Investing Activities (Tables)

12 Months Ended

Dec. 31, 2013

Investments, Debt and Equity Securities [Abstract]

Available-for-sale Securities

The following tables present the debt securities available-for-sale by sector held at December 31, 2013 and 2012, respectively. The unrealized loss amounts presented below include the non-credit loss component of OTTI losses. We classify these investments into various sectors in line with industry conventions.

6. Investing Activities (continued)

Fair Value and Cost of Securities:	December 31, 2013
($ in millions)			Gross		Gross					OTTI
	Amortized		Unrealized		Unrealized			Fair		Recognized
	Cost		Gains [1]		Losses [1]			Value		in AOCI [2]
U.S. government and agency	$	66.1	$	3.3	$	(0.8	)	$	68.6	$	—
State and political subdivision	156.2		3.8		(5.4		)	154.6		(0.2		)
Foreign government	63.1		2.7		(0.3		)	65.5		—
Corporate	2,194.9		69.5		(57.1		)	2,207.3		(1.5		)
Commercial mortgage-backed (“CMBS”)	241.9		13.0		(1.2		)	253.7		(0.4		)
Residential mortgage-backed (“RMBS”)	513.7		7.9		(11.8		)	509.8		(8.6		)
CDO/CLO	70.6		1.7		(1.4		)	70.9		(3.0		)
Other asset-backed	96.1		3.7		(3.9		)	95.9		—
Available-for-sale debt securities	$	3,402.6	$	105.6	$	(81.9	)	$	3,426.3	$	(13.7	)

———————

[1] Net unrealized investment gains and losses on securities classified as available-for-sale and certain other assets are included in our balance sheets as a component of AOCI.

[2] Represents the amount of non-credit OTTI losses recognized in AOCI excluding net unrealized gains or losses subsequent to the date of impairment. The table above presents the special category of AOCI for debt securities that are other-than-temporarily impaired when the impairment loss has been split between the credit loss component (in earnings) and the non-credit component.

Fair Value and Cost of Securities:	December 31, 2012
($ in millions)			Gross		Gross					OTTI
	Amortized		Unrealized		Unrealized			Fair		Recognized
	Cost		Gains [1]		Losses [1]			Value		in AOCI [2]
U.S. government and agency	$	35.8	$	4.8	$	(0.4	)	$	40.2	$	—
State and political subdivision	120.5		10.9		(0.5		)	130.9		(0.2		)
Foreign government	44.4		7.4		—			51.8		—
Corporate	1,776.9		144.6		(24.0		)	1,897.5		(1.5		)
CMBS	229.6		26.0		(1.6		)	254.0		(0.6		)
RMBS	412.6		17.5		(7.6		)	422.5		(9.0		)
CDO/CLO	59.2		1.8		(4.2		)	56.8		(3.3		)
Other asset-backed	119.1		6.0		(6.5		)	118.6		—
Available-for-sale debt securities	$	2,798.1	$	219.0	$	(44.8	)	$	2,972.3	$	(14.6	)

———————

[1] Net unrealized investment gains and losses on securities classified as available-for-sale and certain other assets are included in our balance sheets as a component of AOCI.

[2] Represents the amount of non-credit OTTI losses recognized in AOCI excluding net unrealized gains or losses subsequent to the date of impairment. The table above presents the special category of AOCI for debt securities that are other-than-temporarily impaired when the impairment loss has been split between the credit loss component (in earnings) and the non-credit component.

Investments Classified by Contractual Maturity Date

Maturities of Debt Securities:	December 31, 2013
($ in millions)	Amortized		Fair
	Cost		Value
Due in one year or less	$	36.1	$	36.8
Due after one year through five years	438.5		464.0
Due after five years through ten years	1,227.7		1,225.4
Due after ten years	778.0		769.8
CMBS/RMBS/ABS/CDO/CLO [1]	922.3		930.3
Total	$	3,402.6	$	3,426.3

———————

[1] CMBS, RMBS, ABS, CDO and CLO are not listed separately in the table as each security does not have a single fixed maturity.

Schedule of Available-for-sale Securities Reconciliation

The following table depicts the sources of available-for-sale investment proceeds and related investment gains (losses).

Sales of Available-for-Sale Securities:	As of December 31,
($ in millions)	2013			2012			2011
Debt securities, available-for-sale
Proceeds from sales	$	90.0		$	160.0		$	68.5
Proceeds from maturities/repayments	286.1			285.3			180.0
Gross investment gains from sales, prepayments and maturities	11.3			22.8			2.4
Gross investment losses from sales and maturities	(0.4		)	(0.7		)	(0.8		)

Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value

Aging of Temporarily Impaired	As of
Debt Securities:	December 31, 2013
($ in millions)	Less than 12 months					Greater than 12 months					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
Debt Securities
U.S. government and agency	$	14.5	$	(0.8	)	$	—	$	—		$	14.5	$	(0.8	)
State and political subdivision	65.3		(4.4		)	4.0		(1.0		)	69.3		(5.4		)
Foreign government	17.0		(0.3		)	—		—			17.0		(0.3		)
Corporate	806.5		(38.3		)	120.5		(18.8		)	927.0		(57.1		)
CMBS	39.4		(1.1		)	3.0		(0.1		)	42.4		(1.2		)
RMBS	243.5		(8.5		)	40.3		(3.3		)	283.8		(11.8		)
CDO/CLO	30.5		(0.3		)	24.1		(1.1		)	54.6		(1.4		)
Other asset-backed	7.9		(0.1		)	8.0		(3.8		)	15.9		(3.9		)
Total temporarily impaired securities	$	1,224.6	$	(53.8	)	$	199.9	$	(28.1	)	$	1,424.5	$	(81.9	)
Below investment grade	$	33.7	$	(1.9	)	$	12.1	$	(1.7	)	$	45.8	$	(3.6	)
Number of securities			325					79					404

Aging of Temporarily Impaired	As of
Debt Securities:	December 31, 2012
($ in millions)	Less than 12 months					Greater than 12 months					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
Debt Securities
U.S. government and agency	$	—	$	—		$	3.5	$	(0.4	)	$	3.5	$	(0.4	)
State and political subdivision	4.8		(0.3		)	1.0		(0.2		)	5.8		(0.5		)
Foreign government	—		—			—		—			—		—
Corporate	114.5		(1.7		)	64.7		(22.3		)	179.2		(24.0		)
CMBS	0.7		(0.1		)	10.6		(1.5		)	11.3		(1.6		)
RMBS	24.1		(0.2		)	52.6		(7.4		)	76.7		(7.6		)
CDO/CLO	—		—			39.0		(4.2		)	39.0		(4.2		)
Other asset-backed	0.9		—			10.7		(6.5		)	11.6		(6.5		)
Total temporarily impaired securities	$	145.0	$	(2.3	)	$	182.1	$	(42.5	)	$	327.1	$	(44.8	)
Below investment grade	$	7.8	$	(0.5	)	$	63.4	$	(25.4	)	$	71.2	$	(25.9	)
Number of securities			48					89					137

Other than Temporary Impairment, Credit Losses Recognized in Earnings

The following table presents a roll-forward of pre-tax credit losses recognized in earnings related to debt securities for which a portion of the OTTI was recognized in OCI.

Credit Losses Recognized in Earnings on Available-for-Sale Debt Securities for	As of December 31,
which a Portion of the OTTI Loss was Recognized in OCI:	2013			2012			2011
($ in millions)
Balance, beginning of period	$	(17.8	)	$	(21.3	)	$	(19.9	)
Add: Credit losses on securities not previously impaired [1]	(0.3		)	(1.4		)	(1.0		)
Add: Credit losses on securities previously impaired [1]	(0.8		)	(1.2		)	(1.4		)
Less: Credit losses on securities impaired due to intent to sell	—			—			—
Less: Credit losses on securities sold	0.3			6.1			1.0
Less: Increases in cash flows expected on previously impaired securities	—			—			—
Balance, end of period	$	(18.6	)	$	(17.8	)	$	(21.3	)

———————

[1] Additional credit losses on securities for which a portion of the OTTI loss was recognized in AOCI are included within net OTTI losses recognized in earnings on the statements of income and comprehensive income.

Investment Income

Sources of Net Investment Income:	Years Ended December 31,
($ in millions)	2013		2012		2011
Debt securities [1]	$	135.0	$	122.5	$	94.8
Policy loans	2.9		3.1		3.1
Limited partnerships and other investments	1.8		2.2		1.8
Fair value investments	2.6		4.0		2.8
Total investment income	142.3		131.8		102.5
Less: Investment expenses	1.5		0.9		1.4
Net investment income	$	140.8	$	130.9	$	101.1

———————

[1] Includes net investment income on short-term investments.

Gain (Loss) on Investments

Sources and Types of Net Realized Investment Gains (Losses):	Years Ended December 31,
($ in millions)	2013			2012			2011
Total other-than-temporary debt impairments	$	(1.1	)	$	(5.0	)	$	(9.7	)
Portion of loss recognized in OCI	(0.9		)	2.2			6.9
Net debt impairments recognized in earnings	$	(2.0	)	$	(2.8	)	$	(2.8	)
Debt security impairments:
U.S. government and agency	$	—		$	—		$	—
State and political subdivision	—			(0.1		)	—
Foreign government	—			—			—
Corporate	—			—			(0.4		)
CMBS	(0.3		)	(0.1		)	(0.4		)
RMBS	(1.5		)	(1.9		)	(1.5		)
CDO/CLO	(0.2		)	(0.4		)	(0.4		)
Other asset-backed	—			(0.3		)	(0.1		)
Net debt security impairments	(2.0		)	(2.8		)	(2.8		)
Equity security impairments	—			—			(0.4		)
Impairment losses	(2.0		)	(2.8		)	(3.2		)
Debt security transaction gains	11.3			22.8			2.5
Debt security transaction losses	(0.4		)	(0.7		)	(0.7		)
Limited partnerships and other investment gains	—			—			0.1
Limited partnerships and other investment losses	—			(0.3		)	(0.1		)
Net transaction gains (losses)	10.9			21.8			1.8
Derivative instruments	(23.1		)	(49.0		)	6.2
Embedded derivatives [1]	17.6			11.2			(33.2		)
Related party reinsurance derivatives	—			(3.5		)	9.0
Assets valued at fair value	—			—			—
Net realized investment gains (losses), excluding impairment losses	5.4			(19.5		)	(16.2		)
Net realized investment gains (losses), including impairment losses	$	3.4		$	(22.3	)	$	(19.4	)

———————

[1] Includes the change in fair value of embedded derivatives associated with fixed index annuity indexed crediting feature and variable annuity GMWB, GMAB and COMBO riders. See Note 7 to these financial statements for additional disclosures.

Schedule of Unrealized Loss on Investments

Sources of Changes in Net Unrealized Investment Gains (Losses):	Years Ended December 31,
($ in millions)	2013			2012			2011
Debt securities	$	(150.5	)	$	123.0		$	77.2
Equity securities	—			—			0.1
Other investments	0.1			(0.2		)	(0.1		)
Net unrealized investment gains (losses)	$	(150.4	)	$	122.8		$	77.2
Net unrealized investment gains (losses)	$	(150.4	)	$	122.8		$	77.2
Applicable to deferred policy acquisition cost	(57.8		)	29.2			37.4
Applicable to other actuarial offsets	(57.5		)	59.9			20.1
Applicable to deferred income tax expense (benefit)	(11.8		)	24.9			4.2
Offsets to net unrealized investment gains (losses)	(127.1		)	114.0			61.7
Net unrealized investment gains (losses) included in OCI	$	(23.3	)	$	8.8		$	15.5