Discontinued Operations

9 Months Ended

Sep. 30, 2018

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

On September 18, 2017, we signed a definitive agreement to sell our subsidiary, United Life, to Kuvare for $280,000 in cash, less a $21 adjustment as set forth in the definitive agreement, for a net amount of $279,979. The sale closed on March 30, 2018 and we reported an after-tax gain on the sale of discontinued operations of $27,307. The life insurance business (previously reported as a separate segment) was considered held for sale and reported as discontinued operations and its financial position, results of operations and cash flows were reported separately for all periods presented, as applicable, unless otherwise noted.

UFG has agreed to provide services to Kuvare through a transition services agreement ("TSA"). The TSA ensures a seamless transfer of the business between UFG and Kuvare. The TSA includes, among other considerations,

accounting management, human resources, legal and information technology services, from the closing date for up to 24 months. Since the close date, the Company has received $317 as part of the TSA agreement.

The assets and liabilities associated with discontinued operations prior to the closing of the sale have been presented separately in our Consolidated Balance Sheets. The major assets and liability categories were as follows as of the dates indicated:



Discontinued Operations
Balance Sheets
(In Thousands, Except Share Data)	September 30, 2018		December 31, 2017
	(unaudited)
Assets
Investments
Fixed maturities
Held-to-maturity, at amortized cost (fair value $0 in 2018 and $34 in 2017)	$	—	$	34
Available-for-sale, at fair value (amortized cost $0 in 2018 and $1,412,291 in 2017)	—		1,430,025
Equity Securities at fair value (cost $0 in 2018 and $5,099 in 2017)	—		23,653
Mortgage loans	—		3,435
Policy loans	—		5,815
Other long-term investments	—		16,437
	—		1,479,399
Cash and cash equivalents	—		15,851
Deferred policy acquisition costs	—		71,151
Other assets	—		19,733
Total assets held for sale	$	—	$	1,586,134
Liabilities
Future policy benefits and losses	$	—	$	1,320,401
Deferred income taxes	—		18,716
Accrued expenses and other liabilities	—		8,018
Total liabilities held for sale	$	—	$	1,347,135

Note: The sale of the life insurance business was completed on March 30, 2018.

Summary operating results of discontinued operations were as follows for the periods indicated:



Discontinued Operations
Statements of Income (Unaudited)
	Three Months Ended September 30,				Nine Months Ended September 30,
(In Thousands, Except Share Data)	2018		2017		2018			2017

Revenues
Net premiums earned	$	—	$	14,230	$	13,003		$	45,999
Investment income, net of investment expenses	—		12,354		12,663			37,230
Net realized investment gains (losses)	—		296		(1,057		)	3,600
Other income	—		174		146			498
Total revenues	$	—	$	27,054	$	24,755		$	87,327

Benefits, Losses and Expenses
Losses and loss settlement expenses	$	—	$	10,506	$	10,823		$	30,679
Increase in liability for future policy benefits	—		5,481		5,023			19,341
Amortization of deferred policy acquisition costs	—		2,156		1,895			5,524
Other underwriting expenses	—		2,444		3,864			9,452
Interest on policyholders’ accounts	—		4,587		4,499			13,982
Total benefits, losses and expenses	$	—	$	25,174	$	26,104		$	78,978

Income (loss) from discontinued operations before income taxes	$	—	$	1,880	$	(1,349	)	$	8,349
Federal income tax expense	—		662		563			2,930
Net income (loss) from discontinued operations	$	—	$	1,218	$	(1,912	)	$	5,419
Earnings (loss) per common share from discontinued operations:
Basic	$	—	$	0.05	$	(0.08	)	$	0.21
Diluted	—		0.05		(0.07		)	0.21

Note: The sale of the life insurance business was completed on March 30, 2018.

The Company's Consolidated Statement of Cash Flows presents operating, investing and financing cash flows of the discontinued operations separately. The Company's cash management and financial management of both continued and discontinued operations is consolidated as a centralized corporate function in our Finance Department.