| Supplemental Unaudited Quarterly Financial Information |
Supplemental Unaudited Quarterly Financial Information
The following tables reflect unaudited summarized quarterly financial results during the years ended December 31, 2013 and 2012. | | | | | | | | | | | | | | | | | Summarized Selected Quarterly Financial Data: | Quarter Ended | ($ in millions) | Mar 31, [1] | | June 30, | | Sept 30, | | Dec 31, | | 2013 | | | | | | | | | Revenues | $ | 108.8 |
| | $ | 137.1 |
| | $ | 130.6 |
| | $ | 149.2 |
| | | | | | | | | Benefits and expenses | $ | 131.1 |
| | $ | 149.4 |
| | $ | 143.2 |
| | $ | 68.0 |
| | | | | | | | | Income tax expense (benefit) | $ | (1.9 | ) | | $ | (16.9 | ) | | $ | 2.6 |
| | $ | (5.5 | ) | | | | | | | | | Net income (loss) | $ | (20.4 | ) | | $ | 4.6 |
| | $ | (15.2 | ) | | $ | 86.7 |
|
——————— | | [1] | Results for the quarter ended March 31, 2013 include $3.2 million of income (loss) related to out of period adjustments. Such amounts are not material to any period presented. |
| | | | | | | | | | | | | | | | | Summarized Selected Quarterly Financial Data: | Quarter Ended | ($ in millions) | Mar 31, | | June 30, | | Sept 30, | | Dec 31, | | 2012 | | | | | | | | | Revenues | $ | 125.6 |
| | $ | 111.7 |
| | $ | 130.2 |
| | $ | 114.9 |
| | | | | | | | | Benefits and expenses | $ | 129.3 |
| | $ | 143.3 |
| | $ | 206.5 |
| | $ | 124.8 |
| | | | | | | | | Income tax expense (benefit) | $ | 18.8 |
| | $ | 0.5 |
| | $ | 4.3 |
| | $ | (7.4 | ) | | | | | | | | | Net income (loss) | $ | (22.5 | ) | | $ | (32.1 | ) | | $ | (80.6 | ) | | $ | (2.5 | ) |
| | | | | | | | | | | | | | | | | ($ in millions) | Statements of Income and Comprehensive Income | | Three months ended | | Mar 31, | | June 30, | | Sept 30, | | Dec 31, | | 2013 | REVENUES: | | | | | | | |
| Premiums | $ | 3.1 |
| | $ | 5.1 |
| | $ | 3.1 |
| | $ | 2.6 |
| Insurance and investment product fees | 90.1 |
| | 87.2 |
| | 94.0 |
| | 96.3 |
| Net investment income | 33.0 |
| | 34.1 |
| | 36.3 |
| | 37.4 |
| Net realized investment gains (losses): | | | | | | | | Total OTTI losses | (0.3 | ) | | — |
| | (0.2 | ) | | (0.6 | ) | Portion of OTTI losses recognized in OCI | (0.7 | ) | | (0.2 | ) | | — |
| | — |
| Net OTTI losses recognized in earnings | (1.0 | ) | | (0.2 | ) | | (0.2 | ) | | (0.6 | ) | Net realized investment gains (losses), excluding OTTI losses | (16.4 | ) | | 10.9 |
| | (2.6 | ) | | 13.5 |
| Net realized investment gains (losses) | (17.4 | ) | | 10.7 |
| | (2.8 | ) | | 12.9 |
| Total revenues | 108.8 |
| | 137.1 |
| | 130.6 |
| | 149.2 |
| | | | | | | | |
| BENEFITS AND EXPENSES: | | | | | | | |
| Policy benefits | 88.5 |
| | 91.4 |
| | 91.8 |
| | 14.8 |
| Policy acquisition cost amortization | 14.0 |
| | 26.6 |
| | 22.2 |
| | 25.6 |
| Other operating expenses | 28.6 |
| | 31.4 |
| | 29.2 |
| | 27.6 |
| Total benefits and expenses | 131.1 |
| | 149.4 |
| | 143.2 |
| | 68.0 |
| Income (loss) before income taxes | (22.3 | ) | | (12.3 | ) | | (12.6 | ) | | 81.2 |
| Income tax expense (benefit) | (1.9 | ) | | (16.9 | ) | | 2.6 |
| | (5.5 | ) | Net income (loss) | $ | (20.4 | ) | | $ | 4.6 |
| | $ | (15.2 | ) | | $ | 86.7 |
| | | | | | | | | COMPREHENSIVE INCOME (LOSS): | | | | | | | | Net income (loss) | $ | (20.4 | ) | | $ | 4.6 |
| | $ | (15.2 | ) | | $ | 86.7 |
| Other comprehensive income (loss) before income taxes: | | | | | | | | Unrealized investment gains (losses), net of related offsets | (13.3 | ) | | (12.1 | ) | | 9.9 |
| | (19.6 | ) | Less: Income tax expense (benefit) related to: | | | | | | | | Unrealized investment gains (losses), net of related offsets | 2.7 |
| | (12.1 | ) | | (0.3 | ) | | (2.1 | ) | Other comprehensive income (loss), net of income taxes | (16.0 | ) | | — |
| | 10.2 |
| | (17.5 | ) | Comprehensive income (loss) | $ | (36.4 | ) | | $ | 4.6 |
| | $ | (5.0 | ) | | $ | 69.2 |
|
| | 17. | Supplemental Unaudited Quarterly Financial Information (continued) |
| | | | | | | | | ($ in millions) | Statements of Income and Comprehensive Income | | For the period ended | | June 30, | | Sept 30, | | 2013 | REVENUES: | | | | Premiums | $ | 8.2 |
| | $ | 11.3 |
| Insurance and investment product fees | 177.3 |
| | 271.3 |
| Net investment income | 67.1 |
| | 103.4 |
| Net realized investment gains (losses): | | | | Total OTTI losses | (0.3 | ) | | (0.5 | ) | Portion of OTTI losses recognized in OCI | (0.9 | ) | | (0.9 | ) | Net OTTI losses recognized in earnings | (1.2 | ) | | (1.4 | ) | Net realized investment gains (losses), excluding OTTI losses | (5.5 | ) | | (8.1 | ) | Net realized investment gains (losses) | (6.7 | ) | | (9.5 | ) | Total revenues | 245.9 |
| | 376.5 |
| | | | | BENEFITS AND EXPENSES: | | | | Policy benefits, excluding policyholder dividends | 179.9 |
| | 271.7 |
| Policy acquisition cost amortization | 40.6 |
| | 62.8 |
| Other operating expenses | 60.0 |
| | 89.2 |
| Total benefits and expenses | 280.5 |
| | 423.7 |
| Loss before income taxes | (34.6 | ) | | (47.2 | ) | Income tax expense (benefit) | (18.8 | ) | | (16.2 | ) | Net income (loss) | $ | (15.8 | ) | | $ | (31.0 | ) | | | | | COMPREHENSIVE INCOME (LOSS): | | | | Net income (loss) | $ | (15.8 | ) | | $ | (31.0 | ) | Other comprehensive income (loss) before income taxes: | | | | Unrealized investment gains (losses), net of related offsets | (25.4 | ) | | (15.5 | ) | Less: Income tax expense (benefit) related to: | | | | Unrealized investment gains (losses), net of related offsets | (9.4 | ) | | (9.7 | ) | Other comprehensive income (loss), net of income taxes | (16.0 | ) | | (5.8 | ) | Comprehensive income (loss) | $ | (31.8 | ) | | $ | (36.8 | ) |
Supplemental Unaudited Quarterly Financial Information (continued)
| | | | | | | | | | | | | ($ in millions, except share data) | Balance Sheets | | For the period ended | | Mar 31, | | June 30, | | Sept 30, | | 2013 | ASSETS: | | | | | | Available-for-sale debt securities, at fair value | $ | 3,054.7 |
| | $ | 3,162.2 |
| | $ | 3,252.1 |
| Short-term investments | 224.9 |
| | 165.0 |
| | 55.0 |
| Limited partnerships and other investments | 5.7 |
| | 7.2 |
| | 10.3 |
| Policy loans, at unpaid principal balances | 61.5 |
| | 62.8 |
| | 65.6 |
| Derivative investments | 186.6 |
| | 199.3 |
| | 190.7 |
| Fair value investments | 46.5 |
| | 48.8 |
| | 53.1 |
| Total investments | 3,579.9 |
| | 3,645.3 |
| | 3,626.8 |
| Cash and cash equivalents | 116.2 |
| | 123.9 |
| | 218.1 |
| Accrued investment income | 29.0 |
| | 25.7 |
| | 29.7 |
| Receivables | 9.8 |
| | 8.6 |
| | 14.3 |
| Reinsurance recoverable | 444.1 |
| | 455.5 |
| | 484.8 |
| Deferred policy acquisition costs | 433.6 |
| | 463.1 |
| | 458.5 |
| Deferred income taxes, net | 13.4 |
| | 25.5 |
| | 25.8 |
| Receivables from related parties | — |
| | 6.0 |
| | 2.0 |
| Other assets | 162.2 |
| | 182.4 |
| | 190.4 |
| Separate account assets | 2,109.5 |
| | 2,021.3 |
| | 2,049.5 |
| Total assets | $ | 6,897.7 |
| | $ | 6,957.3 |
| | $ | 7,099.9 |
| | | | | | | LIABILITIES: | | | | | | Policy liabilities and accruals | $ | 1,930.8 |
| | $ | 1,926.5 |
| | $ | 1,974.9 |
| Policyholder deposit funds | 2,468.1 |
| | 2,566.5 |
| | 2,660.9 |
| Payable to related parties | 15.5 |
| | 18.3 |
| | 12.6 |
| Other liabilities | 115.1 |
| | 161.4 |
| | 143.7 |
| Separate account liabilities | 2,109.5 |
| | 2,021.3 |
| | 2,049.5 |
| Total liabilities | 6,639.0 |
| | 6,694.0 |
| | 6,841.6 |
| | | | | | | COMMITMENTS AND CONTINGENT LIABILITIES (Note 16) |
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| | | | | | | STOCKHOLDER’S EQUITY: | | | | | | Common stock, $5,000 par value: 1,000 shares authorized; 500 shares issued | 2.5 |
| | 2.5 |
| | 2.5 |
| Additional paid-in capital | 802.2 |
| | 802.2 |
| | 802.2 |
| Accumulated other comprehensive gain (loss) | (4.6 | ) | | (4.6 | ) | | 5.6 |
| Retained earnings (accumulated deficit) | (541.4 | ) | | (536.8 | ) | | (552.0 | ) | Total stockholder’s equity | 258.7 |
| | 263.3 |
| | 258.3 |
| Total liabilities and stockholder’s equity | $ | 6,897.7 |
| | $ | 6,957.3 |
| | $ | 7,099.9 |
|
Supplemental Unaudited Quarterly Financial Information (continued)
| | | | | | | | | | | | | ($ in millions) | Statement of
Changes in Stockholder’s Equity | | For the period ended | | Mar 31, | | June 30, | | Sept 30, | | 2013 | COMMON STOCK: | | | | | | Balance, beginning of period | $ | 2.5 |
| | $ | 2.5 |
| | $ | 2.5 |
| Balance, end of period | $ | 2.5 |
| | $ | 2.5 |
| | $ | 2.5 |
| | | | | | | ADDITIONAL PAID-IN CAPITAL: | | | | | | Balance, beginning of period | $ | 802.2 |
| | $ | 802.2 |
| | $ | 802.2 |
| Capital contributions from parent | — |
| | — |
| | — |
| Balance, end of period | $ | 802.2 |
| | $ | 802.2 |
| | $ | 802.2 |
| | | | | | | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): | | | | | | Balance, beginning of period | $ | 11.4 |
| | $ | 11.4 |
| | $ | 11.4 |
| Other comprehensive income (loss) | (16.0 | ) | | (16.0 | ) | | (5.8 | ) | Balance, end of period | $ | (4.6 | ) | | $ | (4.6 | ) | | $ | 5.6 |
| | | | | | | RETAINED EARNINGS (ACCUMULATED DEFICIT): | | | | | | Balance, beginning of period | $ | (521.0 | ) | | $ | (521.0 | ) | | $ | (521.0 | ) | Net income (loss) | (20.4 | ) | | (15.8 | ) | | (31.0 | ) | Balance, end of period | $ | (541.4 | ) | | $ | (536.8 | ) | | $ | (552.0 | ) | | | | | | | TOTAL STOCKHOLDER’S EQUITY: | | | | | | Balance, beginning of period | $ | 295.1 |
| | $ | 295.1 |
| | $ | 295.1 |
| Change in stockholder’s equity | (36.4 | ) | | (31.8 | ) | | (36.8 | ) | Stockholder’s equity, end of period | $ | 258.7 |
| | $ | 263.3 |
| | $ | 258.3 |
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Supplemental Unaudited Quarterly Financial Information (continued)
| | | | | | | | | | | | | ($ in millions) | Statements of Cash Flows | | For the period ended | | Mar 31, | | June 30, | | Sept 30, | | 2013 | OPERATING ACTIVITIES: | | | | | | Net income (loss) | $ | (20.4 | ) | | $ | (15.8 | ) | | $ | (31.0 | ) | Net realized investment (gains) losses | 17.4 |
| | 6.7 |
| | 9.5 |
| Policy acquisition costs deferred | (17.2 | ) | | (33.5 | ) | | (49.6 | ) | Amortization of deferred policy acquisition costs | 14.0 |
| | 40.6 |
| | 62.8 |
| Interest credited | 18.4 |
| | 40.1 |
| | 64.0 |
| Equity in earnings of limited partnerships and other investments | 0.8 |
| | (0.1 | ) | | (0.3 | ) | Change in: | | | | | | Accrued investment income | (6.8 | ) | | (3.7 | ) | | (8.5 | ) | Deferred income taxes | — |
| | — |
| | — |
| Receivables | 6.4 |
| | 7.6 |
| | 1.9 |
| Reinsurance recoverable | (17.0 | ) | | (28.4 | ) | | (57.7 | ) | Policy liabilities and accruals | (55.5 | ) | | (59.5 | ) | | (70.7 | ) | Due to/from affiliate | 4.5 |
| | 1.3 |
| | (0.4 | ) | Other operating activities, net | 3.6 |
| | (4.4 | ) | | 7.4 |
| Cash provided by (used for) operating activities | (51.8 | ) | | (49.1 | ) | | (72.6 | ) | | | | | | | INVESTING ACTIVITIES: | | | | | | Purchases of: | | | | | | Available-for-sale debt securities | (155.0 | ) | | (429.8 | ) | | (672.3 | ) | Short-term investments | (224.8 | ) | | (224.8 | ) | | (224.8 | ) | Derivative instruments | (35.1 | ) | | (50.1 | ) | | (62.7 | ) | Fair value investments | (9.8 | ) | | (14.6 | ) | | (21.1 | ) | Sales, repayments and maturities of: | | | | | | Available-for-sale debt securities | 73.4 |
| | 151.3 |
| | 261.2 |
| Short-term investments | 244.9 |
| | 304.8 |
| | 414.8 |
| Derivative instruments | 7.7 |
| | 15.8 |
| | 27.4 |
| Fair value investments | 1.7 |
| | 3.7 |
| | 5.7 |
| Contributions to limited partnerships | (0.3 | ) | | (0.4 | ) | | (3.5 | ) | Distributions from limited partnerships | — |
| | 0.1 |
| | 0.4 |
| Policy loans, net | 0.2 |
| | (0.6 | ) | | (2.7 | ) | Other investing activities, net | 0.1 |
| | 0.1 |
| | 0.1 |
| Cash provided by (used for) investing activities | (97.0 | ) | | (244.5 | ) | | (277.5 | ) | | | | | | | FINANCING ACTIVITIES: | | | | | | Policyholder deposit fund deposits | 247.2 |
| | 469.9 |
| | 690.7 |
| Policyholder deposit fund withdrawals | (135.3 | ) | | (280.0 | ) | | (434.6 | ) | Net transfers to/from separate accounts | 70.0 |
| | 144.5 |
| | 229.0 |
| Cash provided by (used for) financing activities | 181.9 |
| | 334.4 |
| | 485.1 |
| Change in cash and cash equivalents | 33.1 |
| | 40.8 |
| | 135.0 |
| Cash and cash equivalents, beginning of period | 83.1 |
| | 83.1 |
| | 83.1 |
| Cash and cash equivalents, end of period | $ | 116.2 |
| | $ | 123.9 |
| | $ | 218.1 |
| | | | | | | Supplemental Disclosure of Cash Flow Information | | | | | | Income taxes paid (refunded) | $ | (3.7 | ) | | $ | (9.0 | ) | | $ | (25.5 | ) | | | | | | | Non-Cash Transactions During the Year | | | | | | Investment exchanges | $ | 19.0 |
| | $ | 29.6 |
| | $ | 30.5 |
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