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18. Supplemental Unaudited Quarterly Financial Information
 12 Months Ended
Dec. 31, 2012
Notes to Financial Statements  
Supplemental Unaudited Quarterly Financial Information

 

The following tables reflect unaudited summarized quarterly financial results during the years ended December 31, 2012 and 2011.

 

Summarized Selected Quarterly Financial Data:   Quarter Ended  
($ in millions)   Mar 31,     June 30,     Sept 30,     Dec 31,  
    2012  
    As restated     As restated              
    and amended     and amended              
                         
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 )

 

Summarized Selected Quarterly Financial Data:   Quarter Ended  
($ in millions)   Mar 31,     June 30,     Sept 30,     Dec 31,  
    2011  
    As restated and amended  
                         
Revenues   $ 122.4     $ 122.6     $ 118.8     $ 114.5  
                                 
Benefits and expenses   $ 119.7     $ 132.6     $ 146.9     $ 105.4  
                                 
Income tax expense (benefit)   $ (0.9 )   $ 2.1     $ (18.0 )   $ 10.5  
                                 
Net loss   $ 3.6     $ (12.1 )   $ (10.1 )   $ (1.4 )

 

Additional quarterly financial data

 

As a result of the restatement of the Company’s financial statements as of and for the years ended December 31, 2012 and 2011as referred to in Note 2, Restatement and Amendment of Previously Reported Financial Information, certain quarterly information is being restated and amended while certain quarterly information is being presented for the first time in connection with this filing. The following tables summarize the quarterly financial information presented in the following pages which includes the effects of the retrospective application of the adoption of such amended accounting standard and the impact of the correction of the errors identified on any of the Company’s previously reported balance sheets, statements of comprehensive income, changes in stockholder’s equity and statements of cash flows as well as quarterly financial information for periods not previously reported as noted more fully below:

 

 

 

Quarterly Financial Data Page
   
2012 Statement of Comprehensive Income for three months ended:  
     December 31, 2012 F-75
     September 30, 2012 F-76
     June 30, 2012, as restated and amended F-77
     March 31, 2012, as restated and amended F-78
   
2012 Statement of Comprehensive Income for the period ended:  
     September 30, 2012 F-79
     June 30, 2012, as restated and amended F-80
   
2012 Balance Sheet as of:  
     December 31, 2012 F-2
     September 30, 2012 F-81
     June 30, 2012, as restated and amended F-82
     March 31, 2012, as restated and amended F-83
   
2012 Statement of Changes in Stockholder’s Equity for the period ended:  
     December 31, 2012 F-5
     September 30, 2012 F-84
     June 30, 2012, as restated and amended F-85
     March 31, 2012, as restated and amended F-86
   
2012 Statement of Cash Flows for the period ended:  
     December 31, 2012 F-4
     September 30, 2012 F-87
     June 30, 2012, as restated and amended F-88
     March 31, 2012, as restated and amended F-89
   
2011 Statement of Comprehensive Income for three months ended:  
     December 31, 2011, as restated and amended F-90
     September 30, 2011, as restated and amended F-91
     June 30, 2011, as restated and amended F-92
     March 31, 2011, as restated and amended F-93
   
2011 Statement of Comprehensive Income for the period ended:  
     December 31, 2011, as restated and amended F-23
     September 30, 2011, as restated and amended F-94
     June 30, 2011, as restated and amended F-95
   
2011 Balance Sheet as of:  
     December 31, 2011, as restated and amended F-22
     September 30, 2011, as restated and amended F-96
     June 30, 2011, as restated and amended F-97
     March 31, 2011, as restated and amended F-98
   
2011 Statement of Changes in Stockholder’s Equity for the period ended:  
     December 31, 2011, as restated and amended F-27
     September 30, 2011, as restated and amended F-99
     June 30, 2011, as restated and amended F-100
     March 31, 2011, as restated and amended F-101
   
2011 Statement of Cash Flows for the period ended:  
     December 31, 2011, as restated and amended F-25
     September 30, 2011, as restated and amended F-102
     June 30, 2011, as restated and amended F-103
     March 31, 2011, as restated and amended F-104

 

 

 

The following tables present the effects of the retrospective application of the adoption of such amended accounting standard and the impact of the correction of the errors identified on the Company’s previously reported balance sheets, statements of comprehensive income and statements of cash flows:

Statement of Comprehensive Income  
Three months ended December 31, 2012  
($ in millions)      
       
REVENUES:      
Premiums   $ 5.3  
Insurance and investment product fees     84.8  
Net investment income     34.4  
Net realized investment gains (losses):        
  Total OTTI losses     (0.6 )
  Portion of OTTI losses recognized in OCI     0.4  
    Net OTTI losses recognized in earnings     (0.2 )
  Net realized investment gains (losses), excluding OTTI losses     (9.4 )
Net realized investment losses     (9.6 )
Total revenues     114.9  
         
BENEFITS AND EXPENSES:        
Policy benefits     86.0  
Policy acquisition cost amortization     10.9  
Other operating expenses     27.9  
Total benefits and expenses     124.8  
Income (loss) before income taxes     (9.9 )
Income tax expense (benefit)     (7.4 )
Net income (loss)   $ (2.5 )
         
COMPREHENSIVE INCOME (LOSS):        
Net income (loss)   $ (2.5 )
  Other comprehensive income (loss) before income tax:        
  Net unrealized investment gains before income tax     4.6  
  Non-credit portion of OTTI losses recognized in OCI before income tax     10.4  
    Other comprehensive income (loss) before income taxes     15.0  
  Less: Income tax expense (benefit) related to:        
  Net unrealized investment gains     4.1  
  Non-credit portion of OTTI losses recognized in OCI     3.7  
    Total income tax expense (benefit)     7.8  
Other comprehensive income, net of tax     7.2  
Comprehensive income (loss)   $ 4.7  

 

 

 

Statement of Comprehensive Income  
Three months ended September 30, 2012  
($ in millions)      
       
REVENUES:      
Premiums   $ 0.8  
Insurance and investment product fees     92.3  
Net investment income     33.3  
Net realized investment gains (losses):        
  Total OTTI losses     (0.7 )
  Portion of OTTI losses recognized in OCI     (0.3 )
    Net OTTI losses recognized in earnings     (1.0 )
  Net realized investment gains (losses), excluding OTTI losses     4.8  
Net realized investment losses     3.8  
Total revenues     130.2  
         
BENEFITS AND EXPENSES:        
Policy benefits     157.4  
Policy acquisition cost amortization     24.3  
Other operating expenses     24.8  
Total benefits and expenses     206.5  
Income (loss) before income taxes     (76.3 )
Income tax expense (benefit)     4.3  
Net income (loss)   $ (80.6 )
         
COMPREHENSIVE INCOME (LOSS):        
Net income (loss)   $ (80.6 )
  Other comprehensive income (loss) before income tax:        
  Net unrealized investment gains before income tax     0.3  
  Non-credit portion of OTTI losses recognized in OCI before income tax     1.7  
    Other comprehensive income (loss) before income taxes     2.0  
  Less: Income tax expense (benefit) related to:        
  Net unrealized investment gains     6.5  
  Non-credit portion of OTTI losses recognized in OCI     0.6  
    Total income tax expense (benefit)     7.1  
Other comprehensive income, net of tax     (5.1 )
Comprehensive income (loss)   $ (85.7 )

 

 

 

    Statement of Comprehensive Income  
($ in millions)   Three months ended June 30, 2012  
                Adjusted              
                prior to the              
    As previously     Correction     retrospective     Retrospective     As restated  
    reported     of errors(1)     adoption     adoption(2)     and amended  
REVENUES:                              
Premiums   $ 1.8     $ (0.1 )   $ 1.7     $ —     $ 1.7  
Insurance and investment product fees     91.1       0.3       91.4       —       91.4  
Net investment income     32.8       (0.2 )     32.6       —       32.6  
Net realized investment gains (losses):                                        
  Total OTTI losses     (3.0 )     —       (3.0 )     —       (3.0 )
  Portion of OTTI losses recognized in OCI     2.4       —       2.4       —       2.4  
    Net OTTI losses recognized in earnings     (0.6 )     —       (0.6 )     —       (0.6 )

  Net realized investment gains (losses),

    excluding OTTI losses

     (6.4 )     (7.0 )     (13.4 )     —       (13.4 )
Net realized investment losses     (7.0 )     (7.0 )     (14.0 )     —       (14.0 )
Total revenues     118.7       (7.0 )     111.7       —       111.7  
                                         
BENEFITS AND EXPENSES:                                        
Policy benefits     76.9       14.7       91.6       —       91.6  
Policy acquisition cost amortization     27.0       0.6       27.6       —       27.6  
Other operating expenses     24.5       (0.4 )     24.1       —       24.1  
Total benefits and expenses     128.4       14.9       143.3       —       143.3  
Income (loss) before income taxes     (9.7 )     (21.9 )     (31.6 )     —       (31.6 )
Income tax expense (benefit)     (3.7 )     4.2       0.5       —       0.5  
Net income (loss)   $ (6.0 )   $ (26.1 )   $ (32.1 )   $ —     $ (32.1 )
                                         
COMPREHENSIVE INCOME (LOSS):                                        
Net income (loss)   $ (6.0 )   $ (26.1 )   $ (32.1 )   $ —     $ (32.1 )

  Other comprehensive income (loss)

    before income tax:

                                        
  Net unrealized investment gains before income tax     13.3       (7.3 )     6.0       —       6.0  

  Non-credit portion of OTTI losses recognized

    in OCI before income tax

     14.0       (11.9 )     2.1       —       2.1  

    Other comprehensive income (loss)

      before income taxes

     27.3       (19.2 )     8.1       —       8.1  
  Less: Income tax expense (benefit) related to:                                        
  Net unrealized investment gains     4.7       0.9       5.6       —       5.6  

  Non-credit portion of OTTI losses recognized

    in OCI

     4.9       (4.2 )     0.7       —       0.7  
    Total income tax expense (benefit)     9.6       (3.3 )     6.3       —       6.3  
Other comprehensive income, net of tax     17.7       (15.9 )     1.8       —       1.8  
Comprehensive income (loss)   $ 11.7     $ (42.0 )   $ (30.3 )   $ —     $ (30.3 )

———————

(1) Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance. See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
(2) Adjustments related to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance, have been updated from those originally disclosed in the 2012 first quarter Form 10-Q filing to reflect the correction of errors identified related to the adoption of the amended guidance as well as indirect impact of the correction of errors associated with the restatement.

 

 

 

    Statement of Comprehensive Income  
($ in millions)   Three months ended March 31, 2012  
                Adjusted              
                prior to the              
    As previously     Correction     retrospective     Retrospective     As restated  
    reported     of errors(1)     adoption     adoption(2)     and amended  
REVENUES:                              
Premiums   $ 0.7     $ —     $ 0.7     $ —     $ 0.7  
Insurance and investment product fees     96.5       0.3       96.8       —       96.8  
Net investment income     30.3       0.3       30.6       —       30.6  
Net realized investment gains (losses):                                        
  Total OTTI losses     (1.1 )     0.4       (0.7 )     —       (0.7 )
  Portion of OTTI losses recognized in OCI     0.4       (0.7 )     (0.3 )     —       (0.3 )
    Net OTTI losses recognized in earnings     (0.7 )     (0.3 )     (1.0 )     —       (1.0 )

  Net realized investment gains (losses),

    excluding OTTI losses

     (7.1 )     5.6       (1.5 )     —       (1.5 )
Net realized investment losses     (7.8 )     5.3       (2.5 )     —       (2.5 )
Total revenues     119.7       5.9       125.6       —       125.6  
                                         
BENEFITS AND EXPENSES:                                        
Policy benefits     63.7       (1.9 )     61.8       —       61.8  
Policy acquisition cost amortization     28.7       12.0       40.7       —       40.7  
Other operating expenses     23.3       3.5       26.8       —       26.8  
Total benefits and expenses     115.7       13.6       129.3       —       129.3  
Income (loss) before income taxes     4.0       (7.7 )     (3.7 )     —       (3.7 )
Income tax expense (benefit)     1.1       17.7       18.8       —       18.8  
Net income (loss)   $ 2.9     $ (25.4 )   $ (22.5 )   $ —     $ (22.5 )
                                         
COMPREHENSIVE INCOME (LOSS):                                        
Net income (loss)   $ 2.9     $ (25.4 )   $ (22.5 )   $ —     $ (22.5 )

  Other comprehensive income (loss)

    before income tax:

                                        
  Net unrealized investment gains before income tax     12.1       (3.8 )     8.3       —       8.3  

  Non-credit portion of OTTI losses recognized

    in OCI before income tax

     (0.4 )     0.7       0.3       —       0.3  

    Other comprehensive income (loss)

      before income taxes

     11.7       (3.1 )     8.6       —       8.6  
  Less: Income tax expense (benefit) related to:                                        
  Net unrealized investment gains     4.2       (0.6 )     3.6       —       3.6  

  Non-credit portion of OTTI losses recognized

    in OCI

     (0.1 )     0.2       0.1       —       0.1  
    Total income tax expense (benefit)     4.1       (0.4 )     3.7       —       3.7  
Other comprehensive income, net of tax     7.6       (2.7 )     4.9       —       4.9  
Comprehensive income (loss)   $ 10.5     $ (28.1 )   $ (17.6 )   $ —     $ (17.6 )

———————

(1) Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance. See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
(2) Adjustments related to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance, have been updated from those originally disclosed in the 2012 first quarter Form 10-Q filing to reflect the correction of errors identified related to the adoption of the amended guidance as well as indirect impact of the correction of errors associated with the restatement.

 

 

Statement of Comprehensive Income  
Nine months ended September 30, 2012  
($ in millions)      
       
REVENUES:      
Premiums   $ 3.2  
Insurance and investment product fees     280.5  
Net investment income     96.5  
Net realized investment gains (losses):     —  
  Total OTTI losses     (4.4 )
  Portion of OTTI losses recognized in OCI     1.8  
    Net OTTI losses recognized in earnings     (2.6 )
  Net realized investment gains (losses), excluding OTTI losses     (10.1 )
Net realized investment losses     (12.7 )
Total revenues     367.5  
         
BENEFITS AND EXPENSES:        
Policy benefits     310.8  
Policy acquisition cost amortization     92.6  
Other operating expenses     75.7  
Total benefits and expenses     479.1  
Income (loss) before income taxes     (111.6 )
Income tax expense (benefit)     23.6  
Net income (loss)   $ (135.2 )
         
COMPREHENSIVE INCOME (LOSS):        
Net income (loss)   $ (135.2 )
  Other comprehensive income (loss) before income tax:        
  Net unrealized investment gains before income tax     14.6  
  Non-credit portion of OTTI losses recognized in OCI before income tax     4.1  
    Other comprehensive income (loss) before income taxes     18.7  
  Less: Income tax expense (benefit) related to:        
  Net unrealized investment gains     15.7  
  Non-credit portion of OTTI losses recognized in OCI     1.4  
    Total income tax expense (benefit)     17.1  
Other comprehensive income, net of tax     1.6  
Comprehensive income (loss)   $ (133.6 )

 

 

 

    Statement of Comprehensive Income  
($ in millions)   Six months ended June 30, 2012  
                Adjusted              
                prior to the              
    As previously     Correction     retrospective     Retrospective     As restated  
    reported     of errors(1)     adoption     adoption(2)     and amended  
REVENUES:                              
Premiums   $ 2.5     $ (0.1 )   $ 2.4     $ —     $ 2.4  
Insurance and investment product fees     187.6       0.6       188.2       —       188.2  
Net investment income     63.1       0.1       63.2       —       63.2  
Net realized investment gains (losses):                                        
  Total OTTI losses     (4.1 )     0.4       (3.7 )     —       (3.7 )
  Portion of OTTI losses recognized in OCI     2.8       (0.7 )     2.1       —       2.1  
    Net OTTI losses recognized in earnings     (1.3 )     (0.3 )     (1.6 )     —       (1.6 )

  Net realized investment gains (losses),

    excluding OTTI losses

     (13.5 )     (1.4 )     (14.9 )     —       (14.9 )
Net realized investment losses     (14.8 )     (1.7 )     (16.5 )     —       (16.5 )
Total revenues     238.4       (1.1 )     237.3       —       237.3  
                                         
BENEFITS AND EXPENSES:                                        
Policy benefits     140.6       12.8       153.4       —       153.4  
Policy acquisition cost amortization     55.7       12.6       68.3       —       68.3  
Other operating expenses     47.8       3.1       50.9       —       50.9  
Total benefits and expenses     244.1       28.5       272.6       —       272.6  
Income (loss) before income taxes     (5.7 )     (29.6 )     (35.3 )     —       (35.3 )
Income tax expense (benefit)     (2.6 )     21.9       19.3       —       19.3  
Net income (loss)   $ (3.1 )   $ (51.5 )   $ (54.6 )   $ —     $ (54.6 )
                                         
COMPREHENSIVE INCOME (LOSS):                                        
Net income (loss)   $ (3.1 )   $ (51.5 )   $ (54.6 )   $ —     $ (54.6 )

  Other comprehensive income (loss)

    before income tax:

                                        
  Net unrealized investment gains before income tax     25.4       (11.1 )     14.3               14.3  

  Non-credit portion of OTTI losses recognized

    in OCI before income tax

     13.6       (11.2 )     2.4       —       2.4  

    Other comprehensive income (loss)

      before income taxes

     39.0       (22.3 )     16.7       —       16.7  
  Less: Income tax expense (benefit) related to:                                        
  Net unrealized investment gains     8.9       0.3       9.2       —       9.2  

  Non-credit portion of OTTI losses recognized

    in OCI

     4.8       (4.0 )     0.8       —       0.8  
    Total income tax expense (benefit)     13.7       (3.7 )     10.0       —       10.0  
Other comprehensive income, net of tax     25.3       (18.6 )     6.7       —       6.7  
Comprehensive income (loss)   $ 22.2     $ (70.1 )   $ (47.9 )   $ —     $ (47.9 )

———————

(1) Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance. See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
(2) Adjustments related to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance, have been updated from those originally disclosed in the 2012 first quarter Form 10-Q filing to reflect the correction of errors identified related to the adoption of the amended guidance as well as indirect impact of the correction of errors associated with the restatement.

 

 

 

 

Balance Sheet  
As of September 30, 2012  
($ in millions)      
       
ASSETS:      
Available-for-sale debt securities, at fair value   $ 2,966.2  
Limited partnerships and other investments     6.3  
Policy loans, at unpaid principal balances     60.5  
Derivative instruments     185.8  
Fair value investments     44.1  
Total investments     3,262.9  
Cash and cash equivalents     117.2  
Accrued investment income     25.9  
Receivables     451.3  
Deferred policy acquisition costs     434.6  
Deferred income taxes     18.7  
Receivables from related parties     23.4  
Other assets     145.4  
Separate account assets     2,110.7  
Total assets   $ 6,590.1  
         
LIABILITIES:        
Policy liabilities and accruals   $ 1,813.7  
Policyholder deposit funds     2,217.7  
Payable to related parties     13.8  
Other liabilities     143.8  
Separate account liabilities     2,110.7  
Total liabilities     6,299.7  
         
STOCKHOLDER’S EQUITY:        
Common stock, $5,000 par value: 1,000 shares authorized; 500 shares issued     2.5  
Additional paid-in capital     802.2  
Accumulated other comprehensive loss     4.2  
Accumulated deficit     (518.5 )
Total stockholder’s equity     290.4  
Total liabilities and stockholder’s equity   $ 6,590.1  

 

 

 

 

 

($ in millions)

  

Balance Sheet

As of June 30, 2012

  
   

 

As previously

reported

    

Correction

of errors(1)

    

Adjusted

prior to the

retrospective

adoption

    

Retrospective

adoption(2)

    

As restated

and amended

  
ASSETS:                            
Available-for-sale debt securities, at fair value   $ 2,913.2     $ (39.6 )   $ 2,873.6     $ —     $ 2,873.6  
Limited partnerships and other investments     5.8       0.1       5.9       —       5.9  
Policy loans, at unpaid principal balances     61.1       —       61.1       —       61.1  
Derivative instruments     129.6       (7.2 )     122.4       —       122.4  
Fair value investments     7.3       35.7       43.0       —       43.0  
Total investments     3,117.0       (11.0 )     3,106.0       —       3,106.0  
Cash and cash equivalents     97.7       (20.6 )     77.1       —       77.1  
Accrued investment income     21.9       —       21.9       —       21.9  
Receivables     384.0       60.5       444.5       —       444.5  
Deferred policy acquisition costs     496.7       (64.0 )     432.7       —       432.7  
Deferred income taxes     19.5       5.6       25.1       —       25.1  
Receivables from related parties     6.1       —       6.1       —       6.1  
Other assets     59.9       51.4       111.3       —       111.3  
Separate account assets     2,076.8       —       2,076.8       —       2,076.8  
Total assets   $ 6,279.6     $ 21.9     $ 6,301.5     $ —     $ 6,301.5  
                                         
LIABILITIES:                                        
Policy liabilities and accruals   $ 1,386.9     $ 298.5     $ 1,685.4     $ —     $ 1,685.4  
Policyholder deposit funds     2,054.7       0.5       2,055.2       —       2,055.2  
Payable to related parties     34.4       2.7       37.1       —       37.1  
Other liabilities     100.2       (29.3 )     70.9       —       70.9  
Separate account liabilities     2,076.8       —       2,076.8       —       2,076.8  
Total liabilities     5,653.0       272.4       5,925.4       —       5,925.4  
                                         
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 loss     30.1       (20.8 )     9.3       —       9.3  
Accumulated deficit     (208.2 )     (229.7 )     (437.9 )     —       (437.9 )
Total stockholder’s equity     626.6       (250.5 )     376.1       —       376.1  
Total liabilities and stockholder’s equity   $ 6,279.6     $ 21.9     $ 6,301.5     $ —     $ 6,301.5  

———————

(1) Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance. See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
(2) Adjustments related to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance, have been updated from those originally disclosed in the 2012 first quarter Form 10-Q filing to reflect the correction of errors identified related to the adoption of the amended guidance as well as indirect impact of the correction of errors associated with the restatement.

 

 

 

($ in millions)  

Balance Sheet

As of March 31, 2012

   

As previously

reported

    

Correction

of errors(1)

    

Adjusted

prior to the

retrospective

adoption

    

Retrospective

adoption(2)

    

 

As restated and amended

  
ASSETS:                              
Available-for-sale debt securities, at fair value   $ 2,761.2     $ (31.3 )   $ 2,729.9     $ —     $ 2,729.9  
Limited partnerships and other investments     5.5       (0.2 )     5.3       —       5.3  
Policy loans, at unpaid principal balances     60.7       —       60.7       —       60.7  
Derivative instruments     131.9       (5.3 )     126.6       —       126.6  
Fair value investments     7.4       34.1       41.5       —       41.5  
Total investments     2,966.7       (2.7 )     2,964.0       —       2,964.0  
Cash and cash equivalents     90.8       (18.6 )     72.2       —       72.2  
Accrued investment income     23.4       —       23.4       —       23.4  
Receivables     367.0       58.8       425.8       —       425.8  
Deferred policy acquisition costs     517.3       (55.6 )     461.7       —       461.7  
Deferred income taxes     22.4       4.6       27.0       —       27.0  
Receivables from related parties     0.5       —       0.5       —       0.5  
Other assets     58.2       54.8       113.0       —       113.0  
Separate account assets     2,688.6       1.2       2,689.8       —       2,689.8  
Total assets   $ 6,734.9     $ 42.5     $ 6,777.4     $ —     $ 6,777.4  
                                         
LIABILITIES:                                        
Policy liabilities and accruals   $ 1,368.8     $ 272.4     $ 1,641.2     $ —     $ 1,641.2  
Policyholder deposit funds     1,884.8       2.4       1,887.2       —       1,887.2  
Deferred income taxes     —       —       —       —       —  
Payable to related parties     53.0       —       53.0       —       53.0  
Other liabilities     124.8       (25.0 )     99.8       —       99.8  
Separate account liabilities     2,688.6       1.2       2,689.8       —       2,689.8  
Total liabilities     6,120.0       251.0       6,371.0       —       6,371.0  
                                         
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 loss     12.4       (4.9 )     7.5       —       7.5  
Accumulated deficit     (202.2 )     (203.6 )     (405.8 )     —       (405.8 )
Total stockholder’s equity     614.9       (208.5 )     406.4       —       406.4  
Total liabilities and stockholder’s equity   $ 6,734.9     $ 42.5     $ 6,777.4     $ —     $ 6,777.4  

———————

(1) Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance. See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
(2) Adjustments related to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance, have been updated from those originally disclosed in the 2012 first quarter Form 10-Q filing to reflect the correction of errors identified related to the adoption of the amended guidance as well as indirect impact of the correction of errors associated with the restatement.

 

 

 

 

Statement of Changes in Stockholder’s Equity  
For the period ended September 30, 2012  
($ in millions)      
       
COMMON STOCK:   $ 2.5  
Balance, beginning of period     —  
Balance, end of period   $ 2.5  
         
ADDITIONAL PAID-IN CAPITAL:        
Balance, beginning of period   $ 802.2  
  Capital contributions from parent     —  
Balance, end of period   $ 802.2  
         
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS):        
Balance, beginning of period   $ 2.6  
  Adjustment for initial application of accounting changes     —  
  Other comprehensive income     1.6  
Balance, end of period   $ 4.2  
         
RETAINED EARNINGS (ACCUMULATED DEFICIT):        
Balance, beginning of period   $ (383.3 )
  Adjustment for initial application of accounting changes     —  
Net income (loss)     (135.2 )
Balance, end of period   $ (518.5 )
         
TOTAL STOCKHOLDER’S EQUITY:        
Balance, beginning of period   $ 424.0  
  Change in stockholder’s equity     (133.6 )
Balance, end of period   $ 290.4  

 

 

 

    Statement of Changes in Stockholder’s Equity  
($ in millions)   For the period ended June 30, 2012  
                Adjusted              
                prior to the              
    As previously     Correction     retrospective     Retrospective     As restated  
    reported     of errors(1)     adoption     adoption(2)     and amended  
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     $ 0.0     $ 802.2     $ —     $ 802.2  
                                         

ACCUMULATED OTHER COMPREHENSIVE

INCOME (LOSS):

                                        
Balance, beginning of period   $ 6.2     $ 0.2     $ 6.4     $ (3.8 )   $ 2.6  

  Adjustment for initial application of

    accounting changes

     —       —       —       —       —  
  Other comprehensive income     25.3       (18.6 )     6.7       —       6.7  
Balance, end of period   $ 31.5     $ (18.4 )   $ 13.1     $ (3.8 )   $ 9.3  
                                         

RETAINED EARNINGS (ACCUMULATED

DEFICIT):

                                        
Balance, beginning of period   $ (165.1 )   $ (185.9 )   $ (351.0 )   $ (32.3 )   $ (383.3 )

  Adjustment for initial application of

    accounting changes

     —       —       —       —       —  
Net income (loss)     (3.1 )     (51.5 )     (54.6 )     —       (54.6 )
Balance, end of period   $ (168.2 )   $ (237.4 )   $ (405.6 )   $ (32.3 )   $ (437.9 )
                                         
TOTAL STOCKHOLDER’S EQUITY:                                        
Balance, beginning of period   $ 645.8     $ (185.7 )   $ 460.1     $ (36.1 )     424.0  
  Change in stockholder’s equity     22.2       (70.1 )     (47.9 )     —       (47.9 )
Balance, end of period   $ 668.0     $ (255.8 )   $ 412.2     $ (36.1 )   $ 376.1  

———————

(1) Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance. See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
(2) Adjustments related to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance, have been updated from those originally disclosed in the 2012 first quarter Form 10-Q filing to reflect the correction of errors identified related to the adoption of the amended guidance as well as indirect impact of the correction of errors associated with the restatement.


 

 

 

    Statement of Changes in Stockholder’s Equity  
($ in millions)   For the period ended March 31, 2012  
                Adjusted              
                prior to the              
    As previously     Correction     retrospective     Retrospective     As restated  
    reported     of errors(1)     adoption     adoption(2)     and amended  
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     0.0       —       —       —       0.0  
Balance, end of period   $ 802.2     $ —     $ 802.2     $ —     $ 802.2  
                                         

ACCUMULATED OTHER COMPREHENSIVE

INCOME (LOSS):

                                        
Balance, beginning of period   $ 6.2     $ 0.2     $ 6.4     $ (3.8 )   $ 2.6  

  Adjustment for initial application of

    accounting changes

     —       —       —       —       —  
  Other comprehensive income     7.6       (2.7 )     4.9       —       4.9  
Balance, end of period   $ 13.8     $ (2.5 )   $ 11.3     $ (3.8 )   $ 7.5  
                                         

RETAINED EARNINGS (ACCUMULATED

DEFICIT):

                                        
Balance, beginning of period   $ (165.1 )   $ (185.9 )   $ (351.0 )   $ (32.3 )   $ (383.3 )

  Adjustment for initial application of

    accounting changes

     —       —       —       —       —  
Net income (loss)     2.9       (25.4 )     (22.5 )     —       (22.5 )
Balance, end of period   $ (162.2 )   $ (211.3 )   $ (373.5 )   $ (32.3 )   $ (405.8 )
                                         
TOTAL STOCKHOLDER’S EQUITY:                                        
Balance, beginning of period   $ 645.8     $ (185.7 )   $ 460.1     $ (36.1 )   $ 424.0  
  Change in stockholder’s equity     10.5       (28.1 )     (17.6 )     —       (17.6 )
Balance, end of period   $ 656.3     $ (213.8 )   $ 442.5     $ (36.1 )   $ 406.4  

———————

(1) Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance. See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
(2) Adjustments related to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance, have been updated from those originally disclosed in the 2012 first quarter Form 10-Q filing to reflect the correction of errors identified related to the adoption of the amended guidance as well as indirect impact of the correction of errors associated with the restatement.
Supplemental Unaudited Quarterly Financial Information (Part 2)

 

Statement of Cash Flows  
For the period ended September 30, 2012  
($ in millions)      
       
OPERATING ACTIVITIES:      
Net loss   $ (135.2 )
Net realized investment losses     12.7  
Policy acquisition costs deferred     (63.7 ) 
Amortization of deferred policy acquisition costs     92.6  
Interest credited     49.7  
Equity in earnings of limited partnerships and other investments     (0.1 ) 
Change in:        
  Accrued investment income     (10.6 ) 
  Deferred income taxes     (6.4 )
  Receivables     (37.7 )
  Policy liabilities and accruals     (36.9 ) 
  Due to/from affiliate     (22.9 ) 
Other operating activities, net     (4.5 )
Cash provided by (used for) operating activities     (163.0 ) 
         
INVESTING ACTIVITIES:        
Purchases of:        
  Available-for-sale debt securities     (915.7 ) 
  Derivative instruments     (93.3 ) 
  Fair value investments     (2.9 ) 
Sales, repayments and maturities of:        
  Available-for-sale debt securities     592.9  
  Derivative instruments     16.2  
  Fair value investments     4.2  
Contributions to limited partnerships     (1.6 )
Distributions from limited partnerships     0.3  
Policy loans, net     3.7  
Other investing activities, net     (1.0 )
Cash provided by (used for) investing activities     (397.2 )
         
FINANCING ACTIVITIES:        
Policyholder deposit fund deposits     812.3  
Policyholder deposit fund withdrawals     (381.7 ) 
Net transfers to/from separate accounts     197.3  
Cash provided by (used for) financing activities     627.9  
Change in cash and cash equivalents     67.7  
Cash and cash equivalents, beginning of period     49.5  
Cash and cash equivalents, end of period   $ 117.2  
         
Non-Cash Transactions During the Year        
Investment exchanges   $ 25.6  

 

 

 

 

    Statement of Cash Flows  
($ in millions)   For the period ended June 30, 2012  
                Adjusted              
                prior to the              
    As previously     Correction     retrospective     Retrospective     As restated  
    reported     of errors(1)     adoption     adoption(2)     and amended  
OPERATING ACTIVITIES:                              
Net income (loss)   $ (3.1 )   $ (51.5 )   $ (54.6 )   $ —     $ (54.6 )
Net realized investment losses     14.8       1.7       16.5       —       16.5  
Policy acquisition costs deferred     (52.9 )     9.4       (43.5 )     —       (43.5 )
Amortization of policy acquisition costs     55.7       12.6       68.3       —       68.3  
Interest Credited     —       122.3       122.3       —       122.3  

Equity in earnings of

  limited partnerships and other investments

     (0.1 )     —       (0.1 )     —       (0.1 )
Change in:                                        
    Accrued investment income     (3.9 )     (1.6 )     (5.5 )     —       (5.5 )
    Deferred income taxes     (17.6 )     11.9       (5.7 )     —       (5.7 )
    Receivables     (4.3 )     4.6       0.3       —       0.3  
    Policy liabilities and accruals     32.0       (203.3 )     (171.3 )     —       (171.3 )
    Due to/from affiliate     —       10.9       10.9       —       10.9  
  Other operating activities, net     (3.5 )     (10.7 )     (14.2 )     —       (14.2 )
Cash provided by (used for) operating activities     17.1       (93.7 )     (76.6 )     —       (76.6 )
                                         
INVESTING ACTIVITIES:                                        
Purchases of:                                        
  Available-for-sale debt securities     (601.9 )     17.9       (584.0 )     —       (584.0 )
  Derivative instruments     (29.2 )     —       (29.2 )     —       (29.2 )
  Fair Value Investments     —       (2.9 )     (2.9 )     —       (2.9 )
  Other Investments     (0.9 )     0.9       —       —       —  
Sales, repayments and maturities of:                                        
  Available-for-sale debt securities     304.0       (17.2 )     286.8       —       286.8  
  Derivative instruments     12.1       —       12.1       —       12.1  
  Fair Value Investments     —       3.0       3.0       —       3.0  
  Other Investments     0.2       (0.2 )     —       —       —  
Contributions to limited partnerships     —       (0.9 )     (0.9 )     —       (0.9 )
Distributions from limited partnerships     —       0.2       0.2       —       0.2  
Policy loans, net     1.4       1.0       2.4       —       2.4  
Other investing activities, net     —       (0.4 )     (0.4 )     —       (0.4 )
Cash provided by (used for) investing activities     (314.3 )     1.4       (312.9 )     —       (312.9 )
                                         
FINANCING ACTIVITIES:                                        
Policyholder deposit fund deposits     410.2       130.3       540.5       —       540.5  
Policyholder deposit fund withdrawals     (82.8 )     (182.6 )     (265.4 )     —       (265.4 )
Net transfers to/from separate accounts     —       142.0       142.0       —       142.0  
Cash provided by (used for) financing activities     327.4       89.7       417.1       —       417.1  
Change in cash and cash equivalents     30.2       (2.6 )     27.6       —       27.6  
Cash and cash equivalents, beginning of year     67.5       (18.0 )     49.5       —       49.5  
Cash and cash equivalents, end of year   $ 97.7     $ (20.6 )   $ 77.1     $ —     $ 77.1  
                                         
Non-Cash Transactions During the Year                                        
Investment exchanges   $ —     $ 14.0     $ 14.0     $ —     $ 14.0  

———————

(1) Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance. See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
(2) Adjustments related to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance, have been updated from those originally disclosed in the 2012 first quarter Form 10-Q filing to reflect the correction of errors identified related to the adoption of the amended guidance as well as indirect impact of the correction of errors associated with the restatement.

 

 

 

 

    Statement of Cash Flows  
($ in millions)   For the period ended March 31, 2012  
                Adjusted              
                prior to the              
    As previously     Correction     retrospective     Retrospective     As restated  
    reported     of errors(1)     adoption     adoption(2)     and amended  
OPERATING ACTIVITIES:                              
Net income (loss)   $ 2.9     $ (25.4 )   $ (22.5 )   $ —     $ (22.5 )
Net realized investment losses     7.8       (5.3 )     2.5       —       2.5  
Policy acquisition costs deferred     (28.9 )     4.9       (24.0 )     —       (24.0 )
Amortization of deferred policy acquisition costs     28.7       12.0       40.7       —       40.7  
Interest credited     —       16.0       16.0       —       16.0  

Equity in earnings of

  limited partnerships and other investments

     (0.1 )     (0.2 )     (0.3 )     —       (0.3 )
Change in:                             —          
  Accrued investment income     (5.4 )     (0.8 )     (6.2 )     —       (6.2 )
  Deferred income taxes     (11.0 )     9.6       (1.4 )     —       (1.4 )
  Receivables     13.6       (0.2 )     13.4       —       13.4  
  Policy liabilities and accruals     25.7       (81.7 )     (56.0 )     —       (56.0 )
  Due to/from affiliate     —       9.0       9.0       —       9.0  
Other operating activities, net     17.9       (4.9 )     13.0       —       13.0  
Cash provided by (used for) operating activities     51.2       (67.0 )     (15.8 )     —       (15.8 )
                                         
INVESTING ACTIVITIES:                                        
Purchases of:                                        
  Available-for-sale debt securities     (280.4 )     9.4       (271.0 )     —       (271.0 )
  Derivative instruments     (19.0 )     —       (19.0 )     —       (19.0 )
  Fair value investments     —       —       —       —       —  
  Other investments     (0.6 )     0.6       —       —       —  
Sales, repayments and maturities of:                                        
  Available-for-sale debt securities     107.0       (10.4 )     96.6       —       96.6  
  Derivative instruments     1.8       —       1.8       —       1.8  
  Fair value investments     —       1.1       1.1       —       1.1  
  Other investments     0.2       (0.2 )     —       —       —  
Contributions to limited partnerships     —       (0.6 )     (0.6 )     —       (0.6 )
Distributions from limited partnerships     —       0.2       0.2       —       0.2  
Policy loans, net     1.8       0.6       2.4       —       2.4  
Cash provided by (used for) investing activities     (189.2 )     0.7       (188.5 )     —       (188.5 )
                                         
FINANCING ACTIVITIES:                                        
Policyholder deposit fund deposits     214.8       74.4       289.2       —       289.2  
Policyholder deposit fund withdrawals     (53.5 )     (86.3 )     (139.8 )     —       (139.8 )
Net transfers to/from separate accounts     —       77.6       77.6       —       77.6  
Cash provided by (used for) financing activities     161.3       65.7       227.0       —       227.0  
Change in cash and cash equivalents     23.3       (0.6 )     22.7       —       22.7  
Cash and cash equivalents, beginning of year     67.5       (18.0 )     49.5       —       49.5  
Cash and cash equivalents, end of year   $ 90.8     $ (18.6 )   $ 72.2     $ —     $ 72.2  
                                         
Non-Cash Transactions During the Year                                        
Investment exchanges   $ —     $ 7.7     $ 7.7     $ —     $ 7.7  

———————

(1) Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance. See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
(2) Adjustments related to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance, have been updated from those originally disclosed in the 2012 first quarter Form 10-Q filing to reflect the correction of errors identified related to the adoption of the amended guidance as well as indirect impact of the correction of errors associated with the restatement.

 

 

    Statement of Comprehensive Income
($ in millions)   Three months ended December 31, 2011
                Adjusted              
                prior to the              
    As previously     Correction     retrospective     Retrospective     As restated  
    reported     of errors(1)     adoption     adoption(2)     and amended  
REVENUES:                              
Premiums   $ 0.9     $ —     $ 0.9     $ —     $ 0.9  
Insurance and investment product fees     93.1       1.4       94.5       —       94.5  
Net investment income     29.0       1.4       30.4       —       30.4  
Net realized investment gains (losses):                                        
  Total OTTI losses     (3.1 )     —       (3.1 )     —       (3.1 )
  Portion of OTTI losses recognized in OCI     1.8       0.4       2.2       —       2.2  
    Net OTTI losses recognized in earnings     (1.3 )     0.4       (0.9 )     —       (0.9 )

  Net realized investment gains (losses),

    excluding OTTI losses

     (6.9 )     (3.5 )      (10.4 )     —       (10.4 )
Net realized investment losses     (8.2 )     (3.1 )      (11.3 )     —       (11.3 )
Total revenues     114.8       (0.3 )     114.5       —       114.5  
                                         
BENEFITS AND EXPENSES:                                        
Policy benefits     59.3       2.5       61.8       1.6       63.4  
Policy acquisition cost amortization     25.4       (3.2 )     22.2       (3.0 )     19.2  
Other operating expenses     34.3       (11.9 )     22.4       0.4       22.8  
Total benefits and expenses     119.0       (12.6 )     106.4       (1.0 )     105.4  
Income (loss) before income taxes     (4.2 )     12.3       8.1       1.0       9.1  
Income tax expense (benefit)     (0.2 )     11.4       11.2       (0.7 )     10.5  
Net income (loss)   $ (4.0 )   $ 0.9     $ (3.1 )   $ 1.7     $ (1.4 )
                                         
COMPREHENSIVE INCOME (LOSS):                                        
Net income (loss)   $ (4.0 )   $ 0.9     $ (3.1 )   $ 1.7     $ (1.4 )

  Other comprehensive income (loss)

    before income tax:

                                        
  Net unrealized investment gains before income tax     9.0       (7.1 )      1.9       2.3       4.2  

  Non-credit portion of OTTI losses recognized

    in OCI before income tax

     (2.0 )     (0.1 )     (2.1 )     —       (2.1 )

    Other comprehensive income (loss)

      before income taxes

     7.0       (7.2 )      (0.2 )      2.3       2.1  
  Less: Income tax expense (benefit) related to:                                        
  Net unrealized investment gains     3.2       (3.2 )      —       0.7       0.7  

  Non-credit portion of OTTI losses recognized

    in OCI

     (0.8 )     0.1       (0.7 )     -       (0.7 )
    Total income tax expense (benefit)     2.4       (3.1 )      (0.7 )      0.7       —  
Other comprehensive income, net of tax     4.6       (4.1 )     0.5       1.6       2.1  
Comprehensive income   $ 0.6     $ (3.2 )   $ (2.6 )   $ 3.3     $ 0.7  

———————

(1) Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance. See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
(2) Adjustments related to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance, have been updated from those originally disclosed in the 2012 first quarter Form 10-Q filing to reflect the correction of errors identified related to the adoption of the amended guidance as well as indirect impact of the correction of errors associated with the restatement.

 

 

    Statement of Comprehensive Income  
($ in millions)   Three months ended September 30, 2011  
                Adjusted              
                prior to the              
    As previously     Correction     retrospective     Retrospective     As restated  
    reported     of errors(1)     adoption     adoption(2)     and amended  
REVENUES:                              
Premiums   $ 1.1     $ —     $ 1.1     $ —     $ 1.1  
Insurance and investment product fees     98.0       (1.1 )     96.9       —       96.9  
Net investment income     25.7       (0.7 )     25.0       —       25.0  
Net realized investment gains (losses):                                        
  Total OTTI losses     (4.5 )     (0.2 )     (4.7 )     —       (4.7 )
  Portion of OTTI losses recognized in OCI     3.9       (0.2 )     3.7       —       3.7  
    Net OTTI losses recognized in earnings     (0.6 )     (0.4 )     (1.0 )     —       (1.0 )

  Net realized investment gains (losses),

    excluding OTTI losses

     (5.4 )     2.2       (3.2 )     —       (3.2 )
Net realized investment losses     (6.0 )     1.8       (4.2 )     —       (4.2 )
Total revenues     118.8       —       118.8       —       118.8  
                                         
BENEFITS AND EXPENSES:                                        
Policy benefits     61.8       31.2       93.0       0.9       93.9  
Policy acquisition cost amortization     39.8       (5.5 )     34.3       (5.4 )     28.9  
Other operating expenses     19.4       4.4       23.8       0.3       24.1  
Total benefits and expenses     121.0       30.1       151.1       (4.2 )     146.9  
Income (loss) before income taxes     (2.2 )     (30.1 )     (32.3 )     4.2       (28.1 )
Income tax expense (benefit)     (13.8 )     —       (13.8 )     (4.2 )     (18.0 )
Net income (loss)   $ 11.6     $ (30.1 )   $ (18.5 )   $ 8.4     $ (10.1 )
                                         
COMPREHENSIVE INCOME (LOSS):                                        
Net income (loss)   $ 11.6     $ (30.1 )   $ (18.5 )   $ 8.4     $ (10.1 )

  Other comprehensive income (loss)

    before income tax:

                                        
  Net unrealized investment gains before income tax     13.4       (20.1 )     (6.7 )     1.3       (5.4 )

  Non-credit portion of OTTI losses recognized

    in OCI before income tax

     (3.8 )     0.1       (3.7 )     —       (3.7 )

    Other comprehensive income (loss)

      before income taxes

     9.6       (20.0 )      (10.4 )     1.3       (9.1 )
  Less: Income tax expense (benefit) related to:                                        
  Net unrealized investment gains     10.3       (15.3 )     (5.0 )      4.2       (0.8 )

  Non-credit portion of OTTI losses recognized

    in OCI

     (1.3 )     —       (1.3 )     —       (1.3 )
    Total income tax expense (benefit)     9.0       (15.3 )     (6.3 )     4.2       (2.1 )
Other comprehensive income, net of tax     0.6       (4.7 )     (4.1 )     (2.9 )     (7.0 )
Comprehensive income (loss)   $ 12.2     $ (34.8 )   $ (22.6 )   $ 5.5     $ (17.1 )

———————

(1) Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance. See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
(2) Adjustments related to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance, have been updated from those originally disclosed in the 2012 first quarter Form 10-Q filing to reflect the correction of errors identified related to the adoption of the amended guidance as well as indirect impact of the correction of errors associated with the restatement.

 

 

 

 

    Statement of Comprehensive Income  
($ in millions)   Three months ended June 30, 2011  
                Adjusted              
                prior to the              
    As previously     Correction     retrospective     Retrospective     As restated  
    reported     of errors(1)     adoption     adoption(2)     and amended  
REVENUES:                              
Premiums   $ 0.1     $ —     $ 0.1     $ —     $ 0.1  
Insurance and investment product fees     101.9       (0.6 )     101.3       —       101.3  
Net investment income     24.2       —       24.2       —       24.2  
Net realized investment gains (losses):                                        
  Total OTTI losses     (0.8 )     0.1       (0.7 )     —       (0.7 )
  Portion of OTTI losses recognized in OCI     0.4       (0.1 )     0.3       —       0.3  
    Net OTTI losses recognized in earnings     (0.4 )     —       (0.4 )     —       (0.4 )

  Net realized investment gains (losses),

    excluding OTTI losses

     (1.8 )     (0.8 )     (2.6 )     —       (2.6 )
Net realized investment losses     (2.2 )     (0.8 )     (3.0 )     —       (3.0 )
Total revenues     124.0       (1.4 )     122.6       —       122.6  
                                         
BENEFITS AND EXPENSES:                                        
Policy benefits     73.9       7.0       80.9       2.7       83.6  
Policy acquisition cost amortization     28.9       4.7       33.6       (6.4 )     27.2  
Other operating expenses     18.1       3.4       21.5       0.3       21.8  
Total benefits and expenses     120.9       15.1       136.0       (3.4 )     132.6  
Income (loss) before income taxes     3.1       (16.5 )     (13.4 )     3.4       (10.0 )
Income tax expense (benefit)     4.4       (5.0 )     (0.6 )     2.7       2.1  
Net income (loss)   $ (1.3 )   $ (11.5 )   $ (12.8 )   $ 0.7     $ (12.1 )
                                         
COMPREHENSIVE INCOME (LOSS):                                        
Net income (loss)   $ (1.3 )   $ (11.5 )   $ (12.8 )   $ 0.7     $ (12.1 )

  Other comprehensive income (loss)

    before income tax:

                                        
  Net unrealized investment gains before income tax     4.1       4.4       8.5       1.9       10.4  

  Non-credit portion of OTTI losses recognized

    in OCI before income tax

     (0.4 )     0.1       (0.3 )     —       (0.3 )

    Other comprehensive income (loss)

      before income taxes

     3.7       4.5       8.2       1.9       10.1  
  Less: Income tax expense (benefit) related to:                                        
  Net unrealized investment gains     (6.6 )     13.9       7.3       (2.7)       4.6  

  Non-credit portion of OTTI losses recognized

    in OCI

     (0.1 )     —       (0.1 )     —       (0.1 )
    Total income tax expense (benefit)     (6.7 )     13.9       7.2       (2.7)       4.5  
Other comprehensive income, net of tax     10.4       (9.4 )     1.0       4.6       5.6  
Comprehensive income (loss)   $ 9.1     $ (20.9 )   $ (11.8 )   $ 5.3     $ (6.5 )

———————

(1) Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance. See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
(2) Adjustments related to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance, have been updated from those originally disclosed in the 2012 first quarter Form 10-Q filing to reflect the correction of errors identified related to the adoption of the amended guidance as well as indirect impact of the correction of errors associated with the restatement.

 

 

 

    Statement of Comprehensive Income  
($ in millions)   Three months ended March 31, 2011  
                Adjusted              
                prior to the              
    As previously     Correction     retrospective     Retrospective     As restated  
    reported     of errors(1)     adoption     adoption(2)     and amended  
REVENUES:                              
Premiums   $ 0.2     $ —     $ 0.2     $ —     $ 0.2  
Insurance and investment product fees     101.8       (0.2 )     101.6       —       101.6  
Net investment income     21.4       0.1       21.5       —       21.5  
Net realized investment gains (losses):                                        
  Total OTTI losses     (0.9 )     (0.7 )     (1.6 )     —       (1.6 )
  Portion of OTTI losses recognized in OCI     0.4       0.3       0.7       —       0.7  
    Net OTTI losses recognized in earnings     (0.5 )     (0.4 )     (0.9 )     —       (0.9 )

  Net realized investment gains (losses),

    excluding OTTI losses

     (4.0 )     4.0       —       —       —  
Net realized investment losses     (4.5 )     3.6       (0.9 )     —       (0.9 )
Total revenues     118.9       3.5       122.4       —       122.4  
                                         
BENEFITS AND EXPENSES:                                        
Policy benefits     50.6       6.9       57.5       4.2       61.7  
Policy acquisition cost amortization     39.1       4.0       43.1       (8.9 )     34.2  
Other operating expenses     18.3       5.2       23.5       0.3       23.8  
Total benefits and expenses     108.0       16.1       124.1       (4.4 )     119.7  
Income (loss) before income taxes     10.9       (12.6 )     (1.7 )     4.4       2.7  
Income tax expense (benefit)     0.2       (1.2 )     (1.0 )     0.1       (0.9 )
Net income (loss)   $ 10.7     $ (11.4 )   $ (0.7 )   $ 4.3     $ 3.6  
                                         
COMPREHENSIVE INCOME (LOSS):                                        
Net income (loss)   $ 10.7     $ (11.4 )   $ (0.7 )   $ 4.3     $ 3.6  

  Other comprehensive income (loss)

    before income tax:

                                        
  Net unrealized investment gains before income tax     7.9       7.9       15.8       0.7       16.5  

  Non-credit portion of OTTI losses recognized

    in OCI before income tax

     0.5       (0.4 )     0.1       —       0.1  

    Other comprehensive income (loss)

      before income taxes

     8.4       7.5       15.9       0.7       16.6  
  Less: Income tax expense (benefit) related to:                                        
  Net unrealized investment gains     5.1       (3.3 )     1.8       —       1.8  

  Non-credit portion of OTTI losses recognized

    in OCI

     0.2       (0.2 )     —       —       —  
    Total income tax expense (benefit)     5.3       (3.5 )     1.8       —       1.8  
Other comprehensive income, net of tax     3.1       11.0       14.1       0.7       14.8  
Comprehensive income (loss)   $ 13.8     $ (0.4 )   $ 13.4     $ 5.0     $ 18.4  

———————

(1) Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance. See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
(2) Adjustments related to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance, have been updated from those originally disclosed in the 2012 first quarter Form 10-Q filing to reflect the correction of errors identified related to the adoption of the amended guidance as well as indirect impact of the correction of errors associated with the restatement.

 

 

 

    Statement of Comprehensive Income  
($ in millions)   Nine months ended September 30, 2011  
                Adjusted              
                prior to the              
    As previously     Correction     retrospective     Retrospective     As restated  
    reported     of errors(1)     adoption     adoption(2)     and amended  
REVENUES:                              
Premiums   $ 1.4     $ —     $ 1.4     $ —     $ 1.4  
Insurance and investment product fees     301.7       (1.9 )     299.8       —       299.8  
Net investment income     71.3       (0.6 )     70.7       —       70.7  
Net realized investment gains (losses):                                        
  Total OTTI losses     (6.2 )     (0.8 )     (7.0 )     —       (7.0 )
  Portion of OTTI losses recognized in OCI     4.7       —       4.7       —       4.7  
    Net OTTI losses recognized in earnings     (1.5 )     (0.8 )     (2.3 )     —       (2.3 )

  Net realized investment gains (losses),

    excluding OTTI losses

     (11.2 )     5.4       (5.8 )     —       (5.8 )
Net realized investment losses     (12.7 )     4.6       (8.1 )     —       (8.1 )
Total revenues     361.7       2.1       363.8       —       363.8  
                                         
BENEFITS AND EXPENSES:                                        
Policy benefits     186.3       45.1       231.4       7.8       239.2  
Policy acquisition cost amortization     107.8       3.2       111.0       (20.7 )     90.3  
Other operating expenses     55.8       13.0       68.8       0.9       69.7  
Total benefits and expenses     349.9       61.3       411.2       (12.0 )     399.2  
Income (loss) before income taxes     11.8       (59.2 )     (47.4 )     12.0       (35.4 )
Income tax expense (benefit)     (9.2 )     (6.2 )     (15.4 )     (1.4 )     (16.8 )
Net income (loss)   $ 21.0     $ (53.0 )   $ (32.0 )   $ 13.4     $ (18.6 )
                                         
COMPREHENSIVE INCOME (LOSS):                                        
Net income (loss)   $ 21.0     $ (53.0 )   $ (32.0 )   $ 13.4     $ (18.6 )

  Other comprehensive income (loss)

    before income tax:

                                        
  Net unrealized investment gains before income tax     25.4       (7.8 )      17.6       3.9       21.5  

  Non-credit portion of OTTI losses recognized

    in OCI before income tax

     (3.7 )     (0.2 )     (3.9 )     —       (3.9 )

    Other comprehensive income (loss)

      before income taxes

     21.7       (8.0 )     13.7       3.9       17.6  
  Less: Income tax expense (benefit) related to:                                        
  Net unrealized investment gains     8.8       (4.7 )      4.1       1.5       5.6  

  Non-credit portion of OTTI losses recognized

    in OCI

     (1.2 )     (0.2 )     (1.4 )     —       (1.4 )
    Total income tax expense (benefit)     7.6       (4.9 )     2.7       1.5       4.2  
Other comprehensive income, net of tax     14.1       (3.1 )     11.0       2.4       13.4  
Comprehensive income (loss)   $ 35.1     $ (56.1 )   $ (21.0 )   $ 15.8     $ (5.2 )

———————

(1) Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance. See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
(2) Adjustments related to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance, have been updated from those originally disclosed in the 2012 first quarter Form 10-Q filing to reflect the correction of errors identified related to the adoption of the amended guidance as well as indirect impact of the correction of errors associated with the restatement.
Supplemental Unaudited Quarterly Financial Information (Part 3)
    Statement of Comprehensive Income  
($ in millions)   Six months ended June 30, 2011  
                Adjusted              
                prior to the              
    As previously     Correction     retrospective     Retrospective     As restated  
    reported     of errors(1)     adoption     adoption(2)     and amended  
REVENUES:                              
Premiums   $ 0.3     $ —     $ 0.3     $ —     $ 0.3  
Insurance and investment product fees     203.7       (0.8 )     202.9       —       202.9  
Net investment income     45.6       0.1       45.7       —       45.7  
Net realized investment gains (losses):                                        
  Total OTTI losses     (1.7 )     (0.6 )     (2.3 )     —       (2.3 )
  Portion of OTTI losses recognized in OCI     0.8       0.2       1.0       —       1.0  
    Net OTTI losses recognized in earnings     (0.9 )     (0.4 )     (1.3 )     —       (1.3 )

  Net realized investment gains (losses),

    excluding OTTI losses

     (5.8 )     3.2       (2.6 )     —       (2.6 )
Net realized investment losses     (6.7 )     2.8       (3.9 )     —       (3.9 )
Total revenues     242.9       2.1       245.0       —       245.0  
                                         
BENEFITS AND EXPENSES:                                        
Policy benefits     124.5       13.9       138.4       6.9       145.3  
Policy acquisition cost amortization     68.0       8.7       76.7       (15.3 )     61.4  
Other operating expenses     36.4       8.6       45.0       0.6       45.6  
Total benefits and expenses     228.9       31.2       260.1       (7.8 )     252.3  
Income (loss) before income taxes     14.0       (29.1 )     (15.1 )     7.8       (7.3 )
Income tax expense (benefit)     4.6       (6.2 )     (1.6 )     2.8       1.2  
Net income (loss)   $ 9.4     $ (22.9 )   $ (13.5 )   $ 5.0     $ (8.5 )
                                         
COMPREHENSIVE INCOME (LOSS):                                        
Net income (loss)   $ 9.4     $ (22.9 )   $ (13.5 )   $ 5.0     $ (8.5 )

  Other comprehensive income (loss)

    before income tax:

                                        
  Net unrealized investment gains before income tax     12.0       12.3       24.3       2.6       26.9  

  Non-credit portion of OTTI losses recognized

    in OCI before income tax

     0.1       (0.3 )     (0.2 )     —       (0.2 )

    Other comprehensive income (loss)

      before income taxes

     12.1       12.0       24.1       2.6       26.7  
  Less: Income tax expense (benefit) related to:                                        
  Net unrealized investment gains     (1.5 )     10.6       9.1       (2.7 )      6.4  

  Non-credit portion of OTTI losses recognized

    in OCI

     0.1       (0.2 )     (0.1 )     —       (0.1 )
    Total income tax expense (benefit)     (1.4 )     10.4       9.0       (2.7 )      6.3  
Other comprehensive income, net of tax     13.5       1.6       15.1       5.3       20.4  
Comprehensive income (loss)   $ 22.9     $ (21.3 )   $ 1.6     $ 10.3     $ 11.9  

———————

(1) Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance. See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
(2) Adjustments related to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance, have been updated from those originally disclosed in the 2012 first quarter Form 10-Q filing to reflect the correction of errors identified related to the adoption of the amended guidance as well as indirect impact of the correction of errors associated with the restatement.

 

 

 

    Balance Sheet  
($ in millions)   As of September 30, 2011  
                Adjusted              
                prior to the              
    As previously     Correction     retrospective     Retrospective     As restated  
    reported     of errors(1)     adoption     adoption(2)     and amended  
ASSETS:                              
Available-for-sale debt securities, at fair value   $ 2,258.5     $ (32.2 )   $ 2,226.3     $ —     $ 2,226.3  
Limited partnerships and other investments     4.4       —       4.4       —       4.4  
Policy loans, at unpaid principal balances     62.0       —       62.0       —       62.0  
Derivative instruments     108.2       (8.7 )     99.5       —       99.5  
Fair value investments     7.4       31.4       38.8       —       38.8  
Total investments     2,440.5       (9.5 )     2,431.0       —       2,431.0  
Cash and cash equivalents     69.1       (15.5 )     53.6       —       53.6  
Accrued investment income     18.8       —       18.8       —       18.8  
Receivables     358.5       29.0       387.5       —       387.5  
Deferred policy acquisition costs     571.0       (2.7 )     568.3       (81.9 )     486.4  
Deferred income taxes     —       28.7       28.7       —       28.7  
Receivables from related parties     12.1       4.5       16.6       —       16.6  
Other assets     62.1       41.5       103.6       (1.0 )     102.6  
Separate account assets     2,453.7       (0.3 )     2,453.4       -       2,453.4  
Total assets   $ 5,985.8     $ 75.7     $ 6,061.5     $ (82.9 )   $ 5,978.6  
                                         
LIABILITIES:                                        
Policy liabilities and accruals   $ 1,318.8     $ 289.3     $ 1,608.1     $ (43.5 )   $ 1,564.6  
Policyholder deposit funds     1,466.3       6.6       1,472.9       —       1,472.9  
Deferred income taxes     20.3       (20.3 )     —       —       —  
Payable to related parties     16.1       8.7       24.8       —       24.8  
Other liabilities     65.4       (25.8 )     39.6       —       39.6  
Separate account liabilities     2,453.7       (0.3 )     2,453.4       —       2,453.4  
Total liabilities     5,340.6       258.2       5,598.8       (43.5 )     5,555.3  
                                         
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 loss     1.6       4.3       5.9       (5.4 )     0.5  
Accumulated deficit     (161.1 )     (186.8 )     (347.9 )     (34.0 )     (381.9 )
Total stockholder’s equity     645.2       (182.5 )     462.7       (39.4 )     423.3  
Total liabilities and stockholder’s equity   $ 5,985.8     $ 75.7     $ 6,061.5     $ (82.9 )   $ 5,978.6  

———————

(1) Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance. See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
(2) Adjustments related to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance, have been updated from those originally disclosed in the 2012 first quarter Form 10-Q filing to reflect the correction of errors identified related to the adoption of the amended guidance as well as indirect impact of the correction of errors associated with the restatement.

 

 

    Balance Sheet  
($ in millions)   As of June 30, 2011  
                Adjusted              
                prior to the              
    As previously     Correction     retrospective     Retrospective     As restated  
    reported     of errors(1)     adoption     adoption(2)     and amended  
ASSETS:                              
Available-for-sale debt securities, at fair value   $ 1,972.3     $ (31.2 )   $ 1,941.1     $ —     $ 1,941.1  
Limited partnerships and other investments     3.8       0.2       4.0       —       4.0  
Policy loans, at unpaid principal balances     60.8       -       60.8       —       60.8  
Derivative instruments     78.1       (2.9 )     75.2       —       75.2  
Fair value investments     7.6       30.5       38.1       —       38.1  
Total investments     2,122.6       (3.4 )     2,119.2       —       2,119.2  
Cash and cash equivalents     63.6       (18.2 )     45.4       —       45.4  
Accrued investment income     15.0       -       15.0       —       15.0  
Receivables     362.3       25.7       388.0       —       388.0  
Deferred policy acquisition costs     581.6       7.6       589.2       (87.3 )     501.9  
Deferred income taxes     -       22.9       22.9       —       22.9  
Receivables from related parties     14.6       (5.0 )      9.6       —       9.6  
Other assets     51.7       44.5       96.2       (1.0 )     95.2  
Separate account assets     2,873.0       0.6       2,873.6       -       2,873.6  
Total assets   $ 6,084.4     $ 74.7     $ 6,159.1     $ (88.3 )   $ 6,070.8  
                                         
LIABILITIES:                                        
Policy liabilities and accruals   $ 1,311.2     $ 252.4     $ 1,563.6     $ (43.4 )   $ 1,520.2  
Policyholder deposit funds     1,160.1       1.4       1,161.5       —       1,161.5  
Deferred income taxes     15.6       (15.6 )     —       —       —  
Payable to related parties     18.5       8.0       26.5       —       26.5  
Other liabilities     73.0       (24.4 )     48.6       —       48.6  
Separate account liabilities     2,873.0       0.6       2,873.6       —       2,873.6  
Total liabilities     5,451.4       222.4       5,673.8       (43.4 )     5,630.4  
                                         
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 loss     1.0       9.0       10.0       (2.5 )     7.5  
Accumulated deficit     (172.7 )     (156.7 )     (329.4 )     (42.4 )     (371.8 )
Total stockholder’s equity     633.0       (147.7 )     485.3       (44.9 )     440.4  
Total liabilities and stockholder’s equity   $ 6,084.4     $ 74.7     $ 6,159.1     $ (88.3 )   $ 6,070.8  

———————

(1) Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance. See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
(2) Adjustments related to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance, have been updated from those originally disclosed in the 2012 first quarter Form 10-Q filing to reflect the correction of errors identified related to the adoption of the amended guidance as well as indirect impact of the correction of errors associated with the restatement.

 

 

    Balance Sheet  
($ in millions)   As of March 31, 2011  
                Adjusted              
                prior to the              
    As previously     Correction     retrospective     Retrospective     As restated  
    reported     of errors(1)     adoption     adoption(2)     and amended  
ASSETS:                              
Available-for-sale debt securities, at fair value   $ 1,782.9     $ (24.6 )   $ 1,758.3     $ —     $ 1,758.3  
Limited partnerships and other investments     3.6       (0.1 )     3.5       —       3.5  
Policy loans, at unpaid principal balances     58.3       —       58.3       —       58.3  
Derivative instruments     83.1       (2.4 )     80.7       —       80.7  
Fair value investments     12.0       22.6       34.6       —       34.6  
Total investments     1,939.9       (4.5 )     1,935.4       —       1,935.4  
Cash and cash equivalents     37.4       (18.2 )     19.2       —       19.2  
Accrued investment income     15.0       —       15.0       —       15.0  
Receivables     384.9       28.1       413.0       —       413.0  
Deferred policy acquisition costs     590.1       26.3       616.4       (96.1 )     520.3  
Deferred income taxes     —       24.9       24.9       (0.1 )     24.8  
Receivables from related parties     30.2       (4.8 )      25.4       —       25.4  
Other assets     53.3       32.9       86.2       (1.0 )     85.2  
Separate account assets     2,947.5       (1.3 )     2,946.2       —       2,946.2  
Total assets   $ 5,998.3     $ 83.4     $ 6,081.7     $ (97.2 )   $ 5,984.5  
                                         
LIABILITIES:                                        
Policy liabilities and accruals   $ 1,293.8     $ 256.5     $ 1,550.3     $ (47.0 )   $ 1,503.3  
Policyholder deposit funds     977.3       (0.1 )     977.2       —       977.2  
Deferred income taxes     18.2       (18.2 )     —       —       —  
Payable to related parties     40.9       7.3       48.2       —       48.2  
Other liabilities     96.7       (34.0 )     62.7       —       62.7  
Separate account liabilities     2,947.5       (1.3 )     2,946.2       —       2,946.2  
Total liabilities     5,374.4       210.2       5,584.6       (47.0 )     5,537.6  
                                         
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 loss     (9.4 )     18.4       9.0       (7.1 )     1.9  
Accumulated deficit     (171.4 )     (145.2 )     (316.6 )     (43.1 )     (359.7 )
Total stockholder’s equity     623.9       (126.8 )     497.1       (50.2 )     446.9  
Total liabilities and stockholder’s equity   $ 5,998.3     $ 83.4     $ 6,081.7     $ (97.2 )   $ 5,984.5  

———————

(1) Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance. See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
(2) Adjustments related to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance, have been updated from those originally disclosed in the 2012 first quarter Form 10-Q filing to reflect the correction of errors identified related to the adoption of the amended guidance as well as indirect impact of the correction of errors associated with the restatement.

 

 

 

    Statement of Changes in Stockholder’s Equity  
($ in millions)   For the period ended September 30, 2011  
                Adjusted              
                prior to the              
    As previously     Correction     retrospective     Retrospective     As restated  
    reported     of errors(1)     adoption     adoption(2)     and amended  
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   $ (12.5 )   $ 7.4     $ (5.1 )   $ (7.8 )   $ (12.9 )

  Adjustment for initial application of

    accounting changes

     —       —       —       —       —  
  Other comprehensive income     14.1       (3.1 )     11.0       2.4       13.4  
Balance, end of period   $ 1.6     $ 4.3     $ 5.9     $ (5.4 )   $ 0.5  
                                         

RETAINED EARNINGS (ACCUMULATED

DEFICIT):

                                        
Balance, beginning of period   $ (182.1 )   $ (133.8 )   $ (315.9 )   $ (47.4 )   $ (363.3 )

  Adjustment for initial application of

    accounting changes

     —       —       —       —       —  
Net income (loss)     21.0       (53.0 )     (32.0 )     13.4       (18.6 )
Balance, end of period   $ (161.1 )   $ (186.8 )   $ (347.9 )   $ (34.0 )   $ (381.9 )
                                         
TOTAL STOCKHOLDER’S EQUITY:                                        
Balance, beginning of period   $ 610.1     $ (126.4 )   $ 483.7     $ (55.2 )   $ 428.5  
  Change in stockholder’s equity     35.1       (56.1 )     (21.0 )     15.8       (5.2 )
Balance, end of period   $ 645.2     $ (182.5 )   $ 462.7     $ (39.4 )   $ 423.3  

———————

(1) Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance. See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
(2) Adjustments related to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance, have been updated from those originally disclosed in the 2012 first quarter Form 10-Q filing to reflect the correction of errors identified related to the adoption of the amended guidance as well as indirect impact of the correction of errors associated with the restatement.

 

 

 

    Statement of Changes in Stockholder’s Equity  
($ in millions)   For the period ended June 30, 2011  
                Adjusted              
                prior to the              
    As previously     Correction     retrospective     Retrospective     As restated  
    reported     of errors(1)     adoption     adoption(2)     and amended  
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   $ (12.5 )   $ 7.4     $ (5.1 )   $ (7.8 )   $ (12.9 )

  Adjustment for initial application of

    accounting changes

     —       —       —       —       —  
  Other comprehensive income     13.5       1.6       15.1       5.3       20.4  
Balance, end of period   $ 1.0     $ 9.0     $ 10.0     $ (2.5 )   $ 7.5  
                                         

RETAINED EARNINGS (ACCUMULATED

DEFICIT):

                                        
Balance, beginning of period   $ (182.1 )   $ (133.8 )   $ (315.9 )   $ (47.4 )   $ (363.3 )

  Adjustment for initial application of

    accounting changes

     —       —       —       —       —  
Net income (loss)     9.4       (22.9 )     (13.5 )     5.0       (8.5 )
Balance, end of period   $ (172.7 )   $ (156.7 )   $ (329.4 )   $ (42.4 )   $ (371.8 )
                                         
TOTAL STOCKHOLDER’S EQUITY:                                        
Balance, beginning of period   $ 610.1     $ (126.4 )   $ 483.7     $ (55.2 )   $ 428.5  
  Change in stockholder’s equity     22.9       (21.3 )     1.6       10.3       11.9  
Balance, end of period   $ 633.0     $ (147.7 )   $ 485.3     $ (44.9 )   $ 440.4  

———————

(1) Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance. See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
(2) Adjustments related to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance, have been updated from those originally disclosed in the 2012 first quarter Form 10-Q filing to reflect the correction of errors identified related to the adoption of the amended guidance as well as indirect impact of the correction of errors associated with the restatement.

 

    Statement of Changes in Stockholder’s Equity  
($ in millions)   For the period ended March 31, 2011  
                Adjusted              
                prior to the              
    As previously     Correction     retrospective     Retrospective     As restated  
    reported     of errors(1)     adoption     adoption(2)     and amended  
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   $ (12.5 )   $ 7.4     $ (5.1 )   $ (7.8 )   $ (12.9 )

  Adjustment for initial application of

    accounting changes

     —       —       —       —       —  
  Other comprehensive income     3.1       11.0       14.1       0.7       14.8  
Balance, end of period   $ (9.4 )   $ 18.4     $ 9.0     $ (7.1 )   $ 1.9  
                                         

RETAINED EARNINGS (ACCUMULATED

DEFICIT):

                                        
Balance, beginning of period   $ (182.1 )   $ (133.8 )   $ (315.9 )   $ (47.4 )   $ (363.3 )

  Adjustment for initial application of

    accounting changes

     —       —       —       —       —  
Net income (loss)     10.7       (11.4 )     (0.7 )     4.3       3.6  
Balance, end of period   $ (171.4 )   $ (145.2 )   $ (316.6 )   $ (43.1 )   $ (359.7 )
                                         
TOTAL STOCKHOLDER’S EQUITY:                                        
Balance, beginning of period   $ 610.1     $ (126.4 )   $ 483.7     $ (55.2 )   $ 428.5  
  Change in stockholder’s equity     13.8       (0.4 )     13.4       5.0       18.4  
Balance, end of period   $ 623.9     $ (126.8 )   $ 497.1     $ (50.2 )   $ 446.9  

———————

(1) Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance. See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
(2) Adjustments related to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance, have been updated from those originally disclosed in the 2012 first quarter Form 10-Q filing to reflect the correction of errors identified related to the adoption of the amended guidance as well as indirect impact of the correction of errors associated with the restatement.

 

    Statement of Cash Flows  
($ in millions)   For the period ended September 30, 2011  
                Adjusted              
                prior to the              
    As previously     Correction     retrospective     Retrospective     As restated  
    reported     of errors(1)     adoption     adoption(2)     and amended  
OPERATING ACTIVITIES:                              
Net income (loss)   $ 21.0     $ (53.0 )   $ (32.0 )   $ 13.4     $ (18.6 )
Net realized investment losses     12.7       (4.6 )      8.1       —       8.1  
Policy acquisition costs deferred     (3.2 )     (69.2 )     (72.4 )     0.9       (71.5 )
Amortization of policy acquisition costs     —       111.0       111.0       (20.7 )     90.3  
Interest credited     —       46.5       46.5       —       46.5  

Equity in earnings of

  limited partnerships and other investments

     —       (0.3 )     (0.3 )     —       (0.3 )
Change in:                                        
  Accrued investment income     (7.9 )     (1.7 )     (9.6 )     —       (9.6 )
  Deferred income taxes     (0.6 )     (3.9 )     (4.5 )     (1.5 )     (6.0 )
  Receivables     0.4       15.8       16.2       —       16.2  
  Policy liabilities and accruals     36.4       (155.8 )     (119.4 )     7.9       (111.5 )
  Due to/from affiliate     —       6.5       6.5       —       6.5  
  Other operating activities, net     (4.1 )     (51.3 )     (55.4 )     —       (55.4 )
Cash provided by (used for) operating activities     54.7       (160.0 )     (105.3 )     —       (105.3 )
                                         
INVESTING ACTIVITIES:                                        
Purchases of:                                        
  Available-for-sale debt securities     (2,008.2 )     971.5       (1,036.7 )     —       (1,036.7 )
  Derivative instruments     —       (23.0 )     (23.0 )     —       (23.0 )
  Fair value investments     —       (29.8 )     (29.8 )     —       (29.8 )
Sales, repayments and maturities of:                                        
  Available-for-sale debt securities     1,345.7       (952.0 )     393.7       —       393.7  
  Derivative instruments     —       50.3       50.3       —       50.3  
  Fair value investments     —       6.2       6.2       —       6.2  
Contributions to limited partnerships     —       (0.9 )     (0.9 )     —       (0.9 )
Distributions from limited partnerships     —       0.1       0.1       —       0.1  
Policy loans, net     (4.7 )     1.6       (3.1 )     —       (3.1 )
Other investing activities, net     —       (0.6 )     (0.6 )     —       (0.6 )
Cash provided by (used for) investing activities     (667.2 )     23.4       (643.8 )     —       (643.8 )
                                         
FINANCING ACTIVITIES:                                        
Policyholder deposit fund deposits     697.7       185.9       883.6       —       883.6  
Policyholder deposit fund withdrawals     (67.2 )     (290.7 )     (357.9 )     —       (357.9 )
Net transfers to/from separate accounts     —       242.9       242.9       —       242.9  
Cash provided by (used for) financing activities     630.5       138.1       768.6       —       768.6  
Change in cash and cash equivalents     18.0       1.5       19.5       —       19.5  
Cash and cash equivalents, beginning of year     51.1       (17.0 )     34.1       —       34.1  
Cash and cash equivalents, end of year   $ 69.1     $ (15.5 )   $ 53.6     $ —     $ 53.6  
                                         
Non-Cash Transactions During the Year                                        
Investment exchanges   $ —     $ 12.0     $ 12.0     $ —     $ 12.0  

———————

(1) Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance. See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
(2) Adjustments related to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance, have been updated from those originally disclosed in the 2012 first quarter Form 10-Q filing to reflect the correction of errors identified related to the adoption of the amended guidance as well as indirect impact of the correction of errors associated with the restatement.

 

 

    Statement of Cash Flows  
($ in millions)   For the period ended June 30, 2011  
                Adjusted              
                prior to the              
    As previously     Correction     retrospective     Retrospective     As restated  
    reported     of errors(1)     adoption     adoption(2)     and amended  
OPERATING ACTIVITIES:                              
Net income (loss)   $ 9.4     $ (22.9 )   $ (13.5 )   $ 5.0     $ (8.5 )
Net realized investment losses     6.7       (2.8 )     3.9       —       3.9  
Policy acquisition costs deferred     (67.6 )     26.7       (40.9 )     0.6       (40.3 )
Amortization of deferred policy acquisition costs     68.0       8.7       76.7       (15.3 )     61.4  
Interest credited     —       31.1       31.1       —       31.1  

Equity in earnings of

  limited partnerships and other investments

     (0.1 )     (0.1 )     (0.2 )     —       (0.2 )
Change in:                                        
  Accrued investment income     (3.6 )     (1.7 )     (5.3 )     —       (5.3 )
  Deferred income taxes     3.7       (8.9 )     (5.2 )     2.7       (2.5 )
  Receivables     (1.6 )     17.1       15.5       —       15.5  
  Policy liabilities and accruals     32.6       (127.9 )     (95.3 )     7.0       (88.3 )
  Due to/from affiliate     —       6.1       6.1       —       6.1  
Other operating activities, net     9.9       (42.7 )     (32.8 )     —       (32.8 )
Cash provided by (used for) operating activities     57.4       (117.3 )     (59.9 )     —       (59.9 )
                                         
INVESTING ACTIVITIES:                                        
Purchases of:                                        
  Available-for-sale debt securities     (718.3 )     32.1       (686.2 )     —       (686.2 )
  Derivative instruments     (12.5 )     (5.8 )     (18.3 )     —       (18.3 )
  Fair value investments     —       (28.7 )     (28.7 )     —       (28.7 )
  Other investments     (0.5 )     0.5       —       —       —  
Sales, repayments and maturities of:                                        
  Available-for-sale debt securities     313.4       (8.0 )     305.4       —       305.4  
  Derivative instruments     18.5       19.3       37.8       —       37.8  
  Fair value investments     —       5.3       5.3       —       5.3  
Other investments     —       —       —       —       —  
Contributions to limited partnerships     —       (0.5 )     (0.5 )     —       (0.5 )
Distributions from limited partnerships     —       —       —       —       —  
Policy loans, net     (3.5 )     1.0       (2.5 )     —       (2.5 )
Other investing activities, net     —       (0.6 )     (0.6 )     —       (0.6 )
Cash provided by (used for) investing activities     (402.9 )     14.6       (388.3 )     —       (388.3 )
                                         
FINANCING ACTIVITIES:                                        
Policyholder deposit fund deposits     700.3       (162.6 )     537.7       —       537.7  
Policyholder deposit fund withdrawals     (342.3 )     96.1       (246.2 )     —       (246.2 )
Net transfers to/from separate accounts     —       168.0       168.0       —       168.0  
Cash provided by (used for) financing activities     358.0       101.5       459.5       —       459.5  
Change in cash and cash equivalents     12.5       (1.2 )     11.3       —       11.3  
Cash and cash equivalents, beginning of year     51.1       (17.0 )     34.1       —       34.1  
Cash and cash equivalents, end of year   $ 63.6     $ (18.2 )   $ 45.4     $ —     $ 45.4  
                                         
Non-Cash Transactions During the Year                                        
Investment exchanges   $ —     $ 7.0     $ 7.0     $ —     $ 7.0  

———————

 (1) Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance. See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
(2) Adjustments related to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance, have been updated from those originally disclosed in the 2012 first quarter Form 10-Q filing to reflect the correction of errors identified related to the adoption of the amended guidance as well as indirect impact of the correction of errors associated with the restatement.

 

 

 

    Statement of Cash Flows  
($ in millions)   For the period ended March 31, 2011  
                Adjusted              
                prior to the              
    As previously     Correction     retrospective     Retrospective     As restated  
    reported     of errors(1)     adoption     adoption(2)     and amended  
OPERATING ACTIVITIES:                              
Net income (loss)   $ 10.7     $ (11.4 )   $ (0.7 )   $ 4.3     $ 3.6  
Net realized investment losses     4.5       (3.6 )     0.9       —       0.9  
Policy acquisition costs deferred     (36.4 )     14.6       (21.8 )     0.3       (21.5 )
Amortization of deferred policy acquisition costs     39.1       4.0       43.1       (8.9 )     34.2  
Interest credited     —       14.7       14.7       —       14.7  

Equity in earnings of

  limited partnerships and other investments

     (0.1 )     0.2       0.1       —       0.1  
Change in:                                        
  Accrued investment income     (3.2 )     (0.9 )     (4.1 )     —       (4.1 )
  Deferred income taxes     (0.5 )     0.5       —       —       —  
  Receivables     (21.6 )     14.9       (6.7 )     —       (6.7 )
  Policy liabilities and accruals     14.5       (65.9 )     (51.4 )     4.3       (47.1 )
  Due to/from affiliate     —       12.7       12.7       —       12.7  
Other operating activities, net     26.3       (44.3 )     (18.0 )     —       (18.0 )
Cash provided by (used for) operating activities     33.3       (64.5 )     (31.2 )     —       (31.2 )
                                         
INVESTING ACTIVITIES:                                        
Purchases of:                                        
  Available-for-sale debt securities     (339.1 )     18.0       (321.1 )     —       (321.1 )
  Derivative instruments     (16.2 )     3.8       (12.4 )     —       (12.4 )
  Fair value investments     —       (20.4 )     (20.4 )     —       (20.4 )
  Other investments     (0.2 )     0.2       —       —       —  
Sales, repayments and maturities of:                                        
  Available-for-sale debt securities     111.5       2.4       113.9       —       113.9  
  Derivative instruments     15.6       7.3       22.9       —       22.9  
  Fair value investments     —       0.2       0.2       —       0.2  
  Other investments     —       —       —       —       —  
Contributions to limited partnerships     —       (0.2 )     (0.2 )     —       (0.2 )
Distributions from limited partnerships     —       —       —       —       —  
Policy loans, net     (1.0 )     0.5       (0.5 )     —       (0.5 )
Other investing activities, net     —       (0.6 )     (0.6 )     —       (0.6 )
Cash provided by (used for) investing activities     (229.4 )     11.2       (218.2 )     —       (218.2 )
                                         
FINANCING ACTIVITIES:                                        
Policyholder deposit fund deposits     214.5       60.1       274.6       —       274.6  
Policyholder deposit fund withdrawals     (32.1 )     (93.2 )     (125.3 )     —       (125.3 )
Net transfers to/from separate accounts     —       85.2       85.2       —       85.2  
Cash provided by (used for) financing activities     182.4       52.1       234.5       —       234.5  
Change in cash and cash equivalents     (13.7 )     (1.2 )     (14.9 )     —       (14.9 )
Cash and cash equivalents, beginning of year     51.1       (17.0 )     34.1       —       34.1  
Cash and cash equivalents, end of year   $ 37.4     $ (18.2 )   $ 19.2     $ —     $ 19.2  
                                         
Non-Cash Transactions During the Year                                        
Investment exchanges   $ —     $ 2.0     $ 2.0     $ —     $ 2.0  

———————

(1) Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance. See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
(2) Adjustments related to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance, have been updated from those originally disclosed in the 2012 first quarter Form 10-Q filing to reflect the correction of errors identified related to the adoption of the amended guidance as well as indirect impact of the correction of errors associated with the restatement.