-in-control change-in-control In May 2014, the FASB issued a comprehensive new revenue recognition standard (ASU 2014-09, 2015-14) |
Predecessor | |
Income Taxes | Income Taxes — Predecessor The income tax provision is calculated under the liability method. Deferred tax assets and liabilities are recorded based on the difference between the financial statement and tax bases of assets and liabilities at the enacted tax rates. The principal assets and liabilities giving rise to such differences are unrealized capital gains and losses, accrued expenses and reinsurance recoverables. A deferred tax asset valuation allowance is established when there is uncertainty that such assets will be realized. |
General (Tables)
General (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value of Assets Acquired and Liabilities Assumed | assumed are recorded at fair value at the date of acquisition. The following table summarizes the fair values of assets acquired and liabilities assumed as of April 1, 2014: ($ in thousands) Assets Fixed maturities $ 9,194,903 Commercial mortgage loans 1,263,902 Policy loans 196,451 Short-term investments 979,728 Other invested assets 1,104 Cash 40,529 Accrued investment income 103,246 Reinsurance recoverable 5,606,879 Value of business acquired 290,795 Deposit receivable 1,550,351 Intangibles 5,200 Other assets 554,176 Separate account assets 1,661,007 Total assets acquired 21,448,271 Liabilities Future policy benefits and other policyholder liabilities 6,682,833 Policyholders’ account balances 10,367,246 Accrued expenses and other liabilities 78,026 Modified coinsurance payable 1,550,351 Other long-term debt — affiliate 513,000 Separate account liabilities 1,661,007 Total liabilities assumed 20,852,463 Net assets acquired $ 595,808 |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Schedule for Fixed Income Securities at Amortized Cost, Gross Unrealized Gains and Losses and Fair Value | he amortized cost, gross unrealized gains and losses and fair value for fixed maturities as of December 31, 2016 and 2015 were as follows: December 31, 2016 — Successor ($ in thousands) Amortized Gross Gross Embedded (1) Fair Value Fixed maturities U.S. Treasury Securities and Obligations of U.S. Government Authority and Agencies, available for sale $ 508,635 $ 7,681 $ (14,979 ) $ — $ 501,337 U.S. Treasury Securities and Obligations of U.S. Government Authority and Agencies, at fair value option 15,348 — — (733 ) 14,615 Obligations of U.S. States and Political Subdivisions 702,415 15,936 (8,614 ) — 709,737 Foreign government 31,009 303 (3,257 ) — 28,055 All other corporate securities 5,963,354 74,854 (151,382 ) — 5,886,826 ABS 512,486 5,370 (10,093 ) — 507,763 CMBS 385,757 1,283 (5,778 ) — 381,262 RMBS 180,492 5,556 (2,903 ) — 183,145 Total fixed maturities $ 8,299,496 $ 110,983 $ (197,006 ) $ (733 ) $ 8,212,740 Equity securities 5,100 — — — 5,100 Total fixed maturities and equity securities investments $ 8,304,596 $ 110,983 $ (197,006 ) $ (733 ) $ 8,217,840 December 31, 2015 — Successor ($ in thousands) Amortized Gross Gross Embedded (1) Fair Value Fixed maturities U.S. Treasury Securities and Obligations of U.S. Government Authority and Agencies $ 163,096 $ 5,563 $ (81 ) $ — $ 168,578 Obligations of U.S. States and Political Subdivisions 712,948 14,827 (7,018 ) — 720,757 Foreign government 72,042 202 (10,601 ) — 61,643 All other corporate securities 6,060,561 31,263 (353,149 ) — 5,738,675 ABS 542,503 2,517 (8,229 ) — 536,791 CMBS 513,316 627 (7,244 ) — 506,699 RMBS 209,728 4,600 (1,529 ) — 212,799 Total fixed maturities $ 8,274,194 $ 59,599 $ (387,851 ) $ — $ 7,945,942 (1) Embedded derivatives within fixed maturity securities held at fair value option are reported with the host investment. The change in fair value of embedded derivatives are reported in Realized Investment Gains, net in the Consolidated Statement of Operations and Comprehensive Income (Loss). |
Schedule for Fixed Income Securities Based on Contractual Maturities | The scheduled maturities for fixed maturities are as follows as of December 31, 2016: ($ in thousands) Amortized Fair Value Due in one year or less $ 89,822 $ 90,008 Due after one year through five years 1,095,001 1,111,271 Due after five years through ten years 1,443,613 1,469,357 Due after ten years 4,176,392 4,056,041 Total before asset and mortgage-backed securities $ 6,804,828 $ 6,726,677 Asset and mortgage-backed securities 1,494,668 1,486,063 Total fixed maturities $ 8,299,496 $ 8,212,740 |
Schedule of Commercial Mortgage Loan Portfolio by Geographical Region | The Company diversifies its commercial mortgage loan portfolio by geographical region to reduce concentration risk. The following table presents the Company’s commercial mortgage loan portfolio by geographical region as of December 31, 2016 and 2015: ($ in thousands) December 31, December 31, Alabama $ 1,287 $ 1,508 Arizona 20,389 34,911 California 255,023 336,310 Colorado 57,269 57,207 Connecticut 25,317 25,374 Florida 123,194 86,698 Georgia 65,414 67,213 Hawaii 6,099 7,134 Illinois 114,549 92,813 Iowa 1,033 1,266 Kansas 9,200 9,200 Kentucky 7,154 7,696 Maine 3,686 3,905 Maryland 20,975 33,844 Massachusetts 77,772 90,897 Minnesota 132,395 148,346 Nevada 84,721 14,262 New Jersey 65,908 68,720 New York 66,502 94,985 North Carolina 55,851 58,078 Ohio 38,611 36,954 Oklahoma — 10,803 Pennsylvania 31,929 41,975 South Carolina 1,948 2,532 Tennessee 3,238 5,278 Texas 133,020 107,279 Utah 42,641 44,366 Virginia 1,676 2,353 Washington 3,681 11,550 Wisconsin 4,674 5,675 General allowance for loan loss — — Total commercial mortgage loans $ 1,455,156 $ 1,509,132 |
Schedule of Credit Quality of Commercial Mortgage Loans Held-For-Investment | The credit quality of commercial mortgage loans held-for-investment Recorded Investment Debt Service Coverage Ratios December 31, 2016 ($ in thousands) > 1.20x 1.00x - 1.20x < 1.00x Total % of Total Estimated Fair % of Total Loan-to-value Less than 65% $ 785,149 $ 36,743 $ 11,354 $ 833,246 57.3 % $ 848,702 57.9 % 65% to 75% 581,188 25,317 — 606,505 41.7 601,587 41.1 76% to 80% 10,493 — — 10,493 0.7 10,494 0.7 Greater than 80% 4,912 — — 4,912 0.3 4,330 0.3 Total $ 1,381,742 $ 62,060 $ 11,354 $ 1,455,156 100.0 % $ 1,465,113 100.0 % Recorded Investment Debt Service Coverage Ratios December 31, 2015 ($ in thousands) > 1.20x 1.00x - 1.20x < 1.00x Total % of Total Estimated Fair % of Total Loan-to-value Less than 65% $ 869,470 $ 85,869 $ 19,862 $ 975,201 64.6 % $ 1,000,948 65.1 % 65% to 75% 508,557 25,374 — 533,931 35.4 535,690 34.9 76% to 80% — — — — 0.0 — 0.0 Greater than 80% — — — — 0.0 — 0.0 Total $ 1,378,027 $ 111,243 $ 19,862 $ 1,509,132 100.0 % $ 1,536,638 100.0 % |
Composition of Other Invested Assets | The following table sets forth the composition of “Other invested assets” as of December 31, 2016 and 2015: Amortized Cost ($ in thousands) December 31, December 31, Low income housing tax credit properties $ 457 $ 677 Derivatives 18,949 17,735 $ 19,406 $ 18,412 |
Schedule of Net Investment Income | Net investment income for Successor Periods for the years ended December 31, 2016 and 2015 and the period from April 1, 2014 through December 31, 2014 and the Predecessor Period from January 1, 2014 through March 31, 2014 were as follows: Successor Predecessor ($ in thousands) For the Year December 31, 2016 For the Year December 31, 2015 For the Period December 31, For the Period through March 31, Fixed maturities $ 330,707 $ 334,931 $ 231,972 $ 2,461 Commercial mortgage loans 69,360 63,028 49,417 — Cash, cash equivalents and short-term investments 1,007 511 4,786 16 Other investment income 8,845 9,543 7,353 — Gross investment income $ 409,919 $ 408,013 $ 293,528 $ 2,477 Investment expenses 12,836 9,082 4,957 127 Net investment income $ 397,083 $ 398,931 $ 288,571 $ 2,350 |
Schedule of Realized Investment Gains and Losses | Realized investment gains and losses for Successor Periods for the years ended December 31, 2016 and 2015 and the period from April 1, 2014 through December 31, 2014 and the Predecessor Period from January 1, 2014 through March 31, 2014 were as follows: Successor Predecessor ($ in thousands) For the Year December 31, 2016 For the Year December 31, For the Period from April 1, 2014 through December 31, For the Period through March 31, Realized investment gains, net Fixed maturities, available for sale $ 66,560 $ 120,421 $ 25,795 $ 285 Fixed maturities, at fair value option (1) (733 ) — — — Commercial mortgage loans 4,037 2,325 2,880 — Derivatives 3,856 (9,208 ) 17,417 — Net realized gains $ 73,720 $ 113,538 $ 46,092 $ 285 (1) Relates to embedded derivatives within fixed maturity securities that are held at fair value option. |
Proceeds from Sale of Fixed Maturities and Gross Realized Investment Gains and Losses | Proceeds from sales of fixed maturities and gross realized investment gains and losses for Successor Periods for the years ended December 31, 2016 and 2015 and for the period from April 1, 2014 through December 31, 2014 and the Predecessor Period for the period from January 1, 2014 through March 31, 2014 were as follows: Successor Predecessor ($ in thousands) For the Year December 31, For the Year December 31, For the Period through December 31, For the Period through March 31, Fixed maturities, available-for-sale Proceeds from sales $ 3,027,998 $ 3,864,356 $ 1,427,135 $ 5,277 Gross investment gains from sales 109,282 142,534 27,224 317 Gross investment losses from sales (35,136 ) (16,348 ) (2,755 ) (32 ) |
Summary of Gross Unrealized Losses and Fair Value of Fixed Income by Length of Time | The following table summarizes the gross unrealized losses and fair value of fixed maturities by the length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2016 and 2015: Fixed Maturities Available for Sale in a Loss Position Less than 12 months Greater than 12 months December 31, 2016 ($ in thousands) Fair Value Gross Fair Value Gross Fair Value Gross U.S. Treasury Securities and Obligations of U.S. Government Authority and Agencies $ 276,025 $ (14,951 ) $ 1,059 $ (28 ) $ 277,084 $ (14,979 ) Obligations of U.S. States and Political Subdivisions 206,090 (8,314 ) 5,274 (300 ) 211,364 (8,614 ) Foreign government 769 (34 ) 14,632 (3,223 ) 15,401 (3,257 ) All other corporate securities 2,385,689 (94,085 ) 512,710 (57,297 ) 2,898,399 (151,382 ) ABS 204,555 (8,456 ) 39,450 (1,637 ) 244,005 (10,093 ) CMBS 228,303 (5,231 ) 43,903 (547 ) 272,206 (5,778 ) RMBS 61,058 (1,659 ) 40,454 (1,244 ) 101,512 (2,903 ) Total fixed maturities $ 3,362,489 $ (132,730 ) $ 657,482 $ (64,276 ) $ 4,019,971 $ (197,006 ) Less than 12 months Greater than 12 months December 31, 2015 ($ in thousands) Fair Value Gross Fair Value Gross Fair Value Gross U.S. Treasury Securities and Obligations of U.S. Government Authority and Agencies $ 18,639 $ (77 ) $ 98 $ (4 ) $ 18,737 $ (81 ) Obligations of U.S. States and Political Subdivisions 207,889 (6,983 ) 4,030 (35 ) 211,919 (7,018 ) Foreign government 41,507 (8,665 ) 5,965 (1,936 ) 47,472 (10,601 ) All other corporate securities 3,523,371 (293,131 ) 209,474 (60,018 ) 3,732,845 (353,149 ) ABS 397,884 (7,031 ) 15,040 (1,198 ) 412,924 (8,229 ) CMBS 437,244 (7,164 ) 8,419 (80 ) 445,663 (7,244 ) RMBS 65,470 (776 ) 29,659 (753 ) 95,129 (1,529 ) Total fixed maturities $ 4,692,004 $ (323,827 ) $ 272,685 $ (64,024 ) $ 4,964,689 $ (387,851 ) |
Net Unrealized Investment Gains and Losses in AOCI | Net Unrealized Investment Gains and Losses in AOCI ($ in thousands) Predecessor Net Unrealized VOBA Future Policy Deferred Accumulated Other Balance, December 31, 2013 $ 5,954 $ — $ — $ (2,084 ) $ 3,870 Net investment gains and losses on investments arising during the period 2,364 — — (828 ) 1,536 Reclassification adjustment for gains and losses included in net income 285 — — (100 ) 185 Balance, March 31, 2014 $ 8,033 $ — $ — $ (2,812 ) $ 5,221 Successor Balance, April 1, 2014 $ — $ — $ — $ — $ — Net investment gains and losses on investments arising during the period 159,261 — — (55,675 ) 103,586 Reclassification adjustment for gains and losses included in net income — — — — — Impact of net unrealized investment gains and losses on VOBA — (20,287 ) — 7,100 (13,187 ) Impact of net unrealized investment gains and losses on future policy benefits and policyholders’ account balances — — (7,541 ) 2,640 (4,901 ) Balance, December 31, 2014 $ 159,261 $ (20,287 ) $ (7,541 ) $ (45,935 ) $ 85,498 Net investment gains and losses on investments arising during the period (408,019 ) — — 142,807 (265,212 ) Reclassification adjustment for gains and losses included in net income 79,023 — — (27,658 ) 51,365 Impact of net unrealized investment gains and losses on VOBA — 57,061 — (19,971 ) 37,090 Impact of net unrealized investment gains and losses on future policy benefits and policyholders’ account balances — — 60,447 (21,157 ) 39,290 Balance, December 31, 2015 $ (327,781 ) $ 36,774 $ 52,906 $ 83,402 $ (154,699 ) Net investment gains and losses on investments arising during the period 160,311 — — (56,111 ) 104,200 Reclassification adjustment for gains and losses included in net income (81,920 ) — — 28,672 (53,248 ) Impact of net unrealized investment gains and losses on VOBA — (30,948 ) — 10,832 (20,116 ) Impact of net unrealized investment gains and losses on future policy benefits and policyholders’ account balances — — (28,924 ) 10,123 (18,801 ) Balance, December 31, 2016 $ (85,550 ) $ 5,826 $ 23,982 $ 19,574 $ (36,168 ) |
Derivative Financial Instrume27
Derivative Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Summary of Notional and Fair Value Positions of Derivative Instruments | The following table provides a summary of the notional and fair value positions of derivative financial instruments as of December 31, 2016 and 2015: ($ in thousands) December 31, 2016 December 31, 2015 Notional Gross Fair Value Notional Gross Fair Value Assets Liabilities Assets Liabilities Assets Liabilities Assets Liabilities Assets Equity Options $ 410,500 $ 419,225 $ 34,248 $ (15,158 ) $ 879,853 $ 839,994 $ 28,588 $ (10,961 ) Futures 16,913 — — (141 ) 15,373 — 108 — Liabilities Policyholders account balances Derivatives embedded in life and annuity contracts Equity-indexed annuity contracts (2) $ — $ 1,281,993 $ — $ (55,871 ) $ — $ 1,494,084 $ — $ (64,138 ) Equity-indexed life contracts — 460,261 — (23,803 ) — 401,511 — (11,701 ) Guaranteed accumulation benefits (1) — 77,212 — (6,724 ) — 95,752 — (7,499 ) Guaranteed withdrawal benefits (1) — 11,064 — (111 ) — 13,264 — (315 ) (1) As of April 1, 2014, these amounts were ceded in accordance with the Company’s reinsurance agreements (2) Notional amount represents account value of equity indexed contracts |
Amount and Location of Gains (Losses) Recognized in Income Net of Reinsurance for Derivatives Not Designated or Qualifying as Hedging Instruments | The following table presents the amount and location of gains (losses) recognized in income, net of reinsurance, for derivatives that were not designated or qualifying as hedging instruments for the Successor Period for the years ended December 31, 2016 and 2015, and for the period from April 1, 2014 through December 31, 2014: For the Year Ended For the Year Ended For the Period from April 1, 2014 ($ in thousands) Realized Policyholder Realized Policyholder Realized Policyholder Assets Equity options $ 2,472 $ — $ (7,557 ) $ — $ 15,230 $ — Futures 884 — (1,651 ) — 2,187 — Interest rate swaps 500 — — — — — Liabilities Policyholders’ account balances Equity-indexed annuity contracts $ — $ 8,267 $ — $ (478 ) $ — $ (5,622 ) Equity-indexed life contracts — (121 ) — 956 — 90 The following table presents the amount and location of gains (losses) recognized in income for derivatives that were not designated or qualifying as hedging instruments for the Predecessor Period from January 1, 2014 through March 31, 2014: For the Period from January 1, ($ in thousands) Interest Credited (1) Policyholder (1) Liabilities Policyholders’ account balances Derivatives embedded in life and annuity contracts $ 16,427 $ 946 (1) Prior to April 1, 2014, these amounts were ceded in accordance with the Company’s reinsurance agreements. |
Fair Value (Tables)
Fair Value (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Summary of Assets and Liabilities Measured at Fair Value on a Recurring and Non-Recurring Basis | There are no assets or liabilities measured at fair value on a nonrecurring basis as of December 31, 2016 or 2015. The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2016 and 2015: December 31, 2016 Description for Each Class of Asset or Liability ($ in thousands) Level 1 Level 2 Level 3 Total Assets at fair value Fixed maturities U.S. Treasury Securities and Obligations of U.S. Government Authority and Agencies, available for sale $ 97,836 $ 396,928 $ 6,573 $ 501,337 U.S. Treasury Securities and Obligations of U.S. Government Authority and Agencies, at fair value option (1) — 14,615 — 14,615 Obligations of U.S. States and Political Subdivisions — 709,737 — 709,737 Foreign government — 28,055 — 28,055 All other corporate securities — 5,867,475 19,351 5,886,826 ABS — 481,628 26,135 507,763 CMBS — 381,262 — 381,262 RMBS — 183,145 — 183,145 Equity securities 5,100 — — 5,100 Short term investments 129,660 — — 129,660 Other invested assets Equity options 19,090 — — 19,090 Futures (141 ) — — (141 ) Separate accounts assets 1,342,220 — — 1,342,220 Total assets at fair value $ 1,593,765 $ 8,062,845 $ 52,059 $ 9,708,669 Liabilities at fair value Policyholders’ account balances Equity indexed annuity contracts $ — $ — $ (55,871 ) $ (55,871 ) Equity indexed life contracts — (23,803 ) — (23,803 ) Guaranteed minimum accumulation benefits — — (6,724 ) (6,724 ) Guaranteed minimum withdrawal benefits — — (111 ) (111 ) Separate accounts liabilities (1,342,220 ) — — (1,342,220 ) Total liabilities at fair value $ (1,342,220 ) $ (23,803 ) $ (62,706 ) $ (1,428,729 ) (1) Embedded derivatives within fixed maturity securities held at fair value option are reported with the host investment. The change in fair value of embedded derivatives are reported in Realized Investment Gains, net in the Consolidated Statement of Operations and Comprehensive Income (Loss). December 31, 2015 Description for Each Class of Asset or Liability ($ in thousands) Level 1 Level 2 Level 3 Total Assets at fair value Fixed maturities U.S. Treasury Securities and Obligations of U.S. Government Authority and Agencies $ 10,621 $ 157,957 $ — $ 168,578 Obligations of U.S. States and Political Subdivisions — 720,757 — 720,757 Foreign government — 61,643 — 61,643 All other corporate securities — 5,727,155 11,520 5,738,675 ABS — 522,531 14,260 536,791 CMBS — 506,699 — 506,699 RMBS — 212,799 — 212,799 Short term investments 166,358 18,462 — 184,820 Other invested assets Equity options 17,627 — — 17,627 Futures 108 — — 108 Separate accounts assets 1,395,141 — — 1,395,141 Total assets at fair value $ 1,589,855 $ 7,928,003 $ 25,780 $ 9,543,638 Liabilities at fair value Policyholders’ account balances Equity indexed annuity contracts $ — $ — $ (64,138 ) $ (64,138 ) Equity indexed life contracts — (11,701 ) — (11,701 ) Guaranteed minimum accumulation benefits — — (7,499 ) (7,499 ) Guaranteed minimum withdrawal benefits — — (315 ) (315 ) Separate accounts liabilities (1,395,141 ) — — (1,395,141 ) Total liabilities at fair value $ (1,395,141 ) $ (11,701 ) $ (71,952 ) $ (1,478,794 ) |
Summary of Quantitative Information About the Significant Unobservable Inputs Used in Level 3 Fair Value Measurements | The following table summarizes quantitative information about the significant unobservable inputs used in Level 3 fair value measurements as of December 31, 2016 and 2015. December 31, 2016 ($ in thousands) Fair Valuation Unobservable Range Weighted Equity indexed annuity contracts $ (55,871 ) Option Pricing Technique Projected Option Cost 1.40% - 1.84% 1.45% December 31, 2015 ($ in thousands) Fair Valuation Unobservable Range Weighted Equity indexed annuity contracts $ (64,138 ) Option Pricing Technique Projected Option Cost 1.40% - 2.11% 1.70% |
Schedule of Rollforward of Level 3 Assets and Liabilities Held at Fair Value on a Recurring Basis | The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis for the years ended December 31, 2016 and 2015 and the period from April 1, 2014 through December 31, 2014: ($ in thousands) Balance, Net OCI Transfers Transfers Purchases Sales Issues Settlements Balance, Assets Fixed income maturities U.S Treasury Securities and Obligations of U.S. Government Authority and Agencies, available for sale $ — $ (491 ) $ 187 $ — $ — $ 6,877 $ — $ — $ — $ 6,573 All other corporate securities 11,520 (123 ) (246 ) 15,370 (4,483 ) — (955 ) — (1,732 ) 19,351 ABS 14,260 (53 ) 347 3,093 — 11,165 — — (2,677 ) 26,135 Liabilities Equity indexed annuity contracts (64,138 ) 8,267 — — — — — — — (55,871 ) Guaranteed minimum accumulation benefits and guaranteed minimum withdrawal benefits (1) (7,814 ) 979 — — — — — — — (6,835 ) ($ in thousands) Balance, Net OCI Transfers Transfers Purchases Sales Issues Settlements Balance, Assets Fixed income maturities All other corporate securities $ 7,336 $ (282 ) $ 30 $ 13,255 $ (2,386 ) $ — $ — $ — $ (6,433 ) $ 11,520 ABS 5,250 134 (2,338 ) 17,191 — — (5,000 ) — (977 ) 14,260 CMBS 2,693 23,506 314 — — — (20,192 ) — (6,321 ) — Short-term investments 23,713 14 — — — — — — (23,727 ) — Liabilities Equity indexed annuity contracts (63,660 ) (478 ) — — — — — — — (64,138 ) Guaranteed minimum accumulation benefits and guaranteed minimum withdrawal benefits (1) (6,733 ) (1,081 ) — — — — — — — (7,814 ) ($ in thousands) Balance, Net OCI Transfers Transfers Purchases Sales Issues Settlements Balance, Assets Fixed income maturities All other corporate securities $ 396,694 $ 4,514 $ (7,472 ) $ — $ (289,172 ) $ — $ (97,228 ) $ — $ — $ 7,336 ABS 436 — (55 ) — — 4,930 — — (61 ) 5,250 CMBS 3,397 2,179 (314 ) — — — — — (2,569 ) 2,693 Short-term investments 24,095 29 — — — — (411 ) — — 23,713 Liabilities Equity indexed annuity contracts (58,038 ) (5,622 ) — — — — — — — (63,660 ) Guaranteed minimum accumulation benefits and guaranteed minimum withdrawal benefits (1) (8,499 ) 1,766 — — — — — — — (6,733 ) (1) These amounts are 100% ceded in accordance with the Company’s reinsurance agreements. |
Schedule of Carrying Value of Financial Instruments Presented in Consolidated Balance Sheet | The following table presents the fair value by fair value hierarchy level of certain financial instruments that are not reported at fair value. However, in some cases, as described below, the carrying amount equals or approximates fair value as of December 31, 2016 and 2015: December 31, 2016 ($ in thousands) Level 1 Level 2 Level 3 Total Assets Commercial mortgage loans $ — $ — $ 1,465,113 $ 1,465,113 Policy loans — — 178,890 178,890 Cash 648 — — 648 Vehicle note — — 684,855 684,855 Total assets at fair value $ 648 $ — $ 2,328,858 $ 2,329,506 Liabilities at fair value Policyholders’ account balances — investment contracts $ — $ — $ 5,418,188 $ 5,418,188 Other long-term debt — — 684,855 684,855 $ — $ — $ 6,103,043 $ 6,103,043 December 31, 2015 ($ in thousands) Level 1 Level 2 Level 3 Total Assets Commercial mortgage loans $ — $ — $ 1,536,638 $ 1,536,638 Policy loans — — 186,827 186,827 Cash 49,121 — — 49,121 Vehicle note — — 638,270 638,270 Total assets at fair value $ 49,121 $ — $ 2,361,735 $ 2,410,856 Liabilities at fair value Policyholders’ account balances — investment contracts $ — $ — $ 5,967,973 $ 5,967,973 Other long-term debt — — 638,270 638,270 $ — $ — $ 6,606,243 $ 6,606,243 |
Predecessor | |
Schedule of Rollforward of Level 3 Assets and Liabilities Held at Fair Value on a Recurring Basis | The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the period from January 1, 2014 through March 31, 2014. ($ in thousands) Total gains (losses) included in: Balance as of January 1, Net income (1) OCI Transfers Level 3 Transfers out of Level 3 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (267,859 ) $ 18,525 $ — $ — $ — Total recurring Level 3 liabilities $ (267,859 ) $ 18,525 $ — $ — $ — Purchases Sales Issues Settlements Balance as Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (3,764 ) $ 2,612 $ (250,486 ) Total recurring Level 3 liabilities $ — $ — $ (3,764 ) $ 2,612 $ (250,486 ) (1) The amount attributable to derivatives embedded in life and annuity contracts was reported as follows: $17.6 million in interest credited to contractholder funds and $946 thousand in contract benefits. These amounts were ceded in accordance with the Company’s reinsurance agreements. |
Schedule of Change in Unrealized Gains and Losses Included in Net Income for Level 3 Assets and Liabilities Held | The following table provides the change in unrealized gains and losses included in net income for Level 3 assets and liabilities. ($ in thousands) Period from Liabilities Policyholders’ account balances: Derivatives embedded in life and annuity contracts $ 18,525 Total recurring Level 3 liabilities $ 18,525 |
Reinsurance (Tables)
Reinsurance (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Schedule of Effects of Reinsurance on Premiums and Contract Charges | The effects of reinsurance on premiums earned and fee income from policyholders for the Successor Period for the years ended December 31, 2016 and 2015, and the period from April 1, 2014 through December 31, 2014 were as follows: ($ in thousands) For the Year For the Year For the Period from Direct $ 1,328,917 $ 1,463,472 $ 921,444 Assumed 4,749 5,939 5,258 Ceded (971,047 ) (1,106,638 ) (702,833 ) Premiums and fee income, net of reinsurance $ 362,619 $ 362,773 $ 223,869 |
Schedule of Effects of Reinsurance on Interest Credited to Contractholder Funds, Contract Benefits and Expenses | The effects of reinsurance on return credited to policyholders’ account balances and policyholder benefits for the years ended December 31, 2016 and 2015, and the period from April 1, 2014 through December 31, 2014 were as follows: ($ in thousands) For the Year For the Year For the Period from Direct $ 1,643,710 $ 1,603,724 $ 1,104,420 Assumed 6,453 6,743 4,713 Ceded (931,557 ) (957,643 ) (635,887 ) Return credited to policyholders’ account balances and policyholders’ benefits, net of reinsurance $ 718,606 $ 652,824 $ 473,246 |
Predecessor | |
Schedule of Effects of Reinsurance on Premiums and Contract Charges | The effects of reinsurance on premiums and contract charges are as follows: ($ in thousands) Period from January 1, 2014 Direct $ 331,899 Assumed 1,581 Ceded: Affiliate (244,797 ) Non-affiliate (88,683 ) Premiums and fee income, net of reinsurance $ — |
Schedule of Effects of Reinsurance on Interest Credited to Contractholder Funds, Contract Benefits and Expenses | The effects of reinsurance on return credited to policyholders’ account balances, policyholder benefits and other expenses are as follows: ($ in thousands) Period from January 1, 2014 Direct $ 450,041 Assumed 2,606 Ceded: Affiliate (336,122 ) Non-affiliate (116,525 ) Return credited to policyholders, contract benefits and expenses, net of reinsurance $ — |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Components of Deferred Income Tax Assets and Liabilities | The components of the deferred income tax assets and liabilities as of December 31, 2016 and 2015 are as follows: ($ in thousands) December 31, 2016 December 31, 2015 Deferred tax assets Policyholder reserves $ 2,139,431 $ 2,058,446 Deferred acquisition costs 65,002 41,664 Deferred financing costs 6,311 8,707 Investments 29,721 120,893 Other assets 5,137 688 Total deferred tax assets $ 2,245,602 $ 2,230,398 Deferred tax liabilities Value of business acquired $ (65,345 ) $ (86,696 ) Amounts recoverable from reinsurers (2,172,500 ) (2,076,251 ) Intangibles (1,820 ) (1,820 ) Other liabilities (2,251 ) (591 ) Total deferred tax liabilities $ (2,241,916 ) $ (2,165,358 ) Net deferred tax asset (liability) $ 3,686 $ 65,040 |
Reconciliation of Statutory Federal Income Tax Rate to Effective Income Tax Rate | A reconciliation of the statutory federal income tax rate to the effective income tax rate on income from operations for the years ended December 31, 2016 and 2015 and the period from April 1, 2014 through December 31, 2014 were as follows: ($ in thousands) For the Year Ended December 31, 2016 For the Year Ended December 31, 2015 For the Period from April 1, 2014 Through December 31, 2014 Expected federal income tax expense $ 16,135 $ 45,062 $ 15,722 Dividends received deduction (1,960 ) (2,443 ) (1,470 ) Other 472 3,475 (18 ) Total income tax expense $ 14,647 $ 46,094 $ 14,234 |
Predecessor | |
Reconciliation of Statutory Federal Income Tax Rate to Effective Income Tax Rate | March 31, 2014. A reconciliation of the statutory federal income tax rate to the effective income tax rate on income from operations is as follows: Period from January 1, 2014 through March 31, 2014 Statutory federal income tax rate 35.0 % Other — Effective income tax rate 35.0 % |
Components of Income Tax Expense | The components of income tax expense are as follows: ($ in thousands) Period from January 1, 2014 through March 31, 2014 Current $ 914 Deferred 8 Total income tax expense $ 922 |
Future Policy Benefits and Ot31
Future Policy Benefits and Other Policyholder Liabilities - Successor (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Schedule of Future Policy Benefits and Other Policyholder Liabilities | Life insurance liabilities include reserves for death benefits and other policy benefits. As of December 31, 2016 and 2015, future policy benefits and other policyholder liabilities consisted of the following: ($ in thousands) December 31, 2016 December 31, 2015 Traditional life insurance $ 1,598,071 $ 1,567,388 Immediate fixed annuities 520,380 584,948 Accident and health insurance 1,693,598 1,580,809 Equity indexed annuities 40,298 38,739 Other 1,259,444 985,757 Total $ 5,111,791 $ 4,757,641 |
Policyholder Account Balances32
Policyholder Account Balances - Successor (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Policyholder Account Balances | As of December 31, 2016 and 2015, policyholders’ account balances consisted of the following: ($ in thousands) December 31, 2016 December 31, 2015 Interest-sensitive life contracts $ 5,370,563 $ 5,210,152 Individual annuities 5,298,452 5,896,019 Funding agreements 255,200 — Other 11,157 14,394 Total policyholders’ account balances $ 10,935,372 $ 11,120,565 |
Certain Nontraditional Long-D33
Certain Nontraditional Long-Duration Contracts - Successor (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Summary of Variable Annuity Contracts | As of December 31, 2016 and 2015, the Company had the following guarantees associated with these contracts, by product and guarantee type : December 31, 2016 ($ in millions) In the Event of Death At Annuitization/ Accumulation For Cumulative Periodic Withdrawals Accumulation at Specified Dates Variable Annuity Contracts Separate account value $ 543.1 $ 116.5 $ 10.9 $ 75.8 Net amount at risk $ 57.5 $ 15.8 $ 0.1 $ 6.2 Average attained age of contractholders 61 years N/A N/A N/A Weighted average waiting period until guarantee date N/A None N/A 5 years Variable Life, Variable Universal Life and Universal Life Contracts No Lapse Guarantees Separate account value $ 348.0 General account value $ 3,684.1 Net amount at risk $ 77,609.0 Average attained age of contractholders 49 years December 31, 2015 ($ in millions) In the Event of Death At Annuitization/ Accumulation For Cumulative Periodic Withdrawals Accumulation at Specified Dates Variable Annuity Contracts Separate account value $ 608.8 $ 127.4 $ 12.8 $ 91.6 Net amount at risk $ 66.3 $ 16.9 $ 0.1 $ 7.4 Average attained age of contractholders 61 years N/A N/A N/A Weighted average waiting period until guarantee date N/A None N/A 5 years Variable Life, Variable Universal Life and Universal Life Contracts No Lapse Guarantees Separate account value $ 307.3 General account value $ 3,639.6 Net amount at risk $ 84,370.9 Average attained age of contractholders 48 years |
Liabilities for Guarantee Benefits | The table below summarizes the changes in general account liabilities for guarantees on variable contracts. GMDB GMIB GMWB/ Secondary ($ in thousands) Variable Variable Variable Interest- Total Predecessor Net balance as of December 31, 2013 — — — — — Plus reinsurance recoverable 8,444 8,743 9,444 281,771 308,402 Balance as of December 31, 2013 $ 8,444 $ 8,743 $ 9,444 $ 281,771 $ 308,402 Less: reinsurance recoverable 8,444 8,743 9,444 281,771 308,402 Net balance as of December 31, 2013 — — — — — Incurred guarantee benefits — — — — — Paid guarantee benefits — — — — — Net change — — — — — Net balance as of March 31, 2014 — — — — — Plus reinsurance recoverable 8,057 7,122 8,499 293,704 317,382 Balance as of March 31, 2014 $ 8,057 $ 7,122 $ 8,499 $ 293,704 $ 317,382 Successor Balance as of April 1, 2014 $ 8,057 $ 7,122 $ 8,499 $ 557,654 $ 581,332 Less: reinsurance recoverable 8,057 7,122 8,499 67,288 90,966 Net balance as of April 1, 2014 — — — 490,366 490,366 Incurred guarantee benefits — — — 159,314 159,314 Paid guarantee benefits — — — (108,252 ) (108,252 ) Net change — — — 51,062 51,062 Net balance as of December 31, 2014 — — — 541,428 541,428 Plus reinsurance recoverable 8,358 8,240 6,733 83,733 107,064 Balance as of December 31, 2014 $ 8,358 $ 8,240 $ 6,733 $ 625,161 $ 648,492 Less: reinsurance recoverable 8,358 8,240 6,733 83,733 107,064 Net balance as of April 1, 2014 — — — 541,428 541,428 Incurred guarantee benefits — — — 217,603 217,603 Paid guarantee benefits — — — (118,063 ) (118,063 ) Net change — — — 99,540 99,540 Net balance as of December 31, 2015 — — — 640,968 640,968 Plus reinsurance recoverable 8,844 5,663 7,814 100,317 122,638 Balance as of December 31, 2015 $ 8,844 $ 5,663 $ 7,814 $ 741,285 $ 763,606 Less: reinsurance recoverable 8,844 5,663 7,814 100,317 122,638 Net balance as of December 31, 2015 — — — 640,968 640,968 Incurred guarantee benefits — — — 316,344 316,344 Paid guarantee benefits — — — (156,067 ) (156,067 ) Net change — — — 160,277 160,277 Net balance as of December 31, 2016 — — — 801,245 801,245 Plus reinsurance recoverable 8,626 3,440 6,835 122,608 141,509 Balance as of December 31, 2016 $ 8,626 $ 3,440 $ 6,835 $ 923,853 $ 942,754 |
Value of Business Acquired (Tab
Value of Business Acquired (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Changes to Value of Business Acquired | The following reflects the changes to the VOBA asset: ($ in thousands) For the Year Ended For the Year Ended December 31, 2015 For the Period from April 1, 2014 Through December 31, 2014 Balance at beginning of period $ 247,702 $ 231,521 $ 290,795 Business acquired — — — Amortized to expense during the year (1) (30,053 ) (40,880 ) (38,987 ) Adjustment for unrealized investment losses during the year (30,948 ) 57,061 (20,287 ) Balance at end of year $ 186,701 $ 247,702 $ 231,521 (1) Amount is included in Operating and acquisition expenses on the Consolidated Statements of Operations and Other Comprehensive Income (Loss) |
Estimated Percentage of VOBA Balance to Be Amortized | The following table provides estimated percentage of the VOBA balance to be amortized for the years indicated: VOBA 2017 14 % 2018 11 % 2019 9 % 2020 8 % 2021 and thereafter 58 % |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Minimum Aggregate Rental Commitments | The minimum aggregate rental commitments as of December 31, 2016 were as follows: ($ in thousands) 2017 $ 194 2018 207 2019 212 2020 217 2021 222 All future years 1,489 Aggregate total $ 2,541 |
Related Parties (Tables)
Related Parties (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Receivables/ (Payables) to Affiliates | The Company reported the following receivables/ (payables) to affiliates as of December 31, 2016 and 2015 ($ in thousands): December 31, 2016 December 31, 2015 Resolution $ (2,795 ) $ (2,623 ) Lanis $ (1,898 ) $ (1,742 ) |
Predecessor | |
Schedule of Ceded Reinsurance Agreements Reported in Statements of Operations and Comprehensive Income | The following table summarizes amounts that were ceded to ALIC under reinsurance agreements and reported net in the Statements of Operations and Comprehensive Income: ($ in thousands) Period from January 1, 2014 through March 31, 2014 Premiums and contract charges $ 244,797 Interest credited to contractholder funds, contract benefits and expenses 336,122 |
General - Additional Informatio
General - Additional Information (Detail) - USD ($) $ in Millions | Apr. 01, 2014 | Jul. 17, 2013 |
Organization and Summary of Significant Accounting Policies Disclosure [Line Items] | ||
Initial purchase price, subject to closing adjustments | $ 595.8 | |
Increase in assets | 1,330 | |
Increase in liabilities | $ 190 | |
Predecessor | ||
Organization and Summary of Significant Accounting Policies Disclosure [Line Items] | ||
Ownership interest acquired | 100.00% |
Fair Value of Assets Acquired a
Fair Value of Assets Acquired and Liabilities Assumed (Detail) $ in Thousands | Apr. 01, 2014USD ($) |
Assets | |
Fixed maturities | $ 9,194,903 |
Commercial mortgage loans | 1,263,902 |
Policy loans | 196,451 |
Short-term investments | 979,728 |
Other invested assets | 1,104 |
Cash | 40,529 |
Accrued investment income | 103,246 |
Reinsurance recoverable | 5,606,879 |
Value of business acquired | 290,795 |
Deposit receivable | 1,550,351 |
Intangibles | 5,200 |
Other assets | 554,176 |
Separate account assets | 1,661,007 |
Total assets acquired | 21,448,271 |
Liabilities | |
Future policy benefits and other policyholder liabilities | 6,682,833 |
Policyholders' account balances | 10,367,246 |
Accrued expenses and other liabilities | 78,026 |
Modified coinsurance payable | 1,550,351 |
Other long-term debt - affiliate | 513,000 |
Separate account liabilities | 1,661,007 |
Total liabilities assumed | 20,852,463 |
Net assets acquired | $ 595,808 |
Significant Accounting Polici39
Significant Accounting Policies - Additional Information (Detail) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Apr. 01, 2014 | |
Summary Of Significant Accounting Policies [Line Items] | ||||
Increase in surplus note and vehicle note | $ 38.6 | $ 50.3 | $ 57.1 | |
Interest rate on surplus note | 4.00% | |||
Interest expense on surplus note | $ 15.7 | $ 25.1 | $ 22.9 | |
Lancaster | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Surplus note re issued | $ 513 | |||
Other Assets | Lancaster | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Vehicle Note acquired | $ 513 |
Schedule for Fixed Income Secur
Schedule for Fixed Income Securities at Amortized Cost, Gross Unrealized Gains and Losses and Fair Value (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | ||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | $ 8,299,496 | $ 8,274,194 | |
Gross Unrealized Gains | 110,983 | 59,599 | |
Gross Unrealized Losses | (197,006) | (387,851) | |
Embedded Derivatives | [1] | (733) | |
Fair Value | 8,212,740 | 7,945,942 | |
Amortized Cost | 5,100 | ||
Gross Unrealized Gains | 0 | ||
Gross Unrealized Losses | 0 | ||
Fair Value | 5,100 | ||
Amortized Cost | 8,304,596 | ||
Gross Unrealized Gains | 110,983 | ||
Gross Unrealized Losses | (197,006) | ||
Embedded Derivatives | [1] | (733) | |
Fair Value | 8,217,840 | ||
U.S. Treasury Securities and Obligations of U.S. Government Authority and Agencies | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 508,635 | 163,096 | |
Gross Unrealized Gains | 7,681 | 5,563 | |
Gross Unrealized Losses | (14,979) | (81) | |
Fair Value | 501,337 | 168,578 | |
United States Government, Government Agencies and Authorities at fair value option | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 15,348 | ||
Embedded Derivatives | [1] | (733) | |
Fair Value | 14,615 | ||
Obligations of U.S. States and Political Subdivisions | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 702,415 | 712,948 | |
Gross Unrealized Gains | 15,936 | 14,827 | |
Gross Unrealized Losses | (8,614) | (7,018) | |
Fair Value | 709,737 | 720,757 | |
Foreign government | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 31,009 | 72,042 | |
Gross Unrealized Gains | 303 | 202 | |
Gross Unrealized Losses | (3,257) | (10,601) | |
Fair Value | 28,055 | 61,643 | |
All other corporate securities | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 5,963,354 | 6,060,561 | |
Gross Unrealized Gains | 74,854 | 31,263 | |
Gross Unrealized Losses | (151,382) | (353,149) | |
Fair Value | 5,886,826 | 5,738,675 | |
Asset-backed securities ("ABS") | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 512,486 | 542,503 | |
Gross Unrealized Gains | 5,370 | 2,517 | |
Gross Unrealized Losses | (10,093) | (8,229) | |
Fair Value | 507,763 | 536,791 | |
Commercial mortgage-backed securities ("CMBS") | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 385,757 | 513,316 | |
Gross Unrealized Gains | 1,283 | 627 | |
Gross Unrealized Losses | (5,778) | (7,244) | |
Fair Value | 381,262 | 506,699 | |
Residential mortgage-backed securities ("RMBS") | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 180,492 | 209,728 | |
Gross Unrealized Gains | 5,556 | 4,600 | |
Gross Unrealized Losses | (2,903) | (1,529) | |
Fair Value | $ 183,145 | $ 212,799 | |
[1] | Embedded derivatives within fixed maturity securities held at fair value option are reported with the host investment. The change in fair value of embedded derivatives are reported in Realized Investment Gains, net in the Consolidated Statement of Operations and Comprehensive Income (Loss). |
Schedule for Fixed Income Sec41
Schedule for Fixed Income Securities Based on Contractual Maturities (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Amortized cost | ||
Due in one year or less | $ 89,822 | |
Due after one year through five years | 1,095,001 | |
Due after five years through ten years | 1,443,613 | |
Due after ten years | 4,176,392 | |
Total before asset and mortgage-backed securities | 6,804,828 | |
Asset and mortgage-backed securities | 1,494,668 | |
Total fixed maturities | 8,299,496 | $ 8,274,194 |
Fair value | ||
Due in one year or less | 90,008 | |
Due after one year through five years | 1,111,271 | |
Due after five years through ten years | 1,469,357 | |
Due after ten years | 4,056,041 | |
Total before asset and mortgage-backed securities | 6,726,677 | |
Asset and mortgage-backed securities | 1,486,063 | |
Total fixed maturities | $ 8,212,740 | $ 7,945,942 |
Schedule of Commercial Mortgage
Schedule of Commercial Mortgage Loan Portfolio by Geographical Region (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying Value | $ 1,455,156 | $ 1,509,132 |
General allowance for loan loss | 0 | 0 |
Total commercial mortgage loans | 1,455,156 | 1,509,132 |
ALABAMA | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying Value | 1,287 | 1,508 |
ARIZONA | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying Value | 20,389 | 34,911 |
CALIFORNIA | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying Value | 255,023 | 336,310 |
COLORADO | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying Value | 57,269 | 57,207 |
CONNECTICUT | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying Value | 25,317 | 25,374 |
FLORIDA | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying Value | 123,194 | 86,698 |
GEORGIA | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying Value | 65,414 | 67,213 |
HAWAII | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying Value | 6,099 | 7,134 |
ILLINOIS | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying Value | 114,549 | 92,813 |
IOWA | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying Value | 1,033 | 1,266 |
KANSAS | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying Value | 9,200 | 9,200 |
KENTUCKY | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying Value | 7,154 | 7,696 |
MAINE | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying Value | 3,686 | 3,905 |
MARYLAND | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying Value | 20,975 | 33,844 |
MASSACHUSETTS | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying Value | 77,772 | 90,897 |
MINNESOTA | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying Value | 132,395 | 148,346 |
NEVADA | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying Value | 84,721 | 14,262 |
NEW JERSEY | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying Value | 65,908 | 68,720 |
NEW YORK | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying Value | 66,502 | 94,985 |
NORTH CAROLINA | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying Value | 55,851 | 58,078 |
OHIO | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying Value | 38,611 | 36,954 |
OKLAHOMA | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying Value | 10,803 | |
PENNSYLVANIA | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying Value | 31,929 | 41,975 |
SOUTH CAROLINA | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying Value | 1,948 | 2,532 |
TENNESSEE | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying Value | 3,238 | 5,278 |
TEXAS | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying Value | 133,020 | 107,279 |
UTAH | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying Value | 42,641 | 44,366 |
VIRGINIA | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying Value | 1,676 | 2,353 |
Washington | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying Value | 3,681 | 11,550 |
WISCONSIN | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying Value | $ 4,674 | $ 5,675 |
Schedule of Credit Quality of C
Schedule of Credit Quality of Commercial Mortgage Loans Held-For-Investment (Detail) - Commercial Mortgage Loans - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Financing Receivable, Recorded Investment [Line Items] | ||
Recorded Investment | $ 1,455,156 | $ 1,509,132 |
Estimated Fair Value | $ 1,465,113 | $ 1,536,638 |
Recorded Investment, % of Total | 100.00% | 100.00% |
Estimated Fair Value, % of Total | 100.00% | 100.00% |
Debt Service Coverage Ratio >1.20x | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Recorded Investment | $ 1,381,742 | $ 1,378,027 |
Debt Service Coverage Ratio 1.00x - 1.20x | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Recorded Investment | 62,060 | 111,243 |
Debt Service Coverage Ratio Less than 1.00x | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Recorded Investment | 11,354 | 19,862 |
Loan To Value Ratio Less Than 65% | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Recorded Investment | 833,246 | 975,201 |
Estimated Fair Value | $ 848,702 | $ 1,000,948 |
Recorded Investment, % of Total | 57.30% | 64.60% |
Estimated Fair Value, % of Total | 57.90% | 65.10% |
Loan To Value Ratio Less Than 65% | Debt Service Coverage Ratio >1.20x | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Recorded Investment | $ 785,149 | $ 869,470 |
Loan To Value Ratio Less Than 65% | Debt Service Coverage Ratio 1.00x - 1.20x | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Recorded Investment | 36,743 | 85,869 |
Loan To Value Ratio Less Than 65% | Debt Service Coverage Ratio Less than 1.00x | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Recorded Investment | 11,354 | 19,862 |
Loan To Value Ratio 65% to 75% | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Recorded Investment | 606,505 | 533,931 |
Estimated Fair Value | $ 601,587 | $ 535,690 |
Recorded Investment, % of Total | 41.70% | 35.40% |
Estimated Fair Value, % of Total | 41.10% | 34.90% |
Loan To Value Ratio 65% to 75% | Debt Service Coverage Ratio >1.20x | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Recorded Investment | $ 581,188 | $ 508,557 |
Loan To Value Ratio 65% to 75% | Debt Service Coverage Ratio 1.00x - 1.20x | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Recorded Investment | 25,317 | $ 25,374 |
Loan To Value Ratio 76% to 80% | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Recorded Investment | 10,493 | |
Estimated Fair Value | $ 10,494 | |
Recorded Investment, % of Total | 0.70% | 0.00% |
Estimated Fair Value, % of Total | 0.70% | 0.00% |
Loan To Value Ratio 76% to 80% | Debt Service Coverage Ratio >1.20x | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Recorded Investment | $ 10,493 | |
Loan To Value Ratio Greater than 80% | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Recorded Investment | 4,912 | |
Estimated Fair Value | $ 4,330 | |
Recorded Investment, % of Total | 0.30% | 0.00% |
Estimated Fair Value, % of Total | 0.30% | 0.00% |
Loan To Value Ratio Greater than 80% | Debt Service Coverage Ratio >1.20x | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Recorded Investment | $ 4,912 |
Investments - Additional Inform
Investments - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Schedule of Investments [Line Items] | ||||
Commercial Mortgage Loan | $ 1,450,300,000 | $ 1,509,100,000 | ||
Other-than-temporary impairment losses included in accumulated other comprehensive income | $ 0 | 0 | 0 | |
Non-taxable exchanges | 3,000,000 | 11,100,000 | 72,400,000 | |
Commercial Mortgage Loans | ||||
Schedule of Investments [Line Items] | ||||
Impaired loans | 0 | 0 | ||
Commitments to fund borrowers troubled debt restructuring | 0 | 0 | ||
Residential mortgage-backed securities ("RMBS") | ||||
Schedule of Investments [Line Items] | ||||
Other-than-temporary impairment losses | $ 0 | 0 | $ 0 | |
Past Due 90 to 179 Days | ||||
Schedule of Investments [Line Items] | ||||
Commercial Mortgage Loan | $ 4,900,000 | |||
Predecessor | Residential mortgage-backed securities ("RMBS") | ||||
Schedule of Investments [Line Items] | ||||
Other-than-temporary impairment losses | $ 0 |
Other Invested Assets (Detail)
Other Invested Assets (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Schedule of Investments [Line Items] | ||
Other invested assets | $ 19,406 | $ 18,412 |
Low Income Housing Tax Credit Properties | ||
Schedule of Investments [Line Items] | ||
Other invested assets | 457 | 677 |
Derivative | ||
Schedule of Investments [Line Items] | ||
Other invested assets | $ 18,949 | $ 17,735 |
Schedule of Net Investment Inco
Schedule of Net Investment Income (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
Investment income, before expense | $ 293,528 | $ 409,919 | $ 408,013 | |
Investment expenses | 4,957 | 12,836 | 9,082 | |
Net investment income | 288,571 | 397,083 | 398,931 | |
Fixed income securities | ||||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
Investment income, before expense | 231,972 | 330,707 | 334,931 | |
Commercial Mortgage Loans | ||||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
Investment income, before expense | 49,417 | 69,360 | 63,028 | |
Cash And Short Term Investments | ||||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
Investment income, before expense | 4,786 | 1,007 | 511 | |
Other investment (loss) income | ||||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
Investment income, before expense | $ 7,353 | $ 8,845 | $ 9,543 | |
Predecessor | ||||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
Investment income, before expense | $ 2,477 | |||
Investment expenses | 127 | |||
Net investment income | 2,350 | |||
Predecessor | Fixed income securities | ||||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
Investment income, before expense | 2,461 | |||
Predecessor | Cash And Short Term Investments | ||||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
Investment income, before expense | $ 16 |
Schedule of Realized Investment
Schedule of Realized Investment Gains and Losses (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Investment Realized gains (losses) | |||||
Net realized gains | $ 46,092 | $ 73,720 | $ 113,538 | ||
Fixed maturities, available for sale | |||||
Investment Realized gains (losses) | |||||
Net realized gains | 25,795 | 66,560 | 120,421 | ||
Fixed maturities, at fair value option | |||||
Investment Realized gains (losses) | |||||
Net realized gains | [1] | (733) | |||
Commercial Mortgage Loans | |||||
Investment Realized gains (losses) | |||||
Net realized gains | 2,880 | 4,037 | 2,325 | ||
Derivative | |||||
Investment Realized gains (losses) | |||||
Net realized gains | $ 17,417 | $ 3,856 | $ (9,208) | ||
Predecessor | |||||
Investment Realized gains (losses) | |||||
Net realized gains | $ 285 | ||||
Predecessor | Fixed maturities, available for sale | |||||
Investment Realized gains (losses) | |||||
Net realized gains | $ 285 | ||||
[1] | Relates to embedded derivatives within fixed maturity securities that are held at fair value option. |
Proceeds from Sale of Fixed Mat
Proceeds from Sale of Fixed Maturities and Gross Realized Investment Gains and Losses (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Schedule of Investments [Line Items] | ||||
Fixed maturities, available-for-sale Proceeds from sales | $ 1,427,135 | $ 3,027,998 | $ 3,864,356 | |
Fixed maturities, available-for-sale, Gross investment gains from sales | 27,224 | 109,282 | 142,534 | |
Fixed maturities, available-for-sale, Gross investment losses from sales | $ (2,755) | $ (35,136) | $ (16,348) | |
Predecessor | ||||
Schedule of Investments [Line Items] | ||||
Fixed maturities, available-for-sale Proceeds from sales | $ 5,277 | |||
Fixed maturities, available-for-sale, Gross investment gains from sales | 317 | |||
Fixed maturities, available-for-sale, Gross investment losses from sales | $ (32) |
Summary of Gross Unrealized Los
Summary of Gross Unrealized Losses and Fair Value of Fixed Maturities by Length of Time (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Schedule of Investments [Line Items] | ||
Fair value, continuous unrealized loss position for less than 12 months | $ 3,362,489 | $ 4,692,004 |
Unrealized losses, continuous unrealized loss position for less than 12 months | (132,730) | (323,827) |
Fair value, continuous unrealized loss position for Greater 12 months | 657,482 | 272,685 |
Gross Unrealized losses, continuous unrealized loss position for Greater than 12 months | (64,276) | (64,024) |
Fair Value | 4,019,971 | 4,964,689 |
Gross Unrealized Losses | (197,006) | (387,851) |
U.S. Treasury Securities and Obligations of U.S. Government Authority and Agencies | ||
Schedule of Investments [Line Items] | ||
Fair value, continuous unrealized loss position for less than 12 months | 276,025 | 18,639 |
Unrealized losses, continuous unrealized loss position for less than 12 months | (14,951) | (77) |
Fair value, continuous unrealized loss position for Greater 12 months | 1,059 | 98 |
Gross Unrealized losses, continuous unrealized loss position for Greater than 12 months | (28) | (4) |
Fair Value | 277,084 | 18,737 |
Gross Unrealized Losses | (14,979) | (81) |
Obligations of U.S. States and Political Subdivisions | ||
Schedule of Investments [Line Items] | ||
Fair value, continuous unrealized loss position for less than 12 months | 206,090 | 207,889 |
Unrealized losses, continuous unrealized loss position for less than 12 months | (8,314) | (6,983) |
Fair value, continuous unrealized loss position for Greater 12 months | 5,274 | 4,030 |
Gross Unrealized losses, continuous unrealized loss position for Greater than 12 months | (300) | (35) |
Fair Value | 211,364 | 211,919 |
Gross Unrealized Losses | (8,614) | (7,018) |
Foreign government | ||
Schedule of Investments [Line Items] | ||
Fair value, continuous unrealized loss position for less than 12 months | 769 | 41,507 |
Unrealized losses, continuous unrealized loss position for less than 12 months | (34) | (8,665) |
Fair value, continuous unrealized loss position for Greater 12 months | 14,632 | 5,965 |
Gross Unrealized losses, continuous unrealized loss position for Greater than 12 months | (3,223) | (1,936) |
Fair Value | 15,401 | 47,472 |
Gross Unrealized Losses | (3,257) | (10,601) |
All other corporate securities | ||
Schedule of Investments [Line Items] | ||
Fair value, continuous unrealized loss position for less than 12 months | 2,385,689 | 3,523,371 |
Unrealized losses, continuous unrealized loss position for less than 12 months | (94,085) | (293,131) |
Fair value, continuous unrealized loss position for Greater 12 months | 512,710 | 209,474 |
Gross Unrealized losses, continuous unrealized loss position for Greater than 12 months | (57,297) | (60,018) |
Fair Value | 2,898,399 | 3,732,845 |
Gross Unrealized Losses | (151,382) | (353,149) |
Asset-backed securities ("ABS") | ||
Schedule of Investments [Line Items] | ||
Fair value, continuous unrealized loss position for less than 12 months | 204,555 | 397,884 |
Unrealized losses, continuous unrealized loss position for less than 12 months | (8,456) | (7,031) |
Fair value, continuous unrealized loss position for Greater 12 months | 39,450 | 15,040 |
Gross Unrealized losses, continuous unrealized loss position for Greater than 12 months | (1,637) | (1,198) |
Fair Value | 244,005 | 412,924 |
Gross Unrealized Losses | (10,093) | (8,229) |
Commercial mortgage-backed securities ("CMBS") | ||
Schedule of Investments [Line Items] | ||
Fair value, continuous unrealized loss position for less than 12 months | 228,303 | 437,244 |
Unrealized losses, continuous unrealized loss position for less than 12 months | (5,231) | (7,164) |
Fair value, continuous unrealized loss position for Greater 12 months | 43,903 | 8,419 |
Gross Unrealized losses, continuous unrealized loss position for Greater than 12 months | (547) | (80) |
Fair Value | 272,206 | 445,663 |
Gross Unrealized Losses | (5,778) | (7,244) |
Residential mortgage-backed securities ("RMBS") | ||
Schedule of Investments [Line Items] | ||
Fair value, continuous unrealized loss position for less than 12 months | 61,058 | 65,470 |
Unrealized losses, continuous unrealized loss position for less than 12 months | (1,659) | (776) |
Fair value, continuous unrealized loss position for Greater 12 months | 40,454 | 29,659 |
Gross Unrealized losses, continuous unrealized loss position for Greater than 12 months | (1,244) | (753) |
Fair Value | 101,512 | 95,129 |
Gross Unrealized Losses | $ (2,903) | $ (1,529) |
Net Unrealized Investment Gains
Net Unrealized Investment Gains and Losses in Accumulated other Comprehensive Income (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Net Unrealized Gains Losses on Investment Securities | ||||
Schedule of Investments [Line Items] | ||||
Balance | $ (327,781) | $ 159,261 | ||
Net investment gains and losses on investments arising during the period | $ 159,261 | 160,311 | (408,019) | |
Reclassification adjustment for gains and losses included in net income | (81,920) | 79,023 | ||
Balance | 159,261 | (85,550) | (327,781) | |
Value of Business Acquired | ||||
Schedule of Investments [Line Items] | ||||
Balance | 36,774 | (20,287) | ||
Impact of net unrealized investment gains and losses on VOBA | (20,287) | (30,948) | 57,061 | |
Balance | (20,287) | 5,826 | 36,774 | |
Future Policy Benefits and Policyholders' Account Balances | ||||
Schedule of Investments [Line Items] | ||||
Balance | 52,906 | (7,541) | ||
Impact of net unrealized investment gains and losses on future policy benefits and policyholders' account balances | (7,541) | (28,924) | 60,447 | |
Balance | (7,541) | 23,982 | 52,906 | |
Deferred Income Tax (Liability) Asset | ||||
Schedule of Investments [Line Items] | ||||
Balance | 83,402 | (45,935) | ||
Net investment gains and losses on investments arising during the period | (55,675) | (56,111) | 142,807 | |
Reclassification adjustment for gains and losses included in net income | 28,672 | (27,658) | ||
Impact of net unrealized investment gains and losses on VOBA | 7,100 | 10,832 | (19,971) | |
Impact of net unrealized investment gains and losses on future policy benefits and policyholders' account balances | 2,640 | 10,123 | (21,157) | |
Balance | (45,935) | 19,574 | 83,402 | |
Accumulated Net Unrealized Investment Gain (Loss) | ||||
Schedule of Investments [Line Items] | ||||
Balance | (154,699) | 85,498 | ||
Net investment gains and losses on investments arising during the period | 103,586 | 104,200 | (265,212) | |
Reclassification adjustment for gains and losses included in net income | (53,248) | 51,365 | ||
Impact of net unrealized investment gains and losses on VOBA | (13,187) | (20,116) | 37,090 | |
Impact of net unrealized investment gains and losses on future policy benefits and policyholders' account balances | (4,901) | (18,801) | 39,290 | |
Balance | 85,498 | $ (36,168) | $ (154,699) | |
Predecessor | Net Unrealized Gains Losses on Investment Securities | ||||
Schedule of Investments [Line Items] | ||||
Balance | $ 5,954 | 8,033 | ||
Net investment gains and losses on investments arising during the period | 2,364 | |||
Reclassification adjustment for gains and losses included in net income | 285 | |||
Balance | 8,033 | |||
Predecessor | Deferred Income Tax (Liability) Asset | ||||
Schedule of Investments [Line Items] | ||||
Balance | (2,084) | (2,812) | ||
Net investment gains and losses on investments arising during the period | (828) | |||
Reclassification adjustment for gains and losses included in net income | (100) | |||
Balance | (2,812) | |||
Predecessor | Accumulated Net Unrealized Investment Gain (Loss) | ||||
Schedule of Investments [Line Items] | ||||
Balance | 3,870 | $ 5,221 | ||
Net investment gains and losses on investments arising during the period | 1,536 | |||
Reclassification adjustment for gains and losses included in net income | 185 | |||
Balance | $ 5,221 |
Summary of Notional and Fair Va
Summary of Notional and Fair Value Position of Derivative Financial Instruments (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 | |
Equity Options | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Notional Assets | $ 410,500 | $ 879,853 | |
Notional Liabilities | 419,225 | 839,994 | |
Gross Fair Value, Assets | 34,248 | 28,588 | |
Gross Fair Value, Liabilities | (15,158) | (10,961) | |
Future | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Notional Assets | 16,913 | 15,373 | |
Gross Fair Value, Assets | 108 | ||
Gross Fair Value, Liabilities | (141) | ||
Contractholder funds | Guaranteed accumulation benefits | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Notional Liabilities | [1] | 77,212 | 95,752 |
Gross Fair Value, Liabilities | [1] | (6,724) | (7,499) |
Contractholder funds | Guaranteed withdrawal benefits | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Notional Liabilities | [1] | 11,064 | 13,264 |
Gross Fair Value, Liabilities | [1] | (111) | (315) |
Contractholder funds | Equity-indexed annuity contracts | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Notional Liabilities | [2] | 1,281,993 | 1,494,084 |
Gross Fair Value, Liabilities | [2] | (55,871) | (64,138) |
Contractholder funds | Equity-indexed life contracts | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Notional Liabilities | [1] | 460,261 | 401,511 |
Gross Fair Value, Liabilities | [1] | $ (23,803) | $ (11,701) |
[1] | As of April 1, 2014, these amounts were ceded in accordance with the Company's reinsurance agreements | ||
[2] | Notional amount represents account value of equity indexed contracts |
Derivative Financial Instrume52
Derivative Financial Instruments - Additional Information (Detail) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative cash and securities collateral held | $ 0.9 | $ 0.8 |
Amount and Location of Gains (L
Amount and Location of Gains (Losses) Recognized in Income for Derivatives Not Designated or Qualifying as Hedging Instruments (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Policyholders' benefits | $ 216,543 | $ 449,118 | $ 351,744 | ||
Equity-indexed life contracts | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Policyholders' benefits | 90 | (121) | 956 | ||
Derivatives not designated as accounting hedging instruments | Equity Options | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Realized Investment Gains (Losses) | 15,230 | 2,472 | (7,557) | ||
Derivatives not designated as accounting hedging instruments | Future | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Realized Investment Gains (Losses) | 2,187 | 884 | (1,651) | ||
Derivatives not designated as accounting hedging instruments | Interest Rate Swap [Member] | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Realized Investment Gains (Losses) | 500 | ||||
Derivatives not designated as accounting hedging instruments | Equity-indexed annuity contracts | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Policyholders' benefits | $ (5,622) | $ 8,267 | $ (478) | ||
Derivatives not designated as accounting hedging instruments | Predecessor | Life and Annuity Insurance Product Line | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Interest Credited | [1] | $ 16,427 | |||
Policyholders' benefits | [1] | $ 946 | |||
[1] | Prior to April 1, 2014, these amounts were ceded in accordance with the Company's reinsurance agreements. |
Summary of Assets and Liabiliti
Summary of Assets and Liabilities Measured at Fair Value on Recurring and Non-Recurring Basis (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 | |
Assets at fair value | |||
Fixed maturities | $ 8,212,740 | $ 7,945,942 | |
Equity securities | 5,100 | ||
Short term investments | 129,660 | 184,820 | |
Separate accounts assets | 1,342,220 | 1,395,141 | |
Total assets at fair value | 9,708,669 | 9,543,638 | |
Liabilities at fair value | |||
Separate accounts liabilities | (1,342,220) | (1,395,141) | |
Total liabilities at fair value | (1,428,729) | (1,478,794) | |
Guaranteed accumulation benefits | |||
Liabilities at fair value | |||
Policyholders' account balances | (6,724) | (7,499) | |
Guaranteed withdrawal benefits | |||
Liabilities at fair value | |||
Policyholders' account balances | (111) | (315) | |
United States Government, Government Agencies and Authorities at fair value option | |||
Assets at fair value | |||
Fixed maturities | 14,615 | ||
Foreign government | |||
Assets at fair value | |||
Fixed maturities | 28,055 | 61,643 | |
All other corporate securities | |||
Assets at fair value | |||
Fixed maturities | 5,886,826 | 5,738,675 | |
Asset-backed securities ("ABS") | |||
Assets at fair value | |||
Fixed maturities | 507,763 | 536,791 | |
Commercial mortgage-backed securities ("CMBS") | |||
Assets at fair value | |||
Fixed maturities | 381,262 | 506,699 | |
Residential mortgage-backed securities ("RMBS") | |||
Assets at fair value | |||
Fixed maturities | 183,145 | 212,799 | |
Equity indexed annuity contracts | |||
Liabilities at fair value | |||
Policyholders' account balances | (55,871) | (64,138) | |
Equity indexed life contracts | |||
Liabilities at fair value | |||
Policyholders' account balances | (23,803) | (11,701) | |
Recurring basis | |||
Assets at fair value | |||
Equity securities | 5,100 | ||
Short term investments | 129,660 | 184,820 | |
Separate accounts assets | 1,395,141 | ||
Recurring basis | United States Government, Government Agencies and Authorities | |||
Assets at fair value | |||
Fixed maturities | 501,337 | 168,578 | |
Recurring basis | United States Government, Government Agencies and Authorities at fair value option | |||
Assets at fair value | |||
Fixed maturities | [1] | 14,615 | |
Recurring basis | States, municipalities and political subdivisions | |||
Assets at fair value | |||
Fixed maturities | 709,737 | 720,757 | |
Recurring basis | Foreign government | |||
Assets at fair value | |||
Fixed maturities | 28,055 | 61,643 | |
Recurring basis | All other corporate securities | |||
Assets at fair value | |||
Fixed maturities | 5,886,826 | 5,738,675 | |
Recurring basis | Asset-backed securities ("ABS") | |||
Assets at fair value | |||
Fixed maturities | 507,763 | 536,791 | |
Recurring basis | Commercial mortgage-backed securities ("CMBS") | |||
Assets at fair value | |||
Fixed maturities | 381,262 | 506,699 | |
Recurring basis | Residential mortgage-backed securities ("RMBS") | |||
Assets at fair value | |||
Fixed maturities | 183,145 | 212,799 | |
Recurring basis | Equity Options | |||
Assets at fair value | |||
Other invested assets | 19,090 | 17,627 | |
Recurring basis | Future | |||
Assets at fair value | |||
Other invested assets | (141) | 108 | |
Quoted prices in active markets for identical assets (Level 1) | |||
Assets at fair value | |||
Separate accounts assets | 1,342,220 | ||
Total assets at fair value | 1,593,765 | 1,589,855 | |
Liabilities at fair value | |||
Separate accounts liabilities | (1,342,220) | (1,395,141) | |
Total liabilities at fair value | (1,342,220) | (1,395,141) | |
Quoted prices in active markets for identical assets (Level 1) | Recurring basis | |||
Assets at fair value | |||
Equity securities | 5,100 | ||
Short term investments | 129,660 | 166,358 | |
Separate accounts assets | 1,395,141 | ||
Quoted prices in active markets for identical assets (Level 1) | Recurring basis | United States Government, Government Agencies and Authorities | |||
Assets at fair value | |||
Fixed maturities | 97,836 | 10,621 | |
Quoted prices in active markets for identical assets (Level 1) | Recurring basis | Equity Options | |||
Assets at fair value | |||
Other invested assets | 19,090 | 17,627 | |
Quoted prices in active markets for identical assets (Level 1) | Recurring basis | Future | |||
Assets at fair value | |||
Other invested assets | (141) | 108 | |
Significant other observable inputs (Level 2) | |||
Assets at fair value | |||
Total assets at fair value | 8,062,845 | 7,928,003 | |
Liabilities at fair value | |||
Total liabilities at fair value | (23,803) | (11,701) | |
Significant other observable inputs (Level 2) | Equity indexed life contracts | |||
Liabilities at fair value | |||
Policyholders' account balances | (23,803) | (11,701) | |
Significant other observable inputs (Level 2) | Recurring basis | |||
Assets at fair value | |||
Short term investments | 18,462 | ||
Significant other observable inputs (Level 2) | Recurring basis | United States Government, Government Agencies and Authorities | |||
Assets at fair value | |||
Fixed maturities | 396,928 | 157,957 | |
Significant other observable inputs (Level 2) | Recurring basis | United States Government, Government Agencies and Authorities at fair value option | |||
Assets at fair value | |||
Fixed maturities | [1] | 14,615 | |
Significant other observable inputs (Level 2) | Recurring basis | States, municipalities and political subdivisions | |||
Assets at fair value | |||
Fixed maturities | 709,737 | 720,757 | |
Significant other observable inputs (Level 2) | Recurring basis | Foreign government | |||
Assets at fair value | |||
Fixed maturities | 28,055 | 61,643 | |
Significant other observable inputs (Level 2) | Recurring basis | All other corporate securities | |||
Assets at fair value | |||
Fixed maturities | 5,867,475 | 5,727,155 | |
Significant other observable inputs (Level 2) | Recurring basis | Asset-backed securities ("ABS") | |||
Assets at fair value | |||
Fixed maturities | 481,628 | 522,531 | |
Significant other observable inputs (Level 2) | Recurring basis | Commercial mortgage-backed securities ("CMBS") | |||
Assets at fair value | |||
Fixed maturities | 381,262 | 506,699 | |
Significant other observable inputs (Level 2) | Recurring basis | Residential mortgage-backed securities ("RMBS") | |||
Assets at fair value | |||
Fixed maturities | 183,145 | 212,799 | |
Significant unobservable inputs (Level 3) | |||
Assets at fair value | |||
Total assets at fair value | 52,059 | 25,780 | |
Liabilities at fair value | |||
Total liabilities at fair value | (62,706) | (71,952) | |
Significant unobservable inputs (Level 3) | Guaranteed accumulation benefits | |||
Liabilities at fair value | |||
Policyholders' account balances | (6,724) | (7,499) | |
Significant unobservable inputs (Level 3) | Guaranteed withdrawal benefits | |||
Liabilities at fair value | |||
Policyholders' account balances | (111) | (315) | |
Significant unobservable inputs (Level 3) | Equity indexed annuity contracts | |||
Liabilities at fair value | |||
Policyholders' account balances | (55,871) | (64,138) | |
Significant unobservable inputs (Level 3) | Recurring basis | United States Government, Government Agencies and Authorities | |||
Assets at fair value | |||
Fixed maturities | 6,573 | ||
Significant unobservable inputs (Level 3) | Recurring basis | All other corporate securities | |||
Assets at fair value | |||
Fixed maturities | 19,351 | 11,520 | |
Significant unobservable inputs (Level 3) | Recurring basis | Asset-backed securities ("ABS") | |||
Assets at fair value | |||
Fixed maturities | $ 26,135 | $ 14,260 | |
[1] | Embedded derivatives within fixed maturity securities held at fair value option are reported with the host investment. The change in fair value of embedded derivatives are reported in Realized Investment Gains, net in the Consolidated Statement of Operations and Comprehensive Income (Loss). |
Summary of Quantitative Informa
Summary of Quantitative Information About Significant Unobservable Inputs Used in Level Three Fair Value Measurements (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Fair value, liability | $ (1,428,729) | $ (1,478,794) |
Equity indexed annuity contracts | Option Pricing Model Approach Valuation Technique | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Fair value, liability | $ (55,871) | $ (64,138) |
Minimum | Equity indexed annuity contracts | Option Pricing Model Approach Valuation Technique | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Projected option cost (as a percent) | 1.40% | 1.40% |
Maximum | Equity indexed annuity contracts | Option Pricing Model Approach Valuation Technique | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Projected option cost (as a percent) | 1.84% | 2.11% |
Weighted average | Equity indexed annuity contracts | Option Pricing Model Approach Valuation Technique | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Projected option cost (as a percent) | 1.45% | 1.70% |
Fair Value - Additional Informa
Fair Value - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Fair Value Disclosures [Line Items] | |||
Fair value reinsurement rate | 100.00% | ||
Quoted prices in active markets for identical assets (Level 1) | |||
Fair Value Disclosures [Line Items] | |||
Fair value measurement of investment | $ 52,000 | $ 26,000 | |
Predecessor | |||
Fair Value Disclosures [Line Items] | |||
Gains (losses) for Level 3 assets still held at the balance sheet date, included in interest credited to contract holder funds | $ 17,600 | ||
Gains (losses) for Level 3 liabilities still held at the balance sheet date, included in life and annuity contract benefits | $ 946 |
Schedule of Rollforward of Leve
Schedule of Rollforward of Level Three Assets and Liabilities Held at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Equity indexed annuity contracts | |||||
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||
Level 3 liabilities, Balance at beginning of period | $ (58,038) | $ (64,138) | $ (63,660) | ||
Level 3 liabilities, Total gains (losses) included in net income | (5,622) | 8,267 | (478) | ||
Level 3 liabilities, Total gains (losses) included in OCI | 0 | 0 | 0 | ||
Level 3 liabilities, Transfers into Level 3 | 0 | 0 | 0 | ||
Level 3 liabilities, Transfers out of Level 3 | 0 | 0 | 0 | ||
Level 3 liabilities, Purchases | 0 | 0 | 0 | ||
Level 3 liabilities, Sales | 0 | 0 | 0 | ||
Level 3 liabilities, Balance at end of period | $ (58,038) | (63,660) | (55,871) | (64,138) | |
Asset-backed securities ("ABS") | |||||
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||
Level 3 liabilities, Balance at beginning of period | 436 | 14,260 | 5,250 | ||
Level 3 liabilities, Total gains (losses) included in net income | (53) | 134 | |||
Level 3 liabilities, Total gains (losses) included in OCI | (55) | 347 | (2,338) | ||
Level 3 liabilities, Transfers into Level 3 | 3,093 | 17,191 | |||
Level 3 liabilities, Purchases | 4,930 | 11,165 | |||
Level 3 liabilities, Sales | (5,000) | ||||
Level 3 liabilities, Issues | 0 | 0 | 0 | ||
Level 3 liabilities, Settlements | (61) | (2,677) | (977) | ||
Level 3 liabilities, Balance at end of period | 436 | 5,250 | 26,135 | 14,260 | |
GMWB/GMAB | |||||
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||
Level 3 liabilities, Balance at beginning of period | [1] | (8,499) | (7,814) | (6,733) | |
Level 3 liabilities, Total gains (losses) included in net income | [1] | 1,766 | 979 | (1,081) | |
Level 3 liabilities, Total gains (losses) included in OCI | [1] | 0 | 0 | 0 | |
Level 3 liabilities, Transfers into Level 3 | [1] | 0 | 0 | 0 | |
Level 3 liabilities, Transfers out of Level 3 | [1] | 0 | 0 | 0 | |
Level 3 liabilities, Purchases | [1] | 0 | 0 | 0 | |
Level 3 liabilities, Sales | [1] | 0 | 0 | 0 | |
Level 3 liabilities, Balance at end of period | [1] | (8,499) | (6,733) | (6,835) | (7,814) |
All other corporate securities | |||||
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||
Level 3 liabilities, Balance at beginning of period | 396,694 | 11,520 | 7,336 | ||
Level 3 liabilities, Total gains (losses) included in net income | 4,514 | (123) | (282) | ||
Level 3 liabilities, Total gains (losses) included in OCI | (7,472) | (246) | 30 | ||
Level 3 liabilities, Transfers into Level 3 | 15,370 | 13,255 | |||
Level 3 liabilities, Transfers out of Level 3 | (289,172) | (4,483) | (2,386) | ||
Level 3 liabilities, Sales | (97,228) | (955) | |||
Level 3 liabilities, Issues | 0 | 0 | 0 | ||
Level 3 liabilities, Settlements | (1,732) | (6,433) | |||
Level 3 liabilities, Balance at end of period | 396,694 | 7,336 | 19,351 | 11,520 | |
Short-term investments | |||||
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||
Level 3 liabilities, Balance at beginning of period | 24,095 | 23,713 | |||
Level 3 liabilities, Total gains (losses) included in net income | 29 | 14 | |||
Level 3 liabilities, Sales | (411) | ||||
Level 3 liabilities, Issues | 0 | 0 | |||
Level 3 liabilities, Settlements | (23,727) | ||||
Level 3 liabilities, Balance at end of period | 24,095 | 23,713 | |||
Commercial mortgage-backed securities ("CMBS") | |||||
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||
Level 3 liabilities, Balance at beginning of period | 3,397 | 2,693 | |||
Level 3 liabilities, Total gains (losses) included in net income | 2,179 | 23,506 | |||
Level 3 liabilities, Total gains (losses) included in OCI | (314) | 314 | |||
Level 3 liabilities, Sales | (20,192) | ||||
Level 3 liabilities, Issues | 0 | 0 | |||
Level 3 liabilities, Settlements | (2,569) | $ (6,321) | |||
Level 3 liabilities, Balance at end of period | 3,397 | 2,693 | |||
United States Government, Government Agencies and Authorities | |||||
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||
Level 3 liabilities, Total gains (losses) included in net income | (491) | ||||
Level 3 liabilities, Total gains (losses) included in OCI | 187 | ||||
Level 3 liabilities, Purchases | 6,877 | ||||
Level 3 liabilities, Issues | 0 | ||||
Level 3 liabilities, Balance at end of period | $ 6,573 | ||||
Predecessor | |||||
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||
Level 3 liabilities, Balance at beginning of period | (267,859) | (250,486) | |||
Level 3 liabilities, Total gains (losses) included in net income | [2] | 18,525 | |||
Level 3 liabilities, Total gains (losses) included in OCI | 0 | ||||
Level 3 liabilities, Transfers into Level 3 | 0 | ||||
Level 3 liabilities, Transfers out of Level 3 | 0 | ||||
Level 3 liabilities, Purchases | 0 | ||||
Level 3 liabilities, Sales | 0 | ||||
Level 3 liabilities, Issues | (3,764) | ||||
Level 3 liabilities, Settlements | 2,612 | ||||
Level 3 liabilities, Balance at end of period | (250,486) | ||||
Predecessor | Derivatives embedded in life and annuity contracts | |||||
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||
Level 3 liabilities, Balance at beginning of period | (267,859) | $ (250,486) | |||
Level 3 liabilities, Total gains (losses) included in net income | [2] | 18,525 | |||
Level 3 liabilities, Total gains (losses) included in OCI | 0 | ||||
Level 3 liabilities, Transfers into Level 3 | 0 | ||||
Level 3 liabilities, Transfers out of Level 3 | 0 | ||||
Level 3 liabilities, Purchases | 0 | ||||
Level 3 liabilities, Sales | 0 | ||||
Level 3 liabilities, Issues | (3,764) | ||||
Level 3 liabilities, Settlements | 2,612 | ||||
Level 3 liabilities, Balance at end of period | $ (250,486) | ||||
[1] | These amounts are 100% ceded in accordance with the Company's reinsurance agreements. | ||||
[2] | The amount attributable to derivatives embedded in life and annuity contracts was reported as follows: $17.6 million in interest credited to contractholder funds and $946 thousand in contract benefits. These amounts were ceded in accordance with the Company's reinsurance agreements. |
Assets and Liabilities Measured
Assets and Liabilities Measured at Fair Value (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | $ 2,329,506 | $ 2,410,856 |
Liabilities | 6,103,043 | 6,606,243 |
Investment Contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | 5,418,188 | 5,967,973 |
Other Long Term Debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | 684,855 | 638,270 |
Commercial Mortgage Loans | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 1,465,113 | 1,536,638 |
Policy Loans | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 178,890 | 186,827 |
Cash | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 648 | 49,121 |
Vehicle Note | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 684,855 | 638,270 |
Quoted prices in active markets for identical assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 648 | 49,121 |
Quoted prices in active markets for identical assets (Level 1) | Cash | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 648 | 49,121 |
Significant unobservable inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 2,328,858 | 2,361,735 |
Liabilities | 6,103,043 | 6,606,243 |
Significant unobservable inputs (Level 3) | Investment Contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | 5,418,188 | 5,967,973 |
Significant unobservable inputs (Level 3) | Other Long Term Debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | 684,855 | 638,270 |
Significant unobservable inputs (Level 3) | Commercial Mortgage Loans | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 1,465,113 | 1,536,638 |
Significant unobservable inputs (Level 3) | Policy Loans | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 178,890 | 186,827 |
Significant unobservable inputs (Level 3) | Vehicle Note | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | $ 684,855 | $ 638,270 |
Schedule of Rollforward of Le59
Schedule of Rollforward of Level Three Assets and Liabilities Held at Fair Value on Recurring Basis (Parenthetical) (Detail) - Predecessor $ in Thousands | 3 Months Ended |
Mar. 31, 2014USD ($) | |
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Effect to net income included in interest credited to contract holder funds | $ 17,600 |
Effect to net income included in contract benefits | $ 946 |
Schedule of Change in Unrealize
Schedule of Change in Unrealized Gains and Losses Included in Net Income for Level Three Assets and Liabilities Held (Detail) - Predecessor $ in Thousands | 3 Months Ended | |
Mar. 31, 2014USD ($) | ||
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Inputs Gain Loss [Line Items] | ||
Gains (losses) for Level 3 liabilities still held at the balance sheet date, included in earnings | $ 18,525 | [1] |
Derivatives embedded in life and annuity contracts | ||
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Inputs Gain Loss [Line Items] | ||
Gains (losses) for Level 3 liabilities still held at the balance sheet date, included in earnings | $ 18,525 | |
[1] | The amount attributable to derivatives embedded in life and annuity contracts was reported as follows: $17.6 million in interest credited to contractholder funds and $946 thousand in contract benefits. These amounts were ceded in accordance with the Company's reinsurance agreements. |
Reinsurance - Additional Inform
Reinsurance - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Effects of Reinsurance [Line Items] | ||
Reinsurance recoverable supported by comfort trust | $ 6,280,337 | $ 5,984,458 |
Deposit receivable | 1,199,537 | 1,250,328 |
Modified coinsurance payable | $ 1,199,537 | $ 1,250,328 |
Sales Revenue | Credit Concentration Risk | Non-affiliates | Rated A- or better | ||
Effects of Reinsurance [Line Items] | ||
Reinsurance recoverable | 99.80% | 99.80% |
Sales Revenue | Credit Concentration Risk | Non-affiliates | Rated A- or better | Comfort Trust [Member] | ||
Effects of Reinsurance [Line Items] | ||
Reinsurance recoverable supported by comfort trust | $ 5,900,000 | $ 5,300,000 |
Sales Revenue | Credit Concentration Risk | Non-affiliates | Rated A- or better | Allstate Life Insurance Company | ||
Effects of Reinsurance [Line Items] | ||
Reinsurance recoverable | 75.00% | 75.00% |
Schedule of Effects of Reinsura
Schedule of Effects of Reinsurance on Premiums and Contract Charges (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Effects of Reinsurance [Line Items] | ||||
Direct premiums and contract charges | $ 921,444 | $ 1,328,917 | $ 1,463,472 | |
Assumed premiums and contract charges | 5,258 | 4,749 | 5,939 | |
Ceded premiums and contract charges | (702,833) | (971,047) | (1,106,638) | |
Net amount | $ 223,869 | $ 362,619 | $ 362,773 | |
Predecessor | ||||
Effects of Reinsurance [Line Items] | ||||
Direct premiums and contract charges | $ 331,899 | |||
Assumed premiums and contract charges | 1,581 | |||
Predecessor | Affiliates | ||||
Effects of Reinsurance [Line Items] | ||||
Ceded premiums and contract charges | (244,797) | |||
Predecessor | Non-affiliates | ||||
Effects of Reinsurance [Line Items] | ||||
Ceded premiums and contract charges | $ (88,683) |
Schedule of Effects of Reinsu63
Schedule of Effects of Reinsurance on Interest Credited to contract holder Funds, Contract Benefits and Expenses (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Effects of Reinsurance [Line Items] | ||||
Direct interest credited to contractholder funds, contract benefits and expenses | $ 1,104,420 | $ 1,643,710 | $ 1,603,724 | |
Assumed interest credited to contractholder funds, contract benefits and expenses | 4,713 | 6,453 | 6,743 | |
Ceded interest credited to contractholder funds, contract benefits and expenses | (635,887) | (931,557) | (957,643) | |
Return credited to policyholders' account balances and policyholder benefits, net of reinsurance | $ 473,246 | $ 718,606 | $ 652,824 | |
Predecessor | ||||
Effects of Reinsurance [Line Items] | ||||
Direct interest credited to contractholder funds, contract benefits and expenses | $ 450,041 | |||
Assumed interest credited to contractholder funds, contract benefits and expenses | 2,606 | |||
Predecessor | Affiliates | ||||
Effects of Reinsurance [Line Items] | ||||
Ceded interest credited to contractholder funds, contract benefits and expenses | (336,122) | |||
Predecessor | Non-affiliates | ||||
Effects of Reinsurance [Line Items] | ||||
Ceded interest credited to contractholder funds, contract benefits and expenses | $ (116,525) |
Components of Deferred Income T
Components of Deferred Income Tax Assets and Liabilities (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred tax assets | ||
Policyholder reserves | $ 2,139,431 | $ 2,058,446 |
Deferred acquisition costs | 65,002 | 41,664 |
Deferred financing costs | 6,311 | 8,707 |
Investments | 29,721 | 120,893 |
Other assets | 5,137 | 688 |
Total deferred tax assets | 2,245,602 | 2,230,398 |
Deferred tax liabilities | ||
Value of business acquired | (65,345) | (86,696) |
Amounts recoverable from reinsurers | (2,172,500) | (2,076,251) |
Intangibles | (1,820) | (1,820) |
Other liabilities | (2,251) | (591) |
Total deferred tax liabilities | (2,241,916) | (2,165,358) |
Net deferred tax asset (liability) | $ 3,686 | $ 65,040 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Schedule Of Income Taxes [Line Items] | ||
Net operating loss carryforward | $ 0 | $ 0 |
Capital loss carryforwards | $ 0 | $ 0 |
Federal statutory tax rate | 35.00% |
Reconciliation of Statutory Fed
Reconciliation of Statutory Federal Income Tax Rate to Effective Income Tax Rate (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Rate Reconciliation [Line Items] | ||||
Expected federal income tax expense | $ 15,722 | $ 16,135 | $ 45,062 | |
Dividends received deduction | (1,470) | (1,960) | (2,443) | |
Other | (18) | 472 | 3,475 | |
Total income tax expense | $ 14,234 | $ 14,647 | $ 46,094 | |
Statutory federal income tax rate | 35.00% | |||
Predecessor | ||||
Income Tax Rate Reconciliation [Line Items] | ||||
Total income tax expense | $ 922 | |||
Statutory federal income tax rate | 35.00% | |||
Other | 0.00% | |||
Effective income tax rate | 35.00% |
Components of Income Tax Expens
Components of Income Tax Expense (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Components Of Income Tax Expense Benefit [Line Items] | ||||
Current | $ 17,121 | $ 22,528 | ||
Deferred | $ 14,234 | (2,474) | 23,566 | |
Total income tax expense | $ 14,234 | $ 14,647 | $ 46,094 | |
Predecessor | ||||
Components Of Income Tax Expense Benefit [Line Items] | ||||
Current | $ 914 | |||
Deferred | 8 | |||
Total income tax expense | $ 922 |
Schedule of Future Policy Benef
Schedule of Future Policy Benefits and Other Policyholder Liabilities (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Liability for Future Policy Benefit, by Product Segment [Line Items] | ||
Reserve for life-contingent contract benefits | $ 5,111,791 | $ 4,757,641 |
Traditional life insurance | ||
Liability for Future Policy Benefit, by Product Segment [Line Items] | ||
Reserve for life-contingent contract benefits | 1,598,071 | 1,567,388 |
Immediate fixed annuities | ||
Liability for Future Policy Benefit, by Product Segment [Line Items] | ||
Reserve for life-contingent contract benefits | 520,380 | 584,948 |
Accident And Health Insurance | ||
Liability for Future Policy Benefit, by Product Segment [Line Items] | ||
Reserve for life-contingent contract benefits | 1,693,598 | 1,580,809 |
Equity indexed annuity contracts | ||
Liability for Future Policy Benefit, by Product Segment [Line Items] | ||
Reserve for life-contingent contract benefits | 40,298 | 38,739 |
Other Life Contingent Products | ||
Liability for Future Policy Benefit, by Product Segment [Line Items] | ||
Reserve for life-contingent contract benefits | $ 1,259,444 | $ 985,757 |
Future Policy Benefits and Ot69
Future Policy Benefits and Other Policyholder Liabilities - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Future policy benefit reserves including gross unpaid claim reserves | $ 5,111,791 | $ 4,757,641 |
Accident And Health Insurance | ||
Future policy benefit reserves including gross unpaid claim reserves | $ 218,000 | $ 191,000 |
Minimum | ||
Interest rate determination of present values, percentage | 2.50% | |
Maximum | ||
Interest rate determination of present values, percentage | 6.00% |
Policyholder Account Balances (
Policyholder Account Balances (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Policyholder Contract Deposits By Product [Line Items] | ||
Total policyholders' account balances | $ 10,935,372 | $ 11,120,565 |
Interest-sensitive life insurance | ||
Policyholder Contract Deposits By Product [Line Items] | ||
Total policyholders' account balances | 5,370,563 | 5,210,152 |
Equity indexed annuity contracts | ||
Policyholder Contract Deposits By Product [Line Items] | ||
Total policyholders' account balances | 5,298,452 | 5,896,019 |
Funding agreements | ||
Policyholder Contract Deposits By Product [Line Items] | ||
Total policyholders' account balances | 255,200 | |
Other investment contracts | ||
Policyholder Contract Deposits By Product [Line Items] | ||
Total policyholders' account balances | $ 11,157 | $ 14,394 |
Policyholder Account Balances71
Policyholder Account Balances - Additional Information (Detail) | 12 Months Ended |
Dec. 31, 2016 | |
Minimum | |
Interest crediting rates range for sensitive contracts | 0.40% |
Interest crediting rates for individual annuities | 0.00% |
Interest crediting rates for funding agreements | 0.50% |
Maximum | |
Interest crediting rates range for sensitive contracts | 6.00% |
Interest crediting rates for individual annuities | 6.00% |
Interest crediting rates for funding agreements | 1.00% |
Summary of Variable Annuity Con
Summary of Variable Annuity Contracts (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Guaranteed accumulation benefits | Variable Annuity | ||
Net Amount at Risk by Product and Guarantee [Line Items] | ||
Separate account value | $ 75.8 | $ 91.6 |
Net amount at risk | $ 6.2 | $ 7.4 |
Weighted average waiting period until guarantee date | 5 years | 5 years |
Guaranteed withdrawal benefits | Variable Annuity | ||
Net Amount at Risk by Product and Guarantee [Line Items] | ||
Separate account value | $ 10.9 | $ 12.8 |
Net amount at risk | 0.1 | 0.1 |
GMIB | Variable Annuity | ||
Net Amount at Risk by Product and Guarantee [Line Items] | ||
Separate account value | 116.5 | 127.4 |
Net amount at risk | $ 15.8 | $ 16.9 |
Weighted average waiting period until guarantee date | 0 years | 0 years |
GMDB | Variable Annuity | ||
Net Amount at Risk by Product and Guarantee [Line Items] | ||
Separate account value | $ 543.1 | $ 608.8 |
Net amount at risk | $ 57.5 | $ 66.3 |
Average attained age of contractholders | 61 years | 61 years |
GMDB | Variable Life, Variable Universal Life and Universal Life Contracts | ||
Net Amount at Risk by Product and Guarantee [Line Items] | ||
Separate account value | $ 348 | $ 307.3 |
General account value | 3,684.1 | 3,639.6 |
Net amount at risk | $ 77,609 | $ 84,370.9 |
Average attained age of contractholders | 49 years | 48 years |
Liabilities for Guarantee Benef
Liabilities for Guarantee Benefits (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Liabilities for Guarantees on Long-Duration Contracts [Line Items] | ||||
Gross beginning balance | $ 581,332 | $ 763,606 | $ 648,492 | |
Less: reinsurance recoverable | 90,966 | 122,638 | 107,064 | |
Net beginning balance | 490,366 | 640,968 | 541,428 | |
Incurred guarantee benefits | 159,314 | 316,344 | 217,603 | |
Paid guarantee benefits | (108,252) | (156,067) | (118,063) | |
Net change | 51,062 | 160,277 | 99,540 | |
Net ending balance | $ 490,366 | 541,428 | 801,245 | 640,968 |
Plus reinsurance recoverable | 90,966 | 107,064 | 141,509 | 122,638 |
Gross ending balance | 581,332 | 648,492 | 942,754 | 763,606 |
Predecessor | ||||
Liabilities for Guarantees on Long-Duration Contracts [Line Items] | ||||
Gross beginning balance | 308,402 | 317,382 | ||
Less: reinsurance recoverable | 308,402 | 317,382 | ||
Net beginning balance | 0 | 0 | ||
Incurred guarantee benefits | 0 | |||
Paid guarantee benefits | 0 | |||
Net change | 0 | |||
Net ending balance | 0 | |||
Plus reinsurance recoverable | 317,382 | |||
Gross ending balance | 317,382 | |||
Variable Annuity | GMDB | ||||
Liabilities for Guarantees on Long-Duration Contracts [Line Items] | ||||
Gross beginning balance | 8,057 | 8,844 | 8,358 | |
Less: reinsurance recoverable | 8,057 | 8,844 | 8,358 | |
Net beginning balance | 0 | 0 | 0 | |
Incurred guarantee benefits | 0 | 0 | 0 | |
Paid guarantee benefits | 0 | 0 | 0 | |
Net change | 0 | 0 | 0 | |
Net ending balance | 0 | 0 | 0 | 0 |
Plus reinsurance recoverable | 8,057 | 8,358 | 8,626 | 8,844 |
Gross ending balance | 8,057 | 8,358 | 8,626 | 8,844 |
Variable Annuity | GMIB | ||||
Liabilities for Guarantees on Long-Duration Contracts [Line Items] | ||||
Gross beginning balance | 7,122 | 5,663 | 8,240 | |
Less: reinsurance recoverable | 7,122 | 5,663 | 8,240 | |
Net beginning balance | 0 | 0 | 0 | |
Incurred guarantee benefits | 0 | 0 | 0 | |
Paid guarantee benefits | 0 | 0 | 0 | |
Net change | 0 | 0 | 0 | |
Net ending balance | 0 | 0 | 0 | 0 |
Plus reinsurance recoverable | 7,122 | 8,240 | 3,440 | 5,663 |
Gross ending balance | 7,122 | 8,240 | 3,440 | 5,663 |
Variable Annuity | GMWB/GMAB | ||||
Liabilities for Guarantees on Long-Duration Contracts [Line Items] | ||||
Gross beginning balance | 8,499 | 7,814 | 6,733 | |
Less: reinsurance recoverable | 8,499 | 7,814 | 6,733 | |
Net beginning balance | 0 | 0 | 0 | |
Incurred guarantee benefits | 0 | 0 | 0 | |
Paid guarantee benefits | 0 | 0 | 0 | |
Net change | 0 | 0 | 0 | |
Net ending balance | 0 | 0 | 0 | 0 |
Plus reinsurance recoverable | 8,499 | 6,733 | 6,835 | 7,814 |
Gross ending balance | 8,499 | 6,733 | 6,835 | 7,814 |
Variable Annuity | Predecessor | GMDB | ||||
Liabilities for Guarantees on Long-Duration Contracts [Line Items] | ||||
Gross beginning balance | 8,444 | 8,057 | ||
Less: reinsurance recoverable | 8,444 | 8,057 | ||
Net beginning balance | 0 | 0 | ||
Incurred guarantee benefits | 0 | |||
Paid guarantee benefits | 0 | |||
Net change | 0 | |||
Net ending balance | 0 | |||
Plus reinsurance recoverable | 8,057 | |||
Gross ending balance | 8,057 | |||
Variable Annuity | Predecessor | GMIB | ||||
Liabilities for Guarantees on Long-Duration Contracts [Line Items] | ||||
Gross beginning balance | 8,743 | 7,122 | ||
Less: reinsurance recoverable | 8,743 | 7,122 | ||
Net beginning balance | 0 | 0 | ||
Incurred guarantee benefits | 0 | |||
Paid guarantee benefits | 0 | |||
Net change | 0 | |||
Net ending balance | 0 | |||
Plus reinsurance recoverable | 7,122 | |||
Gross ending balance | 7,122 | |||
Variable Annuity | Predecessor | GMWB/GMAB | ||||
Liabilities for Guarantees on Long-Duration Contracts [Line Items] | ||||
Gross beginning balance | 9,444 | 8,499 | ||
Less: reinsurance recoverable | 9,444 | 8,499 | ||
Net beginning balance | 0 | 0 | ||
Incurred guarantee benefits | 0 | |||
Paid guarantee benefits | 0 | |||
Net change | 0 | |||
Net ending balance | 0 | |||
Plus reinsurance recoverable | 8,499 | |||
Gross ending balance | 8,499 | |||
Secondary Guarantees Interest-Sensitive Life and Fixed Annuities | ||||
Liabilities for Guarantees on Long-Duration Contracts [Line Items] | ||||
Gross beginning balance | 557,654 | 741,285 | 625,161 | |
Less: reinsurance recoverable | 67,288 | 100,317 | 83,733 | |
Net beginning balance | 490,366 | 640,968 | 541,428 | |
Incurred guarantee benefits | 159,314 | 316,344 | 217,603 | |
Paid guarantee benefits | (108,252) | (156,067) | (118,063) | |
Net change | 51,062 | 160,277 | 99,540 | |
Net ending balance | 490,366 | 541,428 | 801,245 | 640,968 |
Plus reinsurance recoverable | 67,288 | 83,733 | 122,608 | 100,317 |
Gross ending balance | 557,654 | 625,161 | $ 923,853 | $ 741,285 |
Secondary Guarantees Interest-Sensitive Life and Fixed Annuities | Predecessor | ||||
Liabilities for Guarantees on Long-Duration Contracts [Line Items] | ||||
Gross beginning balance | 281,771 | 293,704 | ||
Less: reinsurance recoverable | 281,771 | 293,704 | ||
Net beginning balance | 0 | $ 0 | ||
Incurred guarantee benefits | 0 | |||
Paid guarantee benefits | 0 | |||
Net change | 0 | |||
Net ending balance | 0 | |||
Plus reinsurance recoverable | 293,704 | |||
Gross ending balance | $ 293,704 |
Changes to Value of Business Ac
Changes to Value of Business Acquired (Detail) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Movement in Present Value of Future Insurance Profits [Roll Forward] | ||||
Balance at beginning of period | $ 290,795 | $ 247,702 | $ 231,521 | |
Business acquired | 0 | 0 | 0 | |
Amortized to expense during the year | [1] | (38,987) | (30,053) | (40,880) |
Adjustment for unrealized investment losses during the year | (20,287) | (30,948) | ||
Adjustment for unrealized investment gains during the year | 57,061 | |||
Balance at end of year | $ 231,521 | $ 186,701 | $ 247,702 | |
[1] | Amount is included in Operating and acquisition expenses on the Consolidated Statements of Operations and Other Comprehensive Income (Loss) |
Estimated Percentage of VOBA Ba
Estimated Percentage of VOBA Balance to be Amortized (Detail) | 12 Months Ended |
Dec. 31, 2016 | |
VOBA Amortization | |
2,017 | 14.00% |
2,018 | 11.00% |
2,019 | 9.00% |
2,020 | 8.00% |
2021 and thereafter | 58.00% |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Commitments and Contingencies Disclosure [Line Items] | ||
Accrued guaranty fund | $ 3,600,000 | $ 6,700,000 |
Estimated future of premium tax deductions | 7,600,000 | |
Amount of deposit with governmental authorities required by law | 8,800,000 | 8,400,000 |
Derivative cash collateral received | 900,000 | 800,000 |
Assets Pledged as collateral | 339,900,000 | |
Mortgage Backed Securities | ||
Commitments and Contingencies Disclosure [Line Items] | ||
Funds pledged on mortgage loans held investment portfolio | $ 14,200,000 | $ 18,400,000 |
Regulatory Capital and Divide77
Regulatory Capital and Dividends - Additional Information (Detail) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Statutory Accounting Practices [Line Items] | |||
Statutory net income | $ 226,000 | $ 52,000 | $ 74,000 |
Statutory capital and surplus | 560,000 | 555,000 | |
Dividends to shareholder | $ 33,200 | $ 42,000 | $ 187,000 |
Leases - Additional Information
Leases - Additional Information (Detail) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Dec. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Property Subject to or Available for Operating Lease [Line Items] | |||||
Non-cancellable operating lease agreement, expiration date | Jan. 31, 2026 | ||||
Lease operating expense | $ 0 | $ 0 | $ 200,000 | $ 100,000 |
Minimum Aggregate Rental Commit
Minimum Aggregate Rental Commitments (Detail) $ in Thousands | Dec. 31, 2016USD ($) |
Property Subject to or Available for Operating Lease [Line Items] | |
2,017 | $ 194 |
2,018 | 207 |
2,019 | 212 |
2,020 | 217 |
2,021 | 222 |
All future years | 1,489 |
Aggregate total | $ 2,541 |
Related Parties - Additional In
Related Parties - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Resolution | ||||
Related Party Transaction [Line Items] | ||||
Related party transactions expense recognized on transaction | $ 21,100 | $ 14,100 | $ 13,900 | |
Lanis | ||||
Related Party Transaction [Line Items] | ||||
Related party transactions expense recognized on transaction | $ 4,300 | $ 7,300 | $ 6,700 | |
Predecessor | Allstate Life Insurance Company | ||||
Related Party Transaction [Line Items] | ||||
Allocated operating expenses | $ 50,100 | |||
Predecessor | Allstate Distributors, LLC | ||||
Related Party Transaction [Line Items] | ||||
Broker-Dealer agreement, Promotion and marketing expense | 12 | |||
Predecessor | Allstate Financial Services, LLC | ||||
Related Party Transaction [Line Items] | ||||
Broker-Dealer agreement, Commission and other distribution expenses | $ 2,200 |
Receivables_ (Payables) to Affi
Receivables/ (Payables) to Affiliates (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Resolution | ||
Related Party Transaction [Line Items] | ||
Receivables/ (Payables) to Affiliates | $ (2,795) | $ (2,623) |
Lanis | ||
Related Party Transaction [Line Items] | ||
Receivables/ (Payables) to Affiliates | $ (1,898) | $ (1,742) |
Related Parties - Predecessor -
Related Parties - Predecessor - Summary of Ceded Under Reinsurance Agreements (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Related Party Transaction [Line Items] | ||||
Premiums and contract charges | $ 702,833 | $ 971,047 | $ 1,106,638 | |
Interest credited to contractholder funds, contract benefits and expenses | $ 635,887 | $ 931,557 | $ 957,643 | |
Allstate Life Insurance Company | Predecessor | ||||
Related Party Transaction [Line Items] | ||||
Premiums and contract charges | $ 244,797 | |||
Interest credited to contractholder funds, contract benefits and expenses | $ 336,122 |
Schedule I - Consolidated Summa
Schedule I - Consolidated Summary of Investments Other Than Investments in Related Parties (Detail) $ in Thousands | Dec. 31, 2016USD ($) |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized cost | $ 10,084,340 |
Fair value | 8,236,789 |
Amount at which shown in the Balance Sheet | 10,000,952 |
United States Government, Government Agencies and Authorities | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized cost | 508,635 |
Fair value | 501,337 |
Amount at which shown in the Balance Sheet | 501,337 |
United States Government, Government Agencies and Authorities at fair value option | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized cost | 15,348 |
Fair value | 14,615 |
Amount at which shown in the Balance Sheet | 14,615 |
States, municipalities and political subdivisions | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized cost | 702,415 |
Fair value | 709,737 |
Amount at which shown in the Balance Sheet | 709,737 |
Foreign government | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized cost | 31,009 |
Fair value | 28,055 |
Amount at which shown in the Balance Sheet | 28,055 |
All other corporate bonds | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized cost | 5,963,354 |
Fair value | 5,886,826 |
Amount at which shown in the Balance Sheet | 5,886,826 |
Residential mortgage-backed securities ("RMBS") | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized cost | 180,492 |
Fair value | 183,145 |
Amount at which shown in the Balance Sheet | 183,145 |
Commercial mortgage-backed securities ("CMBS") | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized cost | 385,757 |
Fair value | 381,262 |
Amount at which shown in the Balance Sheet | 381,262 |
Asset-backed securities ("ABS") | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized cost | 512,486 |
Fair value | 507,763 |
Amount at which shown in the Balance Sheet | 507,763 |
Fixed income securities | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized cost | 8,299,496 |
Fair value | 8,212,740 |
Amount at which shown in the Balance Sheet | 8,212,740 |
Policy Loans | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized cost | 178,890 |
Amount at which shown in the Balance Sheet | 178,890 |
Derivatives | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized cost | 15,581 |
Fair value | 18,949 |
Amount at which shown in the Balance Sheet | 18,949 |
Other long-term assets | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized cost | 457 |
Amount at which shown in the Balance Sheet | 457 |
Short-term investments | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized cost | 129,660 |
Amount at which shown in the Balance Sheet | 129,660 |
Other securities | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized cost | 1,784,844 |
Fair value | 24,049 |
Amount at which shown in the Balance Sheet | 1,788,212 |
Equity Securities | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized cost | 5,100 |
Fair value | 5,100 |
Amount at which shown in the Balance Sheet | 5,100 |
Commercial Mortgage Loan | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Amortized cost | 1,455,156 |
Amount at which shown in the Balance Sheet | $ 1,455,156 |
Schedule IV - Consolidated Rein
Schedule IV - Consolidated Reinsurance (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items] | ||||
Gross amount | $ 921,444 | $ 1,328,917 | $ 1,463,472 | |
Ceded to other companies | (702,833) | (971,047) | (1,106,638) | |
Assumed from other companies | 5,258 | 4,749 | 5,939 | |
Net amount | $ 223,869 | $ 362,619 | $ 362,773 | |
Percentage of amount assumed to net | 2.40% | 1.30% | 1.60% | |
Gross amount | $ 395,385,878 | $ 365,008,309 | $ 390,226,197 | |
Ceded to other companies | 388,790,881 | 359,316,014 | 384,704,438 | |
Assumed from other companies | 5,106,566 | 4,180,222 | 4,601,282 | |
Net amount | $ 11,701,563 | $ 9,872,517 | $ 10,123,041 | |
Percentage of amount assumed to net | 43.60% | 42.30% | 45.50% | |
Life and Annuity Insurance Product Line | ||||
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items] | ||||
Gross amount | $ 869,472 | $ 1,270,770 | $ 1,405,005 | |
Ceded to other companies | (669,382) | (918,414) | (1,056,276) | |
Assumed from other companies | 5,258 | 4,749 | 5,939 | |
Net amount | $ 205,348 | $ 357,105 | $ 354,668 | |
Percentage of amount assumed to net | 2.60% | 1.30% | 1.70% | |
Accident And Health Insurance | ||||
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items] | ||||
Gross amount | $ 51,972 | $ 58,147 | $ 58,467 | |
Ceded to other companies | (33,451) | (52,633) | (50,362) | |
Net amount | $ 18,521 | $ 5,514 | $ 8,105 | |
Percentage of amount assumed to net | 0.00% | 0.00% | 0.00% | |
Predecessor | ||||
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items] | ||||
Gross amount | $ 331,899 | |||
Ceded to other companies | (333,480) | |||
Assumed from other companies | $ 1,581 | |||
Percentage of amount assumed to net | 0.00% | |||
Predecessor | Life and Annuity Insurance Product Line | ||||
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items] | ||||
Gross amount | $ 313,410 | |||
Ceded to other companies | (314,991) | |||
Assumed from other companies | $ 1,581 | |||
Percentage of amount assumed to net | 0.00% | |||
Predecessor | Accident And Health Insurance | ||||
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items] | ||||
Gross amount | $ 18,489 | |||
Ceded to other companies | $ (18,489) | |||
Percentage of amount assumed to net | 0.00% |