Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2021 | |
Cover [Abstract] | |
Entity Registrant Name | UNION SECURITY LIFE INSURANCE CO OF NEW YORK |
Entity Central Index Key | 0000914804 |
Document Type | S-1 |
Amendment Flag | false |
Entity Filer Category | Non-accelerated Filer |
Entity Emerging Growth Company | false |
Entity Small Business | false |
Balance Sheets
Balance Sheets - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Investments: | ||
Fixed maturity securities available for sale, at fair value (amortized cost — $30.1 in 2021 and $38.4 in 2020) | $ 32.8 | $ 42.6 |
Short-term investments | 12 | 4.2 |
Total investments | 44.8 | 46.8 |
Cash and cash equivalents | 0.6 | 0.5 |
Reinsurance recoverables (net of allowances for credit losses of $0.3 and $0.4 at December 31, 2021 and 2020, respectively) | 435.7 | 423.6 |
Other assets | 1.7 | 1.3 |
Assets held in separate accounts | 11.9 | 11.5 |
Total assets | 494.7 | 483.7 |
Liabilities | ||
Future policy benefits and expenses | 333.2 | 328.7 |
Unearned premiums | 2.2 | 2.3 |
Claims and benefits payable | 101 | 93.5 |
Deferred gain on disposal of businesses | 0.8 | 1 |
Accounts payable and other liabilities | 0.3 | 0.2 |
Liabilities related to separate accounts | 11.9 | 11.5 |
Total liabilities | 449.4 | 437.2 |
Commitments and contingencies (Note 13) | ||
Stockholder's equity | ||
Common stock, par value $20 per share, 100,000 shares authorized, issued, and outstanding | 2 | 2 |
Additional paid-in capital | 39.6 | 39.6 |
Retained earnings | 1.5 | 1.5 |
Accumulated other comprehensive income | 2.2 | 3.4 |
Total stockholder's equity | 45.3 | 46.5 |
Total liabilities and stockholder's equity | $ 494.7 | $ 483.7 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Investment exposure | $ 30.1 | $ 38.4 |
Reinsurance recoverable, allowance for credit loss | $ 0.3 | $ 0.4 |
Common stock, par value (in dollars per share) | $ 20 | $ 20 |
Common stock, shares authorized (in shares) | 100,000 | 100,000 |
Common stock, shares issued (in shares) | 100,000 | 100,000 |
Common stock, shares outstanding (in shares) | 100,000 | 100,000 |
Statements of Operations
Statements of Operations - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues | |||
Net earned premiums | $ 0.5 | $ 0.6 | $ 0.7 |
Net investment income | 1.3 | 1.6 | 1.9 |
Net realized gains on investments | 0.2 | 0.1 | 0 |
Amortization of deferred gains on disposal of businesses | 0.2 | 0.3 | 0.2 |
Total revenues | 2.2 | 2.6 | 2.8 |
Benefits, losses and expenses | |||
Policyholder benefits | 0.2 | 0.4 | 0.3 |
Underwriting, general and administrative expenses | 0.5 | 1 | 0.6 |
Total benefits, losses and expenses | 0.7 | 1.4 | 0.9 |
Income before provision for income taxes | 1.5 | 1.2 | 1.9 |
Provision for income taxes | 0.3 | 0.2 | 0.3 |
Net income | $ 1.2 | $ 1 | $ 1.6 |
Statements of Comprehensive Inc
Statements of Comprehensive Income - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 1.2 | $ 1 | $ 1.6 |
Other comprehensive (loss) income: | |||
Change in unrealized gains on securities, net of taxes of $0.3 million, $(0.2) million, and $(0.3) million, respectively | (1.2) | 0.7 | 1 |
Total other comprehensive (loss) income | (1.2) | 0.7 | 1 |
Total comprehensive income | $ 0 | $ 1.7 | $ 2.6 |
Statements of Comprehensive I_2
Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | |||
Change in unrealized gains on securities, taxes | $ 0.3 | $ (0.2) | $ (0.3) |
Statements of Changes in Stockh
Statements of Changes in Stockholder's Equity - USD ($) $ in Millions | Total | Cumulative effect of change in accounting principles, net of taxes | [2] | Common Stock | Additional Paid-in Capital | Retained Earnings | Retained EarningsCumulative effect of change in accounting principles, net of taxes | [2] | Accumulated Other Comprehensive Income | |
Beginning Balance at Dec. 31, 2018 | $ 49.3 | $ 2 | $ 45.2 | $ 0.4 | $ 1.7 | |||||
Equity | ||||||||||
Accounting Standards Update [Extensible List] | Accounting Standards Update 2016-13 [Member] | |||||||||
Net income | $ 1.6 | 1.6 | ||||||||
Dividends to Parent | [1] | (4.7) | (3.4) | (1.3) | ||||||
Other comprehensive income | 1 | 1 | ||||||||
Ending Balance at Dec. 31, 2019 | 47.2 | $ (0.2) | 2 | 41.8 | 0.7 | $ (0.2) | 2.7 | |||
Equity | ||||||||||
Net income | 1 | 1 | ||||||||
Dividends to Parent | [1] | (2.4) | (2.4) | |||||||
Parental loan extinguishment | [3] | 0.2 | 0.2 | |||||||
Other comprehensive income | 0.7 | 0.7 | ||||||||
Ending Balance at Dec. 31, 2020 | 46.5 | 2 | 39.6 | 1.5 | 3.4 | |||||
Equity | ||||||||||
Net income | 1.2 | 1.2 | ||||||||
Dividends to Parent | (1.2) | (1.2) | ||||||||
Other comprehensive income | (1.2) | (1.2) | ||||||||
Ending Balance at Dec. 31, 2021 | $ 45.3 | $ 2 | $ 39.6 | $ 1.5 | $ 2.2 | |||||
[1] | Dividends are required to be deducted from retained earnings available as of the dividend date and when depleted, deducted from additional paid-in capital. | |||||||||
[2] | Amount relates to the adoption of a new accounting standard for accounting for expected credit losses for assets held at amortized cost, which established allowances for such expected credit losses as of January 1, 2020. See Note 2 for additional information. | |||||||||
[3] | Amount relates to a loan from Parent that was extinguished during 2020, which in accordance with ASC 470, Debt, was treated as a capital transaction given it was between related entities. |
Statements of Cash Flows
Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Operating activities | |||
Net income | $ 1.2 | $ 1 | $ 1.6 |
Noncash revenues, expenses, gains and losses included in income: | |||
Amortization of deferred gains on disposal of businesses | (0.2) | (0.3) | (0.2) |
Depreciation and amortization | 0.1 | 0 | (0.1) |
Deferred tax expense | 0 | (0.2) | (0.1) |
Net realized gains on investments | (0.2) | (0.1) | 0 |
Changes in operating assets and liabilities: | |||
Reinsurance recoverable | 0.5 | (0.2) | 0.3 |
Insurance policy reserves and expenses | (0.6) | 0.1 | (0.1) |
Other assets and other liabilities | (0.2) | 0.4 | (0.3) |
Taxes payable | 0.1 | 0 | 0.1 |
Other | 0.1 | 0 | 0 |
Net cash provided by operating activities | 0.8 | 0.7 | 1.2 |
Sales of: | |||
Fixed maturity securities available for sale | 9.1 | 0.5 | 11.6 |
Equity securities | 0 | 0 | 0 |
Maturities, prepayments, and scheduled redemption of: | |||
Fixed maturity securities available for sale | 12.7 | 8.1 | 3.2 |
Purchases of: | |||
Fixed maturity securities available for sale | (13.4) | (3.5) | (11.5) |
Change in short-term investments | (7.9) | (3.6) | 0.2 |
Net cash provided by investing activities | 0.5 | 1.5 | 3.5 |
Financing activities | |||
Cash dividends paid | (1.2) | (2.4) | (4.7) |
Net cash used in financing activities | (1.2) | (2.4) | (4.7) |
Change in cash and cash equivalents | 0.1 | (0.2) | 0 |
Cash and cash equivalents at beginning of period | 0.5 | 0.7 | 0.7 |
Cash and cash equivalents at end of period | 0.6 | 0.5 | 0.7 |
Supplemental information: | |||
Income taxes paid | $ 0.2 | $ 0.4 | $ 0.4 |
Nature of Operations and Items
Nature of Operations and Items Impacting Basis of Presentation | 12 Months Ended |
Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF OPERATIONS AND ITEMS IMPACTING BASIS OF PRESENTATION | NATURE OF OPERATIONS AND ITEMS IMPACTING BASIS OF PRESENTATION Overview: Union Security Life Insurance Company of New York (the "Company") is domiciled in New York and is a provider of life, health, annuity insurance, credit life and credit disability products. The Company's financial statements also reflect the assets, liabilities and activity associated with businesses that were sold through reinsurance and coinsurance arrangements. In 2016 Assurant entered into a reinsurance agreement with Sun Life and Health Insurance Company (U.S.) ("Sun Life") for the sale of its Assurant Employee Benefits ("AEB") segment. In 2001, Assurant entered into a reinsurance agreement with Talcott Resolution (formerly owned by The Hartford) for the sale of the Fortis Financial Group ("FFG") division. In 2000, the Company divested its Long-Term Care ("LTC") operations to John Hancock Life Insurance Company, a subsidiary of Manulife Financial Corporation ("John Hancock"). Assets supporting liabilities ceded relating to these businesses are mainly held in trusts and the separate accounts relating to FFG are still reflected in the Company's balance sheet. The Company is a wholly-owned subsidiary of the Parent. The Parent's common stock is traded on the New York Stock Exchange under the symbol "AIZ". |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 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 millions, except for number of shares, per share amounts and number of loans. Use of Estimates The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts. The items affected by the use of estimates include but are not limited to, investments, reinsurance recoverables, other assets, 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. 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 5 for additional information. Investments Fixed maturity securities are classified as available-for-sale as defined in the investments guidance and are reported at fair value. If the fair value is higher than the amortized cost for fixed maturity securities, the excess is an unrealized gain; and, if lower than amortized 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 AOCI. Effective January 1, 2020, the Company adopted certain changes to the accounting and reporting for impairments involving available for sale securities, including presentation of credit-related impairments as an allowance rather than as an other-than-temporary impairment, eliminating duration of unrealized losses as a consideration when assessing recognition of an impairment, recognition of credit impairments upon purchase of securities as applicable, and requiring reversals of previously recognized credit-related impairments when applicable. For available for sale fixed maturity securities in an unrealized loss position for which the Company does not intend to sell or for which it is more likely than not that the Company would not be required to sell before an anticipated recovery in value, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Company considers the extent to which fair value is less than amortized cost basis, changes to the credit rating of the security by a nationally recognized statistical ratings organization and any adverse conditions specifically related to the security, industry or geographic area, among other factors. If this assessment indicates a potential credit loss may exist, the present value of cash flows expected to be collected are compared to the security’s amortized cost basis. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit-related impairment exists, and a charge to income and an associated allowance for credit losses is recorded for the credit-related impairment. Any impairment not related to credit losses is recorded through other comprehensive income. The amount of the allowance for credit losses is limited to the amount by which fair value is less than the amortized cost basis. Upon recognizing a credit-related impairment, the cost basis of the security is not adjusted. Subsequent changes in the allowance for credit losses are recorded as provision for, or reversal of, credit loss expense. For fixed maturities where the Company records a credit loss, a determination is made as to the cause of the impairment and whether the Company expects a recovery in the value. Write-offs are charged against the allowance when management concludes the financial asset is uncollectible. For fixed maturities where the Company expects a recovery in value, the effective yield method is utilized, and the investment is amortized to par. For available for sale fixed maturity securities that the Company intends to sell, or for which it is more likely than not that the Company will be required to sell before recovery of its amortized cost basis, the entire impairment loss, or difference between the fair value and amortized cost basis of the security, is recognized in net realized gains (losses). The new cost basis of the security is the previous amortized cost basis less the impairment recognized and is not adjusted for any subsequent recoveries in fair value. The Company reports receivables for accrued investment income separately from fixed maturities available for sale and elected not to measure allowances for credit losses for accrued investment income as uncollectible balances are written off in a timely manner. Short-term investments include securities and other investments with durations of one year or less, but greater than three months, between the date of purchase and maturity. These amounts are reported at cost or amortized cost, which approximates fair value. 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 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 for the majority of the Company's mortgage-backed and structured securities. Cash and Cash Equivalents The Company considers all highly liquid securities and other investments with durations of three months or less between the date of purchase and maturity 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 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 and other liabilities. Reinsurance For both ceded and assumed reinsurance, risk transfer requirements must be met for reinsurance accounting to apply. If risk transfer requirements are not met, the contract is accounted for as a deposit, resulting in the recognition of cash flows under the contract through a deposit asset or liability and not as revenue or expense. To meet risk transfer requirements, a reinsurance contract must include both insurance risk, consisting of both underwriting and timing risk, and a reasonable possibility of a significant loss for the assuming entity. Similar risk transfer criteria are used to determine whether directly written insurance contracts should be accounted for as insurance or as a deposit. 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 as a reduction to premiums earned over the terms of the underlying reinsured 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 reinsurer insolvencies, the Company evaluates the financial condition of its reinsurers and typically holds collateral (in the form of funds withheld, trusts and letters of credit) as security under the reinsurance agreements. Effective January 1, 2020, the Company adopted the expected credit loss model for reinsurance recoverables. The Company uses a probability of default and loss given default methodology in estimating the allowance, whereby the credit ratings of reinsurers are used in determining the probability of default. The allowance is established for reinsurance recoverables on paid and unpaid future policy benefits and claims and benefits. Prior to applying default factors, the net exposure to credit risk is reduced for any collateral for which the right of offset exists, such as funds withheld, assets held in trust and letters of credit, which are part of the reinsurance arrangements, with adjustments to include consideration of credit exposure on the collateral. The methodology used by the Company incorporates historical default factors for each reinsurer based on their credit rating using comparably rated bonds as published by a major ratings service. The allowance is based upon the Company’s ongoing review of amounts outstanding, length of collection periods, changes in reinsurer credit standing and other relevant factors. Prior to January 1, 2020, an allowance for doubtful accounts was recorded on the basis of periodic evaluations of balances due from reinsurers (net of collateral), reinsurer solvency, historical collection experience and current economic conditions. 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. Other Assets Other assets include prepaid items, income tax receivable, deferred income tax assets and accrued investment income. Separate Accounts Assets and liabilities associated with separate accounts relate to premium and annuity 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 underlying accounts involve investment-type annuity contracts and/or are subject to reinsurance. Reserves Reserves are established using generally accepted actuarial methods and reflect judgments about expected future premium and claim payments. Factors used in their calculation include experience derived from historical claim payments, expected future premiums and actuarial assumptions. Calculations incorporate assumptions about the incidence of incurred claims, the extent to which all claims have been reported, reporting lags, expenses, inflation rates, future investment earnings, internal claims processing costs and other relevant factors. The estimation of reserves includes an element of uncertainty given that management is using historical information and methods to project future events and reserve outcomes. The recorded reserves represent the Company’s best estimate at a point in time of the ultimate costs of settlement and administration of a claim or group of claims based upon actuarial assumptions and projections using 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: changes in the economic cycle, inflation, natural or human-made catastrophes, judicial trends, legislative changes and claims handling procedures. Many of these items are not directly quantifiable and not all future events can be anticipated when reserves are established. Reserve estimates are refined as experience develops. Adjustments to reserves, both positive and negative, are reflected in the statement of operations in the period in which such estimates are updated. Because establishment of reserves is an inherently complex process involving significant judgment and estimates, there can be no certainty that future settlement amounts for claims incurred through the financial reporting date will not vary from reported claims reserves. Future loss development could require reserves to be increased or decreased, which could have a material effect on the Company’s earnings in the periods in which such increases or decreases are made. However, based on information currently available, the Company believes its reserve estimates are adequate. The following table provides reserve information for our major product lines for the years ended December 31, 2021 and 2020: December 31, 2021 December 31, 2020 Claims and Benefits Payable Claims and Benefits Payable Future Unearned Case Incurred Future Unearned Case Incurred Long Duration Contracts: Universal life and other products no longer offered $ — $ — $ 0.4 $ — $ 0.5 $ — $ 0.4 $ — Disposed and run-off businesses 333.2 2.2 75.0 6.8 328.2 2.3 64.4 6.8 Short Duration Contracts: Disposed and run-off businesses — — 18.6 0.2 — — 21.7 0.2 Total $ 333.2 $ 2.2 $ 94.0 $ 7.0 $ 328.7 $ 2.3 $ 86.5 $ 7.0 For additional information regarding our reserves, see Note 10. Long Duration Contracts Future policy benefits and expense reserves for LTC and the traditional life insurance contracts fully covered by reinsurance and 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 discount, 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 adverse deviations. Claims and benefits payable for policies fully covered by reinsurance are equal to the present value of future benefit payments and related expenses. These amounts are estimated based on assumptions as to inflation, mortality, morbidity and discount rates as well as other assumptions that are based on the Company's experience. Changes in the estimated liabilities are reported as a charge or credit to policyholder benefits as the estimates are updated. Short Duration Contracts The Company’s short duration contracts include group insurance contracts no longer offered, 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. Factors used in the calculation include experience derived from historical claim payments and actuarial assumptions including loss development factors and expected loss ratios. Changes in the estimated liabilities are recorded as a charge or credit to policyholder benefits as estimates are updated. Contingencies 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 amount 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 legal and regulatory matters, which are inherently difficult to evaluate and are subject to significant changes. Premiums Long Duration Contracts Premiums for long term care insurance and life insurance contracts no longer offered are recognized as revenue when due from the policyholder. For investment-type annuity contracts, revenues consist of charges assessed against policy balances. Short Duration Contracts The Company’s short duration contracts revenue is recognized over the contract term in proportion to the amount of insurance protection provided. 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. 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 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 utilized 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 impact of changes in tax rates on all deferred tax assets and liabilities are required to be reflected within income on the enactment date, regardless of the financial statement component where the deferred tax originated. The Company classifies net interest expense related to tax matters and any applicable penalties as a component of income tax expense. Comprehensive Income Comprehensive income is comprised of net income, and net unrealized gains and losses on securities classified as available for sale, less deferred income taxes. Recent Accounting Pronouncements — Adopted Measurement of credit losses on financial instruments held at amortized cost (“CECL”) : In June 2016, the Financial Accounting Standards Board ("FASB") issued amended guidance on reporting credit losses for assets held at amortized cost and available for sale debt securities. For assets held at amortized cost, the amended guidance eliminates the probable recognition threshold and instead requires an entity to reflect the current estimate of all expected credit losses. For available for sale debt securities, credit losses are measured in a manner similar to accounting requirements in effect prior to adoption; however, the amended guidance requires that credit-related impairment losses be presented as an allowance rather than as a permanent impairment. The amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, premium receivables, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. The Company adopted this standard as of January 1, 2020. Refer to Note 3 for additional information. Simplifying the Accounting for Income Taxes: In December 2019, the FASB issued new guidance to simplify the accounting for income taxes by removing certain exceptions to the general principles and also simplify areas such as franchise taxes, step-up in tax basis goodwill, separate entity financial statements and interim recognition of enactment of tax laws or rate changes. The Company adopted this standard as of January 1, 2021, with no material impact on its financial position or results of operations. Recent Accounting Pronouncements — Not Yet Adopted Targeted improvements to the accounting for long-duration contracts: In August 2018, the FASB issued guidance that provides targeted improvements to the accounting for long-duration contracts. The guidance includes the following primary changes: assumptions supporting benefit reserves will no longer be locked-in but must be updated at least annually with the impact of changes to the liability reflected in earnings (except for discount rates); the discount rate assumptions will be based on upper-medium grade (low credit risk) fixed-income instrument yield instead of the earnings rate of invested assets; the discount rate must be evaluated at each reporting date and the impact of changes to the liability estimate as a result of updating the discount rate assumption is required to be recognized in other comprehensive income; the provision for adverse deviation is eliminated; and premium deficiency testing is eliminated. Other noteworthy changes include the following: differing models for amortizing deferred acquisition costs will become uniform for all long-duration contracts based on a constant rate over the expected term of the related in force contracts; all market risk benefits associated with deposit contracts must be reported at fair value with changes reflected in income except for changes related to credit risk which will be recognized in other comprehensive income; and disclosures will be expanded to include disaggregated roll forwards of the liability for future policy benefits, policyholder account balances, market risk benefits, separate account liabilities, and deferred acquisition costs, as well as information about significant inputs, judgments, assumptions and methods used in measurement. The guidance is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. Early adoption is permitted. Generally, the amendments are applied retrospectively as of the beginning of the earliest period presented with two transition options available for changing the assumptions. The Company is evaluating the requirements of this guidance and the potential impact on the Company's financial position and results of operations. Facilitation of the Effects of Reference Rate Reform on Financial Reporting : In March 2020, the FASB issued guidance which provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The relief is applicable only to legacy contracts if the amendments made to the agreements are solely for reference rate reform activities. The provisions must be applied consistently for all relevant transactions other than derivatives, which may be applied at a hedging relationship level. The guidance is effective upon issuance. The guidance on contract modifications is applied prospectively from any date beginning March 12, 2020. The provisions of this update are only available until December 31, 2022, when the reference rate replacement activity is expected to have been completed. The adoption of this standard is expected to have no material impact on the Company’s financial position and results of operations. |
Allowance for Credit Losses
Allowance for Credit Losses | 12 Months Ended |
Dec. 31, 2021 | |
Credit Loss [Abstract] | |
Allowance for Credit Losses | Allowance for Credit Losses The Company adopted the expected credit loss standard using a modified retrospective method for all financial assets measured at amortized cost. Results for the reporting periods beginning January 1, 2020 and after are presented under such method while prior period amounts are reported in accordance with previous applicable GAAP. The Company recorded a decrease of $0.2 million to retained earnings, net of tax, as of January 1, 2020 for the cumulative impact of adoption. The total allowance for credit losses for the financial assets was $0.3 million and $0.4 million as of December 31, 2021 and 2020, respectively. For the year ended December 31, 2021, the net decrease in the allowance for credit losses that increased pre-tax income was $0.1 million, which is included in underwriting, general and administrative expenses. Reinsurance Recoverables As part of the Company’s overall risk and capacity management strategy, reinsurance is used to mitigate certain risks underwritten by various business segments. The Company is exposed to the credit risk of reinsurers, as the Company remains liable to insureds regardless of whether related reinsurance recoverables are collected. As of December 31, 2021 and 2020, reinsurance recoverables totaled $435.7 million and $423.6 million, respectively, the majority of which are protected from credit risk by various types of collateral or other risk mitigation mechanisms, such as trusts, letters of credit or by withholding the assets in a modified coinsurance or funds withheld arrangement. The Company utilizes external credit ratings published by S&P Global Ratings, a division of S&P Global Inc., at the balance sheet date when determining the allowance. Where rates are not available, the Company assigns default credit ratings based on if the reinsurer is authorized or unauthorized. Of the total recoverables subject to the allowance, 99% were rated A- or better and 1% were rated BBB or BB for the year ended December 31, 2021; and 100% were rated A- or better for the year ended December 31, 2020. The following table presents the changes in the allowance for credit losses for reinsurance recoverables for the periods indicated: Total Balance, December 31, 2019 $ — Cumulative effect of adoption 0.3 Current period change for credit losses 0.1 Balance, December 31, 2020 0.4 Current period change for credit losses $ (0.1) Balance, December 31, 2021 $ 0.3 |
Investments
Investments | 12 Months Ended |
Dec. 31, 2021 | |
Investments, Debt and Equity Securities [Abstract] | |
INVESTMENTS | INVESTMENTS The following tables show the cost or amortized cost, gross unrealized gains and losses, and fair value of the Company's fixed maturity securities as of the dates indicated: December 31, 2021 Cost or Gross Gross Fair Value Fixed maturity securities: U.S. government and government agencies and authorities $ 0.9 $ — $ — $ 0.9 States, municipalities and political subdivisions 0.5 — — 0.5 Foreign governments 0.5 0.1 — 0.6 Residential mortgage-backed 4.4 — — 4.4 Commercial mortgage-backed 2.0 — — 2.0 U.S. corporate 16.2 1.9 — 18.1 Foreign corporate 5.6 0.7 — 6.3 Total fixed maturity securities $ 30.1 $ 2.7 $ — $ 32.8 December 31, 2020 Cost or Gross Gross Fair Value Fixed maturity securities: U.S. government and government agencies and authorities $ 0.9 $ — $ — $ 0.9 States, municipalities and political subdivisions 2.0 0.1 — 2.1 Foreign governments 0.3 0.1 — 0.4 Residential mortgage-backed 1.1 0.1 — 1.2 Commercial mortgage-backed 0.7 — — 0.7 U.S. corporate 27.0 3.0 — 30.0 Foreign corporate 6.4 0.9 — 7.3 Total fixed maturity securities $ 38.4 $ 4.2 $ — $ 42.6 The cost or amortized cost and fair value of fixed maturity securities at December 31, 2021 by contractual maturity are shown below. Actual 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. December 31, 2021 Cost or Fair Due in one year or less $ 2.5 $ 2.5 Due after one year through five years 11.8 12.2 Due after five years through ten years 7.4 8.6 Due after ten years 2.0 3.0 Total 23.7 26.3 Residential mortgage-backed 4.4 4.5 Commercial mortgage-backed 2.0 2.0 Total $ 30.1 $ 32.8 The following table shows the major categories of net investment income for the periods indicated: Years Ended December 31, 2021 2020 2019 Fixed maturity securities $ 1.4 $ 1.7 $ 1.9 Other — — 0.1 Total investment income 1.4 1.7 2.0 Investment expenses (0.1) (0.1) (0.1) Net investment income $ 1.3 $ 1.6 $ 1.9 No material investments of the Company were non-income producing for the years ended December 31, 2021, 2020 and 2019. The following table summarizes the proceeds from sales of available-for-sale fixed maturities and the gross realized gains and gross realized losses that have been recognized in the statement of operations as a result of those sales for the periods indicated: Years Ended December 31, 2021 2020 2019 Proceeds from sales $ 9.1 $ 0.5 $ 11.6 Gross realized gains 0.2 0.1 — Gross realized losses — — — Net realized gains (losses) from sales of fixed maturity securities $ 0.2 $ 0.1 $ — The following table sets forth the net realized gains (losses) recognized in the statement of operations for the periods indicated: Years Ended December 31, 2021 2020 2019 Net realized gains (losses) related to sales: Net realized gains (losses) from sales of fixed maturity securities $ 0.2 $ 0.1 $ — The Company had fixed maturity securities of $0.9 million as of December 31, 2021 and 2020, respectively, on deposit with various governmental authorities as required by law. |
Fair Value Disclosures
Fair Value Disclosures | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE DISCLOSURES | 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. The Company has categorized its recurring fair value 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 takes into account 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 or liability, either directly or indirectly, for substantially the full term of the asset or liability. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and inputs other than quoted prices that are observable in the marketplace for the asset or liability. The observable inputs are used in valuation models to calculate the fair value for the asset or liability. • Level 3 inputs are unobservable but are significant to the fair value measurement for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. These inputs reflect management's own assumptions about the assumptions a market participant would use in pricing the asset or liability. The Company reviews fair value hierarchy classifications 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, 2021 and 2020. The amounts presented below for cash equivalents 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, 2021 Total Level 1 Level 2 Level 3 Financial Assets Fixed maturity securities: U.S. government and government agencies and authorities $ 0.9 $ — $ 0.9 $ — States, municipalities and political subdivisions 0.6 — 0.6 — Foreign governments 0.6 — 0.6 — Commercial mortgage-backed 2.0 — 2.0 — Residential mortgage-backed 4.5 — 4.5 — U.S. corporate 18.0 — 18.0 — Foreign corporate 6.2 — 6.2 — Short-term investments 12.0 12.0 (1) — — Cash equivalents 0.4 0.4 (1) — — Assets held in separate accounts 11.9 7.8 (2) 4.1 (3) — Total financial assets $ 57.1 $ 20.2 $ 36.9 $ — Financial Liabilities Liabilities related to separate accounts $ 11.9 $ 7.8 (2) $ 4.1 (3) $ — December 31, 2020 Total Level 1 Level 2 Level 3 Financial Assets Fixed maturity securities: U.S. government and government $ 0.9 $ — $ 0.9 $ — States, municipalities and political subdivisions 2.1 — 2.1 — Foreign governments 0.4 — 0.4 — Commercial mortgage-backed 0.7 — 0.7 — Residential mortgage-backed 1.2 — 1.2 — U.S. corporate 30.0 — 30.0 — Foreign corporate 7.3 — 7.3 — Short-term investments 4.2 4.2 (1) — — Cash equivalents 0.2 0.2 (1) — — Assets held in separate accounts 11.5 6.8 (2) 4.7 (3) — Total financial assets $ 58.5 $ 11.2 $ 47.3 $ — Financial Liabilities Liabilities related to separate accounts $ 11.5 $ 6.8 (2) $ 4.7 (3) $ — (1) Primarily includes money market funds. (2) Primarily includes mutual funds and related obligations. (3) Primarily includes fixed maturity securities and related obligations. The Company held no level 3 assets or liabilities during the years ended December 31, 2021 and 2020. 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, the Company uses valuation techniques consistent with the market approach including matrix pricing and comparables. Matrix pricing is a mathematical technique employed principally to value debt securities without relying exclusively on quoted prices for those securities but, rather, 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. 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, the Company may use one or more valuation techniques. For all the classes of financial assets and liabilities included in the above hierarchy, the Company generally uses the market valuation technique. For the years ended December 31, 2021 and 2020, 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, 2021 and 2020, consisted of mutual funds and related obligations and money market funds that are publicly listed and/or actively traded in an established market. Level 2 Securities The Company uses a pricing service to value Level 2 securities using various observable market inputs. The pricing service prepares estimates of fair value measurements for the Company’s 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 Company uses the following observable market inputs (“standard inputs”), listed in the approximate order of priority, 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: U.S. government and government agencies and authorities: U.S. government and government agencies and authorities securities are priced by the Company's 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. States, municipalities and political subdivisions: States, municipalities and political subdivisions securities are priced by the Company's pricing service using material event notices and new issue data inputs in addition to the standard inputs. Foreign governments: Foreign government securities are priced by the Company's pricing service using 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 and asset-backed: Commercial mortgage-backed and residential mortgage-backed are priced by the Company's pricing service using 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. U.S. and foreign corporate: Corporate securities are priced by the Company's pricing service using standard inputs. Non-investment grade securities within this category are priced by the Company's pricing service using observations of equity and credit default swap curves related to the issuer in addition to the standard inputs. Short-term investments, cash equivalents, and assets held in separate accounts and liabilities related to separate accounts: To price the fixed maturity securities and related obligations in these categories, the pricing service utilizes the standard inputs. Valuation models used by the pricing service can change from period to period, depending on the appropriate observable inputs that are available at the balance sheet date to price a security. 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: • whether there are few recent transactions, • whether little information is released publicly, • whether the available prices vary significantly over time or among market participants, • whether 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 as of December 31, 2021 or 2020. The Company generally obtains one price for each financial asset. The Company performs a periodic analysis to assess if the evaluated prices represent a reasonable estimate of the financial assets' fair values. 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 the Company's assets in the fair value hierarchy. Fair Value of Financial Instruments Disclosures The financial instruments guidance requires disclosure of fair value information about financial instruments, 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, including 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 additional 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; • Short-term investments; • Assets held in separate accounts; and • 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: 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. The following tables disclose the carrying value, fair value and hierarchy level of the financial instruments that are not recognized or are not carried at fair value in the balance sheet as of the dates indicated: December 31, 2021 Fair Value Carrying Total Level 1 Level 2 Level 3 Financial Liabilities Policy reserves under investment products $ 4.8 $ 5.4 $ — $ — $ 5.4 December 31, 2020 Fair Value Carrying Total Level 1 Level 2 Level 3 Financial Liabilities Policy reserves under investment products (Individual and group annuities, subject to discretionary withdrawal) (1) $ 5.2 $ 6.5 $ — $ — $ 6.5 (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, 2021 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | 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. The components of income tax expense (benefit) were as follows for the periods indicated: Years Ended December 31, 2021 2020 2019 Current income tax expense $ 0.3 $ 0.4 $ 0.4 Deferred income tax (benefit) expense — (0.2) (0.1) Total income tax expense $ 0.3 $ 0.2 $ 0.3 A reconciliation of the federal income tax rate to the Company's effective income tax rate follows for the periods indicated: December 31, 2021 2020 2019 Federal income tax rate: 21.0 % 21.0 % 21.0 % Reconciling items: Tax exempt interest (1.3) (3.8) (2.9) Dividend received deduction (0.3) (0.4) (0.1) Other — (0.2) (30.0) Effective income tax rate: 19.4 % 16.6 % (12.0) % The Company had no liability for unrecognized tax benefits as of and for each of the years ended December 31, 2021, 2020, and 2019.The Company does not anticipate any significant increase in the unrecognized tax benefit within the next 12 months. The Parent files its consolidated income tax returns in the U.S. and various state jurisdictions. The Parent has substantially concluded all U.S. federal income tax matters for years through 2015. Substantially all state and local income tax matters have been concluded for the years through 2012. The tax effects of temporary differences that result in deferred tax assets and deferred tax liabilities are as follows as of the dates indicated: December 31, 2021 2020 Deferred tax assets Deferred acquisition costs $ 1.4 $ 1.3 Deferred gain on disposal of business 0.2 0.2 Investments, net 0.1 0.1 Other 0.2 0.3 Total deferred tax assets 1.9 1.9 Deferred tax liabilities Net unrealized appreciation on securities (0.6) (0.9) Total deferred tax liabilities (0.6) (0.9) Net deferred income tax assets $ 1.3 $ 1.0 The calculation of the valuation allowance is made at the consolidated return group level and analyzed at the separate company level. No valuation allowance has been recorded because it is management’s assessment that it is more likely than not that the gross deferred tax assets in the table above 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, a valuation allowance may need to be recorded in the future. As of December 31, 2020, the Company had no net operating loss, capital loss or tax credit carryforwards for U.S. federal income tax purposes. |
Stockholder's Equity
Stockholder's Equity | 12 Months Ended |
Dec. 31, 2021 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDER'S EQUITY | 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 shares are issued and outstanding as of December 31, 2021 and 2020 and are owned by the Parent (see Note 1 to the Financial Statements). The Company paid dividends to its Parent of $1.2 million, $2.4 million, and $4.7 million during the years ended December 31, 2021, 2020 and 2019, respectively. In 2020, the Parent extinguished a $0.2 million substantive debt that was owed by the Company which resulted in a non-cash capital increase within additional paid in capital. The maximum amount of dividends which can be paid by State of New York insurance companies to shareholders without prior approval of the New York Department of Financial Services is subject to restrictions relating to statutory surplus (see as described in Note 8 to the Financial Statements). |
Statutory Information
Statutory Information | 12 Months Ended |
Dec. 31, 2021 | |
Insurance [Abstract] | |
STATUTORY INFORMATION | STATUTORY INFORMATION The Company prepares an Annual Statement on the basis of statutory accounting principles (“SAP”) prescribed or permitted by the New York State 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; 9) the criteria for obtaining reinsurance accounting treatment, as well as presentation of reinsurance, is different under SAP than under GAAP; and 10) deferred gains on the sale of reinsurance are recognized as a surplus under SAP and as a liability 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 Stockholder's Equity 2021 2020 2019 2021 2020 Based on SAP $ 1.1 $ 1.2 $ 2.5 $ 42.7 $ 43.1 Investment valuation difference (0.1) — — 2.6 4.2 Deferred taxes — 0.2 0.1 (0.3) (0.6) Deferred gain on disposal of businesses and gains on disposal of businesses 0.1 (0.3) (1.0) (0.8) (1.0) Other differences 0.1 (0.1) — 1.1 0.8 Based on GAAP $ 1.2 $ 1.0 $ 1.6 $ 45.3 $ 46.5 Dividend distributions to the Parent are restricted as to the amount by state regulatory requirements. The Company declared and paid ordinary cash dividends of $1.2 million during the year ended December 31, 2021. No extraordinary dividends were declared and paid in 2021. The Company declared and paid ordinary cash dividends of $2.4 million during the year ended December 31, 2020. No extraordinary dividends were declared and paid in 2020. 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 preceding year, or the net gain from operations, or exceeds 30 percent of its surplus to policyholders. Dividends may only be paid out of earned surplus. The Company has the ability, under state regulatory requirements, to dividend up to $1.6 million to the Parent in 2022 without permission from the New York Department of Financial Services. 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. |
Reinsurance
Reinsurance | 12 Months Ended |
Dec. 31, 2021 | |
Reinsurance Disclosures [Abstract] | |
REINSURANCE | REINSURANCE In the ordinary course of business, the Company is involved in the cession of reinsurance with non-affiliated companies. The following table provides details of the reinsurance recoverables balance as of the dates indicated: 2021 2020 Ceded future policyholder benefits and expense $ 333.0 $ 328.7 Ceded unearned premium 2.2 2.3 Ceded claims and benefits payable 100.2 92.7 Ceded paid losses 0.3 (0.1) Total $ 435.7 $ 423.6 A key credit quality indicator for reinsurance is the A.M. Best Company ("A.M. Best") financial strength ratings of the reinsurer. A.M. Best financial strength ratings are an independent opinion of a reinsurer’s ability to meet ongoing obligations to policyholders. The A.M. Best ratings for the reinsurers in 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 quarterly basis, or sooner based on developments. The following table provides the reinsurance recoverable as of December 31, 2021 grouped by A.M. Best financial strength ratings: A.M. Best ratings of Ceded future Ceded unearned Ceded claims Ceded paid Total A++ or A+ $ 328.2 $ 2.2 $ 100.3 $ 0.3 $ 431.0 B++ or B+ 5.0 — — — 5.0 Not Rated — — — — — Total 333.2 2.2 100.3 0.3 436.0 Less: Allowance (0.2) — (0.1) — (0.3) Total Reinsurance recoverable $ 333.0 $ 2.2 $ 100.2 $ 0.3 $ 435.7 The Company has used reinsurance to exit certain businesses, including the disposals of AEB, FFG and LTC. The reinsurance recoverables relating to these dispositions amounted to $435.3 million as of December 31, 2021. The three reinsurers with the largest reinsurance recoverable balances relating to these dispositions were Sun Life, John Hancock, and Talcott Resolution (formerly owned by The Hartford). The A.M. Best financial strength ratings of these three insurers were A+, A+ and B++, respectively. A.M. Best currently maintains a stable outlook on the financial strength ratings of Sun Life, John Hancock and Talcott Resolution. Most of the assets backing reserves relating to reinsurance recoverables from Sun Life, John Hancock and Talcott Resolution are held in trust. If these reinsurers become insolvent, the Company would be exposed to the risk that assets in the trusts and/or the separate accounts would be insufficient to support the liabilities that would revert back to the company. The following table presents the reinsurance recoverable from John Hancock, Sun Life, Talcott Resolution, and other reinsurers as of December 31, 2021 and 2020. Years Ended December 31, Reinsurer 2021 2020 John Hancock $ 410.2 $ 394.0 Sun Life 20.1 23.3 Talcott Resolution 5.0 5.3 Other reinsurers 0.4 1.0 Total $ 435.7 $ 423.6 The largest risk is with John Hancock. As of December 31, 2021 there is $864.6 million held in trust to support the coinsurance arrangement. If the value of the assets in this trust falls below the value of the associated statutory liabilities, John Hancock will be required to put more assets in the trust. Refer to Note 2 for additional information on the methodology. The effect of reinsurance on premiums earned and benefits incurred was as follows for the period indicated: Years Ended December 31, 2021 2020 2019 Long Short Total Long Short Total Long Short Total Direct earned premiums $ 8.1 $ 0.6 $ 8.7 $ 7.7 $ 2.0 $ 9.7 $ 8.0 $ 12.2 $ 20.2 Premiums ceded (8.1) (0.1) (8.2) (7.7) (1.4) (9.1) (8.0) (11.5) (19.5) Net earned premiums $ — $ 0.5 $ 0.5 $ — $ 0.6 $ 0.6 $ — $ 0.7 $ 0.7 Direct policyholder benefits $ 35.3 $ 0.5 $ 35.8 $ 26.5 $ 2.8 $ 29.3 $ 56.8 $ 8.3 $ 65.1 Policyholder benefits ceded (35.3) (0.3) (35.6) (26.5) (2.4) (28.9) (56.8) (8.0) (64.8) Net policyholder benefits $ — $ 0.2 $ 0.2 $ — $ 0.4 $ 0.4 $ — $ 0.3 $ 0.3 The Company utilizes ceded reinsurance for loss protection and capital management, client risk and profit sharing and business divestitures. Business Divestitures As referenced in Note 1, the Company has used reinsurance or coinsurance to sell certain businesses, such as for the disposals of AEB, FFG and LTC. The reinsurance agreement associated with the FFG sale also stipulates that Talcott Resolution contributes funds to increase the value of the separate account assets relating to annuity business sold if such value declines below the value of the associated liabilities. If Talcott Resolution fails to fulfill these obligations, the Company will be obligated to make these payments. In addition, the Company would be responsible for administering all of the reinsured or coinsured businesses in the event of reinsurer or coinsurer insolvency. The Company does not currently have the administrative systems and capabilities to process these businesses. Accordingly, the Company would need to obtain those capabilities in the event of an insolvency of one or more of the reinsurers or coinsurers of these businesses. The Company 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, 2021, the Company was not aware of any regulatory actions taken with respect to the solvency of the insurance subsidiaries of Sun Life, John Hancock, or Talcott Resolution that reinsure the AEB, FFG and LTC businesses, and the Company has not been obligated to fulfill any of such reinsurers’ obligations. Sun Life, John Hancock, and Talcott Resolution have paid their obligations when due and there have been no disputes. |
Reserves
Reserves | 12 Months Ended |
Dec. 31, 2021 | |
Insurance Loss Reserves [Abstract] | |
RESERVES | RESERVES Short Duration Contracts The Company’s short duration contracts are mainly comprised of disposed and run-off business. The principal products and services included in these categories are described in the summary of significant accounting policies. See Note 2 to the Financial Statements for further information. Disposed and Run-off Short Duration Insurance Lines Disposed business includes certain medical policies no longer offered and AEB policies disposed of via reinsurance. Reserves for previously disposed business are included in the Company’s reserves in accordance with the insurance guidelines. The Company maintains an offsetting reinsurance recoverable related to the AEB reserves. See Note 9 to the Financial Statements for further information. Long Duration Contracts The Company’s long duration contracts are primarily comprised of life insurance policies (no longer offered), 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 to the Financial Statements for further information. Disposed and Run-off Long Duration Insurance Lines Reserves for previously disposed FFG and LTC businesses 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 to the Financial Statements for additional information on previously disposed business. Reserve Roll Forward The following table provides a roll forward of the Company’s beginning and ending claims and benefits payable balances. Claims and benefits payable is the liability for unpaid loss and loss adjustment expenses and are comprised of case and IBNR reserves. Since unpaid loss and loss adjustment expenses are estimates, the Company’s actual losses incurred may be more or less than the Company’s previously developed estimates, which is referred to as either unfavorable or favorable development, respectively. The best estimate of ultimate loss and loss adjustment expenses is generally selected from a blend of methods that are applied consistently each period. There have been no significant changes in the methodologies and assumptions utilized in estimating the liability for unpaid loss and loss adjustment expenses for any of the periods presented . Years Ended December 31, 2021 2020 2019 Claims and benefits payable, at beginning of year $ 93.5 $ 89.7 $ 94.4 Less: Reinsurance ceded and other (93.4) (89.6) (94.3) Net claims and benefits payable, at beginning of year 0.1 0.1 0.1 Incurred losses and loss adjustment expenses related to: Current Year 0.3 0.3 0.2 Total incurred losses and loss adjustment expenses 0.3 0.3 0.2 Paid losses and loss adjustment expenses related to: Current year 0.2 0.2 0.2 Prior years 0.1 0.1 — Total paid losses and loss adjustment expenses 0.3 0.3 0.2 Net claims and benefits payable, at end of year 0.1 0.1 0.1 Plus: Reinsurance ceded and other 100.9 93.4 89.6 Claims and benefits payable, at end of year $ 101.0 $ 93.5 $ 89.7 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | 12 Months Ended |
Dec. 31, 2021 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE INCOME | 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) for the periods indicated: Year Ended December 31, 2021 Accumulated Balance at December 31, 2020 $ 3.4 Change in accumulated other comprehensive income before reclassifications (1.1) Amounts reclassified from accumulated other comprehensive income (0.1) Net current-period other comprehensive loss (1.2) Balance at December 31, 2021 $ 2.2 Year Ended December 31, 2020 Accumulated Balance at December 31, 2019 $ 2.7 Change in accumulated other comprehensive income before reclassifications 0.8 Amounts reclassified from accumulated other comprehensive income (0.1) Net current-period other comprehensive income 0.7 Balance at December 31, 2020 $ 3.4 Year Ended December 31, 2019 Accumulated Balance at December 31, 2018 $ 1.7 Change in accumulated other comprehensive income before reclassifications $ 1.0 Amounts reclassified from accumulated other comprehensive income $ — Net current-period other comprehensive income $ 1.0 Balance at December 31, 2019 $ 2.7 (1) Accumulated other comprehensive income consists of net unrealized gains on securities. The following tables summarize the reclassifications out of AOCI for the periods indicated: Details about AOCI components Amount reclassified from AOCI Affected line item in the statement Years Ended December 31, 2021 2020 2019 Net unrealized gains on securities $ (0.1) $ (0.1) $ — Net realized gains on investments Total reclassifications for the period $ (0.1) $ (0.1) $ — Net of tax |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2021 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONSThe Company receives various services from the Parent and its affiliates. These services include assistance in corporate insurance, accounting, tax, auditing, investment, information technology, actuarial, property management and other administrative functions. The net amounts paid for services and obligations to the Parent and its affiliates for the years ended December 31, 2021, 2020 and 2019 were $0.3 million, $0.5 million, $0.1 million, respectively. The Parent also pays all income tax payments on behalf of the Company. The income tax payments made by the Parent were $0.2 million, $0.4 million and $0.4 million for the years ended December 31, 2021, 2020 and 2019, respectively. Administrative expenses allocated to 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, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Legal and Regulatory Matters The Company is involved in a variety of litigation and legal and regulatory proceedings relating to its current and past business operations and, from time to time, it may become involved in other such actions, both as a defendant and as a plaintiff. Although the Company cannot predict the outcome of any pending legal or regulatory proceeding, or the potential losses, fines, penalties or equitable relief, if any, that may result, it is possible that such outcome could have a material adverse effect on the Company's results of operations or cash flows for an individual reporting period. However, on the basis of currently available information, management does not believe that the pending matters are likely to have a material adverse effect, individually or in the aggregate, on the Company's financial condition. |
Schedule I-Summary of Investmen
Schedule I-Summary of Investments Other-Than-Investments in Related Parties | 12 Months Ended |
Dec. 31, 2021 | |
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Abstract] | |
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 Amount at (in millions) Fixed maturity securities: U.S. government and government agencies and authorities $ 0.9 $ 0.9 $ 0.9 States, municipalities and political subdivisions 0.5 0.5 0.5 Foreign governments 0.5 0.6 0.6 Residential mortgage-backed 4.4 4.4 4.4 Commercial mortgage-backed 2.0 2.0 2.0 U.S. corporate 16.2 18.1 18.1 Foreign corporate 5.6 6.3 6.3 Total fixed maturity securities 30.1 32.8 32.8 Short-term investments 12.0 12.0 Total investments $ 42.1 $ 44.8 |
Schedule III-Supplementary Insu
Schedule III-Supplementary Insurance Information | 12 Months Ended |
Dec. 31, 2021 | |
SEC Schedule, 12-16, Insurance Companies, Supplementary Insurance Information [Abstract] | |
Schedule III-Supplementary Insurance Information | Schedule III — Supplementary Insurance Information Future Unearned Claims and Premium Net Benefits Other (in millions) 2021 $ 333.2 $ 2.2 $ 101.0 $ 0.5 $ 1.3 $ 0.2 $ 0.5 2020 $ 328.7 $ 2.3 $ 93.5 $ 0.6 $ 1.6 $ 0.4 $ 1.0 2019 $ 326.4 $ 2.5 $ 89.7 $ 0.7 $ 1.9 $ 0.3 $ 0.6 * Includes underwriting, general and administrative expenses. |
Schedule IV-Reinsurance
Schedule IV-Reinsurance | 12 Months Ended |
Dec. 31, 2021 | |
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Abstract] | |
Schedule IV-Reinsurance | Schedule IV — Reinsurance Direct Ceded to Assumed from Net Percentage of (in millions) Year Ended December 31, 2021 Life Insurance in Force $ 29.5 $ 15.8 $ — $ 13.7 — % Premiums: Life insurance $ 0.8 $ 0.7 $ — $ 0.1 — % Accident and health insurance 7.9 7.5 — 0.4 — % Total earned premiums $ 8.7 $ 8.2 $ — $ 0.5 — % Benefits: Life insurance $ 1.4 $ 1.3 $ — $ 0.1 — % Accident and health insurance 34.4 34.3 — 0.1 — % Total policyholder benefits $ 35.8 $ 35.6 $ — $ 0.2 — % Year Ended December 31, 2020 Life Insurance in Force $ 37.9 $ 21.9 $ — $ 16.0 — % Premiums: Life insurance $ 0.6 $ 0.5 $ — $ 0.1 — % Accident and health insurance 9.1 8.6 — 0.5 — % Total earned premiums $ 9.7 $ 9.1 $ — $ 0.6 — % Benefits: Life insurance $ 1.0 $ 1.0 $ — $ — — % Accident and health insurance 28.3 27.9 — 0.4 — % Total policyholder benefits $ 29.3 $ 28.9 $ — $ 0.4 — % Year Ended December 31, 2019 Life Insurance in Force $ 68.1 $ 48.4 $ — $ 19.7 — % Premiums: Life insurance $ 1.0 $ 0.9 $ — $ 0.1 — % Accident and health insurance 19.2 18.6 — 0.6 — % Total earned premiums $ 20.2 $ 19.5 $ — $ 0.7 — % Benefits: Life insurance $ 1.9 $ 1.8 $ — $ 0.1 — % Accident and health insurance 63.2 63.0 — 0.2 — % Total policyholder benefits $ 65.1 $ 64.8 $ — $ 0.3 — % |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
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 millions, except for number of shares, per share amounts and number of loans. |
Use of Estimates | Use of Estimates The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts. The items affected by the use of estimates include but are not limited to, investments, reinsurance recoverables, other assets, 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. |
Fair Value | Fair ValueThe 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. |
Investments | Investments Fixed maturity securities are classified as available-for-sale as defined in the investments guidance and are reported at fair value. If the fair value is higher than the amortized cost for fixed maturity securities, the excess is an unrealized gain; and, if lower than amortized 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 AOCI. Effective January 1, 2020, the Company adopted certain changes to the accounting and reporting for impairments involving available for sale securities, including presentation of credit-related impairments as an allowance rather than as an other-than-temporary impairment, eliminating duration of unrealized losses as a consideration when assessing recognition of an impairment, recognition of credit impairments upon purchase of securities as applicable, and requiring reversals of previously recognized credit-related impairments when applicable. For available for sale fixed maturity securities in an unrealized loss position for which the Company does not intend to sell or for which it is more likely than not that the Company would not be required to sell before an anticipated recovery in value, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Company considers the extent to which fair value is less than amortized cost basis, changes to the credit rating of the security by a nationally recognized statistical ratings organization and any adverse conditions specifically related to the security, industry or geographic area, among other factors. If this assessment indicates a potential credit loss may exist, the present value of cash flows expected to be collected are compared to the security’s amortized cost basis. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit-related impairment exists, and a charge to income and an associated allowance for credit losses is recorded for the credit-related impairment. Any impairment not related to credit losses is recorded through other comprehensive income. The amount of the allowance for credit losses is limited to the amount by which fair value is less than the amortized cost basis. Upon recognizing a credit-related impairment, the cost basis of the security is not adjusted. Subsequent changes in the allowance for credit losses are recorded as provision for, or reversal of, credit loss expense. For fixed maturities where the Company records a credit loss, a determination is made as to the cause of the impairment and whether the Company expects a recovery in the value. Write-offs are charged against the allowance when management concludes the financial asset is uncollectible. For fixed maturities where the Company expects a recovery in value, the effective yield method is utilized, and the investment is amortized to par. For available for sale fixed maturity securities that the Company intends to sell, or for which it is more likely than not that the Company will be required to sell before recovery of its amortized cost basis, the entire impairment loss, or difference between the fair value and amortized cost basis of the security, is recognized in net realized gains (losses). The new cost basis of the security is the previous amortized cost basis less the impairment recognized and is not adjusted for any subsequent recoveries in fair value. The Company reports receivables for accrued investment income separately from fixed maturities available for sale and elected not to measure allowances for credit losses for accrued investment income as uncollectible balances are written off in a timely manner. Short-term investments include securities and other investments with durations of one year or less, but greater than three months, between the date of purchase and maturity. These amounts are reported at cost or amortized cost, which approximates fair value. 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 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 for the majority of the Company's mortgage-backed and structured securities. |
Cash and Cash Equivalents | Cash and Cash EquivalentsThe Company considers all highly liquid securities and other investments with durations of three months or less between the date of purchase and maturity 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 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 and other liabilities. |
Reinsurance | Reinsurance For both ceded and assumed reinsurance, risk transfer requirements must be met for reinsurance accounting to apply. If risk transfer requirements are not met, the contract is accounted for as a deposit, resulting in the recognition of cash flows under the contract through a deposit asset or liability and not as revenue or expense. To meet risk transfer requirements, a reinsurance contract must include both insurance risk, consisting of both underwriting and timing risk, and a reasonable possibility of a significant loss for the assuming entity. Similar risk transfer criteria are used to determine whether directly written insurance contracts should be accounted for as insurance or as a deposit. 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 as a reduction to premiums earned over the terms of the underlying reinsured 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 reinsurer insolvencies, the Company evaluates the financial condition of its reinsurers and typically holds collateral (in the form of funds withheld, trusts and letters of credit) as security under the reinsurance agreements. Effective January 1, 2020, the Company adopted the expected credit loss model for reinsurance recoverables. The Company uses a probability of default and loss given default methodology in estimating the allowance, whereby the credit ratings of reinsurers are used in determining the probability of default. The allowance is established for reinsurance recoverables on paid and unpaid future policy benefits and claims and benefits. Prior to applying default factors, the net exposure to credit risk is reduced for any collateral for which the right of offset exists, such as funds withheld, assets held in trust and letters of credit, which are part of the reinsurance arrangements, with adjustments to include consideration of credit exposure on the collateral. The methodology used by the Company incorporates historical default factors for each reinsurer based on their credit rating using comparably rated bonds as published by a major ratings service. The allowance is based upon the Company’s ongoing review of amounts outstanding, length of collection periods, changes in reinsurer credit standing and other relevant factors. Prior to January 1, 2020, an allowance for doubtful accounts was recorded on the basis of periodic evaluations of balances due from reinsurers (net of collateral), reinsurer solvency, historical collection experience and current economic conditions. |
Other Assets | Other AssetsOther assets include prepaid items, income tax receivable, deferred income tax assets and accrued investment income. |
Separate Accounts | Separate AccountsAssets and liabilities associated with separate accounts relate to premium and annuity 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 underlying accounts involve investment-type annuity contracts and/or are subject to reinsurance. |
Reserves | Reserves Reserves are established using generally accepted actuarial methods and reflect judgments about expected future premium and claim payments. Factors used in their calculation include experience derived from historical claim payments, expected future premiums and actuarial assumptions. Calculations incorporate assumptions about the incidence of incurred claims, the extent to which all claims have been reported, reporting lags, expenses, inflation rates, future investment earnings, internal claims processing costs and other relevant factors. The estimation of reserves includes an element of uncertainty given that management is using historical information and methods to project future events and reserve outcomes. The recorded reserves represent the Company’s best estimate at a point in time of the ultimate costs of settlement and administration of a claim or group of claims based upon actuarial assumptions and projections using 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: changes in the economic cycle, inflation, natural or human-made catastrophes, judicial trends, legislative changes and claims handling procedures. Many of these items are not directly quantifiable and not all future events can be anticipated when reserves are established. Reserve estimates are refined as experience develops. Adjustments to reserves, both positive and negative, are reflected in the statement of operations in the period in which such estimates are updated. Because establishment of reserves is an inherently complex process involving significant judgment and estimates, there can be no certainty that future settlement amounts for claims incurred through the financial reporting date will not vary from reported claims reserves. Future loss development could require reserves to be increased or decreased, which could have a material effect on the Company’s earnings in the periods in which such increases or decreases are made. However, based on information currently available, the Company believes its reserve estimates are adequate. The following table provides reserve information for our major product lines for the years ended December 31, 2021 and 2020: December 31, 2021 December 31, 2020 Claims and Benefits Payable Claims and Benefits Payable Future Unearned Case Incurred Future Unearned Case Incurred Long Duration Contracts: Universal life and other products no longer offered $ — $ — $ 0.4 $ — $ 0.5 $ — $ 0.4 $ — Disposed and run-off businesses 333.2 2.2 75.0 6.8 328.2 2.3 64.4 6.8 Short Duration Contracts: Disposed and run-off businesses — — 18.6 0.2 — — 21.7 0.2 Total $ 333.2 $ 2.2 $ 94.0 $ 7.0 $ 328.7 $ 2.3 $ 86.5 $ 7.0 For additional information regarding our reserves, see Note 10. Long Duration Contracts Future policy benefits and expense reserves for LTC and the traditional life insurance contracts fully covered by reinsurance and 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 discount, 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 adverse deviations. Claims and benefits payable for policies fully covered by reinsurance are equal to the present value of future benefit payments and related expenses. These amounts are estimated based on assumptions as to inflation, mortality, morbidity and discount rates as well as other assumptions that are based on the Company's experience. Changes in the estimated liabilities are reported as a charge or credit to policyholder benefits as the estimates are updated. Short Duration Contracts The Company’s short duration contracts include group insurance contracts no longer offered, 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. Factors used in the calculation include experience derived from historical claim payments and actuarial assumptions including loss development factors and expected loss ratios. Changes in the estimated liabilities are recorded as a charge or credit to policyholder benefits as estimates are updated. |
Contingencies | Contingencies 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 amount 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 legal and regulatory matters, which are inherently difficult to evaluate and are subject to significant changes. |
Premiums | Premiums Long Duration Contracts Premiums for long term care insurance and life insurance contracts no longer offered are recognized as revenue when due from the policyholder. For investment-type annuity contracts, revenues consist of charges assessed against policy balances. The Company’s short duration contracts revenue is recognized |
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. |
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 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 utilized 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 impact of changes in tax rates on all deferred tax assets and liabilities are required to be reflected within income on the enactment date, regardless of the financial statement component where the deferred tax originated. The Company classifies net interest expense related to tax matters and any applicable penalties as a component of income tax expense. |
Comprehensive Income | Comprehensive Income Comprehensive income is comprised of net income, and net unrealized gains and losses on securities classified as available for sale, less deferred income taxes. |
Recent Accounting Pronouncements - Adopted and Not Yet Adopted | Recent Accounting Pronouncements — Adopted Measurement of credit losses on financial instruments held at amortized cost (“CECL”) : In June 2016, the Financial Accounting Standards Board ("FASB") issued amended guidance on reporting credit losses for assets held at amortized cost and available for sale debt securities. For assets held at amortized cost, the amended guidance eliminates the probable recognition threshold and instead requires an entity to reflect the current estimate of all expected credit losses. For available for sale debt securities, credit losses are measured in a manner similar to accounting requirements in effect prior to adoption; however, the amended guidance requires that credit-related impairment losses be presented as an allowance rather than as a permanent impairment. The amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, premium receivables, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. The Company adopted this standard as of January 1, 2020. Refer to Note 3 for additional information. Simplifying the Accounting for Income Taxes: In December 2019, the FASB issued new guidance to simplify the accounting for income taxes by removing certain exceptions to the general principles and also simplify areas such as franchise taxes, step-up in tax basis goodwill, separate entity financial statements and interim recognition of enactment of tax laws or rate changes. The Company adopted this standard as of January 1, 2021, with no material impact on its financial position or results of operations. Recent Accounting Pronouncements — Not Yet Adopted Targeted improvements to the accounting for long-duration contracts: In August 2018, the FASB issued guidance that provides targeted improvements to the accounting for long-duration contracts. The guidance includes the following primary changes: assumptions supporting benefit reserves will no longer be locked-in but must be updated at least annually with the impact of changes to the liability reflected in earnings (except for discount rates); the discount rate assumptions will be based on upper-medium grade (low credit risk) fixed-income instrument yield instead of the earnings rate of invested assets; the discount rate must be evaluated at each reporting date and the impact of changes to the liability estimate as a result of updating the discount rate assumption is required to be recognized in other comprehensive income; the provision for adverse deviation is eliminated; and premium deficiency testing is eliminated. Other noteworthy changes include the following: differing models for amortizing deferred acquisition costs will become uniform for all long-duration contracts based on a constant rate over the expected term of the related in force contracts; all market risk benefits associated with deposit contracts must be reported at fair value with changes reflected in income except for changes related to credit risk which will be recognized in other comprehensive income; and disclosures will be expanded to include disaggregated roll forwards of the liability for future policy benefits, policyholder account balances, market risk benefits, separate account liabilities, and deferred acquisition costs, as well as information about significant inputs, judgments, assumptions and methods used in measurement. The guidance is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. Early adoption is permitted. Generally, the amendments are applied retrospectively as of the beginning of the earliest period presented with two transition options available for changing the assumptions. The Company is evaluating the requirements of this guidance and the potential impact on the Company's financial position and results of operations. Facilitation of the Effects of Reference Rate Reform on Financial Reporting : In March 2020, the FASB issued guidance which provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The relief is applicable only to legacy contracts if the amendments made to the agreements are solely for reference rate reform activities. The provisions must be applied consistently for all relevant transactions other than derivatives, which may be applied at a hedging relationship level. The guidance is effective upon issuance. The guidance on contract modifications is applied prospectively from any date beginning March 12, 2020. The provisions of this update are only available until December 31, 2022, when the reference rate replacement activity is expected to have been completed. The adoption of this standard is expected to have no material impact on the Company’s financial position and results of operations. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Schedule of Reserve Information of the Company’s Major Product Lines | The following table provides reserve information for our major product lines for the years ended December 31, 2021 and 2020: December 31, 2021 December 31, 2020 Claims and Benefits Payable Claims and Benefits Payable Future Unearned Case Incurred Future Unearned Case Incurred Long Duration Contracts: Universal life and other products no longer offered $ — $ — $ 0.4 $ — $ 0.5 $ — $ 0.4 $ — Disposed and run-off businesses 333.2 2.2 75.0 6.8 328.2 2.3 64.4 6.8 Short Duration Contracts: Disposed and run-off businesses — — 18.6 0.2 — — 21.7 0.2 Total $ 333.2 $ 2.2 $ 94.0 $ 7.0 $ 328.7 $ 2.3 $ 86.5 $ 7.0 The following table provides a roll forward of the Company’s beginning and ending claims and benefits payable balances. Claims and benefits payable is the liability for unpaid loss and loss adjustment expenses and are comprised of case and IBNR reserves. Since unpaid loss and loss adjustment expenses are estimates, the Company’s actual losses incurred may be more or less than the Company’s previously developed estimates, which is referred to as either unfavorable or favorable development, respectively. The best estimate of ultimate loss and loss adjustment expenses is generally selected from a blend of methods that are applied consistently each period. There have been no significant changes in the methodologies and assumptions utilized in estimating the liability for unpaid loss and loss adjustment expenses for any of the periods presented . Years Ended December 31, 2021 2020 2019 Claims and benefits payable, at beginning of year $ 93.5 $ 89.7 $ 94.4 Less: Reinsurance ceded and other (93.4) (89.6) (94.3) Net claims and benefits payable, at beginning of year 0.1 0.1 0.1 Incurred losses and loss adjustment expenses related to: Current Year 0.3 0.3 0.2 Total incurred losses and loss adjustment expenses 0.3 0.3 0.2 Paid losses and loss adjustment expenses related to: Current year 0.2 0.2 0.2 Prior years 0.1 0.1 — Total paid losses and loss adjustment expenses 0.3 0.3 0.2 Net claims and benefits payable, at end of year 0.1 0.1 0.1 Plus: Reinsurance ceded and other 100.9 93.4 89.6 Claims and benefits payable, at end of year $ 101.0 $ 93.5 $ 89.7 |
Allowance for Credit Losses (Ta
Allowance for Credit Losses (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Credit Loss [Abstract] | |
Summary of Changes in CECL Allowance for Reinsurance Recoverables | The following table presents the changes in the allowance for credit losses for reinsurance recoverables for the periods indicated: Total Balance, December 31, 2019 $ — Cumulative effect of adoption 0.3 Current period change for credit losses 0.1 Balance, December 31, 2020 0.4 Current period change for credit losses $ (0.1) Balance, December 31, 2021 $ 0.3 |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Investments, Debt and Equity Securities [Abstract] | |
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 | The following tables show the cost or amortized cost, gross unrealized gains and losses, and fair value of the Company's fixed maturity securities as of the dates indicated: December 31, 2021 Cost or Gross Gross Fair Value Fixed maturity securities: U.S. government and government agencies and authorities $ 0.9 $ — $ — $ 0.9 States, municipalities and political subdivisions 0.5 — — 0.5 Foreign governments 0.5 0.1 — 0.6 Residential mortgage-backed 4.4 — — 4.4 Commercial mortgage-backed 2.0 — — 2.0 U.S. corporate 16.2 1.9 — 18.1 Foreign corporate 5.6 0.7 — 6.3 Total fixed maturity securities $ 30.1 $ 2.7 $ — $ 32.8 December 31, 2020 Cost or Gross Gross Fair Value Fixed maturity securities: U.S. government and government agencies and authorities $ 0.9 $ — $ — $ 0.9 States, municipalities and political subdivisions 2.0 0.1 — 2.1 Foreign governments 0.3 0.1 — 0.4 Residential mortgage-backed 1.1 0.1 — 1.2 Commercial mortgage-backed 0.7 — — 0.7 U.S. corporate 27.0 3.0 — 30.0 Foreign corporate 6.4 0.9 — 7.3 Total fixed maturity securities $ 38.4 $ 4.2 $ — $ 42.6 |
Schedule of Cost or Amortized Cost and Fair Value of Fixed Maturity Securities by Contractual Maturity | The cost or amortized cost and fair value of fixed maturity securities at December 31, 2021 by contractual maturity are shown below. Actual 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. December 31, 2021 Cost or Fair Due in one year or less $ 2.5 $ 2.5 Due after one year through five years 11.8 12.2 Due after five years through ten years 7.4 8.6 Due after ten years 2.0 3.0 Total 23.7 26.3 Residential mortgage-backed 4.4 4.5 Commercial mortgage-backed 2.0 2.0 Total $ 30.1 $ 32.8 |
Schedule of Major Categories of Investment Income | The following table shows the major categories of net investment income for the periods indicated: Years Ended December 31, 2021 2020 2019 Fixed maturity securities $ 1.4 $ 1.7 $ 1.9 Other — — 0.1 Total investment income 1.4 1.7 2.0 Investment expenses (0.1) (0.1) (0.1) Net investment income $ 1.3 $ 1.6 $ 1.9 |
Summary of Proceeds from Sales of Available-for-Sale Securities and the Gross Realized gains and Gross Realized Losses | The following table summarizes the proceeds from sales of available-for-sale fixed maturities and the gross realized gains and gross realized losses that have been recognized in the statement of operations as a result of those sales for the periods indicated: Years Ended December 31, 2021 2020 2019 Proceeds from sales $ 9.1 $ 0.5 $ 11.6 Gross realized gains 0.2 0.1 — Gross realized losses — — — Net realized gains (losses) from sales of fixed maturity securities $ 0.2 $ 0.1 $ — |
Schedule of Net Realized Gains (Losses) Recognized in the Statement of Operations | The following table sets forth the net realized gains (losses) recognized in the statement of operations for the periods indicated: Years Ended December 31, 2021 2020 2019 Net realized gains (losses) related to sales: Net realized gains (losses) from sales of fixed maturity securities $ 0.2 $ 0.1 $ — |
Fair Value Disclosures (Tables)
Fair Value Disclosures (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Schedule of the Company's Fair Value Hierarchy for Assets and Liabilities Measured at Fair Value on a Recurring Basis | 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, 2021 and 2020. The amounts presented below for cash equivalents 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, 2021 Total Level 1 Level 2 Level 3 Financial Assets Fixed maturity securities: U.S. government and government agencies and authorities $ 0.9 $ — $ 0.9 $ — States, municipalities and political subdivisions 0.6 — 0.6 — Foreign governments 0.6 — 0.6 — Commercial mortgage-backed 2.0 — 2.0 — Residential mortgage-backed 4.5 — 4.5 — U.S. corporate 18.0 — 18.0 — Foreign corporate 6.2 — 6.2 — Short-term investments 12.0 12.0 (1) — — Cash equivalents 0.4 0.4 (1) — — Assets held in separate accounts 11.9 7.8 (2) 4.1 (3) — Total financial assets $ 57.1 $ 20.2 $ 36.9 $ — Financial Liabilities Liabilities related to separate accounts $ 11.9 $ 7.8 (2) $ 4.1 (3) $ — December 31, 2020 Total Level 1 Level 2 Level 3 Financial Assets Fixed maturity securities: U.S. government and government $ 0.9 $ — $ 0.9 $ — States, municipalities and political subdivisions 2.1 — 2.1 — Foreign governments 0.4 — 0.4 — Commercial mortgage-backed 0.7 — 0.7 — Residential mortgage-backed 1.2 — 1.2 — U.S. corporate 30.0 — 30.0 — Foreign corporate 7.3 — 7.3 — Short-term investments 4.2 4.2 (1) — — Cash equivalents 0.2 0.2 (1) — — Assets held in separate accounts 11.5 6.8 (2) 4.7 (3) — Total financial assets $ 58.5 $ 11.2 $ 47.3 $ — Financial Liabilities Liabilities related to separate accounts $ 11.5 $ 6.8 (2) $ 4.7 (3) $ — (1) Primarily includes money market funds. (2) Primarily includes mutual funds and related obligations. |
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 | The following tables disclose the carrying value, fair value and hierarchy level of the financial instruments that are not recognized or are not carried at fair value in the balance sheet as of the dates indicated: December 31, 2021 Fair Value Carrying Total Level 1 Level 2 Level 3 Financial Liabilities Policy reserves under investment products $ 4.8 $ 5.4 $ — $ — $ 5.4 December 31, 2020 Fair Value Carrying Total Level 1 Level 2 Level 3 Financial Liabilities Policy reserves under investment products (Individual and group annuities, subject to discretionary withdrawal) (1) $ 5.2 $ 6.5 $ — $ — $ 6.5 (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, 2021 | |
Income Tax Disclosure [Abstract] | |
Schedule of Company's Current and Deferred Federal Tax Expense (Benefit) | The components of income tax expense (benefit) were as follows for the periods indicated: Years Ended December 31, 2021 2020 2019 Current income tax expense $ 0.3 $ 0.4 $ 0.4 Deferred income tax (benefit) expense — (0.2) (0.1) Total income tax expense $ 0.3 $ 0.2 $ 0.3 |
Schedule of Reconciliation of Federal Income Tax Rate to the Company’s Effective Income Tax Rate | A reconciliation of the federal income tax rate to the Company's effective income tax rate follows for the periods indicated: December 31, 2021 2020 2019 Federal income tax rate: 21.0 % 21.0 % 21.0 % Reconciling items: Tax exempt interest (1.3) (3.8) (2.9) Dividend received deduction (0.3) (0.4) (0.1) Other — (0.2) (30.0) Effective income tax rate: 19.4 % 16.6 % (12.0) % |
Schedule of Significant Deferred Tax Assets and Deferred Tax Liabilities | The tax effects of temporary differences that result in deferred tax assets and deferred tax liabilities are as follows as of the dates indicated: December 31, 2021 2020 Deferred tax assets Deferred acquisition costs $ 1.4 $ 1.3 Deferred gain on disposal of business 0.2 0.2 Investments, net 0.1 0.1 Other 0.2 0.3 Total deferred tax assets 1.9 1.9 Deferred tax liabilities Net unrealized appreciation on securities (0.6) (0.9) Total deferred tax liabilities (0.6) (0.9) Net deferred income tax assets $ 1.3 $ 1.0 |
Statutory Information (Tables)
Statutory Information (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Insurance [Abstract] | |
Schedule of Reconciliations of Net Income and Stockholder's Equity | 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 Stockholder's Equity 2021 2020 2019 2021 2020 Based on SAP $ 1.1 $ 1.2 $ 2.5 $ 42.7 $ 43.1 Investment valuation difference (0.1) — — 2.6 4.2 Deferred taxes — 0.2 0.1 (0.3) (0.6) Deferred gain on disposal of businesses and gains on disposal of businesses 0.1 (0.3) (1.0) (0.8) (1.0) Other differences 0.1 (0.1) — 1.1 0.8 Based on GAAP $ 1.2 $ 1.0 $ 1.6 $ 45.3 $ 46.5 |
Reinsurance (Tables)
Reinsurance (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Reinsurance Disclosures [Abstract] | |
Schedule of Reinsurance Recoverables | The following table provides details of the reinsurance recoverables balance as of the dates indicated: 2021 2020 Ceded future policyholder benefits and expense $ 333.0 $ 328.7 Ceded unearned premium 2.2 2.3 Ceded claims and benefits payable 100.2 92.7 Ceded paid losses 0.3 (0.1) Total $ 435.7 $ 423.6 |
Schedule of Reinsurance Recoverable | The following table provides the reinsurance recoverable as of December 31, 2021 grouped by A.M. Best financial strength ratings: A.M. Best ratings of Ceded future Ceded unearned Ceded claims Ceded paid Total A++ or A+ $ 328.2 $ 2.2 $ 100.3 $ 0.3 $ 431.0 B++ or B+ 5.0 — — — 5.0 Not Rated — — — — — Total 333.2 2.2 100.3 0.3 436.0 Less: Allowance (0.2) — (0.1) — (0.3) Total Reinsurance recoverable $ 333.0 $ 2.2 $ 100.2 $ 0.3 $ 435.7 The following table presents the reinsurance recoverable from John Hancock, Sun Life, Talcott Resolution, and other reinsurers as of December 31, 2021 and 2020. Years Ended December 31, Reinsurer 2021 2020 John Hancock $ 410.2 $ 394.0 Sun Life 20.1 23.3 Talcott Resolution 5.0 5.3 Other reinsurers 0.4 1.0 Total $ 435.7 $ 423.6 |
Schedule of Effect of Reinsurance on Premiums Earned and Benefits Incurred | The effect of reinsurance on premiums earned and benefits incurred was as follows for the period indicated: Years Ended December 31, 2021 2020 2019 Long Short Total Long Short Total Long Short Total Direct earned premiums $ 8.1 $ 0.6 $ 8.7 $ 7.7 $ 2.0 $ 9.7 $ 8.0 $ 12.2 $ 20.2 Premiums ceded (8.1) (0.1) (8.2) (7.7) (1.4) (9.1) (8.0) (11.5) (19.5) Net earned premiums $ — $ 0.5 $ 0.5 $ — $ 0.6 $ 0.6 $ — $ 0.7 $ 0.7 Direct policyholder benefits $ 35.3 $ 0.5 $ 35.8 $ 26.5 $ 2.8 $ 29.3 $ 56.8 $ 8.3 $ 65.1 Policyholder benefits ceded (35.3) (0.3) (35.6) (26.5) (2.4) (28.9) (56.8) (8.0) (64.8) Net policyholder benefits $ — $ 0.2 $ 0.2 $ — $ 0.4 $ 0.4 $ — $ 0.3 $ 0.3 |
Reserves (Tables)
Reserves (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Insurance Loss Reserves [Abstract] | |
Schedule of Reserve Information of the Company’s Major Product Lines | The following table provides reserve information for our major product lines for the years ended December 31, 2021 and 2020: December 31, 2021 December 31, 2020 Claims and Benefits Payable Claims and Benefits Payable Future Unearned Case Incurred Future Unearned Case Incurred Long Duration Contracts: Universal life and other products no longer offered $ — $ — $ 0.4 $ — $ 0.5 $ — $ 0.4 $ — Disposed and run-off businesses 333.2 2.2 75.0 6.8 328.2 2.3 64.4 6.8 Short Duration Contracts: Disposed and run-off businesses — — 18.6 0.2 — — 21.7 0.2 Total $ 333.2 $ 2.2 $ 94.0 $ 7.0 $ 328.7 $ 2.3 $ 86.5 $ 7.0 The following table provides a roll forward of the Company’s beginning and ending claims and benefits payable balances. Claims and benefits payable is the liability for unpaid loss and loss adjustment expenses and are comprised of case and IBNR reserves. Since unpaid loss and loss adjustment expenses are estimates, the Company’s actual losses incurred may be more or less than the Company’s previously developed estimates, which is referred to as either unfavorable or favorable development, respectively. The best estimate of ultimate loss and loss adjustment expenses is generally selected from a blend of methods that are applied consistently each period. There have been no significant changes in the methodologies and assumptions utilized in estimating the liability for unpaid loss and loss adjustment expenses for any of the periods presented . Years Ended December 31, 2021 2020 2019 Claims and benefits payable, at beginning of year $ 93.5 $ 89.7 $ 94.4 Less: Reinsurance ceded and other (93.4) (89.6) (94.3) Net claims and benefits payable, at beginning of year 0.1 0.1 0.1 Incurred losses and loss adjustment expenses related to: Current Year 0.3 0.3 0.2 Total incurred losses and loss adjustment expenses 0.3 0.3 0.2 Paid losses and loss adjustment expenses related to: Current year 0.2 0.2 0.2 Prior years 0.1 0.1 — Total paid losses and loss adjustment expenses 0.3 0.3 0.2 Net claims and benefits payable, at end of year 0.1 0.1 0.1 Plus: Reinsurance ceded and other 100.9 93.4 89.6 Claims and benefits payable, at end of year $ 101.0 $ 93.5 $ 89.7 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule of Components of Accumulated Other Comprehensive Income, Net of Tax | Certain amounts included in the statement of comprehensive income are net of reclassification adjustments. The following tables summarize those reclassification adjustments (net of taxes) for the periods indicated: Year Ended December 31, 2021 Accumulated Balance at December 31, 2020 $ 3.4 Change in accumulated other comprehensive income before reclassifications (1.1) Amounts reclassified from accumulated other comprehensive income (0.1) Net current-period other comprehensive loss (1.2) Balance at December 31, 2021 $ 2.2 Year Ended December 31, 2020 Accumulated Balance at December 31, 2019 $ 2.7 Change in accumulated other comprehensive income before reclassifications 0.8 Amounts reclassified from accumulated other comprehensive income (0.1) Net current-period other comprehensive income 0.7 Balance at December 31, 2020 $ 3.4 Year Ended December 31, 2019 Accumulated Balance at December 31, 2018 $ 1.7 Change in accumulated other comprehensive income before reclassifications $ 1.0 Amounts reclassified from accumulated other comprehensive income $ — Net current-period other comprehensive income $ 1.0 Balance at December 31, 2019 $ 2.7 (1) Accumulated other comprehensive income consists of net unrealized gains on securities. |
Summary of the Reclassifications Out of Accumulated Other Comprehensive Income | The following tables summarize the reclassifications out of AOCI for the periods indicated: Details about AOCI components Amount reclassified from AOCI Affected line item in the statement Years Ended December 31, 2021 2020 2019 Net unrealized gains on securities $ (0.1) $ (0.1) $ — Net realized gains on investments Total reclassifications for the period $ (0.1) $ (0.1) $ — Net of tax |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Liability for Future Policy Benefit, by Product Segment [Line Items] | ||
Future Policy Benefits and Expenses | $ 333.2 | $ 328.7 |
Unearned Premiums | 2.2 | 2.3 |
Case Reserves | 94 | 86.5 |
Incurred But Not Reported Reserves | 7 | 7 |
Universal life and other products no longer offered | ||
Liability for Future Policy Benefit, by Product Segment [Line Items] | ||
Future Policy Benefits and Expenses | 0 | 0.5 |
Unearned Premiums | 0 | 0 |
Case Reserves | 0.4 | 0.4 |
Incurred But Not Reported Reserves | 0 | 0 |
Disposed and run-off businesses | ||
Liability for Future Policy Benefit, by Product Segment [Line Items] | ||
Future Policy Benefits and Expenses | 333.2 | 328.2 |
Unearned Premiums | 2.2 | 2.3 |
Case Reserves | 75 | 64.4 |
Incurred But Not Reported Reserves | 6.8 | 6.8 |
Disposed and run-off businesses | ||
Liability for Future Policy Benefit, by Product Segment [Line Items] | ||
Future Policy Benefits and Expenses | 0 | 0 |
Unearned Premiums | 0 | 0 |
Case Reserves | 18.6 | 21.7 |
Incurred But Not Reported Reserves | $ 0.2 | $ 0.2 |
Allowance for Credit Losses - N
Allowance for Credit Losses - Narrative (Details) $ in Millions | 12 Months Ended | ||||
Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | |||||
Decrease in retained earnings | $ (45.3) | $ (46.5) | $ (47.2) | $ (49.3) | |
Reinsurance recoverable, allowance for credit loss | 0.3 | 0.4 | 0 | ||
Increase (decrease) in allowance for credit losses | (0.1) | 0.1 | |||
Net reinsurance recoverable | $ 435.7 | $ 423.6 | |||
Standard & Poor's, BBB or BB Rating | |||||
Financing Receivable, Allowance for Credit Loss [Line Items] | |||||
Financing receivable, credit quality, percentage | 0.01 | ||||
Standard & Poor's, A- Rating Or Better | |||||
Financing Receivable, Allowance for Credit Loss [Line Items] | |||||
Financing receivable, credit quality, percentage | 0.99 | 1 | |||
Retained Earnings | |||||
Financing Receivable, Allowance for Credit Loss [Line Items] | |||||
Decrease in retained earnings | $ (1.5) | $ (1.5) | (0.7) | $ (0.4) | |
Cumulative effect of change in accounting principles, net of taxes | |||||
Financing Receivable, Allowance for Credit Loss [Line Items] | |||||
Decrease in retained earnings | [1] | 0.2 | |||
Reinsurance recoverable, allowance for credit loss | 0.3 | ||||
Cumulative effect of change in accounting principles, net of taxes | Retained Earnings | |||||
Financing Receivable, Allowance for Credit Loss [Line Items] | |||||
Decrease in retained earnings | [1] | $ 0.2 | |||
[1] | Amount relates to the adoption of a new accounting standard for accounting for expected credit losses for assets held at amortized cost, which established allowances for such expected credit losses as of January 1, 2020. See Note 2 for additional information. |
Allowance for Credit Losses - C
Allowance for Credit Losses - Changes in CECL Allowance for Reinsurance Recoverables (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Reinsurance Recoverable, Allowance for Credit Loss [Roll Forward] | ||
Beginning balance | $ 0.4 | $ 0 |
Cumulative effect of adoption | 0.3 | 0.4 |
Current period change for credit losses | (0.1) | 0.1 |
Ending balance | $ 0.3 | 0.4 |
Cumulative effect of change in accounting principles, net of taxes | ||
Reinsurance Recoverable, Allowance for Credit Loss [Roll Forward] | ||
Beginning balance | $ 0.3 | |
Cumulative effect of adoption |
Investments - Cost or Amortized
Investments - Cost or Amortized Cost, Gross Unrealized Gains and Losses, Fair Value (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | $ 30.1 | $ 38.4 |
Gross Unrealized Gains | 2.7 | 4.2 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 32.8 | 42.6 |
U.S. government and government agencies and authorities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | 0.9 | 0.9 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 0.9 | 0.9 |
States, municipalities and political subdivisions | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | 0.5 | 2 |
Gross Unrealized Gains | 0 | 0.1 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 0.5 | 2.1 |
Foreign governments | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | 0.5 | 0.3 |
Gross Unrealized Gains | 0.1 | 0.1 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 0.6 | 0.4 |
Residential mortgage-backed | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | 4.4 | 1.1 |
Gross Unrealized Gains | 0 | 0.1 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 4.4 | 1.2 |
Commercial mortgage-backed | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | 2 | 0.7 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 2 | 0.7 |
U.S. corporate | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | 16.2 | 27 |
Gross Unrealized Gains | 1.9 | 3 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 18.1 | 30 |
Foreign corporate | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | 5.6 | 6.4 |
Gross Unrealized Gains | 0.7 | 0.9 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | $ 6.3 | $ 7.3 |
Investments - Cost, Amortized C
Investments - Cost, Amortized Cost, and Fair Value of Fixed Maturity Securities by Contractual Maturity (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Cost or Amortized Cost | ||
Due in one year or less | $ 2.5 | |
Due after one year through five years | 11.8 | |
Due after five years through ten years | 7.4 | |
Due after ten years | 2 | |
Total, single maturity | 23.7 | |
Cost or Amortized Cost | 30.1 | $ 38.4 |
Fair Value | ||
Due in one year or less | 2.5 | |
Due after one year through five years | 12.2 | |
Due after five years through ten years | 8.6 | |
Due after ten years | 3 | |
Total, single maturity | 26.3 | |
Total | 32.8 | 42.6 |
Residential mortgage-backed | ||
Cost or Amortized Cost | ||
Mortgage-backed | 4.4 | |
Cost or Amortized Cost | 4.4 | 1.1 |
Fair Value | ||
Mortgage-backed | 4.5 | |
Total | 4.4 | 1.2 |
Commercial mortgage-backed | ||
Cost or Amortized Cost | ||
Mortgage-backed | 2 | |
Cost or Amortized Cost | 2 | 0.7 |
Fair Value | ||
Mortgage-backed | 2 | |
Total | $ 2 | $ 0.7 |
Investments - Categories of Net
Investments - Categories of Net Investment Income (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Major categories of net investment income | |||
Total investment income | $ 1.4 | $ 1.7 | $ 2 |
Investment expenses | (0.1) | (0.1) | (0.1) |
Net investment income | 1.3 | 1.6 | 1.9 |
Fixed maturity securities | |||
Major categories of net investment income | |||
Total investment income | 1.4 | 1.7 | 1.9 |
Other | |||
Major categories of net investment income | |||
Total investment income | $ 0 | $ 0 | $ 0.1 |
Investments - Proceeds from Ava
Investments - Proceeds from Available-for-Sale Securities (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |||
Proceeds from sales | $ 9.1 | $ 0.5 | $ 11.6 |
Gross realized gains | 0.2 | 0.1 | 0 |
Gross realized losses | 0 | 0 | 0 |
Net realized gains (losses) from sales of fixed maturity securities | $ 0.2 | $ 0.1 | $ 0 |
Investments - Net Realized Gain
Investments - Net Realized Gains (Losses) Recognized in the Statement of Operations (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Net realized gains (losses) related to sales: | |||
Net realized gains (losses) from sales of fixed maturity securities | $ 0.2 | $ 0.1 | $ 0 |
Investments - Narrative (Detail
Investments - Narrative (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Fixed maturity securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturity securities on deposit with various governmental authorities | $ 0.9 | $ 0.9 |
Fair Value Disclosures - Assets
Fair Value Disclosures - Assets and Liabilities (Details) - Recurring basis - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Level 1 | ||
Financial Assets | ||
Financial assets | $ 20.2 | $ 11.2 |
Financial Liabilities | ||
Financial liabilities | 7.8 | 6.8 |
Level 1 | Fixed maturity securities | U.S. government and government agencies and authorities | ||
Financial Assets | ||
Financial assets | 0 | 0 |
Level 1 | Fixed maturity securities | States, municipalities and political subdivisions | ||
Financial Assets | ||
Financial assets | 0 | 0 |
Level 1 | Fixed maturity securities | Foreign governments | ||
Financial Assets | ||
Financial assets | 0 | 0 |
Level 1 | Fixed maturity securities | Commercial mortgage-backed | ||
Financial Assets | ||
Financial assets | 0 | 0 |
Level 1 | Fixed maturity securities | Residential mortgage-backed | ||
Financial Assets | ||
Financial assets | 0 | 0 |
Level 1 | Fixed maturity securities | U.S. corporate | ||
Financial Assets | ||
Financial assets | 0 | 0 |
Level 1 | Fixed maturity securities | Foreign corporate | ||
Financial Assets | ||
Financial assets | 0 | 0 |
Level 1 | Short-term investments | ||
Financial Assets | ||
Financial assets | 12 | 4.2 |
Level 1 | Cash equivalents | ||
Financial Assets | ||
Financial assets | 0.4 | 0.2 |
Level 1 | Assets held in separate accounts | ||
Financial Assets | ||
Financial assets | 7.8 | 6.8 |
Level 2 | ||
Financial Assets | ||
Financial assets | 36.9 | 47.3 |
Financial Liabilities | ||
Financial liabilities | 4.1 | 4.7 |
Level 2 | Fixed maturity securities | U.S. government and government agencies and authorities | ||
Financial Assets | ||
Financial assets | 0.9 | 0.9 |
Level 2 | Fixed maturity securities | States, municipalities and political subdivisions | ||
Financial Assets | ||
Financial assets | 0.6 | 2.1 |
Level 2 | Fixed maturity securities | Foreign governments | ||
Financial Assets | ||
Financial assets | 0.6 | 0.4 |
Level 2 | Fixed maturity securities | Commercial mortgage-backed | ||
Financial Assets | ||
Financial assets | 2 | 0.7 |
Level 2 | Fixed maturity securities | Residential mortgage-backed | ||
Financial Assets | ||
Financial assets | 4.5 | 1.2 |
Level 2 | Fixed maturity securities | U.S. corporate | ||
Financial Assets | ||
Financial assets | 18 | 30 |
Level 2 | Fixed maturity securities | Foreign corporate | ||
Financial Assets | ||
Financial assets | 6.2 | 7.3 |
Level 2 | Short-term investments | ||
Financial Assets | ||
Financial assets | 0 | 0 |
Level 2 | Cash equivalents | ||
Financial Assets | ||
Financial assets | 0 | 0 |
Level 2 | Assets held in separate accounts | ||
Financial Assets | ||
Financial assets | 4.1 | 4.7 |
Level 3 | ||
Financial Assets | ||
Financial assets | 0 | 0 |
Financial Liabilities | ||
Financial liabilities | 0 | 0 |
Level 3 | Fixed maturity securities | U.S. government and government agencies and authorities | ||
Financial Assets | ||
Financial assets | 0 | 0 |
Level 3 | Fixed maturity securities | States, municipalities and political subdivisions | ||
Financial Assets | ||
Financial assets | 0 | 0 |
Level 3 | Fixed maturity securities | Foreign governments | ||
Financial Assets | ||
Financial assets | 0 | 0 |
Level 3 | Fixed maturity securities | Commercial mortgage-backed | ||
Financial Assets | ||
Financial assets | 0 | 0 |
Level 3 | Fixed maturity securities | Residential mortgage-backed | ||
Financial Assets | ||
Financial assets | 0 | 0 |
Level 3 | Fixed maturity securities | U.S. corporate | ||
Financial Assets | ||
Financial assets | 0 | 0 |
Level 3 | Fixed maturity securities | Foreign corporate | ||
Financial Assets | ||
Financial assets | 0 | 0 |
Level 3 | Short-term investments | ||
Financial Assets | ||
Financial assets | 0 | 0 |
Level 3 | Cash equivalents | ||
Financial Assets | ||
Financial assets | 0 | 0 |
Level 3 | Assets held in separate accounts | ||
Financial Assets | ||
Financial assets | 0 | 0 |
Total | ||
Financial Assets | ||
Financial assets | 57.1 | 58.5 |
Financial Liabilities | ||
Financial liabilities | 11.9 | 11.5 |
Total | Fixed maturity securities | U.S. government and government agencies and authorities | ||
Financial Assets | ||
Financial assets | 0.9 | 0.9 |
Total | Fixed maturity securities | States, municipalities and political subdivisions | ||
Financial Assets | ||
Financial assets | 0.6 | 2.1 |
Total | Fixed maturity securities | Foreign governments | ||
Financial Assets | ||
Financial assets | 0.6 | 0.4 |
Total | Fixed maturity securities | Commercial mortgage-backed | ||
Financial Assets | ||
Financial assets | 2 | 0.7 |
Total | Fixed maturity securities | Residential mortgage-backed | ||
Financial Assets | ||
Financial assets | 4.5 | 1.2 |
Total | Fixed maturity securities | U.S. corporate | ||
Financial Assets | ||
Financial assets | 18 | 30 |
Total | Fixed maturity securities | Foreign corporate | ||
Financial Assets | ||
Financial assets | 6.2 | 7.3 |
Total | Short-term investments | ||
Financial Assets | ||
Financial assets | 12 | 4.2 |
Total | Cash equivalents | ||
Financial Assets | ||
Financial assets | 0.4 | 0.2 |
Total | Assets held in separate accounts | ||
Financial Assets | ||
Financial assets | $ 11.9 | $ 11.5 |
Fair Value Disclosures - Carryi
Fair Value Disclosures - Carrying Value, Fair Value, and Fair Value Hierarchy (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Carrying Value | ||
Financial Liabilities | ||
Policy reserves under investment products (Individual and group annuities, subject to discretionary withdrawal) | $ 4.8 | $ 5.2 |
Fair Value | ||
Financial Liabilities | ||
Policy reserves under investment products (Individual and group annuities, subject to discretionary withdrawal) | 5.4 | 6.5 |
Fair Value | Level 1 | ||
Financial Liabilities | ||
Policy reserves under investment products (Individual and group annuities, subject to discretionary withdrawal) | 0 | 0 |
Fair Value | Level 2 | ||
Financial Liabilities | ||
Policy reserves under investment products (Individual and group annuities, subject to discretionary withdrawal) | 0 | 0 |
Fair Value | Level 3 | ||
Financial Liabilities | ||
Policy reserves under investment products (Individual and group annuities, subject to discretionary withdrawal) | $ 5.4 | $ 6.5 |
Income Taxes - Income Tax Expen
Income Taxes - Income Tax Expense (Benefit) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Current and deferred federal tax expense (benefit) | |||
Current income tax expense | $ 0.3 | $ 0.4 | $ 0.4 |
Deferred income tax (benefit) expense | 0 | (0.2) | (0.1) |
Total income tax expense | $ 0.3 | $ 0.2 | $ 0.3 |
Income Taxes - Income Tax Recon
Income Taxes - Income Tax Reconciliation (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |||
Federal income tax rate | 21.00% | 21.00% | 21.00% |
Reconciling items: | |||
Tax exempt interest | (1.30%) | (3.80%) | (2.90%) |
Dividend received deduction | (0.30%) | (0.40%) | (0.10%) |
Other | 0.00% | (0.20%) | (30.00%) |
Effective income tax rate | 19.40% | 16.60% | (12.00%) |
Unrecognized tax benefits (less than) | $ 0 | $ 0 | $ 0 |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Deferred tax assets | ||
Deferred acquisition costs | $ 1,400,000 | $ 1,300,000 |
Deferred gain on disposal of business | 200,000 | 200,000 |
Investments, net | 100,000 | 100,000 |
Other | 200,000 | 300,000 |
Total deferred tax assets | 1,900,000 | 1,900,000 |
Deferred tax liabilities | ||
Net unrealized appreciation on securities | (600,000) | (900,000) |
Total deferred tax liabilities | (600,000) | (900,000) |
Net deferred income tax assets | 1,300,000 | 1,000,000 |
Cumulative valuation allowance against deferred tax assets | $ 0 | |
Net operating loss carryforward | $ 0 |
Stockholder's Equity (Details)
Stockholder's Equity (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | ||
Stockholders' Equity Note [Abstract] | ||||
Authorized shares of common stock (in shares) | 100,000 | 100,000 | ||
Par value of shares of common stock (in dollars per share) | $ 20 | $ 20 | ||
Dividends paid | $ 1.2 | $ 2.4 | $ 4.7 | |
Parental loan extinguishment | [1] | $ 0.2 | ||
[1] | Amount relates to a loan from Parent that was extinguished during 2020, which in accordance with ASC 470, Debt, was treated as a capital transaction given it was between related entities. |
Statutory Information - Reconci
Statutory Information - Reconciliation of Net Income and Stockholder's Equity on the Basis of Statutory Accounting (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Net Income | ||||
Net income | $ 1.2 | $ 1 | $ 1.6 | |
Stockholder's Equity | ||||
Total stockholder's equity | 45.3 | 46.5 | 47.2 | $ 49.3 |
New York Department of Commerce | ||||
Net Income | ||||
Based on SAP | 1.1 | 1.2 | 2.5 | |
Investment valuation difference | (0.1) | 0 | 0 | |
Deferred taxes | 0 | 0.2 | 0.1 | |
Deferred gain on disposal of businesses and gains on disposal of businesses | 0.1 | (0.3) | (1) | |
Other differences | 0.1 | (0.1) | 0 | |
Net income | 1.2 | 1 | $ 1.6 | |
Stockholder's Equity | ||||
Based on SAP | 42.7 | 43.1 | ||
Investment valuation difference | 2.6 | 4.2 | ||
Deferred taxes | (0.3) | (0.6) | ||
Deferred gain on disposal of businesses and gains on disposal of businesses | (0.8) | (1) | ||
Other differences | 1.1 | 0.8 | ||
Total stockholder's equity | $ 45.3 | $ 46.5 |
Statutory Information - Narrati
Statutory Information - Narrative (Details) - New York Department of Commerce - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Statutory Information | ||
Ordinary dividends declared and paid | $ 1,200,000 | $ 2,400,000 |
Extraordinary dividends declared and paid | 0 | $ 0 |
Maximum dividend payable under state regulatory requirements | $ 1,600,000 | |
RBC ratio under authorized control level (up to) | 100.00% | |
TAC of the company subject to RBC requirements | $ 42,900,000 | |
Corresponding authorized control | $ 2,500,000 | |
Minimum | ||
Statutory Information | ||
RBC ratio under company action level | 100.00% | |
Maximum | ||
Statutory Information | ||
RBC ratio under company action level | 200.00% |
Reinsurance - Schedule of Reins
Reinsurance - Schedule of Reinsurance Recoverable (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Reinsurance Disclosures [Abstract] | ||
Ceded future policyholder benefits and expense | $ 333 | $ 328.7 |
Ceded unearned premium | 2.2 | 2.3 |
Ceded claims and benefits payable | 100.2 | 92.7 |
Ceded paid losses | 0.3 | (0.1) |
Total | $ 435.7 | $ 423.6 |
Reinsurance - Schedule of Rei_2
Reinsurance - Schedule of Reinsurance Recoverables by A.M. Best Rating and Narrative (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021USD ($)reinsurer | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Ceded Credit Risk [Line Items] | |||
Total | $ 436 | ||
Less: Allowance | (0.3) | $ (0.4) | $ 0 |
Total | $ 435.7 | $ 423.6 | |
Number of reinsurers with the largest reinsurance recoverable balances | reinsurer | 3 | ||
Ceded future policyholder benefits and expense | |||
Ceded Credit Risk [Line Items] | |||
Total | $ 333.2 | ||
Less: Allowance | (0.2) | ||
Total | 333 | ||
Ceded unearned premiums | |||
Ceded Credit Risk [Line Items] | |||
Total | 2.2 | ||
Less: Allowance | 0 | ||
Total | 2.2 | ||
Ceded claims and benefits payable | |||
Ceded Credit Risk [Line Items] | |||
Total | 100.3 | ||
Less: Allowance | (0.1) | ||
Total | 100.2 | ||
Ceded paid losses | |||
Ceded Credit Risk [Line Items] | |||
Total | 0.3 | ||
Less: Allowance | 0 | ||
Total | 0.3 | ||
John Hancock, The Hartford and Sun Life | |||
Ceded Credit Risk [Line Items] | |||
Total | 435.3 | ||
A++ or A+ | |||
Ceded Credit Risk [Line Items] | |||
Total | 431 | ||
A++ or A+ | Ceded future policyholder benefits and expense | |||
Ceded Credit Risk [Line Items] | |||
Total | 328.2 | ||
A++ or A+ | Ceded unearned premiums | |||
Ceded Credit Risk [Line Items] | |||
Total | 2.2 | ||
A++ or A+ | Ceded claims and benefits payable | |||
Ceded Credit Risk [Line Items] | |||
Total | 100.3 | ||
A++ or A+ | Ceded paid losses | |||
Ceded Credit Risk [Line Items] | |||
Total | 0.3 | ||
B++ or B+ | |||
Ceded Credit Risk [Line Items] | |||
Total | 5 | ||
B++ or B+ | Ceded future policyholder benefits and expense | |||
Ceded Credit Risk [Line Items] | |||
Total | 5 | ||
B++ or B+ | Ceded unearned premiums | |||
Ceded Credit Risk [Line Items] | |||
Total | 0 | ||
B++ or B+ | Ceded claims and benefits payable | |||
Ceded Credit Risk [Line Items] | |||
Total | 0 | ||
B++ or B+ | Ceded paid losses | |||
Ceded Credit Risk [Line Items] | |||
Total | 0 | ||
Not Rated | |||
Ceded Credit Risk [Line Items] | |||
Total | 0 | ||
Not Rated | Ceded future policyholder benefits and expense | |||
Ceded Credit Risk [Line Items] | |||
Total | 0 | ||
Not Rated | Ceded unearned premiums | |||
Ceded Credit Risk [Line Items] | |||
Total | 0 | ||
Not Rated | Ceded claims and benefits payable | |||
Ceded Credit Risk [Line Items] | |||
Total | 0 | ||
Not Rated | Ceded paid losses | |||
Ceded Credit Risk [Line Items] | |||
Total | $ 0 |
Reinsurance - Reinsurance Recov
Reinsurance - Reinsurance Recoverable by Reinsurer (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Ceded Credit Risk [Line Items] | ||
Net reinsurance recoverable | $ 435.7 | $ 423.6 |
John Hancock | ||
Ceded Credit Risk [Line Items] | ||
Net reinsurance recoverable | 410.2 | 394 |
Sun Life | ||
Ceded Credit Risk [Line Items] | ||
Net reinsurance recoverable | 20.1 | 23.3 |
Talcott Resolution | ||
Ceded Credit Risk [Line Items] | ||
Net reinsurance recoverable | 5 | 5.3 |
Other reinsurers | ||
Ceded Credit Risk [Line Items] | ||
Net reinsurance recoverable | $ 0.4 | $ 1 |
Reinsurance - Effect of Reinsur
Reinsurance - Effect of Reinsurance Premiums (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Effect of reinsurance on premiums earned and benefits incurred | |||
Direct earned premiums | $ 8.7 | $ 9.7 | $ 20.2 |
Premiums ceded | (8.2) | (9.1) | (19.5) |
Net earned premiums | 0.5 | 0.6 | 0.7 |
Direct policyholder benefits | 35.8 | 29.3 | 65.1 |
Policyholder benefits ceded | (35.6) | (28.9) | (64.8) |
Net policyholder benefits | 0.2 | 0.4 | 0.3 |
Long Duration | |||
Effect of reinsurance on premiums earned and benefits incurred | |||
Direct earned premiums | 8.1 | 7.7 | 8 |
Premiums ceded | (8.1) | (7.7) | (8) |
Net earned premiums | 0 | 0 | 0 |
Direct policyholder benefits | 35.3 | 26.5 | 56.8 |
Policyholder benefits ceded | (35.3) | (26.5) | (56.8) |
Net policyholder benefits | 0 | 0 | 0 |
Short Duration | |||
Effect of reinsurance on premiums earned and benefits incurred | |||
Direct earned premiums | 0.6 | 2 | 12.2 |
Premiums ceded | (0.1) | (1.4) | (11.5) |
Net earned premiums | 0.5 | 0.6 | 0.7 |
Direct policyholder benefits | 0.5 | 2.8 | 8.3 |
Policyholder benefits ceded | (0.3) | (2.4) | (8) |
Net policyholder benefits | $ 0.2 | $ 0.4 | $ 0.3 |
Reinsurance - Business Divestit
Reinsurance - Business Divestitures Narrative (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2021USD ($)reinsurer | |
Ceded Credit Risk [Line Items] | |
Number of reinsurer insolvency for making company responsible for administering reinsurance business (at least) | reinsurer | 1 |
John Hancock | |
Ceded Credit Risk [Line Items] | |
Assets held under trust under reinsurance agreement | $ | $ 864.6 |
Reserves - Roll Forward of Shor
Reserves - Roll Forward of Short Duration Claims and Benefits Payable Balances (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | |||
Claims and benefits payable, at beginning of year | $ 93.5 | $ 89.7 | $ 94.4 |
Less: Reinsurance ceded and other | (93.4) | (89.6) | (94.3) |
Net claims and benefits payable, at beginning of year | 0.1 | 0.1 | 0.1 |
Incurred losses and loss adjustment expenses related to: | |||
Current Year | 0.3 | 0.3 | 0.2 |
Total incurred losses and loss adjustment expenses | 0.3 | 0.3 | 0.2 |
Paid losses and loss adjustment expenses related to: | |||
Current year | 0.2 | 0.2 | 0.2 |
Prior years | 0.1 | 0.1 | 0 |
Total paid losses and loss adjustment expenses | 0.3 | 0.3 | 0.2 |
Net claims and benefits payable, at end of year | 0.1 | 0.1 | 0.1 |
Plus: Reinsurance ceded and other | 100.9 | 93.4 | 89.6 |
Claims and benefits payable, at end of year | $ 101 | $ 93.5 | $ 89.7 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income - Reclassification Adjustments (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||
Beginning Balance | $ 46.5 | $ 47.2 | $ 49.3 |
Change in accumulated other comprehensive income before reclassifications | (1.1) | 0.8 | 1 |
Amounts reclassified from accumulated other comprehensive income | (0.1) | (0.1) | 0 |
Net current-period other comprehensive income (loss) | (1.2) | 0.7 | 1 |
Ending Balance | 45.3 | 46.5 | 47.2 |
Accumulated Other Comprehensive Income | |||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||
Beginning Balance | 3.4 | 2.7 | 1.7 |
Ending Balance | $ 2.2 | $ 3.4 | $ 2.7 |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Income - Reclassifications Out of AOCI (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Amount reclassified from accumulated other comprehensive income | |||
Net realized gains on investments | $ 0.2 | $ 0.1 | $ 0 |
Net income | 1.2 | 1 | 1.6 |
AOCI | Reclassified from AOCI | |||
Amount reclassified from accumulated other comprehensive income | |||
Net realized gains on investments | (0.1) | (0.1) | 0 |
Net income | $ (0.1) | $ (0.1) | $ 0 |
Related Party Transactions (Det
Related Party Transactions (Details) - Parent and its affiliates - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Related Party Transactions | |||
Net fees paid for services provided by the related parties | $ 0.3 | $ 0.5 | $ 0.1 |
Tax payment | $ 0.2 | $ 0.4 | $ 0.4 |
Schedule I-Summary of Investm_2
Schedule I-Summary of Investments Other-Than-Investments in Related Parties (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | $ 42.1 | |
Amount at which shown in balance sheet | 44.8 | $ 46.8 |
Fixed maturity securities | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 30.1 | |
Fair Value | 32.8 | |
Amount at which shown in balance sheet | 32.8 | |
U.S. government and government agencies and authorities | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 0.9 | |
Fair Value | 0.9 | |
Amount at which shown in balance sheet | 0.9 | |
States, municipalities and political subdivisions | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 0.5 | |
Fair Value | 0.5 | |
Amount at which shown in balance sheet | 0.5 | |
Foreign governments | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 0.5 | |
Fair Value | 0.6 | |
Amount at which shown in balance sheet | 0.6 | |
Residential mortgage-backed | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 4.4 | |
Fair Value | 4.4 | |
Amount at which shown in balance sheet | 4.4 | |
Commercial mortgage-backed | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 2 | |
Fair Value | 2 | |
Amount at which shown in balance sheet | 2 | |
U.S. corporate | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 16.2 | |
Fair Value | 18.1 | |
Amount at which shown in balance sheet | 18.1 | |
Foreign corporate | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 5.6 | |
Fair Value | 6.3 | |
Amount at which shown in balance sheet | 6.3 | |
Short-term investments | ||
Summary of Investments Other-Than-Investments in Related Parties | ||
Cost or Amortized Cost | 12 | |
Amount at which shown in balance sheet | $ 12 |
Schedule III-Supplementary In_2
Schedule III-Supplementary Insurance Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
SEC Schedule, 12-16, Insurance Companies, Supplementary Insurance Information [Abstract] | |||
Future policy benefits and expenses | $ 333.2 | $ 328.7 | $ 326.4 |
Unearned premiums | 2.2 | 2.3 | 2.5 |
Claims and benefits payable | 101 | 93.5 | 89.7 |
Premium revenues | 0.5 | 0.6 | 0.7 |
Net investment income | 1.3 | 1.6 | 1.9 |
Benefits claims, losses and settlement expenses | 0.2 | 0.4 | 0.3 |
Other operating expenses | $ 0.5 | $ 1 | $ 0.6 |
Schedule IV-Reinsurance (Detail
Schedule IV-Reinsurance (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Life Insurance in Force | |||
Direct amount | $ 29.5 | $ 37.9 | $ 68.1 |
Ceded to other companies | 15.8 | 21.9 | 48.4 |
Assumed from other companies | 0 | 0 | 0 |
Net amount | $ 13.7 | $ 16 | $ 19.7 |
Percentage of amount assumed to net | 0.00% | 0.00% | 0.00% |
Premiums: | |||
Direct amount | $ 8.7 | $ 9.7 | $ 20.2 |
Ceded to other companies | 8.2 | 9.1 | 19.5 |
Assumed from other companies | 0 | 0 | 0 |
Net earned premiums | $ 0.5 | $ 0.6 | $ 0.7 |
Percentage of amount assumed to net | 0.00% | 0.00% | 0.00% |
Benefits: | |||
Direct amount | $ 35.8 | $ 29.3 | $ 65.1 |
Ceded to other companies | 35.6 | 28.9 | 64.8 |
Assumed from other companies | 0 | 0 | 0 |
Net policyholder benefits | $ 0.2 | $ 0.4 | $ 0.3 |
Percentage of amount assumed to net | 0.00% | 0.00% | 0.00% |
Life insurance | |||
Premiums: | |||
Direct amount | $ 0.8 | $ 0.6 | $ 1 |
Ceded to other companies | 0.7 | 0.5 | 0.9 |
Assumed from other companies | 0 | 0 | 0 |
Net earned premiums | $ 0.1 | $ 0.1 | $ 0.1 |
Percentage of amount assumed to net | 0.00% | 0.00% | 0.00% |
Benefits: | |||
Direct amount | $ 1.4 | $ 1 | $ 1.9 |
Ceded to other companies | 1.3 | 1 | 1.8 |
Assumed from other companies | 0 | 0 | 0 |
Net policyholder benefits | $ 0.1 | $ 0 | $ 0.1 |
Percentage of amount assumed to net | 0.00% | 0.00% | 0.00% |
Accident and health insurance | |||
Premiums: | |||
Direct amount | $ 7.9 | $ 9.1 | $ 19.2 |
Ceded to other companies | 7.5 | 8.6 | 18.6 |
Assumed from other companies | 0 | 0 | 0 |
Net earned premiums | $ 0.4 | $ 0.5 | $ 0.6 |
Percentage of amount assumed to net | 0.00% | 0.00% | 0.00% |
Benefits: | |||
Direct amount | $ 34.4 | $ 28.3 | $ 63.2 |
Ceded to other companies | 34.3 | 27.9 | 63 |
Assumed from other companies | 0 | 0 | 0 |
Net policyholder benefits | $ 0.1 | $ 0.4 | $ 0.2 |
Percentage of amount assumed to net | 0.00% | 0.00% | 0.00% |