Document_and_Entity_Informatio
Document and Entity Information | 12 Months Ended |
Dec. 31, 2014 | |
Document and Entity Information | |
Entity Registrant Name | UNION SECURITY LIFE INSURANCE CO OF NEW YORK |
Entity Central Index Key | 914804 |
Document Type | S-1 |
Document Period End Date | 31-Dec-14 |
Amendment Flag | FALSE |
Current Fiscal Year End Date | -19 |
Entity Filer Category | Non-accelerated Filer |
Balance_Sheets
Balance Sheets (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Investments: | ||
Fixed maturity securities available for sale, at fair value (amortized cost - $85,562 in 2014 and $94,986 in 2013) | $97,469 | $104,079 |
Equity securities available for sale, at fair value (cost - $7,333 in 2014 and $6,901 in 2013) | 7,968 | 7,200 |
Commercial mortgage loans on real estate, at amortized cost | 19,772 | 24,959 |
Policy loans | 217 | 219 |
Short-term investments | 7,202 | 1,911 |
Other investments | 172 | 333 |
Total investments | 132,800 | 138,701 |
Cash and cash equivalents | 120 | 864 |
Premiums and accounts receivable | 1,679 | 1,708 |
Reinsurance recoverables | 250,172 | 177,301 |
Tax Receivable | 738 | 0 |
Accrued investment income | 1,239 | 1,352 |
Other assets | 487 | 681 |
Assets held in separate accounts | 11,953 | 11,993 |
Total assets | 399,188 | 332,600 |
Liabilities | ||
Future policy benefits and expenses | 210,978 | 146,041 |
Unearned premiums | 4,281 | 2,996 |
Claims and benefits payable | 108,426 | 110,544 |
Commissions payable | 266 | 716 |
Reinsurance balances payable | 46 | 40 |
Funds held under reinsurance | 167 | 159 |
Deferred gain on disposal of businesses | 2,489 | 2,261 |
Accounts payable and other liabilities | 4,591 | 4,830 |
Due to affiliates | 276 | 468 |
Tax payable | 0 | 165 |
Liabilities related to separate accounts | 11,953 | 11,993 |
Total liabilities | 343,473 | 280,213 |
Commitments and contingencies (Note 14) | ||
Stockholder's equity | ||
Common stock, par value $20 per share, 100,000 shares authorized, issued, and outstanding | 2,000 | 2,000 |
Additional paid-in capital | 44,174 | 44,174 |
Retained earnings | 1,280 | 0 |
Accumulated other comprehensive income | 8,261 | 6,213 |
Total stockholder's equity | 55,715 | 52,387 |
Total liabilities and stockholder's equity | $399,188 | $332,600 |
Balance_Sheets_Parenthetical
Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
Balance Sheets | ||
Fixed maturity securities available-for-sale, amortized cost (in dollars) | $85,562 | $94,986 |
Equity securities available-for-sale, cost (in dollars) | $7,333 | $6,901 |
Common stock, par value (in dollars per share) | $20 | $20 |
Common stock, shares authorized | 100,000 | 100,000 |
Common stock, shares issued | 100,000 | 100,000 |
Common stock, shares outstanding | 100,000 | 100,000 |
Statements_of_Operations
Statements of Operations (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Revenues | |||
Net earned premiums | $23,702 | $27,343 | $30,077 |
Net investment income | 6,834 | 7,000 | 7,561 |
Net realized gains on investments, excluding other-than-temporary impairment losses | 263 | 838 | 371 |
Net other-than-temporary impairment losses recognized in earnings | 0 | 0 | -6 |
Amortization of deferred gain on disposal of businesses | -228 | 398 | 436 |
Fees and other income | 147 | 139 | 155 |
Total revenues | 30,718 | 35,718 | 38,594 |
Benefits, losses and expenses | |||
Policyholder benefits | 15,941 | 21,281 | 19,617 |
Underwriting, general and administrative expenses | 7,755 | 9,935 | 12,454 |
Total benefits, losses and expenses | 23,696 | 31,216 | 32,071 |
Income before provision for income taxes | 7,022 | 4,502 | 6,523 |
Provision for income taxes | 1,852 | 929 | 1,639 |
Net income | $5,170 | $3,573 | $4,884 |
Statements_of_Comprehensive_In
Statements of Comprehensive Income (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Statements of Comprehensive Income | |||
Net income | $5,170 | $3,573 | $4,884 |
Other comprehensive income (loss): | |||
Change in unrealized gains on securities, net of taxes of $(1,076), $2,448, and $(1,385), respectively | 1,998 | -4,545 | 2,573 |
Change in other-than-temporary impairment gains recognized in other comprehensive income, net of taxes of $(27), $(83), and $(9), respectively | 50 | 153 | 17 |
Total other comprehensive income (loss) | 2,048 | -4,392 | 2,590 |
Total comprehensive income (loss) | $7,218 | ($819) | $7,474 |
Statements_of_Comprehensive_In1
Statements of Comprehensive Income (Parenthetical) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Statements of Comprehensive Income | |||
Change in unrealized gains on securities, taxes | ($1,076) | $2,448 | ($1,385) |
Change in other-than-temporary impairment gains recognized in other comprehensive income, taxes | ($27) | ($83) | ($9) |
Statements_of_Changes_in_Stock
Statements of Changes in Stockholder's Equity (USD $) | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income | Total |
In Thousands, unless otherwise specified | |||||
Balance at Dec. 31, 2011 | $2,000 | $45,133 | $2,185 | $8,015 | $57,333 |
Equity | |||||
Dividends | 0 | 0 | -609 | 0 | -609 |
Net income | 0 | 0 | 4,884 | 0 | 4,884 |
Other comprehensive (loss) income | 0 | 0 | 0 | 2,590 | 2,590 |
Balance at Dec. 31, 2012 | 2,000 | 45,133 | 6,460 | 10,605 | 64,198 |
Equity | |||||
Dividends | 0 | 0 | -10,033 | 0 | -10,033 |
Return of Capital | 0 | -959 | 0 | 0 | -959 |
Net income | 0 | 0 | 3,573 | 0 | 3,573 |
Other comprehensive (loss) income | 0 | 0 | 0 | -4,392 | -4,392 |
Balance at Dec. 31, 2013 | 2,000 | 44,174 | 0 | 6,213 | 52,387 |
Equity | |||||
Dividends | 0 | 0 | -3,890 | 0 | -3,890 |
Net income | 0 | 0 | 5,170 | 0 | 5,170 |
Other comprehensive (loss) income | 0 | 0 | 0 | 2,048 | 2,048 |
Balance at Dec. 31, 2014 | $2,000 | $44,174 | $1,280 | $8,261 | $55,715 |
Statements_of_Cash_Flows
Statements of Cash Flows (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Operating activities | |||
Net income | $5,170 | $3,573 | $4,884 |
Adjustments to reconcile net income to net cash used in operating activities: | |||
Change in reinsurance recoverables | 235 | 902 | -8,731 |
Change in premiums and accounts receivable | -163 | 469 | -157 |
Change in accrued investment income | 113 | 150 | 123 |
Change in insurance policy reserves and expenses | -9,002 | -7,613 | -2,408 |
Change in accounts payable and other liabilities | -2,689 | 765 | 1,083 |
Change in commissions payable | -450 | -184 | 594 |
Change in reinsurance balances payable | 6 | -24 | 16 |
Change in funds held under reinsurance | 8 | 67 | 1 |
Amortization of deferred gains on disposal of businesses | 228 | -398 | -436 |
Change in income taxes | 572 | 371 | 199 |
Net realized (gains) losses on investments | -263 | -838 | -365 |
Other | -20 | 80 | 26 |
Net cash used in operating activities | -6,255 | -2,680 | -5,171 |
Sales of: | |||
Fixed maturity securities available for sale | 6,045 | 11,921 | 6,691 |
Equity securities available for sale | 258 | 3,144 | 2,057 |
Other invested assets | 161 | 149 | 139 |
Maturities, prepayments, and scheduled redemption of: | |||
Fixed maturity securities available for sale | 7,050 | 8,775 | 10,984 |
Commercial mortgage loans on real estate | 5,199 | 2,349 | 1,080 |
Purchase of: | |||
Fixed maturity securities available for sale | -3,350 | -8,605 | -13,548 |
Equity securities available for sale | -673 | -3,606 | -2,104 |
Commercial mortgage loans on real estate | 0 | 0 | -2,000 |
Change in short-term investments | -5,291 | 215 | 985 |
Change in policy loans | 2 | -11 | -62 |
Net cash provided by investing activities | 9,401 | 14,331 | 4,222 |
Financing Activities | |||
Dividends paid | -3,890 | -10,033 | -609 |
Return of Capital | 0 | -959 | 0 |
Net cash used in financing activities | -3,890 | -10,992 | -609 |
Change in cash and cash equivalents | -744 | 659 | -1,558 |
Cash and cash equivalents at beginning of period | 864 | 205 | 1,763 |
Cash and cash equivalents at end of period | 120 | 864 | 205 |
Supplemental information: | |||
Income taxes paid | $2,105 | $1,215 | $1,556 |
Nature_of_Operations
Nature of Operations | 12 Months Ended |
Dec. 31, 2014 | |
Nature of Operations | |
Nature of Operations | |
1.Nature of Operations | |
Union Security Life Insurance Company of New York (the “Company”) is a provider of life and health insurance products including group disability insurance, group dental insurance, group vision insurance, group life insurance and credit insurance. The Company is a wholly-owned subsidiary of Assurant, Inc. (the “Parent”). The Parent’s common stock is traded on the New York Stock Exchange under the symbol AIZ. | |
The Company is domiciled in New York and is qualified to sell life, health and annuity insurance in the state of New York. | |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2014 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2.Summary of Significant Accounting Policies |
Basis of Presentation | |
The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Amounts are presented in United States of America (“U.S.”) dollars and all amounts are in thousands, except for number of shares, per share amounts and number of securities in an unrealized loss position. | |
Use of Estimates | |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. The items on the Company’s balance sheets affected by the use of estimates include but are not limited to, investments, premiums and accounts receivable, reinsurance recoverables, deferred acquisition costs (“DAC”), deferred income taxes and associated valuation allowances, goodwill, future policy benefits and expenses, unearned premiums, claims and benefits payable, deferred gain on disposal of businesses, and commitments and contingencies. The estimates are sensitive to market conditions, investment yields, mortality, morbidity, commissions and other acquisition expenses, policyholder behavior and other factors. Actual results could differ from the estimates recorded. The Company believes all amounts reported are reasonable and adequate. | |
Comprehensive Income (Loss) | |
Comprehensive income (loss) is comprised of net income, net unrealized gains and losses on securities classified as available for sale and net unrealized gains and losses on other-than-temporarily impaired securities, less deferred income taxes. | |
Reclassifications | |
Certain prior period amounts have been reclassified to conform to the 2014 presentation. | |
Fair Value | |
The Company uses an exit price for its fair value measurements. An exit price is defined as the amount received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In measuring fair value, the Company gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. See Note 4 for further information. | |
Investments | |
Fixed maturity and equity securities are classified as available for sale, as defined in the investments guidance, and reported at fair value. If the fair value is higher than the amortized cost for fixed maturity securities or the purchase cost for equity securities, the excess is an unrealized gain; and, if lower than cost, the difference is an unrealized loss. Net unrealized gains and losses on securities classified as available for sale, less deferred income taxes, are included in accumulated other comprehensive income (“AOCI”). | |
Commercial mortgage loans on real estate are reported at unpaid balances, adjusted for amortization of premium or discount, less allowance for losses. The allowance is based on management’s analysis of factors including actual loan loss experience, specific events based on geographical, political or economic conditions, industry experience, loan groupings that have probable and estimable losses and individually impaired loan loss analysis. A loan is considered individually impaired when it becomes probable the Company will be unable to collect all amounts due, including principal and interest, according to the contractual terms of the loan agreement. Indicative factors of impairment include, but are not limited to, whether the loan is current, the value of the collateral and the financial position of the borrower. If a loan is individually impaired, the Company uses one of the following valuation methods based on the individual loan’s facts and circumstances to measure the impairment amount: (1) the present value of expected future cash flows, (2) the loan’s observable market price, or (3) the fair value of collateral. Changes in the allowance for loan losses are recorded in net realized losses on investments, excluding other-than-temporary impairment (“OTTI”) losses. | |
The Company places loans on non-accrual status after 90 days of delinquent payments (unless the loans are both well secured and in the process of collection). A loan may be placed on non-accrual status before this time if information is available that suggests its impairment is probable. | |
Policy loans are reported at unpaid principal balances, which do not exceed the cash surrender value of the underlying policies. | |
Short-term investments include money market funds and short maturity investments. These amounts are reported at cost, which approximates fair value. | |
Other investments consist primarily of investments in Certified Capital Companies (“CAPCOs”). The Company’s CAPCOs consist of debt instruments that are recorded at amortized cost, which approximates fair value. | |
The Company monitors its investment portfolio to identify investments that may be other-than-temporarily impaired. In addition, securities, aggregated by issuer, whose market price is equal to 80% or less of their original purchase price or which had a discrete credit event resulting in the debtor defaulting or seeking bankruptcy protection are added to a potential write-down list, which is discussed at quarterly meetings attended by members of the Company’s investment, accounting and finance departments. See Note 3 for further information. | |
Realized gains and losses on sales of investments are recognized on the specific identification basis. | |
Investment income is recorded as earned and reported net of investment expenses. The Company uses the interest method to recognize interest income on its commercial mortgage loans. | |
The Company anticipates prepayments of principal in the calculation of the effective yield for mortgage-backed securities and structured securities. The retrospective method is used to adjust the effective yield. | |
Cash and Cash Equivalents | |
The Company considers cash on hand, all operating cash and working capital cash to be cash equivalents. These amounts are carried at cost, which approximates fair value. Cash balances are reviewed at the end of each reporting period to determine if negative cash balances exist. If negative cash balances do exist, the cash accounts are netted with other positive cash accounts of the same bank provided the right of offset exists between the accounts. If the right of offset does not exist, the negative cash balances are reclassified to accounts payable. | |
Uncollectible Receivable Balance | |
The Company maintains allowances for doubtful accounts for probable losses resulting from the inability to collect payments. | |
Reinsurance | |
Reinsurance recoverables include amounts related to paid benefits and estimated amounts related to unpaid policy and contract claims, future policyholder benefits and policyholder contract deposits. The cost of reinsurance is recognized over the terms of the underlying reinsured policies using assumptions consistent with those used to account for the policies. Amounts recoverable from reinsurers are estimated in a manner consistent with claim and claim adjustment expense reserves or future policy benefits reserves and are reported in the balance sheets. The cost of reinsurance related to long-duration contracts is recognized over the life of the underlying reinsured policies. The ceding of insurance does not discharge the Company’s primary liability to insureds, thus a credit exposure exists to the extent that any reinsurer is unable to meet the obligation assumed in the reinsurance agreements. To mitigate this exposure to reinsurance insolvencies, the Company evaluates the financial condition of its reinsurers and holds collateral (in the form of funds withheld, trusts, and letters of credit) as security under the reinsurance agreements. An allowance for doubtful accounts is recorded on the basis of periodic evaluations of balances due from reinsurers (net of collateral), reinsurer solvency, management’s experience and current economic conditions. | |
Funds withheld under reinsurance represent amounts contractually held from assuming companies in accordance with reinsurance agreements. | |
Reinsurance premiums assumed are calculated based upon payments received from ceding companies together with accrual estimates, which are based on both payments received and in force policy information received from ceding companies. Any subsequent differences arising on such estimates are recorded in the period in which they are determined. | |
Income Taxes | |
The Company reports its taxable income in a consolidated federal income tax return along with other affiliated subsidiaries of the Parent. Income tax expense or benefit is allocated among the affiliated subsidiaries by applying corporate income tax rates to taxable income or loss determined on a separate return basis according to a tax allocation agreement. Entities with losses record current tax benefits to the extent such losses are recognized in the consolidated federal tax return. | |
Current federal income taxes are recognized based upon amounts estimated to be payable or recoverable as a result of taxable operations for the current year. Deferred income taxes are recorded for temporary differences between the financial reporting basis and income tax basis of assets and liabilities, based on enacted tax laws and statutory tax rates applicable to the periods in which the Company expects the temporary differences to reverse. A valuation allowance is established for deferred tax assets when it is more likely than not that an amount will not be realized. | |
The Company classifies net interest expense related to tax matters and any applicable penalties as a component of income tax expense. | |
Other Assets | |
Other assets primarily include prepaid items, goodwill, and deferred acquisition costs. Only direct incremental costs associated with the successful acquisition of new or renewal insurance contracts are deferred to the extent that such costs are deemed recoverable from future premiums or gross profits. | |
Goodwill represents the excess of acquisition costs over the net fair value of identifiable assets acquired and liabilities assumed in a business combination. Goodwill is deemed to have an indefinite life and is not amortized, but rather is tested at least annually for impairment. The Company reviews goodwill annually in the fourth quarter for impairment, or more frequently if indicators of impairment exist. The Company regularly assesses whether any indicators of impairment exist. Such indicators include, but are not limited to: significant adverse change in legal factors, adverse action or assessment by a regulator, unanticipated competition, loss of key personnel, or a significant decline in expected future cash flows due to changes in company-specific factors or the broader business climate. In the 2014 and 2013 annual goodwill tests, we concluded that the estimated fair value exceeded its respective book value and therefore goodwill was not impaired. | |
Amortization expense is included in underwriting, general and administrative expenses in the statement of operations. | |
Separate Accounts | |
Assets and liabilities associated with separate accounts relate to considerations for variable annuity products for which the contract-holder, rather than the Company, bears the investment risk. Separate account assets (with matching liabilities) are reported at fair value. Revenues and expenses related to the separate account assets and liabilities, to the extent of benefits paid or provided to the separate account policyholders, are excluded from the amounts reported in the accompanying statements of operations because the accounts are administered by reinsurers. | |
Reserves | |
Reserves are established in accordance with GAAP, using generally accepted actuarial methods. Factors used in their calculation include experience derived from historical claim payments and actuarial assumptions. Such assumptions and other factors include trends, the incidence of incurred claims, the extent to which all claims have been reported, and internal claims processing charges. The process used in computing reserves cannot be exact, particularly for liability coverage, since actual claim costs are dependent upon such complex factors as inflation, changes in doctrines of legal liabilities and damage awards. The methods of making such estimates and establishing the related liabilities are periodically reviewed and updated. | |
Reserves do not represent an exact calculation of exposure, but instead represent our best estimates of what we expect the ultimate settlement and administration of a claim or group of claims will cost based on facts and circumstances known at the time of calculation. The adequacy of reserves may be impacted by future trends in claims severity, frequency, judicial theories of liability and other factors. These variables are affected by both external and internal events, including but not limited to: changes in the economic cycle, changes in the social perception of the value of work, emerging medical perceptions regarding physiological or psychological causes of disability, emerging health issues and new methods of treatment or accommodation, inflation, judicial trends, legislative changes and claims handling procedures. | |
Many of these items are not directly quantifiable. Reserve estimates are refined as experience develops. Adjustments to reserves, both positive and negative, are reflected in the statement of operations of the period in which such estimates are updated. Because establishment of reserves is an inherently uncertain process involving estimates of future losses, there can be no certainty that ultimate losses will not exceed existing claims reserves. Future loss development could require reserves to be increased, which could have a material adverse effect on our earnings in the periods in which such increases are made. However, based on information currently available, we believe our reserve estimates are adequate. | |
Long Duration Contracts | |
The Company’s long duration contracts primarily include traditional life insurance policies no longer offered and policies disposed of via reinsurance (FFG and LTC contracts). | |
Future policy benefits and expense reserves for LTC and the traditional life insurance contracts no longer offered, are equal to the present value of future benefits to policyholders plus related expenses less the present value of the future net premiums. These amounts are estimated based on assumptions as to the expected investment yield, inflation, mortality, morbidity and withdrawal rates as well as other assumptions that are based on the Company’s experience. These assumptions reflect anticipated trends and include provisions for possible unfavorable deviations. | |
Risks related to the reserves recorded for policies under FFG, LTC and life insurance no longer offered have been 100% ceded via reinsurance. While the Company has not been released from the contractual obligation to the policyholders, changes in and deviations from economic mortality, morbidity, and expense assumptions used in the calculation of these reserves will not directly affect our results of operations unless there is a default by the assuming reinsurer. | |
Changes in the estimated liabilities are reported as a charge or credit to policyholder benefits as the estimates are revised | |
Short Duration Contracts | |
The Company’s short duration contracts include group term life contracts, group disability contracts, medical contracts, dental contracts, vision contracts and credit life and disability contracts. For short duration contracts, claims and benefits payable reserves are recorded when insured events occur. The liability is based on the expected ultimate cost of settling the claims. The claims and benefits payable reserves include: (1) case reserves for known but unpaid claims as of the balance sheet date; (2) incurred but not reported (“IBNR”) reserves for claims where the insured event has occurred but has not been reported to the Company as of the balance sheet date; and (3) loss adjustment expense reserves for the expected handling costs of settling the claims. | |
For group disability, the case reserves and the IBNR reserves are recorded at an amount equal to the net present value of the expected future claims payments. Group long-term disability and group term life waiver of premiums reserves are discounted to the valuation date at the valuation interest rate. The valuation interest rate is reviewed quarterly by taking into consideration actual and expected earned rates on our asset portfolio. Group long-term disability and group term life reserve adequacy studies are performed annually, and morbidity and mortality assumptions are adjusted where appropriate. | |
Changes in the estimated liabilities are recorded as a charge or credit to policyholder benefits as estimates are revised. | |
Deferred Gain on Disposal of Businesses | |
The Company recorded a deferred gain on disposal of businesses utilizing reinsurance. On March 1, 2000, the Company sold its LTC business using a coinsurance contract. On April 2, 2001, the Company sold its FFG business using coinsurance and a modified coinsurance contract. Since the form of sale did not discharge the Company’s primary liability to the insureds, the gain on these disposals was deferred and reported as a liability. The liability is decreased and recognized as revenue over the estimated life of the contracts’ terms. The Company reviews and evaluates the estimates affecting the deferred gain on disposal of businesses annually or when significant information affecting the estimates becomes known to the Company, and adjusts the revenue accordingly. Based on the Company’s 2014 annual review, the Company re-established $516 of the FFG deferred gain. There were no adjustments to the estimates affecting the deferred gain in 2013. | |
Premiums | |
Long Duration Contracts | |
Premiums for LTC insurance and life insurance contracts no longer offered are recognized as revenue when due from the policyholder. For investment-type annuity contracts within FFG, revenues consist of charges assessed against policy balances. For the FFG and LTC businesses previously sold and life insurance contracts no longer offered, all revenue is ceded. | |
Short Duration Contracts | |
The Company’s short duration contracts are those on which the Company recognizes revenue over the contract term in proportion to the amount of insurance protection provided. The Company’s short duration contracts primarily include group term life, group disability, dental, vision and credit life and disability. | |
Total Other-Than-Temporary Impairment Losses | |
For debt securities with credit losses and non-credit losses or gains, total OTTI losses is the total of the decline in fair value from either the most recent OTTI determination or a prior period end in which the fair value declined until the current period end valuation date. This amount does not include any securities that had fair value increases. For equity securities and debt securities that the Company has the intent to sell or if it is more likely than not that it will be required to sell for equity securities that have an OTTI or for debt securities if there are only credit losses, total other-than-temporary impairment losses is the total amount by which the fair value of the security is less than its amortized cost basis at the period end valuation date and the decline in fair value is deemed to be other-than-temporary. | |
Fees and Other Income | |
The Company derives fees and other income from providing administrative services. These fees are recognized monthly when services are performed. | |
Underwriting, General and Administrative Expenses | |
Underwriting, general and administrative expenses consist primarily of commissions, premium taxes, licenses, fees, salaries and personnel benefits and other general operating expenses. | |
Leases | |
The Company records expenses for operating leases on a straight-line basis over the lease term. | |
Contingencies | |
The Company evaluates each contingent matter separately. A loss contingency is recorded if reasonably estimable and probable. The Company establishes reserves for these contingencies at the best estimate, or if no one estimated number within the range of possible losses is more probable than any other, the Company records an estimated reserve at the low end of the estimated range. Contingencies affecting the Company primarily relate to litigation matters which are inherently difficult to evaluate and are subject to significant changes. The Company believes the contingent amounts recorded are reasonable. | |
Recent Accounting Pronouncements—Adopted | |
On January 1, 2014, the Company adopted the new guidance on presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The amendments in this guidance state that an unrecognized tax benefit, or a portion thereof, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. An exception to this guidance would be where a net operating loss carryforward or similar tax loss or credit carryforward would not be available under the tax law to settle any additional income taxes that would result from the disallowance of a tax position, or the tax law does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose. In such a case, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The adoption of this new presentation guidance did not impact the Company’s financial position or results of operations. | |
On January 1, 2014, the Company adopted the other expenses guidance that addresses how health insurers should recognize and classify in their statements of operations fees mandated by the Affordable Care Act. The Affordable Care Act imposes an annual fee on health insurers for each calendar year beginning on or after January 1, 2014. The amendments specify that the liability for the fee should be estimated and recorded in full once the entity provides qualifying health insurance in the applicable calendar year in which the fee is payable with a corresponding deferred cost that is amortized to expense ratably over the calendar year during which it is payable. For the calendar year ended December 31, 2014, the Company ratably recorded $146 in underwriting, general and administrative expenses in the statements of operations, and paid, in full, the final assessment during the third quarter of 2014. | |
Recent Accounting Pronouncements — Not Yet Adopted | |
In May 2014, the Financial Accounting Standards Board (“FASB”) issued amended guidance on revenue recognition. The amended guidance affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. Insurance contracts are within the scope of other standards and therefore are specifically excluded from the scope of the amended revenue recognition guidance. The core principle of the amended guidance is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve the core principle, the entity applies a five step process outlined in the amended guidance. The amended guidance also includes a cohesive set of disclosure requirements. The amended guidance is effective for interim and annual periods beginning after December 15, 2016 and early adoption is not permitted. Therefore, the Company is required to adopt the guidance on January 1, 2017. An entity can choose to apply the amended guidance using either the full retrospective approach or a modified retrospective approach. The Company is currently evaluating the requirements of the revenue recognition guidance as it relates to its non-insurance contract revenue and the potential impact on the Company’s financial position and results of operations. | |
Investments
Investments | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Investments | ||||||||||||||||||||
Investments | 3.Investments | |||||||||||||||||||
The following tables show the cost or amortized cost, gross unrealized gains and losses, fair value and other-than-temporary impairment (“OTTI”) of our fixed maturity and equity securities as of the dates indicated: | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Cost or | Gross | Gross | Fair | OTTI in | ||||||||||||||||
Amortized | Unrealized | Unrealized | Value | AOCI (a) | ||||||||||||||||
Cost | Gains | Losses | ||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||
United States Government and government agencies and authorities | $ | 608 | $ | 189 | $ | 0 | $ | 797 | $ | 0 | ||||||||||
States, municipalities and political subdivisions | 26,614 | 2,304 | 0 | 28,918 | 0 | |||||||||||||||
Foreign governments | 255 | 121 | 0 | 376 | 0 | |||||||||||||||
Commercial mortgage-backed | 470 | 29 | 0 | 499 | 0 | |||||||||||||||
Residential mortgage-backed | 6,653 | 1,059 | (11 | ) | 7,701 | 481 | ||||||||||||||
Corporate | 50,962 | 8,343 | (127 | ) | 59,178 | 0 | ||||||||||||||
Total fixed maturity securities | $ | 85,562 | $ | 12,045 | $ | (138 | ) | $ | 97,469 | $ | 481 | |||||||||
Equity securities: | ||||||||||||||||||||
Non-redeemable preferred stocks | $ | 7,333 | $ | 678 | $ | (43 | ) | $ | 7,968 | $ | 0 | |||||||||
December 31, 2013 | ||||||||||||||||||||
Cost or | Gross | Gross | Fair | OTTI in | ||||||||||||||||
Amortized | Unrealized | Unrealized | Value | AOCI (a) | ||||||||||||||||
Cost | Gains | Losses | ||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||
United States Government and government agencies and authorities | $ | 573 | $ | 164 | $ | 0 | $ | 737 | $ | 0 | ||||||||||
States, municipalities and political subdivisions | 26,026 | 2,396 | 0 | 28,422 | 0 | |||||||||||||||
Foreign governments | 255 | 83 | 0 | 338 | 0 | |||||||||||||||
Commercial mortgage-backed | 693 | 59 | 0 | 752 | 0 | |||||||||||||||
Residential mortgage-backed | 6,993 | 711 | (53 | ) | 7,651 | 404 | ||||||||||||||
Corporate | 60,446 | 6,182 | (449 | ) | 66,179 | 0 | ||||||||||||||
Total fixed maturity securities | $ | 94,986 | $ | 9,595 | $ | (502 | ) | $ | 104,079 | $ | 404 | |||||||||
Equity securities: | ||||||||||||||||||||
Non-redeemable preferred stocks | $ | 6,901 | $ | 470 | $ | (171 | ) | $ | 7,200 | $ | 0 | |||||||||
(a) | Represents the amount of OTTI recognized in accumulated other comprehensive income (“AOCI”). Amount includes unrealized gains and losses on impaired securities relating to changes in the value of such securities subsequent to the impairment measurement date. | |||||||||||||||||||
Our states, municipalities and political subdivisions holdings are highly diversified across the United States, with no individual state’s exposure (including both general obligation and revenue securities) exceeding 4% and 3% of the overall investment portfolio as of December 31, 2014 and 2013, respectively. At December 31, 2014 and 2013, the securities include general obligation and revenue bonds issued by states, cities, counties, school districts and similar issuers, including $13,075 and $10,846, respectively, of advance refunded or escrowed-to-maturity bonds (collectively referred to as “pre-refunded bonds”), which are bonds for which an irrevocable trust has been established to fund the remaining payments of principal and interest. As of December 31, 2014 and 2013, revenue bonds account for 55% and 54% of the holdings, respectively. Excluding pre-refunded revenue bonds, the activities supporting the income streams of the Company’s revenue bonds are across a broad range of sectors, primarily higher education, highway, water, transit, specifically pledged tax revenues, and other miscellaneous sources such as bond banks, finance authorities and appropriations. | ||||||||||||||||||||
The Company’s largest European investment exposure in its corporate fixed maturity and equity securities is the country of the United Kingdom. The United Kingdom represents approximately 6% of our corporate securities as of December 31, 2014 and 2013. No other European country represented more than 2% of our corporate securities as of December 31, 2014 and 2013. All the European investments are denominated in U.S. dollars. Our international investments are managed as part of our overall portfolio with the same approach to risk management and focus on diversification. | ||||||||||||||||||||
The Company has exposure to the energy sector in its corporate fixed maturity securities of $7,852 with a net unrealized gain of $968 at December 31, 2014 and $9,137 with a net unrealized gain of $828 at December 31, 2013. Approximately 97% and 93% of the energy exposure is rated as investment grade as of December 31, 2014 and 2013, respectively. | ||||||||||||||||||||
The cost or amortized cost and fair value of fixed maturity securities at December 31, 2014 by contractual maturity are shown below. Expected maturities may differ from contractual maturities because issuers of the securities may have the right to call or prepay obligations with or without call or prepayment penalties. | ||||||||||||||||||||
Cost or | Fair Value | |||||||||||||||||||
Amortized | ||||||||||||||||||||
Cost | ||||||||||||||||||||
Due in one year or less | $ | 2,550 | $ | 2,623 | ||||||||||||||||
Due after one year through five years | 14,379 | 15,839 | ||||||||||||||||||
Due after five years through ten years | 21,857 | 24,188 | ||||||||||||||||||
Due after ten years | 39,653 | 46,619 | ||||||||||||||||||
Total | 78,439 | 89,269 | ||||||||||||||||||
Commercial mortgage-backed | 470 | 499 | ||||||||||||||||||
Residential mortgage-backed | 6,653 | 7,701 | ||||||||||||||||||
Total | $ | 85,562 | $ | 97,469 | ||||||||||||||||
Major categories of net investment income were as follows: | ||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||
Fixed maturity securities | $ | 4,892 | $ | 5,251 | $ | 5,735 | ||||||||||||||
Equity securities | 477 | 462 | 412 | |||||||||||||||||
Commercial mortgage loans on real estate | 1,681 | 1,496 | 1,604 | |||||||||||||||||
Policy loans | 12 | 16 | 13 | |||||||||||||||||
Other investments | 20 | 31 | 42 | |||||||||||||||||
Total investment income | 7,082 | 7,256 | 7,806 | |||||||||||||||||
Investment expenses | (248 | ) | (256 | ) | (245 | ) | ||||||||||||||
Net investment income | $ | 6,834 | $ | 7,000 | $ | 7,561 | ||||||||||||||
No material investments of the Company were non-income producing for the years ended December 31, 2014, 2013, and 2012. | ||||||||||||||||||||
The following table summarizes the proceeds from sales of available for sale securities and the gross realized gains and gross realized losses that have been included in earnings as a result of those sales. | ||||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||
Proceeds from sales | $ | 6,303 | $ | 15,065 | $ | 8,748 | ||||||||||||||
Gross realized gains | 404 | 929 | 471 | |||||||||||||||||
Gross realized losses | 106 | 264 | 77 | |||||||||||||||||
For securities sold at a loss during 2014, the average period of time these securities were trading continuously at a price below book value was approximately 12 months. | ||||||||||||||||||||
The following table sets forth the net realized gains (losses), including other-than-temporary impairments, recognized in the statement of operations as follows: | ||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||
Net realized gains related to sales and other: | ||||||||||||||||||||
Fixed maturity securities | $ | 248 | $ | 430 | $ | 309 | ||||||||||||||
Equity securities | 3 | 295 | 62 | |||||||||||||||||
Commercial mortgage loans on real estate | 12 | 113 | 0 | |||||||||||||||||
Total net realized gains related to sales and other | 263 | 838 | 371 | |||||||||||||||||
Net realized losses related to other-than-temporary impairments: | ||||||||||||||||||||
Equity securities | 0 | 0 | (6 | ) | ||||||||||||||||
Total net realized losses related to other-than-temporary impairments | 0 | 0 | (6 | ) | ||||||||||||||||
Total net realized gains | $ | 263 | $ | 838 | $ | 365 | ||||||||||||||
Other-Than-Temporary Impairments | ||||||||||||||||||||
The Company follows the OTTI guidance which requires entities to separate an OTTI of a debt security into two components when there are credit related losses associated with the impaired debt security for which the Company asserts that it does not have the intent to sell, and it is more likely than not that it will not be required to sell before recovery of its cost basis. Under the OTTI guidance, the amount of the OTTI related to a credit loss is recognized in earnings, and the amount of the OTTI related to other, non-credit factors (e.g., interest rates, market conditions, etc.) is recorded as a component of other comprehensive income. In instances where no credit loss exists but the Company intends to sell the security or it is more likely than not that the Company will have to sell the debt security prior to the anticipated recovery, the decline in market value below amortized cost is recognized as an OTTI in earnings. In periods after the recognition of an OTTI on debt securities, the Company accounts for such securities as if they had been purchased on the measurement date of the OTTI at an amortized cost basis equal to the previous amortized cost basis less the OTTI recognized in earnings. For debt securities for which OTTI was recognized in earnings, the difference between the new amortized cost basis and the cash flows expected to be collected will be accreted or amortized into net investment income. | ||||||||||||||||||||
The following table sets forth the amount of credit loss impairments recognized within the results of operations on fixed maturity securities held by the Company as of the dates indicated, for which a portion of the OTTI loss was recognized in AOCI, and the corresponding changes in such amounts. | ||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||
Balance, beginning of year | $ | 446 | $ | 1,496 | $ | 1,573 | ||||||||||||||
Reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security | (132 | ) | (11 | ) | (6 | ) | ||||||||||||||
Reductions for credit loss impairments previously recognized on securities which matured, paid down, prepaid or were sold during the period | 238 | (1,039 | ) | (71 | ) | |||||||||||||||
Balance, end of year | $ | 552 | $ | 446 | $ | 1,496 | ||||||||||||||
We regularly monitor our investment portfolio to ensure investments that may be other-than-temporarily impaired are identified in a timely fashion, properly valued, and charged against earnings in the proper period. The determination that a security has incurred an other-than-temporary decline in value requires the judgment of management. Assessment factors include, but are not limited to, the length of time and the extent to which the market value has been less than cost, the financial condition and rating of the issuer, whether any collateral is held, the intent and ability of the Company to retain the investment for a period of time sufficient to allow for recovery for equity securities and the intent to sell or whether it is more likely than not that the Company will be required to sell for fixed maturity securities. Inherently, there are risks and uncertainties involved in making these judgments. Changes in circumstances and critical assumptions such as a continued weak economy, a more pronounced economic downturn or unforeseen events which affect one or more companies, industry sectors, or countries could result in additional impairments in future periods for other-than-temporary declines in value. Any equity security whose price decline is deemed other-than-temporary is written down to its then current market value with the amount of the impairment reported as a realized loss in that period. The impairment of a fixed maturity security that the Company has the intent to sell or that it is more likely than not that the Company will be required to sell is deemed other-than-temporary and is written down to its market value at the balance sheet date with the amount of the impairment reported as a realized loss in that period. For all other-than-temporarily impaired fixed maturity securities that do not meet either of these two criteria, the Company is required to analyze its ability to recover the amortized cost of the security by calculating the net present value of projected future cash flows. For these other-than-temporarily impaired fixed maturity securities, the net amount recognized in earnings is equal to the difference between the amortized cost of the fixed maturity security and its net present value. | ||||||||||||||||||||
The Company considers different factors to determine the amount of projected future cash flows and discounting methods for corporate debt and residential and commercial mortgage-backed securities. For corporate debt securities, the split between the credit and non-credit losses is driven principally by assumptions regarding the amount and timing of projected future cash flows. The net present value is calculated by discounting the Company’s best estimate of projected future cash flows at the effective interest rate implicit in the security at the date of acquisition. For residential and commercial mortgage-backed securities, cash flow estimates, including prepayment assumptions, are based on data from widely accepted third-party data sources or internal estimates. In addition to prepayment assumptions, cash flow estimates vary based on assumptions regarding the underlying collateral including default rates, recoveries and changes in value. The net present value is calculated by discounting the Company’s best estimate of projected future cash flows at the effective interest rate implicit in the fixed maturity security prior to impairment at the balance sheet date. The discounted cash flows become the new amortized cost basis of the fixed maturity security. | ||||||||||||||||||||
In periods subsequent to the recognition of an OTTI, the Company generally accretes the discount (or amortizes the reduced premium) into net investment income, up to the non-discounted amount of projected future cash flows, resulting from the reduction in cost basis, based upon the amount and timing of the expected future cash flows over the estimated period of cash flows. | ||||||||||||||||||||
The investment category and duration of the Company’s gross unrealized losses on fixed maturity securities and equity securities at December 31, 2014 and 2013 were as follows: | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Less than 12 months | 12 Months or More | Total | ||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||
Value | Losses | Value | Losses | Value | Losses | |||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||
Residential mortgage-backed | $ | 0 | $ | 0 | $ | 526 | $ | (11 | ) | $ | 526 | $ | (11 | ) | ||||||
Corporate | 683 | (39 | ) | 697 | (88 | ) | 1,380 | (127 | ) | |||||||||||
Total fixed maturity securities | $ | 683 | $ | (39 | ) | $ | 1,223 | $ | (99 | ) | $ | 1,906 | $ | (138 | ) | |||||
Equity securities: | ||||||||||||||||||||
Non-redeemable preferred stocks | $ | 615 | $ | (28 | ) | $ | 235 | $ | (15 | ) | $ | 850 | $ | (43 | ) | |||||
December 31, 2013 | ||||||||||||||||||||
Less than 12 months | 12 Months or More | Total | ||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||
Value | Losses | Value | Losses | Value | Losses | |||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||
Residential mortgage-backed | $ | 2,174 | $ | (29 | ) | $ | 520 | $ | (24 | ) | $ | 2,694 | $ | (53 | ) | |||||
Corporate | 7,394 | (426 | ) | 225 | (23 | ) | 7,619 | (449 | ) | |||||||||||
Total fixed maturity securities | $ | 9,568 | $ | (455 | ) | $ | 745 | $ | (47 | ) | $ | 10,313 | $ | (502 | ) | |||||
Equity securities: | ||||||||||||||||||||
Non-redeemable preferred stocks | $ | 2,966 | $ | (171 | ) | $ | 0 | $ | 0 | $ | 2,966 | $ | (171 | ) | ||||||
Total gross unrealized losses represent approximately 7% and 5% of the aggregate fair value of the related securities at December 31, 2014 and 2013, respectively. Approximately 37% and 93% of these gross unrealized losses have been in a continuous loss position for less than twelve months at December 31, 2014 and 2013, respectively. The total gross unrealized losses are comprised of 9 and 27 individual securities at December 31, 2014 and 2013, respectively. In accordance with its policy described above, the Company concluded that for these securities an adjustment to its results of operations for other-than-temporary impairments of the gross unrealized losses was not warranted at December 31, 2014 and 2013. These conclusions were based on a detailed analysis of the underlying credit and expected cash flows of each security. As of December 31, 2014, the gross unrealized losses that have been in a continuous loss position for twelve months or more were concentrated in the Company’s residential mortgage-backed and corporate fixed maturity securities, and in non-redeemable preferred stocks. The Company’s corporate fixed maturity securities loss position relates to securities in the industrial sector. The non-redeemable preferred stocks are perpetual preferred securities that have characteristics of both debt and equity securities. To evaluate these securities, we apply an impairment model similar to that used for our fixed maturity securities. As of December 31, 2014, the Company did not intend to sell these securities and it was not more likely than not that the Company would be required to sell them and no underlying cash flow issues were noted. Therefore, the Company did not recognize an OTTI on those perpetual preferred securities that had been in a continuous unrealized loss position for twelve months or more. As of December 31, 2014, the Company did not intend to sell the fixed maturity securities and it was not more likely than not that the Company would be required to sell the securities before the anticipated recovery of their amortized cost basis. The gross unrealized losses are primarily attributable to widening credit spreads associated with an underlying shift in overall credit risk premium. | ||||||||||||||||||||
The cost or amortized cost and fair value of available for sale fixed maturity securities in an unrealized loss position at December 31, 2014, by contractual maturity, is shown below. | ||||||||||||||||||||
Cost or | Fair Value | |||||||||||||||||||
Amortized Cost | ||||||||||||||||||||
Due after one year through five years | $ | 224 | $ | 221 | ||||||||||||||||
Due after ten years | 1,283 | 1,159 | ||||||||||||||||||
Total | 1,507 | 1,380 | ||||||||||||||||||
Residential mortgage-backed | 537 | 526 | ||||||||||||||||||
Total | $ | 2,044 | $ | 1,906 | ||||||||||||||||
The Company has exposure to sub-prime and related mortgages within our fixed maturity security portfolio. At December 31, 2014, approximately 8.7% of our residential mortgage-backed holdings had exposure to sub-prime mortgage collateral. This represented approximately 0.7% of the total fixed income portfolio and 4.0% of the total unrealized gain position. The one security with sub-prime exposure is below investment grade. All residential mortgage-backed securities, including those with sub-prime exposure, are reviewed as part of the ongoing other-than-temporary impairment monitoring process. | ||||||||||||||||||||
The Company has entered into commercial mortgage loans, collateralized by the underlying real estate, on properties located throughout the United States. At December 31, 2014, approximately 43% of the outstanding principal balance of commercial mortgage loans was concentrated in the states of Washington, Colorado and California. Although the Company has a diversified loan portfolio, an economic downturn could have an adverse impact on the ability of its debtors to repay their loans. The outstanding balance of commercial mortgage loans range in size from $373 to $1,880 at December 31, 2014 and from $385 to $2,402 at December 31, 2013. | ||||||||||||||||||||
Credit quality indicators for commercial mortgage loans are loan-to-value and debt-service coverage ratios. Loan-to-value and debt-service coverage ratios are measures commonly used to assess the credit quality of commercial mortgage loans. The loan-to-value ratio compares the principal amount of the loan to the fair value of the underlying property collateralizing the loan, and is commonly expressed as a percentage. The debt-service coverage ratio compares a property’s net operating income to its debt-service payments and is commonly expressed as a ratio. The loan-to-value and debt-service coverage ratios are generally updated annually in the third quarter. | ||||||||||||||||||||
The following summarizes our loan-to-value and average debt-service coverage ratios as of the dates indicated: | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Loan-to-Value | Carrying | % of | Debt- | |||||||||||||||||
Value | Gross | Service | ||||||||||||||||||
Mortgage | Coverage | |||||||||||||||||||
Loans | ratio | |||||||||||||||||||
70% and less | $ | 15,073 | 74.8 | % | 2.28 | |||||||||||||||
71 – 80% | 2,266 | 11.2 | % | 1.15 | ||||||||||||||||
81 – 95% | 2,819 | 14 | % | 1.15 | ||||||||||||||||
Gross commercial mortgage loans | 20,158 | 100 | % | 2 | ||||||||||||||||
Less valuation allowance | (386 | ) | ||||||||||||||||||
Net commercial mortgage loans | $ | 19,772 | ||||||||||||||||||
December 31, 2013 | ||||||||||||||||||||
Loan-to-Value | Carrying | % of | Debt- | |||||||||||||||||
Value | Gross | Service | ||||||||||||||||||
Mortgage | Coverage | |||||||||||||||||||
Loans | ratio | |||||||||||||||||||
70% and less | $ | 17,166 | 67.7 | % | 2.41 | |||||||||||||||
71 – 80% | 2,972 | 11.7 | % | 1.14 | ||||||||||||||||
81 – 95% | 5,219 | 20.6 | % | 1.16 | ||||||||||||||||
Gross commercial mortgage loans | 25,357 | 100 | % | 2.01 | ||||||||||||||||
Less valuation allowance | (398 | ) | ||||||||||||||||||
Net commercial mortgage loans | $ | 24,959 | ||||||||||||||||||
All commercial mortgage loans that are individually impaired have an established mortgage loan valuation allowance for losses. Changing economic conditions affect our valuation of commercial mortgage loans. Changing vacancies and rents are incorporated into the discounted cash flow analysis that we perform for monitored loans and may contribute to the establishment of (or an increase or decrease in) a commercial mortgage loan valuation allowance for losses. In addition, we continue to monitor the entire commercial mortgage loan portfolio to identify risk. Areas of emphasis are properties that have exposure to specific geographic events, have deteriorating credits or have experienced a reduction in debt-service coverage ratio. Where warranted, we have established or increased a valuation allowance based upon this analysis. | ||||||||||||||||||||
The commercial mortgage loan valuation allowance for losses was $386 and $398 at December 31, 2014 and 2013, respectively. In 2014 and 2013, the loan valuation allowance decreased $12 and $114, respectively, due to changing economic conditions and geographic concentrations. | ||||||||||||||||||||
The Company has fixed maturity securities of $797 and $737 at December 31, 2014 and 2013, respectively, on deposit with governmental authorities as required by law. | ||||||||||||||||||||
Fair_Value_Disclosures
Fair Value Disclosures | 12 Months Ended | |||||||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||||||
Fair Value Disclosures | ||||||||||||||||||||||||||
Fair Value Disclosures | 4.Fair Value Disclosures | |||||||||||||||||||||||||
Fair Values, Inputs and Valuation Techniques for Financial Assets and Liabilities Disclosures | ||||||||||||||||||||||||||
The fair value measurements and disclosure guidance defines fair value and establishes a framework for measuring 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. In accordance with this guidance, the Company has categorized its recurring basis financial assets and liabilities into a three-level fair value hierarchy based on the priority of the inputs to the valuation technique. | ||||||||||||||||||||||||||
The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. | ||||||||||||||||||||||||||
The levels of the fair value hierarchy are described below: | ||||||||||||||||||||||||||
· | Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access. | |||||||||||||||||||||||||
· | Level 2 inputs utilize other than quoted prices included in Level 1 that are observable for the asset, either directly or indirectly, for substantially the full term of the asset. Level 2 inputs include quoted prices for similar assets in active markets, quoted prices for identical or similar assets in markets that are not active and inputs other than quoted prices that are observable in the marketplace for the asset. The observable inputs are used in valuation models to calculate the fair value for the asset. | |||||||||||||||||||||||||
· | Level 3 inputs are unobservable but are significant to the fair value measurement for the asset, and include situations where there is little, if any, market activity for the asset. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset. | |||||||||||||||||||||||||
A review of fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. | ||||||||||||||||||||||||||
The following tables present the Company’s fair value hierarchy for assets and liabilities measured at fair value on a recurring basis as of December 31, 2014 and 2013. The amounts presented below for Cash equivalents and Assets and Liabilities held in separate accounts differ from the amounts presented in the balance sheet because only certain investments or certain assets and liabilities within these line items are measured at estimated fair value. The fair value amount and the majority of the associated levels presented for Assets and Liabilities held in separate accounts are received directly from third parties. | ||||||||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||
Financial Assets | ||||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||||
United States Government and government agencies and authorities | $ | 797 | $ | 0 | $ | 797 | $ | 0 | ||||||||||||||||||
State, municipalities and political subdivisions | 28,918 | 0 | 28,918 | 0 | ||||||||||||||||||||||
Foreign governments | 376 | 0 | 376 | 0 | ||||||||||||||||||||||
Commercial mortgage-backed | 499 | 0 | 499 | 0 | ||||||||||||||||||||||
Residential mortgage-backed | 7,701 | 0 | 7,701 | 0 | ||||||||||||||||||||||
Corporate | 59,178 | 0 | 57,970 | 1,208 | ||||||||||||||||||||||
Equity securities: | ||||||||||||||||||||||||||
Non-redeemable preferred stocks | 7,968 | 0 | 7,968 | 0 | ||||||||||||||||||||||
Short-term investments | 7,202 | 7,202 | (b) | 0 | 0 | |||||||||||||||||||||
Cash equivalents | 50 | 50 | (b) | 0 | 0 | |||||||||||||||||||||
Assets held in separate accounts | 11,930 | 8,028 | (a) | 3,902 | (c) | 0 | ||||||||||||||||||||
Total financial assets | $ | 124,619 | $ | 15,280 | $ | 108,131 | $ | 1,208 | ||||||||||||||||||
Financial Liabilities | ||||||||||||||||||||||||||
Liabilities related to separate accounts | $ | 11,930 | $ | 8,028 | (a) | $ | 3,902 | (c) | $ | 0 | ||||||||||||||||
December 31, 2013 | ||||||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||
Financial Assets | ||||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||||
United States Government and government agencies and authorities | $ | 737 | $ | 0 | $ | 737 | $ | 0 | ||||||||||||||||||
State, municipalities and political subdivisions | 28,422 | 0 | 27,321 | 1,101 | ||||||||||||||||||||||
Foreign governments | 338 | 0 | 338 | 0 | ||||||||||||||||||||||
Commercial mortgage-backed | 752 | 0 | 752 | 0 | ||||||||||||||||||||||
Residential mortgage-backed | 7,651 | 0 | 7,651 | 0 | ||||||||||||||||||||||
Corporate | 66,179 | 0 | 64,871 | 1,308 | ||||||||||||||||||||||
Equity securities: | ||||||||||||||||||||||||||
Non-redeemable preferred stocks | 7,200 | 0 | 7,200 | 0 | ||||||||||||||||||||||
Short-term investments | 1,911 | 1,911 | (b) | 0 | 0 | |||||||||||||||||||||
Cash equivalents | 610 | 610 | (b) | 0 | 0 | |||||||||||||||||||||
Assets held in separate accounts | 11,978 | 9,650 | (a) | 2,328 | (c) | 0 | ||||||||||||||||||||
Total financial assets | $ | 125,778 | $ | 12,171 | $ | 111,198 | $ | 2,409 | ||||||||||||||||||
Financial Liabilities | ||||||||||||||||||||||||||
Liabilities related to separate accounts | $ | 11,978 | $ | 9,650 | (a) | $ | 2,328 | (c) | $ | 0 | ||||||||||||||||
(a) | Mainly includes mutual funds. | |||||||||||||||||||||||||
(b) | Mainly includes money market funds. | |||||||||||||||||||||||||
(c) | Mainly includes fixed maturity securities. | |||||||||||||||||||||||||
There were no transfers between Level 1 and Level 2 financial assets during 2014 or 2013. However, there were transfers between Level 2 and Level 3 financial assets in 2014 and 2013, which are reflected in the “Transfers in” and “Transfers out” columns below. Transfers between Level 2 and Level 3 most commonly occur from changes in the availability of observable market information and re-evaluation of the observability of pricing inputs. Any remaining unpriced securities are submitted to independent brokers who provide non-binding broker quotes or are priced by other qualified sources. | ||||||||||||||||||||||||||
The following tables summarize the change in balance sheet carrying value associated with Level 3 financial assets carried at fair value during the years ended December 31, 2014 and 2013: | ||||||||||||||||||||||||||
Year Ended December 31, 2014 | ||||||||||||||||||||||||||
Balance, | Total losses | Net | Purchases | Sales | Transfers | Transfers | Balance, | |||||||||||||||||||
beginning | (realized/ | unrealized | in (3) | out (3) | end of | |||||||||||||||||||||
of period | unrealized) | gains | period | |||||||||||||||||||||||
included in | included in | |||||||||||||||||||||||||
earnings (1) | other | |||||||||||||||||||||||||
comprehensive | ||||||||||||||||||||||||||
income (2) | ||||||||||||||||||||||||||
Fixed Maturity Securities | ||||||||||||||||||||||||||
States, municipalities and political subdivisions | $ | 1,101 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | (1,101 | ) | $ | 0 | |||||||||
Corporate | 1,308 | (13 | ) | 13 | 232 | (332 | ) | 0 | 0 | 1,208 | ||||||||||||||||
Total level 3 assets | $ | 2,409 | $ | (13 | ) | $ | 13 | $ | 232 | $ | (332 | ) | $ | 0 | $ | (1,101 | ) | $ | 1,208 | |||||||
Year Ended December 31, 2013 | ||||||||||||||||||||||||||
Balance, | Total gains | Net | Purchases | Sales | Transfers | Transfers | Balance, | |||||||||||||||||||
beginning | (realized/ | unrealized | in (3) | out (3) | end of | |||||||||||||||||||||
of period | unrealized) | (losses) gains | period | |||||||||||||||||||||||
included in | included in | |||||||||||||||||||||||||
earnings (1) | other | |||||||||||||||||||||||||
comprehensive | ||||||||||||||||||||||||||
income (2) | ||||||||||||||||||||||||||
Fixed Maturity Securities | ||||||||||||||||||||||||||
States, municipalities and political subdivisions | $ | 0 | $ | 0 | $ | 81 | $ | 1,020 | $ | 0 | $ | 0 | $ | 0 | $ | 1,101 | ||||||||||
Corporate | 1,483 | 290 | (92 | ) | 0 | (412 | ) | 288 | (249 | ) | 1,308 | |||||||||||||||
Equity Securities | ||||||||||||||||||||||||||
Non-redeemable preferred stocks | 1 | 0 | 0 | 0 | 0 | 0 | (1 | ) | 0 | |||||||||||||||||
Total level 3 assets | $ | 1,484 | $ | 290 | $ | (11 | ) | $ | 1,020 | $ | (412 | ) | $ | 288 | $ | (250 | ) | $ | 2,409 | |||||||
-1 | Included as part of net realized gains on investments in the statement of operations. | |||||||||||||||||||||||||
-2 | Included as part of change in unrealized gains on securities in the statement of comprehensive income. | |||||||||||||||||||||||||
-3 | Transfers are primarily attributable to changes in the availability of observable market information and re-evaluation of the observability of pricing inputs. | |||||||||||||||||||||||||
Three different valuation techniques can be used in determining fair value for financial assets and liabilities: the market, income or cost approaches. The three valuation techniques described in the fair value measurements and disclosures guidance are consistent with generally accepted valuation methodologies. The market approach valuation techniques use prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. When possible, quoted prices (unadjusted) in active markets are used as of the period-end date (such as for mutual funds and money market funds). Otherwise, valuation techniques consistent with the market approach including matrix pricing and comparables are used. Matrix pricing is a mathematical technique employed principally to value debt securities without relying exclusively on quoted prices for those securities but rather by relying on the securities’ relationship to other benchmark quoted securities. Market approach valuation techniques often use market multiples derived from a set of comparables. Multiples might lie in ranges with a different multiple for each comparable. The selection of where within the range the appropriate multiple falls requires judgment, considering both qualitative and quantitative factors specific to the measurement. | ||||||||||||||||||||||||||
Income approach valuation techniques convert future amounts, such as cash flows or earnings, to a single present amount, or a discounted amount. These techniques rely on current market expectations of future amounts as of the period-end date. Examples of income approach valuation techniques include present value techniques, option-pricing models, binomial or lattice models that incorporate present value techniques and the multi-period excess earnings method. | ||||||||||||||||||||||||||
Cost approach valuation techniques are based upon the amount that would be required to replace the service capacity of an asset at the period-end date, or the current replacement cost. That is, from the perspective of a market participant (seller), the price that would be received for the asset is determined based on the cost to a market participant (buyer) to acquire or construct a substitute asset of comparable utility, adjusted for obsolescence. | ||||||||||||||||||||||||||
While not all three approaches are applicable to all financial assets or liabilities, where appropriate, one or more valuation techniques may be used. For all the classes of financial assets and liabilities included in the above hierarchy, the market valuation technique is generally used. For the years ended December 31, 2014 and 2013, the application of the valuation technique applied to the Company’s classes of financial assets and liabilities has been consistent. | ||||||||||||||||||||||||||
Level 1 Securities | ||||||||||||||||||||||||||
The Company’s investments and liabilities classified as Level 1 as of December 31, 2014 and 2013, consisted of mutual funds and money market funds that are publicly listed and/or actively traded in an established market. | ||||||||||||||||||||||||||
Level 2 Securities | ||||||||||||||||||||||||||
The Company’s Level 2 securities are valued using various observable market inputs obtained from a pricing service. The pricing service prepares estimates of fair value measurements for our Level 2 securities using proprietary valuation models based on techniques such as matrix pricing which include observable market inputs. The fair value measurements and disclosures guidance defines observable market inputs as the assumptions market participants would use in pricing the asset or liability developed on market data obtained from sources independent of the Company. The extent of the use of each observable market input for a security depends on the type of security and the market conditions at the balance sheet date. Depending on the security, the priority of the use of observable market inputs may change as some observable market inputs may not be relevant or additional inputs may be necessary. The following observable market inputs (“standard inputs”), listed in the approximate order of priority, are utilized in the pricing evaluation of Level 2 securities: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data including market research data. Further details for level 2 investment types follow: | ||||||||||||||||||||||||||
United States Government and government agencies and authorities: U.S. government and government agencies and authorities securities are priced by our pricing service utilizing standard inputs. Included in this category are U.S. Treasury securities which are priced using vendor trading platform data in addition to the standard inputs. | ||||||||||||||||||||||||||
State, municipalities and political subdivisions: State, municipalities and political subdivisions securities are priced by our pricing service utilizing material event notices and new issue data inputs in addition to the standard inputs. | ||||||||||||||||||||||||||
Foreign governments: Foreign government securities are priced by our pricing service utilizing standard inputs. The pricing service also evaluates each security based on relevant market information including relevant credit information, perceived market movements and sector news. | ||||||||||||||||||||||||||
Commercial mortgage-backed and residential mortgage-backed: Commercial mortgage-backed and residential mortgage-backed securities are priced by our pricing service utilizing monthly payment information and collateral performance information in addition to the standard inputs. Additionally, commercial mortgage-backed securities utilize new issue data while residential mortgage-backed securities utilize vendor trading platform data. | ||||||||||||||||||||||||||
Corporate: Corporate securities are priced by our pricing service utilizing standard inputs. Non-investment grade securities within this category are priced by our pricing service utilizing observations of equity and credit default swap curves related to the issuer in addition to the standard inputs. | ||||||||||||||||||||||||||
Non-redeemable preferred stocks: Non-redeemable preferred stocks are priced by our pricing service utilizing observations of equity and credit default swap curves related to the issuer in addition to the standard inputs. | ||||||||||||||||||||||||||
Assets/liabilities held in separate accounts: To price the fixed maturity securities in these categories, the pricing service utilizes the standard inputs. | ||||||||||||||||||||||||||
Valuation models used by the pricing service can change period to period, depending on the appropriate observable inputs that are available at the balance sheet date to price a security. When market observable inputs are unavailable to the pricing service, the remaining unpriced securities are submitted to independent brokers who provide non-binding broker quotes or are priced by other qualified sources. If the Company cannot corroborate the non-binding broker quotes with Level 2 inputs, these securities are categorized as Level 3 securities. | ||||||||||||||||||||||||||
Level 3 Securities | ||||||||||||||||||||||||||
The Company’s investments classified as Level 3 as of December 31, 2014 and 2013, consisted of fixed maturity securities. All of the Level 3 fixed maturity securities are priced using non-binding broker quotes which cannot be corroborated with Level 2 inputs. Of our total Level 3 fixed maturity securities, $74 and $79 were priced by a pricing service using single broker quotes due to insufficient information to provide an evaluated price as of December 31, 2014 and 2013, respectively. The single broker quotes are provided by market makers or broker-dealers who are recognized as market participants in the markets in which they are providing the quotes. The remaining $1,134 and $2,330 were priced internally using independent and non-binding broker quotes as of December 31, 2014 and 2013, respectively. The inputs factoring into the broker quotes include trades in the actual bond being priced, trades of comparable bonds, quality of the issuer, optionality, structure and liquidity. Significant changes in interest rates, issuer credit, liquidity, and overall market conditions would result in a significantly lower or higher broker quote. The prices received from both the pricing service and internally are reviewed for reasonableness by management and if necessary, management works with the pricing service or broker to further understand how they developed their price. | ||||||||||||||||||||||||||
Management evaluates the following factors in order to determine whether the market for a financial asset is inactive. The factors include, but are not limited to: | ||||||||||||||||||||||||||
· | There are few recent transactions, | |||||||||||||||||||||||||
· | Little information is released publicly, | |||||||||||||||||||||||||
· | The available prices vary significantly over time or among market participants, | |||||||||||||||||||||||||
· | The prices are stale (i.e., not current), and | |||||||||||||||||||||||||
· | The magnitude of the bid-ask spread. | |||||||||||||||||||||||||
Illiquidity did not have a material impact in the fair value determination of the Company’s financial assets. | ||||||||||||||||||||||||||
The Company generally obtains one price for each financial asset. The Company performs a monthly analysis to assess if the evaluated prices represent a reasonable estimate of their fair value. This process involves quantitative and qualitative analysis and is overseen by investment and accounting professionals. Examples of procedures performed include, but are not limited to, initial and on-going review of pricing service methodologies, review of the prices received from the pricing service, review of pricing statistics and trends, and comparison of prices for certain securities with two different appropriate price sources for reasonableness. Following this analysis, the Company generally uses the best estimate of fair value based upon all available inputs. On infrequent occasions, a non-pricing service source may be more familiar with the market activity for a particular security than the pricing service. In these cases the price used is taken from the non-pricing service source. The pricing service provides information to indicate which securities were priced using market observable inputs so that the Company can properly categorize our financial assets in the fair value hierarchy. | ||||||||||||||||||||||||||
Disclosures for Non-Financial Assets Measured at Fair Value on a Non-Recurring Basis | ||||||||||||||||||||||||||
The Company also measures the fair value of certain assets on a non-recurring basis, generally on an annual basis, or when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. These assets include commercial mortgage loans. | ||||||||||||||||||||||||||
Fair Value of Financial Instruments Disclosures | ||||||||||||||||||||||||||
The financial instruments guidance requires disclosure of fair value information about financial instruments, as defined therein, for which it is practicable to estimate such fair value. Therefore, it requires fair value disclosure for financial instruments that are not recognized or are not carried at fair value in the balance sheet. However, this guidance excludes certain financial instruments, such as those related to insurance contracts. | ||||||||||||||||||||||||||
For the financial instruments included within the following financial assets and financial liabilities, the carrying value in the balance sheet equals or approximates fair value. Please refer to the Fair Value Inputs and Valuation Techniques for Financial Assets and Liabilities Disclosures section above for more information on the financial instruments included within the following financial assets and financial liabilities and the methods and assumptions used to estimate fair value: | ||||||||||||||||||||||||||
· | Cash and cash equivalents | |||||||||||||||||||||||||
· | Fixed maturity securities | |||||||||||||||||||||||||
· | Equity securities | |||||||||||||||||||||||||
· | Short-term investments | |||||||||||||||||||||||||
· | Assets held in separate accounts | |||||||||||||||||||||||||
· | Liabilities related to separate accounts | |||||||||||||||||||||||||
In estimating the fair value of the financial instruments that are not recognized or are not carried at fair value in the balance sheet, the Company used the following methods and assumptions: | ||||||||||||||||||||||||||
Commercial mortgage loans: the fair values of mortgage loans are estimated using discounted cash flow models. The model inputs include mortgage amortization schedules and loan provisions, an internally developed credit spread based on the credit risk associated with the borrower and the U.S. Treasury spot curve. Mortgage loans with similar characteristics are aggregated for purposes of the calculations. | ||||||||||||||||||||||||||
Policy loans: the carrying value of policy loans reported in the balance sheet approximates fair value. | ||||||||||||||||||||||||||
Other investments: Other investments include CAPCOs tax credits which are recorded at amortized cost. The carrying value reported for these investments approximates fair value. Due to the nature of these investments, there is a lack of liquidity in the primary market which results in the holdings being classified as Level 3. | ||||||||||||||||||||||||||
Policy reserves under investment products: the fair values for the Company’s policy reserves under investment products are determined using discounted cash flow analysis. Key inputs to the valuation include projections of policy cash flows, reserve run-off, market yields and risk margins. | ||||||||||||||||||||||||||
Funds held under reinsurance: the carrying value reported approximates fair value due to the short maturity of the instruments. | ||||||||||||||||||||||||||
The following tables disclose the carrying value, fair value amount and hierarchy level of the financial instruments that are not recognized or are not carried at fair value in the balance sheet: | ||||||||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||||||||
Fair Value | ||||||||||||||||||||||||||
Carrying Value | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
Financial Assets | ||||||||||||||||||||||||||
Commercial mortgage loans on real estate | $ | 19,772 | $ | 22,366 | $ | 0 | $ | 0 | $ | 22,366 | ||||||||||||||||
Policy loans | 217 | 217 | 217 | 0 | 0 | |||||||||||||||||||||
Other investments | 172 | 172 | 0 | 0 | 172 | |||||||||||||||||||||
Total financial assets | $ | 20,161 | $ | 22,755 | $ | 217 | $ | 0 | $ | 22,538 | ||||||||||||||||
Financial Liabilities | ||||||||||||||||||||||||||
Policy reserves under investment products (Individual and group annuities, subject to discretionary withdrawal)(1) | $ | 4,487 | $ | 5,074 | $ | 0 | $ | 0 | $ | 5,074 | ||||||||||||||||
Funds withheld under reinsurance | 167 | 167 | 167 | 0 | 0 | |||||||||||||||||||||
Total financial liabilities | $ | 4,654 | $ | 5,241 | $ | 167 | $ | 0 | $ | 5,074 | ||||||||||||||||
December 31, 2013 | ||||||||||||||||||||||||||
Fair Value | ||||||||||||||||||||||||||
Carrying Value | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
Financial Assets | ||||||||||||||||||||||||||
Commercial mortgage loans on real estate | $ | 24,959 | $ | 27,981 | $ | 0 | $ | 0 | $ | 27,981 | ||||||||||||||||
Policy loans | 219 | 219 | 219 | 0 | 0 | |||||||||||||||||||||
Total financial assets | $ | 25,178 | $ | 28,200 | $ | 219 | $ | 0 | $ | 27,981 | ||||||||||||||||
Financial Liabilities | ||||||||||||||||||||||||||
Policy reserves under investment products (Individual and group annuities, subject to discretionary withdrawal)(1) | $ | 4,007 | $ | 4,261 | $ | 0 | $ | 0 | $ | 4,261 | ||||||||||||||||
Funds withheld under reinsurance | 159 | 159 | 159 | 0 | 0 | |||||||||||||||||||||
Total financial liabilities | $ | 4,166 | $ | 4,420 | $ | 159 | $ | 0 | $ | 4,261 | ||||||||||||||||
-1 | Only the fair value of the Company’s policy reserves for investment-type contracts (those without significant mortality or morbidity risk) are reflected in the table above. | |||||||||||||||||||||||||
Income_Taxes
Income Taxes | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Income Taxes | |||||||||||
Income Taxes | 5.Income Taxes | ||||||||||
The Company is subject to U.S. tax and files a U.S. consolidated federal income tax return with its Parent. All of the Company’s income comes from domestic sources. Information about the Company’s current and deferred federal tax expense (benefit) follows: | |||||||||||
Years Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Current expense | $ | 378 | $ | 256 | $ | 1,842 | |||||
Deferred expense (benefit) | 1,474 | 673 | (203 | ) | |||||||
Total income tax expense | $ | 1,852 | $ | 929 | $ | 1,639 | |||||
A reconciliation of the federal income tax rate to the Company’s effective income tax rate follows: | |||||||||||
December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Federal income tax rate: | 35 | % | 35 | % | 35 | % | |||||
Reconciling items: | |||||||||||
Tax exempt interest | (8.0 | ) | (12.3 | ) | (8.9 | ) | |||||
Dividend received deduction | (1.4 | ) | (2.2 | ) | (1.5 | ) | |||||
Non deductible health insurer fee | 0.7 | 0 | 0 | ||||||||
Permanent nondeductible expenses | 0.1 | 0.1 | 0.2 | ||||||||
Other | 0 | 0 | 0.3 | ||||||||
Effective income tax rate: | 26.4 | % | 20.6 | % | 25.1 | % | |||||
The 2014 decrease in the deduction for tax-exempt interest and dividends received is primarily due to the increase in pre-tax income. | |||||||||||
As of December 31, 2014, 2013, and 2012, the Company had no liability for unrecognized tax benefits. The Company had no activity related to unrecognized tax benefits for the year ended December 31, 2014 and 2013. | |||||||||||
The Company’s continuing practice is to recognize interest expense related to income tax matters in income tax expense. During the years ended December 31, 2014 and 2013, the Company’s interest expense amounts related to income tax matters were immaterial. The interest accrued as of December 31, 2014 and 2013, respectively, was also immaterial. No penalties have been accrued. | |||||||||||
The Company files federal income tax returns in the U.S. The Company has substantially concluded all U.S. federal income tax matters for years through 2011. | |||||||||||
The tax effects of temporary differences that result in significant deferred tax assets and deferred tax liabilities are as follows: | |||||||||||
December 31, | |||||||||||
2014 | 2013 | ||||||||||
Deferred Tax Assets | |||||||||||
Deferred gain on disposal of business | $ | 871 | $ | 791 | |||||||
Investments, net | 1,740 | 2,123 | |||||||||
Deferred acquisition costs | 1,059 | 1,013 | |||||||||
Employee and post-retirement benefits | 0 | 800 | |||||||||
Capital loss carryforward | 0 | 266 | |||||||||
Compensation related | 2 | 5 | |||||||||
Other | 4 | 4 | |||||||||
Total deferred tax asset | 3,676 | 5,002 | |||||||||
Deferred Tax Liabilities | |||||||||||
Policyholder and separate account reserves | (1,324 | ) | (1,542 | ) | |||||||
Net unrealized appreciation on securities | (4,390 | ) | (3,279 | ) | |||||||
Employee and post-retirement benefits | (375 | ) | 0 | ||||||||
Other | (37 | ) | (54 | ) | |||||||
Total deferred tax liability | (6,126 | ) | (4,875 | ) | |||||||
Net deferred income tax (liability) asset | $ | (2,450 | ) | $ | 127 | ||||||
The calculation of the valuation allowance is made at the consolidated return group level. A portion of the valuation allowance is assigned to the Company based on the provisions of the tax sharing agreement. No cumulative valuation allowance has been recorded because it is management’s assessment that it is more likely than not that deferred tax assets of $3,676 will be realized. | |||||||||||
The Company’s ability to realize deferred tax assets depends on its ability to generate sufficient taxable income of the same character within the carryback or carryforward periods. In assessing future taxable income, the Company considered all sources of taxable income available to realize its deferred tax asset, including the future reversal of existing temporary differences, future taxable income exclusive of reversing temporary differences and carryforwards, taxable income in carryback years and tax-planning strategies. If changes occur in the assumptions underlying the Company’s tax-planning strategies or in the scheduling of the reversal of the Company’s deferred tax liabilities, the valuation allowance may need to be adjusted in the future. | |||||||||||
At December 31, 2014, the Company had no net operating loss carryforward or capital loss carryforward for U.S. federal income tax purposes. | |||||||||||
Premiums_and_Accounts_Receivab
Premiums and Accounts Receivable | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Premiums and Accounts Receivable | ||||||||
Premiums and Accounts Receivable | 6.Premiums and Accounts Receivable | |||||||
Receivables are reported net of an allowance for uncollectible items. A summary of such receivables is as follows: | ||||||||
As of December 31, | ||||||||
2014 | 2013 | |||||||
Insurance premiums receivable | $ | 1,459 | $ | 1,508 | ||||
Other receivables | 220 | 200 | ||||||
Total (1) | $ | 1,679 | $ | 1,708 | ||||
-1 | For the years ended December 31, 2014 and 2013, the Company did not have any material allowances for uncollectible items. | |||||||
Stockholders_Equity
Stockholder's Equity | 12 Months Ended |
Dec. 31, 2014 | |
Stockholder's Equity | |
Stockholder's Equity | 7.Stockholder’s Equity |
The Board of Directors of the Company has authorized 100,000 shares of common stock with a par value of $20 per share. All the shares are issued and outstanding as of December 31, 2014 and 2013 and are owned by the Parent (see Note 1). The Company paid dividends of $3,890, $10,033, and $609 during the year ended December 31, 2014, 2013 and 2012, respectively. The Company returned capital of $959 during the year ended December 31, 2013. There was no return of capital in 2014 or 2012. | |
The maximum amount of dividends which can be paid by State of New York insurance companies to shareholders without prior approval of the Insurance Commissioner is subject to restrictions relating to statutory surplus (see Note 8). | |
Statutory_Information
Statutory Information | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Statutory Information | |||||||||||||||||
Statutory Information | 8.Statutory Information | ||||||||||||||||
The Company prepares financial statements on the basis of statutory accounting principles (“SAP”) prescribed or permitted by the New York Department of Commerce. Prescribed SAP includes the Accounting Practices and Procedures Manual of the National Association of Insurance Commissioners (“NAIC”) as well as state laws, regulations and administrative rules. | |||||||||||||||||
The principal differences between SAP and GAAP are: 1) policy acquisition costs are expensed as incurred under SAP, but are deferred and amortized under GAAP; 2) the value of business acquired is not capitalized under SAP but is under GAAP; 3) amounts collected from holders of universal life-type and annuity products are recognized as premiums when collected under SAP, but are initially recorded as contract deposits under GAAP, with cost of insurance recognized as revenue when assessed and other contract charges recognized over the periods for which services are provided; 4) the classification and carrying amounts of investments in certain securities are different under SAP than under GAAP; 5) the criteria for providing asset valuation allowances, and the methodologies used to determine the amounts thereof, are different under SAP than under GAAP; 6) the timing of establishing certain reserves, and the methodologies used to determine the amounts thereof, are different under SAP than under GAAP; 7) certain assets are not admitted for purposes of determining surplus under SAP; 8) methodologies used to determine the amounts of deferred taxes and goodwill are different under SAP than under GAAP; and 9) the criteria for obtaining reinsurance accounting treatment is different under SAP than under GAAP. | |||||||||||||||||
Reconciliations of net income and stockholder’s equity on the basis of statutory accounting to the related amounts presented in the accompanying statements were as follows: | |||||||||||||||||
Net Income | Shareholder’s Equity | ||||||||||||||||
2014 | 2013 | 2012 | 2014 | 2013 | |||||||||||||
Based on statutory accounting principles | $ | 5,590 | $ | 5,441 | $ | 5,518 | $ | 42,756 | $ | 40,900 | |||||||
Deferred acquisition costs | (97 | ) | (113 | ) | (15 | ) | 4 | 101 | |||||||||
Deferred and uncollected premiums | (40 | ) | 6 | 1 | 0 | 40 | |||||||||||
Policy and claim reserves | (850 | ) | (1,067 | ) | (914 | ) | 4,895 | 5,745 | |||||||||
Investment valuation difference | (62 | ) | 175 | (32 | ) | 12,127 | 9,037 | ||||||||||
Commissions and fees | 1 | 6 | 22 | 0 | (1 | ) | |||||||||||
Deferred taxes | (1,474 | ) | (673 | ) | 203 | (5,180 | ) | (3,720 | ) | ||||||||
Deferred gain on disposal of businesses | 4 | 135 | 149 | (2,489 | ) | (2,261 | ) | ||||||||||
Goodwill and intangibles | 0 | 0 | (7 | ) | 324 | 324 | |||||||||||
Pension | 2,032 | (353 | ) | (309 | ) | (253 | ) | (2,285 | ) | ||||||||
Reinsurance in unauthorized companies | 0 | 0 | 0 | 2 | 12 | ||||||||||||
Interest maintenance reserve, deferral and amortization | 66 | 16 | 268 | 626 | 560 | ||||||||||||
Asset valuation reserve | 0 | 0 | 0 | 768 | 1,009 | ||||||||||||
Non-admitted assets and other | 0 | 0 | 0 | 2,135 | 2,926 | ||||||||||||
Based on generally accepted accounting principles | $ | 5,170 | $ | 3,573 | $ | 4,884 | $ | 55,715 | $ | 52,387 | |||||||
Dividend distributions to the Parent are restricted as to the amount by state regulatory requirements. The Company declared and paid ordinary dividends of $3,890 during the year ended December 31, 2014. No extraordinary dividends were declared and paid in 2014. The Company declared and paid dividends of $10,992, of which $4,492 was ordinary and $6,500 was extraordinary during the year ended December 31, 2013. (For GAAP purposes, the $959 of the extraordinary dividend was classified as a return of capital.) The company declared and paid ordinary dividends of $609 during the years ended December 31, 2012. No extraordinary dividends were declared and paid in 2012. A dividend is considered extraordinary when combined with all other dividends and distributions made within the preceding 12 months exceeds the lesser of 10% of the insurer’s surplus as regards to policyholders on December 31 of the next year, or the net gain from operations. The Company has the ability, under state regulatory requirements, to dividend up to approximately $4,076 to the Parent in 2015 without permission from New York regulators. No assurance can be given that there will not be further regulatory actions restricting the ability of the Company to pay dividends. | |||||||||||||||||
State regulators require insurance companies to meet minimum capitalization standards designed to ensure that they can fulfill obligations to policyholders. Minimum capital requirements are expressed as a ratio of a company’s total adjusted capital (“TAC”) to its RBC (the “RBC Ratio”). TAC is equal to statutory surplus adjusted to exclude certain statutory liabilities. RBC is calculated by applying specified factors to various asset, premium, expense, liability, and reserve items. | |||||||||||||||||
Generally, if a company’s RBC Ratio is below 100% (the “Authorized Control Level”), the insurance commissioner of the company’s state of domicile is authorized to take control of the company, to protect the interests of policyholders. If the RBC Ratio is greater than 100% but less than 200% (the “Company Action Level”), the company must submit a RBC plan to the commissioner of the state of domicile. Corrective actions may also be required if the RBC Ratio is greater than the Company Action Level but the company fails certain trend tests. | |||||||||||||||||
As of December 31, 2014, the TAC of the Company exceeded the Company Action Level and no trend tests that would require regulatory action were violated. As of December 31, 2014, the TAC of the Company subject to RBC requirements was $43,524, and the corresponding Authorized Control Level was $4,235. | |||||||||||||||||
Reinsurance
Reinsurance | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||
Reinsurance | |||||||||||||||||||||||||||||
Reinsurance | 9.Reinsurance | ||||||||||||||||||||||||||||
In the ordinary course of business, the Company is involved in both the assumption and cession of reinsurance with non-affiliated companies. The following table provides details of the reinsurance recoverables balance as of December 31: | |||||||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||||||
Ceded future policyholder benefits and expense | $ | 208,022 | $ | 143,007 | |||||||||||||||||||||||||
Ceded unearned premium | 3,857 | 2,667 | |||||||||||||||||||||||||||
Ceded claims and benefits payable | 36,809 | 29,983 | |||||||||||||||||||||||||||
Ceded paid losses | 1,484 | 1,644 | |||||||||||||||||||||||||||
Total | $ | 250,172 | $ | 177,301 | |||||||||||||||||||||||||
A key credit quality indicator for reinsurance is the A.M. Best financial strength ratings of the reinsurer. The A.M. Best ratings are an independent opinion of a reinsurer’s ability to meet ongoing obligations to policyholders. The A.M. Best ratings for new reinsurance agreements where there is material credit exposure are reviewed at the time of execution. The A.M. Best ratings for existing reinsurance agreements are reviewed on a periodic basis, at least annually. The following table provides the reinsurance recoverable as of December 31, 2014 grouped by A.M. Best rating: | |||||||||||||||||||||||||||||
A.M. Best ratings of | Ceded future | Ceded | Ceded claims and | Ceded | Total | ||||||||||||||||||||||||
reinsurer | policyholder | unearned | benefits payable | paid | |||||||||||||||||||||||||
benefits and | premiums | losses | |||||||||||||||||||||||||||
expense | |||||||||||||||||||||||||||||
A++ or A+ | $ | 203,351 | $ | 3,857 | $ | 36,034 | $ | 145 | $ | 243,387 | |||||||||||||||||||
A or A- | 4,671 | 0 | 27 | 5 | 4,703 | ||||||||||||||||||||||||
Not rated | 0 | 0 | 748 | 1,334 | 2,082 | ||||||||||||||||||||||||
Reinsurance recoverable | $ | 208,022 | $ | 3,857 | $ | 36,809 | $ | 1,484 | $ | 250,172 | |||||||||||||||||||
A.M. Best ratings for The Hartford and John Hancock, the reinsurers with the largest reinsurance recoverable balances, are A- and A+, respectively. A.M. Best currently maintains a stable outlook on the financial strength ratings of John Hancock and The Hartford. The total amount of recoverable for these two reinsurers is $243,308 as of December 31, 2014. Most of the assets backing reserves relating to reinsurance recoverables from these two counterparties are held in trust. | |||||||||||||||||||||||||||||
The effect of reinsurance on premiums earned and benefits incurred was as follows: | |||||||||||||||||||||||||||||
Years Ended December 31, | |||||||||||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||||||||||
Long | Short | Total | Long | Short | Total | Long | Short | Total | |||||||||||||||||||||
Duration | Duration | Duration | Duration | Duration | Duration | ||||||||||||||||||||||||
Direct earned premiums | $ | 8,254 | $ | 18,990 | $ | 27,244 | $ | 10,353 | $ | 22,284 | $ | 32,637 | $ | 9,832 | $ | 24,950 | $ | 34,782 | |||||||||||
Premiums assumed | 295 | 5,458 | 5,753 | 350 | 5,981 | 6,331 | 301 | 6,506 | 6,807 | ||||||||||||||||||||
Premiums ceded | (8,254 | ) | (1,041 | ) | (9,295 | ) | (10,353 | ) | (1,272 | ) | (11,625 | ) | (9,832 | ) | (1,680 | ) | (11,512 | ) | |||||||||||
Net earned premiums | $ | 295 | $ | 23,407 | $ | 23,702 | $ | 350 | $ | 26,993 | $ | 27,343 | $ | 301 | $ | 29,776 | $ | 30,077 | |||||||||||
Direct policyholder benefits | 80,833 | 12,604 | 93,437 | 18,380 | 14,181 | 32,561 | $ | 18,909 | $ | 16,494 | $ | 35,403 | |||||||||||||||||
Policyholder benefits assumed | 258 | 3,911 | 4,169 | 151 | 8,022 | 8,173 | 600 | 4,279 | 4,879 | ||||||||||||||||||||
Policyholder benefits ceded | (80,833 | ) | (832 | ) | (81,665 | ) | (18,380 | ) | (1,073 | ) | (19,453 | ) | (18,948 | ) | (1,717 | ) | (20,665 | ) | |||||||||||
Net policyholder benefits | $ | 258 | $ | 15,683 | $ | 15,941 | $ | 151 | $ | 21,130 | $ | 21,281 | $ | 561 | $ | 19,056 | $ | 19,617 | |||||||||||
The Company utilizes ceded reinsurance for loss protection and capital management, business dispositions, client risk and profit sharing. | |||||||||||||||||||||||||||||
Loss Protection and Capital Management | |||||||||||||||||||||||||||||
As part of the Company’s overall risk and capacity management strategy, the Company purchases reinsurance for certain risks underwritten by the Company, including significant individual risks. Under indemnity reinsurance transactions in which the Company is the ceding insurer, the Company remains liable for policy claims if the assuming company fails to meet its obligations. To mitigate this risk, the Company has control procedures to evaluate the financial condition of reinsurers and to monitor the concentration of credit risk. The selection of reinsurance companies is based on criteria related to solvency and reliability and, to a lesser degree, diversification. | |||||||||||||||||||||||||||||
Business Divestitures | |||||||||||||||||||||||||||||
The Company has used reinsurance to exit certain businesses, such as the disposals of FFG and LTC. Reinsurance was used in these cases to facilitate the transactions because the businesses shared legal entities with operating segments that the Company retained. Assets supporting liabilities ceded relating to these businesses are held mainly in trusts for LTC and the separate accounts relating to FFG are still reflected in the Company’s balance sheet. | |||||||||||||||||||||||||||||
If the reinsurers became insolvent, we would be exposed to the risk that the assets in the trusts and/or the separate accounts would be insufficient to support the liabilities that would revert back to us. The reinsurance recoverable from The Hartford was $4,671 and $4,341 as of December 31, 2014 and 2013, respectively. The reinsurance recoverable from John Hancock was $238,637 and $165,861 as of December 31, 2014 and 2013, respectively. | |||||||||||||||||||||||||||||
The reinsurance agreement associated with the FFG sale also stipulates that The Hartford contribute funds to increase the value of the separate account assets relating to Modified Guaranteed Annuity business sold if such value declines below the value of the associated liabilities. If The Hartford fails to fulfill these obligations, the Company will be obligated to make these payments. | |||||||||||||||||||||||||||||
In addition, the Company would be responsible for administering this business in the event of reinsurer insolvency. We do not currently have the administrative systems and capabilities to process this business. Accordingly, we would need to obtain those capabilities in the event of an insolvency of one or more of the reinsurers of these businesses. We might be forced to obtain such capabilities on unfavorable terms with a resulting material adverse effect on our results of operations and financial condition. | |||||||||||||||||||||||||||||
As of December 31, 2014, we were not aware of any regulatory actions taken with respect to the solvency of the insurance subsidiaries of The Hartford or John Hancock that reinsure the FFG and LTC businesses and the Company has not been obligated to fulfill any of such reinsurers’ obligations. | |||||||||||||||||||||||||||||
John Hancock and The Hartford have paid their obligations when due and there have been no disputes. | |||||||||||||||||||||||||||||
Reserves
Reserves | 12 Months Ended | |||||||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||||||
Reserves | ||||||||||||||||||||||||||
Reserves | 10. Reserves | |||||||||||||||||||||||||
The following table provides reserve information of the Company’s major product lines at the dates shown: | ||||||||||||||||||||||||||
December 31, 2014 | December 31, 2013 | |||||||||||||||||||||||||
Claims and Benefits Payable | Claims and Benefits Payable | |||||||||||||||||||||||||
Future | Unearned | Case | Incurred | Future Policy | Unearned | Case | Incurred | |||||||||||||||||||
Policy | Premiums | Reserves | But Not | Benefits and | Premiums | Reserves | But Not | |||||||||||||||||||
Benefits and | Reported | Expenses | Reported | |||||||||||||||||||||||
Expenses | Reserves | Reserves | ||||||||||||||||||||||||
Long Duration Contracts: | ||||||||||||||||||||||||||
Universal life and other products no longer offered | $ | 672 | $ | 2 | $ | 633 | $ | 1 | $ | 668 | $ | 2 | $ | 635 | $ | 1 | ||||||||||
FFG, LTC and other disposed businesses | 207,348 | 3,854 | 29,099 | 3,003 | 142,337 | 2,646 | 23,117 | 2,102 | ||||||||||||||||||
Other | 2,958 | 12 | 131 | 38 | 3,036 | 13 | 178 | 40 | ||||||||||||||||||
Short Duration Contracts: | ||||||||||||||||||||||||||
Group term life | 0 | 51 | 7,176 | 503 | 0 | 37 | 7,733 | 692 | ||||||||||||||||||
Group disability | 0 | 134 | 63,087 | 3,007 | 0 | 103 | 69,823 | 3,612 | ||||||||||||||||||
Medical | 0 | 2 | 672 | 23 | 0 | 2 | 1,007 | 33 | ||||||||||||||||||
Dental | 0 | 175 | 34 | 368 | 0 | 134 | 43 | 465 | ||||||||||||||||||
Credit life and disability | 0 | 48 | 148 | 499 | 0 | 58 | 333 | 724 | ||||||||||||||||||
Other | 0 | 3 | 0 | 4 | 0 | 1 | 0 | 6 | ||||||||||||||||||
Total | $ | 210,978 | $ | 4,281 | $ | 100,980 | $ | 7,446 | $ | 146,041 | $ | 2,996 | $ | 102,869 | $ | 7,675 | ||||||||||
The following table provides a roll forward of the Company’s product lines with the most significant short duration claims and benefits payable balances: group term life and group disability lines of business. Claims and benefits payable is comprised of case and IBNR reserves. | ||||||||||||||||||||||||||
Group Term Life | Group Disability | |||||||||||||||||||||||||
Balance as of December 31, 2011, gross of reinsurance | $ | 11,404 | $ | 88,945 | ||||||||||||||||||||||
Less: Reinsurance ceded and other (1) | (391 | ) | (4,660 | ) | ||||||||||||||||||||||
Balance as of January 1, 2012, net of reinsurance | 11,013 | 84,285 | ||||||||||||||||||||||||
Incurred losses related to: | ||||||||||||||||||||||||||
Current year | 2,366 | 7,275 | ||||||||||||||||||||||||
Prior year’s interest | 418 | 3,806 | ||||||||||||||||||||||||
Prior year(s) | (866 | ) | (1,670 | ) | ||||||||||||||||||||||
Total incurred losses | 1,918 | 9,411 | ||||||||||||||||||||||||
Paid losses related to: | ||||||||||||||||||||||||||
Current year | 1,486 | 1,200 | ||||||||||||||||||||||||
Prior year(s) | 2,587 | 17,505 | ||||||||||||||||||||||||
Total paid losses | 4,073 | 18,705 | ||||||||||||||||||||||||
Balance as of December 31, 2012, net of reinsurance | 8,858 | 74,991 | ||||||||||||||||||||||||
Plus: Reinsurance ceded and other (1) | 173 | 4,670 | ||||||||||||||||||||||||
Balance as of December 31, 2012, gross of reinsurance | $ | 9,031 | $ | 79,661 | ||||||||||||||||||||||
Less: Reinsurance ceded and other (1) | (173 | ) | (4,670 | ) | ||||||||||||||||||||||
Balance as of January 1, 2013, net of reinsurance | 8,858 | 74,991 | ||||||||||||||||||||||||
Incurred losses related to: | ||||||||||||||||||||||||||
Current year | 1,976 | 8,438 | ||||||||||||||||||||||||
Prior year’s interest | 385 | 3,450 | ||||||||||||||||||||||||
Prior year(s) | (621 | ) | 20 | |||||||||||||||||||||||
Total incurred losses | 1,740 | 11,908 | ||||||||||||||||||||||||
Paid losses related to: | ||||||||||||||||||||||||||
Current year | 1,133 | 1,467 | ||||||||||||||||||||||||
Prior year(s) | 1,190 | 16,344 | ||||||||||||||||||||||||
Total paid losses | 2,323 | 17,811 | ||||||||||||||||||||||||
Balance as of December 31, 2013, net of reinsurance | 8,275 | 69,088 | ||||||||||||||||||||||||
Plus: Reinsurance ceded and other (1) | 150 | 4,347 | ||||||||||||||||||||||||
Balance as of December 31, 2013, gross of reinsurance | $ | 8,425 | $ | 73,435 | ||||||||||||||||||||||
Less: Reinsurance ceded and other (1) | (150 | ) | (4,347 | ) | ||||||||||||||||||||||
Balance as of January 1, 2014, net of reinsurance | 8,275 | 69,088 | ||||||||||||||||||||||||
Incurred losses related to: | ||||||||||||||||||||||||||
Current year | 1,977 | 7,014 | ||||||||||||||||||||||||
Prior year’s interest | 361 | 3,047 | ||||||||||||||||||||||||
Prior year(s) | (323 | ) | (1,765 | ) | ||||||||||||||||||||||
Total incurred losses | 2,015 | 8,296 | ||||||||||||||||||||||||
Paid losses related to: | ||||||||||||||||||||||||||
Current year | 1,484 | 1,761 | ||||||||||||||||||||||||
Prior year(s) | 1,258 | 13,857 | ||||||||||||||||||||||||
Total paid losses | 2,742 | 15,618 | ||||||||||||||||||||||||
Balance as of December 31, 2014, net of reinsurance | 7,548 | 61,766 | ||||||||||||||||||||||||
Plus: Reinsurance ceded and other (1) | 131 | 4,328 | ||||||||||||||||||||||||
Balance as of December 31, 2014, gross of reinsurance | $ | 7,679 | $ | 66,094 | ||||||||||||||||||||||
-1 | Reinsurance ceded and other includes claims and benefits payable balances that have either been (a) reinsured to third parties, (b) established for claims related expenses whose subsequent payment is not recorded as a paid claim, or (c) reserves established for obligations that would persist even if contracts were cancelled (such as extension of benefits), which cannot be analyzed appropriately under a roll-forward approach. | |||||||||||||||||||||||||
Short Duration Contracts | ||||||||||||||||||||||||||
The Company’s short duration contracts are comprised of group term life, group disability, medical, dental, and credit life and disability. The principal products and services included in these categories are described in the summary of significant accounting policies. See Note 2 for further information. | ||||||||||||||||||||||||||
Case and IBNR reserves are developed using actuarial principles and assumptions that consider, among other things, contractual requirements, historical utilization trends and payment patterns, benefit changes, medical inflation, seasonality, membership, product mix, legislative and regulatory environment, economic factors, disabled life mortality and claim termination rates and other relevant factors. The Company consistently applies the principles and assumptions listed above from year to year, while also giving due consideration to the potential variability of these factors. | ||||||||||||||||||||||||||
Since case and IBNR reserves include estimates developed from various actuarial methods, the Company’s actual losses incurred may be more or less than the Company’s previously developed estimates. As shown in the table above, if the amounts listed on the line labeled “Incurred losses related to: Prior years” are negative (redundant) this means that the Company’s actual losses incurred related to prior years for these lines were less than the estimates previously made by the Company. If the line labeled “Incurred losses related to: Prior years” are positive (deficient) this means that the Company’s actual losses incurred related to prior years for these lines were greater than the estimates previously made by the Company. | ||||||||||||||||||||||||||
Group term life case and IBNR reserve redundancies in all years are due to actual mortality rates running below those assumed in prior year reserves, and actual recovery rates running higher than those assumed in prior year reserves. | ||||||||||||||||||||||||||
Group disability case and IBNR reserves show redundancies in 2014 and 2012 due to actual claim recovery rates exceeding those assumed in prior year reserves. However, case and IBNR reserves show a small deficiency in 2013 due to actual claim recovery rates being less than those assumed in prior year reserves. The relatively small size of the block can lead to volatile results year over year. | ||||||||||||||||||||||||||
The Company’s group disability products include short and long-term disability coverage. Case and IBNR reserves for long-term disability claims have been discounted at 5.25% for claims incurred in 2010 and prior years, and between 4.25% and 4.75% for claims incurred after 2010. The amount of discounts deducted from outstanding reserves as of December 31, 2014 and 2013 are $18,195 and $21,348, respectively. | ||||||||||||||||||||||||||
Long Duration Contracts | ||||||||||||||||||||||||||
The Company’s long duration contracts are primarily comprised of life insurance policies (no longer offered), and FFG and LTC disposed businesses. The principal products and services included in these categories are described in the summary of significant accounting policies. See Note 2 for further information. | ||||||||||||||||||||||||||
FFG and LTC | ||||||||||||||||||||||||||
Reserves for business previously disposed of by FFG and LTC are included in the Company’s reserves in accordance with the insurance guidance. The Company maintains an offsetting reinsurance recoverable related to these reserves. See Note 9 for further information. | ||||||||||||||||||||||||||
The Company recorded an out-of-period adjustment in 2012 in the amount of $411 ($267, net of tax) to properly reflect our reserves. The Company did not consider the adjustment to be material to the 2012 or prior year financial statements. | ||||||||||||||||||||||||||
Retirement_and_Other_Employee_
Retirement and Other Employee Benefits | 12 Months Ended |
Dec. 31, 2014 | |
Retirement and Other Employee Benefits | |
Retirement and Other Employee Benefits | 11.Retirement and Other Employee Benefits |
The Parent sponsors a non-contributory, qualified defined benefit pension plan and certain non-contributory, non-qualified post retirement benefits covering employees who meet eligibility requirements as to age and length of service. Plan assets of the qualified defined benefit plan are not specifically identified by each participating subsidiary. Therefore, a breakdown of plan assets is not reflected in these financial statements. The Company has no legal obligation for benefits under these plans. The benefits are based on years of service and career compensation. The Parent’s pension plan funding policy is to contribute amounts to the plan sufficient to meet the minimum funding requirements set forth in the Employee Retirement Income Security Act of 1974, plus additional amounts as the Parent may determine to be appropriate from time to time up to the maximum permitted, and to charge each subsidiary an allocable amount based on its employee pensionable earnings. Pension costs allocated to the Company amounted to $72, $339 and $297 for 2014, 2013 and 2012, respectively. | |
As of January 1, 2014, the Parent’s Pension and Executive Pension Plans are no longer offered to new hires. Current employees will not be affected and will continue to accrue benefits under the Parent’s Pension and Executive Pension Plans. Employees who are currently eligible, but not yet participating in the Parent’s Pension and Executive Pension Plans, will remain eligible to participate in the future once they meet the Parent’s Pension and Executive Pension Plans’ requirements. | |
The Parent sponsors a defined contribution plan covering substantially all employees. The defined contribution plan provides benefits payable to participants on retirement or disability and to beneficiaries of participants in the event of the participant’s death. The amounts expensed by the Company related to this plan were $16, $41 and $72 in 2014, 2013 and 2012, respectively. | |
With respect to retirement benefits, the Company participates in other health care and life insurance benefit plans (postretirement benefits) for retired employees, sponsored by the Parent. On July 1, 2011, the Parent terminated certain health care benefits for employees who do not qualify for “grandfathered” status and will no longer offer these benefits to new hires. The Parent contribution, plan design and other terms of remaining benefits will not change for those grandfathered employees. The Parent has the right to modify or terminate these benefits. During 2014, 2013 and 2012 the Company incurred expenses related to postretirement benefits of $3, $13 and $13, respectively. | |
Accumulated_Other_Comprehensiv
Accumulated Other Comprehensive Income | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Accumulated Other Comprehensive Income. | |||||||||||||
Accumulated Other Comprehensive Income | 12.Accumulated Other Comprehensive Income | ||||||||||||
Certain amounts included in the statement of comprehensive income are net of reclassification adjustments. The following tables summarize those reclassification adjustments (net of taxes): | |||||||||||||
Year Ended December 31, 2014 | |||||||||||||
Unrealized gains | OTTI | Accumulated other | |||||||||||
on securities | comprehensive income | ||||||||||||
Balance at December 31, 2013 | $ | 5,950 | $ | 263 | $ | 6,213 | |||||||
Other comprehensive income before reclassifications | 1,802 | 50 | 1,852 | ||||||||||
Amounts reclassified from accumulated other comprehensive income | 196 | 0 | 196 | ||||||||||
Net current-period other comprehensive income | 1,998 | 50 | 2,048 | ||||||||||
Balance at December 31, 2014 | $ | 7,948 | $ | 313 | $ | 8,261 | |||||||
Year Ended December 31, 2013 | |||||||||||||
Unrealized gains | OTTI | Accumulated other | |||||||||||
on securities | comprehensive income | ||||||||||||
Balance at December 31, 2012 | $ | 10,495 | $ | 110 | $ | 10,605 | |||||||
Other comprehensive loss before reclassifications | (4,840 | ) | (43 | ) | (4,883 | ) | |||||||
Amounts reclassified from accumulated other comprehensive income | 295 | 196 | 491 | ||||||||||
Net current-period other comprehensive (loss) income | (4,545 | ) | 153 | (4,392 | ) | ||||||||
Balance at December 31, 2013 | $ | 5,950 | $ | 263 | $ | 6,213 | |||||||
Year Ended December 31, 2012 | |||||||||||||
Unrealized gains | OTTI | Accumulated other | |||||||||||
on securities | comprehensive income | ||||||||||||
Balance at December 31, 2011 | $ | 7,922 | $ | 93 | $ | 8,015 | |||||||
Other comprehensive income before reclassifications | 2,344 | 17 | 2,361 | ||||||||||
Amounts reclassified from accumulated other comprehensive income | 229 | 0 | 229 | ||||||||||
Net current-period other comprehensive income | 2,573 | 17 | 2,590 | ||||||||||
Balance at December 31, 2012 | $ | 10,495 | $ | 110 | $ | 10,605 | |||||||
The following tables summarize the reclassifications out of accumulated other comprehensive income: | |||||||||||||
Details about accumulated other | Amount reclassified from accumulated other | ||||||||||||
comprehensive income | |||||||||||||
comprehensive income | Years Ended December 31, | Affected line item in the statement | |||||||||||
components | 2014 | 2013 | 2012 | where net income is presented | |||||||||
Unrealized gains on securities | $ | 301 | $ | 454 | $ | 353 | Net realized gains on investments, excluding other-than-temporary impairment losses | ||||||
(105 | ) | (159 | ) | (124 | ) | Provision for income taxes | |||||||
$ | 196 | $ | 295 | $ | 229 | Net of tax | |||||||
OTTI | $ | 0 | $ | 301 | $ | 0 | Portion of net loss recognized in other comprehensive income, before taxes | ||||||
0 | (105 | ) | 0 | Provision for income taxes | |||||||||
$ | 0 | $ | 196 | $ | 0 | Net of Tax | |||||||
Total reclassifications for the period | $ | 196 | $ | 491 | $ | 229 | Net of tax | ||||||
Related_Party_Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2014 | |
Related Party Transactions | |
Related Party Transactions | 13.Related Party Transactions |
The Company receives various services from the Parent and its affiliates. These services include assistance in benefit plan administration, corporate insurance, accounting, tax, auditing, investment, information technology, actuarial, property management and other administrative functions. The net fees paid for these services to the Parent and its affiliates for the years ended December 31, 2014, 2013 and 2012 were $6,497, $7,232 and $9,132, respectively. | |
Administrative expenses allocated for the Company may be greater or less than the expenses that would be incurred if the Company were operating as a separate company. | |
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2014 | |
Commitments and Contingencies | |
Commitments and Contingencies | 14.Commitments and Contingencies |
The Company is involved in litigation in the ordinary course of business, both as a defendant and as a plaintiff. The Company may from time to time be subject to a variety of legal and regulatory actions relating to the Company’s current and past business operations. | |
Although the Company cannot predict the outcome of any pending or future litigation, examination or investigation, it is possible that the outcome of such matters could have a material adverse effect on the Company’s results of operations or cash flows for an individual reporting period. However, based on currently available information, management does not believe that any pending matter is likely to have a material adverse effect, individually or in the aggregate, on the Company’s financial condition. | |
Schedule_ISummary_of_Investmen
Schedule I-Summary of Investments Other-Than-Investments in Related Parties | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Schedule I-Summary of Investments Other-Than-Investments in Related Parties | |||||||||||
Schedule I-Summary of Investments Other-Than-Investments in Related Parties | Schedule I—Summary of Investments Other —Than—Investments in Related Parties | ||||||||||
Cost or | Fair Value | Amount at | |||||||||
Amortized Cost | which | ||||||||||
shown in balance | |||||||||||
sheet | |||||||||||
(in thousands) | |||||||||||
Fixed maturity securities: | |||||||||||
United States Government and government agencies and authorities | $ | 608 | $ | 797 | $ | 797 | |||||
States, municipalities and political subdivisions | 26,614 | 28,918 | 28,918 | ||||||||
Foreign governments | 255 | 376 | 376 | ||||||||
Commercial mortgage-backed | 470 | 499 | 499 | ||||||||
Residential mortgage-backed | 6,653 | 7,701 | 7,701 | ||||||||
Corporate | 50,962 | 59,178 | 59,178 | ||||||||
Total fixed maturity securities | 85,562 | 97,469 | 97,469 | ||||||||
Equity securities: | |||||||||||
Non-redeemable preferred stocks | 7,333 | 7,968 | 7,968 | ||||||||
Commercial mortgage loans on real estate, at amortized cost | 19,772 | 22,366 | 19,772 | ||||||||
Policy loans | 217 | 217 | 217 | ||||||||
Short-term investments | 7,202 | 7,202 | 7,202 | ||||||||
Other investments | 172 | 172 | 172 | ||||||||
Total investments | $ | 120,258 | $ | 135,394 | $ | 132,800 | |||||
Schedule_IIISupplementary_Insu
Schedule III-Supplementary Insurance Information | 12 Months Ended | ||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||
Schedule III-Supplementary Insurance Information | |||||||||||||||||||||||
Schedule III-Supplementary Insurance Information | |||||||||||||||||||||||
Schedule III—Supplementary Insurance Information | |||||||||||||||||||||||
Future | Unearned | Claims and | Premium | Net | Benefits | Other* | |||||||||||||||||
policy | premiums | benefits | revenue | investment | claims, losses | operating | |||||||||||||||||
benefits and | payable | income | and | expenses | |||||||||||||||||||
expenses | settlement | ||||||||||||||||||||||
expenses | |||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
2014 | $ | 210,978 | $ | 4,281 | $ | 108,426 | $ | 23,702 | $ | 6,834 | $ | 15,941 | $ | 7,755 | |||||||||
2013 | $ | 146,041 | $ | 2,996 | $ | 110,544 | $ | 27,343 | $ | 7,000 | $ | 21,281 | $ | 9,935 | |||||||||
2012 | $ | 136,447 | $ | 3,256 | $ | 116,068 | $ | 30,077 | $ | 7,561 | $ | 19,617 | $ | 12,454 | |||||||||
* Includes underwriting, general and administrative expenses. | |||||||||||||||||||||||
Schedule_IVReinsurance
Schedule IV-Reinsurance | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Schedule IV-Reinsurance | ||||||||||||||||
Schedule IV-Reinsurance | ||||||||||||||||
Union Security Life Insurance Company of New York | ||||||||||||||||
for the year ended December 31, 2014 | ||||||||||||||||
Schedule IV - Reinsurance | ||||||||||||||||
Direct amount | Ceded to other | Assumed | Net amount | Percentage of | ||||||||||||
companies | from other | amount | ||||||||||||||
companies | assumed to net | |||||||||||||||
Life Insurance in Force | $ | 907,453 | $ | 132,724 | $ | 0 | $ | 774,729 | 0.0 | % | ||||||
Premiums: | ||||||||||||||||
Life insurance | $ | 4,715 | $ | 1,064 | $ | 0 | $ | 3,651 | 0.0 | % | ||||||
Accident and health insurance | 22,529 | 8,231 | 5,753 | 20,051 | 28.7 | % | ||||||||||
Total earned premiums | $ | 27,244 | $ | 9,295 | $ | 5,753 | $ | 23,702 | 24.3 | % | ||||||
Benefits: | ||||||||||||||||
Life insurance | $ | 3,775 | $ | 1,462 | $ | 0 | $ | 2,313 | 0.0 | % | ||||||
Accident and health insurance | 89,662 | 80,203 | 4,169 | 13,628 | 30.6 | % | ||||||||||
Total policyholder benefits | $ | 93,437 | $ | 81,665 | $ | 4,169 | $ | 15,941 | 26.1 | % | ||||||
Union Security Life Insurance Company of New York | ||||||||||||||||
for the year ended December 31, 2013 | ||||||||||||||||
Schedule IV - Reinsurance | ||||||||||||||||
Direct amount | Ceded to other | Assumed from | Net amount | Percentage of | ||||||||||||
companies | other | amount | ||||||||||||||
companies | assumed to net | |||||||||||||||
Life Insurance in Force | $ | 1,305,072 | $ | 144,288 | $ | 0 | $ | 1,160,784 | 0.0 | % | ||||||
Premiums: | ||||||||||||||||
Life insurance | $ | 6,088 | 1,616 | 0 | 4,472 | 0.0 | % | |||||||||
Accident and health insurance | 26,549 | 10,009 | 6,331 | 22,871 | 27.7 | % | ||||||||||
Total earned premiums | $ | 32,637 | $ | 11,625 | $ | 6,331 | $ | 27,343 | 23.2 | % | ||||||
Benefits: | ||||||||||||||||
Life insurance | $ | 4,617 | $ | 2,226 | $ | 0 | $ | 2,391 | 0.0 | % | ||||||
Accident and health insurance | 27,944 | 17,227 | 8,173 | 18,890 | 43.3 | % | ||||||||||
Total policyholder benefits | $ | 32,561 | $ | 19,453 | $ | 8,173 | $ | 21,281 | 38.4 | % | ||||||
Union Security Life Insurance Company of New York | ||||||||||||||||
for the year ended December 31, 2012 | ||||||||||||||||
Schedule IV — Reinsurance | ||||||||||||||||
Direct amount | Ceded to other | Assumed from | Net amount | Percentage of | ||||||||||||
companies | other | amount | ||||||||||||||
companies | assumed to net | |||||||||||||||
Life Insurance in Force | $ | 1,527,165 | $ | 157,762 | $ | 0 | $ | 1,369,403 | 0.0 | % | ||||||
Premiums: | ||||||||||||||||
Life insurance | $ | 5,908 | $ | 961 | $ | 0 | $ | 4,947 | 0.0 | % | ||||||
Accident and health insurance | 28,874 | 10,551 | 6,807 | 25,130 | 27.1 | % | ||||||||||
Total earned premiums | $ | 34,782 | $ | 11,512 | $ | 6,807 | $ | 30,077 | 22.6 | % | ||||||
Benefits: | ||||||||||||||||
Life insurance | $ | 4,217 | $ | 1,653 | $ | 0 | $ | 2,564 | 0.0 | % | ||||||
Accident and health insurance | 31,186 | 19,012 | 4,879 | 17,053 | 28.6 | % | ||||||||||
Total policyholder benefits | $ | 35,403 | $ | 20,665 | $ | 4,879 | $ | 19,617 | 24.9 | % | ||||||
Schedule_VValuation_and_Qualif
Schedule V-Valuation and Qualifying Accounts | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Schedule V-Valuation and Qualifying Accounts | |||||||||||||||||
Schedule V-Valuation and Qualifying Accounts | |||||||||||||||||
Schedule V —Valuation and Qualifying Accounts | |||||||||||||||||
Additions | |||||||||||||||||
Balance at | Charged to | Charged | Deductions | Balance at | |||||||||||||
Beginning of | Costs and | to Other | End of | ||||||||||||||
Year | Expenses | Accounts | Year | ||||||||||||||
2014:00:00 | |||||||||||||||||
Valuation allowance for mortgage loans on real estate | 398 | (12 | ) | 0 | 0 | 386 | |||||||||||
Total | $ | 398 | $ | (12 | ) | $ | 0 | $ | 0 | $ | 386 | ||||||
2013:00:00 | |||||||||||||||||
Valuation allowance for mortgage loans on real estate | 512 | (114 | ) | 0 | 0 | 398 | |||||||||||
Total | $ | 512 | $ | (114 | ) | $ | 0 | $ | 0 | $ | 398 | ||||||
2012:00:00 | |||||||||||||||||
Valuation allowance for mortgage loans on real estate | 512 | 0 | 0 | 0 | 512 | ||||||||||||
Total | $ | 512 | $ | 0 | $ | 0 | $ | 0 | $ | 512 | |||||||
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | |
Basis of Presentation | |
The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Amounts are presented in United States of America (“U.S.”) dollars and all amounts are in thousands, except for number of shares, per share amounts and number of securities in an unrealized loss position. | |
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 reported amounts of assets and liabilities. The items on the Company’s balance sheets affected by the use of estimates include but are not limited to, investments, premiums and accounts receivable, reinsurance recoverables, deferred acquisition costs (“DAC”), deferred income taxes and associated valuation allowances, goodwill, future policy benefits and expenses, unearned premiums, claims and benefits payable, deferred gain on disposal of businesses, and commitments and contingencies. The estimates are sensitive to market conditions, investment yields, mortality, morbidity, commissions and other acquisition expenses, policyholder behavior and other factors. Actual results could differ from the estimates recorded. The Company believes all amounts reported are reasonable and adequate. | |
Comprehensive Income (Loss) | Comprehensive Income (Loss) |
Comprehensive income (loss) is comprised of net income, net unrealized gains and losses on securities classified as available for sale and net unrealized gains and losses on other-than-temporarily impaired securities, less deferred income taxes. | |
Reclassifications | Reclassifications |
Certain prior period amounts have been reclassified to conform to the 2014 presentation. | |
Fair Value | Fair Value |
The Company uses an exit price for its fair value measurements. An exit price is defined as the amount received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In measuring fair value, the Company gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. See Note 4 for further information. | |
Investments | Investments |
Fixed maturity and equity securities are classified as available for sale, as defined in the investments guidance, and reported at fair value. If the fair value is higher than the amortized cost for fixed maturity securities or the purchase cost for equity securities, the excess is an unrealized gain; and, if lower than cost, the difference is an unrealized loss. Net unrealized gains and losses on securities classified as available for sale, less deferred income taxes, are included in accumulated other comprehensive income (“AOCI”). | |
Commercial mortgage loans on real estate are reported at unpaid balances, adjusted for amortization of premium or discount, less allowance for losses. The allowance is based on management’s analysis of factors including actual loan loss experience, specific events based on geographical, political or economic conditions, industry experience, loan groupings that have probable and estimable losses and individually impaired loan loss analysis. A loan is considered individually impaired when it becomes probable the Company will be unable to collect all amounts due, including principal and interest, according to the contractual terms of the loan agreement. Indicative factors of impairment include, but are not limited to, whether the loan is current, the value of the collateral and the financial position of the borrower. If a loan is individually impaired, the Company uses one of the following valuation methods based on the individual loan’s facts and circumstances to measure the impairment amount: (1) the present value of expected future cash flows, (2) the loan’s observable market price, or (3) the fair value of collateral. Changes in the allowance for loan losses are recorded in net realized losses on investments, excluding other-than-temporary impairment (“OTTI”) losses. | |
The Company places loans on non-accrual status after 90 days of delinquent payments (unless the loans are both well secured and in the process of collection). A loan may be placed on non-accrual status before this time if information is available that suggests its impairment is probable. | |
Policy loans are reported at unpaid principal balances, which do not exceed the cash surrender value of the underlying policies. | |
Short-term investments include money market funds and short maturity investments. These amounts are reported at cost, which approximates fair value. | |
Other investments consist primarily of investments in Certified Capital Companies (“CAPCOs”). The Company’s CAPCOs consist of debt instruments that are recorded at amortized cost, which approximates fair value. | |
The Company monitors its investment portfolio to identify investments that may be other-than-temporarily impaired. In addition, securities, aggregated by issuer, whose market price is equal to 80% or less of their original purchase price or which had a discrete credit event resulting in the debtor defaulting or seeking bankruptcy protection are added to a potential write-down list, which is discussed at quarterly meetings attended by members of the Company’s investment, accounting and finance departments. See Note 3 for further information. | |
Realized gains and losses on sales of investments are recognized on the specific identification basis. | |
Investment income is recorded as earned and reported net of investment expenses. The Company uses the interest method to recognize interest income on its commercial mortgage loans. | |
The Company anticipates prepayments of principal in the calculation of the effective yield for mortgage-backed securities and structured securities. The retrospective method is used to adjust the effective yield. | |
Cash and Cash Equivalents | Cash and Cash Equivalents |
The Company considers cash on hand, all operating cash and working capital cash to be cash equivalents. These amounts are carried at cost, which approximates fair value. Cash balances are reviewed at the end of each reporting period to determine if negative cash balances exist. If negative cash balances do exist, the cash accounts are netted with other positive cash accounts of the same bank provided the right of offset exists between the accounts. If the right of offset does not exist, the negative cash balances are reclassified to accounts payable. | |
Uncollectible Receivable Balance | Uncollectible Receivable Balance |
The Company maintains allowances for doubtful accounts for probable losses resulting from the inability to collect payments. | |
Reinsurance | Reinsurance |
Reinsurance recoverables include amounts related to paid benefits and estimated amounts related to unpaid policy and contract claims, future policyholder benefits and policyholder contract deposits. The cost of reinsurance is recognized over the terms of the underlying reinsured policies using assumptions consistent with those used to account for the policies. Amounts recoverable from reinsurers are estimated in a manner consistent with claim and claim adjustment expense reserves or future policy benefits reserves and are reported in the balance sheets. The cost of reinsurance related to long-duration contracts is recognized over the life of the underlying reinsured policies. The ceding of insurance does not discharge the Company’s primary liability to insureds, thus a credit exposure exists to the extent that any reinsurer is unable to meet the obligation assumed in the reinsurance agreements. To mitigate this exposure to reinsurance insolvencies, the Company evaluates the financial condition of its reinsurers and holds collateral (in the form of funds withheld, trusts, and letters of credit) as security under the reinsurance agreements. An allowance for doubtful accounts is recorded on the basis of periodic evaluations of balances due from reinsurers (net of collateral), reinsurer solvency, management’s experience and current economic conditions. | |
Funds withheld under reinsurance represent amounts contractually held from assuming companies in accordance with reinsurance agreements. | |
Reinsurance premiums assumed are calculated based upon payments received from ceding companies together with accrual estimates, which are based on both payments received and in force policy information received from ceding companies. Any subsequent differences arising on such estimates are recorded in the period in which they are determined. | |
Income Taxes | Income Taxes |
The Company reports its taxable income in a consolidated federal income tax return along with other affiliated subsidiaries of the Parent. Income tax expense or benefit is allocated among the affiliated subsidiaries by applying corporate income tax rates to taxable income or loss determined on a separate return basis according to a tax allocation agreement. Entities with losses record current tax benefits to the extent such losses are recognized in the consolidated federal tax return. | |
Current federal income taxes are recognized based upon amounts estimated to be payable or recoverable as a result of taxable operations for the current year. Deferred income taxes are recorded for temporary differences between the financial reporting basis and income tax basis of assets and liabilities, based on enacted tax laws and statutory tax rates applicable to the periods in which the Company expects the temporary differences to reverse. A valuation allowance is established for deferred tax assets when it is more likely than not that an amount will not be realized. | |
The Company classifies net interest expense related to tax matters and any applicable penalties as a component of income tax expense. | |
Other Assets | Other Assets |
Other assets primarily include prepaid items, goodwill, and deferred acquisition costs. Only direct incremental costs associated with the successful acquisition of new or renewal insurance contracts are deferred to the extent that such costs are deemed recoverable from future premiums or gross profits. | |
Goodwill represents the excess of acquisition costs over the net fair value of identifiable assets acquired and liabilities assumed in a business combination. Goodwill is deemed to have an indefinite life and is not amortized, but rather is tested at least annually for impairment. The Company reviews goodwill annually in the fourth quarter for impairment, or more frequently if indicators of impairment exist. The Company regularly assesses whether any indicators of impairment exist. Such indicators include, but are not limited to: significant adverse change in legal factors, adverse action or assessment by a regulator, unanticipated competition, loss of key personnel, or a significant decline in expected future cash flows due to changes in company-specific factors or the broader business climate. In the 2014 and 2013 annual goodwill tests, we concluded that the estimated fair value exceeded its respective book value and therefore goodwill was not impaired. | |
Amortization expense is included in underwriting, general and administrative expenses in the statement of operations. | |
Separate Accounts | Separate Accounts |
Assets and liabilities associated with separate accounts relate to considerations for variable annuity products for which the contract-holder, rather than the Company, bears the investment risk. Separate account assets (with matching liabilities) are reported at fair value. Revenues and expenses related to the separate account assets and liabilities, to the extent of benefits paid or provided to the separate account policyholders, are excluded from the amounts reported in the accompanying statements of operations because the accounts are administered by reinsurers. | |
Reserves | Reserves |
Reserves are established in accordance with GAAP, using generally accepted actuarial methods. Factors used in their calculation include experience derived from historical claim payments and actuarial assumptions. Such assumptions and other factors include trends, the incidence of incurred claims, the extent to which all claims have been reported, and internal claims processing charges. The process used in computing reserves cannot be exact, particularly for liability coverage, since actual claim costs are dependent upon such complex factors as inflation, changes in doctrines of legal liabilities and damage awards. The methods of making such estimates and establishing the related liabilities are periodically reviewed and updated. | |
Reserves do not represent an exact calculation of exposure, but instead represent our best estimates of what we expect the ultimate settlement and administration of a claim or group of claims will cost based on facts and circumstances known at the time of calculation. The adequacy of reserves may be impacted by future trends in claims severity, frequency, judicial theories of liability and other factors. These variables are affected by both external and internal events, including but not limited to: changes in the economic cycle, changes in the social perception of the value of work, emerging medical perceptions regarding physiological or psychological causes of disability, emerging health issues and new methods of treatment or accommodation, inflation, judicial trends, legislative changes and claims handling procedures. | |
Many of these items are not directly quantifiable. Reserve estimates are refined as experience develops. Adjustments to reserves, both positive and negative, are reflected in the statement of operations of the period in which such estimates are updated. Because establishment of reserves is an inherently uncertain process involving estimates of future losses, there can be no certainty that ultimate losses will not exceed existing claims reserves. Future loss development could require reserves to be increased, which could have a material adverse effect on our earnings in the periods in which such increases are made. However, based on information currently available, we believe our reserve estimates are adequate. | |
Long Duration Contracts | |
The Company’s long duration contracts primarily include traditional life insurance policies no longer offered and policies disposed of via reinsurance (FFG and LTC contracts). | |
Future policy benefits and expense reserves for LTC and the traditional life insurance contracts no longer offered, are equal to the present value of future benefits to policyholders plus related expenses less the present value of the future net premiums. These amounts are estimated based on assumptions as to the expected investment yield, inflation, mortality, morbidity and withdrawal rates as well as other assumptions that are based on the Company’s experience. These assumptions reflect anticipated trends and include provisions for possible unfavorable deviations. | |
Risks related to the reserves recorded for policies under FFG, LTC and life insurance no longer offered have been 100% ceded via reinsurance. While the Company has not been released from the contractual obligation to the policyholders, changes in and deviations from economic mortality, morbidity, and expense assumptions used in the calculation of these reserves will not directly affect our results of operations unless there is a default by the assuming reinsurer. | |
Changes in the estimated liabilities are reported as a charge or credit to policyholder benefits as the estimates are revised | |
Short Duration Contracts | |
The Company’s short duration contracts include group term life contracts, group disability contracts, medical contracts, dental contracts, vision contracts and credit life and disability contracts. For short duration contracts, claims and benefits payable reserves are recorded when insured events occur. The liability is based on the expected ultimate cost of settling the claims. The claims and benefits payable reserves include: (1) case reserves for known but unpaid claims as of the balance sheet date; (2) incurred but not reported (“IBNR”) reserves for claims where the insured event has occurred but has not been reported to the Company as of the balance sheet date; and (3) loss adjustment expense reserves for the expected handling costs of settling the claims. | |
For group disability, the case reserves and the IBNR reserves are recorded at an amount equal to the net present value of the expected future claims payments. Group long-term disability and group term life waiver of premiums reserves are discounted to the valuation date at the valuation interest rate. The valuation interest rate is reviewed quarterly by taking into consideration actual and expected earned rates on our asset portfolio. Group long-term disability and group term life reserve adequacy studies are performed annually, and morbidity and mortality assumptions are adjusted where appropriate. | |
Changes in the estimated liabilities are recorded as a charge or credit to policyholder benefits as estimates are revised. | |
Deferred Gain on Disposal of Businesses | Deferred Gain on Disposal of Businesses |
The Company recorded a deferred gain on disposal of businesses utilizing reinsurance. On March 1, 2000, the Company sold its LTC business using a coinsurance contract. On April 2, 2001, the Company sold its FFG business using coinsurance and a modified coinsurance contract. Since the form of sale did not discharge the Company’s primary liability to the insureds, the gain on these disposals was deferred and reported as a liability. The liability is decreased and recognized as revenue over the estimated life of the contracts’ terms. The Company reviews and evaluates the estimates affecting the deferred gain on disposal of businesses annually or when significant information affecting the estimates becomes known to the Company, and adjusts the revenue accordingly. Based on the Company’s 2014 annual review, the Company re-established $516 of the FFG deferred gain. There were no adjustments to the estimates affecting the deferred gain in 2013. | |
Premiums | Premiums |
Long Duration Contracts | |
Premiums for LTC insurance and life insurance contracts no longer offered are recognized as revenue when due from the policyholder. For investment-type annuity contracts within FFG, revenues consist of charges assessed against policy balances. For the FFG and LTC businesses previously sold and life insurance contracts no longer offered, all revenue is ceded. | |
Short Duration Contracts | |
The Company’s short duration contracts are those on which the Company recognizes revenue over the contract term in proportion to the amount of insurance protection provided. The Company’s short duration contracts primarily include group term life, group disability, dental, vision and credit life and disability. | |
Total Other-Than-Temporary Impairment Losses | Total Other-Than-Temporary Impairment Losses |
For debt securities with credit losses and non-credit losses or gains, total OTTI losses is the total of the decline in fair value from either the most recent OTTI determination or a prior period end in which the fair value declined until the current period end valuation date. This amount does not include any securities that had fair value increases. For equity securities and debt securities that the Company has the intent to sell or if it is more likely than not that it will be required to sell for equity securities that have an OTTI or for debt securities if there are only credit losses, total other-than-temporary impairment losses is the total amount by which the fair value of the security is less than its amortized cost basis at the period end valuation date and the decline in fair value is deemed to be other-than-temporary. | |
Fees and Other Income | Fees and Other Income |
The Company derives fees and other income from providing administrative services. These fees are recognized monthly when services are performed. | |
Underwriting, General and Administrative Expenses | Underwriting, General and Administrative Expenses |
Underwriting, general and administrative expenses consist primarily of commissions, premium taxes, licenses, fees, salaries and personnel benefits and other general operating expenses. | |
Leases | Leases |
The Company records expenses for operating leases on a straight-line basis over the lease term. | |
Contingencies | Contingencies |
The Company evaluates each contingent matter separately. A loss contingency is recorded if reasonably estimable and probable. The Company establishes reserves for these contingencies at the best estimate, or if no one estimated number within the range of possible losses is more probable than any other, the Company records an estimated reserve at the low end of the estimated range. Contingencies affecting the Company primarily relate to litigation matters which are inherently difficult to evaluate and are subject to significant changes. The Company believes the contingent amounts recorded are reasonable. | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements—Adopted |
On January 1, 2014, the Company adopted the new guidance on presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The amendments in this guidance state that an unrecognized tax benefit, or a portion thereof, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. An exception to this guidance would be where a net operating loss carryforward or similar tax loss or credit carryforward would not be available under the tax law to settle any additional income taxes that would result from the disallowance of a tax position, or the tax law does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose. In such a case, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The adoption of this new presentation guidance did not impact the Company’s financial position or results of operations. | |
On January 1, 2014, the Company adopted the other expenses guidance that addresses how health insurers should recognize and classify in their statements of operations fees mandated by the Affordable Care Act. The Affordable Care Act imposes an annual fee on health insurers for each calendar year beginning on or after January 1, 2014. The amendments specify that the liability for the fee should be estimated and recorded in full once the entity provides qualifying health insurance in the applicable calendar year in which the fee is payable with a corresponding deferred cost that is amortized to expense ratably over the calendar year during which it is payable. For the calendar year ended December 31, 2014, the Company ratably recorded $146 in underwriting, general and administrative expenses in the statements of operations, and paid, in full, the final assessment during the third quarter of 2014. | |
Recent Accounting Pronouncements — Not Yet Adopted | |
In May 2014, the Financial Accounting Standards Board (“FASB”) issued amended guidance on revenue recognition. The amended guidance affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. Insurance contracts are within the scope of other standards and therefore are specifically excluded from the scope of the amended revenue recognition guidance. The core principle of the amended guidance is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve the core principle, the entity applies a five step process outlined in the amended guidance. The amended guidance also includes a cohesive set of disclosure requirements. The amended guidance is effective for interim and annual periods beginning after December 15, 2016 and early adoption is not permitted. Therefore, the Company is required to adopt the guidance on January 1, 2017. An entity can choose to apply the amended guidance using either the full retrospective approach or a modified retrospective approach. The Company is currently evaluating the requirements of the revenue recognition guidance as it relates to its non-insurance contract revenue and the potential impact on the Company’s financial position and results of operations. | |
Investments_Tables
Investments (Tables) | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Investments | ||||||||||||||||||||
Schedule of cost or amortized cost, gross unrealized gains and losses, fair value and other-than-temporary impairment ("OTTI") of fixed maturity and equity securities | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Cost or | Gross | Gross | Fair | OTTI in | ||||||||||||||||
Amortized | Unrealized | Unrealized | Value | AOCI (a) | ||||||||||||||||
Cost | Gains | Losses | ||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||
United States Government and government agencies and authorities | $ | 608 | $ | 189 | $ | 0 | $ | 797 | $ | 0 | ||||||||||
States, municipalities and political subdivisions | 26,614 | 2,304 | 0 | 28,918 | 0 | |||||||||||||||
Foreign governments | 255 | 121 | 0 | 376 | 0 | |||||||||||||||
Commercial mortgage-backed | 470 | 29 | 0 | 499 | 0 | |||||||||||||||
Residential mortgage-backed | 6,653 | 1,059 | (11 | ) | 7,701 | 481 | ||||||||||||||
Corporate | 50,962 | 8,343 | (127 | ) | 59,178 | 0 | ||||||||||||||
Total fixed maturity securities | $ | 85,562 | $ | 12,045 | $ | (138 | ) | $ | 97,469 | $ | 481 | |||||||||
Equity securities: | ||||||||||||||||||||
Non-redeemable preferred stocks | $ | 7,333 | $ | 678 | $ | (43 | ) | $ | 7,968 | $ | 0 | |||||||||
December 31, 2013 | ||||||||||||||||||||
Cost or | Gross | Gross | Fair | OTTI in | ||||||||||||||||
Amortized | Unrealized | Unrealized | Value | AOCI (a) | ||||||||||||||||
Cost | Gains | Losses | ||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||
United States Government and government agencies and authorities | $ | 573 | $ | 164 | $ | 0 | $ | 737 | $ | 0 | ||||||||||
States, municipalities and political subdivisions | 26,026 | 2,396 | 0 | 28,422 | 0 | |||||||||||||||
Foreign governments | 255 | 83 | 0 | 338 | 0 | |||||||||||||||
Commercial mortgage-backed | 693 | 59 | 0 | 752 | 0 | |||||||||||||||
Residential mortgage-backed | 6,993 | 711 | (53 | ) | 7,651 | 404 | ||||||||||||||
Corporate | 60,446 | 6,182 | (449 | ) | 66,179 | 0 | ||||||||||||||
Total fixed maturity securities | $ | 94,986 | $ | 9,595 | $ | (502 | ) | $ | 104,079 | $ | 404 | |||||||||
Equity securities: | ||||||||||||||||||||
Non-redeemable preferred stocks | $ | 6,901 | $ | 470 | $ | (171 | ) | $ | 7,200 | $ | 0 | |||||||||
(a) | Represents the amount of OTTI recognized in accumulated other comprehensive income (“AOCI”). Amount includes unrealized gains and losses on impaired securities relating to changes in the value of such securities subsequent to the impairment measurement date. | |||||||||||||||||||
Schedule of cost or amortized cost and fair value of fixed maturity securities by contractual maturity | ||||||||||||||||||||
Cost or | Fair Value | |||||||||||||||||||
Amortized | ||||||||||||||||||||
Cost | ||||||||||||||||||||
Due in one year or less | $ | 2,550 | $ | 2,623 | ||||||||||||||||
Due after one year through five years | 14,379 | 15,839 | ||||||||||||||||||
Due after five years through ten years | 21,857 | 24,188 | ||||||||||||||||||
Due after ten years | 39,653 | 46,619 | ||||||||||||||||||
Total | 78,439 | 89,269 | ||||||||||||||||||
Commercial mortgage-backed | 470 | 499 | ||||||||||||||||||
Residential mortgage-backed | 6,653 | 7,701 | ||||||||||||||||||
Total | $ | 85,562 | $ | 97,469 | ||||||||||||||||
Schedule of major categories of net investment income | ||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||
Fixed maturity securities | $ | 4,892 | $ | 5,251 | $ | 5,735 | ||||||||||||||
Equity securities | 477 | 462 | 412 | |||||||||||||||||
Commercial mortgage loans on real estate | 1,681 | 1,496 | 1,604 | |||||||||||||||||
Policy loans | 12 | 16 | 13 | |||||||||||||||||
Other investments | 20 | 31 | 42 | |||||||||||||||||
Total investment income | 7,082 | 7,256 | 7,806 | |||||||||||||||||
Investment expenses | (248 | ) | (256 | ) | (245 | ) | ||||||||||||||
Net investment income | $ | 6,834 | $ | 7,000 | $ | 7,561 | ||||||||||||||
Summary of proceeds from sales of available-for-sale securities and the gross realized gains and gross realized losses | ||||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||
Proceeds from sales | $ | 6,303 | $ | 15,065 | $ | 8,748 | ||||||||||||||
Gross realized gains | 404 | 929 | 471 | |||||||||||||||||
Gross realized losses | 106 | 264 | 77 | |||||||||||||||||
Schedule of net realized gains (losses), including other-than-temporary impairments | ||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||
Net realized gains related to sales and other: | ||||||||||||||||||||
Fixed maturity securities | $ | 248 | $ | 430 | $ | 309 | ||||||||||||||
Equity securities | 3 | 295 | 62 | |||||||||||||||||
Commercial mortgage loans on real estate | 12 | 113 | 0 | |||||||||||||||||
Total net realized gains related to sales and other | 263 | 838 | 371 | |||||||||||||||||
Net realized losses related to other-than-temporary impairments: | ||||||||||||||||||||
Equity securities | 0 | 0 | (6 | ) | ||||||||||||||||
Total net realized losses related to other-than-temporary impairments | 0 | 0 | (6 | ) | ||||||||||||||||
Total net realized gains | $ | 263 | $ | 838 | $ | 365 | ||||||||||||||
Schedule of credit loss impairments on fixed maturity securities for which a portion of the OTTI loss was recognized in AOCI | ||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||
Balance, beginning of year | $ | 446 | $ | 1,496 | $ | 1,573 | ||||||||||||||
Reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security | (132 | ) | (11 | ) | (6 | ) | ||||||||||||||
Reductions for credit loss impairments previously recognized on securities which matured, paid down, prepaid or were sold during the period | 238 | (1,039 | ) | (71 | ) | |||||||||||||||
Balance, end of year | $ | 552 | $ | 446 | $ | 1,496 | ||||||||||||||
Schedule of gross unrealized losses on fixed maturity securities and equity securities | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Less than 12 months | 12 Months or More | Total | ||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||
Value | Losses | Value | Losses | Value | Losses | |||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||
Residential mortgage-backed | $ | 0 | $ | 0 | $ | 526 | $ | (11 | ) | $ | 526 | $ | (11 | ) | ||||||
Corporate | 683 | (39 | ) | 697 | (88 | ) | 1,380 | (127 | ) | |||||||||||
Total fixed maturity securities | $ | 683 | $ | (39 | ) | $ | 1,223 | $ | (99 | ) | $ | 1,906 | $ | (138 | ) | |||||
Equity securities: | ||||||||||||||||||||
Non-redeemable preferred stocks | $ | 615 | $ | (28 | ) | $ | 235 | $ | (15 | ) | $ | 850 | $ | (43 | ) | |||||
December 31, 2013 | ||||||||||||||||||||
Less than 12 months | 12 Months or More | Total | ||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||
Value | Losses | Value | Losses | Value | Losses | |||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||
Residential mortgage-backed | $ | 2,174 | $ | (29 | ) | $ | 520 | $ | (24 | ) | $ | 2,694 | $ | (53 | ) | |||||
Corporate | 7,394 | (426 | ) | 225 | (23 | ) | 7,619 | (449 | ) | |||||||||||
Total fixed maturity securities | $ | 9,568 | $ | (455 | ) | $ | 745 | $ | (47 | ) | $ | 10,313 | $ | (502 | ) | |||||
Equity securities: | ||||||||||||||||||||
Non-redeemable preferred stocks | $ | 2,966 | $ | (171 | ) | $ | 0 | $ | 0 | $ | 2,966 | $ | (171 | ) | ||||||
Schedule of cost or amortized cost and fair value of available-for-sale fixed maturity securities in an unrealized loss position | ||||||||||||||||||||
The cost or amortized cost and fair value of available for sale fixed maturity securities in an unrealized loss position at December 31, 2014, by contractual maturity, is shown below. | ||||||||||||||||||||
Cost or | Fair Value | |||||||||||||||||||
Amortized Cost | ||||||||||||||||||||
Due after one year through five years | $ | 224 | $ | 221 | ||||||||||||||||
Due after ten years | 1,283 | 1,159 | ||||||||||||||||||
Total | 1,507 | 1,380 | ||||||||||||||||||
Residential mortgage-backed | 537 | 526 | ||||||||||||||||||
Total | $ | 2,044 | $ | 1,906 | ||||||||||||||||
Summary of loan-to-value and average debt-service coverage ratios | December 31, 2014 | |||||||||||||||||||
Loan-to-Value | Carrying | % of | Debt- | |||||||||||||||||
Value | Gross | Service | ||||||||||||||||||
Mortgage | Coverage | |||||||||||||||||||
Loans | ratio | |||||||||||||||||||
70% and less | $ | 15,073 | 74.8 | % | 2.28 | |||||||||||||||
71 – 80% | 2,266 | 11.2 | % | 1.15 | ||||||||||||||||
81 – 95% | 2,819 | 14 | % | 1.15 | ||||||||||||||||
Gross commercial mortgage loans | 20,158 | 100 | % | 2 | ||||||||||||||||
Less valuation allowance | (386 | ) | ||||||||||||||||||
Net commercial mortgage loans | $ | 19,772 | ||||||||||||||||||
December 31, 2013 | ||||||||||||||||||||
Loan-to-Value | Carrying | % of | Debt- | |||||||||||||||||
Value | Gross | Service | ||||||||||||||||||
Mortgage | Coverage | |||||||||||||||||||
Loans | ratio | |||||||||||||||||||
70% and less | $ | 17,166 | 67.7 | % | 2.41 | |||||||||||||||
71 – 80% | 2,972 | 11.7 | % | 1.14 | ||||||||||||||||
81 – 95% | 5,219 | 20.6 | % | 1.16 | ||||||||||||||||
Gross commercial mortgage loans | 25,357 | 100 | % | 2.01 | ||||||||||||||||
Less valuation allowance | (398 | ) | ||||||||||||||||||
Net commercial mortgage loans | $ | 24,959 | ||||||||||||||||||
Fair_Value_Disclosures_Tables
Fair Value Disclosures (Tables) | 12 Months Ended | |||||||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||||||
Fair Value Disclosures | ||||||||||||||||||||||||||
Schedule of the Company's fair value hierarchy for assets and liabilities measured at fair value on a recurring basis | ||||||||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||
Financial Assets | ||||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||||
United States Government and government agencies and authorities | $ | 797 | $ | 0 | $ | 797 | $ | 0 | ||||||||||||||||||
State, municipalities and political subdivisions | 28,918 | 0 | 28,918 | 0 | ||||||||||||||||||||||
Foreign governments | 376 | 0 | 376 | 0 | ||||||||||||||||||||||
Commercial mortgage-backed | 499 | 0 | 499 | 0 | ||||||||||||||||||||||
Residential mortgage-backed | 7,701 | 0 | 7,701 | 0 | ||||||||||||||||||||||
Corporate | 59,178 | 0 | 57,970 | 1,208 | ||||||||||||||||||||||
Equity securities: | ||||||||||||||||||||||||||
Non-redeemable preferred stocks | 7,968 | 0 | 7,968 | 0 | ||||||||||||||||||||||
Short-term investments | 7,202 | 7,202 | (b) | 0 | 0 | |||||||||||||||||||||
Cash equivalents | 50 | 50 | (b) | 0 | 0 | |||||||||||||||||||||
Assets held in separate accounts | 11,930 | 8,028 | (a) | 3,902 | (c) | 0 | ||||||||||||||||||||
Total financial assets | $ | 124,619 | $ | 15,280 | $ | 108,131 | $ | 1,208 | ||||||||||||||||||
Financial Liabilities | ||||||||||||||||||||||||||
Liabilities related to separate accounts | $ | 11,930 | $ | 8,028 | (a) | $ | 3,902 | (c) | $ | 0 | ||||||||||||||||
December 31, 2013 | ||||||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||
Financial Assets | ||||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||||
United States Government and government agencies and authorities | $ | 737 | $ | 0 | $ | 737 | $ | 0 | ||||||||||||||||||
State, municipalities and political subdivisions | 28,422 | 0 | 27,321 | 1,101 | ||||||||||||||||||||||
Foreign governments | 338 | 0 | 338 | 0 | ||||||||||||||||||||||
Commercial mortgage-backed | 752 | 0 | 752 | 0 | ||||||||||||||||||||||
Residential mortgage-backed | 7,651 | 0 | 7,651 | 0 | ||||||||||||||||||||||
Corporate | 66,179 | 0 | 64,871 | 1,308 | ||||||||||||||||||||||
Equity securities: | ||||||||||||||||||||||||||
Non-redeemable preferred stocks | 7,200 | 0 | 7,200 | 0 | ||||||||||||||||||||||
Short-term investments | 1,911 | 1,911 | (b) | 0 | 0 | |||||||||||||||||||||
Cash equivalents | 610 | 610 | (b) | 0 | 0 | |||||||||||||||||||||
Assets held in separate accounts | 11,978 | 9,650 | (a) | 2,328 | (c) | 0 | ||||||||||||||||||||
Total financial assets | $ | 125,778 | $ | 12,171 | $ | 111,198 | $ | 2,409 | ||||||||||||||||||
Financial Liabilities | ||||||||||||||||||||||||||
Liabilities related to separate accounts | $ | 11,978 | $ | 9,650 | (a) | $ | 2,328 | (c) | $ | 0 | ||||||||||||||||
(a) | Mainly includes mutual funds. | |||||||||||||||||||||||||
(b) | Mainly includes money market funds. | |||||||||||||||||||||||||
(c) | Mainly includes fixed maturity securities. | |||||||||||||||||||||||||
Summary of the change in balance sheet carrying value associated with Level 3 financial assets carried at fair value | ||||||||||||||||||||||||||
Year Ended December 31, 2014 | ||||||||||||||||||||||||||
Balance, | Total losses | Net | Purchases | Sales | Transfers | Transfers | Balance, | |||||||||||||||||||
beginning | (realized/ | unrealized | in (3) | out (3) | end of | |||||||||||||||||||||
of period | unrealized) | gains | period | |||||||||||||||||||||||
included in | included in | |||||||||||||||||||||||||
earnings (1) | other | |||||||||||||||||||||||||
comprehensive | ||||||||||||||||||||||||||
income (2) | ||||||||||||||||||||||||||
Fixed Maturity Securities | ||||||||||||||||||||||||||
States, municipalities and political subdivisions | $ | 1,101 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | (1,101 | ) | $ | 0 | |||||||||
Corporate | 1,308 | (13 | ) | 13 | 232 | (332 | ) | 0 | 0 | 1,208 | ||||||||||||||||
Total level 3 assets | $ | 2,409 | $ | (13 | ) | $ | 13 | $ | 232 | $ | (332 | ) | $ | 0 | $ | (1,101 | ) | $ | 1,208 | |||||||
Year Ended December 31, 2013 | ||||||||||||||||||||||||||
Balance, | Total gains | Net | Purchases | Sales | Transfers | Transfers | Balance, | |||||||||||||||||||
beginning | (realized/ | unrealized | in (3) | out (3) | end of | |||||||||||||||||||||
of period | unrealized) | (losses) gains | period | |||||||||||||||||||||||
included in | included in | |||||||||||||||||||||||||
earnings (1) | other | |||||||||||||||||||||||||
comprehensive | ||||||||||||||||||||||||||
income (2) | ||||||||||||||||||||||||||
Fixed Maturity Securities | ||||||||||||||||||||||||||
States, municipalities and political subdivisions | $ | 0 | $ | 0 | $ | 81 | $ | 1,020 | $ | 0 | $ | 0 | $ | 0 | $ | 1,101 | ||||||||||
Corporate | 1,483 | 290 | (92 | ) | 0 | (412 | ) | 288 | (249 | ) | 1,308 | |||||||||||||||
Equity Securities | ||||||||||||||||||||||||||
Non-redeemable preferred stocks | 1 | 0 | 0 | 0 | 0 | 0 | (1 | ) | 0 | |||||||||||||||||
Total level 3 assets | $ | 1,484 | $ | 290 | $ | (11 | ) | $ | 1,020 | $ | (412 | ) | $ | 288 | $ | (250 | ) | $ | 2,409 | |||||||
-1 | Included as part of net realized gains on investments in the statement of operations. | |||||||||||||||||||||||||
-2 | Included as part of change in unrealized gains on securities in the statement of comprehensive income. | |||||||||||||||||||||||||
-3 | Transfers are primarily attributable to changes in the availability of observable market information and re-evaluation of the observability of pricing inputs. | |||||||||||||||||||||||||
Schedule of carrying value, fair value amount and hierarchy level of the financial instruments that are not recognized or are not carried at fair value | ||||||||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||||||||
Fair Value | ||||||||||||||||||||||||||
Carrying Value | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
Financial Assets | ||||||||||||||||||||||||||
Commercial mortgage loans on real estate | $ | 19,772 | $ | 22,366 | $ | 0 | $ | 0 | $ | 22,366 | ||||||||||||||||
Policy loans | 217 | 217 | 217 | 0 | 0 | |||||||||||||||||||||
Other investments | 172 | 172 | 0 | 0 | 172 | |||||||||||||||||||||
Total financial assets | $ | 20,161 | $ | 22,755 | $ | 217 | $ | 0 | $ | 22,538 | ||||||||||||||||
Financial Liabilities | ||||||||||||||||||||||||||
Policy reserves under investment products (Individual and group annuities, subject to discretionary withdrawal)(1) | $ | 4,487 | $ | 5,074 | $ | 0 | $ | 0 | $ | 5,074 | ||||||||||||||||
Funds withheld under reinsurance | 167 | 167 | 167 | 0 | 0 | |||||||||||||||||||||
Total financial liabilities | $ | 4,654 | $ | 5,241 | $ | 167 | $ | 0 | $ | 5,074 | ||||||||||||||||
December 31, 2013 | ||||||||||||||||||||||||||
Fair Value | ||||||||||||||||||||||||||
Carrying Value | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
Financial Assets | ||||||||||||||||||||||||||
Commercial mortgage loans on real estate | $ | 24,959 | $ | 27,981 | $ | 0 | $ | 0 | $ | 27,981 | ||||||||||||||||
Policy loans | 219 | 219 | 219 | 0 | 0 | |||||||||||||||||||||
Total financial assets | $ | 25,178 | $ | 28,200 | $ | 219 | $ | 0 | $ | 27,981 | ||||||||||||||||
Financial Liabilities | ||||||||||||||||||||||||||
Policy reserves under investment products (Individual and group annuities, subject to discretionary withdrawal)(1) | $ | 4,007 | $ | 4,261 | $ | 0 | $ | 0 | $ | 4,261 | ||||||||||||||||
Funds withheld under reinsurance | 159 | 159 | 159 | 0 | 0 | |||||||||||||||||||||
Total financial liabilities | $ | 4,166 | $ | 4,420 | $ | 159 | $ | 0 | $ | 4,261 | ||||||||||||||||
-1 | Only the fair value of the Company’s policy reserves for investment-type contracts (those without significant mortality or morbidity risk) are reflected in the table above. | |||||||||||||||||||||||||
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Income Taxes | |||||||||||
Schedule of Company's current and deferred federal tax expense (benefit) | |||||||||||
Years Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Current expense | $ | 378 | $ | 256 | $ | 1,842 | |||||
Deferred expense (benefit) | 1,474 | 673 | (203 | ) | |||||||
Total income tax expense | $ | 1,852 | $ | 929 | $ | 1,639 | |||||
Schedule of reconciliation of the federal income tax rate to the Company's effective income tax rate | |||||||||||
December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Federal income tax rate: | 35 | % | 35 | % | 35 | % | |||||
Reconciling items: | |||||||||||
Tax exempt interest | (8.0 | ) | (12.3 | ) | (8.9 | ) | |||||
Dividend received deduction | (1.4 | ) | (2.2 | ) | (1.5 | ) | |||||
Non deductible health insurer fee | 0.7 | 0 | 0 | ||||||||
Permanent nondeductible expenses | 0.1 | 0.1 | 0.2 | ||||||||
Other | 0 | 0 | 0.3 | ||||||||
Effective income tax rate: | 26.4 | % | 20.6 | % | 25.1 | % | |||||
Schedule of significant deferred tax assets and deferred tax liabilities | |||||||||||
December 31, | |||||||||||
2014 | 2013 | ||||||||||
Deferred Tax Assets | |||||||||||
Deferred gain on disposal of business | $ | 871 | $ | 791 | |||||||
Investments, net | 1,740 | 2,123 | |||||||||
Deferred acquisition costs | 1,059 | 1,013 | |||||||||
Employee and post-retirement benefits | 0 | 800 | |||||||||
Capital loss carryforward | 0 | 266 | |||||||||
Compensation related | 2 | 5 | |||||||||
Other | 4 | 4 | |||||||||
Total deferred tax asset | 3,676 | 5,002 | |||||||||
Deferred Tax Liabilities | |||||||||||
Policyholder and separate account reserves | (1,324 | ) | (1,542 | ) | |||||||
Net unrealized appreciation on securities | (4,390 | ) | (3,279 | ) | |||||||
Employee and post-retirement benefits | (375 | ) | 0 | ||||||||
Other | (37 | ) | (54 | ) | |||||||
Total deferred tax liability | (6,126 | ) | (4,875 | ) | |||||||
Net deferred income tax (liability) asset | $ | (2,450 | ) | $ | 127 | ||||||
Premiums_and_Accounts_Receivab1
Premiums and Accounts Receivable (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Premiums and Accounts Receivable | ||||||||
Schedule of receivables, net of an allowance for uncollectible items | As of December 31, | |||||||
2014 | 2013 | |||||||
Insurance premiums receivable | $ | 1,459 | $ | 1,508 | ||||
Other receivables | 220 | 200 | ||||||
Total (1) | $ | 1,679 | $ | 1,708 | ||||
-1 | For the years ended December 31, 2014 and 2013, the Company did not have any material allowances for uncollectible items. | |||||||
Statutory_Information_Tables
Statutory Information (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Statutory Information | |||||||||||||||||
Schedule of reconciliations of net income and stockholder's equity | |||||||||||||||||
Net Income | Shareholder’s Equity | ||||||||||||||||
2014 | 2013 | 2012 | 2014 | 2013 | |||||||||||||
Based on statutory accounting principles | $ | 5,590 | $ | 5,441 | $ | 5,518 | $ | 42,756 | $ | 40,900 | |||||||
Deferred acquisition costs | (97 | ) | (113 | ) | (15 | ) | 4 | 101 | |||||||||
Deferred and uncollected premiums | (40 | ) | 6 | 1 | 0 | 40 | |||||||||||
Policy and claim reserves | (850 | ) | (1,067 | ) | (914 | ) | 4,895 | 5,745 | |||||||||
Investment valuation difference | (62 | ) | 175 | (32 | ) | 12,127 | 9,037 | ||||||||||
Commissions and fees | 1 | 6 | 22 | 0 | (1 | ) | |||||||||||
Deferred taxes | (1,474 | ) | (673 | ) | 203 | (5,180 | ) | (3,720 | ) | ||||||||
Deferred gain on disposal of businesses | 4 | 135 | 149 | (2,489 | ) | (2,261 | ) | ||||||||||
Goodwill and intangibles | 0 | 0 | (7 | ) | 324 | 324 | |||||||||||
Pension | 2,032 | (353 | ) | (309 | ) | (253 | ) | (2,285 | ) | ||||||||
Reinsurance in unauthorized companies | 0 | 0 | 0 | 2 | 12 | ||||||||||||
Interest maintenance reserve, deferral and amortization | 66 | 16 | 268 | 626 | 560 | ||||||||||||
Asset valuation reserve | 0 | 0 | 0 | 768 | 1,009 | ||||||||||||
Non-admitted assets and other | 0 | 0 | 0 | 2,135 | 2,926 | ||||||||||||
Based on generally accepted accounting principles | $ | 5,170 | $ | 3,573 | $ | 4,884 | $ | 55,715 | $ | 52,387 | |||||||
Reinsurance_Tables
Reinsurance (Tables) | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||
Reinsurance | |||||||||||||||||||||||||||||
Schedule of reinsurance recoverables | |||||||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||||||
Ceded future policyholder benefits and expense | $ | 208,022 | $ | 143,007 | |||||||||||||||||||||||||
Ceded unearned premium | 3,857 | 2,667 | |||||||||||||||||||||||||||
Ceded claims and benefits payable | 36,809 | 29,983 | |||||||||||||||||||||||||||
Ceded paid losses | 1,484 | 1,644 | |||||||||||||||||||||||||||
Total | $ | 250,172 | $ | 177,301 | |||||||||||||||||||||||||
Schedule of reinsurance recoverable grouped by A.M. Best rating | A.M. Best ratings of | Ceded future | Ceded | Ceded claims and | Ceded | Total | |||||||||||||||||||||||
reinsurer | policyholder | unearned | benefits payable | paid | |||||||||||||||||||||||||
benefits and | premiums | losses | |||||||||||||||||||||||||||
expense | |||||||||||||||||||||||||||||
A++ or A+ | $ | 203,351 | $ | 3,857 | $ | 36,034 | $ | 145 | $ | 243,387 | |||||||||||||||||||
A or A- | 4,671 | 0 | 27 | 5 | 4,703 | ||||||||||||||||||||||||
Not rated | 0 | 0 | 748 | 1,334 | 2,082 | ||||||||||||||||||||||||
Reinsurance recoverable | $ | 208,022 | $ | 3,857 | $ | 36,809 | $ | 1,484 | $ | 250,172 | |||||||||||||||||||
Schedule of effect of reinsurance on premiums earned and benefits incurred | |||||||||||||||||||||||||||||
Years Ended December 31, | |||||||||||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||||||||||
Long | Short | Total | Long | Short | Total | Long | Short | Total | |||||||||||||||||||||
Duration | Duration | Duration | Duration | Duration | Duration | ||||||||||||||||||||||||
Direct earned premiums | $ | 8,254 | $ | 18,990 | $ | 27,244 | $ | 10,353 | $ | 22,284 | $ | 32,637 | $ | 9,832 | $ | 24,950 | $ | 34,782 | |||||||||||
Premiums assumed | 295 | 5,458 | 5,753 | 350 | 5,981 | 6,331 | 301 | 6,506 | 6,807 | ||||||||||||||||||||
Premiums ceded | (8,254 | ) | (1,041 | ) | (9,295 | ) | (10,353 | ) | (1,272 | ) | (11,625 | ) | (9,832 | ) | (1,680 | ) | (11,512 | ) | |||||||||||
Net earned premiums | $ | 295 | $ | 23,407 | $ | 23,702 | $ | 350 | $ | 26,993 | $ | 27,343 | $ | 301 | $ | 29,776 | $ | 30,077 | |||||||||||
Direct policyholder benefits | 80,833 | 12,604 | 93,437 | 18,380 | 14,181 | 32,561 | $ | 18,909 | $ | 16,494 | $ | 35,403 | |||||||||||||||||
Policyholder benefits assumed | 258 | 3,911 | 4,169 | 151 | 8,022 | 8,173 | 600 | 4,279 | 4,879 | ||||||||||||||||||||
Policyholder benefits ceded | (80,833 | ) | (832 | ) | (81,665 | ) | (18,380 | ) | (1,073 | ) | (19,453 | ) | (18,948 | ) | (1,717 | ) | (20,665 | ) | |||||||||||
Net policyholder benefits | $ | 258 | $ | 15,683 | $ | 15,941 | $ | 151 | $ | 21,130 | $ | 21,281 | $ | 561 | $ | 19,056 | $ | 19,617 | |||||||||||
Reserves_Tables
Reserves (Tables) | 12 Months Ended | |||||||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||||||
Reserves | ||||||||||||||||||||||||||
Schedule of reserve information of the Company's major product lines | ||||||||||||||||||||||||||
December 31, 2014 | December 31, 2013 | |||||||||||||||||||||||||
Claims and Benefits Payable | Claims and Benefits Payable | |||||||||||||||||||||||||
Future | Unearned | Case | Incurred | Future Policy | Unearned | Case | Incurred | |||||||||||||||||||
Policy | Premiums | Reserves | But Not | Benefits and | Premiums | Reserves | But Not | |||||||||||||||||||
Benefits and | Reported | Expenses | Reported | |||||||||||||||||||||||
Expenses | Reserves | Reserves | ||||||||||||||||||||||||
Long Duration Contracts: | ||||||||||||||||||||||||||
Universal life and other products no longer offered | $ | 672 | $ | 2 | $ | 633 | $ | 1 | $ | 668 | $ | 2 | $ | 635 | $ | 1 | ||||||||||
FFG, LTC and other disposed businesses | 207,348 | 3,854 | 29,099 | 3,003 | 142,337 | 2,646 | 23,117 | 2,102 | ||||||||||||||||||
Other | 2,958 | 12 | 131 | 38 | 3,036 | 13 | 178 | 40 | ||||||||||||||||||
Short Duration Contracts: | ||||||||||||||||||||||||||
Group term life | 0 | 51 | 7,176 | 503 | 0 | 37 | 7,733 | 692 | ||||||||||||||||||
Group disability | 0 | 134 | 63,087 | 3,007 | 0 | 103 | 69,823 | 3,612 | ||||||||||||||||||
Medical | 0 | 2 | 672 | 23 | 0 | 2 | 1,007 | 33 | ||||||||||||||||||
Dental | 0 | 175 | 34 | 368 | 0 | 134 | 43 | 465 | ||||||||||||||||||
Credit life and disability | 0 | 48 | 148 | 499 | 0 | 58 | 333 | 724 | ||||||||||||||||||
Other | 0 | 3 | 0 | 4 | 0 | 1 | 0 | 6 | ||||||||||||||||||
Total | $ | 210,978 | $ | 4,281 | $ | 100,980 | $ | 7,446 | $ | 146,041 | $ | 2,996 | $ | 102,869 | $ | 7,675 | ||||||||||
Schedule of roll forward of the Company's product lines with the most significant claims and benefits payable balances | ||||||||||||||||||||||||||
Group Term Life | Group Disability | |||||||||||||||||||||||||
Balance as of December 31, 2011, gross of reinsurance | $ | 11,404 | $ | 88,945 | ||||||||||||||||||||||
Less: Reinsurance ceded and other (1) | (391 | ) | (4,660 | ) | ||||||||||||||||||||||
Balance as of January 1, 2012, net of reinsurance | 11,013 | 84,285 | ||||||||||||||||||||||||
Incurred losses related to: | ||||||||||||||||||||||||||
Current year | 2,366 | 7,275 | ||||||||||||||||||||||||
Prior year’s interest | 418 | 3,806 | ||||||||||||||||||||||||
Prior year(s) | (866 | ) | (1,670 | ) | ||||||||||||||||||||||
Total incurred losses | 1,918 | 9,411 | ||||||||||||||||||||||||
Paid losses related to: | ||||||||||||||||||||||||||
Current year | 1,486 | 1,200 | ||||||||||||||||||||||||
Prior year(s) | 2,587 | 17,505 | ||||||||||||||||||||||||
Total paid losses | 4,073 | 18,705 | ||||||||||||||||||||||||
Balance as of December 31, 2012, net of reinsurance | 8,858 | 74,991 | ||||||||||||||||||||||||
Plus: Reinsurance ceded and other (1) | 173 | 4,670 | ||||||||||||||||||||||||
Balance as of December 31, 2012, gross of reinsurance | $ | 9,031 | $ | 79,661 | ||||||||||||||||||||||
Less: Reinsurance ceded and other (1) | (173 | ) | (4,670 | ) | ||||||||||||||||||||||
Balance as of January 1, 2013, net of reinsurance | 8,858 | 74,991 | ||||||||||||||||||||||||
Incurred losses related to: | ||||||||||||||||||||||||||
Current year | 1,976 | 8,438 | ||||||||||||||||||||||||
Prior year’s interest | 385 | 3,450 | ||||||||||||||||||||||||
Prior year(s) | (621 | ) | 20 | |||||||||||||||||||||||
Total incurred losses | 1,740 | 11,908 | ||||||||||||||||||||||||
Paid losses related to: | ||||||||||||||||||||||||||
Current year | 1,133 | 1,467 | ||||||||||||||||||||||||
Prior year(s) | 1,190 | 16,344 | ||||||||||||||||||||||||
Total paid losses | 2,323 | 17,811 | ||||||||||||||||||||||||
Balance as of December 31, 2013, net of reinsurance | 8,275 | 69,088 | ||||||||||||||||||||||||
Plus: Reinsurance ceded and other (1) | 150 | 4,347 | ||||||||||||||||||||||||
Balance as of December 31, 2013, gross of reinsurance | $ | 8,425 | $ | 73,435 | ||||||||||||||||||||||
Less: Reinsurance ceded and other (1) | (150 | ) | (4,347 | ) | ||||||||||||||||||||||
Balance as of January 1, 2014, net of reinsurance | 8,275 | 69,088 | ||||||||||||||||||||||||
Incurred losses related to: | ||||||||||||||||||||||||||
Current year | 1,977 | 7,014 | ||||||||||||||||||||||||
Prior year’s interest | 361 | 3,047 | ||||||||||||||||||||||||
Prior year(s) | (323 | ) | (1,765 | ) | ||||||||||||||||||||||
Total incurred losses | 2,015 | 8,296 | ||||||||||||||||||||||||
Paid losses related to: | ||||||||||||||||||||||||||
Current year | 1,484 | 1,761 | ||||||||||||||||||||||||
Prior year(s) | 1,258 | 13,857 | ||||||||||||||||||||||||
Total paid losses | 2,742 | 15,618 | ||||||||||||||||||||||||
Balance as of December 31, 2014, net of reinsurance | 7,548 | 61,766 | ||||||||||||||||||||||||
Plus: Reinsurance ceded and other (1) | 131 | 4,328 | ||||||||||||||||||||||||
Balance as of December 31, 2014, gross of reinsurance | $ | 7,679 | $ | 66,094 | ||||||||||||||||||||||
-1 | Reinsurance ceded and other includes claims and benefits payable balances that have either been (a) reinsured to third parties, (b) established for claims related expenses whose subsequent payment is not recorded as a paid claim, or (c) reserves established for obligations that would persist even if contracts were cancelled (such as extension of benefits), which cannot be analyzed appropriately under a roll-forward approach. | |||||||||||||||||||||||||
Accumulated_Other_Comprehensiv1
Accumulated Other Comprehensive Income (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Accumulated Other Comprehensive Income. | |||||||||||||
Schedule of components of accumulated other comprehensive income, net of tax | |||||||||||||
Year Ended December 31, 2014 | |||||||||||||
Unrealized gains | OTTI | Accumulated other | |||||||||||
on securities | comprehensive income | ||||||||||||
Balance at December 31, 2013 | $ | 5,950 | $ | 263 | $ | 6,213 | |||||||
Other comprehensive income before reclassifications | 1,802 | 50 | 1,852 | ||||||||||
Amounts reclassified from accumulated other comprehensive income | 196 | 0 | 196 | ||||||||||
Net current-period other comprehensive income | 1,998 | 50 | 2,048 | ||||||||||
Balance at December 31, 2014 | $ | 7,948 | $ | 313 | $ | 8,261 | |||||||
Year Ended December 31, 2013 | |||||||||||||
Unrealized gains | OTTI | Accumulated other | |||||||||||
on securities | comprehensive income | ||||||||||||
Balance at December 31, 2012 | $ | 10,495 | $ | 110 | $ | 10,605 | |||||||
Other comprehensive loss before reclassifications | (4,840 | ) | (43 | ) | (4,883 | ) | |||||||
Amounts reclassified from accumulated other comprehensive income | 295 | 196 | 491 | ||||||||||
Net current-period other comprehensive (loss) income | (4,545 | ) | 153 | (4,392 | ) | ||||||||
Balance at December 31, 2013 | $ | 5,950 | $ | 263 | $ | 6,213 | |||||||
Year Ended December 31, 2012 | |||||||||||||
Unrealized gains | OTTI | Accumulated other | |||||||||||
on securities | comprehensive income | ||||||||||||
Balance at December 31, 2011 | $ | 7,922 | $ | 93 | $ | 8,015 | |||||||
Other comprehensive income before reclassifications | 2,344 | 17 | 2,361 | ||||||||||
Amounts reclassified from accumulated other comprehensive income | 229 | 0 | 229 | ||||||||||
Net current-period other comprehensive income | 2,573 | 17 | 2,590 | ||||||||||
Balance at December 31, 2012 | $ | 10,495 | $ | 110 | $ | 10,605 | |||||||
Summary of the reclassifications out of accumulated other comprehensive income | |||||||||||||
Details about accumulated other | Amount reclassified from accumulated other | ||||||||||||
comprehensive income | |||||||||||||
comprehensive income | Years Ended December 31, | Affected line item in the statement | |||||||||||
components | 2014 | 2013 | 2012 | where net income is presented | |||||||||
Unrealized gains on securities | $ | 301 | $ | 454 | $ | 353 | Net realized gains on investments, excluding other-than-temporary impairment losses | ||||||
(105 | ) | (159 | ) | (124 | ) | Provision for income taxes | |||||||
$ | 196 | $ | 295 | $ | 229 | Net of tax | |||||||
OTTI | $ | 0 | $ | 301 | $ | 0 | Portion of net loss recognized in other comprehensive income, before taxes | ||||||
0 | (105 | ) | 0 | Provision for income taxes | |||||||||
$ | 0 | $ | 196 | $ | 0 | Net of Tax | |||||||
Total reclassifications for the period | $ | 196 | $ | 491 | $ | 229 | Net of tax | ||||||
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Investments | ||
Delinquency period to place loans on non-accrual status | 90 days | |
Other-than-temporary impairment threshold, percentage of market price to original purchase price | 80.00% | |
Reserves | ||
Percentage of certainty that ultimate losses will not exceed claims reserves | 0.00% | |
Long Duration Contracts | ||
Percentage of risks related to reserves recorded for policies under FFG, LTC and life insurance no longer offered, ceded via reinsurance | 100.00% | |
Deferred Gain on Disposal of Businesses | ||
Deferred Gain on Disposal of Businesses | $2,489 | $2,261 |
Adjustments to estimates affecting deferred gain on disposal of businesses | 0 | |
FFG | ||
Deferred Gain on Disposal of Businesses | ||
Deferred Gain on Disposal of Businesses | $516 |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details 2) (USD $) | Dec. 31, 2014 |
In Thousands, unless otherwise specified | |
Summary of Significant Accounting Policies | |
Mandated fees under Affordable Care Act | $146 |
Investments_Details
Investments (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Investments | ||
Cost or Amortized Cost | $120,258 | |
Fair Value | 135,394 | |
Fixed maturity securities | ||
Investments | ||
Cost or Amortized Cost | 85,562 | 94,986 |
Gross Unrealized Gains | 12,045 | 9,595 |
Gross Unrealized Losses | -138 | -502 |
Fair Value | 97,469 | 104,079 |
Fixed maturity securities | OTTI | Available-for-sale securities. | ||
Investments | ||
OTTI in AOCI | 481 | 404 |
Fixed maturity securities | United States Government and government agencies and authorities | ||
Investments | ||
Cost or Amortized Cost | 608 | 573 |
Gross Unrealized Gains | 189 | 164 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 797 | 737 |
Fixed maturity securities | United States Government and government agencies and authorities | OTTI | Available-for-sale securities. | ||
Investments | ||
OTTI in AOCI | 0 | 0 |
Fixed maturity securities | States, municipalities and political subdivisions | ||
Investments | ||
Cost or Amortized Cost | 26,614 | 26,026 |
Gross Unrealized Gains | 2,304 | 2,396 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 28,918 | 28,422 |
Fixed maturity securities | States, municipalities and political subdivisions | OTTI | Available-for-sale securities. | ||
Investments | ||
OTTI in AOCI | 0 | 0 |
Fixed maturity securities | Foreign governments | ||
Investments | ||
Cost or Amortized Cost | 255 | 255 |
Gross Unrealized Gains | 121 | 83 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 376 | 338 |
Fixed maturity securities | Foreign governments | OTTI | Available-for-sale securities. | ||
Investments | ||
OTTI in AOCI | 0 | 0 |
Fixed maturity securities | Commercial mortgage-backed | ||
Investments | ||
Cost or Amortized Cost | 470 | 693 |
Gross Unrealized Gains | 29 | 59 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 499 | 752 |
Fixed maturity securities | Commercial mortgage-backed | OTTI | Available-for-sale securities. | ||
Investments | ||
OTTI in AOCI | 0 | 0 |
Fixed maturity securities | Residential mortgage-backed | ||
Investments | ||
Cost or Amortized Cost | 6,653 | 6,993 |
Gross Unrealized Gains | 1,059 | 711 |
Gross Unrealized Losses | -11 | -53 |
Fair Value | 7,701 | 7,651 |
Fixed maturity securities | Residential mortgage-backed | OTTI | Available-for-sale securities. | ||
Investments | ||
OTTI in AOCI | 481 | 404 |
Fixed maturity securities | Corporate | ||
Investments | ||
Cost or Amortized Cost | 50,962 | 60,446 |
Gross Unrealized Gains | 8,343 | 6,182 |
Gross Unrealized Losses | -127 | -449 |
Fair Value | 59,178 | 66,179 |
Fixed maturity securities | Corporate | OTTI | Available-for-sale securities. | ||
Investments | ||
OTTI in AOCI | 0 | 0 |
Equity securities | Non-redeemable preferred stocks | ||
Investments | ||
Cost or Amortized Cost | 7,333 | 6,901 |
Gross Unrealized Gains | 678 | 470 |
Gross Unrealized Losses | -43 | -171 |
Fair Value | 7,968 | 7,200 |
Equity securities | Non-redeemable preferred stocks | OTTI | Available-for-sale securities. | ||
Investments | ||
OTTI in AOCI | $0 | $0 |
Investments_Details_2
Investments (Details 2) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Investments | ||
Cost or Amortized Cost | 120,258 | |
Fair Value | 135,394 | |
States, municipalities and political subdivisions | Pre-refunded bonds | ||
Investments | ||
Fair Value | 13,075 | 10,846 |
Credit concentration | Corporate fixed maturity and equity securities | Investment rated as investment grade | Energy sector | ||
Investments | ||
Concentration percentage | 97.00% | 93.00% |
Investment portfolio | Credit concentration | Corporate fixed maturity and equity securities | Energy sector | ||
Investments | ||
Cost or Amortized Cost | 7,852 | 9,137 |
Gross Unrealized Gains | 968 | 828 |
Investment portfolio | Credit concentration | Corporate fixed maturity and equity securities | United Kingdom | ||
Investments | ||
Concentration percentage | 6.00% | 6.00% |
Investment portfolio | Credit concentration | Corporate fixed maturity and equity securities | Other individual European countries | Maximum | ||
Investments | ||
Concentration percentage | 2.00% | 2.00% |
Investment portfolio | Credit concentration | States, municipalities and political subdivisions | Individual U. S. states | Maximum | ||
Investments | ||
Concentration percentage | 4.00% | 3.00% |
Investment portfolio | Credit concentration | States, municipalities and political subdivisions | Municipal revenue bonds | ||
Investments | ||
Concentration percentage | 55.00% | 54.00% |
Investments_Details_3
Investments (Details 3) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Cost or Amortized Cost | ||
Total | $85,562 | $94,986 |
Fair Value | ||
Total | 97,469 | 104,079 |
Fixed maturity securities | ||
Cost or Amortized Cost | ||
Due in one year or less | 2,550 | |
Due after one year through five years | 14,379 | |
Due after five years through ten years | 21,857 | |
Due after ten years | 39,653 | |
Total Cost or Amortized Cost, Contractual maturity | 78,439 | |
Fair Value | ||
Due in one year or less | 2,623 | |
Due after one year through five years | 15,839 | |
Due after five years through ten years | 24,188 | |
Due after ten years | 46,619 | |
Total Fair Value, Contractual maturity | 89,269 | |
Commercial mortgage-backed | ||
Cost or Amortized Cost | ||
Cost or Amortized Cost | 470 | |
Fair Value | ||
Fair Value | 499 | |
Residential mortgage-backed | ||
Cost or Amortized Cost | ||
Cost or Amortized Cost | 6,653 | |
Fair Value | ||
Fair Value | $7,701 |
Investments_Details_4
Investments (Details 4) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Major categories of net investment income | |||
Total investment income | $7,082 | $7,256 | $7,806 |
Investment expenses | -248 | -256 | -245 |
Net investment income | 6,834 | 7,000 | 7,561 |
Non-income producing investments | 0 | 0 | 0 |
Fixed maturity securities | |||
Major categories of net investment income | |||
Total investment income | 4,892 | 5,251 | 5,735 |
Equity securities | |||
Major categories of net investment income | |||
Total investment income | 477 | 462 | 412 |
Commercial mortgage loans on real estate | |||
Major categories of net investment income | |||
Total investment income | 1,681 | 1,496 | 1,604 |
Policy loans | |||
Major categories of net investment income | |||
Total investment income | 12 | 16 | 13 |
Other investment | |||
Major categories of net investment income | |||
Total investment income | $20 | $31 | $42 |
Investments_Details_5
Investments (Details 5) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Available-for-sale securities, proceeds and realized gains (losses) included in earnings | |||
Proceeds from sales | $6,303 | $15,065 | $8,748 |
Gross realized gains | 404 | 929 | 471 |
Gross realized losses | $106 | $264 | $77 |
Other information | |||
Average period of time for which securities were traded continuously at a price below book value for securities sold at a loss | 12 months |
Investments_Details_6
Investments (Details 6) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Net realized gains (losses) related to sales and other: | |||
Total net realized gains related to sales and other | $263 | $838 | $371 |
Net other-than-temporary impairment losses recognized in earnings | 0 | 0 | -6 |
Total net realized gains | 263 | 838 | 365 |
Fixed maturity securities | |||
Net realized gains (losses) related to sales and other: | |||
Total net realized gains related to sales and other | 248 | 430 | 309 |
Equity securities | |||
Net realized gains (losses) related to sales and other: | |||
Total net realized gains related to sales and other | 3 | 295 | 62 |
Net other-than-temporary impairment losses recognized in earnings | 0 | 0 | -6 |
Commercial mortgage loans on real estate | |||
Net realized gains (losses) related to sales and other: | |||
Total net realized gains related to sales and other | $12 | $113 | $0 |
Investments_Details_7
Investments (Details 7) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Credit loss impairments on fixed maturity securities for which a portion of the OTTI loss was recognized in AOCI | |||
Balance, beginning of year | $446 | $1,496 | $1,573 |
Reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security | -132 | -11 | -6 |
Reductions for credit loss impairments previously recognized on securities which matured, paid down, prepaid or were sold during the period | 238 | -1,039 | -71 |
Balance, end of year | $552 | $446 | $1,496 |
Investments_Details_8
Investments (Details 8) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
item | item | |
Fair value of securities in a continuous unrealized loss position | ||
Total Fair Value | $1,906 | |
Unrealized losses on securities in a continuous unrealized loss position | ||
Total gross unrealized losses as a percentage of the aggregate fair value of the related securities | 7.00% | 5.00% |
Percentage of gross unrealized losses in a continuous loss position for less than twelve months | 37.00% | 93.00% |
Number of individual securities comprising total gross unrealized losses | 9 | 27 |
Residential mortgage-backed | ||
Fair value of securities in a continuous unrealized loss position | ||
Total Fair Value | 526 | |
Fixed maturity securities | ||
Fair value of securities in a continuous unrealized loss position | ||
Fair value of securities in a continuous unrealized loss position, Less than 12 months | 683 | 9,568 |
Fair value of securities in a continuous unrealized loss position, 12 months or more | 1,223 | 745 |
Total Fair Value | 1,906 | 10,313 |
Unrealized losses on securities in a continuous unrealized loss position | ||
Unrealized losses on securities in a continuous unrealized loss position, Less than 12 months | -39 | -455 |
Unrealized losses on securities in a continuous unrealized loss position, 12 months or more | -99 | -47 |
Unrealized losses on securities in a continuous unrealized loss position | -138 | -502 |
Fixed maturity securities | Residential mortgage-backed | ||
Fair value of securities in a continuous unrealized loss position | ||
Fair value of securities in a continuous unrealized loss position, Less than 12 months | 0 | 2,174 |
Fair value of securities in a continuous unrealized loss position, 12 months or more | 526 | 520 |
Total Fair Value | 526 | 2,694 |
Unrealized losses on securities in a continuous unrealized loss position | ||
Unrealized losses on securities in a continuous unrealized loss position, Less than 12 months | 0 | -29 |
Unrealized losses on securities in a continuous unrealized loss position, 12 months or more | -11 | -24 |
Unrealized losses on securities in a continuous unrealized loss position | -11 | -53 |
Fixed maturity securities | Corporate | ||
Fair value of securities in a continuous unrealized loss position | ||
Fair value of securities in a continuous unrealized loss position, Less than 12 months | 683 | 7,394 |
Fair value of securities in a continuous unrealized loss position, 12 months or more | 697 | 225 |
Total Fair Value | 1,380 | 7,619 |
Unrealized losses on securities in a continuous unrealized loss position | ||
Unrealized losses on securities in a continuous unrealized loss position, Less than 12 months | -39 | -426 |
Unrealized losses on securities in a continuous unrealized loss position, 12 months or more | -88 | -23 |
Unrealized losses on securities in a continuous unrealized loss position | -127 | -449 |
Equity securities | Non-redeemable preferred stocks | ||
Fair value of securities in a continuous unrealized loss position | ||
Fair value of securities in a continuous unrealized loss position, Less than 12 months | 615 | 2,966 |
Fair value of securities in a continuous unrealized loss position, 12 months or more | 235 | 0 |
Total Fair Value | 850 | 2,966 |
Unrealized losses on securities in a continuous unrealized loss position | ||
Unrealized losses on securities in a continuous unrealized loss position, Less than 12 months | -28 | -171 |
Unrealized losses on securities in a continuous unrealized loss position, 12 months or more | -15 | 0 |
Unrealized losses on securities in a continuous unrealized loss position | ($43) | -171 |
Investments_Details_9
Investments (Details 9) (USD $) | 12 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2014 |
Cost or Amortized Cost | |
Total | 2,044 |
Fair Value | |
Total Fair Value | 1,906 |
Fixed maturity securities | |
Cost or Amortized Cost | |
Due after one year through five years | 224 |
Due after ten years | 1,283 |
Total | 1,507 |
Fair Value | |
Due after one year through five years | 221 |
Due after ten years | 1,159 |
Total Fair Value | 1,380 |
Residential mortgage-backed | |
Cost or Amortized Cost | |
Total | 537 |
Fair Value | |
Total Fair Value | 526 |
Other information | |
Number of securities with subprime exposure below investment grade | 1 |
Residential mortgage-backed | Investment revenue sources | Credit concentration | Investment rated as non-investment grade | |
Other information | |
Concentration percentage | 8.70% |
Residential mortgage-backed | Investment revenue sources | Credit concentration | Fixed income portfolio | |
Other information | |
Concentration percentage | 0.70% |
Residential mortgage-backed | Subprime Mortgage Collateral and Total Unrealized Gains | Credit concentration | |
Other information | |
Concentration percentage | 4.00% |
Investments_Details_10
Investments (Details 10) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Investments | ||
Carrying Value | $20,158 | $25,357 |
Less valuation allowance | -386 | -398 |
Net commercial mortgage loans | 19,772 | 24,959 |
Fixed maturity securities | ||
Investments | ||
Fixed maturity securities on deposit with various governmental authorities | 797 | 737 |
70% and less | Maximum | ||
Investments | ||
Loan-to-value percentage | 70.00% | |
71 - 80% | Minimum | ||
Investments | ||
Loan-to-value percentage | 71.00% | |
71 - 80% | Maximum | ||
Investments | ||
Loan-to-value percentage | 80.00% | |
81 - 95% | Minimum | ||
Investments | ||
Loan-to-value percentage | 81.00% | |
81 - 95% | Maximum | ||
Investments | ||
Loan-to-value percentage | 95.00% | |
Commercial mortgage loans | ||
Investments | ||
% of Gross Mortgage Loans | 100.00% | 100.00% |
Debt-Service Coverage ratio | 2 | 2.01 |
Decrease in loan valuation allowance | 12 | 114 |
Commercial mortgage loans | Minimum | ||
Investments | ||
Carrying Value | 373 | 385 |
Commercial mortgage loans | Maximum | ||
Investments | ||
Carrying Value | 1,880 | 2,402 |
Commercial mortgage loans | 70% and less | ||
Investments | ||
Carrying Value | 15,073 | 17,166 |
% of Gross Mortgage Loans | 74.80% | 67.70% |
Debt-Service Coverage ratio | 2.28 | 2.41 |
Commercial mortgage loans | 71 - 80% | ||
Investments | ||
Carrying Value | 2,266 | 2,972 |
% of Gross Mortgage Loans | 11.20% | 11.70% |
Debt-Service Coverage ratio | 1.15 | 1.14 |
Commercial mortgage loans | 81 - 95% | ||
Investments | ||
Carrying Value | $2,819 | $5,219 |
% of Gross Mortgage Loans | 14.00% | 20.60% |
Debt-Service Coverage ratio | 1.15 | 1.16 |
Commercial mortgage loans | Investment portfolio | Geographic Concentration Risk | Washington, Colorado and California | ||
Investments | ||
Concentration percentage | 43.00% |
Fair_Value_Disclosures_Details
Fair Value Disclosures (Details) (Recurring basis, USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Total | ||
Financial Assets | ||
Total financial assets | $124,619 | $125,778 |
Financial Liabilities | ||
Liabilities related to separate accounts | 11,930 | 11,978 |
Total | Fixed maturity securities | United States Government and government agencies and authorities | ||
Financial Assets | ||
Total financial assets | 797 | 737 |
Total | Fixed maturity securities | States, municipalities and political subdivisions | ||
Financial Assets | ||
Total financial assets | 28,918 | 28,422 |
Total | Fixed maturity securities | Foreign governments | ||
Financial Assets | ||
Total financial assets | 376 | 338 |
Total | Fixed maturity securities | Commercial mortgage-backed | ||
Financial Assets | ||
Total financial assets | 499 | 752 |
Total | Fixed maturity securities | Residential mortgage-backed | ||
Financial Assets | ||
Total financial assets | 7,701 | 7,651 |
Total | Fixed maturity securities | Corporate | ||
Financial Assets | ||
Total financial assets | 59,178 | 66,179 |
Total | Equity securities | Non-redeemable preferred stocks | ||
Financial Assets | ||
Total financial assets | 7,968 | 7,200 |
Total | Short-term investments | ||
Financial Assets | ||
Total financial assets | 7,202 | 1,911 |
Total | Cash equivalents | ||
Financial Assets | ||
Total financial assets | 50 | 610 |
Total | Assets held in separate accounts | ||
Financial Assets | ||
Total financial assets | 11,930 | 11,978 |
Level 1 | ||
Financial Assets | ||
Total financial assets | 15,280 | 12,171 |
Financial Liabilities | ||
Liabilities related to separate accounts | 8,028 | 9,650 |
Level 1 | Fixed maturity securities | United States Government and government agencies and authorities | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Level 1 | Fixed maturity securities | States, municipalities and political subdivisions | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Level 1 | Fixed maturity securities | Foreign governments | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Level 1 | Fixed maturity securities | Commercial mortgage-backed | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Level 1 | Fixed maturity securities | Residential mortgage-backed | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Level 1 | Fixed maturity securities | Corporate | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Level 1 | Equity securities | Non-redeemable preferred stocks | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Level 1 | Short-term investments | ||
Financial Assets | ||
Total financial assets | 7,202 | 1,911 |
Level 1 | Cash equivalents | ||
Financial Assets | ||
Total financial assets | 50 | 610 |
Level 1 | Assets held in separate accounts | ||
Financial Assets | ||
Total financial assets | 8,028 | 9,650 |
Level 2 | ||
Financial Assets | ||
Total financial assets | 108,131 | 111,198 |
Financial Liabilities | ||
Liabilities related to separate accounts | 3,902 | 2,328 |
Level 2 | Fixed maturity securities | United States Government and government agencies and authorities | ||
Financial Assets | ||
Total financial assets | 797 | 737 |
Level 2 | Fixed maturity securities | States, municipalities and political subdivisions | ||
Financial Assets | ||
Total financial assets | 28,918 | 27,321 |
Level 2 | Fixed maturity securities | Foreign governments | ||
Financial Assets | ||
Total financial assets | 376 | 338 |
Level 2 | Fixed maturity securities | Commercial mortgage-backed | ||
Financial Assets | ||
Total financial assets | 499 | 752 |
Level 2 | Fixed maturity securities | Residential mortgage-backed | ||
Financial Assets | ||
Total financial assets | 7,701 | 7,651 |
Level 2 | Fixed maturity securities | Corporate | ||
Financial Assets | ||
Total financial assets | 57,970 | 64,871 |
Level 2 | Equity securities | Non-redeemable preferred stocks | ||
Financial Assets | ||
Total financial assets | 7,968 | 7,200 |
Level 2 | Short-term investments | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Level 2 | Cash equivalents | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Level 2 | Assets held in separate accounts | ||
Financial Assets | ||
Total financial assets | 3,902 | 2,328 |
Level 3 | ||
Financial Assets | ||
Total financial assets | 1,208 | 2,409 |
Financial Liabilities | ||
Liabilities related to separate accounts | 0 | 0 |
Level 3 | Fixed maturity securities | United States Government and government agencies and authorities | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Level 3 | Fixed maturity securities | States, municipalities and political subdivisions | ||
Financial Assets | ||
Total financial assets | 0 | 1,101 |
Level 3 | Fixed maturity securities | Foreign governments | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Level 3 | Fixed maturity securities | Commercial mortgage-backed | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Level 3 | Fixed maturity securities | Residential mortgage-backed | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Level 3 | Fixed maturity securities | Corporate | ||
Financial Assets | ||
Total financial assets | 1,208 | 1,308 |
Level 3 | Equity securities | Non-redeemable preferred stocks | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Level 3 | Short-term investments | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Level 3 | Cash equivalents | ||
Financial Assets | ||
Total financial assets | 0 | 0 |
Level 3 | Assets held in separate accounts | ||
Financial Assets | ||
Total financial assets | $0 | $0 |
Fair_Value_Disclosures_Details1
Fair Value Disclosures (Details 2) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Fair Value Disclosures | ||
Transfers from Level 1 to Level 2 financial assets | $0 | $0 |
Transfers from Level 2 to Level 1 financial assets | 0 | 0 |
Changes in balance sheet carrying value associated with Level 3 financial assets carried at fair value | ||
Balance, beginning of period | 2,409 | 1,484 |
Total gains (realized/unrealized) included in earnings | -13 | 290 |
Net unrealized (losses) gains included in other comprehensive income | 13 | -11 |
Purchases | 232 | 1,020 |
Sales | -332 | -412 |
Transfers in | 0 | 288 |
Transfers out | -1,101 | -250 |
Balance, end of period | 1,208 | 2,409 |
Fixed maturity securities | States, municipalities and political subdivisions | ||
Changes in balance sheet carrying value associated with Level 3 financial assets carried at fair value | ||
Balance, beginning of period | 1,101 | 0 |
Total gains (realized/unrealized) included in earnings | 0 | 0 |
Net unrealized (losses) gains included in other comprehensive income | 0 | 81 |
Purchases | 0 | 1,020 |
Sales | 0 | 0 |
Transfers in | 0 | 0 |
Transfers out | -1,101 | 0 |
Balance, end of period | 0 | 1,101 |
Fixed maturity securities | Corporate | ||
Changes in balance sheet carrying value associated with Level 3 financial assets carried at fair value | ||
Balance, beginning of period | 1,308 | 1,483 |
Total gains (realized/unrealized) included in earnings | -13 | 290 |
Net unrealized (losses) gains included in other comprehensive income | 13 | -92 |
Purchases | 232 | 0 |
Sales | -332 | -412 |
Transfers in | 0 | 288 |
Transfers out | 0 | -249 |
Balance, end of period | 1,208 | 1,308 |
Equity securities | Non-redeemable preferred stocks | ||
Changes in balance sheet carrying value associated with Level 3 financial assets carried at fair value | ||
Balance, beginning of period | 1 | |
Total gains (realized/unrealized) included in earnings | 0 | |
Net unrealized (losses) gains included in other comprehensive income | 0 | |
Purchases | 0 | |
Sales | 0 | |
Transfers in | 0 | |
Transfers out | -1 | |
Balance, end of period | $0 |
Fair_Value_Disclosures_Details2
Fair Value Disclosures (Details 3) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Fair value disclosure | ||
Cost or Amortized Cost | $135,394 | |
Level 3 | Single broker quotes | ||
Fair value disclosure | ||
Cost or Amortized Cost | 74 | 79 |
Level 3 | Independent and non-binding broker quotes | ||
Fair value disclosure | ||
Cost or Amortized Cost | $1,134 | $2,330 |
Fair_Value_Disclosures_Details3
Fair Value Disclosures (Details 4) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Financial Assets | ||
Commercial mortgage loans on real estate | $19,772 | $24,959 |
Policy loans | 217 | 219 |
Total assets | 399,188 | 332,600 |
Financial Liabilities | ||
Funds withheld under reinsurance | 167 | 159 |
Total liabilities | 343,473 | 280,213 |
Total | ||
Financial Assets | ||
Commercial mortgage loans on real estate | 22,366 | 27,981 |
Policy loans | 217 | 219 |
Other investment | 172 | |
Total assets | 22,755 | 28,200 |
Financial Liabilities | ||
Policy reserves under investment products (Individual and group annuities, subject to discretionary withdrawal) | 5,074 | 4,261 |
Funds withheld under reinsurance | 167 | 159 |
Total liabilities | 5,241 | 4,420 |
Level 1 | ||
Financial Assets | ||
Commercial mortgage loans on real estate | 0 | 0 |
Policy loans | 217 | 219 |
Other investment | 0 | |
Total assets | 217 | 219 |
Financial Liabilities | ||
Policy reserves under investment products (Individual and group annuities, subject to discretionary withdrawal) | 0 | 0 |
Funds withheld under reinsurance | 167 | 159 |
Total liabilities | 167 | 159 |
Level 2 | ||
Financial Assets | ||
Commercial mortgage loans on real estate | 0 | 0 |
Policy loans | 0 | 0 |
Other investment | 0 | |
Total assets | 0 | 0 |
Financial Liabilities | ||
Policy reserves under investment products (Individual and group annuities, subject to discretionary withdrawal) | 0 | 0 |
Funds withheld under reinsurance | 0 | 0 |
Total liabilities | 0 | 0 |
Level 3 | ||
Financial Assets | ||
Commercial mortgage loans on real estate | 22,366 | 27,981 |
Policy loans | 0 | 0 |
Other investment | 172 | |
Total assets | 22,538 | 27,981 |
Financial Liabilities | ||
Policy reserves under investment products (Individual and group annuities, subject to discretionary withdrawal) | 5,074 | 4,261 |
Funds withheld under reinsurance | 0 | 0 |
Total liabilities | 5,074 | 4,261 |
Carrying Value | ||
Financial Assets | ||
Commercial mortgage loans on real estate | 19,772 | 24,959 |
Policy loans | 217 | 219 |
Other investment | 172 | |
Total assets | 20,161 | 25,178 |
Financial Liabilities | ||
Policy reserves under investment products (Individual and group annuities, subject to discretionary withdrawal) | 4,487 | 4,007 |
Funds withheld under reinsurance | 167 | 159 |
Total liabilities | $4,654 | $4,166 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Current and deferred federal tax expense (benefit) | |||
Current expense | $378 | $256 | $1,842 |
Deferred expense (benefit) | 1,474 | 673 | -203 |
Total income tax expense | 1,852 | 929 | 1,639 |
Reconciliation of the federal income tax rate to the company's effective income tax rate | |||
Federal income tax rate (as a percent) | 35.00% | 35.00% | 35.00% |
Reconciling items: | |||
Tax exempt interest (as a percent) | -8.00% | -12.30% | -8.90% |
Dividend received deduction (as a percent) | -1.40% | -2.20% | -1.50% |
Non deductible health insurer fee (as a percent) | 0.70% | 0.00% | 0.00% |
Permanent nondeductible expenses (as a percent) | 0.10% | 0.10% | 0.20% |
Other (as a percent) | 0.00% | 0.00% | 0.30% |
Effective income tax rate: (as a percent) | 26.40% | 20.60% | 25.10% |
Unrecognized tax benefits | |||
Liability for unrecognized tax benefits | 0 | 0 | 0 |
Penalties accrued | $0 | $0 |
Income_Taxes_Details_2
Income Taxes (Details 2) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Deferred Tax Assets | ||
Deferred gain on disposal of business | $871 | $791 |
Investments, net | 1,740 | 2,123 |
Deferred acquisition costs | 1,059 | 1,013 |
Employee and post-retirement benefits | 0 | 800 |
Capital loss carryforwards | 0 | 266 |
Compensation related | 2 | 5 |
Other | 4 | 4 |
Total deferred tax asset | 3,676 | 5,002 |
Deferred Tax Liabilities | ||
Policyholder and separate account reserves | -1,324 | -1,542 |
Net unrealized appreciation on securities | -4,390 | -3,279 |
Employee and post-retirement benefits | -375 | 0 |
Other | -37 | -54 |
Total deferred tax liability | -6,126 | -4,875 |
Net deferred income tax (liability) asset | -2,450 | 127 |
Cumulative valuation allowance against deferred tax assets | 0 | 0 |
Decrease in valuation allowance against deferred tax assets | -3,676 | |
Net operating loss carryforward | $0 |
Premiums_and_Accounts_Receivab2
Premiums and Accounts Receivable (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Premiums and Accounts Receivable | ||
Insurance premiums receivable | $1,459 | $1,508 |
Other receivables | 220 | 200 |
Total | $1,679 | $1,708 |
Stockholders_Equity_Details
Stockholder's Equity (Details) (USD $) | 12 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Stockholder's Equity | |||
Authorized shares of common stock | 100,000 | 100,000 | |
Par value of shares of common stock (in dollars per share) | $20 | $20 | |
Common stock, shares issued | 100,000 | 100,000 | |
Common stock, shares outstanding | 100,000 | 100,000 | |
Dividends paid | $3,890 | $10,033 | $609 |
Return of Capital | $0 | ($959) | $0 |
Statutory_Information_Details
Statutory Information (Details) (USD $) | 12 Months Ended | |||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Reconciliations of stockholder's equity | ||||
Net income | $5,170 | $3,573 | $4,884 | |
Reconciliations of stockholder's equity | ||||
Total stockholder's equity | 55,715 | 52,387 | 64,198 | 57,333 |
Dividend declared and paid | 3,890 | 10,033 | 609 | |
Return of Capital | 0 | -959 | 0 | |
New York Department of Commerce | ||||
Reconciliations of stockholder's equity | ||||
Based on statutory accounting principles | 5,590 | 5,441 | 5,518 | |
Deferred acquisition costs | -97 | -113 | -15 | |
Deferred and uncollected premiums | -40 | 6 | 1 | |
Policy and claim reserves | -850 | -1,067 | -914 | |
Investment valuation difference | -62 | 175 | -32 | |
Commissions and fees | 1 | 6 | 22 | |
Deferred taxes | -1,474 | -673 | 203 | |
Deferred gain on disposal of businesses | 4 | 135 | 149 | |
Goodwill and intangibles | 0 | 0 | -7 | |
Pension | 2,032 | -353 | -309 | |
Reinsurance in unauthorized companies | 0 | 0 | 0 | |
Interest maintenance reserve, deferral and amortization | 66 | 16 | 268 | |
Asset valuation reserve | 0 | 0 | 0 | |
Non-admitted assets and other | 0 | 0 | 0 | |
Net income | 5,170 | 3,573 | 4,884 | |
Reconciliations of stockholder's equity | ||||
Based on statutory accounting principles | 42,756 | 40,900 | ||
Deferred acquisition costs | 4 | 101 | ||
Deferred and uncollected premiums | 0 | 40 | ||
Policy and claim reserves | 4,895 | 5,745 | ||
Investment valuation difference | 12,127 | 9,037 | ||
Commissions and fees | 0 | -1 | ||
Deferred taxes | -5,180 | -3,720 | ||
Deferred gain on disposal of businesses | -2,489 | -2,261 | ||
Goodwill and intangibles | 324 | 324 | ||
Pension | -253 | -2,285 | ||
Reinsurance in unauthorized companies | 2 | 12 | ||
Interest maintenance reserve, deferral and amortization | 626 | 560 | ||
Asset valuation reserve | 768 | 1,009 | ||
Non-admitted assets and other | 2,135 | 2,926 | ||
Total stockholder's equity | 55,715 | 52,387 | ||
Dividend declared and paid | 10,992 | |||
Ordinary dividends declared and paid | 3,890 | 4,492 | 609 | |
Extraordinary dividends declared and paid | 0 | 6,500 | 0 | |
Return of Capital | -959 | |||
Minimum dividend as percentage of insurers' surplus to be considered as extraordinary dividend | 10.00% | |||
TAC of the Company subject to RBC Requirements | 43,524 | |||
Corresponding Authorized Control | 4,235 | |||
New York Department of Commerce | Minimum | ||||
Reconciliations of stockholder's equity | ||||
RBC Ratio under Company Action Level (as a percent) | 100.00% | |||
New York Department of Commerce | Maximum | ||||
Reconciliations of stockholder's equity | ||||
RBC Ratio under Authorized Control Level (as a percent) | 100.00% | |||
RBC Ratio under Company Action Level (as a percent) | 200.00% | |||
New York Department of Commerce | Maximum | Forecast | ||||
Reconciliations of stockholder's equity | ||||
Maximum dividend payable under state regulatory requirements | $4,076 |
Reinsurance_Details
Reinsurance (Details ) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
item | ||
Reinsurance Recoverables | ||
Ceded future policyholder benefits and expense | $208,022 | $143,007 |
Ceded unearned premium | 3,857 | 2,667 |
Ceded claims and benefits payable | 36,809 | 29,983 |
Ceded paid losses | 1,484 | 1,644 |
Total | 250,172 | 177,301 |
The Hartford and John Hancock | ||
Reinsurance Recoverables | ||
Total | 243,308 | |
Number of reinsurers with the largest reinsurance recoverable balances | 2 | |
A. M. Best ratings of reinsurer, A++ or A+ | ||
Reinsurance Recoverables | ||
Ceded future policyholder benefits and expense | 203,351 | |
Ceded unearned premium | 3,857 | |
Ceded claims and benefits payable | 36,034 | |
Ceded paid losses | 145 | |
Total | 243,387 | |
A. M. Best ratings of reinsurer, A or A- | ||
Reinsurance Recoverables | ||
Ceded future policyholder benefits and expense | 4,671 | |
Ceded unearned premium | 0 | |
Ceded claims and benefits payable | 27 | |
Ceded paid losses | 5 | |
Total | 4,703 | |
Not rated | ||
Reinsurance Recoverables | ||
Ceded future policyholder benefits and expense | 0 | |
Ceded unearned premium | 0 | |
Ceded claims and benefits payable | 748 | |
Ceded paid losses | 1,334 | |
Total | $2,082 |
Reinsurance_Details_2
Reinsurance (Details 2) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Effect of reinsurance on premiums earned and benefits incurred | |||
Direct earned premiums | $27,244 | $32,637 | $34,782 |
Premiums assumed | 5,753 | 6,331 | 6,807 |
Premiums ceded | -9,295 | -11,625 | -11,512 |
Net earned premiums | 23,702 | 27,343 | 30,077 |
Direct policyholder benefits | 93,437 | 32,561 | 35,403 |
Policyholder benefits assumed | 4,169 | 8,173 | 4,879 |
Policyholder benefits ceded | -81,665 | -19,453 | -20,665 |
Net policyholder benefits | 15,941 | 21,281 | 19,617 |
Long Duration Contracts | |||
Effect of reinsurance on premiums earned and benefits incurred | |||
Direct earned premiums | 8,254 | 10,353 | 9,832 |
Premiums assumed | 295 | 350 | 301 |
Premiums ceded | -8,254 | -10,353 | -9,832 |
Net earned premiums | 295 | 350 | 301 |
Direct policyholder benefits | 80,833 | 18,380 | 18,909 |
Policyholder benefits assumed | 258 | 151 | 600 |
Policyholder benefits ceded | -80,833 | -18,380 | -18,948 |
Net policyholder benefits | 258 | 151 | 561 |
Short Duration Contracts | |||
Effect of reinsurance on premiums earned and benefits incurred | |||
Direct earned premiums | 18,990 | 22,284 | 24,950 |
Premiums assumed | 5,458 | 5,981 | 6,506 |
Premiums ceded | -1,041 | -1,272 | -1,680 |
Net earned premiums | 23,407 | 26,993 | 29,776 |
Direct policyholder benefits | 12,604 | 14,181 | 16,494 |
Policyholder benefits assumed | 3,911 | 8,022 | 4,279 |
Policyholder benefits ceded | -832 | -1,073 | -1,717 |
Net policyholder benefits | $15,683 | $21,130 | $19,056 |
Reinsurance_Details_3
Reinsurance (Details 3) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
item | ||
Reinsurance Recoverables | ||
Reinsurance recoverables | 250,172 | $177,301 |
Minimum | ||
Reinsurance Recoverables | ||
Number of reinsurer insolvency for making company responsible for administering reinsurance business | 1 | |
The Hartford | ||
Reinsurance Recoverables | ||
Reinsurance recoverables | 4,671 | 4,341 |
John Hancock | ||
Reinsurance Recoverables | ||
Reinsurance recoverables | 238,637 | $165,861 |
Reserves_Details
Reserves (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Claims and Benefits Payable | ||
Future Policy Benefits and Expenses | $210,978 | $146,041 |
Unearned Premiums | 4,281 | 2,996 |
Case Reserves | 100,980 | 102,869 |
Incurred But Not Reported Reserves | 7,446 | 7,675 |
Universal life and other products no longer offered | ||
Claims and Benefits Payable | ||
Future Policy Benefits and Expenses | 672 | 668 |
Unearned Premiums | 2 | 2 |
Case Reserves | 633 | 635 |
Incurred But Not Reported Reserves | 1 | 1 |
FFG, LTC and other disposed businesses | ||
Claims and Benefits Payable | ||
Future Policy Benefits and Expenses | 207,348 | 142,337 |
Unearned Premiums | 3,854 | 2,646 |
Case Reserves | 29,099 | 23,117 |
Incurred But Not Reported Reserves | 3,003 | 2,102 |
Other | ||
Claims and Benefits Payable | ||
Future Policy Benefits and Expenses | 2,958 | 3,036 |
Unearned Premiums | 12 | 13 |
Case Reserves | 131 | 178 |
Incurred But Not Reported Reserves | 38 | 40 |
Group term life | ||
Claims and Benefits Payable | ||
Future Policy Benefits and Expenses | 0 | 0 |
Unearned Premiums | 51 | 37 |
Case Reserves | 7,176 | 7,733 |
Incurred But Not Reported Reserves | 503 | 692 |
Group disability | ||
Claims and Benefits Payable | ||
Future Policy Benefits and Expenses | 0 | 0 |
Unearned Premiums | 134 | 103 |
Case Reserves | 63,087 | 69,823 |
Incurred But Not Reported Reserves | 3,007 | 3,612 |
Medical | ||
Claims and Benefits Payable | ||
Future Policy Benefits and Expenses | 0 | 0 |
Unearned Premiums | 2 | 2 |
Case Reserves | 672 | 1,007 |
Incurred But Not Reported Reserves | 23 | 33 |
Dental | ||
Claims and Benefits Payable | ||
Future Policy Benefits and Expenses | 0 | 0 |
Unearned Premiums | 175 | 134 |
Case Reserves | 34 | 43 |
Incurred But Not Reported Reserves | 368 | 465 |
Credit life and disability | ||
Claims and Benefits Payable | ||
Future Policy Benefits and Expenses | 0 | 0 |
Unearned Premiums | 48 | 58 |
Case Reserves | 148 | 333 |
Incurred But Not Reported Reserves | 499 | 724 |
Other | ||
Claims and Benefits Payable | ||
Future Policy Benefits and Expenses | 0 | 0 |
Unearned Premiums | 3 | 1 |
Case Reserves | 0 | 0 |
Incurred But Not Reported Reserves | $4 | $6 |
Reserves_Details_2
Reserves (Details 2) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Paid losses related to: | |||
Balance at the end of the period, net of reinsurance | $108,426 | $110,544 | |
Group term life | |||
Changes in Company's product lines with the most significant claims and benefits payable balances | |||
Balance at the beginning of the period, gross of reinsurance | 8,425 | 9,031 | 11,404 |
Less: Reinsurance ceded and other | -150 | -173 | -391 |
Balance at the beginning of the period, net of reinsurance | 8,275 | 8,858 | 11,013 |
Incurred loss related to: | |||
Current year | 1,977 | 1,976 | 2,366 |
Prior year's interest | 361 | 385 | 418 |
Prior year(s) | -323 | -621 | -866 |
Total incurred losses | 2,015 | 1,740 | 1,918 |
Paid losses related to: | |||
Current year | 1,484 | 1,133 | 1,486 |
Prior year(s) | 1,258 | 1,190 | 2,587 |
Total paid losses | 2,742 | 2,323 | 4,073 |
Balance at the end of the period, gross of reinsurance | 7,548 | 8,275 | 8,858 |
Plus: Reinsurance ceded and other | 131 | 150 | 173 |
Balance at the end of the period, net of reinsurance | 7,679 | 8,425 | 9,031 |
Group disability | |||
Changes in Company's product lines with the most significant claims and benefits payable balances | |||
Balance at the beginning of the period, gross of reinsurance | 73,435 | 79,661 | 88,945 |
Less: Reinsurance ceded and other | -4,347 | -4,670 | -4,660 |
Balance at the beginning of the period, net of reinsurance | 69,088 | 74,991 | 84,285 |
Incurred loss related to: | |||
Current year | 7,014 | 8,438 | 7,275 |
Prior year's interest | 3,047 | 3,450 | 3,806 |
Prior year(s) | -1,765 | 20 | -1,670 |
Total incurred losses | 8,296 | 11,908 | 9,411 |
Paid losses related to: | |||
Current year | 1,761 | 1,467 | 1,200 |
Prior year(s) | 13,857 | 16,344 | 17,505 |
Total paid losses | 15,618 | 17,811 | 18,705 |
Balance at the end of the period, gross of reinsurance | 61,766 | 69,088 | 74,991 |
Plus: Reinsurance ceded and other | 4,328 | 4,347 | 4,670 |
Balance at the end of the period, net of reinsurance | $66,094 | $73,435 | $79,661 |
Reserves_Details_3
Reserves (Details 3) (USD $) | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2010 | Dec. 31, 2011 |
In Thousands, unless otherwise specified | |||||
Reserves | |||||
Gross out-of-period adjustments in reserve | $411 | ||||
Net of tax out-of-period adjustments in reserve | 267 | ||||
Group disability | |||||
Claims and Benefits Payable | |||||
Short duration contracts, discount rate (as a percent) | 5.25% | ||||
Short duration contracts, discount | $18,195 | $21,348 | |||
Group disability | Minimum | |||||
Claims and Benefits Payable | |||||
Short duration contracts, discount rate (as a percent) | 4.25% | 4.25% | 4.25% | 4.25% | |
Group disability | Maximum | |||||
Claims and Benefits Payable | |||||
Short duration contracts, discount rate (as a percent) | 4.75% | 4.75% | 4.75% | 4.75% |
Retirement_and_Other_Employee_1
Retirement and Other Employee Benefits (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Defined benefit pension plan | |||
Retirement and Other Employee Benefits | |||
Obligation for defined benefit plans | $0 | ||
Pension costs under the defined benefit plan | 72 | 339 | 297 |
Amount expensed under the defined contribution plan | 16 | 41 | 72 |
Postretirement benefits | |||
Retirement and Other Employee Benefits | |||
Pension costs under the defined benefit plan | $3 | $13 | $13 |
Accumulated_Other_Comprehensiv2
Accumulated Other Comprehensive Income (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Accumulated other comprehensive income | |||
Balance at the beginning of the period | $6,213 | $10,605 | $8,015 |
Other comprehensive income (loss) before reclassifications | 1,852 | -4,883 | 2,361 |
Amounts reclassified from accumulated other comprehensive income | 196 | 491 | 229 |
Total other comprehensive income (loss) | 2,048 | -4,392 | 2,590 |
Balance at the end of the period | 8,261 | 6,213 | 10,605 |
Unrealized gains on securities | |||
Accumulated other comprehensive income | |||
Balance at the beginning of the period | 5,950 | 10,495 | 7,922 |
Other comprehensive income (loss) before reclassifications | 1,802 | -4,840 | 2,344 |
Amounts reclassified from accumulated other comprehensive income | 196 | 295 | 229 |
Total other comprehensive income (loss) | 1,998 | -4,545 | 2,573 |
Balance at the end of the period | 7,948 | 5,950 | 10,495 |
OTTI | |||
Accumulated other comprehensive income | |||
Balance at the beginning of the period | 263 | 110 | 93 |
Other comprehensive income (loss) before reclassifications | 50 | -43 | 17 |
Amounts reclassified from accumulated other comprehensive income | 0 | 196 | 0 |
Total other comprehensive income (loss) | 50 | 153 | 17 |
Balance at the end of the period | $313 | $263 | $110 |
Accumulated_Other_Comprehensiv3
Accumulated Other Comprehensive Income (Details 2) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Amount reclassified from accumulated other comprehensive income | |||
Net realized gains on investments, excluding other-than-temporary impairment losses | $263 | $838 | $371 |
Provision for income taxes | -1,852 | -929 | -1,639 |
Net income | 5,170 | 3,573 | 4,884 |
Reclassified from accumulated other comprehensive income | |||
Amount reclassified from accumulated other comprehensive income | |||
Net income | 196 | 491 | 229 |
Unrealized gains on securities | Reclassified from accumulated other comprehensive income | |||
Amount reclassified from accumulated other comprehensive income | |||
Net realized gains on investments, excluding other-than-temporary impairment losses | 301 | 454 | 353 |
Provision for income taxes | -105 | -159 | -124 |
Net income | 196 | 295 | 229 |
OTTI | Reclassified from accumulated other comprehensive income | |||
Amount reclassified from accumulated other comprehensive income | |||
Portion of net loss recognized in other comprehensive income, before taxes | 0 | 301 | 0 |
Provision for income taxes | 0 | -105 | 0 |
Net income | $0 | $196 | $0 |
Related_Party_Transactions_Det
Related Party Transactions (Details) (Parent and its affiliates, USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Parent and its affiliates | |||
Related Party Transactions | |||
Net fees paid for services provided by the related parties | $6,497 | $7,232 | $9,132 |
Schedule_ISummary_of_Investmen1
Schedule I-Summary of Investments Other-Than-Investments in Related Parties (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | $120,258 | |
Fair Value | 135,394 | |
Amount at which shown in balance sheet | 132,800 | 138,701 |
Fixed maturity securities | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 85,562 | |
Fair Value | 97,469 | |
Amount at which shown in balance sheet | 97,469 | |
United States Government and government agencies and authorities | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 608 | |
Fair Value | 797 | |
Amount at which shown in balance sheet | 797 | |
States, municipalities and political subdivisions | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 26,614 | |
Fair Value | 28,918 | |
Amount at which shown in balance sheet | 28,918 | |
Foreign governments | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 255 | |
Fair Value | 376 | |
Amount at which shown in balance sheet | 376 | |
Commercial mortgage-backed | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 470 | |
Fair Value | 499 | |
Amount at which shown in balance sheet | 499 | |
Residential mortgage-backed | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 6,653 | |
Fair Value | 7,701 | |
Amount at which shown in balance sheet | 7,701 | |
Corporate | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 50,962 | |
Fair Value | 59,178 | |
Amount at which shown in balance sheet | 59,178 | |
Non-redeemable preferred stocks | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 7,333 | |
Fair Value | 7,968 | |
Amount at which shown in balance sheet | 7,968 | |
Commercial mortgage loans on real estate, at amortized cost | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 19,772 | |
Fair Value | 22,366 | |
Amount at which shown in balance sheet | 19,772 | |
Policy loans | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 217 | |
Fair Value | 217 | |
Amount at which shown in balance sheet | 217 | |
Short-term investments | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 7,202 | |
Fair Value | 7,202 | |
Amount at which shown in balance sheet | 7,202 | |
Other investments. | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 172 | |
Fair Value | 172 | |
Amount at which shown in balance sheet | $172 |
Schedule_IIISupplementary_Insu1
Schedule III-Supplementary Insurance Information (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Schedule III-Supplementary Insurance Information | |||
Future policy benefits and expenses | $210,978 | $146,041 | $136,447 |
Unearned premiums | 4,281 | 2,996 | 3,256 |
Claims and benefits payable | 108,426 | 110,544 | 116,068 |
Premium revenue | 23,702 | 27,343 | 30,077 |
Net investment income | 6,834 | 7,000 | 7,561 |
Benefits claims, losses and settlement expenses | 15,941 | 21,281 | 19,617 |
Other operating expenses | $7,755 | $9,935 | $12,454 |
Schedule_IVReinsurance_Details
Schedule IV-Reinsurance (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Life Insurance in Force | |||
Direct amount | $907,453 | $1,305,072 | $1,527,165 |
Ceded to other companies | 132,724 | 144,288 | 157,762 |
Assumed from other Companies | 0 | 0 | 0 |
Net amount | 774,729 | 1,160,784 | 1,369,403 |
Percentage of amount assumed to net | 0.00% | 0.00% | 0.00% |
Premiums: | |||
Direct amount | 27,244 | 32,637 | 34,782 |
Ceded to other companies | 9,295 | 11,625 | 11,512 |
Assumed from other companies | 5,753 | 6,331 | 6,807 |
Net earned premiums | 23,702 | 27,343 | 30,077 |
Percentage of amount assumed to net | 24.30% | 23.20% | 22.60% |
Benefits: | |||
Direct Amount | 93,437 | 32,561 | 35,403 |
Less: Reinsurance ceded and other | 81,665 | 19,453 | 20,665 |
Assumed policyholder benefits | 4,169 | 8,173 | 4,879 |
Net policyholder benefits | 15,941 | 21,281 | 19,617 |
Percentage of amount assumed to net | 26.10% | 38.40% | 24.90% |
Life insurance | |||
Premiums: | |||
Direct amount | 4,715 | 6,088 | 5,908 |
Ceded to other companies | 1,064 | 1,616 | 961 |
Assumed from other companies | 0 | 0 | 0 |
Net earned premiums | 3,651 | 4,472 | 4,947 |
Percentage of amount assumed to net | 0.00% | 0.00% | 0.00% |
Benefits: | |||
Direct Amount | 3,775 | 4,617 | 4,217 |
Less: Reinsurance ceded and other | 1,462 | 2,226 | 1,653 |
Assumed policyholder benefits | 0 | 0 | 0 |
Net policyholder benefits | 2,313 | 2,391 | 2,564 |
Percentage of amount assumed to net | 0.00% | 0.00% | 0.00% |
Accident and health insurance | |||
Premiums: | |||
Direct amount | 22,529 | 26,549 | 28,874 |
Ceded to other companies | 8,231 | 10,009 | 10,551 |
Assumed from other companies | 5,753 | 6,331 | 6,807 |
Net earned premiums | 20,051 | 22,871 | 25,130 |
Percentage of amount assumed to net | 28.70% | 27.70% | 27.10% |
Benefits: | |||
Direct Amount | 89,662 | 27,944 | 31,186 |
Less: Reinsurance ceded and other | 80,203 | 17,227 | 19,012 |
Assumed policyholder benefits | 4,169 | 8,173 | 4,879 |
Net policyholder benefits | $13,628 | $18,890 | $17,053 |
Percentage of amount assumed to net | 30.60% | 43.30% | 28.60% |
Schedule_VValuation_and_Qualif1
Schedule V-Valuation and Qualifying Accounts (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Movement in valuation and qualifying accounts | |||
Balance at Beginning of Year | $398 | $512 | $512 |
Charged to Costs and Expenses | -12 | -114 | 0 |
Charged to Other Accounts | 0 | 0 | 0 |
Deductions | 0 | 0 | 0 |
Balance at End of Year | 386 | 398 | 512 |
Valuation allowance for mortgage loans on real estate | |||
Movement in valuation and qualifying accounts | |||
Balance at Beginning of Year | 398 | 512 | 512 |
Charged to Costs and Expenses | -12 | -114 | 0 |
Charged to Other Accounts | 0 | 0 | 0 |
Deductions | 0 | 0 | 0 |
Balance at End of Year | $386 | $398 | $512 |